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ANNUAL REPORT 2013

Nature

Environment

Energy


PATRON

Patron for DDH Her Majesty Queen Margrethe II of Denmark

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TABLE OF CONTENTS

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Patron

30 Executive Committee and Management

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Table of Contents

31 Management Statement

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DDH in Brief

32 Independent Auditor’s Report

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Preface

33 Income Statement

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The Association

34 Balance Sheet

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Distribution of Profits

36 Statement of Changes in Equity

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Important Events

37 Cash Flow Statement

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Business Activities

38 Notes

13 Competencies and Services

51 Committee of Representatives

14 Financial Highlights 15 Management’s Report 26 Innovation 27 Risk Management 28 Corporate Social Responsibility 29 Corporate Governance

This document is an unofficial translation of the Danish original. In the event of any inconsistencies the Danish version shall apply.

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DDH IN BRIEF

DDH is an association with the status of a business foundation and was established in 1866. Dalgasgroup A/S is responsible for the commercial side of DDH’s activities. DDH is a group which, in accordance with the association’s articles of association, applies long-term focus to investments, innovation and business development within nature, environment and energy.

Objects clause DDH ensures that the enterprise operates at a high ethical, professional and profitable level with respect to natural amenities and natural resources in Denmark and abroad. DDH also works actively to improve living conditions, primarily in rural areas, and to exploit natural resources for the benefit of society through research, development and dissemination within nature, environment and energy. DDH can build, acquire, establish and operate real property or business enterprises within the scope of DDH’s objects clause and in such a way that DDH’s enterprises are operated in corporate form with limited liability

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Vision Through its activities and subsidiaries, DDH’s vision is to be the leader within its business areas in accordance with the association’s objects clause – and thereby to make a significant contribution to development within nature and environment in Denmark and abroad.

Members DDH has approximately 2,500 members. The members consist of individuals with an interest in nature, environment and energy – and include ­decision-makers and professionals. Through the association, DDH’s members have the opportunity to acquire knowledge, exert influence and take advantage of experiences and activities within the company’s areas of activity.


During recent years, climate change has had a significant effect on the surroundings, both in the open countryside and in towns and cities. Floods that have hit residential and agricultural areas have resulted in major costs to private individuals, businesses and the public sector. Orbicon has specialised in drawing up climate adaptation strategies that aim to ensure long-term and cost-effective efforts to alleviate the effects of climate change and to take into account the many different interests that are in play through involvement of local citizens and stakeholders.

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PREFACE

Following several years marked by growth and acquisitions in DDH, 2013 has been characterised by consolidation and sharper focus, with the time now ripe for the numerous competencies that have been acquired to be integrated into and aligned to our business. Despite the fact that a number of one-off circumstances and challenging market conditions have had a negative impact on the year’s financial performance, the majority of DDH’s areas of activity have fared well. In particular, several of our core businesses such as forest management, Outdoor Facility Service in Denmark, recycling of waste products and consultancy services within environment and municipal engineering have delivered good results. In addition, our biogas activities can now boast a positive result on the bottom line, with the outlook for this business area looking promising. DDH’s failure to live up to its economic expectations for 2013 is primarily due to higher write-downs, operational issues within

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Outdoor Facility Service in Sweden and challenges in the market for our businesses related to building and construction. Despite this, DDH can present robust liquidity, with free cash flow from operations having received a considerable boost, which is one of the reasons why we have managed to reduce our interest-bearing debt. It is our ambition to exploit this strong liquidity as a lever to continue our growth strategy. Profitable growth and earnings both nationally and internationally will be the key strategic area of focus during the coming period. An important prerequisite for profitable and controlled growth is continued focus on our services and customers. The common denominator for all the services and products that we sell – and will sell in the future – is a high level of service and quality in our deliveries at a competitive price. In order to continue to be competitive in terms of quality, service and price in the future, we must continue to consolidate and focus our business activities. Today DDH embraces a number of diverse business areas within nature, environment and energy, which in turn means a broad diversity of customers – public and private, national and international – and thus a wide spectrum of different demands on our business. It is therefore essential that our products and services are differentiated

from those of our competitors and satisfy the wishes of our customers. It will thus be increasingly important to be able to offer something out of the ordinary and to be able to make a difference in business terms. One of the tangible expressions of this difference is the fact that DDH does not pay out any dividend. Instead, we distribute a portion of our profits to projects and activities within nature, environment and energy. Profitability in our business activities, which is founded on good quality and service, is thereby an essential prerequisite with regard to our continued ability to distribute these profits. At the same time, the association also has an important part to play in the business, since it contributes to efforts to make a difference to the society around us, our customers and our employees. We are now looking forward to an exciting 2014 marked by high levels of activity, which will entail that DDH’s positive development can continue. In this way we can also generate profits that we can use to develop our business and contribute to activities and projects in accordance with our objects clause.

Lars Johansson CEO


During recent years, several municipal authorities, regions and other public authorities have transferred care and maintenance tasks in the green sector to private companies, which has often resulted in considerable economic benefits. HedeDanmark is collaborating with a number of Denmark’s municipal authorities within the green sector, and three municipal authorities – Svendborg, Favrskov and Frederikssund – have transferred the entire spectrum of tasks within parks and roads to HedeDanmark.

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THE ASSOCIATION

DDH’s members

Tema: Virkem

DDH’s approximately 2,500 members represent a broad cross-section of the Danish population. All members have a common interest in nature, environment and energy. Efforts are actively focused on raising the profile of the association and making it more attractive to new members based on the association’s cornerstones of Knowledge, Influence and Activities.

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idler tidsskrif t

Tema: Ny miljøteknologi

hedesels kabets

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Vækst

2•2013 maj

hedeselskabets tidsskrift

hede selsk

abet s

tidss krift

4•2013

Knowledge

The members of DDH receive the periodical, Vækst, four times a year. Vækst enables members to remain up-to-date on the most important development trends within DDH’s primary areas of activity.

Vækst

nov

Vækst

3•2013 aug

Influence DDH’s highest authority is the Committee of Representatives, which consists of 60 members. Of these members, 48 are directly ­elected by DDH’s members, 8 are appointed by the Committee of Representatives itself, whilst 4 are appointed by the trade organisation Danish Agriculture and Food Council. The members thus have a direct influence on who will head up the association’s operations and development. As a member, you are able to put forward proposals for projects and activities to DDH’s member committee and thereby influence DDH’s choice of new projects (see page 9). The committee comprises

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the chairman and vice chairman of the Committee of Representatives as well as a member of DDH’s Executive Committee. 2 3

Activities

As a member of DDH you have the chance to participate in information events and activities in relation to DDH’s business areas with other members who share the same sphere of interest. The activity programme is developed year on year, although nature, environment and energy remain the common areas of focus. In 2013 eleven member events were held, including a trip to the sensory gardens at Landsbyen Sølund near Skanderborg (to which DDH has earlier provided financial support), a visit to Børglum Abbey in North Jutland, hunting in the plantation at C.E. Flensborg Plantage, as well as a trip to the mini-wetlands area in the vicinity of the stream of Åkjær Å, Vejen.

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DISTRIBUTION OF PROFITS FROM DDH techniques that geologists and biologists employed at Orbicon use when working with the challenges posed by the increasing volumes of rainwater that we will have to deal with in the future. The project has previously received DKK 330,000 of support.

DDH has a long tradition of carrying out research and development projects within nature, environment and energy. DDH’s member committee recommends projects and activities to the Executive Committee, which then decides whether to provide support in accordance with the association’s objects clause. In 2013 DDH donated funds to the following projects:

6 Kongenshus Mindepark received DKK 300,000 of financial support in 2013. The funds are being used for project development and knowledge dissemination in connection with the establishment of a new observation tower in the conservation area of the heath. The observation tower will give visitors to the memorial park better opportunities to experience the heath and to get an insight into the history of many of the people who dedicated their lives to the cultivation of the heaths.

4 The mini-wetlands project received DKK 951,000 of support in 2013. The idea of the mini-wetlands project is to create a competitive and flexible method of reducing nutrients from water drained from local fields. The mini-wetlands are one of the methods that are in focus in connection with compliance with the targets defined by river basin management plans with respect to the removal of nitrogen and phosphorus. The 2013 funds are being used to continue monitoring and processing of data from four full-scale test facilities with a view to documenting the long-term effect of the facilities. DDH’s accumulated support for the project now stands at DKK 6,219,000.

7 Jet-Net.dk received DKK 100,000 in 2013. The concept is based on a nationwide network for school-business partnerships aimed at generating interest in science and technology. The donation of DKK 100,000 makes DDH a core enterprise in the network.

5 Naturvidenskabernes Hus received support of DKK 170,000 in 2013 for a curriculum focused on “Local Drainage of Rainwater – solutions for urban environments of the future”. The curriculum is designed for a secondary school programme and Higher Preparatory Education Course. The students are taught to utilise the same methods and

Guld og grønne skove and Den Kgl. Veterinær og Landbohøjskoles historie 1858-2012 are two literary publications that each received DKK 100,000 of financial support in 2013. “Guld og grønne skove” was written by Jørgen Henneke and

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covers Denmark’s national regeneration after 1864, with particular emphasis on the efforts of Dalgas and DDH to cultivate and develop Jutland’s heathland. “Den Kgl. Veterinær og Landbohøjskolens Historie 18582012” is the story of the Royal Veterinary and Agricultural University between 1858 and 2012 and was written by Flemming Frandsen and Ejvind Slottved. The book covers a period in which the Royal Veterinary and Agricultural University played a significant role in developments within both forestry and agriculture.

”The Deer and the Forest” exhibition received DKK 20,000 in 2013. Strandgården, which is situated in the dunes at Husby Klit, provides the setting for the large exhibition on deer, afforestation and hunting, in which the main theme is the deer’s fantastic re-colonisation of West Jutland. The exhibition will be open until 2016.

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IMPORTANT EVENTS

JANUARY

APRIL

JUNE

Orbicon commences work on the Environmental Impact Assessment for the major offshore wind farm at Horns Rev 3 in 2013. Producing some 400 MW, the offshore wind turbines will be able to supply electricity to 400,000 households. According to the plan, the wind farm will begin producing green electricity in 2017.

Following a year of collaboration with the local authority in Favrskov on the maintenance and operation of roads and green areas, HedeDanmark’s local employees and management receive praise and support from the municipal authority.

3 With Orbicon as consultant in terms of construction and installation, the project planning of the new Experimentarium at Tuborg Havn kicks off. It will be a low-energy building in accordance with BR2015 (Building Regulation 2015 from the Danish Energy Agency) with solar cells on the roof, ventilation on demand and the collection of rainwater used for flushing the toilets.

The mayor, plenty of balloons, children and a bitingly cold wind all feature at the opening of Købmagergade on Friday 25 January. More than 30 employees from landscape architects Skælskør Anlægsgartnere have been working intensively for two years to complete one of the biggest cobblestone projects in the centre of Copenhagen in recent years

Along with HedeDanmark, teachers and parents at Stillinge School create a unique outdoor space for 330 pupils at the main school, after-school centre and class for autistic children. By means of well-known signs and a unique play landscape, the pupils’ learning is boosted through games, recognisability and development.

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MARCH In the small town of Feux near Sancerre in France Xergi is due to deliver a biogas plant to the company Marnay Energie. The biogas plant will have an annual capacity of around 38,000 tonnes of biomass made up of waste products from the production of wine and cheese. 2

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MAY

Xergi signs an agreement for the delivery of two biogas plants to British company Tamar Energy. The plants are among the first projects to make up part of Tamar Energy’s plans to establish more than 40 biogas plants throughout the United Kingdom.

4 HedeDanmark’s activities within sales of equipment for the Christmas tree business and forest management move into new premises and acquire a new name, HD2412. The change of name is a logical consequence of a strategic development focusing on greater internationalisation and focus on online commerce, which the business has undergone in recent years. 5 In order to clear enough space for Rail Net Denmark’s new railway line from Copenhagen to Ringsted, approximately 200 buildings have to be demolished. Orbicon is responsible for environmental consultancy and project management of the demolition work and investigations concerning hazardous substances such as asbestos, lead and PCB.

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2013 JULY

SEPTEMBER

DECEMBER

Queen Margrethe and UN General Secretary Ban-Ki Moon open UN City Copenhagen, and the eight organisations under the UN can begin moving into the new building. Orbicon is the turnkey consultant on the building, which is the largest industrial construction to receive the prestigious platinum LEED standard, which is an American environmental certification system used all over the world.

Lars Johansson takes over the position of Managing Director and CEO at DDH from Ove Kloch. The new CEO has previously held top management positions at Atea, Systematic and SAS Ground Services.

7 Violent storms at the end of 2013 lead to storm surges at several places in Denmark. In order to get a picture of the damage caused in the forests, HedeDanmark uses drones – small, unmanned model aircraft with a built-in camera.

OCTOBER

8 The square at Tåsinge Plads becomes Copenhagen’s first urban space adapted to the climate. Orbicon is involved in the transformation of the unused area into a new attractive urban space which at the same time will help to safeguard the neighbourhood against damage resulting from cloudbursts

AUGUST Orbicon acquires Geodata Danmark, which develops web-based GIS (Geographical Information Systems) solutions and selfservice systems. Geodata Danmark’s solutions are used by around 40 local government authorities and a number of public and private companies. 20 employees are to be integrated into Orbicon’s informatics department.

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Harboes Bryggeri and HedeDanmark enter into collaboration aimed at ensuring that valuable by-products from the production of beer, energy drinks and soft drinks are recycled as animal feed, biogas and fertiliser.

NOVEMBER 6 The Jet-Net.dk network launches a nationwide campaign called Girls Day in Science, which is aimed at increasing awareness of the natural sciences amongst girls. DDH and Orbicon will be participating in the network.

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BUSINESS ACTIVITIES

Association with the status of a business foundation

• Association Today there are approximately 2,500 members of DDH. Through the association, DDH distributes funds to projects and activities within nature, environment and energy. • Forest and rural properties DDH is the owner or co-owner of 24,373 ha of forest and rural properties.

Service and trade enterprise within the green area

Consultancy firm with focus on the environment, building and construction, utility supply, climate and sustainability.

Operation of renewable energy plants in Poland

Supplier and management operator of biogas plants

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•O  utdoor Facility Service Operation and maintenance of parks, roads and green areas, including winter services.

• Innovation DDH works with development and innovation at several different levels: from development of solutions driven by short-term needs to long-term, knowledge-intensive development.

•F  orest Management, development, operation and maintenance of the forest.

•C  ontract • Establishment of green facilities, nature conservation and re-establishment, as well as handling and environmentally-friendly recycling of organic waste.

Commercial trade and planting Production and trade of plants for forests and shelterbelts, equipment for forestry and commercial trade of forest properties.

•B  uilding and construction • Municipal engineering Consultancy services within new building development and Consultancy services within nature, utility renovation, in addition to client design advisor services. supply, infrastructure and climate adaptation. •E  nvironment • Informatics Consultancy services within soil contamination, Consultancy services, development and environmental planning, working environment sale of software services and aquatic environment. • L andfill gas Operation of three renewable energy plants in Poland that recover gas from landfill sites and thereby prevent powerful greenhouse gas

methane from seeping into the atmosphere. The gas from the landfill sites is utilised for the production of electricity and heat.

