Annual Report (ESEF) • Feb 1, 2024
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Download Source FileUntitled Annual Report 2023 Keeping supply chains flowing DSV A/S Hovedgaden 630 2640 Hedehusene Denmark CVR no. 58 23 35 28 1 January – 31 December 2023 DSV is one of the world’s leading freight forwarders. We connect companies 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 – 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 oppor tunities to develop their talent. Combining the latest technologies and the talent of our strong global workforce, we make supply chains leaner and more efficient. That is how we will help to shape a sustainable future. Welcome to our Annual Report 2023. Delivering sustainable growth 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 2023 (47th financial year). Published 1 February 2024. Contents Management’s commentary Introduction Letter from our new CEO and our departing CEO ................ 4 Highlights 2023 ............................................. 6 Five-year overview........................................... 8 Strategy and financial targets Our purpose and strategy. .................................... 9 Sustainable logistics for a fast-changing world.................. 11 Our business model ......................................... 13 Our industry and market trends............................... 14 A responsive approach ....................................... 16 Outlook for 2024 and 2026 financial targets................... 17 Capital structure and allocation ............................... 18 Planned NEOM joint venture..................................19 Financial and non-financial performance Financial review ............................................ 20 Sustainability progress .......................................24 Air & Sea ................................................... 25 Road ...................................................... 28 Solutions ................................................... 30 Corporate governance and shareholder information Risk management ........................................... 32 Corporate governance ....................................... 37 Board of Directors........................................... 40 Shareholder information ..................................... 41 Other information Quarterly financial highlights ................................. 43 Financial statements Consolidated financial statements Statement of profit or loss ................................... 45 Statement of comprehensive income .......................... 45 Statement of cash flows ..................................... 46 Statement of financial position................................ 47 Statement of changes in equity ............................... 48 Notes to the consolidated financial statements ................. 49 Definition of key figures and ratios ............................ 82 Group company overview .................................... 83 Statements Management’s statement .................................... 90 Independent Auditor’s reports ................................ 91 Parent Company financial statements Parent Company financial statements.......................... 94 3 DSV Annual Report 2023 Contents Changing of the guards while keeping supply chains flowing Over the last 12 months, we have witnessed soft demand and a gradual normalisation of global freight markets. Within this environment, we utilised our flexible business model and our dedicated employees delivered solid financial results. 2023 was also a year when we announced an exclusive logistics joint venture with NEOM Company, fine-tuned our organic growth strategy and developed our decarbonisation roadmap. DSV is in good shape for Jens Lund to succeed as Group CEO and continue to deliver on our long-term ambitions. Letter from our new CEO and our departing CEO 4 DSV Annual Report 2023 Introduction Solid financial performance We delivered a solid set of results in a year where global trade volumes and freight rates were in decline and freight markets highly competitive. Our gross profit for the year amounted to DKK 43,818 million (-13.4%), and our operating profit before special items was DKK 17,723 million (-27.4%), in line with our financial guidance for the year. Our adjusted free cash flow for 2023 totalled DKK 11,471 million (-49.7%) and ROIC 17.8% compared to 25.1% last year. Read more about our Group results on pages 20-23. The decline in earnings was expected after recent years’ extraordinary market conditions. The normalisation had the most significant impact in our Air & Sea division, where a general macroeconomic slowdown and reduction of global inventory impacted activity levels significantly. Across all three divisions we delivered a strong performance. During the year, we have utilised our flexible business model, adjusting capacity when needed, and we maintained our focus on delivering good service and creating value for our customers. Navigating macroeconomy and geopolitics We began 2023 under a cloud of uncertainty, amid high inflation and rising interest rates. These macroeconomic factors alongside the normali- sation of market conditions had a significant impact on trade volumes. Towards the end of 2023, we saw some improvements in volumes, but a real pick-up in demand did not materialise. Geopolitical conflicts and regional instabilities impacted our operations and added to existing economic uncertainty. The war in Ukraine and subsequent sanctions on Russia continued to exert pressure on trade flows and impact commodity prices. More recently, the Israel – Hamas conflict has led to further regional un- rest. And as we write this, recent attacks on commercial ships in the Red Sea continue to disrupt access to the Suez Canal. This has caused new unrest and is a clear reminder that global supply chains are fragile and that we must be flexible and do our part to keep supply chains flowing. Growth strategy Within this ever-evolving and competitive landscape, it is essential that we have a clearly defined strategy to navigate towards future growth. We have built a strong foundation via several acquisitions – and we continue to have appetite for M&A. This goes hand in hand with our focus on organic growth and our aim to increase our market share across our divisions. In 2023, we strengthened our network services for the global air and sea markets as well as the European road market. We are already seeing positive results from these efforts, and we will continue to develop these business areas. Another important component of our growth strategy is a more custom- er-focused approach. Recent supply chain challenges have reinforced the importance of being able to understand our customers’ industries and ad- dress their unique challenges. To this end, we are strengthening our com- mercial approach with even greater emphasis on industry-specific solutions. It has also been exciting to witness new technologies such as our AI Factory being utilised within our organisation this year. Digitalisation and efficient infrastructure are key enablers for growth in our industry, and we have developed long-term strategies for these areas to support sup- ply chain visibility for our customers and enhance our own productivity. A new venture In 2023, we announced a new joint venture with NEOM Company, which is developing the NEOM region in Saudi Arabia. It is a one-of-a-kind project, and our role will be to provide transport and logistics services in the coming years. The NEOM joint venture represents an important strategic growth opportunity for DSV, both in the Middle East and our global network. We are proud of this exclusive agreement and look forward to getting it up and running – which is expected to be in the second quarter of 2024. As a global organisation, we must ensure that consistent human and labour rights protections are in place across all operations. DSV’s policies and values also extend to the NEOM joint venture, which will be operated under the same human rights policy and safe working standards that we have in place across our global network, including our existing sub- sidiaries in Saudi Arabia. Roadmap for our sustainability journey Early in 2023, we updated our 2030 mid-term targets and committed to reaching net-zero carbon emissions across our operations by 2050. In 2023, we developed carbon roadmaps, providing milestones and outlining the main tools, initiatives and technologies required to address our decar- bonisation targets. Our roadmaps set a clear framework for each division to align our climate action for scopes 1, 2 & 3. During the year, we supported several new sustainability initiatives through funding from our internal CO 2 fee programme and introduced DSV Energy, with the aim of utilising our facility rooftops for renewable energy production. To meet our future targets, we must collaborate with our customers and sup- pliers. Our Green Logistics services continue to evolve, enabling customers to decarbonise their supply chains and get closer to their emissions targets. Thank you We have been on a fantastic journey together since 2008 and would like to take this opportunity to thank our customers, suppliers and partners for their support and confidence in DSV during Jens Bjørn’s almost 16 years as Group CEO. We would also like to thank our many dedicated DSV colleagues around the world, who have been and continue to be central to DSV’s growth and success. Whatever the market challenges we will encounter in 2024, we have a strong team and have established a solid foundation for DSV’s continued growth in the coming years. Jens H. Lund New Group CEO, DSV A/S Jens Bjørn Andersen Departing Group CEO, DSV A/S 5 DSV Annual Report 2023 Introduction Highlights Group results Gross profit DKK , million Air & Sea % of total Road % of total Solutions % of total EBIT before special items DKK , million Air & Sea % of total Road % of total Solutions % of total EBIT before special items EBIT before special items was in line with our latest out- look for the year, and as expected, the financial results for 2023 did not match the record earnings of 2022. During most of 2023, the demand for transport and logistics services was impacted by economic slowdown and destocking. With our classic DSV approach, we utilised our flexible business model to adjust capacity, optimise productivity and project earnings. .% .% Adjusted free cash flow Adjusted free cash flow was down compared to last year, primarily due to lower EBITDA. In line with our capital allocation policy, we allocated DKK 15,421 million to shareholders in 2023 through share buyback and dividend. ROIC before tax The decline in return on invested capital before tax was due to lower earnings while invested capital was stable. We maintain our 2026 target of a minimum pre-tax ROIC of 20%. , , ,-, , , Actual Actual Actual Actual Actual Actual Outlook Growth in constant currencies. Growth in constant currencies. -.% growth in -.% growth in 6 DSV Annual Report 2023 Introduction Decarbonisation progress 2019 baseline 2022 progress 2023 progress Scope 1+2 Scope 3 409 20,117 15,489 11,734 441 413 -.% +.% SBTi target boundary (CO 2 e - ‘000 tonnes) Solutions The division reported a 5.0% increase in gross profit but 10.7% decrease in EBIT before special items for 2023. The market was impacted by the general decline in global trade, but with pockets of growth, mainly within the e-commerce segment. The division continued the consolidation into multi-client campuses and the expansion of its global footprint. EBIT before special items: DKK 2,355 million -.% Road Despite the soft markets with lower activity and declining freight rates, the division achieved good operational performance and results. Gross profit and EBIT before special items were in line with 2022. We estimate that the division grew across most markets as a result of our strong network and market position. EBIT before special items: DKK 2,009 million -.% Air & Sea In a market characterised by reduced volumes and a gradual normalisation of both freight rates and gross profit yields, the division saw gross profit down 22.4% and EBIT down 33.1% for the year. The negative volume trend was most significant for air freight, whereas the demand for sea freight was more resilient. With strong focus on capacity management, the division maintained a conversion ratio above 50% for the year. EBIT before special items: DKK 13,363 million -.% DKK 11,166 million DKK 5,073 million DKK 8,668 millionDKK 25,300 million DKK 7,352 million DKK 3,982 million % of total % of total % of total % of total Americas Gross profit EBIT before special items % of total EMEA % of total APAC 7 DSV Annual Report 2023 Introduction Five-year overview Ratios 2023 2022 2021 2020 2019 Financial ratios (%) Gross margin 29.1 22.1 20.6 24.6 25.1 Operating margin 11.8 10.7 8.9 8.2 7.0 Conversion ratio 40.4 48.3 43.1 33.4 28.0 Eective tax rate 24.8 23.9 24.5 24.3 25.8 ROIC before tax 17.8 25.1 19.6 14.3 13.4 Return on equity 17.6 24.1 18.4 8.8 11.6 Solvency ratio 46.7 45.0 45.9 49.2 50.7 Gearing ratio 1.5 1.0 1.4 1.3 1.8 Share ratios Earnings per share of DKK 1 57.7 77.3 49.3 18.7 18.7 Diluted adjusted earnings per share of DKK 1 58.7 81.4 50.9 26.5 22.1 Number of shares issued (‘000) 219,000 219,000 240,000 230,000 235,000 Share price at year-end (DKK) 1,185.5 1,096.5 1,527.5 1,020.0 767.8 Proposed dividend per share (DKK) 7.00 6.50 5.50 4.00 2.50 Financials 2023 2022 2021 2020 2019 Results (DKKm) Revenue 150,785 235,665 182,306 115,932 94,701 Gross profit 43,818 52,149 37,615 28,534 23,754 Operating profit before amortisation and depreciation (EBITDA) before special items 22,997 30,275 20,417 13,559 10,292 Operating profit (EBIT) before special items 17,723 25,204 16,223 9,520 6,654 Special items, costs - 1,117 478 2,164 800 Net financial expenses 1,233 866 841 1,729 858 Profit for the year 12,407 17,671 11,254 4,258 3,706 Adjusted earnings 12,650 18,765 11,847 6,146 4,456 Cash flow (DKKm) Operating activities 16,458 26,846 12,202 10,276 6,879 Investing activities (2,030) (966) 420 (556) 1,371 Free cash flow 14,428 25,880 12,622 9,720 8,250 Adjusted free cash flow 11,471 22,810 8,659 8,746 3,678 Share buyback 13,997 20,313 17,841 5,031 4,888 Dividends distributed 1,424 1,320 920 588 423 Cash flow for the year (3,146) 1,635 3,942 2,721 766 Gross investment in property, plant and equipment 2,030 1,514 1,180 1,121 1,000 Financial position (DKKm) DSV A/S shareholders’ share of equity 68,703 71,519 74,103 47,385 49,430 Non-controlling interests 263 222 175 (88) (111) Total assets 147,110 159,045 161,395 96,250 97,557 Net working capital (NWC) 4,742 5,116 8,031 2,701 3,125 Net interest-bearing debt (NIBD) 34,583 29,870 29,245 18,189 18,355 Invested capital 99,973 99,540 101,231 64,285 68,595 For a definition of financial key figures and ratios, please refer to page 82. For a definition of sustainability data, please refer to our Sustainability Report. Sustainability 2023 2022 2021 2020 2019 CO 2 e (g/tonne-km) - Air transport 627.6 694.4 707.4 704.0 718.2 CO 2 e (g/tonne-km) - Sea transport 7.0 6.6 6.5 6.2 6.4 CO 2 e (g/tonne-km) - Land transport 94.3 89.4 89.8 86.3 93.2 Lost Time Injury Frequency Rate 3.3 2.8 4.5 6.7 5.0 Lost workdays due to lost time injury 50.7 52.0 61.0 78.8 97.5 Gender diversity (%) (female/male) 38/62 39/61 38/62 38/62 39/61 Employee turnover ratio (adjusted for synergies) 20.7 22.1 21.9 20.5 21.1 Full-time employees (FTE) 73,577 76,283 77,958 56,621 61,216 8 DSV Annual Report 2023 Introduction Our strategy model Keeping supply chains flowing Our strategy is anchored in our corporate purpose of keeping supply chains flowing in a world of change, acknowledging our role as part of the global infrastructure enabling world trade. As one of the world’s leading freight forwarders, we move millions of ship- ments across oceans and continents. We have earned the trust of our customers and partners by ensuring smooth and efficient storage and distri bution of our customers’ goods, by air, sea, road and rail. With global supply chains becoming increasingly complex, we are focused on leveraging our leading global network and enhancing our service offer- ings. All with the ambition of creating long-term value and sustain able growth for our customers, employees, shareholders and society as a whole. Enabling sustainable growth through operational excellence Our organic growth target remains unchanged: we pursue profitable above-market growth, and we aim to gain market share across our three divisions and the markets we operate in. As our global organisation becomes larger, the geographical footprint more diverse and the services we offer to our customers more advanced, our foundation will always be operational excellence. We continue to pursue organic growth complemented by acquisitions to further strengthen our market position. We have in 2023 strengthened our global network, and we have taken the first steps towards an even more customer-focused approach. Our purpose and strategy We do this by creating efficient and sustainable global trade flows for our customers. And by combining the talent of our strong workforce with scal- able physical and digital infrastructure facilitating efficient workflows. By defining and standardising our service offerings across geographies and divisions, we enable digitalisation and automation and high, consistent service levels. As we pursue the best and most efficient solutions, we remain mindful of the environmental impact of our services, driving down resource consump- tion as well as providing our customers with options to reduce emissions. Leveraging our global network The successful integrations of UTi Worldwide, Panalpina Welttransport and Agility's Global Integrated Logistics (GIL) have turned us into a top three global player in our industry with a worldwide geographical footprint and more advanced and competitive service offerings to our customers. Being a global corporation, we leverage our extensive scale. We imple- ment enterprise-level solutions and collaborate to ensure uniformity throughout our network, with a focus on centralising relevant opera- tional and back- office functions. To optimise efficiency, reduce costs and enhance overall supply chain per- formance for our customers, we offer end-to-end and multimodal services Global network People Purpose Keeping supply chains flowing in a world of change Vision Sustainable growth Mission Operational excellence Customers first Digital M&A Sustainability Strategic focus areas Key enablers 9 DSV Annual Report 2023 Strategy and financial targets across our global network and divisions, managing the entire supply chain process from origin to destination. During 2023, we have strengthened our network through the strategic development of our network services, and we have seen positive results of these efforts. This includes our air charter network, our LCL (less-than- container load) network, our European groupage network as well as our e-commerce solutions. Through the establishment of large, automated multi-user warehouses, we offer flexible and modern contract logistics solutions, accommodating changes in global supply chains and distribution channels. In October 2023, we announced an exclusive logistics joint venture with NEOM, offering a significant long-term growth opportunity, both in Saudi Arabia and for the global DSV network. Completion is subject to incorpora- tion of the entity and issuance of relevant public operating licenses in Saudi Arabia, which are expected in Q2 2024. Customers first We are continuously advancing our industry expertise and digital solutions to strengthen our customers’ experience. This enables us to take an out- side-in approach, understanding our customers’ pain points and proactively address topics like supply chain optimisation and sustainability. Driven by acquisitions, our customer mix has changed in recent years, tipping from small and medium-sized customers towards larger customers. To strengthen our value proposition towards and relationship with this segment, we expand our control towers and centres of excellence setup with the needed industry specific capabilities, e.g. within automotive, industrials, fashion/retail, healthcare and technology. This enables us to offer tailored solutions and one point of contact across our divisions for both commercial, operational and financial inquiries. We continue to optimise and digitalise our customer facing applications, including our portal myDSV and through API/EDI integrations to improve the customer experience and provide supply chain visibility for our customers. Acquisition strategy to complement organic growth We monitor the market for relevant, value-creating acquisitions, as we believe there is room for further consolidation within the fragmented transport and logistics industry. We target both large freight forwarding companies and small companies with specific logistics competences. In April 2023, we acquired the US-based transport and logistics companies S&M Moving Systems West and Global Diversity Logistics, thereby strengthening our position within the semiconductor industry. People is our DNA Our close to 75,000 employees worldwide – from office workers to ware- house operatives – are the heart of our business and pivotal for the long- term success of our company. We maintain a flat, locally empowered organisation with a high degree of ownership and P&L accountability. We combine this with strong global sys- tems, workflows and policies. The flat organisational structure allows for swift escalation and timely response to issues that impact our customers as well as the Group’s earnings and financial and strategic targets. Diversity makes us a more dynamic place to work, ultimately leading to better business decisions. Representing more than 160 nationalities in over 80 countries, we focus on providing a safe, healthy and nurturing workplace with an inclusive culture, where everyone is provided with the right digital tools, training and conditions to grow and develop their talent. As for any company, hiring and keeping talented employees is critical for us. To attract, motivate and retain the best, we provide career advancing opportunities through our DSV Academy and our talent management programmes. Digitalisation is a driving force Technology and digitalisation are paramount in achieving transparency, productivity and scalability in our business and have always been a key enabler for DSV. We continuously monitor the latest trends and adopt new technologies that benefit our business and our customers. We ensure transparency across our business by measuring productivity and financial performance, providing our managers with the required in- sights to inform their decision making. High data quality across systems, activity-based costing and a strong financial organisation are key ele- ments in this. To support our growth strategy, both our physical and digital infrastruc- ture must be able to scale. Working according to the principle of one main system per business area, we run a consolidated, standardised and scala- ble IT platform and, where available, we use standard off-the-shelf IT systems with high focus on data quality and security. All planning of our infrastructure and innovation is based on enterprise solutions which can be applied across our network. Driving decarbonisation in logistics We are committed to ensuring responsible and sustainable business prac- tices everywhere we operate. Together with customers, industry partners and stakeholders we strive to develop solutions that benefit both our planet and our business. We have committed to net-zero emissions across our operations by 2050 and have set ambitious mid-term targets for 2030, accompanied by detailed roadmaps. Our sustainability strategy is described in more details in the following chapter. Fitter for the future Our skilled people, strong digital infrastructure and a clear sustainability strategy are vital enablers for our continued journey. Based on the strong foundation we have today, our ambitions for the coming years revolve around three areas to drive growth: leveraging our global network, cus- tomers first and M&A. Our commitment remains unchanged: we aim to create value for DSV’s stakeholders – not least our shareholders. 10 DSV Annual Report 2023 Strategy and financial targets Sustainability in DSV is anchored at our highest management levels with the Board of Directors and the Executive Board. In close collaboration with the Executive Board, the Board of Directors is responsible for setting the direction for our sustainability agenda. It shapes the strategy, reviews the performance and further develops our sustaina- bility strategy and targets in close cooperation with the Executive Board. To help drive strategic direction and progress, we have established a Sustainability Board, which consist of the Executive Board, divisional management and other relevant management representatives. Our approach to sustainability Our sustainability strategy and priorities are based on recurrent analyses of materiality, risks and opportunities and on continuous dialogue with our stakeholders. Our sustainability priorities, material topics and main targets are highlighted in the adjacent figure. Sustainability plays a key role in our business strategy and we continue to evolve our strategy and progress towards our ambitious targets. Sustainable logistics for a fast-changing world Sustainability strategy Sustainability priorities Material topics Highlighted targets Social Caring for our em ployees We strive to be a safe and inclusive place to work. We work hard to attract and keep talent by giving employees responsibility and growth opportunities. We want to promote diver sity, 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. • Diversity and inclusion • Human capital development • Health and safety • Labour rights & working conditions • Human rights • Community engagement 2024 Number of fatalities must not exceed 0. Lost Time Injuries Frequence Rate (LTIFR) must not exceed 3.5 per million working hours. An eNPS score in our global engagement survey that is at or above the global benchmark. Increase the percentage of female leaders on director level and above. Governance Doing business with integrity We operate with honesty and transpar- ency and pay taxes where we generate our profits. We handle data ethically with appropriate safeguards around data pri- vacy. Running a responsible supply chain We make sure our suppliers meet our standards and understand our sustaina- bility goals. • Business integrity • Responsible supply chain • Tax transparency • Data ethics and cybersecurity 2024 Ensure that all salaried employees receive training on DSV’s Code of Conduct every 24 months. Perform 1,000 supplier audits. Environment Reducing our impact We act as a key enabler for decarbonisation across our value chain with the aim of re- ducing transport and logistics emissions. We are committed to reducing the en viron- mental impact throughout our operations. • Climate change • Waste management and recycling 2024 Total percentage of recycled waste – 53%. 4% reduction of total CO 2 emissions in scopes 1 and 2. 2030 Reduce scopes 1 and 2 absolute emissions by 50% and scope 3 absolute emissions by 30% (2019 baseline). * Scope 3 covers transportation and business travel. Target boundary includes land-related emissions and removals from bioenergy feedstocks. 11 DSV Annual Report 2023 Strategy and financial targets Environment As one of the world’s largest freight forwarding companies, we are committed to reducing our environmental impact and to enable decarbonisation across our value chain. DSV has committed to achieving net-zero operations in all scopes by 2050. Our near-term 2030 carbon reduction tar- gets were validated by SBTi in 2023. To ensure that we are on track to reach our carbon reduction targets, we developed a decarbonisation roadmap in 2023, outlining the main decarbonisation levers that are critical to move towards our 2030 targets and set the course towards net zero. We have a strong foundation in place, but it is also clear that the journey will require cooperation across the transport sector, regulation and, not least, the availability of scalable new technologies. Through our Green Logistics services, we use our exten- sive knowledge of global supply chain networks to help our customers reduce emissions and eventually decarbonise their supply chains. In 2023, we added several new services to our Green Logistics catalogue. We carried out global training for our commercial organisation on our services, as we are seeing increasing demand for our Green Logistics services. Across our operations we are working to optimise energy consumption, water usage and responsible natural resource management. In 2023, we updated our Waste management Policy and introduced new global targets for recycling to support a stronger focus on circular resource usage across our organisation. In 2023, we also added new requirements to our construction tenders to include lifecycle carbon emissions. Furthermore, we carried out a biodiversity impact assessment for our own operations and for key activities in our value chain. Social DSV is a people business, and our employees are our most impor- tant asset. Approximately 75,000 employees of more than 160 nationalities in more than 80 countries make up DSV. Our employ- ees represent various cultures, backgrounds and religious beliefs. DSV strives to be a workplace where everyone can thrive, realise their potential and feel respected. We are committed to ensuring a healthy and safe working environment, respecting labour rights, fostering diversity and inclusion and supporting our employees with training and development opportunities across the organisation. We conduct annual global people surveys for all employees to ensure that we can systematically identify, monitor and address relevant issues. Human rights are fundamental and must be protected at all times. That is why all people who carry out services for DSV, whether directly as DSV employees or indirectly as employees of our suppliers, must be protected. In 2023, we launched a stand-alone Human Rights Policy to further detail and guide our organisation on our standards and our position towards salient human rights risks in our industry. Our Human Rights Programme runs an annual cycle to ensure that human rights risks are identified, addressed and mitigated across all DSV entities – including our planned joint venture with NEOM company. We are committed to supporting the local communities in which we do business and to support local needs as part of our engagement. In 2023, we entered a strategic partnership with UNICEF with a shared vision to leverage our logistics network and expertise to provide children globally access to essential supplies. This year, we also launched an interactive Sustainability Impact Map on our website. The impact map showcases the many different local initiatives taken across our global operations to reach our sustainability priorities. Governance We are committed to doing business with integrity, respecting different cultures and the dignity and rights of individuals. Our strong set of ethical standards governs how we do business and holds our suppliers to the same standards of integrity. Our ethical behaviour is governed by our business ethics frame- work, which sets clear standards throughout our operations. The framework consists of our Code of Conduct, including a zero-tolerance approach towards any form of bribery or corrup- tion, as well as a Supplier Code of Conduct and Whistleblower Policy. In 2023, we carried out a global awareness campaign to support awareness of our ethical standards and DSV’s Whistle- blower system. As a freight forwarder, our services are generally performed by third-party suppliers. We set the same standards for our suppliers as we do for our employees through our Supplier Code of Conduct. Reporting on corporate social responsibility Reporting on corpo- rate social responsi- bility cf. section 99a of the Danish Financial Statements Act We have reported separately on corporate social responsibility in our Sustainability Report 2023, in accordance with section 99a of the Danish Financial Statements Act and the disclosure requirements of Article 8 of Regulation (EU) 2020/852 (EU Tax- onomy Regulation). Reporting on diversity cf. section 107d of the Danish Financial Statements Act We have reported separately on diversity in our Sustainability Report 2023, 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 Sustainability Report 2023 Towards sustainable supply chains 12 DSV Annual Report 2023 Strategy and financial targets Our business model We ship freight by land, sea and air and provide contract logistics. Our business model is flexible and asset light, which helps us to keep supply chains flowing efficiently, from shipper to consignee. 