The Annual Report was adopted and approved
at the Annual General Meeting on 16 May
2023.
Chair
CVR-no. 28 11 39 51
Annual Report 2022
Annual Report
2022
TABLE OF CONTENTS
Management’s review
Executive review ................................................................................................................................................................................................... 2
Financial highlights and ratios ........................................................................................................................................................................ 4
Statutory reporting on corporate governance .............................................................................................................................................. 6
Risk management ............................................................................................................................................................................................... 10
Management’s statement on the annual report ......................................................................................................................................... 12
Independent auditor’s report .......................................................................................................................................................................... 13
Financial statements
Statement of comprehensive income ............................................................................................................................................................ 15
Balance sheet ...................................................................................................................................................................................................... 16
Statement of changes in equity ...................................................................................................................................................................... 18
Statement of cash flows .................................................................................................................................................................................. 19
Notes to financial statements
Basis of reporting ............................................................................................................................................................................................... 20
Earnings ................................................................................................................................................................................................................ 22
Risk management ............................................................................................................................................................................................... 23
Other financial notes ........................................................................................................................................................................................ 31
Working capital .................................................................................................................................................................................................. 34
Capital employed .............................................................................................................................................................................................. 41
Tax .......................................................................................................................................................................................................................... 46
Other notes........................................................................................................................................................................................................... 47
Annual Report 2022 EXECUTIVE REVIEW 2
EXECUTIVE REVIEW
STRONG PERFORMANCE WHILE BRINGING
BALANCE AND LIQUIDITY TO ENERGY
MARKETS
In 2022, the people of Danske Commodities worked with
determination and skill to navigate a European energy
supply crisis. A crisis that firmly underlined the need for
substantial investments in renewable energy and the vi-
tal role that trading companies play in connecting sup-
ply and demand through cross-border trading.
The first effects of the crisis emerged as early as Q4
2021 with supply shortages and substantial energy price
increases. This was caused by world economies bounc-
ing back from Covid-19 lockdowns faster than expected,
extreme weather events, political unrest, low gas stor-
age levels and underperforming deliveries of natural
gas from Russia into Europe.
There’s no doubt, however, that the main causes of the
high energy prices in 2022 were supply concerns and ac-
tual supply shortage in the wake of Russia’s invasion of
Ukraine. Prior to the invasion, 35-40% of the natural gas
consumed in Europe was imported from Russia, but dur-
ing 2022 Russian supply came to a complete halt, caus-
ing an unprecedented energy supply shortage in Europe
that was further exacerbated by heat, drought and low
wind production during the summer.
Danske Commodities strongly condemns the invasion
and the ensuing humanitarian crisis affecting millions
of innocent people. On the morning of the invasion, we
took immediate action and suspended all trading activ-
ities with Russian counterparties.
FINANCIAL ROBUSTNESS WAS KEY AS PRICES ROSE
As prices and volatility rose to historically high levels,
financial robustness became a key factor for energy
market participants to ensure a functioning energy mar-
ket and ultimately help cushion the unprecedented price
volatility.
Since becoming part of energy major Equinor in 2019,
Danske Commodities has strengthened its financial po-
sition. In 2022 that position was further improved by a
capital injection from Equinor of EUR 3.5 billion, ena-
bling us to continue our trading activities in high price
and high volatility scenarios, providing much needed li-
quidity to the energy markets.
Staying active in the markets proved especially im-
portant during the peak of the energy supply crisis, as
efficient energy markets curtail price spikes and help
ensure that we make the most out of the energy re-
sources available by constantly moving energy from
where there is a surplus to where it is needed most. This
not only strengthens security of supply, but also absorbs
the most extreme price shocks, thereby creating signifi-
cant societal value.
STRONG PERFORMANCE AND STRATEGIC PROGRESS
By combining a robust financial position with the
adaptability of our business model and the know-how of
our people, we delivered EUR 2.2 billion in adjusted EBT
(IFRS EUR 1.9 billion) for 2022, significantly exceeding
the expectations of EUR 0.2-0.3 billion. Adjusted gross
profit for the year was EUR 2.4 billion (IFRS EUR 2.1 bil-
lion), exceeding expected gross profit of EUR 0.3-0.4 bil-
lion. With this record result, the Group contributed with
EUR 439 million in company taxes in Denmark, making
Danske Commodities one of the biggest corporate tax
contributors in Denmark.
2022 was also a year of progress for our strategic objec-
tives within asset-backed trading and global expansion.
We grew our portfolio of flexible and renewables assets
by 25% and strengthened our systems platform, resulting
in an increase of average daily trades from 15,000 in
2021 to 25,000 in 2022. We also established offices in
Singapore and São Paolo, moving one step closer to our
long-term ambition of profitability across five conti-
nents, and we welcomed 165 new colleagues to the
Danske Commodities team.
It is a pleasure to see how many people have chosen to
work with us and utilise their skills to help find real so-
lutions to push the energy transition forward. Together,
we want to solve the challenges that arise as we move
towards increasingly decentralised and intermittent en-
ergy production.
PAVING THE WAY FOR MORE RENEWABLES
At Danske Commodities, we are proud to play a central
part in the energy transition by bringing renewables to
the market at scale and providing the flexibility needed
to meet the energy demands through our portfolio of gas
storages and dispatchable assets.
The energy supply crisis has made it evident that Europe
needs to free itself of its dependency on imported natu-
ral gas. While Europe was able to mitigate the effects of
the energy supply crisis in part by buying LNG on the
global markets, this is not a sustainable, long-term so-
lution due to increasing global demand. To meet energy
demands and reach climate targets, there is a need for
more investments in renewable energy production and
market participants like Danske Commodities have an
important part to play in making these investments via-
ble through trading, optimisation and balancing.
Annual Report 2022 EXECUTIVE REVIEW 3
EXECUTIVE REVIEW – CONTINUED
OUTLOOK: PRICES DECLINE, UNDERLYING CHALLENGES
REMAIN
At the end of 2022, prices returned to the levels they
were at prior to the invasion of Ukraine. High prices dur-
ing the year and a relatively warm winter at the end of
the year led to a considerable decrease in demand for
natural gas in Europe. At the same time, an increased in-
flow of LNG from global markets into Europe substituted
some of the natural gas previously imported from Rus-
sia. In combination, this remedied the immediate supply
issues, causing prices to drop, and we expect energy
prices and volatility to remain at lower levels com-
pared to 2022. Taking this into consideration, we expect
gross profit to be in the EUR 300-700 million range in
2023 and EBT to be in the EUR 200-600 million range in
2023.
Looking further ahead, we see that the continued build-
out of renewables will cause an increased need for bal-
ancing on a global scale, and in this context Danske
Commodities is well-positioned to capture value and
deliver an important part of the solution for tomorrow’s
energy system.
THE COMPANY’S MAIN ACTIVITY
Danske Commodities has built a successful business on
trading power and gas across borders. The Company’s
trading activities cover time-delimited markets from
forward to day-ahead and intraday. Using comprehen-
sive data sets, analytical capabilities, automation and
deep market knowledge, Danske Commodities turns
data into knowledge and knowledge into business. Every
day, the Company uses its market expertise, broad mar-
ket footprint and 24-hour trading setup to support en-
ergy producers and large-scale energy consumers
through tailor-made services for renewables producers,
flexible assets and energy suppliers.
Annual Report 2022 FINANCIAL HIGHLIGHTS 4
FINANCIAL HIGHLIGHTS AND RATIOS
ADJUSTED PERFORMANCE MEASURES
EUR '000 2022 2021 2020 2019
Gross turnover 67,014,434 32,311,321 11,844,042 10,046,074
Adjusted gross profit 2,405,560 325,472 96,292 101,265
Adjusted EBT 2,226,558 248,849 41,363 45,267
Adjusted equity 5,751,868 514,299 320,112 288,222
Ratios in %
Adjusted scalability 95.8% 78.6% 46.0% 46.2%
Adjusted return on capital employed 68.0% 42.3% 20.6% 36.2%
Further explanation of adjusted performance measures is outlined on page 5.
GROUP FIGURES
EUR '000 2022 2021 2020 2019 2018 *
Income statement
Trading income and revenue 6,441,796 2,451,083 791,683 791,474 9,376,686
Gross profit 2,064,951 475,666 126,402 110,178 123,472
Profit before financial income
1,955,380 394,127 54,312 52,559 71,826
Net financials -77,775 -6,922 -2,959 -1,538 -233
Profit before tax (EBT) 1,877,605 387,205 51,353 51,021 71,593
Profit for the year 1,467,206 302,909 40,207 39,786 55,967
Balance sheet
Balance sheet total 14,885,542 7,488,231 1,231,814 770,564 373,271
Equity 5,599,884 634,498 332,393 292,711 76,235
Cash flow statement
Cash flow from operating activities -2,222,907 -198,975 143,031 -75,812 50,490
Cash flow from investing activities -6,203 -3,332 -20,928 -91,899 -4,691
- hereof investments in intangible assets -3,078 -2,513 -21,725 -93,656 -1,303
- hereof investments in property, plant and
equipment
-3,125 -819 -915 -1,025 -2,058
Free cash flow -2,229,110 -202,307 122,103 -167,771 45,799
Cash flow from financing activities 2,294,669 1,404,048 -1,050 178,471 -85,634
Change in cash and cash equivalents for the year 39,836 1,204,523 119,397 10,760 -39,835
Cash and cash equivalents ** 1,424,501 1,384,665 180,142 60,745 69,545
Ratios in %
Scalability 94.7% 82.9% 43.0% 47.7% 58.2%
Return on capital employed 58.0% 58.7% 24.3% 39.9% 307.4%
Equity ratio 37.6% 8.5% 27.0% 38.0% 20.4%
Return on equity 47.1% 62.7% 12.9% 21.6% 61.5%
Average number of employees 374 338 319 281 267
Number of employees end of year 412 370 355 317 295
The ratios have been prepared in accordance with the definitions set out in note 8.5 in the financial statements.
** Due to a change in accounting principles regarding the treatment of restricted cash in 2022, comparative figures for
2018-2021 has been amended accordingly. See description of the change in section 'Changes to accounting policies in
2022' in note 1.1.
* Due to a change in accounting principles from Danish GAAP to IFRS, key figures and ratios for 2018 are not
comparable with figures for 2019-2022. Restatement of 2018 figures would not affect gross profit but mainly impact
trading income and revenue as well as balance sheet total.
Annual Report 2022 FINANCIAL HIGHLIGHTS 5
ADJUSTED PERFORMANCE MEASURES
Gross turnover, adjusted gross profit and adjusted EBT
are used as alternatives to the financial figures pre-
pared in accordance with IFRS. These adjusted perfor-
mance measures are used as the primary performance
measure internally in Danske Commodities based on the
assessment that adjusted performance measures better
reflect the business performance.
Adjusted EBT is substituted for adjusted EBIT in 2022 due
to changes in the capital structure of the company and
changed market conditions making EBT the most rele-
vant of the two financial figures in 2022 and going for-
ward. Comparative figures from 2019-2021 are changed
accordingly.
In 2022, adjusted performance measures are expanded
to include adjusted equity and the ratios adjusted
scalability and adjusted return on capital employed to
reflect the performance measures used for internal busi-
ness performance reporting to management.
GROSS TURNOVER
Revenue from trading activities is presented net under
IFRS. To provide readers of the financial statements
with an insight into Danske Commodities’ gross trading
and revenue activities, a gross turnover presentation is
included as a part of the adjusted performance
measures. Gross turnover reflects sales contracts for
physical delivery of non-financial items consisting of
power, gas and certificates, whether or not it is consid-
ered to be a part of trading activities. The gross turnover
amounts to EUR 67,014 million in 2022 compared to the
IFRS trading income and revenue of EUR 6,442 million.
The calculation of the adjusted gross profit and ad-
justed EBT is based on the corresponding IFRS figures.
These are adjusted for the two components, market
value of gas storages and reclassification of amortisa-
tions.
MARKET VALUE OF GAS STORAGES
IFRS requires that trading inventories measured at fair
value uses period-end spot prices. In the internal perfor-
mance measurement reporting Danske Commodities
measures gas storages at an approximated market
value. The market value of the gas storages is valuated
using a storage planning model with multiple inputs,
which mainly are related to storage capacity and physi-
cal restrictions from the underlying gas storage con-
tract, forward prices and gas volume in storage. The dif-
ference between this gas storage market value and the
IFRS gas inventory value is reflected in the adjustment
to IFRS gross profit and IFRS EBT.
RECLASSIFICATION OF AMORTISATIONS
In 2019 and 2020, Danske Commodities entered into sev-
eral PPAs and gas storage contracts which were already
in operation and favourable, given current market terms.
These contracts were recognised as intangible assets
and amortised over the duration of each contract. As the
amortisations are considered an important part of the
performance of these contracts, the amortisations are
reclassified from the financial statement line item ‘de-
preciation and amortisation’ to ‘gross profit’.
As shown in the tables, IFRS gross profit amounted to
EUR 2,065 million in 2022 and is adjusted upward by EUR
349 million in relation to gas storages and downward
by EUR 8 million in reclassification of amortisations,
bringing the adjusted gross profit to EUR 2,406 million.
IFRS EBT is EUR 1,878 million and adjusted only by the
EUR 349 million gas storage adjustment, the adjusted
EBT is EUR 2,227 million.
Adjusted equity is IFRS equity adjusted for the accumu-
lated after tax income statement effect of the gas stor-
age adjustment specified in table above. With IFRS eq-
uity of EUR 5,600 million in 2022, an accumulated gas
storage adjustment of EUR 195 million minus 22% tax,
the adjustment amounts to EUR 152 million and an ad-
justed equity of EUR 5,752 million.
