Annual Report 2023
Accelerating
Change Together
Introduction
3 Who we are
5 Hempel Foundation
highlights 2023
6 Key figures
7 Ownership of Hempel A/S
8 Hempel A/S strategy:
Doubling impact
9 2023 strategic milestones
in Hempel A/S
10 Spotlight on innovation
11 Sustainability in everything we do
12 Philanthropic strategy
13 Our revised strategy
14 Our focus areas
15 Supporting organisations in
accelerating positive change
16 Our goals
17 Our new visual identity
19 Our focus areas
20 Global education
28 Biodiversity
36 Science in coatings technology
38 Danish civil society organisations
40 Complete list of donations in 2023
44 ESG and statements
45 Management’s statement
46 Independent auditor’s report
48 Foundation governance
51 Social responsibility
54 Sustainability leadership
61 Financial affairs
62 Revenue and earnings
64 Hempel Foundation's investment
strategy and other activities
66 Hempel Foundation’s financial
results and other activities
67 Financial statements
68 Consolidated financial statements
112 Hempel Foundation financial
statements
Contents
Front page: Boma and Badingilo National Parks,
South Sudan. Photo: Marcus Westberg← Madagascar. Photo: UNICEF
Hempel Foundation Annual Report 2023
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About the
Hempel
Foundation
The Hempel Foundation is the owner of the
Hempel Group – a world-leading supplier
of coatings – and a committed philanthropist
within the fields of education and sustaining
biodiversity, among others.
The Hempel Foundation was established in
1948 by Jørgen Christian Hempel, the founder
of the Hempel Group. Its main purpose is to
provide and maintain a solid economic base for
Hempel A/S and the Hempel Group. This eco-
nomic base provides a long-term framework for
the Hempel Group.
Who we are
↑ Primary education in Bangladesh. Photo: BRAC
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↑ Tree nursery for reforestation in Ecuador . Photo: WWF
“ We work to make tangible change,
and we aspire to accelerate positive
change by scaling impact through
financial and non-financial means.”
organisations
supported in 2023
146
The Hempel Foundation’s secondary purpose is
philanthropic: to make a positive and sustainable
difference around the globe, based on the prin-
ciples set down in the Foundation’s trust deed.
Within our philanthropic work, we aim to con-
tribute to sustainable impact on some of the
biggest and most urgent global challenges
facing us today.
We work strategically to both lead and leverage
in the ongoing fight to empower children living
in poverty to learn as well as to sustain some of
the planet’s most important and valuable nature.
We work to make tangible change, and we aspire
to accelerate positive change by scaling impact
through financial and nonfinancial means.
2019 2020 2021 2022 2023
21.1
15.4
19.6
21.4
23.0
Donations
EUR m
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420,000
Strengthening quality
education for 420,000 children
→ page 20
Revised strategy:
Accelerating
Change Together
→ page 13
11
Nine partner organisations
strengthened conservation
in 11 landscapes globally
→ page 30
Saksfjed Wilderness
project achieved significant
milestones in rewilding
and nature restoration
→ page 34
We increased both
revenue and
donations in 2023
→ page 6
Launch of
Foundational
Learning
Action Tracker
with UNICEF
→ page 25
Hempel Foundation
highlights 2023
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Key figures
(EUR m) 2023* 2022*
Profit and loss
Revenue 2,353 2,159
EBITDA 331 213
EBITDA, adjusted 333 235
Amortisation, depreciation and impairment 143 100
Operating profit 188 113
Financial items, net -77 -84
Profit before tax 111 29
Net profit for continuing operations 91 10
Net profit for the year 80 8
Financial position
Total assets 3,046 3,003
Investment in tangible assets 72 100
Foundation equity 944 882
Net interest-bearing debt 1,005 984
Cash flow
Total cash flow from operating activities 139 67
Cash flow from acquisitions / divestments of enterprises 6 0
Cash flow from net investments in property, plant and equipment and intangible assets -110 -123
Free cash flow 35 -86
Grants/Donations 23 22
Working capital
Net working capital (NWC) days 61 72
* 2023 is the first year Hempel Foundation present its consolidation financial statement
in accordance with IFRS, therefor one year of comparable figures are presented,
(EUR m) 2023 2022
Ratios (%)
Organic growth 13.7 12.7
Gross margin 38.9 36.3
EBITDA margin 14.1 9.9
EBITDA margin. adjusted 14.2 10.9
Operating profit margin 8.0 5.2
Return on invested capital ROIC
1
7.5 1.9
Equity ratio 31.0 29.4
Cash conversion 80 64
Leverage ratio 3.0 4.6
Environment. social and governance (ESG)
Scope 1 & 2 emissions (tonnes CO2e) 21,167 19,090
Waste to landfill (tonnes) 934 1,353
Average number of employees (FTEs) 7 7
Gender diversity in leadership positions
1
. female/male 28/72 29/71
Satisfaction and motivation
2
75 72
Suppliers screened through Hempel Procurement
Sustainability Screening (% of spend) 44 40
For definitions of financial ratios. see page 111.
1 Including adjustment for hyperinflation
2 Leadership positions with minimum 3 direct reports
3 Answers are given on a scale from 1-10 (with 10 being the highest) and are
subsequently converted to index figures on a scale from 1-100.
Hempel Foundation Annual Report 2023
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Ownership of
Hempel A/S
→ Hempel A/S strategy:
Doubling impact
→ Strategic milestones
→ Spotlight on innovation
→ Sustainability in everything
we do
Page 8-18 and the ESG and statements section will account for actions and
considerations with concern to climate, environment, social- and personnel relations,
human rights and anti-corruption according to Mandatory Statement ÅRL 99a.
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Hempel A/S strategy:
Doubling impact
In 2020, Hempel A/S launched Double Impact,
a strategy aiming to deliver innovative, sustainable
solutions that create a significant positive impact
for our customers and society at large. We also
strive for a positive impact for our colleagues,
who are not just working for a company, but truly
for a purpose, shaping a brighter future with
sustain able coat ing solutions. Lastly, the strategy
is about the social impact we want to make
through the dividends Hempel A/S pay to the
Foundation.
Initially, our strategy had one clear goal: to double
the revenue within five years. We are well on
our way to deliver on this. However, the strategy
encompasses much more than revenue growth
and increased dividends.
Double Impact has proved very robust and effec-
tive, and in 2023, Hempel A/S decided to let the
principles of the strategy guide beyond 2025.
We will naturally refine and adjust as we move
forward to ensure our course remains aligned
with the changing external landscape around us.
This will allow us to consistently achieve our
intended impact.
Increasing value creation and impact
The four strategic pillars in Double Impact are
now: Segment Leadership, Sustainability Leader,
Trusted Partner and Scalable Operations.
See the next page for 2023 highlights for each
of the four pillars.
Hempel A/S also added three strategic enablers
to guide execution of the strategy and give us
greater impact in the market as we move forward:
Innovation, Digitalisation and People.
Innovation is what sets Hempel A/S apart from
the competition. Our innovative and sustainable
solutions are a key driver, enabling us to be a
sustainability leader in our segments.
Digitalisation, enabled by strong data, will be
the key to success in our quest to standardise
key processes to build scale. Digitalisation will
further differentiate our customer offerings.
We build long-term partnerships with our key
customers because we deliver best-in-class
innovation and superior technology.
Hempel A/S emphasise the importance of our
people in the updated Double Impact strat egy,
and we aim for each and every one of our col-
leagues to find their work engaging and meaning-
ful. Hempel colleagues should feel empowered
and guided by a strong purpose, in which they de -
liver value for the Foundation, by counting Hempel
among the best performers in the industry.
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Segment leadership
○ We continued to build customer segment leadership
positions in 2023. One example is the launch of our
innovative and sustainable solution Hempablue, a new
biocide-free hull coating for the world merchant fleet.
○ We revitalised our product offering in our luxury
decorative brand, Farrow & Ball, with the launch of
new finishes and collections.
○ We expanded our leadership position within the market
for cellulosic passive fire protection (C-PFP), where
our Hempafire product portfolio continues to perform
strongly.
Trusted partner
○
Thanks to an organisational structure implemented in
2022, today we work and organise around our customers.
In 2023, this allowed us to get even closer to customers
across the industries we serve, and to embrace their full
eco-system when engaging with them. We continued
to differentiate our offerings by moving beyond selling
coatings to selling differentiated solutions that solve our
customers’ business challenges.
○
In our bi-annual Customer Engagement Survey, we were
happy to see that our customers rated Hempel as ‘High’
in terms of sustainability, an increase compared to the last
survey in 2021. Likewise, customers continued to rate
Hempel as ‘Excellent’, the highest score possible in the
survey, when it comes to trust.
Scalable operations
○ We continuously optimise how we work with our cus-
tomers across segments. We acknowledge the value
of a scalable organisation in supporting our customers
in the most efficient way now and in the future. In 2023,
we formed a new Customer Care department serving
customers across our Marine, Energy and Infrastructure
segments. With this change, we promote scalability and
synergies in our three performance coatings customer
segments: Marine, Energy and Infrastructure.
○ Our new state-of-the-art factories in Yantai and Zhang-
jiagang in China are now fully operational. This provides us
with the capacity to meet increasing demand in the region
and allows us to better serve our customers in the Marine,
Energy and Infrastructure sectors. With the majority of
the world’s marine newbuild business located in China,
and over 50% of Chinese shipyards located in a 200-km
radius around Zhangjiagang, antifouling coatings are in
high demand. This new location will sig nificantly improve
our ‘time to market’ of both products and services, espe-
cially at the shipyards along the Yangtze River.
○ We announced our plans to form a Digital Hub in Mumbai,
where a team of specialists will focus on development
and configuration of our ERP platforms, automation, IT
infrastructure and architecture.
Sustainability leader
○ We are turning our ambitions within sustainability into
actions and our efforts are increasingly recognised
and validated by our customers and partners. Our work
to engage our supply chain on climate-related issues
received an A score in the Carbon Disclosure Project’s
Supplier Engagement Rating (see page 49).
○ Our Sustainable Procurement Programme created
visibility for sustainability within the supply chain, while
linking sustainable performance to our commercial
evaluation of suppliers.
2023 strategic milestones
in Hempel A/S
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Segments served
Decorative
Marine
Energy and Infrastructure
Spotlight
on innovation
Hempel A/S innovate for and with
our customers. Our Research and
Development centres are located
across the world, driving innovation
in new products and solutions.
Innovating new technologies
The innovation ambitions of Hempel A/S stretch
far beyond liquid in the can. We want to transform
how paints and coatings are made, packaged,
sold and applied in order to increase impact and
value, for both the customers and our planet.
This happens in many ways – for example, devel-
oping coatings that deliver higher quality pro-
tection while using less raw material, recycling
and reusing coating materials to create new
coatings or other products, and developing tech-
nologies that reduce the carbon footprint of
coating application.
We do this by fostering an innovative culture
where our people and partners think differently.
Where they are encouraged to re-write the status
quo and change the industry and the planet for
the better. One example is PaintGreen, a dedicat-
ed innovation programme within our decorative
customer segment, focused on sustainability in
product innovation.
Innovation also includes how we innovate in the
digital space. Hempel A/S develop digital solu-
tions that address customer needs and give us
the capability to act as a strategic advisor in order
to foster closer partnerships.
For example, SHAPE (Systems for Hull And
Propeller Efficiency), is our fully integrated main-
tenance concept for customers in Marine, which
gives a holistic view on biofouling on the ship hull
from multiple data sources, and allows the cus-
tomer to lower fuel consumption and emissions.
Copenhagen
Kampen
Merzig
Coesfeld
Darwen
Busan
Zhangjiagang
Dorset
Barcelona
Mina Salman
Kilburn
Nashik
Guangzhou
Footscray
Dallas
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World-leading supplier of trusted, sustainable
and innovative paints and coating solutions.
Sustainability in everything we do
Produce & scale
We constantly strive for greater
excellence, efficiency and
scalability in our production.
Suppliers
With a mindset to continuously
improve, we engage and work
with our suppliers to shorten
lead times and collaborate on
sustainability.
Brand & sell
We strive to always understand
our customers’ business.
We communicate the value
and benefits of our solutions
to give customers the best
possible experience no matter
how or where they meet us.
Distribution
Our global integrated supply
chain and store network allow
us to deliver products and
solutions to our customers
across the world every day.
Advise & support
Our global team of coating
advisors ensure efficiency and
quality during application.
They help our customers
optimise processes to keep their
assets in the agreed condition,
reduce maintenance costs,
cut down on waste and improve
environmental performance.
In our stores, we advise and
inspire our private customers.
Customers first
We solve our customers’
challenges and add value to
their business across the
industries we serve.
○ Decorative
○ Marine
○ Energy
○ Infrastructure
Monetary streams
Parts of our profits are
re- invested into our company.
The rest is paid as dividends
to the Hempel Foundation to
be invested into biodiversity,
education and science
projects around the world.
Research & develop
We research and develop new
products and adjust existing
solutions to improve
performance. We partner
with customers to innovate
and test in the field.
Innovate
Sustainability is at the heart
of our business. And it is a key
driver of our product
development and innovation
across our 15 R&D centres.
Research, develop & innovate Deliver & supply Re-invest profitsAdd value to customers Produce
Our focus areas ESG and statements Financial affairs Financial statements 11Philanthropic strategyIntroduction Ownership of Hempel A/S
Hempel Foundation Annual Report 2023
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→ Our revised strategy
→ Our focus areas
→ Supporting organisations
in accelerating postive change
→ Our goals
→ Our new visual identity
Philanthropic
strategy
Hempel Foundation Annual Report 2023
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↑ Tanzania. Photo: Twaweza
Accelerating
Change
Together
The privilege of being able to spend dividends
from the ownership of Hempel A/S on children’s
education, their wellbeing, and our common
nature in Denmark and internationally, comes
with great responsibility. A responsibility which
we are committed to honour through hard work
and dedication to achieve the greatest impact
possible.
Guiding our work is a commitment to always
be ambitious, while stewarding our responsibility
and privileged position with respectfulness.
We understand our role and potential as a catalyst
for change but never in solitude from broader
collective efforts and always seeking collabora-
tions and partnerships.
Our privileged position and responsibility come
with an obligation to constantly push ourselves
and partners on how we can do things better,
smarter and with greater impact to address the
main challenges within our two primary focus
areas.
At its core, it is an obligation to constantly look for
ways of accelerating positive change. Together.
Our revised strategy
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Our focus areas
Global Education
Biodiversity
Science in Coatings Technology
Danish Civil Society organisations
“ There is an urgent need
to make change happen
faster and at greater
scale than what we
witness today.”
Across all the focus areas there is an urgent need
to make change happen faster and at greater
scale than what we witness today. Such change
can only happen through the collective efforts
of many different stakeholders, each taking on
their particular part.
We believe we achieve the greatest impact when
we apply our capabilities and available resources
(financial and organisational) to identify the most
effective solutions and organisations, and support
them in accelerating positive change.
But we not only work to accelerate change
through our partnerships. Accelerating positive
change is also at the core of our approach and
intent for investing in the rewilding of nature in
Denmark. By engaging, showcasing, and inspiring
others to do the same we believe we can make
change happen faster and at larger scale.
Hempel Foundation Annual Report 2023
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Partner survey
We completed an anonymous partner
survey in June 2023 with responses from
63 colleagues across our international
partnerships in Biodiversity and Education.
Purpose:
→ to record partners’ perceptions of our
approach to partner engagement,
our tools and formats, and our strategic
direction
→ to inform decisions as we develop our
grant-making procedures and strategic
frameworks
Main learnings
Partners in particular express positive
perceptions of:
○ our way of adding value to the project
development process
○ our early financial commitment before
the full project description
○ our engagement and flexibility during
implementation
Partners’ suggestions for new ways
of working include:
○ more use of project evidence for global
influencing
○ support to attract additional funding
○ more information/engagement of partners
related to our strategy
○ and stronger collaboration on communi-
cation efforts and media presence
86%
are significantly or very satisfied
with the partnership when compared
to other donors.
Supporting
organisations in
accelerating
positive change
Along our philanthropic journey we have now
grown a substantial and strong portfolio of part-
ner organisations which share our strategic
ambitions and have the ability to deliver tangible
results, in Denmark and internationally.
While growing our portfolio of partner organi-
sations, we have deepened our engagement
with partners and our understanding of how
we achieve the greatest impact possible.
We do this by providing the following when
needed:
○ Flexible and risk-willing funding
○ Access to our network and a platform for
bringing organisations together to harness
the collective strengths of partners
○ Use of our internal competencies on subjects
such as project management, monitoring and
evaluation, fundraising, and communications,
as well as sharing best practice from across
our partner portfolio
○ Bringing external competencies from experts
and knowledge leaders on highly specialised
topics of relevance for our partners
We do not promote one particular programme
approach or method and we do not attempt to
change the direction or strategy of the organisa-
tions we support.
We exclusively partner with organisations
that we deem to possess significant potential
and a well-aligned focus. And we believe that
if we provide the right support then we enable
partner organisations to deliver cost-effective
programmes at larger scale.
Given the differences across the contexts and
countries within which we work, there will be no
“one fits all” approach to our direct support and
engagement with partner organisations, which
will also continue to differ in size and capacity.
Our own experience and the feedback we receive
from our partners tells us that our added value
as a funder and as a partner is much more signi-
ficant when we accompany financial support
with our internal capacities, access to network of
funders and peer organisations as well as our
communication platform. Capabilities we want
to grow stronger in the future.
By making greater use of all our capabilities we
enable organisations to accelerate their devel op-
ment and scaling of programmes and approaches,
creating positive changes for children and nature.
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Setting ambitious goals for our work is essential
for our way of working. Hereby we hold ourselves
accountable for having high impact and truly
make a difference across the world. Across our
current focus areas, we are intensifying our efforts
to enable partner organisations to accelerate
change through our financial and non-financial
support. This involves a commitment to work to
further leveraging our internal capacities, our
network of funders and experts, and our commu -
nication platforms.
We aim to create more value for our partners
– increasing our additionality above and beyond
a grant.
Our goals
Therefore we are setting a new ambitious goal
to have enabled 30 organisations, in Denmark
and internationally, in accelerating their impact
by 2027. This will be a key stepping stone for
achieving our longer term 2030 targets across
our philanthropic work.
We work towards our 2030 targets:
Education
Reaching 1 million children with learning
interventions
Biodiversity
Significantly contributing to conservation
of at least five million hectares of the most
important tropical forests
Science
Establishing a globally leading centre
for research, innovation, and education in
sustainable coatings technologies
30
Accelerating impact of
30 organisations by 2027.
Atlantic Forest, Brazil.
Photo: SOS Mata Atlântica
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A new Corporate Visual Identity (CVI) is crucial
as a natural continuation of our work on the
foundation strategy. Our goal is to become even
clearer in our communication and to create a
pro file that supports the desired impact – namely,
Accelerating Change Together. This new identity
is not just an aesthetic update; it is a manifesta-
tion of our ambition to make a positive difference
in collaboration with our partners.
Our CVI is a central element as the visual ex-
pression is crucial for how we are perceived and
understood. It is our desire to strengthen our
partnerships and elevate them through our profile
and communication. Therefore, our new CVI
is a platform to underscore the key points of our
strategy to accelerate our impact.
Our new visual identity is all about collaboration
and making a positive impact together. We are
ambitious and want to create real change by
working closely with our partners. That is why
our logo and design revolve around circles. They
represent the idea of community and mov ing
forward to wards positive change. The crucial
element is that these circles overlap, symbolising
collaboration and the interconnection of our efforts.
These circles also show our dedication to speeding
up progress and creating new possibilities. It high -
lights the essential nature of working together to
achieve our vision of making a bigger difference
by accelerating change together.
Our new
visual identity
The new CVI builds upon the foundation of our
previous identity and the well-known Hempel
swirl in blue and red symbolising continuity and
evolution. By integrating the rings from our
former logo and the ongoing Hempel logo into
the new one, we emphasise our heritage while
highlighting our focus on acceleration and col-
laboration with partners.
We are proud of our history and values, and
our new CVI is an expression of our continued
commitment to making a positive impact in
the world.
→ See more about the development of our
new logo on the next page
“ Our new visual identity
is all about collaboration
and making a positive
impact together.”
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Our new logo consists of three overlapping
circles – accelerating by growing in size in
three steps. The overlays create an open space
with open details symbolising the strengths
and benefits of collaboration.
The logo is derived from the shapes in our
Hempel heritage. We keep the circular reference
in the prior logo by deducting three rings.
The combination of the three rings reflects
our focus on meaningful collaborations and the
acceleration of impact in all our projects.
Our logotype aims to express solidity and
trustworthiness and is set in caps in Bold in
our font, North East Expanded.
Our colours are centred around tones of green,
from Foundational Green in the main logo
associated with sustainability to the Future
Green, as a fresh touch of hope.
Accelerating
Change
Together
Collaboration Acceleration Strong foundationOpenness
Hempel Foundation Annual Report 2023
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→ Global education
→ Biodiversity
→ Science in coatings technology
→ Danish civil society organisations
→ Complete list of donations in 2023
Our focus
areas
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Empowering
children to learn
Global education
Target: Reaching one million children by 2030
To inspire others and to serve as an overarching
goalpost for our work, we have made a commitment
to reach one million children by the end of 2030
with learning interventions that enable the achieve-
ment of foundational learning.
Education milestones in 2023
In 2023 we saw a significant increase in the num -
ber of children reached through our partnerships.
With our support, we made improvements in the
quality of education in literacy and numeracy for
an estimated 420,000 children in government-
run primary schools in 12 countries across Africa,
Asia and Latin America.
In addition to expanding our reach to more
children, three projects came to an end in 2023
with evaluations demonstrating solid improve-
ments in children’s learning. We completed a
successful four-year literacy and numeracy en-
hancement programme for girls in Bangladesh
with Save the Children.
We also wrapped up a teacher development
project in Uganda with the same organisation
and completed a UNICEF initiative dedicated
to supporting the most disadvantaged children.
In 2023, we welcomed new endeavours and
collaborators. Our presence grew in Tanzania
alongside RTI International and saw the launch
of a second phase of the Elimu Soko initiative
in Zanzibar with Teach United to further refine
teacher training.
Our efforts in Uganda continued with VVOB’s
Teaching at The Right Level programme and
a new partnership with Building Tomorrow for
the Root to Rise programme.
Our ongoing partnership with Save the Children in
Bangladesh is now focusing on remedial learn ing
and teacher training, leveraging the suc cesses
we have achieved together. We are also assisting
UNICEF with the development of the Foundatio-
nal Learning Action Tracker, a novel initiative born
from conversations with the Hempel Foundation.
“ With our support, we
made improvements in
the quality of education
in literacy and numeracy
for an estimated
420,000 children.”
ESG and statements Financial affairs Financial statements 20Philanthropic strategyOwnership of Hempel A/S Our focus areas
Hempel Foundation Annual Report 2023
Introduction
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Global education Partner survey
Bolstering our work
for the future
While the bulk of our work in 2023 continued
to evolve around driving existing projects and
identifying organisations with strategic alignment
and high potential models for reducing learning
poverty, the year also marked the end of our 2021
– 2023 strategy cycle.
To harvest lessons learned and feedback from
our future work, we commissioned a strategy
review of our approach and projects since 2018.
The review was carried out by the UK-based
social enterprise, Jigsaw and included compre-
hensive desk research and interviews with
partners and peers.
Overall, findings from the review demonstrated
that “the Hempel Foundation education team
has made significant progress in the last few years
to establish an effective portfolio of Foundational,
Literacy and Numeracy focused grantees. The
overall approach should be continued, and the
trajectory is positive. However, there is still work
to be done in order to maximise the positive
impact the Hempel Foundation can have on
helping to improve learning outcomes for the
world’s poorest children”.
While we are excited to get an external validation
of our approach and the results achieved, we
agree with the review that there is much more
we can do to maximise the impact of our funding.
We therefore invested a lot of time this year in
calibrating our approach to be even more focused
on supporting partner organisations in accelerat-
ing their impact.
Based on findings from the review as well as
feedback from partners in our partner survey, we
will dedicate more funding towards institu-
tional strengthening of partner organisations in
areas such as communication, data collection
and fundraising. We will also support partners by
amplifying their communication, providing
access to our network and facilitating knowledge
sharing between other partners in our portfolio.
↑ Baglung, Nepal. Photo: VSO
Hempel Foundation Annual Report 2023
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Strengths of projects
○ Highly relevant and
based on contextual under-
standing, evidence and
community engagement.
○ Demonstrate high levels
of coherence in relation
to government priorities.
○ Generally strong data on
effectiveness of projects.
○ Indications of long-term
impact and sustainability,
especially for projects
focusing on systems
change.
Areas for further
strengthening:
○ Strengthen evidence in
project reporting on cost-
effectiveness.
○ Support more explicit
analysis and alignment
with other similar projects
in the same context.
○ Ensure stronger analysis
and strategy for scaling,
long term impact and
systems change.
○ Ensure greater consistency
in data from projects to
allow for cross project
analysis and extraction of
lessons learned.
○ More emphasis needed
on assessing cost-per-
child and linking this to
associated impact on
children’s learning.
The review found projects to be highly relevant,
supporting government priorities and generally
strong on effectiveness data indicating longer
term sustainable impact.
The review also identified areas for improve-
ments in project designs including stronger
focus on cost effectiveness, scaling pathways
and alignment with other projects.
Partners expressed high levels of satisfaction with
the partnership approach that the Foundation
has been applying over the past five years, appre-
ciating aspects such as the proposal process,
funding model, reporting criteria, and our engage-
ment in project planning and execution.
Key findings from the
review on project results
and our approach
They acknowledged our role in connecting
them with future funding prospects, suggesting
further enhancement of this capacity.
Moreover, partners recognise the Foundation’s
potential to strengthen their external communi-
cation efforts, with our partnerships inspiring
them to better articulate their activities to
broader audiences.
Global education
Source: Jigsaw evaluation 2023Hempel Foundation Annual Report 2023
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Partner: Axis
Number of projects: 1
Location: Peru
Grant: EUR 0.8 M
Partner: Dalberg Catalyst
Number of projects: 1
Location: Elimu Soko
Zanzibar
Grant: EUR 0.5 M
Partner: RTI
Number of projects: 1
Location: Tanzania
Grant: EUR 2.0 M
Partner: Street Child
of Nepal
Number of projects: 1
Location: Nepal
Grant: EUR 1,9 M
Partner: VVOB
Number of projects: 2
Location: Uganda
Grant: EUR 3.2 M
Partner: BRAC
Number of projects: 1
Location: Bangladesh
Grant: EUR 2.0 M
Partner: Education
Outcomes Fund
Number of projects: 1
Location: Sierra Leone
Grant: EUR 1.1 M
Partner: Save the Children
Number of projects: 2
Location: Bangladesh and
Uganda
Grant: EUR 3.1 M
Partner: Twaweza
Number of projects: 1
Location: Tanzania
Grant: EUR 1.3 M
Partner: Voluntary
Services Overseas
Number of projects: 2
Location: Nepal and
Sierra Leone
Grant: EUR 2.9 M
Partner: Building Tomorrow
Number of projects: 1
Location: Uganda
Grant: EUR 1.3 M
Partner: Oxfam Denmark
Number of projects: 2
Location: Bolivia and
Guatemala
Grant: EUR 2.8 M
Partner: SOS
Children’s Villages
Number of projects: 1
Location: Rwanda
Grant: EUR 1.3 M
Partner: Ubongo
Number of projects: 1
Location: Tanzania
Grant: EUR 0.5 M
Partner: UNICEF
Number of projects: 3
Location: Zambia, South
Africa and Madagascar
FLAT Global Grant:
EUR 9.1 M
Strategic
goalposts
Where we work:
Least Developed Countries – rural areas.
What we focus on:
Fighting Learning Poverty – ensuring
foundational skills, literacy, numeracy.
What we aim to achieve:
Supporting one million children to obtain
better access to quality basic education.
Learning poverty is defined
as not being able to read a text
for meaning by age 10.
Global education
Hempel Foundation Annual Report 2023
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Key figures
620,200 children
Since 2011 we have supported
620,200 children with foundational
learning interventions.
61.25 DKK million
During 2023. we committed DKK 61.25 million
in grants to projects and initiatives that will be
supporting foundational learning for more than
312,000 children in Uganda, Tanzania and
Bangladesh over the coming four years.
430 DKK million
By the end of 2023, the Hempel Foundation
had committed DKK 430 million to edu cation
projects since 2011 with the total value of our
ongoing grants equal to DKK 253.5 million.
420,000 children
In 2023 alone, we supported
420,000 children.
