Frontmatec Group ApS
Platinvej 8, DK-6000 Kolding
CVR no: 37 77 37 43
Annual report 2020
Approved at the Company's annual general meeting on
30 April 2021
Chairman
___________________________________
Christian Curtz Henriksen
Frontmatec Group ApS
Annual report 2020
R_2020_Årsrapport Frontmatec Group endelig.docx
2
Contents
Statement by the Board of Directors and the Executive Board 3
Independent auditor's report 4
Management's review 8
Alternative performance measures 15
Consolidated financial statements for the period 1 January – 31 December 17
Income statement 17
Statement of comprehensive income 17
Balance sheet 18
Statement of changes in equity 20
Cash flow statement 21
Notes to the Consolidated Financial Statements 23
Parent company financial statements for the period 1 January – 31 December 53
Income statement 53
Statement of comprehensive income 53
Balance sheet 54
Statement of changes in equity 56
Cash flow statement 57
Notes to the Parent financial statements 59
Frontmatec Group ApS
Annual report 2020
3
Statement by the Board of Directors and the Executive Board
The Board of Directors and the Executive Board have today discussed and approved the annual report of Frontmatec Group ApS for
the financial year 1 January – 31 December 2020.
The financial statements are presented in accordance with the International Financial Reporting Standards (IFRS) as adopted by
the EU and supplementary Danish disclosure requirements of the Danish Financial Statements Act.
It is our opinion that the consolidated financial statements and the parent company financial statements give a true and fair view
of the Group's and the Company's financial position at 31 December 2020
and of the results of the Group's and the Company's operations and cash flows for the financial year
1 January – 31 December 2020.
In our opinion, the management commentary contains a fair review of the development of the Group’s and the Parent’s business
and financial matters, the results for the year and of the Parent’s financial position and the financial position as a whole of the
entities included in the consolidated financial statements, together with a description of the principal risks and uncertainties that
the Group and the Parent face.
We recommend the annual report for adoption at the Annual General Meeting.
Kolding, 30 April 2021
Executive Board:
Allan Jan Formann Kristensen
Chief Executive Officer
Thomas Nybo Stenager
Chief Financial Officer
Board of Directors:
Arne Vraalsen
Chairman
Christoffer Arthur Müller
Vice Chairman
Christian Gymos
Schmidt-Jacobsen
Jan Kjærsgaard
Remko Rosman
Frontmatec Group ApS
Annual report 2020
4
Independent auditor's report
To the shareholders of Frontmatec Group ApS
Opinion
We have audited the consolidated financial statements and the parent financial statements of Frontmatec Group ApS for the
financial year 01.01.2020 - 31.12.2020, which comprise the income statement, statement of comprehensive income, balance
sheet, statement of changes in equity, cash flow statement and notes, including a summary of significant accounting policies, for
the Group as well as for the Parent. The consolidated financial statements and the parent financial statements are prepared in
accordance with International Financial Reporting Standards as adopted by the EU and additional requirements of the Danish
Financial Statements Act.
In our opinion, the consolidated financial statements and the parent financial statements give a true and fair view of the Group’s
and the Parent’s financial position at 31.12.2020, and of the results of their operations and cash flows for the financial year
01.01.2020 - 31.12.2020 in accordance with International Financial Reporting Standards as adopted by the EU and additional
requirements of the Danish Financial Statements Act.
Our opinion is consistent with our audit book comments issued to the Audit Committee and the Board of Directors.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs) and the additional requirements applicable
in Denmark. Our responsibilities under those standards and requirements are further described in the Auditor’s responsibilities for
the audit of the consolidated financial statements and the parent financial statements section of this auditor’s report. We are
independent of the Group in accordance with the International Ethics Standards Board of Accountants' Code of Ethics for
Professional Accountants (IESBA Code) and the additional requirements applicable in Denmark, and we have fulfilled our other
ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
To the best of our knowledge and belief, we have not provided any prohibited non-audit services as referred to in Article 5(1) of
Regulation (EU) No 537/2014.
In October 2019, Frontmatec Group ApS completed a 5-year senior secured bonds issue. The bonds were listed on Nasdaq OMX
Copenhagen on 01 May 2020, from which date Frontmatec Group ApS became a Public Interest Entity. We have been reappointed
annually by decision of the General Meeting for a total of 1 times since the listing up to and including the financial year 2020.
Key audit matters
Based on our risk assessment, we have assessed the relevant internal controls for construction contracts primarily relating to
contract acceptance, change orders, monitoring of project development, costs incurred and estimation of costs to complete and
assessment of specific project risks.
Valuation of construction contracts
Refer to notes 2, 3, 20 and 21 in the consolidated financial statements. Significant judgements are required by Management in
determining stage of completion and estimating profit on each project, including assessment of provisions for specific project
risks.
At 31 December the carrying value of construction contract assets was DKK 154 million and construction contract liabilities DKK
139 million.
Minor changes in the stage of completion and specific project risks can have a significant impact on the valuation and recognition
of construction contracts and income for the year. Accordingly, the valuation of construction contracts is considered to be a key
audit matter.
How the matter was addressed in the audit
Based on our risk assessment, we have assessed the relevant internal controls for construction contracts primarily relating to
contract acceptance, change orders, monitoring of project development, costs incurred and estimation of costs to complete and
assessment of specific project risks.
We obtained from Management an overview of the Group’s construction contracts at 31 December 2020 covering both in progress
contracts as of year-end and contracts completed during the year.
Frontmatec Group ApS
Annual report 2020
5
Independent auditor's report
Based on assessed project risks and materiality, we selected a sample of contracts where we obtained the underlying contracts,
including change orders, original budget and any changes made to original budgets, including estimates of costs to complete and
project reports and corresponding risk provision, where deemed relevant by us. For the selected contracts, we assessed and
challenged Management’s assumptions for determining stage of completion with due consideration to its assessment of project
risks and risk provisions and estimated profit/loss through interviews with project controllers, project management, legal
department and management representatives as well as our understanding and assessment of the contract terms, associated
project risks, including valuation of change orders under discussion with customers and final acceptance.
For the selected completed contracts, we performed retrospective reviews of assessment of project risk and development and
utilisation of risk provisions to assess the completeness and accuracy of Management’s assumptions applied throughout the
contract period.
Valuation of goodwill
The Group has a carrying value of goodwill arising from acquisitions of DKK 1.110 million. The value of goodwill is supported by
Management’s assessment of the future value based on strategic plans, and value-in-use calculations which are based on future
cash flow. We focused on this area because the valuation assessment of Goodwill is dependent on complex and subjective
judgements by Management as well as estimation over the future outcome, which is uncertain by nature. Accordingly, the carrying
value of goodwill is considered to be a key audit matter. Refer to note 2 and 14 in the Consolidated Financial.
How the matter was addressed in the audit
We assessed the Group’s impairment methodology including the identification of CGUs. We challenged Management’s estimates
and key assumptions used in the valuation of Goodwill, comprising revenue development, profit margins, proposed capital
expenditure and growth expectations, etc. Furthermore, we evaluated Management’s sensitivity analysis and challenged key
assumptions within the valuation calculations.
We evaluated the disclosures in relation to impairment testing of goodwill.
Statement on the management commentary
Management is responsible for the management commentary.
Our opinion on the consolidated financial statements and the parent financial statements does not cover the management
commentary, and we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements and the parent financial statements, our responsibility is to
read the management commentary and, in doing so, consider whether the management commentary is materially inconsistent
with the consolidated financial statements and the parent financial statements or our knowledge obtained in the audit or
otherwise appears to be materially misstated.
Moreover, it is our responsibility to consider whether the management commentary provides the information required under the
Danish Financial Statements Act.
Based on the work we have performed, we conclude that the management commentary is in accordance with the consolidated
financial statements and the parent financial statements and has been prepared in accordance with the requirements of the
Danish Financial Statements Act. We did not identify any material misstatement of the management commentary.
Management's responsibilities for the consolidated financial statements and the parent financial statements
Management is responsible for the preparation of consolidated financial statements and parent financial statements that give a
true and fair view in accordance with International Financial Reporting Standards as adopted by the EU and additional
requirements of the Danish Financial Statements Act, and for such internal control as Management determines is necessary to
enable the preparation of consolidated financial statements and parent financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements and the parent financial statements, Management is responsible for assessing
the Group’s and the Parent’s ability to continue as a going concern, for disclosing, as applicable, matters related to going concern,
and for using the going concern basis of accounting in preparing the consolidated financial statements and the parent financial
statements unless Management either intends to liquidate the Group or the Entity or to cease operations, or has no realistic
alternative but to do so.
Frontmatec Group ApS
Annual report 2020
6
Independent auditor's report
Auditor's responsibilities for the audit of the consolidated financial statements and the parent financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements and the parent financial
statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs and the additional requirements applicable in Denmark will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial
statements and these parent financial statements.
As part of an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark, we exercise
professional judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated financial statements and the parent financial
statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s and the
Parent’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by Management.
Conclude on the appropriateness of Management’s use of the going concern basis of accounting in preparing the
consolidated financial statements and the parent financial statements, and, based on the audit evidence obtained,
whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's and
the Parent’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to
draw attention in our auditor’s report to the related disclosures in the consolidated financial statements and the parent
financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group and
the Entity to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements and the parent financial
statements, including the disclosures in the notes, and whether the consolidated financial statements and the parent
financial statements represent the underlying transactions and events in a manner that gives a true and fair view.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction,
supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to
bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in
the audit of the consolidated financial statements and the parent financial statements of the current period and are therefore the
key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the
matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the
adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Frontmatec Group ApS
Annual report 2020
7
Independent auditor's report
Copenhagen, 30 April 2021
Deloitte
Statsautoriseret Revisionspartnerselskab
Business Registration No 33 96 35 56
Bill Haudal Pedersen
State-Authorised Public Accountant
Identification No (MNE) mne30131
Søren Alsen Lauridsen
State-Authorised Public Accountant
Identification No (MNE) mne40040
Frontmatec Group ApS
Annual report 2020
8
Management's review
Company details
Name
Address, zip code, city
Frontmatec Group ApS
Platinvej 8, DK-6000 Kolding
CVR no.
Established
Registered office
Financial year
37 77 37 43
6 June 2016
Kolding
1 January – 31 December
Website
http://www.frontmatec.com/
Board of Directors
Arne Vraalsen, Chairman
Christoffer Arthur Müller, Vice Chairman
Christian Gymos Schmidt-Jacobsen
Jan Kjærsgaard
Remko Rosman
Executive Board
Allan Jan Formann Kristensen, CEO
Thomas Nybo Stenager, CFO
Auditors
Deloitte Statsautoriseret Revisionspartnerselskab
City Tower
Værkmestergade 2
DK-8000 Aarhus C
Frontmatec Group ApS
Annual report 2020
9
Management's review
Financial highlights for the Group
DKK’000
2020
2019
2018
2017
Key figures
Revenue
1,415,574
1,662,323
1,418,685
1,341,573
Gross profit
367,363
393,728
397,556
351,849
Operating profit before depreciation amortization and
special items (EBITDA before special items)
126,452
171,921
207,205
182,996
Pro forma EBITDA before special items
214,381
201,096
226,055
216,100
Net finance costs
-98,727
-77,188
-46,756
-43,114
Loss for the year
-124,864
-120,860
-54,987
-52,559
Equity
472,756
614,645
1,021,038
979,156
Balance sheet totals
2,582,019
2,731,312
2,695,148
2,374,242
Financial development
Cash flows from operating activities
64,906
-129,022
93,522
90,147
Cash flows from investing activities
-52,318
-164,049
-67,312
-212,849
Cash flows from property, plant and equipment
-31,858
-16,901
-18,745
-22,429
Cash flows from financing activities
-40,777
293,674
-54,941
726,797
Change in cash and cash equivalents for the year
-28,190
603
-28,731
604,095
Ratios
Gross margin (%)
26.0%
23.7%
28.0%
26.2%
Pro forma EBITDA before special items margin (%)
14.9%
11.8%
15.9%
15.9%
EBITDA before special items margin (%)
8.9%
10.3%
14.6%
13.6%
Return on assets (%)
-0.8%
-1.2%
-0.2%
1.0%
Equity ratio (%)
18.3%
22.5%
37.9%
41.2%
Number of employees
1,163
1,263
1,230
1,000
Financial ratios are calculated in accordance with the recommendations of the Danish Finance Society.
Pro forma EBITDA before special items are calculated in accordance with the definitions of Alternative Performance Measures on
page 14.
Definition of financial ratios:
Gross margin (%)
Gross profit ×100
Revenue
Pro forma EBITDA before special items margin (%)
Pro forma EBITDA before special items×100
Pro forma revenue
EBITDA before special items margin (%)
EBITDA before special items ×100
Revenue
Return on assets (%)
Operating profit ×100
Average assets
Equity ratio (%)
Equity at year end ×100
Total equity and liabilities at year end
Frontmatec Group ApS
Annual report 2020
10
Frontmatec’s business review
About Frontmatec Group
Frontmatec Group is a global leading provider of advanced food processing equipment. Frontmatec develops world-class
customized solutions for automation in the food industry and other hygiene sensitive industries. The Group is especially renowned
for the high-quality systems for the entire value chain of the meat industry – from carcass grading to slaughter lines, cutting and
deboning lines, hygiene systems and control systems to logistics and packaging.
Frontmatec Group is headquartered in Kolding, Denmark and has production facilities in Denmark, Romania, Canada, China, UK
and Germany. Frontmatec serves its global customers through a network of sales partners in addition to its own sales offices in
Denmark, Germany, UK, Poland, France, Spain, Netherlands, Russia, China, Canada and USA.
The strategy of the group is to leverage its strong market position and full-line product offering to outperform the underlying
market growth while at the same time executing on operational improvement initiatives in order to continue to enhance
profitability significantly.
Highlights 2020
The global pandemic impacted Frontmatec in 2020. Most customers have focused on ensuring business continuity and many
large greenfield projects, which were expected in 2020, were postponed. Consumers around the world still need food and the
Frontmatec business model has proven to be resilient. Frontmatec has an important role in the food value chain and despite
extensive travel restrictions and measures taken to ensure employee and customer safety, most companies in the Group has
delivered robust performance in 2020. The underlying demand for food and in particular meat is still high due to the continuous
growing global population combined with an increasing demand for automation. Therefore, we do not expect any long term impact
from the pandemic with respect to larger projects.
Overall, the business units in Frontmatec have performed satisfactory and have shown resilience to the global pandemic. The After
Sales business unit and other business units including Hygiene solutions, Stunning equipment and Software solutions, have
improved revenue and profit in 2020. The project business unit has lower revenue due to lower sale of the large greenfield
projects.
In May 2019, the manufacturing site in Kolding was relocated, which resulted in significant and unexpected costs in 2020, due to
low efficiency and rework of machinery for several larger projects that were manufactured and installed in 2020. As a result, the
operating profit before depreciations and special non-recurring items was negatively impacted with DKK 79 million in 2020.
Corrective actions have been put in place during 2020, including improved layout of the factory site, hiring of new people,
restructuring of the organization, and standardizing processes from signing the contract to handover to the customer. These
changes have improved profit in Kolding in 2021.
Financial statements
Frontmatec Group had Pro forma revenue of DKK 1,441 million in 2020, which represents a decrease of 16% from 2019 (DKK
1,707 million). The Group had lower revenue from the large greenfield projects, whereas revenue from upgrades, automation,
software, after sales, stunning and hygiene equipment has improved.
Pro forma EBITDA before special items was DKK 214 million in 2020 and improved from DKK 201 million in 2019.
EBITDA before special items (IFRS) was DKK 128 million in 2020 and DKK 44 million lower than 2019. The failed relocation in
Kolding has impacted EBITDA before special items (IFRS) negatively in 2020 with DKK 79 million. These costs are considered
extraordinary and non-recurring and have been adjusted in Pro forma EBITDA before special items of DKK 214 million.
Management did not provide an outlook in 2019 due to the circumstances around COVID-19. EBITDA before special items (IFRS)
for 2020 was lower than expected. The financial impact from the failed relocation in Kolding was higher than anticipated.
