ÅrsrapportAndreas Færk2024-06-21RevisionspåtegningRegnskabsklasse C, stor virksomhedBeierholmVoergaardvej 29200 Aalborg SV2022-01-012022-12-312023-01-012023-12-3126801958Scanmetals A/SSkibbækparken7-11, Kirke Stillinge4200SlagelseSlagelseBeierholm32895468Handelsskolevej14700NæstvedDanmarktruetrueWe have on this day presented the annual report for the financial year 01.01.23 - 31.12.23 for Scanmetals A/S.The annual report is presented in accordance with the Danish Financial Statements Act.In our opinion, the consolidated financial statements and financial statements give a true and fair view of the group's and the parent's assets, liabilities and financial position as at 31.12.23 and of the results of the group’s and parent’s activities and of the group's cash flows for the financial year 01.01.23 - 31.12.23.We believe that the management's review includes a fair review of the matters dealt with in the management's review.The annual report is submitted for adoption by the general meeting.Slagelse2024-06-21Ejvind PedersenAndrew John KingAndreas FærkChairmanEjvind PedersenStiig Brink LarsenCarsten GrøhnAgathe Søndergaard HelleHenrik Linde ThøgersenTo the Shareholder of Scanmetals A/S OpinionWe have audited the consolidated financial statements and financial statements of Scanmetals A/S for the financial year 01.01.23 - 31.12.23, which comprise income statement, balance sheet, statement of changes in equity and notes to the financial statements, including significant accounting policies for the group as well as for the parent company as well as the consolidated cash flow statement. The consolidated financial statements and financial statements are prepared in accordance with the Danish Financial Statements Act.In our opinion the consolidated financial statements and financial statements give a true and fair view of the group's and the company's financial position at 31.12.23 and of the results of the group's and the company's operations and consolidated cash flows for the financial year 01.01.23 - 31.12.23 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 consolidated financial statements and financial statements” section of our report. We are independent of the group and 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 management’s review. Our opinion on the consolidated financial statements and 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 consolidated financial statements and financial statements, it is our responsibility is to read management’s review and, in doing so, consider whether management’s review is materially inconsistent with the consolidated financial statements or parent company financial statements or our knowledge obtained during the audit, or otherwise appears to be materially misstated. Moreover, it is our responsibility to consider whether 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 consolidated financial statements and financial statements and has been prepared in accordance with the requirements of the Danish Financial Statements Act. We did not identify any material misstatement of the management’s review.Management is responsible for the preparation of consolidated financial statements and financial statements that give a true and fair view in accordance with the Danish Financial Statements Act and for such internal control as Management determines is necessary to enable the preparation of consolidated financial statements and financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements and financial statements, management is responsible for assessing the group's and 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 consolidated financial statements and financial statements unless management either intends to liquidate the group and the company or to cease operations, or has no realistic alternative but to do so. Our objectives are to obtain reasonable assurance about whether the consolidated financial statements and 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 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 consolidated financial statements and financial statements. As part of an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the consolidated financial statements and 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 group's and 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 consolidated financial statements and 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 group's and 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 consolidated financial statements and 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 group and the company to cease to continue as a going concern. Evaluate the overall presentation, structure and contents of the consolidated financial statements and financial statements, including the disclosures, and whether the consolidated financial statements and financial statements represent the underlying transactions and events in a manner that gives a true and fair view. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Næstved2024-06-21Rickard Halfdan PatelState Authorized Public Accountantmne33780902479000469428000349975000220059000133031000102310000Profit before depreciation, amortisation, write-downs and impairment losses945571334321494748811967895947320005390500056332000-11262000-9753000-54420005476300029671000410800006950470006351210003016060009755000048483000235630007310900010651400016120400010479400096112000902400003937900069836000-23654000-333676000-102714000-37519000287873000853820002441305526272317321348949Primary activities Scanmetals recovers non-ferrous metals from mixed post-consumer waste. The recovered non ferrous metals are cleaned, separated into different fractions, and sold to primary and secondary smelters, refineries, manufacturers of ingots and foundries globally. Scanmetals A/S is the parent company of the Scanmetals groups of companies (“Scanmetals” or the “company”) with principal operations in Denmark, Germany and the United Kingdom. Development in activities and financial affairs The income statement for the period 01.01.23 - 31.12.23 shows a profit/loss of DKK 6,618k against DKK 45,164k for the period 01.01.22 - 31.12.22. The balance sheet shows equity of DKK 195,933k. Key developments during the year included: • An extensive upgrade of the processing facilities located in Germany where approximately EUR2.4 million was invested in new equipment. This resulted in two months of production shutdown which had a negative relative impact on the year-end result. However, the processing facilities now have significant additional production capacity as well as the ability to recover and produce higher quality end product. • Installation