1,000,000 children
We aim to support 1 million children with learning
interventions by 2030.
In 2023, education projects and learning inter-
ventions, supported by the Hempel Foundation,
reached a total of 420,000 children.
This brings our reach since 2011 to a total of
620,000 children. And with our current com -
mitments to new and ongoing projects, our
projected reach by 2027 is now above 1 million
children across Africa, South Asia and Latin
America. All these children deserve and have
a right to a quality education.
Consequently, we are well on our way to achieving
our 2030 target.
Accelerating access to quality learning
By the end of 2023, we had reached a total of
620,000 children through our partnerships across
Africa, Asia and Latin America. This represents
more than a 60% increase compared to the end
of 2022 where we had reached 387,000 children.
Across all our projects in 2023 we supported
13,279 teachers, bringing the total number of
teachers supported since we began supporting
education, to a total of 17,325 teachers working
across 5,470 schools.
Our 2023 footprint
Global education
Children reached by end 2023 Reach target Achieved
2017 2020 2023 2030
66,550
620,000
100,000
1,000,000
Hempel Foundation Annual Report 2023
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Cases
3
Launch of the Foundational
Action learning Tracker
At the UN General Assembly in September 2023, UNICEF
and Hempel Foundation unveiled the Foundational Learning
Action Tracker, a pivotal online tool to track and foster foun-
dational learning improvements in low- and middle-income
countries. This initiative aims to motivate and support gov-
ernments in enhancing foundational learning. Utilising data
from 94 countries, the tracker facilitates global knowledge
sharing, pinpointing where policy and practice adjustments
can boost learning outcomes.
Highlighting the significance, UNICEF’s Global Director of
Education and Adolescent Development, Robert Jenkins,
stated, “Thrilled to partner with Hempel Foundation to devel-
op the Action Tracker. It will serve as a compass, guiding us
towards the realisation of SDG4. Through this partnership,
we cultivate an ecosystem of shared learning, nurturing
every child’s infinite potential and paving the way for a future
where no dream is out of reach.”
1
How improvements in education
delivery lead to improvements
in children’s learning
2023 saw the successful completion of three large-scale
projects implemented by longstanding partners UNICEF and
Save the Children. In line with Hempel Foundation’s regular
practice, partners commissioned external final evaluations
to ensure accountability of all Hempel Foundation funded
interventions and to share knowledge of project data and
results. Each project outlines steps for sustaining and scaling
the impact through government adoption and continued
collaboration.
2
Supporting scale up of education
innovations – completing the first
iteration of the Elimu Soko initiative
pilot with Rising Academies in
Rwanda
Launched in January 2023, the Elimu-Soko initiative aimed
to enhance teacher professional development in Rwanda
through innovative methods, reaching approxi mately 18,000
learners in 40 primary schools. By the end of 2023, Elimu-
Soko achieved its goals by strengthening the teacher sup-
port system, enhancing teacher confidence and knowledge,
and significantly improving student literacy and numeracy,
with gains of 20 percentage points in reading and 30 points
in maths proficiency.
Project Evaluations Summary
UNICEF
Rwanda (2020-2023)
○ Impact: Remedial learning programme reached 10,500
learners, significantly improving outcomes with a drop
in repetition rates from 12.4% to 8.8% and dropout rates
from 5% to 1.4%.
○ Next Steps: Rwanda’s government adopted the pro-
gramme's key elements, with further investment from
bilateral donors to continue the initiative.
Save the Children
Bangladesh (2018-2023)
○ Impact: Nearly achieved all learning targets for 12,500
learners, enhancing foundational skills in Bangla, English
and mathematics. Increased transition to secondary
school to 99.9% from 93.2% and eliminated child mar-
riage in the intervention areas.
○ Next Steps: A new collaboration with Hempel Founda-
tion will build on these outcomes, aiming to further
engage government and public systems for amplified
impact.
Save the Children
Uganda (2019-2023)
○ Impact: Enhanced teacher professional development
for 541 teachers, benefitting 13,000 learners. Reported
a +30% increase in teacher competencies and a 26.6%
rise in student proficiency in literacy and numeracy
○ Next Steps: Integrated project elements into school
plans, with government taking learnings to inform
policy. Educational Technology component secured
funding for expansion.
Global education
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New partners and initiatives
Organisation Country Project Grant DKK M
Building Tomorrow Uganda Roots to Rise Foundational Learning in Uganda 10
Elimu-Soko Tanzania Elimu Soko demonstration project, Zanzibar 3,5
RTI International Tanzania Remedial education (catch up classes) for primary
students in Tanzania
15
Save the Children Bangladesh Empowering Children through Education 13
VVOB Uganda Scaling Teaching at the Right Level 12
UNICEF Global Foundational Learning Action Tracker
Development phase
1,75
UNICEF Global Foundational Learning Action Tracker
Continuation phase
6
“ The Hempel Foundation is a trustworthy and
encouraging partner of VVOB. Their support
for scaling up our joint TaRL-programme
‘UCatchUp’ in Uganda is so much more than
providing the necessary funds.
When they believe in a project, they dare to
confirm support at an early stage. They also
encourage others to jump on the wagon and
so ensure an ever-growing impact. In that
sense, the Hempel Foundation is a real partner
and companion in Uganda, not only for VVOB,
not only for the TaRL programme, but also for
all children in the Uganda education system.”
Joris Rossie
Country Manager,
VVOB in Uganda
Global education
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Foundational
learning in
least developed
countries
Latin America
○ Oxfam
Guatemala
○ Oxfam
Bolivia
○ AXIS
Peru (Ext.)
Africa
○ EOF
Sierra Leone
○ VSO
Sierra Leone
○ TWAWEZA
Tanzania
○ Ubongo
Tanzania
○ RTI International
Tanzania
○ SOS
Rwanda
○ Building Tomorrow
Uganda
○ VVOB
Uganda
○ Save the Children
Uganda
○ UNICEF
Zambia
○ UNICEF
Madagascar
○ UNICEF
South Africa
Asia
○ BRAC
Bangladesh
○ Save the Children
Bangladesh
○ VSO
Nepal
○ Street Child
Nepal
In 2023 the Hempel Foundation worked to
improve foundational learning in 12 least
developed countries across Africa, Asia and
Latin America.
Global education
Hempel Foundation Annual Report 2023
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Sustaining
tropical forest
Biodiversity
Target: Five million hectares protected by 2030
To inspire others and to provide a reach goal for our
work, we have made this commitment to significantly
contribute to conservation of at least five million hec-
tares of the most important tropical forests by 2030
through conservation actions that enable the long-term
sustainability of tropical forests and their biodiversity.
Biodiversity milestones in 2023
Our commitment to sustain at least five million
hectares of tropical forests marks the scale of our
ambition. We will be driven by quality and mea -
surable impact, so we hold ourselves accountable
not only for the area of tropical forest we support,
but also for the results we help deliver in terms
of reduced deforestation and biodiversity loss,
improved human wellbeing indicators, increases
in financial resources available for conservation,
and other impact targets that we will define and
track with high standards.
In 2023, we significantly expanded our con ser-
va tion efforts, adding three new partners and ex-
tending our biodiversity initiatives to six addi tional
landscapes across the Eastern Afro montane,
Indonesia and Madagascar.
Our strategy focuses on leveraging our funding
to catalyse further investment and foster col lab-
oration among partners and donors, enhancing
support for critical biodiversity areas within our
key regions.
Notably, our projects have yielded substantial pro-
gress, including heightened protection measures,
reduced deforestation, and increased sustaina-
ble finance initiatives. For instance, in Nyungwe
National Park, partnership with African Parks led
to a 55% increase in ranger patrols and a marked
decrease in deforestation rates.
In Brazil’s Atlantic Forest, collaboration with SOS
Mata Atlantica contributed significantly to a re-
duction in deforestation rates, aided by improved
data collection and enforcement efforts. Similarly,
in Madagascar, efforts with local partners resulted
in a dramatic reduction in fire incidents and de-
forestation in the Baobab Forest.
Our commitment to sustainable finance saw the
Birdlife Accelerator Programme attracting an addi-
tional $800,000 in 2023, totalling $3 million
since inception, reducing dependency on tradi-
tional funding. Moreover, new commitments in
Makira National Park (Madagascar) and Gambella
National Park (Ethiopia) unlocked significant
funding, ensuring long-term conservation finance.
Fifty percent of our 2023 funding was allocated
to Indonesian landscapes, with significant pro-
jects launched in West Papua, Java, and Sumatra,
targeting forest conservation and community
engagement. In Madagascar and the Eastern
Afromontane, we focused on sus tainable land -
scape management and biodiversity preservation,
demonstrating our strategic approach to funding
and partnership to maximize conservation impact
across diverse ecosystems.
“ Our strategy focuses on
leveraging our funding
to catalyse further
investment and foster
col laboration.”
Hempel Foundation Annual Report 2023
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Partner: African Parks
Number of projects: 3
Location: Rwanda,
South Sudan and Ethiopia
Grant: EUR 2.5 M
Partner: FAPBM
Number of projects: 2
Location: Madagascar
Grant: EUR 2.4 M
Partner: SOS Mata Atlantica
Number of projects: 1
Location: Brasil
Grant: EUR 0.4 M
Partner: The Nature Conservancy
Number of projects: 1
Location: Indonesia
Grant: EUR 1.6 M
Partner: WWF
Number of projects: 2
Location: Ecuador and
Uganda
Grant: EUR 4.2 M
Partner: Birdlife International
Number of projects: 4
Location: Atlantic Forest,
Madagascar, Accelerator
programme
Grant: EUR 3.6 M
Partner: Konservasi
Indonesia
Number of projects: 1
Location: Indonesia
Grant: EUR 1.9 M
Partner: STEP
Number of projects: 1
Location: Tanzania
Grant: EUR 0.1 M
Partner: UNLive
(for Sounds Right)
Number of projects: 2
Location: Global
Grant: EUR 0.6 M
Partner: Wildlife
Conservation Society
Number of projects: 4
Location: Cameroun,
DRC, Indonesia and
Madagascar
Grant: EUR 6.2 M
Partner: UNEP-WCMC
Number of projects: 1
Location: Global
Grant: EUR 0.2 M
Partner: Whitley Fund for Nature
Number of projects: 1
Location: Global
Grant: EUR 0.3 M
Partner: Copenhagen Zoo
Number of projects: 1
Location: Indonesia
Grant: EUR 1.1 M
Partner: LEAF
Number of projects: 1
Location: Indonesia
Grant: EUR 0.9 M
Strategic
goalposts
Where we work:
Key biodiversity areas in four priority regions:
Eastern Afromontane, Madagascar, Indonesia
and Atlantic Forest – South America.
What we focus on:
Sustaining biodiversity, with a focus on
tropical forests.
What we aim to achieve:
Sustainable coexistence of people
and nature.
Biodiversity
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3.5 HA
In total we are now supporting conser va-
tion efforts across 17 landscapes covering
a total of 3.5 million hectares
62.4 DKK million
In 2023 we committed grants to projects
and initiatives worth a total value of DKK
62.4m including partnerships with three
new organisations [CPH ZOO, Konservasi
International and LEAF]
228 DKK million
This brings our total funding to biodiversity
since 2019 to approx. DKK 228 million.
Biodiversity
Key figures
Through our support we enabled nine partner
organisations in strengthening conservation
efforts in 11 landscapes across nine different
countries. We added three new partners to our
portfolio and increased our engagement to
six additional landscapes.
A majority of our new grants (50%) in 2023
were allocated to four landscapes in Indonesia
– Sumatra, Java and West Papua – followed by
25% to landscapes and a capacity development
programme in Madagascar, and 17% to Eastern
Afromontane.
The remaining budget were committed to support
BirdLife in the acceleration of sustainable finance
initiatives across geographies and an innovative
programme with UN Live to leverage new funding
for biodiversity conservation through music.
Through our new commitments to partners in
2023 we helped them unlock an additional USD
32 million and supported exiting partners in im-
proving living conditions for more than 4,000
households. Across the landscapes where refor-
estation is a priority a total of 7,400 hectares were
undergoing reforestation by the end of 2023.
Our 2023 footprint
“ We enabled nine
partner organisations
in strengthening
conservation efforts in
11 landscapes across
nine different countries.”
2,328,000
5,000,000
3,524,145
2021 2023 2030
Hectares supported by end 2023 Reach target (HA accumulated) Achieved (HA total)
Hempel Foundation Annual Report 2023
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Cases
1
Supporting law enforcement
by government through improved
deforestation data
The Atlantic Forests Hotspot is one of the most degraded
of all hotspots where rapid deforestation threatens unique
biodiversity. Today, only 24% of the forest that originally
existed remains, with only 12.4% being mature and well-
preserved forests.
To combat continued deforestation, we partnered with
Fundação SOS Mata Atlântica who have developed an
advanced deforestation monitoring system, SAD Mata
Atlântica. This system provides essential data to authorities,
aiding in the fight against deforestation and have led to
widespread media coverage and governmental acknowl-
edgement, with even the president citing our reports.
The 2023 data shows a promising decrease in deforesta-
tion rates, with a 42% drop early in the year and a 59%
reduction by August, compared to 2022. This progress is
partly due to the “Operacao Mata Atlântica” campaign,
which has strengthened law enforcement against illegal
deforestation and restricted credit to offenders.
This project demonstrates the power of targeted, data-
driven action in preserving critical ecosystems.
2
Innovative conservation models
Since 2022, Hempel Foundation has been a key supporter
of African Parks, an organisation established in 2000 to
address the decline of Africa’s protected areas and wildlife.
African Parks pioneers a public-private partnership model,
where it takes on the management and financing of national
parks in collaboration with gov ernments. This involves full
responsibility for their daily operations, activities and threat
management, ensuring these parks and their wildlife are
preserved indefinitely. The goal is for each park to be self-
sustaining ecologically, socially and financially.
Our increased support has enabled African Parks to begin
managing Nyungwe National Park in Rwanda from 2022
and to initiate efforts to manage Gambella National Park
in Ethiopia, a region potentially hosting the world’s largest
land mammal assembly. The African Parks model proves
especially effective in resource-limited areas, ensuring the
conservation of critical biodiversity hotspots.
Biodiversity
3
Landscape conservation strategy
One of the landscapes that received our dedicated atten -
tion in 2023 is the Udzungwa Mountains in Tanzania.
As the largest of 13 mountain blocks in the Eastern Arc
Mountain chain, the Udzungwas are incredibly important
due to their biological richness and endemism. The great
age of these Eastern Arc mountains – they are over 100
million years old – means vast numbers of species have
evolved there, most of which occur nowhere else on Earth.
The Udzungwa landscape faces challenges due to dense
population, especially in the agriculturally productive
Kilombero valley, increased deforestation and erosion of
natural resources.
Recognising these challenges, we have facilitated the
development of a comprehensive, long-term landscape
conservation strategy together with our local partner STEP
– Southern Tanzania Elephant Programme. Our goal is to
amplify resources and conservation activities, ensuring the
sustained protection of this invaluable area.
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New partners and initiatives
With the new additions to our portfolio, we are
now supporting a total of 12 organisations doing
conservation work in 17 landscapes, which all
represents key biodiversity areas. While these 12
organisations are our direct partners and grant
recipients, they are all collaborating closely with
national and local organisations to carry out
activities on the ground, bringing the number of
organisations we are supporting to more than 25.
Biodiversity
Organisation Country Project Grant DKK M
African Parks Ethiopia Launch a new landscape programme in southern Ethiopia 10,2
Birdlife Global Accelerator programme 2
CPH ZOO Indonesia Conservation in Mount Slamet-Dieng Plateau landscape
and Belambangan UNESCO Biosphere Reserve
7,95
FAPBM Madagascar National capacity-building initiative 3,05
Konservasi Indonesia Indonesia Securing Irreplaceable, Threatened Forests through
the Crown Jewel of Papua
14
LEAF Indonesia Leuser Ecosystsem 7
UN Live Global Sounds Right: Leveraging new funding for biodiversity
conservation through music
2,8
WCS Madagascar Makira Natural Park 11,4
“ Hempel Foundation prioritises local knowl-
edge and deeply values the dedicated work
of its partners. Their impact-driven approach
involves a keen understanding of urgent
needs, strategically directing funds toward
high-priority activities.
The unwavering commitment to impactful ini-
tiatives and engaging other donors has fos-
tered an innovative collaboration, such as the
FAPBM trust fund, focused on preserving the
endangered Baobab forests in Madagascar.”
Alain Liva Raharijaona
Executive Director,
FAPBM
Hempel Foundation Annual Report 2023
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Landscapes we
are engaged in
Atlantic forest
○ Llanganates-Sangay
Ecological Corridor
Ecuador
○ Atlantic Forest
Brasil
○ San Raphael Reserve
Paraguay
Eastern Afromontane
○ Nyungwe
Rwanda
○ Mbam Djerem
Cameroun
○ Udzungwa
Tanzania
○ Okapi Wildlife Reserve
DRC
○ Rwenzories Mountains
National Park
Uganda
○ Gambella National Park
Ethiopia
Madagascar
○ Baobab Forest
Madagascar
○ Tsitongambarika
Madagascar
○ Makira National Park
Madagascar
Indonesia
○ Eastern Kaliamantan
Indonesia Borneo
○ Crown Jewel of West Papua
Indonesia West Papua
○ Mount Slamet-Dieng
Plateau landscape
Indonesia Java
○ Belambangan UNESCO
Biosphere Reserve
Indonesia Java
○ Leuser Ecosystem
Indonesia Sumatra
○ Singkil Wildlife Reserve
Indonesia Sumatra
Saksfjed Wilderness
Denmark
Biodiversity
We have identified four regions of the world
that contain exceptional biodiversity and
are highly threatened. When these four regions
of the world are combined, their forests cover
only about 0.3% of the planet, yet they hold
nearly a third of all species on Earth. This makes
them the most important regions of the world
to work in, if we are to help prevent massive
biodiversity loss.
Hempel Foundation Annual Report 2023
33Our focus areas ESG and statements Financial affairs Financial statementsPhilanthropic strategyIntroduction Ownership of Hempel A/S
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Biodiversity
Biodiversity in Denmark:
Saksfjed Wilderness
The Saksfjed Wilderness project stands out
due to its remarkable expanse and our ambitions
to accelerate the restoration of biodiversity in
Denmark. The whole area presents significant
potential for biodiversity due to its size, its location
at the Baltic Sea, and the possibilities for rewilding.
With clearly defined, high ambitions centered
on biodiversity, this initiative will be a nexus for
accumulating experiences, sharing knowledge,
and fostering understanding and research in co-
operation with partners.
This unique area of Saksfjed Wilderness offers un-
paralleled opportunities for research in rewilding,
nature restoration, species management (in-
cluding wildlife management) and communica-
tion and learning. We now have an ideal setting
for collaboration with researchers, students,
practitioners, local communities, volunteers and
other stakeholders, including other land manag-
ers such as foundations, farmers and authorities.
The ambition of the Hempel Foundation for
Saksfjed Wilderness is to develop and document
a case for rewilding in Denmark that will be one
of the most important areas of former farmland
turned into a best-practice rewilded wilderness
teeming with biodiversity.
↑ Exmoor ponies grazing in the wild.
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The Hempel Foundation aspires to plays a pivotal
role in Denmark, also directly contributing to
nature education and teaching citizens, schools,
and institutions about biodiversity and the value
of rewilding. This extends not only to the local
community but also to visitors from afar, and
during 2023 we received a high number of visits
from the likes of NGOs, representatives from
the private sector, locals and Hempel A/S.
In 2023, the Hempel Foundation’s Saksfjed
Wilderness project achieved significant mile -
stones in rewilding and nature restoration.
Key developments included the introduction
of grazing with Exmoor ponies and Galloway
cattle, wild seed sowing, and the establishment
of large enclosures for the large grazers.
Furthermore, we initiated plans for the establish-
ment of wetlands and marshes in cooperation
with external partners. A baseline and monitoring
programme is also in development and field work
has already begun. Using bat boxes, automatical-
ly recording bat sounds, 10 of Denmark’s 17
species was recorded during 2023.
We have also focused on enhancing public en-
gagement through the Nature Centre and digital
platforms, setting the stage for an ambitious
2024 agenda aimed at communicating on bio -
diversity, rewilding, wetland restoration etc.
With Saksfjed Wilderness we are poised to accel-
erate rewilding in one of Denmark’s most pivotal
new natural areas even further in coming years.
“ With Saksfjed Wilderness we are
poised to accelerate rewilding in
one of Denmark’s most pivotal new
natural areas.”
↑ The Lesser Swallow Prominent moth released after
a nightly sampling with a special trap.
↑ Biology scientists visiting Saksfjed Wilderness looking at rare plants.
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CoaST
Science in coatings technology
Making a change
In the area of science, Hempel Foundation
is prioritising its commitment to advancing global
education, research and innovation in the field
of sustainable coatings and surface protection.
The foremost objective is to enhance the efficiency
and environmental sustainability of coatings while
facilitating educational initiatives and promoting
international cooperation.
Fouling control coatings
Marine biofoulings accumulate undesirably on
surfaces immersed in seawater with a negative
impact on various industries (i.e. shipping, marine
renewable energy and seawater cooling) in the
form of increased drag and weight leading to in-
creased fuel consumption and emissions of harm-
ful compounds. Furthermore, most fouling control
coatings contains harmful elements in order to
fight the settlements of fouling, elements which
are inevitably emitted to the sea environment.
Working to improve the sustainability profiles
of coatings, CoaST research seeks to provide
new solutions to reduce or even better replace
the harmful elements, while exploring solutions
to deter fouling organisms from settling.
In addition to the core projects of improving coat-
ing formulations, CoaST research is exploring the
best timing for removing physical fouling buildup
and microplastics released from anti-fouling coat-
ings, and how to best test antifouling coat ings
under dynamic conditions, resembling a vessel
in transit. This effort led to the integration of eight
rotors into the CoaST Maritime Test Centre in
Hundested, increasing its capacity to test 96 rota-
tional samples at once.
Advisory Board
An Advisory Board keeps the Hempel Foundation
up to date with the progress in CoaST.
The members of the CoaST Advisory Board are:
○ Jakob Thomasen
Board Professional, CEO Thomasen Safety
○ Mikko Hupa
Professor, Åbo Akademi University
○ Klavs F. Jensen
Professor, MIT
○ Katarina Lindstrøm
COO of Hempel A/S
○ Hanne Harmsen
Vice Dean CBS
The Advisory Board, in collaboration with CoaST,
establishes clear qualitative and quantitative
key performance indicators (KPIs) for the centre.
In 2023, the evaluation of CoaST’s performance
in 2022 by the Advisory Board was based on
various factors, including CoaST’s Annual Report
for 2022, observations from the CoaST Annual
Day 2023, visits by Advisory Board Members
to DTU laboratories, and dialogues with faculty
throughout 2022. The Advisory Board states:
“The Advisory Board concludes that CoaST has
performed very well during 2023 and delivered
the majority of its targets for the year.”
“ CoaST research seeks
to provide new solutions to
reduce or even better re-
place the harmful elements.”
The Hempel Foundation
Coatings Science
and Technology Centre
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The Advisory Board states, that the research
portfolio is focused and has a very high standard
within the sustainability challenges of the coat-
ings industry. CoaST offers a strong combination
of theoretical, laboratory based and real-life
experiment-based research and education in-
cluding the application of the rapidly developing
AI technology to further enhance the research.
CoaST 2023 in numbers
During 2023, CoaST saw active engagement
from a collective of 87 individuals, predominantly
comprised of bachelor’s, master’s, and PhD
students. This diverse cohort, hailing from 20
distinct nationalities, contributed to the vibrant
atmosphere of the organization.
CoaST research, performed in 2023, sums up to
56 projects distributed across seven research
areas. The projects were carried out at all levels,
from short special courses, bachelor’s and mas -
ter’s theses, to the longer-term PhD or postdoc
project. The projects have led to 57 publications,
of which 16 have been published in peer-re-
viewed Web of Science (WOS) journals. In
2023, 17 students graduated from CoaST as
either PhD, MSc, BSc or BEng.
CoaST Graduates
CoaST staff and students
Publications
29
Journal
publications
16
Conference
contributions
20
Non-peer reviewed
contributions
21
87
4
1
8
14
12
8
2
9
Total:
17
Fouling control
coatings
31%
Coatings
in general
6%
Anticorrosive
coatings
19%
Functional
coatings
9%
Intumescent
coatings
17%
Coatings
formulation
and production
8%
Sustainable
raw materials
for coatings
10%
Total of all
CoaST projects
Individual
CoaST projects
Distribution of CoaST projects
per research area
BSc/BEng
MSc
PhD
Faculty
Researchers
Postdocs
PhD
MSc
BSc/BEng
Technical support
Administration
Other
Total
4
8
5
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ESG and statements Financial affairs Financial statements 38Philanthropic strategyOwnership of Hempel A/S Our focus areas
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Introduction
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→ Management’s statement
→ Independent auditor’s report
→ Foundation governance
→ Social responsibility
→ Sustainability leadership
ESG and
statements
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Board of trusteesManagement
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CVR No 33 77 12 31
Hempel Foundation Annual Report 2023
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The Hempel Foundation’s trust deed defines the
overall principles for the Foundation’s activities.
In addition, the Hempel Foundation is governed
by a set of Rules of Procedure for Board work
and an Annual Wheel for planning work during
the year.
Based on the Trust Deed, Rules of Procedure
and the Annual Wheel, the Board of Trustees
considers the Hempel Foundation to be in full
compliance with the legislation and to comply
with all recommendations from the Danish
Committee for Good Governance in commer -
cial foundations.
The Board and the secretariat keep a close
watch on the continued effort to ensure a high
degree of transparency in results and procedures
covering all aspects of the Foundation’s scope
that are not sensitive to the business activities
of Hempel A/S.
Regarding the recommendations from the
committee for good governance in foundations,
the Board of Trustees has made a full report,
which is available at: www.hempelfonden.dk/
da/hvem-vi-er/governance/
Purpose of the Foundation
and ownership structure
of Hempel A/S
According to the Trust Deed, the Hempel
Foundation’s primary purpose is to provide and
maintain a solid economic base for Hempel
Group companies, and to ensure that the com-
panies are able to operate on a sound business
and financial basis.
The second purpose of the Foundation is, in
accordance with the Trust Deed and the policies
and priorities adopted by the Foundation, to
support charitable purposes.
Board of Trustees
The Hempel Foundation is governed by a Board
of Trustees comprising 6 members elected
by the Foundation and 3 members elected from
among employees of Hempel A/S.
The Foundation’s Trust Deed states that the
Board is a self-electing entity. Elections take
place annually. Board members appointed
by the Foundation are elected for a three-year
Foundation governance
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term and may be re-elected. The three-year
term is stipulated in the Trust Deed, with a view
to maintaining satisfactory continuity in the
Board’s activities. The Chair and Deputy Chair
are elected from among the Board members,
each for a three-year term.
Board members must be no more than 65 years
of age when elected for the first time. The age
limit for Board members elected by the Foun da-
tion is 75 years. The members appointed by
employees are elected under Danish legislative
provisions for employee representation on
boards of directors and, accordingly, are elected
for a term of four years.
Under the Trust Deed, the following require-
ments apply to Board members appointed by
the Foundation:
○ A majority cannot at the same time be
Board members of Hempel A/S.
○ A majority should preferably be current or
former Hempel employees or somehow
involved with the Hempel Group over many
years.
○ At least two of the members must have
international business experience.
The Board of Trustees has additionally set a
target for gender representation for members
elected by the Foundation. The declared target is
that a minimum of two of the Board members
appointed by the Foundation must be female.
This target was achieved in 2018 and maintained
in 2023.
The Board of Trustees has also decided that
competencies within charitable donations, com-
mercial business, sustainability and financial
investments should be present among members
of the Board.
The Chair and the Deputy Chair of the Board
monitor and assess the composition of the Board
and its performance on an ongoing basis, in
consultation with individual Board members and
the Board as a whole.
Once a year, the Board performs a formalised
internal Board evaluation in accordance with the
detailed recommendations from the committee
for good governance in commercial foundations.
This evaluation aims to ensure that the required
commercial, investment and personal skills, as
well as competencies regarding charitable dona-
tions, are available among the Board members
appointed by the Foundation.
Detailed information on Board of Trustee mem-
bers can be found at: hempelfoundation.com/
hempel-foundation/board-of-trustees
All new Board members appointed by the Foun-
dation are selected through a structured process
based on the above evaluation, as well as any
specific needs for additional competencies on
the Board. A professional executive search firm is
used for external searches. To meet the specific
requirement stipulated in the Trust Deed that
certain Board members must preferably have
been involved with the Hempel Group, the Chair
and Deputy Chair use a regularly updated list
of potential candidates, which is presented to
the Board members appointed by the Founda-
tion for evaluation and selection.
