CWO2400025Arsbe_omsUK _RT.qx4 29/06/00 12:12 Side 1

C.W. Obel A/S

CVR - no. 39980614

Vestergade 2 DK-1456 Copenhagen K Tel. +45 3333 9797 Fax +45 3333 9779 www.cwobel.com

Annual Accounts 1999 CWO2400025Arsbe_omsUK _RT.qx4 29/06/00 12:12 Side 2

Contents

Vision ...... 1

Financial Summary - The Group ...... 2

Annual Report for the Group and the Parent Company ...... 4

Supervisory Board and Management - Other Executive Staff Members ...... 10

Semco Danmark ...... 12

Semco Sverige ...... 16

C.W. Obel Maritime ...... 18

C.W. Obel Industriteknik ...... 22

Other Companies ...... 26

C.W. Obel Ejendomme ...... 28

Associated Companies ...... 32

Shareholder Information ...... 34

Accounting Report and General Financial Analysis ...... 36

Accounting Policies ...... 40

Signatures and Auditors’ Report ...... 42

Consolidated Profit and Loss Account ...... 43

Assets ...... 44

Liabilities ...... 45

Cash Flow Statement for the Group ...... 46

Notes ...... 47

List of Rental Properties ...... 52 C.W. Obel · April 2000

Group Companies ...... 53 Design: Bysted Hovedkvarteret A/S

Addresses ...... 54 Printing: Repro & Tryk A/S Vision The C.W. Obel Group is one of the largest Scandinavian suppliers of land-based technical installations and service and a significant supplier of technical systems, equipment, installations and service to the interna- tional maritime sector. The Group also has significant activities in properties and investments in associated companies.

The aim is to create continuously profitable, long- term and sustainable growth by strengthening the Group’s know-how and competences. The key words are trustworthiness, professionalism and flexibility.

The skills and dedication of the employees are vital for achieving the goals. Therefore, the C.W. Obel Group must be an attractive workplace that offers versatile development opportunities.

Through its consolidated activities, the C.W. Obel Group will ensure continued stability and a competi- tive return on the Group’s capital.

1 Financial Summary – The Group

Financial Highlights (DKK mill.) 1995 1996 1997 1998 1999

Profit and Loss Account Net turnover, excluding rental income 84.8 2,612.6 3,901.3 4,457.5 4,484.9 Rental income 80.9 81.1 94.5 100.6 99.9 Operating profit 30.2 79.9 -29.5 74.5 110.3 Financial items, net 25.2 -13.6 -38.9 -51.3 -53.7 Share of profits, associated companies 174.1 274.9 244.0 279.5 342.5 Consolidated profit before taxation 229.5 350.9 175.7 302.6 413.3 C.W. Obel’s share of the profit of the year 133.9 245.9 101.8 202.6 302.7

Assets Tangible fixed assets 719.0 1,235.2 1,310.1 1,355.2 1,341.6 Financial fixed assets 559.0 629.2 554.6 550.3 637.7 Stocks, including work in progress 17.1 324.7 369.5 414.1 363.2 Debtors 22.8 682.0 789.0 897.3 968.3 Cash and securities 254.0 361.2 473.2 604.4 393.1 Total assets 1,571.9 3,232.3 3,496.3 3,821.2 3,703.9

Liabilities C.W. Obel’s share of the equity capital 1,400.2 985.9 921.6 1,071.5 1,296.1 Minority shareholders’ share of the equity capital - 3.9 4.5 3.7 0.4 The Group’s combined equity capital 1,400.2 989.8 926.1 1,075.2 1,296.5 Provisions 29.0 197.8 129.4 99.6 130.8 Long-term creditors 48.4 444.2 1,191.5 1,377.7 1,155.2 Short-term creditors 94.3 1,600.6 1,249.3 1,268.7 1,121.3 Total liabilities 1,571.9 3,232.3 3,496.3 3,821.2 3,703.9

Cash Flow Statement Cash flow from operating activities 71.0 -12.4 -79.8 35.0 122.9 Cash flow from investing activities 20.4 -796.0 -38.1 21.3 48.6 Cash flow before financing activities 91.4 -808.4 -117.9 56.3 171.5 Cash flow from financing activities -131.2 758.2 319.0 9.6 -278.9 Net change in cash and securities -115.0 107.2 112.0 131.2 -211.2 Change in interest-yielding net cash 64.5 -1,109.8 -140.0 51.0 119.3 Interest-bearing net debt, end of year -186.8 923.0 1,063.0 1,012.0 892.7

Key Figures Average number of employees 109 4,850 5,828 6,149 6,400 Average number of shares (’000) 2,075 2,075 2,075 2,075 2,075 Earnings per share, DKK 100 64.5 118.5 49.1 97.7 145.9 Cash flow per share, DKK 9.5 (6.0) (38.5) 16.9 59.3 Dividend per share, DKK 100 15.0 15.0 15.0 18.0 18.0 Net asset value per share, DKK 100 675 475 444 516 625 Gross plant investments and purchase of activities 60 996 211 182 232 Equity ratio % 89.1 30.5 26.4 28.0 35.0 Return on equity % 9.9 20.6 10.7 20.3 25.6

Definitions according to the "Recommendations & Key Figures 1997" issued by the Danish Society of Financial Analysts:

Earnings per share Profit after taxation and minority interests/Average no. of shares Cash flow per share Cash flow from operating activities/Average no. of shares Net asset value Equity capital, excl. minority interests, end of year/No. of shares, end of year Equity ratio (Equity capital excl. minority interests/Liabilities, end of year)*100 Return on equity (Profit after taxation and minority interests/Average equity capital excl. minority interests)*100 Interest-bearing net debt Interest-bearing debt - Cash and securities

2 Turnover Operating profit Profit on ordinary operations before taxation

DKK mill. DKK mill. DKK mill.

