Annual Report
2013
Contents group & strategy Foreword
4
Executive and Supervisory Boards
6
The Group’s Financial Highlights
8
Management interview
10
Strategy 3i13
12
Group chart
13
Verdo around the world
14
CSR - focus areas
16
Annual reports Finance
20
Verdo Generation
22
Verdo Renewables
23
Verdo Trading
24
Profit and loss statement
26
Balance sheet
27
Cash flow statement
29
Verdo A/S Verdo is determined to be the greenest, most efficient energy provider in Denmark. Our ambition is to develop the most profitable solutions within production and supply of green energy, at home and abroad. Verdo produces and distributes electricity, water and heat. We also have highly competitive products within telephony and internet, plumbing and sanitation, energy consultancy, alarms and security, plus the production and sale of biomass products in Denmark and the UK. Furthermore, we have subsidiaries in Holland, Norway and the USA. Our approximately 500 employees are responsible for an annual turnover of around DKK 2.4 billion.
2
Annual Report 2013
Over one third of Verdo's turnover is international
Annual Report 2013
3
Foreword
we have succeeded in strengthening the foundations of the business
2013 brought a challenging market for Verdo. Even though the first faint signs of the long-awaited upswing can be discerned, that does not mean that the problems experienced by the energy market have abated. This is also reflected in our results for 2013: We achieved turnover of DKK 2.4 billion, on a par with last year. Earnings before interest, depreciation and amortisation (EBITDA) were DKK 234.4 million, and pre-tax profit was DKK 32.6 million. This was not quite as expected, but is the result of a market generally under pressure, and the fact that many customers in just about all product areas still have problems paying their bills. Given that it was a difficult year, it is therefore a satisfactory result, and we succeeded in strengthening the foundations of the business to enable us to cope even better with what continue to be difficult trading conditions. 2013 was the year in which we continued our investment in green energy. Verdo Trading is working hard to continue being one of the leaders on a number of biomass markets. We have also intensified efforts to ensure professionalism within our value chain, high quality and reliable deliveries. The acquisition of GF Energy (now trading as GF Verdo) in the autumn also meant we consolidated our position as market leader for biomass. Our factories in England and Scotland have built a strong brand and are now perceived as stable suppliers. Consequently, Verdo Renewables achieved significant progress in 2013. We were recognised as Denmark's most efficient electricity grid company and Verdo Water is one of the
4
Annual Report 2013
most efficient drinking water providers in the country. We are delighted with such top placings, which we regard as proof of our focus on the customer. Rationalisation at Verdo Generation and our power stations were given priority - not least in the form of maintenance of our plant and the replacement of a number of district heating pumps that mean a significant increase in capacity and more efficient, eco-friendly operation. Verdo Tele once again enjoyed a good year, with a healthy increase in number of customers. That meant that almost half of all homes in Randers and Hobro are now connected to the internet using fibre optic links from Verdo. After the boom in photovoltaic panels in 2012, Verdo Technical Infrastructure focused to a greater degree on LED techno logy and green heating. Demand for LED lighting has been particularly high from local authorities for a number of new and refurbishment projects for street lighting and traffic lights. We have increased our forecasts for 2014, with better results for all divisions. One of the ways we intend to do so is continued international focus, along with improvements in efficiency and productivity throughout the group. This is also going to be an exciting year with elections for a new General Assembly and Supervisory Board.
gRoup FoRewoRd CHARt
Kim Frimer CEO
søren fischer Chairman of the Board
AnnuAl RepoRt 2013
5
SuperVISory BoArd 2013
Board 2013 After General Assembly and Board elections in 2010, the current Board consists of:
Tom Bøttern Hansen Employee Representative
Bent Hede Board Member
Søren Sørensen Board Member
Pia Maach Møller Board Member
Niels Rasmussen Board Member Jan Holst Employee Representative
Søren Fischer Chairman of the Board
6
Annual Report 2013
supeRVIsoRy BoARd 2013
MAnAgeMent’s RepoRt The Executive and Supervisory Boards considered and adopted the annual report for 1 January - 31 December 2013 for Verdo A/S on 18 March 2014. The annual report is presented in accordance with the Danish Financial Statements Act. In our opinion, the consolidated accounts and annual accounts give a true and fair view of the group’s and company’s assets, liabilities and financial position as at 31 December 2013, and of the result of the group’s and company’s activities and the group’s cash flow for the financial year of 1 January - 31 December 2013.
