DSV Annual Report 2022

51 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.

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