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Pedersens Vej 188200Aarhus N250137191969-05-19Aarhus2021-01-012021-12-312020-01-012020-12-312022-06-23Arni SigurjonssonArni SigurjonssonRichard Vad Koch Gudrun Ulrika LindbergChirmanLars JøkerKPMG Statsautoriseret RevisionspartnerselskabKPMG Statsautoriseret RevisionspartnerselskabFrederiks Plads Frederiks Plads 42, 7. tv42, 7. tv80008000Aarhus CAarhus CDenmarkDenmarkDKDK2557819825578198KPMG Statsautoriseret RevisionspartnerselskabFrederiks Plads 42, 7. tv8000 Aarhus C25578198The Board of Directors and the Management Board have today discussed and approved the annual report of Marel A/S for the financial year 1 January to 31 December 2021. The annual report has been prepared in accordance with the Danish Financial Statements Act. In our opinion, the financial statements give a true and fair view of the Company's assets, liabilities and financial position at 31 December 2021 and of the results of its operations for the financial year 1 January – 31 December 2021. Further, in our opinion, the Management's review gives a fair review of the development in the Company's operations and financial matters and the results of the Company's operations and financial position. We recommend that the annual report be approved at the annual general meeting.Aarhus2022-06-23To the shareholders of Marel A/SOpinionWe have audited the financial statements of Marel A/S for the financial year 1 January – 31 December 2021 comprising income statement, balance sheet, statement of changes in equity and notes, including accounting policies. The financial statements are prepared in accordance with the Danish Financial Statements Act. In our opinion, the financial statements give a true and fair view of the Company's assets, liabilities and financial position at 31 December 2021 and of the results of the Company's operations for the financial year 1 January – 31 December 2021 in accordance with the Danish Financial Statements Act.Basis for OpinionWe 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 are independent of the Company in accordance with the International Ethics Standards Board for Accountants' International Code of Ethics for Professional Accountants (IESBA Code) and the additional ethical requirements applicable in Denmark, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the Danish Financial Statements Act and for such internal control, that 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 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 in preparing the financial statements unless Management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.Our objectives are to obtain reasonable assurance as to 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 includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs and the additional requirements in Denmark will always detect a material misstatement when it exists. Misstatements may 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 financial statement users made on the basis of these financial statements. As part of an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:  identify and assess the risks of material misstatement of the company financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as fraud may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal control.  obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.  evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by Management.  conclude on the appropriateness of Management's use of the going concern basis of accounting in preparing the financial statements and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.  evaluate the overall presentation, structure and contents of the financial 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. 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.Management is responsible for the Management's review. Our opinion on the financial statements does not cover the Management's review, 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 the Management's review and, in doing so, consider whether the Management's review is materially inconsistent with the financial statements or our knowledge obtained during the audit, or otherwise appears to be materially misstated. Moreover, it is our responsibility to consider whether the Management's review provides the information required under the Danish Financial Statements Act. Based on the work we have performed, we conclude that the Management's review is in accordance with the financial statements and has been prepared in accordance with the requirements of the Danish Financial Statement Act. We did not identify any material misstatement of the Management's review.Aarhus2022-06-23Mikkel Trabjerg KnudsenMichael E.K. RasmussenState Authorised Public Accountant State Authorised Public Accountant mne34459mne41364Business model Marel is a leading global provider of advanced processing equipment, systems, software and services to the poultry, meat and fish industries. Marel has a global reach with local presence in over 30 countries, with sales and service engineers servicing customers in over 140 countries. Marel’s business model is based on providing full-line solutions and services to the food processing industry, one of the most important value chains in the world. With an emphasis on innovation, close partnership with customers, and global and local reach, this model supports our vision of a world where quality food is produced sustainably and affordably. Our revenue streams consist of sales of standard equipment, major projects, and recurring sales of parts, services, and software licenses. We have a global customer base diversified across different industries, product mixes, and geographical areas, allowing us to achieve and maintain