of additional equipment in Denmark to facilitate the processing of a wider range of mixed scrap metal to recover non-ferrous metals, principally aluminium which can be used in the manufacture of new low carbon aluminium alloys. • Finalisation of the plant design and start-up of construction of a new processing facility in Zaragoza, Spain. Expectations for 2023 were an operating profit before depreciation (EBITDA) of DKK 90 - 110 million. The objective was met.Outlook The company expects an operating profit before depreciation (EBITDA) in the region of DKK 130 - 140 million for 2024. Knowledge resources Scanmetals has developed proprietary processes to extract non-ferrous metals from post-consumer metal scrap and waste, and the company’s business model represents an important contribution to the Circular Economy. Financial risks Price risks The non-ferrous metals recovered are subject to fluctuations in commodity price. However, the lead time to purchasing raw material and the sale of recovered metals is relatively short and the risk of significant individual commodity price movements is limited. The company does not take speculative positions on the future price of its metal end products. Foreign currency risks The group is exposed to limited foreign currency risk as most raw material purchases (except UK) and sales transactions are settled in Euro. On a monthly basis the company hedges its foreign exchange risk where possible. Exchange rate adjustments of investments in subsidiaries that are an independent entity are recognized directly in equity. Interest rate risks The company’s policy in respect of interest rate and liquidity risk is to maintain a mixture of term finance from its shareholders and banking partners with both fixed and floating interest rates. Credit risks Appropriate and regular credit checks are made on all potential customers before any metal sales are undertaken. The company also makes use of credit insurance to mitigate the credit risk of its customers. Subsequent events No important events have occurred after the end of the financial year. Corporate social responsibility Environmental matters Scanmetals' role in the recycling industry necessitates environmentally sustainable and responsibly managed processes. In recent years, the company has proactively raised awareness about climate-friendly solutions that benefit its operations and conducted assessments of its carbon footprint. These efforts are aimed at implementing long-term strategies to reduce the company’s impact on the environment. To support these initiatives, Scanmetals has implemented a management system, which is based on a mapping of all the company`s stakeholder impacts as well as an assessment of the company's risks and opportunities in relation to this. The management system is based on the following ISO standards: ISO 9001 (Quality), ISO 14001 (Environment), and ISO 45001 (Health & Safety) and has been implemented in Denmark and United Kingdom, with plans for Germany to adopt these standards in 2025-2026. The system is audited annually by external auditors, who assess the company’s actual performance in relation to the procedures in the management system and the requirements of the applicable ISO standards. The company set specific goals in 2023 for each standard, including high customer satisfaction ratings in relation to the quality of the metals they purchase, zero accidents and near misses in terms of Health & Safety and no environmental permit breaches. In line with theses certifications, the company has also established a framework for its climate goals, which has necessitated a deeper examination of the company’s total CO2 emissions. In 2023, Scanmetals chose to initiate a long-term collaboration with a leading environmental consultancy to ensure the company meets it Corporate Sustainability Reporting Directive (CSRD) and European Sustainability Reporting Standards (ESRS) requirements. Extensive data collection and analysis related to the company’s material sustainability-related impacts and physical climate related risks has been undertaken. In addition, data in support of calculating the company’s Scope 1, 2, and 3 carbon emissions has been collected and the company’s total GHG emission intensity estimated. Initiatives undertaken during the year to reduce the company’s carbon footprint included transitioning some diesel operated mobile equipment to electric, installing solar panels, revising shipment pricing, and sourcing new suppliers for recycling internal resources like work clothes. These actions ensure compliance with CSRD and ESRS standards and allow us to capitalise on opportunities identified in 2023 and for further follow up in 2024. Energy consumption Energy consumption is a focal point of the company’s efforts to reduce its carbon footprint. Management has directed attention towards energy consumption across various sites, with key initiatives such as reducing the amount of natural gas used in drying operations and the sourcing of a greater proportion of electricity from renewable sources. These initiatives have led to a 1% increase in total electricity consumption in 2023 (Scope 1 emissions), most of this energy is sourced from renewable sources, representing a 1% reduction in fossil fuel usage (Scope 2 emissions). Moving forward, Scanmetals aims to refine its energy consumption targets, setting more precise goals for fuel, electricity, heat and water consumption. Fleet Management Scanmetals management has introduced new guidelines for its vehicle fleet entailing the gradual replacement of diesel with electric vehicles. This process has commenced and will be integrated into future maintenance plans. By the end of 2030, it is planned to phase out all diesel vehicles in favour of electric alternatives. Reliance on fossil fuels for upstream transportation and distribution, managed through third-party agreements, will depend on future supplier negotiations. Consequently, the company is actively seeking partnerships with freight companies committed to transitioning from diesel to electrically powered vehicles. Social and employee matters Occupational safety In line with the company’s commitment to employee safety, Scanmetals prioritises preventing occupational accidents, striving for an annual target of zero incidents. To support this goal, management has implemented near-miss procedures across its different sites to mitigate potential accidents and ensure employee well-being. Moving forward, Scanmetals will continue to prioritize daily reporting of near misses to further enhance workplace safety across all sites, ensuring that employees can perform their duties