Untitled

Chairman of the meeting

CP Kelco ApS

Adopted at the Annual General Meeting of shareholders on May 31, 2023

4623 Lille Skensved, Denmark

Annual Report

For the fiscal year ended December 31, 2022

24th Fiscal Year

CVR-nr. 21 21 02 85

Ved Banen 16

CONTENTS

Page

Information about the company 3

Management's Review 4

Financial highlights 7

Statement by the Executive Board 9

Independent auditors' Report 10

Income Statement for the years ended December 31 13

Balance Sheet at December 31 14

Statement of Changes in Equity 18

Notes and Disclosures 19

INFORMATION ABOUT THE COMPAN

CP Kelco ApS

Ved Banen 16

4623 Lille Skensved, Denmark

Tel: +45 56 16 56 16

Executive Board:

Jeffrey Jerome Prosinski

Jérôme Fernand Béra

Jennifer Mason

Didier Marcel Claude Viala

Douglas Michael Grant

Parent Company:

Waterview Sarl., Luxembourg

Ultimate Parent Company:

J.M. Huber Corporation, 499 Thornall St., Edison, New York, USA

A copy of the Group's Annual Report can be requested by contacting CP Kelco ApS.

Auditors:

KPMG

Statsautoriseret Revisionspartnerselskab

Dampfærgevej 28

DK 2100 Copenhagen

MANAGEMENT'S REVIEW

Main activities

CP Kelco ApS develops and manufactures pectin and carrageenan and the products are sold

world-wide. CP Kelco ApS is owned by J.M. Huber Corporation one of the largest family-

owned companies in North America.

CP Kelco has more than 1.500 customers in over 100 countries that use the products as food

ingredients or ingredients for industrial and pharmaceutical products as well as suspension

material for oil drilling.

The CP Kelco ApS Group owns and operates 4 plants located in Europe and South America.

Business review

The company generated an operating profit in 2022 of DKK 365 mill. compared to DKK 411

mill. in 2021. The decrease in operating profit is mainly due to higher energy costs in 2022.

Financial income/expenses amount to a net expense of DKK 160.9 mill for 2022 against a net

expense of DKK 422.4 mill in 2021. The development of USD currency rate resulted in 2021 in

a total foreign exchange loss of DKK 35 mill. against foreign exchange loss of DKK 34 mill. in

2021. Dividends from subsidiaries amounted to DKK 75 mill. in 2022. In 2021 dividends

amounted to DKK 107 mill. In 2022 impairments on investments amounted to DKK 203 mill.

compared to impairments on investments and write down on intra-group receivables of DKK

465 mill. in 2021.

The net profit for the year off DKK 136 mill. is satisfactory compared to our expectations and

previous years.

Uncertainty regarding recognition and measuremen

Investments in subsidiaries are measured at cost. The carrying amount of the investments in

subsidiaries are subject to impairment tests when indications of impairments are identified.

The company has assessed the carrying value of investments in subsidiaries based on

management's expectations for the future earnings in the subsidiaries respectively. Management

has assessed that the recoverable amounts of investments in subsidiaries after the write downs

mentioned above exceed the investments carrying values That amounts to DKK 805 million.

References is made to note 10 to the financial statements.

The recoverable amounts in the impairment tests are based on business plans and budgets. The

budgeted future cash-flows are subject to risk and uncertainties as various factors may cause the

actual development and results to differ from the applied expectations and assumptions.

Revenue increased by approx. 16,5%, from DKK 2,023 mill. in 2021 to DKK 2,357 mill. in

2022.

Social responsibility

The company’s statutory report on corporate social responsibility contains also the

environmental report and is published on the company’s website

https://www.cpkelco.com/about‐us/lille‐skensved‐denmark/

cf. the Danish Financial Statements Act §99a, part 3.

Diversity in management cf. The Danish Company Acc. Act § 99 b

Policy:

The Company wishes to have the professionally best qualified person on the individual

leadership position concurrently with maintaining an inclusive workplace, believing that equal

representation of sex in the upper management levels will strengthen the Company’s synergy,

creativity and development.

Action:

The top management level in CP Kelco ApS is the Company’s Executive Board, composed by

five members, appointed by the Company’s American Parent Company, J.M. Huber

Corporation. As the situation is the same as in most other companies the Executive Board is

elected by the shareholders. CP Kelco had set a target of one female to be included in the Board

by 2021. In 2018 the target was achieved and both sex are now represented in the Executive

Board. The next goal would be to have a ratio of 40/60% presentation in the Executive Board

before 2026. There was no changes made to the Executive Board within 2022.