strong profitability throughout economic cycles. Development during the financial year Revenue in 2021 totalled EUR 127.2 million, which is an increase by EUR 22.0 million (20.9%) compared to 2020. The higher revenue combined with higher supply chain costs resulted in a gross profit of EUR 18.6 million compared to EUR 20.4 million in 2020. This has led to a gross margin of 14.6% compared to 19.4% in 2020. Our net result is effected by an decrease in dividends from our subsidiaries , where we have received a total of EUR 2.2 million. The profit for the year after tax totalled EUR 6.1 million, which is a decrease of EUR 4.0 million (-39.9%) compared to 2020. Equity totalled EUR 25.3 million at the end of the year, corresponding to a solvency ratio of 19.9%. In 2021 a dividend of EUR 4.0 million was paid. Overall the financial statements are in line with our expectations disclosed in the latest published annual report. Subsequent events No events materially affecting the Company’s financial position have occurred subsequent to the financial year end. Unusual conditions COVID-19: Marel is a critical infrastructure company for the poultry, meat and fish processing industry. Marel's focus during COVID-19 is on keeping its employees and customers safe, while maintaining productivity of all manufacturing sites. Marel reorganized its manufacturing sites ensuring all sites remained open, although operating at below historical and targeted utilization rates. By systematically building up safety stock of spare parts across locations and having local presence in more than 30 countries, Marel managed to maintain good levels of delivery performance despite a challenging environment. COVID-19 has had an impact on Marel's results in 2021. There was a global peak in the pandemic resulting in significant lockdowns and logistical challenges, which led to inefficiencies in manufacturing and higher costs for service operations and logistics. Despite positive developments in parts of the world following the introduction of vaccines, infectious new variants have affected the recovery of the global economy. In the second half of 2021, Marel has been impacted by an imbalance between supply and demand for electronic components and other raw materials, resulting in an increase in prices and delivery times. Marel is working with its highly talented team and partners around the world to resolve imbalances; innovation and agility in ways of working is critical. Marel's highest priority remains to deliver to our customers the right quality, at the right time. Particular risks Our management has identified certain key risks to our business that demand attention. Of these, seven key risks are discussed below, together with an overview of corresponding mitigative actions. Profit and earnings volatility risk: Our operational results are subject to volatility. Factors like increase in competition, geopolitical conflicts, trade restrictions, and natural disasters might influence our ability to predict revenues, costs, and expenses affecting our growth objectives. Our business model with revenue streams generated by different industries, geographical areas, and product mix allows us to achieve and maintain strong profitability throughout economic cycles. Particular risks Innovation risk: Changes in technology, failure to understand customer needs, inability to enforce intellectual property rights, etc. can affect our expansion objectives. Our success depends on our ability to develop and successfully introduce new products in addition to ensuring the competitiveness of existing ones, including solutions and software. Marel will continue to lead the innovation game in the food processing industry by committing significant resources to support its ambitious innovation objectives. People management risk: A high turnover rate, disengaged employees, gaps in workforce skills or misalignment of those skills with the company’s needs, an inadequate succession plan, etc. can harm our business. Workplace instability, absenteeism, and additional stress caused by the global pandemic, coupled with changing global workforce preferences, further increase the risk of effective talent management. Marel remains a desirable place to work that attracts and retains talented employees. Throughout the pandemic, we have implemented initiatives to maintain motivation and engage with our workforce in a personal manner. Marel is proactive in adapting its policies to align with current global trends. Supply chain disruption risk: As a manufacturer of leading technology solutions, we rely on the timely supply of inputs, as well as continued supply of scarce resources. The global pandemic caused instability in commercial transport and saw an increase in the demand of raw materials. This can lead to increased costs as well as delays to customer delivery. Marel makes use of its global footprint to mitigate supply chain risks, while continuing to adopt new supply chain technologies. Deliberate mitigations include the increasing of inventory levels, as well as identifying substitute suppliers. The company remains agile and proactive when prioritizing its manufacturing needs. Particular risks Reputation and compliance risk: Marel operates worldwide and needs to comply with numerous and changing laws and regulations. Failure to comply can lead to penalties and adverse publicity. The evolution of social media further increases the risk of reputational damage. Marel strives to preserve and enhance its brand value, build resilience, and create emotionally connected customers, employees, and stakeholders, while complying with all industry, regulatory, and other general standards of significance. Information security risk: Failure to secure our information systems and data could