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 that 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 offer supply chain control towers where we monitor and optimise supply chains. 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. End-to-end logistics Through our global network, we provide a wide range of end- to-end supply chain solutions from shipper to consignee. We track our environmental impact systematically to make our operations as efficient as possible. Subcontracted transport Warehousing — Picking/packing — Cross-dock terminal — Deconsolidation Labelling, configuration, testing — Distribution — Documentation & customs clearance E-commerce fulfilment — Supply chain optimisation — 4PL Shipment booking — Pick-up — Warehouse — Documentation & customs clearance Cargo consolidation — Purchase order management Cross-dock terminal — Insurance From shipper A B To consignee Freight forwarding services Logistics and distribution services 13 DSV Annual Report 2023 Strategy and financial targets 5% Kuehne + Nagel 5% DHL Logistics 4% DSV 3% DB Schenker 3% SF KEX 20% Top 6-20 60% Others, estimated A fragmented competitive landscape With a market share of approximately 4%, we are among the top three global freight forwarders. Together, the top 20 forwarders have an esti- mated global market share of 30-40%. The rest of the market consists of multiple regional and local freight forwarders. The highly fragmented market creates a competitive pricing landscape, but because of our scale and logistic competences, large freight forward- ers 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 continue in the coming years. GDP sets the pace for market growth Historically, there has been a correlation between the growth in global trade and the expansion of the global economy. However, in 2023, Our industry and market trends The competitive landscape remains fragmented, and several trends are impacting our customers’ supply chains - not least the trend towards dual sourcing and regionalisation of production. this correlation diverged due to global recalibration of inventory levels and a notable change in consumer spending post-COVID away from goods towards services. In the coming years, we expect that trade volumes will grow in line with GDP again, with the highest growth rates in emerging markets. A world of change Driven by changes to global supply chains, geopolitical events and new tech- nology, several major trends are affecting our customers and the demand for transport and logistics services. We must understand these dynamics so we can act quickly to capitalise on opportunities and mitigate threats. In the following table we have listed important trends affecting our industry. Market share Top five global freight forwarders and market share based on 2022 revenue. Source: Armstrong & Associates and DSV estimates. Top five Others 14 DSV Annual Report 2023 Strategy and financial targets Trends Their impact Our response Dual sourcing and regionalisation Companies are adjusting their supply chains to reduce dependencies and protect their business against future risks. In recent years, several companies have imple- mented dual sourcing strategies and moved part of their production out of China. While China remains a significant production hub, countries like Viet Nam, South Korea and India have seen significant production sector growth. Sourcing from multiple coun- tries reduces dependencies but creates more complex supply chains. Nearshoring or regionalisation creates new production hubs, with Mexico as the best example. Extra buffer inventory in proximity to the end market can be another way of making supply chains more robust. 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. More complex supply chains may increase the demand for our services – e.g., purchase order management, cargo consolidation, customs clearance and warehousing. 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. Across the globe, we continue to see new examples of conflicts, protectionism, changes to tariffs and embargoes. In 2023, the ongoing war in Ukraine and the conflict in the Middle East are examples of this development. When such changes occur, we and our customers must react quickly to keep supply chains flowing. Short term, we can provide alternative routing and transport modes. Longer term, we help cus- tomers to adapt and optimise their supply chains. Additionally, we offer a strong compliance setup to help customers prepare for and adapt to market changes. Greener supply chains The demand for more sustainable supply chain solutions is growing – driven by increasing environ- mental regulations and consumer pressure. The transport and logistics industry is a major carbon emitter, and the sector as a whole must make a significant effort to develop 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. DSV is committed to the Science Based targets. In 2023, we updated our 2030 targets, which have all been validated by SBTi, and we have committed to being net zero by 2050. In 2023, we continued our efforts to support greener supply chains by implementing an internal carbon fee funding programme. We also launched DSV Energy, an internal function focusing on utilising DSV facilities for green energy production. Most importantly, we prepared roadmaps for our decarbonisation journey, which will be an important foundation for our work and dialogue with customers and vendors over the coming years. The rise of e-commerce Consumer behaviour is becoming increasingly digital, sending fulfilment centre and last-mile delivery activities skyward. During 2023, e-commerce continued to grow, although it did slow down alongside the global economy. We still expect structurally high growth in this area in the coming years, both for local and cross-border transactions. We continue to see growth opportunities within the dynamic e-commerce landscape. Our strategic focus involves the establishment of automated e-fulfilment centres and customised solutions for large customers. Our e-commerce “plug & play” warehouse concept supports optimised customer onboard- ing through standardised rates, integrations and Warehouse Management System (WMS) setup. 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. Across supply chains, the demand for visibility and higher 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. 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 scal- able technology across our organisation. Read more about our approach to technology in the following chapter. New competition emerging A high level of competition has always been a part of our industry. In recent years, new competitors have entered our industry. This includes digital forwarders and a few of the established ocean carriers. Digital forwarders typically offer a simple, standardised range of services, mainly fo- cused 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. A few of the established ocean carriers have launched door-to-door transport services. This has created scenarios where these carriers are both suppliers and competitors to freight forwarders. Currently, the new market entrants have not gained material market shares. Leveraging our robust logistics strengths and a clear plan to bolster our digital capabilities, we are confident that DSV will remain highly competitive in the market. 15 DSV Annual Report 2023 Strategy and financial targets Our business operations rely on strong systems and technology. Last year, our scalable, digital platforms handled almost 360 million transactions. These platforms not only support efficient workflows; they also ensure fast and smooth integration of M&As and support our growth strategy. The following are some of the most significant technologies we are working with. A digital customer journey fuelled by generative AI A seamless digital customer journey is key to delivering the services and quality expected by our customers. We are already applying generative AI and similar technologies to digitalise the customer journey and eliminate double entry of data, which often leads to low data quality and slow processing. With more than 500,000 monthly transactions through our AI Factory, mainly related to handling of vendor invoices and customs clearance, we are making good progress. We have a good customer adoption of our myDSV customer platform, and we have more than 10,000 direct integrations to carriers and cus- tomers. However, we still receive many e-mails with shipment data, and we see potential in automating the handling of these by implementing generative AI to both uplift data and feed our systems. Across our network, several manual processes are candidates for automation, using generative AI to assist our employees. Identifying the right use cases and implementing enterprise solutions based on AI technology takes time and a systematic approach. We are taking this seriously by not only empowering our staff, but also encouraging them to drive further digitalisation. Digital warehouse twins to drive further automation We are working closely with our customers to increase automation and digitalisation of our warehouses, with the implementation of digital twins A responsive approach We monitor the latest trends and adapt technologies that benefit our customers and our business. being a key enabler. Digital warehouse twins enable us to reduce labour intensive tasks, optimise warehouse utilisation, reduce damages and im- prove the quality of our services. The technology also paves the way for the implementation of automated guided vehicles. In general, digital twins create a collaboration platform for several different automation solutions and enable further synergies. The combination of human labour and robots has historically posed a problem as they can slow each other down. This is to a large degree miti- gated with digital twins, as they seamlessly communicate with each other. Semi-autonomous trucks to mitigate driver shortage DSV is partnering with leading truck manufacturers and technology compa- nies to test semi-autonomous driving. Advanced Driver Assistance Systems (ADAS) are central to improving the safety and comfort of our drivers. ADAS give drivers extra high awareness of their surroundings with the use of sen- sors, cameras, radars and lidars. This significantly increases traffic safety as well as the safety and comfort of our drivers, which is key for us to retain them in our industry. ADAS also support our sustainability agenda, as die- sel consumption is reduced on trucks using the technology. Fully autonomous trucks are still a thing of the future, but the technology can already deliver significant benefits, and at DSV we are keen to drive the development and exploit the advantages. Staying abreast of the latest trends Our Group Innovation team drives our global innovation efforts, monitoring trends and technologies and prioritising which to explore. Working with internal and external stakeholders, the team tests ideas, establishes financial business cases and implements projects across our global network. DSV technology trend radar Power- to-X Adopting Testing Tracking Circular supply chain Fully autonomous trucks Quantum computing Metaverse Semi- autonomous vehicles Computer vision Wearables Digital warehouse twin Artificial intelligence Digital cargo twins Autonomous drones for delivery Automated guided vehicles 16 DSV Annual Report 2023 Strategy and financial targets For Road we expect a flat or low-growth market, while the Solutions market is expected to achieve higher growth rates in 2024. We continue to monitor activity closely across our organisation and adjust capacity and cost base accordingly. The outlook for 2024 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. Impact from the planned joint venture with NEOM is not in- cluded in the financial outlook. 2024 will be a startup year for the joint venture and we do not expect a material impact on profit or loss for the year. This will be addressed further once the joint venture is established. Assumptions for 2024 financial outlook For 2024, we expect a decline in earnings and margins com- pared to 2023. While we expect growth in transport volumes to return, this will be offset by lower average gross profit yields for both air and sea. The World Bank projects global GDP growth around 3% in 2024, and our financial guidance is based on the assumption that air and sea markets will grow 3-4% in 2024. We continue to target profitable, above market growth, but our strategic growth initiatives may only have a gradual impact in 2024. Outlook for and financial targets 2026 financial targets 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. Towards 2026, we will continue our focus on achieving organic growth ahead of the market, and we see opportunities to im- prove 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 larger acquisitions in the period. The strategic objectives of the Group are translated into the following targets: Outlook (DKKm) 2023 actual Outlook 2024 Operating profit (EBIT) before special items 17,723 15,000- 17,000 Eective tax rate 24.8% 24% For 2024, we expect EBIT before special items of DKK 15,000-17,000 million. We maintain our 2026 financial targets and aim for a 45% conversion ratio for the Group. 2026 targets (%) 2023 actual 2026 targets DSV Group Conversion ratio 40.4 >45.0 ROIC (before tax) 17.8 >20.0 Divisional targets for conversion ratio Air & Sea 51.5 >50.0 Road 25.6 >30.0 Solutions 24.8 >30.0 Forward-looking statements This Annual Report includes forward-looking statements on various matters, such as expected 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 diering considerably from the expectations set out in the 2023 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, competition in the transport sector, operational problems in one or more of DSV’s sub sidiaries and uncertainty in connection with the acquisition and divestment of enterprises. 17 DSV Annual Report 2023 Strategy and financial targets 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. Acquisitions continue to be an important part of our strategy. Additionally, we have strengthened our focus on achieving organic growth supporting our aim to increase our market share. Capital structure Group Management continuously monitors whether the capital structure is in line with the targets, and excess capital is distrib- uted to shareholders through share buybacks and dividends. Adjustments to the capital structure are usually announced in connection with the release of quarterly financial reports and are made primarily through share buybacks. Dividend policy DSV aims to ensure an annual dividend pay-out ratio of approxi- mately 10-15% of our net profit. Proposed dividend for 2023 amounts to DKK 7.00 per share (2022: DKK 6.50 per share). The proposed dividend for 2023 is equivalent to 12.4% of net profit. Capital structure The aim of DSV’s target capital structure is to ensure: • sufficient financial flexibility to meet our strategic objectives; and • a robust financial structure to maximise the return for our shareholders. Our target financial gearing ratio is below 2.0x EBITDA before special items. The ratio may exceed this level following signifi- cant acquisitions. Capital allocation policy Our prioritisation of allocation of the free cash flow remains as follows: 1. We repay net interest-bearing debt in periods when the financial gearing ratio is above target range. 2. We make value-adding investments in the form of acquisitions or development of the existing business. 3. Our distribution to the shareholders takes place through share buybacks and dividends. Capital structure and allo cation ROIC before tax 120,000 100,000 80,000 60,000 40,000 20,000 0 (DKKm) 20232019 2020 2021 2022 ROIC before tax incl. goodwill and customer relationships ■ Goodwill and customer relationships ■ Invested capital excl. goodwill and customer relationships ■ 30 25 20 15 10 5 0 (%) Distribution of capital (DKKm) Share buyback ■ Dividends ■ 30,000 25,000 20,000 15,000 10,000 5,000 0 20232019 2020 2021 2022 , Total , , Total , , Total , , , Total , Total , , , 18 DSV Annual Report 2023 Strategy and financial targets About NEOM The development of the NEOM region is part of Saudi Arabia’s 2030 vision and will be one of the world’s largest construction projects over the next decades. Located in north-western Saudi Arabia and covering 26,000 square kilometres, NEOM comprises several major development projects planned until 2055. These include The Line, an innovative new city; Oxagon, a port and indus- trial area; Trojena, a mountain resort set to host the Asian Winter Games in 2029 and Sindalah, an exclusive ocean resort. NEOM is planned to be the home of 9 million people. The ambitious project will be based on new technologies and targets carbon neutrality. Taking an innovative approach to both con- struction and end state logistics and with the aim to create one consolidat- ed supply chain to support the pro- jects, NEOM Company has partnered up with DSV. For more information on the NEOM projects, please visit www.neom.com Planned NEOM joint venture In October 2023, NEOM Company and DSV announced an exclusive logistics joint venture to provide logistics services for the projects in the NEOM region. We expect that the joint venture will start operations in the second quarter of 2024. About the partnership The planned joint venture will provide end-to-end sup- ply chain management, development and investments in transport and logistics assets and infrastructure as well as transport and delivery of goods and materials to and within NEOM. The activities will include construction logistics, end state logistics, development of logistics properties, management and back-office services, based on DSV’s infrastructure. NEOM envisions unparalleled demand for construction logistics through to 2031, with sustained growth in non-construction logistics thereafter. Besides the logistics activities within the joint venture, the partnership is expected to create attractive growth opportunities for the global DSV network. NEOM will hold 51% of the joint venture with DSV holding the remaining 49%. Expected financial impact DSV’s maximum funding commitment amounts to USD 2.45 billion of the total commitment of the joint ven- ture partners of USD 5 billion until 31 December 2031. The joint venture will gradually ramp up over the next years to match the activity in NEOM, and the timing of investments and financial results thus depend on the progress of the different projects. The funding will come from equity (share capital, share - holder loans), external funding (incl. leasing) and retained earnings in the joint venture. The return on invested capital (ROIC) is expected to be in line with our existing target. This return includes DSV’s share of the profit of the joint venture and the expected growth opportunities for the DSV network. The tax rate for the joint venture is expected to be approximately 11%. Governance setup At DSV, we believe that human rights are fundamental and should be protected at all times. Our commitment to human rights is integrated in our activities across the globe, and the planned joint venture is no exception. The joint venture is expected to create more than 20,000 job opportunities and will be governed based on DSV’s policies and values. This includes our Code of Conduct, Supplier Code of Conduct and Human Rights Policy. DSV will be responsible for the daily operations and appoint the managing director of the joint venture. DSV has been operating in Saudi Arabia for 20 years, and our existing global reporting and internal control setup will also be applied in the joint venture. Further- more, internal and external audits will be conducted throughout the duration of the project. Timeline Completion of the joint venture is pending incorporation of the entity and issuance of relevant public operat- ing licenses in Saudi Arabia, which are expected to be obtained in the second quarter of 2024. In 2031 and every five years hereafter, the parties will update and agree on the business plan for the joint venture. In 2055, the exclusivity of the joint venture expires, but the partnership is expected to continue. 19 DSV Annual Report 2023 Michael Ebbe CFO Financial review Statement of profit or loss (DKKm) 2023 2022 Growth Revenue 150,785 235,665 (34.1%) Direct costs 106,967 183,516 Gross profit 43,818 52,149 (13.4%) Gross margin 29.1% 22.1% Other external costs 4,838 5,559 Sta costs 15,983 16,315 Operating profit before amortisation and depreciation (EBITDA) before special items 22,997 30,275 Amortisation and depreciation 5,274 5,071 Operating profit (EBIT) before special items 17,723 25,204 (27.4%) Conversion ratio 40.4% 48.3% Special items, costs - 1,117 Net financial expenses 1,233 866 Profit before tax 16,490 23,221 Tax on profit for the year 4,083 5,550 Profit for the year 12,407 17,671 The DSV Group achieved solid financial results for 2023 in a gradually normalising market with low volumes. Gross profit came to DKK 43,818 million and EBIT before special items was DKK 17,723 million. This was in line with the expected level of DKK 17,500-18,500 million. A flexible business model The DSV Group achieved solid financial results in 2023 in a competitive market characterised by low freight volumes. Compared to the extraordinary conditions in 2022, we saw a gradual normalisation of the market in 2023, and as expected, the financial results for 2023 did not match the record earn- ings of the previous year. In 2023, the global air and sea freight markets were character- ised by low volumes, as a result of the broader macroeconomic slowdown, shift in consumer behaviour (from goods to services) and reduction of inventory levels. In combination with additional capacity, this led to significantly reduced freight rates compared to 2022. The road and contract logistics markets were more resilient during 2023 but were also impacted by the general economic environment and destocking. The Group’s results reflect our flexible business model and not least our dedicated employees, who continued to deliver good customer service and efficiently manage our capacity. Adjusted free cash flow came to DKK 11,471 million, and in line with our capital allocation policy, we allocated DKK 15,421 million to shareholders through share buyback and dividend. The performance of each of our divisions is further described in the reviews on pages 25-31. * Growth in constant currencies. 20 DSV Annual Report 2023 100 80 60 40 20 0 60,000 50,000 40,000 30,000 20,000 10,000 0 (DKKm) (DKKm) (DKK) (%) (%) 60 50 40 30 20 10 0 30,000 25,000 20,000 15,000 10,000 5,000 0 2022 2022 2022 2021 2021 2021 2020 2020 2020 2019 2019 2019 2023 2023 2023 18 15 12 9 6 3 0 Operating margin EBIT Results Revenue Revenue was down 34.1% in 2023. The Air & Sea division's revenue de- clined by 44.9% compared to previous year, impacted by the reduced freight rates and lower volumes. For both air and sea freight, the volume declines were most significant at the start of the year, and the trend then improved for sea volumes in the second half of the year, while air volume growth remained negative. Revenue (DKKm) 2023 2022 Growth Air & Sea 92,972 174,431 (44.9%) Road 38,155 41,507 (6.4%) Solutions 23,140 24,409 (2.4%) Non-allocated items and eliminations (3,482) (4,682) Total 150,785 235,665 (34.1%) * Growth in constant currencies. The Road division saw a decline in revenue of 6.4%, driven by both lower volumes and lower freight rates, especially in the second half of the year. Solutions reported a 2.4% decline in revenue, mainly owing to lower activity levels in the first half of the year, which then picked up in the second half of 2023. Gross profit Gross profit was down 13.4% in 2023. The decline for Air & Sea was driven by lower freight volumes and continued normalisation of gross profit yields, compared to the record-high levels achieved in 2022. De- spite the decline, the yield level is still considered satisfactory and reflects the division's focus on more specialised services with a high degree of value-added services. Gross profit (DKKm) 2023 2022 Growth Air & Sea 25,970 34,624 (22.4%) Road 7,860 7,911 1.1% Solutions 9,510 9,318 5.0% Non-allocated items and eliminations 478 296 Total 43,818 52,149 (13.4%) * Growth in constant currencies. In a competitive market, Road delivered gross profit levels similar to last year, while Solutions saw an increase of 5.0% in gross profit for the year, driven by the division's continued focus on consolidation in efficient multi-client warehouses and increased automation. In 2023, gross profit declined across most regions, most significantly in APAC due to declining export volumes and lower yields. The Middle East, on the other hand, stood out as the only region across the network to achieve gross profit growth. Gross margin for the Group was 29.1%, compared to 22.1% last year. All divisions reported higher gross margin, most significantly the Air & Sea division. This was mainly due to the substantial decline in air and sea freight rates, leading to lower pass-through element of revenue, and furthemore the gross margin was supported by high yield levels. EBIT before special items For the Group, EBIT before special items decreased by 27.4%, which was mainly due to lower gross profit in Air & Sea. Also on EBIT level, the APAC region reported the highest decline compared to 2022, while the Middle East delivered EBIT growth. Gross profit EBIT before special items Diluted adjusted earnings per share of DKK 1 Conversion ratio Gross profit 21 DSV Annual Report 2023 Financial and non-financial performance EBIT before special items (DKKm) 2022 Growth2023 Air & Sea 13,363 20,658 (33.1%) Road 2,009 2,040 (0.1%) Solutions 2,355 2,701 (10.7%) Non-allocated items and eliminations (4) (195) Total 17,723 25,204 (27.4%) * Growth in constant currencies. The conversion ratio was 40.4%, compared to the extraordinary level of 48.3% last year. In line with our flexible business model, we have imple- mented cost-saving initiatives to adjust our capacity, mainly in the Air & Sea division. These initiatives were partly offset by inflation. Total staff costs (excluding hourly workers) were DKK 15,983 million in 2023 (2022: DKK 16,315 million). Staff costs decreased despite inflationary pressure due to cost-saving initiatives. Other external costs totalled DKK 4,838 million in 2023 (2022: DKK 5,559 million). The cost decreased due to cost-saving initiatives and strong cost discipline. Depreciations totalled DKK 5,274 million in 2023 (2022: DKK 5,071 million). The increase was due to addition of warehouse capacity in the Solutions division. Special items totalled DKK 0 million in 2023 (2022: DKK 1,117 million). The costs in 2022 related to the GIL integration. Net financial expenses totalled DKK 1,233 million in 2023 (2022: DKK 866 million). The higher net financial costs compared to last year mainly related to the increase in FX adjustment losses (on intercompany balances and devaluation of currencies) and an increase in lease liabilities. Net financial expenses (DKKm) 2023 2022 Interest on lease liabilities 851 727 Other interest cost, net 178 396 Interest on pensions 47 19 Currency translation, net 157 (276) Total 1,233 866 The effective tax rate was 24.8% in 2023, compared to 23.9% in 2022. The increase in the effective tax rate was primarily due to higher with- holding taxes on upstreaming of dividends from subsidiaries and the effect of interest limitation. Profit for the year Profit for the year was DKK 12,407 million, compared to DKK 17,671 million for 2022. The decline was mainly due to the lower EBIT for the period. This was partly offset by the absence of special items in 2023. Diluted adjusted earnings per share Diluted adjusted earnings per share decreased by 27.9% to DKK 58.7 in 2023 (2022: DKK 81.4). The decline in earnings for 2023 was partly offset by a 6.5% decrease in the number of outstanding shares following the Group’s share buyback programmes. Cash flow statement Cash flow from operating activities in 2023 fell by 38.7% to DKK 16,458 million. The decline was primarily attributable to lower EBITDA. On 31 December 2023, NWC was DKK 4,742 million, compared to DKK 5,116 million at the end of 2022. The improvement in NWC can be attributed to a combination of reduced activity and lower average freight rates. (DKKm) 2023 2022 Cash flow from operating activities 16,458 26,846 Cash flow from investing activities (2,030) (966) Free cash flow 14,428 25,880 Cash flow from financing activities (17,574) (24,245) Cash flow for the period (3,146) 1,635 Free cash flow 14,428 25,880 Net acquisition of subsidiaries and activities 685 - Special items 263 664 Repayment of lease liabilities (3,905) (3,734) Adjusted free cash flow 11,471 22,810 Relative to full-year revenue, funds tied up in NWC at year-end were at 3.2% compared to 2.2% in 2022. Cash flow from investing activities was an outflow of DKK 2,030 million in 2023, compared to an outflow of DKK 966 million in 2022. Investment cash flow was impacted by the acquisition of two US-based transport and logistics companies and by investments in warehouse equipment and automation technology. Adjusted free cash flow (adjusted for acquisitions, special items and IFRS 16) was DKK 11,471 million, compared to DKK 22,810 million last year. The decline was primarily attributable to lower EBITDA. Cash flow from financing activities was negative by DKK 17,574 million in 2023 (2022: negative DKK 24,245 million). The development was primarily related to share buyback and dividend. 22 DSV Annual Report 2023 Financial and non-financial performance In line with our capital allocation policy, we allocated DKK 15,421 million to shareholders via share buybacks and dividend in 2023. At year end, the financial gearing ratio was 1.5x EBITDA (2022: 1.0x). Capital structure On 31 December 2023, DSV shareholders’ share of equity was DKK 68,703 million (2022: DKK 71,519 million). The decrease was mainly driven by allocations to shareholders and currency translation adjustments, offset by profit for the period. The share capital was nominally DKK 219 million by the end of 2023 (2022: 219 million). The share capital is divided into 219 million shares of DKK 1 each. Each share has one vote. The solvency ratio excluding non-controlling interests was 46.7% on 31 December 2023, compared to 45.0% on 31 December 2022. Net interest-bearing debt (including IFRS 16 lease liabilities) was DKK 34,583 million at the end of 2023 (2022: DKK 29,870 million). The increase can mainly be attributed to investment activities and an increase in leasing liabilities. Weighted average duration of corporate bonds, committed loans and credit facilities was 7.3 years on 31 December 2023, against 8.3 years on 31 December 2022. Invested capital and ROIC The invested capital including goodwill and customer relationships amounted to DKK 99,973 million on 31 December 2023 (2022: DKK 99,540 million). Due to lower earnings compared to previous year, return on invested capital (including goodwill and customer relationships) was 17.8% for 2023 (2022: 25.1%). Excluding goodwill and customer relationships, return on invested capital was 76.3% for 2023 (2022: 105.1%). 23 DSV Annual Report 2023 Financial and non-financial performance The main driver was reduced freight demand across our air, sea and land transport modes and a shift from air to sea transport. Compared to our 2019 baseline, our scope 3 target boundary emissions have declined by 41.7%. As such, our 2030 target has been achieved. We do, however, expect freight demand to pick up again and increase towards 2030. Continuing with our decarbonisation efforts is necessary to ensure we reach our carbon reduction targets in 2030 and 2050. Calculated carbon intensity was affected by the start of implementing a new industry calculation standard (ISO 14083). Carbon intensity for airfreight fell by 9.6% in 2023, while carbon intensity in sea-freight increased by 6.1%. Carbon intensity for land transport increased by 5.5%. A business powered by people Employee turnover rate adjusted for synergies in 2023 was 20.7% compared to 22.1% in 2022. We consider this to be on a par with the level within our industry. Our health and safety indicators remained relatively stable in 2023 compared to 2022. Lost Time Injury Frequency Rate (LTIFR) increased slightly to 3.3 compared to the result in 2022 of 2.8. The result is below our 2023 target of max 4.5 LTIFR. Operating with integrity We conduct mandatory training on our Code of Conduct, and in 2023, we achieved a 100% completion rate of all employees assigned to the training. We hold our suppliers to the same standards as we set for ourselves via our Supplier Code of Conduct. In 2023, we conducted more than 750 supplier audits. In 2023, we continued our progress towards meeting our environ- ment, social and governance targets, thus driving positive change across our operations. Sustainability progress Reduction of scopes 1-2 in 2023 compared to 2022 .