#1DSV Global Transport and Logistics Annual Report 2022 Keeping supply chains flowing in a world of change#2= III Delivering sustainable growth DSV is one of the world's leading freight forwarders. We help companies connect with the world and ensure smooth and efficient storage and transport of their goods. By air, sea and road. We keep supply chains flowing – from shipper to customer doorstep - · and help to deliver sustainable growth. By giving our customers the logistics services they require. By running a profitable operation that delivers return on investment for our shareholders. And by giving our people an inspiring place to work and equal opportunities to develop their talent. Combining the latest technologies and the talent of our strong global workforce, we make supply chains leaner and greener. That is how we will help to shape a sustainable future. Welcome to our Annual Report 2022. DSV A/S Hovedgaden 630, 2640 Hedehusene, Denmark Tel. +45 43 20 30 40, CVR no. 58 23 35 28 Annual Report for the year ending 31 December 2022 (46th financial year). Published 2 February 2023. in#33 DSV Annual Report 2022 Contents Contents Management's commentary Introduction Letter from our CEO. Highlights 2022 Five-year overview... 4 6 8 Financial statements = III Consolidated financial statements Income statement.. Statement of comprehensive income Cash flow statement 44 45 45 46 Balance sheet. 47 Statement of changes in equity. 48 Notes to the consolidated financial statements 49 Definition of key figures and ratios 83 Group company overview.. 84 Statements Management's statement. Independent Auditor's reports 91 92 31 37 Parent Company financial statements 40 Parent Company financial statements.. 95 41 Strategy and financial targets Our strategy: Growth. Efficiency. Sustainability. 9 Sustainable logistics for a fast-changing world. Our business model 11 13 Our industry and market trends. 14 A responsive approach.. 16 Outlook for 2023 and 2026 financial targets. . 17 Corporate governance and Capital structure and allocation. 18 shareholder information Risk management Financial and non-financial performance Corporate governance. Financial review 19 Board of Directors... ESG performance 23 Shareholder information Air & Sea.. Road Solutions. 24 27 Other information 29 Quarterly financial highlights. 43#4= III We integrated Agility GIL within a year - our fastest integration to date. Letter from our CEO Keeping supply chains flowing in a world of change In extraordinary market conditions with continued supply chain disruptions, our teams delivered a strong set of results in 2022. It was also a year when we finalised the integration of Agility's Global Integrated Logistics business (GIL) and we continued to drive the sustainability agenda. In addition, we had to adjust to an increasingly volatile macroeconomic and geopolitical environment.#55 DSV Annual Report 2022 Introduction = III Strong financial performance 2022 was a good year for DSV. I am proud of the results we have achieved for the year and we also made good progress on our long- term strategic ambitions. Our gross profit for the year amounted to DKK 52.1 billion (+33.3%), and operating profit before special items was DKK 25.2 billion (+48.0%). Our adjusted free cash flow for 2022 amounted to DKK 22.8 billion (+163.4%) and ROIC improved by 550bp to 25.1%. Read more about our Group results on pages 19-22. The significant supply chain disruptions increased the value of our services and had a positive impact on our financial performance for 2022. As the freight markets gradually normalise and the general economic slowdown continues, we expect a significant decline in earnings for 2023. This development is reflected in our outlook. Navigating macroeconomy and geopolitics COVID-19 had a lasting effect on our industry and global supply chains. Over the past two years, we have managed to adapt to the challenges it created, mitigate disruptions and offer our customers robust logistics solutions. Although today the world seems to have moved on from COVID-19, the pandemic made a significant impact on 2022 and still casts its shadows across our industry. Market volatility persists. At the start of 2022, capacity was tight, freight rates reached unprecedented highs, and then plummeted. In the second half of 2022, we have been in a period of economic slowdown and declining transport volumes across most markets. Several factors caused the current slump - normalisation of consumer behaviour after the pandemic, the ongoing energy crunch and inflationary levels not seen in decades, to name a few. Not all geographies and indus- tries have been affected the same - the Middle East region and the healthcare and energy industries are examples of more resilient areas. The volatile macroeconomic environment in 2022 was further fuelled by Russia's invasion of Ukraine. In response, we divested or closed down our operations in Russia and Belarus. In response to Ukraine's humanitarian crisis, we have donated transport and logistics services, food and supplies, and in some instances, our staff have opened their homes to take in families fleeing the war. Navigating market volatility and tough challenges is not new to DSV. Our cost discipline, focus on keeping net working capital under control, strong capital structure and scalable asset-light business model are all designed with this purpose in mind. A stronger company We integrated GIL within a year - our fastest integration to date. To bring together two large and complex organisations across multiple countries and divisions is a considerable undertaking, and we are very happy with the outcome. Lessons learnt from previous integrations, cultural synergies between our two companies and the close collaboration all contributed to a successful integration. We are a different company today compared to only a few years ago. Our journey of successful acquisitions and integrations has transformed us into a top three player in our industry. We have added new highly skilled colleagues to our teams, and by joining forces, we have a more comprehensive service offering, greater scale and a stronger global net- work. On top of this, we have worked to develop our digital production platforms and create more transparent supply chains. That means we are now even better placed to support growing customer needs. Our organisation and market position are already strong, but M&A remains an important part of our strategy, and we will continue to monitor the market in search of value creation opportunities. Committing to net-zero by 2050 In 2022, we raised our ambitions and took additional steps to create a more sustainable business. On the environment, we recalculated our 2019 CO₂ emission baseline to reflect our larger size after the GIL inte- gration. We implemented an internal CO2 fee to support new sustainability initiatives and innovation with funding. But most importantly, we committed to net-zero emissions across our operations by 2050. To achieve our sustainability ambitions, we also changed our organisation in 2022 and established a new Operational Sustainability Team headed by our COO. Its purpose is to connect our operational teams directly to our sustainability tar- gets. This will more concretely embed sustainability into our operations and help us drive innovation and implement environmental and climate initiatives. We are determined to reach our long- and mid-term targets, but we know we are at the start of a long and complex net-zero journey. We cannot get there alone; we must collaborate closely with our customers, suppliers and other stakeholders across the industry. And ultimately, we depend on continued technological development in our industry. Success built by our people I have always believed that DSV is a people business, and I will never grow tired of celebrating our employees' hard work and contributions. They are central to our current and long-term success. Operating in the volatile and challenging environment of recent years has rein- forced the importance of our people and their outstanding efforts in supporting our customers - making our success during this period even more remarkable. A huge thanks to all of them for their amazing work and team spirit. Whatever market challenges persist in 2023 and beyond, we are optimistic about the future and are committed to keeping supply chains flowing in this world of change. Jens Bjørn Andersen Group CEO, DSV A/S#66 DSV Annual Report 2022 Introduction Highlights 2022 Group results EBIT before special items EBIT before special items was up 48.0% for 2022, in line with our latest outlook for the year. Growth com- pared to 2021 was driven by strong performance across all business areas and geographical regions and by the addition of Agility Global Integrated Logistics (GIL), which was fully integrated during the year. 2022 Actual 2022 Outlook 2021 Actual 16,223 Adjusted free cash flow The earnings growth was converted to cash, and the adjusted free cash flow was also impacted by improved net working capital. In line with our capital allocation policy, we allocated DKK 21,633 million to sharehold- ers in 2022 through share buyback and dividend. ROIC before tax The increase in ROIC (pre-tax) was driven by the strong earnings growth, while invested capital stayed stable in 2022. Earnings and ROIC for 2022 were boosted by the extraordinary market conditions. We maintain our 2026 target of a minimum ROIC of 20%. 2022 Actual 2021 Actual 8,659 Gross profit DKK 52,149 million Air & Sea 67% of total Road 15% 25,204 24,500 - 25,500 Solutions 18% of total of total 22,810 EBIT before special items DKK 25,204 million 2022 Actual 25.1% 2021 Actual 19.6% +33.3% growth in 2022 Air & Sea 81% of total Road 8% of total +48.0% growth in 2022 Solutions 11% of total Growth including M&A and in constant currencies. = III#77 DSV Annual Report 2022 Introduction Global footprint AMERICAS Gross profit: DKK 13,274 million 25% of total EMEA Gross profit: DKK 27,501 million 53% of APAC of total Gross profit: DKK 11,374 million 22% of tota EBIT before special items: DKK 7,111 million 28% of of total EBIT before special items: DKK 10,952 million 44% of total EBIT before special items: DKK 7,141 million 28% oft of total CO₂ emissions ('000 tonnes) = III Scope 1: 215 Scope 2: 226 Scope 3: 15,489 Air & Sea The division achieved 38.5% increase in gross profit and 53.0% growth in EBIT for the year. This was driven by the successful integration of GIL and by earnings growth across all regions. The results were positively impacted by the extraordinary market conditions, which led to higher gross profit per shipment, espe- cially in the first half of the year. Towards the end of 2022, freight markets declined, and the division increased its focus on productivity and cost management. EBIT before special items: DKK 20,658 million +53.0% Road The increase in EBIT before special items was driven by 11.0% growth in gross profit. In a market impact- ed by new regulation, geopolitical events and by significant cost in- flation, all regions performed well and contributed to the growth. EBIT before special items: DKK 2,040 million +9.2% Solutions Solutions achieved 35.3% growth in gross profit and 47.4% growth in EBIT in 2022. This was driven by the inclusion of GIL, primarily in the Middle East, and strong organic growth across all regions. EBIT before special items: DKK 2,701 million +47.4% As an asset-light company, we know lowering our Scope 3 emissions re- quires collaboration with our partners. And to do so, we have developed DSV Green Logistics. Green Logistics provides a set of solutions ranging from CO, reporting, strategic supply chain optimisation, emission compensation, and sustain- able fuel offerings designed to reduce the carbon footprint of our Scope 3 supply chain.#88 DSV Annual Report 2022 Introduction Five-year overview = III Financials 2022 2021 2020 2019 2018* Ratios 2022 2021 2020 2019 2018* Results (DKKm) Revenue Gross profit Operating profit before amortisation and depreciation (EBITDA) before special items Operating profit (EBIT) before special items Special items, costs Net financial expenses Profit for the year Adjusted earnings Cash flow (DKKm) Operating activities Financial ratios (%) 235,665 182,306 115,932 52,149 37,615 28,534 94,701 79,053 23,754 17,489 Gross margin 22.1 20.6 24.6 25.1 22.1 Operating margin 10.7 8.9 8.2 7.0 6.9 Conversion ratio 48.3 43.1 33.4 28.0 31.2 30,275 20,417 13,559 25,204 16,223 9,520 1,117 866 17,671 10,292 6,212 Effective tax rate 23.9 24.5 24.3 25.8 23.3 6,654 5,450 ROIC before tax 25.1 19.6 14.3 13.4 26.7 478 2,164 800 Return on equity 24.1 18.4 8.8 11.6 27.2 841 1,729 858 249 Solvency ratio 45.0 45.9 49.2 50.7 37.5 11,254 4,258 3,706 3,988 Gearing ratio 1.0 1.4 1.3 1.8 0.9 18,765 11,847 6,146 4,456 4,093 Share ratios Earnings per share of DKK 1 77.3 49.3 18.7 18.7 22.0 26,846 12,202 10,276 6,879 4,301 Diluted adjusted earnings per share of DKK 1 81.4 50.9 26.5 22.1 22.1 Investing activities (966) 420 (556) 1,371 (444) Number of shares issued ('000) 219,000 Free cash flow 25,880 12,622 9,720 8,250 3,857 Adjusted free cash flow 22,810 8,659 8,746 3,678 3,916 Share price at year-end (DKK) Share buyback 20,313 17,841 5,031 4,888 4,161 Proposed dividend per share (DKK) 240,000 1,096.5 1,527.5 1,020.0 6.50 5.50 230,000 235,000 188,000 767.8 429.2 4.00 2.50 2.25 Dividends distributed 1,320 Cash flow for the year 1,635 920 3,942 588 423 380 ESG data 2022 2021 2020 2019 2018 2,721 766 (143) Financial position (DKKm) CO₂e (g/tonne-km) - Air transport 694.4 **707.4 704.0 718.2 728.0 DSV A/S shareholders' share of equity 71,519 Non-controlling interests 222 Balance sheet total 159,045 Net working capital Net interest-bearing debt (NIBD) Invested capital Gross investment in property, plant and equipment 74,103 47,385 175 (88) 161,395 96,250 5,116 8,031 2,701 29,870 29,245 18,189 99,540 101,231 64,285 1,514 1,180 1,121 49,430 14,561 CO₂e (g/tonne-km) - Sea transport 6.6 **6.5 6.2 6.4 7.0 (111) 97,557 3,125 18,355 68,595 1,000 (29) CO₂e (g/tonne-km) - Road transport 97.5 **98.7 92.8 93.2 96.5 38,812 Lost Time Injury Frequency Rate 2.8 4.5 6.7 5.0 4.6 1,767 5,831 20,381 Lost workdays due to lost time injury 52.0 61.0 78.8 97.5 98.0 Gender diversity (%) (female/male) 39/61 720 Employee turnover ratio (adjusted for synergies) Employees (FTE) 22.1 38/62 21.9 76,283 77,958 38/62 20.5 21.1 56,621 61,216 39/61 38/62 20.1 47,394 * The implementation of IFRS 16 Leases as of 1 January 2019 had a material impact on the financial statements and key ratios for 2019 onwards. Comparative figures for 2018 have not been restated. For a definition of financial key figures and ratios, please refer to page 83. For definition of ESG data, please refer to Sustainability Report. ** Comparative figures have been restated, as our method for calculation and data transparency has improved.#99 DSV Annual Report 2022 Strategy and financial targets Our strategy: Growth. Efficiency. Sustainability. Following the successful integration of Agility's Global Integrated Logistics business (GIL), we have in 2022 reinforced our focus on initiatives to support organic growth. We have also raised our ambitions for sustainability and reconfirmed our M&A strategy. Focus areas in our strategy People = III Operational excellence Our strategy is anchored in our corporate purpose of keeping supply chains flowing in a world of change. The four focus areas for delivering our strategy remain consistent: sustainable growth, our customers, our people and operational excellence. With this focus we aim to create long- term value for our stakeholders and make DSV fitter for the future. Helping our customers grow sustainably By combining a broad range of logistics service offerings, competitive pricing and a strong geographic footprint, DSV continues to enhance the customer experience we deliver. We are able to leverage our scale and global reach, providing capacity and consistent service levels across our network. Across the three divisions, our end-to-end logistics services and digital integrations enable customers to achieve visibility and control of supply chains, which is essential when operating in today's complex market conditions. Throughout our operations, we seek to support customers' growth while remaining mindful of the environmental impact of our services and provid- ing options for reduction of emissions through our Green Logistics services. In 2022, we completed the integration of more than 35,000 customers from GIL, adding to our foothold among both the large, global customers as well as small and mid-sized customers. Our industry-specific solutions in automotive, industrial, chemicals, retail and fashion, healthcare, tech- nology and energy help customers in those sectors succeed, and we will continue to strengthen our expertise, not least in the fast-growing healthcare and e-commerce sectors. We proactively manage customer relations through our Global Customer Success Programme. In 2022, we received feedback from more than 13,000 customers, and in line with our internal targets, we responded to the evaluations within 48 hours. Our organic growth target remains unchanged: we aim to take market share across our three divisions and the markets we operate in. Supporting our people to develop their talent Our employees are the heart of our business and responsible for the long- term success of our company. DSV employs more than 75,000 people worldwide from office workers to warehouse operatives. Regardless of function or position, we respect our employees' rights. Our purpose: Sustainable growth Customers Keeping supply chains flowing in a world of change For nearly five decades, we have moved millions of ship- ments across oceans and continents. Knowing how to do that in the most streamlined way is how we have earned the trust of our customers and partners. And it is how we will continue to deliver global transport and logistic services that can help businesses and societies prosper.#1010 DSV Annual Report 2022 Strategy and financial targets = III We work to create a safe, healthy and nurturing workplace where every- one has the chance to grow and develop their talent. To enable our employees to do their best, we give them the right digital tools, training and conditions. In recent years, the pandemic showed the importance of the skills and knowledge of our experienced teams, and the continued development of our industry will increase the need for further skills. As for any company, hiring and keeping talented employees is critical for us. To attract, motivate and retain the best of them, we provide career- advancing opportunities through our DSV Academy and our talent management programme. DSV operates globally and employs +150 different nationalities. In com- bination with an inclusive and responsive culture, diversity - also related to gender and other factors - makes our workplaces more dynamic and ultimately leads to better business decisions. In 2022, we continued our focus on diversity and inclusion across our organisation, supported by mandatory e-learning programmes. Operational excellence, every day Local empowerment and global scale We maintain a flat, locally empowered organisation, firmly anchored in local markets. This has always been a core strength in DSV, and we continue to believe in local ownership and decisions based on sound business acumen, supported by solid data. As a global company, we aim to benefit from our scale where we can. We work together as one global network, and we have centralised selected activities - e.g. in our International Shared Service Centres and group functions such as our Global Commercial Organisation, Group Property, Group Insurance and Group Procurement. Transparency, productivity and scalability Through our focus on transparency, productivity and scalability, we support more efficient global trade flows for our customers. And more efficient workflows for DSV. We support transparency by measuring productivity and financial perfor- mance, ensuring that our managers have good insights to inform their decision making. High data quality across systems, activity-based costing and a strong financial organisation are key elements in this. We boost productivity by defining and standardising our service catalogues across geographies and divisions. Standardised service catalogues enable digitalisation, automation and efficient workflows across the organisation. By streamlining our services across the organisation, we can deliver a high and consistent service level - this is exactly what our customers are looking for. To support our growth strategy, our physical and digital infrastructure must be able to scale. Working according to the principle of one main system per business area, we run a consolidated, standardised and scalable IT platform and, where available, we use standard off-the-shelf IT systems with high focus on data quality and security. Developing our infrastructure Based on our knowledge of the logistics markets, technological trends and our ongoing dialogue with customers, we plan development of our IT infra- structure as well as the long-term planning of warehouses (and warehouse automation), terminals and offices. We prepare strategic roadmaps for each business area, closely managed and prioritised by our Group Executive Committee. All planning of our infra- structure and innovation is based on enterprise solutions which can be applied across our network. Continued focus on M&A DSV has had a remarkable journey in recent years. The acquisitions and successful integrations of UTI Worldwide, Panalpina Welttransport and Agility's Global Integrated Logistics business have transformed us into a top three global player in our industry. Our worldwide organisation is now big- ger than ever; our geographical footprint is more diverse; and the services we offer to our customers are more advanced. We continue to focus on balancing stable, above-market organic growth with an active acquisition strategy. Measured by revenue and profit mar- gins, we are one of the industry's largest and most profitable players. This gives us a strong market position and forms the foundation of our ambition to continuously grow our business. Within the fragmented transport and logistics industry, we believe there is room for further consolidation, and we will continue to monitor the market for relevant, value-creating opportunities. Fitter for the future Our ambitions for the coming years revolve around three themes: growth, efficiency and sustainability. At a practical level, that means continuing our focus on M&A, strengthening our market position through organic growth, enhancing our logistics and digital capabilities, continuing our work on the sustainability agenda and exploring new opportunities in response to changing market dynamics. As we engage in all of these activities, our mindset will always be to try to do more with less, accelerating our operational excellence initiatives and digital transformation to constantly find more efficient solutions to support our customers. Key strategic projects for each of our divisions are described in the divisional reviews on pages 24-30.#1111 DSV Annual Report 2022 Strategy and financial targets = III Sustainable logistics for a fast- changing world DSV's approach to sustainability has evolved systematically over recent years. As the world's third-largest transport and logistics provider, we take an active role in the sustainability agenda in our industry, and today, this is fully integrated in our corporate strategy and business operations. Our sustainability priorities 16 PEACE JUSTICE AND STRONG INSTITUTIONS • Business integrity . Responsible supply chain Tax transparency . Data ethics and cybersecurity Climate change • Waste management and recycling Environment Reducing our impact. We recognise the urgent need to protect the planet. We play our part by reducing our environmental impact. And we want to lead our industry in tackling climate change and decarbonising transport and logistics. 12 RESPONSIBLE CONSUMPTION AND PRODUCTION 18 AFFORDABLE AND CLEAN ENERGY 13 ACT CLINATE PARTNERSHIPS 17 FOR THE GOALS 10 REDUCED INEQUALITIES DECENT WORK AND ECONOMIC GROWTH M . Diversity and inclusion Human capital development ⚫ Health and safety ⚫ Labour rights & working conditions ⚫ Human rights Community engagement Sustainability strategy anchored at the top Our sustainability strategy and efforts are driven from the highest manage- ment levels in our company. In close collaboration with the Executive Board, the Board of Directors sets the direction, reviews the performance and further develops our Sustainability targets and strategy. We are guided by our commitment to promote and fulfil the United Nations' Sustainable Development Goals (SDGs). Our strategy and targets are based on our analysis of materiality, risks and opportunities and our dialogue with our major stakeholders. Our sustainability strategy is centred around our sustainability priorities with- in environment, social and governance. These priorities and our associated material topics are highlighted in the adjacent figure. Governance Doing business with integrity. We do business compliantly and honestly and pay taxes where we generate our profits. We handle data ethically with the right safeguards around data privacy. Running a responsible supply chain. We make sure all suppliers match our standards, environmental and social criteria, and understand our sustainability goals. Social Caring for our employees. We strive to be a safe and inclusive place to work. We work hard to attract and keep talent by giving em- ployees responsibility and growth opportunities. We want to promote diversity, protect rights and improve our employees well-being. Engaging with communities. We work with local communities across the globe. We respond to local needs, challenges and emergencies everywhere we do business.#1212 DSV Annual Report 2022 Strategy and financial targets = III Raising our environmental ambitions We and the whole industry - need to do more to protect the environ- ment. To hold ourselves accountable to that goal, we have now commit- ted to reaching net-zero carbon emissions across our operations by 2050. To make sure this follows a common, robust and science-based definition, we follow the recognized SBTI Net-Zero Standard. We continue to work towards our 2030 emission reduction targets, and this year, we increased our target ambition for the 1.5°C global warming scenario for scope 1 and 2, in line with the latest climate science. We also recalculated our 2019 CO2 emission baseline for all scopes, to reflect our larger business size after the integration of Agility's Global Integrated Logistics business (GIL). Our biggest challenge to reach net-zero is technological; in our industry today there are still no carbon neutral solutions available at scale. Another challenge is that the majority of emissions in our supply chain are not in our full control. As an asset-light freight forwarder we do not own or control the trans- port equipment and we have limited direct influence on investments in new technologies. Still, we take responsibility for our scope 3 emissions and engage with our customers, suppliers and other partners in finding new and more sustainable transport solutions to be able to optimise sup- ply chains and offer our customers lower-emission transport alternatives. Our approach to managing the risk and opportunities from climate change is an embedded part of our risk management framework, as described on page 36. Driving innovation in logistics Delivering our targets will require a huge effort across our industry. We have strengthened our governance and initiated various organisational changes in DSV to anchor our ESG strategies in our business operations and help drive innovation and implementation of our environmental and climate initiatives. Solar panels on rooftops, partnerships with suppliers on sustainable fuel and pilots with electric trucks are examples of the inno- vation initiatives we worked on in 2022 to investigate the possibilities within these technologies. In 2023, we are introducing an internal carbon fee - the fee will be levied on our activities, based on their CO2 emissions. The funds generated will be invested back into our innovation initiatives. At the end of 2021, we implemented our Green Logistics services to help customers reduce emissions from their supply chains. We continue to promote and develop these services, and we expect growing demand in the coming years, as many of our customers have set their own, ambitious climate targets. Partnerships and stakeholder engagement No one, DSV included, can tackle planet-wide environmental challenges alone. Collaboration and partnerships are key to finding and implementing effective and long-lasting solutions to our most pressing sustainability challenges. We engage regularly with employees, customers, suppliers and investors on our sustainability strategy - and use their input and ideas to enhance our plans. During 2022 we evaluated more options for expanding existing partnerships and working with innovative new companies. These are part- nerships that can help us develop more sustainable energy sources, scale sustainable fuel technologies and run alternative trucking technology pilots. Integrity and transparency As one of the world's largest freight forwarding companies, our global network spans geographical and cultural borders across the globe, engag- ing with customers, suppliers, business partners and public authorities in more than 80 different countries. We are committed to conducting our activities with integrity and engag- ing with our stakeholders in an open and transparent manner. We strive to ensure that we apply and maintain uniform high ethical standards across our global organisation as defined by our Code of Conduct. To safeguard this focus, we run global awareness campaigns and recurring training programmes for all employees. As a freight forwarder we are aware of our position in the global logistics value chain in which our services are, to a large degree, performed by third-party suppliers. How our suppliers act reflects back on us as a com- pany and on our industry as a whole. Our Supplier Code of Conduct out- lines our ethical business standards, which we require our suppliers to follow. And our new centralised third-party risk management vetting platform and ongoing annual supplier audits are other measures to safe- guard compliance with our standards. Our social responsibility Freight forwarding is a people business, and ensuring that our employees thrive in an inspiring working environment is a central part of our HR strategy. We believe that a diverse and inclusive working environment consisting of people from across different nationalities, cultures, genders and ages generates better work dynamics and provides a stronger basis for engaging with our customer base. Being mindful of employee safety is also high on our agenda which we manage through several health and safety initiatives as well as addressing labour and human rights. We apply this mindset everywhere we operate globally, and when we integrate companies like GIL in 2021/22 - we make sure this culture and these standards are implemented across the organisation. In 2022, we performed our first global people survey - this has provided us with valuable information to further enhance these values and culture, making DSV an even more attractive place to work. Across the globe, we continue to engage in and support the communities we are part of. In 2022, the war in Ukraine only confirmed how quickly things can change and how important it is that we are ready to respond as a company with both financial and logistics support.#1313 DSV Annual Report 2022 Strategy and financial targets Our business model We ship freight by land, sea and air - and provide contract logistics too. Our business model is flexible and asset light, which helps us to keep supply chains flowing efficiently, from shipper to consignee. Freight forwarding services Shipment booking - Pick-up - Warehouse Documentation & customs clearance Cargo consolidation - Purchase order management Cross-dock terminal - Insurance A light model for the right reasons Our business model allows us to quickly scale activities to match changes in market demand or modes of transport. It also helps us choose the best partners for any ser- vice, based on reliability, available capacity, sustainability factors, transit time and price. Although we are a global business, we are always close to local markets. Working with container carriers, airlines, road hauliers and railway operators, we move goods to wherever they are needed. And being one of the largest buyers globally means we - and our customers - benefit from keen pricing and strong, long-standing relation- ships with carriers. We offer a unique combination of a highly skilled workforce with extensive industry know-how, advanced IT systems, modern warehouses and terminals, strong carrier relationships and a global network across more than 80 countries. Adding value to complex supply chains As well as transport, our customers buy a full range of freight forwarding, logistics and distribution services from us. And we constantly develop new services to keep ahead of what customers need. Our workflows are highly digitalised, and our systems tightly integrated with cus- tomers and suppliers. To cut the environmental impact of our business, we work closely with customers and suppliers to track and minimise emissions across our entire supply chain - from shipper to final destination. From shipper CO2 Scope 1+ 2+ 3 End-to-end logistics Through our global network, we provide a wide range of end-to- end supply chain solutions. We track our environmental impact systematically with a view to making our operations as carbon, energy and resource efficient as possible. The majority of our CO₂ emissions come from subcontracted transport (scope 3). To consignee " CO2 Scope 1+ 2+ 3 Logistics and distribution CO2 Scope 3 2 Subcontracted transport Warehousing Picking/packing - Cross-dock terminal - Deconsolidation Labelling, configuration, testing - Distribution Documentation & customs clearance E-commerce fulfilment - Carbon emission reports - Supply chain optimisation - 4PL = III Green logistics services CO2 reporting Green supply chain design & optimisation Sustainable fuel offerings Carbon offsetting#1414 DSV Annual Report 2022 Strategy and financial targets = III Our industry and market trends By understanding market trends in our own industry - and in others that affect us we can take advantage of opportunities and act quickly to reduce risks. A fragmented competitive landscape We are one of the top three global freight forwarders, with a market share of roughly 4%. Together, the top 20 forwarders have an estimated global market share of 30-40%. The rest of the market consists of a long tail of smaller regional and local freight forwarders. The mix of industry fragmentation and service standardisation creates a competitive pricing landscape. But because of our scale, global network, strong IT systems and logistics competences, big freight forwarders like DSV are in a good position to consolidate the market and gain market share. Our acquisition track record is a strong example of this, and we expect the consolidation trend to prevail in the coming years. New competition emerging In recent years, new competitors have entered the industry. One category is the digital forwarders, who typically offer a simple, standardised range of services, mainly focused on online price quoting and booking. Digital forwarders have a high level of digital capabilities but a lower level of logistics capabilities, such as operational expertise, global networks, scale, warehouses and carrier relationships. Furthermore, a few of the large ocean carriers now aim to provide door- to-door transport services, air and overland transport in addition to ocean transport. This has created scenarios where these carriers are both suppliers and competitors to freight forwarders. So far, the new players have not gained material market shares. Based on our strong logistics capabilities and our clear roadmap to further enhance our digital capabilities, we are confident that DSV will remain highly competitive. GDP sets the pace for market growth In recent years, global trade growth has been on level with GDP growth, and we believe this correlation will continue in the long term - with different growth rates between regions. As a result of the slowdown in the global economy and a post-COVID shift in consumer spending away from goods and towards services, global trade volumes have contracted during 2022 and have developed worse than the general economy. This development will also impact our markets going into 2023. Our asset-light model enables us to quickly adjust our capacity to such changes in demand. Our industry has changed dramatically in recent years. New trends and market dynamics are affecting transport and logistics globally and locally. We must understand these dynamics so we can act quickly to capitalise on opportunities and mitigate threats. In the following chart we have listed important ongoing trends affecting DSV. Market share Top five global freight forwarders and market share based on 2021 revenue. Top five 60% Kuehne + Nagel DHL Logistics DSV+GIL 20% Others 5% 5% 4% 3% 3% DB Schenker C.H. Robinson ■Top 6-20 Others, estimated Source: Armstrong & Associates and DSV estimates.#1515 DSV Annual Report 2022 Strategy and financial targets = III Trends A need for reliable global supply chains Even before the COVID-19 pandemic, companies sought more reliable and transparent supply chains. That need has only grown, and companies are contingency planning and adjusting their setup to protect against future risks. Geopolitical instability and protectionism Geopolitical instability causes tension and unrest. Global trade flows and economies are impacted by factors like protectionism, trade wars and political and military conflicts. Greener supply chains The demand for greener supply chain solutions is growing - driven by increasing environmental regulations and consumer pressure. The rise of e-commerce Consumer behaviour is becoming increasingly digital, sending fulfilment centre and last-mile delivery activities skyward. Digitalisation and automation Technology has transformed our industry over the past decades. This development will continue and will impact the way we operate and interact with customers and other stakeholders. Their impact Many companies are diversifying outsourced production between China and other East Asian countries. With dual sourcing and with more countries involved, dependencies are reduced, but complexity goes up. Companies are also considering reshoring of production. It is happening for certain products, but so far with limited impact on global trade. For some companies, storing extra buffer inventory closer to the end market can be another way to make supply chains more robust. Across the globe, we continue to see new examples of conflicts, protectionism, changes to tariffs and embargoes. In 2022, the war in Ukraine had both direct and indirect impact on the supply chains of many companies and on transport markets due to the closure of Russian air space and Ukrainian truck drivers leaving the European market. In recent years, the UK Brexit and the "trade war" between China and the US have also had a significant impact on supply chains and our operations. The transport and logistics industry is a major contributor to carbon emissions, and the sector as a whole must make a bigger effort to develop more environmentally sustainable business practices and reduce emissions from its activities. Having a clear sustainability strategy and service offering is increasingly becoming a "license to operate" for transport and logistics companies. COVID-19 lockdowns accelerated the shift in consumers' buying behaviour towards more online shopping. During 2022, e-commerce slowed a little, in line with the economic slowdown. But we still expect high structural growth in this area in the coming years, both for local and cross-border transactions. Across supply chains, the demand for visibility and productivity - often in tight labour markets drives technological development. Customer and vendor interactions are gradually changing from manual and classic EDI based to more modern API connections. And to drive productivity and support the fast-growing e-commerce segment, warehouses are increasingly being fitted with automated storage & retrieval systems. Our response We help our customers optimise their supply chains - suggesting efficiency improvements to increase reliability, cut costs or reduce the environmental impact. By providing supply chain visibility through our digital services, we can support planning and monitoring all the way from purchase order to final delivery. Dual sourcing and more complex supply chains may increase the demand for our services - e.g., purchase order management, cargo consolidation, customs clearance and warehousing. When such changes occur, we and our customers must react quickly to keep supply chains flowing - and to avoid violating any regulation. We offer a strong operational and compliance setup to help customers prepare for and adapt to market changes. Ultimately, we expect the benefits of global supply chains to win out over protectionism, and we believe globalisation is here to stay. There will be examples of more local production, and with our flexible business model we can adapt to such changes in trade flows. In 2022, we continued our efforts to support greener supply chains for our customers through our Green Logistics offerings. This market is still at an early stage, and we expect that the demand for these services will increase in the coming years. We continue to develop our services, and in 2022, we changed our organisation and created new operational and commercial sustainability teams to support this. We continue to see growth potential for DSV in the e-commerce market, and we are continuously devel- oping our services. This includes the roll-out of our automated e-fulfilment factories and customised solutions for large customers. We aim to combine our strong logistics competences with advanced digital solutions. We work with strategic roadmaps to develop our digital and physical infrastructure, and we implement scalable tech- nology across our organisation. Read more about our approach to technology in the following chapter.