result in operational disruptions, financial losses, reputational damage with existing and new customers, etc. Marel continues to invest in new facilities and infrastructure and in upgrading existing ones to ensure their integrity and availability in case of adverse events. Foreign exchange risk: As an international company, Marel is exposed to foreign exchange risk arising from various currency movements, primarily with respect to the EUR/USD exchange rate for revenues and EUR/ISK rate on the cost side. Marel takes advantage of natural currency hedges by matching revenues and operational costs as economically as possible. The company’s funding is denominated in its main operational currencies to create natural hedging in the balance sheet. Where necessary, financial exposure is hedged in accordance with Marel’s policy on permitted instruments and exposure limits. Intellectual capital The primary business foundation is to provide competitive products, solutions and technology for the food industry improving its competitiveness. Accordingly, the Company must be able to develop and retain intellectual capital and know-how on products and business processes. The Company therefore regularly develops policies and procedures for recruiting, training and retaining employees and for developing and documenting products and business processes. Research and development activities The Company's research and development activities comprise regular development of new and existing products and processes for the food industry. Marel is committed to developing industryleading technology in partnership with our customers. Annually, we invest approximately 6-8% of revenues in research and development, which translated to EUR 8.7 million in 2021. This is essential to the creation of transformative solutions for the food processing industry and securing our competitive advantage, which in turn deliver organic growth to the company. Branches in Uruguay The company has an established Branch in Uruguay operating under the name Marel A/S Sucursal Uruguay performing sales and service activities in the local market. In 2021 the branch had an operating profit of EUR 0.2 million before taxes. Outlook Increased geopolitical tensions, especially in Europe in the early months of 2022 will cause uncertainty. Marel has a balanced exposure to global economies and local markets through its global reach, innovative product portfolio and diversified business mix. Indeed, our business model has proved to be resilient during times of turbulence. Our global reach and years of investment in innovation and digital solutions have proved to be key differentiating factors for Marel. These will enable us to push forward and help us navigate geopolitical tensions in the long run. That path is of course one of discovery to some extent, with inherent challenges and learnings, but one that team Marel will manage with its characteristic determination The expectation for 2022 is a revenue between EUR 110 – 120 million and an EBIT between EUR 4 – 8 million. These expectations are subjected to uncertainties due the increased geopolitical tensions mentioned above. Reporting on data ethics The Company does not have any policy for data ethics as it is not an integrated part of the company’s strategy.Marel A/S is part of the Marel Group that has signed the United Nations Global Compact. The Company meets the statutory requirement for Corporate Social Responsibility by following the Consolidated Sustainability Policy for Marel Group. For the statutory reporting on Corporate Social Responsibility, according to §99a, we refer to the official SCR reporting for the group which can be found in the ESG report for Marel on the website:https://marel.com/en/investors/financials#sustainability-and-esgThis section constitutes Marel A/S’ reporting on gender diversity according to §99b in the Danish Financial Statements Act. The Marel Group promotes diversity in all its locations worldwide. We must ensure that Marel has a diverse and truly inclusive culture. With this in mind, we have set targets for achieving a betterbalanced gender representation across managerial levels and included targets to that effect in our sustainability program. We understand the value of reflecting the markets and communities we serve across all dimensions – whether that is servicing our customers in their local languages, listening to the needs of our end consumers, moving towards fully local management teams in the regions or hiring and developing more diverse talent in technical roles. Marel employees, prospective employees, contractors, consultants, suppliers, and customers must be treated equally and should not be discriminated against on the grounds of age, race or ethnicity, nationality, or on any other aspect. We want to lead by example and have already taken steps towards this with a well gender-balanced board and executive team. We are also committed to ensuring the right diversity and set of competences at all managerial levels to meet future challenges. We hope to be part of moving our industry towards more diversity and more inclusivity going forward, and feel very proud that both our Board and Executive team are in the optimal gender balance within the 40-60% ratio. In 2021, Marel introduced a new Global Diversity and Inclusion Policy with additional focus on inclusion and accountability. The overall objective of the policy and accompanying action plan is to build and maintain a diverse and inclusive culture, where people thrive and drive the success of Marel. The D&I policy is aligned to the updated Code of Conduct. We also trained 76% of managers globally on how they can play active roles in creating a culture of inclusion and allyship. Policy for the gender quota on the Management