% .% Reduction of our scope 3 SBTi target boundary emissions in 2023 compared to 2022 .% % Employee turnover rate adjusted for synergies in 2023 compared to 22.1% in 2022 Completion rate of all employees assigned to the Code of Conduct training Reducing our environmental impact In 2023, we saw a reduction in carbon emissions across all scopes. Our direct emissions in scopes 1-2 fell by 6.3% compared to 2022. The main drivers were a significant drop in scope 2 emissions caused by reductions in energy consumption and higher share of renewable electricity. Compared to our 2019 baseline, scope 1 and 2 emissions have increased by 1.0%. Our scope 3 target boundary emissions significantly decreased by 24.2% in 2023 compared to 2022. 20222023 CO 2 e scope 1, 2 and 3 (SBTi target boundary) ('000 tonnes) Total CO 2 e scope 1 & 2 emissions 413 441 Total CO 2 e scope 3 emissions (SBTi target boundary) 11,734 15,489 Carbon intensity (gram CO 2 e per tonne transported one km) CO 2 e (g/tonne-km) – Air transport 627.6 694.4 CO 2 e (g/tonne-km) – Sea transport 7.0 6.6 CO 2 e (g/tonne-km) – Land transport 94.3 89.4 Social data Lost Time Injury Frequency Rate (LTIFR) (per million working hours) 3.3 2.8 Employee turnover ratio (adjusted for synergies) (%) 20.7 22.1 24 DSV Annual Report 2023 Condensed statement of profit or loss and key figures (DKKm) 2022 Growth2023 Revenue 92,972 174,431 (44.9%) Direct costs 67,002 139,807 Gross profit 25,970 34,624 (22.4%) Other external costs 3,574 4,244 Sta costs 7,877 8,471 Operating profit before amortisation and depreciation (EBITDA) before special items 14,519 21,909 Amortisation and depreciation 1,156 1,251 Operating profit (EBIT) before special items 13,363 20,658 (33.1%) Gross margin (%) 27.9 19.8 Conversion ratio (%) 51.5 59.7 Operating margin (%) 14.4 11.8 Number of full-time employees at year end 21,385 23,032 Total invested capital 63,176 68,813 Net working capital 1,194 5,849 ROIC before tax (%) 20.2 29.1 In a market characterised by reduced volumes and lower freight rates, the division saw a decrease of 22.4% in gross profit and 33.1% in EBIT before special items (both in constant currencies). The decline was in line with expectations, and both profit margins and the absolute level of earnings remained strong. Air & Sea * Growth in constant currencies. Market situation Navigating volatile markets was – once again – a major theme in 2023. Demand for both air and sea freight continued to be impacted by the macroeconomic slowdown and global inven- tory correction. From the second half of 2022 through most of 2023, supply chain congestion eased up and consumer spending made a shift from material goods towards services. Some companies found themselves with too much invento- ry, and an ongoing correction lowered global trade and the demand for transportation. The negative volume trend was most significant for air freight, which generally is a more volatile market, whereas the demand for sea freight was more resilient. The volume trend improved in the latter half of 2023; however, this improvement was primarily a reflection of weak comparative figures from 2022 rather than a real underlying improvement in demand. The demand for air freight was impacted by improved reliability and lower rates in the sea freight market, which made sea freight a more competitive alternative. Air freight capacity grad- ually increased with the continued return of belly-space capac- ity in passenger planes, which together with the soft demand led to a decline in air freight rates in the first nine months of the year. In the last three months of 2023, air rates out of Asia increased, due to growth in cross-border e-commerce. A number of new vessels ordered during the pandemic started to enter the sea freight market during 2023. The entrance of newbuild vessels resulted in increased available capacity, which further widened the gap between supply and demand. In the coming year, more vessels will be delivered. Sea freight rates declined or remained at low levels during most of 2023; however, disruption in the Red Sea led to a sudden increase at the end of the year. A reminder that global supply chains are vulnerable, and we as freight forwarders constantly have to navigate and adjust to the changes in the market. 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. Gross profit DKK 25,970 million -.% -.% Operating profit DKK 13,363 million % EMEA % APAC % AMERICAS Geographic segmentation based on gross profit 25 DSV Annual Report 2023 For 2023, DSV Air & Sea reported air freight volume decline of 16.2%, and the division’s sea freight volume declined 5.5%. While our perfor- mance on sea freight was close to market level, we estimate that our performance was below market for air freight. This can partly be attribut- ed to our low exposure to the low-margin perishables market, which was one of the only sectors with volume growth in the air market in 2023. Air freight (DKKm) 2023 2022 Revenue 50,604 90,591 Direct costs 37,184 71,988 Gross profit 13,420 18,603 Gross margin (%) 26.5 20.5 Volume (tonnes) 1,305,827 1,557,972 Gross profit per unit (DKK) 10,277 11,941 Sea freight (DKKm) Revenue 42,368 83,840 Direct costs 29,818 67,819 Gross profit 12,550 16,021 Gross margin (%) 29.6 19.1 Volume (TEUs) 2,519,295 2,665,147 Gross profit per unit (DKK) 4,982 6,011 * Volume is defined as the quantity of export cargo processed within the DSV network. Sea volume is measured in TEUs (twenty-foot equivalent units), while air volume is determined by chargeable weight, quantified in tonnes . Strategic and operational highlights Given the challenging market conditions, this year we focused on adapt- ing to an increasingly competitive market with lower rates. While we saw declining TEU and tonnage, the number of shipments was more stable during 2023. This reflects smaller average shipments size and that we have grown in areas like LCL (less-than-container load). Our focus was on maintaining an efficient operation and creating value through our quality services. Cost inflation was more than offset by productivity improve- ments and cost control measures. Our acquisitions of two US-based transport and logistics companies, S&M Moving Systems West and Global Diversity Logistics, have strengthened our capabilities and offering within the semiconductor industry and also support DSV’s Phoenix-Mesa Gateway operations, growing cross-border services to Latin America. The Mesa Gateway serves as our newest route into Latin America within our air charter network. This network provides tailor-made air freight solutions to customers on specific routes. We continue to operate the network with a focus on flexibility enabling us to scale capacity as demand changes. We continued to develop our LCL product in sea freight, focusing on increasing consolidation in our own terminals. This ensures a higher ser- vice level towards our customers and higher profitability per container. In 2023, we continued to develop our digitalisation efforts, focusing on improving digital customer integrations and booking data quality. The improved data quality provides better and faster supply chain visi bility and increases our productivity. Results DSV Air & Sea revenue was DKK 92,972 million in 2023 (2022: DKK 174,431 million), down 44.9% in constant currencies. The development in revenue was driven by the decline in volumes and lower freight rates. Gross profit came to DKK 25,970 million for 2023 (2022: DKK 34,624 mil- lion), a decrease of 22.4%. Besides the lower volumes, the decline in gross profit originates from lower gross profit yields compared to the record-high levels last year. In a competitive market, the division has maintained its focus on pricing discipline and high-margin business. Furthermore, in line with our procurement strategy, the division continued to balance commitments towards customers with our capacity agreements with carriers. The division’s gross margin was 27.9% for 2023 (2022: 19.8%). The development was mainly due to the decline in freight rates, which led to lower pass-through revenue compared to last year. EBIT before special items was DKK 13,363 million (2022: DKK 20,658 million), a decline of 33.1% in constant currencies. The decline in EBIT before special items can be attributed to the reduction in gross profit, which to some extent has been offset by a lower cost base. Since Q3 2022, several cost reduction initiatives have been planned and imple- mented leading to a reduction of staff costs and other external costs. The conversion ratio came to 51.5%, compared to 59.7% last year. The conversion ratio was negatively affected by lower gross profit yields compared to last year, this was partly offset by cost-saving initiatives. Net working capital was DKK 1,194 million at the end of the year, compared to DKK 5,849 million at year-end 2022. The significant re duction was due to lower revenue and an improved NWC process. In 2023, return on invested capital was 20.2%, compared to 29.1% in 2022. The decrease was driven by lower earnings compared to last year. 26 DSV Annual Report 2023 Financial and non-financial performance 20 16 12 8 4 0 Gross profit Conversion ratio Operating margin EBIT (DKKm) (DKKm) (DKKm) 180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 25,000 20,000 15,000 10,000 5,000 0 (%)(%) 2022 2022 20222021 2021 2021 2020 2020 2020 2019 2019 2019 80 70 60 50 40 30 20 10 0 2023 2023 2023 Focus areas for 2024 We expect that transport markets will return to growth in 2024, but mac- roeconomic and geopolitical uncertainty remains high. Over the years, we have built a strong global market position, and our target of gaining market share across geographies remains unchanged. Our sustainability efforts will continue to be highly relevant during 2024, especially around carbon footprint transparency and supply chain optimi- sation. Through our Green Logistics service offerings, we are making sure that our customers have the option to choose lower-emission transports. As a new service, we have introduced carbon emission data from each DSV transport directly on customer invoices. In our interactions with car- riers, sustainability will also play a larger role, as more efficient solutions and equipment become available. In recent years, we have seen changes in our customer mix towards more large customers, and we will strengthen our focus and value proposition towards this segment. We expand our centres of excellence setup with needed industry specific capabilities, e.g., within automotive, industrials, fashion/retail, healthcare and technology. In 2023, these efforts led to growth within the specialised customer segments; oil & gas, semiconduc- tor and aerospace & defence. In addition to our control tower setup, we offer tailored solutions and proactively address topics like supply chain optimisation and emission reduction. As volatility and disruption are expected to continue across global supply chains, we will do our best to navigate the markets, adjust capacity and protect our margins while helping our customers to keep their supply chains flowing. Revenue Gross profit EBIT before special items 27 DSV Annual Report 2023 Financial and non-financial performance For 2023, the Road division reported a 1.1% increase in gross profit and EBIT before special items on level with last year. The division delivered good operational results in a soft market with declining activity. 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 offers full load, part load and groupage services through a network of more than 250 terminals. Gross profit DKK 7,860 million +.% -.% % % Operating profit DKK 2,009 million EMEA AMERICAS Road Condensed statement of profit or loss and key figures (DKKm) 2022 Growth2023 Revenue 38,155 41,507 (6.4%) Direct costs 30,295 33,596 Gross profit 7,860 7,911 1.1% Other external costs 1,428 1,425 Sta costs 3,574 3,543 Operating profit before amortisation and depreciation (EBITDA) before special items 2,858 2,943 Amortisation and depreciation 849 903 Operating profit (EBIT) before special items 2,009 2,040 (0.1%) Gross margin (%) 20.6 19.1 Conversion ratio (%) 25.6 25.8 Operating margin (%) 5.3 4.9 Number of full-time employees at year end 16,235 16,701 Total invested capital 12,994 10,690 Net working capital 1,503 (586) ROIC before tax (%) 17.0 20.1 * Growth in constant currencies. Market situation We estimate that volumes on the European road freight market decreased in 2023 compared to 2022. The decline accelerated in the second half of the year, due to lower demand and contin- ued destocking across most industries. While the road market was still characterised by tight capacity and lack of truck drivers in the beginning of 2023, there were signs of overcapacity in the second half of the year. This impact- ed the overall pricing levels and increased competition. Lower fuel prices also contributed to declining freight rates. We estimate that DSV Road grew its share across most markets as a result of our strong network and market position, not least in the less-than-truckload market. Strategic and operational highlights In recent years, the lack of truck drivers and overall capacity has been a major theme for the road freight market. The war in Ukraine and EU’s Mobility Package have also reduced capacity. This changed during 2023, as the general economic slowdown in Europe had an impact on demand for transportation. While we do not expect this to persist long term, we saw declining rates and increasingly tough competition in 2023. Our effective procurement setup and strong network meant that we were able to offer high service levels in combination with competitive prices. We believe that this was an important factor behind our market share gains in 2023. In 2023, we continued developing our European groupage net- work as part of our Road Way Forward programme. We also con- tinued to enhance our control tower setup, which enables us to offer our customers one point of contact to handle commercial, operational and financial inquiries. In 2023, we strengthened our semiconductor capabilities in the US with the acquisitions of S&M Moving Systems West and Global Diversity Logistics. Geographic segmentation based on gross profit 28 DSV Annual Report 2023 10 8 6 4 2 0 Gross profit Conversion ratio Operating margin EBIT (DKKm) (DKKm) (DKKm) 48,000 40,000 32,000 24,000 16,000 8,000 0 10,000 8,000 6,000 4,000 2,000 0 2,500 2,000 1,500 1,000 500 0 (%) (%) 2022 2022 2022 2021 2021 2021 2020 2020 2020 2019 2019 2019 50 40 30 20 10 0 2023 2023 2023 The other part of the Road Way Forward programme is the development of a new transport management system (TMS). While several parts of the TMS are already operational (for instance our quote tool, booking and in- voicing solutions), we have in 2023 put the development of other elements on hold. Instead, we are redefining our requirements and taking a new ap- proach to achieve an effective IT setup for DSV Road. The change will cause a delay, but the programme continues and the objectives are unchanged. We have continued to help our customers optimise their supply chains and reduce carbon emissions. Promoting our Green Logistics services is one element in this, and we continue to see good interest. In 2023, we formal- ised the divisional roadmaps for our path towards net zero. For DSV Road, this involves strategic partnerships with truck manufacturers and testing of technologies and equipment. These include electric trailers, which have the potential to reduce CO 2 emissions from road transport by up to 40%. Results DSV Road revenue was DKK 38,155 million in 2023 (2022: DKK 41,507 million) – a decline of 6.4%. This was mainly driven by a slight decline in activity and declining freight rates. Based on our flexible, asset-light busi- ness model, we have been able to adjust our capacity accordingly. More than 85% of the division’s revenue is generated in Europe, and we saw good performance under challenging market conditions across most countries in this region, especially on international shipments. In 2023, the division had good traction with Automotive and Pharma customers. DSV Road also performed well in Americas and delivered growth in the number of shipments in a soft market. We estimate that the division performed better than the general market. Gross profit was DKK 7,860 million in 2023 (2022: DKK 7,911 million), an annual increase of 1.1% in constant currencies. The division’s gross margin was 20.6% for 2023, compared to 19.1% for 2022. Overcapacity and lower fuel prices led to lower direct freight cost for the division, which had a positive impact on the gross margin. The focus on European groupage operations, which carry a higher gross margin than full-load and domestic shipments, also had a positive impact on the gross margin. EBIT before special items was DKK 2,009 million in 2023, close to last year’s level of DKK 2,040 million. The conversion ratio came to 25.6% for 2023, also on level with 2022. In an environment with inflationary pres- sure on the cost base, the division has maintained focus on productivity and cost management. Net working capital was DKK 1,503 million at the end of the year, against a negative DKK 586 million at year-end 2022. This development is mainly a result of an increase in funds tied up in property projects. Return on invested capital was 17.0% in 2023, compared to 20.1% for 2022. This was driven by higher average invested capital compared to 2022, mainly due to the increase in NWC. Focus areas in 2024 We expect a competitive market in 2024, with activity levels still impact- ed by the macroeconomic situation. We continue to monitor the activity levels and adjust capacity when needed. Our target of gaining market share across geographies remains unchanged. Across our network, we continue developing our services to support the needs of our customers, and in 2024 we will scale our control tower set- up to increase visibility in our customers’ supply chains. Another strategic focus area is our Road Way Forward programme, where we continue to develop our European groupage services by standardising processes and improving our geographical network coverage as well as our first/last mile distribution services. We will also continue to develop and promote our Green Logistics servic- es. To increase transparency of the environmental impact of our services, we will implement CO 2 data on our customer invoices. Digitalisation remains an important focus area, and we continue to work on standardising workflows and improving data quality on digital bookings to improve customer service quality and boost productivity. In 2024, we will redefine our requirements to a new transport management system as part of the ongoing Road Way Forward programme, maintaining our am- bition of achieving an effective IT setup for the Road division. Revenue Gross profit EBIT before special items 29 DSV Annual Report 2023 Financial and non-financial performance In a market impacted by lower global trade, the division achieved 5.0% increase in gross profit and 10.7% decrease in EBIT before special items (both in constant currencies). The division continued the consolidation into multi-client campuses and expanding its global footprint. Solutions * Growth in constant currencies. Market situation Throughout 2023, the contract logistics market was impacted by the decline in global trade and a global inventory correction. This led to lower inbound activity and lower inventory levels, especially in the retail and industry sectors. We estimate the market has decreased by low single digits in 2023 compared to the previous year. The activity levels were weaker in the first half of the year, but stabilised during the second half of the year. For DSV, the average utilisation of warehouses (and inventory levels) was lower in 2023 compared to the previous year. We estimate that Solutions took market share in all its major markets during the year. This was driven by a strong service offering and addition of new warehouse capacity. Strategic and operational highlights We continued executing our long-term strategy for consolida- tion and developing multi-client warehouse campuses based on roadmaps for each region. In 2023, we added more than 500,000 m 2 new warehouse space. Among other locations, we opened facilities in Dallas, Madrid and Venlo and started property projects in Shanghai, Mumbai and Singapore. Our expansion also includes new capacity added to our Pharma and Healthcare vertical. In 2023, we opened four new sites for our customers in this segment. The new warehouses are certi- fied in line with leading international standards, and the verti- cal will remain a strategic focus area going forward. Our acquisitions of two US-based transport and logistics com- panies, S&M Moving Systems West and Global Diversity Logistics, have strengthened our semiconductor capabilities and support our growing cross-border operations between the US and Latin America. 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. Gross profit DKK 9,510 million +.% -.% % % % Operating profit DKK 2,355 million EMEA APAC AMERICAS Geographic segmentation based on gross profit Condensed statement of profit or loss and key figures (DKKm) 2022 Growth2023 Revenue 23,140 24,409 (2.4%) Direct costs 13,630 15,091 Gross profit 9,510 9,318 5.0% Other external costs 1,782 1,759 Sta costs 2,418 2,254 Operating profit before amortisation and depreciation (EBITDA) before special items 5,310 5,305 Amortisation and depreciation 2,955 2,604 Operating profit (EBIT) before special items 2,355 2,701 (10.7%) Gross margin (%) 41.1 38.2 Conversion ratio (%) 24.8 29.0 Operating margin (%) 10.2 11.1 Number of full-time employees at year end 31,427 32,077 Total invested capital 25,196 23,364 Net working capital 2,407 1,624 ROIC before tax (%) 9.7 12.4 30 DSV Annual Report 2023 12 10 8 6 4 2 0 Gross profit Conversion ratio Operating margin EBIT (DKKm) (DKKm) (DKKm) 28,000 24,000 20,000 16,000 12,000 8,000 4,000 0 12,000 10,000 8,000 6,000 4,000 2,000 0 3,000 2,500 2,000 1,500 1,000 500 0 (%) (%) 2022 2022 2022 2021 2021 2021 2020 2020 2020 2019 2019 2019 30 25 20 15 10 5 0 2023 2023 2023 For our e-commerce segment, we continued rolling out DSV Fulfillment Factory with 8 out of 14 planned sites in operation. DSV Fulfillment Fac- tory offers warehouse automation to all sizes of companies with multiple distribution channels, both B2B and B2C. We continue to focus on reducing our environmental footprint, and in 2023 we launched DSV Energy to facilitate our strategy to reduce emis- sions from our energy consumption. DSV Energy is responsible for pro- ducing renewable energy from large rooftop solar plants installed on our facilities. The energy produced will first and foremost be used to cover our own energy consumption at our facilities, reducing our environmental impact. Excess power can in certain cases be sold externally. Results Solutions revenue was DKK 23,140 million in 2023 (2022: DKK 24,409 million), an annual decline of 2.4%. The Americas region achieved growth in order lines, whereas EMEA and APAC recorded lower activity. Gross profit was DKK 9,510 million in 2023 (2022: DKK 9,318 million) – an annual growth of 5.0%. The division achieved a gross margin of 41.1%, compared to 38.2% last year. The strategy of consolidation into larger and more efficient warehouses (campuses) and implementation of automation have been key drivers in increasing the gross profit margin. EBIT before special items was DKK 2,355 million (2022: DKK 2,701 mil- lion), down 10.7% compared to 2022. This was a result of an extraordi- narily strong first half of 2022 with high warehouse utilisation and activi- ty levels. EBIT for the second half of the year was above the 2022 level in constant currencies. The conversion ratio was 24.8%, compared to 29.0% last year. The 2023 cost base was impacted by general cost inflation and new addition of warehouses. Expansion of warehouse capacity led to the division operat- ing with a slightly lower warehouse utilisation rate, which had a dilutive effect on the conversion ratio. Net working capital was DKK 2,407 million for 2023, compared to DKK 1,624 million last year. The development was impacted by an increase in funds tied up in property projects. Return on invested capital came to 9.7%, compared to 12.4% last year. Focus areas in 2024 Macroeconomic uncertainty and global destocking are impacting the con- tract logistics market, and we maintain high focus on managing our cost base to match demand levels. Despite the current environment, we still expect the market to be characterised by growing 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. In 2024, we will pro- mote our new Sustainable Warehousing concept, by which we help our customers reduce their carbon footprint. Certified, energy efficient warehouses, automation, remaker services, waste reduction and lean processes are important features in this concept. We aim to strengthen our footprint across existing countries and focus particularly on growing our presence in Americas and APAC. Our focus on creating a leading presence in the e-commerce space will continue, and with our new Plug & Play solution we will also target small and medium-sized enterprises. This solution enables a fast setup and easy and cost-effective onboarding. In 2024, we will begin the operation of our 190.000 m 2 warehouse facility in Horsens, Denmark. Being one of the largest facilities in Europe, the new warehouse will be equipped with a high degree of automation to match the needs of customers in different industries. Several industries are focusing on creating more robust supply chains. This may lead to relocating production for our customers, more regional pro- duction and assembly, higher inventory levels and more stock points or distribution centres closer to the end consumer. We will work closely with our customers to support their entire supply chain. Revenue Gross profit EBIT before special items 31 DSV Annual Report 2023 Financial and non-financial performance Risk governance structure As a global transport and logistics company, we are exposed to a variety of risks in our operations. Managing these risks is an integrated part of our management practices. Our approach to managing risks involves identifi cation, analysis and reporting. These processes serve as the foun - dation for continual risk assessments and the subsequent implementation of relevant mitigating actions. Our organisational structure facilitates swift escalation and timely re - sponse to issues that could significantly impact the Group's earnings, financial status and strategic objectives. Risk management The Board of Directors is responsible for the Group’s risk management strategy and oversees the overall framework for identifying and mitigat - ing risks, while the Audit Committee oversees compliance in the risk man- agement process. The Executive Board is responsible for the day-to-day risk management and drives continuous improvements. Risk management processes Our risk management process operates along two concurrent tracks: Ope- rational risk management, which involves the continuous handling of identified risks arising from our day-to-day operations, and strategic risk manage ment, which addresses key risks and other mid- to long-term strategic risks. Operational risk management In addition to our general financial and operational reporting and con- trolling, weekly reports on identified risks are submitted to the Executive Board and senior management across the Group. These reports form the basis for the Executive Board's daily risk management activities and serve as input for the regular reporting to the Board of Directors and the Audit Committee. The weekly reports are shared with lower management levels to foster awareness and knowledge sharing. Strategic risk management The operational risk management process is followed up by annual high- level strategic risk assessments focusing on identifying and mapping the key risks facing the Group. These assessments are based on input from the operational risk man- agement process and extensive risk surveys involving a number of key employees across functions, departments and regions. The key risks identified are addressed by the Executive Board and assigned to risk owners within the Group to make sure that relevant preventive measures are implemented. In line with the established framework, the key risks are reported to and addressed by the Audit Committee and the Board of Directors. Ongoing key risk reassessment Tracking MitigationReportingRecordingAnalysis and assessment Identification Dynamic risk adaptation Identified risks are analysed to determine cause, impact and likelihood of the risk occurring. Risks are identified using the Group’s risk reporting tools. Identified risks are recorded and prioritised. Risk owners are allo cated to identified key risks. Risks are reported to the Board of Directors, the Audit Committee, the Execu- tive Board and other stakeholders in the organisation. Risks are monitored and preventive measures implemented in cooperation with the aected business units. When necessary, mitiga- tion actions are initiated imme- diately aer risk identification. 