IFRS VS. ADJUSTED PERFORMANCE MEASURES
2022
EURm IFRS
Reclas-
sification
Gas
storage
Adjusted
Gross profit 2,065.0 -8.3 349.0 2,405.7
Other operating
income
1.5 1.5
External expenses -23.1 -23.1
Staff costs -74.5 -74.5
Amortisations -13.5 8.3 -5.2
EBIT 1,955.4 0.0 349.0 2,304.4
Net financials -77.8 -77.8
EBT 1,877.6 0.0 349.0 2,226.6
2021
EURm IFRS
Reclas-
sification
Gas
storage
Adjusted
Gross profit 475.7 -11.8 -138.4 325.5
External expenses -13.4 -13.4
Staff costs -51.6 -51.6
Amortisations -16.5 11.8 -4.7
EBIT 394.2 0.0 -138.4 255.8
Net financials -6.9 -6.9
EBT 387.3 0.0 -138.4 248.9
Annual Report 2022 STATUTORY REPORTING ON CORPORATE GOVERNANCE 6
Annual Report 2022 STATUTORY REPORTING ON CORPORATE GOVERNANCE 7
CORPORATE SOCIAL RESPONSIBILITY – CONTINUED
Annual Report 2022 STATUTORY REPORTING ON CORPORATE GOVERNANCE 8
CORPORATE SOCIAL RESPONSIBILITY – CONTINUED
Annual Report 2022 STATUTORY REPORTING ON CORPORATE GOVERNANCE 9
Annual Report 2022 RISK MANAGEMENT 10
RISK MANAGEMENT
MARKET RISK
Market risk is the risk of the value of open positions
changing as a result of fluctuating market conditions.
Danske Commodities’ market risk arises in both com-
modity and financial markets with fluctuating energy
prices, production and consumption balancing and for-
eign exchange rates constituting key risk factors. Due to
the potential impact on the Company’s earnings,
Danske Commodities continuously monitors and stress
tests volatility and commodity price developments.
Market risk is managed as set out in the Market Risk Pol-
icy and the Market Risk Manual. The Market Risk Policy
defines the allowable products, regions and commodi-
ties whereas the Market Risk Manual provides the spe-
cific mandates within the overall market risk appetite.
The market risk appetite of Danske Commodities sets
out the overall risk limits defined as the allocated risk
capital, and the aggregation of the different mandates
is kept within those limits, ensuring that the Company
monitors its risk profile at all times. Open positions are
only accepted if mandates have been established. All
open trading positions are monitored by a second line
of defence by the Risk Management team.
All mandates across the business are reviewed regularly
and updated to ensure that they continue to comply
with the overall risk appetite and are in sync with
changing market conditions. As part of the monitoring
process, Danske Commodities operates several warning
levels and stop-loss limits to ensure timely action if a
mandate is violated. Structured product control, model
validations and additional stress tests and risk
measures, such as Value-at-Risk, are used as an integral
part of risk management for relevant products and ac-
tivities.
Foreign exchange risk, to which the daily commercial
business is exposed, is mitigated and hedged on a daily
basis. As foreign exchange risk is not a core business for
Danske Commodities, a hedging strategy anchored in
the Treasury team is pursued to mitigate the foreign ex-
change risk. Hence, currency risk is an insignificant
component of the overall risk appetite at Danske Com-
modities.
CREDIT RISK
Credit risk is the risk of financial loss resulting from a
counterparty failing to meet contractual obligations.
Danske Commodities manages credit risk through a
clearly defined framework of policies and procedures
approved by the Board of Directors and defined by the
Risk Management team.
The financial strength and creditworthiness of a poten-
tial counterparty is assessed before the Company enters
any contract and subsequently the allowed credit line is
monitored daily. If required, security is requested before
or during the contract lifespan.
Thorough Know Your Customer (KYC) and sanctions
screening processes are performed according to the
agreed policy. The KYC process is reviewed regularly,
and sanctions screening is done on a continual basis.
OPERATIONAL AND IT RISK
Danske Commodities is exposed to operational and IT
risks with possible impact on license to operate, finan-
cial losses or near misses. Operational and IT risks can
broadly be defined as risks of inadequate or failed inter-
nal processes, human errors, system failures or from ex-
ternal events.
Danske Commodities continues to mature and improve
operational and IT risk management to make it an inte-
gral part of the Company’s efforts to reduce the overall
risk exposure.
Cybersecurity training is mandatory for all employees
and IT risk controls are further strengthened as part of
SOX compliance. The Danish Energy Agency has audited
Danske Commodities’ crisis management business con-
tinuity planning and obligations as a balancing respon-
sible party in the energy market.
Crisis management and business continuity processes,
procedures and tooling are updated and exercised on a
monthly and biannual basis.
LIQUIDITY RISK
Liquidity risk is the risk of Danske Commodities not be-
ing able to meet its liabilities towards counterparties.
Danske Commodities is considered to have low liquidity
risk, being under the ownership of Equinor and given its
solid capital structure. Cash flows from operations,
cash reserves and credit facilities are key aspects that
for several years have ensured stable and adequate li-
quidity. Add to that the bolstering of equity through two
capital injections by Equinor in 2019 and 2022 alongside
access to internal credit facilities, also provided by
Equinor.
Danske Commodities measures its overall liquidity, con-
sisting of free liquidity, including cash collateral, other
deposits and forecasted cash flows, on a daily basis. In
addition, different liquidity outcomes are simulated
through various stress tests. The stress testing process
analyses daily and monthly forecasted liquidity against
a minimum liquidity level, enabling the Company to
better manage liquidity reserves and withstand market
movements at all times.
Annual Report 2022 RISK MANAGEMENT 11
RISK MANAGEMENT – CONTINUED
LEGAL RISK
Contractual relationships with customers and business
partners bear the potential for legal risks.
Danske Commodities’ Legal team is focused on proac-
tive legal work and contributes in a structured way to
identifying, prioritising and managing legal risks and
opportunities in consultation with teams across the en-
tire organisation. In 2022, a crossfunctional Market De-
sign Working group was established to follow the mar-
ket situation closely as this was highly affected by the
energy crisis and the geopolitical situation.
The Legal team engages in the ongoing business activi-
ties and decision-making processes at an early stage
and takes part in the approval process for new products.
By drafting and negotiating well-balanced contracts in
accordance with the legal risk tolerance defined by the
Board of Directors in line with local legislation and
practice in the markets in which Danske Commodities
operates, the Company conducts risk assessment on an
ongoing basis. As such, the overall level of claims and
disputes can be held at a minimum. The legal counsels
of Danske Commodities work closely with professional
external advisers when expert knowledge is required.
COMPLIANCE RISK
Compliance risk is the risk posed to Danske Commodi-
ties’ financial, organisational, operational or reputa-
tional standing that could result from a failure to act in
accordance with relevant laws, regulations and pre-
scribed standards.
High ethical standards and compliance with relevant
laws and regulations are fundamental to Danske Com-
modities. Danske Commodities’ Compliance Programme
sets out the framework for operating the Company’s ac-
tivities in an ethical and compliant manner and ensures
that compliance is embedded with all employees and
throughout the organisation, creating a strong culture
of compliance.
The Compliance Programme focuses on preventing, de-
tecting and handling non-compliant behaviour and is
managed by the Compliance Officer who regularly re-
ports to Senior Leadership and the Risk Committee.
Danske Commodities’ Compliance Policy & Guidelines
and Code of Conduct are the foundation for the Compli-
ance Programme as they lay out the requirements and
expectations of the Company’s employees and they ap-
ply to all employees. Annual compliance risk assess-
ments are another important part of the Compliance
Programme.
Training and education also play a vital role in the
Compliance Programme, ensuring that Danske Commod-
ities’ employees are regularly provided with up-to-date
information and knowledge of compliance issues. Fur-
ther, relevant employees also take part in face-to-face
training sessions conducted by the Compliance team. In
2022 these training sessions related to the market abuse
prohibitions that apply to many of the jurisdictions that
Danske Commodities operates in.
Monitoring and trade surveillance are also an important
part of the Compliance Programme and ensure compli-
ance with relevant regulations and allow Danske Com-
modities to monitor that its activities are carried out in
a compliant manner.
Oversight with the Compliance Programme is ensured
through the preparation of an annual compliance report
as well as regular reports to Senior Leadership and the
Risk Committee.
Annual Report 2022 MANAGEMENT’S STATEMENT 12
MANAGEMENT’S STATEMENT ON THE ANNUAL REPORT
Executive Board
Board of Directors
Board member Board member Board member
Annual Report 2022 INDEPENDENT AUDITOR’S REPORT 13
INDEPENDENT AUDITOR’S REPORT
Annual Report 2022 INDEPENDENT AUDITOR’S REPORT 14
INDEPENDENT AUDITOR’S REPORT – CONTINUED
CVR no. 30 70 02 28
Annual Report 2022 STATEMENT OF COMPREHENSIVE INCOME 15
STATEMENT OF COMPREHENSIVE INCOME
1 JANUARY – 31 DECEMBER
INCOME STATEMENT
Group Parent
EUR '000 Note 2022 2021 2022 2021
Trading income and revenue 2.1 6,441,796 2,451,083 6,362,909 2,437,891
Cost of sales 2.1 -4,376,845 -1,975,417 -4,376,825 -1,975,416
Gross profit 2,064,951 475,666 1,986,084 462,475
Other operating income 1,468 10 1,468 10
Other external expenses 4.1 -23,058 -13,410 -23,344 -14,061
Staff costs 4.1 -74,483 -51,594 -72,020 -49,729
6.1, 6.2 -13,498 -16,545 -13,490 -16,537
Operating profit/loss (EBIT) 1,955,380 394,127 1,878,698 382,158
Share of profit in subsidiaries after tax 6.4 0 0 62,484 9,353
Financial income 4.3 9,733 6,161 9,550 6,709
Financial expenses 4.3 -87,508 -13,083 -87,455 -13,121
Profit before tax (EBT) 1,877,605 387,205 1,863,277 385,099
Tax on profit/loss for the year 7.1 -410,399 -84,296 -396,071 -82,190
Profit for the year 1,467,206 302,909 1,467,206 302,909
STATEMENT OF OTHER COMPREHENSIVE INCOME
Group Parent
EUR '000 2022 2021 2022 2021
Profit for the year 1,467,206 302,909 1,467,206 302,909
Items that may subsequently be reclassified to the income statement:
Exchange rate adjustment on translation of foreign operations -1,820 -804 -1,820 -804
Other comprehensive income (net of tax) -1,820 -804 -1,820 -804
Total comprehensive income (net of tax) 1,465,386 302,105 1,465,386 302,105
Amortisation, depreciation and impairment losses
of intangible assets and property, plant and equipment
Annual Report 2022 BALANCE SHEET 16
BALANCE SHEET
AT 31 DECEMBER
Group Parent
EUR '000 Note 2022 2021 2022 2021
Contractual rights 66,597 74,940 66,597 74,940
Software 8,358 8,579 8,358 8,579
Intangible assets 6.1 74,955 83,519 74,955 83,519
Land and buildings 2,690 3,766 2,690 3,766
Other fixtures and fittings, tools and equipment 3,825 1,438 3,800 1,438
Leashold improvements 71 120 50 97
Property, plant and equipment 6.2 6,586 5,324 6,540 5,301
Investment in subsidiaries 6.4 0 0 81,889 15,734
Deferred tax 7.2 39,922 640 38,912 0
Deposits 421 348 417 348
Other non-current assets 40,343 988 121,218 16,082
Non-current assets 121,884 89,831 202,713 104,902
Inventories 5.1 1,914,475 1,124,902 1,914,475 1,124,902
Trade receivables 5.2 1,369,480 829,750 1,360,478 818,303
Other receivables 5.3 76,502 58,153 62,232 45,922
Deposits related to trading 5.3 460,853 1,005,859 458,317 1,005,168
Receivables from group enterprises 4.2 4,093,498 50,363 4,137,218 82,585
Corporation tax receivables 7.1 26,991 178 26,832 0
Prepayments 30,607 14,258 25,607 13,258
Derivative financial instruments 3.5 5,366,751 2,930,272 5,363,786 2,926,914
Cash and cash equivalents 1,424,501 1,384,665 1,386,648 1,374,282
Current assets 14,763,658 7,398,400 14,735,593 7,391,334
Assets 14,885,542 7,488,231 14,938,306 7,496,236
Annual Report 2022 BALANCE SHEET 17
BALANCE SHEET
AT 31 DECEMBER
Group Parent
EUR '000 Note 2022 2021 2022 2021
Share capital 3,679,762 179,065 3,679,762 179,065
Reserve for currency translation -3,365 -1,545 0 0
Reserve for net revaluation under the equity method 0 0 72,608 11,910
Reserve for development costs 0 0 6,375 5,494
Retained earnings 1,923,487 456,978 1,841,139 438,029
Equity 5,599,884 634,498 5,599,884 634,498
Deferred tax liabilities 7.2 0 6,129 0 6,129
Provisions 5.5 620 1,083 620 1,083
Lease liabilites 6.3 1,810 2,930 1,810 2,930
Other payables 5.4 2,118 10,469 2,118 10,469
Non-current liabilities 4,548 20,611 4,548 20,611
Trade payables 1,449,030 880,630 1,443,538 879,663
Payables to group enterprises 4.2 3,829,830 1,632,214 3,900,512 1,648,237
Corporation tax payables 7.1 3,397 41,430 0 40,169
Provisions 5.5 6,763 1,714 6,763 1,714
Other payables 5.4 49,564 34,086 44,873 30,936
Deposits related to trading 5.4 655,110 1,234,474 655,110 1,234,474
Prepayments 34,926 40,011 34,926 40,012
Derivative financial instruments 3.5 3,251,282 2,967,432 3,246,944 2,964,791
Lease liabilities 6.3 1,208 1,131 1,208 1,131
Current liabilities 9,281,110 6,833,122 9,333,874 6,841,127
Liabilities 9,285,658 6,853,733 9,338,422 6,861,738
Liabilities and equity 14,885,542 7,488,231 14,938,306 7,496,236
Annual Report 2022 STATEMENT OF CHANGES IN EQUITY 18
STATEMENT OF CHANGES IN EQUITY
The share capital consists of 3,679,761,954 shares of a nominal value of EUR 1 per share. All shares rank equally.