Board Under section 99b of the Danish Companies Act, the Board of Directors of Marel A/S has laid down the Company's policy to increase the share of the underrepresented gender in the Company's Management in general. The Board of Directors of Marel A/S are now two men and one woman. As this is compliant with the Danish Business Authority’s recommendations, Marel A/S is not required to set targets for the underrepresented gender. Policy for other management levels Marel A/S wishes that the gender quota of society between men and women is reflected in the Company's management level. Through this policy, the Company will create an equal distribution of sexes at management level. Managers of the Company should be elected / employed based on their overall qualifications, and it is essential that the managers have the right qualifications, irrespective of their sex. The Board of Directors, however, acknowledges the advantages of a broad-based management at all levels taking into consideration experience, specialized knowledge, culture and sex, etc. Marel A/S is in a line of business, which has a predominance of male employees. The present management team in Marel A/S comprises seven persons of which none is female. In the management team, we seek diversity in line with Group policy. Marel aims to obtain equality between co-workers, and finds that the positions in the management team are equally suitable for both men and women. However, as Marel is considered a good workplace, we do not have frequently changes in the management group. In case a manger leaves, Marel will strive to get a more diverse management team, as we want to improve the gender balance for the future, as well as making a systematic effort to give the employees a good work life balance. The measures initiated have not yet implied any changes in the gender quota of the management team during 2021, as no replacements has taken place.The annual report of Marel A/S for 2021 has been prepared in accordance with the provisions applying to reporting class C large enterprises under the Danish Financial Statements Act. The accounting policies used in the preparation of the financial statements are consistent with those of last year. Foreign currency translation On initial recognition, transactions denominated in foreign currencies are translated at the exchange rates at the transaction date. Foreign exchange differences arising between the exchange rates at the transaction date and at the date of payment are recognised in the income statement as financial income or financial expenses. Receivables and payables and other monetary items denominated in foreign currencies are translated at the exchange rates at the balance sheet date. The difference between the exchange rates at the balance sheet date and at the date at which the receivable or payable arose or was recognised in the latest financial statements is recognised in the income statement as financial income or financial expenses. Non-current assets acquired in foreign currencies are measured at the exchange rate at the transaction date. Pursuant to section 96(3) of the Danish Financial Statements Act, the Company has not disclosed the fee to the auditors appointed at the annual general meeting. Pursuant to section 98b(3) of the Danish Financial Statements Act, the Company has not disclosed remuneration of Management as only one member of the Management Board is remunerated. The financial statements of Marel A/S are included in the consolidated financial statements of Marel hf., Austurhraun 9, 210 Gardabaer, Iceland. The consolidated financial statements can be downloaded at www.marel.com.In accordance with section 112 (1) of the Danish Financial Statements Act, the Company has not prepared consolidated financial statements, as the Company is a subsidiary and as the financial statements of the Company and its subsidiaries are included in the consolidated financial statements of the parent company, Marel hf., Iceland.Revenue Revenue from the sale of goods and services is recognised in the income statement provided that delivery and transfer of risk to the buyer have taken place before year-end and that the income can be reliably measured and is expected to be received. Contract work in progress is recognised at the selling price of the work performed. Revenue is measured excl. VAT and taxes and less discounts granted in connection with the sale. Production costs Production costs comprise costs incurred in generating the revenue for the year. Such costs include direct and indirect costs for raw materials, goods for resale and consumables, wages and salaries, rent and leases, and depreciation of production plant and other assets used for production purposes. Write-down for inventories and writedown in connection with anticipated bad debt losses on contract work in progress are also included. Production costs also comprise development costs that do not qualify for capitalisation and amortisation of capitalised development costs. Distribution costs Costs incurred in distributing goods sold during the year and in conducting sales campaigns, etc. during the year are recognised as distribution costs. Also, costs relating to sales staff, advertising and depreciation are recognised as distribution costs. Administrative expenses Administrative expenses comprise expenses incurred during the year for Company management and administration, including expenses for administrative staff, management, office premises, insurance and office expenses, etc. and depreciation. Other operating income or operating cost Other operating income and cost comprises items secondary to the activities of the Company, including gains and losses on the disposal of non-current assets. Result from investments in subsidiaries Result