•B  iogas technology and plants Technology development, design, installation, operation and maintenance of turnkey biogas plants. As a partner in all phases of the project, Xergi assists with the develop-

ment and design of the project, dealing with authorities, project planning, purchasing, design, construction and commissioning of the plant.


COMPETENCIES AND SERVICES The transformation of good ideas into commercial – and innovative – solutions for customers is an essential part of DDH’s DNA. DDH’s extensive knowledge is primarily concentrated on nature, environment and energy. The many unique skills within the group are made available to customers in the form of services, commercial trade, consultancy, design, project management, turnkey projects and operational solutions. All this means that DDH has a particularly solid basis of knowledge and experience that all customers can benefit from.

For almost 150 years DDH has been an active driver of development and dissemination of new knowledge and new methods within nature, environment and energy. DDH will continue in this vein in the future. As a result, collaboration is taking place with both Danish and international universities, in addition to the fact that the company has involved several industrial PhDs in the creation of knowledge for the development of new products and services for customers. By the end of 2013 DDH was participating in around 50 development projects in collaboration with customers and/or universities. Dalgas Innovation plays an integral role in the fulfilment of DDH’s innovation strategy, which is aimed at cultivating totally new knowledge and new business areas, as well as supporting ongoing development within the company’s business areas. This includes, for example, the generation of new knowledge concerning biomass production or looking into how digitalisation can make solutions more effective, competitive and productive for each business. HedeDanmark transforms knowledge of nature, water and soil conditions into services and operational solutions within areas such as the care and maintenance of green areas in towns and cities, nature

conservation, recycling of waste products, forest management and commercial trade of plants, trees and equipment. Orbicon is a consulting firm with focus on sustainability in practical solutions within nature, environment and building and construction. The company specialises in its ability to consider a problem from a holistic angle and design solutions that take the customer’s needs, interests and values into account. Hedeselskabet Sp. z o.o. has practical experience of environmental and market conditions in Eastern Europe. The company develops environmental projects in Poland and is responsible for the operation of a number of plants that produce energy from gas extracted from landfill sites. Xergi has knowledge of how to control biological and chemical processes that lead to the development of gas from biomass. Alongside excellent project skills, Xergi exploits this knowledge to supply biogas plants that are tailor-made to the needs of its customers.

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FINANCIAL HIGHLIGHTS FOR THE GROUP Financial Highlights for the Group

Key figures (in millions)

Revenue 281.8 2,101.5 2,062.9 1,710.7 - of which international revenue 14% 14% 16% 19% Profit/loss from ordinary activities (EBIT) 2.9 21.7 43.3 47.9 Profit/loss from fixed assets investments after tax 0.5 3.4 -4.8 -8.1 1 1 Net financials -3.2 -23.7 -6.4 -5.8 Profit/loss before tax (EBT) 0.2 1.3 32.1 34.0 Tax on profit/loss for the year -0.4 -2.7 -11.2 -9.8 Minority interests’ share -0.1 -0.9 -0.8 -0.6 Profit/loss for the financial year -0.3 -2.2 20.1 23.6

Fixed assets Current assets Total assets

134.9 1,006.0 1,082.6 937.7 91.2 680.2 686.3 525.4 226.0 1,686.2 1,768.9 1,463.1

Contributed capital Equity Minority interests’ share Provisions Long-term debt Short-term debt Total equity and liabilities

106.3 793.4 797.4 776.1 2.5 18.4 18.3 19.1 2.7 20.4 8.1 5.6 27.4 204.6 215.4 206.2 87.0 649.4 729.7 456.1 226.0 1,686.2 1,768.9 1,463.1

2013 2013 2012 2011

EUR DKK DKK DKK

6.7 50.0 50.0 50.0

Cash flow from operating activities 10.5 78.1 42.5 48.6 Net cash flow for investing activities 0.0 -0.2 -211.4 -73.6 - of which for investments in property, plant and equipment -0.9 -6.5 -76.9 -25.8 Cash flow from/for financing activities -1.3 -9.9 -9.3 -4.7 Total cash flow 9.1 68.1 -178.2 -29.7 Key ratios (Please refer to definitions and terms under Accounting Policies.) EBT margin 0.1 1.6 2.0 Return on capital employed 2.0 3.0 3.7 Solvency ratio 47.1 45.1 53.0 Return on equity -0.3 2.6 3.1 Changes in equity (in millions)

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Includes write-downs on financial assets of DKK 16.7 million.

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Equity at beginning of year 106.9 797.4 776.1 765.5 Retained earnings -0.5 -3.9 15.0 21.6 Foreign exchange adjustments of foreign subsidiaries -0.2 -1.4 7.3 -7.8 The year’s revaluation of property -0.2 -1.2 - The year’s value adjustment of associates - - -0.4 Other adjustments 0.2 2.5 -0.6 -3.2 Equity at end of year 106.3 793.4 797.4 776.1

Employees

Average number of employees 1,401 1,472 1,052


MANAGEMENT’S REPORT

Managing Director, CEO Lars Johansson

CFO Bent Simonsen

The profits returned by DDH are a result of DDH’s full range of activities within the areas of nature, environment and energy. In 2013 revenue amounted to DKK 2.1 billion, whilst profit from ordinary activities was DKK 21.7 million. This compares to the 2012 figures of just under DKK 2.1 billion in revenue and profit from ordinary activities (EBIT) of DKK 43.3 million. The free cash flow (cash flow from operations) was DKK 78.1 million in 2013, against DKK 42.5 million in 2012. In contrast to the growth and acquisitions that have characterised recent years, 2013 has been a year with focus on consolidation and alignment of the business. The majority of DDH’s business areas have lived up to or exceeded expectations during the year, and the majority of core businesses in both HedeDanmark and Orbicon have made positive contributions to profits. HedeDanmark’s Danish Outdoor Facility DKK mill. Development in overall revenue Service activities have boosted both revenue 2,000 and earnings. The company’s business 1,800 area within the recycling of waste products 1,600 has1,400 achieved a strong market position with respect 1,200 to food and pharmaceutical com1,000 whilst forest activities continued their panies, 800 positive development both domestically and 600 in the Baltic States. 400 Consultancy at Orbicon within both en200 vironment and municipal engineering has 2009 2010 2011 2012 2013 experienced a year with growth in terms of revenue and earnings. Good prices on wood products and sales DKK mill. Development in equity (at year end) of forest properties have made a positive 800 contribution to the results of DDH’s forest 700 properties. 600 Xergi managed to post a profit, following the 500 losses of previous years. This positive de400 velopment at Xergi is due to a greater critical 300for the biogas business as a result of mass 200 considerable efforts in major markets during 100 years. recent In contrast, a number of 2011 one-off2012 circum-2013 2009 2010 stances, challenging markets, organisational changes and the integration of a number of previously acquired businesses have had a DKK mill. Development in net investments

negative influence on a number of business areas – in particular at HedeDanmark, Orbicon and Hedeselskabet Sp. z o.o. At HedeDanmark, negative conditions have in particular affected associated company Emirates Landscape in Abu Dhabi and Outdoor Facility Service activities in Sweden, whilst at Orbicon activities within building and construction have had a negative impact on the company’s financial performance. Low energy prices in Poland have led to losses at Hedeselskabet Sp. z o.o. There is currently extensive focus on creating a good basis for these areas so that in future they will be able to contribute satisfactory results, in addition to which the risk of losses on associated goodwill and receivables will be minimised. In overall terms, the financial performance for the year has fallen short of expectations. DKK mill.

45 40 35 30 25 20 15 10 5 2009

DKK mill.

1,800 % 1,600 70 1,400

2012

2013

Development in overall revenue

DKK mi 50 45

Development in solvency

40 35 30

1,000 50

25

800 40 600 30 400 20 200

20

10

15 10 5 2009

2010

2011

2012

2013

2008

2009

2010

2011

2012

Investments totalling a net DKK 11.0 million were made in 2013, which is considerably DKK mill. Development in equity (at year end) lower than the historically high level of invest800

180

600 1,400

120

2011

60 1,200

700 Number

140

2010

2,000

200 160

Development in profit/loss from ordinary activities

50

500 1,200 400 1,000

% 70

Development in number of employees

60

15

50 40


ment of DKK 215.9 million that was seen in 2012. DKK mill. Development in overall revenue This, combined with improved free cash 2,000 flow in 2013, has resulted in a reduction of 1,800 the interest-bearing debt in the group of DKK 1,600 78.4 1,400 million, which is higher than expected. 1,200 DDH continues to enjoy a solid position with 1,000 of some DKK 793.4 million. Two-thirds equity of800 DDH’s equity is placed in property, includ600 ing forest and rural properties. Over the years, 400 investment in forest and rural properties has 200 proved to represent a safe haven for DDH’s 2009 2010 2011 2012 2013 capital due to the historically positive economic development in real estate. DKK mill.

Development in equity (at year end)

800 700 600 500 400 300 200 100 2009

2010

2011

2012

2013

Distribution of profits DDH’s Committee has approved a DKK mill. Executive Development in net investments decision to award a total of DKK 1.7 million 200 to180 six different projects in 2013: 160

Mini-wetlands 140 120 monitoring of full-scale facilities

DKK 951,000

100

Kongenshus Mindepark 80

knowledge dissemination concerning 60 observation tower 40

DKK 300,000

20 Naturvidenskabernes Hus

curriculum focused2009 on 2008 2010 2011 2012 Local Drainage of Rainwater

DKK 170,000

Jet-Net.dk nationwide network for school-business partnerships

DKK 100,000

“Guld og grønne skove” support for book publication by Jørgen Henneke

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DKK 100,000

“Den Kgl. Veterinær og Landbohøjskoles historie 1858-2012” Development in profit/loss from ordinary activities support for book publication by Flemming

DKK mill. 50

45Frandsen and Ejvind Slottved 40“The

DKK 100,000

deer and the forest”

35

support for thematic exhibition 30

DKK 20,000

25

The 20 remainder of the company’s earnings, 15 corresponding to DKK -3.9 million, is pro10 posed to be transferred to equity. 5

2009 2010 Expectations

2011

2012

2013

A solid basis has been created at DDH over a period of many years. DDH is today a modern concern with a wide range of different and exciting activities,inprojects, % Development solvency services and cus70 tomers, both in Denmark and abroad. 60 During the next few years DDH will undergo a50 process of change such that the company will 40 once again be able to deliver results that meet expectations. At the same time, the aim 30 is 20 to ensure that DDH is an attractive place of employment for existing and new employees. 10 Finally, it is imperative that the business con2008 2009 2010 2011 2012 tinues to develop and provide good services, good quality and good service to its customers. With the increased focus and consolidation Number Development in number of employees that has taken place in DDH’s business areas 1,400 in 2013, the company is in better shape in 1,200 terms of activities and competitiveness as we 1,000 move into 2014. DDH has a goal of a growth 800 strategy with focus on both the top line and 600 the bottom line. The opportunities for strategic acquisitions at both national and international 400 level will continue to be sounded out, and 200 focus will continue to be on profitable growth. 2008 2009 2010 2011 2012 HedeDanmark, Orbicon, Hedeselskabet Sp. z o.o. and Xergi all expect better results in 2014, whilst DDH’s forest and rural properties 5 are expecting to return an operating profit in line with the 2013 figure. Overall, considerably better profits from ordinary activities of the order of DKK 40 million are expected in 2014.

The association DDH is working to strengthen the association on an ongoing basis. A membership recruitment campaign has been launched with the aim of attracting new members. This recruitment focus has resulted in a net influx of 500 members since 2011, which has taken total membership of the association to approximately 2,500 as at the end of 2013. In 2013 the great value of the interaction between the association and the business was once again made very apparent. The business makes up a significant part of the association’s livelihood. Without competitive and profitable business activities it is impossible to carry out long-term investments or distribute funds to projects and activities within nature, environment and energy. At the same time the association adds value to the business, which is an essential factor when it comes to recruiting the right employees. DDH will therefore continue the positive development that the association has undergone during recent years, in addition to continued support for projects that reflect the company’s objects clause. Furthermore, resources will continue to be applied to carry on long-term development projects at Dalgas Innovation.

Events after the balance sheet date No events have occurred after the balance sheet date to this date which would influence the evaluation of this annual report.


Organisational structure

Dalgasgroup A/S 100% Denmark

Denmark

Germany

Silva Estate A/S 100% A/S Jysk Landvinding 100%

Denmark

Denmark

Emirates Landscape L.L.C. 49%

Own Forests in Denmark* Denmark

Enricom A/S 100%

United Arab Emirates

Skælskør Anlægsgartnere A/S 100%

Denmark

Denmark

Väla Mark & Trädgård AB 100%

Skovselskabet Skov-Sam Holding ApS 50%

Sweden

Denmark

Hedeselskabet Sp. z o.o. 100% Skovselskabet Skov-Sam II ApS 15% DDH

Heidegesellschaft G.m.b.H. 100%

HedeDanmark a/s 100%

Poland

HD Fest Forest Holding SIA 100% Latvia

HD Fest Forest Lithuania UAB 100%

Denmark

Lithuania

Plantningsselskabet Steen Blicher A/S 73%

Denmark

HD Fest Forest Latvia SIA 100%

Denmark

Latvia

Ilex Silva SIA 100%

ApS Sønderholm Plantage 34%

Latvia

Denmark

HD Fest Forest Estonia 100%

Østvendsyssels Plantageselskab ApS 28%

Estonia

EST Kinisvara 49%

Denmark

Estlonia

A/S Dover Plantage 23% Denmark

Orbicon A/S 100% Denmark

LHE af 1/1-2010 A/S 100% Denmark

Orbicon Grønland A/S 100% ApS Hundsbæk Plantage 22%

Greenland

Denmark

Velling Plantage ApS 20%

JSCJS Rindibel 29%

Orbicon Informatic A/S 100%

Denmark

Other plantations with ownership less than 20% ** Denmark

Pluss Leadership A/S 35% Denmark

Belarus

Denmark

Danish Biogas Technology A/S 100%

Xergi A/S 50% Denmark

Denmark

Xergi Ltd. 100% DDH Forests A/S 100% Denmark

SIA Dan Baltic Forest I 100% Latvia

United Kingdom

Xergi Biogas GmbH 100% Germany

Xergi SAS 100% France

Xergi NIX Technology A/S 100% Denmark

* Own Forests

** Plantation companies where ownership is less than 20%

Gærum Plantage, Hammer Bakker Skov, Karensminde, Ørsted Plantage, Færchs Plantage, Bødskovgaard Plantage, Den Jenssen Buchske Plantage, Apoteker Aagaards Plantage, C. E. Flensborg Plantage, Bredvad Mølle Plantage, Doses Plantage, Fjederholt Ndr. Plantage, Arnborg Hedegaard Plantage, Birkebæk Plantage, Kaptajn Schultz Plantage, Fjelstervang Plantage, Gjellerup Plantage, Laugesens Gård, Tophøj, Jydsk Landvindings Plantage.