The Skensved management level is composed by functional, middle, and team leaders within

CP Kelco ApS. 41 people in total.

CP Kelco ApS has a target figure for both sexes to be represented in the management level with

a ratio of 40/60%.

For internal recruitment both sexes are ensured same possibilities, and all leaders and potential

leaders regardless of sex are offered leadership training on equal terms. In connection with

external recruitment candidates of both sexes are selected, however, qualifications will always

be a deciding factor.

Result:

The distribution in the management level is per Dec. 31, 2022 27% women and 73% men,

against per Dec. 31, 2021 35% and 65%.

In 2022 CP Kelco ApS, representation of women in the Skensved management level has

decreased by 8% due changes in management during 2022. Our goal is a ratio of 40/60% in

2026.

Report on Data ethics cf. The Danish Company Acc. Act § 99 d

Managing data responsilibly and ethically

As part of its daily operations CP Kelco generates and prossesses a great deal of important

information requiring vigilant protection against desclosure outside of the company. The Data

Protection Policy requires that all company employees sufficiently protect information that has

economic value to the company.

Our commitment to protect personal data and privacy is reflected in two of our four core

Principles "Excellence" and "Ethical Behavior",which all employees strive to meet. In

accordance with these Principles, policy acknowledges the company's goals to achieve

competitive advantage through customer focus and operational excellence. In addition,

employees will operate our business with the highest standard for complience with laws,

regulations and corporate policies, and conduct themselves with professionalism and ethical

reponsibility. By protecting our information and that of our partners, this policy supports these

Principles.

CP Kelco maintains an active privacy and data protection compliance program. The Data

Protection Officers and local Data Privacy Liaisons are responsible for implementing and

overseeing the administration of the policy. The company undertakes to register and keep its

registration updated as a data Controller and processor. All personnel and third-party agents are

required to adhere to the policy and any associated or supporting policies.

All employees confirms by signature their knowledge and accept of the company Data

Protection policy and the Ethical guidelines. The annual ethics training for all employees covers

also Data Ethics.

Interest Rate and Foreign Currency Rate Ris

The interest rates on the company's intra group payables is variable and the company result will

therefore be affected by changes in the interest rates.

A significant portion of CP Kelco’s activities is carried out in US dollars and Japanese yen and

the company’s DKK result will be volatile as a result of exchange rate fluctuations. The

Company uses derivative financial instrument to mitigate exposures to changes in exchange

rates. The Company is also exposed to changes in exchange rates on intergroup USD loans.

The company enters into derivative financial contracts through J.M. Huber Corporate Treasury,

an intergroup company under the same control as CP Kelco ApS. All transactions are made in

close cooperation with the J.M. Huber Corporate Treasury department and based on the

guidelines of the J.M. Huber Treasury policy.

Knowhow

CP Kelco is to some extent dependent on being able to attract and keep employees who

continuously can develop new products and new production techniques so that CP Kelco can

continue to meet customer demands for products which have been adapted to the specific needs

of the customers.

The employees are continuously being educated to enable them to comply with CP Kelco’s

standards of environment and safety.

Research & Development

CP Kelco applies resources to research and development of new production techniques and new

products, meeting customer needs for new products with specific properties.

Consequently CP Kelco is to some extent dependent on the continued focus on research and

development in order to continuously improve production effectiveness and maintain to CP

Kelco’s market position.

Subsequent events

No significant events, which have a material influence on the assessment of the Annual Report

2022 have occurred after the balance sheet date.

Outlook

The Company expects for 2023 a revenue and an operating profit before financial

income/expenses at 2022 level.

FINANCIAL HIGHLIGHTS

2022 2021 2020 2019 2018

DKK’000 DKK’000 DKK’000 DKK’000 DKK’000

Revenue

2,357,262 2,023,010 1,974,542 2,008,113 1,682,047

Gross profit 476,454 533,467 570,768 606,426 487,635

Operating profit 364,892 411,211 470,259 371,058 283,726

Profit (loss) from financial income/expenses -160,869 -422,436 -43,331 -144,495 -104,619

Profit (loss) before tax 204,024 -11,225 426,930 226,564 179,108

Profit (loss) for the year 136,350 -76,676 311,274 121,452 114,553

Equity 988,176 851,826 1,628,503 2,667,229 2,545,777

Total assets 3,598,783 2,954,856 3,476,216 4,822,310 4,971,975

Investments in property, plant and equipment 67,929 64,383 46,928 105,784 68,832

Average number of employees 366 364 390 389 381

Lille Skensved, May 31, 2023

Executive Board:

Jeffrey Jerome Prosinski Jérôme Fernand Béra

Jennifer Mason Didier Marcel Claude Viala

Douglas Michael Grant

We recommend that the annual report be approved at the annual general meeting.