ejvind Clemmensen Vice Chairman
Henrik gade Brendborg Employee Representative
Arne erikslev Board Member
erik Busk Jensen Board Member
kim frimer CEO Camilla dam Rasmussen Employee Representative
AnnuAl RepoRt 2013
7
The Group’s Financial Highlights
FINANCIAL AND OPERATING DATA
Amounts in TDKK Net turnover Index EBITDA Index Operating profit Index Result of net financials Index Pre-tax profit Index Profit for the year Index
2013
2012
2011
2010
2009
2,405,028
2,429,995
2,283,435
1,547,767
1,386,247
173
175
165
112
100
234,389
258,178
236,400
226,963
174,616
134
148
135
130
100
95,119
119,482
106,155
106,759
80,936
118
148
131
132
100
-62,566
-60,043
-52,896
-64,240
-38,667
162
155
137
166
100
32,553
59,439
53,259
42,519
41,381
79
144
129
103
100
25,062
41,498
50,463
42,345
39,187
64
106
129
108
100
3,353,197
3,310,742
3,334,711
3,121,360
2,982,873
112
111
112
105
100
127,529
144,345
163,618
243,832
273,464
47
53
60
89
100
1,308,599
1,252,319
1,254,335
1,264,745
1,229,197
106
102
102
103
100
Balance sheet Total assets Index Investment in tangible assets Index Equity Index
Liquidity Net cash flow from: Operations
143,894
109,996
250,436
239,691
72,008
-133,174
-86,640
-174,355
-244,622
-270,448
Financing
-38,499
-41,090
372,999
-35,380
158,634
The year's effect on cash flow
-27,779
-17,734
449,080
-40,311
-39,806
Investments
8
Annual Report 2013
The Group’s Financial Highlights
KEY FIGURES
Amounts in TDKK
2013
2012
2011
2010
2009
Gross margin ratio
23.4%
24.4%
23.8%
32.2%
31.2%
9.7%
10.6%
10.4%
14.7%
12.6%
5.5
5.0
5.5
5.9
7.5
EBITDA margin Financial gearing Return on equity Solvency ratio
2.0%
3.3%
4.0%
3.4%
3.3%
39.0%
37.8%
37.6%
40.5%
41.2%
Calculation of key figures Key figures have been calculated according to the recommendations of the Danish Society of Financial Analysts: Gross margin ratio
EBITDA margin
Financial gearing (debt / EBITDA)
Return on equity
Solvency ratio
Gross profit x 100 Net turnover EBITDA x 100 Net turnover Net interest-bearing debt EBITDA Income from ordinary activities after tax x 100 Average equity Equity at year end x 100 Total assets
Definitions: Gross profit is the net turnover with direct expenses deducted. EBITDA is the result before depreciation. Net interest-bearing debt is interest-bearing liabilities with the deduction of interest-bearing assets.
Annual Report 2013
9
Management interview
2013 was a year in which we focused on consolidation. CEO Kim Frimer notes that Verdo delivered a satisfactory operating result in 2013 – a fiscal year in which the main problems were one-off losses on debtors and difficult market conditions. Nevertheless, Verdo achieved earnings before interest, depreciation and amortisation (EBITDA) of DKK 234.4 million, and pre-tax profit of DKK 32.6 million. Verdo worked intensively to further cut costs in 2013 whilst improving productivity. "We cannot pretend that the generally difficult market conditions and loss on debtors affected the business in 2013. But that's the way things are, and we therefore have to work harder to ensure even stronger foundations and to consolidate," comments Frimer. There is no shortage of optimism. Not because Verdo is passively waiting for the upturn, but because we are sticking to a strategy designed to strengthen the business even stronger on the green energy market, where Verdo already has world class expertise. A growing international market The biomass market is undergoing dramatic change. Verdo is engaged nationally and internationally, as seen in the acquisition of GF Energy (now GF Verdo) in Holland, well established in France and Italy. "We're now one of the biggest European distributors of biomass products, and Verdo is a premium brand in a number of countries. We have increased productivity at our biomass plants in England and Scotland along with market share, making us far and away the biggest on the UK market," states Frimer, who professes to be delighted that persistence in the UK is beginning to bear fruit after a few difficult years. Ensuring good prices Being one of the biggest distributors of biomass products in Europe is not a goal in itself. What's more important is that earnings from such activities are a means of ensuring that Verdo remains a large, independent utility company able to provide competitive prices for electricity, water and heat at a time when taxes are pushing prices up significantly. More than one third of Verdo's turnover now stems from international trading, and is expected to grow over the next few years. But that does not mean that Verdo is neglecting its local business. "We don't intend to just generate profit for a number of shareholders. We're here to ensure the most competitive prices possible for
10
Annual Report 2013
our customers for water, heat and electricity. That's something we can best achieve by controlled growth, high quality and efficiency at all levels. Growth will primarily be international, but will also help develop and protect local jobs," stresses Frimer. Best in Denmark Highly tuned utility supply that places Verdo at the very top of the list of Danish power generators is a matter of pride to Frimer, who says of the future: "We run our electricity grid and water supply so efficiently that we consistently rank amongst the best in the country in the annual benchmarking. That's due primarily to our strong competences within this sector and means that we will continue to maintain our market position." Meanwhile, Verdo continues to experience a lot of interest in green district heating and fast fibre broadband, products that proved highly attractive to new customers in 2013. "The fibre broadband market in particular is expected to grow over the next few years," predicts Frimer. "Consumer behaviour changed radically through 2013, and I expect that the market will tip even further to the advantage of fast fibre broadband in 2014." Core competences and more focus Apart from continued international focus, 2014 will be about creating profitable growth within all areas, prioritising customer service highly and ensuring that Verdo is perceived as the guarantor of quality, first class products and efficiency. These are all things that can be achieved by more focus. "We will generally strive to become even better at what we are good at. We see good opportunities in Verdo Technical Infrastructure to increase our financial strength and improve the bottom line by strengthening our core competences. Verdo Generation will look increasingly at opportunities on the electricity market, particularly within trading electricity hour-by-hour. These are things we already work with, but which we need to be even better at exploiting moving forward," concludes Frimer.
