Organisation

from Verdo Annual Report 2021

The independent auditor’s report

2021 was a year of changes

“When the winds of change blow, some people build walls and others build windmills.” This ancient Chinese proverb matches Verdo’s progressive strategic development. In 2021, we made a number of organisational changes that will have a major impact on the future of the company. You can read more about these in the following sections.

Verdo is a purpose-driven company. It is therefore important to express our purpose clearly in the articles of association.

Verdo tunes its corporate structure – from S/I to a.m.b.a. In connection with the work on corporate governance, Verdo gave some thought to the way the parent company of the Verdo Group had been organised to date as a self-governing institution – Verdo S/I.

The characteristics of Verdo’s articles of association and legal basis are, however, best aligned with a cooperative society with limited liability (a.m.b.a.) corporate form.

Based on the legal assessment, Verdo therefore amended its articles of association so there is consistency between these and the foundational characteristics of Verdo. This has been done by changing Verdo S/I into a cooperative society, which is also the normal corporate form used in the utilities sector.

The change to a cooperative society has no impacts on our customers, finances or organisation, but simply means that we adjust the company structure so that the articles of association are consistent with the way we perform our activities in practice.

As a cooperative society, we will advance the common interests of the cooperative members by purchasing heating, water and electricity in our supply areas.

As part of the changes to the articles of association, there is a greater focus on democratising the company. For example, the composition of the Board of Representatives has been changed to ensure clear democratic principles and the broadest possible consumer influence in our various supply areas (currently Randers, Herning and Kongerslev).

The size of the Board of Representatives is increasing from 51 to 85 members. This expansion will take effect in Q2 2022 when we have held the election for the Board of Representatives.

Fra Verdo A/S to Verdo Holding A/S In connection with Verdo adjusting the company structure from Verdo S/I to Verdo a.m.b.a., we have also changed the name of Verdo A/S.

The rules do not allow two companies to be registered under the same name, simply with a different company structure (Verdo a.m.b.a. and Verdo A/S). We have therefore decided to change the name of Verdo A/S to Verdo Holding A/S.

This is purely a formal name change with no legal significance. The company remains the same and has the same CVR number.

New director for energy plant development Division Director Morten Birch has assumed responsibility for developing and establishing sustainable energy plant at Verdo Energy.

For many years, Morten Birch has been responsible for technical infrastructure in Verdo Teknik, which has become one of the largest street lighting operators in Denmark during this period. Along with his team, Morten Birch has successfully integrated street lighting into the Group, and has seen opportunities for developing new products and services – such as charging stations and signalling system operations.

Morten Birch has now been assigned even more responsibility in the Verdo Group. In addition to his current area, technical infrastructure, he also heads the development and establishment of energy plant. Together with the management team in Verdo Energy, Morten Birch will continue working to achieve business goals and further accelerate the commercial focus.

We expect to achieve a number of synergies, which customers in the areas of energy plant and technical infrastructure will benefit from in the coming years.

Changes in Energi & Forsyning In order to best pursue Verdo’s strategy in the future, it is necessary for some tasks to be handled differently. In the Energi, forsyning & elsalg division – which changed its name to Energi & Forsyning in 2021, this meant a new organisation.

We decided to combine all activities for consumer customers in one division (except for EL-NET Kongerslev), so Verdo Produktion (the division responsible for Randers CHP plant) was integrated with Verdo Varme and Verdo Vand. This is a step towards ensuring transparency and openness in our regulated companies, while maintaining an expectation of greater collaboration across the utilities division.

Verdo also faces the task of defining the future heating supply in Randers and Herning, and the new organisational structure best supports knowledge sharing between our district heating distribution and production.

A common area for the customer centre and Elsalg has also been established, to support the pledge we made in our strategy about ‘making life simpler for our customers’. By integrating the customer centre and Elsalg in the same area, we focus our energy and attention on the customer.

Competencies gathered in Agerskellet Our social contract contains a pledge to be a community that promotes growth for our employees, where each person feels at home – in their work and with their colleagues. We are therefore making an effort to be an attractive workplace, where each employee is satisfied with their duties and their relationships with their colleagues.

In 2021, we reorganised a range of functions to create the best possible conditions for effective value-creating collaboration between various business areas, across the organisation and between business and staff functions.

Our Trading division moved from the Port of Randers to our headquarters, to provide better opportunities to develop and co-create cross-cutting solutions in relation to energy plant, fuels for private consumers and digitalisation.

The Trading team responded by inviting everyone who works at Agerskellet to a housewarming event, with lunch, socialising and music. More than 100 employees across the Group attended the event. Acquisition of Energi Viborg’s share of Midtjysk Elhandel Energi Viborg and Verdo have reached an agreement for Verdo to take over the remaining part of Midtjysk Elhandel, after more than two decades of cooperation on the purchase and sale of electricity to companies.

Under the deal, Verdo will acquire Energi Viborg’s 26% stake in the company.

We have firmly rooted activities in central Jutland, around Randers, Hobro and Viborg, and in recent years we have increased our presence in Herning, because we want to make a difference to the local communities in central Jutland.

The agreement entered into force on 15 December 2021.

Verdo expects companies to be increasingly interested in their electricity consumption, both in the short and longer term, and thus in a good deal.

Many companies’ interest in electricity use has increased in step with higher electricity prices, and energy consumption has become a bigger part of total costs. Companies are also showing increasing interest in participating in and supporting the green transition, as part of the electrification of society, by choosing green products.

This is one of Midtjysk Elhandel’s areas of expertise, and Verdo therefore expects to strengthen its position in the market.

The change of ownership will have no impact on products or services, and hence on customers, as Midtjysk Elhandel already handles contact with customers in Viborg, as in the other parts of the business.

StrategyRoom aims to ensure words are translated into action

As part of the implementation of Verdo’s new strategy, we set up a strategy office in spring 2021, with a strategy manager at the helm. The strategy manager is charged with ensuring that the strategy is lived out in the organisation, that words are translated into action – and as part of this, that we set ambitious goals and follow up on them.

The strategy office also leads cross-cutting initiatives and projects focused on creating and maintaining a high level of energy in strategy work. As a physical setting for the strategy office, we have created a dynamic and innovative Strategy Room, where we invite the entire organisation to hold meetings or simply drop by to experience and understand the strategy.

Business Partner concept Another initiative prompted by the new strategy is the introduction of a Business Partner concept. There is a Business Partner function in most of Verdo’s staff departments, which serves as a single-point-of-contact and thus as the everyday sparring partner for the business areas.

Business Partners ensure that key initiatives are successfully implemented, and that processes in their field of expertise (e.g. Procurement or HR) are optimally executed in each business unit.

The aim is to create clear and transparent interfaces and more efficient processes between staff and business functions.