STATEMENT BY THE EXECUTIVE BOARD

The Executive Board have today discussed and approved the annual report of CP Kelco ApS for

the financial year January 1 – December 31, 2022.

The Annual Report has been prepared in accordance with the Danish Financial Statements Act.

It is our opinion that the financial statements give a true and fair view of the Company’s assets,

liabilities and financial position at December 31, 2022 and of the result of the Company’s

operations for the financial year January 1 – December 31, 2022.

Further in our opinion, the Management’s review gives a fair review of the development in the

Company’s activities and financial matters, of the results for the year and the Company’s

financial position.

To the Shareholder of CP Kelco ApS

Opinion

Basis for opinion

INDEPENDENT AUDITORS’ REPORT

We have audited the financial statements of CP Kelco ApS for the financial year 1 January – 31

December 2022 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 2022 and of the results of the Company's

operations for the financial year 1 January – 31 December 2022 in accordance with the Danish

Financial Statements Act.

We conducted our audit in accordance with International Standards on Auditing (ISAs) and the

additional requirements applicable in Denmark. Our responsibilities under those standards and

requirements are further described in the "Auditor's responsibilities for the audit of the financial

statements" section of our report.

We are independent of the Company in accordance with the International Ethics Standards Board

for Accountants' Code of Ethics for Professional Accountants (IESBA Code) and the additional

requirements applicable in Denmark, and we have fulfilled our other ethical responsibilities in

accordance with these rules and requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a

basis for our opinion.

Management's responsibility for the financial statements

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.

‐

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.

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.

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.

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.

Auditor's responsibilities for the audit of the financial statements

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.

Statement on the Management's review

Copenhagen, May 31, 2023

KPM

Statsautoriseret Revisionspartnerselskab

CVR-nr. 25 57 81 98

Kåre Kansonen Valtersdorf

State Authorised Public Accountant

MNEno.34490

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.

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.