#1616 DSV Annual Report 2022 Strategy and financial targets = III A responsive approach At DSV, we continuously monitor the latest trends and adopt new technologies that benefit our business and our customers. Our business operations rely on strong systems and technology. Last year, our scalable, digital platforms handled almost 270 million jobs, shipments and order lines. This platform not only supports efficient workflows; it also ensures a fast and smooth integration of M&As and supports our growth strategy. Hybrid computing and Al To fulfil our strategy and react quickly to our dynamic markets, we have a strong, scalable IT infrastructure. We take a hybrid computing approach blending on-premises and cloud-based infrastructure across operational systems, customer integrations and engagement services. On top of our Advanced Integration Platform that we implemented in 2021, we are now applying artificial intelligence (AI) to improve our oper- ational efficiency in various ways. In 2022, we implemented systems for improving data quality of vendor data and for automated scanning of cus- toms declaration forms. Our modular approach to developing Al solutions allows us to quickly reuse models and data across the business to roll out even more solutions and respond to customer needs in a quick fashion. Delivering supply chain visibility Digitalisation is changing the way we interact with customers and vendors through every phase of a shipment. From quote, purchase order, booking, shipment tracking and status alerts to final billing and KPI reports. Our digital tools provide supply chain visibility to DSV customers - and make it easy to do business with us. Our digital freight forwarding platform, myDSV, is part of our critical IT infrastructure, not only managing bookings but also tracking, claims and reporting. In 2022, bookings on my DSV were up by more than 30%. Besides myDSV, we provide direct customer integrations for large customers. Increasingly, we are seeing EDI connections replaced by more advanced API integrations. Automated, efficient warehousing Automating and optimising warehouse processes improve customers' experiences and enable us to utilise warehouse space more efficiently. The structural growth in e-commerce transactions means that the demand for efficient warehouse solutions is growing too. The journey towards more automated warehouses continued in 2022. Our automated goods-to-person storage and retrieval program, DSV Fulfilment Factory, was launched in 2021, and during 2022, it has been rolled out to even more sites and customers. In addition, we are increasing the adoption of a wider range of warehouse automation technologies, including auto- mated guided vehicles and airborne autonomous drones for cycle count. Digital cargo twins In more and more warehouses and terminals, we now scan the size and weight of every incoming parcel and distribute this data across our IT systems as a "digital cargo twin". This gives us a precise view of the utilisation and performance of our warehouses and other assets, allowing us to optimise performance. In addition, the scanning of parcels ensures that customers are invoiced accurately based on the actual size and weight of their shipments. Staying abreast of the latest trends Our DSV Innovation Hub drives our global innovation efforts, monitoring trends and technologies and prioritising which to explore. Working with internal and external stakeholders, this team tests ideas, establishes fi- nancial business cases and implements projects across our global network. DSV technology trend radar Computer Vision Tracking/ Assessing Testing Wearables Smart Robots Adopting Power- to-X Artificial intelligence Digital cargo twins Electrical trucks Micro mobility Hybrid computing platform Autonomous vehicles Warehouse Automation Quantum computing Autonomous drones for delivery#1717 DSV Annual Report 2022 Strategy and financial targets = III Outlook for 2023 and 2026 financial targets For 2023, we expect EBIT before special items of DKK 16,000-18,000 million. We maintain our 2026 financial targets and aim for a 45% conversion ratio for the Group. 2023 Outlook 2023 (DKKm) 2022 Outlook actual Operating profit (EBIT) before special items Effective tax rate 25,204 23.9% 16,000- 18,000 24.0% Assumptions for 2023 financial outlook After an extraordinary 2022, we expect a decline in our earn- ings and margins for 2023 as freight markets find a new nor- mal level after the pandemic. The World Bank projects global GDP growth in the level of 2-3% in 2023 - with lowest growth rates in the advanced economies. Normally, we expect transport volumes to grow in line with the economy, but in the second half of 2022, we saw volumes declining more than GDP due to reduction of inventory levels and normalisation of consumer behaviour after COVID-19. We expect this negative development in freight volumes to continue in the first part of 2023, but we expect a recovery in the second half of the year. We have based our guidance on the assumption of declines in air and sea freight volumes of 2-5% for the full year 2023. As transport markets continue to normalise, we expect that our gross profit yields in Air & Sea will decline compared to the average level in 2022. For Road and Solutions, we expect that markets will be flat or decline by low single digits in 2023. Across all divisions our aim of taking market share remains intact. We will monitor activity closely across our organisation and adjust our capacity and cost base accordingly. The outlook for 2023 assumes that the currency exchange rates, especially the US dollar against DKK, will remain at the current level. The geopolitical and macroeconomic environment remains uncertain, and unforeseen changes may therefore impact our financial results. 2026 financial targets While we expect decline in conversion ratio and ROIC in 2023 compared to the extraordinary levels in 2022 - mainly for Air & Sea our 2026 targets are unchanged. The targets are based on the assumption of stable global eco- nomic development during the period 2024-26, with average annual global GDP growth of at least 3% and transport market growth in line with GDP. All the way towards 2026 we will continue our focus on achiev- ing organic growth ahead of the market, and we see opportuni- ties to improve productivity across the Group. Our IT systems, infrastructure and back-office functions are scalable, providing opportunities to leverage operations in all three divisions. The targets are based on organic growth and do not include the potential impact from large acquisitions in the period. The strategic objectives of the Group are translated into the following targets: 2026 targets (%) DSV Group 2022 actual 2026 targets Conversion ratio ROIC (before tax) 48.3 25.1 >45.0 >20.0 Divisional targets for conversion ratio Air & Sea Road Solutions 59.7 >50.0 25.8 >30.0 29.0 >30.0 Forward-looking statements This Annual Report in- cludes forward-looking statements on various matters, such as expect- ed earnings and future strategies and expansion plans. Such statements are uncertain and involve various risks, because many factors, some of which are beyond our control, may result in actual developments differing considerably from the expectations set out in the 2022 Annual Report. Such factors include, but are not limited to, general economic and business conditions, exchange rate and interest rate fluctuations, the demand for our services, compe- tition in the transport sector, operational prob- lems in one or more of DSV's subsidiaries and uncertainty in connec- tion with the acquisition and divestment of enterprises.#1818 DSV Annual Report 2022 Strategy and financial targets Capital structure and allocation ROIC before tax (%) = III ROIC before tax incl. goodwill and customer relationships Goodwill and customer relationships ■ Invested capital excl. goodwill and customer relationships ■ 120,000 30 100,000 80,000 60,000 40,000 20,000 0 יויו 25 20 15 10 5 0 2018 2019 2020 2021 2022 Capital structure The aim of DSV's target capital structure is to ensure: sufficient financial flexibility to meet our strategic objec- tives; and a robust financial structure to maximise the return for our shareholders. Our target financial gearing ratio is below 2.0 x EBITDA before special items. The ratio may exceed this level following signi- ficant acquisitions. Capital allocation policy Our free cash flow allocation prioritisation remains unchanged: 1. We pay net interest-bearing debt in periods when the financial gearing ratio is above target range. As a Group, we have a track record of successful company inte- grations - the most recent chapter in this story being the acquisi- tion of Agility's Global Integrated Logistics business (GIL) in 2021. We have been able to create increasing return on invested capital (ROIC) over time. However, large acquisitions have initially diluted ROIC before tax. Capital structure Group Management continuously monitors whether the capital structure is in line with the targets, and excess capital is distribut- ed to shareholders through share buybacks and dividends. Distribution of capital (DKKm) 25,000 Dividends Share buyback ■ Total 21,633 Total 18,761 | 20,313 + 17,841 Adjustments to the capital structure are usually announced in connection with the release of quarterly financial reports and are made primarily through share buybacks. 20,000 15,000 2. We make value-adding investments in the form of acqui- sitions or development of the existing business. Dividend policy 3. Our distribution to the shareholders takes place through share buybacks and dividends. DSV aims to ensure an annual dividend pay-out ratio of approx- imately 10-15% of our net profit. 10,000 Total 4,541 Total 5,311 Total 5,619 Value-adding investments DSV pursues an active acquisition strategy. Our acquisitions have created substantial value for shareholders over the years and have also contributed to consolidating an otherwise frag- mented industry. Proposed dividend for 2022 amounts to DKK 6.50 per share (2021: 5.50 per share). The proposed dividend for 2022 is equivalent to 8.1% of net profit. The lower dividend payout- ratio for 2022 reflects the extraordinary result for 2022 and expected normalisation of earnings in 2023. 5,000 4,888 5,031 4,161 380 423 588 920 1,320 0 2018 2019 2020 2021 2022#19Michael Ebbe CFO Financial review The Group delivered strong results for 2022, achieving 33% growth in gross profit. EBIT before special items was DKK 25,204 million and in line with the expected level of DKK 24,500-25,500 million. up 48% Income statement (DKKm) Revenue Direct costs Gross profit Gross margin Other external expenses Staff costs Operating profit before amortisation and depreciation (EBITDA) before special items Amortisation and depreciation 2022 2021 Growth* 235,665 182,306 183,516 144,691 52,149 37,615 24.3% 33.3% 22.1% 5,559 16,315 20.6% 4,173 13,025 30,275 20,417 Operating profit (EBIT) before special items 5,071 25,204 16,223 4,194 48.0% Conversion ratio Special items, costs Net financial expenses 48.3% 1,117 866 43.1% 478 841 Profit before tax 23,221 14,904 Tax on profit for the year 5,550 3,650 Profit for the year 17,671 11,254 Growth including M&A and in constant currencies. = III Strong performance in an extraordinary year 2022 was an eventful year with volatile freight markets, heightened geopolitical unrest, historically high inflation rates and a macroeconomic slowdown. The market for air and sea shifted from congestion, lack of capacity and record-high freight rates in the first half of the year to declining volumes and rapidly falling rates in the second half. The markets for road and contract logistics were less volatile - but certainly also impacted by the changes in the world around us. For DSV, it was also an integration year. We completed the integration of Agility's Global Integrated Logistics business (GIL) less than one year after the closing of the transaction - a new record for us. Across all business areas, we achieved growth in earnings in 2022 with the strongest performance in Air & Sea and Solu- tions. In the extraordinary market conditions, we delivered 48% growth in EBIT before special items. And very importantly, we converted the earnings to cash. Adjusted free cash flow was up by 163.4% compared to 2021, and in line with our capital allo- cation policy, we allocated DKK 21,633 million to shareholders through share buyback and dividend. Earnings per share (diluted and adjusted) was up 59.9% in 2022,#20The performance of each of our divisions is further described in the reviews on pages 24-30. 20 DSV Annual Report 2022 Financial and non-financial performance Gross profit (DKKm) Gross profit Conversion ratio → (DKKm) % driven primarily by growth in earnings and to a less degree a reduction in the number of issued shares. 60,000 50 50,000 40 40,000 30 30,000 20 20,000 10 10,000 0 0 2018 2019 2020 2021 2022 EBIT EBIT before special items (DKKm) Operating margin (DKKm) % 28,000 20 24,000 16 20,000 16,000 12 12,000 8 8,000 4,000 0 2018 2019 2020 2021 2022 Diluted adjusted earnings per share of DKK 1 (DKK) 100 80 60 40 20 0 2018 2019 2020 2021 2022 4 Integration of Agility's Global Integrated Logistics business The acquisition of GIL was closed in August 2021, at which date we included GIL in our consolidated financial statements. Consequently, the business combination was only partly included in the comparable P&L figures for 2021. We finalised the integration during Q3 2022, and in line with previous announcements, we estimate that GIL will contribute at least DKK 3 billion annually to combined EBIT before special items. The integration triggered costs of DKK 1.1 billion in 2022, which are recognised in the income statement under special items. Ukraine and Russia As previously announced, we have divested or closed down all DSV sub- sidiaries in Russia and Belarus. We made this decision shortly after Russia's invasion of Ukraine, and the exit had no material impact on the financial results of the Group. We also make sure that we comply with international sanctions against Russia and Belarus at all times, and we have stopped organising transports to, from and through the two countries, except for pharmaceutical shipments and humanitarian aid. Our Ukrainian operations were temporarily suspended when the invasion started in February 2022. During the year, we have resumed activities in the country to the extent possible. Results Revenue Revenue was up 24.3% in 2022. The Air & Sea division grew revenue by 26.1%, driven by the inclusion of GIL and higher freight rates in the first half of the year. In the second half of 2022, the economic slowdown resulted in lower demand for freight services. = III In combination with less congestion this led to falling freight rates and lower revenue for the division. (DKKm) 2022 2021 Growth* Air & Sea 174,431 131,901 Road 41,507 35,416 Solutions 24,409 18,734 26.1% 16.4% 26.2% Non-allocated items and eliminations (4,682) (3,745) Total revenue 235,665 182,306 24.3% n.a. Growth including M&A and in constant currencies. The Road and Solutions divisions also achieved strong revenue growth for the year. This was driven by higher average rates/fuel prices and higher ac- tivity (market share gains). GIL business contributed to the growth in both divisions, especially in Solutions, due to its strong footprint in the Middle East and APAC. The economic slowdown also affected Road and Solutions in the second half of 2022; however, less than the Air & Sea division. Gross profit Gross profit was up 33.3% in 2022. Growth in Air & Sea was mainly driven by the addition of GIL and higher gross profit yields due to the extra- ordinary market conditions with port congestion, high freight rates and general cost inflation. In the second half of the year, the division was affected by a gradual drop in yields as congestion started to ease. (DKKm) 2022 2021 Growth⭑* Air & Sea Road 34,624 23,769 38.5% 7,911 7,095 11.0% Solutions 9,318 6,653 35.3% Non-allocated items and eliminations 296 98 n.a. Total gross profit 52,149 37,615 33.3% Growth including M&A and in constant currencies.#2121 DSV Annual Report 2022 Financial and non-financial performance = III Gross profit growth in Road and Solutions was driven by the addition of GIL business and higher activity levels. Solutions in particular achieved high growth as we added new warehouse capacity. Gross margin for the Group was 22.1%, compared to 20.6% last year. This increase was driven by the Air & Sea division with high gross profit yields and a change in its product mix. The Solutions division also achieved a higher gross margin, due to increased warehouse utilisation and more efficient workflows. All regions achieved growth in gross profit in 2022, strongest in APAC and Americas. Furthermore, the Middle East was significantly strengthened by the addition of GIL's network in this region. EBIT before special items For the Group, EBIT before special items increased by 48.0%. This was driven by gross profit growth across all divisions and geographical regions and by the addition of GIL. Growth* Total staff costs (excluding hourly workers) were DKK 16,315 million in 2022 (2021: DKK 13,025 million). The cost rise was from the inclusion of GIL as well as organic increases in activity, cost inflation and the impact of exchange rate fluctuations. Other external expenses totalled DKK 5,559 million in 2022 (2021: DKK 4,173 million). They were affected by the same factors as staff costs. Depreciations totalled DKK 5,071 million in 2022 (2021: DKK 4,194 million). This rise was due to the inclusion of GIL and the addition of several warehouses in our Solutions division. Special items totalled DKK 1,117 million in 2022 (2021: DKK 478 mil- lion), relating to the now finalised GIL integration. The total GIL integration cost came to DKK 1.6 billion. Net financial expenses totalled DKK 866 million in 2022 (2021: DKK 841 million). The increase was partly due to the inclusion of GIL and an increase in our leasing debt compared to 2021 due to our warehouse expansions in 2022. Gain on currency translation was DKK 276 million in 2022, compared to a DKK 53 million loss in 2021. Currency translations were mainly related to intercompany loans and had no cash impact. The integration of GIL led to a temporary increase in intra-group currency exposure. (DKKm) 2022 2021 Air & Sea 20,658 Road 2,040 12,768 1,857 Solutions 2,701 1,775 53.0% 9.2% 47.4% Non-allocated items and eliminations (195) (177) n.a. (DKKm) Total EBIT before special items 25,204 16,223 48.0% * Growth including M&A and in constant currencies. Interest on lease liabilities Other interest cost, net Interest on pensions Currency translation, net Diluted adjusted earnings per share Diluted adjusted earnings per share went up by 59.9% to DKK 81.4 in 2022 (2021: DKK 50.9). This was driven by the significant increase in adjusted earnings and also a reduction in shares outstanding, as treasury shares from share buybacks were cancelled during the year. Cash flow statement Cash flow from operating activities in 2022 rose by 120.0% to DKK 26,846 million. Cash flow from operating activities was positively affected by higher EBITDA before special items and an improvement in net working capital, but offset by higher tax payments for the period. On 31 December 2022, our net working capital (NWC) was DKK 5,116 million, compared to DKK 8,031 million in 2021. The main reason was lower NWC for the Air & Sea division, where lower freight rates and lower activity in the last months of 2022 reduced funds tied up in NWC. Process optimi- sations, especially in the GIL business, also contributed to lower NWC. (DKKm) Cash flow from operating activities Cash flow from investing activities 2022 2021 26,846 (966) 12,202 420 Free cash flow 25,880 12,622 2022 2021 Cash flow from financing activities (24,245) (8,680) 727 495 Cash flow for the period 1,635 3,942 396 276 19 17 Free cash flow 25,880 12,622 (276) 53 Net acquisition of subsidiaries and activities Special items (1,631) 866 841 Repayment of lease liabilities 664 (3,734) Adjusted free cash flow 22,810 828 (3,160) 8,659 The 2022 conversion ratio was 48.3%, compared to 43.1% last year. Our Air & Sea and Solutions divisions improved their ratios and Road was on par with 2021, even though inflation put high pressure on the cost base in the second half of the year. In extraordinary market circumstances - and while managing the GIL integration - our teams continued to opti- mise workflows and systems and leverage our network. As logistics mar- kets gradually normalise, we expect a lower conversion ratio in 2023. Net financial expenses The effective tax rate was 23.9% in 2022, compared to 24.5% in 2021. This was in line with our expectations. The inclusion of GIL and the growth of the Air & Sea division have increased the Group's presence in countries with a relatively higher corporate tax rate.#2222 DSV Annual Report 2022 Financial and non-financial performance = III Relative to full-year revenue, funds tied up in NWC at year- end decreased to 2.2%, from 3.5% in 2021. Cash flow from investing activities was an outflow of DKK 966 million in 2022, in line with our expectations. The cash inflow of DKK 420 million in 2021 was due to including the positive cash position of GIL. Adjusted free cash flow (adjusted for acquisitions, special items and IFRS 16) was DKK 22,810 million, compared to DKK 8,659 million last year. The adjusted free cash flow was mainly driven by the significant positive increase in cash flow from operating activities. Cash flow from financing activities was negative by DKK 24,245 million in 2022 (2021: negative DKK 8,680 million). This difference was mainly due to higher proceeds from bor- rowings last year. In 2021, we issued three new corporate bonds versus only one in 2022. In line with our capital allocation policy, we allocated DKK 21,633 million to shareholders via share buybacks and divi- dend in 2022. At year end, the financial gearing ratio was 1.0x EBITDA (2021: 1.4x). Capital structure On 31 December 2022, DSV shareholders' share of equity was DKK 71,519 million (2021: DKK 74,103 million). This decrease was mainly driven by allocations to shareholders, partly offset by profit for the period. The share capital was nominally DKK 219 million by the end of 2022 (2021: 240 million). The share capital is divided into 219 million shares of DKK 1 each. Each share has one vote. The share capital was reduced on 20 April 2022 through the cancellation of 6 million treasury shares and on 22 December 2022 through the cancellation of 15 million treasury shares. The solvency ratio excluding non-controlling interests was 45.0% on 31 December 2022, compared to 45.9% on 31 December 2021. Net interest-bearing debt (including IFRS 16 lease liabilities) was DKK 29,870 million by the end of 2022 - close to the level of last year (2021: DKK 29,245 million). In 2022, we issued one new corporate eight-year bond of EUR 600 million. The weighted average duration of corporate bonds, committed loans and credit facilities was 8.3 years on 31 December 2022, compared to 9.6 years on 31 December 2021. Invested capital and ROIC The invested capital including goodwill and customer relation- ships amounted to DKK 99,540 million on 31 December 2022 (2021: DKK 101,231 million). The decrease was mainly due to lower net working capital, partly offset by higher currency exchange rates. Driven by strong growth in earnings, return on invested capital (including goodwill and customer relationships) was 25.1% for 2022 (2021: 19.6%). Excluding goodwill and customer rela- tionships, return on invested capital was 105.1% for 2022 (2021: 77.9%). Reporting on corporate social responsibility Reporting on corporate social responsibility cf. section 99a of the Danish Financial Statements Act We have reported separately on corporate social responsibility in our Sustainability Report 2022, in accordance with section 99a of the Danish Financial Statements Act. Reporting on management gender composition cf. section 99b of the Danish Financial Statements Act We have reported separately on management gender composition in our Sustainability Report 2022, in accordance with section 99b of the Danish Financial Statements Act. Reporting on diversity cf. section 107d of the Danish Financial Statements Act We have reported separately on diversity in our Sustainability Report 2022, in accordance with section 107d of the Danish Financial Statements Act. For more information on developments within each ESG area, please refer to our Sustainability Report at: https://www.dsv.com/en/sustainability-reports tuyor 2022 Accelerating our ambitions towards a more sustainable future#2323 DSV Annual Report 2022 Financial and non-financial performance = III ESG performance In 2022, we committed to an ambitious 2050 net-zero target, and we restated our 2019 baseline for CO2 emissions to now include GIL. We also completed our first global employee engagement survey and updated our human rights assessment programme. Performance on CO2 emissions In 2022, we raised our ambitions and committed to reaching net-zero carbon emissions across our operations by 2050, and we revised our 2030 emission reduction targets for scope 1 and 2. According to our revised targets, we will reduce our scope 1 and 2 emissions by 50% by 2030 and our scope 3 emissions by 30%. Scope 3 2019 Total Co₂ emissions ('000 tonnes) Scope 1+2 2022 2021 Baseline 15,930 15,373 20,526 441 254 409 15,489 15,119 20,117 Carbon intensity - Co₂e (g/tonne-km) Air transport 694.4 707.4 Sea transport 6.6 6.5 Road transport 97.5 98.7 739.5 6.3 98.1 Our total CO2 emissions in 2022 increased by 4% compared to 2021. The increase was primarily due to the full-year effect from GIL, but this was offset by declining volumes within air and sea due to the economic slowdown in the second half of 2022. The growth in scope 1 and 2 emissions was also impacted by the growth in our Solutions division and an increase in our own truck fleet. Compared to the 2019 baseline - now including GIL - our total emissions declined by 22%. The main reason for this was an overall decline in freight volumes in the period. As volume growth is expected to return in the coming years, we need to achieve lower carbon intensity per transport. Carbon intensity has generally improved over the years as transport equipment becomes more efficient enabling better utilisation of capacity. For sea freight, carbon intensity saw a negative development in 2021 and 2022, mainly due to less slow-steaming in a period with port congestion and tight capacity - we expect this situation to reverse in the coming years as more capacity is added. With our CO2 baseline in place, we are now working on a roadmap with initiatives which over time can contribute to reducing our emissions across all business areas. This includes the continued development of our Green Logistics offerings, the use of sustainable fuels, pilots with electric trucks, own production of energy and continued focus on optimising our own buildings. A business powered by people We successfully integrated GIL in 2022. Across the organisation we were able to retain the key GIL employees, which was very positive. In a tight labour market we also achieved a relatively stable development for existing DSV employees, and as a result, our employee turnover adjusted for synergies was 22.1%. This was on level with last year and we estimate that this is on level with our industry. Promoting health and safety capabilities across the organisation is a key priority for us in order to keep employees safe. It is reflected in our lost time injury frequency rate, which this year dropped to 2.8 compared to 4.5 in 2021. Conducting our business activities responsibly and applying strong ethical standards is high on our agenda. This includes ensuring that we comply with the latest human rights regulations, and in 2022 we developed a new and improved Human Rights programme which will be fully rolled out in 2023. Towards the end of 2022, we carried out a global engagement survey across our organisation. The survey achieved a high response rate and provided valuable feedback and insight on how we can make DSV an even better place to work. The results of the survey are currently being reviewed, and we look forward to addressing these findings over the coming year. Working with integrity The DSV Code of Conduct forms our ethical foundation and guides our principles, behaviour and culture. We conduct mandatory internal e-learning modules every year, and in 2022, we achieved a 100% completion rate among the employees assigned this year. As freight forwarders, we depend on our suppliers who perform the trans- port services. This year, we have implemented a new global third-party risk management system, enabling us to improve our risk assessments, approval and monitoring capabilities. In combination with new automated distribution and sign-off capabilities of our Supplier Code of Conduct, these solutions will help enforce our standards across our entire supply chain. We will continue developing the new platform in 2023, improving our supplier screening and evaluation capabilities.#24= III Gross profit DKK 34,624 million +38.5% Operating profit DKK 20,658 million +53.0% Geographic segmentation based on gross profit DEMEA 39% AMERICAS 32% APAC 29% The Air & Sea division operates a global network specialising in transportation of cargo by air and sea. The division offers both conventional freight for- warding services and tailored project cargo solutions. Air & Sea For 2022, the division reported a 38.5% increase in gross profit and 53.0% increase in EBIT before special items. This growth was driven by the inclusion of GIL, high gross profit yields in extraordinary freight markets and a continued focus on operational excellence. Market situation Navigating volatile markets was a major theme in 2022. Dur- ing the year, there was a significant change in the dynamics of the global freight markets. At the start of the year, supply chains were still heavily impacted by congestion and COVID-19 lockdowns. This resulted in lack of capacity, high freight rates and low schedule reliability. During the second half of the year, demand for transport servic- es declined as a result of the general macroeconomic slowdown, de-stocking in the retail sector and a gradual normalisation after COVID-19 lockdowns as consumption shifted away from mate- rial goods and towards services. Congestion across supply chains gradually eased and capacity started to recover, leading to a more balanced market situation by the end of the year. Condensed income statement and key figures (DKKm) 2022 2021 Growth* Revenue Direct costs 174,431 131,901 139,807 108,132 26.1% Air 34,624 23,769 38.5% 4,244 8,471 3,366 6,598 Gross profit Other external expenses Staff costs 21.9 The global air freight market saw gradually declining demand during 2022, especially for export from Asia to Europe and to North America. Demand for air freight was also impacted by improving schedule reliability and lower rates in the sea freight market, which made sea freight a more competitive alternative. The available air freight capacity gradually increased as belly- space capacity in passenger planes returned. As a result, air freight rates declined, mainly in the second half of 2022. This year, we achieved air freight volume growth of 3% (in- cluding M&A impact). Adjusted for the acquisition of GIL, the division's 2022 volumes were down by approximately 7%, compared to an estimated general market decline of 8-10%. Sea In the global sea freight market, port congestion was still an issue on the US East Coast and in Northern Europe in the first part of 2022, but available capacity gradually increased as congestion eased during the year. In combination with weaker Operating profit before amortisation and depreciation (EBITDA) before special items Amortisation and depreciation 21,909 1,251 13,805 1,037 Operating profit (EBIT) before special items 20,658 12,768 53.0% Gross margin (%) 19.8 18.0 Conversion ratio (%) 59.7 53.7 Operating margin (%) 11.8 9.7 Number of full-time employees at year end 23,032 24,675 Total invested capital 68,813 73,256 Net working capital 5,849 10,675 ROIC before tax (%) 29.1 Growth including M&A and in constant currencies.#2525 DSV Annual Report 2022 Financial and non-financial performance = III demand especially on the Asia-Europe and Trans-Pacific routes - this led to rapidly declining spot rates from the historical high rate levels we saw at the end of 2021. In 2022, we achieved sea freight volume growth of 7% (including M&A impact). Adjusted for the acquisition of GIL, the division's 2022 volumes were down by approximately 7%, which we estimate to be in line with the general market. The volume development compared to the market for both air and sea was impacted by our relatively high exposure to the Asia-Europe trade lane, which was among the weakest performing in 2022. Furthermore, our abili- ty to outgrow the market is normally limited during an integration year. Air freight (DKKm) Revenue Direct costs 2022 2021 90,591 71,988 70,846 57,795 18,603 13,051 20.5 Gross profit per unit (DKK) 11,941 18.4 1,557,972 1,510,833 8,638 Gross profit Gross margin (%) Volume (tonnes) Sea freight (DKKm) Revenue Direct costs Gross profit 83,840 67,819 16,021 61,055 50,337 10,718 Gross margin (%) 19.1 Volume (TEUS) 2,665,147 2,493,951 Gross profit per unit (DKK) 6,011 17.6 4,298 Strategic and operational highlights We successfully completed the integration of GIL in 2022, less than a year after the acquisition - thanks to the strong efforts from our teams worldwide. The inclusion of GIL has strengthened our Air & Sea network across most geographies, especially in the Middle East and APAC. With the integration of GIL, we also gained new competences, e.g., within the energy and the chemicals sectors. With the GIL integration behind us and general demand declining, our focus has shifted to adjusting our capacity and workforce and managing the impact of cost inflation on our business. This was a theme in the last part of 2022 and will continue to be high priority for us in 2023. In 2022, we continued to develop systems and service offerings to cus- tomers. Our workflows are already close to paperless, but we see poten- tial to use and further improve our systems, focusing on areas like digital customer integrations and booking data quality. This will help us provide better and faster supply chain visibility to customers - and increase our own productivity. Our air charter network provides tailor-made solutions to customers on specific routes. In 2022, we added new lanes to the network, e.g., from Singapore to Los Angeles. We operate the network with a clear fo- cus on flexibility so we can scale capacity up and down as demand chang- es. LCL (less than container load) in ocean freight is another business area where we increased our focus in 2022. We have gained a strong position within LCL in recent years, and we see good growth opportu- nities in this market. We saw increasing interest from customers for our Green Logistics services in 2022, especially around carbon footprint transparency and supply chain optimisation. The market for sustainable fuel is still relatively immature with volatile pricing and limited availability. We expect this will improve in the coming years, and it is highest priority for us to make sure that our customers have the option to choose lower-emission transports. Results DSV Air & Sea revenue was DKK 174,431 million in 2022 (2021: DKK 131,901 million), a growth of 26.1%. This revenue growth was driven by the addition of GIL business and high- er freight rates for both air and sea compared to 2021. Geographically, all regions contributed to the growth in revenue. Gross profit came to DKK 34,624 million for 2022 (2021: DKK 23,769 million), a growth of 38.5%. The increase was driven by the addition of GIL and high yields per unit for both air and sea freight compared to the same period last year. The extraordinary market conditions over the past years have had a positive impact on gross profit per TEU (sea freight) and per tonne (air freight). Our skilled forwarders, scale benefits and strong carrier relation- ships have enabled us to navigate the complex markets and offer trans- port solutions for our customers despite the challenges. With weaker demand, less congestion and lower freight rates, our gross profit yields started to decline in the second half of 2022. The division's gross margin was 19.8% for 2022 (2021: 18.0%). The in- crease was mainly due to the extraordinary markets as well as a change in product mix compared to 2021 - with growth within higher-margin activities like LCL and decline in lower-margin project business. This year, EBIT before special items was DKK 20,658 million (2021: DKK 12,768 million) an increase of 53.0%. The significant growth was driven by the inclusion of GIL, the general gross profit rise and our continued focus on productivity, achieving synergies and managing costs (operational excel- lence). All regions contributed to the EBIT growth in 2022. The conversion ratio came to 59.7%, compared to 53.7% last year. The con- version ratio was positively affected by extraordinary high gross profit yields. As yields normalise, we expect conversion ratio to decline. The improvement in 2022 was also driven by the GIL integration and the achieved synergies.