32 DSV Annual Report 2023 Corporate governance and shareholder information Key risk assessment 2023 The latest assessment of the Group’s internal and external strategic risks was carried out in Q4 2023. The analysis reaffirmed the existence of seven overarching risk categories identified in previous years, which have the potential to signifi cantly impact the Group's earnings, financial posi - tion and strategic objectives if they materialise. The results of the risk analysis are depicted in the accompanying risk map and elaborated upon in the subsequent sections. The key risks are listed in random order. The indicated likelihood of occurrence and annual EBIT impact are based on our best estimates, factoring in mitigation strategies. However, it is im - portant to note that the quantifications in the risk map entail a degree of uncertainty. Financial risks While our daily operations involve various financial risks, they are not con- sidered key risks. Our Group Finance departments actively monitor the financial risks to ensure the efficacy of our hedging strategies. For further details on our financial risks, please refer to Chapter 4 of the notes to the financial statements. The risk from climate changes Climate changes impact our industry and we closely monitor the potential impact, but currently do not consider this a key risk for the Group within the time horizon covered by our Enterprise Risk Management framework. As part of our environmental management system, we assess, monitor and manage climate associated risks and opportunities. Long-term cli - mate-related financial risks and opportunities are identified, assessed and managed guided by the recommendations of the Task Force on Climate Related Financial Disclosures (TCFD). For more information about our 2023 climate risk assessment, see page 13 of our Sustainability Report 2023. Likelihood of occurrence Moderate: DKK 1,000 million Estimated annual EBIT impact in case of occurence Almost certain Moderate LikelyUnlikelyRare Key risk map 3 5 2 7 4 6 1 1 IT Security System breakdowns and cyberattacks 2 Macroeconomy Recession and changes to global supply chains 3 Employees Retention and attraction 4 Compliance Increasing regulatory complexity and new risk areas 5 M&A Acquisitions and integration failure 6 Technology Innovation and tech- nological adaptation 7 Com mercial Failure to execute on organic growth strategy 33 DSV Annual Report 2023 Corporate governance and shareholder information Risk description Mitigation strategies Risk assessment IT security: System breakdowns and cyberattacks IT systems, networks and related processes are crucial to our day-to- day operations – from the delivery of our core logistics services to our analytical capabilities and reporting to financial markets. This makes us vulnerable to system breakdowns and IT criminal activi- ties, such as malware, hacking and virus attacks. IT failure not immediately solvable or an attempt to adversely impact the confidentiality, integrity or availability of data for DSV, our cus- tomers, suppliers or partners could pose a significant risk to financial or operational systems. Our IT strategy emphasises system consolidation, centralisation, and standardisation and swift integration of acquired companies. We prioritise IT security, cyber awareness training and disaster recovery training, while ensuring robust continuity plans via regular audits and application recovery tests. Risk miti- gation includes cloud solutions, patch management, multi-factor authentication and timely security updates. Proactive cyber threat monitoring and thorough incident analysis drive risk reduction. Globally, our IT department oversees risk and infrastructure readiness. The Executive Board and Audit Committee actively supervise cyber risks through regular meetings and reporting, involving IT and compliance teams. This approach ensures resilience and quick adaptation to evolving IT security challenges. In 2023, our IT systems and infrastructure have maintained stable performance and security standards. Focused IT security campaigns have been conducted. These involved intensified training, mandatory e-learning, internal phishing drills and the introduction of a new user-friendly reporting system for suspected phishing. Rigorous testing of Business Continuity and Disaster Recovery Plans confirmed our resilience towards negative IT incident effects. In 2023, we achieved ISO 27001:2022 certification, emphasising our commitment to security. Overall, our IT security risk slightly increased compared to last year. This devel- opment is not related specifically to DSV – rather, it is our assessment that the general risk from cybercrime is increasing. Macroeconomy: Recession and changes to global supply chains Potential triggers like geopolitical conflicts, inflation, interest rate hikes, market distortions and pandemics may affect our activities and finan- cial results. Protectionist measures by major economies could impact global trade. This would to some degree be balanced by increased regional or do- mestic activities and the sale of other logistics services. Changes in industry and consumer patterns, like reduced global trade and shorter supply chains due to environmental concerns or localising production, are impacting our customers' supply chains and the de- mand for logistics services. Our flexible business model, stringent cost controls and efficiency measures ensure that we optimise financial performance across all business areas and geographies. Operational performance, financial results and cash flows are continuously monitored and necessary adjustments to capacity made. Our asset-light approach with external transport partners (carriers, hauliers) and leased terminals, warehouses and offices provides flexibility and enables us to adapt to market changes. Our global network and diversified customer portfolio mean that we do not depend on the development in single regions or industries. We continuously adapt our network to align with changing global supply chains. We pursue areas with higher growth potential, and as production expands into new markets and dual sourcing strategies emerge, we are ready to support our customers. In 2023, declining global transport volumes and yields affected our gross profit and EBIT. The market normalisation was expected, and by utilising our flexible business model we maintained strong financial performance. Economic forecasts for 2024 by IMF and others suggest a “soft landing” with 2-3% annual GDP growth and parallel growth in the transport market. However, the geopolitical situation remains uncertain and may in several areas impact global supply chains in 2024. The NEOM joint venture in Saudi Arabia and our investments to support the semiconductor industry in the US are examples of our strategy to support growth in the coming years. With continued focus on cost discipline, net working capital control, robust capi- tal structure and our asset-light model, we are well prepared for the years ahead. Even if several factors point to continued uncertainty, we estimate that the potential financial impact from these risks are lower than last year. 34 DSV Annual Report 2023 Corporate governance and shareholder information Risk description Mitigation strategies Risk assessment Employees: Retention and attraction Our success relies on employees executing strategies and meeting targets. Skilled technical, operational and managerial key employees are essential for DSV. Failing to retain or attract talent could significantly hamper business performance, hindering strategic projects and goal achievement. Fostering a positive, inclusive workplace makes DSV an attractive employer. This involves respecting labour rights and ensuring safe and inspiring workplaces in modern offices, terminals and warehouses. Upholding our performance culture is crucial and empowers our employees to take responsibility, make decisions and influence their everyday work life. We continue to invest in initiatives to attract, retain and develop our workforce. These in- clude promoting diversity and inclusion, career advancement pathways, our DSV Academy, leadership training programmes, Young DSV initiatives and attractive remuneration. Despite economic fluctuations and adjustments to our capacity in 2023, we maintained stability in our workforce, successfully retaining key employees. Our ongoing focus is on retaining talent and preparing for new workforce trends, and we continue to invest in our training and development programmes. There are fewer difficulties in recruiting and retaining essential personnel com- pared to previous year. This assessment is impacted by the fact that the labour market in the logistics industry has normalised slightly during 2023, due to lower activity across the sector. Compliance: Increasing regulatory complexity and new risk areas As a result of our global operations, we are subject to extensive na- tional and international regulatory requirements. In particular, regula- tion relating to tax, customs, VAT, sustainability, data privacy and com- petition law continue to increase in scope and complexity. Trade em- bargoes impacting international transports are also changing and in- creasing in magnitude. In recent years, our network has grown in regions with an increased risk of violation of labour rights. Our upcoming joint venture in NEOM will make these factors even more relevant. Cases of non-compliance may carry a long-term impact on our public reputation and brand, which may in turn have a negative impact on our relationships with customers and other stakeholders. Additionally, non-compliance may lead to significant fines, claims and other repercussions for the Group, members of our Management or our employees. At all levels of our organisation and in all countries we do business in, we are committed to honest and ethical business practices and to complying with all relevant international and local regulation. These fundamental principles are anchored with our Top Management and are defined to safeguard the company and its employees. We believe this is the right way to run a business. DSV’s policies – e.g. our Code of Conduct, Supplier Code of Conduct and Human Rights Policy – are enforced across all subsidiaries and followed up through internal controlling and audits. 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, communicating 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. In 2023, compliance challenges increased in various areas, e.g., sustainability reporting, value chain adherence and minimum tax regulations. Our compliance framework upholds ethical standards across our organisation, and during the year, we have invested further in strengthening this setup. The planned joint venture in NEOM will over time significantly increase our pres- ence in Saudi Arabia and may eventually impact the risk assessment, especially related to violation of human rights and labour rights. We have engaged with NEOM Company, and the joint venture's compliance setup is based on DSV’s standards and policies. DSV will appoint the managing director and will secure a setup to handle daily operations as well as managing the operationally relevant risks. Despite the continued pressure, our assessment shows a lower potential impact than the previous year. This is a testament to our resilient compliance setup, and the continued commitment across our organisation. 35 DSV Annual Report 2023 Corporate governance and shareholder information Risk description Mitigation strategies Risk assessment M&A: Acquisitions and integration failure Strategic acquisitions are fundamental to our corporate strategy, which we have upheld for years. An erroneous acquisition may incur signifi- cant costs and divert resources from other potential candidates or growth strategies. Acquisitions inherently carry integration risks, poten- tially delaying cost synergies, strategic advantages or economies of scale. DSV's robust M&A model ensures that acquisition targets align with our business model and growth objectives. We conduct a comprehensive due diligence and develop integration plans covering technology, processes, structure, culture and risk mitigation. Compliance with global regulations and financial readiness underpin our approach. Our many successful integrations, such as UTi (2016), Panalpina (2019), and GIL (2021), underline our record. In 2023, we have not completed any significant M&A transactions, and as we have no larger ongoing integrations, it is our assessment that the M&A risk has decreased. Our M&A strategy remains intact, and larger acquisitions may change the risk assessment in 2024. Technology: Innovation and technological adoption As with most industries, freight forwarding undergoes continuous technological developments, while also being exposed to gradual changes in the competitive landscape, driven by both existing players and new entrants to the market. Technologies like machine learning and generative AI will accelerate this development in the coming years. Currently, we see digitalisation and automation of processes (purchase order management, quoting, booking, tracking, reporting and billing) and the increasing focus on sustainability as the most significant devel- opments impacting the freight forwarding industry. Insufficient innovation and failure to keep up with, adapt to and utilise new technological opportunities – as well as tackle the competitive chal- lenges they bring – will lead to gradual loss of market share and earnings. We are actively monitoring the logistics market, keeping up to date with our customers' needs and anticipating the impact of emerging technologies. To foster innovation within our organisation, we have established a Group Innovation team and we encourage our employ- ees to generate and share ideas. Strategic planning, innovation and continued development of our digital and physical infra- structure are anchored with our Innovation Board, headed by our COO. Based on strategic roadmaps for each business area, we focus on developing our service catalogues, systems and operational procedures. This enables further digitalisation of our business and ensures that we have a robust and competitive service offering that meets customer needs. The aim of our strategy is to ensure that we can continue to benefit from our logistics ex- pertise, scale and global network as a classic freight forwarder, while increasing our digital competences and utilising the benefits of technology. 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 2023, we have continued to invest in and develop our IT platforms across our service offerings. We have established a dedicated AI team to explore opportuni- ties and implement relevant applications. Furthermore, we have supported our sustainability strategy and Green Logistics services with new technology. Consequently, we assess that our technology risk has remained largely un- changed from last year. For additional descriptions of our current technology focus areas, please see ‘A responsive approach’ on page 16. Commercial: Failure to execute on organic growth strategy DSV's acquisitions in recent years have boosted revenue and number of employees. Our network and market position have become stronger, but growth also comes with challenges. While we integrate acquired companies and grow as a business, we must make sure to maintain a strong commercial focus. We must retain our focus on customer needs, know how to adapt to market changes and develop our network and 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. Managing our commercial risk is anchored with the Executive Board and the Group Execu- tive Committee. In this forum, strategic initiatives are aligned and our commercial threats and opportunities are explored. For each of our business areas, we define the overall strate- gy and purpose, our value proposition and which customer segments we target. Our strategic initiatives to support organic growth include strengthening our network ser- vices (LCL, air charter network, European groupage network) and a revised commercial approach to enhance our vertical competences and value proposition. Furthermore, we have commercial initiatives in place to support cross-divisional cooperation and our Green Logis- tics services. We always pursue profitable growth, and the financial performance of each initiative is tracked, as part of our normal business reviews. In a low-growth and highly competitive market, we achieved solid financial results in 2023. Measured by development in absolute gross profit and EBIT, we outperformed our large peers, indicating that our value proposition and market position are robust. In 2023, we made good progress on several strategic initiatives which aim to strengthen our network services and our commercial approach to the market. These are long-term initiatives which are expected to have gradual effect over the coming years. Based on this, we estimate that the risk associated with executing our organic growth strategy decreased in 2023. 36 DSV Annual Report 2023 Corporate governance and shareholder information Annual General Meeting Board of Directors Executive Board Division Management Air & SeaRoad Solutions Organisation Board Committees Sustainability 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 activities 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 members. 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 2023, Birgit W. Nørgaard resigned from her position after serving 13 years on the Board. Helle Østergaard Kristiansen joined in her place, bringing substantial manage- ment experience within finance, regulatory compliance, renewable energy and sustainability. Corporate governance All members of the Board of Directors are considered independent in accordance with the Danish Recommendation on Corporate Governance with the exception of Thomas Plenborg, who has served more than 12 years on the Board. Board competencies The Board is composed so as to ensure that the competences of its members are diverse and business relevant, so it can perform its duties as intended. Overboarding is also taken into consideration when deter- mining the Board’s composition. The current competencies required of Board members are: knowledge of the transport sector, international commercial experience as well as ex- perience 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, com- petencies 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. 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. 37 DSV Annual Report 2023 Corporate governance and shareholder information The Chairman of the Board is responsible for initiating and running the eval- uation 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 external advisors were used was in 2021. Involving external advisors helps give an independent perspec- tive on the performance and composition of the Board of Directors. The Board can then use their input to support the self-evaluation the follow- ing years. The 2023 self-evaluation addressed a number of topics – including Board members’ mix of competences and insight in areas like digitalisation 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 2023, the Board of Directors held nine ordinary and three extraordi- nary meetings. The agenda for each is defined in accordance with the annual cycle of the Board to make sure the strategic and operational poli- cy framework of the Group is always up to date and in accordance with the emphasis defined by the Board. Besides the work outlined in the annual cycle, this year the Board mainly focused on growth strategies, the Group's sustainability efforts and the continuous development of our digital freight forwarding platforms. The Board also addressed various strategic considerations and business adaptations in view of the emerging economic slowdown in a number of major global economies and other macroeconomic impacts brought on by current geopolitical conflicts. Meeting attendance 2023 Board of Directors Audit Committee Nomination Committee Remune ration Committee Thomas Plenborg 12/12 3/3 2/2 2/2 Jørgen Møller 12/12 - 1/1 1/1 Marie-Louise Aamund 12/12 3/3 1/1 - Beat Walti 12/12 - - 2/2 Niels Smedegaard 12/12 3/3 - - Tarek Sultan Al-Essa 12/12 - - - Benedikte Leroy 12/12 1/1 1/1 1/1 Helle Ø. Kristiansen (elected March 2023) 10/10 2/2 - - Birgit W. Nørgaard (resigned March 2023) 2/2 - 1/1 - 38 DSV Annual Report 2023 Corporate governance and shareholder information ME = Member 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 Governance 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 Recommen- dations on Corporate Governance issued by the Danish Committee on Corporate Governance. The Board uses the Recommendations for guidance when setting up management 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 2023. We report on our adherence to the Recommendations – including internal controls and risk management systems applied as basis for our 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-reports Reporting on Diversity at management levels cf. section 99b of the Danish Financial Statements Act Our Board of Directors has 8 members where 38% are women and 62% men, which is considered an equal gender composition according to Danish corporate governance rules. Five board members have Danish citizenship while three live in countries other than Denmark and have other citizenships. To achieve a balanced gender distribution, we are working towards a target of 40% female representation by 2030 at Executive Management levels in our large Danish companies. Executive Management comprises the Executive Board and the direct management level below (other management levels). Executive Management in DSV A/S comprises 13 members. At end of 2023, the gender distribution comprised 23% women and 77% men, remaining unchanged from last year. This target is aligned with our Diversity and Inclusion Policy and is sup- ported by our recruitment and succession planning policies. We continued our mandatory diversity and inclusion training for all new managers and HR staff during 2023. Further development of initiatives to reach this target will continue during 2024. Jens Bjørn Andersen Office CEO Member since 2008 Born 1966 Jens H. Lund Office COO and Vice CEO Member since 2002 Born 1969 Michael Ebbe Office CFO Member since 2021 Born 1970 Board positions ME EET Group Holdings ApS Executive Board 39 DSV Annual Report 2023 Corporate governance and shareholder information Jørgen Møller Office Deputy Chairman Member since 2015 Up for re-election Yes Independent Yes Born 1950 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 Beat Walti Office Member Member since 2019 Up for re-election Yes Independent Yes Born 1968 Committee Audit Committee - Nomination Committee - Remuneration Committee Chairman Skills and experience • 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 Wenger Vieli AG CM Rahn AG ME EGS Beteiligungen Ltd ME Siegfried Holding AG Benedikte Leroy Office Member Member since 2022 Up for re-election Yes Independent Yes Born 1970 Committee Audit Committee - Nomination Committee Chairman Remuneration Committee Member Skills and experience • 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 environmental, social and governance regulation (sustainability expert), latest in Volvo Trucks • Acquisition and divestment of enterprises Helle Østergaard Kristiansen Office Member Member since 2023 Up for re-election Yes Independent Yes Born 1978 Committee Audit Committee Chairman Nomination Committee - Remuneration Committee - Skills and experience • General international management experience • Extensive experience in finance, renewable energy and sustainability (sustainability expert) • Corporate strategy, operation and resource advisory Other Board positions ME Systematic A/S CEO Danske Commodities A/S Niels Smedegaard Office Member Member since 2020 Up for re-election Yes Independent Yes Born 1962 Tarek Sultan Al-Essa Office Member Member since 2021 Up for re-election Yes Independent Yes Born 1964 Committee Audit Committee Member 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 Other Board positions CM ISS A/S CM Abacus Medicine A/S CM Bikubenfonden CM Falck A/S Committee Audit Committee - Nomination Committee - Remuneration Committee - Skills and experience • Extensive experience in shipping and logistics • Acquisition and divestment of enterprises • General international management experience • Extensive insight in environmental, social and governance regulation (sustainability expert) Other Board positions CM Sultan Center Food Products Company K.S.C DC Agility Public Warehousing Company K.S.C.P. ME National Real Estate Company K.P.S.C. Thomas Plenborg Office Chairman Member since 2011 Up for re-election Yes Independent No Born 1967 Committee Audit Committee Member Nomination Committee Member Remuneration Committee Member Skills and experience • Management experience from directorships and honorary oces • Strategy and financial management • Professor of accounting and auditing at Copenhagen Business School Other Board positions CM ECIT AS ME Menzies Aviation Limited Marie-Louise Aamund Office Member Member since 2019 Up for re-election Yes Independent Yes Born 1969 Committee Audit Committee Member Nomination Committee Member Remuneration Committee - Skills and experience • General international management experience • International tech leadership experience from Microso, IBM and Google • Cybersecurity, digital transformation and sustainability • Acquisition and divestment of enterprises Other Board positions ME The Lego Foundation ME WS Audiology A/S ME KIRKBI A/S ME Matas CM = Chairman DC = Deputy Chairman ME = Member * = Listed company CM Nordic Ferry Infrastructure ME UK P&I ME TT Club Board of Directors 40 DSV Annual Report 2023 Corporate governance and shareholder information DSV share price (DKK) ■ DSV ■ C25 rebased 31-12-2019 31/12 202031/12 2019 31/12 2021 31/12 2022 31/12 2023 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 Share price performance in 2023 At year-end, the closing price for DSV shares on Nasdaq Copenhagen was DKK 1,185.5 – up 8.1% since year-end 2022. During the same period, the Danish C25 Index increased by 7.1%. The average daily trading volume of DSV shares on Nasdaq Co- penhagen was 329,172 shares in 2023 (0.2% of shares issued). At year-end, DSV’s market capitalisation (excluding treasury shares) was DKK 248 billion against DKK 238 billion at the end of 2022. Ownership There is no complete record of all shareholders. Based on the available information as of 31 December 2023, DSV had 94,369 registered shareholders. The registered shares totalled 213 million, corresponding to 97.2% of the share capital. The 25 largest shareholders owned 61.1% 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 (8.8%) • BlackRock, Inc., USA (7.8%) • Capital Group Companies, Inc., USA (5.1%) Shareholder information Share buyback and treasury shares In 2023, DSV acquired 11.1 million treasury shares at a total purchase price of DKK 13,997 million (average purchase price DKK 1,264 per share). On 31 December 2023, DSV held 9.8 million shares as treasury shares, corresponding to 4.5% of the share capital. On 31 January 2024, our portfolio of treasury shares amounted to 10.3 million shares. Throughout 2023, we have engaged in five share buyback programmes. The purpose of these was to accommodate 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 and in compliance with the Safe Harbour principles. Dividends The Board of Directors proposes an ordinary dividend of DKK 7.00 per share for 2023 (2022: DKK 6.50). Shares issued (‘000) 2019 2020 2021 2022 2023 Number of shares issued 235,000 230,000 240,000 219,000 219,000 Average number of shares out- standing during the past 12 months 198,273 227,246 227,501 227,317 213,518 Average diluted number of shares outstanding during the past 12 months 201,405 231,576 232,639 230,467 215,519 41 DSV Annual Report 2023 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 9.1 million were acquired as of 31 December 2023. This authority remains valid until 16 March 2028. Share capital reduction Following the acquisition of treasury shares, the Board of Directors in- tends to propose to the 2024 Annual General Meeting that the Board be authoritsed to reduce the share capital by a nominal value of DKK 5 million. 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. 2023 219,000,000 Share classes 1 Restrictions on transferability and voting rights None Listed Nasdaq Copenhagen Trading symbol DSV ISIN code DK0060079531 Company announcements In 2023, we published 73 company announcements (Nos. 1007-1079). The most important of these are listed in the chart below: 02 Feb. No. 1012 Annual Report 2022 16 Mar. No. 1022 Annual General Meeting 27 Apr. No. 1030 Interim Financial Report Q1 2023 25 Jul. No. 1045 Upgrade of financial outlook for 2023 25 Jul. No. 1046 Interim Financial Report H1 2023 18 Oct. No. 1062 DSV announces changes to Executive Board 24 Oct. No. 1064 NEOM and DSV establish USD 10 billion logistics joint venture 24 Oct. No. 1065 Interim Financial Report Q3 2023 Financial calendar The financial calendar for 2024 is as follows: Annual General Meeting 14 March Q1 2024 Report 24 April H1 2024 Report 24 July Q3 2024 Report 23 October Others % Kuwait UK % Switzerland % % USA % % Denmark The geographical distribution of our shareholders 42 DSV Annual Report 2023 Corporate governance and shareholder information Quarterly financial highlights 2023 2022 Q1 Q2 Q3 Q4 Full year Q1 Q2 Q3 Q4 Full year Statement of profit or loss (DKKm) Revenue 40,954 37,727 35,576 36,528 150,785 61,125 62,749 60,560 51,231 235,665 Gross profit 11,391 11,331 10,649 10,447 43,818 12,877 14,078 13,538 11,656 52,149 Operating profit (EBIT) before special items 4,672 4,705 4,396 3,950 17,723 6,496 7,453 6,506 4,749 25,204 Operating margin (%) 11.4 12.5 12.4 10.8 11.8 10.6 11.9 10.7 9.3 10.7 Conversion ratio (%) 41.0 41.5 41.3 37.8 40.4 50.4 52.9 48.1 40.7 48.3 ROIC before tax (%) (trailing 12 months) 23.2 20.4 17.9 17.8 17.8 23.1 27.2 24.7 25.1 25.1 Invested capital (YTD) 97,151 97,019 99,791 99,973 99,973 103,986 105,596 106,713 99,540 99,540 Segment information (DKKm) Air & Sea Revenue 26,213 22,993 21,912 21,854 92,972 45,887 47,282 45,339 35,923 174,431 Gross profit 7,027 6,754 6,210 5,979 25,970 8,637 9,575 9,135 7,277 34,624 Operating profit (EBIT) before special items 3,626 3,574 3,281 2,882 13,363 5,224 6,163 5,455 3,816 20,658 Operating margin (%) 13.8 15.5 15.0 13.2 14.4 11.4 13.0 12.0 10.6 11.8 Conversion ratio (%) 51.6 52.9 52.8 48.2 51.5 60.5 64.4 59.7 52.4 59.7 Road Revenue 10,094 9,650 9,036 9,375 38,155 10,188 10,835 10,406 10,078 41,507 Gross profit 1,976 2,023 1,924 1,937 7,860 1,938 2,074 1,989 1,910 7,911 Operating profit (EBIT) before special items 495 525 522 467 2,009 498 566 525 451 2,040 Operating margin (%) 4.9 5.4 5.8 5.0 5.3 4.9 5.2 5.0 4.5 4.9 Conversion ratio (%) 25.1 26.0 27.1 24.1 25.6 25.7 27.3 26.4 23.6 25.8 Solutions Revenue 5,625 5,898 5,538 6,079 23,140 6,162 6,182 5,841 6,224 24,409 Gross profit 2,285 2,373 2,381 2,471 9,510 2,322 2,324 2,325 2,347 9,318 Operating profit (EBIT) before special items 548 613 584 610 2,355 789 753 613 546 2,701 Operating margin (%) 9.7 10.4 10.5 10.0 10.2 12.8 12.2 10.5 8.8 11.1 Conversion ratio (%) 24.0 25.8 24.5 24.7 24.8 34.0 32.4 26.4 23.3 29.0 Please refer to page 82 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. 43 DSV Annual Report 2023 Other information Consolidated financial statements 2023 Statement of profit or loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Statement of comprehensive income ................... 45 Statement of cash flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Statement of financial position ......................... 47 Statement of changes in equity ........................ 48 Notes to the consolidated financial statements ........... 