from investments in subsidiaries comprises dividends from subsidiaries recognised as income in the income statement when adopted at the General Meeting of the subsidiary. Financial income and expenses Financial income and expenses comprise interest income and expense, finance charges in respect of finance leases, realised and unrealised gains and losses on securities, payables and transactions denominated in foreign currencies, amortisation of financial assets and liabilities as well as surcharges and refunds under the on-account tax scheme, etc. Tax on profit/loss for the year Tax for the year comprises current tax for the year end and changes in deferred tax, including changes in tax rates. The tax expense relating to the profit/loss for the year is recognised in the income statement at the amount attributable to the profit/loss for the year and directly in equity at the amount attributable to entries directly in equity.Intangible assets Development projects comprise costs directly and indirectly attributable to the Company's development activities and which comply with the criteria for recognition under the Danish Financial Statements Act. Capitalised development projects are measured at cost less accumulated amortisation or at recoverable amount if the latter is lower. Capitalised development projects are amortised on a straight-line basis of the estimated useful lives after completion of the development project. The amortisation period is usually five years. Goodwill is measured at cost less accumulated amortisation and impairment losses. Goodwill is amortized on a straight-line basis over the remaining life. Depreciation is provided on a straight-line basis over the expected useful lives of the assets. The expected useful lives are as follows: Goodwill 10 years Software 3 - 5 years Property, plant and equipment Land and buildings, plant and machinery, fixtures and fittings, as well as other plant and equipment are measured at cost less accumulated depreciation. Land is not depreciated. The basis of depreciation is cost less expected residual value at the end of the useful life. Cost comprises the purchase price and any costs directly attributable to the acquisition until the date when the asset is available for use. Where individual components of an item of property, plant and equipment have different useful lives, they are accounted for as separate items, which are depreciated separately. The basis of depreciation is cost less any projected residual value after the end of the useful life. Depreciation is provided on a straight-line basis over the estimated useful life Depreciation is provided on a straight-line basis over the expected useful lives of the assets. The expected useful lives are as follows: Buildings 20 - 55 years Plant and machinery 3 - 10 years Fixtures, fittings and other equipment 4 - 6 years The useful life and residual value are reassessed annually. Changes are treated as accounting estimates, and the effect on depreciation is recognised prospectively. Gains and losses on the disposal of property, plant and equipment are determined as the difference between the selling price less selling costs and the carrying amount at the date of disposal. Gains or losses are recognised in the income statement as other operating income or operating costs. Leased assets On initial recognition, leases for fixed assets that transfer substantially all risks and rewards incident to ownership to the Company (finance leases) are recognised in the balance sheet at the lower of fair value and the net present value of future lease payments. When the net present value is calculated, the interest rate implicit in the lease or the incremental borrowing rate is used as the discount factor. Assets held under finance leases are subsequently depreciated as the Company's other fixed assets. The capitalised residual lease obligation is recognised in the balance sheet as a liability, and the interest element of the lease payment is recognised in the income statement over the term of the lease. Short term leases and leases of low-value assets Short term leases that have a lease term of 12 month or less and leases of low-value assets are not recognized as right of use assets and lease liability and the lease payments associated with these leases are expensed as a straight line base over the lease term. The Company's obligation relating to these leases is disclosed in contingent liabilities. Equity investments Equity investments in subsidiaries are recognised in the balance sheet at cost. Write- down is made to the lower of cost and recoverable amount. Cost is reduced by dividends received that exceed accumulated earnings after the date of acquisition. For subsidiaries where the parent company has a legal or constructive obligation to cover the deficit equity investments are written down corresponding to the parent company's share of negative equity. Any receivable from these enterprises is written down by the parent company's share of the negative net asset value. If the net asset value exceeds the amount owed, the residual amount is recognised under provisions. Impairment of non-current assets The carrying amount of intangible assets and property, plant and equipment as well as investments in subsidiaries is subject to an annual test for indications of impairment other than the decrease in value reflected by depreciation or amortisation. Impairment tests of individual assets or groups of assets are conducted when there is an indication that they may be impaired. Write-down is made to the recoverable amount if this is lower than the carrying amount. Impairment of non-current assets The recoverable amount is the higher of an asset's net selling price and its value in use. The value in use is determined as the