Aktieplantageselskabet for Aalborg amt/Volsted Plantage, Plantningsselskabet Legind Bjerge Aps, A/S Bjøvlund-Aastrup plantager, A/S Borris Plantage, Aps Give plantage, Aps Haardkjær plantage, Aps Hejbøl Plantage, A/S Houborg plantage, A/S Københavns Plantageselskab, A/S Løbners plantage, A/S Løvstrup plantage, A/S Morsø Sønderherreds plantage, Aps Orten plantage, A/S Plantningsselskab Sønderjylland, Aps Skelhøj Plantage, Aps Sondrup Plantningsselskab, A/S Beplantningsselskabet Staushede, A/S Stilde plantage, A/S Sønder Omme plantage, Aps Tirslund plantage, Tolne Skov Aps, A/S Tranum plantage, Vistoft Sogns plantningsselskab Aps and Gammel Skovsende Plantage Anpartsselskab.

Videbæk Biogas A/S 50% Denmark

17


HedeDanmark a/s is a service and trade enterprise within the green area which delivers services aimed at the forest, the open countryside, gardens and parks, as well as urban spaces in towns and cities. HedeDanmark has subsidiaries in Denmark, Sweden, Germany, Estonia, Latvia and Lithuania, as well as an associated enterprise in the United Arab Emirates.

HedeDanmark a/s

2013 2012

Revenue in DKK million

1,671

1,662

- of which international revenue

16%

17%

EBIT in DKK million

33.1

34.4

Profit/loss before tax in DKK million 13.1

30.8

Profit/loss after tax in DKK million

9.2

21.6

220.4

232.0

Equity in DKK million Solvency ratio in %

29.2

27.5

Number of employees

895

1,002

Managing Director Carsten With Thygesen HedeDanmark a/s

18

Financial Director Jørgen Mikkelsen HedeDanmark a/s

HedeDanmark’s areas of activity: •O  utdoor Facility Service Operation and maintenance of parks, roads and green areas, including winter services.

•F  orest Management, development, operation and maintenance of the forest.

•C  ontract Establishment of green facilities, nature conservation and re-establishment, as well as handling and environmentallyfriendly recycling of organic waste.

•C  ommercial trade and planting Production and trade of plants for forests and shelterbelts, equipment for forestry and commercial trade of forest and rural properties.

HedeDanmark realised a profit before tax of DKK 13.1 million in 2013, which thus falls well short of expectations. The majority of the company’s activities enjoyed a better year than in 2012, but two isolated areas of HedeDanmark’s business experienced particular challenges in 2013. The primary causes of the profit not meeting expectations are the activities in Abu Dhabi (United Arab Emirates) and Sweden respectively. For Abu Dhabi it was decided to expense non-recurring costs of DKK 16.7 million on the partly-owned company Emirates Landscape in the form of write-downs in 2013, which will therefore not have any impact in terms of liquidity in 2013. HedeDanmark is continuing to finance the operation of Emirates Landscape and therefore still has a debt. Following repayment of DKK 6.5 million incl. accrual of interest in 2013, the debt stands at DKK 21.4 million as at the close of the year. At the same time, HedeDanmark realised highly unsatisfactory results in its Swedish subsidiary Väla Mark & Trädgård. Start-up and integration costs in Sweden have been considerably higher than were expected in 2012 when the acquisition

of the Swedish subsidiary took place. In spite of these negative factors, the majority of HedeDanmark’s business areas have undergone positive development in 2013, and revenue reached DKK 1,671 million, which matched the 2012 level. Profit ratio in 2013 was 2.0%, against 2.1% the previous year. Interest-bearing debt has been reduced by more than DKK 40 million. Despite major challenges in the market, earnings from activities in Denmark, Germany and the Baltic States have developed in a positive manner in relation to 2012, which in overall terms thus means that budget expectations were met. In order to boost business focus, major organisational restructuring took place in HedeDanmark at the end of the year. In 2013 these changes resulted in restructuring costs and outgoings related to employee redundancy schemes, but are expected to lead to improved earnings in the future.

Outdoor Facility Service HedeDanmark’s Outdoor Facility Service activities in Denmark have seen increased revenue and better earnings through optimisation of operations and the merging of


operating and maintenance activities from landscape gardeners Skælskør Anlægsgartnere. HedeDanmark’s collaboration with the country’s municipal authorities on the performance of tasks in the area of parks and roads is also developing in a satisfactory manner. Due to shortcomings in operational economic focus in Sweden the development of Swedish Outdoor Facility Service activities has not been satisfactory. New management was put in place during the summer of 2013, whilst the finance function was also strengthened. Overall, these initiatives have helped to stabilise developments during the final quarter of the year. Similarly, developments in associated company Emirates Landscape require close follow-up, despite the fact that the company is improving operations and earnings on an ongoing basis. At the close of the financial year, there were also indications of positive developments in the building and construction market in the United Arab Emirates, where the repercussions of the financial and economic crises have had a significant impact on both the market and HedeDanmark’s activities in the area for several years. Despite the brighter forecast, HedeDanmark chose to expense non-recurring costs of DKK 16.7 million in 2013 as a consequence of the negative results of this and previous years – which to a great extent are due to a major loss on a single debtor.

Contract HedeDanmark’s activities within recycling of waste products from industry and public utility supply companies achieved success during the year by strengthening the company’s position relative to food and pharmaceutical companies. An unusually mild winter at the end of 2013 also enabled waste products to be taken directly out onto the fields without the need to store them in temporary stock facilities. Skælskør Anlægsgartnere, which is one of Denmark’s biggest landscape gardeners,

completed the renovation of Købmagergade in Copenhagen and the riding ground of Christiansborg Ridebane in 2013. Alongside major new landscaping assignments for companies such as Novo Nordisk, these projects demonstrated that Skælskør Anlægsgartnere has a strong market position in the building and construction sector. Bankruptcies that hit several main contractors resulted in several jobs in which Skælskør Anlægsgartnere were sub-suppliers either being postponed or abandoned altogether, which has had a negative impact on results.

Expectations A considerable improvement to HedeDanmark’s profit is expected in 2014, in addition to which investments are expected to exceed the previous year. Expectations are based on an expected positive earnings impact of the initiatives implemented, in addition to which the management now believes that the necessary write-downs on assets in Emirates Landscape have been carried out and that Swedish activities are clearly in a better state.

Forest Forest activities have continued their positive development, and the area has bolstered its position with respect to public and private forest owners through focus on establishing long-term strategic partnerships. Similarly, through efficiency drives, it has been possible to boost earnings on the trade of raw wood despite lower volumes and with deliveries of woodchips of more than 1.5 million cubic metres. Along with a positive situation in terms of sales of just about every product, results are expected to improve still further in the future. The integration of activities within forest management in the Baltic, which were acquired in 2012 and effected in 2013, is progressing faster than expected, which has in turn led to better-than-expected results.

Trade and planting HedeDanmark’s trading activities in 2013 came under pressure due to a reluctant market with regard to the sale of forest and rural properties, in addition to which greater competition has put pressure on earnings associated with sales of equipment for the production of Christmas trees and forestry. At the same time, earlier years’ stagnation within shelterbelt planting and afforestation continued in 2013. During the last 10 years public subsidies for collective planting of shelterbelts have been halved, which explains the fact that the market is weak.

DDH Denmark

Dalgasgroup A/S 100% Denmark

HedeDanmark a/s 100% Denmark

Heidegesellschaft G.m.b.H. 100% Germany

Silva Estate A/S 100% Denmark

Emirates Landscape L.L.C. 49% United Arab Emirates

Skælskør Anlægsgartnere A/S 100% Denmark

Väla Mark & Trädgård AB 100% Sweden

HD Fest Forest Holding SIA 100% Latvia

HD Fest Forest Lithuania UAB 100% Lithuania

HD Fest Forest Latvia SIA 100%

Latvia

Ilex Silva SIA 100% Latvia

HD Fest Forest Estonia 100% Estonia

EST Kinisvara 49% Estonia

19


Orbicon A/S is a consulting firm that works to create sustainable solutions that provide value to both customers and society as a whole. Orbicon’s operations span a range of fields including environment, nature, utility supply engineering, climate, building construction, working environment, construction engineering and information technology.

Orbicon A/S

2013 2012

Revenue in DKK million

416.7

389.4

- of which international revenue

3%

3%

EBIT in DKK million

3.5

13.9

Profit/loss before tax in DKK million 3.1

14.1

Profit/loss after tax in DKK million

0.9

10.4

Equity in DKK million

42.9

46.0

Solvency ratio in %

22.2

23.3

Number of employees

465

429

Orbicon’s areas of activity: •B  uilding and construction Consultancy services within new building development and renovation, in addition to client design advisor services. •E  nvironment Consultancy services within soil contamination, environmental planning, working environment and aquatic environment.

In 2013 Orbicon realised a profit before tax of DKK 3.1 million, which is below expectations. The majority of Orbicon’s business areas, however, have developed in a satisfactory manner since 2012. The company’s consultancy services within environment and municipal engineering have lived up to expectations and have exceeded the results of previous years. On the other hand, the building and construction area has seen a marked negative development since 2012.

Building and construction

Managing Director Jesper Nybo Andersen Orbicon A/S

20

Orbicon’s building and construction area has generally experienced a year of considerable difficulties, which has been manifested as a decline in both revenue and earnings. Among the reasons for these losses are a number of contractors going out of business during the course of the year. A number of construction projects were halted, thus incurring a loss of productivity. The projects have been started up again, but uncertainty continues to affect the market. Furthermore, the profit for the year has also been affected by major losses on individual projects.

•M  unicipal engineering Consultancy services within nature, utility supply, infrastructure and climate adaptation. • Informatics Consultancy services, development and sale of software services

There has been positive growth in renovation and social housing, in addition to which the delivery of the UN City, which was awarded the LEED platinum standard (an American environmental certificate that is used throughout the world), was one of the year’s highlights.

Environment The environmental area in Orbicon has generally enjoyed a satisfactory 2013 with growth in revenue and earnings. Water resources, soil contamination, environmental impact assessment and environmental monitoring have all experienced noteworthy progress, and it is only the area of working environment that has experienced difficult conditions in 2013. Delays in the implementation of the politically-based river basin management plans led to employment issues during the early spring. During the summer months, however, the area picked up once more and Orbicon expects a positive development in 2014.

Municipal engineering Orbicon’s municipal engineering has devel-


oped positively in 2013, with growth in both revenue and earnings. This growth has been primarily driven by traditional areas such as sewage effluent, drinking water and the countryside in general. New areas such as infrastructure and climate adaptation have grown in 2013. Within infrastructure Orbicon has been involved in the consortium that has been working on the new stretch of railway line between Copenhagen and Ringsted. The company is responsible for areas such as project planning of the drainage system, including project engineering of rainwater basins and pump stations. The increased focus on climate adaptation activities, both in the open landscape and in towns and cities, has been positive for Orbicon. The company is working with the municipal authority and with the water utility supply company on putting climate-proofing measures into place in the Aarhus suburb of Lystrup. These growth areas exploit the full range of Orbicon’s professional expertise.

Informatics In 2013 Orbicon purchased the joint municipally-owned companies that go under the name Geodata Danmark. These activities have been integrated into Informatics and have resulted in a considerable boost to technical expertise and market opportunities

with regard to information technology in the company. The decision to embark on international sales of IT solutions has had a negative effect on the overall results for the business area in the short term due to the need to devote considerable resources to the internationalisation of solutions, establishment of partnership agreements and start-up costs in Poland. The organisation has now been established, the first partner agreements put in place and actual sales work is now underway. It is expected that in 2014 Orbicon will provide software solutions for the first water and sewage utility supply systems in Poland. This initiative is taking place in collaboration with Hedeselskabet Sp. z o.o. The separation of the information technology area will be fully implemented in the years ahead, and considerable growth in Informatics’ international revenue is expected. Orbicon’s informatics business has now obtained a sufficient size and future potential that as of 1 January 2014 the area has been hived off as an independent business area in line with Environment, Building Construction and Municipal Engineering.

Expectations As of the turn of the year, the state of the order books at Orbicon painted a positive picture for the year ahead. Overall, a considerable improvement of Orbicon’s profit is expected in 2014. DDH Denmark

Dalgasgroup A/S 100% Denmark

Orbicon A/S 100% Denmark

LHE af 1/1-2010 A/S 100% Denmark

Orbicon Grønland A/S 100% Greenland

Pluss Leadership A/S 35% Denmark

Orbicon Informatic A/S 100% Denmark

21


The activities at Hedeselskabet Sp. z o.o. comprise ownership and operation of three renewable energy plants based on the degasification of landfill sites.

Hedeselskabet Sp. z o.o. Revenue in DKK million

2013 2012 15.8

26.3

100%

100%

-1.5

4.7

Profit/loss before tax in DKK million -1.9

4.5

- of which international revenue EBIT in DKK million Profit/loss after tax in DKK million

-1.5

3.4

Equity in DKK million

51.3

53.8

Solvency ratio in %

71.1

70.5

19

20

Number of employees

Hedeselskabet Sp. z o.o.’s areas of activity: • L andfill gas Operation of three renewable ­energy plants in Poland that recover gas from landfill sites and thereby prevent ­powerful greenhouse gas methane

Hedeselskabet Sp. z o.o. realised a loss of DKK 1.9 million before tax in 2013, whicht does not meet expectations. The earnings performance should be seen in the light of a considerable drop in energy prices in Poland as a result of uncertainty on the market resulting from attempts to introduce new energy legislation. Furthermore, the loss should also be considered in the light of continued very low prices of carbon credits, which is a consequence of the lack of international accession to an extension of the Kyoto agreements and thereby a lack of international support concerning efforts to prevent global warming.

Landfill gas

Managing Director Bent Simonsen Hedeselskabet Sp. z o.o.

22

Hedeselskabet Sp. z o.o. operates three renewable energy plants which utilise gas recovered from landfill sites, thereby preventing methane, which is a potent greenhouse gas, from seeping out into the atmosphere, whilst at the same time helping to replace the use of fossil fuels such as oil and coal in energy production. The company supplies electricity corresponding to the annual consumption of 20,000 Polish households and heat corresponding to the annual consumption of 5,000 Polish households. During the period 2007-2012 the Polish company has reduced emissions of methane gases corresponding to approximately

from seeping into the atmosphere. The gas from the landfill sites is utilised for the production of electricity and heat.

600,000 tonnes of CO2. This corresponds to the annual CO2 emission from around 20,000 Polish households. This CO2 reduction is transferred to the Danish pool of so-called joint implementation carbon credits under the provisions of the Kyoto Protocol. With effect from 2013, the Danish government no longer wishes to acquire carbon credits from Poland. Hedeselskabet Sp. z o.o. has an expectation that new energy legislation will be introduced in Poland by 2015 that will promote the production of renewable energy and thereby contribute to positive development in the company. Hedeselskabet Sp. z o.o. has drawn up a business plan for the biogas area based on agricultural waste in Poland. Due to the uncertainty concerning energy legislation outlined above, this plan is currently on hold.

Expectations Based on sales prices at the close of 2013, Hedeselskabet Sp. z o.o. expects to return a profit in 2014.

DDH Denmark

Dalgasgroup A/S 100% Denmark

Hedeselskabet Sp. z o.o. 100% Poland


Xergi A/S is a leading supplier of biogas plants. Xergi has subsidiaries in Denmark, the UK, Germany and France.