49 44 DSV Annual Report 2023 Consolidated financial statements 2023 Statement of profit or loss Statement of comprehensive income (DKKm) Note 2023 2022 Revenue 2.2 150,785 235,665 Direct costs 2.3 106,967 183,516 Gross profit 43,818 52,149 Other external costs 2.4 4,838 5,559 Staff costs 2.5 15,983 16,315 Operating profit before amortisation and depreciation (EBITDA) before special items 22,997 30,275 Amortisation and depreciation 2.6 5,274 5,071 Operating profit (EBIT) before special items 17,723 25,204 Special items, costs 2.7 - 1,117 Financial income 2.8 473 606 Financial expenses 2.8 1,706 1,472 Profit before tax 16,490 23,221 Tax on profit for the year 5.1 4,083 5,550 Profit for the year 12,407 17,671 Profit for the year attributable to: Shareholders of DSV A/S 12,315 17,568 Non-controlling interests 92 103 Earnings per share: Earnings per share of DKK 1 4.6 57.7 77.3 Diluted earnings per share of DKK 1 4.6 57.1 76.2 (DKKm) Note 2023 2022 Profit for the year 12,407 17,671 Items that may be reclassified to profit or loss when certain conditions are met: Net foreign exchange differences recognised in OCI (1,626) 1,260 Fair value adjustments of hedging instruments (10) 9 Fair value adjustments of hedging instruments transferred to financial expenses (5) 9 Tax on items reclassified to profit or loss 5.1 6 (2) Items that will not be reclassified to profit or loss: Actuarial gains/(losses) 3.7 (398) (395) Tax on items that will not be reclassified 5.1 75 54 Other comprehensive income, net of tax (1,958) 935 Total comprehensive income 10,449 18,606 Total comprehensive income attributable to: Shareholders of DSV A/S 10,363 18,500 Non-controlling interests 86 106 Total 10,449 18,606 45 DSV Annual Report 2023 Consolidated financial statements 2023 Statement of cash flows (DKKm) Note 2023 2022 Operating profit before amortisation and depreciation (EBITDA) before special items 22,997 30,275 Adjustments: Share-based payments 6.2 267 202 Change in provisions (704) 520 Change in working capital 826 2,840 Special items, paid 2.7 (263) (664) Interest received 2.8 473 323 Interest paid, lease liabilities 3.6 (851) (727) Interest paid, other 2.8 (698) (745) Income tax paid 5.1 (5,589) (5,178) Cash flow from operating activities 16,458 26,846 Purchase of intangible assets 3.2 (345) (280) Purchase of property, plant and equipment 3.3 (2,030) (1,514) Disposal of property, plant and equipment 3.3 1,258 824 Acquisition of subsidiaries and activities 6.1 (685) - Change in other financial assets (228) 4 Cash flow from investing activities (2,030) (966) Free cash flow 14,428 25,880 Proceeds from borrowings 4.3 212 4,393 Repayment of borrowings 4.3 (327) (3,719) Repayment of lease liabilities 4.3 (3,905) (3,734) Other financial liabilities incurred 108 (161) (DKKm) Note 2023 2022 Transactions with shareholders: Dividends distributed to shareholders of DSV A/S 4.2 (1,424) (1,320) Purchase of treasury shares 4.1 (13,997) (20,313) Sale of treasury shares 4.1 1,794 618 Other transactions with shareholders and non-controlling interests (35) (9) Cash flow from financing activities (17,574) (24,245) Cash flow for the year (3,146) 1,635 Cash and cash equivalents 1 January 10,160 8,299 Cash flow for the year (3,146) 1,635 Currency translation (562) 226 Cash and cash equivalents 31 December 4.2 6,452 10,160 The statement of cash flows cannot be directly derived from the statement of financial position and statement of profit or loss. Statement of adjusted free cash flow (DKKm) Note 2023 2022 Free cash flow 14,428 25,880 Net acquisition of subsidiaries and activities (reversed) 6.1 685 - Special items (reversed) 2.7 263 664 Repayment of lease liabilities 4.3 (3,905) (3,734) Adjusted free cash flow 11,471 22,810 46 DSV Annual Report 2023 Consolidated financial statements 2023 Statement of financial position Assets (DKKm) Note 2023 2022 Intangible assets 3.2 77,106 77,674 Right-of-use assets 3.6 15,655 14,694 Property, plant and equipment 3.3 6,214 6,284 Other receivables 2,461 2,461 Deferred tax assets 5.2 3,300 3,494 Total non-current assets 104,736 104,607 Trade receivables 4.4 22,296 32,387 Contract assets 3.4 4,985 5,785 Inventories 3.5 4,314 1,889 Other receivables 4,283 4,179 Cash and cash equivalents 4.2 6,452 10,160 Assets held for sale 44 38 Total current assets 42,374 54,438 Total assets 147,110 159,045 Equity and liabilities (DKKm) Note 2023 2022 Share capital 4.1 219 219 Reserves 4.1 (718) 919 Retained earnings 69,202 70,381 DSV A/S shareholders’ share of equity 68,703 71,519 Non-controlling interests 263 222 Total equity 68,966 71,741 Lease liabilities 3.6 14,139 13,190 Borrowings 4.3 20,004 21,398 Pensions and other post-employment benefit plans 3.7 1,281 1,183 Provisions 3.8 3,772 4,260 Deferred tax liabilities 5.2 609 504 Total non-current liabilities 39,805 40,535 Lease liabilities 3.6 3,808 3,577 Borrowings 4.3 2,139 814 Trade payables 4.4 13,111 14,992 Accrued cost of services 3.4 7,920 12,085 Provisions 3.8 1,967 2,407 Other payables 8,138 9,640 Tax payables 1,256 3,254 Total current liabilities 38,339 46,769 Total liabilities 78,144 87,304 Total equity and liabilities 147,110 159,045 47 DSV Annual Report 2023 Consolidated financial statements 2023 Statement of changes in equity 2023 2022 Attributable to shareholders of DSV A/S Attributable to shareholders of DSV A/S (DKKm) Share capital Reserves Retained earnings Tota l Non- con trolling interests Total equity Share capital Reserves Retained earnings Tota l Non- con trolling interests Total equity Equity at 1 January 219 919 70,381 71,519 222 71,741 240 (356) 74,219 74,103 175 74,278 Profit for the year - - 12,315 12,315 92 12,407 - - 17,568 17,568 103 17,671 Other comprehensive income, net of tax - (1,629) (323) (1,952) (6) (1,958) - 1,271 (339) 932 3 935 Total comprehensive income for the year - (1,629) 11,992 10,363 86 10,449 - 1,271 17,229 18,500 106 18,606 Transactions with shareholders and non-controlling interests: Share-based payments - - 267 267 - 267 - - 202 202 - 202 Tax on share-based payments - - 171 171 - 171 - - (322) (322) - (322) Dividends distributed - - (1,424) (1,424) (50) (1,474) - - (1,320) (1,320) (58) (1,378) Purchase of treasury shares - (11) (13,986) (13,997) - (13,997) - (19) (20,294) (20,313) - (20,313) Sale of treasury shares - 3 1,791 1,794 - 1,794 - 2 616 618 - 618 Capital reduction - - - - - - (21) 21 - - (1) (1) Dividends on treasury shares - - 19 19 - 19 - - 43 43 - 43 Other adjustments - - (9) (9) 5 (4) - - 8 8 - 8 Total equity transactions - (8) (13,171) (13,179) (45) (13,224) (21) 4 (21,067) (21,084) (59) (21,143) Equity at 31 December 219 (718) 69,202 68,703 263 68,966 219 919 70,381 71,519 222 71,741 * For a specification of reserves, please refer to note 4.1. 48 DSV Annual Report 2023 Consolidated financial statements 2023 Notes to the consolidated financial statements Contents Chapter 1 Basis of preparation Basis of measurement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Changes in accounting policies . . . . . . . . . . . . . . . . . . . . . . . 50 Management judgements and estimates . . . . . . . . . . . . . . . . . 50 Climate-related risks in the financial statments . . . . . . . . . . . . . 50 Basis of consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Foreign currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Presentation of the Annual Report . . . . . . . . . . . . . . . . . . . . . 51 New accounting regulations. . . . . . . . . . . . . . . . . . . . . . . . . 51 Chapter 2 Profit for the year 2.1 Segment information . . . . . . . . . . . . . . . . . . . . . . . . . 52 2.2 Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 2.3 Direct costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 2.4 Other external costs . . . . . . . . . . . . . . . . . . . . . . . . . 55 2.5 Staff costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 2.6 Amortisation and depreciation. . . . . . . . . . . . . . . . . . . . 55 2.7 Special items. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 2.8 Financial income and expenses . . . . . . . . . . . . . . . . . . . 56 Chapter 3 Operating assets and liabilities 3.1 Impairment test . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 3.2 Intangible assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 3.3 Property, plant and equipment . . . . . . . . . . . . . . . . . . . 60 3.4 Contract assets and accrued cost of services . . . . . . . . . . . 61 3.5 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 3.6 Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 3.7 Pension and other post-employment benefit plans . . . . . . . . 63 3.8 Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 Chapter 4 Capital structure and finances 4.1 Equity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 4.2 Capital structure and capital allocation . . . . . . . . . . . . . . . 67 4.3 Financial liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 4.4 Financial risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 4.5 Derivative financial instruments. . . . . . . . . . . . . . . . . . . 72 4.6 Earnings per share. . . . . . . . . . . . . . . . . . . . . . . . . . . 72 4.7 Financial instruments – fair value hierarchy . . . . . . . . . . . . 73 Chapter 5 Tax 5.1 Income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 5.2 Deferred tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 Chapter 6 Other notes 6.1 Acquisition and disposal of entities . . . . . . . . . . . . . . . . . 77 6.2 Share option schemes . . . . . . . . . . . . . . . . . . . . . . . . 78 6.3 Remuneration of the Executive Board and the Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . 80 6.4 Fees to auditors appointed at the Annual General Meeting . . . . . . . . . . . . . . . . . . . . . . . 80 6.5 Related parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 6.6 Contingent liabilities and security for debt . . . . . . . . . . . . .81 49 DSV Annual Report 2023 Consolidated financial statements 2023 Chapter 1 Basis of preparation The 2023 Annual Report of DSV A/S is pre- pared on a going concern basis in accordance with the IFRS Accounting Standards as issued by the International Accounting Standards Board (IASB) and in accordance with IFRS Accounting Standards as adopted by the European Union and further requirements for listed companies in the Danish Financial Statements Act. 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 2023 Annual Report of DSV A/S on 1 February 2024. The Annual Report will be submitted to the shareholders of DSV A/S for approval at the Annual General Meeting on 14 March 2024. Basis of measurement The Annual Report is 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 to the consol- idated financial statements have been applied consistently for the finan- cial year and for the com parative figures. Changes in accounting policies All amendments to the IFRS Accounting Standards effective for the finan- cial year 2023 have been implemented as basis for preparing the consoli- dated financial statements and notes to the financial 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) • Tax on profit for the year and deferred tax (note 5.1 and note 5.2) Additional description of management judgements and estimates made are provided in the relevant notes. Climate-related risks in the financial statements In preparing the consolidated financial statements, Management assesses how climate-related risks may affect the consolidated financial state- ments and the measures that have been, or will be, put in place to miti- gate them. Management assesses that climate-related risks do not have a significant impact on the 2023 primary financial statements. While climate-related risks do not currently impact the primary financial statements significantly, we are closely monitoring changes and develop- ments in these risks. Our assessment of climate-related risks is included in the notes to the financial statements regarding the primary financial statement items that are assessed to be potentially exposed to cli- mate-related risks in the future. These are: • Impairment testing (note 3.1) • Property, plant and equipment (note 3.3) 50 DSV Annual Report 2023 Consolidated financial statements 2023 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 over which the Group has direct or indirect significant influence are ac- counted for as associates and measured using the equity method. Invest- ments with negative net asset values are recognised at DKK 0. 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. Group composition The Group holds interests in 455 entities and was composed as follows at 31 December 2023: RegionEntities (Number)EMEA Americas APAC TotalSubsidiaries 288 59 99 446Associates 6 1 2 9 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 statement of profit or loss under financials. Monetary items denominated in a foreign currency are translated at the exchange rate at the reporting date. The difference between the ex- change rate at the reporting date and the transaction date or the ex- change rate used in the latest annual report is recognised in the statement of profit or loss 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 statement of profit or loss of entities with a functional currency other than DKK are translated at the average exchange rate for the period, and statement of financial position 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 statement of profit or loss from the average exchange rate for the period to the ex- change rate at the reporting date are recognised in other comprehensive income. Adjustments are presented within the translation reserve in equity. Presentation of the Annual Report Statement of cash flows The statement of cash flows is prepared using the indirect method based on operating profit before depreciation and amortisation (EBITDA) before special items. The statement of cash flows cannot be derived directly from the statement of financial position and the statement of profit or loss. Applying materiality in financial reporting In preparing the Annual Report, Management seeks to achieve a high in- formation value 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. Disclosures that are considered immaterial to the decision making of the primary users of these financial statements are omitted. Presentation of financial statement items and subtotals The presentation of financial statement items and subtotals is based on separate classification of material groups of similar items. In the state- ment of profit or loss, 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 un- derstanding of the Group’s financial statements by separating the core performance of the Group from exceptional items. For a definition and reconciliation of Group results before and after special items, please 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 2023 consolidated financial statements. DSV expects to im- plement 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. 51 DSV Annual Report 2023 Consolidated financial statements 2023 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. 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 global 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 operates a global network specialising in transpor- tation of cargo by air and sea. The division offers both conventional freight forwarding services and tailored project cargo solutions. Road The Road division offers road freight services, including full load, part load and groupage. The division operates a European network and furthermore has operations in North America, South Africa and in the Middle East. Solutions The Solutions division offers warehousing and logistics services globally. The service portfolio includes freight management, customs clearance, order management and e-commerce solutions. Measurement of earnings by segment Our operating segments are measured and reported down to operating profit before special items. This reporting adheres to the accounting poli- cies disclosed in these consolidated financial statements. Segment income and costs, as well as assets and liabilities, comprise items directly attributable to the segment as well as items that may be allocat- ed to the segment on a reliable basis. Income and costs 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 operating 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. Please refer to note 2.2 for regional segmentation of revenue. The corporate headquarters of DSV is located in Denmark, which is in the EMEA region. Our business is based on transactions in our global network 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 the consolidated Group revenue. 2.1 Segment information 52 DSV Annual Report 2023 Consolidated financial statements 2023 2.1 Segment information – continued Non-allocated items Air & Sea Road Solutionsand eliminations Tota lSegment information – divisions (DKKm)2023 2022 2023 2022 2023 2022 2023 2022 2023 2022Condensed statement of profit or lossRevenue 92,438 172,868 35,509 38,746 22,482 23,826 356 225 150,785 235,665Intersegment revenue 534 1,563 2,646 2,761 658 583 (3,838) (4,907) - -Divisional revenue 92,972 174,431 38,155 41,507 23,140 24,409 (3,482) (4,682) 150,785 235,665Direct costs 67,002 139,807 30,295 33,596 13,630 15,091 (3,960) (4,978) 106,967 183,516Gross profit 25,970 34,624 7,860 7,911 9,510 9,318 478 296 43,818 52,149Other external costs 3,574 4,244 1,428 1,425 1,782 1,759 (1,946) (1,869) 4,838 5,559Staff costs 7,877 8,471 3,574 3,543 2,418 2,254 2,114 2,047 15,983 16,315Operating profit before amortisation and depreciation (EBITDA) before special items 14,519 21,909 2,858 2,943 5,310 5,305 310 118 22,997 30,275Amortisation and depreciation 1,156 1,251 849 903 2,955 2,604 314 313 5,274 5,071Operating profit (EBIT) before special items 13,363 20,658 2,009 2,040 2,355 2,701 (4) (195) 17,723 25,204Condensed statement of financial positionTotal gross investments 1,776 1,797 1,057 501 5,229 4,338 475 165 8,537 6,801Total assets 80,257 93,821 25,702 24,437 30,730 29,347 10,421 11,440 147,110 159,045Total liabilities 50,336 67,546 19,057 17,547 24,658 23,357 (15,907) (21,146) 78,144 87,304 Revenue Non-current assetsGeographical information – major countries (DKKm)2023 2022 2023 2022USA 26,399 52,826 3,184 2,431Germany 12,187 17,684 1,786 1,526Denmark 11,534 17,071 4,297 4,159China 6,714 10,415 469 465United Kingdom 5,845 9,761 1,054 896Other 88,106 127,908 14,456 14,750Total 150,785 235,665 25,246 24,227 Non-current assetsGeographical information – regions (DKKm) 2023 2022EMEA 18,416 18,179Americas 4,625 3,593APAC 2,205 2,455Total 25,246 24,227 ** Non-current assets less tax assets, customer relationships and goodwill. * Reference is made to the statement of profit or loss for reconciliation of operating profit (EBIT) before special items to profit for the year. 53 DSV Annual Report 2023 Consolidated financial statements 2023 2.2 Revenue Accounting policies Revenue comprises sale of services and other operating income. Sale of services comprises freight forwarding services, contract logistics, sale of property projects and other related services rendered. Other operating income includes rental income from terminal and building leases, gains from disposal of non-current assets and income from insurance contracts. Revenue from services rendered is recognised in accordance with the over-time recognition principle following the satisfaction of various mile- stones as the performance obligations are fulfilled towards the customer. Our main services comprise the following: Air services Air services comprise air freight logistics. Air services are reported within the Air & Sea operating 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. Sea services are reported within the Air & Sea operating segment. Sea services are characterised by longer delivery times, averaging one month depending on destination. Road services Road services comprise road freight logistics. Road services are reported within the Road operating 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. Solutions services are reported within the Solu- tions operating segment. Solutions services are characterised by very short delivery times, happening almost instanta neously. Recognition principles Revenue from services rendered are recognised based on the price speci- fied in the contract with the customer. Revenue is measured excluding VAT and other taxes 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 a cost when in- curred, due to the short delivery times. Trade receivables are recognised as services invoiced to the customer. Trade receivables are not adjusted for financing components due to short credit terms, typically ranging from 14 to 60 days, rendering the financ- ing component insignificant. Where services rendered have yet to be in- voiced and invoices on services received from hauliers still have to be received, contract assets and accrued cost of services are recognised at the reporting date. Revenue allocated to remaining performance obligations are not disclosed following the practical expedient of IFRS 15. Revenue also comprises 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 operating segment to which it relates. Revenue is recognised based on the price and performance obligations specified in the contract with the cus- tomer. Delivery times on property 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. Services and geographical segmentation of revenue is specified as follows: EMEA Americas APAC TotalServices and geogra phical segmentation of revenue (DKKm)2023 2022 2023 2022 2023 2022 2023 2022Air services 20,793 30,258 15,189 28,083 14,622 32,250 50,604 90,591Sea services 20,607 41,386 14,243 28,494 7,518 13,960 42,368 83,840Road services 34,624 37,453 3,531 4,054 - - 38,155 41,507Solutions services 15,062 16,537 4,803 4,382 3,275 3,490 23,140 24,409Total 91,086 125,634 37,766 65,013 25,415 49,700 154,267 240,347Non-allocated items and eliminations (3,482) (4,682)Total revenue 150,785 235,665 54 DSV Annual Report 2023 Consolidated financial statements 2023 2.2 Revenue - continued 2.3 Direct costs Sale of property projects presented within sale of services constitutes less than 1% of total revenue (2022: less than 1%). Income from insur- ance contracts presented within other operating income constitutes less than 1% of total revenue (2022: less than 1%). Accounting policies Direct costs comprise costs paid to generate the revenue. Direct costs in- clude settlement of accounts with haulage contractors, shipping 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 relating to property projects. Revenue is specified as follows: Revenue (DKKm) 2023 2022Sale of services 149,916 234,669Other operating income 869 996Total 150,785 235,665 Direct costs (DKKm) 2023 2022Cost of carriers 92,286 169,068Staff costs, hourly workers 7,669 7,647Other costs of operation 7,012 6,801Total 106,967 183,516 2.6 Amortisation and depreciation 2.5 Staff costs Accounting policies Other external costs comprise costs relating to IT, marketing, consultants, other rent, training and education, office premises, travelling, communi- cations as well as other selling and administrative costs, less costs trans- ferred to direct costs. Accounting policies Staff costs comprise salaries and wages, pension costs, social security costs, costs relating to share options schemes and other staff costs for salaried employees. Staff costs for hourly workers, recognised as direct costs, are excluded. Staff costs are recognised in the financial year in which the employee renders the related service. Costs related to long-term employee bene- fits, 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 regarding pensions and other post-employment benefit 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. Accounting policies Amortisation and depreciation for the year are recognised based on the amor tisation and depreciation profiles of the underlying assets (reference is made to notes 3.2, 3.3 and 3.6). Other external costs (DKKm) 2023 2022Other external costs 11,850 12,360Transferred to direct costs (7,012) (6,801)Total 4,838 5,559 Staff costs (DKKm) 2023 2022Salaries and wages, etc. 19,590 20,111Defined contribution pension plans 728 745Defined benefit pension plans 54 84Other social security costs 3,013 2,820Share-based payments 267 202Total 23,652 23,962Classification in the statement of profit or loss:Hourly workers – recognised as direct costs 7,669 7,647Salaried employees – recognised as staff costs 15,983 16,315Total 23,652 23,962 Weighted average number of FTEs 74,839 76,583 Number of FTEs at year-end 73,577 76,283 Amortisation and depre ci ation (DKKm) 2023 2022Customer relationships 178 254Software 154 185Buildings 341 341Other plant and operating equipment 610 530ROU assets – land and buildings 3,888 3,549ROU assets – other plant and operating equipment140 212Net gain on sale of assets(37) -Total 5,274 5,071 2.4 Other external costs 55 DSV Annual Report 2023 Consolidated financial statements 2023 2.8 Financial income and expenses Accounting policies Special items are used in connection with the presentation of profit or loss for the year to distinguish consolidated operating profit from excep- tional items, which by their nature are not related to the Group’s ordinary operations or investment in future activities. Special items in these financial statements comprise restructuring costs, impairment costs, etc., relating to material structural, procedural or man- agerial reorganisations as well as any related gains or losses on disposals. 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. Accounting policies Financial income and expenses include interest, share of associates’ net result, foreign exchange gains and losses, bank charges as well as amortisa- tion of financial assets and liabilities, including lease liabilities. Furthermore, realised and unrealised gains and losses on derivative financial instruments that cannot be classified as hedging contracts are included. Interest income includes interest on financial assets of DKK 469 million (2022: DKK 323 million). Interest expenses include interest on financial liabilities measured at amortised cost of DKK 1,502 million (2022: DKK 1,453 million). 2023 2022Reported Adjusted Reported Adjusted statement statement statement statement of profit Special of profit of profit Specialof profit Special items bridge (DKKm) or lossitemsor loss or lossitemsor loss Revenue 150,785 - 150,785 235,665 - 235,665Direct costs 106,967 - 106,967 183,516 19 183,535Gross profit 43,818 - 43,818 52,149 (19) 52,130Other external costs 4,838 - 4,838 5,559 237 5,796Staff costs 15,983 (18) 15,965 16,315 653 16,968Operating profit before amortisation and depreciation 22,997 18 23,015 30,275 (909) 29,366Amortisation and depreciation 5,274 18 5,292 5,071 213 5,284Operating profit 17,723 - 17,723 25,204 (1,122) 24,082Special items, costs - - - 1,117 (1,117) -Financial income 473 - 473 606 - 606Financial expenses 1,706 - 1,706 1,472 (5) 1,467Profit before tax 16,490 - 16,490 23,221 - 23,221 Special items (DKKm) 2023 2022Settlement of defined benefit plans relating to previous acquisitions (227) -Restructuring and integration costs 160 1,117Termination benefits to the Executive Board 67 -Special items, costs - 1,117 Financial income (DKKm) 2023 2022Interest income 469 323Share of associates’ profit, net of tax 4 7Foreign exchange gain, net - 276Total 473 606 Financial expenses (DKKm) 2023 2022Interest expenses on lease liabilities 851 727Interest expenses on borrowings 229 236Interest expenses, bank 349 397Financial expenses on pension obligations, refer to note 3.7 47 19Foreign exchange loss, net 157 -Other financial expenses 73 93Total 1,706 1,472 2.7 Special items 56 DSV Annual Report 2023 Consolidated financial statements 2023 Chapter 3 Operating assets and liabilities This chapter includes 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 com prises significant intangible assets mainly relating to acquired goodwill from business combinations carried out over the years. 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 state- ment of profit or loss 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 and 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 statement of profit or loss. The recover- able 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, conversion ratios, future capital expenditures, discount rates and growth expectations in the terminal pe- riod. These are based on an assessment of current and future develop- ments in the three cash-generating units and on historical data and as- sumptions of future expected market developments, including expected long-term average market growth rates. Data includes both internal and external data sources. 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 development and management initiatives 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 development and management initiatives 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 develop- ment and management initiatives in internal productivity (number of order lines per employee) also affect the division’s cash flows. 3.1 Impairment test 57 DSV Annual Report 2023 Consolidated financial statements 2023 2023 2022Goodwill impairment test at 31 December Air & Sea Road Solutions Air & Sea Road SolutionsCarrying amount of goodwill (DKKm) 58,198 8,008 9,568 58,877 7,964 9,452Budget periodAnnual revenue growth 4.0% 4.0% 4.0% 4.0% 4.0% 4.0%Conversion ratio 50.0% 30.0% 30.0% n.a. n.a. n.a.Operating margin n.a. n.a. n.a. 9.1% 5.6% 11.0%Terminal periodGrowth 2.5% 2.5% 2.5% 2.5% 2.5% 2.5%Pre-tax discount rate 11.3% 7.9% 9.5% 11.0% 9.7% 11.1%Sensitivity analysisGrowth in budget period – allowed decline (percentage points) 15.8% 29.0% 11.1% 23.1% 28.2% 9.0%Discount rate – allowed increase (percentage points) 5.3% 10.7% 2.7% 9.9% 11.0% 2.5% Climate-related risks Management has assessed that no climate-related assumptions are key assumptions for the 2023 impairment test of goodwill. Investments as- sociated with our climate change initiatives, including our commitment to achieve net-zero carbon emissions, are considered when determining the recoverable amount of each cash-generating unit. Impairment test 2023 Goodwill was tested for impairment at 31 December 2023. The tests did not result in any impairment of carrying amounts. The expected future net cash flow is based on budgets and business plans approved by Management for the year 2024 and projections for 3.1 Impairment testing — continued subsequent years up to and including 2028. These projections are based on the assumption of stable global economic development during 2024- 26, with average annual GDP growth of at least 3% and transport market growth in line with GDP. From 2026 onwards, DSV expects the growth rate to remain in line with the expected long-term average growth rate for the industry. The budget for 2024 assumes a global GDP growth around 3% and a growth in the global transport markets of 3-4%. In the 2023 impairment test, conversion ratios have replaced operating margins as a key assumption to reflect how the division’s performance is measured. The conversion ratios applied in the impairment test reflect the Group’s communicated long-term targets for 2026. The pre-tax discount rate is calculated in accordance with IAS 36. Sensitivity analysis The sensitivity analysis assesses the impact of changes in cash flows and discount rates on the impairment test results. The an alysis 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. 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 and property, plant and equipment Other non-current assets were also tested for impairment indications to- gether with goodwill at 31 December 2023. No indication of impairment was identified in connection with these tests. 58 DSV Annual Report 2023 Consolidated financial statements 2023 Accounting policies 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. 3.2 Intangible assets Customer relationships On initial recognition, customer relationships identified from business combinations are recognised in the statement of financial position 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 costs 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. 2023 2022Customer Software in Customer Software in Intangible assets (DKKm) Goodwillrelationships Softwareprogress To t a l Goodwillrelationships Softwareprogress To t a lCost at 1 January 76,293 2,574 1,180 342 80,389 75,063 2,565 1,212 280 79,120Additions from business combinations/previous period adjustments 640 - - - 640 370 - - - 370Additions - - 18 327 345 - - 42 238 280Disposals - (10) (82) - (92) - (27) (250) (2) (279)Reclassifications - - 302 (302) 0 - - 174 (174) -Currency translation (1,159) - (7) (3) (1,169) 860 36 2 - 898Total cost at 31 December 75,774 2,564 1,411 364 80,113 76,293 2,574 1,180 342 80,389Total amortisation and impairment at 1 January - 1,981 734 - 2,715 - 1,719 740 - 2,459Amortisation and impairments for the year - 178 154 - 332 - 254 185 - 439Disposals - (10) (30) - (40) - (27) (191) - (218)Reclassification - - - - - - - - - -Currency translation - - - - - - 35 - - 35Total amortisation and impairment at 31 December - 2,149 858 - 3,007 - 1,981 734 - 2,715Carrying amount at 31 December 75,774 415 553 364 77,106 76,293 593 446 342 77,674 59 DSV Annual Report 2023 Consolidated financial statements 2023 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 costs directly attribut- able to preparing the asset for its intended use. The present value of esti- mated costs for dismantling and disposing of assets as well as restoration costs are added to the cost if such costs are recognised as provisions. Material borrowing costs directly attributable to the construction of the individual asset are also added to cost. 3.3 Property, plant and equipment 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 equipment (PPE), 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 statement of financial position and recognised in the statement of profit or loss. 2023 2022Other plant Property, plant Other plant Property, plant Land and and operating and equipment Land and and operating and equipment Property, plant and equipment (DKKm)buildingsequipmentin progress Totalbuildingsequipmentin progress TotalCost at 1 January 4,461 4,425 414 9,300 4,907 3,838 282 9,027Additions from business combinations/previous period adjustments - 1 7 8 (408) - - (408)Additions 430 1,120 480 2,030 393 963 158 1,514Disposals (1,023) (205) (30) (1,258) (533) (402) - (935)Reclassification 226 63 (289) - 19 22 (26) 15Currency translation (132) (148) (2) (282) 83 4 - 87Total cost at 31 December 3,962 5,256 580 9,798 4,461 4,425 414 9,300Total depreciation and impairment at 1 January 1,212 1,804 - 3,016 1,111 1,654 - 2,765Depreciation for the year 341 610 - 951 341 530 - 871Disposals (125) (212) - (337) (226) (402) - (628)Reclassification - - - - (21) 21 - -Currency translation (26) (20) - (46) 7 1 - 8Total depreciation and impairment at 31 December 1,402 2,182 - 3,584 1,212 1,804 - 3,016Carrying amount at 31 December 2,560 3,074 580 6,214 3,249 2,621 414 6,284 60 DSV Annual Report 2023 Consolidated financial statements 2023 Depreciation is carried out on a straight-line basis over the expected use- ful lives of the assets. The expected useful lives of the overall asset cate- gories are as follows: • Terminals and administration buildings: 50-60 years • Other buildings and building elements: 10-30 years • Technical plant and machinery: 6-10 years • Other plant and operating equipment: 3-8 years • Land is not depreciated 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. Climate-related risks Management has considered the influence of climate-related risks on property, plant and equipment, including inherent impact on useful lives of underlying asset groups. Climate-related risks assessed encompass accellerated techno- logical deterioration of assets due to climate-related innovations, regulatory requirements, and customer demand, as well as increased demolition and re - storation cost on premises vacated, due to stricter environmental regulations. 