2022
Group
EUR '000 Share capital
Reserve for currency
translation Retained earnings
Total
Equity at 1 January
-1,545
Net profit for the year
Other comprehensive income for the year
-1,820
-1,820
Total comprehensive income for the year
-1,820
Capital decrease
-179,762
-179,762
Capital increase
Other adjustments
-697
Equity at 31 December
-3,365
2021
Group
EUR '000 Share capital
Reserve for currency
translation Retained earnings
Total
Equity at 1 January
-741
Net profit for the year
Other comprehensive income for the year
-804
-804
Total comprehensive income for the year
-804
Equity at 31 December
-1,545
2022
Parent
EUR '000 Share capital
Reserve for net
revaluation under
the equity method
Reserve for
development
costs
Retained
earnings
Total
Equity at 1 January
179,065
11,910
5,494
438,029
634,498
Net profit for the year
0
62,484
0
1,404,722
1,467,206
Development costs for the year
0
0
881
-881
0
Other adjustments
0
34
0
-34
0
Other comprehensive income for the year
0
-1,820
0
0
-1,820
Total comprehensive income for the year
0
60,698
881
1,403,807
1,465,386
Capital decrease
-179,762
0
0
0
-179,762
Capital increase
3,679,762
0
0
0
3,679,762
Other adjustments
697
0
0
-697
0
Equity at 31 December
3,679,762
72,608
6,375
1,841,139
5,599,884
2021
Parent
EUR '000 Share capital
Reserve for net
revaluation under
the equity method
Reserve for
development
costs
Retained
earnings
Total
Equity at 1 January
179,065
3,370
4,405
145,553
332,393
Net profit for the year
0
9,353
0
293,556
302,909
Development costs for the year
0
0
1,089
-1,089
0
Other adjustments
0
-9
0
9
0
Other comprehensive income for the year
0
-804
0
0
-804
Total comprehensive income for the year
0
8,540
1,089
292,476
302,105
Equity at 31 December
179,065
11,910
5,494
438,029
634,498
Annual Report 2022 STATEMENT OF CASH FLOWS 19
STATEMENT OF CASH FLOWS
Group Parent
EUR '000 Note 2022 2021 2022 2021
Profit for the year 1,467,206 302,909 1,467,206 302,909
Non-cash adjustments 5.7 499,858 106,974 424,982 95,786
Change in working capital 5.7 -3,617,263 -554,868 -3,576,817 -550,645
Cash flow form operating activities before
financial income and expenses
-1,650,199 -144,985 -1,684,629 -151,950
Financial income, received 4.3 9,733 3,379 9,550 3,927
Financial expenses, paid 4.3 -61,785 -13,083 -67,983 -13,121
Cash flow from ordinary activities -1,702,251 -154,689 -1,743,062 -161,144
Corporation tax paid -520,656 -44,560 -508,113 -42,384
Corporation tax received 0 274 0 230
Cash flow from operating activities -2,222,907 -198,975 -2,251,175 -203,298
Purchase of intangible assets 6.1 -3,078 -2,513 -3,078 -2,513
Purchase of property, plant and equipment 6.2 -3,125 -819 -3,087 -819
Capital increase in subsidiaries 6.4 0 0 -5,467 -1,469
Disposal of subsidiaries 0 0 -24 71
Cash flow from investing activities -6,203 -3,332 -11,656 -4,730
Proceeds from borrowings 1,574,587 1,405,049 1,574,587 1,405,049
Payments to group enterprise cash pool -2,778,875 0 -2,778,875 0
Capital increase 3,500,000 0 3,500,000 0
Payment of principal portion of lease liabilities -1,043 -1,001 -1,043 -1,001
Cash flow from financing activities 2,294,669 1,404,048 2,294,669 1,404,048
Net foreign exchange difference on cash and
cash equivalents
-25,723 2,782 -19,472 2,782
Change in cash and cash equivalents 39,836 1,204,523 12,366 1,198,802
Cash and cash equivalents at 1 January 1,384,665 180,142 1,374,282 175,480
Cash and cash equivalents at 31 December 1,424,501 1,384,665 1,386,648 1,374,282
Cash and cash equivalents are specified as follows:
Cash at bank and in hand without restrictions 228,595 946,609 191,632 936,226
Restricted cash * 1,195,906 438,056 1,195,016 438,056
Cash and cash equivalents at 31 December 1,424,501 1,384,665 1,386,648 1,374,282
* Restricted cash is relating to initial margin coverage held at clearing banks.
Annual Report 2022 NOTES TO FINANCIAL STATEMENTS 20
NOTES TO FINANCIAL STATEMENTS
BASIS OF REPORTING
1.1 BASIS OF PREPARATION
The consolidated and parent financial statements have
been prepared in accordance with International Finan-
cial Reporting Standards (IFRS) as adopted by the EU
and further requirements in the Danish Financial State-
ments Act applying to large enterprises of reporting
class C.
The consolidated and parent financial statements have
been prepared on a going concern basis and under the
historical cost convention, with the exception of deriva-
tives and gas trading inventories, which are measured
at fair value as disclosed in notes 3.5 and 5.1 and with
the exception of investments in subsidiaries, which are
measured under the equity method as disclosed in note
6.4.
The consolidated financial statements are presented in
Euro, which is also Danske Commodities' functional cur-
rency. All values are rounded to the nearest thousand
(EUR’000), except if otherwise indicated.
Accounting policies related to specific line items are
described in the notes to which they relate. The descrip-
tion of accounting policies in the notes form part of the
overall description of accounting policies. Accounting
policies not directly related to a specific line item cov-
ered by a note are presented below.
CHANGES TO ACCOUNTING POLICIES IN 2022
IFRIC agenda decision
In April 2022, IFRIC issued an agenda decision on the
application of IAS 7 regarding ‘Demand Deposits with
Restrictions on Use arising from a Contract with a Third
Party’. The decision concluded that restrictions on the
use of a demand deposit arising from a contract with a
third party do not result in the deposit no longer being
cash.
Danske Commodities A/S holds demand deposits at
clearing banks restricted to cover initial margin, and
this was previously recognised as deposits held for
trading.
Danske Commodities A/S has adopted the treatment set
out in the IFRIC agenda decision regarding demand de-
posits in which demand deposits with restrictions on
use are subsequently classified as cash and cash equiv-
alents.
The change in accounting treatment has been ac-
counted for retrospectively and comparative infor-
mation has been restated. The change has no effect on
the statement of comprehensive income or equity. The
comparative figures for cash and cash equivalents in-
creased by EUR 438 million and deposits held for trading
decreased by EUR 438 million.
The Group has implemented other changes in standards
and interpretation relevant that are mandatory for 2022.
None of these have had a material impact on the finan-
cial statements for 2022.
BASIS FOR CONSOLIDATION
The consolidated financial statements incorporate the
financial information of Danske Commodities A/S, the
Parent Company, and its subsidiaries, together the
Group. Control is achieved where the Group is exposed,
or has rights, to variable returns from its involvement
with an entity and has the ability to affect those returns
through its power over the entity.
An associate is an entity over which the Group has sig-
nificant influence. Significant influence is the power to
participate in the financial and operating policy deci-
sions of the investee but is not control or joint control
over those policies.
The consolidated financial statements are prepared by
combining items of a uniform nature and subsequently
eliminating intercompany transactions, internal stock-
holdings and balances and unrealised intercompany
profits and losses.
TRANSLATION OF FOREIGN CURRENCIES
Transactions in foreign currencies are translated at the
exchange rates prevailing at the dates of transaction.
Gains and losses arising due to differences between the
transaction date rates and the rates at the dates of pay-
ment are recognised in financial income or financial ex-
penses in the income statement.
Receivables, payables and other monetary items in for-
eign currencies that have not been settled at the bal-
ance sheet date are translated at the exchange rates at
the balance sheet date. Any differences between the ex-
change rates at the balance sheet date and the transac-
tion date rates are recognised in financial income and
expenses in the income statement.
Foreign subsidiaries are considered separate entities.
The income statements are translated at the average
exchange rates for the month, and the balance sheet
items are translated at the exchange rates at the bal-
ance sheet date.
Foreign exchange differences arising on translation of
the opening equity of foreign entities at the exchange
rates at the balance sheet date and on translation of
the income statements from average exchange rates to
the exchange rates at the balance sheet date are recog-
nised in other comprehensive income.
Annual Report 2022 NOTES TO FINANCIAL STATEMENTS 21
1.1 BASIS OF PREPARATION – CONTINUED
CURRENT / NON-CURRENT
The Group presents assets and liabilities in the state-
ment of financial position based on current/non-current
classification. An asset is current when it is:
expected to be realised or intended to be sold
or consumed in the normal operating cycle
held primarily for the purpose of trading
expected to be realised within twelve months
after the reporting period
cash or cash equivalent unless restricted from
being exchanged or used to settle a liability for
at least twelve months after the reporting pe-
riod
All other assets are classified as non-current.
A liability is current when it is:
expected to be settled in the normal operating
cycle
held primarily for the purpose of trading
due to be settled within twelve months after
the reporting period
without unconditional right to defer the settle-
ment of the liability for at least twelve months
after the reporting period
The Group classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-
current assets and liabilities.
FAIR VALUE MEASUREMENT
The Group measures financial instruments, such as de-
rivatives, at fair value at each balance sheet date. Fair
value is the price that would be received for selling an
asset or paid for transferring a liability in an orderly
transaction between market participants at the meas-
urement date. The fair value measurement is based on
the presumption that the transaction to sell the asset or
transfer the liability takes place either:
in the principal market for the asset or liability,
or
in the absence of a principal market, in the
most advantageous market for the asset or lia-
bility
The fair value of an asset or a liability is measured us-
ing the assumptions that market participants would use
when pricing the asset or liability, assuming that mar-
ket participants act in their economic best interest.
A fair value measurement of a non-financial asset takes
into account a market participant's ability to generate
economic benefits by using the asset in its highest and
best use or by selling it to another market participant
that would use the asset in its highest and best use.
Danske Commodities uses valuation techniques that are
appropriate in the circumstances and for which suffi-
cient data are available to measure fair value, maximis-
ing the use of relevant observable inputs and minimis-
ing the use of unobservable inputs.
All assets and liabilities for which fair value is meas-
ured or disclosed in the financial statements are cate-
gorised within the fair value hierarchy, described as fol-
lows, based on the lowest level input that is significant
to the fair value measurement as a whole:
level 1 — quoted and unadjusted market prices
in active markets for identical assets or liabili-
ties
level 2 — valuation techniques for which the
lowest level input that is significant to the fair
value measurement is directly or indirectly ob-
servable
level 3 — valuation techniques for which the
lowest level input that is significant to the fair
value measurement is unobservable
For assets and liabilities that are recognised in the fi-
nancial statements at fair value on a recurring basis,
the Group determines whether transfers have occurred
between levels in the hierarchy by reassessing categori-
sation at the end of each period in which the reassess-
ment is based on the lowest level input that is signifi-
cant to the fair value measurement as a whole.
Danske Commodities' Risk Management function deter-
mines the policies and procedures for recurring fair
value measurement for unquoted financial assets and
liabilities.
For the purpose of fair value disclosures, the Group has
determined classes of assets and liabilities on the basis
of the nature, characteristics and risks of the asset or li-
ability and the level of the fair value hierarchy, as ex-
plained above.
Fair value related disclosures for financial instruments
and non-financial assets that are measured at fair value
or where fair values are disclosed are summarised in
note 3.6.
Annual Report 2022 NOTES TO FINANCIAL STATEMENTS 22
1.2 SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGMENTS
The preparation of Danske Commodities’ consolidated
and parent financial statements requires management
to make estimates and assumptions that can have a sig-
nificant effect on the application of policies and re-
ported amounts of assets, liabilities, income, expenses
and related disclosures. The estimates and underlying
assumptions are based on historical experience and
various other factors. Actual results may differ from
these estimates. The estimates and underlying assump-
tions are reviewed on an ongoing basis. Changes in esti-
mates may be necessary if there are changes in the cir-
cumstances on which the estimate was based or more
detailed information becomes available. Such changes
are recognised in the period in which the estimate is re-
vised.
The application of the Group’s accounting policies may
require management to make judgments that can have a
significant effect on the amounts recognised in the con-
solidated and parent financial statements and related
disclosures. Management judgment is required in partic-
ular when assessing the substance of transactions that
have a complicated structure or legal form.
The significant accounting estimates and judgments
can potentially significantly impact the consolidated
financial statements.
The table below shows the significant accounting esti-
mates and judgments and their level of potential im-
pact on the consolidated and parent financial state-
ments.
EARNINGS
2.1 TRADING INCOME AND REVENUE
SIGNIFICANT ACCOUNTING JUDGMENTS
Management uses significant judgments when determin-
ing presentation of income from complex contracts that
contain certain sales of goods or services that are not
clearly defined within the IFRS framework. In this as-
sessment, management takes into consideration both
the individual characteristics of the goods and services
and the nature of the promise within the context of the
contract, evaluating all the facts and circumstances re-
lating to the specific contract under the relevant legal
and regulatory framework as well as assessing whether
the Group acts as principal or agent to determine the
appropriate presentation of income.
ACCOUNTING POLICIES
Trading income
Trading income comprises realised and unrealised fair
value changes as well as realised gains and losses on
commodity derivatives and inventory held for trading.
Net trading income comprises net realised fair value
changes, gains and losses arising from trading within
energy commodity derivatives. The energy commodity
derivatives make up Danske Commodities’ trading port-
folio which includes futures, options, swaps, transport
capacities and certain forward sales and forward pur-
chases commodity contracts that are either financially
or physically settled. As the physically settled con-
tracts are managed on a portfolio basis, a practice of
net settlement is present, and the contracts are consid-
ered in scope of IFRS 9 and treated as derivatives.
Net changes in fair value of commodity derivatives and
net changes in fair value of inventory held for trading
represents unrealised changes in the fair value of com-
modity derivatives held for trading and inventory held
for trading at the balance sheet date.
SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGMENTS
Estimate/
judgment
Impact from estimates
and judgments
Notes
Presentation of net and gross income Judgment Large 2.1
Valuation of derivative financial instruments Estimate Moderate 3.6
Gas trading inventories at fair value Estimate Low 5.1
Group Parent
EUR '000 2022 2021 2022 2021
Trading income
Net trading income 1,642,459 469,356 1,408,015 455,447
Net change in fair value of commodity derivatives held for trading
1,518,169
44,624
1,515,927
45,341
Net change in fair value of inventory held for trading
-1,183,437
-61,834
-1,025,638
-61,834
Revenue from contracts with customers
Sales of climate certificates 648,562 540,066 648,562 540,066
Sales of power and energy related services 3,816,043 1,458,871 3,816,043 1,458,871
Total trading income and revenue 6,441,796 2,451,083 6,362,909 2,437,891
Annual Report 2022 NOTES TO FINANCIAL STATEMENTS 23
2.1 TRADING INCOME AND REVENUE – CONTINUED
Revenue from contracts with customers
Revenue is measured at the contractually agreed price
exclusive of VAT and taxes charged on behalf of third
parties.