5,000 120 500

100 4,000 400 80

3,000 60 300 40

2,000 20 200

0 1,000 100 -20

0 -40 0 1996 1997 1998 1999 1995 1996 1997 1998 1999 1995 1996 1997 1998 1999

Total assets Interest-bearing net debt Equity ratio

DKK mill. DKK mill. %

4,000 1,200 100

3,500 1,000 80 3,000 800

2,500 60 600 2,000 400 1,500 40 200 1,000 20 500 0

0 -200 0 1995 1996 1997 1998 1999 1995 1996 1997 1998 1999 1995 1996 1997 1998 1999

Return on equity Earnings per share

% DKK

30 150

25 120

20 90 15

60 10

30 5

0 0 1995 1996 1997 1998 1999 1995 1996 1997 1998 1999

3 Annual Report for the Group and the Parent Company

4 In 1999, the C.W. Obel Group gen- Strategy Semco Danmark: A significant strength- erated sales totalling DKK 4,485m, In autumn 1998, the Group initiated a ening of core business, including efficien- which is in line with sales in 1998. strategic planning program, whose ob- cy improvements of financial and admin- jective is to clarify the Group’s vision and istrative functions, focus on customer/ The operating profit went up from to adapt the Group so that the operating sales in order to better handle the exist- DKK 74m in 1998 to DKK 110m, structure reflects the vision. In 1999, ef- ing market situation and reinforcement equal to a 49% increase. The strong forts continued in the divisions to formu- of the sale of services. advance in profits is due to the sus- late divisional strategies with related tained profit improvement of 34% goals. Semco Sverige: Growth by the acquisi- reported for the Technical Installa- tion of local competitors, which will be- tions and Service Sector. In addi- Strategic efforts in the divisions sprang come integrated into Semco Sverige. tion, C.W. Obel Ejendomme affects from the Group's overall vision of con- the profit performance distinctively centrating on its strategic fortes as a C.W. Obel Maritime: Internationaliza- with sales gains reaching DKK 41m. stepping stone, in particular the three tion through company acquisitions, an Other Companies also reported overall competencies critical to the extension of the product portfolio, par- progress compared to the previous Group’s development: ticularly within the operating market in year. • Project control and management, right the offshore area, and enhanced flexibili- from canvassing new orders to hand- ty via more external business partners. The Group’s share of Skandinavisk ing over the individual jobs and provid- Tobakskompagni’s profits con- ing the appropriate servicing in this C.W. Obel Industriteknik: Consolida- tributes significantly to the connection tion and expansion of the existing core progress. • Focusing on customer needs through business in Scandinavia. pro-active sales work, market develop- The Group’s profit on ordinary op- ment and modelling solutions tailored Other Companies: Ongoing spin-off erations rose by 37% from DKK to the customer’s requirements until end-2001. 303m to DKK 413m. • Exchanging know-how and experience within the individual divisions and C.W. Obel Ejendomme: Further im- The profit for the year aggregated across divisional and national bound- provements to existing properties, sites DKK 303m, up 49% on that report- aries. and current operations plus new property ed in 1998, which amounted to acquisitions. DKK 203m. After completing the strategic planning for the divisions, the C.W. Obel Group’s The Group will constantly observe the The Group’s assets totalled DKK financial goals can be headlined thus: structural adaptation underway in indi- 3,704m. At the end of the year, the • Additional growth in the Technical In- vidual lines of the Technical Installations Group’s equity had grown to DKK stallations and Service Sector through and Service Sector, and which leans to- 1,296m, equal to a solvency ratio organic growth and via acquisitions. wards increasingly larger units. of 35%. However, the sales performance for the existing business is contingent up- In keeping with the adopted strategy, the Cash flow before financing activi- on the Group’s winning bids for indi- Group launched an ambitious program in ties improved to DKK 172m in 1999 vidual major contract works, and the 1999 intended to position the Group compared to DKK 56m in 1998. Group’s being the principal contractor. during 2000 and 2001 at the forefront of • Earnings performance must be im- project management and completion. Efforts in 1999 focused on improv- proved within a short span of years The program consists of two elements: ing the Group’s short-term earn- such that the profit margin for the • Continued development and imple- ings. In addition, efforts were fur- Technical Installations and Service mentation of electronic project man- thermore centered upon strategy Sector reaches 4-5%, which would be agement tools underpinning project initiatives in the individual divi- in line with best practice in this line of completion and the subsequent servic- sions, the definition of long-term business. ing earnings targets for the Group, up- • Training personnel and project man- grading of the business systems in In order to realize these goals, the indi- agers, project participants and decision the individual divisions and sus- vidual divisions must press on with the makers in the Group. tained development of the Group’s following strategic initiatives: Corporate Identity. As a natural extension of the strategy, the legal structure will be changed into line with the operating structure. According- ly, the Group’s divisions will be trans-