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. 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. Please refer to note 4.4 for disclosure of credit risk, as trade receivables carry substantially the same characteris- tics 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. 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 statement of profit or loss. Accounting policies Whether a contract contains a lease is assessed at contract inception. For identified leases, a right-of-use (ROU) asset and corresponding lease liability are recognised on the lease commencement date. Upon initial recognition, the ROU asset is measured at cost corresponding 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 dis- counted using the interest rate implicit in the lease contract. In cases where the implicit interest rate cannot be determined, an appropriate incremental DSV borrowing rate is used. In determining the lease period extension, op- tions are only included if it is reasonably certain they will be utilised. At subsequent measurement, the ROU asset is measured less accumulated depreciation and impairment losses and adjusted for any remeasurements of the lease liability. Depreciation follows the straight-line method over the lease term or the useful life of the ROU asset, whichever is shortest. 3.3 Property, plant and equipment — continued 3.4 Contract assets and accrued cost of services 3.5 Inventories 3.6 Leases Inventories (DKKm) 2023 2022Property projects under construction 4,247 1,796Stocks 67 93Total 4,314 1,889 Inventories consists of property projects under construction held for the purpose of sale in the ordinary course of business and stocks. In total, DKK 417 million relating to property projects was recognised as a cost in 2023 (2022: DKK 1,231 million). 61 DSV Annual Report 2023 Consolidated financial statements 2023 The lease liability is measured at amortised cost using the effective interest method and adjusted for any remeasurements or modifications made to the contract. ROU 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 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. ROU 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. The leases may include extension options with the intention of securing flexibility in the lease – however, any leas- ing period beyond the normal ten years expected at the initiation of the lease will normally be reflected in the contractual lease term agreed. Management judgements and estimates In accounting for lease contracts, various judgements are applied in de- termining ROU assets and lease liabilities. Judgements include assessment of lease periods, utilisation of extension and termination options and ap- plicable discount rates. Analysis of lease liabilities showing the remaining contractual maturities is provided in the table: 2023 2022Other Other plant and plant and Land and operating Land and operating Right-of-use assets (DKKm)buildingsequipment Tota lbuildingsequipment Tota lCarrying amount at 1 January 14,285 409 14,694 13,121 588 13,709Additions 5,453 61 5,514 4,970 75 5,045Disposals (308) (9) (317) (252) (40) (292)Depreciation for the year (3,888) (140) (4,028) (3,549) (212) (3,761)Currency translation (186) (22) (208) (5) (2) (7)Carrying amount at 31 December 15,356 299 15,655 14,285 409 14,694 Contractual maturity of lease liabilities (DKKm) 202220230-1 year 4,599 4,3021-5 years 12,056 11,059> 5 years 5,055 5,917Total undiscounted lease liabilities at 31 December 21,710 21,278Non-current/current classification (discounted)Non-current 14,139 13,190Current 3,808 3,577 Lease effects recognised in profit or loss and cash flow (DKKm) 20222023Profit or lossIncome from subleasing of ROU assets 79 14Gain on sale and leaseback transactions 101 109Expenses relating to short-term leases (591) (563)Expenses relating to leases of low-value assets (655) (635)Expenses relating to variable lease payments not included in the measurement of lease liabilities (70) (97)Depreciation of ROU assets (4,028) (3,761)Interest expenses on lease liabilities (851) (727)Total profit or loss for leases (6,015) (5,660)Cash flowTotal cash outflow for leases 4,756 4,461 3.6 Leases — continued The profit or loss and cash flow impact of leases recognised for the year are specified below: 62 DSV Annual Report 2023 Consolidated financial statements 2023 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 statement of profit or loss for the period in which they are earned. Contributions payable are recognised in the statement of financial position 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 fu- ture development in wage/salary levels, interest rates, inflation and mortal- ity. The present value is only calculated for benefits to which the employees have become entitled during their employment with the Group. The actuar- ial calculation of the present value less the fair value of assets under the plan is recognised in the statement of financial position under pensions and other post-employment benefit plans. Pension costs for the year are rec- ognised in the statement of profit or loss 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 statement of profit or loss immediately if the employees have already earned the right to the adjusted benefits. Otherwise, they will be recog- nised in the statement of profit or loss over the period in which the em- ployees 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. 3.7 Pensions and other post-employment benefit plans Pension obligations Pension obligations at 31 December are specified as follows: Of these obligations, DKK 873 million relates to unfunded pension obliga- tions (2022: DKK 856 million) and DKK 408 million relates to partly funded obligations (2022: DKK 327 million). The latter is primarily due to the Swiss plans being overfunded. Total pension costs for the year In 2023, net costs of DKK 602 million relating to the Group’s pension plans were recognised in the statement of profit or loss (2022: DKK 848 million) and specify as follows: Pension obligations (DKKm) 2023 2022Present value of defined benefit plans 4,983 4,112Fair value of pension plan assets 3,702 2,929Pension obligations, net 1,281 1,183 Defined Defined contribution benefit Pension cost 2023 (DKKm) plansplans Tota lStaff costs 728 54 782Special items - (227) (227)Financial expenses - 47 47Total costs recognised 728 (126) 602Defined Defined contribution benefit Pension cost 2022 (DKKm) plansplans Tota lStaff costs 745 84 829Financial expenses - 19 19Total costs recognised 745 103 848 Defined benefit pension obligations Development in the present value of defined benefit pension obligations is specified as follows: Defined benefit pension obligations (DKKm) 20222023Obligations at 1 January 4,112 5,693Current service cost 86 135Past service cost from plan amendments, curtailments and gains/losses on settlements (259) 9Total obligations recognised Calculated interest on obligations 174 754,983Actuarial gains/losses arising from changes in financial assumptions 243 (1,283)4,112Actuarial gains/losses arising from changes in demographic assumptions 3 (23)Actuarial gains/losses arising from experience adjustments (14) 39Payments from the plan (87) (521)Settlement payments from the plan 596 -Additions from business combinations 4 -Currency translation 125 (12)Obligations at 31 December 4,983 4,112Settlement payments from the plan, DKK 596 million relate to DSV taking over pensioners from the pension fund formerly used by the acquired GIL entities. The expected average duration of the obligations is 13 years.Expected maturity of pension obligations (DKKm) 202220230-1 year 581 5011-5 years 1,115 933> 5 years 3,287 2,678 63 DSV Annual Report 2023 Consolidated financial statements 2023 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: Actuarial loss included in statement of comprehensive income amounts to DKK 398 million. DSV expects to contribute DKK 67 million to defined benefit plan assets in 2024 (2023: DKK 61 million). The pension plan assets are composed as follows: 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. Significant pension plans The most significant defined benefit plans of the Group relate to Europe, with Germany representing 60% (2022: 62%) and Sweden representing 13% (2022: 13%) of the total net obligation. No other countries have indi- vidual significant net pension obligations. 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. Pension plan assets (DKKm) 2023 2022Pension plan assets at 1 January 2,929 4,785Calculated interest on plan assets 126 56Return on plan assets excluding calculated interest 102 (1,288)Contributions to the plan 121 163Payments from the plan (254) (411)Settlement payments from the plan 819 -Asset ceiling (268) (374)Currency translation 127 (2)Pension plan assets at 31 December 3,702 2,929 Composition of pension plan assets (%) 2023 2022Shares 42% 47%Bonds 51% 44%Insurance contracts 7% 9% Total 100% 100% Sensitivity analysis (DKKm) 2023 2022Defined benefit pension obligations 4,983 4,112Discount rateIncrease of 0.5 percentage point 4,698 3,888Decrease of 0.5 percentage point 5,276 4,346Future wage/salary increaseIncrease of 0.5 percentage point 5,013 4,148Decrease of 0.5 percentage point 4,937 4,071InflationIncrease of 0.5 percentage point 5,104 4,223Decrease of 0.5 percentage point 4,848 3,987Life expectancyLife expectancy increase of 1 year 5,122 4,218Life expectancy decrease of 1 year 4,842 3,986 We continuously work to change our defined benefit plans in DSV into defined contribution plans for the benefit of the Group and the employees. The key assumptions applied for the most significant pension plans are as follows: Future Discount wage/salary Future rate Key assumptions 2023 (%)rateincreaseof inflationSweden 3.5% 2.4% 1.9%Germany 3.5% 2.7% 2.2%Other 0-7.3% 0-10.0% 0-3.8%Weighted average 3.6% 2.6% 1.7%Mortality prognosis tablesSweden DUS21 (w-c)Germany RT Heubeck 2018 G Future Discount wage/salary Future rate Key assumptions 2022 (%)rateincreaseof inflationSweden 3.9% 2.6% 2.1%Germany 4.1% 3.0% 2.4%Other 0.7-7.3% 0-10.0% 0-3.5%Weighted average 4.2% 3.0% 1.8%Mortality prognosis tablesSweden DUS21 (w-c)Germany RT Heubeck 2018 G 64 DSV Annual Report 2023 Consolidated financial statements 2023 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 settle ment 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. 3.8 Provisions 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 termi- nation benefits and costs under terminated leases. Disputes and legal actions Provisions for disputes and legal actions relate mainly to ongoing disputes and legal proceedings. Indemnification liabilities Indemnification liabilities totalling DKK 1,742 million (2022: DKK 1,843 million) relating to various company- and value-added taxes from the GIL acquisition. A corresponding indemnification asset has been recognised as other receivables. Other provisions Other provisions relate mainly to restoration obligations in connection with property leases and onerous contracts. Restruc turing Disputes and Indemnification Other Provisions — 2023 (DKKm)costslegal actionsliabilities provisions Tota lProvisions at 1 January 966 975 1,843 2,883 6,667Additions for the year 254 506 - 876 1,636Additions from business combinations 3 - - 5 8Used for the year (546) (134) - (1,598) (2,278)Reversal of provisions made in previous years (68) (74) - - (142)Currency translation (2) (13) (101) (36) (152)Provisions at 31 December 607 1,260 1,742 2,130 5,739Non-current/current classification:Non-current liabilities 261 534 1,742 1,235 3,772Current liabilities 346 726 - 895 1,967Provisions at 31 December 607 1,260 1,742 2,130 5,739 65 DSV Annual Report 2023 Consolidated financial statements 2023 Chapter 4 Capital structure and finances 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 2.0x EBITDA before special items and our 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. Accounting policies Share capital At year end, the share capital of DSV A/S amounted to 219 million shares (2022: 219 million shares) with a nominal value of DKK 1 each. 4.1 Equity Shares consist of only one share class and include no special rights, preferences or restrictions. All shares are fully paid up. Foreign currency Reserves specification – 2023 (DKKm) Treasury share reserve Hedging reservetranslation reserve Total reservesReserves at 1 January (2) 5 916 919Other comprehensive income, net of tax - (9) (1,620) (1,629)Transactions with shareholders:Purchase of treasury shares (11) - - (11)Sale of treasury shares 3 - - 3Reserves at 31 December (10) (4) (704) (718)Foreign currency Reserves specification – 2022 (DKKm) Treasury share reserve Hedging reservetranslation reserve Total reservesReserves at 1 January (6) (9) (341) (356)Other comprehensive income, net of tax - 14 1,257 1,271Transactions with shareholders:Purchase of treasury shares (19) - - (19)Sale of treasury shares 2 - - 2Capital reduction 21 - - 21Reserves at 31 December (2) 5 916 919 66 DSV Annual Report 2023 Consolidated financial statements 2023 Reserves Reserves as presented in the statement of changes in equity comprise treasury share reserve, hedging reserve and translation reserve, as spe- cified on the previous page. Treasury share reserve The reserve comprises the nominal value of treasury shares. The differ- ence 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 incentive schemes and to adapt the capital structure. The reserve is a distributable reserve. Capital structure 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 1.5 at 31 December 2023 (2022: 1.0). The target gearing ratio is below 2.0x 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. Net interest-bearing debt The Group increased its net interest-bearing debt in 2023 by DKK 4,713 million (2022: increased by DKK 625 million). Net interest-bearing debt can be specified as follows: 4.1 Equity — continued 4.2 Capital structure and capital allocation Hedging reserve The reserve comprises the fair value of hedging instruments qualifying for hedge accounting. Hedge accounting ceases when the hedging instru- ment matures or if a hedge is no longer effective. Foreign currency translation reserve The reserve comprises foreign currency translation arising on the translation of net investments and related hedging in entities with a functional cur- rency other than DKK. The reserve is dissolved upon disposal of entities. 2023 2022Market value% of share capital Nominal valueMarket value% of share capital Nominal value Treasury shares(DKKm)at 31 December(DKKm)(DKKm)at 31 December(DKKm)Portfolio at 1 January 2,339 1.0% 2.1 8,921 2.4% 5.8Cancellation of treasury shares - - - (24,474) (9.6%) (21.0)Portfolio, adjusted for number 2,339 1.0% 2.1 (15,553) (6.9%) (15.2)of sharesPurchased during the year 13,997 5.1% 11.1 20,313 8.5% 18.6Sold during the year (3,983) (1.6%) (3.4) (1,601) (0.6%) (1.3)Value adjustment (689) - - (820) - -Portfolio at 31 December 11,664 4.5% 9.8 2,339 1.0% 2.1 Net interest-bearing debt (DKKm) 2023 2022Lease liabilities 17,947 16,767Interest-bearing borrowings 22,127 22,206Pensions and other post-employment benefit plans 1,281 1,183Other receivables (320) (126)Cash and cash equivalents (6,452) (10,160)Total 34,583 29,870 67 DSV Annual Report 2023 Consolidated financial statements 2023 Distribution to the Company’s shareholders In 2023, the Group spent DKK 13,997 million on the purchase of treas- ury shares and DKK 1,424 million on dividends distributed (2022: DKK 20,313 million and DKK 1,320 million, respectively). It is proposed to distribute a dividend of DKK 7.00 per share for 2023 (2022: DKK 6.50). 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 1,918 million (2022: DKK 1,777 million) are subject to re- strictions implying that the cash may not be readily available for general use or distribution by the Group. Specification of major types of cash and capital restrictions is provided below: Cash and capital restrictions (DKKm) 2023 2022Exchange control restrictions 1,581 1,498Insurance collaterals 330 273Other collaterals 7 6Total 1,918 1,777 Exchange control restrictions Exchange control restrictions comprise cash balances in countries where various forms of foreign exchange controls or other legal restrictions ap- ply. While the cash balances are available for the daily operations of the local entities, the balances cannot be immediately repatriated to the ulti- mate 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. 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 non-current financial liabilities. Overdraft and credit facilities are initially recognised at fair value net of transaction expenses. Subsequently, the financial liability is measured at amortised cost, corre- sponding to the capitalised value using the effective interest method, so that the difference between the proceeds and the nominal value is recog- nised in the statement of profit or loss over the term of the loan. Lease liabilities are described in further detail in note 3.6. 4.2 Capital structure and capital allocation — continued 4.3 Financial liabilities Financial liabilities (DKKm) 2023 2022Non-current liabilities 34,143 34,588Current liabilities 5,947 4,391Total 40,090 38,979 Other liabilities are measured at amortised cost, which does not differ significantly from the net realisable value. Non-cash change Foreign currency Beginning exchange rate Financing activities 2023 (DKKm)of year Cash flowadjustments Other End of yearOverdraft and credit facilities 829 (115) (20) (17) 677Issued bonds 21,377 - 36 37 21,450Lease liabilities 16,767 (3,905) (234) 5,319 17,947Total liabilities from financing activities 38,973 (4,020) (218) 5,339 40,074Other non-current financial liabilities 6 - - 10 16Total financial liabilities 38,979 (4,020) (218) 5,349 40,090Financing activities 2022 (DKKm)Overdraft and credit facilities 1,896 (1,159) 92 - 829Issued bonds 19,557 1,833 53 (66) 21,377Lease liabilities 15,288 (3,734) (33) 5,246 16,767Total liabilities from financing activities 36,741 (3,060) 112 5,180 38,973Other non-current financial liabilities 12 - - (6) 6Total financial liabilities 36,753 (3,060) 112 5,174 38,979 * Other includes additions and remeasurement of financial liabilities. 68 DSV Annual Report 2023 Consolidated financial statements 2023 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 bond loans, credit and overdraft facilities are subject to standard clauses, according to which the Group’s debt must be repaid in case of a change of control. The total duration of the Group’s long-term loan commitments and the undrawn amounts on our credit lines at 31 December 2023 are present- ed in the accompanying table. The weighted duration of the Group’s drawn long-term loan facilities is 7.8 years at 31 December 2023. 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 state- ment of financial position. Foreign currency risk Due to our global activities, the Group is to some degree exposed to ex- change rate fluctuations. 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. The Group is exposed to foreign currency risks relating to the translation of debt denominated in foreign currency other than the functional cur- rency and the translation of net investments in entities with a functional 4.4 Financial risks Principal amount Principal amount Fixed/floating Expiry of Duration Undrawn Loan facilities (EURm)(DKKm)interest ratecommitments(years)(DKKm)Bond loan - ISIN XS2387735470 500 3,727 Fixed 17-09-2036 12.7 -Bond loan - ISIN XS2360881549 600 4,472 Fixed 05-07-2033 9.5 -Bond loan - ISIN XS2308616841 500 3,727 Fixed 03-03-2031 7.2 -Bond loan - ISIN XS2458285355 600 4,472 Fixed 16-03-2030 6.2 -Bond loan - ISIN 212542679 500 3,727 Fixed 26-02-2027 3.2 -Revolving credit facility I 200 1,491 Floating 03-10-2027 3.8 1,491Revolving credit facility II 75 559 Floating 31-12-2025 2.0 559Revolving credit facility III 200 1,491 Floating 16-12-2028 5.0 1,491Revolving credit facility IV 200 1,491 Floating 14-12-2028 5.0 1,491Revolving credit facility V 75 559 Floating 31-01-2029 5.1 559Revolving credit facility VI 100 745 Floating 15-01-2026 2.0 745Overdraft facility I 75 559 Floating 31-01-2029 5.1 559Total 3,625 27,020 6,895 The Group’s financial liabilities fall due as follows:Total cash flow, Financial liabilities – 2023 (DKKm) Carrying amountinclu ding interest 0-1 year 1-5 years 6-10 years >10 yearsOverdraft and credit facilities 677 700 700 - - -Issued bonds 21,450 22,927 1,670 4,342 8,578 8,337Lease liabilities 17,947 21,710 4,599 12,056 4,622 433Trade payables 13,111 13,111 13,111 - - -Total 53,185 58,448 20,080 16,398 13,200 8,770Total cash flow, Financial liabilities – 2022 (DKKm) Carrying amountinclu ding interest 0-1 year 1-5 years 6-10 years >10 yearsOverdraft and credit facilities 829 859 859 - - -Issued bonds 21,377 23,062 186 5,852 8,705 8,319Lease liabilities 16,767 21,278 4,302 11,059 5,322 595Trade payables 14,992 14,992 14,992 - - -Total 53,965 60,191 20,339 16,911 14,027 8,914 Commitments and amounts drawn on long-term loan facilities at 31 December 2023: 69 DSV Annual Report 2023 Consolidated financial statements 2023 currency other than DKK. The former risk affects profit before tax. On recognition of net investments in foreign subsidiaries, the Group is ex- posed 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 2023, 79% 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 and CNY/DKK, will result in more fluctuations in re- ported financial items. Unhedged intra- group balances at 31 December are outlined in the main currency exposures table to the right. Sensitivity analysis The Group does not hedge EUR positions, as it expects that the official Danish fixed exchange-rate policy against the EUR will continue. The sen- sitivity analysis of EUR/DKK exposure shows the effect of a 2% increase in average exchange rates for the year on profit/loss (EBIT) and the ef- fect of a 2% increase in year-end closing rates on other comprehensive income. The sensitivity analysis of other significant currency exposures shows the effect of a 5% increase in average exchange rates for the year on profit/loss (EBIT) and the effect of a 5% increase change in year-end closing rates on other comprehensive income. The Group is not signifi- cantly exposed to foreign currency transaction risk. The calculation method applied in the sensitivity analysis is unchanged compared to previous years. 4.4 Financial risks — continued 2023 2022Fixed/floating Fixed/floating Loan facilities (DKKm)Carrying amountinterest rate Expiry Carrying amountinterest rate Expiry Bond loans 21,450 Fixed 2024-2036 21,377 Fixed 2024-2036Overdraft facilities 677 Floating 2024 829 Floating 2023Loan facilities at 31 December 22,127 22,206Current/non-current classification:Non-current liabilities 19,988 21,392Current liabilities 2,139 814 Unhedged intra-group balances Foreign currency translation risk – sensitivity analysis2023 2022 2023 2022Main currency exposures Impact on Impact on Impact on Impact Impact on Impact (DKKm)Net positionprofit/loss Net positionprofit/lossprofit/losson OCIprofit/losson OCIEUR/DKK (27,945) (559) (26,927) (539) (89) 154 (103) 130USD/DKK (2,781) (139) (7,076) (354) (179) 780 (275) 552CNY/DKK (1,776) (89) (2,558) (128) (68) 44 (134) 74SGD/DKK (1,352) (68) (845) (42) (16) 18 (18) 16PLN/DKK (1,074) (54) (873) (44) (15) 53 (28) 38CHF/DKK (688) (34) (1,798) (90) (17) 78 (18) 24SEK/DKK 351 18 (551) (28) (20) 38 (42) 33Total n.a. (925) n.a. (1,225) (404) 1,165 (618) 867 70 DSV Annual Report 2023 Consolidated financial statements 2023 Interest rate risk At 31 December 2023, 97% (2022: 96%) of Group borrowings were secured through fixed-rate loans. The weighted duration of the fixed-rate loans is 7.3 years at 31 December 2023 (2022: 8.3 years). The weighted average interest rate on the Group’s loans, credit and over- draft facilities and interest rate hedging was 0.9% at the end of 2023 (2022: 1.0%). A 1 percentage point increase in interest rates would not have a signifi- cant impact on the statement of profit or loss or other comprehensive income, based on average net interest-bearing debt for 2023. The cal- culation method applied in the sensitivity analysis is unchanged compared to pre vious years. The Group does not hedge the interest rate risk. 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 number of customers, the Group uses non-recourse fac toring. At 31 December 2023, non-recourse factoring amounted to DKK 2,030 million (2022: DKK 2,288 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. 4.4 Financial risks — continued 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 insurance policies are taken out for the majority of these. At 31 December 2023, credit insurance amounted to DKK 17,598 million, corresponding to 79% of total trade receivables (2022: DKK 26,628 million or 82%). Loss allowances for impaired trade receivables are provided for following an expected credit loss model. The model includes uninsured trade re- ceivables and contract assets. The model also factors in any own risk on insured receivables. Expected credit loss at 31 December 2023 and 31 December 2022 is presented in the following tables: Expected credit loss 2023Carrying Expected Loss (DKKm)amount loss rate (%)allowance Current 23,139 0.1% 32Overdue 1-30 days 2,687 1.2% 32Overdue 31-60 days 730 3.8% 28Overdue 61-90 days 289 8.3% 24Overdue 91-120 days 167 15.6% 26Overdue >121 days 600 31.5% 189Total 27,612 331 Current receivables are considered to have high credit worthiness with a low risk of loss. The loss allowance provision for the year is specified below: Loss allowance provision (DKKm) 20222023Provision at 1 January 873 757Additions for the year 6 713Losses recognised (159) (155)Reversal of provisions from previous years (375) (443)Currency translation (14) 1Provision at 31 December 331 873 Impairment losses on trade receivables for 2023 amounted to DKK 159 million, corresponding to 0.11% of consolidated revenue (2022: DKK 155 million, or 0.07%). Expected credit loss 2022Carrying Expected Loss (DKKm)amount loss rate (%)allowance Current 31,530 0.2% 76Overdue 1-30 days 4,319 2.2% 94Overdue 31-60 days 1,331 7.1% 95Overdue 61-90 days 615 15.0% 92Overdue 91-120 days 368 26.9% 99Overdue >121 days 882 47.3% 417Total 39,045 873 71 DSV Annual Report 2023 Consolidated financial statements 2023 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 other current re ceivables or other current payables in the statement of financial position. Positive 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 settlement 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 investments in foreign entities. The effectiveness of recognised financial instruments is assessed on a monthly basis, and any in effectiveness is recognised in the statement of profit or loss. Fair value changes classified as and fulfilling the criteria for recognition as a fair value hedge are recognised in the statement of profit or loss to- gether with changes in the value of the specific portion 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 hedging 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 statement of profit or loss under financial items. 4.5 Derivative financial instruments Foreign currency risk hedging The Group mainly uses foreign exchange forward contracts to hedge foreign currency risks. The main currency hedged is USD. The foreign exchange forward contracts are used as fair value hedges of currency exposures relating to external assets and liabilities as well as expected short-term operational cash flows. A gain on hedging instruments of DKK 181 million was recognised in the statement of profit or loss for 2023 (2022: a loss of DKK 184 million). In the same period, a loss of DKK 338 million was recognised relating to assets and liabilities (2022: a gain of DKK 460 million). Currency instrument (DKKm) 2023 2022Contractual value 4,131 5,589Maturity (year) 2024 2023Fair value 37 93Of which recognised in profit or loss 40 97Of which recognised in OCI (3) (4) 4.6 Earnings per share Earnings per share (DKKm) 2023 2022Profit for the year 12,407 17,671Non-controlling interests’ share of consolidated profit for the year 92 103DSV A/S shareholders’ share of profit for the year 12,315 17,568Amortisation of customer relationships 178 254Share-based payment 267 202Special items, costs - 1,117Related tax effect (110) (376)Adjusted profit for the year 12,650 18,765(‘000 shares)Total average number of shares issued 219,000 235,438Average number of treasury shares (5,482) (8,121)Average number of shares outstanding 213,518 227,317Average dilutive effect of outstanding share options under incentive schemes 2,000 3,150Diluted average number of shares outstanding 215,518 230,467Earnings per share of DKK 1 57.7 77.3Diluted earnings per share of DKK 1 57.1 76.2Adjusted earnings per share of DKK 1 59.2 82.5Diluted adjusted earnings per share of DKK 1 58.7 81.4 Diluted average number of shares Diluted earnings per share and diluted adjusted earnings per share have been calculated excluding out-of-the money share options. The number of non-vested out-of-the money share options was 6,870,263 in 2023 (2022: 4,325,750). 72 DSV Annual Report 2023 Consolidated financial statements 2023 4.7 Financial instruments — fair value hierarchy Fair value hierarchy by category Derivative financial instruments 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). Financial instruments are measured based on level 2 input (input other than quoted prices that are observable either directly or indirectly). 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. Issued bonds The fair value of issued bonds measured at amortised cost is within level 1 of the fair value hierarchy. Overdraft and credit facilities The carrying amount of overdraft and credit facilities measured at amortised cost is not considered to differ significantly from the fair value. Trade receivables, trade payables and other receivables Receivables and payables pertaining to operating activities with short churn ratios are considered to have a carrying amount equal to fair value. Cash and cash equivalents The carrying amount of cash and cash equivalents is not considered to differ significantly from the fair value. 2023 2022 Financial instruments by category (DKKm) Carrying amount Fair Value Carrying amount Fair ValueFinancial assets:Currency derivatives 37 37 93 93Trade receivables 22,296 22,296 32,387 32,387Other receivables 6,744 6,744 6,640 6,640Cash and cash equivalents 6,452 6,452 10,160 10,160Financial assets measured at amortised cost 35,492 35,492 49,187 49,187Financial liabilities:Issued bonds measured at amortised cost 21,450 18,364 21,377 16,615Overdraft and credit facilities 677 677 829 829Trade payables 13,111 13,111 14,992 14,992Financial liabilities measured at amortised cost 35,238 32,152 37,198 32,436 73 DSV Annual Report 2023 Consolidated financial statements 2023 Chapter 5 Tax In 2023, 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 5,589 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. Accounting policies Current tax payables and receivables are recognised in the statement of financial position as tax calculated on the taxable income for the year ad- justed 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, penalties related to pending tax disputes and adjustments to previous years, including adjustments due to tax rulings. Tax for the year is recognised in the statement of profit or loss, unless the tax expense relates directly to items included in other comprehensive income or equity. 