with confidence and security. Respect for human rights Scanmetals operates globally, necessitating a critical assessment of human rights observance within the countries it operates and does` business with. The company actively monitors its suppliers and customers through ongoing dialogue to ensure compliance with all human rights conventions. See Scanmetals website to review the company’s Modern Slavery & Human Trafficking statement: https://scanmetals.com/modern-slavery-human-trafficking-statement/ Scanmetals is committed to fostering a healthy and inclusive working environment and therefore refrains from engaging with external partners whose practices conflict with the company’s values. Scanmetals dedication to ethical conduct extends beyond its business operations to encompass the well-being and inclusivity of all employees. Scanmetals strives to cultivate a workplace culture that values its employees, with dignity for all, and empowering employees to thrive in a supportive environment. Anti-corruption and bribery matters Anti-corruption and bribery are paramount concerns for Scanmetals, and the company is committed to upholding the highest standards in all dealings with customers and suppliers alike. The company’s values and ethical standards can be found in the Code of Conduct. Furthermore, the company has implemented a Whistleblower policy for both employees and clients, allowing the reporting of any suspicions regarding the company's activities. To date, the whistleblower scheme has not received any reports of inappropriate behaviour or issues of concern. For information on the company’s Whistleblower policy, please visit the Scanmetals website: https://whistleportal.co/HYpjq. This policy allows both employees and clients to report any activities that may compromise the integrity of Scanmetals. Future Steps for ESG Reporting As Scanmetals falls under accounting class C, it is classified as a medium-sized company mandated to report on ESG factors, including its climate footprint in 2025. In response, management has proactively initiated business procedures and data collection processes to meet future reporting obligations under ESRS and CSRD standards, well in advance of the comprehensive reporting required for the financial year 2025. Business model Scanmetals has operations in Denmark, Germany and the United Kingdom, and a dedicated workforce of approximately 193 employees. The company’s primary focus lies in the recycling and treatment of mixed non-ferrous metals sourced from post-consumer waste and metal scrap, reflecting its steadfast commitment to environmental sustainability and resource conservation. As industry leaders in metal recycling, Scanmetals utilises the latest separation technologies to efficiently and effectively recover individual fractions of non-ferrous metals for further use in the production of low carbon alloys and metals that can be then used by various manufacturing industries.Scanmetals has begun implementing a comprehensive Code of Conduct to govern staff and all persons who act on behalf of Scanmetals, guaranteeing that all the company’s activities are conducted ethically, under socially responsible conditions and which prioritize the well-being of both employees and the environment. Gender composition of the management Supreme management body Scanmetals recognizes the importance of gender diversity at the Board of Director level and wishes to ensure equitable representation and foster contribution from both genders in the management and leadership of the company. 31.12.23 6 17 33 2026 *) The table does not contain information for 2022 and earlier, in line with section 99 b(7) of the Danish Financial Statements Act. Accounting policies The gender diversity ratio in the supreme management body is calculated as the proportion of female board members on the Board of Directors. It only includes board members elected by the general meeting. Employee representatives are not included. Other management levels Other levels of management include the Executive Board, and people with responsibility for personnel who report directly to the Executive Board. 31.12.23 8 38 *) The table does not contain information for 2022 and earlier, in line with section 99 b(7) of the Danish Financial Statements Act. Accounting policies The gender diversity ratio at other management levels is calculated as the proportion of female managers with responsibility for personnel out of the total number of managers with responsibility for personnel at the other management levels. 617332026Update on meeting targets The company’s Board of Directors currently consists of 1 female board member out of a total of 6 board members.Significant actions taken during the financial year to achieve the target The company wishes to have diverse representation on the Board of Directors and has therefore taken the following actions during the year in line with this policy to increase the proportion of female board members: • Considered candidates from both sexes to stand for board positions. • Considered several internal initiatives to encourage female candidates to seek to be elected to the board.838Gender balance Scanmetals A/S' other levels of management consist of 3 female and 5 male), and the gender distribution is therefore seen as relatively equal. The gender balance is expected to be maintained in future. The overall gender composition of Scanmetals workforce across all 3 operating sites is 36,8% female and 63.2% male.Data ethics Scanmetals has, following advice from the associated GDPR legal counsel, opted out of a data ethics policy, as Scanmetals does not process data or personal data on a large scale or uses new technologies, such as algorithms, machine learning or artificial intelligence in the development and provision of the company's services. The processing of personal data or data is not part of Scanmetals’ business activities or strategy. In connection with Scanmetals’ activities, no personal data or data is processed as only B2B customers are traded with and therefore, as a rule, no personal data or data is processed in a business context. Scanmetals only processes contact information (name and work email address and / or work telephone number) of a contact person at a B2B customer in connection with the administration or collaboration with the B2B customer. This information is collected from the contact person himself. In addition to the above, Scanmetals processes personal information about its employees to manage the employment relationship. Scanmetals does not make use of algorithms for the processing of this personal data. 