Cash flows from operating activities have improved with DKK 194 million from DKK -129 million in 2019 to DKK 65 million in
2020.
The balance sheet at 31 December 2020 for the Group shows total assets of DKK 2,582 million (2019: DKK 2,731 million) and
equity of DKK 473 million (2019: DKK 615 million).
Events after the balance sheet date
There have been no events since 31 December 2020, which could significantly affect the evaluation of the Group’s financial
position and revenue.
Frontmatec Group ApS
Annual report 2020
11
Frontmatec’s business review
Outlook
The strong revenue growth in recent years slowed down in 2020 due to the uncertainties of the global pandemic. Management
expect that the larger greenfield projects will continue to be postponed due to the global pandemic in the first half of 2021. We
expect several of these to materialize when the pandemic is under control. Furthermore, as a result of the pandemic, new health
and safety regulations are likely to be introduced in many markets which will drive demand for automation, re-builds and upgrades
to comply with the new regulations.
Based on above, we expect an increase in activity and EBITDA before special items (IFRS) above 2020 in the range of 10-20% or
at the same level as 2020, given the uncertainties of the global pandemic in 2021.
Bond
Frontmatec Group ApS EUR 175,000,000 Senior Secured Floating Rate Bonds due 10 October 2024 are listed on Nasdaq
Copenhagen (FRTMGP, ISIN DK0030452263).
Sustainability and CSR (in accordance with Danish Financial Statement Act §99a)
Food and meat in particular is a precious resource that has a major impact on the global sustainability. We, as a leading provider
of advanced food processing equipment are fully aware of this and we want to take an active part to in helping feeding the growing
global population, while using less resources. Our contribution towards this goal is to continuously design and develop solutions
that maximizes the yield of each raw material and eliminate meat that could be used for human consumption from going to waste.
We want Frontmatec to be a company where people are safe at work; and not just in Frontmatec locations, but equally at the
plants where we provide our solutions. Frontmatec has implemented measure for Corporate Social Responsibility which are
included in the UN Global Compact communication on progress report. How we work with sustainability and our contribution to the
UN Sustainability Development Goals is available on the Frontmatec website:
https://www.frontmatec.com/media/6566/frontmatec-cop_2020.pdf
Account of the gender composition of management (in accordance with Danish Financial Statement Act §99b)
Frontmatec Group has a policy for diversity and equality, e.g. with a fair representation of gender and cultural mix on the board of
directors as well as in the executive management group, based on a desire to strengthen the company’s versatility, broaden its
competences and improve its decision-making processes.
It is Frontmatec Group’s policy that regardless of gender, race, and religion, all employees must be treated equally in order to
ensure that everyone has equal opportunities for employment.
The board of directors aims to ensure that its members complement each other in the best possible way with respect to age,
experience, nationality, gender, etc. for the purpose of ensuring a competent and versatile contribution to the work of the board in
Frontmatec Group. These factors are taken into account when new candidates for the board of directors are identified, and the
nomination of candidates will always be based on an assessment of their competences, how they match Frontmatec Group’s
requirements and how they will contribute to the overall efficiency of the board of directors.
The share of women in the Frontmatec Group board of directors is 0% (2019: 0%), senior management is 14% (2019: 14%) and
the total number of employees is 8% (2019: 8%). The objective is to have at least one woman represented in the Board of
Directors and at least 20% women in the senior management group before 2024. To strengthen the market knowledge, the Board
of Directors have appointed Remko Rosman as member of the Board of Directors in 2020. Allan Jan Formann Kristensen has been
appointed as new CEO in 2020. Allan has been appointed as CEO due to his extensive experience from various senior
management positions. Allan has been working internationally within complex project sales, execution of large specialized
technical engineering projects and building up aftermarket focused organisations in many different industrial segments.
Corporate Governance
With the Danish private equity firm Axcel as the principal shareholder, the Group is subject to the guidelines of the Danish Venture
and Private Equity Association (DVCA, www.dvca.dk) for responsible ownership and corporate governance. Frontmatec Group
intends to fully comply with all guidelines where it is relevant.
Frontmatec Group ApS
Annual report 2020
12
Frontmatec’s business review
Management’s focus on corporate governance is, among other things, based on the Danish Companies Act, the Danish Financial
Statements Act, the company’s articles of association and good practice from comparable companies.
In addition, the management is continuously monitoring the development in the field of corporate governance to ensure that the
Group, internally as well as externally, is managed in a way that is in accordance with applicable laws in order to protect the interests
of all stakeholders.
Board of directors
The board of directors of the Frontmatec Group ensures that the executive board complies with the objectives, strategies and
business processes decided by the board of directors. Moreover, the board of directors ensures on an ongoing basis that the
governance structure and control systems are appropriate and working well.
The board of directors consists of five members. The principal shareholder Axcel has appointed Christoffer Arthur Müller and
Christian Schmidt-Jacobsen. The remaining three members of the board of directors are independent.
The board of directors has adopted the rules of procedure for the board of directors. In addition, the board of directors uses
committees for special tasks. Thus, a chairman committee, an audit and risk committee and a remuneration committee have been
established.
The following board members are represented on the individual committees:
Chairman committee: Arne Vraalsen and Christoffer Arthur Müller
Audit and risk committee: Christoffer Arthur Müller
Remuneration committee: Arne Vraalsen
The board of directors meet on a predetermined schedule of meetings at least six times a year. Usually there is an annual strategy
seminar in connection with an ordinary board meeting. The seminar defines the objectives and strategy of the Group.
The chairman committee meets with the management of the company on a monthly basis.
Audit and risk committee meetings are held three to four times a year. The work of the audit committee is described in an annual
calendar, which is approved by the board of directors. The committee is responsible for monitoring the company’s financial reporting
and the internal control environment as well as determining the relations and framework of the external audit. Standard procedures
have been established, focusing on e.g. updating financial reporting standards and reviews of any items containing material
accounting estimates and items of a one-off nature.
Frontmatec Group ApS’ Board of Directors and Executive Board hold other executive positions as described below:
Arne Vraalsen, Chairman
Elected in September 2016.
Chairman of the board of directors Ytab Group AB, Chairman of the board of directors MMAB Group AB.
Christoffer Arthur Müller, Partner
Elected in September 2016
CEO Frontmatec Holding III ApS incl. 2 subsidiaries, CEO Müller-Scheibye Invest ApS, CEO Mopani ApS, Chairman of the executive
board Mountain Top Holding III ApS including 3 daughter companies, Member of the board of directors of Brødrene Müller Holding
A/S, Member of the executive board Müller Gas Equipment A/S.
Christian Gymos Schmidt-Jacobsen, CEO
Elected in September 2016
CEO Axcel management A/S, CEO Spero Invest ApS, CEO and chairman of the board of directors Axcel Management Holding ApS,
Chairman of the board of directors of Frontmatec Holding III ApS and two daughter companies, Chairman of the board of directors
of AX V INV1 Holding III OY including two daughter companies, Chairman of the board of directors for AX IV Moment Holding III ApS
including 4 daughter companies, Chairman of the board of directors AX V INV8 Holding III ApS including one daughter company,
Chairman of the board of directors IsaDora AB, Member of the board of directors Axcel GP Fonden including two daughter
companies, Member of the board of directors Axcel V GP ApS, Member of the board of directors Axcel VI GP ApS.
Frontmatec Group ApS
Annual report 2020
13
Frontmatec’s business review
Jan Kjærsgaard, Group Executive Vice President
Elected in January 2017
CEO Eslund Holding ApS.
Remko Rosman, CEO DGS Group BV
Elected in June 2020
CEO DGS Group BV.
Allan Jan Formann Kristensen, CEO Frontmatec Group ApS
Allan Jan Formann Kristensen became Chief Executive Officer of the Frontmatec Group in December 2020. Before his employment
in the Company Mr. Kristensen has been with the Howden Group for the last 20 years in various senior management positions and
was last based in Singapore as CEO for Howden Asia. Mr. Kristensen has a TGM, in Business Administration and Management from
INSEAD’s leadership programme at Fontainbleu in France and a B.Sc. in Civil Engineering from Haslev Engineering College.
Thomas Nybo Stenager, CFO Frontmatec Group ApS
Thomas N. Stenager became the Chief Financial Officer of the Frontmatec Group in October 2017. Before joining Frontmatec, Mr.
Stenager has held Group CFO positions at Micro Matic and Fertin Pharma. Prior to that Mr. Stenager held senior finance positions
at Tvilum - Masco Corporation, LEGO and has a background as auditor at PwC. Mr. Stenager holds a MSc Business Economics and
Auditing from Aarhus School of Business.
Financial reporting and control environment
The Board of Directors and Executive Board set out general requirements for business processes and internal controls. A number
of policies are defined by the Executive Board and approved by the Board of Directors. The overall operational responsibility for
risk management and internal controls relating to financial reporting rests with the Executive Board. The Audit Committee
appointed by the Board of Directors assesses at regular intervals Frontmatec’s overall organisational structure and organisation
and the staffing of the functions that are important to internal controls and risk management.
In collaboration with the local management of the individual subsidiaries, the Executive Board assesses whether the Group has an
appropriate and effective control environment. The Executive Board reports regularly to the Board of Directors on the development
of Frontmatec’s operations, the company’s financial performance and risk position.
Frontmatec’s central finance function is responsible for risk management and internal controls relating to financial reporting. The
Group finance function prepares Group accounting policies and instructions and ensures that the company has permanent
procedures in place for the preparation of financial statements, including an assessment of new accounting regulation and the
presentation of the financial reporting to Frontmatec’s stakeholders.
The Board of Directors and Executive Board receive monthly reports with detailed financial follow-up. All construction contracts are
reviewed on a monthly basis on project meetings by project managers and local management. Deviations to expectations on the
construction contracts are reviewed and approved by Executive Board.
Shareholders
Frontmatec Holding III ApS, Kolding, Denmark, owns 93.03% of:
Frontmatec Holding II ApS, Kolding, Denmark, which owns 100% of:
Frontmatec Holding I ApS, Kolding, Denmark, which owns 100% of:
Frontmatec Group ApS.
Frontmatec Group ApS
Annual report 2020
14
Frontmatec’s business review
Risk
Risk management is considered an essential and natural part of the realization of the Group’s objectives and strategy. The daily
activities, the implementation of the established strategy and the continuous use of business opportunities involve inherent risks,
and the company’s handling of these risks is therefore seen as a natural and integrated part of the daily work and a way to ensure
stable and reliable growth.
Unusual risks
The Group has no particular commercial or financial risks other than risks of common occurrence within the industry. The Group
considers the risks in the industry to be related to the global market conditions.
Financial risks
The Group is exposed to changes in exchange rates and interest rates due to its operational and financial set-up. The Group manages
its financial risks through instruments for hedging of currencies and interest.
Knowledge resources
The leading position of the Group within the red meat processing industry is dependent on the ability to retain and attract employees
with special skills and experience in order to achieve its business goals.
IT risks
Frontmatec uses IT to a significant extent and is vulnerable to interruptions of operations and breaches of the established security.
Frontmatec constantly seeks to improve its IT security in order to ensure that a high level of security is maintained at all times.
Frontmatec Group ApS
Annual report 2020
15
Alternative performance measures
The Group assesses its performance using a variety of alternative performance measures which are not defined under IFRS. The
Group applies these measures because it is considered an important supplement measure of the Group’s financial performance. It
is to be noted that since not all companies calculate financial measurements in the same manner, these are not always comparable
to measurements used by other companies (even if similarly labelled). Accordingly, these financial measures should not be seen as
a substitute for measures defined according to IFRS.
A reconciliation from these alternative performance measures to the nearest IFRS measure is presented below.
Pro forma revenue (non-IFRS)
Pro forma revenue is defined as revenue from all group entities for the period 1 January to 31 December. Group entities included
are entities where the Group has made an investment per 31 December and comprise subsidiaries and associated companies. For
associated companies, revenue is included on a pro rata basis. For entities acquired during the year, revenue is measured as though
the acquisition date for all acquired entities during the year had been as of the beginning of the annual reporting period.
Management considers pro forma revenue to be a useful measure of the full year activities of the Group, as it is per year-end.
DKK million
2020
2019
Pro forma revenue for the period ending 31 December
Revenue for the period ending 31 December
1,416
1,662
Impact from acquisitions (full year revenue)
0
12
Impact from associated companies (pro rata)
25
33
1,441
1,707
Revenue (IFRS)
1,416
1,662
Pro forma EBITDA before special items (non-IFRS)
Pro forma EBITDA before special items is defined as earnings before interest, tax, special non-recurring items, depreciation,
amortization and impairment for all group entities for the period 1 January to 31 December. Group entities included are entities
where the Group has made an investment per 31 December and comprise subsidiaries and associated companies. For associated
companies, Pro forma EBITDA before special items is included on a pro rata basis. For entities acquired during the year, Pro forma
EBITDA before special items is measured as though the acquisition date for all acquired entities during the year had been as of the
beginning of the annual reporting period.
Management considers Pro forma EBITDA before special items to be a useful measure of full year performance of the Group as it is
per year-end by adding financials for associated companies and full year numbers for acquired businesses during the year and by
excluding such interest, tax, special non-recurring items, depreciation, amortization and impairment, i.e. the measure is not
impacted by capital investments or extraordinary income and expenses that are considered to be non-recurring.
DKK million
2020
2019
Pro forma EBITDA before special items for the period ending 31 December
EBITDA before special items (non-IFRS)
207
185
Impact from acquisitions (full year EBITDA before special items)
0
2
Impact from associated companies
7
14
214
201
EBITDA before special items (IFRS)
126
172
Frontmatec Group ApS
Annual report 2020
16
Alternative performance measures
EBITDA before special items (non-IFRS)
EBITDA before special items is defined as earnings before interest, tax, depreciation, amortization and impairment. Management
considers EBITDA before special items to be a useful measure to monitor the underlying performance because by excluding the
before mentioned items, the measure is not impacted by capital investments when measuring performance.
The following table provides a reconciliation of Operating loss (EBIT) to EBITDA before special items:
DKK million
2020
2019
EBITDA before special items for the period ending 31 December
EBITDA before special items (IFRS)
126
172
Loss on disposals
2
0
Special items
79
13
207
185
EBITDA before special items (IFRS)
126
172
Special non-recurring items (non-IFRS)
Special non-recurring items are defined as non-recurring income and expenses that are not considered to be a part of the Group’s
ordinary operations such as restructuring costs and discontinued activities. Management considers adjustments for special items
to be a useful measure to monitor the underlying and ordinary performance of the Group.