5 Annual Report for the Group and the Parent Company

formed into stand-alone legal entities. In 1999, the Group’s operating profit Associated Companies also posted an This means that as from 1 January 2000, amounted to DKK 110m versus last year’s impressive lift in the profit on ordinary Semco A/S will be split into two compa- DKK 74m, equal to a 49% growth. Tech- operations before taxation: from DKK nies: Semco Danmark A/S and C.W. Obel nical Installations and Service posted an 280m in 1998 to DKK 343m in 1999. Maritime A/S. At the same time, the operating profit of DKK 91m, up DKK This advance stems primarily from Skan- Semco Maritime division will change its 23m, or 34%, on 1998. This performance dinavisk Tobakskompagni, but Motor- name to C.W. Obel Maritime to avoid any corresponds to the expected level for the tramp also turned in a fine performance confusion with the name of one of the year, but fell somewhat short of the prof- in 1999. division’s business units. In addition, the it margin target, which will hopefully investment properties in C.W. Obel A/S reach a level of around 4-5% in a few The profit for the year after tax and the will be transferred to C.W. Obel Ejen- years. C.W. Obel Ejendomme recorded a share attributable to minority sharehold- domme A/S. satisfactory operating profit of DKK 93m ers amounted to DKK 303m, up 49% on in 1999, against DKK 56m a year earlier. 1998. Taxes for the year amount to DKK 1999 - an Overview This improvement is due primarily to a 109m, equal to 27% of the pre-tax profit In 1999, the Group’s turnover worked gain on the sale of a site with an associat- versus 34% in 1998. The comparatively out at DKK 4,485m versus DKK 4,458m ed construction project in the Copen- low tax payment is due in whole or in the previous year. The turnover and the hagen neighbourhood ‘Sydhavnen’. In part to tax-free gains on equities and change in per cent compared to 1998 the year under review, Other Companies properties sold and utilization of tax loss- can be broken down by divisions – see reduced the loss by DKK 13m to DKK es relating to prior years. the pie chart below. 16m. This improvement in the two sec- tors is partly offset by the costs of im- Given the post-tax profit of DKK 303m, In the Technical Installations and Service proving and standardizing the Group’s IT the return on equity for 1999 reached Sector, C.W. Obel Industriteknik makes systems and business routines, plus the 25.6% versus last year’s 20.3%. the most significant contribution to heavy costs of ensuring year 2000 com- growth in turnover, as the division’s busi- pliance for the Group’s existing systems. The Group’s total assets at 31 December ness unit C.W. Obel Industriservice has 1999 stood at DKK 3,704m, down from completed two major projects. In addi- The profit on ordinary operations before DKK 3,821m a year earlier and thus a re- tion, the division’s business unit C.W. taxation rose 37%, namely by DKK 110m duction of DKK 117m. On the asset side, Obel Isoleringsteknik doubled its to DKK 413m in 1999. this is due primarily to a reduction of liq- turnover in the Norwegian activities. uid funds and securities, resulting from a Both Semco Danmark and Semco Sverige In connection with the sale of Skandi- partial realization of the bond portfolio. reported turnover figures that were in navisk Miljø Service A/S, the Group real- On the liabilities side, both short- and line with last year’s performance. On the ized a DKK 36m profit, of which DKK long-term debt were reduced. other hand, C.W. Obel Maritime reported 14m has been credited to the profit and a marginal decline, due primarily to the loss account, and DKK 22m was included choppy market conditions encountered in the consolidated equity as disposal of in the offshore industry. added value.

Turnover broken down on divisions (compared with last year)

Other Companies DKK 560m (-12%)

Semco Danmark C.W. Obel DKK 1,777m (0%) Industriteknik DKK 906m (17%)

C.W. Obel Maritime DKK 801m (-2%) Semco Sverige DKK 485m (-1%)