Board committees
The Board has established two permanent
committees: an Investment Committee and
a Donations Committee. For preparation of
specific purposes, the Board of Trustees can
decide to establish ad hoc committees, which
are dissolved when the specific tasks are
completed.
Investment Committee
The Foundation has elected an Investment
Committee made up of Board members to pre-
pare the Board’s higher-level decisions regarding
the Foundation’s financial investments and to
evaluate professional external portfolio managers
used by the Foundation.
The Investment Committee usually holds five to
six meetings a year with each of the Foundation’s
external portfolio managers, as well as meetings
on strategic investment issues. The final decision
on investments is made by all Board members.
The Board continuously oversees and ensures
that the Foundation’s asset management corre-
sponds to the Foundation’s purpose and needs
in the short and long terms.
Donations Committee
The Foundation has elected a Donations Com-
mittee, which examines and evaluates the many
applications the Foundation receives, many of
which are for significant and complex projects.
The final decisions on donations are, in accord-
ance with an agreement made within the Board,
made by all Board members and not only by the
Board members appointed by the Foundation
(ref. Commercial Foundations Act § 64). The final
decision on the total annual donations is also
taken by all Board members.
The Donations Committee generally holds five
to six meetings each year with application terms
and schedule announced on the Foundation’s
website.
Spokespersons
The Chair of the Board speaks on behalf of Hempel
Foundation Group, unless the Chairman, after a
concrete assessment, appoints the Foundation’s
exec u tive director to do so.
Meetings, committees
and remuneration
The Board of Trustees generally convenes five
to six times a year. Two of these meetings take
place as soon as possible after the completion
of the Foundation’s half-yearly and annual finan-
cial statements. The Board of Trustees has a
continuing involvement in the Hempel Group’s
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operations on an overall strategic level, with a view
to maintaining the required degree of consul -
tation and consensus between the two entities.
Members of the Board of Trustees are paid a
fixed annual remuneration that must not be
above what is deemed to be usual in relation to
the workload, nature of the job and competen-
cies involved. As is customary, a higher level of
remuneration is received by the Chair (+200%)
and Deputy Chair (+50%). Besides the Chair,
members of the Investment Committee and
the Donations Committee receive a fixed annual
fee for committee work.
Remuneration is decided by the Board of
Trustees on an annual basis, using a structured
process that takes into account the number of
working hours spent by the Trustees, the overall
responsibilities of the Trustees and activities
carried out by the Trustees, the purpose of the
Foundation as well as the total activities of the
Foundation, the leading role of the Trustees and
the major responsibility of the Trustees in relation
to the overall leadership of the Hempel Group,
the Trustees’ participation in all major and
strategic decisions in the Hempel Group, and the
income derived by the Trustees from other
positions in the Group.
To further support the correct handling of decisions
on remuneration issues, the Trustees additionally,
and from a critical standpoint, make sure that the
suggested remuneration is reasonable in relation
to the overall interests of the Foundation, as well
as comparable to the level of remuneration in other
similar commercial foundations. This work includes
peer-group benchmarking, which is carried out
by an independent external consultancy.
It is the firm commitment and aim of the Trustees
at all times that the Foundation is not to accept
costs or remuneration to Management, Board
members, Trustees or other kinds of administra-
tive costs that do not support and strengthen the
purpose of the Foundation or its charitable
donations.
The total remuneration paid to the Board in
2023, including remuneration for work on Board
committees, was EUR 1,089,000. The base re-
muneration paid to each Board member in 2023
was EUR 33,604. The Hempel Foundation is
fully transparent about remuneration and the
amount each Board member receives. This infor-
mation, as well as the salary for the Executive
Director, is reflected in this report and can be
found on the Hempel Foundation website in the
‘Redegørelse for god fondsledelse’ (report on
foundation governance).
Conflicts of interest
The Foundation is committed to ensuring that all
persons involved in its investment and dona-
tion processes possess the requisite skills.
The Foundation is committed to avoiding any
potential conflict of interest in order to ensure the
integrity of decisions made regarding invest-
ment proposals and donation applications.
All decisions are made in accordance with com-
mon conflict of interest principles. In practice this
means that no Board member or Foundation
employee can take part in any decisions in which
they may be deemed to have a material personal
interest.
↑ Lafitsignana Primary School, Madagascar.
Photo: UNICEF
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The purpose and business area of the Hempel
Foundation is twofold: firstly, to secure the finan-
cial foundation for the operation and develop-
ment of the Hempel Group; secondly, to support
cultural, social, humanitarian, scientific, artistic
or other charitable purposes.
Thus, social responsibility has been an integral part
of the Foundation’s activities since its inception.
The work of the Foundation is largely focused on
contributing to the achievement of the UN’s Sus-
tainable Development Goals (SDGs) and reporting
according to these goals, with a particular focus on
actively contributing to the fulfilment of the goals
for education (goal 4) and life on land (goal 15).
Risk assessment
Risk assessment is an integrated part of the
Foundation’s work with investments and dona-
tions. As indicated in the Foundation’s annual
report, it adopts a financial investment profile
with limited risk appetite. In its philanthropic work
it is more willing to take risks, based on an overall
assessment of the potential for impact in each
project or partnership.
In connection with larger donations and part ner-
ships, we map out potential risks in the drafting
of each project description, as high, medium, or
low, and providing a brief outline on how to miti-
gate the risk. Due diligence is often based on the
existing efforts of other major donors and organi-
sations. When this is not possible, we engage
with external parties.
The Foundation focuses particularly on the risk
of corruption, human rights violations and lack of
sustainability: the risk that the project’s positive
changes will not be maintained after the project’s
lifespan. There is also a focus on risks related
to environmental, climate, social and personnel
matters. The Foundation is not aware of any
human rights violations or other fundamental
rights in connection with the work carried out at
the Foundation’s behest.
Policies for employee
responsibility
The Foundation’s employees are subject to the
Hempel Group’s Code of Conduct. All employees
of the Foundation are therefore covered by the
provisions, which relate, among other things, to
how employees behave in their daily work in rela-
tion to our co-workers, IT security, the receipt of
gifts etc.
In 2023, all employees of the Foundation under-
went an online refresher course on the Hempel
Group’s Code of Conduct.
Sustainability policy
Since 2022, the Foundation’s secretariat has
worked with a common policy for sustainable
behaviour in the Foundation’s daily practice.
This policy defines five overarching areas, within
which the Foundation and its employees can
increase their focus on sustainable behaviour.
Social
responsibility
↑ Community working on fire protection belt in Madagascar. Photo: Whitley Fund for Nature
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These areas are:
○ Transport
○ Property (buildings)
○ Property (land)
○ Supplies
○ Investments
The Sustainability Policy is available on the Foun-
dation’s website: https://www.hempelfonden.dk/
media/2396/internal-sustainability-policy-
2023.pdf
Social responsibility in donations
The Foundation’s grant strategy contains three
strategic areas in addition to support based on
applications.
1. Education:
Across projects, results are reported in relation to
two sub-goals under the UN’s SDG 4 (see pp
13-20 in this report) (sub-goal 4.1 and 4.5).
The Foundation has developed standard formats
for partnership agreements and project descrip-
tions and a set of requirements and criteria that
support a strong focus on sustainability, capacity
building of local organisations, zero tolerance
for corruption, transparency and human rights,
including the protection of children’s rights, etc.
The Foundation has guidelines for the safe-
guarding of children and adults participating in
the Foundation’s projects. The updated guide-
lines can be found on the Foundation’s website:
https://www.hempelfonden.dk/en/what-we-
do/partnering-with-hempel-foundation/
The Foundation collaborates with Danish civil
society organisations that are approved partners
of the Ministry of Foreign Affairs and/or CISU, and
have undergone a due diligence process that the
Foundation deems sufficient. The Foundation is
also increasingly collaborating with civil society
organisations outside Denmark and has defined
its own approach and process for due diligence.
2. Nature:
In the area of nature,, the Foundation focuses
particularly on preserving and enhancing nature’s
diversity (biodiversity). The effort is reported n
accordance with the UN’s SDG 15 (see pp 21-26
in this report), using similar standards as for edu-
cation regarding partnership agreements and
project descriptions. The Foundation’s annual
report accounts for efforts and results in nature.
3. Research:
Primarily we support the research centre for
sustainable Coatings, Science and Technology,
CoaST, established by the Hempel Foundation at
DTU, with a mission to increase sustainability with-
in the field of surface protection. The Foundation
has asked the centre to report on sustainability and
which specific projects support the UN’s SDGs.
Applications:
The Foundation receives and evaluates appli-
cations based on publicly available guidelines
stemming from the Foundation’s charter.
The Foundation only accepts applications through
its online application system. The Foundation has
adopted guidelines for ensuring impartiality in
decisions on possible commitments of support
and has adopted guidelines for follow-up, reporting
etc., for the applications that are supported.
Option for anonymous reporting
The Hempel Foundation has a whistleblower
scheme that allows for anonymous reporting to
an independent entity if one has knowledge or
reasonable suspicion that a recipient and/or other
participants in a project have misused a donation
from the Hempel Foundation. The scheme is
available on the Hempel Foundation’s website:
www.hempelfonden.dk/en/who-we-are/
governance/whistleblower
Hempel A/S has an externally hosted whistle-
blower system that enables any employee or exter-
nal stakeholder to anonymously report potentially
irregular or unethical conduct through a secure
reporting portal.
The system is an important tool to ensure that
allegations of irregular or unethical conduct are
reported and addressed quickly.
All reports are treated confidentially and followed
up with an objective and independent investiga-
tion led by the Compliance and Data Protection
department, which recommends appropriate
action to handle the reported issue to the Ethics
Committee
Gender distribution in management
according to mandatory statement
ÅRL §99 b
At the end of 2023, the board consisted of six
Foundation-elected members, including two
women. In addition, there are three employee
representatives of which two are women.
Top level management:
Board of trustees 2023
Elected members (total) 6
Underrepresented gender 2
Underrepresented gender (%) 33
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Investments
The boards of the Hempel Foundation and
Hempel Invest A/S have adopted the following
policy regarding ethical guidelines for invest-
ments in the Hempel Foundation and Hempel
Invest A/S:
At the Hempel Foundation and Hempel Invest,
we wish to be responsible in everything we do.
Therefore, all our investments must be responsible.
This means specifically that we only use managers
who have joined the UN PRI, and we conduct
ESG screenings, ensuring that we do not invest
in companies involved in corruption or systematic
abuses against the environment, working condi-
tions and human rights.
Both financial investments and alternative invest-
ments are ESG-screened at the same level.
The expectation for 2024 is that the areas of
environment and climate, social and personnel
matters, respect for human rights, and combating
corruption and bribery will continue to be in
focus, and the 2024 report will also reflect this to
prepare for implementation of CSRD in 2025.
Responsible business conduct
Hempel operates a complex global supply
chain. To ensure responsible business conduct
throughout our supply chain and achieve our
sustainability ambitions, we must engage and
collaborate extensively with our suppliers.
We do this through our Sustainable Procure-
ment Programme, through which we are proud
to have received an A score in the Carbon Dis-
closure Project’s Supplier Engagement Rating.
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Futureproof
Our sustainability framework
Sustainability leadership
What sustainability leadership means to us
At Hempel, sustainability leadership means
being frontrunners within the coatings industry;
working with material topics such as climate,
biodiversity, resource depletion and diversity. By
making clear commitments and setting relevant
targets, we can turn ambition into action.
‘Action’ is critical for us. ‘Turning our ambitions
into action’ has required us to continuously seek
new knowledge around sustainability. Our
sustainability framework, Futureproof, has been
instrumental in driving our work.
Under environment (page 56-58) we focus on:
○ Scope 1, 2 & 3 CO2e emissions
○ Product and packaging goals
○ Waste and circularity
Under Social (page 59-60) we focus on:
○ People sustainability
○ Diversity, Equity & Inclusion
○ Learning and development
○ Health and safety
○ Materials harzardous to people and the
environment
Under governance (page 48-53) we focus on:
○ Corporate governance
○ Social responsibility
○ Compliance
We commit to our science-based targets and
have linked our credit facilities to four ESG targets.
This has intensified focus on these topics.
The four ESG targets linked to our credit
facilities are:
○ Reduce Scope 1 and 2 CO2e emissions
○ Suppliers screened
○ Reduce waste to landfill at production sites
○ Reduce and phase-out hazardous raw
materials
The annual savings in interest and fees that we
will gain by meeting our ESG targets total
approximately EUR 500,000.
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Linking material issues to futureproof
To maintain a position of sustainability leadership
in the future, we will focus on the ESG issues that
are most material to our business. Our approach
is based on double materiality assessments, which
enable us to define, act and report on issues
where Hempel has a significant impact on the en-
vironment and society, as well as issues that pose
significant risks or opportunities for our business.
We connect our material issues to our Future-
proof framework pillars (see table on the right).
In 2022, we conducted our first materiality
assessment to ensure our efforts are geared
towards the most relevant and key areas, specific
to Hempel. The assessment confirmed that the
Climate Crisis, Resource Depletion, Biodiversity
Crisis and Health & Wellbeing are the most
important material issues for us to focus on.
As our ESG efforts and reporting processes
mature, we expect the quality of our disclosures
around these issues to improve further. This will
bring us in line with the future reporting
requirements specified in the CSRD.
As part of delivering on Sustainability Leadership,
we have performed a structured assessment of
the environmental impacts of our product portfolio
across the entire value chain, including data from
raw materials suppliers. Gathering this data has
been a complex process, involving collecting and
analysing carbon information (for example, on
the embodied and downstream CO2 of each
product), as well as information on circularity and
the footprint of the application process.
Futureproof pillars Hempel sustainability targets Climate Crisis Resource Depletion Biodiversity Crisis Health & Wellbeing
Performance
90% reduction of Scope 1 & 2
CO2e emissions by 2026
Achieve zero waste to landfill at our
production sites by end of 2025
Products
Reduce CO2e emissions in our value
chain by 50% by 2030 (Scope 3)
Complete a five-year plan to reduce and
phase out hazardous materials
Achieve 50% recycled plastic in primary
plastic packaging by end of 2025
People
Build an even stronger safety culture and
eliminate all Lost Time Accidents and
other injuries
Achieve the targets of 33% women
in general workforce and 30% women
in leadership by 2024
Partners
Reduce customer emissions by at
least 30 million tonnes CO2e by 2025
1.3 million cans collected and recycled
through the Can Back Scheme
Promote and further good ethical
behaviour and environmental
practices in our supply chain
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Turning ambition
into action
Science-based targets
We made significant progress towards delivering
on our science- based targets and ESG com mit-
ments in 2023. Our combined Scope 1 & 2
emissions decreased by 51% compared to our
2019 baseline. We also formalised our reporting
metrics and governance around Scope 3
emis sions – and are now working to set clear
KPIs for Scope 3 emissions at segment and
function levels.
Increasing use of renewable energy
Our goal is to source 100% renewable electricity
wherever available, at all of our sites, including
production units, warehouses, offices and retail
stores.
We took significant steps towards this in 2023.
We mapped all fossil fuel driven equipment in use
at our production units around the globe. By col -
lecting data on fuel type and power consumption,
The carbon footprint from our suppliers has a direct influence on our own
Scope 3 emissions. Our coating solutions leave a carbon handprint, bringing
an opportunity to reduce our customers’ Scope 1, 2 & 3 emissions.
Our approach to de-carbonising
the full value chain
we were able to identify replacement equipment
that can deliver the greatest CO2 savings at the
lowest cost. We also continued to install solar
panels at key sites, including new installations at
two Wattyl production units in Australia that
enable the sites to self-generate up to 30% of
the electricity they use.
Installing solar panels and purchasing grid-sup-
plied renewable electricity at key sites are our first
priorities when it comes to sourcing electricity.
However, due to differences in renewable energy
infrastructure between countries, access is not
yet available for all locations.
Therefore, during 2023, we continued our invest-
ment in Renewable Energy Certificates (REC)
to help account for part of our Scope 2 footprint.
At the same time, we remain on the look out for
new sources of grid-supplied renewables as infra-
structure develops internationally.
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Hempel Foundation Annual Report 2023
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○ Use less by providing longer-lasting coating solutions and
through services that optimise paint application and use.
○ Sell different products by optimising our product
assortment and providing coatings that deliver the same
technical performance with a lower CO2e footprint.
○ Improve existing products by working with our product
formulations to phase out raw materials with the
greatest CO2e footprint.
○ Use our Sustainability Product Scorecard to evaluate
the carbon footprint of our different solutions and drive
the above objectives.
○ Engage suppliers to reduce carbon emissions across the
upstream value chain.
For our value chain (Scope 3) CO2e emissions, we had an
increase of 7% in 2023 compared to 2022. In 2023, we
progressed our efforts around Scope 3 with continued
focus on our three value chain decarbonisation themes: use
less, sell different and improve existing.
Our product
& packaging goals
Use less examples: Avantguard systems are proven to
deliver the same or better performance than conventional
zinc-rich epoxy systems, with fewer coats and lower dry
film thicknesses. This means less paint consumption, which
reduces VOC emissions and lowers carbon footprint.
Sell different examples: We developed a lightweight
paint formulation resulting in improved performance across
environmental impact categories and we launched bio-
based product ranges with lower carbon footprint through
J.W. Ostendorf / Renaulac.
Improve existing examples: We established projects
to reduce both cost and CO2 emissions from our existing
formulations.
In 2023, we focused on building the foundation and
organisational maturity needed to execute on our Scope 3
programme. We executed internal training programmes,
launched sustainability tools and developed support mea-
sures to ensure that all key functions across segments have
the capacity and capability to identify opportunities and
drive plans for decarbonisation.
Our Scope 3 commit ment has now transitioned from being
a high-level corporate ambition to a more tangible outline
of plans that are anchored at business unit level. As we are
now 1.5 years into our decarbonisation journey, awareness
and knowledge have developed, commitment has increased,
and a heightened sense of accountability is evident across
our organisation.
Engaging with suppliers to reduce the impact of our pur-
chased goods, services and raw materials continues to be
a central priority of our overall Scope 3 plans, and we are
helping suppliers focus on emissions through our Sustainable
Procurement Programme.
In 2023, we completely removed
or found less hazardous substitutes
for 29 raw materials through
our Hazardous Raw Materials
Programme.
We achieve this through our Sustainability Product Score-
card and Carbon Footprint Report. Carbon footprint data
on product data sheets enable easy promotion of more
sustainable products. We launched this concept for core
products in our Marine, Energy and Infrastructure segments
in 2023. The remaining products in these segments will
follow in 2024.
We believe this to be an industry-first initiative, which sends
a strong signal to our customers that we have a clear focus
on sustainability and that we support them in achieving
their sustainability agenda. In our Decorative customer
segment, we launched PaintGreen, a dedicated innovation
programme focused on sustainability in innovation. 19 out
of the 20 ideas selected for further development under this
programme are related to sustainability. In addition, we
launched our Sustainable Solution Definition for Decorative
paints, a tool that we will use in 2024 to guide product
development by setting sustainability thresholds that new
products must meet.
Our Decorative products account for over 95% of the
plastic packaging we put on the market. In 2020, we set
a target of having 50% recycled plastic in the primary
packaging of our Decorative products by 2025. In 2023,
we managed to reach 49% recycled content (from 0% in
2017). As a result, we decided to expand the scope of our
2025 target to include all plastic packaging (primary and
secondary) from all our customer segments: Decorative,
Marine, Energy and Infrastructure.
Goal 2
Goal 3
Goal 4
Goal 1
Make sustainability a key driver
of all product development and
innovation
Reduce hazardous
substances in our products
29
50%
recycled plastic in packaging of
Decorative products
Achieve 50% recycled
content in primary packaging
by end of 2025
Reduce Scope 3 CO2e
emissions from our value chain
by 50% by end of 2030
50%
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Moving the needle on waste
management and circularity
In 2023, we reduced waste to landfill by 69% at
Hempel production sites compared to 2022.
Compared to our baseline year of 2019, this is a
total reduction of 95% (using a comparative
baseline that excludes acquisitions).
In 2023, we added our production unit in Sharjah
in the United Arab Emirates to our list of sites that
deliver zero landfill waste. This was the result of
dedicated effort by our factory team in collabora-
tion with the Danish Foreign Ministry to help
identify clean incineration facilities in the region.
Our team at Farrow & Ball also achieved zero
operational waste to landfill by recycling 100% of
their end use material, independent of the waste
stream. Even paint-related waste streams are
re-worked and recycled by an external supplier to
ensure our resources remain in the use-phase for
as long as possible.
We will now extend the paint-recycling initiative
to include all production units (i.e. including
newly acquired sites).
This change is supported by the ongoing
deployment of our ‘Smart Scales’ automated
waste monitoring and reporting system. By the
end of 2023, all our production units had Smart
Scales onsite.
During 2024, we will focus on aligning data
collection between sites, as well as data
verification and assurance.
95%
Reduction of waste to landfill from our
production sites compared to 2019.
We have a goal to eliminate all
waste to landfill from our own
operations by 2025.
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People sustainability
Driving diversity & inclusion
At Hempel, gender balance is one of our top
priorities. Our long-term goal is to have no more
than 60% of one gender represented. Currently,
women make up 32% of our general workforce.
At the same time, 28% of our leaders at group
level (defined as people with 3 or more direct
reports) are female.
For 2024, our target for women in leadership is
30%. To ensure we fulfil our ambition going
forward, we continue to engage with our female
colleagues to get their input, and we are imple-
menting the following initiatives:
○ Targeting a balanced gender mix in our
recruitment for managerial positions, focusing
on our employee pipelines, interview slate
and new hires.
A diverse workforce and an inclusive culture benefit all
colleagues, while improving decision-making, innovation
and collaboration. We want everyone at Hempel to feel
safe, respected and treated fairly.
○ Creating focus groups with the CEO. These
will use data from new questions in our
engagement survey to better understand
how we enable a higher retention of women
in our general workforce and improve our
gender balance in leadership.
○ Making attrition and recruitment metrics
available for tracking as well as follow-up
during quarterly Business Reviews with
Executive Management.
We will also continue our strategic partnership
with the Womenomics Global DE&I Summit in
2024, which we sponsored in 2022 and 2023.
This event is the largest of its kind and explores
important topics, such as diversity, inclusion, and
women’s impact on the global economy.
60%
40%
Our long-term goal is to have no more
than 60% of one gender represented.
Creating an inclusive workplace
Diversity extends far beyond gender. We want to
create an inclusive workplace where everyone
feels welcome and valuable, regardless of their
background, demographics, beliefs or preferenc-
es. Our Human Rights Policy outlines the scope
and governance process of human rights across
our value chain. It emphasises the responsibilities
of leadership and employees in relation to human
rights and any suspected violations including the
process for reporting any violations.
We launched several initiatives in 2023 to increase
diversity and create a more inclusive workplace.
○ We launched the first Hempel Human
Rights Council. The council focuses on
analysing human rights practices across the
Hempel organisation and will put systems
and processes in place to promote human
rights for all.
○ We joined the Diversity Council – a
cross-industry alliance that enables large
organisations to share and learn from best
practice cases.
○ We hosted the Diversity Council CEO
Meeting in April where topics included ‘The
role of the CEO as an ally’ and ‘Inclusive
leadership and psychological safety’.
○ We updated our Global Anti-Harassment
Training to include new content covering
topics such as bullying and microaggressions.
In 2024, we are developing a company-wide due
diligence process to ensure our practices going
forward are consistent in terms of upholding
human rights and investigating any suspected
violations.
As well as new initiatives, we continued many
existing programmes in the DEI (Diversity, Equity
and Inclusion) sphere. For example, we run
Inclusive Leadership Training for our people
leaders. We have also integrated DEI into every
step of our talent acquisition process by
providing targeted training in unconscious bias
for our talent acquisition partners. In addition, the
Hempel DEI Council communicates, educates
and celebrates DEI topics, such as International
Women’s Day and World Pride.
Our goal is to become an employer and brand
known for its inclusive culture. By becoming a
leader in this field, we will continue to attract a
diverse group of employees, which we believe is
paramount to our future success.
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Learning and development for all
In 2023, we launched Hempel Academy – our
online learning offering – to enable colleagues
at all levels of the organisation to access training
24/7 in multiple languages. Following the
launch, we promoted relevant topics to create
awareness and inspire employees to upskill in a
variety of areas, including project management,
language and communication.
In addition to our High 5 leadership development
programme, targeting all leaders at Hempel, we
run talent development training for three distinct
target groups (see below).
We revamped these programmes in 2023,
allowing us to invite more colleagues to actively
engage in their own development and help us
build a strong pipeline of potential leaders.
To ensure that the activities and content are
targeted to individual needs, all programmes kick
off with a personality profile, and individual
feedback is used to guide participants’ develop-
ment plans.
Our talent development programmes cover:
○ Lighthouse (20 top-level leaders enrolled
in 2023)
○ Navigator (54 mid-level leaders enrolled
in 2023)
○ Greenhouse (190 early-stage leaders
enrolled in 2023)
Sustainability training for all
Sustainability underpins all our work and everyone
in our organisation plays a role. Therefore, we
rolled out a mandatory Sustainability Foundation
e-learning module for over 4,500 employees in
2023. Subsequent engagement with employees
showed that they had a better understanding of
our sustainability goals following the training.
The health and safety of employees are
our top priority
Given the inherent complexities of our operational
processes and the use of various chemicals, we
acknowledge a heightened risk of work-related
incidents. This assessment stems from our careful
examination of operational dynamics, chemical
handling protocols, and associated risks within
our operations environment. The safety of our
people is our number one priority, and one acci-
dent is one too many.
In 2023, we continued to strengthen our health
and safety initiatives. These included implement-
ing our Safety Leadership Programme as part of
our target to achieve zero accidents.
The programme focuses on training our leaders
to be safety champions and promote a healthy
and safe environment for our colleagues. It was
piloted in our Decorative customer segment in
Germany and the UK – and the full programme
will run throughout 2024. In addition, we launched
Safety Excellence 2.0, a training programme for
all employees that runs until Q4 2024.
Our other health and safety initiatives in 2023
included introducing a new compliance training
module to monitor and manage local compliance
in all our operations and introducing a new regu-
latory platform to train our colleagues in relevant
chemical requirements.
Reducing substances that are harmful
to people and the environment
Our Hazardous Raw Materials Programme was
established to limit exposure to substances in
our products that can be hazardous to people’s
health, while at the same time reducing environ-
mental impact.
These efforts focus on removing carcinogens,
reproductive toxicants, non-biodegradable
materials and other substances that can have
severe health and environmental impacts. Based
on established classification hierarchies, we are
actively substituting and phasing out materials
with the highest potential impact, while creating
long-term plans, based on internal and external
research, to support and drive our efforts.
In 2022, we linked our near-term substitution/
reduction goals with the terms of our bank loans.
Our target was to reduce the intensity (kg of
hazardous substances / 1,000 L paint produced)
by 25% by the end of 2025, compared to the
baseline year of 2022, with an interim target of
a 5% reduction in 2023 .
Hempel Foundation Annual Report 2023
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→ Revenue and earnings
→ Hempel Foundation’s investment
strategy and other activities
→ Hempel Foundation’s financial
results and other activities
Financial
affairs
The Hempel Foundation Group consists of the Hempel Foundation,
Hempel Invest A/S, Hempel Invest ll and Hempel Ejendomme
(Hempel Foundation and other activities), as well as Hempel A/S Group.
Hempel Foundation Annual Report 2023
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Hempel Foundation Annual Report 2023
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Revenue and earnings
Revenue and organic growth
Total revenue in 2023 reached EUR 2,353 million.
Despite geopolitical and macro-economic un-
rest, our optimistic expectations for mid-to-high
single- digit organic revenue growth, as outlined in
the 2022 outlook, were surpassed. Total revenue
growth was driven by volume expansion and the
full-year impact of price increases.
Growth was driven by double-digit growth in our
Marine and Energy customer segments.
Our Decorative customer segment delivered 4.0%
organic growth, ending the year at EUR 792 million
revenue in 2023. The main driver of growth was
the positive impact of price increases taken in
2022 following raw material price developments.
Our Marine customer segment drove the strongest
organic growth of 26.2%, landing at EUR 725
million revenue in 2023.
Growth was driven by increased volumes in
New Build business solutions and our premium
antifouling hull coating Hempaguard.