The following table provides a specification of special non-recurring items:
DKK million
2020
2019
Special items for the period ending 31 December
External costs related to acquisitions
0
17
Discontinuing outsourcing activities
0
23
Costs of internal restructuring
87
24
Other
-1
9
Special items (non-IFRS)
86
73
Special items (IFRS)
8
60
Frontmatec Group ApS
Annual report 2020
17
Consolidated financial statements for the period 1 January – 31 December
Income statement
Note
DKK'000
2020
2019
4
Revenue
1,415,574
1,662,323
5,6
Production costs
-970,548
-1,156,856
8
Other operating income
9,886
154
External costs
-87,549
-111,893
Gross profit
367,363
393,728
6
Staff costs
-238,899
-221,695
9
Other operating costs
-2,012
-112
Operating profit before depreciation amortisation and special items
126,452
171,921
6,10
Special items
-7,750
-59,797
7
Depreciation, amortisation and impairment of non-current assets
-139,599
-145,922
-
Operating loss
-20,897
-33,798
16
Share of results of associates
1,739
13,361
11
Financial income
667
2,648
12
Financial expense
-98,939
-79,836
Loss before tax
-117,430
-97,625
13
Tax for the year
-7,434
-23,235
Loss for the year
-124,864
-120,860
Statement of comprehensive income
Note
DKK'000
2020
2019
Loss for the year
-124,864
-120,860
Items that are or may be reclassified subsequently to profit or loss:
Unrealised gain on forward exchange contracts for the year
1,769
2,236
Hereof tax
-422
-492
Exchange rate gain/loss on foreign investments
-16,562
12,222
Other comprehensive income for the year
-15,215
13,966
Comprehensive income for the year
-140,079
-106,894
Frontmatec Group ApS
Annual report 2020
18
Consolidated financial statements for the period 1 January – 31 December
Balance sheet
Note
DKK'000
2020
2019
ASSETS
Non-current assets
Goodwill
1,109,933
1,109,933
Development completed
217,833
269,964
Acquired intangible assets
165,084
183,940
Development in progress
104,398
82,551
14
Intangible assets
1,597,248
1,646,388
Land and buildings
126,905
137,073
Plant and machinery
26,147
33,296
Other fixtures and fittings, tools and equipment
16,123
15,160
16
Right-of-use assets
41,345
48,007
15
Property, plant and equipment
210,520
233,536
17
Investments in associates
37,702
40,292
22
Deferred tax asset
31,762
31,184
Fixed asset investments
69,464
71,476
Non-current assets
1,877,232
1,951,400
18
Inventories
189,124
197,804
19
Trade receivables
211,644
262,723
20,21
Contract assets
153,575
168,855
Amounts owed by Group entities
150
105
Income taxes receivable
2,316
639
Other receivables
36,184
54,997
Prepayments
18,203
1,207
Receivables
422,072
488,526
Securities and investments
3,517
5,753
Cash at bank and in hand
90,074
87,829
Current assets
704,787
779,912
ASSETS
2,582,019
2,731,312
Frontmatec Group ApS
Annual report 2020
19
Consolidated financial statements for the period 1 January – 31 December
Balance sheet
Note
DKK'000
2020
2019
EQUITY AND LIABILITIES
23
Share capital
100
100
Reserve for value adjustments of hedging transactions
-3,083
-4,430
Reserve for foreign exchange adjustments
3,018
19,580
Retained earnings
472,721
599,395
Equity
472,756
614,645
Liabilities
22
Deferred tax
100,834
118,662
24
Lease liabilities
26,592
33,840
24
Other credit institutions
1,290,760
1,294,250
24
Other long-term liabilities
22,684
0
Non-current liabilities
1,440,870
1,446,752
24
Current portion of long-term liabilities
16,920
17,791
Other credit institutions
148,792
118,357
25
Other provisions
11,236
12,853
20,21
Contract liabilities
139,144
142,272
Trade payables
123,639
171,131
Payable to associate company
0
11,514
Amounts owed to Group entities
1,010
1,765
Income taxes
24,545
13,024
Deferred income
2,847
2,780
Other payables
200,260
178,428
Current liabilities
668,393
669,915
Liabilities
2,109,263
2,116,667
EQUITY AND LIABILITIES
2,582,019
2,731,312
Frontmatec Group ApS
Annual report 2020
20
Consolidated financial statements for the period 1 January – 31 December
Statement of changes in equity
DKK'000
Share capital
Value adjust-
ments of
hedging
transactions
Foreign
exchange
adjustments
Retained
earnings
Total
Equity at 1 January 2019
100
-6,174
7,358
1,019,754
1,021,038
Comprehensive income for the year
Loss for the year
0
0
0
-120,860
-120,860
Other comprehensive income
Unrealised profit on currency and interest swap
in group entities
0
2,236
0
0
2,236
Hereof tax
0
-492
0
0
-492
Exchange rate on foreign investments
0
0
12,222
0
12,222
Other comprehensive income for the year
0
1,744
12,222
0
13,966
Comprehensive income for the year
0
1,744
12,222
-120,860
-106,894
Paid dividend
0
0
0
-292,860
-292,860
Dividend tax
0
0
0
-6,134
-6,134
Share-based payment
0
0
0
-505
-505
Equity at 31 December 2019
100
-4,430
19,580
599,395
614,645
DKK'000
Share capital
Value adjust-
ments of
hedging
transactions
Foreign
exchange
adjustments
Retained
earnings
Total
Equity at 1 January 2020
100
-4,430
19,580
599,395
614,645
Comprehensive income for the year
Loss for the year
0
0
0
-124,864
-124,864
Other comprehensive income
Unrealised profit on currency and interest swap
in group entities
0
1,769
0
0
1,769
Hereof tax
0
-422
0
0
-422
Exchange rate gain/loss on foreign
investments
0
0
-16,562
0
-16,562
Other comprehensive income for the year
0
1,347
-16,562
0
-15,215
Comprehensive income for the year
0
1,347
-16,562
-124,864
-140,079
Share-based payment
0
0
0
-1,810
-1,810
Equity at 31 December 2020
100
-3,083
3,018
472,721
472,756
Frontmatec Group ApS
Annual report 2020
21
Consolidated financial statements for the period 1 January – 31 December
Cash flow statement
DKK'000
2020
2019
Operating loss
-20,897
-33,798
Depreciation, amortisation and impairment losses
139,599
145,922
Provisions
-1,617
556
Changes in receivables
52,851
5,328
Changes in inventory, contract assets and contract liabilities
20,832
-141,758
Changes in trade payables
-47,492
-30,183
Changes in other working capital
35,897
46,344
Interest received
667
2,648
Interest paid
-98,939
-79,836
Corporation tax paid
-15,996
-44,245
Cash flows from operating activities
64,905
-129,022
Addition of intangible assets and property, plant and equipment
-62,889
-88,818
Sale of property, plant and equipment
6,307
2,026
Business acquisitions
0
-60,628
Dividends received
4,264
0
Cash flows from investing activities
-52,318
-147,420
Contracting of long-term liabilities
-4,361
580,957
Leasing activities
-18,109
-16,629
Capital movement
-18,307
-287,283
Cash flows from financing activities
-40,777
277,045
Net cash flows for the year
-28,190
603
Cash and cash equivalents at 1 January
-30,528
-31,131
Cash and cash equivalents at 31 December
-58,718
-30,528
The cash flow statement cannot be directly derived from the other components of the consolidated financial statements.
Cash at bank and in hand
90,074
8
Other credit institutions
-148,792
-118,357
Cash and cash equivalents at 31 December
-58,718
-30,528
Frontmatec Group ApS
Annual report 2020
22
Consolidated financial statements for the period 1 January – 31 December
Content of notes to the Consolidated Financial Statements
Note
1 Adoption of new and revised International Financial Reporting Standards (IFRS)
2 Key accounting estimates and judgements
3 Other general accounting policies
4 Segment information
5 Production costs
6 Staff costs
7 Depreciation, amortisation and impairment losses
8 Other operating income
9 Other operating cost
10 Special non-recurring items
11 Financial income
12 Financial expense
13 Tax for the year
14 Intangible assets
15 Property, plant and equipment
16 Right-of-use assets
17 Investments in associates
18 Inventories
19 Trade receivables
20 Contract assets and liabilities
21 Construction contracts
22 Deferred tax
23 Share capital
24 Long–term liabilities
25 Provisions
26 Security for loans and contingent liabilities
27 Financial risks
28 Derivatives
29 Related parties
30 Fees paid to auditors appointed at the annual general meeting
31 Incentive programmes
32 Reconciliation of financing activities
33 Events after the balance sheet date
34 New standards and interpretations issued but not yet effective
Frontmatec Group ApS
Annual report 2020
23
Consolidated financial statements for the period 1 January – 31 December
Notes to the Consolidated Financial Statements
1 Adoption of new and revised International Financial Reporting Standards (IFRS)
In the current year, the Group has applied a number of amendments to IFRS Standards and Interpretations issued by the IASB that
are effective for an annual period that begins on or after 1 January 2020. Their adoption has not had any material impact on the
disclosures or on the amounts reported in these financial statements. The Group has not early adopted any other standard,
interpretation or amendment that has been issued but is not yet effective.
Amendments to IFRS 3: Definition of a Business
The amendment to IFRS 3 Business Combinations clarifies that to be considered a business, an integrated set of activities and
assets must include, at a minimum, an input and a substantive process that, together, significantly contribute to the ability to
create output. Furthermore, it clarifies that a business can exist without including all of the inputs and processes needed to create
outputs. These amendments had no impact on the consolidated financial statements of the Group but may impact future periods
should the Group enter into any business combinations.
Amendments to IFRS 7, IFRS 9 and IAS 39 Interest Rate Benchmark Reform
The amendments to IFRS 9 and IAS 39 Financial Instruments: Recognition and Measurement provide a number of reliefs, which
apply to all hedging relationships that are directly affected by interest rate benchmark reform. A hedging relationship is affected if
the reform gives rise to uncertainty about the timing and/or amount of benchmark-based cash flows of the hedged item or the
hedging instrument. These amendments have no impact on the consolidated financial statements of the Group as the amount of
interest rate hedge relationships is limited.
Amendments to IAS 1 and IAS 8 Definition of Material
The amendments provide a new definition of material that states, “information is material if omitting, misstating or obscuring it
could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the
basis of those financial statements, which provide financial information about a specific reporting entity.” The amendments clarify
that materiality will depend on the nature or magnitude of information, either individually or in combination with other information,
in the context of the financial statements. A misstatement of information is material if it could reasonably be expected to influence
decisions made by the primary users. These amendments had no impact on the consolidated financial statements of, nor is there
expected to be any future impact to the Group.
Amendments to IFRS 16 Covid-19 Related Rent Concessions
On 28 May 2020, the IASB issued Covid-19-Related Rent Concessions - amendment to IFRS 16 Leases. The amendments provide
relief to lessees from applying IFRS 16 guidance on lease modification accounting for rent concessions arising as a direct
consequence of the Covid-19 pandemic. As a practical expedient, a lessee may elect not to assess whether a Covid-19 related
rent concession from a lessor is a lease modification. A lessee that makes this election accounts for any change in lease payments
resulting from the Covid-19 related rent concession the same way it would account for the change under IFRS 16, if the change
were not a lease modification.
The amendment applies to annual reporting periods beginning on or after 1 June 2020. Earlier application is permitted. This
amendment had no impact on the consolidated financial statements of the Group.
Frontmatec Group ApS
Annual report 2020
24
Consolidated financial statements for the period 1 January – 31 December
Notes to the financial statements
2 Key accounting estimates and judgements
The financial reporting process is subject to systematic assessment on an ongoing basis in collaboration with the Audit
Committee. The tasks and focus areas of the Audit Committee are updated every year in the form of an annual wheel. According to
the annual wheel, the tasks of the Audit Committee include monitoring the financial reporting process in connection with the
publication of annual and interim reports, including a review of accounting policies and significant accounting estimates and
judgments:
Revenue/construction contracts
The total expected costs related to construction contracts are partly based on an estimate, as they include provisions for
unforeseen cost deviations in future supplies of raw materials, subcontractor products and services plus commissioning and
handing over. Cost estimates have an impact when assessing the progress of contract works and thereby revenue recognition.
Impairment test
An estimate is made of the future free net cash flow based on budgets and the strategy and projections for subsequent years.
Significate parameters in this estimate are discount rate, revenue development, EBIT margins and growth expectations for the
years after the budget year.
Deferred tax liabilities and assets
Deferred tax assets are recognised if it is likely that there will be taxable income in the future against which timing differences or
tax loss carry forwards may be used.
For this purpose, Management estimates the coming years' earning based on budgets and expected growth.
Inventories
The net realisable value of inventories is calculated as selling price less costs of completion and costs necessary to make the sale.
The net realisable value is determined, taking into account marketability, obsolescence and development in expected selling
prices. Following the economic trend in the market, Management have given special attention to inventory turnover when
determining net realisable value.
Trade receivables
Estimates are used in determining the level of receivables that cannot be collected according to Management. When evaluating
the adequacy of the allowance for doubtful receivables, Management analyses trade receivables and examines changes in
customer creditworthiness, customer payment patterns and current economic trends.
Warranties
Warranties are measured on the basis of empirical information covering several years as well as estimates by Management of
future trends.
Fair value
Estimates and judgements used to determine fair value is described in the relevant notes.
Frontmatec Group ApS
Annual report 2020
25
Consolidated financial statements for the period 1 January – 31 December
Notes to the financial statements
3 Other general accounting policies
Frontmatec Group ApS is a private limited company registered in Denmark. The company holds a bond listed on Nasdaq OMX
Copenhagen. The financial statements section of the Annual Report for the year 1 January 2020 - 31 December 2020 comprises
both the consolidated financial statements of Frontmatec Group ApS and its subsidiaries (the Group) and the separate Parent
Company financial statements.
The consolidated annual accounts are presented in accordance with IFRS as adopted by the EU and other requirements of the
Danish Financial Statements Act reporting class D.
Basis of recognition and measurement
Assets are recognised in the balance sheet when it is probable that future financial benefits will accrue to the Group and the value
of the assets can be measured reliably. Liabilities are recognised in the balance sheet when the Group as a result of a previous
event has a legal or actual commitment, and it is probable that future financial benefits will flow out of the Group and the value of
the liability can be measured reliably. Measurement at initial and subsequent recognition of assets and liabilities takes place as
described for each individual item below. At recognition and measurement, various risks and losses which appear before the
annual report is presented and which confirm or invalidate matters which existed on the balance sheet date are taken into
consideration.
Reporting currency
The annual report is presented in Danish kroner (DKK) and rounded to thousands of DKK. DKK is the presentation currency of the
activities of the Group and the functional currency of the Parent Company.
Consolidation
The consolidated financial statements comprise the Parent Company Frontmatec Group ApS and entities controlled by it. Control
is presumed to exist when the parent owns, directly or indirectly, more than half of the voting power of an entity is exposed or has
rights to variable returns from its involvement with the investee and has the ability to use its power to affect its returns. Control may
also exist by virtue of an agreement or articles of association or when the parent otherwise has a controlling interest in the
subsidiary or actually exercises controlling influence over it.
The existence and effect of potential voting rights that are currently substantive are considered when assessing whether control
exists including whether the parent has an exposure or has rights to variable returns from its involvement with the entity.
The consolidated entities' financial statements are prepared in accordance with the accounting policies applied by the parent.
The consolidated financial statements are prepared on the basis of the financial statements of the consolidated entities by adding
together like items. Intra-group income, expenses, gains, losses, investments, dividends and balances are eliminated.
Business combinations
Recently acquired or sold subsidiaries are recognised in the consolidated comprehensive income statement for the period in
which the parent controls such entities. Comparative figures are not restated for recently acquired or sold entities.
The acquisition method is applied to the acquisition of subsidiaries. The cost is made up at the fair value of the consideration.
Acquisition-related costs are recognised in the comprehensive income statement. Conditional payments are recognised at fair
value at the amount expected to be paid. Identifiable assets and liabilities in the acquired entities are recognised at the fair value
at the time of acquisition. Provisions for restructuring expenses relating to the acquired entity are recognised if the restructuring
has been decided at the time of acquisition. Provisions for deferred tax are recognised according to fair value revaluations of
assets and liabilities. Any residual difference between the cost and the Group's share of the fair value of the identifiable assets
and liabilities including deferred tax is recognised as goodwill or negative goodwill.
Frontmatec Group ApS
Annual report 2020
26
Consolidated financial statements for the period 1 January – 31 December
Notes to the financial statements
3 Other general accounting policies (continued)
If there is uncertainty regarding the identification or measurement of acquired assets, liabilities and contingent liabilities or the
determination of the consideration at the date of acquisition, initial recognition is based on provisional values. The provisional
values can be adjusted or additional assets or liabilities included until 12 month after the acquisition date. If new information has
occurred regarding circumstances that existed at the time of acquisition which would have affected the statement of value at the
time of acquisition if the information had been known, assets and liabilities including goodwill are restated accordingly.
Currency translation
The functional currency is determined for each of the reporting entities. The functional currency is the currency primarily used by
the individual reporting entity in connection with day-to-day operations. Transactions in another currency than the functional
currency are transactions in foreign currency.
Transactions in another currency than the functional currency are translated at a periodic average currency rate or the exchange
rate on the transaction date. Receivables, payables and other monetary items denominated in foreign currencies are translated
into Danish kroner (DKK) at the exchange rate on the balance sheet date. Any foreign exchange differences between rates
prevailing on the date of transaction and the payment date or the balance sheet date, as the case may be, are recognised in the
comprehensive income statement as financial items.