INDEPENDENT AUDITORS’ REPORT

INCOME STATEMENT for the years ended December 31

2022 2021

Note

DKK’000 DKK’000

Revenue

1 2,357,262 2,023,010

Production costs 2 1,880,808 1,489,543

Gross profit 476,454 533,467

Distribution costs 2 38,778 41,760

Administrative expenses 2+3 72,782 80,496

Operating profit 364,892 411,211

Financial income

5 150,535 147,536

Financial expenses

6 311,403 569,972

Profit (loss) before tax

204,024 -11,225

Tax on profit for the year

7 67,674 65,451

Profit (loss) for the yea

8 136,350 -76,676

BALANCE SHEET at December 31

ASSETS 2022 2021

Note DKK’000 DKK’000

NON-CURRENT ASSETS

Intangible assets

Development Projects

20,914 29,420

Licenses and software 9,234 8,895

Total intangible assets 4 30,148 38,315

Property, plant and equipmen

Land and buildings

150,169 156,750

Plant and machinery

360,398 377,790

Fixtures and equipment 3,011 4,125

Assets under construction

98,979 58,729

Total property, plant and equipment

9 612,557 597,394

Investments

Investments in subsidiaries

10 805,141 805,274

Intra-group receivables

11 533,524 357,353

Total investments

1,338,665 1,162,627

TOTAL NON-CURRENT ASSETS

1,981,372 1,798,336

BALANCE SHEET at December 31

2022 2021

ASSETS - continued

Note

DKK’000 DKK’000

CURRENT ASSETS

Inventories

12 796,872 497,973

Receivables

Trade accounts receivable

17,039 57,550

Intra-group receivables

693,277 560,098

Company tax receivable

43,722 0

Other receivables

59,106 34,343

Prepaid expenses

5,243 3,839

Total receivables

818,387 655,830

Cash and bank

2,154 2,717

TOTAL CURRENT ASSETS

1,617,411 1,156,520

TOTAL ASSETS

3,598,783 2,954,856

BALANCE SHEET at December 31

LIABILITIES

2022 2021

Note DKK’000 DKK’000

STOCKHOLDERS’ Equity

Capital stock

13 53,002 53,002

Reserve for development costs 20,915 29,421

Proposal of dividend 0 0

Retained earnings

914,259 769,403

STOCKHOLDERS’ EQUITY

988,176 851,826

PROVISIONS

Deferred tax

14 115,467 83,532

PROVISIONS

115,467 83,532

LONG-TERM LIABILITIES

Long-term liabilities

Intra-group payables

2,076,505 1,663,588

Leasing obligation

636 1,253

Total long-term liabilities

15 2,077,141 1,664,841

BALANCE SHEET at December 31

2022 2021

LIABILITIES - continued

Note

DKK’000 DKK’000

Current liabilities

Current liability of long-term liabilities

15 574 563

Trade accounts payable

259,611 178,093

Intra-group payables

96,622 72,867

Company tax payable

0 4,884

Other payables

61,190 98,250

Total current liabilities

417,997 354,657

2,495,139 2,019,498

TOTAL LIABILITIES

3,598,783 2,954,856

Contingent liabilities and contractual obligations

Related party transactions

TOTAL LONG-TERM & CURRENT LIABILITIES

STATEMENT OF CHANGES IN EQUITY

2022

DKK’000

Capital Stock

Balance at January 1 53,002

Balance at December 31 53,002

Reserve from development costs

Balance at January 1 29,421

Amortization of development costs -11,471

Capitalised for development costs 2,965

Balance at December 31 20,915

Retained earnings

Balance at January 1 769,403

Appropriation of net profit 144,856

Balance at December 31 914,259

Proposal of dividend

Balance at January 1 0

Paid dividend during the year 0

Proposal of dividend for the year 0

Balance at December 31 0

Total Equity 988,176

NOTES AND DISCLOSURES

Note 1. Revenue

2022 2021

Note 2. Staff costs DKK’000 DKK’000

Specification of staff costs:

Payroll costs

254,799 261,663

Pensions 20,907 20,529

Other social security costs

3,877 3,868

279,583 286,060

Average number of employee

366 364

Remuneration paid to the Executive Board through management fees

Salaries, pensions and incentives

4,538 3,637

Staff costs is stated in the income statement

at the following amounts:

Production costs

217,685 213,078

Distribution costs

31,543 31,599

Administrative expenses

30,355 41,383

279,583 286,060

The Company has paid management fees to group related companies which also cover remuneration

to intra-group members of the Executive Board. The fee for performing the responsibilities of the

Executive Board is estimated below.

The Company operates in one segment consisting of production of natural and naturally derived

hydrocolloids. The operations are managed as one segment or strategic unit, because it offers similar

products in similar markets and the factors determining strategic decisions are comparable for all

products.

Information about activities on geographic areas is not submitted pursuant to the Danish Financial

Statements Act, section 96 (1) as such information may be detrimental to the Group as there are only

few material competitors in the segment.

NOTES AND DISCLOSURES

2022 2021

Note 3. Fee to statutory audito

DKK’000 DKK’000

Statutory audit

1,612 1,447

Other assurance engagements 15 76

Non-audit services

1,635 1,523

Note 4. Intangible assets

Investments in and amortization of intangible assets made during the fiscal year can be specified as

follows (in DKK thousands)

Develop-

ment

projects

Licences

and

software

Total

Cost at January 1 99,057 52,535 151,592

Additions for the year 2,965 2,764 5,729

Disposals for the year 0 0 0

Cost at December 31 102,022 55,299 157,321

Amortization at January 1 69,637 43,641 113,278

Amortization for the year 11,471 2,424 13,895

Amortization of disposals 0 0 0

Amortization at December 31 81,108 46,065 127,172

Carrying amount at December 31 20,914 9,234 30,148

Depreciation of development projects, licenses and software are expensed in the income statement as

production costs.

NOTES AND DISCLOSURES

2022 2021

Note 5. Financial income DKK’000 DKK’000

nanc

ncome can

e spec

ifi

ows:

Dividend from subsidiaries

75,113 106,812

Gain on sale of investment

1,086 0

Foreign currency adjustments

Interest received from group companies

74,336 40,724

150,535 147,536

Note 6. Financial expenses

Financial expenses can be specified as follows:

Interest paid to group companies

108,034 65,049

Write-down of Intra-group receivables

0 464,577

Write-down of investments in subsidiaries

168,084 2,575

Loss on liquidation of investment

127 2852

Foreign currency adjustments

34,652 34,029

Other financial expenses

506 890

311,403 569,972

NOTES AND DISCLOSURES

2022 2021

DKK’000 DKK’000

Note 7. Tax on profit for the year

The expensed corporate income tax can be specified as follows:

Tax on profit for the year

33,551 81,606

Adjustments regarding previous years

Deferred tax adjustment for the year

31,936 -6,577

Other taxes, withholding tax

2,187 -9,578

67,674 65,451

2022

Note 8. Appropriation of income DKK’000

Net profit

136,350

Capitalised development costs

-2,965

Amortization of development costs

11,471

144,856

Proposed distributed as follows:

Proposed dividends for the year

Retained earnings

144,856

The Executive Board recommends that the net income of the Company is distributed as follows:

NOTES AND DISCLOSURES

Note 9. Property, plant and equipment

Land and

buildings

Plant and

machi-

nery

Fixtures

and equip

ment

Assets

under

construc-

tion Total

Cost at January 1 332,531 1,139,522 43,597 58,729 1,574,379

Transferred 928 18,604 257 -21,070 -1,281

Additions for the year 182 7,610 98 61,320 69,210

Disposals for the year -18 -1,791 0 0 -1,809

Cost at December 31 333,623 1,163,945 43,952 98,979 1,640,499

Depreciation at January 1 175,781 761,731 39,472 0 976,984

Depreciation for the year 7,692 43,600 1,469 0 52,761

Depreciation of disposals -18 -1,785 0 0 -1,803

Depreciation at December 31

183,454 803,547 40,941 0 1,027,942

Carrying amount at December 31 150,169 360,398 3,011 98,979 612,557

Carrying amount of leased assets 0 2,572 0 0 2,572

2022 2021

DKK’000 DKK’000

Production costs 52,396 52,408

Distribution costs 2 148

Administrative expenses 363 413

52,761 52,969

Investments in and depreciation of property, plant and equipment made during the fiscal year can be

specified as follows (in DKK thousands):

Depreciation of property, plant and equipment is stated in the income

statement at the following amounts:

NOTES AND DISCLOSURES

Note 10. Investments in subsidiaries

2022 2021

DKK’000 DKK’000

Cost at January 1 1,239,019 1,218,180

Additions 203,048 21054

Disposal of investments -127 -215

Cost at December 31 1,441,940 1,239,019

Valuation adjustments at January 1 -433,745 -413,530

Write down for the year -203,054 -20,215

Valuation adjustments at December 31 -636,799 -433,745

Carrying amount at December 31 805,141 805,274

In instances of impairment indication, the carrying amount of the investment in subsidiaries at 31

December 2022 have been tested for impairment. The recoverable amount is based on business

plans and budgets for 2023 to 2028 approved by Executive Board and J.M. Huber Group. The

budgeted future cash-flows are subject to risk and uncertainties as various factors, some of which

are beyond the control of CP Kelco ApS, may cause actual development and results to differ

materiality from the current expectations and assumptions.

Significant assumptions

Although depending on the specific market, generally a growth rate of 2.0 % during the terminal

period has been assumed.

Net cash flows have been discounted using a discount rate after tax of 7.9 % -8.8 %, based on the

country and market specific risk and the debt structure.

NOTES AND DISCLOSURES

Subsidiaries Interest Currency Equity

Profit

(loss) for

the year

CP Kelco Germany GmbH, Germany

94.99% EUR'000 *18,547 *4,897

CP Kelco UK Limited, UK

100% GBP'000 *1,406 *231

CP Kelco Brazil SA, Brazil

99.99% BRL'000 *(100,457) *(9,998)

CP Kelco Services ApS, Denmark

100% DKK'000 232,448 19,813

CP Kelco Argentina SA, Argentina

98% ARS'000 *45,514 *(9,957)

Zanea Seaweed Co Ltd., Tanzania

66% TSHS'000 *(401,621) *77,296

CP Kelco Japan ApS, Denmark (including Japan

Branch Japan)

100% DKK'000 8,180 2,600

CP Kelco France SARL, France

100% EUR'000 *1,345 *472

CP Kelco Singapore Pte Ltd, Singapore

100% SGD'000 *4,888 *183

CP Kelco Belgium BVBA, Belgium

99.50% EUR'000 *1,013 *184

CP Kelco India

100% INR'000 *53,810 *3,589

* From audited Financial Statements for the year 2021.

Companies in which the participating interest is less than 50% are entered as subsidiaries in the

Financial Statements as CP Kelco ApS has the controlling influence in the companies.