6 Corporate Identity Effective 1 December 1999, C.W. Obel Moreover, in autumn 1999 the Group in- In 1999, efforts to mould corporate iden- Maritime acquired the telecommunica- vested DKK 38m in own shares, equal to tity continued. A homepage for the tions business Protobase Ltd. in Norwich, 40,453 shares. Of these, 13,834 were ac- Group has been established, England. Protobase supplies complete quired to cover a share option agreement www.cwobel.com, providing updates on telecommunications solutions to the in- concluded with Group Management, recent developments in the Group’s activ- ternational offshore industry. Via the sub- while the balance will be held to cover fu- ities. Efforts will continue to introduce sidiary Norse Electronics, the division ture share option obligations. At the time and refine homepages for the individual formed the company RigNet Operation of their acquisition, the shares were writ- divisions and business units. AS in January 1999. Effective 1 Novem- ten off to the equity capital under other ber 1999, Semco Technology acquired reserves. The 1999 annual accounts and the annu- the activities in Chemical Injection Sys- al report of C.W. Obel A/S can be down- tems AS, which designs and manufac- In keeping with the Group’s focused loaded from the Group’s homepage from tures chemical injection systems for the strategy, the shares in Skandinavisk Miljø mid-April 2000. oil and gas market. Service A/S were sold at 1 October 1999 to the company’s German business part- In order to bolster corporate identity and In C.W. Obel Industriteknik, the activities ner and licensor, Lurgi Lentjes Bischoff interaction across the organization as in Per Petersen Rør- og Industrimontage GmbH and the Danish company Invest such, the Group launched “CWO News”, A/S in Middelfart were acquired at 1 Miljø A/S. The sale of Skandinavisk Miljø a newsletter catering to all employees. March 1999 and now form part of Skan- Service A/S gave a DKK 36m profit. The newsletter focuses on the daily activ- dinavisk Industriservice A/S as its Region ities of staff members at the Group’s West. Fjeldstad in Norway acquired a fur- Fjeldstad’s stake in the surface treatment many locations and is intended to rein- ther 39% of the shares in the engineer- business Visman AS in Stavanger was force cooperation and the common iden- ing business Nopicon and now has a sold off. tity by enhancing awareness and under- 90% stake in it. In September 1999, standing of the work performed CWO WIAB in Sweden acquired the In cooperation with Højgaard & Schultz throughout the Group, and thus the op- shares in Roneco Montage AB in Gothen- a/s, C.W. Obel Ejendomme performed erations of its many business units. burg, with the purpose of gaining a project planning for a new corporate regional foothold. domicile for the Nokia Group in the Syd- Acquisitions and Divestments havnen dock area. At 1 July 1999, the In 1999, C.W. Obel made a number of No new properties were acquired in project was sold to PFA Byg, which has at small, strategic acquisitions within the di- 1999. Improvements for the year and the same time concluded a letting agree- visions for a grand total of DKK 55m other activities in the properties, totalling ment with Nokia. compared to DKK 3m in 1998. DKK 48m, include renovation of the property called Brøstes Gaard in the area After the close of the financial year, the On 1 April 1999, Semco Danmark ac- of Copenhagen called Christianshavn, operating activities in the German com- quired the activities of C.S. Køleteknik in and completion of a construction project pany Brockmeyer GmbH were sold to the Hadsten as a means of strengthening its in Møllegade, Aalborg. In addition, reno- company’s executive management in a market position within cooling and venti- vation works were initiated on Semco management buyout. lation in central Jutland. Danmark’s corporate domiciles in Odense and Brøndby, and C.W. Obel Ejendomme initiated construction of new properties for a total of DKK 62m, of which DKK 18m was defrayed in 1999.

The Group invested DKK 177m in 1999 in other plant and operating equipment, mainly in the form of minor acquisitions, and a large number of service cars.

7 Annual Report for the Group and the Parent Company

Management and Employees Spotlight on Human Resources On average, the Group had 6,400 em- Corporate Executive Vice President Ib Focus on this issue resulted in the Group ployees in 1999 versus 6,149 in 1998; Dybdahl Christoffersen, with special re- adding a Human Resource function in the increase is attributable to the mount- sponsibility for Treasury, Finance and IT, 1999. A chief task for this function is to ing activity level in C.W. Obel Industri- retired from C.W. Obel’s Board of Man- initiate and coordinate activities aimed at teknik and a rising share of contract agement on 1 July 1999 according to a securing that the Group as such is cap- crews hired by C.W. Obel Maritime. mutual agreement. able of offering the market the skills that are in demand both today and in future. At 31 December 1999, Danish staff num- At 1 September 1999, functional man- Along this track, another task is to in- bered 4,033, with 2,083 employees agers Stella Jacobsson and Kren Erik crease employee flexibility, and thus that working abroad. Nielsen were appointed vice presidents, of the organization, across the Group. and, together with the Presidents of the Development in the Sectors and five divisions and C.W. Obel’s President Based on C.W. Obel’s core values: “Cred- the Underlying Divisions and CEO, they make up Group Manage- ibility, professionalism and flexibility,” a A detailed review of the individual divi- ment. general HR policy was formulated in sions can be found in this report on pp. 1999 for the Group. The HR policy consti- 12-33. In autumn 1999, C.W. Obel launched a tutes the pillars employed in day-to-day share option program targeted at a num- HR administration and activities common C.W. Obel’s activities are divided into ber of executive staff members. Initially, to all companies in the Group to hold on three sectors: Technical Installations and Group Management has been granted to its employees and contribute to their Service, Properties and Associated Com- share options with a right to buy a total personal development. panies, to which should be added the ac- of 13,834 shares from the company’s tivities in Other Companies. portfolio of own shares. As an example of these activities, the Group’s training program for project Technical Installations and completion could be singled out; this Service program is aimed at enhancing one of This sector reported an aggregate the Group’s most important inter-discipli- turnover of DKK 3,926m, versus DKK nary strength dimensions, namely the 3,819m in 1998. ability to manage and implement proj- ects, right from initial sale to project The operating profit rose from DKK 68m completion. The program is intended to in 1998 to DKK 91m, equal to an operat- cover about 500 employees and will be ing margin of 2.3%. Thus, this perform- implemented in year 2000 and 2001 and ance is still some distance from the is an essential ingredient in the Group’s Group’s target but lives up to the im- endeavours to reach its earnings targets. provement projected for 1999.

The Properties Sector Rental income for the year aggregated DKK 100m, versus DKK 101m in 1998.

The operating profit, including the activi- ties in Semco Ejendomsselskab, ended at DKK 79m versus DKK 57m a year ago. The 1999 profit is positively affected by a Employees at year-end 1999 gain on the sale of a construction project in the Sydhavnen dock area. On the other Other Germany 108 hand, Semco Ejendomsselskab defrayed 380 substantial costs in connection with the Norway 771 maintenance of two of Semco Danmark’s corporate domiciles. If the above is not taken into account, the operating profit came to DKK 55m, which conforms to Sweden 824 the forecast.