Foreign group entities
As regards foreign operations, the items in their financial statements are translated using the following principles:
Balance sheet items are translated at the closing rate.
Items in the comprehensive income statement are translated at an average periodic exchange rate.
Any exchange differences resulting from the translation of the opening equity at the closing rate and the exchange adjustment of
the items in the comprehensive income statement from the rate at the date of the transaction to the closing rate are recognised
through other comprehensive income and attributed to a separate translation reserve in equity.
Derivative financial instruments
On initial recognition, derivative financial instruments are measured at fair value. On subsequent recognition, derivative financial
instruments are measured at fair value at the balance sheet date. Positive and negative fair values are recognised as other
receivables and other payables, respectively.
Fair value adjustments of derivative financial instruments designated as and qualifying for recognition as a fair value hedge of
recognised assets or liabilities are recognised in the comprehensive income statement together with changes in the fair value of
the hedged asset or liability.
Fair value adjustments of derivative financial instruments designated and qualifying as a cash flow hedge are taken to equity until
the hedged transaction is carried through. Where the future transaction results in recognition of an asset or a liability, the
accumulated fair value adjustment is transferred from equity to the cost of the asset or liability. Where the future transaction
results in income or expenses, the accumulated fair value adjustment is transferred from equity to the comprehensive income
statement together with the hedged item.
Fair value adjustments of derivative financial instruments which do not qualify for being treated as hedging instruments are
recognised in the comprehensive income statement as financial income or expenses.
Comprehensive income
Revenue recognition
The Group recognizes revenue from the following major sources:
Sale of spare parts and consumables
Construction and installation of specialized machinery and equipment including automation
Supply of service
Frontmatec Group ApS
Annual report 2020
27
Consolidated financial statements for the period 1 January – 31 December
Notes to the financial statements
3 Other general accounting policies (continued)
Revenue is measured based on the consideration to which the Group expects to be entitled in a contract with a customer and
excludes amounts collected on behalf of third parties. The Group recognizes revenue when it transfers control of a product or
service to a customer.
Sale of spare parts
The Group sells spare parts and consumables directly to customers. Sales-related warranties associated with spare parts cannot
be purchased separately and they serve as an assurance that the products sold comply with agreed-upon specifications.
Accordingly, the Group accounts for warranties in accordance with IAS 37. Revenue is recognized when control of the goods has
transferred being when the goods have been shipped to the customer’s specific location (delivery). A receivable is recognized by
the Group when the goods are delivered to customer as this represents the point in time at which the right to consideration
becomes unconditional, as only the passage of time is required before payment is due.
Construction and installation of specialized machinery and equipment
The Group constructs and sells specialized machinery and equipment including automation under long-term contracts with
customers. Such contracts are entered into before construction begins. Under the terms of the contracts, the Group has an
enforceable right to payment for work done. Revenue from these contracts is therefore recognized over time on a cost-to cost
method, i.e. based on the proportion of contract costs incurred for work performed to date relative to the estimated total contract
costs. The directors consider that this input method is an appropriate measure of the progress towards complete satisfaction of
these performance obligations under IFRS 15.
The Group becomes entitled to invoice customers based on achieving a series of performance-related milestones. When a
particular milestone is reached the customer is sent a relevant statement of work and an invoice for the related milestone
payment. The Group will previously have recognized a contract asset for any work performed. Any amount previously recognized as
a contract asset is reclassified to trade receivables at the point at which it is invoiced to the customer. If the milestone payment
exceeds the revenue recognized to date under the cost-to-cost method then the Group recognizes a contract liability for the
difference. There is not considered to be a significant financing component in construction contracts with customers as the period
between the recognition of revenue under the cost-to-cost method and the milestone payment is typically less than one year.
Supply of service
The Group provides service for maintenance and repair purposes. Such services are recognized as a performance obligation
satisfied over time. Revenue is recognized for these services based on the stage of completion of the contract. The directors have
assessed that the stage of completion determined as the proportion of the total time expected to install that has elapsed at the
end of the reporting period is an appropriate measure of progress towards complete satisfaction of these performance obligations
under IFRS 15. Payment for service rendered is typically not due from the customer until the service is completed and therefore a
contract asset is recognized over the period in which the installation services are performed representing the entity’s right to
consideration for the services performed to date.
Other operating income and operating expenses
Other operating income and operating expenses comprise items of a secondary nature relative to the entity's core activities.
Production costs
Production costs comprise the consumption of raw materials and consumables for the financial year after adjustment for changes
in inventories of these goods from the beginning to the end of the year. This item includes shrinkage, if any, and ordinary write-
downs of the relevant inventories. Production costs regarding construction contracts for third parties are recognised as incurred.
Production costs further include research and development costs not satisfying the capitalisation criteria.
Frontmatec Group ApS
Annual report 2020
28
Consolidated financial statements for the period 1 January – 31 December
Notes to the financial statements
3 Other general accounting policies (continued)
Other external expenses
Other external expenses include expenses relating to the Entity’s ordinary activities, including expenses for premises, stationery
and office supplies, marketing costs, etc. This item also includes write-downs of receivables recognised in current assets. Grants
Grants for research and development costs are recognised in the comprehensive income statement as other operating income on
a systematic basis over the period in which the Group recognises the expenses for which the grants are intended to compensate.
Staff costs
Staff costs include wages and salaries, including compensated absence and pensions, as well as other social security
contributions, etc. made to the entity's employees. The item is net of refunds made by public authorities.
Special non-recurring items
Special non-recurring items include significant income and costs of a special nature in terms of the Group's revenue generating
operating activities which cannot be attributed directly to the Group's ordinary operating activities. Such income and costs include
the cost related to significant restructuring of processes and fundamental structural adjustment, as well as gains or losses arising
in this connection, and which are significant over time.
Special non-recurring items also include items that by nature are non-recurring, specifically impairment of goodwill, gains and
losses on the disposal of activities and transaction cost in a business combination. These items are classified separately in the
income statement, in order to provide a more accurate and transparent view of the Group's recurring operating profit.
Amortisation/depreciation of intangible assets and property, plant and equipment
The item comprises amortisation/depreciation of intangible assets and property, plant and equipment.
Intangible assets and property, plant and equipment are amortised/depreciated on a straight-line basis over the expected useful
life of each individual asset. The amortisation/depreciation basis is the cost and a scrap value of zero. The expected useful lives of
the assets are as follows:
Useful life (years)
Buildings 10-40
Plant and machinery 3-10
Other fixtures and fittings, tools and equipment 3-5
Development costs 3-10
Acquired intangible assets 3-10
Income from investments in associates
Income from investments in associates comprises the pro rata share of the individual associate’s profit/loss after elimination of
internal profits or losses.
Financial income and expenses
Financial income and expenses are recognised in the comprehensive income statement at the amounts that relate to the financial
reporting period. The items comprise interest income and expenses, e.g. from group entities, dividends declared from other
securities and investments, realised and unrealised capital gains and losses relating to other securities and investments,
exchange gains and losses and amortisation of financial assets and liabilities in consolidated financial statements and parent
company financial statements the period 1 January - 31 December.
Frontmatec Group ApS
Annual report 2020
29
Consolidated financial statements for the period 1 January – 31 December
Notes to the financial statements
3 Other general accounting policies (continued)
Tax
Tax for the year includes current tax on the year's expected taxable income and the years deferred tax adjustments. The portion of
the tax for the year that relates to the profit/loss for the year is recognised in the comprehensive income statement, whereas the
portion that relates to transactions taken to equity is recognised in equity.
Current tax liabilities and current tax receivable, respectively, are recognised in the balance sheet, computed as calculated tax of
the taxable income of the year, adjusted for tax paid on account.
Deferred tax is recognised and measured by the balance orientated liability method of all temporary differences between book
value and value for tax of assets and liabilities. Tax value of the assets is computed on the basis of the planned use of the
individual asset. Deferred tax is measured on the basis of the tax rules and the rates of tax in the respective countries, which with
the legislation on the balance sheet day, will apply when the deferred tax is expected triggered as current tax. Changes in deferred
tax as a result of changes in tax rates are recognised in the statement of comprehensive income. Deferred tax assets, including
value for tax of tax losses allowed for carry forward are recognised in the balance sheet with the value at which the asset is
expected to be realised, either through set off in deferred tax liabilities or as net tax assets.
Balance sheet
Goodwill
Goodwill is measured in the balance sheet at cost in connection with initial recognition. Subsequently, goodwill is measured at
cost less accumulated impairment losses. Goodwill is allocated to the cash flow generating units as defined by Management. The
determination of cash generating units complies with the managerial structure and the internal control and reporting in the Group.
Other intangible assets
Acquired intangible assets are measured at cost less accumulated amortisation and impairment losses.
Development projects are capitalised if they are clearly defined and identifiable and the following recognition criteria can be
satisfied:
the technical feasibility of completing the project can be demonstrated
plans are to produce and market the product or to use the product or the process
sufficient technical and financial resources to complete and use or sell the project are available
it is probable that the project will generate future economic benefits and that a potential, future market or possibility of
internal use in the entity exists
the cost can be made up reliably.
Development costs not satisfying the above criteria are expensed in the comprehensive income statement as incurred.
The cost of development projects is measured at direct costs incurred as well as a portion of costs directly attributable to the
individual development projects.
Property, plant and equipment
Land and buildings, plant and facilities and other fixtures and fittings are measured at cost less accumulated depreciation and
impairment losses. Land is not depreciated, as the scrap value expects to exceed carrying amounts.
Cost includes the acquisition price and costs directly related to the acquisition until the time at which the asset is ready for use.
The cost of self-constructed non-current assets includes the cost of direct materials and labour, etc. directly used in the
production process and a portion of the relating production overheads.
Frontmatec Group ApS
Annual report 2020
30
Consolidated financial statements for the period 1 January – 31 December
Notes to the financial statements
3 Other general accounting policies (continued)
Investments in group entities
Investments in subsidiaries are in the Parent company’s financial statements measured at cost less impairment. Where the cost
exceeds the recoverable amount, an impairment loss is recognised to this lower value.
Investments in associates
Investment in associates is accounted for using the equity method.
Dividends received from associates below represent the actual amounts attributable and hence received by the Group. The other
summary information that precedes the reconciliation to the Group’s carrying amount represents amounts included in the IFRS
financial statements of the associate, not the entity’s share of these amounts, although they are adjusted to reflect fair value
adjustments upon acquisition or accounting policy alignments.
Impairment test
Goodwill is tested for impairment at least once a year and when there is evidence of impairment, the first time being before the
end of the year of acquisition. The carrying amounts of other non-current assets are reviewed each year to determine whether there
is any evidence of impairment. If any such evidence exists, the recoverable amount of the as-set is calculated. The recoverable
amount is the higher of the fair value of the assets less expected disposal costs or value in use.
Impairment losses are recognised if the carrying amount of an asset or a cash generating unit exceeds the recoverable amount of
the asset or the cash generating unit. Impairment losses are recognised in the comprehensive income statement under the same
heading as the related amortisation and depreciation. Impairment of goodwill is not reversed.
Recognition of impairment of other assets is reversed to the extent that changes have taken place in the assumptions and
estimates that led to the recognition of impairment.
Loss on impairment is only reversed to the extent that the new carrying amount of the asset does not exceed the carrying amount
which the asset would have had after depreciation or amortisation if the asset had not been written down for impairment.
Inventories
Inventories are measured at the lower of cost, measured by reference to the FIFO method, and net realisable value. The cost of raw
materials and consumables comprises the cost of acquisition plus delivery costs as well as other costs directly attributable to the
acquisition.
Work in progress and finished goods are measured at manufacturing cost, which includes the cost of raw materials, consumables
and direct payroll costs plus production overheads.
Production overheads comprise direct attributable costs incurred in connection with processing raw materials into finished goods,
including labour as well as maintenance and amortisation/depreciation of intangible assets and property, plant and equipment
used in the production process.
Receivables
Receivables are recognised initially at fair value less expected credit loss. The expected credit losses on these financial assets are
estimated based on the Group’s historical credit loss experience, adjusted for factors that are specific to the debtors, general
economic conditions and an assessment of both the current as well as the forecast direction of conditions at the report date,
including time value of money where appropriate.
Construction contracts
Ongoing service supplies and construction contracts are measured at the fair value of the work performed less advances received.
The fair value is calculated on the basis of the percentage of completion at the balance sheet date and the total expected income
from the relevant contract. The percentage of completion is made up based on costs incurred relative to the expected, total
expenses on each individual construction contract.
Frontmatec Group ApS
Annual report 2020
31
Consolidated financial statements for the period 1 January – 31 December
Notes to the financial statements
3 Other general accounting policies (continued)
Where the outcome of a construction contract cannot be made up reliably, the fair value is measured at the costs incurred in so far
as they are expected to be paid by the purchaser.
Where the total expenses relating to the construction contract are expected to exceed the total fair value, the expected loss is
recognised as a loss making agreement under "Provisions" and is expensed in the comprehensive income statement.
The value of each construction contract less prepayments is classified as contract assets when the fair value exceeds prepayments
and as contract liabilities when prepayments exceed the fair value.
The individual construction contract is recognised in the balance sheet under receivables or liabilities dependent on whether the
net value, calculated as the purchase price less received prepayments, is negative or positive.
Securities and investments
Securities and investments are measured at fair value. The fair value is made up at the market value at the balance sheet date if
the securities are listed and at a value made up using generally recognised valuation principles if the securities are unlisted.
Cash
Cash comprises cash and bank balances, utilised draft facilities and are measured at amortised cost.
Employee obligations
Pension obligations and similar non-current liabilities
The Group has entered into pension plans and similar arrangements with most employees.
Contributions to defined contribution plans where the Group makes fixed pension payments to independent pension funds are
recognised in the income statement in the period to which they relate, and any outstanding contributions are recognised in the
statement of financial position as other payables.
Incentive programme
The value of services received in exchange for granted options is measured at the fair value of the options granted.
For equity-settled programmes, the share options are measured at the fair value at the grant date and recognised in the income
statement under staff costs over the vesting period. The counter entry is recognised directly in equity as an owner transaction.
On initial recognition of the share options, an estimate is made of the number of options expected to vest. That estimate is
subsequently revised for changes in the number of options expected to vest so that the total recognition is based on the actual
number of vested options.
Accordingly, recognition is based on the number of options ultimately vested. The fair value of granted options is estimated using
an option pricing model, taking into account the terms and conditions upon which the options were granted.
Provisions
Provisions comprise expected expenses relating to guarantee commitments, losses on construction contracts, restructurings, etc.
Provisions are recognised when the entity has a legal or constructive obligation as a result of a past event at the balance sheet
date and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation.
Income tax
Current tax payables and receivables are recognised in the balance sheet as the estimated tax charge in respect of the taxable
income for the year, adjusted for tax on prior years' taxable income and tax paid on account.
Frontmatec Group ApS
Annual report 2020
32
Consolidated financial statements for the period 1 January – 31 December
Notes to the financial statements
3 Other general accounting policies (continued)
Provisions for deferred tax are calculated, based on the liability method, of all temporary differences between carrying amounts
and tax values, with the exception of temporary differences occurring at the time of acquisition of assets and liabilities neither
affecting the results of operations nor the taxable income, as well as temporary differences on nonamortisable goodwill.
Deferred tax is measured according to the taxation rules and taxation rates in the respective countries applicable at the balance
sheet date when the deferred tax is expected to crystallise as current tax. Deferred tax assets are recognised at the value at which
they are expected to be utilised, either through elimination against tax on future earnings or through a set off against deferred tax
liabilities within the same jurisdiction.
Liabilities
Financial liabilities are recognised on the raising of the loan at the proceeds received net of transaction costs incurred. Interest
bearing debt is subsequently measured at amortised cost, using the effective interest rate method. Borrowing costs, including
capital losses, are recognised as financing costs in the comprehensive income statement over the term of the loan. Other
liabilities are measured at net realisable value.