Sales agreements are divided into individually identifia-
ble performance obligations when applicable. If a sales
agreement includes several performance obligations,
the sales agreement's transaction price is allocated to
each performance obligation.
Revenue from the sale of power and energy-related ser-
vices comprises the sale of power sourced from energy
producers and related services in terms of e.g. produc-
tion management and balancing. Danske Commodities
considers whether it is acting as principal or agent,
based on whether it holds the main risks related to and
controls the power and services delivered before trans-
ferring it to the counterparty. The Group has concluded
that it is acting as principal in all material aspects,
however, insignificant activity is accounted for net, as
the conclusion is agent due to the nature of the busi-
ness. Revenue is recognised when control of the power is
transferred to the buyer simultaneously with fulfilment
of the related services, that being when the power is de-
livered. Agreements for the sale of power and energy-re-
lated services are considered a series of identical goods
and services that are transferred over time and revenue
is recognised at the amount to which the Group is enti-
tled.
Revenue from the sale of climate certificates comprises
the sale of climate certificates sourced from producers.
As Danske Commodities controls the climate certifi-
cates before transferring them to the counterparty, the
Group has concluded that it is acting as principal in
these agreements. Revenue is recognised when control
of the climate certificate is transferred to the buyer be-
ing when the certificate is delivered to the buyer. Agree-
ments for the sale of climate certificates are fulfilled at
a point in time.
Cost of sales
Cost of sales includes the purchase of power and certif-
icates for resale and transportation thereof incurred to
achieve revenue for the year.
RISK MANAGEMENT
3.1 MARKET RISK
Danske Commodities' market risk arises in both com-
modity and financial markets, in which changing com-
modity prices and volumes are key risk factors.
The sensitivity analysis in the following sections relates
to open positions at 31 December 2022 and 31 December
2021. The sensitivity is calculated by adjusting the mar-
ket price used on each individual trade.
The sensitivity of the relevant statement of profit or loss
item is the effect of the assumed changes in respective
market risks and prepared on an ‘all else being equal’
basis. The analysis is based on the financial assets and
financial liabilities held at 31 December 2022 and 31
December 2021. Percentage change in commodity prices
used to determine sensitivity is based on the current ob-
servable market environment.
Danske Commodities' business is focused on short-term
trading, which is reflected in the maturity of the finan-
cial instruments that primarily fall due within 12
months. For more information, refer to note 3.3.
RISK MANAGEMENT PROCEDURES
Danske Commodities' Board of Directors has developed
and enacted a risk management strategy for commodity
price risk and its mitigation. The risk management strat-
egy also includes limits on foreign currency exposure.
COMMODITY PRICE RISK
Commodity price risk is the risk that the fair value or fu-
ture cash flows of an exposure will fluctuate because of
changes in underlying commodity prices. The Group's ex-
posure to the risk of changes in commodity prices re-
lates primarily to the trading performed at Danske Com-
modities.
FOREIGN CURRENCY RISK
Foreign currency risk is the risk that the fair value or fu-
ture cash flows of an exposure will fluctuate because of
changes in foreign exchange rates. Danske Commodi-
ties’ exposure to the risk of changes in foreign exchange
rates derives primarily from those of the Group’s operat-
ing activities in which trade receivables, accounts pay-
ables and derivatives held for trading are denominated
in a currency other than the functional currency.
The foreign currency risk is mitigated and hedged via
economic hedges by the Treasury function on a daily ba-
sis in accordance with the mandates, policies and hedg-
ing strategy approved by the Board of Directors.
The risk relates to a wide range of currencies to which
the daily commercial business is exposed. The main un-
derlying currency of the Group’s cash flow is Euro as the
majority of Danske Commodities' activities are per-
formed in market areas where commodity products are
priced in EUR.
Next to EUR, GBP is the most significant currency to
which Danske Commodities is exposed. The analysis
shows the profit and loss effect estimated gains and
losses from movements in the GBP/EUR ratio with all
other variables held constant.
Annual Report 2022 NOTES TO FINANCIAL STATEMENTS 24
3.1 MARKET RISK – CONTINUED
INTEREST RATE RISK
Interest rate risk is the risk that the future cash flows of
a financial instrument will fluctuate because of change
in market interest rates. Danske Commodities' exposure
to the risk of changes in market interest rates relates
primarily to interest-bearing floating rate liabilities
and assets.
INSTRUMENTS USED BY THE GROUP
Forwards and futures are the primary instruments traded
for gas and power with physical delivery, while finan-
cially settled instruments other than forwards and fu-
tures also include options and swaps.
The table is calculated on an ‘all else being equal’ ba-
sis. The sensitivity calculation does not account for the
correlation between products. For some products, the
value is affected by multiple commodities.
3.2 CREDIT RISK MANAGEMENT
Exposure to credit risk may arise in Danske Commodi-
ties’ trading and treasury operations. Trading is gener-
ally performed under standard agreements such as EFET
and ISDA, which features netting provisions. The Group
manages credit risk through a clear framework of poli-
cies and procedures defined by the Board of Directors,
Senior Leadership and the Risk Management function.
Responsibilities are divided between different business
teams, Risk Management, Senior Leadership and the
Board of Directors. A thorough Know Your Customer
(KYC) process is carried out for all counterparties with
whom the Group engages in transactions.
As commodity exchanges generally settle fair values
daily, the Group considers its credit exposure to com-
modity exchanges to be insignificant.
The credit risk affecting the derivative financial instru-
ments measured at fair value is considered limited
based on the individual counterparty’s ratings with pub-
lic rating agencies.
Historically, Danske Commodities suffered no realised
losses from any single major counterparty.
Credit risk from the Company’s financial assets primar-
ily concerns derivatives, trade receivables and receiva-
bles from group enterprises. For more information of
credit risk related to receivables, refer to note 5.2.
Group Parent
SENSITIVITY 2022 2021 2022 2021
EUR '000 +/- in %
30% -560,572 -289,104 -560,572 -289,104
Gas price risk (financial instruments) -30% 613,167 349,512 613,167 349,512
30% 560,931 329,533 560,931 329,533
Gas price risk (inventory) -30% -560,931 -329,533 -560,931 -329,533
30% 3,761 67,081 -1,922 67,081
Power price risk -30% 64,740 33,345 70,252 33,345
30% 7,284 6,864 7,284 6,864
Certificate price risk -30% -5,053 9,341 -5,053 9,341
8% 26,043 -572 20,394 -1,711
EUR/GBP currency risk -8% -26,043 572 -20,394 1,711
1% 27,789 -14,400 27,789 -14,400
Interest rate risk -1% -27,789 14,400 -27,789 14,400
Effect on profit/
loss before tax
Effect on profit/
loss before tax
Effect on profit/
loss before tax
Effect on profit/
loss before tax
CREDIT QUALITY OF THE GROUP'S COUNTERPARTIES
Group Parent
EUR '000 2022 2021 2022 2021
AA Rating 8,522,961 439,737 8,488,635 439,294
A Rating 1,662,247 3,580,084 1,661,886 3,573,207
BBB Rating 1,624,782 1,770,747 1,621,822 1,769,687
BB Rating and lower 845,798 209,559 845,798 208,543
Not rated 90,323 201,130 114,330 216,869
Total at 31 December 12,746,111 6,201,257 12,732,471 6,207,600
Annual Report 2022 NOTES TO FINANCIAL STATEMENTS 25
3.3 LIQUIDITY RISK
Liquidity management is executed on an ongoing daily
basis in Danske Commodities' Treasury function. Daily
cashflow forecasts are produced, ensuring availability
of required liquidity of the Group by appropriate cash
management, and maintaining adequate liquidity re-
serves at any time through a combination of readily
available cash and committed credit facilities provided
by Equinor.
The table below shows Danske Commodities’ financial
liabilities divided into relevant maturity buckets based
on their contractual maturities for all financial liabili-
ties and derivative financial instruments. The amounts
disclosed in the table are the contractual undiscounted
cash flows.
In 2022, the increase in power and gas prices led to
higher margin calls and the need for collateral. This led
to further draws on the committed credit facility.
The Group and Parent Company’s committed credit fa-
cility (‘Revolving Credit Facility’) amounted to EUR 3,000
million at 31 December 2022 (2021: EUR 2,400 million).
The committed credit facility terminates in 3Q 2023. In
2022, Danske Commodities has engaged in a cash pool
with Equinor ensuring liquidity for the years to come. At
31 December 2022, the cash pool has an overdraft limit
of EUR 6,500 million, which is reduced to EUR 3,000 mil-
lion in 1Q 2023 and will be renegotiated during the sum-
mer of 2023 to reflect expected liquidity needs.
As per 31 December 2022, the Group has drawn EUR
3,000 million (2021: EUR 1,440 million) of the total avail-
able facilities, in the amount of EUR 9,500 million (2021:
EUR 2,400 million).
For overview of available cash comprising ‘cash and
cash equivalents’ and ‘group cash pool’ refer to note 3.4.
CONTRACTUAL MATURITIES OF FINANCIAL LIABILITIES
Group Parent
EUR '000 2022 2021 2022 2021
Financial instruments, maturity <1 year
Trade payables 1,449,030 880,630 1,443,538 879,663
Lease liabilities 1,208 1,131 1,208 1,131
Payables to group enterprises 815,194 192,165 885,876 208,188
Revolving credit facility * 3,014,636 1,440,049 3,014,636 1,440,049
Deposits related to trading 655,110 1,234,474 655,110 1,234,474
Other payables 49,564 34,086 44,873 30,936
Financial instruments, maturity 1-5 years
Lease liabilities 1,810 2,930 1,810 2,930
Other payables 2,118 10,469 2,118 10,469
Derivative financial instruments, maturity <1 year 3,029,609 2,641,499 3,025,311 2,638,897
Derivative financial instruments, maturity 1-5 years 262,250 325,933 262,125 325,894
Total financial liabilities 9,280,529 6,763,366 9,336,605 6,772,631
* For the Revolving Credit Facility provided by Equinor, the effective interest rate is the base rate (EURIBOR12M) plus a margin rate of 0.03%. In
the case the aggregate of the base rate and the rate drops below zero, the effective interest rate will be set at 0.0%. The effective interest rate
at 31 December 2022 is 1.0% (2021: 0.0%).
Annual Report 2022 NOTES TO FINANCIAL STATEMENTS 26
3.4 CAPITAL RISK MANAGEMENT
The Group manages its capital to ensure that entities in
the Group will be able to continue as going concern
while maximising the return to shareholders through the
optimisation of the debt and equity balance.
The capital structure of the Group consists of net debt
and equity of the Group as disclosed in the statement of
equity.
The Group is not subject to any externally imposed capi-
tal requirements. The increase in debt is primarily due to
utilisation of the Parent Company credit facility as de-
scribed in note 3.3.
3.5 DERIVATIVE FINANCIAL INSTRUMENTS
Derivative financial instruments in Danske Commodities
mainly consist of commodity derivatives that are traded
as part of the Group's ordinary business activities as
well as foreign exchange derivatives used for managing
currency risk exposure. Trading activities are undertaken
by using a range of contract types in combination to
create incremental gains by arbitraging prices between
markets, locations and time periods. Foreign currency
derivatives are traded to mitigate the exposure to cur-
rencies denominated in a currency other than EUR. Fi-
nancial risks relating to the financial instruments are
managed on a portfolio basis. The net of these expo-
sures is monitored daily through risk reporting. The
credit risk is assessed separately and presented in a ta-
ble in note 3.2. For further information about offsetting
of financial assets and liabilities, refer to note 5.6.
For information about the methods and assumptions
used in determining the fair value of derivatives, refer to
note 3.6.
ACCOUNTING POLICIES
When derivatives do not meet the hedge accounting cri-
teria, they are primarily classified as ‘held for trading’
for accounting purpose and initially recognised, and
subsequently measured at fair value through profit and
loss and recognised in the balance sheet as ‘derivative
financial instruments’. Derivative financial instruments
that are held for trading are classified as current assets
and liabilities regardless of their maturity date. The
Group does not apply any type of hedge accounting in
the financial statements. Derivative financial instru-
ments are categorised by means of shared risk and un-
derlying commodity.
Danske Commodities routinely enters into sale and pur-
chase transactions for physical delivery of energy com-
modities. A considerable part of these transactions for
physical delivery of a non-financial item is considered
within the scope of IFRS 9 since the contracts are net
settled, and they are consequently accounted for as de-
rivative financial instruments measured at fair value
through profit and loss.
A derivative embedded in a hybrid contract, with a non-
financial host contract, is separated from the host con-
tract and accounted for as a separate derivative if:
the economic characteristics and risks are not
closely related to the host contract;
a separate instrument with the same terms as
the embedded derivative would meet the defi-
nition of a derivative;
and the hybrid contract is not measured at fair
value through profit or loss.
Embedded derivatives are measured at fair value with
changes in fair value recognised in profit or loss.
A portion of the sale and purchase transactions for
physical delivery of energy commodities takes the form
of contracts that were entered into and continue to be
held for the purpose of receipt or delivery of the physi-
cal commodity in accordance with the Group’s expected
sale, purchase or usage requirements (‘own use’) and are
not within the scope of IFRS 9. The assessment of
whether a contract is deemed to be ‘own use’ is based
on the nature of the promise within the contract as well
as facts and circumstances of how the contract is in-
cluded in Danske Commodities’ business activity.
GEARING RATIO
Group
Parent
EUR '000
2022
2021
2022
2021
Debt *
6,023,596
3,835,945
6,084,095
3,847,852
Less:
Group cash pool (part of 'receivables from group enterprises')
2,778,875
0
2,778,875
0
Cash and cash equivalents
1,424,501
1,384,665
1,386,648
1,374,282
Net debt
1,820,220
2,451,280
1,918,572
2,473,570
Equity **
5,599,884
634,498
5,599,884
634,498
Net debt to equity ratio (%)
33%
386%
34%
390%
** Equity includes all capital and reserves of the Group.
* Debt is defined as lease liabilities, trade and other payables (excluding derivatives and financial gurantee contracts), prepayments and
payables to group enterprises.