Xergi’s area of activity: •B  iogas technology and plants Technology development, design, installation, operation and maintenance of turnkey biogas plants. As a partner in all phases of the project, Xergi assists with the development and design of the pro-

Xergi A/S

2013 2012

Revenue in DKK million

204.3

118.2

88%

85%

3.9

-8.8

Profit/loss before tax in DKK million 4.1

-8.6

- of which international revenue EBIT in DKK million Profit/loss after tax in DKK million

1.4

-8.2

Equity in DKK million

35.3

34.0

Solvency ratio in %

31.7

32.0

64

49

Number of employees

In 2013 Xergi achieved a profit before tax of DKK 4.1 million, which is a considerable improvement in comparison to the losses of previous years, which as recently as 2012 stood at DKK 8.6 million. DDH’s share of this year’s profit is 50%. The positive development at Xergi primarily results from a greater critical mass in terms of the biogas business as a result of work carried out in major markets in recent years. The profit is in line with expectations.

Biogas technology and plants

Managing Director Jørgen Ballermann Xergi A/S

With focus on bio gasification of agricultural biomass that has proved more difficult to break down (deep litter, velvet grass, straw, etc.), Xergi launched X-chopper® in 2013. The machine is a robust chain shredder that enables existing or new biogas plants to receive more dry matter and thereby more “fuel”, which in turn will increase the production of gas. In 2013 Xergi won orders for biogas projects to Marnay and Labat in France, Holbeach and Retford in the UK, as well as Vegger in Denmark. These projects were all underway by the end of 2013 and are expected to be completed on time. The Tiper project in France and the Sibsey and Holton projects in the UK were also handed over to customers during the course of 2013. The company also completed project planning of the delivery of key components to Minnesota Municipal Power Agency’s large biogas plant in the USA. The Danish energy agreement that was adopted

ject, dealing with authorities, project planning, purchasing, design, construction and commissioning of the plant.

in 2012 has enabled several major plants to be offered for tender on the Danish market during 2013. Xergi has chosen to bid on selected projects. The rounds of bidding had not been completed by the end of the year.

Expectations Xergi’s primary markets in France and the UK are continuing to grow, and Xergi expects to be able to retain its market share. In Denmark there will be good sales opportunities for Xergi’s technology in 2014, since the projects that have qualified for subsidies are due to be commenced during the spring. Xergi expects to increase the overall scope of its activities in 2014 in relation to 2013. DDH Denmark

Dalgasgroup A/S 100% Denmark

Xergi A/S 50% Denmark

Danish Biogas Technology A/S 100% Denmark

Xergi Ltd. 100% United Kingdom

Xergi Biogas GmbH 100% Germany

Xergi SAS 100% France

Xergi NIX Technology A/S 100% Denmark

Videbæk Biogas A/S 50% Denmark

23


Foreningen blev stiftet i 1866 med Enrico Mylius Dalgas som første direktør.

Denmark

A/S Dover Plantage 23% Denmark

ApS Hundsbæk Plantage 22% Denmark

Velling Plantage ApS 20% Denmark

Other plantations with ownership less than 20% ** Denmark

DDH Forests A/S 100% Denmark

* Own Forests Gærum Plantage, Hammer Bakker Skov, Karensminde, Ørsted Plantage, Færchs Plantage, Bødskovgaard Plantage, Den Jenssen Buchske Plantage, Apoteker Aagaards Plantage, C. E. Flensborg Plantage, Bredvad Mølle Plantage, Doses Plantage, Fjederholt Ndr. Plantage, Arnborg Hedegaard Plantage, Birkebæk Plantage, Kaptajn Schultz Plantage, Fjelstervang Plantage, Gjellerup Plantage, Laugesens Gård, Tophøj, Jydsk Landvindings Plantage.

24

SIA Dan Baltic Forest I 100% Latvia

** Plantation companies where ownership is less than 20%

Aktieplantageselskabet for Aalborg amt/Volsted Plantage, Plantningsselskabet Legind Bjerge Aps, A/S Bjøvlund-Aastrup plantager, A/S Borris Plantage, Aps Give plantage, Aps Haardkjær plantage, Aps Hejbøl Plantage, A/S Houborg plantage, A/S Københavns Plantageselskab, A/S Løbners plantage, A/S Løvstrup plantage, A/S Morsø Sønderherreds plantage, Aps Orten plantage, A/S Plantningsselskab Sønderjylland, Aps Skelhøj Plantage, Aps Sondrup Plantningsselskab, A/S Beplantningsselskabet Staushede, A/S Stilde plantage, A/S Sønder Omme plantage, Aps Tirslund plantage, Tolne Skov Aps, A/S Tranum plantage, Vistoft Sogns plantningsselskab Aps and Gammel Skovsende Plantage Anpartsselskab.

7,000 6,000 5,000 4,000 3,000 2,000 1,000

Ownership less than 20%

Østvendsyssels Plantageselskab ApS 28%

Forest and rural properties (24,373 ha)

Other plantation companies

ApS Sønderholm Plantage 34% Denmark

ha 8,000

Ownership greater than 20%

Denmark

Other plantation companies

Plantningsselskabet Steen Blicher A/S 73%

15% ownership

Denmark

Skovselskabet Skov-Sam II ApS

Skovselskabet Skov-Sam II ApS 15%

50% ownership

Denmark

Skovselskabet Skov-Sam Holding ApS

Skovselskabet Skov-Sam Holding ApS 50%

100% ownership

Own Forests in Denmark* Denmark

Own forests abroad

A/S Jysk Landvinding 100% Denmark

Reviderede vedtægter ApS (50% shareholding) and Skovselskabet Ved Hedeselskabets årsmøde på Sorø Akademi den 20. Skov-Sam II ApSHedeselskabets (15% shareholding), whichet april 2009, vedtog repræsentantskab forslag til revidering vedtægterne. together make upaf one of Denmark’s leading Revideringen af vedtægterne omfattede etablering af private forest owners, with 6,954 ha of forest. et medlemsudvalg under bestyrelsen. Medlemsudvalget består af the repræsentantskabets Peder During course of the formand year, 164 haThomsen, of forest repræsentantskabets næstformand Jørgen Skeel samt in Denmark have been sold off from the SkovSam companies. Through other plantation companies with ownership of more than 20%, DDH owns a total of 2,506 ha of forest. Of this, 1,707 ha are owned through Plantningsselskabet Steen Blicher in Denmark and France. 188 ha of French forest were sold during the year. The remaining 8,020 ha of forest and rural properties are owned through plantation companies in which DDH’s share of ownership is less than 20%.

100% ownership

DDH Denmark

As of the end of 2013, DDH was the owner or co-owner of 24,373 ha of forest and rural properties. In 2013 DDH’s forest and rural properties realised a profit before tax of DKK 12.5 million, which exceeds expectations. This improved profit is attributed to good price conditions on wood products, favourable weather conditions for forestry and sales of forest properties that have boosted the profit before tax by DKK 4.3 million. DDH’s Own Forests in Denmark, which is a designation for all the Danish forest properties that are 100%-owned by the company, cover 3,800 ha. The forests are PEFC certified. Certification means that DDH undertakes to manage its forests in line with the criteria and guidelines that are applicable to sustainable forest management based on economic, ecological and social conditions. DDH’s Own Forests abroad cover 3,093 ha of forest and rural properties in the Baltics. Of this area, 2,564 ha are owned via Sia Dan Baltic Forest I, which is a subsidiary of DDH Forests, whilst HedeDanmark’s subsidiaries in Latvia and Lithuania own some 529 ha of forest. The subsidiaries HedeDanmark and DDH Forest work together with DDH to develop the company’s forest and rural properties. This collaboration includes the development of a number of methods for sustainable nature and wildlife conservation and methods of forest management that lie closer to nature’s own. In collaboration with the Pen-Sam Group, DDH owns Skovselskabet Skov-Sam Holding

Own forests in Denmark

Forest properties

Expectations DDH also expects to retain its position as a major forest owner in the years ahead. DDH’s forest properties expect an operating profit for 2014 in line with that in 2013.

bestyrelsesmed af Hedeselskab Med vedtæg tet at reducere bestyrelse komm skabsvalgte me medarbejderne


Other capital interests

Rindibel

Enricom

DDH owns 29% of the shares in the company JSCJS Rindibel, which carries out felling and produces wood chips in Belarus. In 2013 Rindibel realised a profit before tax of DKK 0.7 million, which was in line with expectations. DDH’s involvement in Rindibel has ensured a valuable insight into the forestry sector in Russia and Belarus. In addition, DDH’s involvement in Rindibel has paved the way for collaboration with NEFCO (Nordic Environment Finance Corporation), which is a majority shareholder in Rindibel.

Enricom A/S is a company without commercial activity.

Expectations It is expected that during the years ahead there will be a controlled development of both technology and activity levels at Rindibel. The Belarus company also expects to be able to present a profit in 2014.

DDH Denmark

Dalgasgroup A/S 100% Denmark

Enricom A/S 100% Denmark

JSCJS Rindibel 29% Belarus

25


INNOVATION

DDH works with development and innovation on several different levels: from shortterm needs-based development to long-term knowledge-intensive development, which is typically associated with greater uncertainty. This innovation and development take place both at subsidiary level, at group level under the auspices of Dalgas Innovation and via capital interests in Agro Business Park and Agro Business Innovation. DDH is actively involved in different development projects with universities, knowledge environments, private enterprises and customers. Project types at DDH:

RESEARCH AND DEVELOPMENT

TESTING AND DEMONSTRATION

BUSINESS DEVELOPMENT

26

By the close of 2013 DDH was involved in approximately 50 development projects in partnership with customers and/or universities, including eight research and innovation projects that all had project budgets in excess of DKK 20 million. Among other things, Orbicon is part of an innovation consortium aimed at developing and implementing solutions based on local drainage of rainwater that can cope with every­day rainfall and cloudbursts in urban areas. A project under the auspices of Xergi is focused on demonstrating preliminary treatment methods of biomass for biogas production in a full-scale demonstration facility. In 2013 DDH was involved in 20 projects that were characterised by testing and demonstration. Furthermore, the company has employed three industrial PhDs, in addition to which two PhD projects are being co-financed at the University of Copenhagen. Within Outdoor Facility Service HedeDanmark is also involved in the generation of new knowledge that can help increase efficiency in the public sector within the care and operation of green areas, as well as developing and bolstering the company’s position in the market. Development is in part taking place via HedeDanmark’s involvement in an assigned assistant professorship within landscape management at Sweden’s agricultural university in Alnarp, and in part through a research partnership with Aalborg University. The research partnership with Aalborg University is designed to examine and develop innovative solutions in public-private partnerships. The project is due to commence at the beginning of 2014 in collaboration with Dalgas Innovation.

Dalgas Innovation Dalgas Innovation supplements innovation and business development in the subsidiaries by enabling DDH to participate in long-term innovation and development projects that carry a greater degree of risk. I 2013 DDH deployed DKK 3.6 million in development projects through Dalgas Innovation, thus representing a significant increase from the 2012 figure of DKK 2.8 million. New projects under the auspices of Dalgas Innovation have been launched in 2013, and by the end of the year the project unit had five development projects underway: Blue Biomass, BioResource, Ashback, Big Cities – Quiet Spots, and Drinking Water Supply of the Future. Read more about these projects at www.dalgasinnovation.com. In 2014 DDH expects to use DKK 5 million on innovation and development projects in Dalgas Innovation that are expected to have a long-term positive effect on DDH’s business.

Agro Business Park / Agro Business Innovation DDH owns 4% of the capital in Agro Business Park, which is a science park with focus on entrepreneurship and innovation within agriculture, foodstuffs, bioenergy and environmental technology. In addition, DDH owns 6% of the capital in Agro Business Innovation.


RISK MANAGEMENT

Risks Currency risks The enterprise’s international activities result in currency risks. It is the group’s policy to reduce currency risks by individually evaluating each assignment and market with regard to foreign currency hedging. Currency overdrafts are normally set up through credit institutions on the basis of an ongoing compilation of currency exposure in the major currencies. Forward contracts are also used to provide a safeguard against currency exposure. Investments in short-term and long-term receivables in affiliated foreign companies are normally not hedged in terms of currency.

Interest risks Interest-bearing debt and interest-bearing assets in the group amounted to a net debt of DKK 425.9 million at the end of 2013. In order to minimise both interest costs and risks, cash pool and interest netting agreements comprising debts in Danish Kroner and Euro have been reached with the group’s credit institutions. DDH financed the conversion and extension at Klostermarken 10-12 in Viborg in 2008 through a 30-year mortgage loan. The company chose a fixed rate of interest for the first 10-year period, corresponding to the term of the lease agreement with the Danish University and Property Agency concerning the District Court in Viborg. This hedging is characterised as a derivative financial instrument in the financial statements. The company does not otherwise have any derivative financial instruments.

Credit risks A significant percentage of the group’s customers consist of public customers, where the exposure to financial losses is minimal. The group’s trade receivables from other customers are subject to ordinary credit risks. Credit assessment is therefore carried out with respect to these customers prior to commencement of an assignment. Trade receivables are covered through bank and insurance guarantees and letters of credit to whatever extent this is deemed appropriate.

Liquidity and loan risks It is the group’s policy to have the necessary liquidity at its disposal. The group’s excellent, stable solvency results in high creditworthiness, which is reflected in expedient credit facilities and loan undertakings in both the short and the long term.

Market risks Decisions and postponements to the implementation of political initiatives at global, national and local levels will have an impact on levels of activity and earnings. Weather and climatic conditions will of course also affect levels of activity and earnings. DDH reduces the risks associated therewith by adapting and allocating activities in accordance with the effects. Claims from customers and business partners are risks which the group tries to limit through professional liability insurance and contract guarantees.

27


CORPORATE SOCIAL RESPONSIBILITY Corporate Social Responsibility DDH focuses on Corporate Social Responsibility, and the company responds to demands to this effect on an ongoing basis. The Executive Committee and the executive management ensure that the enterprise is operated with respect for nature, the environment, the employees and society – based on the applicable ethical framework and social conditions. In DDH’s opinion, elements within standard CSR (Corporate Social Responsibility) definitions help to support the enterprise in business terms with positive value-creating effect. DDH’s definition of CSR is that the company acts on the basis of common sense whilst taking into account the environment, society, business partners (customers and suppliers) and employees. In DDH’s view, common sense means high levels of ethics, a high degree of professional competence and cost-effectiveness. This applies both internally to the employees, the members and the group, and externally to customers and business partners and society as a whole. DDH is well aware of its social responsibility and acts in accordance herewith. The ethical framework within which DDH operates is complied with at all levels in the group. The group has adopted separate policies and implemented statements for social responsibility in each subsidiary and associated company based on the activities in the enterprise concerned.