Deferred income
Deferred income is measured at cost in consolidated financial statements and parent company financial statements for the period
1 January - 31 December.
Cash flow statement
The cash flow statement shows the entity's net cash flows, broken down by operating, investing and financing activities, the year's
changes in cash and cash equivalents and the entity's cash and cash equivalents at the beginning and the end of the year.
Cash flows from operating activities are presented using the indirect method and are made up as the profit or loss for the year,
adjusted for non-cash operating items, changes in working capital, paid net financials and paid income taxes.
Cash flows from investing activities comprise payments in connection with purchase and sale of fixed assets, securities which are
part of investment activities and payments in connection with purchase and sale of businesses and activities.
Cash flows from financing activities comprise dividends paid to shareholders, capital increases and reductions, borrowings and
repayments of interest bearing debt.
Cash and cash equivalents comprise cash and short-term securities in respect of which the risks of changes in value are
insignificant.
Frontmatec Group ApS
Annual report 2020
33
Consolidated financial statements for the period 1 January – 31 December
Notes to the financial statements
4 Segment information
Advanced food processing equipment is our only operating and reporting segment. Due to differences in the product offerings in
the geographical areas we therefore focus our internal reporting on geographical areas and three reportable segments: North
America, Europe and Rest of the World
With the responsibility of the total product line anchored in the local geographical areas we are capable of improving our customer
specific offerings. Offerings range from first time sale of single products to turn-key projects, subsequent services operation &
maintenance, upgrades and rebuilds of existing equipment, plant and sale of spare parts and wear parts.
The segmentation reflects the internal reporting and management structure applied. The segments are primarily managed on
operating profit before depreciations.
Financial year ended 31 December 2020
DKK'000
North America
Europe
Rest of World
Total
Unallocated
Consolidated
309
Revenue
396,676
949,499
69,398
1,415,574
0
1,415,574
Operating profit before
depreciation
89,644
47,214
-18,156
118,702
0
118,702
Total assets
210,836
667,525
129,041
1,007,402
1,574,617
2,582,019
Short term liabilities
-86,810
-417,494
-110,037
-614,341
-1,511,412
-2,125,753
124,026
250,031
19,004
393,061
63,205
456,266
There has not been allocated any equity, borrowings, cash, deferred tax and tax payables to the three operating segments.
Financial year ended 31 December 2019
DKK'000
North America
Europe
Rest of World
Total
Unallocated
Consolidated
309
Revenue
573,756
984,352
104,216
1,662,323
0
1,662,323
Operating profit before
depreciation
106,944
7,266
-2,086
112,124
0
112,124
Total assets
205,496
720,168
142,485
1,068,149
1,663,163
2,731,312
Short term liabilities
-191,413
-375,999
-105,539
-672,951
-1,443,716
-2,116,667
14,083
344,169
36,946
395,198
219,447
614,645
There are no single customers with revenue of more than 10% of the total revenue.
DKK'000
2020
2019
Timing of revenue recognition
Recognition at single point of time
475,146
486,665
Recognition over time
940,428
1,175,658
1,415
1,415,574
1,662,323
Performance obligations are usually satisfied within a 12-month period and hence part of the transaction price allocated to the
unsatisfied part of ongoing contracts is not disclosed.
Frontmatec Group ApS
Annual report 2020
34
Consolidated financial statements for the period 1 January – 31 December
Notes to the financial statements
DKK'000
2020
2019
5 Production costs
Production costs for the year
962,707
1,148,030
Inventory write-down for the year
7,841
8,826
970,548
1,156,856
6 Staff costs
Wages and salaries
463,096
490,937
Pensions
17,314
18,383
Other social security costs
31,322
34,588
511,732
543,908
Average number of full-time employees
1,163
1,263
Staff costs are recognised as follows financial statements:
Production costs
272,833
318,113
Staff costs
238,899
221,695
Special non-recurring costs
0
4,100
511,732
543,908
Total remuneration to the Executive Board of DKK 5,693 thousand and Board of Directors of DKK 489 thousand are included in
staff costs (DK 10,095 thousand in 2019).
Remuneration for the year can be specified as follows:
DKK'000
Group Executive
Management
Executive Board
Board of
directors
2020
Salaries
10,539
6,414
484
Pension
1,063
812
0
Share based payment
-1,240
-1,533
5
10,362
5,693
489
2019
Salaries
10,431
7,670
850
Pension
963
817
0
Share based payment
707
671
87
12,101
9,158
937
The average number of members in the Executive Board have decreased from 2019 to 2020.
For details on share based payment please refer to note 31.
Frontmatec Group ApS
Annual report 2020
35
Consolidated financial statements for the period 1 January – 31 December
Notes to the financial statements
DKK'000
2020
2019
7 Depreciation, amortisation and impairment losses
Development completed
71,512
74,261
Acquired intangible assets
27,537
35,347
Buildings
8,477
7,454
Plant and equipment
8,629
6,025
Other fixtures and fittings, tools and equipment
5,921
5,710
Right-of-use assets
17,523
17,125
139,599
145,922
8 Other operating income
COVID-19 related compensation
7,937
0
Government Grant
462
0
Profit on sale of business activity
1,487
0
Profit on sale of property, plant and equipment
0
154
9,886
154
9 Other operating cost
Loss on sale of property, plant and equipment
2,012
112
2,012
112
10 Special items
External cost related to acquisitions
68
13,215
Discontinuing outsourcing activities
0
23,386
Cost of internal restructuring
7,682
23,196
7,750
59,797
11 Financial income
Other interest receivable, exchange rate gains and similar income
667
2,648
667
2,648
12 Financial expenses
Exchange rate losses
5,001
419
Interest expense, and similar expenses
92,324
77,465
Calculated interest expense for right of use assets
1,614
1,952
98,939
79,836
Frontmatec Group ApS
Annual report 2020
36
Consolidated financial statements for the period 1 January – 31 December
Notes to the financial statements
DKK'000
2020
2019
13 Tax for the year
Current tax for the year
18,931
13,813
Current tax for last year
6,909
1
Changes in provision for deferred tax
-18,406
9,421
7,434
23,235
Specified as follows:
Tax for the year
103
24,383
Tax for last year
6,909
-1,150
Tax on profit/loss
7,012
23,233
Tax on changes in OCI
422
2
7,434
23,235
Reconciliation of tax rate:
Tax according to Danish tax rate
-25,835
-10,958
Differences in the tax rates in foreign subsidiaries relative to 22%
5,686
4,851
Non-taxable income and non-deductible costs
20,674
-2,852
Adjustments of current tax regarding previous years
0
-286
Not recognised deferred tax asset
6,909
32,480
7,434
23,235
Effective tax rate
-6.3 %
-23.8 %
Frontmatec Group ApS
Annual report 2020
37
Consolidated financial statements for the period 1 January – 31 December
Notes to the financial statements
14 Intangible assets
DKK'000
Goodwill
Development
completed
Acquired
intangible
assets
Development in
progress
Total
Cost price
Cost at 1 January 2020
1,109,933
505,873
309,888
82,553
2,008,247
Acquisitions
0
0
0
0
0
Exchange rate adjustments
0
-1,656
-632
-793
-3,081
Transfer
0
20,715
0
-20,715
0
Additions in the year
0
156
9,273
43,538
52,967
Disposals in the year
0
-575
-547
-185
-1,307
Cost at 31 December 2020
1,109,933
524,513
317,982
104,398
2,056,826
Amortisation and write-downs
Balance at 1 January
0
235,909
125,948
0
361,857
Exchange rate adjustments
0
-626
-332
0
-958
Transfer
0
0
0
0
0
Amortisation in the year
0
71,512
27,537
0
99,049
Disposals in the year
0
-115
-255
0
-370
Balance at 31 December 2020
0
306,680
152,898
0
459,578
Carrying amount at 31 December 2020
1,109,933
217,833
165,084
104,398
1,597,248
Cost price
Cost at 1 January 2019
1,100,455
479,231
282,455
47,262
1,909,403
Acquisitions
9,478
0
18,836
0
28,314
Exchange rate adjustments
0
728
178
700
1,606
Transfer
0
24,690
-359
-24,690
-359
Additions in the year
0
1,224
8,778
59,279
69,281
Disposals in the year
0
0
0
0
0
Cost at 31 December 2019
1,109,933
505,873
309,888
82,551
2,008,245
Amortisation and write-downs
Balance at 1 January
0
161,259
90,645
0
251,904
Exchange rate adjustments
0
389
80
0
469
Transfer
0
0
-124
0
-124
Amortisation in the year
0
74,261
35,347
0
109,608
Disposals in the year
0
0
0
0
0
Balance at 31 December 2019
0
235,909
125,948
0
361,857
Carrying amount at 31 December 2019
1,109,933
269,964
183,940
82,551
1,646,390
The management performs an impairment test of the carrying amount of carrying amount at least annually and more frequently if
there are indicators of impairment. In the review of other non-current assets there were no evidence of impairment.
The annual impairment test is performed on 31 December 2020.
The recoverable amount of goodwill to the individual cash generating units are calculated based on the Capital Asset Pricing
Model (CAPM model).
Frontmatec Group ApS
Annual report 2020
38
Consolidated financial statements for the period 1 January – 31 December
Notes to the financial statements
14 Intangible assets (continued)
The impairment test as at 31 December 2020 showed no evidence of impairment for 2020. Management believes that currently
no changes in the key assumptions are reasonably likely to reduce the headroom to zero in the CGU.
The definition of CGU in the impairment test is based on the certainty by which the carrying amount of the intangible assets can
reasonably be allocated and monitored. The impairment test is based on the CGU “Advanced food processing equipment”.
Key assumptions
The recoverable amount of the individual cash-generating unit to which the goodwill amounts to, is calculated based on the
calculations of capital value. The most significant uncertainties are connected to the determination of discount rates, growth rates
and expected changes in costs in the budget and terminal periods.
Assumptions used in the calculation is an EBIT Margin of 8.5 percent in 2021. The increased EBIT is based on the turnaround of
Kolding. The long-term EBIT margin of 12-18 percent.
The expected annual growth rate and the expected margins in the budget period are based on historical experience and the
assumptions about expected market developments as detailed above.
Growth is supported by a rising world population, increasing urbanising, growing wealth and as an outcome of the COVID-19
Pandemic there is an increasing demand for food well-being and food safety. The entities have a potential to grow in both their
core markets as well as in other markets where other group entities are located.
The discount rate has been revised for the CGU to reflect the latest market assumptions for the risk-free rate based on a 10-year
government bond, the equity risk premium and the cost of debt.
The long term growth rate for the terminal period is based on the expected growth in the world economy, specifically for the
industry.
Cash generating unit
Annually average
growth rate in EBIT
in budget period
Growth rate in
terminal period
Discount rate after
tax
Discount rate
before tax
Advanced food processing equipment
12-18
1%
10,5
8,2
A sensibility analysis has been made of the main assumptions in the impairment test to identify the lowest and/or highest
discount rate and the lowest growth rate for each cash generating unit. The sensibility analysis shows no evidence of impairment.
Completed development projects and development projects in progress are own developed R&D.
Frontmatec Group ApS
Annual report 2020
39
Consolidated financial statements for the period 1 January – 31 December
Notes to the financial statements
15 Property, plant and equipment
DKK'000
Land and
buildings
Plant and
machinery
Other fixtures
and fittings,
tools and
equipment
Total
Cost price
Cost at 1 January 2020
156,757
53,130
28,639
238,526
Acquisitions
0
0
0
0
Exchange rate adjustments
-3,561
-2,844
-706
-7,111
Transfer
0
0
0
0
Additions in the year
1,401
8,134
7,366
16,901
Disposals in the year
0
-7,303
-2,072
-9,375
Cost at 31 December 2020
154,597
51,117
33,227
238,941
Amortisation and write-downs
Balance at 1 January
19,684
19,834
13,479
52,997
Exchange rate adjustments
-469
-1,607
-362
-2,438
Transfer
0
0
0
0
Amortisation in the year
8,477
8,629
5,921
23,027
Disposals in the year
0
-1,886
-1,934
-3,820
Balance at 31 December 2020
27,692
24,970
17,104
69,766
Carrying amount at 31 December 2020
126,905
26,147
16,123
169,175
Cost price
Cost at 1 January 2019
143,051
35,318
23,810
202,179
Acquisitions during the year
54
13
506
573
Exchange rate adjustments
2,955
2,399
476
5,830
Additions in the year
11,395
13,772
6,691
31,858
Transfer
554
5,634
177
6,365
Disposals in the year
-252
-4,006
-3,021
-7,279
Cost at 31 December 2019
157,757
53,130
28,639
239,526
Amortisation and write-downs
Balance at 1 January
12,105
9,687
9,480
31,272
Exchange rate adjustments
210
1,214
235
1,659
Transfer
122
6,053
-45
6,130
Depreciation in the year
7,454
6,025
5,710
19,189
Accumulated depreciation and write-downs of disposals
-207
-3,145
-1,901
-5,253
Balance at 31 December 2019
19,684
19,834
13,479
52,997
Carrying amount at 31 December 2019
137,073
33,296
15,160
185,529
Frontmatec Group ApS
Annual report 2020
40
Consolidated financial statements for the period 1 January – 31 December
Notes to the financial statements
16 Right-of-use assets
DKK'000
Land and
buildings
Plant and
machinery
Other fixture and
fittings, tools
and equipment
Total
Balance at 1 January 2020
38,431
133
9,443
48,007
Exchange rate adjustments
-600
-3
-181
-784
Additions in the year
5,604
664
5,184
11,452
Re-measurement of leading debt
226
0
-33
193
Depreciation in the year
-11,368
-331
-5,824
-17,523
Balance at 31 December 2020
32,293
463
8,589
41,345
Balance at 1 January 2019
27,681
541
8,436
36,658
Exchange rate adjustments
302
1
21
324
Additions in the year
23,578
0
6,015
29,593
Re-measurement of leading debt
-742
0
-701
-1,443
Depreciation in the year
-12,388
-409
-4,328
-17,125
Balance at 31 December 2019
38,431
133
9,443
48,007
The Group leases several assets including building and cars. The lease terms range from 1 to 3 years for cars and 2 to indefinite for
buildings.
Management estimate for the expected use of tight-of-use assets with no defines expiry date a range of 1.5 to 5 years was
applied.
Leases does not include variable lease payments.
Approximately one third of the leases for cars expires in the current financial year. The expired contracts were replaced with new
leases for identical underlying assets. The resulted in additions to right-of-use assets of DKK 5.2 million.
The addition to land and buildings relate to new leases of buildings in Kolding and Shanghai.
DKK'000
2020
2019
Depreciation expense on right-of-use assets
17,507
17,125
Interest expense on lease liabilities
1,614
1,952
19,121
19,077
The total cash outflow for leases amount to DKK 18.1 million for the Frontmatec Group.
Frontmatec Group ApS
Annual report 2020
41
Consolidated financial statements for the period 1 January – 31 December
Notes to the financial statements
17 Investments in associates
Associates
AIRA ROBOTICS, S.L (Aira)
Principal activity
Legal form
Domicile
Direct Group
holding
Development and sales of robotic solutions for
the meat industry
S.L.
Cardona, Spain
40%
Summarised financial information in respect of each of the Group’s material associates is set out below. The summarised
financial information below represents amounts in associates’ financial statements prepared in accordance with IFRS Standards
(adjusted by the Group for equity accounting purposes).
DKK'000
2020
Current assets
40,329
Non-current assets
13,404
Current liabilities
-14,246
Non-current liabilities
-4,371
Equity attributable to owners of the company
35,116
Non-controlling interest in associate
-21,070
Controlling interest in associate
14,046
Goodwill
23,656
Carrying amount of the Group’s interest in the associate
37,702
Revenue
64,738
Profit for the year
4,319
Other comprehensive income attributable to other owners of the company
-2,580
Total comprehensive income
1,738
Dividends received from the associate during the year
4,264
Reconciliation of the above summarised financial information to the carrying amount of the interest in Aira recognised in the
consolidated financial statements.
Cost price for the investment in Aira is DKK 26.9 million.