Annual Report 2022 NOTES TO FINANCIAL STATEMENTS 27
3.6 FAIR VALUE MEASUREMENTS
Determining the fair value of the financial instruments
recognised and measured at fair value through profit
and loss in the financial statements may require the use
of estimates. To provide an indication about the relia-
bility of the inputs used in determining fair value, the
Group has classified its financial instruments into the
three levels prescribed under the accounting standards.
LEVEL 1
Exchange-traded derivatives are valued using closing
prices provided by the exchanges at the balance sheet
date. These derivatives are categorised within level 1 of
the fair value hierarchy. Exchange-traded derivatives
are typically considered cleared through the payment or
receipt of variation margin.
LEVEL 2
Derivatives designated to level 2 include both power,
gas and certificate trades with a typical contract
length < 1 year. Over-the-counter (OTC) financial swaps
and physical commodity sale and purchase contracts
including commodity forwards and options are gener-
ally valued using readily available information in the
public markets and if necessary, quotations provided by
brokers and price index developers. These quotes are
corroborated with market data and are predominately
categorised within level 2 of the fair value hierarchy.
Capacity and foreign exchange contracts within Danske
Commodities are measured using internal models. Inter-
nal models refer to standard valuation models that use
market forward levels on standard instruments, as well
as incorporating inputs for the volatility of the underly-
ing indices, markets or commodities.
LEVEL 3
Derivatives within level 3 of the fair value hierarchy in-
cludes derivatives where the unobservable inputs used
in the valuation is significant. These inputs include
prices risk premiums, volatility and interruption factors.
For some markets, there is only observable prices avail-
able for a maximum of three years ahead, after which
there is no active market. Danske Commodities holds
power forward contracts up to a 10-year time horizon.
For OTC commodity derivatives in this time horizon, the
market price used in the valuation model is extrapo-
lated from the latest observable prices assuming no
price movements (0%). The unobservable prices used
range from EUR 48.75 to EUR 51.88 (2021: EUR 64.75 -
65.75).
The valuation of power contracts with a variable deliv-
ery profile incorporates a risk premium based on observ-
able market activity for the contracts while accounting
for the relationship to the observable base prices. For
the valuation of basket option products, the fair value is
estimated using simulation valuation techniques using
assumptions developed internally based on observable
market activity. The volatility factor used in the simula-
tion model ranges from 0.469 to 1.29. For products,
where the delivery can be interrupted, the fair value is
reliant on a factor of interruptions ranging from 0-40%
that is internally developed based on historically ob-
servable market activity.
Based on the unobservable input parameters above a
reasonable alternative possible assumption is consid-
ered a movement of the unobservable input of 5%. For
prices and volatility, the effect of such movements are
considered significant and the impact is described be-
low.
An increase of the unobservable prices of 5% will in-
crease the fair value by EUR 1,236 thousand (2021: EUR
898 thousand). A decrease of 5% decreases fair value by
EUR 1,236 thousand (2021: EUR 898 thousand). An in-
crease of the volatility factor used in simulation models
of 5% will increase the fair value by EUR 10,803 thou-
sand. A decrease of 5% decreases fair value by EUR
10,804 thousand.
VALUATION PROCESSES
The valuation process of the derivatives includes input
from relevant stakeholders of Danske Commodities, and
the final valuation is verified and approved by the Risk
Management function. To minimise the use of subjective
estimates or modifications of parameters and calcula-
tion models, it is Danske Commodities' policy to deter-
mine fair values based on the external information that
most accurately reflects the market values. The Group
uses pricing services and benchmark services to in-
crease the data quality. Danske Commodities’ policy is
to recognise transfers into and out of fair value hierar-
chy levels at the end of each reporting period.
Transfers in fair value hierarchy
The transfer from level 2 to level 3 relates to financial
instruments whose measurement is now using signifi-
cant unobservable input.
Annual Report 2022 NOTES TO FINANCIAL STATEMENTS 28
3.6 FAIR VALUE MEASUREMENTS – CONTINUED
SIGNIFICANT ACCOUNTING ESTIMATES
In some cases, the fair values of derivatives are esti-
mated using internal models due to the absence of
quoted prices or other observable, market-corroborated
data. This primarily applies to the Group’s longer-term,
structured derivative contracts or contracts in illiquid
markets. Most of these contracts are valued using mod-
els with inputs that include price curves for each of the
different products. These price curves are built up from
available active market pricing data, including volatil-
ity and correlation, and modelled using the maximum
available market-derived information. Additionally,
when limited data exist for certain products or market
areas, prices are determined using historical and long-
term pricing relationships. The use of alternative esti-
mates or valuation methodologies may result in signifi-
cantly different values for these derivatives.
2022
Quoted prices in active
markets
Significant observable
inputs
Unobservable inputs
EUR '000 Note Level 1 Level 2 Level 3 Total
Financial assets
Gas trading derivatives 73 4,715,630 60,799 4,776,502
Power trading derivatives 1,348 485,426 84,477 571,251
Foreign exchange derivatives 0 18,998 0 18,998
Non-financial assets
Gas trading inventories 5.1 0 1,869,772 0 1,869,772
Total financial and non-financial assets 1,421 7,089,826 145,276 7,236,523
Liabilities
Gas trading derivatives 44,481 2,375,525 23,890 2,443,896
Power trading derivatives 150 686,527 64,556 751,233
Foreign exchange derivatives 0 56,153 0 56,153
Total financial liabilities 44,631 3,118,205 88,446 3,251,282
2021
Quoted prices in active
markets
Significant observable
inputs
Unobservable inputs
EUR '000 Note Level 1 Level 2 Level 3 Total
Financial assets
Gas trading derivatives 414,786 782,419 0 1,197,205
Exchange-traded certificates 21,403 0 0 21,403
Power trading derivatives 401,474 1,292,112 18,078 1,711,664
Foreign exchange derivatives 0 2,612 0 2,612
Non-financial assets
Gas trading inventories 5.1 0 1,098,444 0 1,098,444
Total financial and non-financial assets 837,663 3,175,587 18,078 4,031,328
Liabilities
Gas trading derivatives * 19,461 1,018,031 0 1,037,492
Power trading derivatives 387 1,929,553 0 1,929,940
Foreign exchange derivatives 0 335 0 335
Total financial liabilities 19,848 2,947,919 0 2,967,767
Group
Group
Annual Report 2022 NOTES TO FINANCIAL STATEMENTS 29
3.6 FAIR VALUE MEASUREMENTS – CONTINUED
2022 Parent
Quoted prices in active
markets
Significant observable
inputs
Unobservable inputs
EUR '000 Note Level 1 Level 2 Level 3 Total
Financial assets
Gas trading derivatives 73 4,715,630 60,799 4,776,502
Power trading derivatives 1,348 482,461 84,477 568,286
Foreign exchange derivatives 0 18,998 0 18,998
Non-financial assets
Gas trading inventories 5.1 0 1,869,772 0 1,869,772
Total financial and non-financial assets 1,421 7,086,861 145,276 7,233,558
Liabilities
Gas trading derivatives 44,481 2,375,525 23,890 2,443,896
Power trading derivatives 114 682,225 64,556 746,895
Foreign exchange derivatives 0 56,153 0 56,153
Total financial liabilities 44,595 3,113,903 88,446 3,246,944
2021 Parent
Quoted prices in active
markets
Significant observable
inputs
Unobservable inputs
EUR '000 Note Level 1 Level 2 Level 3 Total
Financial assets
Gas trading derivatives 414,786 782,419 0 1,197,205
Exchange-traded certificates 21,403 0 0 21,403
Power trading derivatives 401,472 1,288,756 18,078 1,708,306
Foreign exchange derivatives 0 2,612 0 2,612
Non-financial assets
Gas trading inventories 5.1 0 1,098,444 0 1,098,444
Total financial and non-financial assets 837,661 3,172,231 18,078 4,027,970
Liabilities
Gas trading derivatives * 19,461 1,018,031 0 1,037,492
Power trading derivatives 387 1,926,912 0 1,927,299
Foreign exchange derivatives 0 335 0 335
Total financial liabilities 19,848 2,945,278 0 2,965,126
LEVEL 3 DERIVATIVES
Group and Parent
EUR '000 2022 2021
Fair value contracts at 1 January 18,078 0
Transfers into level 3 76,275 2,461
Gains (losses) recognised in the income statement 27,508 15,617
Purchases
-87,593
0
Sales 22,562 0
Net fair value of contracts at 31 December 56,830 18,078
Annual Report 2022 NOTES TO FINANCIAL STATEMENTS 30
3.7 FINANCIAL ASSETS AND LIABILITIES BY CATEGORY
The carrying amount of financial assets and liabilities
measured at amortised cost is considered a reasonable
approximation of fair value.
3.8 DEFERRED DAY-1 PROFIT OR LOSS
Refer to note 3.6 for information regarding fair value
measurements.
ACCOUNTING POLICIES
Danske Commodities uses various valuation techniques
to measure the fair value of financial instruments that
are not traded in an active market. Differences may
arise between the fair value at initial recognition and
the amount determined at initial recognition using the
valuation techniques. Any such gains or losses are de-
ferred and recognised in the income statement over the
delivery period of underlying contracts.
Group Parent
EUR '000 2022 2021 2022 2021
Financial assets measured at fair value through profit or loss
Derivatives held for trading * 5,347,753 2,930,272 5,344,788 2,926,914
Derivatives in economic hedges ** 18,998 2,612 18,998 2,612
Financial assets measured at amortised cost
Trade receivables 1,369,480 829,750 1,360,478 818,303
Cash and cash equivalents 1,424,501 1,384,665 1,386,648 1,374,282
Receivables from group enterprises 4,093,498 50,363 4,137,218 82,585
Deposits related to trading and prepayments 491,881 1,020,465 484,341 1,018,774
Financial assets 12,746,111 6,218,127 12,732,471 6,223,470
Financial liabilities measured at fair value through profit or loss
Derivatives held for trading * 3,195,129 2,967,432 3,190,791 2,964,791
Derivatives in economic hedges ** 56,153 335 56,153 335
Financial liabilities measured at amortised cost
Trade payables 1,449,030 880,630 1,443,538 879,663
Payables to group enterprises 3,829,830 1,632,214 3,900,512 1,648,237
Deposits related to trading and prepayments 690,036 1,274,485 690,036 1,274,486
Lease liabilities 3,018 4,061 3,018 4,061
Financial liabilities 9,223,196 6,759,157 9,284,048 6,771,573
* Derivative financial instruments consist of swaps, futures, forwards and options related to commodity trading derivatives.
** Derivatives in economic hedges consist of foreign exchange derivatives.
Group and Parent
EUR '000 2022 2021
Balance at 1 January 30,407 6,627
Profit/loss deferred on new transactions 246,760 27,894
Profit/loss recognised in the income statement -3,637 -4,114
Reserve balance at 31 December 273,530 30,407
Annual Report 2022 NOTES TO FINANCIAL STATEMENTS 31
OTHER FINANCIAL NOTES
4.1 STAFF COSTS
Refer to note 4.2 for further information regarding the
Group’s share savings programme.
ACCOUNTING POLICIES
Staff Costs
Wages, salaries, pension contributions, social security
contributions, sick leave and bonuses are recognised in
the year in which the associated services are rendered
by employees of the Group.
Other external expenses
Other external expenses comprise other operating ex-
penses, including expenses for premises, consultancy,
marketing and office expenses, etc.
4.2 RELATED PARTIES
Danske Commodities A/S is controlled by Equinor Refin-
ing Norway AS, 5954 Mongstad, 1263 Lindås, Norway. The
ownership is registered in the Company’s register of
shareholders as holding 100% of the votes and shares.
The Group is included in the consolidated financial
statements of its ultimate Parent Company, Equinor
ASA.
The consolidated financial statements of Equinor ASA
can be obtained on request to:
Equinor ASA, Forusbeen 50, 4035 Stavanger, Norway.
OTHER RELATED PARTIES
Other related parties comprise the management of Equi-
nor Refining Norway AS and Equinor ASA as well as the
Board of Directors and the Executive Board, together
with their immediate families. Furthermore, other re-
lated parties include companies in which Equinor ASA
and the aforementioned individuals have significant in-
fluence, joint control or control.
The majority of the agreements related to these trans-
actions are renegotiated on a regular basis. There were
no transactions with members of the Board of Directors
and the Executive Board, other than remuneration.
Group Parent
EUR '000 2022 2021 2022 2021
Wages and salaries 68,475 47,634 66,298 45,978
Pensions 3,056 2,553 2,997 2,483
Other staff costs 2,952 1,407 2,725 1,268
Staff costs 74,483 51,594 72,020 49,729
Average number of employees 374 338 365 330
Number of employees, end of the year 412 370 401 361
THE GROUP IS CONTROLLED BY THE FOLLOWING ENTITIES
Name Type Place of incoporation Ownership interest
Equinor ASA* Ultimate parent entity Norway 100%
Equinor refining Norway AS** Immediate parent entity Norway 100%
* The Norwegian State is the majority shareholder of Equinor ASA
** Equinor ASA holds 100% of the issued ordinary shares of Equinor refining Norway AS
Annual Report 2022 NOTES TO FINANCIAL STATEMENTS 32
4.2 RELATED PARTIES – CONTINUED
The Group has a Parent Company Guarantee of EUR 300
million (2021: EUR 100 million) to cover ongoing trading
commitments.
The sales to and purchases from related parties are
made on EFET terms.
KEY MANAGEMENT REMUNERATION
During the year, key management personnel consisted of
the CEO and one CFO (2021: three members, one CEO
and two different CFOs). The current CFO was appointed
on 3
January 2022.
Remuneration to four members of the Board of Directors
is paid by the ultimate parent, Equinor ASA. Remunera-
tion to two members of the Board of Directors is paid by
Danske Commodities A/S and amounted to EUR 54 thou-
sand for 2022 (2021: EUR 72 thousand).
Remuneration of the Executive Board comprises a base
salary, pension contribution, share-based incentive pro-
grammes and other benefits (car, cash bonus, etc.).
SHARE SAVINGS PROGRAMME
The share savings programme provides employees with
the opportunity to purchase Equinor shares through
monthly salary deductions. If shares are kept for two
full calendar years of continued employment, following
the year of purchase, the employees will be allocated
one bonus share for each share purchased. The latest
vesting date for the granted bonus warrants is 2023. The
amount expensed for the Executive Board amounted to
EUR 14 thousand in 2022 (2021: EUR 21 thousand).