Management interview
Verdo is a premium brand in a number of countries
Annual Report 2013
11
Strategy 3i13
Verdo wants to be Denmark's greenest energy company
Strategy visions Verdo has a comprehensive strategy, vision, mission and a range of values which eloquently express precisely what we stand and work for. Strategy 3i13 Our strategic objective for 2010-2013 was to achieve total turnover of DKK 3 billion, with operating profit of DKK 300 million before interest, taxation, depreciation and amortisation (EBITDA). Such ambitions made high demands of the group's organisation. Verdo shall continue to be a profitable company within the Danish energy sector, able to create results on competitive terms. Deploying values We believe it is important that all our employees are aware of Verdo's objectives and strategy - and to get there, it is essential that we all pull together. That's why Verdo is a value-oriented enterprise, in which we work together to reach our common goal and act responsibly. Values are essential to the choices we make. That's why we make an extra effort to ensure that our employees are totally familiar with them, so that they naturally become a part of the way we work. In recent years, we have worked a lot with the values of efficiency and customer focus. These are both key reasons why customers choose Verdo as their preferred provider today, tomorrow and in the future.
12
Annual Report 2013
vision We create green energy
Mission We will create profitable organic growth, through:
• Satisfied customers • Sales and productivity • Engaged employees Values At Verdo we conduct ourselves responsibly according to the values of:
• Respect and trust • Customer focus • Efficiency • Courage • Loyalty
Telecom
Verdo Tele A/S
renewables
Group chart
Verdo Renewables Ltd.:
Verdo Energy GmbH
TRADING
Verdo Energy A/S MJ Commodities A/S Carbon Partners AS Norway
Carbon Partners Inc. USA
GF Energy B.V.
Supply
verdo A/S
Verdo Randers Electricity Network A/S
Verdo Randers Electricity Utilities A/S
Verdo Hillerød Electricity Network A/S
Verdo Hillerød Electricity Utilities A/S
Central Jutland Electricity Supply A/S 74% Verdo Water Holding A/S
Verdo Water A/S
PRODUCTION
Verdo Heating A/S
CONTRACTS
verdo S/I
Verdo Generation A/S Verdo Hydrogen A/S
Verdo Technical Infrastructure A/S
Annual Report 2013
13
VeRdo ARound tHe woRld
verdo
did you know that:
around the world
• verdo has subsidiaries in 7 countries.
verdo has focused for several years on the fact that
• more than a third of the
international activities can strengthen and secure the
verdo group's sales are gen-
future of the company. we will exploit our expertise
erated internationally.
and competence nationally and internationally. do-
• verdo has increased the num-
ing so is essential to creating growth, jobs and
ber of foreign employees from 2
competitive prices in the future.
to 91 since 2007. around 18% of group employees are based outside the borders of denmark.
Production of high quality biomass products Verdo Renewables Verdo Renewables embodies our aim of being a green business that covers the entire value chain. Our plants in England and Scotland provide us with experience in the production and supply of high quality biomass products, creating sales in the UK and exports to the rest of Europe. Verdo Renewables has established a strong brand for wood pellets and briquettes and is the market leader on the British market. employees: 75 production, distribution and sale of wood pellets and briquettes, primarily in the uk.
14
AnnuAl RepoRt 2013
VeRdo ARound tHe woRld
turnover by market
International sales
Verdo operates on several foreign markets, and is a premium brand in a number of European countries. It therefore follows that Europe is where we generate most of our international sales.
Verdo is engaged nationally and internationally. Group sales outside Denmark have grown strongly since 2009.
sAles outsIde denMARK
BReAKdown By tuRnoVeR (tdKK)
UK 14%
2,000,000
Oceania 2.2% USA 3.5% Asia 3.2% Middle East 0.3%
1,500,000 1,000,000 500,000
Africa 13.3% 2009
2010
2011
2012
2013
Europe 63.5% Denmark
global network and partnerships Carbon partners Carbon Partners cements our position on the global market via its niche. The Carbon Partners logistics setup and network provides us with access to a number of industrial customers in Europe for sales of bioproducts. It also opens the door for new partnerships and acquisitions. employees: 10 sales and supply of raw materials such as special coals and coke for the metalworking industries in the usa, europe and middle east.