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Income is recognised in the income statement as earned, including value adjustments of financial assets and liabilities. All expenses, including depreciation, amortisation, impairment losses and write-downs, are also recognised in the income statement. Assets are recognised in the balance sheet when it is probable that future economic benefits will flow to the company, and the value of such assets can be measured reliably. Liabilities are recognised in the balance sheet when it is probable that future economic benefits will flow from the company, and the value of such liabilities can be measured reliably. On initial recognition, assets and liabilities are measured at cost. Subsequently, assets and liabilities are measured as described for each item below. On recognition and measurement, account is taken of foreseeable losses and risks arising before the date at which the annual report is presented and proving or disproving matters arising on or before the balance sheet date. The consolidated financial statements comprise the parent and its subsidiaries in which the parent directly or indirectly holds more than 50% of the voting rights or by way of agreements exercises control. Enterprises in which the group holds participating interests, between 20% and 50% of the voting rights and in which it has significant interest but not control, are considered associates. All financial statements used for consolidation are prepared in accordance with the accounting policies of the group. The consolidated financial statements consolidate the financial statements of the parent and its subsidiaries by adding together items of a uniform nature, eliminating intercompany income and expenditure, equity investments, intercompany balances and dividends as well as gains and losses resulting from transactions between the consolidated enterprises to the extent that the underlying assets and liabilities are not realised. The financial items of the subsidiaries are recognised in full in the consolidated financial statements. The non-controlling interests’ proportionate share of the subsidiaries’ equity is classified as a part of consolidated equity. The subsidiaries’ results are distributed proportionately to non-controlling interests and the parent’s equity interest. Purchase and sale of non-controlling interests in a subsidiary which do not result in changes in control of the subsidiary are treated in the consolidated financial statements as equity transactions, and the difference between the consideration and the carrying amount is allocated to the parent’s equity interest. The annual report is presented in Danish kroner (DKK). On initial recognition, transactions denominated in foreign currencies are translated using the exchange rates applicable at the transaction date. Exchange rate differences between the exchange rate applicable at the transaction date and the exchange rate at the date of payment are recognised in the income statement as a financial item. Receivables, payables and other monetary items denominated in foreign currencies are translated using the exchange rates applicable at the balance sheet date. The difference between the exchange rate applicable at the balance sheet date and at the date at which the receivable or payable arose or was recognised in the latest annual report is recognised under financial income or expenses in the income statement. Fixed assets, inventories and other non-monetary assets acquired in foreign currencies are translated using historical exchange rates. On recognition of independent foreign entities, the income statements are translated at the exchange rates applicable at the transaction date or approximate average exchange rates. The balance sheet items are translated using the exchange rates applicable at the balance sheet date. Foreign currency translation adjustments arising from the translation of equity at the beginning of the year using the exchange rates applicable at the balance sheet date and from the translation of income statements from average exchange rates to the exchange rates applicable at the balance sheet date are recognised directly in equity under the reserve for net revaluation according to the equity method in respect of investments measured according to the equity method, and otherwise under the foreign currency translation reserve. Translation adjustments of intercompany balances with independent foreign entities, measured using the equity method and where the balance is considered to be part of the overall investment, are recognised directly in equity under the foreign currency translation reserve. On the divestment of foreign entities, accumulated exchange differences are recognised in the income statement.On initial recognition, derivative financial instruments are measured at cost. Subsequently, they are measured at fair value and recognised under other receivables and other payables, respectively. Fair value adjustment of derivative financial instruments classified as and meeting the criteria for hedging future cash flows (cash flow hedging) are recognised in equity under the cash flow hedging reserve. In the event that the hedged transaction results in the recognition of an asset or a liability, the accumulated fair value adjustment of the hedging instrument, which was previously recognised in equity, will be included in the cost of the asset or the liability. In the event that the hedged transaction results in the recognition of an income or an expense, the accumulated fair value adjustment of the hedging instrument, which was previously recognised in equity, will be recognised together with the hedged income or expense. If the hedged transaction is no longer expected to occur, the cash flow hedging treatment is discontinued, and the accumulated fair value adjustment of the hedging instrument is transferred to other net financials in the income statement. If the hedged transaction is still expected to occur, but the criteria for cash flow hedging are no longer met, the hedging treatment is discontinued, and the accumulated fair value adjustment of the hedging instrument remains in equity until the transaction occurs. Fair value adjustments of derivative financial instruments that do not meet the criteria for hedge accounting treatment are recognised under other net financials in the income statement on an ongoing basis. Leases relating to assets where the company has substantially all the risks and benefits incidental to the ownership of the asset (finance leases) are recognised in the balance sheet. On initial recognition, assets held under finance leases and related lease commitments are measured at