Our Energy customer segment grew 18.6%
organically, landing at EUR 364 million revenue
in 2023.
The expansion of our customer base and the
strong performance of our Avantguard solutions
contributed to this growth.
Our Infrastructure customer segment reported
9.6% organic growth, ending the year at EUR
470 million revenue in 2023.
The result was strong considering the challeng-
ing geopolitical and economic instability that
caused delays in projects. Hempafire and Avant-
guard were among the main drivers of growth.
Gross profit and margin
Gross profit increased by in 2023, up from EUR
784 million in 2022 to EUR 917 million in 2023.
The positive impact on gross profit is attributed
to higher volumes, increased demand for high
value proposition products, increased sales prices
and a decline in raw material costs.
Sales, distribution and administrative costs
Sales, distribution and administrative costs
amounted to EUR 729 million in 2023, EUR 55
million higher than 2022.
The increase in operating expenses was driven
by investments to support growth, increased
manning to support higher volumes in the supply
chain and technical service, as well as inflation,
which impacted merit and operation costs.
Additionally, we invested in capabilities to
support and drive digitalisation.
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EBITDA and EBITDA margin
The improved EBITDA was the result of flow-
through from the improvement in gross profit.
Financial items and foreign exchange
Financial items, net amounted to EUR -76 million
(EUR -84 million in 2022). There has been
an increase in net foreign exchange losses and
increasing interest costs.
The loss on foreign exchange was heavily
impacted by currency devaluation in Argentina
and partially offset by financial income.
Increasing interest rates, coupled with a stable
and unchanged debt position, explains the
increase in interest costs and bank charges.
The positive development can be explained by
increased return from financial investments
of EUR 25 million (EUR -36 million in 2022)
Tax and net profit
Tax on profit of continued business in 2023
amounted to EUR 21 million, resulting in an effec-
tive tax rate of 25.4%, down from 33.9% in 2022.
The effective tax rate adjusted for hyperinflation
was 23.6% and was reduced from 26.8% in
2022. This was due to a lower weighted tax rate
for the group and a reduction of uncertain tax
positions.
Net profit for the year from continued business
amounted to EUR 80 million (EUR 16 million
in 2022).
Discontinued operations
As a result of the Russian invasion of Ukraine,
Hempel decided to leave Russia and ceased
opera tions in Russia in 2022. The associated
opera tions, assets and liabilities were conse-
quently presented as discontinued operations
and assets and liabilities held for sale.
On 13 July 2023, the divestment of Hempel’s
activities in Russia was completed.
The total impact on the profit and loss statement
in 2023 amounted to a loss of EUR 11 million
(EUR 2 million in 2022), mainly driven by the
reclassification of accumulated foreign exchange
differences.
Financial position and cash flow
Total assets
Total assets increased from EUR 3,076 million
at 31 December 2022 to EUR 2,959 million at
31 December 2023.
Non-current assets amounted to EUR 1,923
million in 2023, a decrease of EUR 85 million
from 2022.
Current assets amounted to EUR 1,153 million in
2023, an increase of EUR 38 million from 2022.
The increase is attributed to a higher cash postion,
income tax receivables, and an increase in trade
receivables driven by revenue growth.
Cash flows from operating activities
Cash flows from operating activities amounted
to EUR 139 million in 2023, up from EUR 67
million in 2022.
The higher cash flow from operating activities
was mainly driven by the positive development in
the operating profit.
The positive development offset the slight neg-
ative development of cash flow from working
capital of EUR 87 million, which was driven by in-
creased receivables coming from higher revenues.
Cash flows from investing activities
Cash outflows from investing activities, including
cash flows from acquisitions and divestments,
amounted to EUR 104 million in 2023, down
from EUR 278 million in 2022.
Investments in 2023 mainly related to com-
pletion of factories in China and in digitalisation.
The investment in factories in China will allow
us to materially increase our capacity from 2024.
Digitalisation includes investments in ERP
systems. These are key to delivering on our
strategy, Double Impact.
Free cash flow
Free cash flow amounted to EUR 35 million in
2023, up from negative EUR 208 million in 2022.
The increase was mainly a result of improved
cash flows from operating activities. The result
was driven by a positive development in volume
and product mix, supported by the annualisation
of price increases implemented in 2022
following raw material price increases.
Cash flows from financing activities
Cash flows from financing activities totalled EUR
14 million. Net proceeds from borrowings
amounted to EUR 82 million and repayment of
lease liabilities amounted to EUR 38 million.
2024 Outlook
In 2024, the Hempel Foundation Group expect
to see single-digit organic revenue growth and
an EBITDA margin of around 15%.
Subsequent events
No events occurred after the balance
sheet date that could have a material
impact on the company’s financial
results, assets, liabilities or equity.
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Hempel Foundation’s
investment strategy and
other activities
The Hempel Foundation’s Board of Trustees
has set down overall guidelines and policies for
investing in different types of assets: financial
investments, properties, alternatives and impact
investments. The Investment Committee pre-
pares decisions on the Foundation’s investment
activities; however, the Board as a whole makes
the final decision regarding investments and
investment activities.
We adopt a financial investment strategy with
a limited risk appetite,, focusing on absolute
return, and avoiding losses in the medium term.
Ethical guidelines
To better manage ethical risks, the Hempel
Foundation has established ethical guidelines
for the portfolio managers’ handling of financial
investments.
The Hempel Foundation and Hempel Invest A/S,
Hempel Invest A/S II, and Hempel Ejendomme
A/S aim to be responsible in all our activities.
Hence, all our investments must be responsible.
This specifically means that we only use manag-
ers who have joined the UN PRI, and we conduct
conduct ESG screenings, ensuring we do not
invest in companies involved in corruption or sys-
tematic abuses against the environment, working
conditions and human rights. Where possible,
we apply similar principles to alternative invest-
ments including Private Equity-like funds.
Regarding tax
The Hempel Foundation and Hempel Invest A/S,
Hempel Invest A/S II, and Hempel Ejendomme
A/S do not wish to contribute to aggressive tax
planning through our investments. For invest-
ments in publicly traded companies through our
managers, investments are screened for fair tax
practices, including adherence to the OECD’s
tax principles for multinational companies
(BEPS).
Regarding biodiversity
We have a long-term desire for more of the
companies we invest in directly – and indirectly
through capital managers – to report on bio-
diversity, thereby reducing their risks associated
with the resources they use and their negative
impact on biodiversity over the years. Therefore,
we maintain an ongoing dialogue with our man-
agers on how this is adhered to.
↑ Madagascar. Photo: Birdlife International
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Financial investments
Financial investments in shares, bonds etc., are
managed by external professional port folio man-
agers. Portfolio management is split to increase
the risk-adjusted net return of the total portfolio.
The majority of investments are in listed secu -
rities that can be redeemed within a few days.
According to the annual wheel, IC must con duct
a review of the performance of the portfolio man-
agers. Based on this evaluation, the Foundation
replaced one of our asset managers in 2023.
This decision reflects our proactive approach
to portfolio management and our unwavering
commitment to achieving the best possible
outcomes for our investments.
“ With completion expected
in 2024, the renovation of
Amaliegade 8 is a testament
to our dedication to blending
tradition with modernity.”
Property investments
in Hempel Ejendomme A/S
In 2023, in a move to streamline our operations,
we established a subsidiary – Hempel Ejendomme
A/S –, uniting the real estate activities of Hempel
Foundation and Hempel Invest.
Hempel Ejendomme A/S owns the property
located at Amaliegade 8 in central Copenhagen,
built in 1785-88. Amaliegade 8 was acquired by
J.C. Hempel in 1933 and was the headquarters
for the Hempel companies before they relocated
to Kgs. Lyngby, north of Copenhagen, in 1972.
The Hempel Foundation remained in Amaliegade
8 and today it has offices and meeting rooms in
the building.
Our commitment to preserving our heritage is
exemplified in the ongoing renovation of Amalie -
gade 8. Undertaken with the utmost respect for
the property’s historical significance, this project
aims to transform the space into contemporary
office premises with uncompromised historical
tradition.
With completion expected in 2024, the renovation
of Amaliegade is a testament to our dedication
to blending tradition with modernity, ensuring our
properties meet the evolving needs of today’s
businesses.
Hempel Ejendomme A/S also owns the proper-
ties housing the Hempel Group’s headquarters
and main R&D departments in Kgs. Lyngby,
Denmark. We have made major investments in
expanding the properties in Lyngby.
Hempel Invest A/S, another 100%-owned sub-
sidiary of the Hempel Foundation holds ownership
of two forests located in Denmark and share-
holdings in a listed real estate property company.
Alternatives and
impact investments
Investments in shareholdings, private equity, and
alternative investments make up only a minor
part of total investments. These are illiquid invest-
ments with a longer investment period.
The Hempel Foundation and its investment
company Hempel Invest A/S have made a num-
ber of investments, including shareholdings in
medium-sized companies and innovative enter-
prises, private equity investments and fund-
of-funds structures, impactful investments and
impact (mission related investments).
Hempel Foundation Annual Report 2023
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Income from investments in subsidiaries
derives primarily from financial development
in Hempel A/S.
Dividends from Hempel A/S
Hempel A/S is ultimately owned by the Hempel
Foundation. Dividends from Hempel A/S, through
Hempel Invest A/S, are still the prime source
of income for the Hempel Foundation, supple-
menting the direct income derived financial invest-
ments and real estate investments in Hempel
Ejendomme A/S.
No person or entity owns any part of the Hempel
Foundation, which is a self-owning entity. There-
fore, no individual shareholder receives any divi-
dends or profit from the Foundation.
There is no link between the commercial interests
of the Hempel Group and the philanthropic acti -
vities of the Foundation.
Hempel Foundation’s
financial results
and other activities
However, Hempel A/S is by far the principal
source of income for the Foundation.
Therefore, in the long term, the better the perfor-
mance of Hempel A/S, the more dividends
are paid to the Foundation – and the bigger the
impact of the Foundation’s philanthropic work.
Hempel Foundation
Net financial income amounted to EUR 27
million in 2023 compared to EUR -23 million in
2022. The development can be explained by
a increased return from financial investments.
The parent company’s net profit before tax was
EUR 12 million in 2023 compared to EUR -46
million in 2022. Investments in subsidiaries
amounted to EUR 551 million as of 31 December
2023 compared to EUR 548 million as of 31
December 2022.
Total assets for the parent company amounted to
EUR 778 million as of 31 December 2023 com -
pared to EUR 848 million as of 31 December 2022.
Hempel Foundation (parent and associated activi-
ties) expects a result at the same level as in 2023.
Ownership structure
Hempel Foundation
Hempel Ejendomme A/S Hempel Invest A/S
Hempel A/S GroupFrontier Innovation ApS
Hempel Invest II ApS
Hempel Adm. ApS
Brænderupvænge ApS
Keldskov ApS
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Consolidated financial statements
Notes
1. Basis of preparation
1.1 General accounting policies
. . . . . . . . . . . . . . . . . . . . . . . . . . 73
1.2 Significant accounting estimates and judgements
. . . . . . 77
2. Results for the year
2.1 Revenue
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
2.2 Employee costs
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
2.3 Other operating income and expenses
. . . . . . . . . . . . . . . . 81
2.4 Special items
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
2.5 Income tax, tax assets and liabilities
. . . . . . . . . . . . . . . . . . . 82
3. Operating assets and liabilities
3.1 Intangible assets
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
3.2 Property, plant and equipment
. . . . . . . . . . . . . . . . . . . . . . . 89
3.3 Leases
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
3.4 Inventories
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
3.5 Trade receivables
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
3.6 Pensions and similar obligations
. . . . . . . . . . . . . . . . . . . . . . 95
3.7 Provisions
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
3.8 Other liabilities
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
4. Capital structure and financing items
4.1 Base capital and grants
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
4.2 Borrowings
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
4.3 Financial risks
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
4.4 Financial instruments
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
4.5 Financial income and expenses
. . . . . . . . . . . . . . . . . . . . . . 105
4.6 Discontinued operations, assets and
liabilities held for sale
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
5. Other disclosures
5.1 Fee to the auditors appointed at the General Meeting
. . 107
5.2 Adjustment for non-cash items
. . . . . . . . . . . . . . . . . . . . . . 107
5.3 Contingent liabilities and other commitments
. . . . . . . . . 107
5.4 Events after the reporting period
. . . . . . . . . . . . . . . . . . . . 108
5.5 Related parties
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
5.6 The Hempel Group
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
5.7 Financial definitions
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
Primary statements
Consolidated statement of profit and loss . . . . . . . . . . . . . . . 69
Consolidated statement of comprehensive income
. . . . . . 69
Consolidated statement of financial position
. . . . . . . . . . . . 70
Consolidated statement of changes in equity
. . . . . . . . . . . . 71
Consolidated cash flow statement
. . . . . . . . . . . . . . . . . . . . . . 72
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Consolidated statement of profit and loss Consolidated statement of comprehensive income
Note (EUR m) 2023 2022
2.1 Revenue 2,353 2,159
2.4 Production costs - 1,436 - 1,375
Gross profit 917 784
2.4 Sales and distribution costs - 561 - 552
2.4 Administrative costs - 168 - 122
2.3 Other operating income 1 4
2.3 Other operating expenses - - 1
Operating profit 188 113
4.5 Financial income 56 26
4.5 Financial expenses - 132 - 110
Profit before tax 111 29
2.5 Income tax - 21 - 19
Net profit for the year from continuing operations 91 10
4.6 Net loss for the year from discontinued operations - 11 - 2
Net profit for the year 80 8
Attributable to:
The Foundation 71 19
Non-controlling interests 9 - 11
Net profit for the year 80 8
Note (EUR m) 2023 2022
Net profit for the year 80 8
Other comprehensive income:
Items that may be reclassified to profit or loss:
Exchange rate differences on translation of foreign operations 1 - 23
4.4 Value adjustments of hedges - 5 -
2.5 Tax on other comprehensive income - 1 2
Items that will not be reclassified to profit or loss:
3.6 Remeasurements of defined benefit obligations - 1 5
2.5 Tax on other comprehensive income - - 1
Other comprehensive income for the year, net of tax - 6 - 17
Total comprehensive income for the year 74 - 9
Attributable to:
The foundation 67 - 1
Non-controlling interests 7 - 8
Total comprehensive income for the year 74 - 9
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Consolidated statement of financial position
31 December
Note (EUR m) 2023 2022
3.1 Intangible assets 761 765
3.2 Property, plant and equipment 606 621
3.3 Right-of-use assets 105 117
4.4 Other financial assets 307 291
2.5 Deferred tax assets 113 94
Total non-current assets 1,893 1,888
3.4 Inventories 332 343
3.5 Trade receivables 505 476
Income tax receivables - -
Prepayments 18 17
Other receivables 75 72
Cash 223 186
4.6 Assets held for sale - 21
Total current assets 1,153 1,115
Total assets 3,046 3,003
Note (EUR m) 2023 2022
4.1 Base capital and grants 5 5
Translation reserve - 25
Cash flow hedge -
Reserve for future grants 30
Retained earnings 844
Equity belonging to the foundation
- 25
- 4
881
Non-controlling interests 57 28
Total equity 944 882
4.2/3.3 Borrowings 1,069 947
3.3 Lease liabilities 71 90
3.7 Provisions 36 36
3.6 Pension and similar obligations 19 16
2.5 Deferred tax liabilities 77 96
Total non-current liabilities 1,273 1,185
4.2/3.3 Borrowings 58 102
3.3 Lease liabilities 30 31
Trade payables 337 362
Deferred income 8 8
3.7 Provisions 10 11
Income tax payables 23 23
3.8 Other liabilities 365 392
4.6 Liabilities held for sale - 6
Total current liabilities 830 935
Total liabilities 2,102 2,121
Total equity and liabilities 3,046 3,003
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Consolidated statement of changes in equity
Note (EUR m) Capital
base
Retained
earnings
Reserve for
future grants
Currency
adjustments
Cash flow
hedges
Total other
comprehensive
income
Minority
interests
Total equity
2023
Balance at the beginning of the year 5 845 30 - 25 - - 25 28 882
Opening adjustments to IFRS - 5 - - - - - 5
Balance at beginning of the year 5 850 30 - 25 - - 25 28 887
Net profit - 48 23 - - - 9 80
Other comprehensive income - - - - - 4 - 4 - 2 - 6
Total comprehensive income - 48 23 - - 4 - 4 7 74
Dividends/grants - - - - - - - 5 - 5
Grants, net - - - 23 - - - - - 23
Other adjustments - - 16 - - - - 27 11
4.1 Balance at the end of the year 5 881 30 - 25 - 4 - 29 57 944
2022
Balance at the beginning of the year 5 842 30 - 1 - - 1 44 919
Balance at beginning of the year 5 842 30 - 1 - - 1 44 919
Net profit - - 4 23 - - - - 11 8
Other comprehensive income - 7 - - 24 - - 24 - - 17
Total comprehensive income - 3 23 - 24 - - 24 - 11 -9
Dividends/grants - - - - - - - 5 - 5
Grants, net - - - 23 - - - - - 23
Other adjustments - - - - - - - -
4.1 Balance at the end of the year 5 845 30 - 25 - - 25 28 882
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Consolidated cash flow statement
Note (EUR m) 2023 2022
Cash flows from financing and grant-making activities
4.4 Repayment of lease liabilities - 38 - 42
Proceeds from borrowings 188 264
Repayment of borrowings - 106 - 96
Transactions with shareholders:
Paid out grants - 23 - 22
4.1 Dividend distributed to and other transactions non-controlling interests - 7 - 5
Total cash flows from financing and grant-making activities 14 99
Net cash flow 49 13
Cash beginning of year 186 180
Exchange adjustment - 12 - 7
Cash end of year 223 186
Note (EUR m) 2023 2022
Cash flows from operating activities
Operating profit 188 113
Operating profit from discontinued operations - 11 - 5
5.2 Adjustment for non-cash items 177 111
Total cash flows from operating activities before financial items, tax and
changes in working capital 354 219
Changes in working capital:
Change in receivables - 62 - 97
Change in inventories 1 - 10
Change in trade payables, other liabilities etc. - 26 32
Total change in working capital - 87 - 75
Total cash flows from operating activities before financial items and tax 267 144
Income tax paid - 62 - 27
Interest received 23 5
Interest paid - 90 - 55
Total cash flows from operating activities 139 67
Cash flows from investing activities
Purchase of property, plant and equipment - 72 - 100
Purchase of fixed assets investments - 5 -
Purchase of intangible assets - 34 - 28
Sale of property, plant and equipment 1 5
Change in deposits - - 1
Acquisition of enterprises - -28
Divestment of enterprises 6 -
Total cash flows from investing activities - 104 - 152
Free cash flow 35 - 86
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1 Basis of preparation
Introduction
The consolidated financial statements of
Hempel Foundation for the period 1 January
– 31 December 2023 comprise Hempel
Foundation and its subsidiaries (the Group).
The Board of Directors considered and approved
the 2023 Annual Report of Hempel Foundation
on 2 May 2024.
Accounting policies and first time adoption
of International Financial Reporting
Standards
The consolidated financial statements of
the Hempel Foundation group have been
prepared in accordance with IFRS® Accounting
Standards. The Foundation has prepared its
consolidated financial statement for the first year.
In the previous years the Foundation prepared
its annual report according to the Danish
Financial Statements Act and therefore used
an exemption for not preparing consolidated
financial statements. Therefore, the Foundation
has not prepared any reconciliations from the
transition from Danish Financial Statements Act
to IFRS.
The first consolidated financial statement
prepared by the Foundation is based on a
consolidation of the underlying subsidiaries,
including Hempel A/S, who adopted IFRS in the
past. Therefore, the basis for the consolidated
financial Statement in the Foundation is the
values in the consolidated financial statement
prepared by Hempel A/S, cf. IFRS 1.D17,
together with other subsidiaries controlled by
the Hempel Foundation. No reconcilliation has
therefore been prepared.
The consolidated financial statements have
been prepared in accordance with the IFRS
accounting standards as endorsed by the EU
and additional Danish disclosure requirements
applying to entities of reporting class C for
large companies.
The notes are grouped in sections and include
the relevant accounting policies. The Group’s
significant accounting estimates and judge-
ments are described in note 1.2 ‘Significant
accounting estimates and judgements’.
Basis of measurement
The consolidated financial statements have been
prepared under the historical cost basis, except
for derivative financial instruments and assets
held for sale that are measured at fair value.
The accounting policies have been applied
consistently in the preparation of the
consolidated financial statements and for the
comparative figures (2022).
Assets held for sale and discontinued
operations
Non-current assets and disposal groups are
classified as held for sale when their carrying
amount will be recovered through a sale
transaction rather than through continuing use.
Non-current assets and disposal groups are
measured at the lower of the carrying amount
and fair value less costs to sell. Costs to sell are
the incremental costs directly attributable to
the disposal of the disposal group, excluding
financial costs and income tax. Property, plant
and equipment, intangible assets and right-of-
use assets are not depreciated or amortised
once classified as held for sale. Assets and
liabilities held for sale are presented separately
as current items in the statement of the financial
position. Discontinued operations are excluded
from the results of the continuing operations
and presented as a single amount in profit and
loss after tax from discontinued operations in
the statement of profit and loss. For discontinued
operations, comparatives are restated in the
statement of profit and loss. Refer also to
note 4.6 ‘Discontinued operations, assets and
liabilities held for sale’.
Applying materiality
The consolidated financial statements are
a result of processing large numbers of
transactions and aggregating those transactions
into classes according to their nature or function.
The transactions are presented in classes
of similar items in the consolidated financial
statements. If a line item is not individually
material, it is aggregated with other items of
a similar nature in the consolidated financial
statements or in the notes. Management
provides specific disclosures required by IFRS
unless the information is not applicable or is
considered immaterial to the decision making of
the primary users of these financial statement.
New standards, interpretations and
amendments adopted
The Group applied certain standards,
interpretations and amendments, which are
effective for annual periods beginning on or after
1.1 General accounting policies
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1 January 2023: Amendments to IAS 1, IAS 8,
IAS 12 and IFRS 17.
The amendments listed above did not have
any impact on the amounts recognised in
current or prior periods and are not expected to
significantly affect future periods.
Changes to IAS 12 Income taxes
The changes to IAS 12 provide a temporary
relief from the requirement to recognise and
disclose deferred taxes arising from enacted or
substantively enacted tax law that implements
the Pillar two model rules published by the
OECD, including tax law that implements
qualified domestic minimum top-up taxes.
Reference is made to note 2.5 ‘Income tax, tax
assets and liabilities’.
New standards and interpretations not yet
adopted
Certain new accounting standards and inter-
pretations that have been published are not
mandatory for the 31 December 2023 reporting
period and have not been early adopted by the
Group. These standards are not expected to
have a material impact on the Group in future
reporting periods, or on foreseeable future
transactions.
Basis of consolidation
The consolidated financial statements comprise
the parent company, Hempel Foundation, and
entities controlled by Hempel Foundation (sub-
sidiaries). Control is achieved when the Group is
exposed to, or has a right to variable returns from,
its involvement with the investee and has the
power to affect those returns through its power
over the investee. Subsidiaries are consolidated
from the date on which control commences until
the date on which control ceases.
Control is usually achieved by directly or
indirectly owning, or in other ways controlling,
more than 50% of the votes or other rights
through agreements of management control. De
facto control and other potential voting rights
at the balance sheet date are also considered
when determining whether control is achieved.
Consolidation is performed by summarising
the financial statements of the parent company
and its subsidiaries. On consolidation, items of
a uniform nature are combined. Elimination is
made of intercompany income and expenses,
shareholdings, dividends and intra-Group
balance accounts as well as of realised and
unrealised gains and losses on transactions
between the consolidated enterprises.
When the Group loses control of a subsidiary,
it derecognises assets (including goodwill),
liabilities, the carrying amount of any non-
controlling interests and components of other
comprehensive income attributable to the
non-controlling interests. Any gain or loss is
recognised within other operating income and
expenses.
The acquisition method of accounting is used to
account for business combinations by the Group.
Non-controlling interests
Non-controlling interests’ share in the results
and equity of subsidiaries is shown separately
in the consolidated statement of profit and loss,
statement of comprehensive income, statement
of financial position and statement of changes in
equity, respectively.
The Group treats transactions with non-
controlling interests that do not result in a loss of
control as transactions with equity owners of the
Group. A change in ownership interest results in
an adjustment between the carrying amounts
of the controlling and non-controlling interests
to reflect their relative interests in the subsidiary.
Any difference between the amount of the
adjustment to non-controlling interests and any
consideration paid or received is recognised in
retained earnings within equity.
Where a non-controlling interest holds a put
option to sell the remaining minority shares
to the Group, a liability is recognised in the
statement of financial position at fair value
calculated as the present value of the exercise
price of the option. Any subsequent adjustment
to the fair value of the put option is recognised
directly within equity under retained earnings.
Presentation currency
The functional currency of the parent company
is DKK, however the consolidated financial
statements are presented in EUR million as the
Group operates in a global environment with
international stakeholders.
Translation of transactions and balances
in foreign currencies
Items included in the financial statements
of each of Hempel Foundation’s entities are
measured using the currency of the primary
economic environment in which the entity
operates (functional currency). Transactions
denominated in other currencies than the
functional currency are considered transactions
denominated in foreign currencies.
Transactions in foreign currencies are translated
into the functional currency defined for each
company using the exchange rates prevailing at
the date of transaction.
1.1 General accounting policies — continued
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Receivables, payables and other monetary items in
foreign currencies are translated at the exchange
rates on the balance sheet date. Foreign exchange
differences arising between the exchange
rates at the transaction date and at the date of
payment are recognised as foreign exchange
gains and losses in the statement of profit and
loss as financial income or financial expenses.
Non-monetary items recognised in foreign
currencies are measured at the transaction date
rates and are not retranslated subsequently.
Translation of Group companies
The results and financial position of foreign
operations with a functional currency other
than EUR (and which is not the currency of a
hyperinflationary economy) are translated into
the presentation currency EUR as follows:
– assets and liabilities are translated at the
exchange rate on the balance sheet date
– income and expenses in profit and loss and
in the statement of comprehensive income
are translated at monthly average exchange
rates (unless this is not a reasonable
approximation of the rates prevailing on the
transaction dates, in which case income and
expenses are translated at the dates of the
transactions)
– share capital denominated in a currency
that differs from the presentation currency
of the consolidated financial statements is
translated at historical cost
– all resulting exchange differences are
recognised in other comprehensive income
and attributed to a separate translation
reserve in equity. However, where the foreign
entity is not wholly-owned, a proportion of the
translation difference is allocated to the non-
controlling interests.
Foreign currency translation adjustments of a
loan to or borrowings from subsidiaries which
are neither planned nor likely to be settled in
the foreseeable future, and which are therefore
considered to form part of the net investment in
the subsidiary, are recognised directly in other
comprehensive income under the separate
translation reserve within equity. When a foreign
operation is derecognised, the associated
cumulative exchange rate differences are
reclassified to profit or loss, as part of the gain or
loss on sale. Repayment of loans considered a
part of the net investment in a subsidiary is not
considered a disposal when Hempel Foundation
retains its proportionate ownership interests,
thus the cumulative exchange difference is not
reclassified to profit and loss.
Goodwill and fair value adjustments arising on
the acquisition of a foreign operation are treated
as assets and liabilities of the foreign operation.
Hyperinflation
In foreign subsidiaries that operate in hyper-
inflationary economies, income and expenses
are translated into the presentational currency
EUR at the exchange rate at the balance sheet
date. Prior to translating the financial statements
of foreign operations in hyperinflationary
economies, the income statement and non-
monetary balance sheet items are restated
taking into account changes in the general
purchasing power of the functional currency
based on the inflation up to the balance sheet
date (‘inflation adjustment’). The effect of the
inflation adjustment is recognised in ‘Other
comprehensive income within the translation
reserve’. In the income statement, gain/loss on
the net monetary position in the foreign entities
is recognised as financial income or expense.
The assessment as to when an economy is
hyperinflationary is based on qualitative as well
as quantitative factors, including whether the
accumulated inflation over a three-year period
exceeds 100%. Currently, Turkey, which entered
into hyperinflation as of 30 June 2022, and
Argentina are considered hyperinflationary
economies. Thus, the Group’s operations in
Argentina and Turkey have been remeasured
in accordance with the principles described,
applying the national Consumer Price Index
(CPI) of Argentina and Turkey, respectively,
for the inflation adjustment. The effect on
the opening balance of Turkey entering into
hyperinflation in 2022 was recognised directly
within equity under retained earnings.