Denmark 4,033

8 Associated Companies In Sweden, the activity level within build- Purchase Offer - Statement of The share of pre-tax profits totalled DKK ing & construction is expected to improve Background 343m in 1999, versus DKK 280m a year in general, with the ensuing better prices In agreement with Det Obelske Familie- earlier. This advance is due to an impres- in the offing. fond and C.W. Obel A/S, Den Danske sive earnings jump reported by Skandi- Bank made an offer on 29 March 2000 to navisk Tobakskompagni and an improved On the market in general, the Danish sec- the shareholders of C.W. Obel A/S to pur- performance for Motortramp, while tor of the offshore industry is expected to chase all the shares in C.W. Obel A/S at a Skandinavisk Industries fell short of post- experience a mounting activity level aris- price of DKK 1,200 per share. ing a satisfactory profit despite substan- ing from the anticipated greater inclina- tial progress. tion to invest in the Danish oil industry. The offer to the shareholders should be On the other hand, the shipyard industry viewed in light of the fact that the Execu- Other Companies is projected to follow the downward tive Committee of Det Obelske Familie- The combined turnover reported by Other trend in activity and shipyard closures fond and the Supervisory Board of C.W. Companies in 1999 amounted to DKK seen during the past few years. Obel A/S have long believed that the price 560m, which is less than the previous of C.W. Obel A/S’ shares on the Copen- year, when the corresponding figure was A positive development is projected for hagen Stock Exchange does not reflect DKK 639m. the Norwegian market, particularly due the true value of C.W. Obel A/S or its to the current relatively high oil prices, earnings potential. In addition, the Execu- The total operating loss improved from which are expected to trigger the launch- tive Committee of Det Obelske Familie- DKK 29m in 1998 to DKK 16m in 1999, ing of a number of new projects/invest- fond and the Supervisory Board of C.W. due to generally better profit perform- ments in the offshore industry. Obel A/S have come to the conclusion ances reported by the individual compa- that professional investors tend to be less nies. The improvement includes a DKK C.W. Obel Industriteknik projects a inclined to invest in tobacco shares today, 20m provision regarding an anticipated downturn in the supply of major projects that industrials are generally low-priced, loss in connection with the sale of the op- in Norway, and the activity level on the and that investors take a critical attitude erating activities of Brockmeyer GmbH. Scandinavian market is also projected to towards companies controlled by a foun- be somewhat more subdued than in 1999. dation and which pursue a diversified Outlook for 2000 strategy aimed at a long-term return. In year 2000, the Group will focus on: Thus, the overall projection for the Tech- • Implementation of the strategy nical Installations and Service Sector is for Since there are no plans of changing the mapped out for the divisions turnover to advance slightly with a small company’s strategy, the Supervisory Board • Continued consolidation and prof- improvement in the operating profit. has negotiated with Det Obelske Familie- itability improvements fond and in keeping with the outcome of • Implementation of a group standard C.W. Obel Ejendomme forecasts a slight the talks decided to request Den Danske for measuring the ability of individual improvement in the operating profit, not Bank to make a purchase offer to the other business units to create shareholder counting 1999 profits in connection with shareholders with a view to reselling the value the sale of construction projects. shares to Det Obelske Familiefond and • Development and continued imple- C.W. Obel A/S and the subsequent delist- mentation of an electronic project For Associated Companies, the perform- ing of C.W. Obel A/S’ B-shares from the management handbook ance is expected to be on a par with that Copenhagen Stock Exchange. • Training of personnel and project man- reported for 1999. The projection does not agers, project participants and decision take into account any sale of companies The price of 1,200 means a 45% premi- makers in the Group forming part of Skandinavisk Industries. um compared to the average price during • Completion and standardization of the the last 30 trading days prior to Stock Ex- Group’s IT platform. As concerns Other Companies, a further change Announcement no. 05 of 12 two or three of the companies are likely March 2000 from C.W. Obel A/S. A setback is projected for the Danish to be divested during 2000. land-based activities, due in particular to The Supervisory Board is confident that the the general slump in construction activi- The profit for the first two months of price offered constitutes a fair offer to the ties and the anticipated slimming of pub- 2000 is below the forecast, due primarily shareholders and accordingly recommends lic capital investments. To this should be to difficult market conditions for the the shareholders to accept the offer. added the steadily increasing competi- Group’s Danish installation activities. tion ensuing from an overcapacity of sup- The Supervisory Board and the Board of pliers. The resulting competition on For the C.W. Obel Group as a whole the Management wish to thank all employ- prices is expected to lead to a shake-up pre-tax profit on ordinary operations is ees in the Group for their excellent and of the business line over time. projected to be in line with the profit for determined efforts in 1999. 1999.

9 Supervisory Board and Management – Other Executive Staff Members

Supervisory Board

Hans Werdelin Frederik Chr. Obel Morten Balling Steen Engel Erik Højby Hansen Chairman Deputy Chairman

Hans Chr. Mølau Anders Obel Birger Riisager Finn Sørensen

Management

President and CEO Mogens Hugo Jørgensen

Group Management (At the back from left) Vice President Kren Erik Nielsen, Senior Vice President Mogens Andersen Senior Vice President Søren Hofman Laursen Senior Vice President Poul Nørby Senior Vice President Jens Otto Daugaard

(in front from left) Senior Vice President Lars Christiansen Vice President Stella Jacobsson and President and CEO Mogens Hugo Jørgensen.