#2626 DSV Annual Report 2022 Financial and non-financial performance = III Net working capital (NWC) was DKK 5,849 million at the end of the year, compared to DKK 10,675 million at year-end 2021. This was due to a combination of lower freight volumes and lower freight rates in the last part of 2022, but also process improvements, especially in the GIL related business. In 2022, return on invested capital was 29.1%, compared to 21.9% in 2021. The increase was driven by the strong earnings growth. Focus areas for 2023 After completing three large integrations in recent years, we have achieved a strong market position. We have the network, skilled people and digital tools to provide market-leading global services to our custom- ers, and our clear target is to gain market share. Today, some companies are taking a critical look at their supply chains. We see this as an oppor- tunity, and we are ready to help them with production relocation, dual sourcing strategies, lowering emissions and by creating more supply chain visibility/predictability. In 2022, we had good momentum within sectors like energy, healthcare and semiconductors, and we will continue to focus on these sectors. Furthermore, we will continue to develop our LCL network, express services and our air charter network as well as adapting to future changes in demand. Supply chain disruptions and volatility will still be an issue in some parts of the market in 2023, but the soft markets we saw in the second half of 2022 are likely to continue in the first part of 2023. Due to the transport market slowdown and increasing competition, we expect a decline in gross profit yields compared to the 2022 level, and we will do our best to navigate the markets, adjust capacity and protect our margins. Revenue (DKKm) 180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 2018 2019 2020 2021 2022 Gross profit (DKKm) 35,000 30,000 25,000 20,000 15,000 10,000 5,000 Gross profit Conversion ratio EBIT before special items EBIT Operating margin → % (DKKm) % 60 25,000 21 18 50 20,000 40 15,000 30 10,000 20 5,000 10 15 12 9 6 3 0 0 0 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022#27= III Gross profit DKK 7,911 million +11.0% Operating profit DKK 2,040 million +9.2% Geographic segmentation based on gross profit EMEA 93% AMERICAS 7% The Road division is among the market leaders in Europe and furthermore has operations in North America, South Africa and in the Middle East. The division operates more than 23,000 trucks and offers full load, part load and groupage services through a net- work of more than 250 terminals. Road For 2022, the Road division achieved 11.0% growth in gross profit and a 9.2% increase in EBIT before special items. The increase in earnings was mainly driven by organic growth. The division deliv- ered strong operational performance in a market affected by tight capacity and cost inflation. Condensed income statement and key figures (DKKm) 2022 2021 Growth* 41,507 33,596 35,416 28,321 16.4% 7,911 7,095 11.0% 1,425 1,122 3,543 3,149 Revenue Direct costs Gross profit Other external expenses Staff costs Operating profit before amortisation and depreciation (EBITDA) before special items 2,943 2,824 Amortisation and depreciation 903 967 Operating profit (EBIT) before special items 2,040 1,857 9.2% Gross margin (%) 19.1 20.0 Conversion ratio (%) 25.8 26.2 Operating margin (%) 4.9 5.2 Number of full-time employees at year end 16,701 16,888 Total invested capital Net working capital ROIC before tax (%) 10,690 9,624 (586) (2,133) 20.1 20.0 Growth including M&A and in constant currencies. Market situation We estimate that our main road freight market in Europe grew by around 1-3 % in 2022 - in line with European GDP. With the general economic slowdown in the second half of the year, the road freight market slowed down and market volumes dropped below 2021 levels in the last quarter of the year. The road market was characterised by tight capacity and lack of truck drivers during most of 2022. The EU Mobility Package came into effect at the beginning of the year, and the new regu- lation effectively reduced available capacity. On top of this, the market was impacted by higher fuel costs and general cost infla- tion, which also contributed to increasing freight rates and costs. In a challenging market, we estimate that our Road business grew its share across most markets as a consequence of our strong network and market position. Strategic and operational highlights The war in Ukraine, EU's Mobility Package and other market challenges were top of mind in 2022. Following the outbreak of the war, many Ukrainian truck drivers left Western Europe and returned to their home country. This added to the already tight situation with structural lack of truck drivers. Our effective procurement setup and network meant that, in most cases, we were able to provide necessary capacity for our customers. We believe that this was an important factor be- hind our market share gains in 2022. We also made progress on our Road Way Forward programme. We implemented improvements across our European groupage network, including enhanced planning, better equipment utilisa- tion and most importantly, more departures and higher and more consistent customer service levels. Our new transport management system is live in the Baltic countries, but we made less progress than expected in 2022. We have now changed our approach and reduced vendor dependency, and we are confident that we will achieve further progress in 2023.#2828 DSV Annual Report 2022 Financial and non-financial performance = III The GIL acquisition had a limited impact on the Road division, but it did add road activities in the Middle East, which continued to perform well in 2022. We have continued our work to help customers optimise their supply chains and reduce their carbon footprints. This includes promoting our Green Logistics services, where we are seeing good interest - especially in North- ern Europe and among large customers. Longer term, we are involved in strategic partnerships with truck manufacturers, and we are testing differ- ent technologies and equipment. This includes electric trailers, which have the potential to reduce CO2 emissions from transport by up to 40%. Results DSV Road revenue was DKK 41,507 million in 2022 (2021: DKK 35,416 million) a growth of 16.4%. This was driven mainly by higher freight rates and higher fuel surcharges. For international transports and busi- ness-to-business shipments, we achieved growth year-on-year. Busi- ness-to-consumer shipments were down, mainly due to lower activity for customers within e-commerce and construction/do-it-yourself and simi- lar sectors. In a market with record-high rate increases and cost inflation, the division has tracked developments closely and has generally been able to adjust prices and provide capacity to our customers. - The division has more than 85% of its revenue in Europe and saw good performance across most countries in this region especially in our German operations. Our still relatively small operation in North America achieved the highest organic growth rate in 2022, and adding GIL's road activities also contributed to growth. Gross profit was DKK 7,911 million in 2022 (2021: DKK 7,095 million), an annual increase of 11.0%. The division's gross margin was 19.1% for 2022, compared to 20.0% for 2021. Capacity shortages, higher fuel prices and general cost inflation - partly due to the EU Mobility Package - led to higher direct freight cost for the division. The pass-through element of cost inflation had a negative impact on the gross margin. EBIT before special items was DKK 2,040 million in 2022, compared to DKK 1,857 million in 2021. This 9.2% increase was driven by the gross profit growth and solid performance across all regions, except for South Africa which was loss-making in 2022. The conversion ratio came to 25.8% for 2022, compared to 26.2% for the same period last year. In an environ- ment with high inflationary pressure on the cost base, the division has maintained focus on productivity and cost management. Net working capital (NWC) was negative DKK 586 million at the end of the year, against negative DKK 2,133 million at year-end 2021. This development was mainly a result of pre-payments related to property projects included in NWC at the end of 2021. Return on invested capital was 20.1% in 2022 and was on level with last year. Focus areas in 2023 We expect a competitive market in 2023, with activity levels still impact- ed by the economic slowdown. During the year, we will monitor activity levels closely and adjust capacity when needed. Our target of gaining market shares across geographies remains unchanged. Across our network, we will continue to develop our services and systems, supporting our customers' need for supply chain visibility. We take more than 90% of customer bookings digitally, and we aim to enhance data quality in these bookings to improve customer service quality and our own productivity. We will also continue to promote and develop our Green Logistics services, and we expect an increasing demand for these services. We continue to see North America as an attractive market with strong potential for DSV Road, both organically and through M&A. The Road Way Forward project continues in 2023. This includes rolling out our transport management system in more countries and continuing devel- opment of our European groupage services - aiming for greater geographi- cal network coverage and improved performance on first/last mile distribu- tion. Based on the network improvements we have already made, we ex- pect growth in international groupage shipments in 2023. Revenue (DKKm) 48,000 40,000 32,000 24,000 16,000 8,000 0 2018 2019 2020 2021 2022 Gross profit (DKKm) 10,000 8,000 6,000 4,000 2,000 Gross profit Conversion ratio →→ % 40 35 30 25 20 15 10 5 0 0 2018 2019 2020 2021 2022 EBIT Operating margin → % 10 8 6 500 0 IT 4 2 0 2018 2019 2020 2021 2022 EBIT before special items (DKKm) 2,500 2,000 1,500 1,000#29= III Gross profit DKK 9,318 million +35.3% Operating profit DKK 2,701 million +47.4% Geographic segmentation based on gross profit EMEA 71% AMERICAS 17% APAC 12% The Solutions division offers ware- housing and logistics services globally and controls more than 500 logistics facilities. The service portfolio includes freight management, customs clear ance, order management and e-com- merce solutions. Solutions The Solutions division achieved a 35.3% increase in gross profit and a 47.4% increase in EBIT before special items. The strong performance was driven by organic growth and the addition of GIL activities. Condensed income statement and key figures (DKKm) Revenue Direct costs Gross profit Growth* 2022 2021 24,409 15,091 18,734 12,081 26.2% 9,318 6,653 35.3% Other external expenses 1,759 1,338 Staff costs 2,254 1,664 Operating profit before amortisation and depreciation (EBITDA) before special items 5,305 3,651 Amortisation and depreciation 2,604 1,876 Operating profit (EBIT) before special items 2,701 1,775 47.4% Gross margin (%) 38.2 35.5 Conversion ratio (%) 29.0 26.7 Operating margin (%) 11.1 9.5 Number of full-time employees at year end 32,077 31,866 Total invested capital 23,364 20,182 Net working capital 1,624 1,061 ROIC before tax (%) 12.4 11.3 Growth including M&A and in constant currencies. Market situation The contract logistics market grew by an estimated 3-4% in 2022 compared to the previous year. The market had strong momentum for the first part of the year, but growth deceler- ated towards the end of the year. For many companies, espe- cially in the retail sector, inventory levels increased during the year, but in- and outbound transactions in warehouses de- clined compared to the high activity level in 2021. Throughout the year, warehouse capacity stayed in high demand across most markets. As a result, warehouse utilisation has been high, and the market was impacted by lack of labour, increasing energy prices, general cost inflation and higher interest rates. We estimate that Solutions took market share in all its major markets during the year. This was driven by a strong service offering, addition of new warehouse capacity and high utilisa- tion of existing capacity. Strategic and operational highlights In 2022, we completed the GIL integration. The contract logistics operations in the Middle East and South-East Asia added activities across several industries, including pharma/ healthcare, and were a strong contributor to the growth. We continued executing our long-term strategy for developing multi-client warehouse campuses based on strategic roadmaps for each region, and in 2022 we added more than 800,000 m² of warehouse facilities of which approximately 300,000 m² was a net addition to the existing capacity. The campuses are partly replacing existing facilities but are also adding new capac- ity and are a key organic growth driver for the division. The new warehouses can be equipped and automated to match the needs of customers in different industries and can accommodate changes in customer needs around seasonality and growth. Having several customers in the same location#3030 DSV Annual Report 2022 Financial and non-financial performance = III Revenue (DKKm) 28,000 24,000 20,000 16,000 12,000 8,000 4,000 0 2018 2019 2020 2021 2022 Gross profit Gross profit Conversion ratio → delivers significant scale benefits, including improved utilisation of space and equipment, warehouse automation and better staff planning. This is clearly reflected in the division's higher profit margins in recent years. Across both new and existing warehouses, we continue to focus on sus- tainability, launching several initiatives to reduce the environmental im- pact of our operations. Our new warehouses are certified in line with leading standards, such as BREEAM, and we increase the utilisation of rooftop areas for solar panels. Our ongoing consolidation efforts also include the IT infrastructure. More than 70% of all sites operate on the division's global Warehouse Manage- ment System, enabling standardisation of services and workflows while reducing the cost per transaction (order line). In 2021, we launched DSV Fulfilment Factory. This solution enables us to offer warehouse automation to all sizes of companies with multiple distribution channels, both B2B and B2C. We continued rolling it out in 2022 and now have 8 of 16 planned sites in operation. (DKKm) % 10,000 30 25 8,000 20 6,000 15 4,000 10 Results 2,000 5 0 0 2018 2019 2020 2021 2022 EBIT before special items EBIT Operating margin → % 14 12 10 8 6 4 2 (DKKm) 3,000 2,500 2,000 1,500 1,000 500 0 2018 2019 2020 2021 2022 Solutions revenue was DKK 24,409 million in 2022 (2021: DKK 18,734 million), an annual growth of 26.2%. Growth was strongest in the first part of the year and was driven both by the inclusion of GIL and by organic growth across all regions. Gross profit was DKK 9,318 million in 2022 (2021: DKK 6,653 million) - an annual increase of 35.3%. The division achieved a gross margin of 38.2%, compared to 35.5% last year. Higher activity, high warehouse utilisation and more efficient workflows in the new campuses were the main drivers behind this development. EBIT before special items was DKK 2,701 million (2021: DKK 1,775 million). This increase of 47.4% was driven by organic growth across all regions and the successful integration of GIL. The conversion ratio was 29.0%, compared to 26.7% last year. This improvement was driven by growth in gross profit, and it was achieved despite general cost inflation affecting the cost base - especially in the second half of the year. Net working capital (NWC) was DKK 1,624 million at the of the year, compared to DKK 1,061 million last year. The increase was mainly due to higher activity levels and property projects in progress. Return on invested capital came to 12.4%, compared to 11.3% last year. The growth in earnings was partly offset by an increase in average invest- ed capital compared to 2021, mainly due to increases in warehouse leas- ing commitments. Focus areas in 2023 The current economic slowdown is also impacting the contract logistics market. We are closely monitoring developments and maintain high focus on continu- ously adjusting capacity and managing our cost base to match demand levels. Despite the temporary economic slowdown, we still expect the market to be characterised by strong demand for modern, efficient and automated warehouses in the right locations. We will continue to develop multi-client, automated warehouses with a high focus on sustainability and energy efficiency. We aim to strengthen our foot- print across existing countries and focus particularly on growing our presence in Americas and APAC. Bolt-on acquisitions may be relevant for us, especially to gain specific industry competences or a foothold in a specific market. We maintain our target of gaining market share our improved pharma sector offering and strengthened e-commerce products are examples of commercial initiatives we expect will support growth in 2023. Several industries are focusing on creating more robust supply chains. This may lead to relocating production for our customers, more regional production and assembly, higher inventory levels and more stock points or distribution centres closer to the end consumer. We will work closely with our customers and pursue the opportunities this will provide.#3131 DSV Annual Report 2022 Corporate governance and shareholder information Risk management = III Risk governance structure As a global freight forwarder, we are exposed to a variety of risks that are inherent to our operations. Managing these risks is an integrated part of our management activities. Our risk management framework is based on structured risk identification, analysis and reporting processes, all of which provide the basis for ongoing risk assessments and subsequent initiation of relevant mitigating actions. Our flat organisational structure allows for fast escalation and timely re- sponse to issues that may have a material impact on the Group's earnings and financial and strategic targets. The Board of Directors is responsible for the Group's risk management strategy and the overall framework for identifying and mitigating risks. The Audit Committee supervises compliance with the established framework. The Executive Board is responsible for the day-to-day risk management processes as well as the continuous development of the Group's risk management activities. Dynamic risk adaption Ongoing key risk reassessment Identification Risks are identified using the Group's risk reporting tools. علمما Analysis and assessment Identified risks are analysed to determine cause, impact and likelihood of the risk occurring. Recording Identified risks are recorded and prioritised. Risk owners are allocated to identified key risks. Reporting Risks are reported to the Board of Directors, the Audit Committee, the Execu- tive Board and other stakeholders in the organisation. Tracking → Mitigation Risks are monitored and preventive measures implemented in cooperation with the affected business units. When necessary, mitiga- tion actions are initiated imme- diately after risk identification. Risk management Our risk management process is structured into two parallel tracks: 1. Operational risk management - which includes continuous handling of various identified risks resulting from our normal day-to-day operations; 2. Strategic risk management - which addresses key risks and other mid- to long-term strategic risks. Operational risk management Every week, the operational risks that arise as part of the daily business operations are registered and processed across the organisation, followed by initiation of mitigating actions. The risks and risk management procedures initiated are reported on a weekly basis to the Executive Board as well as to senior management across the Group. Our weekly operational risk reporting forms the basis for the Executive Board's day-to-day risk management activities and serves as input for the regular reporting to the Board of Directors and the Audit Committee. The weekly report is also distributed to lower management levels across the organisation to create awareness and support knowledge sharing on risks and other matters of importance to the Group. Strategic risk management The operational risk management process is followed up annually by high-level strategic risk assessments. They focus on identifying and map- ping the key risks facing the Group. These assessments are based on input from the operational risk manage- ment process and extensive risk surveys involving a number of key em- ployees across functions, departments and regions.#3232 DSV Annual Report 2022 Corporate governance and shareholder information The key risks identified are addressed by the Executive Board and as- signed to risk owners within the Group to make sure that relevant pre- ventive measures are implemented. In line with the established frame- work, the key risks are reported to and addressed by the Audit Commit- tee and the Board of Directors. Key risk assessment 2022 The latest assessment of the Group's internal and external strategic risks was carried out in Q4 2022. The analysis confirmed the eight overall key risk areas - also identified in previous years - which may have a significant impact on the Group's earnings, financial position and ability to achieve other strategic objec- tives, should they materialise. The results of the risk analysis are presented in the adjacent risk map and described in greater detail in the following pages. The risks are not listed in a specific order. The indicated likelihood of occurrence and annual EBIT impact are based on our best estimates, taking mitigation strategies into consideration. As such, it should be noted that the quantifications applied in the risk map carries some degree of uncertainty. Financial risks Our daily operations involve various financial risks. However, these are not considered key risks. Our financial risks are monitored by our Group Finance departments to ensure a high level of management attention on the effectiveness of our hedging strategies. Please refer to Chapter 4 of the notes for additional information on our financial risks. Key risk map Estimated annual EBIT impact in case of occurence 750 million Rare Unlikely 2022 ○ 2021 = III 1 IT Security System breakdowns and cyberattacks 2 Macroeconomy Recession and changes to global supply chains 3 Employees Retention and DKK 6 4 5 Moderate 8 Likelihood of occurrence attraction Compliance Increasing regulatory complexity 5 M&A Acquisitions and integration 6 Technology 7 Likely Almost certain 8 Disruption and technological adaption Commercial Failure to execute on organic growth strategy Climate risk The short-term impact from climate change#3333 DSV Annual Report 2022 Corporate governance and shareholder information = III IT security - System breakdowns and cyberattacks Risk description IT systems, networks and related processes are crucial to our day-to-day operations - from the delivery of our core logistics services to our analytic capabilities and reporting to the financial markets. This makes us vulnerable to system breakdowns, cyberattacks and failed IT implementations. A breakdown or an attempt to cause damage to DSV, our customers, sup- pliers or partners through unauthorised access, destruction, corruption or manipulation of data or systems could pose a significant risk to the Group. Mitigation strategies Consolidation, centralisation and standardisation of our systems and processes are cornerstones of our IT strategy and security setup. When integrating acquired companies, we migrate these to our IT platform as quickly as possible. The Group is focused on IT security and awareness, and we conduct regular audits and continu- ous analyses of current controls and regular security updates. Migration to cloud-based solu- tions, continuous cyber awareness training across the organisation, multi-factor authentication, anti-virus and patch management and disaster recovery training are among the measures implemented to mitigate the potential impact of this risk. Our global IT organisation oversees IT risks and is responsible for ensuring infrastructure pre- paredness. The Executive Board and the Audit Committee actively monitor cyber risks and the effectiveness of our key IT controls through reporting and regular meetings with the IT and compliance teams. Risk assessment In 2022, we have experienced stable performance from our IT and security plat- forms both in terms of operational performance and in terms of mitigating cyber- attacks, phishing attempts and other IT security risks. The geopolitical situation and increasing digitalisation of our industry and workplaces have accelerated the risk of targeted cyberattacks. This trend is likely to continue, and our strategy for IT security is already based on this. To mitigate the increased risk, we maintain a high security level, and we have among other initiatives - expanded the IT security training of employees. During 2022, the Agility's Global Integrated Logistics business (GIL) operational systems were successfully migrated to the DSV platform, reducing last year's height- ened exposure level. Everything considered, the IT risk of the Group remains on par with last year, with a slight increase in risk of occurrence. Macroeconomy - Recession and changes to global supply chains Risk description An economic recession triggered by, e.g., geopolitical conflicts, rising infla- tion and interest rates, distortion of the financial markets or a pandemic will have an impact on our activity levels and, consequently, on our finan- cial results. Similarly, protectionist measures enacted by the major world economic powers can also have a negative impact on global trade. Some restrictions may be counterbalanced by increasing domestic activities and, as a result, sale of other logistics services. Finally, changing industry and consumer patterns which lead to lower glob- al trade volumes or shortened logistic chains (e.g., because of increasing environmental awareness or industries bringing production closer to home to mitigate supply chain exposures) is also something we monitor closely, although we have yet to see a material impact of this on our business. Mitigation strategies To diversify our geographical exposure, we have for several years focused on organic and acquisitive growth outside Europe, which has historically been our main market. The acquisitions of UTI, Panalpina and GIL have significantly strengthened our network in Americas, APAC and MENA. Our asset-light approach implies that the majority of our terminals, warehouses and operational equipment are leased on short- to medium-term contracts, with the average duration closely monitored to accommodate capacity requirements. This allows us to quickly adapt to any po- tential slowdown in individual markets. Certain global supply chains are gradually changing, and we continuously adapt our network and service offerings. This way, when production is established in new markets and dual sourcing strategies are applied, we are ready to support our customers. Risk assessment During 2022, the global economy and trade volumes have slowed down. Going into 2023, we are facing lower demand for transport services. This slowdown is already in- cluded in our financial guidance for the year - but, obviously, there is uncertainty related to the development both in terms of timing and severity. We maintain our long-term assumption of 2-3% annual growth in global economy and transport volumes growing in line with this. Navigating economic downturns and the resulting fluctuations in demand is not new to DSV. Our cost discipline, focus on keeping net working capital under control, strong capital structure and scalable asset-light business model are all designed with this very purpose in mind. As a consequence of the economic slowdown, our macroeconomic risk has increased from last year.#3434 DSV Annual Report 2022 Corporate governance and shareholder information = III Employees - Retention and attraction Risk description Our employees are our most important asset and vital to ensuring that we succeed when it comes to executing on our strategies and meeting our financial targets. As freight forwarding is a people-reliant service offering, we depend on highly qualified management teams and employees with technical and operational qualifications, customer and market insights at all organisa- tional levels. Failure to attract new talent or to retain existing, experienced key employ- ees can potentially have long-term consequences for the operational, strategic and financial development of our company. Mitigation strategies We strive to make our company an attractive place to work by offering a supportive and inspiring working environment for all employees. This includes ensuring that our office and warehouse premises are modern and safe places to work as well as encouraging a safe and healthy working environment. We have established a performance culture centred around the empowerment of the individual, which allows our employees to take responsibilities, make decisions and influence their everyday work life. We also offer clear career-advancing opportunities to talented employees. We implement this strategy through several initiatives driven by both local management teams and our Group HR department. Examples include initiatives to promote our diversity and inclusion policy, DSV Academy, talent development programmes and retention bonus programmes for key employees. Risk assessment During 2022, it remained a challenge to recruit new candidates for certain open positions and in some cases to retain existing colleagues. Skilled employees and managers will most likely continue to be in high demand, but as the global economy slows down, we expect parts of the labour markets to ease. Compared to previous years, we were able to retain a stable turnover ratio for our employees, despite the challenging market in 2022. The integration of GIL now completed, we see that we have managed to retain key staff throughout the GIL organisation, as we intended. Despite the positive notes, it is our assessment that the challenges involved in recruiting and retaining staff for key positions have intensified. This implies that the employee risk has slightly increased. Compliance - Increasing regulatory complexity Risk description At all levels of our organisation and in all the regions and countries we do business, we are committed to honest and ethical business practices and complying with all relevant international and local regulations. As a result of our global operations, we are subject to extensive national and international regulatory requirements. In particular, regulations relating to tax, customs, VAT, data privacy and competition law continue to in- crease in scope and complexity. Trade embargoes impacting international transports is another area currently increasing in magnitude. Cases of non-compliance may carry a long-term impact on our public reputation, which may in turn have a negative impact on our relationships with customers and other stakeholders. Additionally, cases of non-compliance may lead to significant fines, claims, etc., for the Group, members of our Management or our employees. Mitigation strategies 'We do not deal in compliance' is a mantra which is well-known throughout the DSV organisa- tion. This fundamental principle has been defined to safeguard the company and its employees, but also because we believe it is the right way to run a business. Our internal procedures, systems and employee training programmes are designed to ensure awareness of this core principle and to ensure proper understanding and compliance with relevant legislation and our Code of Conduct. Our compliance framework is integrated into our business processes, containing clear guidelines on how to identify compliance-related issues and how to act accordingly. In addition, communi- cating and creating awareness of relevant issues is high on our agenda and activated through regular news updates, global newsletters, webcasts and internal conferences. Significant compliance-related risks are monitored and managed at Group level in close cooperation with our local business units. Risk assessment Following the trend from previous years, regulatory requirements continue to expand in number and complexity. The fact that our operational activities span more than 80 countries and jurisdictions adds to this complexity. To ensure adherence, we keep a close track of changes in the regulations governing international taxation, transfer pricing as well as goods and country restrictions - the latter currently emphasised by the international sanctions imposed as a result of the Russian-Ukrainian war. The integration of the GIL business into our compliance framework was completed in 2022, significantly reducing the risk of non-conformance with existing DSV compliance processes. Although the GIL integration has been successfully completed, regulatory complexity remains high. In addition to this, the current geopolitical situation also poses chal- lenges. This leads us to conclude that the overall compliance risk exposure has increased slightly.#3535 DSV Annual Report 2022 Corporate governance and shareholder information = III M&A Acquisitions and integration failure - Risk description Growth through strategic acquisitions is fundamental to our corporate strategy and has been for many years. Acquisitions always involve the risk of unsuccessful integration of the acquired company, which could result in cost synergies, strategic advan- tages or economies of scale being delayed or not fully realised. Deciding on and carrying out the wrong acquisition may also be costly and take up valuable resources that could have been spent on other potential acquisition candidates. Mitigation strategies We have a history of successful integration of acquired companies and realisation of expected synergies. This rests on several factors. First of all, we stress the importance that any potential acquiree matches our business model Our IT, reporting and operational systems are designed to be scalable and to accommodate effective integration of acquired companies. Large integrations are headed by an integration board, and the activities are organised into work streams (operational, commercial, financial, IT, legal, tax, etc.). The integration of operational ac- tivities is anchored with and led by local management teams, based on guidance from Group Man- agement. Local ownership ensures that acquired activities are integrated, with due consideration of local legislation, market conditions and cultures. Risk assessment A little over a year after the takeover date, the integration of GIL was finalised in 2022. The integration of operations, IT and back-office functions across close to 60 countries was carried out according to our plans and in line with our financial business case. M&A remains an important part of our strategy; this can lead to both large and small acquisitions and integrations in the coming years. We continue to apply our strong governance structure around M&A, but the financial risk related to each transaction will depend on the size and type of the acquired company. Due to the completed integration of GIL, the M&A risk has decreased compared to last year. Technology - Disruption and technological adoption Risk description As with most industries, freight forwarding undergoes continuous techno- logical developments, while also being exposed to gradual changes in the competitive landscape, driven by both existing players and new entrants to the market. Currently, we see digitalisation and automation of processes (quoting, booking, tracking, reporting and billing) and the increasing focus on sus- tainability as the most significant developments impacting the freight forwarding industry in the coming years. These developments provide an opportunity to optimise workflows and increase productivity, while also providing higher levels of service and product offerings to our customers. Failure to keep up with, adapt to and utilise these new technological op- portunities as well as tackle the competitive challenges they bring - will lead to gradual loss of market share and earnings. Mitigation strategies Central to our mitigation strategy is the monitoring of the logistics market, our customers' needs and emerging technologies that could impact and improve our operations or services. Strategic planning, innovation and continued development of our digital and physical infrastruc- ture are anchored with our COO. Based on strategic roadmaps for each business area, we focus on developing our service catalogues, systems and operational procedures to ensure that we have a strong and competitive product offering that meets customer needs. The aim of our strategy is to ensure that we can continue to benefit from our logistics exper- tise, scale and global network as a classic freight forwarder, while increasing our digital com- petences and utilising the benefits of technology. Risk assessment We believe that we are well positioned in our industry within these areas, and that our current development and strategic plans will ensure that we will remain so in the coming years. In 2022, we have continued to invest in and develop our IT platforms across our service offerings. The COO function was established in 2021 and has been further strengthened during 2022. Consequently, we assess that our technology risk has remained largely unchanged from last year. For additional descriptions of our current technology focus areas, please see 'A responsive approach to technology and digitalisation' on page 16.