Environment and climate The environment and climate are important areas of focus for DDH. In the company’s objects clause it is specified that DDH works to exploit natural resources for the benefit of society through research, development and dissemination within nature, environment and energy. DDH’s Own Forests in Denmark are subject to PEFC certification. Certification means that DDH undertakes to manage its forests in line with the criteria and guidelines that are applicable to sustainable forest management

28

based on economic, ecological and social conditions. DDH focuses on reducing its impact on the environment and climate in connection with the performance of its activities. During the course of the year these efforts have included a reduction in transport needs by optimising transport planning, as well as a reduction of energy consumption at the enterprise’s premises. DDH helps customers and suppliers to fulfil their responsibility with respect to nature and the environment in a careful and respectful manner. Among the tasks that benefit the environment for which policies exist in DDH’s business activities are: • Planting and forest management that contribute to protection of the groundwater and binding atmospheric CO2 in plant matter. • Sustainability and energy optimisation are incorporated into consultancy services. • Products with fertiliser value are used as organic waste for farming purposes on the basis of a recirculation concept. • DDH encompasses Denmark’s biggest supplier of woodchips for bioenergy. • Biogas plants that use various waste products and by-products for the production of electricity and heat are being built in Denmark and abroad. • In Poland gas is recovered from landfill sites, which contributes to a reduction in the emission of the greenhouse gas methane to the atmosphere, as well as providing an alternative to fossil fuels such as oil and coal. • Work is ongoing with business development within the cultivation of seaweed and mussels, which remove nutrients from the sea and thereby enhance the aquatic environment.

Employees It is a prerequisite for the operation and continued development of DDH that the enterprise has motivated and committed employees who use their common sense.

DDH’s subsidiaries have employee policies and codes of conduct that embrace job satisfaction, absenteeism and certification of the working environment. Follow-up and adaptation of these policies is carried out on an ongoing basis. In certain areas of DDH trainees and apprentices are trained within the enterprises’ professional fields and within administrative functions. In addition, company interns are also engaged in order to give them an insight into professional work. Work continues on an ongoing basis to plan and organise the performance of tasks such that the welfare of the employees is as far as possible taken into consideration, including those employees who are not fully able-bodied – either permanently or temporarily. The planning and organisation of tasks also takes place in order to ensure that absenteeism as a result of sickness and industrial accidents is kept to a minimum.

Anticorruption DDH has zero tolerance with respect to bribery, facilitation payment (payment that is designed to ensure or expedite an action to which the party is legally or otherwise entitled), kickback and the creation of cartels. There have been no anticorruption cases in 2013. The expectation in 2014 is that this will be made more visible to management groups and employees, in addition to the implementation of a policy that defines the group’s position in the area.

Human rights There is no separate policy for human rights at DDH. With respect for the fact that the group has activities in many countries with different cultures and working conditions, internationally recognised human rights are integrated into the employment policies of the business. These policies cover the working environment, job satisfaction and diversity, and support the right to nondiscrimination and the right to a healthy and non-harmful working life.


CORPORATE GOVERNANCE Corporate governance

MEMBERS COMMITTEE OF REPRESENTATIVES

60 PERSONS

48 elected by the members 8 elected by the Committee of Representatives 4 appointed by the Danish Agricultural & Food Council

DDH responds to the recommendations on good corporate governance on an ongoing basis. The collective management attaches great importance to the fact that corporate governance is practised with the aim of long-term creation of value and timely exchange of information between the governing bodies within the enterprise. DDH’s highest authority is the Committee of Representatives, which is elected by the members and appointed by the Committee of Representatives and the trade organisation Danish Agriculture & Food Council respectively. The Committee of Representatives receives information about DDH’s activities and development at the annual meeting, through information meetings, the annual report and via information material from the management. The Committee of Representatives elects six representatives for DDH’s Executive Committee. The Executive Committee represents the executive management and elects its officers on an annual basis with the election of chairman and vice chairman. The distribution of tasks takes place in accordance with the Executive Committee’s rules of procedure. There are three employee-elected members, which is in line with amendments made to the articles of association in 2009. MEMBER COMMITTEE

EXECUTIVE COMMITTEE  9 PERSONS

6 elected by the Committee of Representatives 3 elected by the employees

GROUP MANAGEMENT  2 PERSONS

ORGANISATION

3 PERSONS

Chairman of the Committee of Represen­ tatives Vice Chairman of the Committee of Representatives 1 member of the Executive Committee

The work of the Executive Committee is structured on the basis of an annual cycle of work, which schematises the matters that the Executive Committee deals with during the course of the year. The executive management makes up the day-to-day management of the company. The executive management reports to the Executive Committee on an ongoing basis with respect to the group’s financial position by means of monthly reports and management reports. Furthermore, budgets, forecasts, strategy plans and annual reports are reported to the Executive Committee. At DDH a member committee is appointed, which, among other things, is charged with recommending projects and activities to the Executive Committee. These projects and activities are supported in accordance with DDH’s objects clause. This committee consists of the chairman and vice chairman of the Committee of Representatives and a member of the Executive Committee.

Diversity in the management DDH’s Executive Committee has adopted a target of 17% with regard to the proportion of the minority gender in the Executive Committee in 2017. The 17% figure is measured on the basis of the number of independent members of the Executive Committee. DDH acts on the basis of a policy in which employees and job applicants feel that they have equal opportunities to enjoy a career in the company irrespective of their gender. Skills are at all times the overriding parameter with respect to recruitment and promotion at DDH. At employee appraisals during the course of the year and when recruiting or promoting employees, efforts are made to ensure that the policies are complied with and that no one is discriminated against on account of their gender. The expectation for 2014 is a continuation of the policy, as well as a follow-up that ensures that skills are the overriding parameter in recruitment and in the event of promotion.

29


EXECUTIVE COMMITTEE AND MANAGEMENT Executive Committee and Management posts in companies with major board activity.

Svend Aage Linde Member of the Executive Committee at DDH since 2003 Particular competencies within company management and business development.

Executive Committee

Managing director of Eurofins Danmark A/S and Eurofins Steins Laboratorium A/S.

Frants Bernstorff-Gyldensteen Chairman of DDH since 2007 and member of the Executive Committee since 1995. Particular competencies within local government politics, agriculture, forest management, company management and business development.

Chairman: • The Eurofins Group’s companies in Denmark, Finland, Norway and Sweden • Holstebro Invest A/S • Vejen Invest A/S • Smedeskovvej 38 Galten A/S

Chairman: • Dalgasgroup A/S • Plantningsselskabet Steen Blicher A/S Board member: • Xergi A/S • Scholarships managed by DDH • Skovselskabet Skov-Sam Holding ApS and its subsidiaries • Skovselskabet Skov-Sam II ApS and its subsidiaries • Mærsk Olie og Gas A/S • Fonden af 28. maj 1948 • DAN-Engineering A/S and its subsidiaries Peter Høstgaard-Jensen Vice Chairman of DDH since 2007 and member of the Executive Committee since 2006. Particular competencies within the energy and utility supply area and business development. Chairman: • Greentech Energy Systems A/S • Aalborg Energie Technik A/S • Enviscan A/S • Novi Innovation A/S Vice Chairman: • Dalgasgroup A/S Board member: • Xergi A/S • Nordenergie A/S • Nordenergie Renewables A/S • Aalborg Engineering A/S and Aalborg Engineering Holding A/S • Frederikshavn Forsyning A/S (as of 1 January 2014) Jørgen Skeel Member of the Executive Committee at DDH since 2012. Particular competencies in agriculture, agricultural organisations and affiliated businesses. Chairman: • AKV-Langholt AmbA • Cargrill-AKV I/S • Donau Agro ApS • Slåbakkegaard Fonden Board member: • Dalgasgroup A/S • Den Shimmelmannske Fond

Board member:: • Dalgasgroup A/S • Eurofins Danmark A/S • Eurofins Steins Laboratorium A/S • 3D Logistik A/S • GO Danmark A/S Aleksander Aagaard Member of the Executive Committee at DDH since 2002. Particular competencies within local government and regional government politics, as well as responsibility for pensions and insurance for public employees, organisational development, management and personnel development Board member: • Dalgasgroup A/S • Den Erhvervsdrivende Fond Udviklingscenter for Møbler og Træ • Kommunekredit og Kommuneleasing Public duties: • Member of the Regional Council at Central Region Denmark • Member of the town council and finance committee in Skanderborg • Vice Chairman at Reno Syd I/S • Member of the Danish Regions’ Salaries & Personnel Committee Jens Ejner Christensen Member of the Executive Committee at DDH since 2003. Particular competencies within agriculture, agricultural organisations and affiliated businesses. Chairman: • Knowledge Centre for Agriculture • Vejle Spildevand A/S Board member: • Dalgasgroup A/S • Danish Agriculture and Food Council • Jyske Medier A/S • JE&P A/S • Det Danske Madhus Vejle A/S • Fonden Syddanske Forskerparker Public duties: • Member of the town council in Vejle

Torben Bøgh Christensen Employee-elected member of the Executive Committee at DDH since 2011. Employee-elected member of the board at Dalgasgroup A/S. Jovanco Dimovski Employee-elected member of the Executive Committee at DDH since 2011. Employee-elected member of the board at Dalgasgroup A/S. Poul-Erik Nielsen Employee-elected member of the Executive Committee at DDH since 2011. Employee-elected member of the board at Dalgasgroup A/S.

Management Lars Johansson Managing director of DDH since 2013. CEO and managing director of Dalgasgroup A/S since 2013. Chairman: • Hededanmark A/S • Orbicon A/S • Enricom A/S • DDH Forests A/S • A/S Jysk Landvinding Board member: • Hedeselskabet Sp. z o.o. • Xergi A/S • Scholarships managed by DDH • Skovselskabet Skov-Sam Holding Aps and its subsidiaries • Skovselskabet Skov-Sam II Aps and its subsidiaries • Kongenshus Mindepark Bent Simonsen CFO of DDH and Dalgasgroup A/S since 2010. Managing director of Hedeselskabet Sp. z o.o., Enricom A/S, DDH Forests A/S and Sia Dan Baltic Forest I since 2009. Board member: • Hededanmark A/S • Orbicon A/S • Enricom A/S • Hedeselskabet Sp. z o.o. • DDH Forests A/S • Plantningsselskabet Steen Blicher A/S • A/S Jysk Landvinding • A/S Plantningsselskabet Sønderjylland • JSCJS Rindibel • SIA Dan Baltic Forest I • LHE af 1/1-2000 A/S • Viborg Håndbold Klub A/S • Vestjysk Bank A/S

DDH’s Executive Committee and Management photographed in conjunction with the board meeting in September 2013. Back row from left: Jovanco Dimovski, Jørgen Skeel, Peter Høstgaard-Jensen, Bent Simonsen, Svend Aage Linde and Jens Ejner Christensen. Front row from left: PoulErik Nielsen, Torben Bøgh Christensen, Aleksander Aagaard, Lars Johansson and Frants Bernstorff-Gyldensteen.

30


MANAGEMENT STATEMENT Management and the Executive Committee have today considered and approved the annual report of DDH for the financial year 1 January to 31 December 2013. The annual report is presented in accordance with the Danish Financial Statements Act. In our opinion, the consolidated financial statements and the parent financial statements give a true and fair view of the Group’s and the Parent’s financial position at 31 Decem-

ber 2013 and of their financial performance as well as the consolidated cash flow for the financial year 1 January to 31 December 2013. We believe that the Management’s report contains a fair review of the affairs and conditions referred to therein. We recommend the annual report for adoption by the Committee of Representatives.

Viborg, 25 March 2014 Management

Executive Committee

CEO Lars Johansson

Frants Bernstorff-Gyldensteen

Peter Høstgaard-Jensen

CFO Bent Simonsen

Jørgen Skeel

Svend Aage Linde

Aleksander Aagaard

Jens Ejner Christensen

Torben Bøgh Christensen

Jovanco Dimovski

Poul-Erik Nielsen

31


INDEPENDENT AUDITOR’S REPORT To the Committee of Representatives of DDH Report on the consolidated financial statements and parent financial statements We have audited the consolidated financial statements and parent financial statements of DDH for the financial year 1 January to 31 December 2013, which comprise the accounting policies, income statement, balance sheet, statement of changes in equity and notes for the Group as well as for the Parent, and the consolidated cash flow statement. The consolidated financial statements and parent financial statements are prepared in accordance with the Danish Financial Statements Act.

Management’s responsibility for the consolidated financial statements and parent financial statements Management is responsible for the preparation of consolidated financial statements and parent 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 parent financial statements that are free from material misstatement, whether due to fraud or error.

32

Auditor’s responsibility

Opinion

Our responsibility is to express an opinion on the consolidated financial statements and parent financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing and additional requirements under Danish audit regulation. This requires that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements and parent financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements and parent financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatements of the consolidated financial statements and parent financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of consolidated financial statements and parent financial statements that give a true and fair view 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 entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Management, as well as the overall presentation of the consolidated financial statements and parent financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Our audit has not resulted in any qualification.

In our opinion, the consolidated financial statements and parent financial statements give a true and fair view of the Group’s and the Parent’s financial position at 31 December 2013, and of the results of their operations and cash flows for the financial year 1 January to 31 December 2013 in accordance with the Danish Financial Statements Act.

Statement on the Management’s report Pursuant to the Danish Financial Statements Act, we have read the Management’s report. We have not performed any further procedures in addition to the audit of the consolidated financial statements and parent financial statements. On this basis, it is our opinion that the information provided in the Management’s report is consistent with the consolidated financial statements and parent financial statements.