10 Supervisory Board Management Hans Werdelin, Chairman President and CEO Mogens Hugo Jørgensen (Member of the Supervisory Board since 1993) Chairman of the Supervisory Boards of A/S Motortramp and Chairman of the Supervisory Boards of Danske Trælast A/S, Dampskibsselskabet “NORDEN” A/S. Damgaard A/S, Publicis A/S and Lomax A/S Deputy Chairman of the Supervisory Board of GN Great Nordic Ltd. Deputy Chairman of the Supervisory Boards of Skandinavisk Member of the Supervisory Boards of Skandinavisk Holding A/S, Holding A/S, Skandinavisk Industries A/S, Skandinavisk Skandinavisk Industries A/S, Skandinavisk Tobakskompagni A/S, Tobakskompagni A/S and Fritz Hansen A/S Fritz Hansen A/S and Unidanmark A/S Member of the Supervisory Boards of Novo A/S, Novo Nordisk A/S and Ratin A/S Other Executive Staff Members: Frederik Chr. Obel, Deputy Chairman Senior Vice President Mogens Andersen, Semco Sverige Senior Vice President Lars Christiansen, C.W. Obel Industriteknik (Member of the Supervisory Board since 1991) Senior Vice President Jens Otto Daugaard, Semco Danmark Chairman of the Supervisory Board of Obelhus A/S Vice President Stella Jacobsson, Accounting and Treasury Deputy Chairman of the Supervisory Boards of Torsana A/S, Senior Vice President Søren Hofman Laursen, C.W. Obel Ejendomme Danske Obligationer A/S, A/S Obligationsinvest II af 01.07.1992, Vice President Kren Erik Nielsen, Finance and Treasury Codan Forsikring A/S, Codan A/S and Carli Gry International A/S Senior Vice President Poul Nørby, C.W. Obel Maritime Member of the Supervisory Board of H. Hoffmann & Sønner A/S and A/S Det Alm. Danske Ejendoms Selskab

Morten Balling (Member of the Supervisory Board since 1991) Member of the Supervisory Boards of Realkredit Danmark A/S, BG Kredit A/S and A/S Chr. Fabers Fabrikker

Steen Engel (Member of the Supervisory Board since 1997) Member of the Supervisory Boards of Chr. Hansen Holding A/S, Investeringsforeningen Danske Invest and Danske Invest Administration A/S

Erik Højby Hansen (Employee Representative since 1997)

Hans Chr. Mølau (Employee Representative since 1997)

Anders Obel (Member of the Supervisory Board since 1997)

Birger Riisager (Member of the Supervisory Board since 1998) President and CEO in FLS Industries A/S Chairman of the Supervisory Board of Danfoss A/S

Finn Sørensen (Employee Representative since 1997)

11 VISION Semco Danmark intends to be the first-choice partner in Denmark in terms of technical installa- tions and service. The division will achieve this objective through constant development of skills and quality and by creating value for customers.

Jens Otto Daugaard, President

Semco Danmark Technical Installations and Service

East North South

12 Core Business Semco Danmark will be a leading ket, particularly within the plumbing, Semco Danmark is the largest supplier of provider of tele- and datacommunica- HVAC and cooling area. However, electri- technical installations in the country. tions solutions and of petro-technical cal installation activities showed satisfac- services to service stations. tory progress with a result exceeding the Core business includes electrical installa- forecast. The profit for the year is consid- tions, plumbing & piping and HVAC. The division’s strategy is backed up by a ered unsatisfactory. Semco Denmark’s activities also include nationwide organization, where flexibili- installing and servicing data/telecommu- ty is a significant element. The order intake for the year totalled nications systems, fire & security systems, DKK 1,589m, versus DKK 1,567m in petro-technology, cooling, combined The division’s activities consist largely of 1998. At 31 December 1999, the volume heating and power systems and automa- projects. Consequently, project manage- of orders aggregated DKK 568m, a DKK tion. To this should be added services re- ment is a key parameter for success. The 186m decline compared to a year earlier. lated to the operation and maintenance objective is to ensure an overall solution The reduced volume of orders is due pri- of buildings and production plants, in- that is competitive, both when it comes marily to the completion of a number of cluding facility management, which is a to pricing and quality, and to handing major projects, including: significant and steadily growing area. over a project to the customer within the • Relocation of production facilities and agreed deadline. This calls for efficient the establishment of new control sys- Semco Danmark assists its customers coordination of the many diverse tasks tems and control panels for Pingvin right from the planning stage to final de- involved in a project, from the very start Galle & Jessen in Copenhagen livery and subsequent servicing of the to finish. Semco Danmark has successful- • Technical installations in Sonofon’s end-product. The company carries out its ly developed a project management con- new corporate domicile at Frederikskaj principal activities in Denmark, where the cept moulding all the technical installa- in Copenhagen division is represented by 37 branches tions involved in a contract into a turnkey • Technical installations in Philips Dan- nationwide. solution. mark’s new corporate domicile at Frederikskaj in Copenhagen Semco Danmark’s strengths lie in exten- This concept includes service, such as • Technical installations in Unibank’s sive, interdisciplinary expertise, local pres- consultancy, budget proposals and sug- headquarters at Christiansbro in ence and a flexible organization and staff gestions for solutions, installation, tun- Copenhagen, consisting of HVAC sys- that ensure the rapid, smooth transfer of ing-up and documentation, operating tems, CTS, electrical installations and skills and knowledge across trade sector and maintenance instructions and after- mounting of copper roofing and function lines. This aids in making sales service. • Replacement of HVAC installations, in- certain that large and small projects alike cluding installation of stainless steel are handled highly professionally. In package contracts, where all technical water mains in more than 800 flats for installations are combined, the customer the housing company ‘Århus & Semco Danmark’s primary customers in- gets more value for money and runs a Omegn’ clude end-users in the professional mar- smaller risk than in traditional technical • Sprinkler system for LEGO ket, both private and public enterprises, construction management contracts or • Natural gas-fired cogeneration plant organizations and institutions, plus hous- main contracts. This is the result of Semco for heating holiday homes in Grønhøj ing societies. Many projects are carried Danmark’s technical know-how, ap- Holiday Centre out in close cooperation with architects proach to problem-solving and integra- • Communications project for the Sound and consulting engineers. tion between technical disciplines. Link, comprising mobile telephone sys- tems, train radio systems, telecommu- Financial highlights Major Events in 1999 nications and data transmission and In 1999, Semco Danmark recorded a emergency phones, essentially com- 1999 turnover of DKK 1,777m versus DKK pleted in 1999. The balance of the Turnover 1,777 1,778m a year ago.The company was un- work is expected to be completed on Operating profit35able to report a rise in turnover because schedule Profit margin 2.0 of a reduced activity level with respect to only a few major projects in 1999 com- pared to 1998.Turnover developed as Strategic Role projected in the individual regions and Semco Danmark wants to be the market business units. leader within the core areas electrical in- stallations, plumbing & piping and Compared to 1998, the operating profit HVAC. Semco Danmark wants to be the declined in 1999, partly as a conse- leading supplier of technical services, quence of large writedowns on a project both locally in the regions and in Den- and intensified competition on the mar- mark as a whole.