Dividend received from CP Kelco Services ApS in 2022 exceeds the results in the period it was

owned by CP Kelco and therefore the cost price has been reduced by DKK 6,000. CP Kelco Poland

is liquidated in 2022 and is included as disposal for the year. CP Kelco Brazil received capital

infusion of DKK 203 mill. The impairment calculation for CP Kelco Brazil concluded that write-

down on investment was necessary with DKK 203 mill. For all other investments the recoverable

amount is higher than the carrying amount and thus no write-down have been necessary.

Note 10. Investments in subsidiaries - continued

NOTES AND DISCLOSURES

2022 2021

Note 11. Intra-Group receivables DKK’000 DKK’000

Balance at January 1 357,353 650,989

Additions 141,207 170,941

Repayments 0 0

Write down based on impairment calculation ref. Note 10 34,964 -464,577

Balance at December 31 533,524 357,353

Note 12. Inventories

Inventories can be specified as follows:

Raw materials 205,320 165,309

Work in progress 175,715 104,813

Finished goods and goods for resale 415,837 227,851

796,872 497,973

Note 13. Capital Stock

Analysis of the Company’s capital stock, DKK 53,002 thousand:

50,501 class A shares of DKK 1,000 each

50,501 50,501

2,500 class B shares of DKK 1,000 each

2,500 2,500

62,553 class C shares of DKK 0,01 each

53,002 53,002

2022 2021

DKK’000 DKK’000

Note 14. Deferred tax

Provision at January 1 83,532 90,109

31,936 -6,577

Provision at December 31 115,468 83,532

2022 2021

Note 15. Long-term liabilities

DKK’000 DKK’000

Long-term liabilities can be specified as follows:

Falling due after more than 5 years

2,076,505 1,663,588

Falling due between 1 and 5 years

636 1,253

Falling due within 1 year

574 563

2,077,715 1,665,404

NOTES AND DISCLOSURES

Deferred tax relates to intangibles, fixed assets, inventories, receivables, trade accounts payable and

other payables.

Adjustment of deferred tax for the year

Class B shares have no voting rights, and the holders are not entitled to receive dividends on these

shares.

In the event of liquidation, each Class B share is entitled to a liquidation preference of the DKK

equivalent of USD 20,000 per share. With respect to the liquidation preference, the Class B shares

rank prior to the Company’s Class A shares. In connection with a transaction which constitutes a

change in control, as defined, or in connection with certain equity offerings, as defined, the Company

shall be required to make an offer to the Class B shareholders to redeem the Class B shares at a

multiple of the liquidation preference.

The Class C shares have no voting rights and its liquidation preference is subordinate to that of the

Class B shares currently outstanding, but senior to Class A shares.

NOTES AND DISCLOSURES

Note 16. Contingent liabilities and contractual obligations

Note 17. Related party transactions

Related party disclosures

CP Kelco ApS' related parties comprise the following:

Control

The Company has undertaken car, truck and computer leases last contract ending December

2026 amounting to DKK 6,711 thousand.

The Company is jointly taxed with other Danish companies in the J.M. Huber group. As a

wholly owned subsidiary of J.M. Huber Corporation, the Company is unlimited and solidary

liable with the other companies in the joint taxation regarding Danish withholding taxes on

dividends, interest and royalties in the joint taxation. Tax receivables in the joint taxation are

as of 31 December 2022 DKK 43 million. Any subsequent corrections of the taxable income

in the joint taxation or withholding taxes could lead to the Company's liability being higher.

In connection with a change of control of the ownership the Parent Company is obligated to

make an offer to redeem the Class B shares on the terms highlighted in note 12.

J.M. Huber Corporation holds the majority of the share capital in CP Kelco ApS.

CP Kelco ApS is part of the consolidated financial statements of J.M. Huber Corporation,

499 Thornall St., Edison, New York, USA, which is the smallest and largest group in which

the Company is included as a subsidiary.

The consolidated financial statements of J.M. Huber Corporation can be obtained by

contacting the Company.

NOTES AND DISCLOSURES

Note 17. Related party transactions

2022 2021

DKK’000 DKK’000

Purchase of services from group enterprises -58,577 -50,923

Sale of services sold to group enterprises 40,458 38,005

Sale of goods to group enterprises, revenue 904,377 720,855

Purchase of goods from group enterprises, cost of goods -748,719 -501,412

137,539 206,525

The company's balances with group enterprises at December 31, 2022 are recognized in the

balance sheet. Interest income and expenses with respect to group enterprises are disclosed in

note 5 and 6. Further balances with group enterprises comprise trade balances related to

purchase and sale of goods and services and long term loans, which are specified in the

balance sheet.

Purchases of services from or to group enterprises consists of royalty, management,

administration and business services and sales and marketing services.