Viborg, 25 March 2014 Deloitte Statsautoriseret Revisionspartnerselskab

Gert Stampe State Authorised Public Accountant

Kenneth Biirsdahl State Authorised Public Accountant


INCOME STATEMENT Note

DDH DDH Group Parent Organisation 2013 2012 2013 2012 DKK ’000

DKK ’000

DKK ’000

DKK ’000

1 Revenue 2,101,503 2,062,851 25,434 28,106 Changes in inventories of finished goods and work in progress 4,268 13,251 - Work performed on own account and recognised under assets 284 4,879 - 2 Other operating income 5,822 4,408 611 2,197 Total income 2,111,877 2,085,389 26,045 30,303 Goods and services -1,004,663 -988,189 -5,589 -8,609 3 Other external expenses -318,163 -325,654 -17,235 -18,792 4 Staff costs -700,357 -662,240 -2,072 -1,874 5 Amortisation, depreciation and impairment losses -64,544 -65,716 -3,359 -3,219 Other operating expenses -2,491 -329 - Profit/loss from ordinary activities 21,659 43,261 -2,210 -2,191 11 Income from investments in subsidiaries - - -10,236 12,892 11 Income from investments in associates 3,111 -5,354 5,058 2,258 11 Income from other investments 266 524 266 524 6 Financial income 7,613 8,772 13,915 15,643 7 Financial expenses -31,302 -15,153 -6,261 -6,159 Profit/loss before tax 1,347 32,050 532 22,967 8

Tax on profit for the year Profit/loss from ordinary activities after tax

-2,662 -1,315

-11,167 20,883

-2,707 -2,175

-2,898 20,069

Minority interests -860 -814 - Profit/loss for the financial year -2,175 20,069 -2,175 20,069 Proposal for distribution of profit Distributed for association purposes 1,741 5,105 Retained earnings -3,916 14,964 Total distribution of profit/loss -2,175 20,069

33


BALANCE SHEET Assets as at 31 December. Note

DDH DDH Group Parent Organisation 2013 2012 2013 2012 DKK ’000

DKK ’000

DKK ’000

DKK ’000

9

Fixed assets Completed development projects 2,603 3,904 3 4 Acquired patents, licences, trademarks and rights 11,899 13,515 - Goodwill 100,858 108,190 - Development projects in progress - 192 - Total intangible assets 115,360 125,801 3 4

10

Land and buildings Plant and machinery Other fixtures and fittings, tools and equipment Property, plant and equipment under construction Total property, plant and equipment

Investments in subsidiaries Investments in associates Receivables from associates Other investments 11 Total fixed asset investments

Total fixed assets

504,349 94,059 37,027 1,223 636,658

487,556 118,694 40,134 19,275 665,659

335,405 153 681 325 336,564

326,667 218 778 325 327,988

- - 79,039 90,175 210,213 216,277 188,921 194,663 21,834 53,137 - 21,984 21,774 21,946 21,734 254,031 291,188 289,906 306,572 1,006,049

1,082,648

626,473

634,564

Current assets 12 Inventories 119,776 111,593 2,400 650 Trade receivables 13 Contract work in progress 14 Receivables from subsidiaries Receivables from associates 15 Other receivables 16 Deferred tax asset Prepayments Total receivables Cash

Total current assets

Total assets

34

417,171 447,719 1,600 1,439 104,549 86,964 - - - 196,164 194,347 1,056 6 - 18,003 15,084 300 - - 8,442 21,400 13,513 15,413 - 27 554,292 565,186 206,506 217,213 6,132 680,200

9,493 686,272

1,686,249 1,768,920

157,845 148,093 366,751

365,956

993,224 1,000,520


Equity and liabilities as at 31 December. Note

DDH DDH Group Parent Organisation 2013 2012 2013 2012 DKK ’000

DKK ’000

DKK ’000

DKK ’000

Equity 17 Contributed capital 50,000 50,000 50,000 50,000 Revaluation reserve 226,241 227,471 200,989 202,219 Retained earnings 517,174 519,911 542,426 545,163 Total equity 793,415 797,382 793,415 797,382 18

Minority interests

18,439

18,285

-

-

Provisions 16 Provisions for deferred tax 17,548 4,499 - 19 Other provisions 2,887 3,657 750 1,250 Total provisions 20,435 8,156 750 1,250 20

Long-term debt Mortgage debt 194,579 193,280 176,411 181,198 Debt to employees with respect to bonds 5,804 12,397 4,741 9,316 Other debt 4,180 9,687 - Total long-term debt 204,563 215,364 181,152 190,514

13 21

Short-term debt Repayment on long-term debt due within 1 year 12,668 12,200 7,238 4,877 Bank debt 214,765 286,180 4,544 114 Prepayments received for work in progress 126,525 118,786 - Trade payables 130,058 151,008 1,316 1,179 Debt to subsidiaries - - 1,104 1,224 Debt to associates - 93 - Tax payables 76 961 - Other debt 163,893 158,111 3,060 3,355 Deferred income 1,412 2,394 645 625 Total short-term debt 649,397 729,733 17,907 11,374

Total debt

853,960 945,097

199,059 201,888

Total equity and liabilities 1,686,249 1,768,920 993,224 1,000,520 22 Contingent liabilities and security 23 Related parties

35


STATEMENT OF CHANGES IN EQUITY DDH, Group (DKK ’000) Contributed Revaluation Retained capital reserve earnings Total Equity at beginning of year 50,000 227,471 519,911 797,382 Net change - -1,230 - -1,230 Exchange adjustments relating to translation - - -1,420 -1,420 Fair value adjustment of hedging instruments - - 2,599 2,599 Profit/loss for the year - - -3,916 -3,916 Equity at end of year 50,000 226,241 517,174 793,415

DDH, Parent Organisation (DKK ’000) Contributed Revaluation Retained capital reserve earnings Total Equity at beginning of year 50,000 202,219 545,163 797,382 Net change - -1,230 - -1,230 Exchange adjustments relating to translation - - -1,420 -1,420 Fair value adjustment of hedging instruments - - 2,599 2,599 Profit/loss for the year - - -3,916 -3,916 Equity at end of year 50,000 200,989 542,426 793,415

36


CASH FLOW STATEMENT DDH Group Note

2013 2012 DKK ’000

DKK ’000

Cash flow from operating activities Operating profit/loss 21,659 43,261 Depreciation, amortisation and impairment losses 64,544 65,716 Adjustment for non-cash operating items 3,704 -161 Cash flow from operating activities before change in working capital 89,907 108,816 24 Working capital changes -3,221 -55,797 Financial income received 7,667 8,772 Financial expenses paid -12,111 -14,692 Cash flow from ordinary activities before tax 82,242 47,099 Income taxes paid -4,121 -4,568 Cash flow from operating activities 78,121 42,531 Cash flow from investing activities Purchase of intangible assets -8,714 -19,326 Purchase of property, plant and equipment -53,555 -118,703 Sale of property, plant and equipment 47,075 41,775 Investments in subsidairies -519 -102,130 Investments in associates -1,755 -8,054 Dividends received from associates 10,800 4,450 Receivables from associates 6,478 -9,414 Purchase of other fixed assets investments -2 -58 Cash flow from investing activities -192 -211,460 Cash flow from financing activities Decrease in long-term debt -8,099 -3,909 Distributions -1,776 -5,338 Cash flow from financing activities -9,875 -9,247 Cash flow from operating, investing and financing activities 68,054 -178,176 Cash and cash equivalents at beginning of year -276,687 -106,924 Cash and cash equivalents acquired as a result of acquisition - 8,413 25 Cash and cash equivalents at end of year -208,633 -276,687

37


NOTES

DDH DDH Group Parent Organisation 2013 2012 2013 2012

DKK ’000

DKK ’000

DKK ’000

DKK ’000

Note 1 Revenue Sale of goods, services and consultancy 2,080,867 2,042,966 11,557 14,473 Rental income 20,636 19,885 13,877 13,633 2,101,503 2,062,851 25,434 28,106 Revenue by segment Activity segmentation Green Service 1,645,188 1,636,079 - Consultancy 410,592 386,702 - Energy production 15,154 26,252 - Forestry and other activities 30,569 13,818 25,434 28,106 Total revenue 2,101,503 2,062,851 25,434 28,106

Geographical segmentation Denmark 1,799,089 1,739,187 25,434 28,013 Rest of Scandinavia 69,375 59,960 - Western Europe 177,338 190,827 - Eastern Europe and the Baltic States 48,938 71,446 - 93 Other 6,763 1,431 - Total revenue 2,101,503 2,062,851 25,434 28,106

Note 2 Other operating income Income from members Profit on sale of minor assets Compensation from insurance companies Profit on sale of properties Adjustment of provisions Other income

339 337 511 476 101 366 2,812 1,184 - 1,064 2,059 981 5,822 4,408

339 337 - 57 4 178 222 - 1,064 46 561 611 2,197

Note 3 Other external expenses Office and administrative expenses 77,728 57,951 12,990 14,153 Operation and maintenance of equipment and buildings 122,965 124,587 3,287 3,430 Freight of goods sold 79,046 90,205 - Other external expenses 38,424 52,911 958 1,209 318,163 325,654 17,235 18,792 Fee to auditor elected by the Committee of Representatives Statutory audit 998 1,078 87 85 Other assurance engagements 127 40 3 Tax advice 42 451 - 211 Other services 1,164 2,253 - 25

Note 4 Staff costs Wages and salaries Pensions and contributions to pension plans Other social security costs Other staff costs

Number of full-time employees

Salaries and remuneration to the Management in Parent Organisation Remuneration to the Executive Committee in Parent Organisation Remuneration to Committee of Representatives in Parent Organisation

38

634,881 602,143 2,058 1,836 26,626 24,750 - 19,342 18,628 - 19,508 16,719 14 38 700,357 662,240 2,072 1,874 1,401 1,472

-

-

8,807

6,111

1,484

1,510

1,520

1,421

1,520

1,421

478

416

478

416


DDH DDH Group Parent Organisation 2013 2012 2013 2012

DKK ’000

DKK ’000

DKK ’000

DKK ’000

Note 5 Amortisation, depreciation and impairment losses

Completed development projects 1,301 372 Acquired patents, licences, trademarks and rights 5,741 5,369 Goodwill 11,743 8,425 Amortisation and impairment losses on intangible assets 18,785 14,166

Land and buildings Plant and machinery Other fixtures and fittings, tools and equipment Depreciation and impairment losses on property, plant and equipment

Profit and loss on sale of fixed assets -3,683 -1,777 - Total amortisation, depreciation and impairment losses 64,544 65,716 3,359 3,219

1 - - 1

14 48 62

8,659 24,916 15,867

8,621 29,201 15,505

3,125 65 168

2,975 68 114

49,442

53,327

3,358

3,157

Note 6 Financial income Interest on cash Interest from subsidiaries Interest on trade receivables Foreign exchange gains Other financial income

3,170 3,354 2,658 2,653 - - 11,129 12,679 152 194 128 88 147 250 - 6 4,144 4,974 - 217 7,613 8,772 13,915 15,643

Note 7 Financial expenses Interest on mortgage debt Interest on bank debt Foreign exchange losses Impairment of financial assets Other financial expenses

5,024 5,687 4,831 5,500 6,436 6,527 227 153 713 1,006 5 35 16,691 - - 2,438 1,933 1,198 471 31,302 15,153 6,261 6,159

Note 8 Tax on profit/loss for the year Current tax on profit for the year Adjustments concerning previous years Change in deferred tax for the year Effect due to a change in the tax rate

2,149 1,575 - 1,742 - - -695 9,592 2,106 2,898 -534 - 601 2,662 11,167 2,707 2,898

39


Note 9 Intangible assets

DDH, Group

Cost at beginning of year Adjustments at beginning of year Translation adjustment Additions for the year Disposals for the year Cost at end of year

Amortisation and impairment losses at beginning of year Adjustments at beginning of year Translation adjustment Amortisation for the year Disposals for the year Amortisation and impairment losses at end of year

Carrying amount at end of year

DDH, Parent Organisation

Cost at beginning of year Cost at end of year

Amortisation and impairment losses at beginning of year Amortisation for the year Amortisation and impairment losses at end of year

Carrying amount at end of year

(DKK ’000)

Acquired patents, Completed licences, Development Total development trademarks projects intangible projects and rights Goodwill in progress assets

7,125 36,375 159,442 192 203,134 - 565 - - 565 - -2 -94 -3 -99 - 4,187 4,527 - 8,714 - -982 -412 -189 -1,583 7,125 40,143 163,463 - 210,731 3,221 - - 1,301 -

22,860 627 -2 5,741 -982

51,252 - -9 11,743 -381

- - - - -

77,333 627 -11 18,785 -1,363

4,522

28,244

62,605

-

95,371

2,603

11,899 100,858

-

115,360

(DKK ’000)

Acquired patents, Completed licences, Development Total development trademarks projects intangible projects and rights Goodwill in progress assets

40

332 332

1,967 1,967

- -

- -

2,299 2,299

328 1

1,967 -

- -

- -

2,295 1

329

1,967

-

-

2,296

3

-

-

-

3


Note 10 Property, plant and equipment

DDH, Group

Cost at beginning of year Adjustments at beginning of year Translation adjustment Transfer Additions for the year Disposals for the year Cost at end of year

280,773 252,482 118,324 21,244 672,823 -1,689 373 -247 -64 -1,627 -922 -1,314 -708 -4 -2,948 17,036 - 1,236 -18,272 10,690 10,695 14,798 566 36,749 -12,804 -33,013 -14,966 -278 -61,061 293,084 229,223 118,437 3,192 643,936

Revaluation at beginning of year Adjustments at beginning of year Additions for the year Revaluation at end of year

262,337 1,689 9,022 273,048

Depreciation and impairment losses at beginning of year Adjustments at beginning of year Translation adjustment Depreciation for the year Impairment losses for the year Disposals for the year Depreciation and impairment losses at end of year

Carrying amount at end of year

DDH, Parent Organsation

Cost at beginning of year Adjustments at beginning of year Additions for the year Disposals for the year Cost at end of year

159,557 -1,689 3,309 -890 160,287

608 - - -20 588

3,299 - 71 -136 3,234

2,294 - - - 2,294

165,758 -1,689 3,380 -1,046 166,403

Revaluation at beginning of year Adjustments at beginning of year Additions for the year Revaluation at end of year

200,456 1,689 9,022 211,167

- - - -

- - - -

- - - -

200,456 1,689 9,022 211,167

Depreciation and impairment losses at beginning of year Depreciation for the year Disposals for the year Depreciation and impairment losses at end of year

33,346 3,125 -422

390 65 -20

2,521 168 -136

1,969 - -

38,226 3,358 -578

36,049

435

2,553

1,969

41,006

Carrying amount at end of year

335,405

153

681

325

336,564

(DKK ’000)

Other fixtures  Property, Total Land, Plant and fittings, plant, and equ- property, buildings and tools and ipment under plant and and forests machinery equipment construction equipment

- - - -

- - - -

- - - -

262,337 1,689 9,022 273,048

55,554 133,788 78,190 1,969 269,501 - 379 -379 - -225 -620 -483 - -1,328 8,659 24,613 15,796 - 49,068 - 303 71 - 374 -2,205 -23,299 -11,785 - -37,289 61,783 135,164 504,349

94,059

81,410

1,969

280,326

37,027

1,223

636,658

(DKK ’000)

Other fixtures  Property, Total Land, Plant and fittings, plant, and equ- property, buildings and tools and ipment under plant and and forests machinery equipment construction equipment

41


Note 11 Fixed asset investments

DDH, Group

Acquisition cost at beginning of year Reclassification Additions for the year Disposals for the year Acquisition cost at end of year

Adjustments at beginning of year Impairment losses Adjustments Translation adjustment of opening balance of equity and retained earnings Dividends received Foreign exchange adjustment Share of profit/loss for the year after tax Adjustments at end of year

(DKK ’000)

Investments Receivables in from Other associates associates investments

316,363 53,137 10,368 -5 - 1,755 - 2 - -6,478 -1 318,113 46,659 10,369 -100,086 - 11,406 - -16,691 276 -6,000 -401 -10,800 - 3,111 -107,900

- - -2,134 - -24,825

-54 -3 266 11,615

Carrying amount at end of year 210,213 21,834 21,984 Of the carrying amount of other investments, the Group’s share in 24 plantation companies accounts for DKK 21.3 million at year-end and DKK 21.2 million at beginning of year, respectively.

DDH, Parent Organisation

(DKK ’000)

Investments Investments in in Other subsidiaries associates investments

Acquisition cost at beginning of year Additions for the year Acquisition cost at end of year

72,346 251,251 10,332 519 - 72,865 251,251 10,332

17,829 -56,588 11,402 -40 - -440 - - -10,800 -54

Adjustments at beginning of year Other adjustments Translation adjustment of opening equity and retained earnings Dividend received Foreign exchange adjustment of intercompany account with subsidiaries Intra-group profits/losses Share of profit/loss for the year after tax Adjustments at end of year

-939 - 2,613 - -12,849 5,058 266 6,174 -62,330 11,614

Carrying amount at end of year 79,039 188,921 21,946 Of the carrying amount of other investments, DDH’s share in 24 plantation companies accounts for DKK 21.3 million at year-end and DKK 21.2 million at beginning of year, respectively.