Frontmatec Group ApS
Annual report 2020
42
Consolidated financial statements for the period 1 January – 31 December
Notes to the financial statements
18 Inventories
DKK'000
2020
2019
Raw materials and consumables
97,845
100,509
Work in progress
14,822
24,113
Manufactured goods and goods for resale
76,457
73,182
189,124
197,804
19 Trade receivables
DKK'000
2020
2019
Receivables from sales
211,644
266,723
Write down at 1 January
9,471
3,376
Acquired write downs
0
159
Foreign exchange adjustments
-48
93
Addition
321
7,464
Reversals/realised
-4,156
-1,621
Write-down at 31 December
5,588
9,471
The credit period is between 8-60 days. No interest is charged on outstanding trade receivables. The Group always measures the
loss allowance for trade receivables at an amount equal to lifetime expected credit loss. Expected credit losses on trade
receivables are estimated based on past default experience of the debtor and an analysis of the debtor’s current financial
position, adjusted for factors that are specific to the debtors, general economic conditions of the industry and an assessment of
both the current as well as the forecast direction of conditions at the reporting date.
Historical losses are fairly limited since the majority of trade receivables relate to projects where prepayments are received.
Frontmatec Group ApS
Annual report 2020
43
Consolidated financial statements for the period 1 January – 31 December
Notes to the financial statements
20 Contract assets and liabilities
DKK'000
2020
2019
Contractual assets
Construction contracts
153,575
168,855
Contractual liabilities
Construction contracts
-139,144
-142,272
Recorded revenue related to contracts
Contracts (assets) with customers include sales value of work performed where the Group has not yet obtained an unconditional
right to payment since the work has not been completed in full and thereby accepted by the customer
Contracts (liabilities) include unconditional prepayments for work not yet performed. The liabilities at 1 January 2020 of DKK
142.3 million (2019: DKK 234.2 million) have been recognised as revenue in 2020 and 2019 respectively.
Significant change in contractual assets and liabilities
The change in contractual assets and contractual liabilities is driven by changed mix in project phases.
Not satisfied performance obligations related to construction contracts
In accordance with IFRS 15.112 the Group does not disclose information on not-satisfied performance obligations since the
construction contract have an activity range of less than one year.
21 Construction contracts
DKK'000
2020
2019
Selling price of work performed
1,348,183
1,345,973
Progress billings
-1,333,752
-1,319,390
14,431
26,583
recognised as follows:
Contracts assets
153,575
168,855
Contracts liabilities
-139,144
-142,272
14,431
26,583
Frontmatec Group ApS
Annual report 2020
44
Consolidated financial statements for the period 1 January – 31 December
Notes to the financial statements
22 Deferred tax
Deferred tax relates to:
DKK'000
2020
2019
Intangible assets
-97,251
-119,131
Property, plant and equipment
1,383
4,365
Current assets
2,226
-36,558
Liabilities
3,420
4,882
Tax loss carry forwards
21,150
58,964
Deferred tax at 31 December
-69,072
-87,478
recognised as follows:
Deferred tax assets
31,762
31,184
Deferred tax liability
-100,834
-118,662
Deferred tax at 31 December
-69,072
-87,478
Carry forward losses are recognized based on the expected utilization within 3-5 year.
Carry forward losses of DKK 49.5 million are not registered deferred tax as it is not expected to be utilized within the 3-5 years.
23 Share capital
The Parent Company's share capital, DKK 100 thousand, is composed of shares of DKK 0.01 or multiples hereof.
DKK'000
2020
2019
1 January
100
100
31 December
100
100
Frontmatec Group ApS
Annual report 2020
45
Consolidated financial statements for the period 1 January – 31 December
Notes to the financial statements
24 Long–term liabilities
Breakdown of certain liabilities according to long-term and short-term liabilities:
DKK'000
Due between 1 and
5 years
Due after more
than 5 years
Total long-term
liabilities at 31/12
2020
Due within
1 year
Total 31/12 2020
Mortgage debt
3,831
3,598
7,429
1,128
8,557
Other credit institutions
1,283,331
0
1,283,331
0
1,283,331
Other long-term liabilities
1,184
21,500
22,684
743
23,427
Lease liabilities
26,592
0
26,592
15,792
42,384
1,314,938
25,098
1,340,036
17,663
1,357,699
DKK'000
Due between 1 and
5 years
Due after more
than 5 years
Total long-term
liabilities at 31/12
2019
Due within
1 year
Total 31/12 2019
Mortgage debt
4,502
4,026
8,528
1,128
6,656
Other credit institutions
1,285,722
0
1,285,722
1,731
1,287,453
Lease liabilities
32,288
1,552
33,840
14,932
48,772
1,322,512
5,578
1,328,090
17,791
1,342,881
The fair value is other credit institutions is calculated as redemption cost for the outstanding bonds. The fair value is DKK 1,354
million for the Senior Secured Floating Rate Bonds. Significant observable inputs (level 2) have been used in the fair value
measurement.
Interest for EUR 175,000,000 Senior Secured Floating Rate Bonds until due date 10 October 2024 amount to DKK 286.8 million.
The Group does not face a significant liquidity risk with regard to its lease liabilities. Lease liabilities are monitored within the
Group’s central finance function.
25 Provisions
DKK'000
2020
2019
Warranties at 1 January
12,853
10,570
Acquisition of warranty
0
0
Exchange rate adjustments
-653
334
Utilised during the year
-5,612
-11,272
Reversal
-4,398
-105
Provision for the year
9,046
13,326
Warranties at 31 December
11,236
12,853
Frontmatec Group ApS
Annual report 2020
46
Consolidated financial statements for the period 1 January – 31 December
Notes to the financial statements
26 Security for loans and contingent liabilities
Group
The shares in Frontmatec Kolding A/S, Frontmatec Tandslet A/S, Frontmatec Skive A/S, Frontmatec Smørum A/S, Frontmatec
Hygiene GmbH, Frontmatec Equipment Inc., Frontmatec Inc. and Frontmatec B.V. are held as security for all bank debt.
As security for mortgage loan of DKK 9.7 million, mortgage is granted on the land buildings at a book value of DKK 36.4 million
with an owner’s mortgage secured on the property Mommarksvej a293-301, Tandslet of DKK 15.0 million, Hassellunden 9,
Smørum DKK 6.2 million.
As security for ERU 175m Nordic Bond is granted with an owner’s mortgage secured on the property, Mommarksvej 293-301,
Tandslet of DKK 2.5 million.
As security for all bank loans, floating company deed over chattels is granted by Frontmatec Tandslet A/S, DKK 37.7 million,
Frontmatec Smørum A/S, DKK 3 million and Frontmatec Kolding A/S, DKK 15 million.
As security for bank loan of CNY 10 million mortgage is granted on the land of the property, No. 11 Industrial Garden, Huangtun
town, Jining High & New Tech. Development Zone, Shandong, R.R. 272100 China.
Furthermore, the Group has issued a negative pledge to the bank.
Frontmatec Group ApS, Frontmatec Kolding A/S, Frontmatec Tandslet A/S, Frontmatec GmbH and Frontmatec Hygiene GmbH,
Frontmatec Equipment Inc., Frontmatec Inc. have issued a guarantee of payment for all bank debt.
Prepayment guarantees and performance bonds provided to customers amount to DKK 85.2 million.
The Group’s Danish companies are jointly and severally liable for tax on consolidated taxable income etc. The total amount of
corporation tax payable is disclosed in the annual report of Frontmatec Holding III ApS, which is the administration company for
joint taxation.
Furthermore, the Group’s Danish companies are jointly and severally liable for Danish withholding taxes on dividends, royalties
and interest. Any subsequent changes to corporation taxes and withholding taxes may render the Company liable for a greater
amount.
The Group is involved in disputes. The outcome of such disputes is by nature unknown but is not expected to have significant
impact on our financial position.
27 Financial risks
The Group's financial risks comprise currency, interest, and price risks. Management identifies the level and concentration of risks
and initiates policies to address these through continuous business reviews. The Group is also exposed to liquidity and credit
risks, but it is the Group’s policy not to engage in any active speculation in financial risks.
Currency risk
The Group's currency risk derives from the impact of exchange rates on future commercial payments and financial payments. Most
of the Group's revenue is order-based and consists mainly of sales in the functional currency used by the individual company. The
Group enters into forward contracts no later than when the sales contract becomes effective.
Production costs typically consist of internal costs and procurement in the Group's functional currency and other currencies.
The Group’s has a EUR 175,000,000 Senior Secured Floating Rate Bonds due 10 October 2024.
The Group's main currencies for commercial purposes are DKK, EUR, USD, CAD, CNY, GBP and RUB.
Frontmatec Group ApS
Annual report 2020
47
Consolidated financial statements for the period 1 January – 31 December
Notes to the financial statements
27 Financial risks (continued)
An increase of 5% in a given exchange rate against DKK would in 2020 have had the following impact on the consolidated profit
for the year and equity.
DKK'000
EUR
USD
CAD
CNY
GBP
RUB
309
Profit/Loss
-61,228
1,461
1,755
-609
523
98
Equity
-56,379
5,143
5,012
-3,808
2,165
91
The currency exposures arising from financial instruments; thus, the analysis does not include the hedged commercial
transactions.
Interest risk
Interest rate risks concern the interest-bearing financial assets and liabilities of the Company. The interest-bearing financial
assets consist primarily of cash in financial institutions and the interest-bearing liabilities mainly consist of corporate bonds, bank
and mortgage debt. Interest rate risks occur when interest rate levels change. A 1% increase in the interest rate will have a DKK
14.2 million effect on the Company's interest expenses. The Group has entered into an interest swap to minimize the interest risk.
Price risk
The Company has a low price risk on procurement and sales. The possibilities to apply price adjustments to the sales prices
depend partly on the market situation. Price changes can therefore affect the profit/loss both upwards and downwards. It is
company policy not to enter into long-term price agreements with neither customers nor vendors.
Liquidity risk
The purpose of the Company's cash management is to ensure that the Company at all times has sufficient and flexible financial
resources at its disposal and is able to honour its obligations when due. The Company's liquidity reserves consist of credit
balances and fixed overdraft facilities.
Financial counterpart risk
The use of financial instruments entails the risk that the counterparty may not be able to honour its obligations. The Company
minimizes risk by limiting its use of financial institutions to those with an acceptable credit rating.
Commercial credit risk
The credit risk incurred from trade receivables is generally managed by continuous credit evaluation of customers and trading
partners. Credit risks on counterparties other than banks are minimized through the use of export letters of credit, prepayments.
The maximum credit risk related to financial assets corresponds to the accounting value plus write-downs.
Frontmatec Group ApS
Annual report 2020
48
Consolidated financial statements for the period 1 January – 31 December
Notes to the financial statements
28 Derivatives
Fair value hedge
To minimize the foreign currency exposure arising from intercompany balances, the Company uses forward exchange contracts.
The change in fair value is specified below:
DKK'000
2020
2019
Fair value
-14,132
-7,424
Included in the income statement
-14,132
-7,424
The contract notional amount on the forward exchange contracts are:
2020
2019
DKK/USD
-73,875
-62,456
DKK/GBP
-3,701
-3,747
DKK/CAD
0
-29,019
CNH/DKK
122,650
106,636
Cash-flow hedge
To minimise the foreign currency exposure arising from future cash transactions and to minimize the interest fluctuations on long-
term liabilities, the company used forward exchange contracts and interest rate caps. The change in fair value is specified below:
DKK'000
2020
2019
Fair value
-3,716
-6,947
Included in other comprehensive income
1,769
2,236
The contract notional amount on the forward exchange contracts are:
DKK'000
2020
2019
AUD/DKK
2,926
38,339
USD/DKK
11,111
3,688
USD/CAD
1,000
-
Expected recognition for the hedges are in 2021.
The conditions on the interest rate caps are:
DKK'000
2020
2019
Principal amount
871,328
871,328
Strike
0%
0%
Expire
10/10 2022
10/10 2022
At 31 December 2020 the fair value of the Group’s hedge instruments amounted to DKK -17.8 million (2019: DKK -14.4 million).
Frontmatec Group ApS
Annual report 2020
49
Consolidated financial statements for the period 1 January – 31 December
Notes to the financial statements
29 Related parties
Frontmatec Group I ApS has controlling interest in Frontmatec Group ApS.
Related parties with significant influence consist of the Company's Board of Directors and Executive Board plus close relatives of
these persons.
Related parties also include companies on which these persons exert considerable influence.
Transactions between the consolidated group enterprises are eliminated in these consolidated financial statements. In 2020
there were no transactions between related parties not part of the Group apart from the transactions mentioned below and in
notes 6 and 31.
In 2020 the Group had tax and interest transactions with Frontmatec Holding I ApS, Frontmatec Holding II ApS and Frontmatec
Holding III ApS for an amount between 0.1-0.6 million (2019: DKK 0.1-0.6 million).
Ownership
The following shareholders are registered in the Company's register of shareholders as holding minimum 5% voting rights or
minimum 5% of the share capital:
► Frontmatec Holding I ApS, Platinvej 8, DK-6000 Kolding.
30 Fees paid to auditors appointed at the annual general meeting
DKK'000
2020
2019
Total fees to Deloitte
Fee for statutory audit
1,213
879
Other assurance engagements
5
0
Fee for tax advice
266
1,263
Fee for non-audit services
937
8,119
2,421
10,261
Total fees to other auditors
Fee for statutory audit
363
459
Other assurance engagements
0
0
Fee for tax advice
168
466
Fee for non-audit services
616
1,312
1,147
2,237
The fee for non-audit services provided to the Group in 2020 by Deloitte Statsautoriseret Revisionspartnerselskab, Denmark,
amounted to DKK 0.6 million and consisted of financial advisory and accounting services. The fee for non-audit services provided
to the Group in 2019 by Deloitte Statsautoriseret Revisionspartnerselskab, Denmark, amounted to DKK 8.1 million and consisted
of M&A activities and financial advisory services.
The subsidiaries Frontmatec Shanghai Co. Ltd., China, Frontmatec Jining Co., Ltd., China, Frontmatec B.V., The Netherlands,
Frontmatec Holding B.V., The Netherlands, Frontmatec Sp. Z. o. o., Poland, Frontmatec LLC, Russia, Accles & Shelvoke, Ltd., UK,
Accles & Shelvoke Inc., USA, Frontmatec Sibiu SRL, Romania and Frontmatec – Intecal S.A.U., Spain are not audited by the
Parent company’s auditors, but by another recognised local audit firm.
Frontmatec Group ApS
Annual report 2020
50
Consolidated financial statements for the period 1 January – 31 December
Notes to the financial statements
31 Incentive programmes
The group executive management, and a number of key employees in the Group have been granted options to purchase shares in
Frontmatec Holding II ApS, at a set strike price.
The program, which can only be exercised by purchasing the shares in question, grants the right to acquire a number of shares in
Frontmatec Holding II ApS at a price agreed in advance. The warrant program is contingent on employment in the Company.
The value of the allotted warrants in 2020 is DKK 0.8 million. The value of the lapsed warrants in 2020 is DKK 2.6 million. The
value of exercised warrants in 2020 is DKK 0 million. The total value of the allotted warrants as of 31 December 2020 are DKK
16.9 million. The cost is booked as staff costs.
The fair value of the warrants allocated is estimated by means of the Monte Carlo simulations. The value is calculated under the
following assumptions:
Estimated volatility (based on a view of peer-Companies)
25.00%
Risk-free interest
0.00%
Market value at the time of establishment
DKK 12.3 million
Expiry (number of years)
2.67
Every A1 warrant grants the right to buy 1 share in Frontmatec Holding II ApS with a nominal value of 0.01 at a rate of DKK 0.01 at
the Exit date
Every A2 warrant grants the right to buy 1 share in Frontmatec Holding II ApS with a nominal value of 0.01 at a rate of DKK 10-
12.9 + 8 % p.a.
Every B warrant grants the right to buy 1 share in Frontmatec Holding II ApS with a nominal value of 0.01 at a rate of DKK 10-12.9
+ 16 % p.a.