Classification of operating expenses
in the statement of profit and loss
Production costs
Production costs comprise costs incurred to
achieve revenue for the year. Costs comprise
raw materials, consumables, direct labour
costs and indirect production costs, such as
maintenance and amortisation and depreciation,
as well as costs for operation, administration and
management of factories. Production costs also
include research and development costs that do
not qualify for capitalisation as well as amortisation
of capitalised development costs (except for
amortisation of business application software).
Write-downs of inventory are also included.
Sales and distribution costs
Sales and distribution costs comprise costs
incurred to distribute sales and for sales
campaigns, including costs for sales and
distribution staff, advertising costs, depreciation
of sales equipment and amortisation of customer
relationships.
1.1 General accounting policies — continued
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Administrative costs
Administrative costs comprise costs incurred for
management and administration of the Group,
including costs for administrative staff and
manage ment as well as office costs, depreciations
and write-downs for bad debt. Amortisation of
brands and software business applications are
also recognised in administrative costs.
Cash flow statement
The statement of cash flows is presented using
the indirect method. The statement of cash
flows for the Group shows the cash flows for
the year, broken down into operating, investing
and financing/grant activities and changes in
the Group’s cash and cash equivalents from the
beginning of the year to the end of the year. The
statement of cash flows cannot be immediately
derived from the published financial records.
Cash flow from operating activities
Cash flow from operating activities is calculated
as the operating profit/loss for the year adjusted
for changes in working capital, non-cash
items such as depreciation, amortisation and
impairment losses and provisions as well as
interest and tax paid.
Cash flow from investing/grant activities
Cash flow from investing activities comprises
cash flows from purchases and disposals of
intangible assets, property, plant and equipment
and acquisitions of enterprises.
Cash flow from financing/grant activities
Cash flow from financing/grant activities
comprises cash flows from raising and
repayment of principal long-term and short-term
debt, including repayment of lease liabilities as
well as payments to and from non-controlling
shareholders and grant receipents.
Cash flow in currencies other than the
functional currency
Cash flow in currencies other than the functional
currency are translated at the average exchange
rates for the month, unless these differ
significantly from the rates at the transaction
date, in which case the exchange rate at the
transaction date is applied.
Cash
Cash comprises cash at hand and bank deposits.
1.1 General accounting policies — continued
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1.2 Significant accounting estimates and judgements
In preparation of the consolidated financial
statements, management is required to make
various accounting judgements and estimates
that affect the reported amounts of assets,
liabilities, income and expenses, including the
related disclosures. A degree of uncertainty is
involved in carrying out these judgements and
estimates, which could result in adjustments to
the carrying amount of assets and liabilities in
future periods.
The judgements, estimates and the related
assumptions made are based on historical
experience and other factors that management
considers to be reasonable under the given
circumstances. Estimates and judgements are
reviewed on an ongoing basis.
The Group’s significant accounting estimates
and judgements are described below.
Significant accounting estimates and
judgements
The significant accounting estimates are those
that have a significant risk of resulting in a
material adjustment to the carrying amounts of
assets and liabilities in the following reporting
period.
Warranties
The Group generally offers warranties for its
products. Management makes estimates
regarding the related provisions, including the
probability of pending legal disputes and future
litigation outcomes. When determining the most
likely outcome, management considers input
from internal and external counsel, historical
warranty claim information, and recent trends
that might suggest that historic cost levels do
not accurately represent an approximation of the
costs of future claims. The assumptions made
in relation to the current period are consistent
with those in the prior year. Factors that could
impact the estimated amounts include whether
the claims are deemed valid, to which extent
the claims are covered by the product warranty
and estimates of the costs of coating and
other associated costs for remediating any
product failure. Reference is made to note 3.7
‘Provisions for information about the Group’s
warranty provision’.
The Group has taken out insurance against
product failures. The product failure insurance is,
to a certain extent, linked to the size and nature
of claims. This reduces the overall exposure to
warranty claims and the potential net impact on
profit and loss from claims.
Uncertain tax positions
The Group has activities and subsidiaries in
many different countries, and therefore is subject
to income taxes in tax jurisdictions around
the world. Uncertain tax positions relate to
uncertainty in the interpretation of tax legislation
in the countries the Group operates in.
Significant estimates and judgements are
required when determining the worldwide
accrual for income taxes, deferred income tax
assets and liabilities, and provision for uncertain
tax positions.
In the course of conducting business globally,
transfer pricing disputes with tax authorities may
occur, and management’s judgement is applied
to assess the possible outcome of such disputes.
Hempel believes that the provision made for
uncertain tax positions is adequate. However,
due to the uncertainty, there is a possibility that,
on conclusion of open tax matters at a future
date, the final outcome may differ significantly.
Reference is made to note 2.5 ‘Income tax, tax
assets and liabilities’.
Valuation of deferred tax assets
The deferred tax assets comprise carry-forward
tax losses expected to be utilised and temporary
differences.
The Group recognises deferred tax assets,
including the expected value of carry-forward
tax losses, based on an assessment of the
recoverability of the deferred tax assets.
The assessment of the recoverability of the
deferred tax assets involves estimates by
management as to the likelihood of the utilisation
of the deferred tax assets within a foreseeable
future.
This depends on a number of factors, including
whether there will be sufficient taxable profits
available in future periods, against which the
carry-forward tax losses can be utilised. In the
event that actual future taxable profits generated
are less than expected, and depending on the
tax strategies that the Group may be able to
implement, impairment of the deferred tax
assets may be required. Reference is made to
note 2.5 ‘Income tax, tax assets and liabilities’.
Impairment test of goodwill
In performing the annual impairment test,
management assesses whether the groups
of Cash Generating Units (CGUs) to which
the goodwill relates will be able to generate
sufficient positive net cash flows to support
their carrying amount together with other net
assets of the respective groups of CGUs. This
assessment is based on estimates of expected
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future cash flows. The cash flows are derived
from the forecast for the next five years and
do not include restructuring activities that the
Group is not yet committed to or significant
future investments that will enhance the
performance of the assets of the groups of
CGUs being tested. The recoverable amount is
sensitive to the discount rate used, as well as the
expected future cash inflows and the terminal
growth rate used for extrapolation purposes.
The key assumptions used to determine the
recoverable amount for the different groups of
CGUs are disclosed and further explained in
note 3.1 ‘Intangible assets’.
Impairment test of brand
In performing the annual impairment test of the
Farrow & Ball brand, management assesses
whether the brand will be able to generate
sufficient positive net cash flows to support the
carrying amount of the brand. The assessment
is performed using a relief-from-royalty method
based on expected future cash flows generated
from the royalty savings attributable to owning
the brand. The expected cash flows are based
on assumptions about the royalty rate, expected
future revenue and the discount rate. The key
assumptions used to determine the recoverable
amount of the brand are disclosed and further
explained in note 3.1 ‘Intangible assets’.
Impairment test of Decorative Germany
and France CGU
An impairment test of Decorative Germany
and France CGU has been performed based
on a fair value less costs of disposal model. The
significant estimates relate to improvements of
revenue through volume increases, development
in fixed expenses and the discount rate.
The applied assumptions are based on
expectations for market development, expansion
of our relationship with key customers and
increased focus on toll manufactoring and
optimization of production capacity. Refer to
note 3.2 ‘Property, plant and equipment’.
A change in key estimates, i.e. a decrease/
increase in EBITDA margin in the terminal period
by 0.5% would result in a decrease/increase in
impairment loss of EUR 10 million, whereas an
increase or decrease in the long-term growth
rate of 0.5% would result in an decrease in
impairment loss of EUR 6 million, respectively an
increase of EUR 5 million. If the development of
net working capital
in the terminal period was affected positively or
adversely by 5%, a decrease, or a corresponding
increase, in impairment loss of EUR 13 million
would have been recognised in the financial
statements. An increase in the discount rate of
1% would result in an additional impairment of
EUR 12 million, where a corresponding decrease
of 1% would positively impact the recoverable
amount by EUR 17 million.
Significant accounting judgements
The significant judgements, apart from those
that involve estimations, are the judgements
that management made in the process of
applying the Group’s accounting policies and
that have the most significant effect on the
amounts recognised in the consolidated financial
statements.
Useful life of brands
Management has assessed that certain brands,
mainly the Farrow & Ball brand, have indefinite
useful life as there is no foreseeable limit to
the period over which the brand is expected
to generate net cash inflows, based on the
brand being well-established in its markets,
having existed for decades and having no legal,
regulatory, contractual, competitive, economic or
other factors limiting the useful life of the brand.
1.2 Significant accounting estimates and judgements — continued
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2 Results for the year
Accounting policies
The Group mainly generates revenue from the
sale of paints and coatings (goods for resale and
finished goods) based on prices and conditions
stated in the contracts with customers. Sale of
finished goods comprises business-to-business
sales and, in the Decorative customer category,
also retail sales. In addition, the Group generates
a minor part of its revenue from provision of tech-
nical services.
Revenue from sale of paints and coatings is
recognised when the related performance obli-
gation is satisfied by transferring control of the
promised goods to a customer. The Group’s
customer contracts usually include only a single
performance obligation. Control of the paints
and coatings is obtained when the goods are
transferred to the customer. Where the Group
provides technical services, including advice,
training, project oversight and surface manage-
ment services, etc., revenue is recognised over
time as the services are rendered.
Revenue from contracts with customers is meas-
ured at an amount that reflects the consideration
to which the Group expects to be entitled in
exchange for those goods and services (transac-
tion price), which normally comprises the price
specified in the contract, net of discounts and
customer bonuses.
The Group offers various discounts, including
rebates, bonuses, volume discounts and pay-
ments to customers depending on the nature
of the customer and business. These discounts
are considered variable consideration. Bonuses
and discounts payable to a customer are accrued
for as the related performance obligations are
satisfied and revenue is recognised. Historical
experience is used to estimate and provide for
the discounts, using the expected value method.
Variable consideration related to discounts is
only recognised as revenue to the extent that
it is highly probable that a significant reversal
will not occur in a later period. In the case of
expected returns, a refund liability and a right to
the returned goods (included in other current
assets) are recognised for the products expected
to be returned.
Revenue
The vast majority of the Group’s performance
obligations are satisfied within one year or less.
Amounts for remaining performance obligations
(order backlog) are therefore not disclosed in
accordance with the practical expedient in IFRS
15.121.
Payments from customers are due depend-
ing on the type of customer and local business
practices, though typically within 30-90 days.
Longer credit terms are provided in certain coun-
tries, though normally not exceeding 180 days.
Retail payments are normally due immediately
after control of the goods has transferred to the
customer. Accordingly, no significant element of
financing is present.
Disaggregation of revenue
The following table displays revenue disaggre-
gated into sale of goods per geographical region:
(EUR m) 2023 2022
EMEA 1,340 1,240
Asia-Pacific 750 653
Americas 263 266
Total revenue 2,353 2,159
Revenue disaggregated into sale of goods per
customer category:
(EUR m) 2023 2022
Decorative 792 775
Marine 725 626
Infrastructure 470 445
Energy 364 313
Other 2 -
Total revenue 2,353 2,159
2.1 Revenue
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2.2 Employee costs
Accounting policies
Employee costs include wages and salaries, pen-
sions, social security contributions, annual leave and
sick leave, bonuses and non-monetary benefits.
(EUR m) 2023 2022
Employee costs
Wages and salaries 414 382
Pensions – defined contribution plans 22 22
Pensions – defined benefit plans 1 1
Other social security contributions 29 28
Other employee costs 25 23
Total employee costs for the year 491 456
Average number of full-time employees 7,426 7,356
Staff costs have been recognised in the
profit and loss statement as follows:
Production costs 155 131
Sales and distribution costs 247 258
Administrative costs 89 67
Special items
Total employee costs in the profit and loss statement 491 456
Employee costs are recognised in the finan-
cial year in which the associated services are
rendered by employees of the Group.
Where the Group provides long-term employee
benefits, the costs are accrued to match the
rendering of the services by the employees
concerned.
For further information about the Group’s
pension plans, reference is made to note 3.6
‘Pensions and similar obligations’.
Other key management compensation
Together with the Board of Directors, key
management personnel comprise individuals in
the Executive Board and the Executive Group
Management (EGM). The Executive Board is
a part of the EGM and the EGM consists of 8
individuals (2022: 8 individuals).
Remuneration of the Executive Group Manage-
ment includes a fixed salary, company car and
other standard fringe benefits, as well as bonus
payments in the form of an annual cash bonus and
a long-term cash-based incentive scheme. of spe-
cific financial targets for organic growth, EBITDA
and working capital. The annual cash bonus can-
not exceed 70-100% of the individual’s fixed salary.
The annual cash bonus payment is contingent
upon the fulfilment of ESG targets and the
realisation.
The long-term cash-based incentive scheme
comprises rolling three-year cash-based bonus
programmes. All programmes are subject to vest-
ing criteria based on a number of factors, includ-
ing the realisation of minimum financial targets for
the nominal EBITDA accumulated over the three-
year period. The outcome is calculated at the end
of the three-year programme period. Potential
payments are made in the first quarter of the year
after the programme expires. The long-term cash
incentive programme payment cannot exceed
110-220% of the individual’s fixed annual salary.
The Board of Directors determines annually
whether to instigate new programmes and, if so,
the scope and objectives of said programmes.
The compensation paid or payable to the key
management personnel for employee services
is shown in the table to the left. Total remunera-
tion for the Board & Directors in the Foundation
amounted to EUR 1.3 million in 2023 (2022:
EUR 1.3 million). Total remuneration for Other key
management amounted to EUR 17.2 million in
2023 (2022: EUR 10.1 million).
Salaries and remuneration for the Group
Executive Team and Board of Directors
(EUR t)
Board & directors in the Foundation* Other key management** Total
2023 2022 2023 2022 2023 2022
Remunerations, salaries and other costs 1,347 1,324 9,600 8,400 10,947 9,724
Commitees and other costs - - - - - -
Pensions – defined contribution plans - - 400 400 400 400
Severance pay - - 1,800 - 1,800 -
Other long-term benefits - - 5,400 1,300 5,400 1,300
Total 1,347 1,324 17,200 10,100 18,547 11,424
* With reference to section 98 b subsection 2 of the Danish Financial Statement Act, the remuneration for the Executive Management and the board of directors are disclosed
together, as the Executive Management consists of one member.
** Other key management consist of key management in Hempel A/S Group.
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2.3 Other operating income and expenses 2.4 Special items
Accounting policies
Other operating income and expenses comprise
items of a secondary nature to the core activities
of the Hempel Foundation, including gains
and losses on the sale of intangible assets and
property, plant and equipment and certain
govern ment grants.
Government grants are recognised in other
operating income at fair value where there is
a reasonable assurance that the grant will be
received and Hempel Foundation will comply
with all attached conditions. Government grants
relating to costs are deferred and recognised in
the statement of profit and loss and presented in
the same line item as the relating costs, over the
period necessary to match them with the costs
that they are intended to compensate.
Grants received for the acquisition of property,
plant and equipment are recognised as deferred
income, which is recognised in the statement of
profit and loss under other operating income on a
systematic basis over the useful life of the asset.
Special items include significant income and
expenses of a special nature relative to the
Group’s earnings-generating activities, such as
costs related to M&A activities, integration of
acquired businesses and restructuring costs.
Other significant amounts of a non-recurring
nature are also included in special items, such as
gain/loss on divestments of subsidiaries.
In 2023, special items comprised employee
redundancy costs and related costs in
connection with organisational changes.
Special items also included M&A related costs,
mainly consultancy costs and an insurance
settlement payment related to a past business
acquisition.
Due to the significant impact on the statement
of profit and loss, these non-recurring items of
special nature are disclosed separately in this
note. The special items are presented in the
statement of profit and loss within the functions,
shown in the table below.
Special items (EUR m) 2023 2022
Restructuring costs 5 27
M&A and integration related costs 5 3
Insurance settlement - 3 -
Total special items 7 30
(EUR m) 2023 2022
Production costs 1 5
Sales and distribution costs 3 11
Administrative costs 3 14
Total special items 7 30
Other operating income (EUR m) 2023 2022
Gain on sale of property, plant and equipment 1 4
Total other operating income 1 4
Other operating expenses (EUR m) 2023 2022
Loss on disposal of property, plant and equipment - - 1
Total other operating expense - - 1
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2.5 Income tax, tax assets and liabilities
Income tax
Accounting policies
The income tax expense for the year is the tax
payable on the current year’s taxable income
based on the applicable income tax rate for each
jurisdiction, adjusted for changes in deferred tax
assets and liabilities attributable to temporary
differences and to unused tax losses, changes
due to changes in tax rates, adjustments to tax
from previous years and changes in provision for
uncertain tax positions.
The current income tax charge is calculated on
the basis of the tax laws enacted or substantively
enacted at the balance sheet date in the
countries where the parent company and its
subsidiaries operate and generate taxable
income. Management periodically evaluates
positions taken in tax returns with respect to
situations in which applicable tax regulation is
subject to interpretation. It establishes provisions,
where appropriate, on the basis of amounts
expected to be paid to the tax authorities.
Current tax payable and receivable are
recognised in the consolidated statement of
financial position as tax computed on the taxable
income for the year, adjusted for tax on taxable
income for prior years and for prepaid tax.
Current tax and changes in deferred tax are
recognised in profit and loss, except to the
extent that it relates to items recognised in other
comprehensive income or directly in equity. In
these cases, the tax is also recognised in other
comprehensive income or directly in equity,
respectively.
Uncertain tax positions are recognized where
the probability of the tax position being upheld
in individual cases is considered less than 50%.
Uncertain tax positions are assessed individually,
and the possible outcome is measured based
on management’s best estimate of the amount
required to settle the obligation. Uncertain tax
positions relate to various tax disputes, including
transfer pricing cases.
Hempel Foundation has the option to use
section 3(4) of the Danish Corporation Tax Act.
Under these rules, the taxable income of Hempel
Invest A/S is considered to have been earned
by Hempel Foundation if the taxable income is
distributed as a dividend to Hempel Foundation.
Since Hempel Foundation’s taxableincome is
regularly offset against grants for the year and
tax provisions for future grants, no deferred
taxasset or liability is recognised owned by
Hempel Fonden.
Tax for the year (EUR m) 2023 2022
Tax for the year is specified as follows:
Tax on profit for the year - 21 - 19
Tax on other comprehensive income - 1 1
Total tax for the year - 22 - 18
Tax on profit for the year is calculated as follows:
Current tax for the year - 59 - 51
Deferred tax for the year 41 31
Adjustment in respect of previous years - 3 1
Total tax on profit for the year - 21 - 19
Deferred tax, beginning of year - 5 - 41
Recognised in profit on loss 41 31
Recognised in equity - 1 1
Adjustment in respect of previous years - 1 7
Tax assets and liabilities at 31 December, net 36 - 2
Effective tax rate of the Group
Danish tax rate 22.0% 22.0%
Higher/(lower) tax rates of foreign subsidiaries - 8.9% - 16.6%
Permanent differences 3.5% - 0.2%
Unrecognised deferred tax assets 20.8% 42.1%
Recognised deferred tax assets related to prior years - 6.0% - 35.3%
Adjustments in respect of previous years - 2.7% 3.1%
Other adjustments (mainly changes in uncertain tax position) - 11.0% 24.1%
Withholding taxes etc. 5.5% 12.6%
Deduction for grants - 5.7% 0.0%
Effective tax rate of the Group excluding hyperinflation 17.5% 51.7%
Hyperinflation 1.4% 13.7%
Effective tax rate of the Group 18.9% 65.4%
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2.5 Income tax, tax assets and liabilities — continued
Deferred tax
Accounting policies
Deferred income tax is provided in full, using
the liability method, on temporary differences
arising between the tax bases of assets and
liabilities and their carrying amounts in the
consolidated financial statements. However,
deferred tax liabilities are not recognised if they
arise from the initial recognition of goodwill.
Nor is deferred income tax accounted for if it
arises from initial recognition of an asset or
liability in a transaction other than a business
combination that, at the time of the transaction,
affects neither accounting profit nor taxable
profit or loss. Deferred income tax is calculated
using tax rates (and laws) that were enacted
or substantially enacted by the end of the
reporting period and are expected to apply
when the related deferred income tax asset is
realised or the deferred income tax liability is
settled. Deferred tax is adjusted for elimination
of unrealised intra-group gains and losses.
Deferred tax assets are recognised if it is
probable that future taxable amounts will be
available to utilise those temporary differences
and losses.
Deferred tax liabilities and assets are not
recognised for temporary differences
between the carrying amount and tax bases
of investments in foreign operations where
Hempel A/S is able to control the timing of the
reversal of the temporary differences and it is
probable that the differences will not reverse in
the foreseeable future.
Deferred tax assets and liabilities are offset
when there is a legally enforceable right to offset
current tax assets and liabilities and when the
deferred tax balances relate to the same taxation
authority. Current tax assets and tax liabilities are
offset where the entity has a legally enforceable
right to offset and intends either to settle on a
net basis, or to realise the asset and settle the
liability simultaneously.
Deferred tax recognised in the balance sheet (EUR m) 2023 2022
Deferred tax, beginning of year - 5 - 41
Recognised in profit or loss 41 32
Adjustments in respect of previous years - 1 4
Deferred tax assets and liabilities at 31 December, net 35 - 5
Specification of deferred tax assets (EUR m) 2023 2022
Intangible assets 14 17
Property, plant and equipment 5 10
Inventories 2 2
Trade receivables 1 4
Provisions and defined benefit obligations 27 17
Lease liabilities 1 3
Tax loss carryforwards 62 41
Deferred tax assets at 31 December 112 94
Specification of deferred tax liabilities (EUR m) 2023 2022
Intangible assets 38 54
Property, plant and equipment 4 3
Provisions and defined benefit obligations 35 42
Deferred tax liabilities at 31 December 77 99
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The Group recognises deferred tax assets,
including the expected value of tax loss
carryforwards, based on an assessment of the
expected recoverability. At 31 December 2023,
Hempel recognised a deferred tax asset related
to tax loss carryforwards of EUR 62 million
(2022: EUR 41 million).
Management has considered future taxable
income and applied judgement in assessing
whether deferred income tax assets should be
recognised. The assessment of the recoverability
of the deferred tax assets depends on a number of
factors, including whether there will be sufficient
taxable profits available in future periods in tax
jurisdictions for which the tax losses carryforwards
can be utilised.
Assessment of the recoverability of the
deferred tax assets is based on taxable income
projections that contain estimates of, and tax
strategies for, the future taxable income, taking
into account the general market conditions,
recent financial performance of the individual
entities and the Group’s approved business plan.
The projections are based on the Group’s five-
year forecast, though in certain cases a longer
forecast period is applied, and are inherently
subject to uncertainty, as the realisation of the
projections are dependent on the outcome of
future events. It is management’s assessment
that the forecast is achievable and supports
the capitalised deferred tax assets. In making
this assessment, business initiatives to improve
organic growth and taxable income are
considered together with expected allocation
of future taxable income based on the transfer
pricing policy in place.
Implementation of the Pillar Two reform
As a response to the increasing tax challenges
arising from digitalisation of the economy, OECD
has worked on a tax avoidance project called
BEPS (base erosion and profit shifting). In 2021,
Pillar One (not in scope for Hempel) and Pillar
Two were introduced as a set of Global Anti-
Base Erosion Model Rules (GloBE).
The overall purpose of Pillar Two is to impose
a minimum tax of 15% on the local income in
each jurisdiction in which a company operates.
The GloBE rules are a key component of Pillar
Two, providing a coordinated system of taxation
that imposes a top-up tax on profits arising in
a jurisdiction whenever the effective tax rate,
determined on a jurisdictional basis, is below the
minimum effective tax rate.
The Pillar Two tax rules will generally be
applicable for the Hempel Foundation Group
as of 1 January 2024. For some countries, Pillar
Two qualifying domestic minimum top-up tax
legislation will be implemented at a later date.
It is estimated that additional taxes arising from
implementing Pillar Two amounts to EUR 0.7-1.7
million in 2024. As the analysis of the Pillar Two
impact is not finalised, there is still uncertainty
about the final tax impact. The estimated
increase in taxes mainly relates to the activities in
the following jurisdictions: United Arab Emirates
and Cyprus.
The Group has applied the temporary mandatory
exception of not recognising deferred tax assets
and liabilities arising from the implementation
of the Pillar Two tax legislation. The exception is
applied retrospectively.
2.5 Income tax, tax assets and liabilities — continued
Deferred tax not recognised in the balance sheet (EUR m) 2023 2022
Temporary differences 9 9
Tax loss carryforwards 50 36
Total tax asset not recognised 59 45
Out of recognised tax loss carry forwards 1% (2022: 0%) expire within 1 year, and 0% (2022: 10-15%) within 5 years from the
balance sheet date and 40-45% after five years. The remaining tax loss carry forwards does not have an expiration date.
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3 Operating assets and liabilities
3.1 Intangible assets
Amortisations and impairment included in profit and loss (EUR m) 2023 2022
Production costs 6 5
Sales and distribution costs 13 -
Administrative costs 27 16
Total amortisation and impairment 46 21
Accounting policies
Goodwill
Goodwill is initially recognised in the statement
of financial position at cost and allocated to
groups of CGUs in which goodwill is monitored.
Subsequently, goodwill is measured at cost less
accumulated impairment losses. Goodwill is not
amortised.
Brands with an indefinite useful life
Brands acquired in a business combination are
initially recognised in the statement of financial
position at fair value and subsequently measured
at cost less accumulated impairment losses.
Brands which are considered to have an
indefinitely useful life are not amortised, since
there is no foreseeable limit to the period over
which the brands are expected to generate net
cash inflows.
Software and software under development
Acquired software and developed software are
initially measured at cost and subsequently at
cost less amortisation and impairment losses.
Acquired software and developed software
are amortised on a straightline basis over the
estimated useful life, which is 3-10 years, though
typically 5 years for ERP systems.
For software as a service (SaaS) arrangements,
implementation costs are capitalised only
where customisation and configuration of the
SaaS arrangement results in an intangible asset
controlled by the Group. Where customisation
and configuration costs do not result in an
intangible asset, costs are either expensed as
incurred or alternatively over the contract term
when the received services are not distinct from
the SaaS solution.
Software under development is recognised at
cost less impairment losses. Software under
development is not amortised.
Customer relationships
Customer relationships acquired in a business
combination are initially recognised at fair
value and subsequently measured at cost less
accumulated amortisation and impairment
losses. Amortisation is calculated on a straight-
line basis over the estimated useful life, which is
5-12 years.
Other intangible assets
Other intangible assets comprise development
projects such as development of products or
processes, formulas and smaller brands.
Development projects concerning products
or processes (other than software development
projects) that are clearly defined and identifiable,
and in respect of which technical feasibility,
sufficient resources and a potential future market
or development opportunity in the enterprise can
be demonstrated, and where it is the intention
to manufacture, market or use the product or
process in question, are recognised as intangible
assets. Development projects are initially
measured at cost, which comprises expenses,
including salaries, amortisation and external
costs, directly attributable to these development
projects.
Development projects are subsequently meas-
ured at cost less amortisation and impairment
losses.
Development projects are amortised on a
straightline basis over the estimated useful life,
which is 3-10 years.
Formulas and smaller brands are measured
at cost less accumulated amortisation and
impairment losses. The assets are amortised on
a straight-line basis over their estimated useful
lives. The amortisation period is 2-10 years.
Amortisation and impairment are included as
follows in the statement of profit and loss.
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Research and development costs expensed
Research and development costs not eligible for
capitalisation are expensed in the period incurred
and included in the statement of profit and loss
within production costs. In 2023, this amounted
to EUR 34 million (2022: EUR 29 million).
Impairment of non-current assets
Goodwill, intangible assets with an indefinite
useful life and software under development that
is not subject to amortisation are tested annually
for impairment, or more frequently if events or
changes in circumstances indicate that they
might be impaired. Other assets are tested for
impairment whenever events or changes in
circumstances indicate that the carrying amount
may not be recoverable. An impairment loss is
recognised for the amount by which the asset’s
carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an
asset’s fair value less costs of disposal and value
in use. For the purposes of assessing impairment,
assets are grouped at the lowest levels for which
there are separately identifiable cash inflows that
are largely independent of the cash inflows from
other assets or groups of assets (CGUs).
Non-financial assets other than goodwill that
suffered an impairment are reviewed for possible
reversal of the impairment at the end of each
reporting period.
Impairment test
Hempel has tested the carrying amount of
software under development, brands with
indefinite useful life and goodwill for impairment.