#3636 DSV Annual Report 2022 Corporate governance and shareholder information = III Commercial Failure to execute on organic growth strategy - Risk description With the acquisitions of UTI in 2016, Panalpina in 2019 and GIL in 2021, DSV has grown significantly over few years, more than tripling our revenue and the number of employees of the Group. Our network and market position have been strengthened, but growth also carries challenges. While we integrate acquired companies and grow as a business, we must make sure to maintain a strong commercial focus and stimulate collaboration across the organisation. Most important of all, we must retain our focus on customer needs, know how to adapt to market changes and develop our services to ensure that our value proposition is clear. If we fail to deliver in these areas, our ability to execute on our organic growth strategy will be impaired, and this will influence our long-term financial results. Mitigation strategies Managing our commercial risk is anchored with the Executive Board and the Group Executive Committee. In this forum, strategic initiatives are aligned and our commercial threats and op- portunities are explored. For each of our business areas, we define the overall strategy and purpose, our value proposition and which customer segments we target. Through regular business reviews with divisions and our operational companies in each country, Executive Management ensures that each division and country is aligned with the Group's strat- egy and policies. These reviews include financial performance, market situation, organisation, local strategic initiatives, etc. Risk assessment During 2022, we estimate that DSV has taken market share across most of the markets we operate in. For the coming years, we maintain our target of achieving organic growth above the market. A number of strategic projects are in place to support our organic growth ambitions. In 2022, we implemented a more systematic approach to managing and prioritising these projects. The initiatives are anchored with our COO and include enhancing our digital capabilities, deepening our vertical expertise, improving our green logistics services and strengthening the cooperation across divisions. We go into 2023 with a stronger network and market position than ever. Still, we assess that the current macroeconomic slowdown will limit our short-term growth potential and intensify the competition across our industry. Based on this, we esti- mate that the potential impact from commercial risk for 2023 has increased slightly. Climate - The long-term impact from climate change Risk description The long-term negative effects of climate change (as forecasted by the UN IPCC and others) have the potential of significantly impacting our industry. As such, it is a risk that we monitor closely. Associated risks may manifest themselves as physical disruptions of our logistic sites and operations or other forms of disruption in the global sup- ply chains, triggered by an increase in the number of extreme weather events. Increasing climate regulations, taxations and customer requirements may also impact the financial results of our company - for example as a result of higher fuel costs or tax on emissions - to the extent that we are not able to transfer the associated costs to our customers. Finally, increasing consumer climate awareness may also lead to changes in global supply and demand patterns, resulting in supply chains moving clos- er to home markets. This could have a dampening effect on the long-term growth potential on the more profitable intercontinental transport lanes. Mitigation strategies Oversight and management of climate-related risks is anchored with the Board of Directors. To support the Board of Directors in this role, we have established a Sustainability Board, headed up by the Group CEO. The Sustainability Board takes the lead when it comes to identifying, assessing and reporting on the development in climate-related risk. To address the longer-term risk from climate change, we have committed to the Science Based Targets initiative. We aim to achieve our CO2 emission reduction targets through a number of initiatives, such as making lower-emission transport alternatives available to our customers and investing in modern and energy-efficient infrastructure. As part of our mitigation strategy, we include the potential impact from climate changes when we plan our physical infrastructure. For example, new warehouses and logistic centres are de- signed to withstand more extreme weather conditions; and when deciding on placement, loca- tions with lower risk of flooding is also taken into consideration. Furthermore, our asset-light business model allows us to adapt to changes in the market, as we have not invested in specific transport equipment. For additional details and results on our 2022 TCFD climate risk assessment, please see the DSV Sustainability Report 2022: https://www.dsv.com/en/sustainability-reports Risk assessment Climate change and sustainability continue to move up on our agenda. In 2022, we have among other initiatives - increased our ambitions and introduced a net-zero target for carbon emissions. And to support innovation and ensure that our sustaina- bility ambitions are embedded in our operations, we established an Operational Sustainability team, headed up by our COO. We continue to develop our climate risk assessment framework based on guidelines set by the Task Force on Climate-related Financial Disclosures (TCFD). As reflected in the risk map, it is our current assessment that the overall climate risk to our company is unchanged from last year, with a potential low-to-moderate im- pact on our business, should unmitigated risks materialise. Making projections on the long-term effects of climate change on our business in- volves a high degree of uncertainty, hence our assessment may change in the future.#3737 DSV Annual Report 2022 Corporate governance and shareholder information Corporate governance The Board of Directors and the Executive Board form the governing body of DSV, the ultimate authority resting with the shareholders at the General Meeting. The allocation of tasks and responsibilities between the two boards is defined by the Rules of Procedure. Board Committees Annual General Meeting Board of Directors = III Executive Board Group functions Management structure The Board of Directors outlines and supervises the overall vision, strategy and objectives of the Group's business activities. The Executive Board is responsible for the execution of these and for the day-to-day management of the Group. It also provides input and supports the work done by the Board of Directors. Divisional Management is responsible for managing the operational activi- ties of the divisions, supported by centralised Group functions. The Board of Directors Board composition The Board of Directors must comprise five to nine members in accordance with the Articles of Association and currently numbers eight. Directors are elected for a term of one year, and new Directors are elected in accordance with the applicable rules of the Danish Companies Act. At the ordinary General Meeting in March 2022, Annette Sadolin resigned from her position after serving more than 12 years on the Board. Benedikte Leroy joined in her place, bringing substantial management experience from the tech industry as well as extensive expertise in the fields of legal com- pliance, ESG and business ethics. All members of the Board of Directors are considered independent in ac- cordance with the Danish Recommendation on Corporate Governance with the exception of Birgit W. Nørgaard, who has served more than 12 years on the Board. Birgit is not up for re-election at the Annual General Meeting in 2023. Board competencies The Board is composed so as to ensure that the competencies of its mem- bers are diverse and business relevant, so it can perform its duties as in- tended. Overboarding is also taken into consideration when determining the Board's composition. The current competencies required of Board members are: knowledge of the transport sector, international commercial experience as well as experience in strategy, M&A, risk management, IT, human resources and accounting. See page 40 for a description of the individual members' competencies and experience. Board self-evaluation Once a year, the Board of Directors self-evaluates its composition, compe- tencies and performance during the year. Diversity, overboarding, internal management cooperation, succession planning and strategic focus areas for the coming year are some of the topics evaluated. Division Management Road Air & Sea Solutions Organisation#3838 DSV Annual Report 2022 Corporate governance and shareholder information = III DSV The Chairman of the Board is responsible for initiating and running the evaluation process, which includes a mix of questionnaires and interviews. When completed, the outcome is presented to - and discussed by - the Board. At least every third year, external advisors are brought in to help conduct the annual self-evaluation. The last time was in 2021. Using external advi- sors helps give an independent perspective on the performance and com- positions of the Board of Directors. The Board can then use their input to support the self-evaluation the following years. The 2022 self-evaluation addressed a number of topics - including Board members' mix of competencies and insight in areas like digitisation and ESG regulation. The summary report had no reservations on these topics and validated the appropriateness of the current Board composition. Board committees The Board of Directors is assisted by an audit, nomination and remunera- tion committee. Each is responsible for carrying out various preparatory tasks around the Board's key areas of responsibility. The committees also assist the Board by preparing and assessing all man- agerial and strategic proposals presented to the Board, to ensure a solid and informed basis for decision-making. The rules of procedure for the committees are available at: https://www.dsv.com/en/board-committees Board meetings In 2022, the Board of Directors held nine ordinary and no extraordinary meetings. The agenda for each is defined in accordance with the annual cycle of the Board to make sure the strategic and operational policy framework of the Group is always up to date and in accordance with the emphasis defined by the Board. Besides the work laid down in the annual cycle, this year the Board mainly focused on M&A and growth strategies, various integration topics around the acquisition of Agility's Global Integrated Logistics business (GIL), cy- bersecurity and the continuous development of our digital freight for- warding platforms. Meeting attendance 2022 Thomas Plenborg Jørgen Møller Birgit W. Nørgaard Marie-Louise Aamund Beat Walti Board of Directors Audit Committee Nomination Committee Remuneration Committee 9/9 3/3 2/2 2/2 9/9 2/2 2/2 9/9 2/2 9/9 3/3 9/9 2/2 Niels Smedegaard 9/9 3/3 Tarek Sultan Al-Essa 9/9 Benedikte Leroy (elected March 2022) 7/7 2/2 Annette Sadolin (resigned March 2022) 2/2 1/1#3939 DSV Annual Report 2022 Corporate governance and shareholder information = III The Board also addressed various strategic considerations and business adaptations in light of the European energy crisis, emergence of a global economic downturn and other macroeconomic impacts brought on by the war in Ukraine. Remuneration of the Board of Directors and Executive Board Remuneration policy Remuneration of the Board of Directors and Executive Board is carried out in accordance with DSV's Remuneration Policy as adopted by the Annual General Meeting. The purpose of the Remuneration Policy is threefold: to make sure DSV can attract and retain qualified members of the Board of Directors and Executive Board; to align the interests of the Executive Board with those of our investors and other societal stakeholders; and ultimately to create incentive for generating long-term value for shareholders and executing on goals set by the Board of Directors (for example around sustainability or other strategic business initiatives). The latest DSV Remuneration Policy is available at: https://www.dsv.com/en/remuneration-policy Remuneration report We report on the remuneration of members of the Board of Directors and Executive Board separately in the DSV Remuneration Report. The report is prepared in accordance with section 139b of the Danish Companies Act and the Danish Recommendations on Corporate Govern- ance and is available at: https://www.dsv.com/en/remuneration-reports Report on Corporate Governance cf. section 107b of the Danish Financial Statements Act In managing DSV, the Board of Directors applies the latest Recommenda- tions on Corporate Governance issued by the Danish Committee on Corporate Governance. The Board uses the Recommendations for guidance when setting up man- agement structures, tasks and procedures and checks against them to make sure we are acting in accordance with the principal intentions of the Recommendations. The Board regularly assesses its procedures based on the Recommendations. DSV fully abided by the Recommendations in 2022. We report on our adherence to the Recommendations - including internal controls and risk management systems applied as basis for the financial reporting process - in the Statutory Report on Corporate Governance available at https://www.dsv.com/en/governance-reports Reporting on Data Ethics policies cf. section 99d of the Danish Financial Statements Act We report separately on our policies and approach to Data Ethics in accordance with section 99d of the Danish Financial Statements Act. The reporting is available in our Statutory Report on Data Ethics, at: https://www.dsv.com/en/data-ethics Executive Board ME Member Jens Bjørn Andersen Office CEO Member since 2008 Born 1966 Jens H. Lund Office Member since Born COO and Vice CEO 2002 1969 Michael Ebbe Office CFO Member since Born 2021 1970 Board positions ME EET Group Holdings ApS#4040 DSV Annual Report 2022 Corporate governance and shareholder information Board of Directors Thomas Plenborg Office Chairman Member since 2011 Up for re-election Independent Yes Yes Born 1967 Committee Audit Committee Nomination Committee Remuneration Committee Skills and experience Management experience from directorships and honorary offices • Strategy and financial management • Professor of accounting and auditing at Copenhagen Business School Other Board positions CM ECIT AS* Member Chairman Chairman ME Menzies Aviation Marie-Louise Aamund Office Member Member since 2019 Up for re-election Yes Independent Born Yes 1969 Jørgen Møller Office Member since Deputy Chairman 2015 Up for re-election Independent Yes Yes Born 1950 CM Chairman DC = Deputy Chairman ME Member Benedikte Leroy Office Member Member since 2022 Up for re-election Independent Yes Yes Born 1970 = III = Listed company Beat Walti Office Member Member since 2019 Up for re-election Independent Yes Yes Born 1968 Committee Audit Committee Nomination Committee Remuneration Committee Skills and experience . General international management experience • Extensive experience in shipping and logistics (industry expert) ⚫ CEO of DSV Air & Sea Holding A/S 2002-2015 Member Member Birgit W. Nørgaard Committee Audit Committee Nomination Committee Remuneration Committee Skills and experience Committee Chairman Audit Committee Nomination Committee Remuneration Committee International board and general management experience • Extensive experience in technology from international leadership roles in Dell, Symantec, GE and Apple ⚫ Legal compliance, ethics and extensive insight in environ- mental, social and governance regulation (ESG expert) Acquisition and divestment of enterprises . Niels Smedegaard Skills and experience Member Professional board and general management experience ⚫ Dr. jur. and legal experience serving as an attorney-at-law ⚫ Acquisition and divestment of enterprises Other Board positions CM Ernst Göhner Foundation ME Siegfried Holding AG* CM Zurzach Care AG DC Rahn AG ME Wenger Vieli AG ME EGS Beteiligungen Ltd Tarek Sultan Al-Essa Office Member since Up for re-election Independent Born Committee Audit Committee Nomination Committee Remuneration Committee Skills and experience . General international management experience Committee Member Audit Committee ⚫ International tech leadership experience from Microsoft, IBM and Google Cybersecurity, digital transformation and sustainability • Acquisition and divestment of enterprises Nomination Committee Remuneration Committee Skills and experience . General international management experience Strategy and financial management • Acquisition and divestment of enterprises Other Board positions Member 2010 No No 1958 Member Office Member Member since 2020 Up for re-election Yes Independent Yes Born 1962 Office Member since Up for re-election Independent Born Committee Audit Committee Nomination Committee Remuneration Committee Skills and experience . General international management experience •Extensive experience in shipping, logistics and the airline industry (industry expert) ⚫ Acquisition and divestment of enterprises Member Committee Audit Committee Nomination Committee Remuneration Committee Skills and experience • General international management experience • Extensive experience in shipping and logistics ⚫ Acquisition and divestment of enterprises ⚫ Extensive insight in environmental, social and governance regulation (ESG expert) Other Board positions Agility Public Warehousing Company K.S.C.P.* National Real Estate Company K.P.S.C.* CM NO Invest A/S and two ME NCC AB* Other Board positions related subsidiaries ME ABP Associated Other Board positions CM ISS A/S* CM Bikubenfonden CM Thinkproject GmbH ME KIRKBI A/S DC NNE A/S British Ports CM ME The Lego Foundation ME WS Audiology A/S DC The Danish Council for ICT ME WSP Global Inc.* Molslinjen Group ApS and two related subsidiaries CM Falck A/S DC ME UK P&I ME DC Dansk Vækstkapital | ME RGS Nordic A/S CM Abacus Medicine A/S ME TT Club ME Dansk Vækstkapital II ME Consolis Group SAS Member 2021 Yes Yes 1964#4141 DSV Annual Report 2022 Corporate governance and shareholder information Shareholder information = III Share price performance in 2022 At year-end, the closing price for DSV shares on Nasdaq Copenhagen was DKK 1,096.5 - down 28.2% since year- end 2021. During the same period, the Danish C25 Index decreased by 13.5%. The average daily trading volume of DSV shares on Nasdaq Copenhagen was 383,288 shares in 2022 (0.2% of shares issued). At year-end, DSV's market capitalisation (excluding treasury shares) was DKK 238 billion against DKK 358 billion at the end of 2021. Ownership There is no complete record of all shareholders. Based on the available information as of 31 December 2022, DSV had 92,179 registered shareholders. The registered shares totalled 211 million, corresponding to 96.2% of the share capital. The 25 largest shareholders owned 60.9% of the free-floating share capital. DSV has no majority shareholders. Shareholders owning more than 5% of the share capital in DSV A/S according to latest shareholding notifications are: Ernst Göhner Stiftung, Switzerland (9.7%) Agility Public Warehousing Company K.S.C.P, Kuwait (8.0%) BlackRock, Inc., USA (7.8%) Capital Group Companies, Inc., USA (5.1%) Share buyback and treasury shares DSV share price (DKK) ■ DSV C25 rebased 31-12-2018 In 2022, DSV acquired 18.6 million treasury shares at a total purchase price of DKK 20,313 million (average purchase price DKK 1,092.8 per share). 1,800 1,600 During 2022, 21 million treasury shares were cancelled in connection with reduction of the registered share capital. 1,400 1,200 On 31 December 2022, DSV held 2.1 million shares as treasury shares, corresponding to 1.0% of the share capital. 1,000 800 On 1 February 2023, our portfolio of treasury shares amounted to 3.1 million shares. 600 400 Throughout 2022, we have engaged in five share buy- back programmes. The purpose of these was to accommo- date the exercise of share options under incentive schemes and to adjust the capital structure in accordance with the financial targets. The shares were acquired under the authorisation of the Annual General Meeting. One programme was carried out outside the Safe Harbour principles, while the remaining programmes were executed under the Safe Harbour principles. Dividends The Board of Directors proposes an ordinary dividend of DKK 6.5 per share for 2022 (2021: DKK 5.5). 200 0 31/12 2018 31/12 2019 31/12 2020 31/12 2021 31/12 2022 Shares issued ('000) Number of shares issued Average number of shares issued during the past 12 months Average diluted number of shares during the past 12 months 2018 2019 2020 2021 2022 188,000 235,000 230,000 240,000 219,000 182,092 198,273 227,246 227,501 235,438 185,287 201,405 231,576 232,639 230,467#4242 DSV Annual Report 2022 Corporate governance and shareholder information. Capital allocation policy Our capital allocation principles are described on page 18. Authorities granted to the Board of Directors The following authorities have been granted to the Board of Directors: to increase DSV's share capital by issuing up to 48 million shares with or without pre-emptive rights for existing shareholders. This authority remains valid until 8 September 2026; and to acquire up to 21.9 million own shares, of which 3.1 million were utilised as per 1 February 2023. This authority remains valid until 22 November 2027. Communication with shareholders We wish to provide the basis for fair and efficient pricing of the DSV share by practising open and proactive communication. To keep investors and other stakeholders up to date with the latest devel- opments, our Executive Management host conference calls following the release of financial results. Throughout the year, Executive Management and Investor Relations stay in close contact with existing and potential investors as well as market analysts, engaging with them through road- shows and conferences hosted by various brokers. We observe a four-week silent period prior to the publication of annual and interim reports. DSV is covered by more than 20 equity analysts. For more information about analyst coverage, please visit investor.dsv.com DSV share data Number of shares of DKK 1 on 31 Dec. 2022 Share classes 219,000,000 1 Restrictions on transferability and voting rights None Nasdaq Copenhagen DSV DK0060079531 Listed Trading symbol ISIN code Company announcements In 2022, we published 71 company announcements (Nos. 936-1006). The most important of these are listed in the chart below: Annual Report 2021 09 Feb. No. 941 11 Mar. No. 949 17 Mar. 20 Apr. 27 Apr. 26 Jul. 03 Aug. No. 951 EUR 600 Million EUROBOND issue Annual General Meeting 21 Oct. No. 956 No. 957 No. 972 No. 975 No. 988 25 Oct. No. 991 22 Nov. No. 998 22 Dec. No. 1005 The geographical distribution of our shareholders = III 36% USA Reduction of Share Capital in DSV A/S Interim Financial Report Q1 2022 Interim Financial Report H1 2022 Major shareholder announcement Major shareholder announcement Interim Financial Report - Q3 Extraordinary General Meeting Reduction of Share Capital in DSV A/S 11% Switzerland 18% Denmark 10% Financial calendar The financial calendar for 2023 is as follows: Annual General Meeting Q1 2023 Report H1 2023 Report Q3 2023 Report 16 March 27 April 25 July 24 October 9% Kuwait 16% Others UK#4343 DSV Annual Report 2022 Other information Quarterly financial highlights = III 2022 2021 Q1 Q2 Q3 Q4 Full year Q1 Q2 Q3 Q4 Full year Income statement (DKKm) Revenue* 61,125 62,749 60,560 Gross profit* 12,877 14,078 13,538 51,231 11,656 235,665 33,616 37,831 49,557 61,302 182,306 52,149 7,785 8,333 9,823 11,674 37,615 Operating profit (EBIT) before special items* 6,496 7,453 6,506 4,749 25,204 3,067 3,571 4,472 5,113 16,223 Operating margin (%) 10.6 11.9 10.7 9.3 10.7 9.1 9.4 9.0 8.3 8.9 Conversion ratio (%) 50.4 52.9 48.1 40.7 48.3 39.4 42.9 45.5 43.8 43.1 ROIC before tax (%) (trailing 12 months) 23.1 27.2 24.7 25.1 25.1 16.4 17.8 16.6 19.6 19.6 Invested capital (YTD) 103,986 105,596 106,713 99,540 99,540 66,420 67,690 100,316 101,231 101,231 Segment information (DKKm) Air & Sea Revenue 45,887 47,282 45,339 35,923 174,431 22,924 25,948 36,861 46,168 131,901 Gross profit 8,637 9,575 9,135 7,277 34,624 4,788 5,142 6,314 7,525 23,769 Operating profit (EBIT) before special items 5,224 6,163 5,455 3,816 20,658 2,393 2,843 3,521 4,011 12,768 Operating margin (%) 11.4 13.0 12.0 10.6 11.8 10.4 11.0 9.6 Conversion ratio (%) 60.5 64.4 59.7 52.4 59.7 50.0 55.3 55.8 8.7 53.3 9.7 53.7 Road Revenue 10,188 10,835 10,406 10,078 41,507 8,056 8,663 8,783 9,914 35,416 Gross profit 1,938 2,074 1,989 1,910 7,911 1,657 1,768 1,745 1,925 7,095 Operating profit (EBIT) before special items 498 566 525 451 2,040 403 476 465 513 1,857 Operating margin (%) 4.9 5.2 5.0 4.5 4.9 5.0 5.5 5.3 5.2 5.2 Conversion ratio (%) 25.7 27.3 26.4 23.6 25.8 24.3 26.9 26.6 26.6 26.2 Solutions Revenue Gross profit Operating profit (EBIT) before special items Operating margin (%) Conversion ratio (%) 6,162 6,182 5,841 2,322 2,324 2,325 6,224 2,347 24,409 3,609 3,997 4,739 6,389 9,318 1,348 1,377 1,717 2,211 18,734 6,653 789 753 613 546 2,701 263 278 486 748 1,775 12.8 12.2 10.5 8.8 11.1 7.3 7.0 10.3 11.7 9.5 34.0 32.4 26.4 23.3 29.0 19.5 20.2 28.3 33.8 26.7 Please refer to page 83 for a definition of key figures and financial ratios. * Reference is made to note 2.1 Segment information for a reconciliation of revenue, gross profit and operating profit before special items.#44Consolidated financial statements 2022 = III Income statement 45 Statement of comprehensive income 45 Cash flow statement 46 Balance sheet 47 Statement of changes in equity 48 Notes to the consolidated financial statements... 49#4545 DSV Annual Report 2022 Consolidated financial statements 2022 = III Income statement (DKKm) Revenue Direct costs Statement of comprehensive income Note 2022 2021 (DKKm) 2.2 235,665 182,306 Profit for the year Note 2022 17,671 2021 11,254 2.3 Gross profit Other external expenses 2.4 Staff costs 2.5 183,516 144,691 52,149 37,615 5,559 4,173 16,315 13,025 Items that may be reclassified to the income statement when certain conditions are met: Net foreign exchange differences recognised in OCI Fair value adjustments of hedging instruments 1,260 9 2,472 (21) Operating profit before amortisation and depreciation (EBITDA) before special items Fair value adjustments of hedging instruments transferred to financial expenses 9 6 30,275 20,417 Tax on items reclassified to the income statement 5.1 (2) 3 Amortisation and depreciation 2.6 Operating profit (EBIT) before special items 5,071 25,204 4,194 16,223 Items that will not be reclassified to the income statement: Actuarial gains/(losses) 3.7 (395) 555 Special items, costs 2.7 Financial income Financial expenses 2.8 1,117 606 478 Tax on items that will not be reclassified 5.1 54 (119) 206 Other comprehensive income, net of tax 935 2,896 2.8 1,472 Profit before tax Tax on profit for the year Profit for the year Profit for the year attributable to: Shareholders of DSV A/S Non-controlling interests Earnings per share: Earnings per share of DKK 1 Diluted earnings per share of DKK 1 23,221 1,047 14,904 Total comprehensive income 18,606 14,150 5.1 5,550 17,671 3,650 11,254 Total comprehensive income attributable to: Shareholders of DSV A/S Non-controlling interests Total 18,500 106 14,109 41 18,606 14,150 17,568 103 11,205 49 4.6 77.3 49.3 76.2 48.2#4646 DSV Annual Report 2022 Consolidated financial statements 2022 Cash flow statement = III (DKKm) Note 2022 2021 (DKKm) Note 2022 2021 Operating profit before amortisation and depreciation (EBITDA) Transactions with shareholders: before special items 30,275 20,417 Dividends distributed to shareholders of DSV A/S 4.2 (1,320) Adjustments: Purchase of treasury shares 4.1 Share-based payments 6.2 Change in provisions Change in working capital Special items Interest received Interest paid, lease liabilities Interest paid, other 202 520 160 Sale of treasury shares 4.1 2,840 2.7 (664) 105 (4,604) (828) Other transactions with shareholders (20,313) 618 (9) (920) (17,841) 784 (6) Cash flow from financing activities (24,245) (8,680) Cash flow for the year 1,635 3,942 2.8 323 153 Cash and cash equivalents 1 January 8,299 4,060 3.6 (727) (495) Cash flow for the year 1,635 3,942 2.8 (745) (443) Currency translation 226 297 Income tax paid 5.1 (5,178) (2,263) Cash and cash equivalents 31 December 10,160 8,299 Cash flow from operating activities 26,846 12,202 The cash flow statement cannot be directly derived from the balance sheet and income statement. Purchase of intangible assets 3.2 (280) Purchase of property, plant and equipment 3.3 Disposal of property, plant and equipment (1,514) 824 (303) (1,180) Statement of adjusted free cash flow (DKKm) Acquisition of subsidiaries and activities Change in other financial assets 6.1 420 1,631 Free cash flow 4 (148) Net acquisition of subsidiaries and activities (reversed) Cash flow from investing activities (966) 420 Special items (reversed) Repayment of lease liabilities Free cash flow 25,880 12,622 Adjusted free cash flow Note 2022 25,880 6.1 2021 12,622 (1,631) 2.7 664 828 4.3 (3,734) (3,160) 22,810 8,659 Proceeds from borrowings 4.3 Repayment of borrowings 4.3 4,393 (3,719) 12,834 (489) Repayment of lease liabilities 4.3 (3,734) (3,160) Other financial liabilities incurred (161) 118#4747 DSV Annual Report 2022 Consolidated financial statements 2022 Balance sheet = III Assets (DKKm) Note 2022 2021 Equity and liabilities (DKKm) Note 2022 2021 Intangible assets 3.2 77,674 76,661 Share capital 4.1 219 240 Right-of-use assets 3.6 14,694 13,709 Reserves 4.1 919 (356) Property, plant and equipment 3.3 6,284 6,262 Retained earnings 70,381 74,219 Other receivables 2,461 2,395 DSV A/S shareholders' share of equity 71,519 74,103 Deferred tax assets 5.2 3,494 3,544 Non-controlling interests 222 175 Total non-current assets 104,607 102,571 Total equity 71,741 74,278 Trade receivables 4.4 32,387 36,369 Lease liabilities 3.6 13,190 11,848 Contract assets 3.4 5,785 9,797 Borrowings 4.3 21,398 16,993 Inventories 3.5 1,889 284 Pensions and other post-employment benefit plans 3.7 1,183 908 Other receivables 4,179 4,009 Provisions 3.8 4,260 3,508 Cash and cash equivalents Assets held for sale 10,160 38 8,299 Deferred tax liabilities 5.2 504 447 66 Total non-current liabilities 40,535 33,704 Total current assets 54,438 58,824 Lease liabilities 3.6 3,577 3,440 Total assets 159,045 161,395 Borrowings 4.3 814 4,472 Trade payables 4.4 14,992 17,040 Accrued cost of services Provisions Other payables Tax payables Total current liabilities 3.4 12,085 13,289 3.8 2,407 1,841 9,640 10,257 3,254 46,769 53,413 3,074 Total liabilities 87,304 87,117 Total equity and liabilities 159,045 161,395#4848 DSV Annual Report 2022 Consolidated financial statements 2022 Statement of changes in equity (DKKm) Equity at 1 January Profit for the year Other comprehensive income, net of tax Total comprehensive income for the year Transactions with shareholders and 2022 Attributable to shareholders of DSV A/S 2021 Attributable to shareholders of DSV A/S = III Non- Share capital 240 Retained Reserves* earnings (356) 74,219 Total 74,103 controlling interests Total equity 175 74,278 Share capital 230 Retained Reserves* earnings (2,836) 49,991 Total Non- controlling interests 47,385 (88) Total equity 47,297 1,271 1,271 17,568 (339) 17,229 17,568 103 17,671 932 3 935 18,500 106 18,606 2,482 2,482 11,205 422 11,205 49 11,254 2,904 (8) 2,896 11,627 14,109 41 14,150 non-controlling interests: Share-based payments Tax on share-based payments Dividends distributed Purchase of treasury shares Sale of treasury shares Capital increase Capital reduction (21) 21 Transfer of treasury shares as business combination consideration Addition/disposal of non-controlling interests Dividends on treasury shares Other adjustments Total equity transactions 202 (322) 202 202 160 160 160 (322) (322) 791 791 791 (1,320) (19) (20,294) (1,320) (20,313) (58) (1,378) (920) (920) (7) (927) (20,313) 2 616 618 618 (13) 2 16 (17,828) 782 24,479 (17,841) 784 24,495 (17,841) 784 24,495 (1) (1) (6) 6 3 5,073 5,076 5,076 273 273 43 8 43 8 43 28 28 28 8 36 36 (44) (8) (21) 4 (21,067) (21,084) (59) (21,143) 10 (2) 12,601 12,609 222 12,831 Equity at 31 December 219 919 70,381 71,519 222 71,741 240 (356) 74,219 74,103 175 74,278 * For a specification of reserves, please see note 4.1.#4949 DSV Annual Report 2022 Consolidated financial statements 2022 Notes to the consolidated financial statements Contents = III Chapter 1 Basis of preparation Introduction.. Chapter 4 Capital structure and finances 50 4.1 Equity. Basis of measurement. 50 4.2 Capital structure and capital allocation. Changes in accounting policies 50 4.3 Financial liabilities. Management judgements and estimates 50 4.4 Financial risks 69 Basis of consolidation 50 4.5 Derivative financial instruments. Foreign currency 51 4.6 Earnings per share. Presentation 51 4.7 Financial instruments - fair value hierarchy 6701233 66 68 New accounting regulations. 51 Chapter 5 Chapter 2 Tax Profit for the year 5.1 Income tax. 2.1 Segment information. 2.2 Revenue 2.3 Direct costs 2.4 Other external expenses. 55 SSSS 52 5.2 Deferred tax. 74 75 54 55 Chapter 6 Other notes 2.5 Staff costs. 55 6.1 Acquisition and disposal of entities 77 2.6 Amortisation and depreciation. 55 6.2 Share option schemes 79 2.7 Special items. 56 6.3 Remuneration of the Executive Board and 2.8 Financial income and expenses 56 the Board of Directors . . . 81 6.4 Fees to auditors appointed at the Chapter 3 Annual General Meeting 81 ○ 3 3 3 3 3 3 3 3 Operating assets and liabilities 6.5 Related-party transactions 81 3.1 Impairment testing 57 6.6 Contingent liabilities and security for debt. 82 3.2 3.3 3.4 3.5 3.6 3.7 3.8 234567∞ Intangible assets. 59 Property, plant and equipment 60 Contract assets and accrued cost of services Inventories. 61 61 Leases 61 Pension and other post-employment benefit plans Provisions 66 63 65#5050 DSV Annual Report 2022 Consolidated financial statements 2022 = III Chapter 1 Basis of preparation The 2022 Annual Report of DSV A/S has been prepared on a going concern basis in accordance with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and additional disclosure requirements for listed companies in the Danish Financial Statements Act. IFRS standards have been applied to the extent these have been adopted by the European Union. The consolidated financial statements are presented in Danish kroner (DKK) and rounded to the nearest million. Introduction The Annual Report of DSV A/S comprises the consolidated financial state- ments of DSV A/S and its subsidiaries. The Board of Directors and Executive Board considered and approved the 2022 Annual Report of DSV A/S on 2 February 2023. The Annual Report will be submitted to the shareholders of DSV A/S for approval at the Annual General Meeting on 16 March 2023. Basis of measurement The Annual Report has been prepared under the historical cost convention with the exception of derivative financial instruments and acquisition opening balances, which are measured at fair value. Non-current assets held for sale are measured at the lower of their carrying amount and fair value less costs to sell. The accounting policies described in the notes have been applied consistently for the financial year and for the com- parative figures. Changes in accounting policies All amendments to the International Financial Reporting Standards (IFRS) effective for the financial year 2022 have been implemented as basis for preparing the consolidated financial statements and notes to the statements. None of the implementations have had any material impact on the state- ments or notes presented. Management judgements and estimates In preparing the consolidated financial statements, Management makes various accounting judgements and estimates that affect the reported amounts and disclosures in the financial statements and notes to the statements. These are based on professional experience, historical data and other factors available to Management. By nature, a degree of uncertainty is involved when carrying out these judgements and estimates, hence actual results may deviate from the assessments made at the reporting date. Judgements and estimates are continuously evaluated, and the effects of any changes are recognised in the relevant period. The primary financial statements items for which significant accounting judgements and estimates are applied are listed below: Contract assets and accrued cost of services (note 3.4) Provisions (note 3.8) Acquisition and disposal of entities (note 6.1) Tax (note 5.1 and note 5.2) Additional description of management judgements and estimates made are provided in the relevant notes. Basis of consolidation The consolidated financial statements include the Parent Company (DSV A/S) and all subsidiaries over which DSV A/S exercises control. Entities in which the Group directly or indirectly controls at least 20%, but not more than 50%, of the voting power are accounted for as associates and meas- ured using the equity method. Investments with negative net asset values are recognised at DKK O. The consolidated financial statements are prepared based on uniform accounting policies in all Group entities. Consolidation of Group entities is performed after elimination of all intra-group transactions, balances, in- come and expenses.#5151 DSV Annual Report 2022 Consolidated financial statements 2022 = III Group composition The Group holds interests in 473 entities and was composed as follows at 31 December 2022: Region Entities (Number) EMEA Americas APAC Total Subsidiaries 302 Associates 5 55 1 108 2 465 8 Foreign currency Functional currency A functional currency is determined for each Group entity. The functional currency is the currency used in the primary financial environment in which the individual Group entity operates. Foreign currency translation On initial recognition, foreign currency transactions are translated into the functional currency at the exchange rate at the transaction dates. Foreign currency translation differences between the exchange rates at the trans- action date and the date of payment are recognised in the income state- ment under financials. Monetary items denominated in a foreign currency are translated at the exchange rate at the reporting date. The difference between the exchange rates at the reporting date and the transaction date or the exchange rate used in the latest annual report is recognised in the income statement under financials. Foreign currency translation differences arising on the translation of non-monetary items, such as investments in associates, are recognised directly in other comprehensive income. Recognition in the consolidated financial statements When preparing the consolidated financial statements, the income state- ments of entities with a functional currency other than DKK are translated at the average exchange rate for the period, and balance sheet items are translated at the closing rate at the end of the reporting period. Foreign exchange differences arising on translation of the equity of for- eign entities and on translation of receivables considered part of net in- vestment are recognised directly in other comprehensive income. Foreign exchange differences arising on the translation of income state- ments from the average exchange rate for the period to the exchange rate at the reporting date are also recognised in other comprehensive income. Adjustments are presented under a separate translation reserve in equity. Presentation Cash flow statement The cash flow statement is prepared using the indirect method based on operating profit before amortisation, depreciation and special items. The cash flow statement cannot be derived directly from the balance sheet and income statement. Materiality in financial reporting In preparing the Annual Report, Management seeks to improve the infor- mation value of the consolidated financial statements, the notes to the statements and other measures disclosed by presenting the information in a way that supports the understanding of the Group's performance in the reporting period. This objective is achieved by presenting fair transactional aggregation levels on items and other financial information, emphasising information that is considered of material importance to the user and making relevant rather than generic descriptions throughout the Annual Report. All disclosures are made in compliance with the International Financial Reporting Standards, the Danish Financial Statements Act and other relevant regulations, ensuring a true and fair view throughout the Annual Report. Presentation of items and subtotals The presentation of items and subtotals is based on separate classification of material groups of similar items. In the income statement, income and expense items are classified based on the 'nature of expense' method in accordance with IAS 1. Furthermore, the use of special items is applied to improve the transparency and understanding of the Group's financial statements by separating the core performance of the Group from ex- ceptional items. For a definition and reconciliation of Group results before and after special items, refer to note 2.7 Special items. New accounting regulations The IASB has issued a number of new standards and amendments not yet in effect or adopted by the EU and therefore not relevant for the prepara- tion of the 2022 consolidated financial statements. DSV expects to imple- ment the standards and amendments when they take effect. None of the new standards issued are currently expected to have signifi- cant impact on the Group's financial statements when implemented.#5252 DSV Annual Report 2022 Consolidated financial statements 2022 = III Chapter 2 Profit for the year This chapter includes disclosures on components of consolidated profit for the year. The consolidated profit is based on the combined results of our three operating segments - Air & Sea, Road and Solutions as described in the following. - Reference is also made to the comments on the financial performance of the Group and the divisions in Management's commentary. 