The participants may exercise their warrants in the below periods and in the event of Exit.
Issued
Exercise period one
Exercise period two
Sep-2016- to Dec-2016
1 October 2021 to 1 November 2021
1 October 2023 to 1 November 2023
Aug-1028
1 August 2023 to 1 September 2023
1 August 2025 to 1 September 2025
Mar-2019
1 October 2023 to 1 November 2023
1 October 2025 to 1 November 2025
Jan-2020
1 January 2025 to 1 February 2025
1 January 2027 to 1 February 2027
Feb-2020
1 February 2005 to 1 March 2025
1 February 2027 to 1 March 2027
Feb-2020
1 April 2025 to 1 Maj 2025
1 April 2027 to 1 May 2027
Number of warrants
A1 warrants
A2 warrants
B warrants
1 January 2020
258,500
3,396,466
1,701,464
Allotted in 2020
0
716,504
363,097
Lapsed in 2020
0
-632,900
-324,525
31 December 2020
258,500
3,480,071
1,740,036
Frontmatec Group ApS
Annual report 2020
51
Consolidated financial statements for the period 1 January – 31 December
Notes to the financial statements
32 Reconciliation of financing activities
2019
Cash flows
FX movement
2020
Lang-term borrowings
1,294,250
-2,630
-860
1,290,760
Short-term credit institutions
2,859
-1,731
0
1,128
1,297,109
-4,361
-860
1,291,888
2018
Cash flows
FX movement
2019
Lang-term borrowings
682,686
611,518
46
1,294,250
Short-term credit institutions
33,420
-30,561
0
2,859
716,106
580,957
46
1,297,109
33 Events after the balance sheet date
There have been no events since 31 December 2020, which could significantly affect the evaluation of the group’s activities and
financial position.
34 New standards and interpretations 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 disclosed 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 paragraphs 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 likelihood that an entity will exercise its deferral right
• That only if an embedded derivative in a convertible liability is itself an equity instrument would the terms of a liability not
impact its classification
The amendments are effective for annual reporting periods beginning on or after 1 January 2023 and must be applied
retrospectively. The Group is currently assessing the impact the amendments will have on current practice and whether existing
loan agreements may require renegotiation.
Reference to the Conceptual Framework – Amendments to IFRS 3
In May 2020, the IASB issued Amendments to IFRS 3 Business Combinations - Reference to the Conceptual Framework. The
amendments are intended to replace a reference to the Framework for the Preparation and Presentation of Financial Statements,
issued in 1989, with a reference to the Conceptual Framework for Financial Reporting issued in March 2018 without significantly
changing its requirements.
The Board also added an exception to the recognition principle of IFRS 3 to avoid the issue of potential ‘day 2’ gains or losses
arising for liabilities and contingent liabilities that would be within the scope of IAS 37 or IFRIC 21 Levies, if incurred separately.
At the same time, the Board decided to clarify existing guidance in IFRS 3 for contingent assets that would not be affected by
replacing the reference to the Framework for the Preparation and Presentation of Financial Statements.
The amendments are effective for annual reporting periods beginning on or after 1 January 2022 and apply prospectively.
Frontmatec Group ApS
Annual report 2020
52
Consolidated financial statements for the period 1 January – 31 December
Notes to the financial statements
34 New standards and interpretations issued but not yet effective (Continued)
Property, Plant and Equipment: Proceeds before Intended Use – Amendments to IAS 16
In May 2020, the IASB issued Property, Plant and Equipment — Proceeds before Intended Use, which prohibits entities deducting
from the cost of an item of property, plant and equipment, any proceeds from selling items produced while bringing that asset to
the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an
entity recognises the proceeds from selling such items, and the costs of producing those items, in profit or loss.
The amendment is effective for annual reporting periods beginning on or after 1 January 2022 and must be applied retrospectively
to items of property, plant and equipment made available for use on or after the beginning of the earliest period presented when
the entity first applies the amendment.
The amendments are not expected to have any impact on the Group.
Onerous Contracts – Costs of Fulfilling a Contract – Amendments to IAS 37
In May 2020, the IASB issued amendments to IAS 37 to specify which costs an entity needs to include when assessing whether a
contract is onerous or loss-making.
The amendments apply a “directly related cost approach”. The costs that relate directly to a contract to provide goods or services
include both incremental costs and an allocation of costs directly related to contract activities. General and administrative costs
do not relate directly to a contract and are excluded unless they are explicitly chargeable to the counterparty under the contract.
The amendments are effective for annual reporting periods beginning on or after 1 January 2022. The Group will apply these
amendments to contracts for which it has not yet fulfilled all its obligations at the beginning of the annual reporting period in
which it first applies the amendments.
IFRS 9 Financial Instruments – Fees in the ’10 per cent’ test for derecognition of financial liabilities
As part of its 2018-2020 annual improvements to IFRS standards process the IASB issued amendment to IFRS 9. The amendment
clarifies the fees that an entity includes when assessing whether the terms of a new or modified financial liability are substantially
different from the terms of the original financial liability. These fees include only those paid or received between the borrower and
the lender, including fees paid or received by either the borrower or lender on the other’s behalf. An entity applies the amendment
to financial liabilities that are modified or exchanged on or after the beginning of the annual reporting period in which the entity
first applies the amendment.
The amendment is effective for annual reporting periods beginning on or after 1 January 2022 with earlier adoption permitted. The
Group will apply the amendments to financial liabilities that are modified or exchanged on or after the beginning of the annual
reporting period in which the entity first applies the amendment.
The amendments are not expected to have a material impact on the Group.
Frontmatec Group ApS
Annual report 2020
53
Parent company financial statements for the period 1 January – 31 December
Income statement
Note
DKK'000
2020
2019
Revenue
0
0
5
Other operating income
48,593
46,939
Other external costs
-11,947
-19,931
Gross profit
36,646
27,008
2
Staff costs
-19,294
-16,080
4
Other operating costs
0
-58
Operating profit before depreciation and special items
17,352
10,870
6
Special items
-6,201
-12,795
3
Depreciation, amortisation and impairment of non-current assets
-2,076
-1,578
Operating profit/loss
9,075
-3,503
Share of results of associates
1,739
13,361
7
Financial income
46,023
58,167
8
Financial expenses
-237,935
-72,406
Loss before tax
-181,098
-4,381
9
Tax for the year
750
259
Loss for the year
-180,348
-4,122
Statement of comprehensive income
Note
DKK'000
2020
2019
Loss for the year
-180,348
-4,122
Items that are or may be reclassified subsequently to profit or loss:
Unrealised profit/loss on forward exchange contracts for the year
741
-819
Hereof tax
-163
231
Other comprehensive income for the year after tax
578
-588
Comprehensive income for the year
-179,770
4,710
Frontmatec Group ApS
Annual report 2020
54
Parent company financial statements for the period 1 January – 31 December
Balance sheet
Note
DKK'000
2020
2019
ASSETS
10
Acquired intangible assets
2,759
3,459
Intangible assets
2,759
3,459
11
Other fixtures and fittings, tools and equipment
806
936
12
Right of use assets
984
993
Property, plant and equipment
1,790
1,929
13
Investments in subsidiaries
1,827,998
1,932,779
14
Investments in associates
37,702
40,292
15
Deferred tax assets
3,073
3,507
Fixed assets Investments
1,868,773
1,976,578
Non-current assets
1,873,322
1,981,966
Receivables
Amounts owed by subsidiaries
338,783
379,567
Other receivables
11
2,283
Prepayments
1,622
1,207
Current assets
340,416
383,057
Cash
0
1,286
Total current assets
340,416
384,343
ASSETS
2,213,738
2,366,309
Frontmatec Group ApS
Annual report 2020
55
Parent company financial statements for the period 1 January – 31 December
Balance sheet
Note
DKK'000
2020
2019
EQUITY AND LIABILITIES
20
Share capital
100
100
Reserve for value adjustments of hedging transactions
-2,708
-3,286
Reserve for foreign exchange adjustments
-65
0
Reserve for net revaluation according to the equity method
10,771
13,361
Reserve for retained earnings
615,906
784,332
Equity
605,135
794,507
16
Other credit institutions
1,283,331
1,285,721
16
Lease liabilities
489
464
16
Other long-term liabilities
943
0
Non-current liabilities
1,284,763
1,286,185
16
Current portion of non-current liabilities
490
500
Other credit institutions
127,837
115,725
Trade payables
4,978
7,144
Amounts owed to group entities
131,818
112,817
Income taxes
0
0
Other payables
50,619
49,431
Current liabilities
315,742
285,617
Liabilities
1,600,505
1,571,802
EQUITY AND LIABILITIES
2,213,738
2,366,309
Frontmatec Group ApS
Annual report 2020
56
Parent company financial statements for the period 1 January – 31 December
Statement of changes in equity
DKK'000
Share capital
Value adjust-
ments of
hedging
transactions
Foreign
exchange
adjustments
Reserve for net
revaluation
according to the
equity method
Retained
earnings
Total
Equity at 1 January 2019
100
-2,467
0
0
1,096,009
1,093,642
Comprehensive income for the year
Loss for the year
0
0
0
13,361
-17,483
-4,122
Other comprehensive income
Unrealised loss on forward exchange
contracts
0
-1,050
0
0
0
-1,050
Hereof tax
0
231
0
0
0
231
Comprehensive income for the year
0
-819
0
13,361
-17,483
-4,941
Paid dividend
0
0
0
0
-292,860
-292,860
Share-based payment
0
0
0
0
-1,334
-1,334
Equity at 31 December 2019
100
-3,286
0
13,361
784,332
794,507
DKK'000
Share capital
Value adjust-
ments of
hedging
transactions
Foreign
exchange
adjustments
Reserve for net
revaluation
according to the
equity method
Retained
earnings
Total
Equity at 1 January 2020
100
-3,286
0
13,361
784,332
794,507
Comprehensive income for the year
Loss for the year
0
0
0
-2,590
-177,758
-180,348
Other comprehensive income
Unrealised profit on forward exchange
contracts
0
741
0
0
0
741
Hereof tax
0
-163
0
0
0
-163
Exchange rate on foreign investments
0
0
-65
0
0
-65
Comprehensive income for the year
0
578
-65
-2,590
-177,758
-179,835
Share-based payment
0
0
0
0
-1,439
-1,439
Equity at 31 December 2020
100
-2,708
-65
10,771
605,135
613,233
Frontmatec Group ApS
Annual report 2020
57
Parent company financial statements for the period 1 January – 31 December
Cash flow statement
DKK'000
2020
2019
EBIT
9,075
-3,503
Depreciation, amortisation and impairment losses
146,201
1,578
Changes in receivables
22,298
-163,753
Changes in trade payables
-2,165
2,305
Changes in other working capital
2,708
19,317
Financial income
46,023
58,167
Financial costs
-237,935
-72,406
Tax for the year
1,184
37
Cash flows from operating activities
-12,611
-158,258
Addition of property, plant and equipment
-684
-2,090
Addition of investments
0
-111,844
Dividends received
4,264
0
Capital movements
-1,439
-294,194
Cash flows from investing activities
2,141
-408,128
External financing:
Contracting of long-term liabilities
-2,390
580,394
Leasing activities
-538
-269
Cash flows from financing activities
-2,928
580,125
Net cash flows for the year
-13,398
13,739
Cash and cash equivalents at 1 January
-114,439
-128,178
Cash and cash equivalents at 31 December
-127,837
-114,439
Cash at bank and in hand
0
1,286
Other credit institutions
-127,837
-115,725
Cash and cash equivalents at 31 December
-127,837
-114,439
Frontmatec Group ApS
Annual report 2020
58
Parent company financial statements for the period 1 January – 31 December
Content of notes to the Parent company Financial Statements
Note
1 Accounting policies - Parent
2 Staff costs
3 Depreciation, amortisation and impairment losses
4 Other operating income
5 Other operating cost
6 Special items
7 Financial income
8 Financial expenses
9 Tax for the year
10 Intangible assets
11 Property, plant and equipment
12 Right-of-use assets
13 Investments in subsidiaries
14 Investments in associates
15 Deferred tax
16 Long–term liabilities
17 Security for loans and contingent liabilities
18 Derivatives
19 Related parties
20 Share capital
21 Fees paid to auditors appointed at the annual general meeting
22 Events after the balance sheet date
Frontmatec Group ApS
Annual report 2020
59
Parent company financial statements for the period 1 January – 31 December
Notes to the financial statements
1 Accounting policies – Parent Company
The financial statements of the parent company (Frontmatec Group ApS) are presented in conformity with the provisions of the
Danish Financial Statements Act for reporting class D enterprises.
To ensure uniform presentation, the terminology used in the consolidated financial statements has as far as possible been applied
in the parent company’s financial statements. The parent company’s accounting policies on recognition and measurement are
generally consistent with those of the Group. The instances in which the parent company’s accounting policies deviate from those
of the Group have been described below.
The accounting policies for the parent company are unchanged from 2019.
The company’s main activity, dividend income from Group enterprises, is presented first in the income statement.
Dividend from Group enterprises
Dividend from investments in subsidiaries is recognised as income in the parent company’s income statement in the financial year
in which the dividend is declared. This will typically be at the time of the approval by the Annual General Meeting of distribution
from the company concerned. When the dividend distributed exceeds the accumulated earnings after the date of acquisition, the
dividend is recognised in the income statement, however, this will trigger an impairment test of the investment.
Investments
Investments in Group enterprises are measured at cost less impairment. Where the cost exceeds the recoverable amount, an
impairment loss is recognised to this lower value. To the extent the distributed dividend exceeds the accumulated earnings after
the date of acquisition, an impairment test of the investment is triggered.
DKK'000
2020
2019
2 Staff costs
Wages and salaries
17,641
14,583
Pensions
1,616
1,463
Other social security costs
37
34
19,294
16,080
Average number of full-time employees
16
15
Staff costs are recognised as follows financial statements:
Staff costs
19,294
15,072
Special non-recurring costs
0
1,008
19,294
16,080
Reference is made to note 6 in the consolidated financial statement for information on
remuneration to the Executive Board of Directors.
Frontmatec Group ApS
Annual report 2020
60
Parent company financial statements for the period 1 January – 31 December
Notes to the financial statements
DKK'000
2020
2019
3 Depreciation, amortisation and impairment losses
Acquired intangible assets
1,286
908
Other fixtures and fittings, tools and equipment
228
168
Right-of-use assets
562
502
2,076
1,578
4 Other operating income
Group management fee
48,116
46,939
COVID-19 related compensation
477
0
48,593
46,939
5 Other operating cost
Loss on sale of property, plant and equipment
0
58
0
58
6 Special items
External cost related to acquisitions
68
1,760
Cost of internal restructuring
6,133
11,035
6,201
12,795
7 Financial income
Interest income from subsidiaries
21,018
18,127
Dividends received from subsidiaries
25,000
40,000
Other interest receivable, exchange rate gains and similar income
5
40
46,023
58,167
8 Financial expenses
Interest expense from subsidiaries
512
3,593
Interest expense, exchange rate losses and similar income
93,269
68,774
Calculated interest expense for right of use assets
29
39
Impairment of receivable and investment in subsidiaries
144,125
0
237,935
72,406
Frontmatec Group ApS
Annual report 2020
61
Parent company financial statements for the period 1 January – 31 December
Notes to the financial statements
DKK'000
2020
2019
9 Tax for the year
Current tax for the year
-1,953
561
Current tax for last year
769
475
Changes in provision for deferred tax
434
-1,295
-750
-259
Specified as follows:
Tax for the year
-1,682
-879
Tax for last year
769
475
Tax on profit/loss
-913
-404
Tax on changes in OCI
163
145
-750
-259
Effective tax rate
2.0 %
5.9 %
10 Intangible assets
DKK'000
Acquired
intangible assets
2020
Acquired
intangible assets
2019
Cost at 1 January
4,539
2,334
Additions in the year
586
2,205
Cost at 31 December
5,125
4,539
Amortisation and write-downs at 1 January
1,080
179
Amortisation in the year
1,286
908
Impairments at 31 December
2,366
1,087
Carrying amount at 31 December
2,759
3,459
Frontmatec Group ApS
Annual report 2020
62
Parent company financial statements for the period 1 January – 31 December
Notes to the financial statements
11 Property, plant and equipment
DKK'000
Other fixtures
and fittings,
tools and
equipment
2020
Other fixtures
and fittings,
tools and
equipment
2019
Cost at 1 January
1,227
1,073
Additions in the year
98
154
Cost at 31 December
1,325
1,227
Depreciation at 1 January
291
123
Depreciation in the year
228
168
Impairments at 31 December
519
291
Carrying amount at 31 December
806
936
12 Right-of-use assets
DKK'000
Other fixtures
and fittings,
tools and
equipment
2020
Other fixtures
and fittings,
tools and
equipment
2019
Balance at 1 January 2020
993
1,226
Additions in the year
553
328
Re-measurement of leading debt
0
-59
Depreciation in the year
-562
-502
Balance at 31 December 2020
984
993
The company leases cars. The lease terms range from 1 to 3 year. Leases do not include variable lease payments.