RELATED PARTY TRANSACTIONS
Group Parent
EUR '000 2022 2021 2022 2021
Transactions with related parties
Transactions included in 'trading income and revenue':
Sales of energy commodities to related parties 4,612,877 674,376 4,783,338 789,717
Sales of energy commodities to other related parties 1,504,861 947,585 1,504,861 947,585
Purchases of energy commodities from related parties 3,950,232 1,190,298 4,173,563 1,271,966
Purchases of energy commodities from other related parties 27,177 115,183 27,177 115,183
Transactions included in 'cost of sales':
Purchases of energy commodities from related parties 1,881 2,418 12,773 14,681
Purchases of energy commodities from other related parties 427,656 264,752 427,656 264,752
Other transactions:
Finance expenses to related parties 41,343 240 41,463 288
Finance income from related parties 0 0 671 711
Change in value of derivatives from related parties 1,389,259 80,612 1,389,259 59,404
Change in value of derivatives from other related parties -1,716 0 -1,716 0
Equity injection from related parties 3,500,000 0 3,500,000 0
Related party balances at 31 December
Payables to related parties 624,351 183,751 695,033 199,774
Receivables from related parties 1,287,344 18,066 1,331,064 30,815
Payables to other related parties 190,843 8,414 190,843 8,414
Receivables from other related parties 27,279 32,297 27,279 32,715
Fair value of derivatives with related parties, asset 2,740,301 69,297 2,740,301 48,090
Fair value of derivatives with related parties, liability 1,339,052 34,349 1,339,052 34,349
Fair value of derivatives with other related parties, asset 35 0 35 0
Loans from related parties 3,014,636 1,440,049 3,014,636 1,440,049
Loans to other related parties 2,778,875 0 2,778,875 19,055
REMUNERATION OF THE EXECUTIVE BOARD
Group and Parent
EUR '000 2022 2021
Base salary 806 629
Other benefits 814 409
Pensions contributions 81 98
Shared-based payments 127 121
Total remuneration 1,828 1,257
Annual Report 2022 NOTES TO FINANCIAL STATEMENTS 33
4.2 RELATED PARTIES – CONTINUED
LONG-TERM INCENTIVE PROGRAMME ('LTI')
The LTI is calculated as a portion of the CEO's fixed re-
muneration. On behalf of the CEO, the company ac-
quires shares equivalent to the net annual grant
amount. The shares are subject to a three-year lock-in
period and then released for the CEO’s disposal. If the
lock-in obligations are not fulfilled, the CEO must pay
back the gross value of the locked-in shares limited to
the gross value of the grant amount.
The level of the annual LTI reward is in the range of 20-
30% of the annual base salary for the participant on the
condition the CEO is invited to participate in in the LTI
programme. The latest vesting date for granted LTI-pro-
grammes is 2023. The amount expensed for the LTI pro-
gramme amounted to EUR 113 thousand in 2022 (2021:
EUR 99 thousand).
The total recognised expense for the Executive Board
amounts to EUR 127 thousand in 2022 (2021: EUR 120
thousand) and was expensed in the period incurred.
ACCOUNTING POLICIES
Equinor ASA has established share-based incentive pro-
grammes which are equity-settled and in which the Ex-
ecutive Board and employees in Danske Commodities
can participate. Danske Commodities compensates the
parent entity for the cost of both the LTI and the share
savings programme through intra-group recharges. The
recharges are linked to the fair value of the programmes
and the vesting period. Recharged costs from the parent
entity are expensed in the period incurred. Costs relat-
ing to the share-based programmes are recognised in
the income statement within staff costs.
4.3 FINANCIAL INCOME AND EXPENSES
ACCOUNTING POLICIES
Financial income and expenses comprise interest in-
come and interest expenses, realised and unrealised ex-
change rate adjustments as well as interest on extra
payments and repayment under the on-account taxation
scheme and interest in respect of lease liabilities.
Other financial income primarily comprises realised
gains on exchange forward derivatives as well as inter-
est income. Other financial expenses primarily comprise
realised losses on exchange forward derivatives as well
as well as interest expenses.
FINANCIAL INCOME
Group Parent
EUR '000 2022 2021 2022 2021
Interest income, group enterprises 0 0 671 711
Currency exchange gains 266 0 0 0
Other financial income 9,467 6,161 8,879 5,998
Total 9,733 6,161 9,550 6,709
FINANCIAL EXPENSES
EUR '000 2022 2021 2022 2021
Net fair value gains/losses on listed securities 0 1,723 0 1,723
Interest expense, group enterprises 41,343 240 41,463 288
Other financial expenses 43,098 8,161 42,924 8,155
Currency exchange losses 3,001 2,872 3,002 2,868
Interst on lease liabilities 66 87 66 87
Total 87,508 13,083 87,455 13,121
Annual Report 2022 NOTES TO FINANCIAL STATEMENTS 34
WORKING CAPITAL
5.1 INVENTORIES
Inventories comprise gas and certificates for resale. Ex-
penses relating to the gas trading inventories are recog-
nised as 'trading income'. Expenses relating to certifi-
cates are recognised as 'cost of sales'.
Costs related to certificate inventories expensed in the
income statement amounts to EUR 673,265 thousand
(2021: EUR 526,267 thousand).
SIGNIFICANT ACCOUNTING ESTIMATES
Fair value measurement of the gas trading inventories
requires management to make estimates and use as-
sumptions, as observable market prices for gas kept in
storages are not available, whereas closely related
proxy prices for gas kept at the gas hubs are. The proxy
prices are used to value the storages.
ACCOUNTING POLICIES
The gas trading inventories are acquired with the pur-
pose of selling in the near future and generating a profit
from fluctuations in price or margin. Therefore, the
Group meets the criteria in IAS 2 for broker-traders.
As a result, gas trading inventories are measured at fair
value less cost to sell, using quoted spot prices at each
physical location. Changes in fair value are recognised
in the income statement within 'trading income and rev-
enue'. The inventories are categorised within level 2 of
the fair value hierarchy.
Certificate inventories are measured at the lower of
cost according to FIFO and net realisable value. The net
realisable value of certificate inventories is calculated
at the amount expected to be generated by sales during
normal operations less-selling expenses. The net realis-
able value is determined allowing for marketability, ob-
solescence and development in expected sales.
In the event of a write-down of certificate inventories to
net realisable value, the write-down is expensed in the
period when the loss occurs. Any subsequent reversal of
a write-down, as a result of an increase in the net realis-
able value, will be recognised as a reduction in the
amount of inventory costs recognised in the period when
the increase has occurred.
5.2 TRADE RECEIVABLES
Group Parent
EUR '000 2022 2021 2022 2021
Gas trading inventories 1,869,772 1,098,444 1,869,772 1,098,444
Certificates 44,703 26,458 44,703 26,458
Total inventories 1,914,475 1,124,902 1,914,475 1,124,902
Group Parent
EUR '000 2022 2021 2022 2021
Trade receivables 1,374,933 829,948 1,365,931 818,501
Loss allowance -5,453 -198 -5,453 -198
Total receivables 1,369,480 829,750 1,360,478 818,303
LOSS ALLOWANCE
Group Parent
EUR '000 2022 2021 2022 2021
Loss allowance at 1 January 198 0 198 0
Loss allowance recognised in profit or loss during the year
5,453
198
5,453
198
Unused amount reversed -198 0 -198 0
Loss allowance at 31 December 5,453 198 5,453 198
Annual Report 2022 NOTES TO FINANCIAL STATEMENTS 35
5.2 TRADE RECEIVABLES – CONTINUED
Information about Danske Commodities’ exposure to
credit risk and foreign currency risk can be found in
notes 3.2 and 3.1. Information about the Group’s gross
trade receivables balances at 31 December can be
found in note 5.6.
ACCOUNTING POLICIES
Trade receivables are amounts due from customers for
goods sold or services performed in the ordinary course
of business. Trade receivables are measured at amor-
tised cost less allowance for lifetime expected credit
losses. They are generally due for settlement within 30
days and are therefore all classified as current.
The Group applies the IFRS 9 simplified approach to
measuring expected credit losses which uses a lifetime
expected loss allowance for all trade receivables.
Therefore, the Group does not track changes in credit
risk, but instead recognises a loss allowance based on
lifetime expected credit losses at each reporting date.
The Group has established a provision matrix that is
based on its historical credit loss experience, taking for-
ward-looking factors into account. The expected loss
rates are updated at each reporting date.
Historically, the Group has not recognised any signifi-
cant impairment of any single debtor.
In addition to the lifetime expected credit loss allow-
ance on trade receivables, the Group may also recog-
nise an impairment on a specific debtor if there is any
internal or external information indicating that a loss
will incur. When receivables have been written off, the
Group continues to engage in enforcement activity to
attempt to recover the receivable due. Recoveries made
are recognised in profit or loss.
Impairment losses on trade receivables are presented
as other external expenses within operating profit. Sub-
sequent recoveries of amounts previously written off are
credited against the same line item.
2022
AGING OF TRADE RECEIVABLES, GROSS
Group
EUR '000 Current Between 30 and 60 days More than 60 days Total
Expected loss rate 0% 0% 0%
Carrying amount - trade receivables 4,829,255 69 1,327 4,830,651
Loss allowance 5,452 1 0 5,453
2021
Group
EUR '000 Current Between 30 and 60 days More than 60 days Total
Expected loss rate 0% 0% 50%
Carrying amount - trade receivables 3,333,031 0 117 3,333,148
Loss allowance 198 0 0 198
2022
Parent
EUR '000 Current Between 30 and 60 days More than 60 days Total
Expected loss rate 0% 0% 50%
Carrying amount - trade receivables 3,321,584 0 117 3,321,701
Loss allowance 198 0 0 198
2021
Parent
EUR '000 Current Between 30 and 60 days More than 60 days Total
Expected loss rate 0% 0% 0%
Carrying amount - trade receivables 4,820,253 69 1,327 4,821,649
Loss allowance 5,452 1 0 5,453
Annual Report 2022 NOTES TO FINANCIAL STATEMENTS 36
5.3 OTHER RECEIVABLES AND DEPOSITS RELATED TO TRADING
ACCOUNTING POLICIES
Deposits related to trading
Deposits relating to trading activities within the Group
are the amounts of cash required to maintain or open a
trading position with certain counterparties. Deposits
related to trading consists of margin calls and cash de-
posits.
Margin calls are a collateral payment to/from OTC
counterparties to cover changes in the value of underly-
ing assets used in futures/forward contracts. Cash de-
posits are used as collateral in order for the Group to
open a new position for certain counterparties.
Margin calls are monitored daily by management and
increases/decreases in margin calls are transferred at a
daily basis to ensure credit risk is minimised to the
greatest extend possible under the applicable agree-
ments.
Deposits related to trading are measured at amortised
cost.
5.4 OTHER PAYABLES AND DEPOSITS RELATED TO TRADING
ACCOUNTING POLICIES
Deposits related to trading
Accounting policies for deposits related to trading can
be found in note 5.3.
OTHER RECEIVABLES
Group Parent
EUR '000 2022 2021 2022 2021
VAT receivables 71,109 49,296 62,232 43,295
Other receivables 5,393 8,857 0 2,627
Total 76,502 58,153 62,232 45,922
OTHER PAYABLES
Group Parent
EUR '000 2022 2021 2022 2021
Staff obligations 35,945 22,281 35,945 22,281
Other payables 15,433 21,871 11,046 19,124
VAT payables 304 403 0 0
Total 51,682 44,555 46,991 41,405
Annual Report 2022 NOTES TO FINANCIAL STATEMENTS 37
5.5 PROVISIONS
Onerous contracts comprise contracts with delivery
from 2023 to 2027. The onerous contracts comprise con-
tracts for which the unavoidable costs for purchase of
commodities exceed the economic benefits for the same
commodities.
The Group is party to a number of minor court cases and
legal disputes. In our assessment, none of these will
significantly impact the Group’s financial position, nei-
ther individually nor collectively. The outcome of the
claims may depend on future events which are uncertain
by nature.
ACCOUNTING POLICIES
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past
event, it is probable that an outflow of resources em-
bodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the
amount of the obligation.
If the Group has a contract that is onerous, the present
obligation under the contract is recognised and meas-
ured as a provision. An onerous contract is a contract
under which the unavoidable costs (i.e. the costs that
the Group cannot avoid because it has the contract) of
meeting the obligations under the contract exceed the
economic benefits expected to be received under it.
Group
Parent
EUR '000
2022
2021
2022
2021
Onerous contracts
At 1 January
1,297
0
1,297
0
Arising during the year
0
1,297
-214
1,297
Utilised amounts
-214
0
0
0
Litigation and claims
At 1 January
1,500
0
1,500
0
Arising during the year
5,000
1,500
5,000
1,500
Reversal of unused amounts
-200
0
-200
0
Total
7,383
2,797
7,383
2,797
Current
6,763
1,714
6,763
1,714
Non-current
620
1,083
620
1,083
Total
7,383
2,797
7,383
2,797
Annual Report 2022 NOTES TO FINANCIAL STATEMENTS 38
5.6 OFFSETTING FINANCIAL ASSETS AND FINANCIAL LIABILITIES
2022
EUR '000
Gross amounts of
recognised financial
asset/liability
Gross amounts offset
in the balance sheet
Net amounts
presented in the
balance sheet
Cash collateral
(received/pledged)
Net amount
Financial assets
Trade receivables 4,830,651 3,461,171 1,369,480 226,758 1,142,722
Derivative financial
instruments
20,656,453 15,289,702 5,366,751 428,352 4,938,399
Deposits held for
trading
8,173,393 7,712,540 460,853 0 460,853
Total 33,660,497 26,463,413 7,197,084 655,110 6,541,974
Financial liabilities
Trade payables 4,910,201 3,461,171 1,449,030 201,124 1,247,906
Derivative financial
instruments
19,390,691 16,139,409 3,251,282 73,575 3,177,707
Deposits held for
trading
7,517,943 6,862,833 655,110 0 655,110
Total 31,818,835 26,463,413 5,355,422 274,699 5,080,723
2021
EUR '000
Gross amounts of
recognised financial
asset/liability
Gross amounts offset
in the balance sheet
Net amounts
presented in the
balance sheet
Cash collateral
(received/pledged)
Net amount
Financial assets
Trade receivables 3,333,148 2,503,398 829,750 59,686 770,064
Derivative financial
instruments
19,376,879 16,446,607 2,930,272 1,142,367 1,787,905
Deposits held for
trading
3,519,053 2,513,194 1,005,859 0 1,005,859
Total 26,229,080 21,463,199 4,765,881 1,202,053 3,563,828
Financial liabilities
Trade payables 3,384,028 2,503,398 880,630 92,264 788,366
Derivative financial
instruments
20,009,820 17,042,388 2,967,432 739,772 2,227,660
Deposits held for
trading
3,151,887 1,917,413 1,234,474 0 1,234,474
Total 26,545,735 21,463,199 5,082,536 832,036 4,250,500
2022 Parent
Related amounts not set off in the balance sheet
EUR '000
Gross amounts of
recognised financial
asset/liability
Gross amounts offset
in the balance sheet
Net amounts
presented in the
balance sheet
Cash collateral
(received/pledged)
Net amount
Financial assets
Trade receivables 4,821,649 3,461,171 1,360,478 226,758 1,133,720
Derivative financial
instruments
20,644,625 15,280,839 5,363,786 428,352 4,935,434
Deposits held for
trading
8,164,468 7,706,151 458,317 0 458,317
Total 33,630,742 26,448,161 7,182,581 655,110 6,527,471
Financial liabilities
Trade payables 4,904,709 3,461,171 1,443,538 201,124 1,242,414
Derivative financial
instruments
19,379,963 16,133,019 3,246,944 73,575 3,173,369
Deposits held for
trading
7,509,081 6,853,971 655,110 0 655,110
Total 31,793,753 26,448,161 5,345,592 274,699 5,070,893
Related amounts not set off in the balance sheet
Related amounts not set off in the balance sheet
Group
Group
Annual Report 2022 NOTES TO FINANCIAL STATEMENTS 39
5.6 OFFSETTING FINANCIAL ASSETS AND FINANCIAL LIABILITIES – CONTINUED
For 2021 gross amounts have been restated due to reas-
sessment of certain exchange traded derivatives being
derecognised, with no effect on net amounts presented.