No transactions have been carried out with the Executive Board, senior employees, major

shareholders or related parties apart from ordinary remuneration.

NOTES AND DISCLOSURES

Note 18. Accounting policies

General

The Annual Report for the Company has been presented in accordance with the provisions of the

Danish Financial Statements Act as regards reporting class C enterprises (large).

The company has not prepared group consolidated financial statements with reference to section

112(1) of the Danish Financial Statements Act CP Kelco ApS and its subsidiaries are consolidated

into the consolidated Group Financial Statements of the ultimate Parent company, J.M. Huber

Corporation. The consolidated Group Financial Statements can be obtained from CP Kelco ApS.

Pursuant to section 86(4) of the Danish Financial Statements Act, no cash flow statement has been

prepared. The Company's cash flows are included in the cash flow statement in the consolidated

financial statements fo J.M. Huber Corporation.

The accounting policies used in the preparation of the financial statements are consistent with those

of last year.

Recognition and measurement

Assets are recognised in the balance sheet when it is probable that future economic benefits will flow

to the Company and the value of the asset can be reliably measured. Liabilities are recognised in the

balance sheet when an outflow of economic benefits is probable and when the value of the liability

can be reliably measured. On initial recognition, assets and liabilities are measured at cost.

Subsequently, assets and liabilities are measured as described below for each individual item. In

recognising and measuring assets and liabilities, any gains, losses and risks occurring prior to the

presentation of the annual report that evidence conditions existing at the balance sheet date are taken

into account. Income is recognised in the income statement as earned. Equally, costs incurred to

generate the year's earnings are recognised, including depreciation, amortisation, impairment losses

and provisions as well as reversals as a result of changes in accounting estimates of amounts which

were previously recognised in the income statement.

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 consolidated and parent company financial statements is recognised in the income statement as

financial income or financial expenses.

Foreign exchange adjustments of intra-group balances with independent foreign subsidiaries which

are considered part of the investment in the subsidiary are recognized directly in equity.

NOTES AND DISCLOSURES

Revenue

Revenue related to the sale of goods is recorded in the income statement concurrently with delivery of

goods, when risks have been transfered to the customer and the goods are invoiced.

Production costs

Production costs comprise costs, including depreciation, amortisation, wages and salaries incurred to

generate revenue for the year. Such costs include direct and indirect costs for raw materials and

consumables, wages and salaries, rent and leases and depreciation of production plant and machinery.

Production costs also comprise research and development costs that do not qualify for capitalisation

and amortisation of capitalised development costs.

Distribution costs

Distribution costs comprise costs incurred to distribute goods sold during the year and to conduct

sales campaigns, etc., including costs relating to sales staff, advertising and exhibitions as well as

reciation.

Administrative expenses

Administrative expenses comprise expenses incurred during the year for management and

administration of the Company, including expenses for administrative staff, management, office

premises, office expenses and depreciation.

Financial income and expenses

Financial income and expenses comprise interest income and expense, 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. Dividends from

investments in group entities measured at cost are recognised as income in the Parent Company's

income statement in the financial year when the dividends are declared.

Gains and losses on the disposal of investments in group entities measured at cost are recognised as

financial income or financial expenses, respectively.

Tax on profit/loss for the year, corporation tax and deferred tax

The Company is comprised by the Danish rules on compulsory joint taxation of the J.M Huber

Group's Danish subsidiaries.

CP Kelco ApS is the administrative company for the joint taxation and accordingly settles all

payments of corporation tax to the tax authorities.

On payment of joint taxation contributions, current Danish corporation tax is allocated between the

jointly taxed entities in proportion to their taxable income. Entities with tax losses receive joint

taxation contributions from entities that have used the losses to reduce their own taxable profit.

Tax for the year comprises current corporation tax for the year 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, and the tax expense relating to amounts directly recognised in equity is recognised

directly in equity.

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.

NOTES AND DISCLOSURES

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 based on the planned use of the

asset or settlement of the liability. However, deferred tax is not recognised on temporary differences

relating to goodwill non-deductible for tax purposes and on office premises and other items where the

temporary differences arise at the date of acquisition without affecting either profit/loss or taxable

income.

Deferred tax assets, including the tax value of tax loss carryforwards, are recognised at the expected

value of their utilisation within the foreseeable future; 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 value.

Deferred tax is measured in accordance with 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 as a

result of changes in tax rates are recognised in the income statement or equity, respectively.