5.1 Income tax Income tax for the year (DKKm) 2023 2022Tax on profit for the year 4,083 5,550Tax on other changes in equity (171) 322Tax on other comprehensive income (81) (52)Total tax for the year 3,831 5,820Current tax 3,961 5,704Deferred tax 245 (302)Tax adjustment relating to previous years (123) 148Total tax on profit for the year 4,083 5,550Fair value adjustment of hedging instruments 6 (2)Actuarial gains/(losses) 75 54Total tax on other comprehensive income 81 52 Tax rate (%) 2023 2022Calculated tax on profit for the year before tax 22.0% 22.0%Adjustment of calculated tax in foreign Group entities relative to 22.0% 2.0% 2.5%Change in deferred tax based on change in income tax rate 0.0% 0.0%Tax effect of:Non-deductible expenses/non-taxable income 1.9% 0.5%Non-deductible losses/non-taxable gains on shares (0.4%) (0.1%)Tax adjustment relating to previous years (0.7%) 0.6%Tax asset valuation adjustments, net (0.8%) (2.3%)Other taxes and adjustments 0.8% 0.7%Effective tax rate 24.8% 23.9% 74 DSV Annual Report 2023 Consolidated financial statements 2023 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 entities, if such temporary differenc- es 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 according 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 utilisation, either by elimination in tax on future earnings or by offsetting deferred 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 5.2 Deferred tax 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 Statement of financial positions (DKKm) 20222023Deferred tax at 1 January 2,990 3,097Deferred tax for the year (245) 302Tax adjustment relating to previous years 101 (74)Tax on changes in equity (139) (430)Additions from business combinations (24) 79Other adjustments 40 (20)Currency translation (32) 36Deferred tax at 31 December 2,691 2,990 Deferred tax not recog nised in the Statement of financial positions (DKKm) 20222023Temporary differences 4 29Tax loss carryforwards 515 853Total tax assets not recognised 519 882 Of not recognised tax loss carryforwards, DKK 354 million (2022: DKK 574 million) may be carried forward indefinitely. Global minimum top-up tax In March 2022, the Organisation for Economic Co-operation and Devel- opment (OECD) issued technical guidance and overview of the potential impact of the OECD Pillar Two expansion on the financial statements in accordance with IAS 12 Income Taxes. The expansion of Pillar Two aims to address Base Erosion and Profit Shift- ing (BEPS) by introducing a global minimum tax rate of 15% and imple- menting tax legislation for the allocation of taxing rights. The Group’s ultimate parent is in Denmark, which has enacted new tax legislation to implement the global minimum top-up tax, which may consequently be applied with respect to all subsidiaries of the Group. As the newly enacted tax legislation in Denmark is only effective from 1 January 2024, there is no current tax impact for the year ended 31 December 2023. The Group has applied a temporary mandatory relief from deferred tax accounting for the impacts of the top-up tax and accounts for it as a current tax as it is incurred. The Group has prepared a preliminary Transitional Country-by-Country Reporting (CbCR) Safe Harbour assessment concluding on fiscal year 2023, based on which it expects to be eligible for the Transitional CbCR Safe Harbour in the majority of jurisdictions in which the Group is present during fiscal year 2024. The top-up tax would not have had a material impact to the Group if it had been applicable in 2023. At 31 December 2023, there are no indications that the top-up tax will have material impact to the Group in 2024. 5.1 Income tax — continued 75 DSV Annual Report 2023 Consolidated financial statements 2023 5.2 Deferred tax — continued PPE, ROU Tax base ofassets, lease tax loss carry-Deferred tax allocation 2023 (DKKm) Intangible assetsliabilities Provisions Other liabilitiesforwards Tota lDeferred tax at 1 January (11) 112 953 994 942 2,990Recognised in profit or loss 49 (20) (176) (201) 204 (144)Recognised in equity - - 81 (220) - (139)Additions from business combinations (24) - - - - (24)Other adjustments - 2 13 12 13 40Currency translation (3) 5 (16) (15) (3) (32)Deferred tax at 31 December 11 99 855 570 1,156 2,691Recognised as follows:Deferred tax assets 155 209 1,084 768 1,084 3,300Deferred tax liabilities (144) (110) (229) (198) 72 (609) PPE, ROU Tax base of assets, lease tax loss carry-Deferred tax allocation 2022 (DKKm) Intangible assetsliabilities Provisions Other liabilitiesforwards Tota lDeferred tax at 1 January (290) (166) 889 1,758 906 3,097Recognised in profit or loss 277 170 111 (298) (32) 228Recognised in equity - - 52 (482) - (430)Additions from business combinations - 90 (95) - 84 79Other adjustments - - (2) 13 (31) (20)Currency translation 2 18 (2) 3 15 36Deferred tax at 31 December (11) 112 953 994 942 2,990Recognised as follows:Deferred tax assets 162 273 1,034 1,074 951 3,494Deferred tax liabilities (173) (161) (81) (80) (9) (504) The deferred tax assets and liabilities recognised are allocated to the following items: 76 DSV Annual Report 2023 Consolidated financial statements 2023 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. 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. 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. Acquisitions and disposals No material entities, non-controlling interests or activities were acquired or divested in 2023. 6.1 Acquisition and disposal of entities 77 DSV Annual Report 2023 Consolidated financial statements 2023 Accounting policies DSV's share option schemes are equity-settled, measured at the grant date and recognised in the statement of profit or loss as staff costs over the vesting period. The offsetting item is recognised directly in equity. The value of employee services received during the vesting period in exchange for share options granted corresponds to the fair value of the share options at the date of granting. 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 valuation 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 options earned. The estimated volatility is based on historical data over the preceding three years adjusted for any unusual circumstances during the period. The valuation of the share options granted in 2023 and 2022 is based on the following assumptions: 6.2 Share option schemes Assumptions 2023 2022Exercise price (DKK) 1,485.0 1,485.0Volatility 18.0% 18.0%Risk-free interest rate 3.4% 1.2%Expected dividends 0.8% 0.8%Expected remaining life (years) 3.5 3.5 Current share option schemesExercise price Number of Fair value at date of Scheme Options granted Exercise period(DKK)employeesgranting (DKKm)2019 2,735,000 29.03.2022 - 27.03.2024 545.0 1,624 141.72020 3,080,750 31.03.2023 - 31.03.2025 560.0 2,000 155.52021 2,438,300 01.04.2024 - 31.03.2026 1,325.0 2,202 205.32022 2,640,900 01.04.2025 - 31.03.2027 1,485.0 2,524 279.82023 2,664,000 01.04.2026 - 31.03.2028 1,485.0 2,516 368.1 Average exercise Share option schemes at 31 December 2023Key price per option Scheme Executive Boardemployees Tot a l(DKK)2019 - 783,000 783,000 545.02020 - 1,653,250 1,653,250 560.02021 168,750 2,155,300 2,324,050 1,325.02022 198,250 2,334,875 2,533,125 1,485.02023 198,750 2,424,950 2,623,700 1,485.0Outstanding at 31 December 2023 565,750 9,351,375 9,917,125 1,219.1Open for exercise at 31 December 2023 - 2,436,250 2,436,250 555.2Life (years) 3.3 2.7 2.7 n.a.Fair value (DKKm) 26 1,864 1,890 n.a. Share options granted in 2019 and 2020 are currently exercisable. 78 DSV Annual Report 2023 Consolidated financial statements 2023 Share option schemes DSV has launched share-based incentive schemes with the purpose of motivating and retaining key employees across the organisation. Share options are awarded at all levels in the organisation, e.g. from team leads, specialists, branch managers, country managers, up to Executive Man- agement. 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 in accordance with the procedures outlined in the Group’s Remuneration Policy for the respective year. A total of 3,117 employees held share options at 31 December 2023 (2022: 2,988 employees). Total costs recognised in 2023 for services received but not recognised as an asset amounted to DKK 267 million (2022: DKK 202 million). The average share price for options exercised in the financial year was DKK 1,263.6 per share at the date of exercise (2022: DKK 1,093.4 per share). 6.2 Share option schemes — continued Average exercise Executive Key price per option Outstanding share options Boardemployees Tot a l(DKK)Outstanding at 1 January 2023 949,000 9,812,800 10,761,800 940.6Granted 198,750 2,465,250 2,664,000 1,485.0Exercised (582,000) (2,784,500) (3,366,500) 533.1Options waived/expired - (142,175) (142,175) 1,365.5Outstanding at 31 December 2023 565,750 9,351,375 9,917,125 1,219.1Outstanding at 1 January 2022 762,750 8,814,648 9,577,398 730.9Granted 198,250 2,442,650 2,640,900 1,485.0Exercised (12,000) (1,279,573) (1,291,573) 479.1Options waived/expired - (164,925) (164,925) 1,091.6Outstanding at 31 December 2022 949,000 9,812,800 10,761,800 940.6 79 DSV Annual Report 2023 Consolidated financial statements 2023 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. Ordinary remuneration to the members of the Executive Board for 2023 was DKK 63.6 million (2022: DKK 54.8 million). Additional DKK 67 million (2022: DKK 0 million) has been included related to termination benefits. Total aggregate remuneration of the members of the Executive Board for 2023 was DKK 130.6 million (2022: DKK 54.8 million). The termination benefits relate to the CEO change that will take effect in 2024. Termina- tion benefits relating to share-based payments consists of share-options to be granted under the Executive Board share options programme in 2024 and 2025. In measuring the cost for share options up for grant, the Black-Scholes value determined at the grant of the latest share op- tions programme has been applied. Termination benefits are presented as special items costs in the statement of profit or loss. Executive Board remuneration (DKKm) 20222023Fixed salary 39.1 36.1Pension 3.1 2.9Share-based payment 21.4 15.8Total ordinary remuneration 63.6 54.8Share-based payment - termination benefits 30.9 -Termination benefits 36.1 -Total aggregate remuneration 130.6 54.8 Board of Directors The aggregate remuneration to the Board of Directors of DSV A/S for 2023 was DKK 8.4 million (2022: DKK 6.9 million). Non-audit services provided by PwC Denmark amounted to DKK 5 million in 2023, relating to advisory services in relation to legal disputes and IT compliance, assurance and advisory in relation to ESG, various tax adviso- ry services, due diligence 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. 6.3 Remuneration of the Executive Board and the Board of Directors 6.4 Fees to auditors appointed at the Annual General Meeting Audit fees and services (DKKm) 20222023Statutory audit fees 47 45Other assurance services 3 3Tax and VAT advisory services 1 1Other services 4 5Total fees to auditors appointed at the Annual General Meeting 55 54Statutory audit fees 4 6Tax and VAT advisory services 1 2Total fees, other 5 8Total 60 62 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 2023 other than ordinary remuneration and termination benefits, as described in notes 6.2 and 6.3. Associated companies DSV holds ownership interests in 9 associates (2022: 8 associates). The Group’s share of associates’ profit for the year amounted to DKK 4 million (2022: DKK 7 million). The carrying amount of the investment was DKK 47 million at 31 December 2023 (2022: DKK 50 million). The Group had the following transactions with associates: 6.5 Related parties Associated companies transactions (DKKm) 20222023Sale of services 79 128Purchase of services 14 14 The Group had the following outstanding balances with associates at 31 December: Associated companies balances (DKKm) 20222023Receivables 199 19Payables - - 80 DSV Annual Report 2023 Consolidated financial statements 2023 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. 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. 6.6 Contingent liabilities and security for debt Commitments Joint ventures The Group has a funding commitment towards joint ventures of USD 2,450 million corresponding to DKK 16,522 million (2022: DKK 0 mil- lion). The commitment is callable until 31 December 2031. At 31 De- cember 2023, the Group had a remaining commitment of USD 2,450 million, corresponding to DKK 16,522 million (2022: DKK 0 million) if called. Contracts DSV has concluded IT service contracts. Costs related to these contracts are recognised as the services are provided. 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 2023, property, plant and equipment and other financial assets with a carrying amount of DKK 2 million were pledged as security (2022: DKK 30.9 million). The carrying amount of debt secured by pledg- es amounted to DKK 0 million (2022: DKK 0 million). 81 DSV Annual Report 2023 Consolidated financial statements 2023 Definition of key figures and ratios 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 2023 to which reference is made. Net interest- = bearing debt (NIBD) Net working = capital (NWC) Invested capital = Adjusted earnings = Net financial = expenses Special items = Adjusted free = cash flow Gross margin = Operating margin = Conversion ratio = Effective tax rate = Return on invested = capital (ROIC) before tax Return on equity = Solvency ratio = Gearing ratio = Earnings per share = Diluted earnings = per share Diluted adjusted = earnings per share Number of shares = issued Average number = of shares outstanding Average number = of shares diluted 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, right-of-use assets, intangible assets including goodwill and custom- er relationships 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 additional details on items included Free cash flow adjusted for net acquisition of sub- sidiaries and activities, lease liability repayments, special items and normalisation of working capital in subsidiaries and activities acquired Gross profit * 100 Revenue Operating profit (EBIT) before special items * 100 Revenue 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 Profit attributable to the shareholders of DSV A/S Average number of shares Profit attributable to the shareholders of DSV A/S Average number of shares diluted Adjusted earnings Average number of shares diluted Total number of shares issued at the reporting date Average number of shares issued adjusted for treasury shares 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 Key figures Financial ratios Share ratios 82 DSV Annual Report 2023 Consolidated financial statements 2023 Air & Sea Road Solutions GroupActivity: Company Country Ownership share Activity Europe (continued) Company Country Ownership share Activity Europe (continued) Group company overview The overview below is a list of companies in the DSV Group at 31 December 2023 showing the companies by segment and not by legal structure. Ownership Company Countryshare ActivityParentDSV A/S DenmarkSubsidiariesEuropeDSV Andorra, SLU Andorra 100.0%DSV Air & Sea GmbH Austria 100.0%GIL Austria GmbH in Liquidation Austria 100.0%DSV Road GmbH Austria 100.0%Panalpina Central Asia EC Azerbaijan 100.0%- Azerbaijan BranchDSV Air & Sea NV Belgium 100.0%Panalpina World Transport N.V. Belgium 100.0%AD Handling NV Belgium 100.0%ABX Worldwide Holdings NV/SA Belgium 100.0%DSV Road Holding NV Belgium 100.0% DSV Air & Sea Belgium NV Belgium 100.0%DSV Solutions N.V. Belgium 100.0%DSV Logistics N.V. Belgium 100.0%DSV Road N.V. Belgium 100.0%MCI Brokers N.V. Belgium 99.9%DSV Real Estate Ghent NV Belgium 100.0%DSV Air & Sea EOOD Bulgaria 100.0%DSV Road EOOD Bulgaria 100.0%DSV Hrvatska d.o.o. Croatia 100.0%DSV Air & Sea s.r.o. Czech Republic 100.0%Panalpina Czech S.R.O. Czech Republic 100.0%GIL Czech Republic s.r.o. Czech Republic 100.0%DSV Air & Sea Czech Republic s.r.o. Czech Republic 100.0%DSV Solutions s.r.o. Czech Republic 100.0%DSV Road a.s. Czech Republic 100.0%DSV Insurance A/S Denmark 100.0%DSV Group Services A/S Denmark 100.0%DSV FS A/S Denmark 100.0%Anpartselskabet af 25. januar 2017 Denmark 100.0%DSV Real Estate Ringsted A/S Denmark 100.0%DSV Air & Sea Holding A/S Denmark 100.0%DSV Air & Sea A/S Denmark 100.0%DSV Ocean Transport A/S Denmark 100.0%PC KH ApS Denmark 100.0%DSV Air & Sea Denmark ApS Denmark 100.0%DSV Solutions Holding A/S Denmark 100.0%DSV Solutions A/S Denmark 100.0%DSV Real Estate Duisburg A/S Denmark 100.0%DSV Road Holding A/S Denmark 100.0% DSV Road A/S Denmark 100.0%DSV Real Estate Horsens A/S Denmark 100.0%DSV Real Estate Hedeland 5 A/S Denmark 100.0%DSV Road Services A/S Denmark 100.0%DSV Real Estate Oem A/S Denmark 100.0%DSV Estonia AS Estonia 100.0%DSV Air & Sea Oy Finland 100.0%DSV Solutions Oy Finland 100.0%DSV Road Oy Finland 100.0%DSV Air & Sea SAS France 100.0%DSV International Air & Sea France France 100.0%DSV Solutions SAS France 100.0%DSV Road Holding S.A. France 100.0%DSV Road SAS France 100.0%Panalpina Georgia LLC Georgia 100.0%DSV Group Services GmbH Germany 100.0%DSV Air & Sea Germany GmbH Germany 100.0%DSV Air & Sea Deutschland GmbH Germany 100.0%DSV Real Estate Duisburg A/S Germany 100.0%- German BranchDSV Solutions Group GmbH Germany 100.0%DSV Solutions GmbH Germany 100.0%DSV Stuttgart GmbH & Co. KG Germany 100.0%DSV Stuttgart Verwaltung GmbH Germany 100.0%DSV Road GmbH Germany 100.0%DSV Services GmbH Germany 100.0%DSV Air & Sea Single Member S.A. Greece 100.0%DSV Road Single Member S.A. Greece 100.0%DSV Air & Sea Hungary Kft. Hungary 100.0% 83 DSV Annual Report 2023 Consolidated financial statements 2023 Company Country Ownership share Activity Europe (continued) Company Country Ownership share Activity Europe (continued) Company Country Ownership share Activity Europe (continued) DSV Solutions Hungary Kft. Hungary 100.0%DSV Hungaria Kft. Hungary 100.0%DSV Real Estate Hungary Kft. Hungary 100.0%DSV Air & Sea Limited Ireland 100.0%Panalpina World Transport (Ireland) Ltd. Ireland 100.0%DSV GIL Ireland Limited Ireland 100.0%LEP Shannon Ltd. Ireland 100.0%DSV Air & Sea (Ireland) Limited Ireland 100.0%DSV Solutions Ltd. Ireland 100.0%UTI Inventory Management Ireland 100.0%Solutions LimitedDSV Road Limited Ireland 100.0%DSV S.p.A. Italy 100.0%Panalpina Trasporti Mondiali S.p.A. Italy 100.0%DSV Real Estate S.p.A. Italy 89.8%UTi Italy SrL Italy 100.0%DSV Air & Sea Italy S.r.l. Italy 100.0%DSV Solutions S.R.L. Italy 100.0%DSV Real Estate Novara S.r.l. Italy 66.0%DSV Real Estate Modena S.r.l. Italy 100.0%DSV Road S.R.L. Italy 100.0%DSV Verona S.r.l. Italy 100.0%GIL Kazakhstan LLP Kazakhstan 100.0%DSV Latvia SIA Latvia 100.0%DSV Lithuania UAB Lithuania 100.0%DSV Air Services Luxembourg 100.0%DSV Lead Logistics B.V. Netherlands 100.0%Agility Logistics International BV Netherlands 100.0%GeoLogistics European Holdings B.V. Netherlands 100.0% Telmidas AMS B.V. Netherlands 100.0%TransOceanic Holdings BV Netherlands 100.0%DSV Finance B.V. Netherlands 100.0%African Investments BV Netherlands 100.0%UTi (Netherlands) Holdings BV Netherlands 100.0%DSV Air & Sea Nederland B.V. Netherlands 100.0%DSV Shared Services B.V. Netherlands 100.0%DSV Solutions Holding B.V. Netherlands 100.0%DSV Solutions Nederland B.V. Netherlands 100.0%IMS Holdings BV Netherlands 100.0%DSV Solutions (Moerdijk) B.V. Netherlands 100.0%DSV Real Estate Dallas Holding B.V. Netherlands 100.0%DSV Real Estate Maastricht B.V. Netherlands 100.0%DSV Real Estate Moerdijk B.V. Netherlands 100.0%DSV Moerdijk Project B.V. Netherlands 100.0%DSV Road Holding N.V. Netherlands 100.0%DSV Road B.V. Netherlands 100.0%DSV Real Estate Eindhoven B.V. Netherlands 100.0%DSV ROAD DOOEL Skopje North Macedonia 100.0%DSV Air & Sea AS Norway 100.0%Panalpina AS Norway 100.0%GIL Norway AS Norway 100.0%DSV Solutions AS Norway 100.0%DSV Road AS Norway 100.0%DSV International Shared Poland 100.0%Services Sp. z o.o.DSV Real Estate Warsaw II Sp. z o.o. Poland 100.0%DSV Air & Sea Sp. z o.o. Poland 100.0%Panalpina Polska Sp. z o.o. Poland 100.0% GIL POLAND Sp. z o.o. Poland 100.0%DSV Air & Sea Poland Sp. z o.o. Poland 100.0%DSV Services Sp. z o.o. Poland 100.0%DSV Road Sp. z o.o. Poland 100.0%DSV Solutions Sp. z o.o. Poland 100.0%DSV Real Estate Lodz Sp. z o.o. Poland 100.0%DSV Group Services Unipessoal, Lda Portugal 100.0%DSV Air & Sea Portugal, LDA Portugal 100.0%DSV Solutions, Lda. Portugal 100.0%DSV SGPS, Lda. Portugal 100.0%DSV Transitarios, Lda. Portugal 100.0%DSV Air & Sea SRL Romania 100.0%GIL AIR&SEA S.R.L. Romania 100.0%DSV Solutions S.R.L. Romania 100.0%DSV Road S.R.L. Romania 100.0%DSV Road d.o.o. Serbia 100.0%DSV Solutions Slovakia s. r. o. Slovakia 100.0%DSV Air & Sea Slovakia s.r.o. Slovakia 100.0%DSV Real Estate Bratislava s.r.o. Slovakia 100.0%DSV Slovakia, s.r.o. Slovakia 100.0%DSV Transport d.o.o. Slovenia 100.0%DSV Air & Sea d.o.o. Slovenia 100.0%Tacisa Transitaria S.L. Spain 100.0%DSV Air & Sea International, S.L.U. Spain 100.0%DSV Solutions Spain S.A.U. Spain 100.0%Servicios Logisticos Integrados SLI, S.A. Spain 100.0%DSV Road Spain S.A.U. Spain 100.0%DSV Holding Spain S.L. Spain 100.0%DSV Air & Sea, S.A.U. Spain 100.0% 84 DSV Annual Report 2023 Consolidated financial statements 2023 Company Country Ownership share Activity Europe (continued) Company Country Ownership share Activity North America (continued) Company Country Ownership share Activity Europe (continued) DSV REAL ESTATE LA BISBAL S.L. Spain 100.0%DSV Air & Sea AB Sweden 100.0%DSV Air & Sea Nordic AB Sweden 100.0%Agility AB Sweden 100.0%DSV Solutions AB Sweden 100.0%DSV Real Estate Landskrona 2 AB Sweden 100.0%DSV Real Estate Helsingborg AB Sweden 100.0%DSV Group AB Sweden 100.0%DSV Road AB Sweden 100.0%Göinge Frakt EK Sweden 100.0%DSV Road Property Holding AB Sweden 100.0%GIL Switzerland 4 AG Switzerland 100.0%Panalpina Welttransport Holding AG Switzerland 100.0%DSV Corporate Services AG Switzerland 100.0%Panalpina International AG Switzerland 100.0%DSV Air & Sea AG Switzerland 100.0%GIL Switzerland 2 AG Switzerland 100.0%DSV Logistics S.A. Switzerland 100.0%DSV Air & Sea A.S. Türkiye 100.0%DSV International Hava ve Türkiye 100.0%Deniz Taşimaciliği Ltd.ŞirketiDSV Road & Solutions A.S. Türkiye 100.0%Panalpina World Transport Ltd. Ukraine 100.0%DSV Logistics LLC Ukraine 100.0%Agility Logistics LLC Ukraine 100.0%DSV GIL Holding Limited United Kingdom 100.0%DSV Air & Sea Limited United Kingdom 100.0%Panalpina World Transport Ltd. United Kingdom 100.0%DSV GIL UK Limited United Kingdom 100.0% DSV GIL Fairs & Events Limited United Kingdom 100.0%DSV GIL Pension Trustees Limited United Kingdom 100.0%DSV Air & Sea 2018 (UK) Limited United Kingdom 100.0%DSV Lead Logistics Limited United Kingdom 100.0%DSV GIL Solutions Limited United Kingdom 100.0%DSV GIL Management Limited United Kingdom 100.0%DSV Real Estate Thrapston Limited United Kingdom 100.0%DSV Road Holding Ltd. United Kingdom 100.0%DSV Commercials Ltd. United Kingdom 100.0%DSV Road Ltd. United Kingdom 100.0%Global Options Worldwide Express (Ltd) United Kingdom 100.0%DSV Pension Trustees Ltd. United Kingdom 100.0%DSV Solutions Ltd. United Kingdom 100.0%DFDS Transport Ltd. United Kingdom 100.0%DSV Real Estate Tamworth Ltd. United Kingdom 100.0%G T Exhibitions Limited United Kingdom 100.0%North AmericaDSV Air & Sea Inc. Canada 100.0%DSV Solutions Inc. Canada 100.0%DSV Road, Inc. Canada 100.0%DSV Air & Sea, S.A. de C.V. Mexico 100.0%DSV International Shared Mexico 100.0%Services S.A. de C.V.TransOceanic Shipping Co. S. Mexico 100.0%de RL de C.V.DSV Solutions S.A. de C.V. Mexico 100.0%DSV Road, S.A. de C.V. Mexico 100.0%DSV 4PL Inc. United States 100.0%DSV Air & Sea Holding Inc. United States 100.0% DSV Air & Sea Inc. United States 100.0%DSV Air & Sea International United States 100.0%Holding Inc.DSV Solutions, LLC United States 100.0%DSV Inventory Management United States 100.0%Solutions Inc.DSV Real Estate Dallas Inc. United States 100.0%Market Industries LLC United States 100.0%DSV Road Transport, Inc. United States 100.0%DSV Road, Inc. United States 100.0%DSV US Property Holding, Inc. United States 100.0%DSV Real Estate Los Angeles, LLC United States 100.0%DSV Real Estate Phoenix, LLC United States 100.0%DSV Real Estate New Jersey, LLC United States 100.0%DSV Real Estate Chicago, LLC United States 100.0%DSV Real Estate New Albany, LLC United States 100.0%DSV Real Estate Pharr, LLC United States 100.0%DSV Real Estate Atlanta, LLC United States 100.0%South AmericaUTi Logistics Argentina S.A. Argentina 100.0%DSV Air & Sea S.A. Argentina 100.0%GeoLogistics Holdings Bermuda 100.0%(Bermuda) LimitedDSV Solutions Brasil Serviços Brazil 100.0%de Logística Ltda.DSV Air & Sea Brasil Ltda. Brazil 100.0%UTi Worldwide Inc. Brit. Virgin Islands 100.0%UTi Logistics (Proprietary) Limited Brit. Virgin Islands 100.0%Thomas International Freight Brit. Virgin Islands 100.0%Auditors Limited 85 DSV Annual Report 2023 Consolidated financial statements 2023 Company Country Ownership share Activity Company Country Ownership share Activity Asia (continued) Company Country Ownership share Activity South America (continued) UTi Kazakhstan Investments Ltd Brit. Virgin Islands 100.0%Agility (Asia/Pacific) Limited Brit. Virgin Islands 100.0%PWC Global Logistics Holdings Ltd Brit. Virgin Islands 100.0%DSV Air & Sea (Latin America) Chile 100.0%Holding S.A.DSV Air & Sea S.A. Chile 100.0%Agility Logistics Corp. Holding SpA Chile 100.0%Agility Logistics Chile SA Chile 100.0%DSV Air & Sea S.A.S. Colombia 100.0%AGENCIA DE ADUANAS DSV Colombia 100.0%S.A.S. NIVEL 1DSV Solutions S.A.S. Colombia 100.0%DSV Solutions Zona Franca SAS Colombia 100.0%DSV Air & Sea S.A. Costa Rica 100.0%DSV AIR & SEA DOMINICANA, Dominican 100.0%S.R.L.RepublicDSV-AIR&SEA S.A. Ecuador 100.0%DSV Air & Sea, S.A. de C.V. El Salvador 100.0%DSV Air & Sea PA Inc. Panama 100.0%Panalpina SEM, S.A. Panama 100.0%Panalpina S.A. Panama 100.0%Almacenadora Mercantil S.A. Panama 100.0%DSV Air & Sea S.A. Peru 100.0%Agility Logistics Peru S.A. Peru 100.0%DSV Air & Sea (PR) Inc. Puerto Rico 100.0%Arabella Shipping LtdSaint Vincent And 100.0%The GrenadinesDSV Air & Sea Uruguay Uruguay 100.0%- Servicios Logisticos SADSV Air & Sea Uruguay S.A. Uruguay 100.0% AsiaDSV Air & Sea Ltd. Bangladesh 100.0%Agility Ltd. Bangladesh 100.0%DSV Air & Sea (Cambodia) Co., Ltd. Cambodia 100.0%Prime Cargo (Cambodia) Co., Ltd. Cambodia 100.0%GIL Integration 1 (Cambodia) Co., Ltd. Cambodia 100.0%DSV Air & Sea Co., Ltd. Cambodia 100.0%UTi Worldwide Co. Ltd. Cambodia 100.0%- Cambodia Branch (USD)DSV Air & Sea Co., Ltd. China 100.0%DSV Air & Sea Co., Ltd. (China) China 100.0%Baisui United Logistics China 100.0%(Shanghai) Co. Ltd.Agility Logistics (Shanghai) Limited China 100.0%DSV Logistics Co., Ltd. China 100.0%Panalpina World Transport (PRC) Ltd. China 100.0%Zhejiang DSV supply chain China 100.0%management CO.,LTDDSV Solutions Co., Ltd. China 100.0%DSV Logistics (Nanjing) Co., Ltd. China 100.0%DSV Air & Sea Ltd. Hong Kong 100.0%Pantainer (H.K.) Ltd. Hong Kong 100.0%Agility Logistics Limited Hong Kong 100.0%ECT Transport Limited Hong Kong 100.0%DSV Solutions Limited Hong Kong 100.0%DSV Air & Sea (HK) Ltd. Hong Kong 100.0%Panalpina China Ltd. Hong Kong 100.0%DSV Air & Sea Pvt. Ltd. India 100.0%DSV Air & Sea International India 100.0%Private LimitedDSV Coload & Clearance Pvt. Ltd. India 100.0% DSV Solutions Private Limited India 100.0%PT. DSV Transport Indonesia Indonesia 100.0%PT GIL Solusi Indonesia Indonesia 100.0%PT DSV Solutions Indonesia Indonesia 100.0%PT Synergy Indonesia Indonesia 100.0%PT Sarana Prima Optima Indonesia 100.0%DSV Air & Sea Japan GK Japan 100.0%DSV Air & Sea Co., Ltd. Japan 100.0%DSV Solutions Co., Ltd. Japan 100.0%DSV Air & Sea Ltd. Korea 100.0%DSV Solutions Ltd. Korea 100.0%DSV Air & Sea International Ltd. Korea 100.0%DSV Air and Sea Limited Macao 100.0%DSV Air & Sea Sdn. Bhd. Malaysia 100.0%Panalpina Customs Services Malaysia 100.0%(M) SDN BHDLitvest Corporation Sdn Bhd Malaysia 100.0%DSV Solutions (DC) Sdn. Bhd. Malaysia 100.0%GOCT Logistics Sdn Bhd Malaysia 100.0%DSV Shared Services Asia Sdn Bhd Malaysia 100.0%DSV Solutions (Management) Sdn. Bhd. Malaysia 100.0%DSV Logistics Sdn. Bhd. Malaysia 100.0%DSV STATIONARY SDN. BHD. Malaysia 100.0%Panalpina Transport Malaysia 100.0%(Malaysia) Sdn. Bhd.DSV Inventory Management Malaysia 100.0%Solutions Sdn. Bhd.DSV Air & Sea (Myanmar) Limited Myanmar 100.0%DSV Air and Sea Pakistan Pakistan 100.0%(SMC-Private) Limited 86 DSV Annual Report 2023 Consolidated financial statements 2023 Company Country Ownership share Activity Asia (continued) Company Country Ownership share Activity Middle East (continued) Company Country Ownership share Activity Asia (continued) DSV SOLUTIONS (PRIVATE) LIMITED Pakistan 100.0%DSV Air & Sea Limited Papua 100.0%New GuineaPanalpina Global Business Services Philippines 100.0%(GBS) - PhilippinesDSV International Shared Philippines 100.0%Services Inc.DSV Air & Sea Inc. Philippines 100.0%GIL Holding Co Inc. Philippines 100.0%GIL Logistics Holding Inc. Philippines 100.0%GIL International Logistics Inc. Philippines 100.0%DSV Logistics Solutions Philippines 100.0%Philippines, Inc.Panalpina World Transport Philippines 100.0%(Philippines) Inc.DSV Global Solutions Inc. Philippines 100.0%GIL Logistics Distribution Inc. Philippines 100.0%Agility Logistics Holdings Pte Ltd Singapore 100.0%Agility Logistics Holdings (S) Pte. Ltd. Singapore 100.0%DSV Singapore Real Estate Singapore 100.0%Holding Pte. Ltd.Agility International Logistics Singapore 100.0%Pte. Ltd.China Baisui Logistics Pte Ltd Singapore 100.0%DSV Solutions Pte Ltd. Singapore 100.0%DSV Air & Sea Singapore Pte. Ltd. Singapore 100.0%DSV Inventory Management Singapore 100.0%Solutions Pte. LtdUTi Pership (Pvt) Limited Sri Lanka 51.0%DSV Pership (Private) Limited Sri Lanka 40.0%DSV Air & Sea Co., Ltd. Taiwan 100.0% DSV Air & Sea (Taiwan) Ltd. Taiwan 100.0%DSV Solutions Co., Ltd. Taiwan 100.0%Panalpina Asia-Pacific Services Thailand 100.0%(Thailand) Ltd.Supreme Eliga Co. Ltd. Thailand 100.0%GIL Air & Sea (Thailand) Co., Ltd. Thailand 100.0%DSV Solutions Ltd. Thailand 100.0%DSV Holding (Thailand) Co., Ltd. Thailand 100.0%Panalpina World Transport Thailand 100.0%(Thailand) Ltd.DSV Air & Sea Ltd. Thailand 100.0%DSV Air & Sea Company Limited Viet Nam 99.0%DSV Solutions Co., Ltd Viet Nam 100.0%Agility Logistics Vietnam Viet Nam 100.0%Company LtdAgility Ltd Viet Nam 71.0%DSV Air & Sea Vietnam Limited Viet Nam 100.0%Inventory Management Viet Nam 100.0%Solutions Vietnam LimitedMiddle EastAgility Logistics Limited Afghanistan 100.0%DSV AIR & SEA W.L.L. Bahrain 100.0%Panalpina Central Asia EC Bahrain 100.0%DSV Solutions B.S.C Closed Bahrain 100.0%Al-Alb Co. for General Iraq 100.0%Transportation (PLLC)Agility Kurdistan Company for Iraq 67.5%Administration of Warehouses and Facilitate Storage Process Limited The Warehousing Company for Iraq 100.0%Shipping, Discharging and Custom Clearance LLCDSV Air & Sea Ltd. Israel 100.0%DSV Marine Insurance Agency Ltd. Israel 100.0%DSV - E-COMMERCE LTD. Israel 100.0%DSV Solutions Ltd Israel 100.0%U.T.I.