DSV Annual Report 2022

71 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%).

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