42


Note 11 DDH’s share Fixed asset investments, Subsidiaries (DKK ’000) Ownership Profit/loss Profit/loss continued

interest

Equity for the year

% DKK ’000

DKK ’000

Equity for the year

DKK ’000

DKK ’000

Dalgasgroup A/S, Denmark1 100 8,097 -15,733 8,097 -15,733 DDH Forests A/S, Denmark 100 25,999 430 25,999 430 Plantningsselskabet Steen Blicher A/S, Denmark 73 69,216 3,228 50,777 2,367 A/S Jysk Landvinding, Denmark 100 7,939 87 7,939 87 92,812 -12,849 Intra-group profits/losses at end of year -13,773 2,613

Parent organisation’s share in subsidiaries

1)

Dalgasgroup A/S’s share in subsidiaries

79,039 -10,236

Dalgasgroup A/S’s share

(DKK ’000)

Ownership Profit/loss Profit/loss interest Equity for the year Equity for the year % DKK ’000

DKK ’000

DKK ’000

DKK ’000

Orbicon A/S, Denmark 100 42,942 865 42,942 865 HedeDanmark a/s, Denmark 100 220,372 9,241 220,372 9,241 Enricom A/S, Denmark 100 9,396 105 9,396 105 Hedeselskabet Sp. z o.o., Poland 100 51,346 -1,538 51,346 -1,538 Dalgasgroup A/S’s share in subsidiaries 324,056 8,673

Associates

(DKK ’000)

DDH’s share

Share- Profit/loss Profit/loss holding Equity for the year Equity for the year % DKK ’000

DKK ’000

DKK ’000

DKK ’000

Skovselskabet Skov-Sam Holding ApS, Denmark 50 328,485 9,131 164,243 4,565 Skovselskabet Skov-Sam II ApS, Denmark 15 124,767 2,033 18,715 305 A/S Dover Plantage, Denmark 24 1,598 409 379 97 ApS Hundsbæk Plantage, Denmark 22 14,629 -28 3,176 -6 Velling Plantage ApS, Denmark 20 2,695 198 539 40 Østvendsyssels Plantageselskab ApS, Denmark 28 6,020 126 1,713 36 Anpartsselskabet Sønderholm Plantage, Denmark 34 463 64 156 21 Total parent organisation share in associates 188,921 5,058 Xergi A/S, Denmark 50 31,674 454 15,837 227 JSCJS Rindibel, Belarus 29 9,428 653 2,700 187 Emirates Landscape L.L.C., Abu Dhabi 49 - -4,596 - -2,252 EST Kinnisvara, Estonia 49 1,592 232 780 114 Pluss Leadership A/S, Denmark 35 1,304 -305 457 -107 208,695 3,227

Goodwill at end of year 1,518 Amortisation and impairment losses of goodwill Total group share in associates 210,213

-116 3,111

43


DDH DDH Group Parent Organisation 2013 2012 2013 2012

DKK ’000

DKK ’000

DKK ’000

Note 12 Inventories Raw materials and consumables Work in progress Finished goods and goods for resale Prepayments for goods

2,105 2,720 8,030 4,307 104,675 100,960 4,966 3,606 119,776 111,593

Note 13 Contract work in progress Selling price 551,606 522,987 Invoicing on account -573,582 -554,809 21,976 31,822 Included in the balance sheet: Contract work in progress, assets 104,549 86,964 Prepayments received on work in progress, liabilities 126,525 118,786 21,976 31,822

Note 14 Receivables from subsidiaries Due 0-1 year Due after 1 year

Note 15 Other receivables Receivable income tax Recievables from managed forests VAT receivable Other receivables

- - -

DKK ’000

- - 2,400 - 2,400

650 650

- - -

-

- - -

-

- 3,622 1,805 - 192,542 192,542 - 196,164 194,347

4,386 1,939 3,833 5,082 1,055 1,541 8,729 6,522 18,003 15,084

300 - - - 300

-

Note 16 Deferred tax Deferred tax is incumbent on the following items: Intangible assets -5,115 -10,733 -2,979 -3,919 Property, plant and equipment 21,444 6,885 7,632 -1,528 Inventories -433 - -652 Contract work in progress 43,239 41,894 - Receivables -1,225 -2,969 -6 -266 Provisions -628 -870 -165 -313 Liabilities -3,209 -3,380 -373 -411 Tax loss carryforward -36,525 -26,328 -11,899 -14,963 17,548 4,499 -8,442 -21,400 Recognised in the balance sheet: Deferred tax assets - - 8,442 21,400 Deferred tax liabilities 17,548 4,499 - 17,548 4,499 -8,442 -21,400 Deferred tax is not expected to be used until more than one year from the balance sheet date

44


2013 2012 2013 2012

Note 17 Contributed capital

DDH DDH Group Parent Organisation DKK ’000

DKK ’000

DKK ’000

Changes in contributed capital over the past five years: Contributed capital at beginning of year 2009 Additions 2009 Contributed capital at end of year 2013

DKK ’000

300 49,700 50,000

Note 18 Minority interests Balance at beginning of year 18,285 19,123 - Share of profit/loss for the year 860 814 - Acquisitions -706 -1,652 - Balance at end of year 18,439 18,285 - -

Note 19 Other provisions

Balance at beginning of year Translation adjustment Liabilities paid during the year Provisions for the year Provisions for the year, reversed Balance at end of year

3,657 5,627 1,250 2,314 - 49 - - -1,602 - 1,693 1,377 - -2,463 -1,794 -500 -1,064 2,887 3,657 750 1,250

Expected time of maturity for liabilities: 0-1 year 2,887 2,757 750 1,250 More than 1 year - 900 - 2,887 3,657 750 1,250 Provisions for claims and complaints

2,887 3,657 2,887 3,657

750 1,250 750 1,250

Note 20 Mortgage debt: Long-term debt 0-1 year 3,340 55 2,664 55 1-5 year 21,343 13,233 17,800 8,448 More than 5 years 173,236 180,047 158,611 172,750 197,919 193,335 179,075 181,253 Debt to employees with respect to bonds: 0-1 year 6,579 5,985 4,574 4,822 1-5 year 5,804 12,397 4,741 9,316 12,383 18,382 9,315 14,138 Other long-term debt: 0-1 year 2,749 6,160 - 1-5 year 4,180 9,680 - More than 5 years - 7 - 6,929 15,847 - Recognised in the balance sheet: Long-term debt 204,563 215,364 181,152 190,514 Short-term debt 12,668 12,200 7,238 4,877 217,231 227,564 188,390 195,391

Note 21 Other debt Debt to managed forests Payroll-related items payable VAT payable Payable relating to distribution for association purposes Other payable amounts

26,892 24,300 - 102,568 87,902 - 29,069 26,797 250 356 682 717 682 717 4,682 18,395 2,128 2,282 163,893 158,111 3,060 3,355

45


Note 22 Contingent liabilities and security

Security Land and buildings at a carrying amount of DKK 309.7 million as at 31.12.2013 have been provided as security for the Group’s mortgage debt of DKK 186.7 million. Contingent liabilities The Group has undertaken rent and lease obligations with terms of between 1 month and 13 years. The current annual rent is DKK 32.3 million, of which subsidiaries’ commitments towards DDH account for DKK 5.5 million. The Group’s credit institutions and insurance companies have issued work guarantees of DKK 76.5 million for work in progress. DDH has issued guarantees of DKK 57.6 million to financing institutions and customers. The Group has entered into a purchase agreement (put and call option) with NEFCO. According to the agreement, the Group is entitled to buy 51% of NEFCO’s shares in JSCJS Rindibel at the end of 2016 at a price which is fixed as the price NEFCO has paid for the shares and with addition of an annual accumulated interest rate of 15%. The Group is obliged to buy 51% of NEFCO’s shares at the end of 2018 at a price which is fixed as the net asset value of the shares with addition of four times the average EBITDA in JSCJS Rindibil in the two preceding years. The Group’s Danish companies participate in a Danish joint taxation arrangement with Dalgasgroup A/S serving as the administration company. The Group’s Danish companies therefore have secondary liability from the financial year 2013 for income taxes etc. for the jointly taxed companies, and from 1 July 2012 also secondary liability for obligations, if any, relating to the withholding of taxes on interest, royalties and dividend for these companies. In both cases, however, secondary liability cannot exceed an amount equalling the share of capital held by the Danish companies which are owned by DDH as the ultimate parent. DDH does not participate in this Danish joint taxation arrangement, being an association with the status of a business foundation.

Note 23 Related parties

Pending court cases In the opinion of Management, any negative outcomes of pending legal cases will not have any material influence on the Group’s financial position.

DDH’s related parties comprise:

Controlling influence Committee of Representatives, Executive Committee and Management. Trading with related parties with a controlling influence primarily takes place within forest and landscape activities and is conducted on market terms.

Other related parties Companies controlled by DDH. All transactions with other related parties take place on market terms.

DDH Group

2013 2012

DKK ’000

DKK ’000

Note 24 Working capital changes Change in inventories -8,183 10,919 Change in receivables 21,872 -91,419 Change in trade payables and other debt -16,910 24,703 -3,221 -55,797 Note 25 Cash and cash equivalents Cash in hand 6,132 9,493 Bank debt -214,765 -286,180 -208,633 -276,687

46


Note 26 Accounting policies The annual report for the DDH Group (Det danske Hedeselskab) for 2013 is presented in accordance with the provisions of the Danish Financial Statements Act for large enterprises in reporting class C. The financial statements are presented on the basis of the same accounting policies as the previous year. Changes in accounting estimates Profit for the year and equity have been affected positively by DKK 534k. The impact is due to a change in estimated deferred tax as a result of the reduction in the tax rate over the next three years. Basis of recognition and measurement Assets are recognised in the balance sheet when, as a result of a previous event, it is probable that future economic benefits will flow to the Group, and the value of such assets can be reliably measured. Liabilities are recognised in the balance sheet when, as a result of a previous event, the Group has a legal or constructive obligation and it is probable that future economic benefits will be flow out of the Group, and the value of such liabilities can be reliably measured. On initial recognition, assets and liabilities are measured at cost. Assets and liabilities are subsequently measured as described for each individual financial item below. When carrying out recognition and measurement, foreseeable gains, losses and risks that arise prior to the presentation of the annual report and which confirm or invalidate affairs and conditions that existed on the balance sheet date are taken into account. Income is recognised in the income statement as and when earned, including value adjustments of financial assets and liabilities, which are measured at fair value. Furthermore, costs are recognised that are defrayed in order to achieve the year’s earnings, including amortisation, depreciation, impairment losses and provisions, as well as reversals as a consequence of revised accounting estimates of amounts that have previously been recognised in the income statement. Consolidated financial statements The consolidated financial statements include the Parent Organisation and its subsidiaries in which DDH directly or indirectly has the majority of the voting rights. Enterprises that are not subsidi­aries, but in which DDH and its subsidiaries hold equity interests that entitle them to hold between 20% and 50% of the voting rights or to exercise significant influence, are regarded as a ­ ssociates. Consolidation principles The consolidated financial statements are based

upon the financial statements of DDH and its subsidiaries by combining financial statement items of a uniform nature. Consolidation involves the elimination of intragroup income and expenses, intra-group accounts and dividends, as well as realised and unrealised profits and losses incurred in transactions between the consolidated companies. The financial statements that are used for consolidation are prepared in accordance with the Group’s accounting policies. Minority interests In the consolidated financial statements the subsidiaries’ financial statement items are recognised 100%. The minority interests’ proportionate share of the subsidiaries’ profit or loss and equity is adjusted every year and recognised as a separate item in the income statement and balance sheet. Business combinations Newly acquired or newly established companies are recognised in the consolidated financial statements from the date of acquisition or date of establishment, respectively. Companies that have been sold or liquidated are recognised in the consolidated income statement until the date of sale or date of liquidation, respectively. Comparative figures are not adjusted for newly acquired, sold or liquidated companies. When acquiring new companies, the acquisition method is used, according to which the newly acquired companies’ identifiable assets and liabilities are measured at fair value on the date of acquisition. Provisions are made for costs concerning restructurings in the acquired company in connection with acquisition. The tax effect of the revaluations carried out is taken into account. Positive differences (goodwill) between the cost of the acquired equity interest and the fair value of the acquired assets and liabilities are recognised under intangible assets and are amortised systematically through the income statement following an individual assessment of the asset’s useful life, although the maximum period is 20 years. Negative differences (negative goodwill), which correspond to the expected unfavourable development in the companies in question, are recognised in the balance sheet under deferred income and are recognised in the income statement as and when the unfavourable development is realised. Profit or loss on fixed asset divestments Profit or loss on the divestment or liquidation of subsidiaries is calculated as the difference between the selling price or liquidation price and the carrying amount of the net assets on the date of divestment or liquidation, inclusive of non-amortised goodwill and expected costs associated with sale or liquidation.

Foreign currency translation On initial recognition, transactions in foreign currency are translated using the exchange rate on the date of transaction. Exchange rate differences which arise between the exchange rate on the date of transaction and the date of payment are recognised in the income statement under financial income/ expenses. Receivables, debts and other monetary items denominated in foreign currency which have not been settled on the balance sheet date are translated at the official rates of exchange on the balance sheet date. The difference between the exchange rate on the balance sheet date and the exchange rate on the date of origin of the relevant receivable or debt or date of recognition thereof in the latest financial statements is recognised in the income statement as a financial income or a financial expense. Intangible assets, property, plant and equipment, inventories and other non-monetary assets which have been purchased in foreign currency are translated at historical exchange rates. When recognising foreign subsidiaries and associates which are independent units, their income statements are translated into Danish kroner using periodic average exchange rates that do not deviate materially from the exchange rates on the transaction date. The balance sheet items are translated using exchange rates on the balance sheet date. Exchange rate differences arising out of the translation of foreign subsidiaries’ equity at the beginning of the year at the balance sheet date exchange rates as well as out of the translation of income statements from average rates to the exchange rates at the balance sheet date are recognised directly in equity. Exchange rate adjustments of balances with independent foreign subsidiaries that are regarded as being part of the total investment in the subsidiary are recognised directly in equity. Derivative financial instruments Derivative financial instruments are initially recognised in the balance sheet at cost and subsequently measured at fair value. Positive and negative fair values of derivative financial instruments are included in other receivables and other debt, respectively. Changes in fair value of derivative financial instruments which are classified as and qualify for hedging of the fair value of a recognised asset or liability are recognised in the income statement along with changes in the value of the hedged asset or hedged liability. Changes in fair value of derivative financial instruments which are classified as and qualify for hedging of future transactions are recognised directly in equity. When the hedged transactions are realised, the accumulated changes are recognised as part of the cost of the financial statement items in question.

47


Income Statement

Balance Sheet

Revenue Sales of finished goods and goods for resale are recognised in the income statement when delivery and transfer of risk to the purchaser have taken place, which corresponds to the time of invoicing. Revenue is recognised exclusive VAT, taxes and discounts in connection with the sale and is measured at the selling price of the specified consideration. Services and consultancy services are recognised in revenue as and when the services are performed, whereby revenue corresponds to the selling price of the work carried out during the year (percentage-ofcompletion method).