International
Synergy and opportunities for expansion gF Verdo We acquired GF Energy (now GF Verdo) of Holland in the autumn, consolidating our position as the European market leader for wood pellets. GF Verdo provides the opportunity to expand for Verdo. Consolidated purchasing of wood pellets means significantly bigger volumes purchased, and access to more suppliers. Consolidated marketing and logistics means access to new markets and customers. employees: 6 purchasing, warehousing and distribution of wood pellets for heating homes, primarily in germany, italy, holland and france.
AnnuAl RepoRt 2013
15
CSR - focus areas
We take responsibility for the climate, environment, our employees and the community at Verdo. We do so by working with sustainable CSR to ensure that it benefits our business and the world we are part of. For example: when we incinerate climate-friendly biomass in our CHP plants, our customers get green heat and electri city, whilst Verdo increases its earnings. The environment wins, the customers win and Verdo wins as a result. Our CSR strategy is deeply rooted in the business. Its principles are based on our vision, mission and values - the cornerstones of Verdo. These are the principles that form the basis of our CSR strategy and the objectives on the following pages.
Based on UN principles Verdo's CSR policy uses the UN’s Global Compact principles as a benchmark, which is based on international conventions within human rights, labour, environment and anti-corruption. Verdo has no written policy for human rights as yet, but supports the Global Compact. The essence of the Global Compact are the following 10 principles for social responsibility:
16
Annual Report 2013
Verdo’s CSR principles ¬ We will be Denmark’s greenest energy company. ¬ We strive to promote green solutions. ¬ We will always choose green solutions if they are not to the detriment of Verdo. ¬ We choose green solutions which benefit the environment, the world around us and Verdo. ¬ We will launch initiatives which boost the loyalty of our employees. ¬ We will launch initiatives which increase the safety of our employees. ¬ We support sport and culture, and provide sponsorships which promote Verdo.
Human rights 1. The company should support and respect the protection of internationally proclaimed human rights 2. The company should ensure that it is not complicit in human rights abuses. Labour 3. The company should uphold the freedom of association and the effective recognition of the right to collective bargaining 4. The company should support the elimination of all forms of forced and compulsory labour 5. The company should support the effective abolition of child labour 6. The company should eliminate discrimination in respect of employment and occupation Environment 7. The company should support a precautionary approach to environmental challenges 8. The company should undertake initiatives to promote greater environmental responsibility 9. The company should encourage the development and diffusion of environmentally friendly technologies. Anti-corruption 10. The company should work against corruption in all its forms, including extortion and bribery.
CSR - focus areas
We see diversity in the workplace as a strength we can translate into results at Verdo. We cultivate diversity by taking in candidates for trial periods and practical experience, and set up places for apprentices and trainees every year. We believe that this provides potential employees with the chance to try their hand at tackling the challenges of work, or obtaining qualifications. That increases diversity within the group and contributes to the community of which we and our business are a part. In line with the new legislation, Verdo has set targets for the number of women on Verdo's Supervisory Board. Our aim is to keep at least 2 women on the board out of 12 members in all at the next election in 2014, corresponding to 16.67%. We also work proactively with diversity at executive management level. We continuously focus on promoting diversity amongst our managers to ensure they all have equal opportunities.
Verdo's principles for diversity of management Our efforts to ensure diversity at management level are based on the following principles: • W e want the under-represented sex (female personnel at this time) to perceive that they have the same career and management opportunities as their counterparts. • We endeavour to increase the number of female executives at all management levels in the group. - Level 3 (directors) from 15% to 25% by 2018. - Level 2 (managers) from 14% to 20% by 2018. - Level 1 (managers/team leaders) from 3% to 10% by 2015.
Annual Report 2013
17
CSR - focus areas
We measure our results within CSR. We measure the following specific aspects for CSR reporting in the annual accounts:
CO2 and NOx emissions We persistently strive to keep our CO2 and NOx emissions at a low level. Our CO2 account is vastly improved by burning biomass instead of coal, and new technology and efficient operation keep NOx emissions at a similarly low level. CO2 emissions in 2013 were 4,176 tons, whilst NOx emissions were 306,890 kg. CO2 and NOx emissions were a little lower in 2012, but we are now down to such a low level that even small production fluctuations and technical events will make a difference, as reflected in the difference between the 2012 and 2013 figures.
Using wood pellets as fuel Biofuels such as wood pellets and chips are CO2-neutral and are therefore very important to Verdo. For instance, we buy and chip exhausted rubber trees in Ghana that have been felled, sail the chips to Denmark and use them as fuel at our CHP plant in Randers. That makes electricity and heat production greener. We used 206,838 tons of wood chips in 2013. Scan the QR code at the foot of the page to see a video clip from Ghana.