-Inventory Management Israel 100.0%Solutions Limited partnershipUTI IMS Ltd. Israel 100.0%DSV Air & Sea Jordan Jordan 100.0%Public warehousing Company Jordan 100.0%-Jordan PSCPublic Warehousing Company for Jordan 100.0%Storage and Distribution ServicesPublic warehousing Company Jordan 100.0%-Jordan PSC - Aqaba BranchDSV Holding for Company Kuwait 100.0%Business Management W.L.LGlobal Logistics for General Kuwait 100.0%Trading and Contracting Co. WLLDSV Air & Sea Co. W.L.L. Kuwait 49.0%DSV A&S for Shipping and Kuwait 100.0%Transport W.L.LDSV Solutions for Warehousing Kuwait 100.0%and Third Party Inventory Man-agement Co. S.P.CGIL Logistics Cargo Transport W.L.L Kuwait 100.0%Agility Freight Forwarding Lebanon 100.0%(Lebanon) SARLPWC Trading and contracting Lebanon 100.0%Lebanon SAL (Holding)PWC Lebanon (Holding) SAL Lebanon 100.0% 87 DSV Annual Report 2023 Consolidated financial statements 2023 Company Country Ownership share Activity Middle East (continued) Company Country Ownership share Activity Africa (continued) Company Country Ownership share Activity Middle East (continued) PWC investments (Lebanon) SARL Lebanon 100.0%DSV Air and Sea LLC Oman 70.0%Global Logistics (Oman) LLC Oman 50.0%DSV Air and Sea Shipping WLL Qatar 49.0%DSV Panalpina Marine Qatar 100.0%Shipping W.L.L.DSV Air and Sea for Logistics Saudi Arabia 100.0%Services CompanyDSV Solutions for Logistics Saudi Arabia 100.0%Services CompanyGIL INTERNATIONAL HOLDINGS I United Arab 100.0%LIMITEDEmiratesGIL INTERNATIONAL HOLDINGS II United Arab 100.0%LIMITEDEmiratesGIL INTERNATIONAL HOLDINGS III United Arab 100.0%LIMITEDEmiratesDSV Air & Sea (LLC) United Arab 100.0%EmiratesDSV Solutions DWC-LLC United Arab 100.0%EmiratesPanalpina Jebel Ali Ltd. United Arab 100.0%EmiratesDSV Gulf Customs Broker LLC United Arab 49.0%EmiratesDSV Air and Sea DWC-LLC United Arab 100.0%EmiratesDSV Air and Sea Middle East United Arab 100.0%DWC-LLCEmiratesDSV Solutions PJSC United Arab 49.0%EmiratesDSV Solutions L.L.C. United Arab 100.0%EmiratesDSV Solutions MENA FZE United Arab 100.0%Emirates DSV Solutions - FZE United Arab 100.0%EmiratesG T M E Logistics LLC United Arab 100.0%EmiratesOceaniaDSV Air & Sea Pty. Ltd. Australia 100.0%DSV Solutions Pty. Ltd. Australia 100.0%A.C.N. 116 779 876 PTY LTD Australia 100.0%A.C.N. 004 265 721 PTY LTD Australia 100.0%A.C.N. 007 430 935 PTY LTD Australia 100.0%A.C.N. 078 189 296 PTY LTD Australia 100.0%A.C.N. 082 751 460 PTY LTD Australia 100.0%A.C.N. 144 885 156 PTY LTD Australia 100.0%DSV Air & Sea Limited New Zealand 100.0%AfricaAgility Maghreb Sarl Algeria 49.0%Agility Logistics SARL Algeria 100.0%Frans Maas Algerie S.a.r.l. Algeria 100.0%Panalpina Transportes Mundiais Angola 52.0%Navegãçao e Trânsitos S.A.R.L.Global Integrated Logistics Lda Angola 100.0%DSV Air & Sea (PTY) Limited Botswana 100.0%Panalpina Transports Mondiaux Cameroon 90.0%Cameroun S.A.R.L.DSV-UTI Egypt Ltd. Egypt 100.0%Panalpina World Transport Egypt LLC Egypt 100.0%GIL Egypt Limited Liability Company Egypt 100.0%DSV Solutions S.A.E. Egypt 100.0% Global Options Worldwide Express Eswatini 100.0%Investments (Pty) LtdPanalpina Transports Mondiaux Gabon 89.8%Gabon S.A.DSV Air & Sea Limited Kenya 100.0%Panalpina Kenya Ltd. Kenya 100.0%GIL Africa Holdings Ltd Mauritius 100.0%Panalpina Morocco S.A.R.L. Morocco 100.0%Global Integrated Logistics Morocco 100.0%Company SARL AUDSV Transport Int'l S.A Morocco 100.0%DSV Air & Sea Limitada Mozambique 100.0%GIL Mozambique, LDA Mozambique 100.0%Globeflight Worldwide Express Namibia 100.0%(Pty) LtdDSV Freight International Limited Nigeria 100.0%DSV Air and Sea South Africa 100.0%(Proprietary) LimitedDSV South Africa (Pty) Ltd. South Africa 75.0%DSV Shared Services (Pty) Ltd. South Africa 100.0%UTi Logistics (Proprietary) South Africa 100.0%Limited - SC OCS DivisionDSV AFRICA HOLDING (Pty) Ltd. South Africa 100.0%DSV Skyservices (Pty) Ltd South Africa 100.0%Scorpion Share Block (Pty) Ltd. South Africa 100.0%DSV Real Estate Johannesburg South Africa 100.0%(Pty) Ltd.Firefly Investments 337 Properties South Africa 100.0%Proprietary LimitedLinkit lnvestments (Pty) Ltd. South Africa 80.0%GIL South Africa 1 (Pty) Ltd South Africa 100.0%DSV Healthcare (Pty) Ltd. South Africa 100.0% 88 DSV Annual Report 2023 Consolidated financial statements 2023 Company Country Ownership share Activity Africa (continued) DSV Solutions (Pty) Ltd. South Africa 100.0%DSV Assembly Services (Pty) Ltd. South Africa 65.3%DSV Mounties (Pty) Ltd. South Africa 100.0%DSV Road (Pty) Ltd. South Africa 100.0%Globeflight Worldwide Express South Africa 100.0%(SA) Pty LtdMercury Couriers (Pty) Ltd South Africa 100.0%DSV Air & Sea Limited Uganda 100.0%Agility Logistics Limited Uganda 100.0%DSV Air & Sea Limited Zambia 100.0%DSV Air & Sea (Private) Limited Zimbabwe 100.0%AssociatesTrans-Link Cambodia Ltd Cambodia 49.0%GT Stevedores Oy Finland 25.5%KM Logistik GmbH Germany 35.0%IDS Logistik GmbH Germany 28.0%AEP Logistics Properties Venlo B.V. Netherlands 30.0%Tristar Transport (Private) Limited Pakistan 50.0%ATS Air Transport Service AG Switzerland 48.0%Polymer Logistics United Arab 36.5%Investments LLCEmiratesKey Logistics, Inc. United States 49.0% 89 DSV Annual Report 2023 Consolidated financial statements 2023 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 2023. The Annual Report has been prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standard Board (IASB) and in accordance with IFRS Accounting Standards as adopted by the European Union and further requirements for listed companies 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 2023 and of the results of the Group and Parent Company operations and cash flows for the financial year 2023. Hedehusene, 1 February 2024 Executive Board: Jens Bjørn Andersen CEO Michael Ebbe CFO Jens H. Lund COO and Vice CEO Board of Directors: Thomas Plenborg Chairman Niels Smedegaard Jørgen Møller Deputy Chairman Tarek Sultan Al-Essa Marie-Louise Aamund Benedikte Leroy Beat Walti Helle Østergaard Kristiansen In our opinion, the Annual Report of DSV A/S for the financial year 1 January to 31 December 2023 with the file name DSV-2023-12-31-en.zip is prepared, in all material respects, in compliance with the ESEF Regulation. Management’s commentary has been prepared in accordance with the requirements of the Danish Financial Statements Act and the disclosure requirements of Article 8 of Regulation (EU) 2020/852 (EU Taxonomy 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. 90 DSV Annual Report 2023 Statements 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 2023 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 2023 in accord- ance with IFRS Accounting Standards as issued by the International Ac- counting Standards Board (‘IASB’) and in accordance with IFRS Accounting Standards 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 2023 comprise statement of profit or loss and statement of comprehen- sive income, statement of cash flows, statement of financial position, statement of changes in equity and notes, including material accounting policy information 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 seven years including the financial year 2023. 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 2023. 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. shipments 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 esti- mates and which are complex by nature, i.e. accrual of income (contract assets) and related costs (accrued cost of services), including methods and data applied and assumptions made by Management. The process of ac- cruing for services rendered is, therefore, complex and dependent on rel- evant IT controls in certain IT systems and significant management judgement and estimates. 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 revenue and as revenue consists of 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 IFRS Accounting Standards, including disclosure requirements. We updated our understanding of relevant controls, including Group controlling procedures and IT controls, concerning the timing of revenue recognition and evaluated whether these were designed in line with the Group’s accounting policies and were operating effectively. For contract assets and accrued cost of services, we examined reports con- cerning services in progress at year-end and challenged the estimates made by Management regarding revenue and related cost accruals, including Man- agement’s use of methods, assumptions and data for preparing the estimates. 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. Independent Auditor’s reports 91 DSV Annual Report 2023 Statements 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 carryfor- wards. The utilisation of tax losses and tax amortisation balances is, inher- ently, uncertain, as it is dependent on the financial development of business activities in certain countries and regions. 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 IFRS Accounting Standards, in- cluding disclosure requirements. 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 re- viewed correspondence with tax authorities and discussed methods and data applied as well as assumptions made by Management, and assessed whether they are adequate. 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 future taxable income, and evaluated the assumptions made by Man- agement 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 Commentary, and we do not express any form of assurance conclusion thereon. In connection with our audit of the Financial Statements, our responsibility 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 and Article 8 of Regulation (EU) 2020/852 (EU Taxonomy Regulation). 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 and the disclosure requirements of Article 8 of Regulation (EU) 2020/852 (EU Tax- onomy Regulation). We did not identify any material misstatement in Man- agement’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 IFRS Accounting Standards as issued by the International Accounting Standards Board (‘IASB’) and in accordance with IFRS Accounting Standards as adopted by the EU and further require- ments in the Danish Financial Statements Act, and for such internal con- trol as Management determines 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 pro- cedures responsive to those risks, and obtain audit evidence that is suffi- cient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intention- al 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; 92 DSV Annual Report 2023 Statements • 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 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; and • 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. 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 2023 with the filename DSV- 2023-12-31-en.zip is prepared, in all material respects, in compliance with the Commission Delegated Regulation (EU) 2019/815 on the European Single Electronic Format (ESEF Regulation) which includes requirements 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 exten- sions 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 Consolidated 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 Reg- ulation 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 2023 with the file name DSV-2023-12-31-en.zip is prepared, in all material respects, in compliance with the ESEF Regulation. Hellerup, 1 February 2024 PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab CVR no 3377 1231 Lars Baungaard State Authorised Public Accountant mne23331 Kim Tromholt State Authorised Public Accountant mne33251 Report on compliance with the ESEF Regulation 93 DSV Annual Report 2023 Statements Contents Parent Company financial statements 2023 Financial statements Statement of profit or loss .......................................95 Statement of comprehensive income ..............................95 Statement of cash flows .........................................96 Statement of financial position ....................................97 Statement of changes in equity ...................................98 Notes to the Parent Company financial statements Basis of preparation 1. Material accounting policy information .........................99 2. Changes in accounting policies ................................99 3. Management judgements and estimates .......................99 4. New accounting regulations ..................................99 Profit for the year 5. Revenue ...................................................99 6. Fees to auditors appointed at the Annual General Meeting .......99 7. Staff costs .................................................99 8. Special items ............................................. 100 9. Financial income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 10. Financial expenses ......................................... 100 11. Income tax ............................................... 100 Financial position 12. Intangible assets .......................................... 100 13. Other plant and operating equipment ........................ 101 14. Equity reserves ........................................... 101 15. Financial liabilities ......................................... 102 16. Deferred tax .............................................. 102 Other notes 17. Share option schemes ..................................... 103 18. Investments in Group entities ............................... 103 19. Derivative financial instruments ............................. 104 20. Financial risks ............................................. 104 21. Related parties ............................................ 105 22. Contingent liabilities and security for debt .................... 105 94 DSV Annual Report 2023 Parent Company financial statements 2023 Statement of profit or loss Statement of comprehensive income (DKKm) Note 2023 2022 Revenue 5 3,320 3,077 Gross profit 3,320 3,077 Other external costs 6 1,792 1,533 Staff costs 7 1,578 1,411 Operating profit before amortisation and depreciation (EBITDA) before special items (50) 133 Amortisation and depreciation 263 255 Operating profit (EBIT) before special items (313) (122) Special items, cost 8 67 84 Financial income 9 9,915 5,006 Financial expenses 10 1,608 594 Profit before tax 7,927 4,206 Tax on profit for the year 11 82 349 Profit for the year 7,845 3,857 Proposed distribution of profit: Proposed dividend per share is DKK 7.00 (2022: DKK 6.50 per share) 1,533 1,424 Transferred to equity reserves 6,312 2,433 Total distribution 7,845 3,857 (DKKm) 2023 2022 Profit for the year 7,845 3,857 Items that may be reclassified to profit or loss when certain conditions are met: Fair value adjustments of hedging instruments transferred to financial expenses 1 1 Other comprehensive income, net of tax 1 1 Total comprehensive income 7,846 3,858 95 DSV Annual Report 2023 Parent Company financial statements 2023 Statement of cash flows (DKKm) Note 2023 2022 Operating profit before amortisation and depreciation (EBITDA) before special items (50) 133 Adjustments: Share-based payments 17 47 36 Change in working capital (130) 55 Dividend received 9 7,654 2,930 Gain on disposal of investment in Group entities 46 - Interest received 9 197 227 Interest paid 10 (180) (161) Income tax paid (323) 71 Cash flow from operating activities 7,261 3,291 Purchase of intangible assets 12 (322) (236) Purchase of other plant and operating equipment 13 (120) (204) Acquisition and disposal of Group entities and activities 8,845 6,212 Cash flow from investing activities 8,403 5,772 Free cash flow 15,664 9,063 (DKKm) Note 2023 2022 Repayment of issued bonds 15 - (1,500) Change in payables and borrowings, net 15 (9,359) 11,578 Transactions with shareholders: Dividends distributed (1,424) (1,320) Dividends on treasury shares 19 43 Purchase of treasury shares (13,997) (20,313) Sale of treasury shares 3,704 1,426 Cash flow from financing activities (21,057) (10,086) Cash flow for the year (5,393) (1,023) Cash and cash equivalents 1 January 6,673 7,696 Cash flow for the year (5,393) (1,023) Cash and cash equivalents 31 December 1,280 6,673 The statement of cash flows cannot be directly derived from the statement of financial position and statement of profit or loss. 96 DSV Annual Report 2023 Parent Company financial statements 2023 Assets (DKKm) Note 2023 2022 Intangible assets 12 850 710 Other plant and operating equipment 13 299 306 Investments in Group entities 18 39,029 47,874 Receivables from Group entities 28,114 24,414 Other receivables 45 35 Deferred tax assets 16 67 - Total non-current assets 68,404 73,339 Receivables from Group entities 11,945 18,414 Other receivables 484 585 Cash and cash equivalents 1,280 6,673 Total current assets 13,709 25,672 Total assets 82,113 99,011 Equity and liabilities (DKKm) Note 2023 2022 Share capital 219 219 Reserves 14 649 545 Retained earnings 36,466 40,385 Total equity 37,334 41,149 Borrowings 15 3,713 5,186 Payables to Group entities 15 16,502 16,202 Provisions 122 74 Deferred tax liabilities 16 - 16 Total non-current liabilities 20,337 21,478 Borrowings 15 1,503 206 Provisions 163 145 Tax payables 11 168 Payables to Group entities 15 22,134 34,901 Other payables 631 964 Total current liabilities 24,442 36,384 Total liabilities 44,779 57,862 Total equity and liabilities 82,113 99,011 Statement of financial position 97 DSV Annual Report 2023 Parent Company financial statements 2023 Statement of changes in equity 2023 2022 (DKKm) Share capital Reserves Retained earnings Total equity Share capital Reserves Retained earnings Total equity Equity at 1 January 219 545 40,385 41,149 240 488 56,704 57,432 Profit for the year - 111 7,734 7,845 - 52 3,805 3,857 Other comprehensive income, net of tax - 1 - 1 - 1 - 1 Total comprehensive income for the year - 112 7,734 7,846 - 53 3,805 3,858 Transactions with shareholders: Share-based payments - - 47 47 - - 36 36 Dividends distributed - - (1,424) (1,424) - - (1,320) (1,320) Purchase of treasury shares - (11) (13,986) (13,997) - (19) (20,294) (20,313) Sale of treasury shares - 3 3,701 3,704 - 2 1,424 1,426 Capital reduction - - - - (21) 21 - - Dividends on treasury shares - - 19 19 - - 43 43 Other adjustments - - (10) (10) - - (13) (13) Total transactions with shareholders - (8) (11,653) (11,661) (21) 4 (20,124) (20,141) Equity at 31 December 219 649 36,466 37,334 219 545 40,385 41,149 * For a specification of reserves, please refer to note 14. 98 DSV Annual Report 2023 Parent Company financial statements 2023 Basis of preparation 1. Material accounting policy information As the Parent Company of the DSV Group, the financial statements of DSV A/S are separate financial statements disclosed as required under the Danish Financial Statements Act. The separate financial statements have been prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (IASB) and addi- tional disclosure requirements for listed companies in the Danish Finan- cial Statements Act. IFRS Accounting Standards have been applied to the extent these have been adopted by the European Union. The accounting policies of the Parent Company are identical with the accounting policies 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 statement of profit or loss 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 indi- cation of impairment, investments are tested for impairment as de- scribed in the accounting policies disclosed by the Group. If the cost exceeds the recoverable amount, the investment is written down to this lower value. Receivables from Group Entities Receivables from Group entities are measured at amortised cost. These are considered to have low credit risk based on the Group’s credit rating and consequently the creditworthiness of the major subsidiaries within the Group. Impairment of receivables from Group Entities is assessed on an ongoing basis. The impairment provision calculated based on 12 months of expected credit losses is considered immaterial. Currency translation Foreign currency adjustments of balances considered part of the total net investment in Group entities which have a functional currency other than Danish kroner (DKK) are recognised in the statement of profit or loss of the Parent Company under financials. Development cost reserve In accordance with the Danish Financial Statements Act, the reserve for development costs comprises capitalised development costs adjusted for deferred tax. 2. Changes in accounting policies All amendments to the IFRS Accounting Standards effective for the finan- cial year 2023 have been implemented as basis for preparing the Parent Company financial statements and notes to the financial statements. None of the implementations have had any material impact on the state- ments 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 disclosures in the statements and in the notes to the financial state- ments. These are based on professional judgement, historical data and other factors available to Management. By nature, a degree of uncertain- ty 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 ef- fect of any changes is recognised in the relevant period. The primary fi- nancial 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 are tested for impairment in the same way as goodwill, involving various estimates on future cash flows, growth, discount rates, etc. During the financial year, the cost price of one subsidiary has been partially written down. As of 31 December 2023, no impairment indicators were identified. Audit fees and services (DKKm) 2023 2022 Statutory audit 7 7 Other assurance services 2 1 Tax and VAT advisory services - 1 Other services 2 1 Total 11 10 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. Staff costs (DKKm) 2023 2022 Remuneration of the Board of Directors 8 7 Salaries etc. 528 390 Intra-group salary charges etc. 994 971 Defined contribution pension plans 48 43 Total 1,578 1,411 Average number of FTEs 666 607 * The intra-group salary charges relate to an average of 1,831 FTEs in 2023 (2022: 1,803). 6. Fees to auditors appointed at the Annual General Meeting 4. New accounting regulations The IASB has issued a number of new accounting standards and amend- ments not yet in effect or adopted by the EU and therefore not relevant for the preparation of the 2023 Parent Company financial statements. These accounting standards and amendments are expected to be imple- mented when they take effect. None of the new accounting standards or amendments issued are currently expected to have any signi ficant impact on the Parent Company financial statements when implemented. Profit for the year 5. Revenue Revenue comprises intra-group charges. 99 DSV Annual Report 2023 Parent Company financial statements 2023 11. Income tax Tax for the year is disaggregated as follows: Financial position 12. Intangible assets Tax on profit for the year specifies as follows: Tax rate specifies as follows: Interest income includes interest on financial assets of DKK 1,857 million (2022: DKK 1,058 million). 10. Financial expenses Interest expenses include interest on financial liabilities measured at amortised cost of DKK 1,608 million (2022: DKK 594 million). Financial income (DKKm) 2023 2022 Interest income 197 227 Interest income from Group entities 1,660 831 Foreign exchange gain, net 332 1,018 Dividends from subsidiaries, net of cost reductions 7,654 2,930 Gain on disposal of investments in Group entities 46 - Gain on disposal of payables to Group entities 26 - Total 9,915 5,006 Financial expenses (DKKm) 2023 2022 Interest expenses on borrowings 112 108 Interest expenses, bank 68 53 Interest expenses to Group entities 1,428 433 Total 1,608 594 (DKKm) 2023 2022 Tax on profit for the year 82 349 Total tax for the year 82 349 (DKKm) 2023 2022 Current tax 233 326 Deferred tax (107) 24 Tax adjustment relating to previous years (44) (1) Total tax on profit for the year 82 349 (%) 2023 2022 Calculated tax on profit for the year 22.0% 22.0% Tax effect of: Non-deductible expenses/non-taxable income (20.4%) (13.7%) Tax adjustment relating to previous years (0.6%) 0.0% Effective tax rate 1.0% 8.3% 2023 2022 Intangible assets (DKKm) Software Software in progress Total Software Software in progress Total Cost at 1 January 941 328 1,269 908 266 1,174 Additions - 322 322 - 236 236 Disposals (51) - (51) (141) - (141) Reclassifications 302 (302) - 174 (174) - Total cost at 31 December 1,192 348 1,540 941 328 1,269 Total amortisation and im pairment at 1 January 559 - 559 517 - 517 Amortisation and impairment for the year 136 - 136 151 - 151 Disposals (5) - (5) (109) - (109) Total amortisation and im pairment at 31 December 690 - 690 559 - 559 Carrying amount at 31 December 502 348 850 382 328 710 9. Financial income 8. Special items Special items (DKKm) 2023 2022 Restructuring and integration costs - 84 Termination benefits to the Executive Board 67 - Total 67 84 100 DSV Annual Report 2023 Parent Company financial statements 2023 13. Other plant and operating equipment 14. Equity reserves Other plant and operating equipment (DKKm) 2023 2022 Cost at 1 January 524 460 Additions 120 204 Disposals - (140) Total cost at 31 December 644 524 Total depreciation and impairment at 1 January 218 244 Depreciation for the year 127 104 Disposals - (130) Total depreciation and impairment at 31 December 345 218 Carrying amount at 31 December 299 306 2023 Reserves specification (DKKm) Treasury share reserve Hedging reserve Development cost reserve Total reserves Reserves at 1 January (2) (3) 550 545 Profit for the year - - 111 111 Other comprehensive income, net of tax - 1 - 1 Transactions with shareholders: Purchase of treasury shares (11) - - (11) Sale of treasury shares 3 - - 3 Reserves at 31 December (10) (2) 661 649 2022 Reserves specification (DKKm) Treasury share reserve Hedging reserve Development cost reserve Total reserves Reserves at 1 January (6) (4) 498 488 Profit for the year - - 52 52 Other comprehensive income, net of tax - 1 - 1 Transactions with shareholders: Purchase of treasury shares (19) - - (19) Sale of treasury shares 2 - - 2 Capital reduction 21 - - 21 Reserves at 31 December (2) (3) 550 545 For a description of equity reserves, please refer to note 4.1 to the consolidated financial statements. 101 DSV Annual Report 2023 Parent Company financial statements 2023 15. Financial liabilities 16. Deferred tax Borrowings are subject to standard trade covenants. All financial ratio covenants were observed during the year. The weighted average interest rate was 2.7% (2022: 0.9%). Financial liabilities (DKKm) 2023 2022 Payables to Group entities 38,636 51,103 Overdraft and credit facilities 14 206 Issued bonds 5,202 5,186 Total financial liabilities 43,852 56,495 Financial liabilities as recognised in the statement of financial position: Non-current liabilities 20,215 21,388 Current liabilities 23,637 35,107 Financial liabilities at 31 December 43,852 56,495 Carrying amount (DKKm) Expiry Fixed/floating interest rate 2023 2022 Payables to Group entities 2024-2036 Fixed 38,636 51,103 Bond loans 2024-2027 Fixed 5,202 5,186 Overdraft and credit facilities 2024 Fixed 14 206 Total 43,852 56,495 2023 2022 Non-cash change Non-cash change Financing activities (DKKm) Beginning of year Cash flow Other End of year Beginning of year Cash flow Other End of year Payables to Group entities 51,103 (9,167) (3,300) 38,636 40,348 11,420 (665) 51,103 Overdraft and credit facilities 206 (192) - 14 48 158 - 206 Issued bonds 5,186 - 16 5,202 6,681 (1,500) 5 5,186 Total liabilities from financing activities 56,495 43,852 47,077 56,495 Other non-current liabilities - - 173 (173) - Total financial liabilities 56,495 (9,359) (3,284) 43,852 47,250 10,078 (833) 56,495 Deferred tax recognised in the statement of financial position (DKKm) 2023 2022 Deferred tax at 1 January (16) 20 Deferred tax for the year 107 (24) Tax adjustments relating to previous years (14) 1 Tax on changes in equity (10) (13) Deferred tax at 31 December 67 (16) Recognised as follows: Deferred tax liabilities - 16 Deferred tax assets 67 - Deferred tax, net 67 (16) Specification of deferred tax: Intangible assets (44) (84) Current assets 43 (11) Other liabilities 68 79 Deferred tax at 31 December 67 (16) 102 DSV Annual Report 2023 Parent Company financial statements 2023 Other notes 17. 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 2023. Total costs recognised in 2023 for services re- ceived but not recognised as an asset amounted to DKK 47 million (2022: DKK 36 million). The average share price for options exercised in the financial year was DKK 1,316.6 per share at the date of exercise. 18. Investments in Group entities DSV A/S owns the following subsidiaries, all of which are included in the consolidated financial statements: Owner ship 2023 Owner ship 2022 Registered office Share capital (DKKm) DSV Road Holding A/S 100% 100% Hedehusene, Denmark 100 DSV Air & Sea Holding A/S 100% 100% Hedehusene, Denmark 50 DSV Solutions Holding A/S 100% 100% Hedehusene, Denmark 100 DSV Insurance A/S 100% 100% Hedehusene, Denmark 25 DSV Group Services A/S 100% 100% Hedehusene, Denmark 5 DSV FS A/S 100% 100% Hedehusene, Denmark 1 Panalpina Welttransport (Holding) AG 100% 100% Basel, Switzerland 19 Agility Logistics International B.V. 100% 100% Rozenburg, Netherlands 2,805 DSV Finance B.V. 100% 100% Venlo, Netherlands 0 GIL International Holdings I Ltd. 100% 100% Abu Dhabi, UAE 7 Share option schemes at 31 December 2023 Scheme Exercise period Executive Board Key employees Total Average exercise price per option (DKK) 2019 29.03.2022 - 27.03.2024 - 65,500 65,500 545.0 2020* 31.03.2023 - 31.03.2025 - 140,000 140,000 560.0 2021 01.04.2024 - 31.03.2026 168,750 234,425 403,175 1,325.0 2022 01.04.2025 - 31.03.2027 198,250 257,775 456,025 1,485.0 2023 01.04.2026 - 31.03.2028 198,750 280,175 478,925 1,485.0 Outstanding at 31 December 2023 565,750 977,875 1,543,625 1,319.4 Open for exercise at 31 December 2023 - 205,500 205,500 555.2 Life (years) 3.3 2.8 3.0 n.a. Fair value (DKKm) 26 166 193 n.a. * Share options granted in 2019 and 2020 are currently exercisable. Outstanding share options Executive Board Key employees Total Average exercise price per option (DKK) Outstanding at 1 January 2023 949,000 998,850 1,947,850 926.7 Granted 198,750 284,925 483,675 1,485.0 Exercised (582,000) (289,750) (871,750) 531.7 Options waived/expired - (16,150) (16,150) 1,430.5 Outstanding at 31 December 2023 565,750 977,875 1,543,625 1,319.4 Outstanding at 1 January 2022 762,750 920,148 1,682,898 972.4 Granted 198,250 274,075 472,325 1,485.0 Exercised (12,000) (164,573) (176,573) 514.1 Options waived/expired - (30,800) (30,800) 1,112.0 Outstanding at 31 December 2022 949,000 998,850 1,947,850 926.7 103 DSV Annual Report 2023 Parent Company financial statements 2023 19. Derivative financial instruments In 2023, a gain on hedging instruments of DKK 176 million was recog- nised in the statement of profit or loss (2022: gain of DKK 208 million). In the same period, a gain of DKK 9 million was recognised relating to assets and liabilities (2022: gain of DKK 810 million). For more infor- mation on foreign currency risk hedging, refer to notes 4.4 and 4.5 to the consolidated financial statements. 20. Financial risks Financial risks of the Parent Company are handled within the risk man- agement processes and framework of the Group. Reference is made 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 statement of financial position. Hedging instruments (DKKm) Contractual value Maturity Fair value Of which recognised in the statement of profit or loss Of which recognised in OCI Currency instruments - 2023 11,244 2024-2026 46 45 1 Currency instruments - 2022 16,736 2023-2025 82 81 1 2023 2022 Financial liabilities (DKKm) 0-1 year 1-5 years > 5 years Total cash flows, incl. interest 0-1 year 1-5 years > 5 years Total cash flows, incl. interest Loans, credit facilities and issued bonds 1,538 3,757 - 5,295 40 5,269 - 5,309 Other payables 631 - - 631 964 - - 964 Payables to Group entities 23,057 1,064 16,984 41,105 35,047 583 17,024 52,654 Total 25,226 4,821 16,984 47,031 36,051 5,852 17,024 58,927 104 DSV Annual Report 2023 Parent Company financial statements 2023 20. Financial risks – continued Derivative financial instruments DSV has no financial instruments measured at fair value based on level 1 input (quoted active market prices) or level 3 input (non-observable mar- ket data). Financial instruments are measured based on level 2 input (input other than quoted prices that are observable either directly or indirectly). 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. Issued bonds The fair value of issued bonds measured at amortised cost is within level 1 of the fair value hierarchy. 2023 2022 Carrying amount (DKKm) Carrying amount Fair value Carrying amount Fair value Financial assets: Currency derivatives 49 49 97 97 Receivables from Group entities 40,059 40,059 42,826 42,826 Other receivables 529 529 620 620 Cash and cash equivalents 1,280 1,280 6,673 6,673 Financial assets measured at amortised cost 41,868 41,868 50,119 50,119 Financial liabilities: Currency derivatives (3) (3) 15 15 Issued bonds measured at amortised cost 5,202 4,898 5,186 4,649 Overdraft and credit facilities 14 14 206 206 Payables to Group entities 38,636 38,636 51,103 51,103 Other payables 631 631 964 964 Financial liabilities measured at amortised cost 44,483 44,179 57,459 56,922 Receivables from Group entities, other receivables, payables to Group entities and other payables The carrying amount of receivables and payables is not considered to differ significantly from the fair value. Overdraft and credit facilities The carrying amount of overdraft and credit facilities measured at amor- tised cost is not considered to differ significantly from the fair value. Cash and cash equivalents The carrying amount of cash and cash equivalents is not considered to differ significantly from the fair value. 21. Related parties 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 2023 financial year other than ordinary remuneration and ter- mination benefits, as described in notes 6.2 and 6.3 to the consolidated financial statements. Intra-group transactions No intra-group transactions were made in 2023 other than as stated in the notes to the Parent Company financial statements. 22. 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 domestic Group entities. DSV A/S is the administration company of the joint taxation ar- rangement 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 11 million (2022: payable of DKK 168 million), which is included in the financial statements of DSV A/S. Parent Company gurarantees 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 8,460 million (2022: DKK 12,424 million). DSV A/S has provided guarantees for subsidiaries’ obligations towards joint ven- tures of USD 2,450 million corresponding to DKK 16,522 million (2022: DKK 0 million). Moreover, DSV A/S has issued several declarations of intent relating to outstanding balances between subsidiaries and third parties. 105 DSV Annual Report 2023 Parent Company financial statements 2023 DSV 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 2023 (47th financial year). Published 1 February 2024. 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