present value of the anticipated net cash flows from the use of the asset or group of assets. Previously recognised write-downs are reversed when the basis for the write-down no longer exists. Write-down of goodwill is not reversed. Inventories Inventories are measured at cost in accordance with the average cost formula. Where the net realisable value is lower than cost, inventories are written down to this lower value. Goods for resale and raw materials and consumables are measured at cost, comprising purchase price plus delivery costs. Finished goods and work in progress are measured at cost, comprising the cost of raw materials, consumables, direct wages and salaries as well as direct and indirect production overheads. The net realisable value of inventories is calculated as the sales amount less costs of completion and costs necessary to make the sale and is determined taking into account marketability, obsolescence and development in expected sales price. Receivables Receivables are measured at amortised cost. Write-down is made for bad debt losses where there is an objective indication that a receivable or a receivable portfolio has been impaired. If there is objective evidence that an individual receivable has been impaired, write-down is made on an individual basis. Receivables with no objective indication of individual impairment are assessed for objective indication of impairment on a portfolio basis. The portfolios are primarily composed on the basis of the country of domicile and credit ratings of the debtors in accordance with the credit risk management policy of the Company. The objective indicators used in relation to portfolios are determined based on historical loss experience. Receivables Write-downs are calculated as the difference between the carrying amount of the receivables and the present value of the expected cash flows, including the realisable value of any collateral received. The effective interest rate for the individual receivable or portfolio is used as discount rate. Contract work in progress Contract work in progress is measured at the selling price of the work performed. The selling price is measured by reference to the stage of completion at the balance sheet date and total expected income from the work. The degree of completion is computed as the proportion between resources spent and total estimated resources for the completion of the contract. When it is probable that contract work in progress will result in losses, the estimated loss is recognised in the income statement. When the selling price of contract work in progress cannot be measured reliably, the contract work in progress is measured at the lower of costs incurred and net realisable value. The individual work in progress is recognised in the balance sheet as receivables or payables depending on the net value of the sales amount less on-account invoicing and prepayments. Selling costs and costs incurred in securing contracts are recognised in the income statement as incurred. Prepayments Prepayments comprise costs incurred concerning subsequent financial years, such as office rent, insurance premiums and licences. Equity Dividends: The expected dividend payment for the year is disclosed as a separate item under equity. Reserve for development costs: The reserve for development costs comprises capitalised development costs. The reserve cannot be used for dividend, distribution or to cover losses. If the recognised development costs are sold or in other ways excluded from the Company's operations, the reserve will be dissolved and transferred directly to the distributable reserves under equity. If the recognised development costs are written down, the part of the reserve corresponding to the write-down of the developments costs will be reversed. If a write- down of development costs is subsequently reversed, the reserve will be re-established. The reserve is reduced by amortisation of capitalised development costs on an ongoing basis. Corporation tax and deferred tax Current tax payable and receivable is recognised in the balance sheet as tax computed on the taxable income for the year, adjusted for tax on the taxable income of prior years and for tax paid on account. Deferred tax is measured using the balance sheet liability method on all temporary differences between the carrying amount and the tax value of assets and liabilities. Where alternative tax rules can be applied to determine the tax base, e.g. regarding shares, deferred tax is measured based on the planned use of the asset or settlement of the liability, respectively. Deferred tax assets, including the tax value of tax loss carryforwards, are measured at the expected value of their realisation; either as a set-off against tax on future income or as a set-off against deferred tax liabilities in the same legal tax entity. Any deferred net assets are measured at net realisable values. Deferred tax is measured according to the tax rules and at the tax rates applicable at the balance sheet date when the deferred tax is expected to crystallise as current tax. Changes in deferred tax due to changes in tax rates are recognised in the income statement. Corporation tax and deferred tax The Company is jointly taxed with other Danish subsidiaries and affiliated companies. Current Danish corporation tax is settled by the parent company, which is the administrative company, and allocated between the jointly taxed companies in proportion to their taxable income. Provisions Provisions comprise expected costs of warranties, losses on work in progress, restructurings, etc. Liabilities other than provisions Financial liabilities comprising amounts owed to credit institutions, trade payables and payables to group enterprises are recognised at the date of borrowing