Energy savings Energy companies are obliged to realise energy savings by the end-users. Verdo ensures that energy savings achieved are reported annually to the Danish Energy Agency. Our energy savings are realised through Verdo Energy Consultancy, which specialises in finding savings for private customers, public sector organisations and private sector businesses. We have also achieved savings within our own grid, totalling 21,276,000 kWh in 2013. Play
Occupational accidents We place a lot of emphasis at Verdo on reducing the number of occupational accidents, e.g. by registering potentially hazardous incidents and preventive activities. We also constantly monitor working environment
Play the film and see how Verdo imports and utilises exhausted rubber plantation trees from Ghana.
18
Annual Report 2013
quality via workplace evaluations. The Danish Verdo subsidiaries registered six occupational accidents and 70 near-accidents in 2013. Accidents in 2013 led to a total of 786 days of sick leave.
Work training and further education Verdo believes strongly in supporting the local community, and provides practical experience and work training places throughout the group. We had 16 people in work training in 2013, with a further 6 in practical experience or student jobs. We find such schemes help us to develop and bring the latest knowledge into the organisation. Our apprenticeship committee is responsible for ensuring that we fulfil the government's target of 95% of school leavers in 2015 taking at least one further education course. Verdo has 13 apprentices/students employed in 2012, under-18s and adults. We had 17 apprentices/students as at the end of 2013.
We publish our results We publish a number of measurable CSR activities in the annual accounts, along with the group's other key figures. That clearly indicates that there is a relationship between CSR and good business practices at Verdo. Several of our CSR programmes are in the public interest, and are promoted via the media. Others are promoted via internal communication such as the intranet, creating internal pride amongst the workforce.
CSR - focus areas
Results in 2013 Measurement parameter CO2 emissions
(1)
NOx emissions(2) Use of wood chips(2) Kilowatt hours produced by green energy Energy savings Electric cars Occupational accidents/near accidents
2013
2012
4,176 tonnes
801 tonnes
306,890 kg
288,476 kg
206,838 tonnes
208,991 tonnes
176,368,371 kWh
176,104,873 kWh
21,276,000 kWh
21,555,000 kWh
3
3
6/70
10/37
Employee Satisfaction
Verdo measures sa Response by %: 95 (3) Go-getters: 80 tisfaction levels every two years. There are Relationships: 84 therefore no new fig- Commitment: 89 ures for 2013. A range of measures have been implemented in 2013 based on survey responses from 2012.
Women in management
Supervisory Board Supervisory Board 16 % 16 % Executive Board: 12 % Executive Board: 12 %
Apprentices
Young apprentices: 12 Adult apprentices: 5
Young apprentices: 9 Adult apprentices: 4
Students (office and technical designer)
4
1
Students studying (practical experience etc.)
6
1
Employees given light duties and flexible working
9
9
16
12
Employees in job training
(1) The CO2 figures are from the CHP plant and peak load management centres in Randers. (2) The NOx and wood chip figures are for the CHP plant in Randers only. (3) Points awarded for go-getters, relationships and commitment are on a scale of 0 – 100. The figures for go-getters (80) can be compared with figures from the EEI (European Employee Index) and comparable businesses at 70.
Annual Report 2013
19
Finance
we expect that the new finance and resource management system will cut group costs in the future
20
Annual Report 2013
FInAnCe
Verdo Group turnover was on a par with the previous year for the first time in what was a mixed year for the group. Difficult trading conditions included private and industrial consumers struggling to pay their bills despite the first signs of an upturn in the economy. nevertheless, the group reduced long-term debt by nearly DKK 40 million during the year, equity ratio rose to 39.0 and pre-tax profits were DKK 32.6 million. Centralisation of internal processes within the group, including invoicing and reminders, saved costs and the Work Smarter business project – designed to streamline working processes and support business-critical processes – saw implementation of a new ERP system, another contribution to cutting group costs. dataHub heralds composite billing The startup of the national ‘DataHub’ programme (a common database of all electricity meter readings) on 1 march 2013 was one of the biggest challenges for the industry as a whole. DataHub provides consumers with online access to their own consumption data and self-service options. Grid companies will bill electricity providers direct, and consumers will receive a composite bill for grid use and consumption – the first step towards a ‘wholesale’ model. secure supply – the best kind Verdo Supply aims to demonstrate how green growth, supply reliability and efficiency can go hand in hand. And we are well on the way to doing so. We have completed a programme of laying electricity supply cables in the ground in Randers, Hobro and Hillerød, making supply invulnerable to the worst nature could throw at us during the winter storms. 2013 saw the introduction of new legislation that will put all 36 supply licences out to tender in the future. Verdo in Randers and Hillerød will not be affected until 2015 and 2017 respectively.