ACCOUNTING POLICIES
Danske Commodities assesses financial assets and lia-
bilities on an individual basis and uses that assessment
as the unit of account. Financial assets and liabilities
are offset and the net amount is reported in the balance
sheet when the Group currently has a legally enforcea-
ble right to offset the recognised amounts, and there is
an intention to settle on a net basis or realise the asset
and settle the liability simultaneously.
Danske Commodities enters into master netting agree-
ments with counterparties to manage the credit risks
associated primarily with over-the-counter commodity
trading. These master netting agreements enable
Danske Commodities and their counterparties to set off
financial liabilities against financial assets in the ordi-
nary course of business as well as in case of default.
Amounts which cannot be offset under IFRS, but which
could be offset if certain conditions arise such as col-
lateral received or pledged, are presented in the table
to show the total net exposure of the Group.
2021 Parent
Related amounts not set off in the balance sheet
EUR '000
Gross amounts of
recognised financial
asset/liability
Gross amounts offset
in the balance sheet
Net amounts
presented in the
balance sheet
Cash collateral
(received/pledged)
Net amount
Financial assets
Trade receivables 3,321,701 2,503,398 818,303 59,686 758,617
Derivative financial
instruments
19,373,520 16,446,606 2,926,914 1,142,367 1,784,547
Deposits held for
trading
3,518,362 2,513,194 1,005,168 0 1,005,168
Total 26,213,583 21,463,198 4,750,385 1,202,053 3,548,332
Financial liabilities
Trade payables 3,383,061 2,503,398 879,663 92,264 787,399
Derivative financial
instruments
20,007,178 17,042,387 2,964,791 739,772 2,225,019
Deposits held for
trading
3,151,887 1,917,413 1,234,474 0 1,234,474
Total 26,542,126 21,463,198 5,078,928 832,036 4,246,892
Annual Report 2022 NOTES TO FINANCIAL STATEMENTS 40
5.7 CASH FLOW
ACCOUNTING POLICIES
Cash flow statement
The statement of cash flows is compiled using the indi-
rect method, showing cash flows from operating, invest-
ing and financing activities as well as cash and cash
equivalents at the beginning and end of the year for the
Group and the Parent Company, respectively.
Cash flows from operating activities
Cash flows from operating activities are calculated as
the net profit/loss for the year adjusted for changes in
working capital and non-cash operating items such as
depreciation, amortisation and impairment losses and
provisions.
Cash payments for short-term leases, leases of low
value assets and variable lease payments, which are
not included in the measurement of the lease liability
within operating activities, are classified as cash flows
from operating activities.
Working capital comprises current assets less short-
term debt excluding items included in cash and cash
equivalents.
Cash flows from investing activities
Cash flows from investing activities comprise cash
flows from acquisitions and disposals of intangible as-
sets, property, plant and equipment as well as fixed as-
set investments.
Cash flows from financing activities
Cash flows from financing activities comprise cash
flows from the raising and repayment of long-term debt,
repayment of lease liabilities, payments to and from
shareholders as well as payments to group cash pool.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and
on hand and short-term deposits with a maturity of
three months or less. The short-term deposits are highly
liquid, readily convertible to known amounts of cash
and subject to an insignificant risk of changes in value
and are held for the purpose of meeting short-term cash
commitments.
Demand deposits held in clearing bank accounts are in-
cluded as restricted cash if the deposits provided as
part of the Group’s operating activities and therefore is
deemed as held for the purpose of meeting short-term
cash commitments, and the deposits can be released
from the account without undue expenses.
CASH FLOW STATEMENT - NON-CASH ADJUSTMENTS
Group Parent
EUR '000 2022 2021 2022 2021
Financial income -9,733 -6,161 -9,550 -6,709
Financial expenses 87,508 13,083 87,455 13,121
Share of profit in subsidiaries after tax 0 0 -62,484 -9,353
Amortisation, depreciation and impairment losses 13,498 16,545 13,490 16,537
Tax on profit/loss for the year 410,399 84,296 396,071 82,190
Exchange rate adjustments -1,814 -789 0 0
Total 499,858 106,974 424,982 95,786
CASH FLOW STATEMENT - CHANGE IN WORKING CAPITAL
Group Parent
EUR '000 2022 2021 2022 2021
Change in inventories -789,573 -852,648 -789,573 -852,648
Change in trade and other receivables -1,293,754 -1,659,286 -1,299,810 -1,666,782
Change in fair value of derivatives -2,152,629 -24,897 -2,154,719 -24,180
Change in trade and other payables 618,693 1,981,963 667,285 1,992,965
Total -3,617,263 -554,868 -3,576,817 -550,645
Annual Report 2022 NOTES TO FINANCIAL STATEMENTS 41
CAPITAL EMPLOYED
6.1 INTANGIBLE ASSETS
Contractual rights consist of power purchase agree-
ments (PPAs) and gas storage contracts which were ac-
quired in 2019 and 2020 from the ultimate Parent Com-
pany Equinor ASA. All the contracts were in operation at
the time of purchase by Danske Commodities. All con-
tracts have been acquired at a price reflecting fair
value in the market at the date of acquisition.
ACCOUNTING POLICIES
Intangible assets are measured at cost less accumu-
lated amortisation and less any accumulated impair-
ment losses.
Cost comprises the cost of acquisition and expenses di-
rectly related to the acquisition up until the time when
the asset is ready for use.
Software projects containing significant development
aspects are identified as intangible assets when they
are clearly defined, identifiable, provide a development
opportunity for the Group and future use is intended.
Costs related to projects that do not meet the criteria
for recognition in the balance sheet are recognised as
expenses in the income statement as incurred. Develop-
ment costs previously recognised as an expense are not
recognised as an asset in a subsequent period.
Development costs that are directly attributable to the
design and testing of identifiable and unique projects,
including software products controlled by the Group,
are recognised as intangible assets when the following
criteria are met:
It is technically feasible to complete the soft-
ware and it will be available for use
Management intends to complete the software
and use or sell it
There is an ability to use or sell the software
It can be demonstrated how the software will
generate probable future economic benefits
Adequate technical, financial and other re-
sources needed to complete the development
and to use or sell the software are available
The expenditure attributable to the software
during its development can be reliably meas-
ured
Costs associated with maintaining the assets are rec-
ognised as an expense as and when incurred. Directly
attributable costs that are capitalised as part of the as-
sets include employee costs.
Capitalised development costs are recorded as intangi-
ble assets and amortised from the point at which the
asset is ready for use.
Amortisation based on cost reduced by any residual
value is calculated on a straight-line basis over the ex-
pected useful lives of the assets, which are:
Contractual rights: 4-18 years
Software: 3-5 years
2022 Group and Parent
EUR '000 Contractual rights Software
Software development
projects in progress
Cost at 1 January 94,618 25,881 962
Additions - internally developed 0 0 821
Additions 0 2,219 38
Transfers 0 654 -654
Cost at 31 December 94,618 28,754 1,167
Amortisation and impairment losses at 1 January 19,678 18,264 0
Amortisation for the year 8,343 3,299 0
Amortisation and impairment losses at 31 December 28,021 21,563 0
Carrying amount at 31 December 66,597 7,191 1,167
2021 Group and Parent
EUR '000 Contractual rights Software
Software development
projects in progress
Cost at 1 January 109,759 23,918 1,299
Additions - internally developed 0 0 904
Additions 0 1,559 50
Disposals -15,141 -887 0
Transfers 0 1,291 -1,291
Cost at 31 December 94,618 25,881 962
Amortisation and impairment losses at 1 January 22,981 16,258 0
Amortisation for the year 11,838 2,893 0
Reversal of amortisation of disposals for the year -15,141 -887 0
Amortisation and impairment losses at 31 December 19,678 18,264 0
Carrying amount at 31 December 74,940 7,617 962
Annual Report 2022 NOTES TO FINANCIAL STATEMENTS 42
6.1 INTANGIBLE ASSETS – CONTINUED
For the parent entity, a reserve is recognised in equity
for software projects that meet the criteria as develop-
ment projects. The amount recognised corresponds to
the amount capitalised as intangible assets for these
projects since 1 January 2016. The reserve is reduced
concurrently with amortisation of the software projects
and presented after tax.
Intangible assets are tested for impairment whenever
events or changes in circumstances indicate that the
carrying amount may not be recoverable. The key as-
sumptions used by management to determine whether
external or internal indicators of impairment on intangi-
ble assets exist are commodity prices, market outlook
and secondary foreign exchange rates.
An impairment loss is recognised for the amount by
which the asset’s carrying amount exceeds its recovera-
ble 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 sep-
arately identifiable cash inflows which are largely inde-
pendent of the cash inflows from other assets or groups
of assets (cash-generating units). Intangible assets that
suffered an impairment are reviewed for possible rever-
sal of the impairment at the end of each reporting pe-
riod.
Management assesses the risk of impairment of Danske
Commodities’ intangible assets. This requires judgment
in relation to the identification of cash-generating units
(CGUs) and other underlying assumptions used.
6.2 PROPERTY, PLANT AND EQUIPMENT
2022 Group
EUR '000
Land and
buildings
Other fixtures
and fittings, tools
and equipment
Right-of-use-assets
Leasehold
improvements
Cost at 1 January 0 4,177 6,889 2,040
Additions 0 2,984 135 6
Disposals 0 -209 -67 0
Exchange rate adjustments 0 -1 0 -12
Cost at 31 December 0 6,951 6,957 2,034
Depreciation and impairment losses at 1 January 0 2,847 3,015 1,920
Depreciation for the year 0 633 1,174 49
Exchange rate adjustments 0 0 0 -6
Reversal of depreciation on disposals for the year
0
-209
-67
0
Depreciation and impairment losses at 31 December 0 3,271 4,122 1,963
Carrying amount at 31 December 0 3,680 2,835 71
2021 Group
EUR '000
Land and
buildings
Other fixtures
and fittings, tools
and equipment
Right-of-use-assets
Leasehold
improvements
Cost at 1 January 0 4,838 6,818 2,498
Additions 0 703 86 30
Disposals 0 -1,358 -15 -460
Exchange rate adjustments 0 -6 0 -28
Cost at 31 December 0 4,177 6,889 2,040
Depreciation and impairment losses at 1 January 0 3,563 1,907 2,349
Depreciation for the year 0 647 1,123 44
Exchange rate adjustments 0 -5 0 -13
Reversal of depreciation on disposals for the year
0
-1,358
-15
-460
Depreciation and impairment losses at 31 December 0 2,847 3,015 1,920
Carrying amount at 31 December 0 1,330 3,874 120
Annual Report 2022 NOTES TO FINANCIAL STATEMENTS 43
6.2 PROPERTY, PLANT AND EQUIPMENT – CONTINUED
Right-of-use assets with carrying amounts of EUR 2,835
thousand (2021: EUR 3,873 thousand) are presented as
‘land and buildings‘ and ‘other fixtures and fittings,
tools and equipment‘ in the balance sheet. Right-of-use
assets included in the category ‘land and buildings‘
amounted to EUR 2,690 thousand at 31 December 2022
(2021: EUR 3,766 thousand). Right-of-use assets included
in the category ‘other fixtures and fittings, tools and
equipment‘ amounted to EUR 145 thousand at 31 Decem-
ber 2022 (2021: EUR 107 thousand).
ACCOUNTING POLICIES
Individual components of property, plant and equip-
ment that have different useful lives are accounted for
as separate items, which are depreciated separately.
Property, plant and equipment is measured at cost less
accumulated depreciation and less any accumulated
impairment losses.
Cost comprises the cost of acquisition and expenses di-
rectly related to the acquisition up until the time when
the asset is ready for use.
Depreciation based on cost reduced by any residual
value is calculated on a straight-line basis over the ex-
pected useful lives of the assets, which are:
Other fixtures and fittings, tools and equipment: 3-15
years
Leasehold improvements: 3-5 years
Right-of-use assets: 2-7 years
In the case of changes in the depreciation period or the
residual value, the effect on the depreciation charges is
recognised prospectively as a change in accounting es-
timates if the amount is material.
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 ex-
pressed by depreciation. If so, an impairment test is
carried out to determine whether the recoverable
amount is lower than the carrying amount, and the asset
is written down to its lower recoverable amount.
The recoverable amount of the asset is calculated as
the higher of net selling price and value in use. When a
recoverable amount cannot be determined for the indi-
vidual asset, assets are assessed in the smallest group
of assets for which a reliable recoverable amount can
be determined based on an overall assessment.