the lower of the fair value of the leased asset and the present value of future lease payments. Subsequently, assets held under finance leases are treated like other similar assets. Lease commitments relating to assets held under finance leases are recognised in the balance sheet as payables. Subsequent to initial recognition, lease commitments are measured at amortised cost according to which the interest element of the lease payment is recognised in the income statement over the lease term. Lease payments relating to operating leases are recognised in the income statement on a straight-line basis over the lease term. Income from the sale of goods is recognised in the income statement if delivery has taken place and the risk has passed to the buyer before the end of the financial year and where the selling price can be determined reliably and is expected to be paid. Revenue is measured at fair value and is determined exclusive of VAT and other taxes collected on behalf of third parties and less discounts. Change in inventories of finished goods and work in progress comprises adjustments in inventories of finished goods and work in progress for the year, including write-downs of inventories of finished goods and work in progress to the extent that these do not exceed normal write-downs. Other operating income comprises income of a secondary nature in relation to the enterprise’s activities, including rental incomel and gains on the sale of intangible assets and property, plant and equipment. Cost of sales comprises cost of sales for the year measured at cost plus any changes in inventories, including write-downs to the extent that these do not exceed normal write-downs. Other external expenses comprise costs relating to distribution, sales and advertising and administration, premises and bad debts to the extent that these do not exceed normal write-downs. Staff costs comprise wages and salaries as well as other staff-related costs. The depreciation and amortisation of intangible assets and property, plant and equipment aim at systematic depreciation and amortisation over the expected useful lives of the assets. Assets are depreciated and amortised according to the straight-line method based on the following expected useful lives and residual values: Goodwill is amortised over 10 years. The useful life has been determined in consideration of the expected future net earnings of the enterprise or activity to which the goodwill relates. Land is not depreciated. The basis of depreciation and amortisation is the cost of the asset less the expected residual value at the end of the useful life. Moreover, the basis of depreciation and amortisation is reduced by any impairment losses. The useful life and residual value are determined when the asset is ready for use and reassessed annually. Intangible assets and property, plant and equipment are impaired in accordance with the accounting policies referred to in the ‘Impairment losses on fixed assets’ section. Other operating expenses comprise costs of a secondary nature in relation to the enterprise’s activities, including costs relating to rental activities and losses on the sale of intangible assets and property, plant and equipment. For equity investments in equity investments in associates and in the parent also equity investments in subsidiaries that are measured using the equity method, the share of the enterprises’ profit or loss is recognised in the income statement after elimination of unrealised intercompany profits and losses and less any goodwill amortisation and impairment losses. For associates only the proportionate share of intercompany gains and losses is eliminated. Income from equity investments in equity investments in subsidiaries and associates also comprises gains and losses on the sale of equity investments. Interest income and interest expenses, the interest element of finance lease payments, foreign exchange gains and losses on transactions denominated in foreign currencies etc. are recognised in other net financials. Amortisation of capital losses and borrowing costs relating to financial liabilities is recognised on an ongoing basis as financial expenses. The current and deferred tax for the year is recognised in the income statement as tax on the profit/loss for the year with the portion attributable to the profit/loss for the year, and directly in equity with the portion attributable to amounts recognised directly in equity.Property, plant and equipment comprise land and buildings, leasehold improvements, plant and machinery as well as other fixtures and fittings, tools and equipment. Property, plant and equipment are measured in the balance sheet at cost less accumulated depreciation and impairment losses. Cost comprises the purchase price and expenses resulting directly from the purchase until the asset is ready for use. Interest on loans arranged to finance production is not included in the cost. The total cost of an asset is decomposed into separate components that are depreciated separately if the useful lives of the individual components vary. Property, plant and equipment are depreciated using the straight-line method based on useful lives and residual values, which are stated in the ‘Depreciation, amortisation and impairment losses' section. Property, plant and equipment under construction Property, plant and equipment under construction are measured at cost. Costs incurred on property, plant and equipment under construction are transferred to the relevant asset category when the asset is ready for use. Gains and losses on the disposal of property, plant and equipment Gains and losses on the disposal of property, plant and equipment are determined as the difference between the selling price, if any, less selling costs and the carrying amount at the date of disposal less any costs of disposal.Equity investments in group enterprises Equity investments in subsidiaries are recognised and measured according to the equity method in the balance sheet of the parent. For equity investments in subsidiaries, the equity method is considered a measurement method, and reference is made to the 'Equity method' section for further details. Equity investments in associates In the balance sheet, equity investments in associates are recognised and measured according to the equity method. For equity investments in associates, the equity method is considered a measurement method, and reference is made to the 'Equity method' section for further details. Equity method On initial recognition, equity investments measured according to the equity method are measured at cost. Transaction costs directly attributable to the