13 Semco Danmark

Relocating production and designing control systems and control panels for Pingvin Galle & Jessen.

• Electrical and mechanical works in the Semco Telecom enjoyed great success in pact of the restructuring during the past tunnel for the Sound Link. At the re- 1999 with its telecommunications solu- few years yielded a comfortable hike in quest of the customer, installation tions targeted at municipalities and hous- earnings. The profit is deemed satisfactory. works were completed in 13 months ing associations. With radio links and compared to the scheduled 24 months their own underground cables, several As a full-line supplier, DOMS A/S handed by deploying as many as 235 crafts- municipalities have achieved major sav- over a large pump replacement project at men and 40 salaried employees during ings on data traffic costs and the tele- the end of the year to Statoil Detailhan- the peak load period. phone bill, as the municipality’s adminis- del A/S. All petro-technical and project tration, schools and institutions have management activities were undertaken In 1999, Semco Danmark continued in- been linked up to their own network for by DOMS. stalling base stations for Telia’s GSM transmitting data and telephone calls. 1800 mobile telephone network. In total, The company completed work on such Product development of a new electronic Semco Danmark has established 530 integrated tele- and datacommunica- forecourt control system, primarily tar- base stations for Telia, all operational at tions networks for the Municipality of geted at the international market, pro- the end of 1999. Fredericia, and in the course of the year gressed as scheduled, and the first pilot new agreements were concluded with installations were ready for use at end- In the course of the year, Semco Dan- the municipal authorities of Værløse, 1999. Despite keener competition within mark continued expanding its market po- Løkken-Vrå and Gladsaxe. the forecourt control area, DOMS A/S has sition within cooling by acquiring the ac- been successful in retaining its market tivities of C. S. Køleteknik in Hadsten. Semco Telecom’s concept for housing as- share and thus held a stable turnover. sociations also aroused great interest. In 1999, Semco Danmark completed a This concept is based on a closed-circuit Employees few foreign activities. In connection with telecommunications and data network In a business dictated by demands for ef- some Danida-financed contracts, the and thus entails cheaper telephone rates, ficient project management and logistics, company supplied electricity equipment lower subscription fees, free in-house employees are Semco Danmark’s most vi- to Burkina Faso, plus 14 generator plants phone calls and permanent link-up to the tal resource. In 1999, Semco Danmark for Sonabel, a power supply company in internet, without added telephone bill sustained its determined efforts in hu- that country. In addition, Semco Dan- costs. A system based on this concept man resource development. mark completed a Danida-financed elec- was installed in 1999 in Andelsbolig- trification project in Ghana in a joint ven- foreningen AB Nymindegaard in the Last year’s focus was on human resource ture with Skanska Jensen International. Copenhagen area Østerbro. development. The company transformed The project objective was to electrify 85 the results of appraisal interviews into a villages in Ghana. In 1999, Semco Telecom expanded its number of initiatives. A training program position as Denmark’s second largest for middle-level managers was launched, Semco Services kept up work on its supplier of tele- and datacommunica- and joint project management initiatives newly developed service concepts tions solutions. were taken for employees at all echelons throughout 1999. These concepts are of Semco Danmark. These initiatives are based on Semco Danmark’s know-how Extraordinarily heavy demand for goods intended to optimize Semco Danmark’s within the fields of systematic mainte- and services on the Danish market within nance project management and the opti- several core areas, DOMS A/S (Dansk mal operation of complex technical in- Olie-Måler Service A/S) spurred a jump in stallations to save energy and protect the turnover. This performance and the im- environment. Service Management can be singled out as an example; this service covers the transfer of responsibility for overall operation of the installations, plus Technical installations at Facility Management and Production Philips Danmark’s headquarters. Maintenance Management geared to- wards taking over general responsibility for the customer’s operation and mainte- nance of buildings and production equip- ment.