Intangible assets Goodwill and premium on subsidiaries are amortised over their expected useful life, which is determined individually and on the basis of Management’s experience. Clearly defined and identifiable development projects for which the technical rate of utilisation, sufficient resources and a potential future market or development opportunity in the enterprise can be demonstrated and where the intention is to manufacture, market or apply the product or process in question, are recognised as intangible assets provided that the cost can be reliably calculated and that there is a sufficient degree of certainty that future earnings can cover manufacturing, selling and administrative costs in addition to the development costs. Other development costs are recognised in the income statement as and when incurred. Capitalised development costs are measured at cost less accumulated amortisation and impairment losses. The cost of development projects comprises costs, including salaries and amortisation, which are directly and indirectly attributable to development projects. Acquired intellectual property rights in the form of patents and licences, including software, are measured at cost less accumulated amortisation. Amortisation is carried out applying the straightline-method over the expected useful life of the asset based on the following assessment of the assets’ expected useful lives or remaining duration of a patent or remaining term of an agreement: Goodwill and premium on subsidiaries 5-20 years Development projects 5-20 years Patents remaining duration, but not more than 20 years Licences term of agreement, but not more than 20 years Software 3-8 years

Other external expenses Other external expenses include direct and indirect expenses incurred to achieve revenue. Other operating income and expenses Other operating income and other operating expenses contain financial statement items of a secondary nature in relation to the main activities of the Group. Profit/loss from investments in subsidiaries and associates The pro-rata share of the individual subsidiaries’ and associates’ profit or loss after tax following full elimination of intra-group gains/losses and deduction of amortisation on goodwill is recognised in the Parent Organisation’s income statement. Financial income and expenses Financial income and financial expenses include interest, gains and losses concerning securities, debt and transactions in foreign currency, amortisation of financial assets and liabilities, as well as tax surcharge and tax relief under the Danish Tax Prepayment Scheme etc. Tax As a consequence of its status as a commercial foundation, DDH is not jointly taxed with its subsidiaries. However, its subsidiaries are subject to the rules concerning compulsory joint taxation of Danish subsidiaries. Dalgasgroup A/S is the administration company for joint taxation and thus makes all resulting payments of corporation tax to the tax authorities. The tax on profit/loss for the year, which consists of the year’s current tax and changes in deferred tax – including that resulting from changes to tax rates – is recognised in the income statement by the portion attributable to the year’s profit/loss, and entered directly against equity by the portion attributable to items taken directly to equity.

48

Goodwill is amortised over a maximum period of 20 years. The period of amortisation is longest for strategically acquired enterprises with a strong market position and a long-term earnings profile. The period of amortisation for capitalised development costs is usually 5 years, but in some cases it may be up to 20 years provided that the longer period of amortisation is deemed to be a better reflection of the Group’s benefit from the developed product or developed process. Intangible assets are written down to the the lower of recoverable amount and carrying amount. Each asset or group of assets is tested for impairment every year. Property, plant and equipment On initial recognition, land, buildings and forests

are measured at cost. The cost includes the acquisition cost and costs directly associated with the acquisition until the time at which the asset is ready to be used. For self-manufactured assets the cost comprises direct and indirect costs of materials, subsuppliers and wages. For assets held under finance leases the cost is the lower of the asset’s fair value and present value of future lease payments. Finance costs for loans in the manufacturing or installation period are recognised in the cost of capital expenditure for buildings. For forests, regular revaluation is carried out at calculated fair value. An annual assessment of the value of the forests is carried out. If this value deviates significantly from the public land assessment value, the estimated value is used as fair value. Operating buildings, plant, machinery and other fixtures and fittings, tools and equipment are measured at cost plus revaluation and less accumulated depreciation and impairment losses. The cost is based on the acquisition cost and direct costs associated with the acquisition. The basis of depreciation is cost less expected residual value at the end of the useful life of the asset. Depreciation is carried out in accordance with the straight-line-method over the expected useful life of the asset in question based on the following assessment of the assets’ expected useful lives: Operating buildings 30 years Other buildings 50 years Plant and machinery 5 - 8 years Landfill gas plants 3 - 25 years Other fixtures and fittings, tools and equipment 3 - 8 years Property, plant and equipment are written down to the lower of recoverable amount and carrying amount. Each asset or group of assets is tested for impairment every year. Profit or loss on the disposal of property, plant and equipment is calculated as the difference between the selling price less selling costs and the carrying amount at the time of sale. Profit or loss is recognised in the income statement under other operating income/expenses for the portion that is associated with non-depreciable land, buildings and forests. Profit or loss concerning other property, plant and equipment is recognised in the income statement under depreciation and impairment losses. Fixed asset investments Investments in subsidiaries and associates are measured according to the equity method at the pro-rata share of the companies’ equity less unrealised intra-group profit. The Parent Organisation’s share of the companies’ results following elimination of unrealised intra-group profits or losses and plus or less goodwill or negative goodwill is recognised in the income statement.


In connection with the distribution of profits, net revaluation of investments in associates and subsidiaries is transferred to the reserve for net revaluation according to the equity method to the extent that the carrying amount exceeds cost. When acquiring equity interests in subsidiaries and associates, the acquisition method is used, cf. description above under consolidated business combinations. Other investments are measured at a calculated fair value corresponding to the equity value of the shares at the end of the preceding financial year. Changes in fair value are recognised in the income statement under financial income or expenses.

Finance costs concerning contracts are not included in the value of work in progress. Costs in connection with sales and tendering work when securing contracts are expensed in the income statement under other external expenses in the financial year in which they are incurred. Invoicing on account is offset against the value of the individual contract and the net amount is recognised as an asset to the extent that it does not exceed the capitalised amount. In the event that invoicing on account exceeds the value of the capitalised amount, the net amount is recognised under prepayments from customers under shortterm debt.

Inventories Raw materials, consumables and goods for resale are measured at the lower of cost, calculated according to the FIFO method (first in, first out), and net realisable value. Cost comprises the acquisition cost plus delivery costs. Work in progress and manufactured finished goods are stated at the lower of calculated cost comprising raw materials, direct wage costs and additions for indirect production costs and net realisable value. Indirect production costs comprise indirect materials and wages, costs for maintenance and depreciation and impairment losses of the machinery, buildings and equipment used in the production process as well as costs for production administration and management. Finance costs are not included in cost. The net realisable value of inventories is calculated as the expected selling price less costs of completion and costs to be incurred to effect sale.

Prepayments Prepayments comprise costs incurred concerning subsequent financial years. Prepayments are measured at cost.

Receivables Receivables are measured at amortised cost, which usually corresponds to nominal value, less writedowns for bad and doubtful debts. Contract work in progress Contract work in progress is measured at the selling price of the work carried out less invoicing on account. The selling price is measured on the basis of the stage of completion of the order concerned on the balance sheet date and the total expected income from the individual project in progress. The stage of completion for each order is normally calculated as the ratio of resources consumed to total budgeted consumption of resources. For certain orders where the consumption of resources cannot be used as a basis, the ratio of completed sub-activities to total sub-activities for the order in question is used. In the event that the selling price of a contract cannot be calculated reliably, the selling price is measured at the lower of costs incurred and net realisable value.

Corporation tax and deferred tax Current tax payable and current tax receivable are recognised in the balance sheet as calculated tax on the year’s taxable income adjusted for tax on previous years’ taxable income and for prepaid tax. Deferred tax is calculated in accordance with the balance-sheet liability method on all temporary differences between the carrying amount and the tax-based value of assets and liabilities, where the tax base of assets is calculated on the basis of the planned use of the asset concerned. Deferred tax assets, including the tax base of tax loss carry-forwards, are recognised at the value at which they are expected to be used, either as an elimination against tax on future earnings or as a set-off against deferred tax liabilities. Deferred tax is calculated on the basis of the tax regulations and rates that according to the legislation on the balance sheet date will be applicable when the deferred tax is expected to result in current tax. Changes in deferred tax as a result of changes in tax rates are recognised in the income statement. Provisions Provisions are recognised when, as a consequence of a previous event, the Group has a legal or constructive obligation, and it is probable that discharging this obligation will result in an outflow from the Group’s financial resources. Other provisions are recognised and measured as the best estimate of the costs which, on the balance sheet date, are necessary to discharge any obligations. Financial liabilities At the date of borrowing, debts to mortgage credit institutions and financial institutions are measured at cost, corresponding to the proceeds received less transaction costs incurred. Subsequently, debts to mortgage credit institutions and financial institutions

are measured at amortised cost. This means that the difference between the proceeds of the loan and the nominal value that is to be repaid is recognised in the income statement over the term of the loan as a financial expense using the effective interest method. Lease commitments Lease commitments relating to assets held under finance leases are recognised in the balance sheet as liabilities other than provisions and, at the time of inception of the lease, measured at the present value of the future lease payments. Subsequent to initial recognition, lease commitments are measured at amortised cost. The difference between present value and nominal amount of the lease payments is recognised in the income statement as a financial expense over the term of the leases. Other debt Other financial liabilities are measured at amortised cost, which usually corresponds to nominal value. Deferred income Deferred income comprises income received to be recognised in subsequent financial years. Deferred income is measured at cost. Cash flow statement The cash flow statement of the Group is prepared according to the indirect method on the basis of the profit or loss for the year. The cash flow statement shows cash flow funds from operating, investing, financing activities and the year’s changes in liquidity as well as cash and cash equivalents at the beginning and the end of the year. A separate cash flow statement for the Parent Organisation has not been drawn up since this is included in the cash flow statement for the Group. Effect on cash flow from the acquisition and disposal of companies is shown separately under cash flow from investing activities. The cash flow statement recognises cash flow concerning acquired companies from the date of acquisition, whilst cash flow concerning companies disposed of is recognised up to the date of sale. Cash flow from operating activities are calculated as the profit/loss for the year adjusted for non-cash operating items and working capital changes. Cash flow from investing activities include the acquisition and disposal of intangible assets, property, plant and equipment and fixed asset investments. Cash flow from financing activities comprise the raising of and instalment on long-term and shortterm debt to financing and credit institutions as well as distributions. Cash and cash equivalents include cash and the portion of short-term debt to credit institutions which forms part of the Group’s ongoing liquidity management.

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Segment information Information is provided on areas of business (Primary segment) and geographical markets (Secondary segment). Segment information is presented in accordance with the Group’s accounting policies and internal economic management. The secondary segment information is provided on the basis of the location of the customers.

Key ratios The key ratios listed under financial highlights are calculated as follows: EBT margin = Company’s profitability = Profit/loss before tax x 100 Revenue Return on capital employed = The return on investment which the company generates in terms of the operating assets =

Profit/loss from ordinary activities with addition of amortisation on goodwill (EBITA) x 100 Operating assets at end of financial year

Solvency ratio = The company’s equity as a percentage of total equity and liabilities =

Equity at end of year x 100 Total equity and liabilities at end of year

Return on equity = The company’s return on the capital that is invested in the company =

50

Profit/loss for the year (after tax) x 100 Average equity of the Parent Organisation

EBITA (Earnings Before Interest, Tax and Amortisation) is defined as the operating profit/loss with the addition of the year’s amortisation of goodwill. Operating assets are total assets less cash and other interest-bearing assets measured at the end of the financial year.


COMMITTEE OF REPRESENTATIVES Honorary Members Chamberlain, Master of the Royal Hunt Oluf Krieger von Lowzow Smallholder Christian Sørensen

Committee of Representatives

31 December 2013

Elected by the members of DDH Farm owner Henrik Bach Estate farmer Jens P. Gadensgaard Farm owner Svend Erik Jakobsen Farm owner Esben Oddershede Landowner Niels Jørgen Bønløkke Forest manager Niels Juhl Bundgaard Jensen Solicitor, landowner Klavs Krieger von Lowzow Chamberlain, Master of the Royal Hunt Hans Helmuth Lüttichau Solicitor, landowner Janus Skak Olufsen Landowner Birger H. Schütte Farm owner Anders Chr. Wegger Member of the Regional Council Aleksander Aagaard Landowner Ulrik I. Bernhoft Chairman of County of Ribe Family Farmers Association Henrik Bertelsen Farm owner Henning Ølgaard Bloch Farm owner Benny Ravn Bonde Land surveyor Peder B. Corneliussen

Forest manager Inge Gillesberg Farm owner Peter Gæmelke Mayor Lars Erik Hornemann Chairman Ib W. Jensen (Vice chairman) Director Jørgen Graulund Jørgensen Farm owner Jørgen Skovdal Larsen Managing director Svend Aage Linde Group managing director Henning Lorentzen Farmer Henrik Petersen Plant cultivation consultant Bjarne Risvig Farmer Knud Strøm Plant cultivation consultant Kim Enemark Landowner Henrik Fabienke Senior consultant, engineer Inge Faldager Master of the Royal Hunt, Landowner Andreas Hastrup Landowner Claus de Neergaard Farm owner Jørn Nordstrøm Professor Jørgen Primdahl Head gamekeeper Kristian Raunkjær Master of the Royal Hunt, Landowner Carl Boisen Thøgersen Director Hans Peter Hjerl Vice director Torben Huss Director Lars Peter Nielsen Farmer Finn-Olaf Pedersen Director Dorrit Vanglo Farmer Lone Andersen CFO Stig Pastwa Director Bolette van Ingen Bro Director Lone Færch Farm owner Henrik Høegh Director Henrik Bindslev

Elected by the Committee of Representatives Chamberlain, Master of the Royal Hunt Frants lensgreve Bernstorff-Gyldensteen Farm owner Arne Frandsen Director Peter Høstgaard-Jensen Director Arent B. Josefsen Director Norbert F. V. Ravnsbæk Chamberlain, Master of the Royal Hunt Steen Reventlow-Mourier Chamberlain, Master of the Royal Hunt, landowner Jørgen Skeel (Chairman) Director Mai Louise Agerskov

Appointed by the Danish Agriculture and Food Council Farm owner Jens Ejner Christensen Farm owner Torben Hansen Farm owner Kurt Mølgård Jørgensen Farmer Niels Kragh

In 2013 DDH’s Annual General Meeting was held in Grenaa. In 2014 DDH’s Committee of Representatives, Executive Committee and other guests will gather for the Annual General Meeting on 28th April in the ceremonial auditorium at the Faculty of Science, Bülowsvej 17, 1870 Frederiksberg, Copenhagen.

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Klostermarken 12 P.O. Box 91 DK-8800 Viborg CVR no. 42344613 Founded on 28 March 1866 Registered office: Viborg

Tel. +45 87 28 11 33 Fax +45 87 28 10 01 hedeselskabet@hedeselskabet.dk www.hedeselskabet.com

April 2014. Photo: Hedeselskabet, Orbicon A/S, Shutterstock, Jacob Jørgensen, JJ Film, Scanpix - Christian Lindgren, Mogens Holmgaard, Naturvidenskabernes Hus - Plotpoint film, Thomas Tholstrup, Xergi A/S, Experimentarium, HedeDanmark a/s, Chr. B. Hvidt - Naturfocus, GHB Landskabsarkitekter, Bert Wiklund, Kontraframe, Chili foto - Claus Haagensen

DDH (Det danske Hedeselskab)

Ddh aarsrapport 2013 uk til web  

AnnualReport,Hedeselskabet,2013

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