at cost, corresponding to the proceeds received less transaction costs paid. In subsequent periods, financial liabilities are measured at amortised cost. Financial liabilities also include the capitalised residual obligation on finance leases. Other liabilities are measured at net realisable value. Segment information Segment information is provided on business segments and geographical markets. The segment information is in line with the Company's accounting policies, risks and internal financial management.In accordance with section 86(4) of the Danish Financial Statements Act, the Company has not prepared a cash flow statement, as this is included in the consolidated cash flow statement of the parent company, Marel hf., Iceland.12717500010519500097627000905250008599100010519500018590000204480001850200019462000206860002044800018850003178000116900071840005093000605600010083000498800013688000133400001008300050000004000000-26500022800013210005855000-26500022800063210009855000126897000100505000964740008916500085076000100505000955000079800025200032400027880002528200023219000225890002565000027007000232190001342000134200013420003120000289200028550001475700014355000160850004000000400000050000002321900022589000Ordinary operating profit/lossOrdinary operating profit/lossOrdinary operating profit/lossOrdinary operating profit/lossOrdinary operating profit/loss5048000791000048040008002000100080000.1460.1940.1900.2150.2410.0400.0750.0490.0880.1150.1990.2310.2330.2880.3170.0640.1250.0840.1550.188Financial ratios are calculated in accordance with the Danish Society of Financial Analysts' guidelines on the calculation of financial ratios "Recommendations and Financial Ratios 2015". The financial ratios are defined as follows: Gross margin Gross profit/loss x 100/ Revenue Operating margin Ordinary operating profit/loss x 100 Revenue Return on investment Ordinary operating profit/loss/ Average number of operating assets Solvency ratio Equity at year end x 100/ Total equity and liabilities at 31 December108585000847470005959000510600075830007432000504800079100002164000536600072000053000999000224100069330001108800087700010050005509000577900030004000129800018340006810000761700018134000121690001790001690001229000101600003770001900015300019561000138840003537800035378000353780003537800061749000568790003052500019271000166600011710008730000799800019039000115060005370008630008060001157000420002760003082000022971000380300013840006514800043626000134200013420002855000312000016085000147570005000000400000034630003555000561000657000402400042120006384600035846000259300004780002914000669170003876000009808000927000621000117760007694000120060007445000551200079730004520007710003067300034313000975900007307300012689700010050500050000004000000-5000000-400000000-700087000-700087000536600053660004000000400000040000004000000Operating segments The identified operating segments comprise the three industries, which are the reporting segments. These operating segments form the basis for managerial decision taking. The segment information for the period ended 31 December 2021 is as follows: Poultry Fish Meat Others Total Revenue 57.828 31.115 26.922 11.310 127.175 Geographical information The Companys operating segments operate in four main geographical areas Revenue Denmark 7.033 5.766 Europe other 62.757 57.664 North America 35.183 26.371 Other countries 22.202 15.394 Total 127.175 105.195Wages and salaries, etc. 28.315 26.106 Pensions 1.960 1.539 Other social security costs 413 340 30.688 27.985 Staff costs are recognised as follows: Production 21.793 19.901 Distribution 5.155 4.607 Administration 3.740 3.477 30.688 27.985Incentive schemes Pursuant to section 98b(3) of the Danish Financial Statements Act, the Company has not disclosed remuneration of Management as only one member of the Management Board is remunerated.314294Land and building 682 625 Plant and machinery 54 214 Fixtures, fittings and other equipment 558 504 Leasehold improvements 0 50 1.294 1.393 Depreciations are recognised as follows: Production 214 238 Distribution 671 764 Administration 409 391 1.294 1.393Result from investments in subsidiaries Dividends from group enterprises 2.164 5.366 2.164 5.366Other financial income 721 53 721 53Interest expense, group companies 711 602 Interest expense, leasing 105 125 Other financial expenses 183 1.514 999 2.241Tax on profit for the year is specified as follows: Current tax -960 -1.044 Correction tax prior years -9 9 Deferred tax 92 30 -877 -1.005Completed development projects Ongoing development projects Total development projects Cost at 1 January 22.388 3.511 25.899 Additions 0 855 855 Transferred 468 -468 0 Cost at 31 December 22.856 3.898 26.754 Impairment loss and amortisation at 1 January 20.120 0 20.120 Amortisation and impairment for the year 1.125 0 1.125 Impairment loss and amortisation at 31 December 21.245 0 21.245 Carrying amount at 31 December 1.611 3.898 5.509 Completed development projects relate to the deveopment and test of machines for the food processing industry and are usually amortised over five years. Ongoing development projects relate to the development and test of machines for the food processing industry and the majority of the projects are expected to be completed within 1-3 years where considerable economic benefits are expected. Software Goodwill Cost at 1 January 711 8.295 Foreign exchange adjustments at 1 January 1 0 Disposals during the year -94 0 Cost at 31 December 618 8.295 Impairment loss and amortisation at 1 January 707 6.461 Foreign exchange adjustments at 1 January 0 0 Disposals during the year -94 0 Amortisation for the year 2 536 Impairment loss and amortisation at 31 December 615 6.997 Carrying amount at 31 December 3 1.298 Goodwill is amortized over 10 years, as the service business