The monitoring of goodwill is based on four
commercial business units (Marine, Energy,
Infrastructure and Decorative) and one internal
business unit (Technology & Operations). Goodwill
is allocated to the groups of CGUs as follows:
(EUR m) 2023 2022
Marine 4 4
Energy 3 3
Infrastructure 3 3
Decorative 180 160
T&O 345 341
Unallocated - 18
Total goodwill 535 529
In 2022, EUR 18 million of goodwill recognised from acquisitions
of Paint World, Cap Couleurs and two smaller acquisitions was not
allocated to the respective groups of CGUs. The goodwill allocation
was finalised in 2023 with EUR 18 million allocated to Decorative.
The four key commercial business units manage
sales and are responsible for daily contact with
the customers.
Marine customers comprise both newbuilding
shipyards, ship owners requiring maintenance in
dry dock or at sea, and maintenance contractors.
Maintenance work relates to every area of a
vessel, most notably hull coating systems to
protect the metal structure of the vessels.
Energy customers are owners of energy assets,
which are often subject to harsh weather
conditions, such as windmills and other energy
solution assets.
Infrastructure mainly relates to bridges,
transportation assets and other infrastructure
buildings.
Customers include governments responsible
for maintenance of critical infrastructure,
companies that own of infrastructure assets and
maintenance contractors.
Decorative sells indoor and outdoor coating
products. Decorative customers are both private
and commercial customers, e.g. retailers.
Technology & Operations is an internal business
unit where most of the Group’s production and
supply chain is managed, and where R&D activities
take place. All products developed and produced
by Technology & Operations are sold internally to
the four key commercial business units.
Impairment test goodwill
For the purpose of impairment testing, revenue
in Technology & Operations comprises internal
sales of coating and paint products to the four
commercial business areas. The internal selling
prices in Technology & Operations and thus
COGS in the commercial business units are, for
the purpose of impairment testing, adjusted to
reflect management’s best estimate of prices
that could have been achieved in an arm’s length
transaction based on the commercial business
units’ operating model. In determining the
carrying amount of net assets of each group of
CGUs, certain allocation keys were applied.
The recoverable amounts of each group of CGUs
are based on value in use calculations and based
on cash flow projections for the years 2024-
2028. The forecast represents management’s
best expectation of the future cash flows and is
assumed to be both reasonable and achievable.
The assumptions applied by management in fore-
casting the future cash flows reflect management’s
expectations considering all relevant factors, includ-
ing Hempel’s strategic initiatives, local initiatives,
past experience and external sources of informa-
tion, where possible and relevant. The key assump-
tions used in the cash flow projections are revenue
growth, EBITDA margin, long-term growth rate and
pre-tax discount rate (refer to the table on the
next page). Cash flows beyond the five-year fore-
cast period are extrapolated using the estimated
growth rates stated in the table on the next page.
Sensitivity analysis
Management reasonably considered and
assessed possible changes for the key
assumptions and did not identify any instances
that could cause the carrying amount of goodwill
to exceed its recoverable amount.
3.1 Intangible assets — continued
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3.1 Intangible assets — continued
Impairment test of the Farrow & Ball brand
The carrying amount of the Farrow & Ball brand
with indefinite useful life of EUR 136 million (2022:
136 million) was tested separately for impairment
as the brand relates to the Farrow & Ball CGU.
The recoverable amount is calculated based on
a relief-from-royalty method, assuming a steady
average revenue growth of 5.1% in the forecasting
period based on expected market development
within the luxury paint business. Further, the
forecast assumes that selling prices will increase
in line with raw material price increases.
The royalty rate applied in the relief-from-royalty
calculation is based on a benchmark study for
high-end brands with similar market position
to Farrow & Ball. A royalty rate of 6.15% (2022:
6.15%) and a weighted average cost of capital
(WACC) of 9.35% (2022: 8.79%) were applied.
Impairment test of software business
applications
One of the Group’s software business applications
systems (ERP) was scrapped and replaced with
a more flexible IT solution to ensure scalable
operations and to streamline processes across
the Group. Consequently, the software business
application was written down, and an impairment
of EUR 18 million was included in administrative
expenses in the statement of profit and loss. Refer
also to note 3.2 ‘Property, plant and equipment for
impairment of customer relationships’.
Key assumption Description
Revenue growth and EBITDA margin Revenue for all commercial business units is assumed to increase over the forecasting period on average by mid single-digit growth
rates, assuming a slight increase in market share. This is based on past performance and assumptions about the general market
development in the different commercial business areas, taking into consideration the maturity of the market and the current
challenges with volatile energy and raw material prices, and an assumption of a normalisation of the global economy over the
forecasting period. Further, Group and local strategic initiatives are considered when estimating the revenue growth rates for the
individual commercial businesses, including initiatives focusing on increasing sales prices and volumes. A stable EBITDA margin is
assumed in all the commercial business units in the forecasting period, based on the business units’ ability to generally increase selling
prices in line with long term inflation.
The estimated revenue growth in Decorative is, in particular, to be achieved through our strong market position, brand awareness
and companies and stores acquired in 2021 and 2022 that increase Decorative’s accessibility in selected markets. For Marine,
the estimated revenue growth is to be achieved through our highly, competitive products, e.g. hull coatings, and higher sales prices
through a more value-based price setting model, as well as increased sales volumes based on the assumed continuation of the trend
of increasing demand for products in the marine industry that reduce both fuel consumption and CO
2
emissions. For Energy and
Infrastructure, the estimated revenue growth is based on an increased demand for sustainable solutions in the renewable energy and
infrastructure sectors and higher sales prices through a more value-based price setting model.
For Technology & Operations, revenue and EBITDA margin is derived from sales to the four commercial business units. Sales volumes
are therefore based on the expected sales volumes in the four commercial business units. The internal sales prices are adjusted to
reflect an arm’s length selling price. EBITDA margin is assumed to increase over the forecasting period. This is based on assumptions
of a stabilisation of raw material prices, the ability to continuously optimise the production and supply chain, including higher utilisation
of existing production capacity and reduction in production and employee cost, as well as the realisation of expected synergies from
businesses acquired during the period and in previous years. In addition, completion of the ongoing construction of new cost-efficient
factories in 2022 and 2023 is assumed to improve the EBITDA margin over the forecast period.
Long-term growth The terminal growth rates do not exceed expected long-term inflation.
Pre-tax discount rate The pre-tax discount rate reflects the specific risks to the CGUs.
(EUR m) Long-term growth
rate 2023
Long-term growth
rate 2022
Pre-tax discount
rate 2023
Pre-tax discount
rate 2022
Marine 2.00% 2.00% 17.35% 15.26%
Energy 2.00% 2.00% 17.36% 15.11%
Infrastructure 2.00% 2.00% 17.36% 15.11%
Decorative 2.00% 2.00% 16.01% 14.30%
Technology & Operations 2.00% 2.00% 16.02% 14.35%
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3.1 Intangible assets — continued
Intangible assets (EUR m) Goodwill Brands Software Software
under
development
Customer
relationships
Other
intangible
assets
Total
Costs at 1 January 2023 529 138 56 29 142 91 985
Effect of exchange rate adjustment 6 2 - 1 - - 2 1 6
Additions for the year - - - 32 - 1 33
Transfer and reclassifications - - 23 - 29 - 6 -
Disposals for the year - - - 2 - - - - 2
Costs at 31 December 2023 535 140 76 32 140 99 1,022
Accumulated amortisation at 1 January 2023 - - 45 - 112 63 220
Effect of exchange rate adjusted - - - 1 - - 2 - - 3
Amortisation for the year - - 8 - 8 6 22
Impairment for the year - - 18 - 5 1 24
Reversal of amortisation of assets disposed - - - 2 - - - - 2
Accumulated amortisation at 31 December 2023 - - 68 - 123 70 261
Carrying amount at 31 December 2023 535 140 8 32 17 29 761
Costs at 1 January 2022 530 145 50 18 139 84 966
Effect of exchange rate adjustment - 23 - 7 - - 3 2 - 25
Additions for the year - - 1 22 - 1 24
Acquisition of enterprises 22 - - - - - 22
Transfer and reclassifications - - 7 - 11 - 4 -
Disposals for the year - - - 1 - - - - 1
Reclassification to assets held for sale - - - 1 - - - - 1
Costs at 31 December 2022 529 138 56 29 142 91 985
Accumulated amortisation at 1 January 2022 - - 42 - 101 57 200
Effect of exchange rate adjustment - - - - 2 - 1 1
Amortisation for the year - - 5 - 9 7 21
Reversal of amortisation of assets disposed - - - 1 - - - - 1
Reclassification to assets held for sale - - - 1 - - - - 1
Accumulated amortisation at 31 December 2022 - - 45 - 112 63 220
Carrying amount at 31 December 2022 529 138 11 29 30 28 765
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Property, plant and equipment are measured
at cost less accumulated depreciation and
impairment losses.
Costs comprise the purchase price, including
import duties and non-refundable taxes, and
expenses directly related to the acquisition
up until the time when the asset is ready for
intended use. In the case of assets of own
construction, costs comprise direct expenses for
labour, materials, components and suppliers.
Material general and specific borrowing costs
that are directly attributable to the construction
or production of a qualifying asset are capitalised
during the period of time that is required to
complete and prepare the asset for its intended
use. Qualifying assets are assets that necessarily
take a substantial period of time to get ready for
their intended use or sale.
Subsequent costs, such as partial replacement
of property, plant and equipment, are included
in the carrying amount of the asset in question
when it is probable that such costs will result
in future economic benefits. The carrying
amount of the replaced parts is derecognised
from the balance sheet and recognised in the
statement of profit and loss. All other repairs and
maintenance are charged to profit or loss during
the reporting period in which they are incurred.
Depreciation is based on the costs of an asset
less its residual value. Depreciation is calculated
on a straight-line basis over the expected useful
lives of the assets, which are:
Buildings (max.) 50 years
Laboratory equipment 10 years
Plant and machinery 10 years
Other fixtures and fittings,
tools and equipment 3-10 years
If the individual material components of an asset
have different useful lives, each component will
be depreciated separately. Gains and losses
on disposals are determined by comparing
proceeds with the carrying amount. These
gains and losses are included in other operating
income and expenses (refer to note 2.3 ‘Other
operating income and expenses’). The assets’
residual values and useful lives are reviewed,
and adjusted if necessary, at the end of each
reporting period.
Information about commitments for acquisition
of property, plant and equipment is provided
in note 5.3 ‘Contingent liabilities and other
commitments’.
The carrying amounts of property, plant and
equipment are reviewed on an annual basis
to determine whether there is any indication
of impairment. If an asset’s carrying amount
exceeds its recoverable amount, an impairment
loss is recognised in the statement of profit and
loss.
Impairment test Decorative Germany
and France
An impairment test was carried out for the
Decorative CGU Germany and France due to
challenging market conditions.
The CGU mainly comprises production
buildings, customer relationships and current
assets such as inventories and trade receivables.
The CGU is measured within level 3 of the fair
value hierarchy and the impairment amount was
determined based on a fair value less costs of
disposal model, i.e. a market specific model using
discounted cash flow projections approved by
management, covering a five-year period.
The key assumptions used when determining
the cash flow projections are development in
EBITDA margin, development in net working
capital, the long-term growh rate and the
discount rate.
Cash flows beyond the five-year forecast period
are extrapolated applying a 2.0% growth rate,
corresponding to the long-term inflation. A post
tax discount rate of 7.5% was applied, reflecting
the specific risk of the CGU. Development in
EBITDA margin assumes increasing revenue,
utilization of idle production capacity and
costs adjustments, a market participant would
consider when pricing the CGU.
The carrying amount of the CGU was reduced
to its recoverable amount, approx. EUR 67
million. An impairment loss of EUR 23 million
was recognised, hereof EUR 6 million within
intangible assets and the remaining EUR 17
million within property, plant and equipment. The
impairment loss is recognised within production
cost EUR 18 million and sales and distribution
costs EUR 5 million, respectively. The main
classes of assets impaired were production
buildings and customer relationships.
3.2 Property, plant and equipment
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3.2 Property, plant and equipment — continued
Property, plant and equipment (EUR m) Land and
buildings
Plant and
machinery
Other fixtures
and fittings, tools
and equipment
Assets under
construction
Total
Costs at 1 January 2023 430 292 129 151 1,002
Effect of exchange rate adjustment - 7 - 4 - 1 - 6 - 18
Additions for the year - 4 5 53 62
Transfer and reclassifications 89 53 8 - 150 -
Disposals for the year - - 4 - 7 - - 11
Costs at 31 December 2023 513 341 134 48 1,036
Accumulated depreciations at 1 January 2023 114 189 79 - 382
Effect of exchange rate adjustment - 3 - 2 - 1 - - 6
Depreciation for the year 14 20 12 - 46
Impariment for the year 17 - - - 17
Transfer and reclassifications - - - 1 - - 1
Reversal of depreciations of assets disposed 1 - 3 - 6 - - 9
Accumulated depreciation at 31 December 2023 143 204 83 - 430
Carrying amount at 31 December 2023 370 137 51 48 606
Costs at 1 January 2022 415 277 113 127 932
Effect of exchange rate adjustment 5 1 - 1 - 2 3
Acquisition of enterprises - 1 - - 1
Additions for the year - 2 5 83 90
Transfer and reclassifications 11 28 18 - 56 -
Disposals for the year - - 7 - 4 - - 11
Reclass to assets held for sale - - 10 - 2 - - 12
Costs at 31 December 2022 430 292 129 151 1,003
Accumulated depreciations at 1 January 2022 102 183 73 - 358
Effect of exchange rate adjustment 3 2 - 1 - 4
Depreciation for the year 11 19 11 - 41
Transfer and reclassifications - - 1 - 1
Reversal of depreciations of assets disposed - 2 - 8 - 4 - - 14
Reclass to assets held for sale - - 8 - 1 - - 9
Accumulated depreciation at 31 December 2022 114 189 79 - 382
Carrying amount at 31 December 2022 315 103 50 151 621
Capitalised interest expenses in the year amounts to EUR 2 million (2022: EUR 1 million).
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Accounting policies
Lease liabilities
At the commencement date of leases, the
Group recognises lease liabilities, measured at
the present value, of the lease payments to be
made over the lease term. The lease payments
include fixed payments less any lease incentive
receivables, variable lease payments that
depend on an index or rate, e.g. when a minimum
indexation is applied, and amounts expected to
be paid under residual value guarantees. The
lease payments also include the exercise price
of a purchase option reasonably certain to be
exercised by the Group and payment of penalties
for terminating a lease, if the lease term reflects
the Group exercising the option to terminate.
The present value is calculated using the Group’s
incremental borrowing rate if the interest rate
implicit in the lease is not readily determinable.
Contracts may contain both lease and non-
lease components. The Group has elected to
separate lease and non-lease components. For
these contracts, the consideration promised in
the contract is allocated based on the relative
standalone prices between the lease and non-
lease component. Non-lease components are
accounted for in accordance with the accounting
policy applicable to such items.
Some lease contracts include extension and
termination options. Management exercises
judgement in determining whether these
options are reasonably certain to be exercised.
Management considers all relevant facts and
circumstances that create an economic incentive
to exercise the extension option.
After initial recognition, the lease liability is
measured at amortised cost using the effective
interest method. The lease liability is increased
to reflect the accretion of interest and reduced
for lease payments made. The lease liability
is remeasured when there is a change in the
lease term or a change in the assessment to
purchase the underlying asset. In addition,
the lease liability is remeasured if there is a
change in future lease payments arising from
a change in an index or rate, including revised
lease payments that reflect a change in market
rental rates, or if there is a change in the Group’s
estimate of the amount expected to be payable
under a residual value guarantee.
When lease liabilities are remeasured, a
corresponding adjustment is made to the
carrying amount of the right-of-use asset. If
the carrying amount of the right-of-use asset
is reduced to zero, any further reduction is
recognised in the statement of profit and loss.
Right-of-use assets
The Group recognises right-of-use assets at the
commencement date of the lease. Right-of-use
assets are initially measured at cost comprising
the amount of the initial measurement of the
lease liability, adjusted for any lease payments
made at or before the commencement date
and any initial direct costs incurred, as well as an
estimate of dismantling and restoration costs to
be incurred.
After initial recognition, right-of-use assets are
measured at cost less accumulated depreciation
and impairment losses and adjusted for any
remeasurement of the lease liability. Depreciation
is calculated on a straight-line basis over the
shorter of the useful life of the asset and the
lease term.
Right-of-use assets mainly comprise office and
warehouse buildings, stores, warehouses and
vehicles, such as cars, trucks and vans. Lease
terms of buildings are usually 5-10 years whereas
vehicles typically have a lease term of 3-5 years.
COVID-19 rent concessions
The Group elected to apply the practical
expedient for COVID-19 rent concessions
applicable for payments due on or before 30
June 2022. Under the practical expedient, rent
concessions arising as a direct consequence
of the COVID-19 pandemic are not accounted
for as a lease modification. Instead, the amount
forgiven is recognised directly within the income
statement.
Short-term and low-value leases
Short-term and low-value leases are expensed
directly as operating costs in the statement of
profit and loss, usually on a straight-line basis
over the lease term.
The Group has recognised the following amounts
relating to leases, as shown on the next page.
3.3 Leases
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3.3 Leases — continued
The statement of profit and loss shows the
following expenses relating to leases:
Amounts relating to leases (EUR m) Land and
buildings
Vehicles Other
fixed assets
Total
Right-of-use assets
Costs at 1 January 2023 154 27 1 182
Effect of exchange rate adjustment - 2 - - - 2
Additions for the year 6 6 - 12
Remeasurement 11 - - 11
Disposals - 10 - 6 - - 16
Cost at 31 December 2023 159 27 1 187
Depreciation at 1 January 2023 51 14 - 65
Effect of exchange rate adjustment - 1 - - - 1
Depreciation for the year 26 8 - 34
Disposals - 9 - 6 - - 15
Accumulated depreciation at 31 December 2023 67 16 - 83
Carrying amount at 31 December 2023 93 11 1 105
Right-of-use assets
Cost at 31 January 2022 147 26 1 174
Effects of exchange rate adjustments - 1 - - - 1
Acquisition of enterprises 3 - - 3
Additions for the year 7 8 - 15
Remeasurement 10 - 1 - 9
Disposals - 11 - 6 - - 17
Reclassification to assets held for sale - 1 - - - 1
Cost at 31 December 2022 154 27 1 182
Depreciation at 1 January 2022 34 11 - 45
Effects of exchange rate adjustments - 1 - - - 1
Depreciation for the year 30 9 - 39
Disposals - 11 - 6 - - 17
Reclassification to assets held for sale - 1 - - - 1
Accumulated depreciation at 31 December 2022 51 14 - 65
Carrying amount at 31 December 2022 103 13 1 117
Lease liabilities (EUR m) 2023 2022
Current 30 31
Non-current 71 90
Total 101 121
Expenses relating to leases (EUR m) 2023 2022
Depreciation expense of right-of-use assets 34 39
Interest expense on lease liabilities 4 3
Expense relating to short-term leases, excluding short-term leases of low-value assets 1 1
Total amount recognised in profit or loss 39 43
Total cash outflow from leases amounts to EUR 39 million, including cash outflow from short-term and low-value leases
(2022: EUR 42 million).
The maturity analysis of undiscounted cash flow in lease liabilities is disclosed in note 4.3
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3.4 Inventories
Accounting policies
Inventories are measured at cost, determined
using the FIFO-method, or net realisable
value if the net realisable value is lower. Costs
of inventories comprise purchase costs of
raw materials, including import duties and
transportation costs directly attributable to the
acquisition of raw materials, costs of conversion
and other costs incurred in bringing the
inventories to the present location and condition.
The costs of finished goods and work in progress
also include indirect production costs, which
comprise the cost of indirect materials and labour
as well as maintenance and depreciation of the
machinery, factory buildings and equipment used
in the manufacturing process and costs of factory
administration and management.
The net realisable value is calculated as the
selling price less costs of completion and costs
necessary to make the sale and is determined
based on the most reliable evidence available
at the time the estimates are made, taking into
account obsolescence and development in
expected selling prices.
(EUR m) 2023 2022
Raw materials and consumables 92 109
Work in progress 9 7
Finished goods 231 227
Total inventories 332 343
Cost of inventories, included under production costs 1,307 1,283
Hereof write-downs to net realisable value during the year 12 11
Reversal of write-downs during the year - -
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3.5 Trade receivables
Accounting policies
Trade receivables are recognised initially at
their transaction price. The Group holds trade
receivables with the objective of collecting the
contractual cash flows and therefore measures
them subsequently at amortised cost using the
effective interest method, less loss allowance.
Due to the short-term nature of trade receivables,
amortised cost will equal the invoiced amount
less loss allowance for expected credit losses.
Credit risk
The Group is exposed to financial and
commercial counterparties but has no particular
concentration of customers. To minimise the
credit risk related to trade receivables, financial
vetting is undertaken for all major customers and
credit limits are assigned for major customers
based on the Group’s credit risk assessment.
The Group applies the simplified approach to
providing the expected credit losses, which
permits the use of the lifetime expected loss
provision for all trade receivables. To measure
the expected credit losses, trade receivables
are grouped based on shared credit risk
characteristics and the days past due. Trade
receivables not due are also included when
assessing the expected lifetime loss provision.
Trade receivables are written off when there is no
reasonable expectation of recovery, i.e. typically
when customers are undergoing restructuring or
bankruptcy proceedings have commenced.
The Group’s maximum exposure to credit risk
at the end of the reporting period related to
trade receivables is the carrying amount of trade
receivables mentioned above. The Group does
not hold collateral as security.
Expected credit loss 2023 (EUR m) Carrying
amount, gross
Expected
loss rate (%)
Loss
allowance
Carrying
amount, net
Current 367 0.70% 2.4 364.6
Overdue 1-30 days 63 0.60% 0.4 62.6
Overdue 31-60 days 31 1.50% 0.5 30.5
Overdue 61-120 days 23 1.60% 0.3 22.7
Overdue 121-240 days 16 7.20% 1.2 14.8
Overdue 241-360 days 4 16.80% 0.6 3.4
Overdue > 360 days 39 84.10% 32.7 6.3
Total 543 38.1 504.9
Expected credit loss 2022 (EUR m) Carrying
amount, gross
Expected
loss rate (%)
Loss
allowance
Carrying
amount, net
Current 352 0.70% 2.3 349.7
Overdue 1-30 days 61 0.90% 0.6 60.4
Overdue 31-60 days 27 1.50% 0.4 26.6
Overdue 61-120 days 19 1.70% 0.3 18.7
Overdue 121-240 days 12 6.80% 0.8 11.2
Overdue 241-360 days 6 26.10% 1.5 4.5
Overdue > 360 days 31 82.70% 25.7 5.3
Total 508 31.6 476.4
Loss allowance provision (EUR m) 2023 2022
Provision at 1 January 31 29
Additions for the year 9 2
Losses recognised - 2 - 2
Currency translation - 2
Total 38 31
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3.6 Pensions and similar obligations
Accounting policies
The Group operates various post-employment
schemes, including defined benefit and defined
contribution pension plans.
Defined contribution plans
Hempel operates a number of defined contribution
plans, which receive fixed contributions from
Group companies. The Group’s contributions to
the defined contribution plans are recognised
in the statement of profit and loss in the year
to which they relate. The Group’s obligation is
limited to the amount that it agrees to contribute
to the pension funds. Contributions payable are
recognised in the statement of financial position
under other current liabilities. The Group has no
further obligations once the contributions have
been paid.
Defined benefit plans
In regards to defined benefit plans, the liability
or asset recognised in the balance sheet is the
present value of the defined benefit obligation
at the end of the reporting period less the fair
value of plan assets. The net defined benefit
obligation is calculated annually by independent
actuaries using the projected unit credit method.
This is done separately for each major plan
by estimating an amount of future benefits
that employees have earned in return for their
service in the current and prior periods. The
present value of the defined benefit obligation is
determined by discounting the estimated future
cash outflows using interest rates of high-quality
corporate bonds that are denominated in the
currency in which the benefits will be paid, and
that have terms approximating to the terms of
the related obligation. In countries where there is
no deep market in such bonds, the market rates
on government bonds are used.
The net obligation is recognised in Pensions
and similar obligations where service costs are
recognised as employee benefit expenses.
Service costs comprise current service costs
and past service costs. Current service cost is
the increase in the present value of the defined
benefit obligation resulting from employee
services in the current period. Changes in the
present value of the defined benefit obligation
resulting from plan amendments or curtailments
are recognised immediately in profit and loss as
past service costs.
The net interest cost is calculated by applying the
discount rate to the net balance of the defined
benefit obligation and the fair value of plan assets.
This cost is included in financial expenses in the
consolidated statement of profit and loss.
Remeasurement gains and losses arising
from experience adjustments and changes in
actuarial assumptions are recognised in the
period in which they occur, directly in other
comprehensive income. They are included in
retained earnings in the statement of changes in
equity and the balance sheet.
Pension costs
In 2023, net costs of EUR 25 million relating
to Hempel Foundation pension plans were
recognised in the statement of profit and loss
(2022: EUR 24 million). The figures break down
as shown in the table below.
Pension costs (EUR m) 2023 2022
Costs for defined contribution plans:
Employee costs 22 21
Costs for defined benefit plans:
Employee costs 2 2
Interest expense 1 1
Total costs recognised in the profit and loss 25 24
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3.6 Pensions and similar obligations — continued
Hempel Foundation defined benefit plans
The Group operates defined benefit plans in a
range of countries with the major plans being
in Ireland and the UK. None of the plans are
individually significant at Group level.
The plans are generally final salary pension plans,
which provide benefits to the employees in the
form of a guaranteed level of pension payable
for life. The level of benefits provided depends
on the employees’ length of service and their
salary in the final years leading up to retirement.
The majority of benefit plans are funded. How-
ever, there are also a number of unfunded plans
in which the Group meets the benefit payment
obligation as it falls due. Plan assets held in trusts
are governed by local regulations and practice in
each country, as is the nature of the relationship
between the Group and the trustees and their
composition.
The development in the present value of defined
benefit pension obligations breaks down as, as
shown in the table to the right.
Present value of the net obligation at 31 December (EUR m) 2023 2022
Present value of defined benefit obligation 50 51
Fair value of assets related to the plans 31 35
Pension obligations recognised in the balance sheet, net 19 16
Of these obligations, EUR 22 million relates to unfunded pension obligations (2022: EUR 19 million) and EUR 28 million relates to
partly funded obligations (2022: EUR 32 million). Of the total gross obligation, 48% (2022: 51%) relates collectively to Ireland and
the UK.
(EUR m) 2023 2022
Present value of obligation at 1 January 51 64
Current service cost 2 2
Interest expense 2 1
Actuarial (gains)/losses arising from changes in financial assumptions - 3 - 13
Actuarial (gains)/losses arising from experience adjustments 2 1
Exchange differences - - 1
Benefit payments from employer - 1 -
Acquired in business combinations - 1
Payments from the plans - 3 - 4
Present value of obligation at 31 December 50 51
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3.6 Pensions and similar obligations — continued
The expected average duration of the obligations
is 11 years (2022: 12 years) and the expected
contributions to post-employment benefit plans
for the year ending 31 December 2024 are EUR
3 million. The development in the fair value of
pension plan assets and the composition of plan
assets are shown in the tables below.
Sensitivity analysis
The following table illustrates the change in the
gross obligation relating to defined benefit plans
due to a change in the key actuarial assumptions.
The analysis is based on fairly probable changes,
provided that the other parameters remain
unchanged.
The following table summarises the key
assumptions of the defined benefit plans:
Recognised defined benefit pension obligation (EUR m) 2023 2022
Discount rate
Increase of 0.5 p.p. - 2 - 3
Decrease of 0.5 p.p. 2 3
Future wage / salary increase
Increase of 0.5 p.p 1 1
Decrease of 0.5 p.p. - 1 - 1
Mortality
Increase of +1 year 1 1
Decrease of -1 year - 1 - 1
Defined benefit plans (%) 2023 2022
Specification of plan assets:
Cash and cash equivalents 2% 1%
Shares and properties 23% 26%
Debt instruments 47% 48%
Real estate 1% 2%
Investment funds 18% 16%
Assets held by insurance company 5% 5%
Other 4% 2%
Total 100% 100%
% 2023 2022
Discount rate 4.57% 4.24%
Future wage / salary increase 3.45% 3.86%
(EUR m) 2023 2022
Fair value of pension plan assets at 1 January 35 43
Calculated interest in plan assets 1 -
Return on plan assets excluding calculated interest - 2 - 7
Exchange differences - - 1
Contributions:
Employer 1 1
Payments from the plans - 3 - 1
Effect on asset ceiling - 1 -
Fair value of pension plan assets at 31 December 31 35
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3.7 Provisions
Accounting policies
Provisions are recognised when the Group has a
present legal or constructive obligation as a result
of past events, it is probable that an outflow of
resources will be required to settle the obligation,
and the amount can be reliably estimated.