2.1 Segment information Accounting policies Operating segments are defined by the operational and management structure of DSV, which is derived from the types of services we deliver and our geographical presence on the world market. As such, our operat- ing segments reflect our divisional and Group reporting used for manage- ment decision-making. Operating segments Our business operations are carried out by three divisions, forming the basis of our segment reporting. Air & Sea The Air & Sea division provides air and sea freight services across the globe. This includes a projects department, handling out of gauge cargo and special transportation projects. Road The Road division provides road freight services across Europe, Middle East, North America and South Africa. Solutions The Solutions division offers contract logistics services, incl. warehousing and inventory management, across the globe. Measurement of earnings by segment Our business segments are measured and reported down to operating profit before special items. Segment results are accounted for in the same way as in the consolidated financial statements. Segment income/expenses and assets/liabilities comprise the items directly attributable to the individual segment as well as the items that may be allocated to the individual segment on a reliable basis. Income and expenses relating to Group functions, investing activities, etc., are managed at Group level. These items are not included in the statement of segment information, but are presented under 'non- allocated items and eliminations'. Financial position of business segments Assets and liabilities are included in the segmental reporting to the extent they are used for the operation of the segment. Assets and liabilities that cannot be attributed to any of the three seg- ments on a reliable basis are presented under 'non-allocated items and eliminations'. Geographical information DSV operates in most parts of the world and has activities in more than 80 countries, which are divided into the following geographical regions: . EMEA: Europe, Middle East and Africa Americas: North and South America APAC: Asia, Australia and the Pacific Revenue and non-current assets are allocated to the geographical areas according to the country in which the individual consolidated entity is based. Refer to note 2.2 for regional segmentation of revenue. The cor- porate headquarter of DSV is located in Denmark, which is included in the EMEA segment. Our business is based on transactions in our global net- work rather than in individual countries or regions. Intersegment transactions are made on an arm's length basis. Major customers DSV is not reliant on any major customers. No single customer exceeds 5% of combined Group revenue.#5353 DSV Annual Report 2022 Consolidated financial statements 2022 = III 2.1 Segment information - continued Segment information - divisions (DKKm) Condensed income statement Revenue Intercompany revenue Divisional revenue Direct costs Non-allocated items Air & Sea 2022 Road Solutions and eliminations Total 2021 2022 2021 2022 2021 2022 2021 2022 2021 172,868 1,563 174,431 130,899 1,002 131,901 38,746 2,761 41,507 33,077 2,339 35,416 23,826 583 17,989 745 24,409 139,807 108,132 33,596 28,321 15,091 Gross profit 34,624 23,769 7,911 7,095 9,318 18,734 12,081 6,653 225 341 (4,907) (4,086) (4,682) (3,745) 235,665 182,306 (4,978) (3,843) 183,516 144,691 296 98 52,149 235,665 182,306 37,615 Other external expenses 4,244 3,366 1,425 1,122 1,759 1,338 (1,869) (1,653) 5,559 4,173 Staff costs 8,471 6,598 3,543 3,149 2,254 1,664 2,047 1,614 16,315 13,025 Operating profit before amortisation, depreciation and special items 21,909 13,805 2,943 2,824 5,305 3,651 118 137 30,275 Amortisation and depreciation Operating profit (EBIT) before special items* 1,251 20,658 1,037 12,768 903 967 2,604 1,876 313 314 2,040 1,857 2,701 1,775 (195) (177) 5,071 25,204 20,417 4,194 16,223 Condensed balance sheet Total gross investments 1,797 17,262 Total assets 93,821 96,879 501 24,437 1,958 4,338 4,118 Total liabilities 67,546 79,824 17,547 24,135 18,883 29,347 23,357 26,245 20,310 165 11,440 (21,146) 7,864 14,136 (31,900) 6,801 159,045 87,304 31,202 161,395 87,117 * Reference is made to the income statement for a reconciliation from operating profit (EBIT) before special items to profit for the year. Geographical information Revenue Non-current assets** Geographical information Non-current assets** - major countries (DKKm) 2022 2021 2022 2021 - regions (DKKm) 2022 2021 USA Germany Denmark United Kingdom Sweden Other Total 52,826 36,532 2,431 1,715 EMEA 18,179 18,154 17,684 15,061 1,526 1,523 Americas 3,593 2,542 17,071 17,452 4,159 4,774 APAC 2,455 2,422 9,761 7,807 896 813 Total 24,227 23,118 8,360 6,172 890 896 ** Non-current assets less tax assets, customer relationships and goodwill. 129,963 99,282 235,665 182,306 14,325 24,227 13,397 23,118#5454 DSV Annual Report 2022 Consolidated financial statements 2022 = III 2.2 Revenue Accounting policies Revenue comprises freight forwarding services, contract logistics and other related services delivered in the financial year. Revenue from services delivered is recognised in accordance with the over-time recognition principle following the satisfaction of various mile- stones as the performance obligation is fulfilled towards the customer. Our main services comprise air, sea, road and solutions services as de- scribed in the following. Air services Air services comprise air freight logistics facilitating transportation of goods across the globe. Air services are reported within the Air & Sea re- porting segment. Air services are characterised by short delivery times, as most air transports are completed within a few days. Sea services Sea services comprise sea freight logistics facilitating transportation of goods across the globe. Sea services are reported within the Air & Sea re- porting segment. Sea services are characterised by longer delivery times, averaging one month depending on destination. Road services Road services comprise road freight logistics facilitating transportation of goods by road networks mainly in Europe, Middle East, the US and South Africa. Road services are reported within the Road reporting segment. Road services are characterised by short delivery times, as most road transports are completed within a few days. Solutions services Solutions services comprise contract logistics, incl. warehousing and in- ventory management, across the globe. Solutions services are reported within the Solutions reporting segment. Solutions services are character- ised by very short delivery times, happening almost instantaneously as agreed actions under the customer contract are carried out. General recognition principles Revenue from services delivered are recognised based on the price speci- fied in the contract with the customer. Revenue is measured excluding VAT and other tax collected on behalf of third parties, and any discounts are offset against the revenue. Incremental costs of obtaining a contract with a customer are not recognised as an asset but as an expense when incurred due to the short delivery times. Trade receivables from services delivered are invoiced to the customer and are not adjusted for any financing components, as credit terms are short typically between 14 and 60 days - and the financing component therefore insignificant. Where services delivered have yet to be invoiced and invoices on services received from hauliers have still to be received, contract assets and accrued cost of services are recognised at the re- porting date. Revenue allocated to remaining performance obligations are not disclosed following the practical expedient of IFRS 15. Revenue also comprises Services and geographical segmentation (DKKm) Air services Sea services Road services income from sale of property projects in the form of sale of land and buildings acquired, constructed and held for sale in the ordinary course of business. Revenue from property projects is recognised at a point in time in the reporting segment to which it relates when control of and legal title to the property have been transferred to the customer. Revenue is recognised based on the price specified in the contract with the customer, and the consideration is due upon transfer of the legal title. Delivery times on prop- erty projects are typically 8-18 months. If the property is leased back after completion, the right-of-use asset arising from the leaseback is recognised at the proportion of the previous carrying amount of the asset that relates to the right of use retained by DSV. As such, any gain or loss recognised only corresponds to rights transferred to the buyer. Sale of services and geographical segmentation specify as follows: EMEA Americas APAC Total Solutions services Total 2022 2021 30,258 24,867 41,386 32,053 37,453 32,452 16,537 12,914 125,634 102,286 2022 2021 28,083 19,624 28,494 18,317 4,054 2,964 4,382 3,639 65,013 44,544 2022 2021 32,250 26,355 13,960 10,685 2022 90,591 83,840 2021 70,846 61,055 41,507 35,416 3,490 2,181 49,700 39,221 24,409 240,347 186,051 18,734 Non-allocated items and eliminations Total revenue (4,682) (3,745) 235,665 182,306#5555 DSV Annual Report 2022 Consolidated financial statements 2022 = III 2.2 Revenue Revenue is specified as follows: Revenue (DKKm) Sale of services Other operating income Total revenue 2022 234,669 996 2021 181,707 599 2.4 Other external expenses Accounting policies Other external expenses include expenses relating to marketing, IT, other rent, training and education, office premises, travelling, communications as well as other selling costs and administrative expenses, less costs transferred to direct costs. Staff costs (DKKm) 2022 Salaries and wages, etc. 20,111 2021 16,250 Defined contribution pension plans 745 Defined benefit pension plans Other social security costs Share-based payments 84 567 74 2,820 2,254 202 Total staff costs 23,962 160 19,305 235,665 182,306 Other external expenses (DKKm) 2022 2021 Other external expenses 12,360 Transferred to direct costs Total other external expenses (6,801) 5,559 8,953 (4,780) 4,173 Recognised in the income statement items: Hourly workers - recognised as direct costs Salaried employees - recognised as staff costs Total 7,647 16,315 23,962 6,280 13,025 19,305 Weighted average number of full-time employees Number of full-time employees at year-end 76,583 67,016 76,283 77,958 Sale of services includes revenue from freight forwarding services, con- tract logistics, sale of property projects and other related services. Sale of property projects recognised at a point in time constitutes less than 1% of total revenue (2021: less than 2%). Other operating income includes rental income from terminal and building leases, gains from disposal of non-current assets and income from insurance contracts. 2.3 Direct costs Accounting policies Direct costs comprise costs paid to generate the revenue for the year. Direct costs include settlement of accounts with haulage contractors, ship- ping companies, airlines, etc. Direct costs also include staff costs relating to hourly workers used for fulfilling orders and other direct costs of operation, such as rental of logistics facilities and costs of property projects. Direct costs (DKKm) Cost of carriers Staff costs, hourly workers Other costs of operation Direct costs 2022 169,068 7,647 6,801 183,516 2021 133,631 6,280 4,780 144,691 2.5 Staff costs Accounting policies Staff costs include wages and salaries, pension costs, social security costs and other staff costs for salaried employees, but exclude staff costs for hourly workers, which are recognised as direct costs. Staff costs are recognised in the financial year in which the employee renders the related service. Costs related to long-term employee benefits, e.g. share-based payments, are recognised in the periods in which they are earned. Reference is made to note 3.7 for detailed information on pension plans, note 6.3 for information on remuneration of the Executive Board and the Board of Directors and note 6.2 for detailed information on the Group's share option schemes. 2.6 Amortisation and depreciation Accounting policies Amortisation and depreciation for the year are recognised based on the amortisation and depreciation profiles of the underlying assets (refer to notes 3.2, 3.3 and 3.6). Software Amortisation and depreciation (DKKm) Customer relationships 2022 2021 254 212 185 218 Buildings 341 231 Other plant and operating equipment 530 388 ROU assets - Land and buildings 3,549 2,757 ROU assets -Other plant and operating equipment 212 388 Total amortisation and depreciation 5,071 4,194#5656 DSV Annual Report 2022 Consolidated financial statements 2022 = ||| Restructuring and integration costs Transaction costs relating to acquisitions Special items, costs 2.7 Special items Accounting policies Special items are used in connection with the presentation of profit or loss for the year to distinguish consolidated operating profit from exceptional items, which by their nature are not related to the Group's ordinary opera- tions or investment in future activities. Special items comprise: Restructuring costs, impairment costs, etc., relating to fundamental structural, procedural and managerial reorganisations as well as any related gains or losses on disposals; Transaction and restructuring costs relating to the acquisition and divestment of enterprises. Special items reconcile to the income statement items as specified in the table below: Management judgements and estimates In the classification of special items, judgement is applied in ensuring that only exceptional items not associated with the ordinary operations of the Group are included. Special items (DKKm) 2.8 Financial income and expenses Accounting policies Financial income and expenses include interest, share of associates' profit/ loss, foreign currency gains and losses, bank charges as well as amortisation of financial assets and liabilities, including finance lease obligations. Further- more, realised and unrealised gains and losses on derivative financial instru- ments that cannot be classified as hedging contracts are included. 2022 1,117 2021 392 86 Financial income (DKKm) 2022 2021 Interest income 323 1,117 478 Share of associates' profit, net of tax 7 202 4 Currency translation recognised in the income statement 276 Total financial income 606 206 2022 2021 Reported Adjusted Special items Bridge (DKKm) Revenue Direct costs income Special statement items 235,665 183,516 Gross profit Other external expenses Staff costs 52,149 5,559 16,315 Operating profit before amortisation and depreciation 30,275 Amortisation and depreciation Operating profit 5,071 25,204 Special items, costs Financial income Financial expenses Profit before tax income statement 235,665 19 183,535 (19) 52,130 237 5,796 653 16,968 (909) 29,366 213 5,284 (1,122) 24,082 1,117 (1,117) 606 1,472 Reported income statement Adjusted Special income items statement Interest income includes interest on financial assets of DKK 323 million (2021: DKK 202 million). 182,306 144,691 23 12 23,221 606 (5) 1,467 23,221 37,615 4,173 13,025 20,417 4,194 16,223 478 206 182,329 144,703 11 37,626 184 4,357 277 13,302 (450) 19,967 29 4,223 (479) 15,744 (478) Financial expenses (DKKm) 2022 2021 Interest expenses on lease liabilities Interest expenses on borrowings 727 495 236 159 Interest expenses, bank 397 249 Financial expenses on pension obligations, refer to note 3.7 19 17 Currency translation recognised in the income statement Other financial expenses 1,047 (1) 14,904 206 1,046 14,904 Total financial expenses 53 93 74 1,472 1,047 Interest expenses include interest on financial liabilities measured at amortised cost of DKK 1,453 million (2021: DKK 977 million).#5757 DSV Annual Report 2022 Consolidated financial statements 2022 = III Chapter 3 Operating assets and liabilities This chapter includes notes disclosures on the Group's invested capital that forms the basis of our business activities. Invested capital repre- sents the Group's property, plant and equip- ment, intangible assets and net working capital in the form of operating assets and liabilities. Invested capital is structured based on our asset-light business model, including our focus on minimising funds tied up in working capital to optimise the generation of available free cash flow. Invested capital also comprises significant intangible assets mainly relating to acquired goodwill from business combinations carried out over the years. 3.1 Impairment testing Accounting policies Goodwill The carrying amount of goodwill is tested for impairment at least annually together with other non-current assets of the Group. Impairment testing is performed for the lowest cash-generating unit to which consolidated goodwill is allocated, as defined by our divisional management and operational structure. The cash-generating units there- by follow our divisional structure: Air & Sea, Road and Solutions. Goodwill is written down to its recoverable amount through the income statement if lower than the carrying amount. The recoverable amount is determined as the present value of the discounted future net cash flow from the cash-generating unit to which the goodwill relates. In calculating the present value, discount rates are applied reflecting the risk-free interest rate with the addition of risks relating to the individual cash-generating units, such as geographical and financial exposure. Other non-current intangible assets, property, plant and equipment The carrying amount of other non-current assets is tested for impairment at least once a year in connection with the impairment test of goodwill. If the tests show evidence of impairment, the asset is written down to the recoverable amount through the income statement. The recoverable amount is the higher of the fair value of the asset less the expected costs to sell and its value in use. The value in use is calculated as the present value of expected future cash flows from the asset or the division of which the asset forms part. Management judgements and estimates For goodwill impairment testing, a number of estimates are made on the development in revenues, gross profits, operating margins, future capital expenditures, discount rates and growth expectations in the terminal peri- od. These are based on an assessment of current and future developments in the three cash-generating units and on historical data and assumptions of future expected market developments, including expected long-term average market growth rates. Material value drivers affecting the future net cash flows of the three cash-generating units are: Air & Sea The Air & Sea division operates globally, so developments in the global economy and world trade therefore have a material impact on the divi- sion's future net cash flow. Developments in gross profit per shipment, cost management initiatives and development in internal productivity (number of shipments per employee) also affect the division's cash flow. Road The Road division mainly operates on the EMEA and US markets, which means that the division's future net cash flow is affected by the growth rate in these regions. Developments in gross profit per shipment, including truck and terminal utilisation rates, cost management initiatives and devel- opment in internal productivity (number of shipments per employee) also affect the division's cash flow. Solutions The Solutions division operates globally, so developments in the global economy and world trade therefore have a material impact on the divi- sion's future net cash flow. Developments in warehouse lease costs and costs of related services, utilisation of warehouse facilities, cost manage- ment initiatives and development in internal productivity (number of order lines per employee) also affect the division's cash flows.#5858 DSV Annual Report 2022 Consolidated financial statements 2022 = III 3.1 Impairment testing - continued The expected future net cash flow is based on budgets and business plans approved by Management for the year 2023 and projections for subsequent years up to and including 2026. From 2026 onwards, DSV expects the growth rate to remain in line with the expected long-term average growth rate for the industry. Impairment test Goodwill was tested for impairment at 31 December 2022. The tests did not result in any impairment of carrying amounts. The assumptions used, including a sensitivity analysis, are stated in the following paragraph. The pre-tax discount rate is calculated in accordance with IAS 36. The sensitivity analysis assesses the impact of changes in cash flows and discount rates on the impairment test results. The analysis concluded that even negative changes, which are unlikely to occur, will not result in im- pairment of goodwill in any of the three cash-generating units. Sensitivity analysis The sensitivity analysis shows the lowest possible growth rate or highest possible discount rate in percentage points by which the assumptions used can change before goodwill becomes impaired. Other non-current intangible assets, property, plant and equipment Other non-current assets were also tested for impairment indications to- gether with goodwill at 31 December 2022. No indication of impairment was identified in connection with these tests. Goodwill impairment test at 31 December 2022 (DKKm) Carrying amount of goodwill Budget period Annual revenue growth Operating margin Terminal period Growth Pre-tax discount rate 2022 2021 Air & Sea Road 58,877 7,964 Solutions 9,452 Air & Sea 57,893 Road 7,901 Solutions 9,269 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 9.1% 5.6% 11.0% 9.1% 5.6% 11.0% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 11.0% 9.7% 11.1% 7.2% 6.0% 7.3% Sensitivity analysis Growth in budget period - allowed decline (percentage points) 23.1% 28.2% 9.0% 28.3% 40.0% 18.4% Discount rate allowed increase (percentage points) 9.9% 11.0% 2.5% 8.7% 13.2% 4.1%#5959 DSV Annual Report 2022 Consolidated financial statements 2022 = III 3.2 Intangible assets Goodwill Only goodwill arising from business combinations is recognised in the finan- cial statements. Goodwill is measured as the difference between the total of the fair value of the consideration transferred, the value of non-controlling interests and any equity investments previously held in the acquiree, com- pared to the fair value of identifiable net assets on the date of acquisition. Goodwill is not amortised, but is tested for impairment at least annually. Customer relationships On initial recognition, customer relationships identified from business com- binations are recognised in the balance sheet at fair value. Subsequently, customer relationships are measured at cost less accumulated amortisation and impairment losses. Customer relationships are amortised over a period of eight years using the diminishing balance method. Software and software in progress Software bought or developed for internal use is measured at the lower of cost less accumulated amortisation and impairment losses and the recover- able amount. Cost comprises payments for the software and other directly attributable expenses of preparing the software for its intended use. After commissioning, software is amortised on a straight-line basis over its expected useful life. The amortisation period is 1-8 years. Intangible assets (DKKm) Cost at 1 January Additions from business combinations/previous period adjustments Additions Disposals Reclassifications Currency translation Total cost at 31 December Total amortisation and impairment at 1 January Amortisation and impairments for the year Disposals Reclassification Currency translation Total amortisation and impairment at 31 December Carrying amount at 31 December 2022 2021 Goodwill Customer relationships 75,063 2,565 Software 1,212 Software in progress 280 Total 79,120 47,476 Customer Goodwill relationships 2,032 Software Software in progress Total 1,265 206 50,979 370 370 25,333 569 1 13 42 238 280 56 247 25,916 303 (27) (250) (2) (279) (56) (246) (43) (345) 174 (174) 143 (143) 860 76,293 36 2 898 2,574 1,180 342 80,389 2,254 75,063 20 (7) 2,267 2,565 1,212 280 79,120 1,719 740 254 185 2,459 439 1,551 763 2,314 212 218 430 (27) (191) (218) (56) (241) (297) 7 7 35 35 12 (7) 5 1,981 734 2,715 1,719 740 2,459 76,293 593 446 342 77,674 75,063 846 472 280 76,661#6060 DSV Annual Report 2022 Consolidated financial statements 2022 = III 3.3 Property, plant and equipment Accounting policies Land and buildings and other plant and operating equipment are measured at cost less accumulated depreciation and impairment losses. The cost comprises the acquisition price and other expenses directly attributa- ble to preparing the asset for its intended use. The present value of estimated expenses for dismantling and disposing of the asset as well as restoration expenses are added to the cost if such expenses are recognised as a provision. Material borrowing costs directly attributable to the construction of the indi- vidual asset are also added to cost. If the individual components of an asset have different useful lives, each component will be depreciated separately. The cost of self-constructed assets comprises direct and indirect costs for materials, components, subcontractors, wages and salaries. Costs for self-constructed assets are recognised as property, plant and equipment in progress on an ongoing basis until the assets are ready for use. Subsequent costs, such as partial replacement of property, plant and equip- ment, are included in the carrying amount of the asset in question when it is probable that such costs will result in future economic benefits. The carrying amount of the replaced parts is disposed from the balance sheet and recognised in the income statement. 2022 2021 Property, plant and equipment (DKKm) Cost at 1 January Additions from business combinations/previous period adjustments Land and buildings Other plant and operating Property, plant and equipment Land and Other plant and operating equipment in progress Total buildings equipment Property, plant and equipment in progress Total 4,907 3,838 282 9,027 2,355 2,649 473 5,477 (408) (408) 2,229 295 30 2,554 Additions Disposals 393 963 158 1,514 241 762 177 1,180 (533) (402) (935) (146) (348) (33) (527) Transferred to assets held for sale 2 (2) Reclassification 19 22 (26) 15 64 356 (375) 45 Currency translation 83 4 87 162 124 12 298 Total cost at 31 December 4,461 4,425 414 9,300 4,907 3,838 282 9,027 Total depreciation and impairment at 1 January 1,111 1,654 2,765 967 1,496 2,463 Depreciation for the year 341 530 871 231 388 619 Disposals (226) (402) (628) (87) (289) (376) Reclassification (21) 21 24 31 55 Currency translation 7 1 8 (24) 28 4 Total depreciation and impairment at 31 December 1,212 1,804 3,016 1,111 1,654 2,765 Carrying amount at 31 December 3,249 2,621 414 6,284 3,796 2,184 282 6,262#6161 DSV Annual Report 2022 Consolidated financial statements 2022 = III 3.3 Property, plant and equipment - continued Depreciation is carried out on a straight-line basis over the expected useful lives of the assets. The expected useful lives of the overall asset categories are as follows: ' Terminals and administration buildings: 50-60 years Other buildings and building elements: Technical plant and machinery: Other plant and operating equipment: Land is not depreciated 10-30 years 6-10 years 3-8 years The basis of depreciation takes into account the residual value of assets and is reduced by any impairment losses. The residual value is calculated on the date of acquisition and reassessed once a year. Depreciation will be halted if the residual value exceeds the carrying amount of the asset. Assets are transferred to assets held for sale if it is highly probable that their carrying amount will be recovered primarily through sale rather than through continuing use. Management judgements and estimates Judgement is applied in determining the depreciation period and future residual value of the assets recognised and is generally based on historical experience. Reassessment is done annually to ascertain that the deprecia- tion basis applied is still representative and reflects the expected life and future residual value of the assets. 3.4 Contract assets and accrued cost of services Accounting policies Contract assets and accrued costs of services include accrued revenue and accrued costs from freight forwarding services, contract logistics and other related services in progress at 31 December 2022. Contract assets are recognised when a sales transaction fulfils the criteria for revenue recognition, but the final invoice has yet to be issued to the customer for the services delivered. Refer to note 4.4 for disclosure of credit risk as trade receivables carry substantially the same characteristics as contract assets. Accrued costs of services are estimated and recognised when supplier in- voices relating to recognised revenue for the reporting period have yet to be received. Management judgements and estimates In the preparation of the consolidated financial statements, significant estimates are applied in assessing services in progress, including accrual of income and pertaining direct costs. These estimates are based on experi- ence and continuous follow-up on services in progress relative to sub- sequent invoicing. 3.5 Inventories Accounting policies Inventories are measured at the lower of cost and net realisable value. The cost of inventories comprises all costs of purchase, processing and other costs incurred in bringing the inventories to their present condition. Write- downs of inventories to net realisable value are recognised as direct costs in the income statement. Inventories (DKKm) Stocks 2022 2021 93 119 Property projects under construction Total 1,796 1,889 165 284 Inventories consists of land and buildings under construction held for the purpose of sale in the ordinary course of business (property projects) and stocks. In total, DKK 1,231 million relating to property projects was recog- nised as an expense in 2022 (2021: DKK 1,562 million). 3.6 Leases Accounting policies Whether a contract contains a lease is assessed at contract inception. For identified leases, a right-of-use asset (ROU) and corresponding lease liability are recognised on the lease commencement date. Upon initial recognition, the right-of-use asset is measured at cost corre- sponding to the lease liability recognised, adjusted for any lease prepayments or directly related costs, including dismantling and restoration costs. The lease liability is measured at the present value of lease payments of the leasing period discounted using the interest rate implicit in the lease contract. In cas- es where the implicit interest rate cannot be determined, an appropriate in- cremental DSV borrowing rate is used. In determining the lease period exten- sion, options are only included if it is reasonably certain they will be utilised. At subsequent measurement, the right-of-use asset is measured less accu- mulated depreciation and impairment losses and adjusted for any remeas- urements of the lease liability. Depreciation is carried out following the straight-line method over the lease term or the useful life of the right-of- use asset, whichever is shortest.#6262 DSV Annual Report 2022 Consolidated financial statements 2022 = III 3.6 Leases continued — The lease liability is measured at amortised cost using the effective interest method and adjusted for any remeasurements or modifications made to the contract. Right-of-use assets and lease liabilities are not recognised for low value lease assets or leases with a lease term of 12 months or less. These are recognised as an expense on a straight-line basis over the term of the lease. Any service elements separable from the lease contract are also accounted for following the same principle. Extension options are only included in the lease term if extension of the lease is reasonably certain. The majority of extension and termination options held are exercisable only by the Group and not by the respective lessor. Management judgements and estimates In accounting for lease contracts, various judgements are applied in deter- mining right-of-use assets and lease liabilities. Judgements include assess- ment of lease periods, utilisation of extension options and applicable dis- count rates. Leases Right-of-use assets classified as land and buildings mainly relate to leases of warehouses, terminals and office buildings, whereas assets recognised as other plant and operating equipment mainly relate to leases of trailers, trucks, company cars, forklifts, IT hardware and other office equipment. Land and building leases normally have a lease term of up to ten years, whereas leases of other plant and operating equipment normally have a lease term of up to five years. Land and buildings may include extension options with the intention of se- curing flexibility in the lease - however, any leasing period beyond the nor- mal ten years expected at the initiation of the lease will normally be reflect- ed in the contractual lease term agreed. Analysis of lease liabilities showing the remaining contractual maturities is provided in the following table: Contractual maturity of lease liabilities (DKKm) 2022 2021 0-1 year 1-5 years 4,302 3,692 11,059 9,835 5,917 4,803 > 5 years Total undiscounted lease liabilities at 31 December 21,278 18,330 Current/non-current classification (discounted) Current Non-current 3,577 13,190 3,440 11,848 The profit or loss and cash flow impact of leases recognised for the year are specified below: Right-of-use assets (DKKm) Carrying amount at 1 January Additions from business combinations Land and buildings 2022 Other plant and operating equipment 2021 Lease effects recognised in profit or loss and cash flow (DKKm) 2022 2021 Total Land and buildings Other plant and operating equipment Profit or loss Interest expenses on lease liabilities 727 495 Total Expenses relating to short-term leases Expenses relating to leases of low-value assets 563 457 635 308 13,121 588 13,709 10,146 965 11,111 2,367 8 2,375 Additions Disposals Depreciation for the year 4,970 (252) 75 5,045 3,488 227 3,715 (40) (292) (336) (224) Currency translation (3,549) (5) (212) (2) (3,761) (7) (2,757) (388) 213 (560) (3,145) 213 Expenses relating to variable lease payments not included in the measurement of lease liabilities Gains from sale and leaseback transactions Income from subleasing of right-of-use assets 97 103 109 56 14 Cash flow Carrying amount at 31 December 14,285 409 14,694 13,121 588 13,709 Total cash outflow for leases 4,461 3,655#6363 DSV Annual Report 2022 Consolidated financial statements 2022 = III 3.7 Pensions and other post-employment benefit plans Accounting policies Pension obligations relating to defined contribution plans, under which the Group pays regular pension contributions to independent pension funds, are recognised in the income statement for the period in which they are earned. Contributions payable are recognised in the balance sheet under other current liabilities. In regards to defined benefit plans, an actuarial valuation of the present value of future benefits payable under the plan is made once a year. The present value is calculated based on various assumptions, including the future development in wage/salary levels, interest rates, inflation and mortality. The present value is only calculated for benefits to which the employees have become entitled during their employment with the Group. The actuarial calculation of the present value less the fair value of assets under the plan is recognised in the balance sheet under pensions and other post-employment benefit plans. Pen- sion costs for the year are recognised in the income statement based on actuarial estimates and the financial outlook at the beginning of the year. Differences between the calculated development in pension plan assets and liabilities and the realised values are recognised in other comprehensive income as actuarial gains or losses. Changes in benefits payable for employees' past services to the company result in an adjustment of the actuarial calculation of the present value, which is classified as past service costs. Past service costs are charged to the income statement immediately if the employees have already earned the right to the adjusted benefits. Otherwise, they will be recognised in the income statement over the period in which the employees earn the right to the adjusted benefits. Management judgements and estimates In determining pension obligations, management makes use of valuations from external and independent actuaries as basis for the estimates ap- plied. The actuarial assumptions used in the valuations vary from country to country owing to national, economic and social conditions. Pension obligations Pension obligations (DKKm) Present value of defined benefit plans Fair value of pension plan assets Pension obligations, net Defined benefit pension obligations Development in the present value of defined benefit pension obligations 2022 2021 is specified as follows: 4,112 5,693 Defined benefit pension 2,929 4,785 obligations (DKKm) 1,183 908 Obligations at 1 January Of these obligations, DKK 856 million relates to unfunded pension obliga- tions (2021: DKK 1,032 million) and DKK 327 million relates to partly funded obligations (2021: DKK 124 million). The latter is primarily due to the Swiss plans being overfunded. Total pension costs for the year In 2022, net costs of DKK 848 million relating to the Group's pension plans were recognised in the income statement (2021: DKK 658 million) and specify as follows: Current service cost 2022 2021 5,693 4,218 135 100 Past service cost from plan amendments, curtailments and gains/losses on settlements Calculated interest on obligations 9 (26) 75 56 Actuarial gains/losses arising from changes in financial assumptions (1,283) (186) Actuarial gains/losses arising from changes in demographic assumptions (23) (63) Pension cost 2022 (DKKm) Staff costs Defined contribution plans Defined Actuarial gains/losses arising from experience adjustments 39 benefit Payments from the plan (521) plans Total Additions from business combinations (8) (1,211) 2,667 745 84 829 Currency translation (12) 146 Financial expenses Total costs recognised 19 19 Obligations at 31 December 4,112 5,693 745 103 848 The expected average duration of the obligations is 14 years. Pension cost 2021 (DKKm) Staff costs Defined Defined contribution plans benefit Expected maturity of plans Total pension obligations (DKKm) 2022 2021 567 74 641 0-1 year 501 206 Financial expenses Total costs recognised 17 17 1-5 years 933 747 567 91 658 > 5 years 2,678 4,740 Total obligations recognised 4,112 5,693#6464 DSV Annual Report 2022 Consolidated financial statements 2022 = III 3.7 Pensions and other post-employment benefit plans - continued Pension plan assets Development in the fair value of pension plan assets is specified as follows: Sensitivity analysis (DKKm) 2022 Defined benefit pension obligation 4,112 2021 5,693 We continuously work to change our defined benefit plans in DSV into defined contribution plans for the benefit of the Group and the employees. Pension plan assets (DKKm) 2022 2021 Applied key assumptions for the most significant pension plans are as follows: Discount rate Pension plan assets at 1 January 4,785 2,999 Increase of 0.5 percentage point 3,888 5,293 Calculated interest on plan assets 56 29 Decrease of 0.5 percentage point 4,346 6,126 Return on plan assets excluding Key assumptions 2022 rate Future Discount wage/salary increase Future rate of inflation calculated interest (1,288) 298 Future wage/salary increase Sweden 3.9% 2.6% 2.1% Contributions to the plan 163 121 Payments from the plan (411) (1,168) Increase of 0.5 percentage point Decrease of 0.5 percentage point 4,148 5,744 Germany 4.1% 3.0% 2.4% 4,071 5,595 Other 0.7-7.3% Additions from business combinations 2,312 Inflation Weighted average 4.2% 0-10.0% 3.0% 0-3.5% 1.8% Asset ceiling (374) Increase of 0.5 percentage point 4,223 5,900 Currency translation Pension plan assets at 31 December (2) 2,929 194 Mortality prognosis table Decrease of 0.5 percentage point 3,987 5,479 Sweden DUS21 (w-c) 4,785 Life expectancy Germany RT Heubeck 2018 G Actuarial loss included in statement of comprehensive income amounts to DKK 395 million. DSV expects to contribute DKK 61 million to defined benefit plan assets in 2023 (2022: DKK 55 million). The pension plan assets are composed as follows: Life expectancy increase of 1 year Life expectancy decrease of 1 year 4,218 5,810 3,986 5,507 Future Discount wage/salary Future rate Significant pension plans Key assumptions 2021 Sweden rate increase of inflation 1.5% 2.0% 1.5% Composition of pension plan assets (%) 2022 2021 Shares 47% Bonds 44% Insurance contracts 9% 52% 37% 11% Total 100% 100% Sensitivity analysis The