is linked to equipment with a long lifespan.Own assetsLand and buildings Plant and machinery Fixtures, fittings and other equipment Assets under construction Leasehold improvements Cost at 1 January 11.671 972 1.148 153 587 Foreign exchange adjustments at 1 January 0 1 1 0 0 Additions 8.279 33 332 0 0 Transferred 691 30 0 -134 -587 Disposals 0 0 0 0 0 Cost at 31 December 20.641 1.036 1.481 19 0 Impairment loss and depreciation at 1 January 2.293 803 848 0 210 Foreign exchange adjustments at 1 January 0 0 1 0 0 Transferred 210 0 0 0 -210 Disposals 0 0 0 0 0 Depreciation for the year 186 54 157 0 0 Impairment loss and depreciation at 31 December 2.689 857 1.006 0 0 Carrying amount at 31 December 17.952 179 475 19 0 Leased assets Cost at 1 January 4.207 0 1.336 0 0 Foreign exchange adjustments 0 0 -10 0 0 Additions 348 0 558 0 0 Disposals -4.359 0 -272 0 0 Cost at 31 December 196 0 1.612 0 0 Impairment loss and depreciation at 1 January 1.416 0 620 0 0 Foreign exchange adjustments 0 0 1 0 0 Disposals -1.898 0 -164 0 0 Depreciation for the year 496 0 401 0 0 Impairment loss and depreciation at 31 December 14 0 858 0 0 Carrying amount at 31 December 182 0 754 0 0 Total 18.134 179 1.229 19 0Equity investments Equity investments in group companies Cost at 1 January 35.378 35.378 Additions for the year 0 0 Disposals for the year 0 0 Cost at 31 December 35.378 35.378 Impairment loss at 1 January 0 0 Impairment for the year 0 0 Disposals for the year 0 0 Impairment loss at 31 December 0 0 Carrying amount at 31 December 35.378 35.378 Specification of subsidiaries see latest published financial statements Registered office Ownership Profit / loss Equity Marel Salmon A/S Denmark 100% 3 15 Marel New Zealand Limited New Zealand 100% 6 896 Marel GB Ltd. England 100% 533 4.864 Marel Food Systems Ltd. Ireland 100% 225 1.464 Marel Polska Sp. z.o.o. Poland 100% 422 1.499 Marel Chile SPA Chile 100% 869 1.298 Marel Equipameintos Industriales S.A. Uruguay 100% -29 -139Finished goods 5.376 3.467 Work in progress 25.141 15.797 Raw materials and consumables 8 7 30.525 19.271Contract work in progress 8.498 8.098 Progress billings -695 -721 Net value at 31 December 7.803 7.377 - recognised as follows: Contract work in progress 8.730 7.998 Prepayments from customers -927 -621 Net value at 31 December 7.803 7.377 In the above numbers are intercompany projects included with a sales value of EUR 7,347 thousand and progress billings of EUR 320 thousand or a net value of EUR 7,027 thousand wiht EUR 7,347 thousand reported under assets and EUR 320 thousand reported under liabilities.The Company's share capital amounts to EUR 1,342 thousand, broken down on a share with a face value of EUR 134.2 thousand. No shares carry special rights. 2021 2020 2019 2018 2017 Share capital for the last 5 years 1.342 1.342 1.342 1.342 1.342Deferred tax at 1 January 3.555 3.590 Deferred tax for the year recognised in profit for the year -92 -35 Deferred tax at 31 December 3.463 3.555 Deferred tax relates to: Intangible assets 1.497 1.675 Property, plant and equipment 988 972 Retaxation obligation, foreign entities 38 43 Current assets 937 912 Provisions 2 -7 Leased assets and liabilities 1 -40 3.463 3.555Warranties Balance at 1 January 488 516 Adjustments for the year 24 -28 Balance at 31 December 512 488 Date of maturity is expected to be 0-1 year Other provisions Employee Benefits Provision 0 119 Other provisions 49 50 49 169 Date of maturity is expected to be 0-1 yearCurrent portion Non-current portion Total Herof falling due after more than fice years Finance leases 452 478 930 0 Payables to group enterprises 12.006 63.846 75.852 0 Other payables 5.512 2.593 8.105 2.368 17.970 66.917 84.887 2.368Marel A/S' related parties comprise the following: Control: Marel hf., Austurhraun 9, Gardabaer, Iceland Marel hf. Holds the majority of the share capital in the Company Marel A/S is part of the consolidated financial statements of Marel hf. Austurhraun 9, Gardabaer, Iceland, which is the smallest and largest group in which the Company is included as a subsidiary. The consolidated financial statements of Marel hf. can be obtained by contacting the Company or at the following website: www.marel.com. Related party transactions: Group Sale of goods 110.381 93.393 Production costs -59.610 -34.614 Distribution costs -1.021 1.945 Administrative expenses 3.147 -6.077 Interest -711 -602 Total 52.186 54.045 Parent Company Dividend -4.000 -9.366 Total -4.000 -9.366 Payables and receivables to group enterprises are disclosed in the balance sheet and in note 14 and 19, and expensed interest and received dividend is disclosed in note 5 and 7.Consolidated financial statements The financial statements of Marel A/S are included in the consolidated financial statements of Marel hf., Austurhraun 9, 210 Gardabaer, Iceland. The consolidated financial statements can be downloaded at www.marel.com.The Company is jointly taxed with other Danish group companies. As the administrative company, together with the other companies included in the joint taxation, the Company has joint and several unlimited liability for Danish corporation taxes and withholding taxes on dividends, interest and royalties. Corporation taxes payable and withholding taxes within the joint taxation unit totalled a receivable of EUR 474 thousand at 31 December 2021. Any subsequent corrections to the taxable joint taxation income or withholding taxes may imply that the Company's liability will increase. Cash at bank and in hand amounting to EUR 3,066 thousand has been pledged as security for a group cash pool. In February 2020, Marel hf., entered into a restated Facility Agreement. In relation to this, the shares in Marel Salmon A/S amounting to EUR 15,205 thousand have been provided as collateral to the lenders.