Our commercial activities were strengthened on 1 January 2014 with the acquisition of Central Jutland Electricity Supply, a nationwide provider of electricity trading and consultancy. We expect valuable synergies within the expanded division, and that their skills will be an added asset to the Vedro Group as a whole. Verdo Tele achieved market penetration of almost 50% of households in Randers and Hobro in 2013. The general market trends confirm that fibre technology is the fastest growing in Denmark for internet connection. The product portfolio has been improved along with productivity – the latter boosted by enthusiasm and commitment from the employees resulting in optimised procedures and processes. More online marketing will support the sales campaigns for 2014 that will focus on the areas where fibre has already been laid in the ground. Verdo Technical Infrastructure focused heavily on better relations with existing customers, and winning new customers within certain sectors. LED technology was much in demand in 2013, with major contracts for the replacement of traffic, street and park lighting, not to mention for private homeowners. Photovoltaic panel installations ordered during the boom year of 2012 – when government subsidies applied – continued into 2013 and there was growing interest in wood pellet stokers.
kenneth R. h. Jeppesen cfo verdo a/s
The economic upturn increased demand for green energy solutions in the form of biofuels, photovoltaic cells and heat pumps and we expect demand to continue rising. We also expect more work within service and maintenance of electrical, plumbing, ventilation/climate control, alarms, security and surveillance. Detailed summaries are provided below for Verdo Generation, Trading and Renewables.
AnnuAl RepoRt 2013
21
Verdo Generation
Verdo is determined to be the greenest, most efficient energy provider in Denmark, which is why we now exclusively burn biofuels in our CHP plant at Randers. We do so for the sake of the future, and because it makes financial sense. Concurrent production of heat and electricity is green common sense, because it makes maximum use of the fuel burned. And given the location of the plant on the harbour, we ensure the most efficient transport of the 240,000 tons of biomass we use every year – to the benefit of our finances and the environment. Henrik Bøgh Nielsen Divisional Director Verdo Generation
modernisation and efficiency 2013 was a highly satisfactory year for our CHP plants in Randers and Grenaa with a very high degree of availa bility. The Randers plant is 100% CO2 neutral (with the exception of a few hours), but there are still problems in Grenaa however, due largely to fluctuating straw quality including stones and even machinery parts in the bales. The bale conveyor system was refurbished to improve flow and we will be joining the local authority’s strategy plan for energy supply in 2014, but no permanent solution has yet been found for the plant after 2017. The 30 year-old district heating pumps were replaced in Randers by 12 eco-friendly, highly efficient pumps, cutting costs and boosting capacity. The last of the reheaters was also replaced in the Randers CHP plant, reducing running costs. Further measures to continue
Verdo Generation Amounts in TDKK
2013
2012
417,429
417,029
EBITDA
71,682
91,366
Operating profit or loss
15,794
33,832
Investments
26,006
23,642
Equity
70.500
35.938
Turnover
22
Annual Report 2013
rationalisation and growth will be implemented in 2014. Our immediate future is under pressure from political moves designed to develop the Danish and European energy system. To maintain high efficiency, we will optimise production on the Intraday market for that element of electricity production generated any given hour during the day of operation.
Verdo renewables
Verdo Renewables specialises in the production and distribution of environment-friendly, sustainable biomass-based fuels in the UK, with wood pellet and briquette plants in Scotland and England respectively. Head office is near London, from where energy consultancy and the buying and selling of bio-fuels are coordinated.
Verdo 2013 was a year of significant improvement for Verdo Renewables. The Grangemouth plant was reopened and brought up to full production, the growth of wood pellets for heat is growing in the UK at a rate of over 200% per year, thanks in large part to the government’s Renewable Heat Incentive scheme and exports to Italy were resumed where prices are rising.
as the market leader in the UK, increase turnover and the value of our products by improving uniformity and efficiency.
We worked hard in 2013 to improve profit with particular gains in the second half of the year. We now intend to strengthen our position
Our main problem is the rising price of raw materials, but in conjunction with Verdo Energy we are looking at ways of importing wood chips from Ghana, which could alleviate the effects of price rises.
Given that demand in the UK is only 30% of that in Denmark with over ten times the population, there is plenty of opportunity for growth, and the next phase of the Renewable Heat Incentive (aimed at the private consumer) is now launched in the spring of 2014, which should lead to significant growth in the market for green heating.
Richard Smith Divisional Director Verdo Renewables
Verdo Renewables Ltd. Amounts in TDKK
2013
2012
Turnover
112,117
81,371
EBITDA
-23,499
-38,036
Operating profit or loss
-36,225
-48,301
7,402
4,006
160,188
-4,542
Investments Equity
Annual Report 2013
23
VeRdo tRAdIng
verdo’s trading division deals in electricity, special carbon and fuels. we are one of the biggest traders in europe within different types of biomass such as wood, cocoa pellets and olive stones – some of the key energy sources of the future. we also trade in coal, oil and related bulk products, and co2 trading is an important area.