following table illustrates the change in the gross obligation relating to defined benefit plans from a change in the key actuarial assumptions. The analysis is based on reasonably probable changes, provided that the other parameters remain unchanged. The most significant defined benefit plans of the Group relate to Europe, with Germany, Sweden and the UK being the largest. No other countries have individual defined benefit plans of significance. The plan in Sweden is a final pay scheme, which covers all salaried employees born in or before 1978 and is based on a collective labour agreement. Salaried employees born in or after 1979 are covered by a defined contribution plan. The plan in Germany covers both salaried and hourly workers. Under this plan, employees earn a fixed amount for each year in service. The plan has been closed for new employees since 1994. Other Germany 1.0% 2.0% 1.5% 0.3-6.1% Weighted average Mortality prognosis table Sweden DUS14 (w-c) Germany RT Heubeck 2018 G 1.5% 0-10.0% 2.8% 0-2.1% 1.2%#6565 DSV Annual Report 2022 Consolidated financial statements 2022 = III 3.8 Provisions Accounting policies Provisions are recognised when, due to an event occurring on or before the reporting date, the Group has a legal or constructive obligation and it is probable that the Group will have to give up future economic benefits to meet the obligation. Provisions are measured on the basis of Management's best estimate of the anticipated expenditure for settlement of the relevant obligation and are discounted if deemed material. Management judgements and estimates Management continually assesses provisions, including contingencies and the likely outcome of pending and potential legal proceedings. The out- come of such proceedings depends on future events, which are, by na- ture, uncertain. When considering provisions involving significant estimates, opinions and estimates by external legal experts as well as existing case law are applied in assessing the probable outcome of material legal proceedings, etc. Provisions Provisions have not been discounted, as the effect thereof is immaterial. Provisions are expected to be settled within two years in all material respects. Restructuring costs Restructuring costs relate mainly to the integration of acquirees and the restructuring plans previously announced, which consist mainly of termina- tion benefits and costs under terminated leases. Disputes and legal actions Provisions for disputes and legal actions relate mainly to probable liabilities taken over at the acquisition of enterprises. Provisions - 2022 (DKKm) Provisions at 1 January Additions for the year Other provisions Other provisions include indemnification liabilities totalling DKK 1,843 million relating to various company- and value added taxes (2021: DKK 1,818 million). Furthermore, other provisions mainly relates to restoration obligations in connection with property leases and onerous contracts. Restructuring costs Disputes and legal actions Other provisions Total 673 940 3,736 5,349 978 301 2,202 3,481 Additions from business combinations Used for the year 4 4 69 77 (655) (227) (1,223) (2,105) Reversal of provisions made in previous years (36) (56) (53) (145) Currency translation 2 13 (5) 10 Provisions at 31 December 966 975 4,726 6,667 Current/non-current classification: Non-current liabilities Current liabilities Provisions at 31 December 445 325 3,490 4,260 521 650 1,236 2,407 966 975 4,726 6,667#6666 DSV Annual Report 2022 Consolidated financial statements 2022 = III Chapter 4 Capital structure and finances 4.1 Equity Accounting policies Share capital At year end, the share capital of DSV A/S amounted to 219 million shares with a nominal value of DKK 1 each. Shares consist of only one share class and include no special rights, pref- erences or restrictions. All shares are fully paid up. Treasury share reserve Hedging reserve Translation reserve Total reserves (6) (9) 14 (341) 1,257 (356) 1,271 This chapter includes disclosures on the financial basis and exposures of the Group's activities derived by our capital structure and net working capital. The capital structure is linked to our long-term financial target of a gearing ratio below 2.0 x EBITDA before special items and the principles for capital allocation. In order of priority, the free cash flow is used to reduce the Group's net interest-bearing debt in periods when the gearing ratio exceeds the target, for investments and business combina- tions, and for share buybacks or distribution to the Company's shareholders. Reserves specification - 2022 (DKKm) Reserves at 1 January Other comprehensive income, net of tax Transactions with shareholders: Purchase of treasury shares Sale of treasury shares Capital reduction Reserves at 31 December Reserves specification - 2021 (DKKm) Reserves at 1 January Other comprehensive income, net of tax Transactions with shareholders: Purchase of treasury shares Sale of treasury shares Capital reduction Transfer of treasury shares as business combination consideration Reserves at 31 December (19) 2 (19) 2 21 21 (2) 5 916 919 Treasury share reserve (4) Hedging reserve (11) 2 Translation reserve (2,821) 2,480 Total reserves (2,836) 2,482 (13) (13) 2 2 6 6 3 3 (6) (9) (341) (356)#6767 DSV Annual Report 2022 Consolidated financial statements 2022 4.1 Equity continued Reserves - Reserves as presented in the statement of changes in equity comprise treasury share reserve, hedging reserve and translation reserve, as speci- fied on the previous page. Treasury share reserve The reserve comprises the nominal value of treasury shares. The difference between the market price paid and the nominal value plus dividends on treasury shares is recognised directly as retained earnings in equity. Treasury shares are bought to meet obligations under the Company's incen- tive schemes and to adapt the capital structure. The reserve is a distributable reserve. Hedging reserve The reserve comprises the fair value of hedging instruments qualifying for hedge accounting. Hedge accounting ceases when the hedging instrument matures or if a hedge is no longer effective. Translation reserve The reserve comprises foreign currency translation arising on the transla- tion of net investments and related hedging in entities with a functional currency other than DKK. The reserve is dissolved upon disposal of entities. 4.2 Capital structure and capital allocation Capital structure = III The capital structure of DSV is intended to maintain financial stability, opti- mise cost of capital and to ensure financial readiness allowing to act on business opportunities as they present themselves. The gearing ratio was 1.0 at 31 December 2022 (2021: 1.4). The target gearing ratio is below 2.0 x EBITDA, but may exceed this level following significant acquisitions. Capital allocation The Group aims to spend its free cash flow in the following order of priority: 1. Repayment of net interest-bearing debt in periods when the financial gearing ratio is above target; 2. Value-adding investments in the form of acquisitions or development of the existing business; 3. Distribution to the Company's shareholders by means of share buybacks and dividends. 2022 2021 Treasury shares Market value % of share capital (DKKm) at 31 December Nominal value (DKKm) Market value % of share capital (DKKm) at 31 December Nominal value (DKKm) Net interest-bearing debt Portfolio, beginning of year New shares issued 8,921 2.4% 5.8 3,972 1.7% 3.9 The Group increased its net interest-bearing debt in 2022 by DKK 625 million (2021: increased by DKK 11,056 million). Net interest-bearing debt can be specified as follows: 24,495 6.7% 16.0 Cancellation of treasury shares (24,474) (9.6%) (21.0) (5,863) (2.5%) (6.0) Net interest-bearing debt (DKKm) 2022 2021 Lease liabilities 16,767 15,288 Portfolio, adjusted for Interest-bearing borrowings 22,206 21,472 amount of shares (15,553) (6.9%) (15.2) 22,604 5.8% 13.9 Pensions and other post-employment benefit plans 1,183 908 Purchased during the year 20,313 8.5% 18.6 17,841 5.5% 13.3 Other receivables (126) (124) Consideration for acquisition (29,571) (8.0%) (19.3) Cash and cash equivalents (10,160) (8,299) Sold during the year (1,601) (0.6%) (1.3) (784) (0.9%) (2.1) Net interest-bearing debt 29,870 29,245 Value adjustment (820) (1,169) Portfolio, end of year 2,339 1.0% 2.1 8,921 2.4% 5.8#6868 DSV Annual Report 2022 Consolidated financial statements 2022 = III 4.2 Capital structure and capital allocation-continued Distribution to the Company's shareholders In 2022, the Group spent DKK 20,313 million on purchase of treasury shares and DKK 1,320 million on dividends distributed (2021: DKK 17,841 million and DKK 920 million, respectively). It is proposed to distribute a dividend of DKK 6.50 per share for 2022 (2021: DKK 5.50). Cash and capital restrictions Cash and cash equivalents comprise cash on hand and short-term liquid assets that are readily convertible to cash. Of total cash and cash equiva- lents, DKK 1,777 million (2021: DKK 839 million) are subject to restric- tions implying that the cash may not be readily available for general use or distribution by the Group. Major types of cash and capital restrictions: 4.3 Financial liabilities Accounting policies The financial liabilities of the Group are divided into four financing cate- gories: overdraft and credit facilities, issued bonds, lease liabilities and other financial liabilities. Overdraft and credit facilities obtained through the issuance of bonds are initially recognised at fair value net of transaction expenses. Subsequently, the financial liability is measured at amortised cost, correspond- ing to the capitalised value using the effective interest method, so that the difference between the proceeds and the nominal value is recognised in the income statement over the term of the loan. Lease liabilities are described in further detail in note 3.6. Other liabilities are measured at amortised cost, which, in all essentials, corresponds to the net realisable value. Financial liabilities (DKKm) Non-current liabilities Current liabilities Total Non-cash change Additions from business Cash flow combinations (1,159) Currency effects 2022 2021 34,588 28,841 4,391 7,912 38,979 36,753 Financing activities 2022 (DKKm) Beginning of year Other* End of year Cash and capital restrictions (DKKm) Exchange control restrictions 2022 2021 Overdraft and credit facilities 1,896 92 829 1,498 654 Issued bonds 19,557 1,833 53 (66) 21,377 Insurance collaterals 273 178 Lease liabilities 15,288 (3,734) (33) 5,246 16,767 Other collaterals 6 7 Total liabilities from financing activities 36,741 (3,060) 112 5,180 38,973 Total Exchange control restrictions 1,777 839 Other non-current liabilities 12 6 Total financial liabilities 36,753 38,979 Exchange control restrictions comprise cash balances in countries where various forms of foreign exchange controls or other legal restrictions apply. While the cash balances are available for the daily operations of the local entities, the balances cannot be immediately repatriated to the ultimate parent company. Insurance collaterals Insurance collaterals constitute security for outstanding insurance con- tracts sold to customers by DSV Insurance. The amount is regulated and measured in accordance with laws and regulations issued by the Danish Financial Supervisory Authority. Financing activities 2021 (DKKm) Overdraft and credit facilities 1,089 563 139 105 1,896 Issued bonds Lease liabilities 7,730 12,278 11,782 48 (3) 19,557 (3,160) 2,539 246 3,385 15,288 Total liabilities from financing activities Other non-current liabilities 21,097 9,185 2,678 399 3,382 36,741 62 12 Total financial liabilities 21,159 36,753 * Other includes additions and remeasurement of financial liabilities.#6969 DSV Annual Report 2022 Consolidated financial statements 2022 = III 4.4 Financial risks Liquidity risk The cash readiness of the Group is ensured through short and long-term credit facilities from the main banks of the Group and through the issuance of bonds. The purpose of issuing bond loans is to diversify the Group's long-term debt, making the Group less dependent on bank loans. The Group's bank and bond loans are subject to standard clauses, accord- ing to which the Group's debt must be repaid in case of a change of con- trol. The long-term credit facilities with banks are furthermore subject to one covenant. The covenant relates to the gearing ratio of the Group and is reported on every quarter. The covenant has not been breached in 2022. The total duration of the Group's long-term loan commitments and the amounts drawn on its credit lines at 31 December 2022 are shown in the accompanying table. Furthermore, a maturity analysis has been provided based on contractual cash flows, including estimated interest payments. The amounts have not been discounted and as such do not reconcile directly to the balance sheet. Foreign currency risk Due to its global activities, the Group is exposed to exchange rate fluctu- ations to a certain extent. DSV seeks to eliminate foreign currency risks by hedging currency exposures centrally via the Group's Treasury depart- ment. The risk exposure is managed on a net basis, primarily by using foreign exchange forward contracts. The Group's foreign subsidiaries are not affected where trading income and costs are denominated in the local functional currency. This applies to a large part of the Group's subsidiaries. Furthermore, a large proportion of the income and expenses of the Group are denominated in EUR, and the total foreign currency risk is therefore limited. Commitments and amounts drawn on long-term credit facilities at 31 December 2022: Principal amount Principal amount (EURM) (DKKm) Loan facilities Overdraft facility I Overdraft facility II Total and weighted duration Expiry of 133 Fixed/floating interest rate Bond loan ISIN XS2387735470 Bond loan ISIN XS2360881549 Bond loan ISIN XS2308616841 Bond loan ISIN XS2458285355 Bond loan ISIN 212542679 Bond loan ISIN 0030403993 Revolving credit facility I 500 3,718 600 4,462 Fixed Fixed 500 3,718 commitments 17-09-2036 05-07-2033 Fixed 03-03-2031 Duration (years) Undrawn 13.7 10.5 8.2 600 4,462 Fixed 16-03-2030 7.2 500 3,718 Fixed 26-02-2027 4.2 200 1,487 Fixed 20-09-2024 1.7 200 1,487 Floating 03-10-2027 4.8 1,487 Revolving credit facility II 75 558 Floating 31-12-2024 2.0 558 Revolving credit facility III 125 930 Revolving credit facility IV 150 1,115 Floating Floating 31-01-2024 28-02-2024 1.2 930 1.1 1,115 Revolving credit facility V 100 744 Floating 31-01-2024 1.1 744 Revolving credit facility VI 100 744 Floating 15-01-2026 3.0 744 100 744 50 372 Floating 28-02-2025 Floating 31-01-2024 2.2 744 3,800 28,259 1.1 8.3 372 6,694 829 21,377 Total cash flow, Carrying amount including interest 859 23,062 0-1 year 1-5 years > 5 years 859 16,767 21,278 14,992 14,992 93 93 186 4,302 14,992 93 5,852 11,059 17,024 5,917 60,284 20,432 16,911 22,941 Total cash flow, 0-1 year 1-5 years > 5 years 3,692 17,040 1,952 9,835 The Group's financial liabilities fall due as follows: Financial liabilities - maturity 2022 (DKKm) Overdraft and credit facilities Issued bonds Lease liabilities Trade payables Currency derivatives Total Financial liabilities - maturity 2021 (DKKm) Overdraft and credit facilities Issued bonds Lease liabilities Trade payables Currency derivatives Interest rate derivatives Total 54,058 Carrying amount including interest 1,932 20,923 1,896 19,557 15,288 17,040 18,330 17,040 1,932 2,741 16,230 4,803 33333 53,821 58,249 25,429 11,787 21,033#7070 DSV Annual Report 2022 Consolidated financial statements 2022 = III 4.4 Financial risks - continued The Group is also exposed to foreign currency risks, partly on the transla- tion of debt denominated in foreign currency other than the functional currency and partly on the translation of net investments in enterprises with a functional currency other than DKK. The former risk affects profit before tax. On recognition of net investments in foreign subsidiaries, the Group is exposed to a translation risk when the profit or loss and equity of foreign subsidiaries are translated into DKK at the reporting date based on the average rates of exchange and the closing rates. The need to hedge the Parent's net investments in subsidiaries is assessed on a regular basis. It is Group policy to reduce net investments in Group subsidiaries on an ongoing basis by distributing the subsidiaries' profits as dividends. The Group hedges booked external net currency positions and currencies with large expected short-term operational cash flows for up to six months. At year-end 2022, 71% of expected six-month cash flows in USD were hedged. As hedge accounting is only applied to a limited extent and we do not hedge currency exposure related to intra-group balances with no under- lying cash flow impact, significant changes in currency rates, especially EUR/DKK, USD/DKK, CNY/DKK and CHF/DKK, will result in more fluctua- tions in reported financial items. Unhedged intra-group balances at 31 December are outlined in the main currency exposures table to the right. In general, the Group does not hedge EUR positions, as it expects that the official Danish fixed exchange-rate policy against the EUR will continue. The sensitivity analysis of EUR/DKK exposure shows the effect of a 2% (2021: 5%) change in average exchange rates for the year on profit/loss (EBIT) and the effect of a 2% (2021: 5%) change in year-end closing rates on other comprehensive income. The sensitivity analysis of other significant currency exposures shows the effect of a 5% change in average exchange rates for the year on profit/loss (EBIT) and the effect of a 5% change in year-end closing rates on other comprehensive income. The calculation method applied in the sensitivity analysis is unchanged compared to previous years. Main currency exposures (DKKm) EUR/DKK USD/DKK CNY/DKK Unhedged intra-group balances Currency exposures - sensitivity analysis 2022 2021 2022 2021 Impact on Net position profit/loss Net position Impact on profit/loss Impact on Impact profit/loss on OCI Impact on profit/loss Impact on OCI (26,927) (539) (12,154) (608) 103 130 191 238 (7,076) (354) (188) (9) 275 552 145 293 (2,558) (128) (3,143) (157) 134 74 84 54 CHF/DKK (1,798) (90) (1,771) (89) 18 24 14 38 PLN/DKK (873) (44) (543) (27) 28 38 22 24 SGD/DKK (845) (42) 102 n.a. 18 16 n.a. n.a. SEK/DKK Total (551) (28) (240) n.a. 42 33 n.a. n.a. n.a. (1,225) n.a. (890) 618 867 456 647 Loan and credit facilities (DKKm) Bond loans Credit facilities Overdraft facility Loans and credit facilities 2022 2021 Carrying amount 21,377 Fixed/floating interest rate Fixed Fixed/floating Expiry 2024-2036 829 Floating 2023 Carrying amount 19,557 818 1,078 interest rate Expiry Fixed/floating 2022-2036 Fixed Floating 2022 2022 at 31 December 22,206 Current/non-current classification: Non-current liabilities 21,392 814 Current liabilities 21,453 16,981 4,472#7171 DSV Annual Report 2022 Consolidated financial statements 2022 4.4 Financial risks - continued = III Interest rate risk At 31 December 2022, 96% (2021: 92%) of Group borrowings were secured either through fixed-rate loans or other hedge transactions. The duration of hedges relating to net borrowings of the Group was 182 months (2021: 151 months). The weighted average interest rate on the Group's loans, credit facilities and interest rate hedging was 1.0% at the end of 2022 (2021: 1.2%). A 1 percentage point increase in interest rates would not have a signifi- cant impact on the income statement (2021: increase DKK 57 million) and other comprehensive income (2021: increase DKK 5 million), based on average net interest-bearing debt for 2022. The calculation method applied in the sensitivity analysis is unchanged compared to previous years. Credit risk The Group's credit risk mainly relates to trade receivables. The Group is not dependent on particular customer segments or any spe- cific customers, and all customers are subjected to individual credit as- sessments and credit limits in accordance with the Group's Credit Policy. As a result, the credit risk of the Group is generally considered insignificant. The Group mainly hedges credit risks through the use of credit insurance. For a limited number of customers, the Group uses non-recourse fac- toring. At 31 December 2022, non-recourse factoring amounted to DKK 2,288 million (2021: 1,696 million). DSV is exposed to counterparty credit risk when entering into derivative financial instruments. In order to reduce this risk, DSV only enters into derivative financial instruments with the existing banks of the Group whose credit ratings from Standard & Poor's are long-term A or higher. As a general rule, the Group only makes short-term deposits with banks rated short-term A-2 or higher by Standard & Poor's and/or P-2 or high- er by Moody's. Impairment of trade receivables Impairment of trade receivables is assessed on an ongoing basis and in- surance policies are taken out for the majority of these. At 31 December 2022, credit insurance amounted to DKK 26,628 mil- lion, corresponding to 82% of total trade receivables (2021: DKK 25,295 million or 70%). Loss allowances for impaired trade receivables are provided for following an expected credit loss model. The model includes uninsured trade receiv- ables and also factors in any own risk on insured receivables. Expected credit loss at 31 December 2022 is presented in the following table: Expected credit loss 2021 (DKKm) Expected Carrying amount loss rate (%) allowance Loss Current 31,079 0.4% 117 Overdue 1-30 days 3,834 1.6% 62 Overdue 31-60 days 970 5.8% 56 Overdue 61-90 days 413 13.3% 55 Overdue 91-120 days Overdue >121 days 167 24.4% 41 663 64.2% 426 Total 37,126 757 Current receivables are considered to have high creditworthiness with a low risk of loss. The loss allowance provision for the year is specified below: Expected credit loss 2022 (DKKm) Carrying amount Expected loss rate (%) Loss allowance Loss allowance provision (DKKm) 2022 2021 Current 25,745 0.3% 76 Provision at 1 January 757 423 Overdue 1-30 days 4,319 2.2% 94 Additions from business combinations 351 Overdue 31-60 days Overdue 61-90 days 1,331 7.1% 95 Additions for the year 713 337 615 15.0% 92 Losses recognised (155) (79) Overdue 91-120 days 368 26.9% 99 Reversal of provisions from Overdue >121 days 882 47.3% 417 previous years (443) (277) Currency translation 1 2 Total 33,260 873 Provision at 31 December 873 757 Impairment losses on trade receivables for 2022 amounted to DKK 155 million, corresponding to 0.07% of consolidated revenue (2021: DKK 79 million, or 0.04%).#7272 DSV Annual Report 2022 Consolidated financial statements 2022 = III 4.5 Derivative financial instruments Accounting policies Derivative financial instruments are recognised on the trade date and are measured at fair value. Positive and negative fair values are included in oth- er current receivables or other current payables in the balance sheet. Posi- tive and negative fair values are only offset if the Group has a right and an intention to settle several financial instruments net (by means of settle- ment of differences). Fair value is determined based on generally accepted valuation methods using available observable market data. When entering into contracts for financial instruments, an assessment is made of whether the instrument qualifies for hedge accounting, including whether the instrument hedges recognised assets and liabilities or net in- vestments in foreign entities. The effectiveness of recognised financial in- struments is assessed on a monthly basis, and any ineffectiveness is recog- nised in the income statement. Fair value changes which are classified as and fulfil the criteria for recogni- tion as a fair value hedge are recognised in the income statement together with changes in the value of the part of the asset or liability that has been hedged. Fair value changes in the part of the derivative which is classified as and qualifies for recognition as a future cash flow hedge and which effectively hedges against changes in the value of the hedged item are recognised in other comprehensive income as a separate hedging reserve. When the underlying hedged item is realised, any gain or loss on the hedg- ing transaction is transferred from equity and recognised together with the hedged item. Fair value changes that do not meet the criteria for treatment as hedging instruments are recognised on an ongoing basis in the income statement under financial items. Foreign currency risk hedging The Group mainly uses foreign exchange forward contracts to hedge for- eign currency risks. The main currency hedged is USD. The foreign ex- change forward contracts are used as fair value hedges of currency expo- sures relating to external balance sheet assets and liabilities as well as expected short-term operational cash flows. A loss on hedging instruments of DKK 184 million was recognised in the income statement for 2022 (2021: a loss of DKK 84 million). In the same period, a gain of DKK 460 million was recognised relating to assets and liabilities (2021: a loss of DKK 28 million). The net gain in 2022 primarily relates to unhedged intercompany positions. External hedging instruments (DKKm) Contractual value Maturity (year) Fair value Of which recognised in income statement Of which recognised in OCI Interest rate risk hedging The Group has obtained long-term loans mainly on a fixed rate basis, which means that the Group is less exposed to interest rate fluctuations. The Group mainly uses interest rate swaps to hedge future cash flows relating to interest rate risks. Thereby, floating-rate loans are converted to fixed-rate financing. At the balance sheet date, the Group no longer had any interest rate swaps. The weighted average effective interest rate of existing interest rate instruments used as hedges of long-term loans was therefore 0.0% at the reporting date (2021: 0.8%). 2022 Currency instruments Interest rate instruments Total Currency instruments 2021 Interest rate instruments Total 5,589 5,589 2023 11,801 2022 744 12,545 2022 93 93 (33) (7) (40) 97 97 (34) (34) (4) (4) 1 (7) (6)#7373 DSV Annual Report 2022 Consolidated financial statements 2022 = III 4.6 Earnings per share Earnings per share (DKKm) 2022 Profit for the year 17,671 2021 11,254 Non-controlling interests' share of consolidated profit for the year 103 49 DSV A/S shareholders' All financial instruments are measured based on level 2 input (input other than quoted prices that are observable either directly or indirectly). share of profit for the year 17,568 11,205 Amortisation of customer relationships 254 212 Share-based payment 202 Special items, costs 1,117 160 478 Related tax effect (376) Adjusted profit for the year 18,765 (208) 11,847 4.7 Financial instruments fair value hierarchy Fair value hierarchy by category - DSV has no financial instruments measured at fair value based on level 1 input (quoted active market prices) or level 3 input (non-observable market data). Derivative financial instruments The fair value of currency and interest rate derivatives is determined based on generally accepted valuation methods using available observable market data. Calculated fair values are verified against comparable external market quotes on a monthly basis. Financial liabilities measured at amortised cost In 2021, the carrying value of financial liabilities measured at amortised cost was not considered to differ significantly from fair value. Due to changes in the macroeconomic environment, the carrying value of fi- nancial liabilities measured at amortised cost is no longer considered to rep- resent the fair value. The 2022 fair value of issued bonds measured at amor- tised cost is within level 1 of the fair value hierarchy. Trade receivables, trade payables and other receivables Receivables and payables pertaining to operating activities and with short churn ratios are considered to have a carrying value equal to fair value. 2022 2021 ('000 shares) Total average number of shares 235,438 231,732 Financial instruments by category (DKKm) Carrying amount Fair Value Carrying amount Fair value Average number of treasury shares (8,121) Average number of shares in circulation 227,317 (4,231) 227,501 Financial assets: Currency derivatives 93 93 Average dilutive effect of outstanding share options under incentive schemes Trade receivables 32,387 32,387 36,369 36,369 3,150 5,138 Other receivables 6,640 6,640 6,404 6,404 Diluted average number of shares in circulation 230,467 232,639 Cash and cash equivalents 10,160 10,160 8,299 8,299 Financial assets measured at amortised cost 49,187 49,187 51,072 51,072 Earnings per share of DKK 1 77.3 49.3 Diluted earnings per share of DKK 1 76.2 48.2 Financial liabilities: Adjusted earnings per share of DKK 1 82.5 52.1 Interest rate derivatives 7 7 Diluted adjusted earnings per share of DKK 1 81.4 50.9 Currency derivatives 33 33 Diluted average number of shares Issued bonds measured at amortised cost Overdraft and credit facilities 21,377 16,615 19,557 19,557 829 829 1,896 1,896 Diluted earnings per share and diluted adjusted earnings per share have been calculated excluding out-of-the money share options. The number of out-of- the money share options was O in 2022 (2021:0). Trade payables 14,992 14,992 17,040 17,040 Financial liabilities measured at amortised cost 37,198 32,436 38,493 38,493#7474 DSV Annual Report 2022 Consolidated financial statements 2022 Chapter 5 Tax = III 5.1 Income tax Accounting policies Current tax payables and receivables are recognised in the balance sheet as tax calculated on the taxable income for the year adjusted for tax on taxable income for previous years and for prepaid tax. Tax for the year comprises current and deferred tax on profit or loss for the year, interest expenses related to pending tax disputes and adjust- ments to previous years, including adjustments due to tax rulings. Tax for the year is recognised in the income statement, unless the tax expense relates directly to items included in other comprehensive income or equity. Tax rate (%) 2022 2021 Tax rate specifies as follows: Calculated tax on profit for the year before tax Adjustment of calculated tax in foreign 22.0% 22.0% group enterprises relative to 22.0% 2.5% 2.4% Change in deferred tax based on change in income tax rate 0.0% (0.1%) Tax effect of: Tax for the year (DKKm) 2022 2021 Non-deductible expenses/non-taxable income Non-deductible losses/non-taxable gains on shares 0.5% 0.7% (0.1%) 0.0% Tax for the year is disaggregated as follows: Tax adjustment relating to previous years 0.6% 0.3% Tax on profit for the year 5,550 3,650 Tax asset valuation adjustments, net (2.3%) (1.2%) Tax on other changes in equity 322 (791) Other taxes and adjustments 0.7% 0.4% Tax on other comprehensive income (52) 116 Effective tax rate 23.9% 24.5% Total tax for the year 5,820 2,975 Tax on profit for the year is calculated as follows: Current tax 5,704 3,830 Deferred tax (302) (220) 148 40 5,550 3,650 In 2022, we contributed with direct and indirect taxes such as corporate taxes, VAT, GST, duties, etc., in more than 80 countries. Our corporate tax payments amounted to DKK 5,178 million. We believe in contributing to the societies and communities we do business in. One of the ways we do that is through our global tax payments. In all tax matters, we act in a fair, compliant and responsible way. Tax adjustment relating to previous years Total tax on profit for the year Tax on other comprehensive income specifies as follows: Fair value adjustment of hedging instruments Actuarial gains/(losses) (2) 3 54 (119) Total tax on other comprehensive income 52 (116)#7575 DSV Annual Report 2022 Consolidated financial statements 2022 = III 5.2 Deferred tax Accounting policies Deferred tax is recognised based on temporary differences between the carrying amount and the tax value of assets and liabilities. No recognition is made of deferred tax on temporary differences relating to amortisation or depreciation of goodwill, properties and other items if disallowed for tax purposes, except at the acquisition of enterprises, if such temporary differ- ences arose on the date of acquisition without affecting the results or the taxable income. In cases where it is possible to calculate the tax value ac- cording to different taxation rules, deferred tax is measured on the basis of the planned use of the asset or the settlement of the liability. Deferred tax assets, including the tax base of tax loss carryforwards, are recognised as other non-current assets at the expected value of their utili- sation, either by elimination in tax on future earnings or by offsetting de- ferred tax liabilities within the same legal tax entity and jurisdiction. Deferred tax assets and tax liabilities are offset if the enterprise has a legally enforceable right to set off current tax liabilities and tax assets or intends either to settle current tax liabilities and tax assets on a net basis or to realise the assets and liabilities simultaneously. Deferred tax is adjusted for elimination of unrealised intra-group gains and losses. Deferred tax is measured on the basis of the tax rules and tax rates of the relevant countries that will be effective under current legislation at the reporting date on which the deferred tax is expected to materialise as current tax. Management judgements and estimates Management applies significant estimates when recognising and measuring deferred tax assets and uncertain tax positions. Deferred tax assets, including the tax base of tax loss carryforwards, are recognised if it is assessed that there will be sufficient future taxable in- come against which the temporary differences and unutilised tax losses can be utilised. This assessment is based on budgets and business plans for the following years, including planned business initiatives. Deferred tax assets are tested annually and are only recognised if it is probable that future taxa- ble profit will allow the deferred tax asset to be recovered. Uncertain tax positions include ongoing disputes with tax authorities and have been provided for in accordance with the accounting policies. Man- agement believes that the provisions made are adequate. The actual obliga- tions may deviate as they depend on the result of litigations and settlements with the relevant tax authorities. Deferred tax recognised in the balance sheet (DKKm) Deferred tax at 1 January Deferred tax for the year 2022 3,097 2021 2,293 302 220 Tax adjustment relating to previous years (74) (337) (430) 675 Additions from business combinations 79 456 Currency translation 36 (47) Other adjustments (20) (163) Deferred tax at 31 December 2,990 3,097 Tax on changes in equity Deferred tax not recognised in the balance sheet (DKKm) Temporary differences Tax loss carryforwards Total tax assets not recognised 2022 2021 29 (58) 853 1,220 882 1,162 Of not recognised tax loss carryforwards, DKK 574 million (2021: DKK 795 million) may be carried forward indefinitely.#7676 DSV Annual Report 2022 Consolidated financial statements 2022 5.2 Deferred tax-continued The deferred tax assets and liabilities recognised are allocated to the following items: Deferred tax allocation 2022 (DKKm) Deferred tax at 1 January Recognised in profit/loss Recognised in equity Additions from business combinations Other adjustments Currency translation Deferred tax at 31 December Balance sheet classification: Deferred tax assets Deferred tax liabilities = III PPE, ROU assets, lease Tax base of tax loss carry- Intangible assets (290) liabilities Provisions Other liabilities forwards Total (166) 889 1,758 906 277 170 111 (298) (32) 3,097 228 52 (482) (430) 90 (95) 84 79 (2) 13 (31) (20) 2 18 (2) 3 15 36 (11) 112 953 994 942 2,990 162 273 1,034 (173) (161) (81) 1,074 (80) 951 3,494 (9) (504) Tax base of PPE and ROU assets Provisions Other liabilities tax loss carry- forwards Total (253) (42) (252) 204 1,225 702 871 2,293 (418) 311 (172) (117) (116) 791 675 6 (135) 210 (21) 396 456 1 (2) (162) (163) (1) 17 (13) (23) (27) (47) (290) (166) 889 1,758 906 3,097 Deferred tax allocation 2021 (DKKm) Deferred tax at 1 January Recognised in profit/loss Recognised in equity Additions from business combinations Other adjustments Currency translation Deferred tax at 31 December Balance sheet classification: Intangible assets Deferred tax assets Deferred tax liabilities (275) 590 701 1,620 908 3,544 (15) (756) 188 138 (2) (447)#7777 DSV Annual Report 2022 Consolidated financial statements 2022 = III Chapter 6 Other notes This chapter includes disclosures on other statutory information not directly related to the operating activities of the Group. The chapter describes the acquisition and disposal of entities during the year, contingent liabilities and security for debt as well as trans- actions with Group Management, auditors and other related parties. 6.1 Acquisition and disposal of entities Accounting policies When accounting for business combinations, the acquisition method is applied in accordance with IFRS 3. Acquirees are recognised in the consolidated financial statements from the date of acquisition. The date of acquisition is the date on which DSV obtains control of the company. Entities disposed of are recognised in the consolidated financial statements until the date of disposal. The date of disposal is the date on which DSV surrenders control of the company. The consideration transferred as payment for the acquiree consists of the fair value of assets transferred, liabilities incurred to former owners of the acquiree and equity instruments issued. Contingent considerations de- pendent on future events or the performance of contractual obligations are also recognised at fair value and form part of the total consideration transferred. Fair value changes in contingent considerations are recog- nised in the income statement until final settlement. Identifiable assets, liabilities and contingent liabilities of the acquiree are measured at fair value at the date of acquisition by applying relevant val- uation methods. Identifiable intangible assets are recognised if they are separable or arise from a contractual right. Deferred tax is recognised for identifiable tax benefits existing at the date of acquisition and from the perspective of the new combined Group in compliance with local tax legislation. The excess of the total consideration transferred, value of non-controlling interests and the fair value of any equity investments previously held in the acquiree over the total identifiable net assets measured at fair value are recognised as goodwill. If measurement of the identifiable net assets is uncertain at the date of acquisition, initial recognition is done based on provisional amounts. Measurement period adjustments to the provisional amounts may be done for up to 12 months following the date of acquisition. The effects of cross-period measurement period adjustments are recog- nised in equity at the beginning of the financial year, and comparative figures are restated. After the end of the measurement period, goodwill is no longer adjusted. Transaction costs inherent from the acquisition are recognised in the in- come statement when incurred. Goodwill and fair value adjustments arising from the acquisition of an ac- quiree whose functional currency differs from the presentation currency of the Group are translated into the functional currency of the foreign entity using the exchange rate ruling at the date of acquisition. Other than cross-period measurement period adjustments, comparative figures are not adjusted when acquiring or disposing of entities. Management judgements and estimates In applying the acquisition method of accounting, estimates are an inte- gral part of assessing fair values of several identifiable assets acquired and liabilities assumed, as observable market prices are typically not available. Valuation techniques where estimates are applied typically relate to de- termining the present value of future uncertain cash flows or assessing other events in which the outcome is uncertain at the date of acquisition. More significant estimates are typically applied in accounting for property, plant and equipment, customer relationships, trade receivables, deferred tax, debt and contingent liabilities. As a result of the uncertainties inherent in fair value estimation, measurement period adjustments may be applied.