Intangible Assets

Goodwill

Goodwill is valued at cost less accumulated depreciation and write-down. Goodwill is depreciated

over the expected useful lifetime which is 20 years based on experience for strategic acquisitions with

a long-term profitability profile.

Development projects, patents and licences

Development costs comprise costs, wages, salaries and amortisation directly and indirectly

attributable to development activities.

Development projects that are clearly defined and identifiable, where the technical feasibility,

sufficient resources and a potential future market or development opportunities are evidenced, and

where the Company intends to produce, market or use the project, are recognised as intangible assets

provided that the cost can be measured reliably and that there is sufficient assurance that future

earnings can cover production costs, distribution costs and administrative expenses as well

development costs. Other development costs are recognised in the income statement as incurred.

Development costs recognised in the balance sheet are measured at cost less accumulated

amortisation and impairment losses.

Upon completion of development work, development costs are amortised on a straight-line basis over

the estimated useful lives. The amortisation period is 4 years.

Licences are measured at cost less accumulated amortisation and impairment losses. Licences are

amortised over the contract period, however, not exceeding 20 years.

NOTES AND DISCLOSURES

An amount corresponding to the capitalised development costs will be tied to the Reserve for

development costs in equity. 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.

Property, plant and equipment

Land and buildings, plant and machinery and fixtures and fittings, tools and equipment are measured

at cost less accumulated depreciation and impairment losses.

Cost comprises the purchase price and any costs directly attributable to the acquisition until the date

on which the asset is available for use. The cost of self-constructed assets comprises direct and

indirect costs of materials, components, subsuppliers, energy consumption, staff and depreciation of

machinery used.

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 depreciable amount, which is calculated as cost less any projected residual values after the end of

the useful life, is depreciated on a straight-line basis over the estimated useful life. The estimated

useful lives are as follows:

Buildings 30 years

Plant and machinery 10-15 years

Land is not depreciated.

Depreciation is recognised in the income statement as production costs, distribution costs and

administrative expenses, respectively.

The useful life and residual values are reassessed annualy. Changes are treated as accounting

estimates, and the effect on depreciation is recognised prospectively.

Leases

On initial recognition, leases fo

non-curren

assets tha

transfe

substantiall

all risks an

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

non-current assets.

The capitalised lease obligation is recognised in the balance sheet as a liability at amortised cost,

allowing the interest element of the lease payment to be recognised in the income statement over the

term of the lease.

All other leases are operating leases. Payments relating to operating leases and other leases are

recognised in the income statement over the term of the lease. The Company's total obligation relating

to operating leases and other leases is disclosed as contractual obligations, etc.

Fixtures and fittings, tools and equipment 3-10 years

NOTES AND DISCLOSURES

Participating interests in subsidiaries

Investments in subsidiaries are measured at cost. Where the recoverable amount is lower than cost,

investments are written down to this lower value.

Dividends from subsidiaries are recognized in the income statement for that accounting year, in

which the dividend is declared. To the extent that the declared dividend exceeds the accumulated

earnings after the acquisition, cost is reduced by this exceeding amount.

Gains and losses on the disposal of investments in group entities measured at cost are stated as the

difference between the selling price less selling costs and the carrying amount at the date of disposal.

Impairment of non-current assets

The carrying amount of intangible assets and property, plant and equipment as well as investments in

group entities and associates is subject to an annual assessment for indications of impairment other

than the decrease in value reflected by depreciation or amortisation.

Impairment tests are conducted of individual assets or groups of assets 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.

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 forecast net cash flows from the use of the asset or the

group of assets, including forecast net cash flows from the disposal of the asset or the group of assets

after the end of the useful life.

Inventories

Inventories are measured at cost in accordance with the 'Average method'. 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 and indirect production overheads. Indirect production

overheads comprise indirect materials and wages and salaries as well as the maintenance of

depreciation of production machinery, buildings and equipment as well as factory administration and

management.

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 selling price.

Receivables

Receivables are valued at

ar value and write downs for losses based on an individual assesment.

Pre

ments

Pre

ments com

rise

ments of costs relatin

to subse

uent financial

ears.

NOTES AND DISCLOSURES

Liabilities other than

rovisions

Financial liabilities are recognised at the date of borrowing at cost, corresponding to the proceeds

received less transaction costs paid. In subsequent periods, the financial liabilities are measured at

amortised cost, corresponding to the capitalised value using the effective interest rate. Accordingly,

the difference between cost and the nominal value is recognised in the income statement over the

term of the loan together with interest expenses.

Finance lease obligations are recognised as financial liabilities at amortised cost.

Other liabilities are measured at net realisable value.