acquisition are recognised in the cost of equity investments. However, transaction costs on the acquisition of subsidiaries are recognised in the income statement in the consolidated financial statements at the date incurred. On subsequent recognition and measurement of equity investments according to the equity method, equity investments are measured at the proportionate share of the enterprises' equity value, determined according to the accounting policies of the parent, adjusted for the remaining value of goodwill and gains and losses on transactions with the enterprises in question. Equity investments, where information for recognition according to the equity method is not known, are measured at cost. Goodwill recognised under equity investments is amortised according to the straight-line method based on an individual assessment of the useful life of the asset. The useful life of goodwill has been determined at 10 years for equity investments in subsidiaries. The useful life has been determined in consideration of the expected future net earnings of the enterprise to which the goodwill relates. Gains or losses on disposal of equity investments Gains or losses on disposal of equity investments are determined as the difference between the disposal consideration and the carrying amount of net assets at the time of sale, including non-amortised goodwill, as well as the expected costs of divestment or discontinuation. Gains and losses are recognised in the income statement under income from equity investments. The carrying amount of fixed assets which are not measured at fair value is assessed annually for indications of impairment over and above what is reflected in depreciation and amortisation. If the company's realised return on an asset or a group of assets is lower than expected, this is considered an indication of impairment. If there are indications of impairment, an impairment test is conducted of individual assets or groups of assets. The assets or groups of assets are impaired to the lower of recoverable amount and carrying amount. The higher of net selling price and value in use is used as the recoverable amount. The value in use is determined as the present value of expected net cash flows from the use of the asset or group of assets as well as expected net cash flows from the sale of the asset or group of assets after the expiry of their useful lives. Impairment losses are reversed when the reasons for the impairment no longer exist. Impairment losses on goodwill are not reversed, unless goodwill is included in the carrying amount of equity investments. Inventories are measured at cost calculated according to the FIFO-method. Inventories are written down to the lower of cost and net realisable value. The cost of raw materials and consumables as well as goods for resale is determined as purchase prices plus expenses resulting directly from the purchase. The cost of manufactured finished goods and work in progress is determined as the value of direct and indirect material and labour costs. Production overheads include indirect material and labour costs as well as maintenance and depreciation of machinery, buildings and equipment used in the production process as well as the costs of factory administration and management. Interest on loans arranged to finance production is not included in the cost. The net realisable value of inventories is determined as the selling price less costs of completion and costs necessary to make the sale and is determined taking into account marketability, obsolescence and the expected development in the selling price. Receivables are measured at amortised cost, which usually corresponds to the nominal value, less write-downs for bad debts. Write-downs for bad debts are determined based on an individual assessment of each receivable if there is no objective evidence of individual impairment of a receivable. Prepayments recognised under assets comprise costs incurred in respect of subsequent financial years. Cash includes deposits in bank account. The net revaluation of equity investments measured according to the equity method is recognized in the financial statements of the parent in the net revaluation reserve in equity according to the equity method to the extent that the carrying amount exceeds the cost. Unrealised foreign currency gains and losses from the translation of the net investment in independent foreign entities are recognised in equity under the foreign currency translation reserve. The reserve is dissolved when the independent foreign entities are disposed of. Unrealised gains and losses on financial instruments classified as and meeting the criteria for hedging of future cash flows (cash flow hedging) are recognised in equity under the cash flow hedging reserve. The reserve is measured less deferred tax. The reserve is dissolved when the hedged transaction occurs, or it is no longer expected to occur. Current tax payable and receivable is recognised in the balance sheet as tax computed on the basis of the taxable income for the year, adjusted for tax paid on account. Deferred tax liabilities and tax assets are recognised on the basis of all temporary differences between the carrying amounts and tax bases of assets and liabilities. However, deferred tax is not recognised on temporary differences relating to goodwill which is non-amortisable for tax purposes and other items where temporary differences, except for acquisitions, have arisen at the date of acquisition without affecting the net profit or loss for the year or the taxable income. In cases where the tax value can be determined according to different taxation rules, deferred tax is measured on the basis of management’s intended use of the asset or settlement of the liability. Deferred tax assets are recognised, following an assessment, at the expected realisable value through offsetting against deferred tax liabilities within the same tax jurisdiction or elimination in tax on future earnings. Deferred tax is measured on the basis of the tax rules and at the tax rates in the respective countries which, according to the legislation in force at the balance sheet date, will be applicable when the deferred tax is expected to crystallise as current tax. Long-term payables are measured at cost at the time of contracting such liabilities (raising of the loan). The payables are subsequently measured at amortised cost where capital losses and loan expenses are recognised in the income statement as a financial expense over the term of the payable on the basis of the calculated effective interest rate in force at the time of contracting the liability. Short-term financial