#7878 DSV Annual Report 2022 Consolidated financial statements 2022 = III 6.1 Acquisition and disposal of entities - continued Acquisitions and disposals On 16 August 2021, DSV acquired the Global Integrated Logistics divi- sion (GIL) of Agility Public Warehousing Company K.S.C.P. No material enterprises, non-controlling interests or activities were acquired or di- vested in 2022. About Agility's Global Integrated Logistics business The GIL business was a leading global transport and logistics provider with a strong footprint in emerging markets. The business offered a mix of integrated logistics services, including air, ocean and road freight forward- ing services, contract logistics and specialised logistics capabilities. GIL operated a flexible, customer-centric and sustainability-driven business with a global workforce of approximately 17,000 employees and service provision across 100+ countries around the world (incl. agents). GIL em- powered businesses of all sizes, from small businesses to large multination- als, through sector-specific expertise and digital tools and technology to enhance supply chain efficiency. Consideration transferred The consideration transferred for GIL was made in DSV equity instru- ments by offering 19,304,348 DSV shares in total at a fair value of DKK 29,493 million based on the acquisition date share closing price of DKK 1,531 on Nasdaq Copenhagen, offset by a cash consideration transferred from Agility to DSV of approximately DKK 61 million. Adjusted for the fair value of cash and cash equivalents acquired of DKK 1,759 million, the total net consideration amounted to DKK 27,734 million. Fair value of acquired net assets and recognised goodwill In 2022, DKK 370 million was recognised as measurement period adjust- ments to the acquisitional opening balance. The measurement period adjustments primarily relate to the valuation of properties. For further details, refer to note 6.1 in the DSV Annual Report 2021. The fair value of other receivables recognised includes indemnification assets totalling DKK 1,818 million relating to various corporate tax and value added taxes. Indemnification assets have not been excluded from the consideration transferred or opening balance recognition. Had the indemnification assets been excluded, the consideration trans- ferred and net assets recognised would have amounted to DKK 27,675 million and DKK 2,105 million respectively, whereas acquisitional goodwill would have remained unchanged. The fair value of identified net assets and goodwill recognised from the acquisition is comprised of the following items: Net assets and goodwill recognised (DKKm) Customer relationships Contract assets Inventories Fair value at date of acquisition 569 Other intangible assets 13 Right-of-use assets 2,375 Property, plant and equipment 2,146 Trade receivables 5,438 1,448 34 Deferred tax assets 720 Other receivables 2,365 Cash and cash equivalents 1,759 Total assets 16,867 Lease liabilities 2,331 Borrowings 138 Provisions 2,800 Pensions and similar obligations 349 Trade payables 2,499 Accrued cost of services 1,864 Deferred tax liabilities 159 Tax payables 605 1,935 12,680 264 Acquired net assets 3,923 Fair value of total consideration transferred 29,493 Goodwill arising from the acquisition 25,570 Other payables Total liabilities NCI share of acquired net assets#7979 DSV Annual Report 2022 Consolidated financial statements 2022 = III 6.2 Share option schemes Accounting policies DSV's share option schemes are equity-settled, measured at the grant date and recognised in the income statement as staff costs over the vesting period. The offsetting item is recognised directly in equity. Current share option schemes Scheme Number of Market value at date Options granted Exercise period Exercise price employees of granting (DKKm) 2018 2019 The value of employee services received during the vesting period in ex- change for share options granted corresponds to the fair value of the share options at the date of granting. 2020 2021 2022 2,733,500 2,735,000 29.03.2022 - 27.03.2024 3,080,750 31.03.2023 31.03.2025 2,438,300 2,640,900 28.03.2021 - 28.03.2023 477.5 1,600 118.2 545.0 1,624 141.7 560.0 2,000 155.5 01.04.2024 - 31.03.2026 01.04.2025 - 31.03.2027 1,325.0 2,202 205.3 1,485.0 2,524 279.8 2022 The fair value of the options granted is determined based on the Black & Scholes valuation model. The assumptions used in the valuation takes into account the terms and conditions applicable to the options granted and Management's expectations of the various parameters on which the valua- tion model is based. Upon initial recognition, an estimate is made of the number of share options that the employees are expected to earn. The estimated number of share options is adjusted subsequently to reflect the actual number of share op- tions earned. The estimated volatility is based on historical data over the preceding three years adjusted for any unusual circumstances during the period. The valu- ation of the share options granted in 2022 and 2021 is based on the fol- lowing assumptions: Assumptions Share option schemes at 31 December 2022 Scheme 2018* 2019* 2020 2021 2022 Outstanding at 31 December 2022 Executive Board Key employees Average exercise 190,000 190,000 687,000 1,836,500 202,000 2,708,500 Total 877,000 2,026,500 2,910,500 price per option 477.5 545.0 560.0 168,750 198,250 949,000 2,193,800 2,362,550 1,325.0 2,387,000 9,812,800 10,761,800 2,585,250 1,485.0 940.6 Open for exercise at 31 December 2022 Life (years) 380,000 2,523,500 2,903,500 524.6 2.2 2.6 Market value (DKKm) 350.5 3,134.4 2.6 3,484.9 n.a. n.a. Share options granted in 2018 and 2019 are currently exercisable. Share price Volatility Risk-free interest rate 1,485.0 18.0% 1.2% 2021 1,325.0 18.0% (0.1%) Expected dividends 0.8% 0.8% Expected remaining life (years) 3.5 3.5#8080 DSV Annual Report 2022 Consolidated financial statements 2022 = III 6.2 Share option schemes - continued Share option schemes DSV has launched incentive share-based payment schemes with the purpose of motivating and retaining key employees across the organisa- tion. Share options are awarded at all levels in the organisation, e.g. from team leads, specialists, branch managers, country managers, up to Executive Management. Retention is motivated by requiring continued service for a period cover- ing the vesting period as a minimum. The schemes are also intended to align the interests of employees and shareholders. All active schemes entail a three-year vesting period and a two-year ex- ercise period. In case of a change of control, all outstanding share options will vest. Exercise prices are set based on the quoted market prices lead- ing up to the date of granting. The share options can be exercised by cash purchase of shares only. The obligation relating to the schemes is partly covered by the Company's treasury shares. Share options are granted pursuant to the procedures laid down in the Group's Remuneration Policy applicable in the relevant year. A total of 2,988 employees held share options at 31 December 2022 (2021: 2,625 employees). Total costs recognised in 2022 for services received but not recognised as an asset amounted to DKK 202 million (2021: DKK 160 million). The average share price for options exercised in the financial year was DKK 1,093.4 per share at the date of exercise (2021: DKK 1,324.5 per share). Granted Transferred* Exercised Executive Outstanding share options Board Key employees Total Average exercise price per option Outstanding at 1 January 2021 760,000 8,646,129 156,750 36,000 (190,000) 2,281,550 9,406,129 2,438,300 507.2 1,325.0 Options waived/expired Outstanding at 31 December 2021 762,750 (36,000) (1,953,556) (123,475) 8,814,648 (2,143,556) 427.9 (123,475) 684.7 9,577,398 730.9 Outstanding at 1 January 2022 Granted 762,750 198,250 (12,000) 8,814,648 2,442,650 (1,279,573) (164,925) 9,577,398 730.9 2,640,900 (1,291,573) (164,925) 1,485.0 479.1 1,091.6 949,000 9,812,800 10,761,800 940.6 Exercised Options waived/expired * Outstanding at 31 December 2022 A member of the Executive Board has previously received share options in the Director's former capacity as a key employee.#8181 DSV Annual Report 2022 Consolidated financial statements 2022 = III 6.3 Remuneration of the Executive Board and the Board of Directors Executive Board The members of the Executive Board are subject to a notice period of up to 24 months. Remuneration of the members of the Executive Board and the Board of Directors complies with the principles of the Company's Re- muneration Policy and is described in detail in the Remuneration Report. The aggregate remuneration to the members of the Executive Board for 2022 was DKK 54.8 million (2021: DKK 41.5 million). The remuneration to the Executive Board is specified: Executive Board remuneration (DKKm) Fixed salary Pension 6.4 Fees to auditors appointed at the Annual General Meeting Audit fees and services (DKKm) Statutory audit fees Other assurance services Tax and VAT advisory services Other services Total fees to auditors appointed at the Annual General Meeting Statutory audit fees 2022 2021* Tax and VAT advisory services 36.1 27.6 Other services 2.9 2.2 Total fees, other Share-based payment 15.8 11.7 Total 54.8 41.5 Total fees Michael Ebbe became a member of the Executive Board on 26 October 2021. 2022 2021 45 42 3 4 2 4 15 62 6.5 Related-party transactions DSV has no related parties with control of the Group and no related par- ties with significant influence other than key management personnel - mainly in the form of the Board of Directors and the Executive Board. Related-party transactions Board of Directors and Executive Board No transactions with the Board of Directors and Executive Board were made in 2022 other than ordinary remuneration, as described in notes 6.2 and 6.3. 54 52 Associated companies 13 21 DSV holds ownership interests in 8 associates (2021: 12 associates). The Group's share of associates' profit for the year amounted to DKK 7 million (2021: DKK 4 million). 12 8 46 Board of Directors The aggregate remuneration to the Board of Directors of DSV A/S for 2022 was DKK 6.9 million (2021: DKK 7.0 million). 62 98 Non-audit services provided by PwC Denmark amounted to DKK 5 million in 2022 relating to advisory services in relation to legal disputes, assur- ance and advisory in relation to ESG, various tax advisory services and other advisory services. Non-audit services provided by PwC Denmark did not exceed 70% of the audit fees in accordance with EU audit legislation. The carrying amount of the investment was DKK 50 million at 31 Decem- ber 2022 (2021: DKK 63 million). The Group had the following transac- tions with associates: Associated companies transactions (DKKm) 2022 2021 Sale of services 128 163 Purchase of services 14 18 The Group had the following balances with associates at 31 December: Associated companies balances (DKKm) Receivables Payables 2022 2021 19 26 1#8282 DSV Annual Report 2022 Consolidated financial statements 2022 6.6 Contingent liabilities and security for debt Contingent liabilities Accounting policies Contingent liabilities comprise possible obligations which have not yet been confirmed, are uncertain or cannot be measured reliably, but which, if realised, may result in a drain on the Group's resources. Obligations are recognised in the financial statements only to the extent that the criteria for recognising a provision are met. Management judgements and estimates Management applies judgements in assessing the existence of contingent liabilities on an ongoing basis and in this regard considers if the criteria for recognising a provision are met. These judgements may involve advice from external experts, legal advisors, etc. Contingent liabilities As an international transport service provider, the Group is regularly in- volved in tax and VAT disputes, legal proceedings or inquiries from compe- tition authorities. Management believes that the cases currently identified will have no material impact on the financial position of the Group. A detailed disclosure of individual contingent liabilities is considered im- practicable and is therefore not included in the notes to the financial statements. Security for debt Bank guarantees As part of its ordinary operations, DSV has provided bank guarantees to authorities, suppliers, etc. The counterparties may claim appropriation of collateral if DSV fails to pay any amount due. Pledges At 31 December 2022, property, plant and equipment and other financial assets with a carrying value of DKK 30.9 million were pledged as security (2021: DKK 140.9 million). The carrying amount of debt secured by pledges amounted to DKK 0 million (2021: DKK 64 million). Contracts DSV has concluded IT service contracts. Costs related to these contracts are recognised as the services are provided. = III#8383 DSV Annual Report 2022 Consolidated financial statements 2022 Definition of key figures and ratios Key figures Net interest- bearing debt Net working capital Invested capital Adjusted earnings Net financial expenses Special items Adjusted free cash flow = Interest-bearing debt less interest-bearing assets and cash and cash equivalents Receivables and other current operating assets less trade payables and other payables and other current operating liabilities = NWC + property, plant and equipment, ROU assets, intangible assets including goodwill and customer rela- tionships less long-term provisions = The DSV A/S shareholders' share of profit for the re- porting period adjusted for amortisation and impairment of goodwill and customer relationships, costs related to share-based payments and special items. The tax effect of the adjustments has been taken into account Financial income less financial expenses Exceptional items of income or expense which by nature are not related to the Group's ordinary operation or investments in future activities. See note 2.7 for addi- tional details on items included Free cash flow adjusted for net acquisition of subsidiar- ies and activities, lease liability repayments, special items and normalisation of working capital in subsidiar- ies and activities acquired Key figures and ratios are disclosed in accordance with 'Recommendations & Ratios' published by the Danish Finance Society, except for financial ratios marked with (*), as these are either derived or not included in the Recommendations. Earnings per share and diluted earnings per share are disclosed in accordance with IAS 33. Environmental, social and govern- mental key figures and ratios are defined in the DSV Sustainability Report 2022 to which reference is made. = III Financial ratios Share ratios Gross margin Gross profit * 100 Revenue Earnings per share Profit attributable to the shareholders of DSV A/S Average number of shares Operating margin Operating profit (EBIT) before special items * 100 Revenue Diluted earnings per share Profit attributable to the shareholders of DSV A/S Average number of shares diluted Conversion ratio Effective tax rate* Return on invested capital before tax Return on equity Solvency ratio Gearing ratio* Operating profit (EBIT) before special items * 100 Gross profit Tax on profit for the year * 100 Profit before tax Operating profit (EBIT) before special items * 100 Average invested capital Profit attributable to the shareholders of DSV A/S * 100 Average equity excluding non-controlling interests Equity excluding non-controlling interests * 100 Total assets Net interest-bearing debt Operating profit before amortisation, depreciation (EBITDA) before special items Diluted adjusted earnings per share Number of shares Average number of shares Average number of shares diluted Adjusted earnings Average number of shares diluted Total number of shares outstanding excluding treasury shares at the reporting date Average number of shares outstanding during the reporting period Average number of shares outstanding during the reporting period including share options, but excluding out-of-the-money options measured relative to the average share price for the period#8484 DSV Annual Report 2022 Consolidated financial statements 2022 = III Ownership Country share Activity Group company overview Company Country Ownership share Activity Company Europe (continued) DSV Solutions N.V. Belgium 100.00% DSV Logistics N.V. Belgium 100.00% DSV Road N.V. Belgium 100.00% Europe (continued) DSV Real Estate Duisburg A/S DSV Road Holding A/S DSV Road A/S Denmark 100.00% Denmark 100.00% DSV Air & Sea EOOD DSV Road EOOD Belgium 99.90% Bulgaria 100.00% Bulgaria 100.00% Croatia 100.00% Denmark 100.00% Denmark 100.00% Denmark 100.00% Denmark 100.00% Estonia 100.00% Finland 100.00% Finland 100.00% Finland 100.00% The overview below is a list of companies in the DSV Group at 31 December 2022 showing the companies by segment and not by legal structure. MCI Brokers N.V. DSV Hrvatska d.o.o. Panalpina Business Services (Prague), s.r.o. Activity: Air & Sea Road Solutions Group DSV Air & Sea s.r.o. Panalpina Czech S.R.O. Company Country Ownership share Activity GIL Czech Republic s.r.o. DSV Air & Sea Czech Republic s.r.o. DSV Solutions s.r.o. Parent DSV Road a.s. DSV A/S Denmark Subsidiaries Europe Austria 100.00% Austria 100.00% DSV Insurance A/S DSV Group Services A/S DSV Shop Hub A/S DSV FS A/S Anpartselskabet af 25. januar 2017 DSV Real Estate Ringsted A/S DSV Air & Sea Holding A/S DSV Air & Sea A/S Czech Republic 100.00% Czech Republic 100.00% Czech Republic 100.00% Czech Republic 100.00% Czech Republic 100.00% Czech Republic 100.00% Czech Republic 100.00% Denmark 100.00% Denmark 100.00% Denmark 100.00% Denmark 100.00% Denmark 100.00% Denmark 100.00% Denmark 100.00% Denmark 100.00% Denmark 100.00% Denmark 100.00% Denmark 100.00% Denmark 100.00% DSV Real Estate Horsens A/S DSV Real Estate Hedeland 5 A/S DSV Road Services A/S DSV Estonia AS DSV Air & Sea Oy DSV Solutions Oy DSV Road Oy DSV Air & Sea SAS DSV International Air & Sea France DSV Solutions SAS DSV Road Holding S.A. DSV Road SAS ING REEIF WAT TRELOS DSV Group Services GmbH DSV Air & Sea Germany GmbH DSV Air & Sea Deutschland GmbH DSV Real Estate Duisburg A/S - German Branch DSV Solutions Group GmbH DSV Solutions GmbH France 100.00% France 100.00% France 100.00% France 100.00% France 100.00% France 100.00% Germany 100.00% Germany 100.00% Germany 100.00% DSV Air & Sea GmbH GIL Austria GmbH in Liquidation Germany 100.00% Germany 100.00% DSV Road GmbH Austria 100.00% Germany 100.00% DSV Air & Sea NV Panalpina World Transport N.V. AD Handling NV Belgium 100.00% Belgium 100.00% Belgium 100.00% DSV Ocean Transport A/S PC KH APS ABX Worldwide Holdings NV/SA DSV Road Holding NV DSV Air & Sea Belgium NV Belgium 100.00% DSV Air & Sea Denmark ApS Agility A/S DSV Stuttgart GmbH & Co. KG DSV Stuttgart Verwaltung GmbH Administration & Accounting Service GmbH Germany 100.00% Germany 100.00% Germany 100.00% Belgium 100.00% DSV Solutions Holding A/S Denmark 100.00% DSV Road GmbH Belgium 100.00% DSV HELLAS S.A. DSV Solutions A/S Denmark 100.00% Germany 100.00% Greece 100.00%#8585 DSV Annual Report 2022 Consolidated financial statements 2022 = III Ownership Country share Activity Ownership Company Country share Activity Company Ownership Country share Activity Company Europe (continued) UTi Networks Limited Guernsey 100.00% DSV Air & Sea Hungary Kft. Hungary 100.00% DSV Solutions Hungary Kft. Hungary 100.00% Europe (continued) DSV Air Services DSV Lead Logistics B.V. Agility Logistics International BV DSV Hungaria Kft. Hungary 100.00% DSV Air & Sea Limited Ireland 100.00% Panalpina World Transport (Ireland) Ltd. Ireland 100.00% DSV GIL Ireland Limited Ireland 100.00% LEP Shannon Ltd. Ireland 100.00% DSV Air & Sea (Ireland) Limited DSV Solutions Ltd. Ireland 100.00% Ireland 100.00% UTI Inventory Management Solu- tions Limited DSV Road Limited DSV S.p.A. Ireland 100.00% Ireland 100.00% Italy 100.00% GeoLogistics European Holdings B.V. Telmidas AMS B.V. TransOceanic Holdings BV DSV Finance B.V. African Investments BV UTI (Netherlands) Holdings BV DSV Air & Sea Nederland B.V. DSV Shared Services B.V. DSV Solutions Holding B.V. DSV Solutions Nederland B.V. IMS Holdings BV UTi Italy SrL Italy 100.00% Panalpina Trasporti Mondiali S.p.A. Italy 100.00% DSV Real Estate S.p.A. DSV Air & Sea Italy S.r.l. Italy 89.75% Italy 100.00% DSV Solutions S.R.L. Italy 100.00% DSV Real Estate Novara S.r.l. Italy 66.00% DSV Real Estate Modena S.r.l. Italy 100.00% DSV Road S.R.L. Italy 100.00% DSV Multi-Channel Fulfilment B.V. DSV Solutions (Moerdijk) B.V. DSV Real Estate Dallas Holding B.V. DSV Real Estate Venlo 5 B.V. DSV Real Estate Maastricht B.V. DSV Real Estate Moerdijk B.V. DSV Moerdijk Project B.V. DSV Road Holding N.V. DSV Road B.V. DSV Real Estate Verona S.r.l. Italy 100.00% UTi Kazakhstan LLP GIL Kazakhstan LLP DSV Latvia SIA DSV Lithuania UAB DSV Air & Sea S.A. XB Luxembourg Holdings 1 SA Kazakhstan 100.00% Kazakhstan 100.00% Latvia 100.00% Lithuania 100.00% Luxembourg 100.00% Luxembourg 100.00% DSV Road AS DSV ROAD DOOEL Skopje DSV Air & Sea AS Panalpina AS GIL Norway AS DSV Solutions AS Luxembourg 100.00% Netherlands 100.00% Netherlands 100.00% Netherlands 100.00% Netherlands 100.00% Netherlands 100.00% Netherlands 100.00% Netherlands 100.00% Netherlands 100.00% Netherlands 100.00% Netherlands 100.00% Netherlands 100.00% Netherlands 100.00% Netherlands 100.00% Netherlands 100.00% Netherlands 100.00% Netherlands 100.00% Netherlands 100.00% Netherlands 100.00% Netherlands 100.00% Netherlands 100.00% Netherlands 100.00% Netherlands 100.00% North Macedonia 100.00% Norway 100.00% Europe (continued) DSV International Shared Services Sp. z o.o. Poland 100.00% DSV Real Estate Warsaw Sp. z o.o. DSV Real Estate Warsaw II Sp. z o.o. DSV Air & Sea Sp. z o.o. Panalpina Polska Sp. z o.o. GIL POLAND Sp. z o.o. Poland 100.00% Poland 100.00% Poland 100.00% Poland 100.00% Poland 100.00% DSV Air & Sea Poland Sp. z o.0. DSV Services Sp. z o.o. DSV Road Sp. z O.O. DSV Solutions Sp. z o.o. Poland 100.00% Poland 100.00% Poland 100.00% Poland 100.00% DSV Group Services Unipessoal, Lda DSV Air & Sea Portugal, LDA DSV Solutions, Lda. Portugal 100.00% Portugal 100.00% Portugal 100.00% DSV SGPS, Lda. Portugal 100.00% DSV Transitarios, Lda. Portugal 100.00% DSV Air & Sea SRL GIL AIR&SEA S.R.L. DSV Solutions S.R.L. DSV Road S.R.L. DSV Road d.o.o. Romania 100.00% Romania 100.00% Romania 100.00% Romania 100.00% DSV Solutions Slovakia s. r. o. DSV Air & Sea Slovakia s.r.o. DSV Real Estate Bratislava s.r.o. DSV Slovakia, s.r.o. Norway 100.00% DSV Transport d.o.o. Serbia 100.00% Slovakia 100.00% Slovakia 100.00% Slovakia 100.00% Slovakia 100.00% Slovenia 100.00% Norway 100.00% Norway 100.00% Norway 100.00% Tacisa Transitaria S.L. DSV Air & Sea International, S.L.U. DSV Solutions Spain S.A.U. Spain 100.00% Spain 100.00% Spain 100.00%#8686 DSV Annual Report 2022 Consolidated financial statements 2022 = III Ownership Ownership Company Country share Activity Company Ownership Country share Activity Company Country share Activity Europe (continued) Servicios Logisticos Integrados SLI, S.A. Spain 100.00% DSV Road Spain S.A.U. Spain 100.00% DSV Holding Spain S.L. DSV Air & Sea, S.A.U. DSV Air & Sea AB Spain 100.00% Spain 100.00% Sweden 100.00% DSV Air & Sea Nordic AB Agility AB DSV Solutions AB DSV Real Estate Landskrona 2 AB Sweden 100.00% Sweden 100.00% Sweden 100.00% Sweden 100.00% DSV Real Estate Helsingborg AB DSV Group AB DSV Road AB Göinge Frakt EK DSV Road Property Holding AB GIL Switzerland 4 AG Panalpina Welttransport Holding AG DSV Corporate Services AG Panalpina International AG Sweden 100.00% Sweden 100.00% Sweden 100.00% Sweden 100.00% Sweden 100.00% Switzerland 100.00% Switzerland 100.00% Switzerland 100.00% Switzerland 100.00% Europe (continued) DSV Road & Solutions A.S. Panalpina World Transport Ltd. DSV Logistics LLC Agility Logistics LLC DSV GIL Holding Limited DSV Air & Sea Limited UTI (UK) Holdings Ltd. UTI Worldwide (UK) Ltd. Panalpina World Transport Ltd. DSV GIL UK Limited DSV GIL Fairs & Events Limited DSV GIL Pension Trustees Limited DSV Air & Sea 2018 (UK) Limited DSV Lead Logistics Limited DSV GIL Solutions Limited DSV GIL Management Limited DSV Peterborough Real Estate Limited Panalpina Global Employment Services AG Switzerland 100.00% Panalpina Air & Ocean AG in liquidation DSV Air & Sea AG GIL Switzerland 1 AG GIL Switzerland 2 AG GIL Switzerland 3 AG DSV Logistics S.A. Switzerland 100.00% Switzerland 100.00% Switzerland 100.00% Switzerland 100.00% Switzerland 100.00% Switzerland 100.00% DSV Pension Trustees Ltd. DSV Solutions Ltd. DFDS Transport Ltd. DSV Air & Sea A.S. DSV International Hava ve Deniz Taşimaciliği Ltd.Şirketi Türkiye 100.00% Türkiye 100.00% DSV Real Estate Tamworth Ltd. United Kingdom 100.00% United Kingdom 100.00% United Kingdom 100.00% United Kingdom 100.00% United Kingdom 100.00% DSV Real Estate Thrapston Limited DSV Road Holding Ltd. DSV Commercials Ltd. DSV Road Ltd. Global Options Worldwide Express (Ltd) Türkiye 100.00% Ukraine 100.00% Ukraine 100.00% Ukraine 100.00% United Kingdom 100.00% United Kingdom 100.00% United Kingdom 100.00% United Kingdom 100.00% United Kingdom 100.00% United Kingdom 100.00% United Kingdom 100.00% United Kingdom 100.00% United Kingdom 100.00% United Kingdom 100.00% United Kingdom 100.00% United Kingdom 100.00% United Kingdom 100.00% United Kingdom 100.00% United Kingdom 100.00% United Kingdom 100.00% United Kingdom 100.00% North America GeoLogistics Holdings (Bermuda) Limited DSV Air & Sea Inc. DSV Solutions Inc. DSV Road, Inc. DSV Air & Sea, S.A. de C.V. DSV International Shared Services S.A. de C.V. TransOceanic Shipping Co. S. de RL de C.V. DSV Solutions S.A. de C.V. DSV Road, S.A. de C.V. DSV 4PL Inc. DSV Air & Sea Holding Inc. DSV Air & Sea Inc. Agility Fairs and Events Logistics LLC DSV Air & Sea International Holding Inc. DSV Solutions, LLC DSV Inventory Management Solutions Inc. DSV Real Estate Dallas Inc. Market Industries LLC Sammons Transportation, Inc. DSV Road, Inc. Bermuda 100.00% Canada 100.00% Canada 100.00% Canada 100.00% Mexico 100.00% Mexico 100.00% Mexico 100.00% Mexico 100.00% Mexico 100.00% United States 100.00% United States 100.00% United States 100.00% United States 100.00% United States 100.00% United States 100.00% United States 100.00% United States 100.00% United States 100.00% United States 100.00% United States 100.00% South America UTi Logistics Argentina S.A. DSV Air & Sea S.A. DSV Solutions Brasil Serviços de Logística Ltda. Argentina 100.00% Argentina 100.00% Brazil 100.00%#8787 DSV Annual Report 2022 Consolidated financial statements 2022 Ownership Ownership = III Ownership Company Country share Activity Company Country share Activity Company Country share Activity South America (continued) DSV Air & Sea Brasil Ltda. UTi Worldwide Inc. UTI Logistics (Proprietary) Limited Thomas International Freight Auditors Limited UTi Kazakhstan Investments Ltd Agility (Asia/Pacific) Limited PWC Global Logistics Holdings Ltd DSV Air & Sea (Latin America) Holding S.A. DSV Air & Sea S.A. Panalpina Chile Transportes Brazil 100.00% 100.00% Brit. Virgin Islands Brit. Virgin Islands 100.00% South America (continued) DSV Air & Sea S.A. Agility Logistics Peru S.A. DSV Air & Sea (PR) Inc. Brit. Virgin Islands 100.00% Brit. Virgin Islands 100.00% Brit. Virgin Islands 100.00% Brit. Virgin Islands 100.00% Arabella Shipping Ltd Peru 100.00% Peru Puerto Rico Saint Vincent And The Grenadines 100.00% 100.00% Asia (continued) Zhejiang DSV supply chain management CO.,LTD DSV Air & Sea Ltd. Pantainer (H.K.) Ltd. China 100.00% Hong Kong 100.00% Hong Kong 100.00% 100.00% DSV Air & Sea Uruguay - Servicios Logisticos SA Prime Cargo (H.K.) Ltd. Agility Logistics Limited Hong Kong 100.00% Uruguay 100.00% Hong Kong 100.00% Panalpina Uruguay Transportes Mundiales S.A. Chile 100.00% Panalpina Zona Franca S.A. Uruguay 100.00% Uruguay 100.00% GIL Integration Hong Kong 1 Limited ECT Transport Limited Hong Kong 100.00% Hong Kong 100.00% Chile 100.00% Asia Mundiales Ltda. Chile 100.00% Agility Logistics Corp. Holding SpA Chile 100.00% DSV Air & Sea Ltd. Agility Ltd. Bangladesh 100.00% Bangladesh 100.00% Agility Logistics Chile SA Chile 100.00% DSV Air & Sea S.A.S. Agility Logistics Colombia S.A.S. AGENCIA DE ADUANAS DSV S.A.S. NIVEL 1 DSV Solutions S.A.S. Colombia 100.00% UTI Pership (Pvt) Limited - Bangladesh Branch (BDT) Colombia 100.00% DSV Air & Sea S.A. GIL 1 (Curaçao) N.V. DSV AIR & SEA DOMINICANA, S.R.L. DSV-AIR&SEA S.A. DSV Air & Sea, S.A. de C.V. Curacao Dominican Colombia 100.00% Colombia 100.00% Costa Rica 100.00% 100.00% Republic 100.00% Ecuador 100.00% DSV Air & Sea (Cambodia) Co., Ltd. Prime Cargo (Cambodia) Co., Ltd. GIL Integration 1 (Cambodia) Co., Ltd. DSV Air & Sea Co., Ltd. UTi Worldwide Co. Ltd. - Cambodia Branch (USD) DSV Air & Sea Co., Ltd. DSV Air & Sea Co., Ltd. (South East China) Bangladesh 100.00% Cambodia 100.00% Cambodia 100.00% Cambodia 100.00% Cambodia 100.00% GIL Shared Services Private Limited DSV Air & Sea Pvt. Ltd. DSV Air & Sea International Private Limited Hong Kong 100.00% Hong Kong 100.00% India 100.00% India 100.00% DSV Solutions Limited DSV Air & Sea (HK) Ltd. Panalpina World Transport Ltd. Panalpina China Ltd. Hong Kong 100.00% Hong Kong 100.00% India 100.00% Cambodia 100.00% China 100.00% DSV Coload & Clearance Pvt. Ltd. DSV Solutions Private Limited PT. DSV Transport Indonesia PT GIL Solusi Indonesia PT DSV Solutions Indonesia PT Synergy Indonesia India 100.00% India 100.00% Indonesia 100.00% Indonesia 100.00% Indonesia 100.00% Indonesia 100.00% El Salvador 100.00% DSV Air & Sea PA Inc. Panama 100.00% DSV Air & Sea Co., Ltd. (China) Baisui United Logistics (Shanghai) Co. Ltd. China 100.00% China 100.00% Panalpina SEM, S.A. Panama 100.00% Panalpina S.A. Panama 100.00% Agility Logistics (Shanghai) Limited DSV Logistics Co., Ltd. Almacenadora Mercantil S.A. Panama 100.00% Panalpina World Transport (PRC) Ltd. China 100.00% China 100.00% China 100.00% China 100.00% PT Sarana Prima Optima DSV Air & Sea Japan GK DSV Air & Sea Co., Ltd. DSV Solutions Co., Ltd. DSV Air & Sea Ltd. DSV Solutions Ltd. Indonesia 100.00% Japan 100.00% Japan 100.00% Japan 100.00% Korea 100.00% Korea 100.00% DSV Air & Sea International Ltd. Korea 100.00%#8888 DSV Annual Report 2022 Consolidated financial statements 2022 Ownership Company Country share Activity Company Country Ownership share Activity Company Asia (continued) = III Ownership Country share Activity Philippines 100.00% Philippines 100.00% Philippines 100.00% Singapore 100.00% Singapore 100.00% DSV Air & Sea Ltd. Panalpina World Transport (Vietnam) Co. Ltd. DSV Solutions Co., Ltd Thailand 100.00% Vietnam 99.00% Vietnam 100.00% Agility Logistics Vietnam Company Ltd. Agility Ltd Vietnam 100.00% Vietnam 71.00% Vietnam 100.00% Asia (continued) DSV Air and Sea Limited Macao 100.00% DSV Air & Sea Sdn. Bhd. Malaysia 100.00% Panalpina Customs Services (M) SDN BHD Litvest Corporation Sdn Bhd DSV Solutions (DC) Sdn. Bhd. GOCT Logistics Sdn Bhd Malaysia 100.00% Malaysia 100.00% Malaysia 100.00% Malaysia 100.00% DSV Shared Services Asia Sdn Bhd Malaysia 100.00% Logik Pengurusan Sdn Bhd DSV Logistics Sdn. Bhd. DSV SOLUTIONS SDN. BHD. Panalpina Transport (Malaysia) Sdn. Bhd. DSV Inventory Management Solutions Sdn. Bhd. DSV Air & Sea (Myanmar) Limited DSV Air and Sea Pakistan (SMC- Private) Limited DSV SOLUTIONS (PRIVATE) LIMITED DSV Air & Sea Limited Malaysia 100.00% Malaysia 100.00% Malaysia 100.00% Asia (continued) Panalpina World Transport (Philippines) Inc. DSV Global Solutions Inc. GIL Logistics Distribution Inc. Agility Logistics Holdings Pte Ltd Agility Logistics Holdings (S) Pte. Ltd. DSV Singapore Real Estate Holding Pte. Ltd. DSV Air & Sea Pte. Ltd. Malaysia 100.00% Malaysia 100.00% Myanmar 100.00% Agility International Logistics Pte. Ltd. Agility Fairs & Events Logistics Pte. Ltd. China Baisui Logistics Pte Ltd ABX LOGISTICS Singapore PTE LTD DSV Solutions Pte Ltd. DSV Air & Sea Singapore Pte. Ltd. DSV Inventory Management Solutions Pte. Ltd Singapore 100.00% Singapore 100.00% Pakistan 100.00% Pakistan 100.00% Papua New UTi Pership (Pvt) Limited DSV Pership (Private) Limited DSV Air & Sea Co., Ltd. Guinea 100.00% Panalpina Global Business Services (GBS) Philippines UTI Holding Co., Ltd. Philippines 100.00% DSV International Shared Services Inc. Philippines 100.00% DSV Air & Sea (Taiwan) Ltd. DSV Solutions Co., Ltd. Singapore 100.00% Sri Lanka 51.00% Sri Lanka 40.00% Taiwan 100.00% Taiwan 100.00% Taiwan 100.00% Taiwan 100.00% DSV Air & Sea Inc. Philippines 100.00% GIL Holding Co Inc. GIL Logistics Holding Inc. GIL International Logistics Inc. DSV Logistics Solutions Philippines, Inc. DSV SHARED SERVICES MANILA (ROHQ) Philippines 100.00% Philippines 100.00% Philippines 100.00% Philippines 100.00% Philippines 100.00% DSV Holding (Thailand) Co., Ltd. Panalpina World Transport (Thailand) Ltd. Panalpina Asia-Pacific Services (Thailand) Ltd. Supreme Eliga Co. Ltd. Agility Co. Ltd. DSV Solutions Ltd. Thailand 100.00% Thailand 100.00% Thailand 100.00% Thailand 100.00% Thailand 100.00% Singapore 100.00% Singapore 100.00% Singapore 100.00% Singapore 100.00% Singapore 100.00% Singapore 100.00% Thailand 100.00% DSV Air & Sea Vietnam Limited Inventory Management Solutions Vietnam Limited Middle East Agility Logistics Limited Panalpina Central Asia EC - Azerbaijan Branch DSV W.L.L. Panalpina Central Asia EC DSV Solutions B.S.C Closed Panalpina Georgia LLC Al-Alb Co. for General Transportation (PLLC) Agility Kurdistan Company for Administration of Warehouses and Facilitate Storage Process Limited The Warehousing Company for Shipping, Discharging and Custom Clearance LLC DSV Air & Sea Ltd. DSV Marine Insurance Agency Ltd. Hermes Exhibition & Projects Limited DSV E-COMMERCE LTD. DSV Solutions Ltd Vietnam 100.00% Afghanistan 100.00% Azerbaijan 100.00% Bahrain 100.00% Bahrain 100.00% Bahrain 100.00% Georgia 100.00% Iraq 100.00% Iraq 67.50% Iraq 100.00% Israel 100.00% Israel 100.00% Israel 100.00% Israel 100.00% Israel 100.00%#8989 DSV Annual Report 2022 Consolidated financial statements 2022 Company Ownership Country share Activity Company Country Ownership share Activity Company = III Ownership Country share Activity Middle East (continued) U.T.I.-Inventory Management Solutions Limited partnership UTI IMS Ltd. DSV Air & Sea Jordan Public warehousing Company -Jordan PSC Middle East (continued) DSV Panalpina Marine Shipping W.L.L. Qatar 100.00% Israel 100.00% Israel 100.00% Jordan 100.00% Panalpina World Transport (Saudi Arabia) Ltd. DSV Solutions for Logistics Services Company Saudi Arabia 100.00% Jordan 100.00% Public Warehousing Company for Storage and Distribution Services GIL INTERNATIONAL HOLDINGS I LIMITED Jordan 100.00% GIL INTERNATIONAL HOLDINGS II LIMITED Public warehousing Company -Jordan PSC - Aqaba Branch Jordan 100.00% GIL INTERNATIONAL HOLDINGS III LIMITED DSV Holding for Company Business Management W.L.L Kuwait 100.00% DSV Air & Sea (LLC) Global Logistics for General Trading and Contracting Co. WLL Kuwait 100.00% DSV Solutions DWC-LLC DSV Air & Sea Co. W.L.L. DSV A&S for Shipping and Transport W.L.L Muroona Logistics Solution Co. for General Trading of Equipments, Supplier for Construction and Real Estate WLL Kuwait 49.00% Kuwait 100.00% Panalpina Jebel Ali Ltd. DSV Gulf Customs Broker LLC Kuwait 100.00% DSV Air and Sea DWC-LLC DSV Solutions for Warehousing and Third Party Inventory S.P.C GIL Logistics Cargo Transport W.L.L Kuwait 100.00% Kuwait 100.00% DSV Air and Sea Middle East DWC-LLC DSV Solutions PJSC Agility Freight Forwarding (Lebanon) SARL PWC Trading and contracting Lebanon SAL (Holding) PWC Lebanon (Holding) SAL PWC investments (Lebanon) SARL DSV Air and Sea LLC Global Logistics (Oman) LLC Panalpina Qatar WLL Lebanon 100.00% Saudi Arabia United Arab Emirates United Arab Emirates United Arab Emirates 100.00% United Arab Emirates United Arab Emirates United Arab Emirates United Arab Emirates United Arab Emirates United Arab Emirates United Arab Emirates 49.00% United Arab 100.00% 100.00% 100.00% Oceania DSV Air & Sea Pty. Ltd. DSV Solutions Pty. Ltd. A.C.N. 116 779 876 PTY LTD A.C.N. 004 265 721 PTY LTD A.C.N. 007 430 935 PTY LTD A.C.N. 078 189 296 PTY LTD A.C.N. 082 751 460 PTY LTD A.C.N. 144 885 156 PTY LTD DSV Air & Sea Limited 100.00% Australia 100.00% New Zealand 100.00% Australia 100.00% Australia 100.00% Australia 100.00% Australia 100.00% Australia 100.00% Australia 100.00% Australia Africa 100.00% 100.00% 100.00% 49.00% 100.00% 100.00% Agility Maghreb Sarl Agility Logistics SARL Frans Maas Algerie S.a.r.l. Panalpina Transportes Mundiais Navegaçao e Trânsitos S.A.R.L. Global Integrated Logistics Lda DSV Air & Sea (PTY) Limited Panalpina Transports Mondiaux Cameroun S.A.R.L. DSV-UTI Egypt Ltd. Botswana Algeria 49.00% Algeria 100.00% Algeria 100.00% Angola 49.00% Angola 100.00% 100.00% DSV Solutions L.L.C. Lebanon 100.00% Lebanon 100.00% Lebanon 100.00% DSV Solutions MENA FZE DSV Road and Transport L.L.C Oman 70.00% Oman 50.00% DSV Solutions - FZE Emirates United Arab Emirates 99.00% Emirates 100.00% United Arab Emirates 100.00% United Arab GIL Egypt Limited Liability Company DSV Solutions S.A.E. Global Options Worldwide Express Investments (Pty) Ltd Panalpina Transports Mondiaux Gabon S.A. DSV Air & Sea Limited Cameroon 90.00% Egypt 100.00% Panalpina World Transport Egypt LLC Egypt 100.00% Egypt 100.00% Egypt 100.00% Eswatini 100.00% Gabon 89.78% Kenya 100.00% 100.00% Panalpina Kenya Ltd. Kenya 100.00% Qatar 49.00%#9090 DSV Annual Report 2022 Consolidated financial statements 2022 Ownership Company Country share Activity Company Country Ownership share Africa (continued) DSV Air & Sea Limited GIL Africa Holdings Ltd Panalpina Morocco S.A.R.L. Malawi 100.00% Mauritius 100.00% Morocco 100.00% Africa (continued) DSV Road (Pty) Ltd. Globeflight Worldwide Express (SA) Pty Ltd South Africa 100.00% Global Integrated Logistics Company SARL AU Morocco 100.00% DSV Transport Int'l S.A Morocco 100.00% Mozambique 100.00% Mercury Couriers (Pty) Ltd DSV Air & Sea Limited DSV Air & Sea Limited South Africa 100.00% South Africa 100.00% Tanzania 100.00% Uganda 100.00% Agility Logistics Limited Uganda 100.00% Mozambique 100.00% Swift Freight International (Zambia) Ltd. DSV Air & Sea Limitada GIL Mozambique, LDA Globeflight Worldwide Express (Pty) Ltd DSV Freight International Limited DSV Air and Sea (Proprietary) Limited DSV South Africa (Pty) Ltd. DSV Shared Services (Pty) Ltd. UTi Logistics (Proprietary) Limited - SC OCS Division Namibia 100.00% Nigeria 100.00% South Africa 100.00% South Africa 75.00% South Africa 100.00% DSV Air & Sea Limited DSV Air & Sea (Private) Limited Associates Zambia 100.00% Zambia 100.00% Zimbabwe 100.00% Trans-Link Cambodia Ltd Cambodia 49.00% GT Stevedores Oy South Africa 100.00% KM Logistik GmbH DSV AFRICA HOLDING (Pty) Ltd. DSV Skyservices (Pty) Ltd Scorpion Share Block (Pty) Ltd. Marine Link (Pty) Ltd. South Africa 100.00% IDS Logistik GmbH South Africa 100.00% South Africa 100.00% Tristar Transport (Private) Limited ATS Air Transport Service AG Finland 25.50% Germany 35.00% Germany 28.00% Pakistan Switzerland 50.00% 48.00% South Africa 100.00% United Arab DSV Real Estate Johannesburg (Pty) Ltd. South Africa 100.00% Polymer Logistics Investments LLC Key Logistics, Inc. Emirates 36.50% United States 49.00% Firefly Investments 337 Properties Proprietary Limited Linkit Investments (Pty) Ltd. GIL South Africa 1 (Pty) Ltd DSV Healthcare (Pty) Ltd. DSV Solutions (Pty) Ltd. DSV Assembly Services (Pty) Ltd. DSV Mounties (Pty) Ltd. South Africa 100.00% South Africa 80.00% South Africa 100.00% South Africa 100.00% South Africa 100.00% 65.30% South Africa South Africa 100.00% Activity = III#9191 DSV Annual Report 2022 Statements Statement by the Board of Directors and the Executive Board The Board of Directors and Executive Board have today considered and adopted the Annual Report of DSV A/S for the financial year 1 January to 31 December 2022. The Annual Report has been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standard Board (IASB) and in accordance with IFRS as adopted by the EU and further requirements in the Danish Financial Statements Act. In our opinion, the Consolidated Financial Statements and the Parent Company Financial Statements give a true and fair view of the financial position of the Group and the Parent Company at 31 December 2022 and of the results of the Group and Parent Company operations and cash flows for the financial year 2022. = III In our opinion, the annual report of DSV A/S for the financial year 1 January to 31 December 2022 with the file name DSV-2022-12-31-en.zip is prepared, in all material respects, in compliance with the ESEF Regulation. In our opinion, Management's commentary includes a true and fair account of the development in the operations and financial circumstances of the Group and the Parent Company, of the results for the year and of the financial position of the Group and the Parent Company as well as a de- scription of the most significant risks and elements of uncertainty facing the Group and the Parent Company. We recommend that the Annual Report be adopted at the Annual General Meeting. Hedehusene, 2 February 2023 Executive Board: Board of Directors: Jens Bjørn Andersen CEO Jens H. Lund COO and Vice CEO Thomas Plenborg Chairman Jørgen Møller Deputy Chairman Birgit W. Nørgaard Marie-Louise Aamund Michael Ebbe CFO Beat Walti Niels Smedegaard Tarek Sultan Al-Essa Benedikte Leroy#9292 DSV Annual Report 2022 Statements = III Independent Auditor's reports To the shareholders of DSV A/S Report on the audit of the Financial Statements Our opinion In our opinion, the Consolidated Financial Statements and the Parent Company Financial Statements give a true and fair view of the Group's and the Parent Company's financial position at 31 December 2022 and of the results of the Group's and the Parent Company's operations and cash flows for the financial year 1 January to 31 December 2022 in accord- ance with International Financial Reporting Standards ('IFRS') as issued by the International Accounting Standards Board ('IASB') and in accordance with IFRS as adopted by the EU and further requirements in the Danish Financial Statements Act. Our opinion is consistent with our Auditor's Long-form Report to the Audit Committee and the Board of Directors. What we have audited The Consolidated Financial Statements and Parent Company Financial Statements of DSV A/S for the financial year 1 January to 31 December 2022 comprise income statement and statement of comprehensive income, cash flow statement, balance sheet, statement of changes in equity and notes, including summary of significant accounting policies for the Group as well as for the Parent Company. Collectively referred to as the "Financial Statements". 