2022 Parent
EUR '000
Land and
buildings
Other fixtures
and fittings, tools
and equipment
Right-of-use-assets
Leasehold
improvements
Cost at 1 January 0 4,142 6,889 1,996
Additions 0 2,953 134 0
Disposals 0 -200 -67 0
Cost at 31 December 0 6,895 6,956 1,996
Depreciation and impairment losses at 1 January 0 2,812 3,015 1,899
Depreciation for the year 0 628 1,173 47
Reversal of depreciation on disposals for the year
0
-200
-67
0
Depreciation and impairment losses at 31 December 0 3,240 4,121 1,946
Carrying amount at 31 December 0 3,655 2,835 50
2021 Parent
EUR '000
Land and
buildings
Other fixtures
and fittings, tools
and equipment
Right-of-use-assets
Leasehold
improvements
Cost at 1 January 0 4,765 6,818 2,426
Additions 0 703 86 30
Disposals 0 -1,326 -15 -460
Cost at 31 December 0 4,142 6,889 1,996
Depreciation and impairment losses at 1 January 0 3,494 1,907 2,320
Depreciation for the year 0 644 1,123 39
Reversal of depreciation on disposals for the year
0
-1,326
-15
-460
Depreciation and impairment losses at 31 December 0 2,812 3,015 1,899
Carrying amount at 31 December 0 1,330 3,874 97
Annual Report 2022 NOTES TO FINANCIAL STATEMENTS 44
6.3 LEASES
Danske Commodities has lease contracts for various
items of office spaces, vehicles and other equipment
used in its operations. Leases of office spaces generally
have lease terms between five and seven years, while
motor vehicles and other equipment generally have
lease terms between one and four years.
The total cash outflows for leases amounted to EUR 1,4
million and EUR 1,2 million in 2022 and 2021, respec-
tively.
ACCOUNTING POLICIES
The Group leases various offices, warehouses, equip-
ment and vehicles.
Leases are recognised as a right-of-use asset and a cor-
responding liability at the date at which the leased as-
set is available for use by the Group. Lease liabilities
are initially recognised at the present value of future
lease payments including payments from extension or
purchase options that are considered reasonably cer-
tain to be exercised.
The lease liability is measured using the implicit bor-
rowing rate in the contracts or, when this is not availa-
ble, the Group’s average incremental borrowing rate at
the date of inception. Lease assets are depreciated over
a 2-7-year period.
Short-term leases and leases of low value of EUR 5 thou-
sand and below are accounted for as low-value-assets
and recognised as expenses in the income statement on
a straight-line basis over the lease term.
Subsequent to initial measurement, the liability will be
reduced with payments made and increased with inter-
est. Lease payments are allocated between principal
and finance cost. The finance cost is charged to profit
or loss over the lease period to produce a constant peri-
odic rate of interest on the remaining balance of the lia-
bility for each period. Lease assets are measured at
cost comprising the following:
the amount of the initial measurement of lease
liability
any lease payments made at or before the com-
mencement date
The lease assets are depreciated using the straight-line
method over the shorter of the expected lease term and
the useful life of the underlying asset. The lease assets
are tested for impairment whenever there is an indica-
tion that the assets may be impaired. No impairment in-
dicators were identified at 31 December 2022.
AMOUNTS RECOGNISED IN THE INCOME STATEMENT
Group and Parent
EUR '000 2022 2021
Depriciation of right-of-use-assets 1,174 1,123
Interest on lease liabilities 66 87
Expenses relating to low-value leases 34 56
Total 1,274 1,266
Annual Report 2022 NOTES TO FINANCIAL STATEMENTS 45
6.4 INVESTMENTS IN SUBSIDIARIES
ACCOUNTING POLICIES
Share of profit in subsidiaries after tax
The separate line item ‘share of profit in subsidiaries af-
ter tax’ in the income statement includes the propor-
tionate share of the underlying entities’ profit after tax
for the year.
Investments in subsidiaries
The Parent Company has chosen to apply the equity
method as the measurement method, and investments in
subsidiaries are measured accordingly.
On initial recognition, investments in subsidiaries are
measured at cost plus transaction costs and included in
the line item ‘investments in subsidiaries’ in the balance
sheet.
The total net revaluation of investments in subsidiaries
is transferred upon distribution of profit to ‘reserve un-
der the equity method’ in equity. The reserve is reduced
by dividends distributed to the Parent Company and ad-
justed for other equity movements in the subsidiaries.
Subsidiaries with a negative net asset value are recog-
nised at EUR 0 and any receivables from them are writ-
ten down by the Parent Company’s share of the negative
net asset value. Any legal or constructive obligation of
the Parent Company to cover the negative balance of
the enterprise is recognised in provisions.
Investments in subsidiaries measured at net asset value
are subject to impairment test requirements if there is
any indication of impairment.
Parent
EUR '000 2022 2021
Cost at 1 January 3,824 2,432
Disposals -10 -77
Additions 5,467 1,469
Cost at 31 December 9,281 3,824
Value adjustments at 1 January 11,910 3,355
Exchange rate adjustments -1,820 -804
Net profit/loss for the year 62,484 9,353
Disposal for the year 34 6
Value adjustments at 31 December 72,608 11,910
Carrying amount at 31 December 81,889 15,734
The financial statements of the Parent Company include:
Name
Share capital
Danske Commodities Albania Sh.p.k. Albania tALL 14,000 100%
Danske Commodities APAC Pte. Ltd. Singapore tSGD 2,000 100%
Danske Commodities Australia Pty Limited Australia tAUD 0 100%
Danske Commodities BH d.o.o. Bosnia and Herzegovina tEUR 513 100%
Danske Commodities Comercializadora de Energia Ltda Brazil tBRL 13,000 100%
Danske Commodities Deutschland Gmbh Germany tEUR 25 100%
Danske Commodities Kosovo SH.P.K. Kosovo tEUR 11 100%
Danske Commodities DOOEL Skopje Macedonia tMKD 55,822 100%
Danske Commodities Sweden AB Sweden tSEK 50 100%
Danske Commodities Turkey Enerji Ticaret A.Ş. Turkey tTRY 61,700 100%
Danske Commodities Ukraine LLC Ukraine tUAH 229 100%
Danske Commodities UK Limited United Kingdom tGBP 0 100%
Votes and
ownership
Place of registered office
Annual Report 2022 NOTES TO FINANCIAL STATEMENTS 46
TAX
7.1 TAX ON PROFIT/LOSS FOR THE YEAR
ACCOUNTING POLICIES
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 recognised in the income state-
ment, whereas the tax attributable to equity transac-
tions is recognised directly in equity.
Any changes in deferred tax due to changes to tax rates
are recognised in the income statement.
The Parent Company is subject to the Danish rules on
compulsory joint taxation of the Danish group enter-
prises. The tax effect of the joint taxation is allocated
to enterprises showing profit or loss in proportion to
their taxable incomes. The jointly-taxed enterprises
have adopted the on-account taxation scheme.
7.2 DEFERRED TAX
Deferred tax and provision for deferred tax comprise all
temporary differences between the carrying amount and
the tax base of intangible assets, property, plant and
equipment, receivables and short-term debt.
Group Parent
EUR '000 2022 2021 2022 2021
Current tax for the year 454,046 74,953 439,343 72,211
Deferred tax for the year -43,784 9,619 -43,413 10,255
Adjustment of tax relating to prior years 1,764 619 1,769 619
Adjustment of deferred tax relating to prior years -1,627 -895 -1,628 -895
Total tax for the year 410,399 84,296 396,071 82,190
The total contribution for the year is specified as follows:
Profit for the year before tax 1,877,605 387,205 1,863,277 385,099
Adjustments (non-deductible) -1,118 -840 -63,599 -10,256
Tax on profit/loss for the year 410,262 84,572 395,930 82,466
Effective tax rate 21.9% 21.8% 21.2% 21.4%
Tax on profit (loss) for the year can be explained as follows:
Calculated tax (22 %) 413,073 85,185 409,921 84,722
Calculated tax in foreign subsidiaries in relation to 22 % -2,565 -428 0 0
Non-deductible costs and non-taxable income -246 -185 -13,991 -2,256
Effective tax for the year 410,262 84,572 395,930 82,466
Group Parent
EUR '000 2022 2021 2022 2021
Deferred tax at 1 January 5,489 -3,235 6,129 -3,231
Deferred tax recognised in profit and loss for the year -45,411 8,724 -45,041 9,360
Deferred tax 31 December -39,922 5,489 -38,912 6,129
The items are recognised in the balance sheet as follows:
Deferred tax asset -39,922 -640 -38,912 0
Deferred tax liability 0 6,129 0 6,129
Total -39,922 5,489 -38,912 6,129
Deferred tax relates to the following
Property, plant and equipment -485 -526 -485 -526
Intangible assets 1,839 1,676 1,839 1,676
Current liabilities -3,241 -1,416 -3,241 -1,416
Derivative financial instruments -37,722 5,925 -36,775 6,546
Losses available for offsetting against future taxable income -63 -19 0 0
Other -250 -151 -250 -151
Total -39,922 5,489 -38,912 6,129
Annual Report 2022 NOTES TO FINANCIAL STATEMENTS 47
7.2 DEFERRED TAX – CONTINUED
ACCOUNTING POLICIES
Current tax receivables and liabilities
Current tax receivables and liabilities are recognised in
the balance sheet at the amount calculated on the ba-
sis of the expected taxable income for the year adjusted
for tax on taxable incomes for prior years and tax paid
on account. Tax receivables and liabilities are offset if
there is a legally enforceable right of set-off and an in-
tention to settle on a net basis or simultaneously.
Joint taxation contributions payable and receivable are
recognised in the balance sheet as corporation tax re-
ceivable or corporation tax payable.
Deferred tax assets and liabilities
Deferred tax is recognised in respect of all temporary
differences between the carrying amount and the tax
base of assets and liabilities.
Deferred tax assets, including the tax base of tax loss
carry-forwards, are measured at the value at which the
asset is expected to be realised, either by elimination in
tax on future earnings or by set-off against deferred tax
liabilities.
Deferred tax assets and liabilities are offset within the
same legal tax entity and jurisdiction.
Deferred tax is measured according to the tax rules and
at the tax rates applicable in the respective countries
at the balance sheet date when the deferred tax is ex-
pected to crystallise as current tax.
OTHER NOTES
8.1 AUDITORS’ FEES
Fees to statutory auditors comprise fees to auditors ap-
pointed by the Company at the Annual General Meeting.
Audit-related services comprise services related to im-
plementation and improvement of an integrated audit.
8.2 OTHER COMMITMENTS AND CONTINGENT LIABILITIES
GAS STORAGES
Danske Commodities has entered into various long-term
agreements for storage of gas. The agreements ensure
the rights to the capacity or volumes in question, but
also impose on the Group the obligation to pay for the
agreed-upon service, irrespective of actual use.
The terms of the contracts vary, with durations of up to
three years.
OTHER GUARANTEES AND COMMITMENTS TO RELATED
PARTIES
The Parent Company has provided guarantees and secu-
rities for related parties to third parties with a carrying
amount of EUR 10,290 thousand (2021: EUR 2,471 thou-
sand).
The Danish group enterprises are jointly and severally li-
able for tax on the taxable income etc. in the joint taxa-
tion. Danske Commodities A/S is the administration
company of the jointly-taxed companies. Furthermore,
the Danish group enterprises are jointly and severally li-
able for Danish withholding taxes such as tax on divi-
dend, royalty and interests. Any subsequent adjustments
to corporation tax and withholding taxes may increase
the Company’s obligations.
Group Parent
EUR '000 2022 2021 2022 2021
Statutory audit 173 139 173 139
Audit-related services 1,415 735 1,415 735
Total 1,588 874 1,588 874
MATURITY OF GAS STORAGE AGREEMENTS
Group and Parent
EUR '000
2023 54,425
2024 7,202
2025 504
Annual Report 2022 NOTES TO FINANCIAL STATEMENTS 48
8.3 STANDARDS ISSUED BUT NOT YET EFFECTIVE
The new and amended standards and interpretations
that are issued, but not yet effective, up to the date of
issuance of the Group’s financial statements are dis-
closed below. The Group intends to adopt these new and
amended standards and interpretations, if applicable,
when they become effective.
AMENDMENTS TO IAS 1: CLASSIFICATION OF LIABILITIES
AS CURRENT OR NON-CURRENT
In January 2020, the IASB issued amendments to para-
graphs 69 to 76 of IAS 1 to specify the requirements for
classifying liabilities as current or non-current. The
amendments clarify:
what is meant by a right to defer settlement
that a right to defer must exist at the end of the
reporting period
that classification is unaffected by the likeli-
hood that an entity will exercise its deferral
right
that only if an embedded derivative in a con-
vertible liability is itself an equity instrument
would the terms of a liability not impact its
classification
The amendments are effective for annual reporting peri-
ods beginning on or after 1 January 2023 and must be
applied retrospectively. The Group is currently as-
sessing the impact the amendments will have on current
practices.
AMENDMENTS TO IAS 8: DEFINITION OF ACCOUNTING ES-
TIMATES
In February 2021, the IASB issued amendments to IAS 8,
in which it introduces a definition of ‘accounting esti-
mates’. The amendments clarify the distinction between
changes in accounting estimates and changes in ac-
counting policies and the correction of errors. Also, they
clarify how entities use measurement techniques and in-
puts to develop accounting estimates.
The amendments are effective for annual reporting peri-
ods beginning on or after 1 January 2023 and apply to
changes in accounting policies and changes in account-
ing estimates that occur on or after the start of that pe-
riod. Earlier application is permitted as long as this fact
is disclosed.
The amendments are not expected to have a material
impact on the Group’s financial statements.
8.4 EVENTS AFTER THE BALANCE SHEET DATE
No events have occurred since the balance sheet date
which could materially impact the Group or the Parent
Company’s financial position.
8.5 DEFINITIONS OF FINANCIAL RATIOS
Average number of employees: Calculated as average number of full-time employees
Number of employees, end of year: Calculated as number of employees at end of year
Equity ratio =
Equity x 100
Total assets
Return on equity =
Net profit for the year x 100
Average equity
Scalability =
EBIT x100
Gross profit
Return on capital employed =
EBIT x100
Average total equity plus net interest bearing debt