Verdo
thomas bornerup divisional director verdo trading
2013 was a year of intense activity and challenges for Verdo Trading. Turnover of DKK 1,627 and EBITDA profit of DKK 37.2 million made 2013 less than satisfactory, thanks to a mild winter, low electricity prices and a weaker market than expected, especially within carbon trading. nevertheless, there was growth in the wood pellet market, we tested new bio-products and continued to import rubber tree wood chips from Ghana. The sale of high quality wood pellets to dealers and private customers continues to grow and we now have full control over the entire value chain, which improves our delivery reliability and quality. GF Verdo is the latest member of the trading division, specialising in the supply of high quality wood pellets to
VeRdo tRAdIng Amounts in tdKK
2013
2012
1,627.435
1,615,020
EBITDA
37,236
52,227
Operating profit or loss
19,978
26,658
2,304
8,232
226.720
218.662
Turnover
Investments Equity
24
AnnuAl RepoRt 2013
central and southern Europe from its head office in Rotterdam, Holland. Sales of coal for heating and industry in Denmark fell, but we managed to maintain the same volume thanks to sales to new export customers. Carbon Partners turned over less than expected due to continued market over-capacity, but new customers were found outside Europe. We will focus even more on bioenergy and technical carbon, and the trading division as a whole expects its international activities to grow, requiring the recruitment of more employees. We also expect growth in the USA, Middle and Far East, where we will initiate new activities to strengthen relations and collaboration within sales and processing. Verdo Trading expects results in 2014 to be on a par overall with 2013.
Verdo trading
Annual Report 2013
25
Profit and loss statement
Group 2013
2012
2013
2012
DKK
TDKK
DKK
TDKK
Net turnover
2,405,028,017
2,429,995
76,670,298
76,572
Expenses for raw products and auxiliary materials
1,843,314,954
1,837,548
598,497
921
Other external expenses
108,047,683
115,804
38,881,535
37,239
Total external expenses
1,951,362,637
1,953,352
39,480,032
38,160
Gross profit
453,665,380
476,643
37,190,266
38,412
Staff costs
219,276,362
218,465
38,824,711
42,406
Result before depreciation (EBITDA)
234,389,018
258,178
-1,634,445
-3,994
Depreciation and amortisation of intangible and tangible assets
139,269,855
138,696
6,753,667
5,726
95,119,163
119,482
-8,388,112
-9,720
0
0
16,362,409
53,773
-996,933
4,019
-1,300,000
0 28,566
Operating profit or loss
Income from equity investments in associated companies Income from other equity investments Financial expenses for associated companies
0
0
28,876,931
3,420,572
2,422
2,317,209
1,625
Other financial expenses
-64,989,814
-66,484
-7,621,012
-36,030
Total financial items
-62,566,175
-60,043
38,635,537
47,934
32,552,988
59,439
30,247,425
38,214
7,320,085
17,288
5,185,500
-3,284
Group profit for the year Of which minority interests
25,232,903 170,978
42,151 653
25,061,925 0
41,498 0
Profit for the year
25,061,925
41,498
25,061,925
41,498
Other financial income
Pre-tax profit Tax on profit
Profit for the year is proposed transferred to equity as profit carried forward and reserve for net appreciation according to the equity value method.
26
Parent Company
Annual Report 2013
balance sheet
assets
Group
Parent Company 31.12.13
31.12.12
31.12.13
31.12.12
DKK
TDKK
DKK
TDKK
Goodwill
40,561,206
52,867
0
0
Total intangible assets
40,561,206
52,867
0
0
Property and buildings
174,374,008
178,959
100,618,079
102,435
CHP plant and peak load stations
485,526,023
489,467
0
0
Distribution systems, installation and meters
1,573,069,779
1,572,640
0
0
238,475,200
256,093
8,376,938
10,090
28,123,236
17,675
14,468,563
7,332
2,499,568,246
2,514,834
123,463,580
119,857
1,295,590
Operating material Tangible assets under construction Total tangible assets
Equity investment in associated companies
0
0
1,506,558,044
4,028,708
0
0
0
Other securities and equity investment
19,862,691
22,356
0
1,500
Total financial assets
23,891,399
22,356
1,506,558,044
1,297,090
2,564,020,851
2,590,057
1,630,021,624
1,416,947
172,053,336
158,651
81,121
38
690,000
800
0
0
Total stocks
172,743,336
159,451
81,121
38
Receivables from sales and services
301,185,206
261,593
1,310,407
6,202
Other receivables
Total Raw products and auxiliary materials Prepayment for products
Current contract work
13,948,826
8,420
0
0
110,001,247
145,498
0
0
Receivables from associated companies
0
0
773,177,242
896,847
Equity loan
0
0
510,000,000
510,000
64,455,484
13,624
13,479,500
14,766
0
484
0
484
Other receivables
47,598,680
94,215
6,384,633
1,694
Prepaid expenses
12,307,093
3,523
3,372,964
2,301