payables are measured at amortised cost, normally corresponding to the nominal value of such payables. Other short-term payables are measured at net realisable value. The cash flow statement is prepared using the indirect method, showing cash flows from operating, investing and financing activities as well as cash and cash equivalents at the beginning and end of the year. Cash flows from operating activities comprise the net profit or loss for the year, adjusted for non-cash operating items, income tax paid and changes in working capital. Cash flows from investing activities comprise payments in connection with the acquisition and divestment of companies and financial assets as well as the purchase, development, improvement and sale of intangible assets and property, plant and equipment. Cash flows from financing activities comprise changes in the parent’s share capital and associated costs and financing from and dividends paid to shareholders as well as the arrangement and repayment of long-term payables. Cash flows from financing activities also comprise finance lease payments. Cash and cash equivalents at the beginning and end of the year comprise cash. Referring to section 86(4) of the Danish Financial Statements Act a cash flow statement has not been prepared for the parent as the parent is included in the consolidated cash flow statement.Ratios definitions Return on equity: Profit/loss for the year x 100 Average equity Gross margin: Gross result x 100 Revenue Solvency ratio: Equity, end of year x 100 Total assets Figures in DKK '000 Share capital Reserve for net revaluation according to the equity method Foreign currency translation reserve Cash flow hedging reserve Retained earnings Proposed dividend for the financial year Equity attributable to owners of the parent Non-controlling interests Total equity Group: Statement of changes in equity for 01.01.22 - 31.12.22 Balance as at 01.01.22 1,300 0 440 0 136,061 10,000 147,801 13,402 161,203 Foreign currency translation adjustment of foreign enterprises 0 0 -1,638 0 0 0 -1,638 -720 -2,358 Dividend paid 0 0 0 0 0 -10,000 -10,000 0 -10,000 Net profit/loss for the year 0 0 0 0 37,275 0 37,275 7,889 45,164 Balance as at 31.12.22 1,300 0 -1,198 0 173,336 0 173,438 20,571 194,009 Statement of changes in equity for 01.01.23 - 31.12.23 Balance as at 01.01.23 1,300 0 -1,198 0 173,336 0 173,438 20,571 194,009 Foreign currency translation adjustment of foreign enterprises 0 0 1,106 0 0 0 1,106 476 1,582 Capital increase 22 0 0 0 4,978 0 5,000 0 5,000 Fair value adjustment of hedging instruments 0 0 0 -7,192 0 0 -7,192 0 -7,192 Dividend paid 0 0 0 0 0 0 0 -5,666 -5,666 Tax on changes in equity 0 0 0 1,582 0 0 1,582 0 1,582 Net profit/loss for the year 0 0 0 0 -5,342 0 -5,342 11,960 6,618 Balance as at 31.12.23 1,322 0 -92 -5,610 172,972 0 168,592 27,341 195,933 Figures in DKK '000 Share capital Reserve for net revaluation according to the equity method Foreign currency translation reserve Cash flow hedging reserve Retained earnings Proposed dividend for the financial year Equity attributable to owners of the parent Non-controlling interests Total equity Parent: Statement of changes in equity for 01.01.22 - 31.12.22 Balance as at 01.01.22 1,300 29,811 440 0 106,250 10,000 147,801 0 147,801 Foreign currency translation adjustment of foreign enterprises 0 0 -1,638 0 0 0 -1,638 0 -1,638 Dividend paid 0 0 0 0 0 -10,000 -10,000 0 -10,000 Net profit/loss for the year 0 -29,811 0 0 67,086 0 37,275 0 37,275 Balance as at 31.12.22 1,300 0 -1,198 0 173,336 0 173,438 0 173,438 Statement of changes in equity for 01.01.23 - 31.12.23 Balance as at 01.01.23 1,300 0 -1,198 0 173,336 0 173,438 0 173,438 Foreign currency translation adjustment of foreign enterprises 0 0 1,106 0 0 0 1,106 0 1,106 Capital increase 22 0 0 0 4,978 0 5,000 0 5,000 Fair value adjustment of hedging instruments 0 0 0 -7,192 0 0 -7,192 0 -7,192 Other changes in equity 0 0 92 0 -92 0 0 0 0 Tax on changes in equity 0 0 0 1,582 0 0 1,582 0 1,582 Net profit/loss for the year 0 0 0 0 -5,342 0 -5,342 0 -5,342 Balance as at 31.12.23 1,322 0 0 -5,610 172,880 0 168,592 0 168,592 Information about the distribution of revenue by geographical markets is provided below. The segment information is prepared in accordance with the company's accounting policies and follows the company's internal financial management. With reference to the exemption-on-prejudice provision in section 96(1) of the Danish Financial Statements Act, the company has omitted to provide further segment information. The reason for the omission is that this information will have a negative effect on the Group's competitiveness. Revenue comprises the following activities: Recycled metals 1,094,273 1,161,712 515,484 585,915 Revenue comprises the following geographical markets: Revenue, EU 757,160 773,773 301,937 285,170 Revenue, Non-EU 337,113 387,939 213,547 300,745 Total 1,094,273 1,161,712 515,484 585,915 Remuneration for the management: Remuneration for the Executive Board and Board of Directors 4,807 4,760 4,807 4,760 Amortisation of intangible assets 26,198 26,198 0 0 Depreciation of property, plant and equipment 30,910 29,548 20,426 17,600 Total 57,108 55,746 20,426 17,600 12. Property, plant and equipment Figures in DKK '000 Land and buildings Leasehold improve-ments Plant and machinery Other fixtures and fittings, tools and equipment Property, plant and equipment under construction Group: Cost as at 01.01.23 107,634 14,800 217,130 7,344 15,082 Foreign currency translation adjustment of foreign enterprises 0 176 1,000 31 0 Additions during the year 14,736 459 20,930 1,532 59,893 Disposals during the year 0 0 -3,379 -333 0 Transfers during the year to/from other items 0 0 5,223 0 -5,223 Cost as at 31.12.23 122,370 15,435 240,904 8,574 69,752 Depreciation and impairment losses as at 01.01.23 -18,631 -2,601 -91,617 -3,610 0 Foreign currency translation adjustment of foreign enterprises 0 -26 -426 -23 0 Depreciation during the year -4,375 -798 -24,685 -1,052 0 Reversal of depreciation of and impairment losses on disposed assets 0 0 3,153 323 0 Depreciation and impairment losses as at 31.12.23 -23,006 -3,425 -113,575 -4,362 0 Carrying amount as at 31.12.23 99,364 12,010 127,329 4,212 69,752 12. Property, plant and equipment - continued - Figures in DKK '000 Land and buildings Leasehold improve-ments Plant and machinery Other fixtures and fittings, tools and equipment Property, plant and equipment under construction Parent: Cost as at 01.01.23 102,495 0 156,216 1,842 0 Additions during the year 14,735 0 3,275 88 16,445 Disposals during the year 0 0 0 -110 0 Cost as at 31.12.23 117,230 0 159,491 1,820 16,445 Depreciation