Amounts recognised in comprehensive income statement.
DKK'000
2020
2019
Depreciation expense on right-of-use assets
562
502
Interest expense on lease liabilities
29
39
591
541
The total cash outflow for leases amount to DKK 0.6 million for the Parent Company.
Frontmatec Group ApS
Annual report 2020
63
Parent company financial statements for the period 1 January – 31 December
Notes to the financial statements
13 Investments in subsidiaries
DKK'000
2020
2019
Cost at 1 January
1,932,779
1,847,886
Additions of entities
0
84,913
Capital increase
9,128
0
Cost at 31 December
1,941,907
1,932,799
Impairments at 1 January
0
0
Impairments during the year
-113,909
0
Impairments at 31 December
-113,909
0
Carrying amount at 31 December
1,827,998
1,932,799
Investments in subsidiaries are specified as follows:
Subsidiaries
Legal form
Domicile
Direct Group
holding
Frontmatec Group ApS
o Frontmatec Kolding A/S
A/S
Kolding, Denmark
100%
o Frontmatec Smørum A/S
A/S
Smørum, Denmark
100%
o Frontmatec Tandslet A/S
A/S
Tandslet, Denmark
100%
o Frontmatec Skive A/S
A/S
Skive, Denmark
100%
o Frontmatec Hygiene GmbH
GmbH
Beckum, Germany
100%
o Frontmatec GmbH
GmbH
Lünen, Germany
100%
o Accles & Shelvoke Inc.
Inc.
West Greenwhich, USA
100%
o Frontmatec Jining Co., Ltd.
Ltd.
China
100%
o Frontmatec Sibiu SRL
SRL
Sibiu, Romania
100%
o Frontmatec – Intecal S.A.U.
S.A.U
Barcelona, Spain
100%
Frontmatec Kolding A/S
o Frontmatec Equipment Inc.
Inc.
St. Anselme, Canada
100%
o Frontmatec Inc.
Inc.
Kanas City, USA
100%
o Frontmatec Shanghai Co. Ltd.
Co. Ltd.
Shanghai China
100%
o Frontmatec Holding B.V.
B.V.
Rijssen, The Netherlands
100%
o Frontmatec LLC
LLC
Moscow, Russia
100%
Frontmatec Holding B.V.
o Frontmatec B.V.
B.V.
Rijssen, The Netherlands
100%
Frontmatec Smørum A/S
o Frontmatec Sp. Z. o. o.
Sp. Z. o. o.
Grodzisk, Poland
100%
Accles & Shelvoke Inc.
o Accles & Shelvoke, Ltd.
Ltd.
Birmingham, UK
100%
The management performs an impairment test of the carrying amount of investments in subsidiaries at least annually and more
frequently if there is indication of impairment. The annual impairment test is performed on 31 December 2020.
The recoverable amount of investments related to the individual cash generating units is calculated based on the Capital Assets
Pricing Model (CAPM model).
For Jining Xinglong Food Machinery Manufacturing Co., Ltd. Calculations showed a need for impairment whereby the carrying
amount of the investment was reduced by DKK 113.9 million and amounts owed by subsidiaries was reduced by DKK 30.2 million.
For the remaining entities the impairment test at 31 December 2020 showed no indication of impairment for 2020. Management
believes that currently no changes in key assumptions are reasonably likely to reduce the headroom to zero in the CGU.
Frontmatec Group ApS
Annual report 2020
64
Parent company financial statements for the period 1 January – 31 December
Notes to the financial statements
13 Investments in subsidiaries (continued)
The definition of CGUs in the impairment test is based on the certainty by which the carrying amount of the fixed asset investment
can reasonably be allocated and monitored.
The impairment test is carried out on the CGU Frontmatec Jining Co., Ltd.
Key assumptions
The recoverable amount of the cash-generating units to which the investment amounts to, is calculated based on the calculations
of capital value. The most significant uncertainties relate to the determination of discount rates, growth rates and expected
changes in costs in the budget and terminal periods.
Assumptions used in the calculation is an EBIT Margin of -11.4 percent in 2021 and long-term EBIT margin of 12-18 percent. The
improved EBIT margin is mainly driven by a restructuring of the work processes in Frontmatec Jining Co., Ltd. On top of this China
expects to make significant investments in food safety and automation in the advance food processing industry on the outskirts of
the Covid-19 pandemic and the African swine fever.
Management have determined the expected annual growth in the budget period and the expected margins based on increased
market activity and under the assumptions of expected market developments on the outskirts of the Covid-19 pandemic and the
African swine fever.
The discount rate has been revised for the Company to reflect the latest market assumptions for the risk-free rate based on a 10-
year government bond, the equity risk premium and the cost of debt.
The long-term growth rate is based on business plans and expected growth rates.
Cash generating unit
Annually average
growth rate in EBIT
in budget period
Growth rate in
terminal period
Discount rate after
tax
Discount rate
before tax
Frontmatec Jining Co., Ltd.
10-50%
1.0%
10,1%
11,3%
A sensibility analysis has been made of the main assumptions in the impairment test to identify the lowest and/or highest
discount rate and the lowest growth rate for each cash generating unit.
DKK' million
EBIT decreases by
10 percent
Annual Growth rate
drops 2 percentage
points
Discount rate after
tax increase by 1
percentage point
Effect on value in use
-10,3
-17,4
-13,4
14 Investments in associates
Investments in associates mentioned in note 17 in the consolidated financial statements is also valid for the Parent Company.
Frontmatec Group ApS
Annual report 2020
65
Parent company financial statements for the period 1 January – 31 December
Notes to the financial statements
15 Deferred tax assets
Deferred tax relates to:
DKK'000
2020
2019
Intangible assets
-322
908
Tangible assets
-47
586
Current assets
2,278
-927
Liabilities
-764
1,354
Tax loss carry forwards
1,928
1,586
Deferred tax at 31 December
3,073
3,507
recognised as follows:
Deferred tax assets
3,073
3,507
Deferred tax liability
0
0
Deferred tax at 31 December
3,073
3,507
Tax loss carry forwards are recognised based on the expected utilization within 3-5 year.
16 Long–term liabilities
Breakdown of certain liabilities according to long-term and short-term liabilities:
DKK'000
Due between 1 and
5 years
Due after more
than 5 years
Total long-term
liabilities at 31/12
2020
Due within
1 year
Total 31/12 2020
Other credit institutions
1,283,331
0
1,283,331
0
1,283,331
Other long-term liabilities
88
855
943
0
943
Lease liabilities
489
0
489
490
979
1,283,908
855
1,284,763
490
1,285,253
DKK'000
Due between 1 and
5 years
Due after more
than 5 years
Total long-term
liabilities at 31/12
2019
Due within
1 year
Total 31/12 2019
Other credit institutions
1,285,721
0
1,285,721
0
1,285,721
Lease liabilities
464
0
464
500
964
1,286,185
0
1,286,185
500
1,286,685
The fair value is other credit institutions is calculated as redemption cost for the outstanding bonds. The fair value is DKK 1,354
million for the Senior Secured Floating Rate Bonds. Significant observable inputs (level 2) have been used in the fair value
measurement.
Interest for EUR 175,000,000 Senior Secured Floating Rate Bonds until due date 10 October 2024 amount to DKK 286.8 million.
The Company does not face a significant liquidity risk with regard to its lease liabilities. Lease liabilities are monitored within the
Company’s central finance function.
Frontmatec Group ApS
Annual report 2020
66
Parent company financial statements for the period 1 January – 31 December
Notes to the financial statements
17 Security for loans and contingent liabilities
The shares in Frontmatec Kolding A/S, Frontmatec Tandslet A/S, Frontmatec Skive A/S, Frontmatec Smørum A/S, Frontmatec
GmbH and Frontmatec Hygiene are provided as security for all bank debt.
Furthermore, the Company has issued a negative pledge to the bank. The Company has issued a guarantee of payment for all bank
debt for the group entities. Reference is also made to note 25 in the consolidated financial statements.
The joint taxation liability mentioned in note 26 in the consolidated financial statements is also valid for the Parent Company.
18 Derivatives
Fair value hedge
To minimize the foreign currency exposure arising from intercompany balances, the Company uses forward exchange contracts.
The change in fair value is specified below:
DKK'000
2020
2019
Fair value
-13,543
-7,598
Included in the income statement
-13,543
-7,598
The contract notional amount on the forward exchange contracts are:
2020
2019
DKK/USD
-46,045
-34,543
DKK/GBP
-3,751
-3,747
DKK/CAD
0
-29,019
CNH/DKK
102,010
106,636
Cash-flow hedge
To minimise the interest fluctuations on long-term liabilities, the company used interest rate caps. The change in fair value is
specified below:
DKK'000
2020
2019
Fair value
-3,472
-4,212
Included in other comprehensive income
741
-1,050
The conditions on the interest rate caps are:
DKK'000
2020
2019
Principal amount
869,097
871,328
Strike
0%
0%
Expire
10/10 2022
10/10 2022
At 31 December 2020 the fair value of the Company hedge instruments amounted to DKK -17.0 million (2019: DKK -11.8
million).
Frontmatec Group ApS
Annual report 2020
67
Parent company financial statements for the period 1 January – 31 December
Notes to the financial statements
19 Related parties
Related party transaction mentioned in note 29 in the consolidated financial statements is also valid for the Parent Company.
20 Share capital
The parent company’s share capital, DKK 100 thousand, is composed of share of DKK 0.01 or multiples thereof.
21 Fees paid to auditors appointed at the annual general meeting
DKK'000
2020
2019
Total fees to Deloitte
Fee for statutory audit
50
50
Fee for tax advice
107
984
Fee for non-audit services
530
7,663
687
8,697
Total fees to other auditors
Fee for non-audit services
85
361
85
361
The fee for non-audit services provided to the company in 2020 by Deloitte Statsautoriseret Revisionspartnerselskab, Denmark,
amounted to DKK 0.5 million and consisted of financial advisory and accounting services. The fee for non-audit services provided
to the company in 2019 by Deloitte Statsautoriseret Revisionspartnerselskab, Denmark, amounted to DKK 7.7 million and
consisted of M&A activities and financial advisory services.
22 Events after the balance sheet date
There have been no events since 31 December 2020, which could significantly affect the evaluation of the group’s financial
position and revenue.
549300L2VDVI7KPEL3302020-01-012020-12-31549300L2VDVI7KPEL3302020-01-012020-12-31cmn:ConsolidatedMember549300L2VDVI7KPEL3302020-01-012020-12-311cmn:ConsolidatedMember549300L2VDVI7KPEL3302020-01-012020-12-312cmn:ConsolidatedMember549300L2VDVI7KPEL3302020-01-012020-12-311cmn:ConsolidatedMember549300L2VDVI7KPEL3302020-01-012020-12-312cmn:ConsolidatedMember549300L2VDVI7KPEL3302020-01-012020-12-313cmn:ConsolidatedMember549300L2VDVI7KPEL3302020-01-012020-12-314cmn:ConsolidatedMember549300L2VDVI7KPEL3302020-01-012020-12-315cmn:ConsolidatedMember549300L2VDVI7KPEL3302020-01-012020-12-311cmn:ConsolidatedMember549300L2VDVI7KPEL3302020-01-012020-12-312cmn:ConsolidatedMember549300L2VDVI7KPEL3302019-01-012019-12-31cmn:ConsolidatedMember549300L2VDVI7KPEL3302019-01-012019-12-31549300L2VDVI7KPEL3302020-12-31549300L2VDVI7KPEL3302019-12-31549300L2VDVI7KPEL3302018-12-31ifrs-full:IssuedCapitalMember549300L2VDVI7KPEL3302019-01-012019-12-31ifrs-full:IssuedCapitalMember549300L2VDVI7KPEL3302019-12-31ifrs-full:IssuedCapitalMember549300L2VDVI7KPEL3302018-12-31ifrs-full:ReserveOfCashFlowHedgesMember549300L2VDVI7KPEL3302019-01-012019-12-31ifrs-full:ReserveOfCashFlowHedgesMember549300L2VDVI7KPEL3302019-12-31ifrs-full:ReserveOfCashFlowHedgesMember549300L2VDVI7KPEL3302018-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember549300L2VDVI7KPEL3302019-01-012019-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember549300L2VDVI7KPEL3302019-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember549300L2VDVI7KPEL3302018-12-31ifrs-full:RetainedEarningsMember549300L2VDVI7KPEL3302019-01-012019-12-31ifrs-full:RetainedEarningsMember549300L2VDVI7KPEL3302019-12-31ifrs-full:RetainedEarningsMember549300L2VDVI7KPEL3302018-12-31549300L2VDVI7KPEL3302020-01-012020-12-31ifrs-full:IssuedCapitalMember549300L2VDVI7KPEL3302020-12-31ifrs-full:IssuedCapitalMember549300L2VDVI7KPEL3302020-01-012020-12-31ifrs-full:ReserveOfCashFlowHedgesMember549300L2VDVI7KPEL3302020-12-31ifrs-full:ReserveOfCashFlowHedgesMember549300L2VDVI7KPEL3302020-01-012020-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember549300L2VDVI7KPEL3302020-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember549300L2VDVI7KPEL3302020-01-012020-12-31ifrs-full:RetainedEarningsMember549300L2VDVI7KPEL3302020-12-31ifrs-full:RetainedEarningsMemberxbrli:pureiso4217:DKKFrontmatec Group ApSKoldingPrivate limited companyDenmarkPlatinvej 8, 7000 KoldingKoldingFrontmatec Group is a global leading provider of advanced food processing equipment. Frontmatec devel-ops world-class customized solutions for automation in the food industry and other hygiene sensitive indus-tries. The Group is especially renowned for the high-quality systems for the entire value chain of the meat industry – from carcass grading to slaughter lines, cutting and deboning lines, hygiene systems and control systems to logistics and packaging.Frontmatec Holding I ApSFrontmatec Holding III ApSN/AAnnual reportAuditor's report on audited financial statementsParsePort XBRL Converter2020-01-012020-12-312019-01-012019-12-31549300L2VDVI7KPEL330Frontmatec Group ApSReporting class D37773743Platinvej86000Koldingwww.frontmatec.comhttp://www.frontmatec.com/media/4987/frontmatec-cop_2019.pdf116312631615Kolding2020-04-30Jan Allan Formann KristensenChief Executive OfficerThomas Nybo StenagerChief Financial OfficerArne VraalsenChairmanChristoffer Arthur MüllerDeputy ChairmanChristian Gymos Schmidt-JacobsenJan KjærsgaardRemko Rosmann549300L2VDVI7KPEL33037773743Frontmatec Group ApSPlatinvej 86000 KoldingOpinionBasis for OpinionBill Haudal PedersenState-Authorised Public Accountantmne3013133963556Deloitte Statsautoriseret RevisionspartnerselskabCity Tower, Værkmestergade2DK-8000Aarhus CSøren Alsen LauridsenState-Authorised Public Accountantmne4004033963556Deloitte Statsautoriseret RevisionspartnerselskabCity Tower, Værkmestergade2DK-8000Aarhus C