Total receivables
549,496,536
527,357
1,307,724,746
1,432,294
66,936,485
33,877
909,365
645
789,176,357
720,685
1,308,715,232
1,432,977
3,353,197,208
3,310,742
2,938,736,856
2,849,924
Receivables
Deferred tax assets Corporation tax receivable
Cash Total current assets Total assets
Annual Report 2013
27
balance sheet
LIABILITIES
Share capital Revaluation reserves Reserve for net revaluation according to the equity value method
Parent Company 31/12/2013
31.12.12
31/12/2013
31.12.12
DKK
TDKK
DKK
TDKK
263,024,000
263,024
263,024,000
263,024
53,959,135
53,959
0
0
0
0
89,748,452
61,825
-102,467,516
-144,089
-46,127,986
-59,320
Retained earnings
1,094,083,034
1,079,425
1,001,954,187
986,790
Total equity
1,308,598,653
1,252,319
1,308,598,653
1,252,319
3,964,374
3,756
0
0
Reserves for pensions
57,600,000
60,800
0
0
Other deferrals
10,328,260
27,762
6,328,260
23,762
Total provisions
67,928,260
88,562
6,328,260
23,762
Debt to mortgage credit institute
363,488,252
385,483
42,797,327
45,932
Other credit institutes
207,707,204
218,634
205,394,615
218,634
Net adjustment, hedging instruments
Minority interests
Other loans
0
3,728
0
0
18,056,948
21,066
0
0
Investment contribution, accrual basis of accounting
146,776,815
145,725
0
0
Total long-term debt
736,029,219
774,636
248,191,942
264,566
Other debt
Long-term debts due within 1 year Other credit institutes Debt to associated companies
46,811,638
46,294
16,257,000
16,393
735,176,977
669,298
647,195,058
620,478
0
0
634,113,579
561,333
200,537,721
150,095
4,126,428
6,678
1,773,528
4,984
0
0
248,878,060
317,227
73,925,936
104,395
3,498,778
3,571
0
0
Total short-term debt
1,236,676,702
1,191,469
1,375,618,001
1,309,277
Total debt
1,972,705,921
1,966,105
1,623,809,943
1,573,843
Total liabilities
3,353,197,208
3,310,742
2,938,736,856
2,849,924
Suppliers of products and services Pre-paid current work Other debt Accrued income
Contingent liabilities Security Contractual obligations Related parties Ownership Adjustments in cash flow statement Information about segments
28
Group
Annual Report 2013
Cash flow statement
Group 2013
2012
DKK
TDKK
Group profit
25,061,925
41,498
Adjustments
196,497,790
217,608
Interest income and similar income received
3,420,572
2,422
Paid interest expenses and similar expenses
-64,989,814
-66,484
-5,841,098
-6,129
154,149,375
188,915
2,611,094
-15,050
-22,975,583
-42,358
Corporation tax paid Operating income adjusted for non-cash items Change in working capital Stocks Receivable Suppliers of products and services
16,094,988
15,102
Other operation-derived debt
-5,985,653
-36,613
Cash flow from operations
143,894,221
109,996
Acquisition of tangible assets
-117,681,335
-185,743
-10,447,752
41,398
0
-5,587
-10,827,781
-9,830
Installation under construction Purchase of financial assets Purchase of associated companies/paid earn out Long-term receivables
-551,903
0
0
1,935
Sale of financial assets
2,625,816
63,258
Sale of intangible and tangible assets
3,709,147
7,929
-133,173,808
-86,640
10,720,413
23,356
0
-3,885
Dividend received
Cash flow from investments Total cash flow from operations and investments
Dividends paid to minority shareholders Financial leasing contracts
1,376,331
0
Instalment payments on long-term loan
-39,875,169
-37,205
Cash flow from financing
-38,498,838
-41,090
Total cash flow for the year Cash at bank and in hand at the beginning of the year Cash at bank and in hand at the beginning of the year, purchased companies Cash at bank and in hand at the end of the year
-27,778,425
-17,734
-635,421,112
-617,687
-5,040,955
0
-668,240,492
-635,421
Cash at bank and in hand at the end of the year is specified thus: Cash at bank and in hand
66,936,485
33,877
Short-term bank and savings bank debt
-735,176,977
-669,298
Total
-668,240,492
-635,421
Annual Report 2013
29
30
Annual Report 2013
company details Verdo A/S Agerskellet 7 DK-8920 Randers NV Tel. +45 8911 4811 Fax +45 8911 4800 Registered office: Randers Central Business Register no.: 25 48 19 68 info@verdo.dk www.verdo.dk
colophon Editor in Chief: Lisa Dyhr Dalsgaard Iglin Margrethe I. Tanggaard Verdo A/S Translation: admark translations Circulation: 400 copies Photo: David Bering and Verdo A/S PRODUCTION This brochure was printed using vegetable coloured inks on Munken Polar paper at a Swan ecolabel-approved printworks.
The paper originates from FSCÂŽ certified, sustainable forestry, which protects nature and its flora and fauna plus the people working in the forest, and from other controlled sources.
Annual Report 2013
31
VERDO VERDO
| |
Agerskellet 7 Agerskellet 7
| |
8920 Randers NV 8920 Randers NV
| |
Tel. +45 8911 4811 Tel. +45 8911 4811
| |
info@verdo.dk info@verdo.dk
|
www.verdo.dk