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 Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We are independent of the Group in accordance with the International Ethics Standards Board for Accountants' International Code of Ethics for Professional Accountants (IESBA Code) and the additional ethical require- ments applicable in Denmark. We have also fulfilled our other ethical re- sponsibilities in accordance with these requirements and the IESBA Code. To the best of our knowledge and belief, prohibited non-audit services referred to in Article 5(1) of Regulation (EU) No 537/2014 were not provided. Appointment We were first appointed auditors of DSV A/S on 9 March 2017 for the financial year 2017. We have been reappointed annually by shareholder resolution for a total period of uninterrupted engagement of six years including the financial year 2022. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the Financial Statements for 2022. These matters were addressed in the context of our audit of the Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Revenue recognition, contract assets and accrued cost of services The Group's revenue consists primarily of services, i.e. transportation of goods between destinations, which by nature is rendered over a period of time. We focused on this area, because at year-end, material contract assets and accrued cost of services exist which involve significant accounting estimates and which are complex by nature, i.e. accrual of income (con- tract assets) and related costs (accrued cost of services), including meth- ods and data applied and assumptions made by Management. The process of accruing for services rendered around the balance sheet date is, there- fore, complex and dependent on relevant IT controls in certain operational IT systems. Moreover in the Air & Sea division, an inherent risk exists regarding estimates for recognising revenue in the right period at year end due to the services being rendered over a lengthier period of time. In addition, we focused on this area because of the significance of re- venue and as revenue comprises a substantial number of transactions, including with different characteristics depending on which business segment the revenue relates to. Reference is made to notes 2.2 and 3.4 in the Consolidated Financial Statements. How our audit addressed the key audit matter Our audit procedures included considering the appropriateness of the accounting policies for revenue recognition applied by Management and assessing compliance with applicable financial reporting standards. We updated our understanding of relevant controls, including Group controlling procedures and IT controls, concerning the timing of revenue recognition, contract assets and accrued cost of services, and evaluated. whether these were designed in line with the Group's accounting policies and were operating effectively. For revenue, contract assets and accrued cost of services, we examined reports concerning services in progress and challenged the assumptions made by Management in this regard. Moreover, we selected a sample of transactions during the year and at year-end, and traced these to underlying evidence to determine whether revenue and the related costs are recognised in the right period.#9393 DSV Annual Report 2022 Statements = III In addition, we applied data analysis in our testing of revenue transactions in order to identify and assess transactions outside the ordinary transaction flow. Deferred tax assets and income tax positions The Group operates in many territories and is, consequently, subject to local laws and cross-border transfer pricing legislation, which complicates the Group's tax matters, and which gives rise to provisions for income tax positions. The Group also carries significant deferred tax assets that consist primarily of tax on provisions made at the balance sheet date and tax loss carryforwards. The utilisation of tax assets is, inherently, uncertain, as they are dependent on the financial development of business activities in certain countries. We focused on this area because the valuation of deferred tax assets and provisions for income tax positions are subject to significant Management estimates, including Management's applied model, data and assumptions. Reference is made to note 5.2 to the Consolidated Financial Statement. How our audit addressed the key audit matter Our audit procedures included considering the appropriateness of the accounting policies and valuation models within the tax accounting area and assessing compliance with applicable financial reporting standards. We also assessed Management's process for identifying and assessing complex income tax transactions as well as deferred tax assets that might not be recoverable. We tested provisions made for income tax positions. As part of this, we reviewed correspondence with tax authorities and discussed methods and data applied as well as assumptions made by Management. In doing so, we used our internal corporate tax specialists. Moreover, we tested Management's assessment of the recoverability of the carrying value of deferred tax assets arising from temporary differ- ences and tax loss carryforwards on the basis of internal forecasts of fu- ture taxable income, and evaluated the assumptions made by Manage- ment in this connection. Statement on Management's Commentary Management is responsible for Management's Commentary Our opinion on the Financial Statements does not cover Management's Com- mentary, and we do not express any form of assurance conclusion thereon. In connection with our audit of the Financial Statements, our responsi- bility is to read Management's Commentary and, in doing so, consider whether Management's Commentary is materially inconsistent with the Financial Statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. Moreover, we considered whether Management's Commentary includes the disclosures required by the Danish Financial Statements Act. Based on the work we have performed, in our view, Management's Com- mentary is in accordance with the Consolidated Financial Statements and the Parent Company Financial Statements and has been prepared in accord- ance with the requirements of the Danish Financial Statements Act. We did not identify any material misstatement in Management's Commentary. Management's responsibilities for the Financial Statements Management is responsible for the preparation of consolidated financial statements and parent company financial statements that give a true and fair view in accordance with International Financial Reporting Standards ('IFRS') as issued by the International Accounting Standards Board ('IASB') and in accord- ance with IFRS as adopted by the EU and further requirements in the Danish Financial Statements Act, and for such internal control as Management deter- mines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the Financial Statements, Management is responsible for assessing the Group's and the Parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless Management ei- ther intends to liquidate the Group or the Parent Company or to cease operations, or has no realistic alternative but to do so. Auditor's responsibilities for the audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that in- cludes 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 Financial Statements. As part of an audit in accordance with ISAs and the additional require- ments 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 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, for- gery, 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 circum- stances, but not for the purpose of expressing an opinion on the ef- fectiveness of the Group's and the Parent Company's internal control. Evaluate the appropriateness of accounting policies used and the rea- sonableness of accounting estimates and related disclosures made by Management. Conclude on the appropriateness of Management's use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions#9494 DSV Annual Report 2022 Statements = III that may cast significant doubt on the Group's and the Parent Compa- ny's ability to continue as a going concern. If we conclude that a mate- rial uncertainty exists, we are required to draw attention in our audi- tor's report to the related disclosures in the Financial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclu- sions 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 or the Parent Company to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the Finan- cial Statements, including the disclosures, and whether the 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 ap- plicable, actions taken to eliminate threats or safeguards applied. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the 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 matters. Report on compliance with the ESEF Regulation As part of our audit of the Financial Statements we performed procedures to express an opinion on whether the annual report of DSV A/S for the financial year 1 January to 31 December 2022 with the filename DSV- 2022-12-31-en.zip is prepared, in all material respects, in compliance with the Commission Delegated Regulation (EU) 2019/815 on the Euro- pean Single Electronic Format (ESEF Regulation) which includes require- ments related to the preparation of the annual report in XHTML format and iXBRL tagging of the Consolidated Financial Statements including notes. Management is responsible for preparing an annual report that complies with the ESEF Regulation. This responsibility includes: . The preparing of the annual report in XHTML format; The selection and application of appropriate iXBRL tags, including ex- tensions to the ESEF taxonomy and the anchoring thereof to elements in the taxonomy, for all financial information required to be tagged using judgement where necessary; Ensuring consistency between iXBRL tagged data and the Consolidat- ed Financial Statements presented in human-readable format; and For such internal control as Management determines necessary to enable the preparation of an annual report that is compliant with the ESEF Regulation. Our responsibility is to obtain reasonable assurance on whether the annual report is prepared, in all material respects, in compliance with the ESEF Regulation based on the evidence we have obtained, and to issue a report that includes our opinion. The nature, timing and extent of procedures selected depend on the auditor's judgement, including the assessment of the risks of material departures from the requirements set out in the ESEF Regulation, whether due to fraud or error. The procedures include: Testing whether the annual report is prepared in XHTML format; Obtaining an understanding of the company's iXBRL tagging process and of internal control over the tagging process; Evaluating the completeness of the iXBRL tagging of the Consolidated Financial Statements including notes; Evaluating the appropriateness of the company's use of iXBRL ele- ments selected from the ESEF taxonomy and the creation of extension elements where no suitable element in the ESEF taxonomy has been identified; Evaluating the use of anchoring of extension elements to elements in the ESEF taxonomy; and Reconciling the iXBRL tagged data with the audited Consolidated Financial Statements including notes. In our opinion, the annual report of DSV A/S for the financial year 1 January to 31 December 2022 with the file name DSV-2022-12-31-en.zip is prepared, in all material respects, in compliance with the ESEF Regulation. Hellerup, 2 February 2023 PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab CVR no 3377 1231 Lars Baungaard State Authorised Public Accountant mne23331 Kim Tromholt State Authorised Public Accountant mne33251#9595 DSV Annual Report 2022 Parent Company financial statements 2022 = III Financial statements Balance sheet 12. Intangible assets 101 Income statement 96 13. Other plant and operating equipment 102 Statement of comprehensive income 96 14. Current receivables from Group entities and other receivables .. 102 Cash flow statement 97 15. Equity reserves 102 Balance sheet 98 16. Financial liabilities 103 Statement of changes in equity .99 17. Payables to Group entities and other payables. 103 18. Deferred tax. 103 Parent Company financial statements 2022 Contents Notes Basis of preparation 1. Accounting policies Supplementary information 19. Share option schemes 104 100 20. Investments in Group entities 104 2. Changes in accounting policies 100 21. Derivative financial instruments 105 3. Management judgements and estimates 100 22. Financial risks 105 4. New accounting regulations 100 23. Contingent liabilities and security for debt 24. Related-party transactions 106 106 Income statement 5. Revenue 100 6. Fees to auditors appointed at the Annual General Meeting 100 7. Staff costs. 100 8. Special items 100 9. Financial income 101 10. Financial expenses 101 11. Income tax 101#9696 DSV Annual Report 2022 Parent Company financial statements 2022 = III Income statement (DKKm) Revenue Gross profit Statement of comprehensive income Note 2022 2021 (DKKm) 2022 2021 5 3,077 2,417 Profit for the year 3,857 5,859 3,077 2,417 Items that may be reclassified to the income statement when certain conditions are met: Fair value adjustments of hedging instruments transferred to financial expenses 1 14 Other external expenses 6 1,533 1,138 Tax on items reclassified to the income statement (8) Staff costs 7 1,411 1,095 Other comprehensive income, net of tax 1 6 Operating profit before amortisation and depreciation (EBITDA) before special items 133 184 Total comprehensive income 3,858 5,865 Amortisation and depreciation 255 268 Operating profit (EBIT) before special items (122) (84) Special items, costs 8 84 251 Financial income Financial expenses Profit before tax Tax on profit for the year 9 5,006 6,543 10 594 212 4,206 5,996 11 349 137 3,857 5,859 Profit for the year Proposed distribution of profit: Proposed dividend per share is DKK 6.50 (2021: DKK 5.50 per share) 1,424 1,320 Transferred to equity reserves 2,433 4,539 Total distribution 3,857 5,859#9797 DSV Annual Report 2022 Parent Company financial statements 2022 Cash flow statement = III (DKKm) Note 2022 2021 (DKKm) Operating profit before amortisation and depreciation (EBITDA) before special items Proceeds from borrowings 133 184 Repayment of borrowings Adjustments: Share-based payments Change in long-term receivables and borrowings, net Note 2022 2021 4,462 11,898 (1,500) 7,116 (828) 19 36 Transactions with shareholders: Change in working capital Special items Dividend received 55 (583) Dividends distributed (185) Dividends on treasury shares (1,320) 43 (920) 28 9 2,930 5,746 Purchase of treasury shares (20,313) (17,841) Interest received 9 227 797 Sale of treasury shares 1,426 2,150 Interest paid, other 10 (161) (212) Cash flow from financing activities (10,086) (5,513) Income tax paid 71 (477) Cash flow for the year (1,023) 1,534 Cash flow from operating activities 3,291 5,270 Cash and cash equivalents 1 January Purchase of intangible assets 12 (236) (230) Cash flow for the year 7,696 (1,023) 6,160 1,534 Purchase of other plant and operating equipment 13 (204) (146) Currency translation 2 Acquisition of subsidiaries and activities 6,212 2,153 Cash and cash equivalents at 31 December 6,673 7,696 Cash flow from investing activities 5,772 1,777 The cash flow statement cannot be directly derived from the balance sheet and income statement. Free cash flow 9,063 7,047#9898 DSV Annual Report 2022 Parent Company financial statements 2022 Balance sheet = III Assets (DKKm) Note 2022 2021 Equity and liabilities (DKKm) Note 2022 2021 Intangible assets 12 710 657 Share capital 219 240 Other plant and operating equipment 13 306 216 Reserves 15 545 488 Investments in Group entities 20 47,874 54,087 Retained earnings 40,385 56,704 Receivables from Group entities and other receivables 24,449 Deferred tax assets 18 24,062 20 Total equity 41,149 57,432 Total non-current assets 73,339 79,042 Borrowings Provisions 16 21,388 27,176 74 Receivables from Group entities and other recievables 14 18,999 18,463 Deferred tax liabilities 18 16 Tax receivables Cash and cash equivalents Total current assets 6,673 25,672 216 7,696 26,375 Total non-current liabilities 21,478 27,176 Borrowings 16 206 1,714 Provisions 145 Total assets 99,011 105,417 Tax payables 168 Payables to Group entities and other payables 17 35,865 19,095 Total current liabilities 36,384 20,809 Total liabilities 57,862 47,985 Total equity and liabilities 99,011 105,417#9999 DSV Annual Report 2022 Parent Company financial statements 2022 Statement of changes in equity (DKKm) Equity at 1 January Profit for the year Other comprehensive income, net of tax Total comprehensive income for the year Transactions with shareholders: Share-based payments Dividends distributed = III 2022 2021 Share capital Reserves* Retained earnings Total equity 240 488 56,704 57,432 Share capital 230 Reserves* Retained earnings Total equity 425 37,920 38,575 52 3,805 1 3,857 1 59 5,800 5,859 6 6 53 3,805 3,858 65 5,800 5,865 36 (1,320) 36 (1,320) Purchase of treasury shares Sale of treasury shares Capital increase Capital reduction (19) (20,295) 2 1,425 (20,313) 1,426 (13) (920) (17,828) (920) (17,841) 2 2,166 2,168 16 24,479 24,495 (21) 21 (6) 6 Transfer of treasury shares as business combination consideration 3 5,073 5,076 Dividends on treasury shares Other adjustments 43 (13) 43 28 28 (13) (14) (14) Total transactions with shareholders Equity at 31 December (21) 4 (20,124) (20,141) 10 (2) 12,984 12,992 219 545 40,385 41,149 240 488 56,704 57,432 * For a specification of reserves, please refer to note 15.#100100 DSV Annual Report 2022 Parent Company financial statements 2022 = III Basis of preparation 1. Accounting policies As the Parent Company of the DSV Group, the financial statements of DSV A/S are separate financial statements disclosed as required by the Danish Financial Statements Act. The separate financial statements have been prepared in accordance with International Financial Reporting Stand- ards (IFRS) as issued by the International Accounting Standards Board (IASB) and additional disclosure requirements in the Danish Financial Statements Act for listed companies. IFRS standards have been applied to the extent these have been adopted by the European Union. The account- ing policies of the Parent Company are identical with the accounting poli- cies for the consolidated financial statements, except for the following: Dividends from investments in subsidiaries Dividends from investments in subsidiaries are recognised as income in the Parent Company's income statement under financial income in the financial year in which the dividends are declared. Investments in subsidiaries in the Parent Company's financial statements Investments in subsidiaries are measured at cost. If there is any indica- tion of impairment, investments are tested for impairment as described in the accounting policies applied by the Group. If the cost exceeds the recoverable amount, the investment is written down to this lower value. Currency translation Foreign currency adjustments of balances considered part of the to- tal net investment in enterprises which have a functional currency other than Danish kroner (DKK) are recognised in the income state- ment of the Parent Company under financials. Development cost reserve In accordance with the Danish Financial Statements Act the reserve for development costs comprises capitalized development costs ad- justed for deferred tax. 2. Changes in accounting policies All amendments to the International Financial Reporting Standards (IFRS) effective for the financial year 2022 have been implemented as basis for preparing the Parent Company financial statements and notes to the statements. None of the implementations have had any material impact on the statements or notes presented. 3. Management judgements and estimates In preparing the Parent Company financial statements, Management makes various accounting judgements that affect the reported amounts and disclo- sures in the statements and in the notes to the financial statements. These are based on professional judgement, historical data and other factors availa- ble to Management. By nature, a degree of uncertainty is involved when car- rying out these judgements and estimates, hence actual results may deviate from the assessments made at the reporting date. Judgements and estimates are continuously evaluated, and the effect of any changes is recognised in the relevant period. The primary financial statements items for which significant accounting judgements and estimates are applied are listed below: Investments in subsidiaries Management assesses annually whether there is an indication of impair- ment of investments in subsidiaries. If so, the investments will be tested for impairment in the same way as Group goodwill, involving various esti- mates on future cash flows, growth, discount rates, etc. On 31 December 2022, no impairment indicators were identified. 4. New accounting regulations The IASB has issued a number of new standards and amendments not yet in ef- fect or adopted by the EU and therefore not relevant for the preparation of the 2022 Parent Company financial statements. These standards and amendments are expected to be implemented when they take effect. None of the new standards or amendments issued are currently expected to have any significant impact on the Parent Company financial statements when implemented. Income statement 6. Fees to auditors appointed at the Annual General Meeting 20 (DKKm) 2022 2021 Statutory audit 7 9 Other assurance services Tax and VAT advisory services Other services 1 1 1 1 4 Total fees 10 16 7. Staff costs For information on remuneration of the Executive Board and the Board of Directors, refer to notes 6.2 and 6.3 to the consolidated financial statements. (DKKm) 2022 2021 Remuneration of the Board of Directors Salaries etc. 7 7 390 332 Intra-group salary charges etc.* Defined contribution pension plans Total staff costs 971 721 43 35 1,411 1,095 Average number of full-time employees 607 507 The intra-group salary charges relate to an average of 1,803 FTEs in 2022 (2021: 1,364). 8. Special items 86 84 251 (DKKm) 2022 2021 Restructuring and integration costs Transaction costs relating to acquisition 84 165 of GIL 5. Revenue Total special items, costs (DKKm) 2022 2021 Intra-group charges 3,077 2,417 Total revenue 3,077 2,417#101101 DSV Annual Report 2022 Parent Company financial statements 2022 = III 9. Financial income Tax on profit for the year specifies as follows: Tax rate specifies as follows: (DKKm) 2022 2021 (DKKm) 2022 2021 (DKKm) 2022 2021 Interest income 227 154 Current tax 326 187 Calculated tax on profit for the year before tax 22.0% 22.0% Interest income from Group entities 831 406 Deferred tax 24 (78) Tax effect of: Currency translation, net 1,018 237 Tax adjustment relating to previous years (1) 28 Dividends from subsidiaries 2,930 5,746 Total tax on profit for the year 349 137 Non-deductible expenses/non-taxable income Tax adjustment relating to previous years (13.7%) (20.2%) 0.0% 0.5% Total financial income 5,006 6,543 Effective tax rate 8.3% 2.3% Interest income includes interest on financial assets of DKK 227 million (2021 DKK 154 million). 10. Financial expenses (DKKm) Interest expenses Interest expenses to Group entities Total financial expenses Balance sheet 12. Intangible assets 2022 2021 161 145 433 67 (DKKm) 594 212 Cost at 1 January Additions 2022 2021 Software in Software progress Total Software Software in progress Total 908 266 1,174 1,004 166 1,170 236 236 230 230 11. Income tax Tax for the year is disaggregated as follows: Interest expenses include interest on financial liabilities measured at amortised cost of DKK 161 million (2021: DKK 145 million). Disposals Reclassifications Total cost at 31 December Total amortisation and impairment at 1 January (141) (141) (226) (226) 174 (174) 130 (130) 941 328 1,269 908 266 1,174 517 517 554 554 Amortisation and impairment for the year 151 151 140 140 (DKKm) 2022 2021 Disposals (109) (109) (177) (177) Tax on profit for the year 349 137 Total amortisation and impairment at 31 December 559 559 517 517 Tax on other comprehensive income 8 Carrying amount at 31 December 382 328 710 391 266 657 Total tax for the year 349 145#102102 DSV Annual Report 2022 Parent Company financial statements 2022 = III 13. Other plant and operating equipment (DKKm) 15. Equity reserves Equity reserves are specified below: 2022 2022 2021 Treasury share Development Cost at 1 January 460 350 (DKKm) reserve Additions 204 146 Reserves at 1 January (6) Hedging reserve (4) cost reserve Total reserves 498 488 Disposals (140) (36) Profit for the year 52 52 Total cost at 31 December 524 460 Total depreciation and impairment at 1 January 244 204 Other comprehensive income, net of tax Transactions with shareholders: 1 1 Depreciation for the year 104 76 Purchase of treasury shares Disposals (130) (36) Sale of treasury shares Total depreciation and Capital reduction impairment at 31 December 218 244 Reserves at 31 December (19) 2 (19) 2 21 21 (2) (3) 550 545 Carrying amount at 31 December 306 216 14. Current receivables from Group entities and other receivables (DKKm) Reserves at 1 January (DKKm) 2022 Receivables from Group entities 18,764 2021 18,138 Profit for the year Other receivables 235 325 Other comprehensive income, net of tax Total 18,999 18,463 Transactions with shareholders: 2021 Treasury share Development reserve (4) Hedging reserve (10) cost reserve 439 Total reserves 425 59 59 6 6 Purchase of treasury shares Sale of treasury shares Capital reduction (13) (13) 2 2 6 6 Transfer of treasury shares as business combination consideration Reserves at 31 December 3 3 (6) (4) 498 488 For a description of equity reserves, please refer to note 4.1 to the consolidated financial statements.#103103 DSV Annual Report 2022 Parent Company financial statements 2022 = III 16. Financial liabilities 17. Payables to Group entities and other payables (DKKm) 2022 2021 Overdraft and credit facilities: (DKKm) Carrying amount Overdraft and credit facilities 16,408 22,036 Payables to Group entities (DKKm) Issued bonds 5,186 6,681 Bond loans Expiry Fixed/floating 2024-2027 2022 2021 Other payables Fixed 5,186 6,681 Other financial liabilities 173 Total 2022 34,901 964 2021 18,364 731 35,865 19,095 Overdraft and Total financial liabilities 21,594 28,890 credit facilities 2023-2036 Fixed Financial liabilities as recognised in the balance sheet: Loans and credit facilities at 31 December Borrowings are subject to standard trade covenants. All financial ratio covenants were observed during the year. The weighted average interest rate was 0.9% (2021: 0.7%). (DKKm) 16,408 21,594 28,717 22,036 18. Deferred tax Non-current liabilities Current liabilities 21,388 206 Financial liabilities at 31 December 21,594 27,176 1,714 28,890 2022 2021 Deferred tax at 1 January 20 (29) Deferred tax for the year (24) 78 Tax adjustments relating to previous years 1 (38) Tax on changes in equity (13) 9 2022 2021 Deferred tax at 31 December (16) 20 Non-cash change Non-cash change Deferred tax as recognised in Beginning Financing activities (DKKm) Overdraft and credit facilities Issued bonds of year 22,036 6,681 Cash flow Acqui- sition Other (5,628) End of year 16,408 Beginning of year 4,045 Cash flow Acqui- sition Other 17,807 184 (1,500) 5 5,186 6,674 7 End of year 22,036 6,681 the balance sheet: Deferred tax liabilities 16 Deferred tax assets 20 Deferred tax, net (16) 20 Lease liabilities 1 (1) Specification of deferred tax: Total liabilities from financing activities 28,717 (7,128) 5 21,594 10,720 17,813 - 184 28,717 Intangible assets (84) (86) Current assets (11) (3) Other non-current liabilities 173 90 173 Other liabilities 79 109 Total financial liabilities 28,890 21,594 10,810 28,890 Deferred tax at 31 December (16) 20#104104 DSV Annual Report 2022 Parent Company financial statements 2022 = III Supplementary information Share option schemes at 31 December 2022 Scheme Executive Key Average exercise price Exercise period Board employees Total per option 19. Share option schemes DSV A/S has issued share options to key employees and members of the Executive Board of the Company. Refer to note 6.2 to the consolidated financial statements for a list of current incentive share option schemes and a description of the assumptions used for the valuation of the share options granted in 2022. Total costs recognised in 2022 for services re- ceived but not recognised as an asset amounted to DKK 36 million (2021: DKK 27 million). The average share price for options exercised in the financial year was DKK 1,097.7 per share at the date of exercise. 20. Investments in Group entities DSV A/S owns the following subsidiaries, all of which are included in the consolidated financial statements: Ownership Ownership 2018* * Share options granted in 2018 and 2019 are currently exercisable. 2019* 28.03.2021 - 28.03.2023 29.03.2022 - 27.03.2024 190,000 58,000 248,000 477.5 190,000 154,000 344,000 545.0 2020 31.03.2023 31.03.2025 202,000 283,250 485,250 560.0 2021 01.04.2024 - 31.03.2026 168,750 239,925 408,675 1,325.0 2022 01.04.2025 - 31.03.2027 198,250 263,675 461,925 1,485.0 Outstanding at 31 December 2022 949,000 998,850 1,947,850 926.7 Open for exercise at 31 December 2022 Life (years) 380,000 212,000 592,000 516.7 Market value (DKKm) 2 350 3 3 n.a. 299 650 n.a. Average 2022 2021 DSV Road Holding A/S 100% 100% DSV Air & Sea Holding A/S 100% 100% DSV Solutions Holding A/S 100% 100% DSV Insurance A/S 100% 100% DSV Group Services A/S 100% 100% DSV FS A/S 100% 100% Registered Share capital office (DKKm) Hedehusene, Denmark Hedehusene, Denmark Hedehusene, Denmark Hedehusene, Denmark Hedehusene, Denmark Hedehusene, Denmark Outstanding share options Outstanding at 1 January 2021 100 Granted 50 Transferred ** Exercised 100 Options waived/expired Outstanding at 31 December 2021 25 Outstanding at 1 January 2022 5 Granted Exercised 0.5 Panalpina Options waived/expired Welttransport Basel, Outstanding at 31 December 2022 Executive Board Key employees exercise price Total per option 760,000 156,750 36,000 (190,000) 762,750 926,129 1,686,129 263,850 (36,000) (222,056) (412,056) (11,775) (11,775) 920,148 1,682,898 501.3 420,600 1,325.0 401.7 703.3 972.4 762,750 198,250 (12,000) 949,000 920,148 1,682,898 274,075 472,325 (164,573) (176,573) (30,800) (30,800) 998,850 1,947,850 972.4 1,485.0 514.1 1,112.0 926.7 (Holding) AG 100% 100% Agility Logistics Switzerland Rozenburg, 18 ** A member of the Executive Board has previously received share options in the Director's former capacity as DSV key employee. International B.V. 100% 100% DSV Finance B.V. 100% 100% Netherlands Venlo, Netherlands 2,632 0 GIL International Holdings | Ltd. 100% 100% Abu Dhabi, UAE 3,108#105105 DSV Annual Report 2022 Parent Company financial statements 2022 = III 21. Derivative financial instruments DSV A/S has obtained long-term loans mainly on a fixed rate basis, imply- ing that DSV A/S is less exposed to interest rate fluctuations. DSV A/S mainly uses interest rate swaps to hedge future cash flows relat- ing to interest rate risks. Thereby, floating-rate loans are converted to fixed-rate financing. At the balance sheet date, DSV A/S no longer have any interest rate swaps. The weighted average effective interest rate for existing interest rate instruments used as hedges of long-term loans was therefore 0% at the reporting date (2021: 0.8%). For 2022 a gain on hedging instruments of DKK 208 million was recog- nised in the income statement (2021: loss of DKK 51 million). In the same period, a gain of DKK 810 million was recognised relating to assets and liabilities (2021: loss of DKK 5 million). For more information on foreign currency and interest rate risk hedging, refer to notes 4.4 and 4.5 to the consolidated financial statements. 22. Financial risks Financial risks of the Parent Company are handled within the risk manage- ment processes and framework of the Group. Please refer to note 4.4 to the consolidated financial statements. The liabilities of DSV A/S fall due as listed in the adjacent table. The analysis of expected maturity is based on contractual cash flows, including estimated interest payments. No amounts have been discount- ed, for which reason they cannot necessarily be reconciled to the related items of the balance sheet. 2022 Hedging instruments (DKKm) Contractual value Currency instruments Total 16,736 Maturity 2023-2025 Fair value Of which recog- nised in income statement Of which recognised in OCI 82 16,736 82 86 86 (4) (4) (DKKm) Currency instruments Interest rate instruments Total Loan and credit facilities (DKKm) Loans, credit facilities and issued bonds Other payables Payables to Group entities Currency derivatives Interest rate derivatives Total 2021 Of which recog- Contractual value 26,137 744 Maturity 2022 2022 Fair value nised in income statement Of which recognised in OCI (26) (27) 1 (7) (7) 26,881 (33) (27) (6) 2022 2021 Total cash flows, incl. Total cash flows, incl. 0-1 year 1-5 years > 5 years interest 0-1 year 1-5 years > 5 years interest 186 5,852 17,024 964 34,901 80 2 23,062 964 34,901 82 11,805 736 18,359 26 3 1,952 16,230 29,987 736 18,359 26 6 9 36,131 5,854 17,024 59,009 30,929 1,958 16,230 49,117#106106 DSV Annual Report 2022 Parent Company financial statements 2022 = III 22. Financial risks - continued Financial instruments by category DSV has no financial instruments measured at fair value based on level 1 input (quoted active market prices) or level 3 input (non-observable market data). All financial instruments are measured based on level 2 input (input other than quoted prices that are observable either directly or indirectly). Derivative financial instruments The fair value of currency derivatives is determined based on generally accepted valuation methods using available observable market data. Calculated fair values are verified against comparable external market quotes on a monthly basis. Financial liabilities measured at amortised cost In 2021, the carrying value of financial liabilities measured at amortised cost was not considered to differ significantly from fair value. Due to changes in the macroeconomic environment, the carrying value of financial liabilities measured at amortised cost is no longer considered to represent the fair value. The 2022 fair value of issued bonds measured at amortised cost is within level 1 of the fair value hierarchy. Receivables from Group entities and other receivables and payables to Group entities and other payables. Receivables and payables pertaining to operating activities and with short churn ratios are considered to have a carrying value equal to fair value. 2022 2021 Carrying amount Fair value Carrying amount Fair value 97 13 18,463 13 18,463 Carrying amount (DKKm) Financial assets: Currency derivatives 97 Current receivables from Group entities and other receivables 18,998 18,998 Non-current receivables from Group entities and other receivables 24,448 24,448 Cash and cash equivalents 6,673 6,673 24,062 7,696 24,062 7,696 50,119 50,119 50,221 50,221 Financial assets measured at amortised cost Financial liabilities: Interest rate derivatives Currency derivatives 9 9 39 39 15 15 Issued bonds measured at amortised cost 5,186 4,649 6,681 6,681 Loans and credit facilities. 16,408 16,408 22,036 22,036 Payables to Group entities and other payables 35,865 35,865 19,095 19,095 Financial liabilities measured at amortised cost 57,459 56,922 47,812 47,812 23. Contingent liabilities and security for debt Contingent liabilities DSV A/S and the other Danish Group entities are registered jointly for VAT purposes and are jointly and severally liable for the VAT liabilities. DSV A/S is assessed jointly for Danish tax purposes with the other do- mestic Group entities. DSV A/S is the administration company of the joint taxation arrangement and is under an unlimited and joint liability regime for all Danish tax payments and withholding taxes on dividends, interest and royalties from the jointly taxed entities. Income tax and withholding tax payables under the joint taxation arrangement amounted to DKK 168 million (2021: payable of DKK 506 million), which is included in the financial statements of DSV A/S. Parent Company guarantees DSV A/S has provided guarantees for subsidiaries' outstanding balances with banks and liabilities to leasing companies, suppliers and public authorities, etc. in the amount of DKK 12,424 million (2021: DKK 11,005 million). Moreover, DSV A/S has issued several declarations of intent relating to outstanding balances between subsidiaries and third parties. 24. Related-party transactions DSV A/S has no related parties with control of the Group and no related parties with significant influence other than key management personnel mainly in the form of the Board of Directors and Executive Board. - Related-party transactions Board of Directors and Executive Board No transactions with the Board of Directors and Executive Board were made in the 2022 financial year other than ordinary remuneration, as described in notes 6.2 and 6.3 to the consolidated financial statements. Intra-group transactions No intra-group transactions were made in 2022 other than as stated in the income statement and notes.#107DSV A/S Hovedgaden 630 2640 Hedehusene Denmark Tel. +45 43 20 30 40 www.dsv.com CVR no. 58 23 35 28 Annual Report for the year ending 31 December 2022 (46th financial year). Published 2 February 2023. in