Provisions for environmental, warranty and
restructuring obligations, as well as other
obligations, are measured at the present value of
management’s best estimate of the expenditure
required to settle the present obligation at the
end of the reporting period. The costs required
to settle the liability are discounted if the effect
is material to the measurement of the provision.
The discount rate used to determine the present
value is a pre-tax rate that reflects current market
assessments of the time value of money and
the risks specific to the liability. The increase
in the provision due to the passage of time is
recognised as interest expense.
Decommission and restoration obligations are
measured at the present value of the future
liability in respect of decommissioning as
expected at the balance sheet date. The present
value of the provision and changes in estimate
are recognised as part of the cost of property,
plant and equipment and depreciated together
with the associated asset.
Interest on provisions is recognised in the
statement of profit and loss under financial
expenses.
Environmental provisions
Environmental obligations relate to restoration
of various sites and to remedying established
environmental damages that occurred in connec-
tion with the production of coatings and disposal or
release of certain wastes. Management anticipates
that the resolution of the Group’s environmental
obligations will occur over an extended period, in
some cases over a period of more than 5 years.
Warranties
Provision is made for estimated warranty claims
in respect of products sold that are still under
warranty at the end of the reporting period.
Warranty cases are normally resolved within 0 - 5
years, though some complex cases are resolved
over an extended period of more than 5 years.
In line with accounting policies, potential product
warranties are recognised as warranty provisions
when revenue from the related sale is recognised.
Other provisions
The Group is involved in a number of legal cases,
tax cases and other disputes. Some of these
involve significant amounts and are subject to
some uncertainty. Management continuously
assesses the risks associated with the cases
and disputes, and their likely outcome. It is
the opinion of management that, apart from
items recognised in the financial statements,
the outcomes of these cases and disputes are
not probable or cannot be reliably estimated in
terms of amount or timing. The Group does not
expect these to have a material impact on the
consolidated financial statements.
(EUR m) Environmental
obligations
Warranties Other
provisions
Total
Total provisions, beginning of year 20 15 12 47
Effect of exchange rate adjustment - 1 - - - 1
Additions for the year 4 7 4 15
Reversed for the year - 2 - - 4 - 6
Consumed for the year - 1 - 7 - 2 - 10
Unwind of discount 1 - - 1
Total provisions, end of year 21 15 10 46
Current liabilities 5 3 2 10
Non-current liabilities 16 12 8 36
Total provisions, end of year 21 15 10 46
3.8 Other liabilities
Accounting policies
Other liabilities mainly comprise accrued
employee costs, grants contributions, including
bonuses, withholding tax and VAT, customer
bonuses, commission payables, accrued
interests and prepaid rent.
Not yet settled donations refer to EUR 64 million.
(2022: EUR 69 million).
Other financial liabilities are measured at initial
recognition at fair value. Subsequently, other
financial liabilities are measured at amortised
cost using the effective interest method, which
usually corresponds to the nominal value.
Other non-liabilities arising, for example, from
taxation or employer benefits, are measured in
accordance with the appropriate standards.
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4 Capital structure and financing items
Accounting policies
The translation reserve comprises foreign
exchange differences arising from the
translation to EUR of financial statements of
the parent Foundation and its subsidiaries.
Also, the effect of the inflation adjustment from
hyperinflationary economies is recognised within
the translation reserve.
The cash flow hedge reserve covers cash flow
hedging of interest rates associated with loans
and borrowings.
Base capital
The base capital of the Foundation amounts
to DKK 35 million.
Grants
Grants are recognised in equity when the
Foundation is obligated towards the recipient
of the grants. From that point in time and until
the grants have been paid out, the donations are
classified as other liabilities.
Capital structure
The capital structure of the Group is intended to
ensure sufficient financial flexibility and stability
for the Group to reach its strategic goals. The
Group aims to maintain an optimal capital
structure, and to use the free operating cash flow
after financial items and tax for debt servicing,
business development and grants.
The Group strives to ensure adequate credit
resources at all times, which includes securing
access to committed bank financing and
refinancing maturing debt in a timely manner.
Capital ressources and covenants
in Hempel A/S Group
The Hempel A/S Group aims to have minimum
EUR 250 million of free committed credit
resources available for the next 12 months.
In order to achieve this overall objective, the
Hempel A/S Group’s capital management aims
to ensure that it meets its financial covenants
attached to the interest-bearing loans and
borrowings that define capital structure
requirements. The covenants’ terms relate to
the Group’s leverage ratio. At the end of 2023,
the leverage ratio was 3.1x (2022: 4.2x). The
Hempel A/S Group aims to maintain a leverage
ratio below 2.5x in the long term while a higher
leverage ratio is accepted when acquiring
strategic businesses.
Breaches in meeting the financial covenants
would permit the bank to immediately call loans
and borrowings. There have been no breaches,
nor close to default, of the financial covenants of
any interest-bearing loans or borrowings in the
current period or in the previous period.
No changes were made in the objectives,
policies or processes for managing capital during
2023 or 2022.
4.1 Base capital and grants
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4.2 Borrowings
Accounting policies
Long-term loans, such as loans from credit
institutions, are recognised initially at fair
value net of directly attributable transaction
costs. Subsequently, the loans are measured
at amortised cost using the effective interest
method. The difference between the proceeds
initially received and the nominal value is
recognised as financial expenses in the state-
ment of profit and loss over the loan term.
The bank loans are floating interest loans based
mainly on EURIBOR. Further, the interest rate
is linked to the Group’s leverage ratio and to
achievement of the Group’s sustainability targets
aimed at reducing CO
2
emissions, landfill waste
and use of hazardous materials in production.
A negative pledge clause is attached to the
Group’s long-term loan arrangements that
prevents Hempel Foundation from pledging
certain assets as security.
Secured loans
Lease liabilities are effectively secured as the
rights to the leased assets recognised in the
financial statements revert back to the lessor in
the event of default.
The Group’s borrowings consists of the
following, se table to the right:
2023 (EUR m) Average
interest rate
Maturity Carrying
amount
Bank loans 5.46% 2025-2027 1,069
Overdraft facilities 5.21% 2024 58
Lease liabilities 0.2% - 13.1% 2024-2047 101
Total borrowings 1,228
Current 88
Non-current 1,140
Total borrowings 1,228
2022 (EUR m) Average
interest rate
Maturity Carrying
amount
Bank loans 3.8% 2024-2026 947
Overdraft facilities 2.8% - 7.9% 2023 102
Lease liabilities 0.2% - 12.0% 2022-2045 121
Total borrowings 1,170
Current 133
Non-current 1,037
Total borrowings 1,170
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4.3 Financial risks
This note describes the exposure to financial
risks and how these risks could affect the
Group’s future financial performance.
The Group’s activities expose Hempel to a
variety of risks related to the Group’s financial
assets and liabilities. The Group’s financial
liabilities comprise primarily borrowings, trade
and other payables and lease liabilities, whereas
the financial assets primarily comprise trade
receivables and cash deposits.
Management has assessed the following key
financial risks and their significance to the Group:
The above financial risks are inherent to the way
Hempel operates as a global company with
a large number of operating units across the
world. The Group’s overall risk management
programme seeks to identify, assess and
mitigate these financial risks in order to reduce
the effects on the Group’s financial performance.
The risks are managed in accordance with the
policies and guidelines laid out by the Board of
Directors. Hempel has centralised handling of
these risks, except for commercial credit risk,
which is managed locally. There are no changes
in the Group’s financial risk management policies
compared to the previous year.
It is the Group’s policy not to speculate actively
on financial risks.
To some extent, the Group’s income and
expenses in foreign currencies net out and
create a natural hedge of the Group’s profitability
margin. Hempel hedges intercompany loans in
the major currencies using financial instruments.
Foreign exchange hedges are entered into in
order to mitigate foreign exchange risks related
to internal balances between Group entities. See
further description under ‘Market risk’.
Market risk
The Group’s exposure to market risks is related
to foreign exchange risks and interest rate risk.
All market risks are managed in accordance with
the Group’s Treasury Policy.
Foreign exchange risk
Foreign exchange risk is the risk that the fair
value or future cash flows of a balance sheet
exposure will fluctuate because of changes in
foreign exchange rates.
The Group’s exposure to the risk of changes in
foreign exchange rates relates primarily to the
Group’s trade receivables and trade payables,
arising respectively from revenue and purchase
transactions denominated in a foreign currency
and intercompany loans and deposits. The
currency exposure in these balances may affect
the Group’s result.
The overall objective of foreign exchange risk
management is to reduce the short-term
negative impact of exchange rate fluctuations
on net financials and cash flows, thereby
contributing to the predictability of the financial
results.
To manage exposure to foreign exchange risk,
it is the Group’s policy to pool funding activities
centrally through intercompany loans and
deposits. In each subsidiary, foreign exchange
risk derived from trade receivables or payables
is mitigated by the Group establishing an
intercompany loan/receivable towards the local
entity in the same foreign currency, thereby
creating a natural hedge.
Currency risk is, as a main policy, hedged against
DKK or EUR when exposure exceeds EUR 0.5
million (higher thresholds are applied for US,
SGD, HKD and PLN). Some currencies cannot
be hedged within a reasonable price range, in
which case correlation to a proxy currency is
considered and, if deemed appropriate, proxy
hedging is applied.
Foreign exchange forward contracts are used to
hedge the exposure to currency risk. As the vast
majority of intercompany loans are hedged, and
because changes in the fair value of both the
hedged item and the foreign exchange forward is
recognised in profit and loss under financial
items, the net exposure to foreign currency risk is
deemed low, though a higher foreign exchange
risk persists in countries with high inflation.
Foreign currency sensitivity
The sensitivity analysis is based on financial
assets and liabilities recognised as of
31 December. The table on the next page
demonstrates the sensitivity to a reasonably
possible change in USD and GBP exchange
rates against EUR, with all other variables held
constant. The Group’s exposure to foreign
currency changes for all other currencies is not
material.
The impact on the Group’s profit before tax is
due to changes in the fair value of monetary
assets and liabilities denominated in foreign
currencies and non-designated foreign exchange
derivatives. Although the derivatives have not
been designated in a hedge relationship, they
act as an economic hedge and will offset the
underlying transactions when they occur.
The movement in pre-tax equity equals the
effect on profit before tax adjusted for fair value
movements of interest rate swaps designated as
hedging instruments.
Financial risk type 2023 2022
Foreign exchange risk Low Low
Interest rate risk Medium Medium
Credit risk Low Low
Liquidity risk Low Low
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Interest rate risk
Interest-bearing debt increased primarily due to
additional net working capital driven by organic
growth.
The Group’s exposure to changes in interest
rates primarily relates to long-term loans and
borrowings with floating interest rates. The
Group’s policy is to hedge its interest rate risk
depending on the Group’s interest coverage level
(EBITDA/interest). When the Group’s interest
coverage level falls below 10, the Group assesses
whether it is necessary to mitigate the interest
rate risk by entering into hedging instruments.
The Group has fixed the interest rate on EUR
700 million of debt by entering into variable- to-
fixed interest rate swaps maturing in December
2025, which reduces the exposure to changes
in interest rates in 2024 and 2025. The interests
related to the EUR 700 million debt is fixed at an
average interest rate of 3.01% until December
2025.
There is an economic relationship between the
loans and the hedging instruments as both the
nominal amount and terms of the interest rate
swaps mirror the hedged exposure, creating
an equal opposite interest receipt and a fixed
interest payment. The Group has established a
hedge ratio of 1:1 for the hedging relationships as
the underlying risk of the interest rate swaps are
identical to the hedged risk.
The table above demonstrates sensitivity to
reasonable possible changes in interest rates,
with all other variables held constant.
The sensitivity analysis is based on financial
assets and liabilities recognised as of
31 December and assumes that the interest
rate hedges are 100% effective. The sensitivity
analysis is based on a change of 100 bps which
is considered a reasonably possible change at
31 December 2023.
4.3 Financial risks — continued
(EUR m) Increase/
decrease in bps
Effect on profit
before tax
Effect on equity
2023
Euro +100 bps - 2 - 2
Euro - 100 bps 2 2
2022
Euro +100 bps - 9 - 7
Euro - 100 bps 9 7
(EUR m) Change in rate Nominal value Effect on profit
before tax
Effect on equity
2023
USD/EUR 5% - 66.7 - 3.3 - 2.6
USD/EUR - 5% - 66.7 3.3 2.6
2023
GBP/EUR 5% - 6.8 -0.3 -0.3
GBP/EUR - 5% - 6.8 0.3 0.3
2022
USD/EUR 5% - 45.5 - 2.3 - 1.8
USD/EUR - 5% - 45.5 2.3 1.8
2022
GBP/EUR 5% 2.3 0.1 0.1
GBP/EUR - 5% 2.3 - 0.1 - 0.1
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4.3 Financial risks — continued
Credit risk
Credit risk arises from the possibility that trading
partners and customers may default on their
obligations, causing financial losses for the
Group. The Group is exposed to credit risk on
cash, trade and other receivables. Please refer to
note 3.5 for a description of the Group’s credit
risk in relation to trade receivables.
The carrying amount of EUR 278 million (2022:
EUR 253 million) represents the maximum credit
exposure related to cash and other receivables.
The Group main banks are all financial
institutions with a high credit rating and,
therefore, financial assets such as cash are
considered to be of low risk.
Other financial assets measured at amortised
cost comprise other receivables. These financial
assets are considered to have a low credit risk,
and thus the impairment provision calculated
based on 12 months of expected losses is
considered immaterial. The financial assets
are considered to be low risk when they have a
low risk of default, and the issuer has a strong
capacity to meet its contractual cash flow
obligations in the near term.
The Group has no material risks relating to a
single customer or business partner. It is the
Group’s credit policy to rate major customers and
other business partners on a current basis.
Bank Acceptance Bills are used as a financial
instrument to further limit the risk of credit
losses.
The Group considers a financial asset in
default when the Group is unlikely to recover
the outstanding contractual amount in full.
A financial asset is written off when there is
no reasonable expectation of recovering the
contractual cash flows.
Liquidity risk
The liquidity risk is assessed to be low. Hempel
ensures the availability of the required liquidity
through a combination of cash management
and both uncommitted and committed
credit facilities. The Group applies cash pool
arrangements for optimisation and centralisation
of cash management.
The Group has an undrawn credit facility of EUR
472 million (2022: EUR 565 million).
Maturities of financial liabilities
The table to the right provides an analysis of the
Group’s financial liabilities divided into relevant
maturity groupings based on their contractual
maturities for non-derivative financial liabilities.
The amounts disclosed in the table are the
contractual undiscounted cash flows.
Contractual undiscounted cashflows (EUR m) Less than
1 year
Between
1 and 5 years
More than
5 years
2023
Non-derivatives:
Borrowings, current and non-current 89 1,084 38
Trade payables 337 - -
Lease liabilities 30 60 19
Derivatives:
Derivatives financial instruments 4 4 -
Total contractual undiscounted cash flows at the end of the year 460 1,148 57
Non-current liabilities 1,205
Current liabilities 460
2022
Non-derivatives:
Borrowings, current and non-current 137 958 46
Trade payables 355 - -
Lease liabilities 31 70 29
Total contractual undiscounted cash flows at the end of the year 523 1,028 75
Non-current liabilities 1,103
Current liabilities 523
For borrowings, the contractual payments are based on the variable interest rates at December 2023, except for a total of EUR 700
million in loans for which the fixed interest swap rates are applied until the swap rates mature in December 2025, thus reflecting the
Group’s expected net cash outflow until maturity of the loan and the interest rate swaps.
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4.4 Financial instruments
Accounting policies
Derivative financial instruments, foreign
exchange forwards, currency swaps and interest
rate swaps are initially recognised in the balance
sheet at fair value and subsequently remeasured
at their fair value.
Derivatives are used for economic hedging
purposes and not as speculative investments.
Where the derivatives do not meet the hedge
accounting criteria, they are measured at fair
value through profit and loss.
Hedging instruments not qualifying for hedge
accounting
For foreign exchange forwards and currency
swaps, positive and negative fair values of these
derivative financial instruments are recognised
as Other receivables and Other payables,
respectively. Changes in the fair values of foreign
exchange forwards and currency swaps are
recognised in the statement of profit and loss
under financial income and expenses.
Cash flow hedge accounting
For interest rate swaps, cash flow hedge
accounting is applied. Positive and negative
fair values are recognised as Other receivables
and Other payables, respectively. Changes in
the fair values are recognised directly within
Other comprehensive income. The amount
accumulated in equity is reclassified to profit and
loss as a reclassification adjustment in the same
periods during which the hedged cash flows
affect profit and loss. Fair value of the interest
rate swaps was negative EUR 4.5 million as of
31 December 2023.
Financial instruments, fair value disclosures
The carrying amount of financial instruments
is a reasonable approximation of the fair value,
except for loans measured at amortised cost.
The carrying amount of loans measured at
amortised cost amounts to EUR 1,127 million
(2022: 1,049 million) compared to a fair value of
EUR 1,130 million (2022: 1,052 million). The fair
value is determined based on the present value
of expected future cash flows.
The carrying amount of lease liabilities amount to
EUR 101 millions (2022: 121 million) compared
to a fair value EUR 101 million (2022: 121 million)
is the same.
Financial instruments measured at fair value
Financial instruments measured at fair value can
be divided into three levels:
Level 1 — Quoted prices (unadjusted) in active
markets for identical assets or liabilities.
Level 2 — Inputs other than quoted prices
included within level 1 that are observable for the
asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices).
Level 3 — Inputs for the asset or liability that are
not based on observable market data.
Foreign exchange contracts, currency swaps
and interest rate swaps are within level 2 of the
fair value hierarchy and are calculated based
on observable market data, such as foreign
exchange rates and yield curves at the end of
the reporting period, and generally accepted
valuation methods. Loans are with level 3 of the
fair value hierarchy.
Reconciliation of liabilities arising from
financing activities (EUR m)
Beginning of
the year
Cash flows Additions Disposals Acquisitions Exchange rates
etc.
End of
the year
2023
Lease liabilities 121 - 38 12 - - 6 101
Borrowings, current and non-current 1,049 82 - - - - 4 1,127
Liabilities arising from financing activities 1,170 44 12 - - 2 1,228
2022
Lease liabilities 132 - 42 30 - 3 - 2 121
Borrowings, current and non-current 890 158 - - - 1 1,049
Liabilities arising from financing activities 1,022 116 30 - 3 - 1 1,170
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4.5 Financial income and expenses4.4 Financial instruments — continued
Accounting policies
Financial income and expenses comprise
interest income and expenses, gains and losses
on receivables, payables, realised and unrealised
exchange gains and losses on transactions
denominated in foreign currencies.
Fair value of investments in private equity funds
Uncommitted investment commitments to private
equity funds amounted to EUR 70,8 million as of
December 31, 2023 (2022: EUR 49,3 million).
Other securities and equity interests consist of
investments in private equity funds (fair value
hierarchy level 3). For this type of investment, fair
value is not measured based on observations in an
active market but based on information about fair
value provided by the private equity funds. When
entering into new investments in private equity
funds, the company receives information about
the funds’ general valuation principles, which
are accepted simultaneously with the Group’s
decision to invest in a private equity fund. The fair
value of the Group’s investments in private equity
funds is based on the latest received quarterly
and annual statements, adjusted for cash calls
and distributions in the period between the date
of the latest received report and the balance
sheet date.
The valuation of all investments is based on
unobservable inputs. Recognition is based
on the formalized valuation reporting process
implemented at the private equity fund. Detailed
information about the valuation model’s data
and underlying assumptions is not received.
Financial income (EUR m) 2023 2022
Interest income 13 8
Gain on derivative financial instruments at fair value through profit and loss 2 7
Income from investments in other financial assets 6 5
Realised and unrealised gain on securities 25 6
Other financial gains 10 -
Total financial income 56 26
Financial expenses (EUR m) 2023 2022
Interest expense on borrowings - 55 - 23
Interest expense on lease liabilities - 4 - 3
Interest expenses on financial liabilities measured at amortised cost - 59 - 26
Realised and unrealised losses on securities - 10 - 42
Foreign exchange losses (net) - 38 - 19
Net monetary loss - 2 - 3
Other financial expenses - 23 - 20
Total financial expenses - 132 - 110
Gain and losses on foreign exchange derivative financial instruments measured at fair value through profit and loss has been
presented separately. Last year, these instruments were presented within the line item foreign exchange gain/loss. As a result of the
change in presentation, comparative figures have been restated.
Other financial assets
Investment category (EUR m)
Fair value
hierarchy level
Fair value as of
31 December
2023
Net revaluation
recognised through
profit and loss
2023
Bonds (listed) 1 116 11
Shares (listed) 1 132 6
Other investments (listed) 1 8 -
Shares non listed 2 3 -
Other investments (non-listed) 3 48 1
Total 307 18
2022
Bonds (listed) 1 103 - 9
Shares (listed) 1 135 - 22
Other investments (listed) 1 8 -
Shares non listed 2 3 -
Other investments (non-listed) 3 42 -1
Total 291 - 32
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4.6 Discontinued operations, assets and liabilities held for sale
Hempel was established in Russia in 1996 and
employed 124 employees by the beginning
of 2022. Following a strategic review of its
presence in Russia, Hempel decided to leave
Russia permanently as a result of the Russian
invasion of Ukraine. The associated operations,
assets and liabilities were consequently
presented as discontinued operations and assets
and liabilities held for sale in the 2022 financial
statement. On 13 July 2023, the divestment of
the assets in Russia was completed. The total
impact on the profit and loss statement in 2023
amounts to a loss of EUR 11 million (2022: EUR
2 million), primarily related to reclassification of
accumulated foreign currency translation reserve
in equity to profit and loss. The loss is attributable
to the shareholder of Hempel A/S.
The carrying amounts of assets and liabilities as
of the date of sale (13 July 2023) were:
Net loss from discontinued operations (EUR m) 2023 2022
Revenue - 10
Expenses - 1 - 15
Net profit before tax - 1 - 5
Income tax - 3
Loss on sale of Hempel Russia after income tax - 10 -
Net profit from discontinued operations - 11 - 2
Cash flow from discontinued operations (EUR m) 2023 2022
Cash flow from operating activities - 1 - 6
Cash flow from investing activities (including net cash inflow from sale of Hempel Russia of
EUR 6 million)
6 -
Cash flow from financing activities - -
Total 5 - 6
Statement of financial position of business classified as held for sale (EUR m) 2023 2022
Fixed assets - 14
Deferred tax asset - 3
Cash - 3
Other current assets - 1
Assets held for sale - 21
Deferred tax liabilities - 4
Current liabilities - 2
Liabilities held for sale - 6
Loss on sale of Hempel Russia (EUR m) 2023 2022
Net cash received 6 -
Net cash receivables 4 -
Total consideration received or receivables 10 -
Carrying amount of net assets sold - 13 -
Reclassification of foreign currency translation reserve - 7 -
Total loss on sale of Hempel Russia - 10 -
(EUR m) 2023
Fixed assets 11
Cash 1
Other current assets 1
Total assets 13
Total liabilities -
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5 Other disclosures
Fees for services other than statutory audit
of the financial statements provided by
PricewaterhouseCoopers Statsautoriseret
Revisionspartnerselskab to the Group mainly
consist of financial due diligence and transaction
advice, accounting advisory services, and other
advisory and tax services.
Other contingent liabilities
The Group is, through its ongoing business,
involved in product liability claims and disputes
in connection with the Group’s operational
activities. The Group does not expect the
pending litigations, claims and investigations,
individually or in aggregate, to have a material
impact on the Group’s financial position,
operating profit or cash flows in addition to the
amounts accrued as provision for legal disputes.
Hempel A/S and its Danish subsidiaries are
jointly taxed with several Danish companies in
the Hempel Foundation Group. The Group’s
Danish enterprises are jointly and severally liable
for Danish taxes at source and income taxes.
Refer to the tax administration company Hempel
Invest A/S for the total amount of corporate tax
payable for the Group of jointly taxed companies.
Commitments
Contruction of a factory in China has been
finalised. Hence, the total capital expenditure
contracted for at the end of the reporting period
related to the construction of the factory, but
not recognised as liabilities, amounted to EUR 0
million (2022: 6 million).
The consolidated Hempel Foundation
has committed a total of EUR 70,8 million
investment in other securities.
As of December 31, 2023 the remaining
commitment is EUR 36,6 million.
For the purpose of presenting the statement of
cash flows, non-cash items with effect on the
statement of profit and loss must be reversed
to identify the actual cash flow effect from the
statement of profit and loss. The adjustments
are specified as follows:
5.1 Fee to the auditors appointed at the General Meeting 5.3 Contingent liabilities and other commitments
5.2 Adjustment for non-cash items
(EUR m) 2023 2022
Audit fee 2 2
Tax advice 1 1
Other fees - 1
Total 3 4
(EUR m) 2023 2022
Amortisation,
depreciation and
impairment
149 110
Provisions 13 - 4
Loss from
divestment of
discontinued
operation
10 -
Gains and losses
on the sale of fixed
assets
- - 3
Hyperinflation 5 8
Total 177 111
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5.5 Related parties
Related parties and transactions Basis
Related parties:
Hempel’s Employee Foundation, Amaliegade 8, 1256 Copenhagen K, Denmark Related party
Hempel’s Cultural Foundation, Amaliegade 8, 1256 Copenhagen K, Denmark Related party
Hempel’s Employee Foundation of 2017, Lundtoftegårdsvej 91, 2800 Kgs. Lyngby, Denmark Related party
Transactions:
All related-party transactions were carried out at arm’s length
No events occurred after the balance sheet
date that could have a material impact on the
company’s financial results, assets, liabilities
or equity.