and impairment losses as at 01.01.23 -18,631 0 -59,816 -1,146 0 Depreciation during the year -4,375 0 -15,810 -241 0 Reversal of depreciation of and impairment losses on disposed assets 0 0 0 100 0 Depreciation and impairment losses as at 31.12.23 -23,006 0 -75,626 -1,287 0 Carrying amount as at 31.12.23 94,224 0 83,865 533 16,445 Carrying amount of assets held under finance leases as at 31.12.23 0 0 69,498 0 12,704 13. Equity investments Figures in DKK '000 Equity investments in group enterprises Equity investments in associates Group: Cost as at 01.01.23 0 500 Cost as at 31.12.23 0 500 Revaluations as at 01.01.23 0 -50 Net profit/loss from equity investments 0 200 Revaluations as at 31.12.23 0 150 Carrying amount as at 31.12.23 0 650 Parent: Cost as at 01.01.23 312,557 500 Foreign currency translation adjustment of foreign enterprises 1,106 0 Cost as at 31.12.23 313,663 500 Revaluations as at 01.01.23 -10,167 -50 Amortisation of goodwill -26,198 0 Net profit/loss from equity investments 28,798 200 Dividend relating to equity investments -11,503 0 Revaluations as at 31.12.23 -19,070 150 Carrying amount as at 31.12.23 294,593 650 13. Equity investments - continued - Name and registered office: Ownership interest Subsidiaries: Euroscan AB, Sweden 100 Scanmetals (UK) Limited, United Kingdom 67 Scanmetals Deutschland GmbH, Germany 100 Recoin Unipessoal Lda., Portugal 100 Scanmetals Iberia Sociedad Limitada, Spain 100 Associates: EIBAR A/S, Aabenraa, Denmark 50 Group Parent 31.12.23 31.12.22 31.12.23 31.12.22 DKK '000 DKK '000 DKK '000 DKK '000 14. Prepayments Prepaid insurance premiums 441 627 441 627 Other prepayments 1,181 1,517 503 982 Total 1,622 2,144 944 1,609 17. Deferred tax Deferred tax as at 01.01.23 10,612 10,258 7,564 6,233 Deferred tax recognised in the income statement -943 568 -2,231 1,331 Deferred tax recognised in equity -1,514 -214 -1,582 0 Deferred tax as at 31.12.23 8,155 10,612 3,751 7,564 19. Fair value information Figures in DKK '000 Derivative financial instruments Group: Fair value as at 31.12.23 -7,192 Unrealised changes of fair value recognised in equity for the year -7,192 Parent: Fair value as at 31.12.23 -7,192 Unrealised changes of fair value recognised in equity for the year -7,192 Group: The group has entered into two interest rate swaps to hedge future interest payments on a variable-rate mortgage loan. The interest rate swaps have a term of five to ten years for the latest expiry on 31 December 2033. The interest rate swaps are recognised at fair value calculated by the bank, amounting to DKK -7,192k at the balance sheet date. The interest rate swaps have been entered into with a Danish bank as the counterparty. Parent: The company has entered into two interest rate swaps to hedge future interest payments on a variable-rate mortgage loan. The interest rate swaps have a term of five to ten years for the latest expiry on 31 December 2033. The interest rate swaps are recognised at fair value calculated by the bank, amounting to DKK -7,192k at the balance sheet date. The interest rate swaps have been entered into with a Danish bank as the counterparty. Group: Lease commitments The group has concluded lease agreements with total lease payments of DKK 73,476k. Recourse guarantee commitments The group has provided a guarantee whereby the guarantor assumes primary liability for group enterprises' debt to credit institutions. The guarantee is maximised at DKK 5,200k. The group enterprises' debt to the credit institutions concerned amounts to DKK 378k at the balance sheet date. Guarantee commitments The group has provided guarantees of DKK 2,565k to suppliers and public authorities. Parent: Lease commitments The company has concluded lease agreements with total lease payments of DKK 134k. Recourse guarantee commitments The company has provided a guarantee whereby the guarantor assumes primary liability for group enterprises' debt to credit institutions. The guarantee is maximised at DKK 5,200k. The group enterprises' debt to the credit institutions concerned amounts to DKK 378k at the balance sheet date. Guarantee commitments The company has provided guarantees of DKK 2,565k to suppliers and public authorities. Group: Land and buildings with a carrying amount of DKK 87,745k have been provided as security of DKK 32,685k for mortgage debt of DKK 32,467k. The group has issued mortgage deeds registered to the mortgagor in the total amount of DKK 9,300k secured upon land and buildings with a carrying amount of DKK 67,971k. The mortgage deeds registered to the mortgagor are provided as security for debt to credit institutions. The group has provided a company charge of DKK 27,500k as security for debt to credit institutions of DKK 250,880k. As at 31.12.23, the company charge comprises the following assets with the following carrying amounts: Goodwill and intellectual property rights, DKK 0k Motor vehicles, DKK 0k Other plant, fixtures and fittings, tools and equipment, DKK 84,396k Inventories, DKK 56,865k Trade receivables, DKK 28,032k Fuels and other ancillary materials, DKK 0k Parent: Land and buildings with a carrying amount of DKK 87,745k have been provided as security of DKK 32,685k for mortgage debt of DKK 32,467k. The company has issued mortgage deeds registered to the mortgagor in the total amount of DKK 9,300k secured upon land and buildings with a carrying amount of DKK 67,971k. The mortgage deeds registered to the mortgagor are provided as security for debt to credit institutions. The company has provided a company charge of DKK 27,500k as security for debt to credit institutions of DKK 250,880k. As at 31.12.23, the company charge comprises the following assets with the following carrying amounts: Goodwill and intellectual property rights, DKK 0k Motor vehicles, DKK 0k Other plant, fixtures and fittings, tools and equipment, DKK 84,396k Inventories, DKK 56,865k Trade receivables, DKK 28,032k Fuels and other ancillary materials, DKK 0k Related party transactions are not disclosed, as all transactions are entered into in the ordinary course of business at arms’ length. Remuneration for the management is specified in note 2. Staff costs. Goodwill Goodwill is measured in the balance sheet at cost less accumulated amortisation and impairment losses. Goodwill is amortised using the straight-line method based on useful lives, which are stated in the ‘Depreciation, amortisation and impairment losses’ section. Gains or losses on the disposal of intangible assets are determined as the difference between the selling price, if any, less selling costs and the carrying amount at the date of disposal. 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