5.4 Events after the reporting period
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5.6 The Hempel Group
Location Name Currency Ownership
Denmark Hempel A/S DKK 100%
Argentina Hempel Argentina S.R.L. ARS 100%
Australia Hempel (Australia) Pty. Ltd. AUD 100%
Australia Hempel NewCo (Australia) Pty. Ltd. AUD 100%
Australia Hempel (Wattyl) Australia Pty. Ltd. AUD 100%
Australia Hempel (Wattyl) New Zealand Ltd. AUD 100%
Austria Ostendorf GmbH EUR 100%
Bahrain Hempel Paints (Bahrain) S.P.C. BHD 51%
Brazil Hempel Tintas do Brasil Ltda BRL 100%
Canada Farrow & Ball Canada Limited CAD 100%
Canada Hempel (Canada) Inc. CAD 100%
Chile Pinturas Hempel Chile SpA CLP 100%
China Hempel North Asia Holding Co., Ltd CNY 100%
China Hempel (Hong Kong) Limited HKD 100%
China Hempel (China) Limited HKD 100%
China Hempel (Kunshan) Coatings Ltd. CNY 100%
China Hempel (Yantai) Coatings Ltd. CNY 100%
China Hempel (Guangzhou) Coatings Ltd. CNY 100%
China Hempel (Zhangjiagang) Coatings Ltd. CNY 100%
Croatia Hempel Coatings (Croatia) Ltd. HRK 100%
Cyprus Hempel Coatings (Cyprus) Limited EUR 100%
Czech Republic Hempel (Czech Republic) s.r.o. CZK 100%
Denmark Brifa Maling A/S DKK 100%
Denmark Brænderupvænge ApS DKK 100%
Denmark Frontier Innovation ApS DKK 100%
Denmark Hempel Administration ApS DKK 100%
Denmark Hempel Decorative Paints A/S DKK 100%
Denmark Hempel Invest A/S DKK 100%
Indonesia P.T. Hempel Indonesia IDR 100%
Ireland Crown Paints Ireland Limited EUR 100%
Italy Hempel (Italy) S.r.l. EUR 100%
Kenya Hempel Paints Kenya Company Limited KES 100%
Korea Hempel Korea Co. Ltd. KRW 100%
Kuwait Hempel Paints (Kuwait) K.S.C.C. KWD 51%
Location Name Currency Ownership
Malaysia Hempel (Malaysia) Sdn. Bhd MYR 100%
Malaysia Hempel Manufacturing (Malaysia) Sdn. Bhd. MYR 100%
Mexico Pinturas Hempel de Mexico S.A. de C.V. MXN 100%
Morocco Hempel Maroc SARL MAD 100%
New Zealand Hempel (New Zealand) Ltd NZD 100%
Norway Hempel Norway AS NOK 100%
Oman Hempel (Oman) L.L.C OMR 25%
Oman Hempel Manufacturing LLC OMR 25%
Peru Hempel Pinturas Del Perú S.A.C. PEN 100%
Poland Hempel Paints (Poland) S.p. z o.o. PLN 100%
Portugal Hempel (Portugal) Lda EUR 100%
Qatar Hempel Paints (Qatar) W.L.L. QAR 28%
Russia Joint Stock Company Hempel RUB 100%
Saudi Arabia Hempel Paints (Saudi Arabia) W.L.L. SAR 51%
Saudi Arabia Painting Materials and Equipment Centre Co. LTD SAR 26%
Singapore Hempel (Singapore) Pte. Ltd. SGD 100%
South Africa Hempel Paints South Africa (Pty) Ltd. ZAR 100%
Spain Pinturas Hempel SAU EUR 100%
Sweden Hempel (Sweden) AB SEK 100%
Switzerland Hempel Schweiz AG CHF 100%
Switzerland J.W. Ostendorf (Schweiz) AG CHF 100%
Syria Hempel Paints (Syria) W.L.L. SYP 43%
Taiwan Hempel (Taiwan) Co., Ltd. TWD 100%
Thailand Hempel (Thailand) Ltd. THB 100%
Denmark Hempel Invest II ApS DKK 100%
Denmark HF (Denmark) A/S DKK 100%
Denmark Hempel Ejendomme DKK 100%
Denmark HSA (Danmark) A/S DKK 100%
Denmark Keldskov ApS DKK 100%
Ecuador Hempel Ecuador S.A. USD 100%
Egypt Hempel Coatings (Egypt) LLC EGP 100%
Egypt Hempel Egypt L.L.C. EGP 100%
Egypt Hempel Paints Egypt LLC EGP 99%
Finland OY Hempel (Finland) AB EUR 100%
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5.6 The Hempel Group — continued
Location Name Currency Ownership
France Hempel (France) SAS EUR 100%
France BB Participations SAS EUR 100%
France B.B Fabrications SAS EUR 100%
France Bontemps-Bonnarme SAS EUR 100%
France Capcouleurs SAS EUR 100%
France Cap Couleurs Brignoles SAS EUR 100%
France Cap Couleurs Distribution SAS EUR 100%
France Cap Couleurs Est SAS EUR 100%
France Cap Couleurs Gestion SAS EUR 100%
Germany Farrow & Ball DE GmbH EUR 100%
Germany Hempel (Germany) GmbH EUR 100%
Germany Hempel Beteiligungsgesellschaft GmbH EUR 100%
Germany J.W. Ostendorf GmbH & Co. KG* EUR 100%
Germany Ostendorf-Beteiligungs-GmbH EUR 100%
Germany FLT Handel & Service GmbH EUR 100%
Germany Brand.IQ GmbH EUR 100%
Germany Rottkamp Immoblilien GmbH & Co. KG* EUR 100%
Germany Rottkamp Immobilien Verwaltung GmbH EUR 100%
Greece Hempel Coatings (Hellas) Single Member S.A. EUR 100%
India Hempel Paints (India) Private Limited INR 100%
Iraq Hempel (Iraq) Ltd OBS 31%
The Netherlands Hempel (The Netherlands) B.V. EUR 100%
The Netherlands Hempel Industrial B.V. EUR 100%
Turkey Hempel Coatings San. ve Tic. Ltd. Sti. TRY 100%
UK Crown Brands Limited GBP 100%
UK Crown Paints Limited GBP 100%
UK Crown Paints Group Limited GBP 100%
UK Crown Paints Holdings Limited GBP 100%
UK FB Ammonite Limited GBP 100%
UK FB Brassica Limited GBP 100%
UK FB Brinjal Limited GBP 100%
UK FB Calluna Limited GBP 100%
UK Farrow & Ball Holding Limited GBP 100%
UK Farrow & Ball Limited GBP 100%
Location Name Currency Ownership
UK Hempel Decorative Paints Limited GBP 100%
UK Hempel UK Ltd. GBP 100%
UK Reebor Limited GBP 1%
UK Ostendorf U.K. Ltd. GBP 100%
Ukraine Hempel Ukraine LLC UAH 100%
United Arab Emirates Hempel Paints Company Abu Dhabi L.L.C. AED 24%
United Arab Emirates Hempel Paints Emirates L.L.C. AED 49%
USA Farrow & Ball Inc. USD 100%
USA Hempel (USA), Inc. USD 100%
USA Jones-Blair Company, LLC USD 100%
Vietnam Hempel Vietnam Company Limited VND 100%
J.W. Ostendorf GmbH & Co. KG and Rottkamp Immobilien GmbH & Co. KG are exempt from their obligation to prepare,
have audited and disclose annual financial statements and a management report in accordance with the regulations
applicable to partnerships pursuant to Section 264b of the German Commercial Code (HGB).
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5.7 Financial definitions
Financial ratios have been calculated as follows:
Organic growth =
Organic revenue
Revenue in comparative period
Organic growth is defined as growth from one year to the next, based on values in fixed
currencies for both years excluding mergers, acquisitions and divestments, etc.
Gross margin =
Gross profit
Revenue
EBITDA margin =
EBITDA
Revenue
EBITDA margin, adjusted =
EBITDA, adjusted
Revenue
EBITDA = Operating profit (and loss) before impairment, amortisation and depreciation
EBITDA, adjusted = EBITDA before special items and before adjustment for hyperinflation according to IAS 29
Operating profit margin =
Operating profit (loss)
Revenue
Return on invested capital (ROIC) =
12 month operating profit less effective tax rate + Special items
(∑
i=T
Invested capital) / 12
i=T–12
Invested capital =
Intangibles + property, plant and equipment + inventories + receivables
– provisions – trade payables – other payables
Equity ratio =
Shareholders’ equity
Total assets
Leverage ratio =
Net interest-bearing debt
EBITDA before special items (incl. full-year figures from acquisitions)
Net interest-bearing debt =
Overdraft facilities + bank loans, etc. + interest-bearing payables to Group enterprises
+ lease liabilities - cash at bank and in hand
Free cash flow = Total net cash generated from operating activities less net cash used in investing activities
Cash conversion =
Total net cash flows from operating activities before financial items and tax
Total EBITDA
Financial ratios have been calculated as follows:
Accounts receivable days =
Accounts receivable x 90
Revenue (last 3 months)
Accounts payable days =
Accounts payable x 90
Cost of goods sold + change in inventory (last 3 months)
Inventory days =
Inventory x 90
Cost of goods sold (last 3 months)
Average net working capital days = Accounts receivable days + inventory days – accounts payable days (12 months average)
The following key figures are calculated as follows (EUR m) 2023 2022
Operating profit 188 113
Amortisation, depreciation and impairment 143 100
EBITDA = 331 213
Special items, c.f. note 2.4 7 30
Adjustment for hyperinflation according to IAS 29 5 8
EBITDA, adjusted = 333 235
The following key figures are calculated as follows:
Borrowings 1,121 1,049
Lease liabilities 107 121
Cash - 223 - 186
Net interest-bearing debt = 1,005 984
EBITDA, adjusted 333 235
Adjustment for hyperinflation according to IAS 29 - 5 - 8
EBITDA from 1 January to date of acquisition for acquired companies - 1
EBITDA before special items = 331 213
Leverage ratio = 3.0 4.6
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Hempel Foundation financial statements
Primary statements
Key figures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
Income statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
Balance sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
Statement of changes in equity . . . . . . . . . . . . . . . . . . . . 116
Notes
1. Basis of preparation
1.1 General accounting policies . . . . . . . . . . . . . . . . . . . 117
2. Results for the year
2.1 Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
2.2 Employee costs . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
2.3 Income from investments in subsidiaries . . . . . . . . . . 120
2.4 Income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
3. Operating assets and liabilities
3.1 Property, plant and equipment . . . . . . . . . . . . . . . . . 121
3.2 Other securities and investments . . . . . . . . . . . . . . . 122
3.3 Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
3.4 Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
3.5 Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
4. Capital structure and financing items
4.1 Base capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
4.2 Financial risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
4.3 Net financials . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
4.4 Cash and cash equivalents, net . . . . . . . . . . . . . . . . . 124
4.5 Bank loans, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
5. Other disclosures
5.1 Related parties and ownership . . . . . . . . . . . . . . . . . 126
5.2 Investments in subsidiaries . . . . . . . . . . . . . . . . . . . 127
5.3 Contingent liabilities and other financial obligations . . . 127
5.4 Events after the reporting period . . . . . . . . . . . . . . . . 127
5.5 Financial definitions . . . . . . . . . . . . . . . . . . . . . . . . 127
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Key figures
(EUR m) 2023 2022 2021 2020 2019
Income statement
Revenue 5 3 3 2 2
EBITDA 1 1 1 - -
Depreciation and amortisation 2 2 2 1 6
Operating profit - 1 - 1 0 - 1 - 6
Income from investments in subsidiaries - 14 - 21 55 45 60
Net financials 27 - 24 23 5 15
Profit before tax 12 - 46 78 49 69
Net profit for the year 12 - 46 78 49 69
Financial positions
Balance sheet total 778 848 945 855 855
Equity 713 763 867 778 778
Investment in tangible assets - 16 - 6 18
Cash flows
Operating activities * * 3 - 1 0
Investing activities * * 5 17 - 59
Financing activities * * - 8 - 10 - 9
Change in cash and cash equivalents * * - 7 - 69
Employees
Average number of employees 13 12 9 8 8
Donations
Donations for the year 23 21 20 15 21
Ratios
Solvency ratio 91.6 90.0 91.8 91.1 91.0
Return on equity 1.6 - 5.6 9.5 6.5 9.2
* With reference to section 86 of the Danish Financial Statements Act, the Hempel Foundation
does not prepare cash flow statements for the years 2022-2023, as the Foundation is included
in the consolidated cash flow statement on page 72.
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Income statement
Note (EUR m) 2023 2022
2.1 Revenue 5 3
Gross profit 5 3
Distribution expenses - -
Administrative expenses - 6 - 5
2.3 Income from investments in subsidiaries - 14 - 21
4.3 Financial income 33 12
4.3 Financial expenses - 6 - 35
Profit/loss before tax 12 - 46
2.4 Tax on profit/loss for the year - -
Net profit/loss for the year 12 - 46
(EUR m) 2023 2022
Proposed distribution of profit
Donations for the year 23 21
Reserve for net revaluation under the equity method - 14 - 21
Retained earnings 3 - 46
Proposed distribution of profit 12 - 46
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Balance sheet
31 December
Note (EUR m) 2023 2022
Assets
Land and buildings 16 40
Other fixtures and fittings, tools and equipment - 1
Property, plant and equipment in progress - -
Prepayments for property, plant and equipment - 16
3.1 Property, plant and equipment 16 57
5.2 Investments in subsidiaries 551 548
3.2 Other investments 202 188
Fixed asset investments 753 736
Fixed assets 769 793
3.4 Trade receivables - -
3.4 Receivables from group enterprises 2 50
3.4 Other receivables - 2
Foundation tax 1 -
3.3 Prepayments - -
Receivables 3 52
Cash at bank and in hand 6 3
Current assets 9 55
Assets 778 848
Note (EUR m) 2023 2022
Liabilities and equity
4.1 Capital base 5 5
Reserve for net revaluation under the equity method 492 544
Distribution framework 30 30
Retained earnings 186 184
Equity 713 763
Provisions for pensions and similar obligations - -
Provisions - -
Credit institutions - 16
4.5 Long-term debt - 16
Credit institutions - 1
Trade payables 1 -
Payables to group enterprises - -
Other payables 64 68
Short-term debt 65 69
Debt 65 85
Liabilities and equity 778 848
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Statement of changes in equity
31 December
Note (EUR m) Capital base Reserve for
net revaluation
under the equity
method
Distribution
framework
Retained
earnings
Total
Equity at 1 January 5 544 30 184 763
Exchange adjustments - - 38 0 - 1 - 39
Grants for the year - - - 23 - - 23
Net profit/loss for the year - - 14 23 3 12
4.1 Equity at 31 December 2023 5 492 30 186 713
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General
This section gives a summary of the significant
accounting policies. Further accounting policies
are presented in the specific notes.
The Annual Report of the Hempel Foundation
for 2023 have been prepared in accordance with
the provisions of the Danish Financial Statements
Act (Årsregnskabsloven) applying to large enter-
prises of reporting class C. The Annual Report for
2023 is presented in EUR millions.
The accounting policies applied remain
unchanged from previous years.
Recognition and measurement
Revenues are recognised in the income
statement as earned. Furthermore, value
adjustments of financial assets and liabilities
measured at fair value or amortised costs are
recognised.
Moreover, all expenses incurred to achieve
the earnings for the year are recognised in the
income statement, including depreciation,
amortisation, impairment losses and provisions
as well as reversals due to changed accounting
estimates of amounts that have previously been
recognised in the income statement.
Assets are recognised in the balance sheet when
it is probable that future economic benefits
attributable to the asset will flow to the Hempel
Foundation, and the value of the asset can be
measured reliably.
Liabilities are recognised in the balance sheet
when it is probable that future economic benefits
will flow out of the Hempel Foundation, and the
value of the liability can be measured reliably.
Assets and liabilities are initially measured at
cost. Subsequently, assets and liabilities are
measured as described for each item below.
Recognition and measurement take into account
predictable losses and risks occurring before the
presentation of the Annual Report that confirm
or invalidate affairs and conditions existing at
the balance sheet date. Euro is used as the
presentation currency. All other currencies are
regarded as foreign currencies.
Foreign currency translation
Functional and presentation currency
Items included in the financial statements of
each of the Hempel Foundation entities are
measured using the currency of the primary
economic environment in which the entity
operates (functional currency).
Translation of transactions and balances
Transactions in foreign currencies are translated
at the exchange rates on the transaction dates.
Gains and losses arising from differences
between the transaction date rates and the
rates on the payment dates are recognised in
financial income and expenses in the income
statement. Where foreign exchange transactions
are considered hedging of future cash flows,
the value adjustments are recognised directly in
equity.
Receivables, payables and other monetary items
in foreign currencies that have not been settled
at the balance sheet date are translated at the
exchange rates at the balance sheet date. Any
differences between the exchange rates at the
balance sheet date and the transaction date
rates are recognised in financial income and
expenses in the income statement.
Fixed assets acquired in foreign currencies are
measured at the transaction date rates.
Translation of Group companies
For foreign subsidiaries with a functional
currency other than the euro, the income
statements are translated into euro at the
exchange rates prevailing at the end of the
reporting period for balance sheet items and
at average monthly exchange rates for income
statement items in so far these do not deviate
materially from the actual exchange rates at the
transaction date.
All exchange differences are recognised in
the income statement for the year, except for
exchange rate adjustment of investments in
subsidiaries arising from:
– foreign exchange adjustments arising from
the translation of the opening balance of
equity of foreign subsidiaries at the exchange
rates on the balance sheet date
– the translation of foreign subsidiaries’ income
statements from monthly average exchange
rates to exchange rates at the end of the
reporting period
These specific exchange rate adjustments
are recognised directly in equity. If the foreign
entity is a non-wholly owned subsidiary, the
relevant proportion of the translation difference is
allocated to the minority interest.
1 Basis of preparation
1.1 General accounting policies
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Other operating income
Other operating income and operating expenses
comprise items of a secondary nature relative
to the Hempel Foundation’s core activities,
including gains or losses on the sale of fixed
assets.
Other external expenses
Other external expenses include the year’s
expenses relating to the Hempel Foundation’s
core activities, including expenses relating to
administration, premises, etc.
Cash flow Statement
With reference to section 86 of the Danish
Financial Statements Act, the Hempel Foundation
does not prepare cash flow statement.
1.1 General accounting policies — continued
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2 Results for the year
Accounting policies
Revenue from rent income is recognised in
the income statement in the periods the rent
concerns.
Revenue is recognised exclusive of VAT and net
of discounts relating to sales.
2.1 Revenue
Accounting policies
Wages, salaries, social security contributions,
annual leave and sick leave, bonuses and
non-monetary benefits are recognised in the
year in which the associated services are ren-
dered by employees of the Hempel Foundation.
Where the Hempel Foundation provides long-
term employee benefits, the costs are accrued
to match the rendering of the services by the
employees concerned.
2.2 Employee costs
Staff Expenses
(EUR m)
2023 2022
Wages and salaries 2 1
Pensions - -
Other social security expenses - -
Total 2 1
Including remuneration to the:
Average number of employees 13 12
Remuneration for Board of
Trustees and Management 2023 (EUR t)
Hempel Foundation Hempel Invest Hempel A/S
Remuneration Commitees Car Remuneration Commitees Remuneration Commitees Total
Richard Sand 101 - 41 34 5 191 94 466
Leif Jensen 50 9 - 27 11 64 68 229
Kim Dam- Johansen 34 3 - 20 5 - - 62
Birgitte Hagemann Snabe 34 3 - 20 - - - 57
Lars Aaen 34 3 - 20 5 - - 62
Britt Meelby Jensen 34 - - 20 - - - 54
Claus Juul Petersen 34 - - 20 - - - 54
Henrik Bach Falkenberg 11 - - 7 - - - 18
Morten Schaarup 11 - - 7 - - - 18
Lone Borre 22 - - 13 - - - 36
Tine Gundersen 22 - - 13 - - - 36
Total 386 17 41 201 27 255 162 1090
Anders holm 257
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2.4 Income tax
Accounting policies
The items ‘Income from investments in sub-
sidiaries’ in the income statement include the
proportionate share of the profit for the year less
depreciation of intercompany profits.
2.3 Income from investments
in subsidiaries
(EUR m) 2023 2022
Profit before tax 3 - 8
Tax for the year - 17 - 13
Profit after tax - 14 - 21
(EUR m) 2023 2022
Total tax - -
Total - -
Current tax for the year - -
Deferred tax for the year - -
Adjustment in respect of previous years - -
Total - -
Income tax
Accounting policies
Income tax for the year consists of current tax
for the year and deferred tax for the year. The tax
attributable to the profit for the year is recog-
nised in the income statement, whereas the tax
attributable to equity transactions is recognised
directly in equity.
Deferred tax assets and liabilities
Accounting policies
Deferred income tax is measured using the bal-
ance sheet liability method in respect of tempo-
rary differences arising between the tax bases of
assets and liabilities and their carrying amounts
for financial reporting purposes on the basis of
the intended use of the asset and settlement of
the liability, respectively.
Deferred tax assets, including the tax base of tax
loss carryforwards, are measured at the value at
which the asset is expected to be realised, either
by eliminating the tax on future earnings or by
setting off against deferred tax liabilities within
the same legal tax entity.
Deferred tax is measured on the basis of the tax
rules and tax rates that will be effective under the
legislation at the balance sheet date when the
deferred tax is expected to crystallise as current
tax. Any changes in deferred tax due to changes
to tax rates are recognised in the income
statement.
Current tax receivables and liabilities
Accounting policies
Current tax liabilities and receivables are
recognised in the balance sheet as the expected
taxable income for the year adjusted for tax on
taxable incomes for prior years and tax paid on
account.
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3 Operating assets and liabilities
3.1 Property, plant and equipment
Property, plants, and equipment are measured at
a cost less than accumulated depreciation and
less than any accumulated impairment losses.
Costs comprise the cost of acquisition and
expenses directly related to the acquisition up
until the time when the asset is ready for use.
In the case of assets of own construction, costs
comprise direct and indirect expenses for labour,
materials, components and sub-suppliers.
Interest expenses on loans raised directly for
financing the construction of property, plant
and equipment are recognised in costs over the
period of construction. All indirectly attributable
borrowing expenses are recognised in the
income statement.
Depreciation based on costs reduced by any
residual value is calculated on a straight-line
basis over the expected useful lives of the assets,
which are:
– Buildings (max.) 30-50 years
– Other fixtures and fittings,
tools and equipment 3-10 years
Land is not depreciated
Leasehold improvements are included in other
operating equipment and are recognised at
cost and depreciated over the term of the lease;
however, not exceeding 10 years.
Impairment of fixed assets
The carrying amounts of property, plant and
equipment are reviewed on an annual basis
to determine whether there is any indication
of impairment other than that expressed by
amortisation and depreciation.
If so, the asset is written down to its lower
recoverable amount.
Property, plant and equipment (EUR m) Land and
buildings
Other fixtures
and fittings, tools
and equipment
Property, plant
and equipment
in progress
Cost at 1 January 52 5 16
Exchange adjustment - - -
Additions for the year - - -
Disposals for the year - 47 - 1 -
Transfers for the year 16 - - 16
Cost at 31 December 20 4 -
Impairment losses and depreciation at 1 January 11 4 -
Depreciation for the year 1 1 -
Reversal of impairment and depreciation of sold assets - 7 - 1 -
Impairment losses and depreciation at 31 December 5 4 -
Carrying amount at 31 December 16 - -
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3.2 Other securities and investments
Accounting policies
Other securities and capital investments, rec-
ognised under fixed assets, consist of listed
and non-listed bonds and shares measured at
fair value on the balance sheet date. The fair
value of listed shares and bonds is calculated on
the latest listed closing quote. The fair value of
investments in other securities and investments
that are not traded often is measured with ref-
erence to the latest publicly announced equity.
Realised and unrealised capital gains and capital
losses are included in net financials in the income
statement.
The investments are classified in accordance
with the fair value hierarchy:
Level 1: Fair Value can be measured using
quoted market prices in an active
market for identical assets and
liabilities.
Level 2: Fair Value can be measured using
observable inputs other than quoted
market prices.
Level 3: Fair Value is measured using
unobservable inputs.
(EUR m) 2023 2022
Costs, beginning of year 207 197
Additions for the year 98 106
Disposals for the year - 97 - 97
Exchange rate at year-end rate - -
Cost at 31 December 208 206
Net revaluations, beginning of year - 18 13
Net Revaluations for the year 12 - 31
Exchange rate at year-end rate - -
Net revaluations end of year - 6 - 18
Carrying amount at 31 December 202 188
Investment category (EUR m) Fair value
hierarchy level
Fair value as of
31 December
2023
Net revaluation
recognised
through profit
and loss
Bonds (listed) 1 116 5
Shares (listed) 1 77 7
Other investments (listed) 1 8 -
Other investments (non-listed) 3 1 -
Total 202 12
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3.3 Prepayments 3.5 Other liabilities3.4 Receivables
Accounting policies
Prepayments comprise prepaid expenses relat-
ing to rent, insurance premiums and interest.
Accounting policies
Other liabilities are measured at amortised cost,
substantially corresponding to the nominal value.
Other liabilities comprise donations not yet paid,
employee costs payable, VAT and duties payable,
accruals, other payables and fair values of deriva-
tive financial instruments.
Accounting policies
Receivables are measured in the balance sheet
below amortised cost and net realisable value,
which corresponds to a nominal value less than
the provisions for bad debts. Provisions for bad
debts are determined on the basis of an indi-
vidual assessment of each receivable and, in
respect of trade receivables, a general provision
is also made based on the Hempel Foundation’s
experience from previous years.
Receivables are recognised in the balance sheet
at amortised cost, which substantially corre-
sponds to the nominal value. Provisions for esti-
mated bad debts are made.
(EUR m) 2023 2022
Receivables of which due more than one year from the balance sheet date 2 52
Total 2 52
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4 Capital structure and financing items
4.1 Base capital
4.2 Financial risks
The base capital of the Foundation amounts
to DKK 35 million.
The Foundation has adopted a conservative
investment strategy and hence are not exposed
to financial risks other than what is considered
normal market risk.
4.3 Net financials
Accounting policies
Financial income and expenses are recognised in
the income statement at the amounts relating to
the financial year.
Financial income (EUR m) 2023 2022
Interest from subsidiaries 3 1
External interest income 1 1
Dividend 5 4
Realised and unrealised exchange gains 24 6
Total 33 12
Financial expenses (EUR m) 2023 2022
Other financial expenses 1 -
Exchange adjustments, expenses 5 35
Total 6 35
4.4 Cash and cash equivalents, net
Accounting policies
Cash and cash equivalents consist of cash at
the bank and in hand.
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4.5 Bank loans, etc.
Accounting policies
Fixed-interest loans, such as mortgage loans
and loans from credit institutions, are recognised
initially at fair value net of incurred transaction
costs and subsequently at amortised cost using
the effective interest method. The difference
between the proceeds initially received and
the nominal value is recognised as a financial
expense in the income statement over the loan
term.
Mortgage loans are measured at amortised cost,
which for cash loans corresponds to the remain-
ing loan. Amortised cost of debenture loans cor-
responds to the remaining loan calculated as the
underlying cash value of the loan at the date of
raising the loan adjusted for depreciation of the
price adjustment of the loan made over the terms
of the loan at the date of raising the loan.
Long-term bank borrowings etc. including short-term part (EUR m) 2023 2022
Due within 1 year - 1
Due within 1 to 5 years - 5
Due efter 5 years - 11
Total - 17
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5 Other disclosures
The Hempel Foundation had the following transactions
with related parties, (income)/expense:
5.1 Related parties and ownership
Related parties and ownership Basis
Controlling influence:
Hempel Invest A/S, Amaliegade 8, 1256 Copenhagen K, Denmark Related party
Subsidiaries owned by Hempel Invest A/S as specified in note 5.6 in the consolidated financial statements
Hempel Ejendomme A/S, Amaliegade 8, 1256 Copenhagen K, Denmark Related party
/subsidiary
Members of the Executive Board and Board of Directors of Hempel A/S and Hempel Invest A/S
as well as the Board of Trustees of the Hempel Foundation are also regarded as related parties.
For remuneration to the Board of Trustees, please refer to note 2.2 Employee costs.
Other related parties:
Hempel’s Employee Foundation, Amaliegade 8, 1256 Copenhagen K, Denmark Related party
Hempel’s Cultural Foundation, Amaliegade 8, 1256 Copenhagen K, Denmark Related party
Hempel’s Employee Foundation of 2017, Lundtoftegårdsvej 91, 2800 Kgs. Lyngby, Denmark Related party
Transactions:
All related-party transactions were carried out at arm’s length
(EUR m) 2023 2022
Hempel A/S:
Rent payments
- 3 - 3
Administrative servcies provided by the Hempel A/S
- -
Hempel Invest A/S:
Administrative servcies provided by the Hempel Foundation
- -
Interests
- 3 - 1
Keldskov ApS
Administrative servcies provided by the Hempel Foundation
- -
Brænderupvænge ApS
Administrative servcies provided by the Hempel Foundation
- -
Frontier Innovations ApS
Administrative servcies provided by the Hempel Foundation
- -
Hempel Invest II
Administrative servcies provided by the Hempel Foundation
- -
Hempel Administration ApS
Administrative servcies provided by the Hempel Foundation - -
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5.2 Investments in subsidiaries
Accounting policies
Investments in subsidiaries are recognised
and measured under the equity method. This
implies that the investments are measured in the
balance sheet at the proportionate ownership
share of the net asset value of the enterprises
with deduction or addition of shares of
unrealised intercompany profits and losses.
The total net revaluation of investments in
subsidiaries is transferred upon distribution
of profit to ‘Reserve for net revaluation under
the equity method’ under equity. The reserve
is reduced by dividends distributed to the
Foundation and adjusted for other equity
movements in subsidiaries.
Investments in subsidiaries (EUR m) 2023 2022
Cost at 1 January 4 4
Additions for the year 55 -
Cost at 31 December 59 4
Value adjustments at 1 January 544 668
Exchange adjustment - 38 - 37
Net profit/loss for the year - 14 - 21
Dividend to the Parent Company - - 67
Other adjustments - 1
Value adjustments at 31 December 492 544
Carrying amount at 31 December 551 548
Investments in subsidiaries are specified as follows: Place of registered office Share capital Ownership
Name
Hempel Invest A/S Copenhagen EUR 15,000,000 100%
Hempel Ejendomme A/S Copenhagen DKK 800,000 100%
5.3 Contingent liabilities and other financial obligations
5.4 Events after the reporting period
Other contingent liabilities
The Hempel Foundation has committed a total
of EUR 1.3 million investment in other securities.
As of December 31, 2023 the remaining
commitment is EUR 0.7 milliion.
No events have occurred after the balance sheet
date that could significantly affect the financial
position of the Hempel Foundation.
5.5 Financial definitions
Financial ratios have been calculated as follows:
EBITDA = Operating profit (and loss) before impairment, amortisation and depreciation
Solvency ratio =
Equity at year-end x 100
Total assets
Return on equity =
Net profit for the year x 100
Average equity
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Tel: +45 4527 3074
hempel.foundation@hempel.com