These concepts have been favourably re- ceived by the customers, and, so far, have led to contracts with several nationwide companies. Electrical and mechanical works at the Sound Link.

14 project implementation processes. In the Market situation Turnover broken down course of the year, the company held A general decline in construction activi- by business area project management courses for more ties is projected for year 2000, which will 7% than 150 employees in the organization. affect both the construction of commer- Petro-technology (DOMS) cial properties and residential properties. The average number of employees in However, as concerns Semco Danmark’s 35% 1999 was 2,497, and at 31 December primary market segments, the downturn 20% Plumbing Electricity, etc. the staff numbered 2,500. in construction activities will be less no- and cooling ticeable than for the market as a whole. Outlook for 2000 Strategy and business development Public capital investments in year 2000 8% In the course of 1999, a new strategy will reflect a significant, albeit anticipat- Services plan was prepared for Semco Danmark, ed, downturn compared to 1999, prima- and, in that connection, a number of rily due to the conclusion of several major 13% 17% strategic priorities were selected that will infrastructure projects. Telecom Ventilation be highlighted during the next few years. As concerns traditional trades, the mar- In 2000, investments will be made in ket is characterized by ever-keener com- Market shares on the Danish market continuing the development of Semco petition brought on by the overcapacity broken down by trade Services, where the great interest shown of providers. The decline in prices must % in the service concepts is expected to be assumed to lead to a shake-up of the trigger a major increase in the activity lev- sector. 25 el. In addition, investments will be made in the expansion of Semco Telecom. The growing trend towards outsourcing 20 service functions, experienced in the Focus will be on full-line technical con- business sector in general as well as in 15 tracts, service and concept development, the public sector, is expected to continue sales, project implementation, purchas- within property service and production ing and logistics and organizational and maintenance. The market for tele- and 10 human resource development, with the datacommunications solutions is expect- objective of expanding the division’s mar- ed to develop positively. 5 ket position, streamlining processes and raising productivity. The Danish petro-technical market is pro- jected to rise marginally. 0 In addition, initiatives have been taken to Cooling ElectricityPlumbing make administrative functions more effi- Profit projections Ventilation Fire & Security cient. For Semco Danmark as a whole, turnover Petro-technology is projected to be down on 1999, due pri- To strengthen business development marily to the conclusion of a few, huge within Semco Services and Semco Tele- individual projects in 1999. Tele- and datacommunications com, the company has implemented a The total market volume within Semco Danmark’s number of organizational changes. Ef- However, the operating profit is forecast business areas is expected to amount to about forts to streamline administrative func- to increase slightly compared to 1999, DKK 20bn, of which Semco Danmark accounts for tions have also entailed organizational due to the initiatives to enhance efficien- a total market share of about 9%. adaptations. The company has reinforced cy, despite the anticipated sustained know-how, expertise, concepts and tech- competition on prices in the market and nical solutions by establishing product a lower turnover level. management functions.

Pursuing the division’s strategic goals, Semco Danmark will continue to work on the implemented strategic priorities in year 2000.

15 VISION Semco Sverige intends to be the first-choice partner in Sweden in terms of technical installa- tions and service. The division will achieve this objective through constant development of skills and quality and by creating value for customers.

Mogens Andersen, President

Core Business Semco Sverige supplies and services tech- nical installations locally and regionally in Sweden and Poland. The division’s most significant geographical markets are southern Sweden, the Stockholm region and selected areas in Poland.

Semco Sverige is highly skilled in plan- ning and installing electrical systems, da- ta/telecommunications, fire & security, plumbing & piping, HVAC, and tailoring planning and service to the needs of the individual customer.

Semco Sverige Work is primarily targeted at the profes- Technical Installations and Service sional market, comprising both major property holding companies, utilities and the construction sector in general.

16 Financial highlights In the year under review, the division im- large freshwater terminal in Järfälla, plemented an expansive strategic plan- Stockholm. 1999 ning process involving a great many of Turnover 485 the division’s employees. Efforts to bol- Backlunds El-service, which concen- Operating profit6ster the division’s competencies contin- trates on major electricity and data- Profit margin 1.3 ued, particularly within project manage- /telecommunications projects in the ment and project implementation. Ef- Stockholm region, again reported a rise Major Events in 1999 forts also continued to focus on expand- in profits. This progress was achieved Generally, the Swedish market did not ing capacity as well as expertise within through determined efforts focused on develop entirely as projected in 1999. In data-/telecommunications. strengthening project management and the Stockholm region, the number of as- implementation. signments increased regularly through- Prenad is a major player in the Sound re- out the year, but the price level remains gion in terms of electrical systems, data- In 1999, the company completed a num- low. /telecommunications, plumbing & piping ber of major installation jobs, including and HVAC. Through its elaborate branch the large office construction project, In southern Sweden, the market was network and quality-conscious service or- Tegeludden, for the property company weak throughout the year, despite ex- ganization, the company has managed Drotts, an extensive new university con- pectations of major new construction to increase its volume of service activities, struction project in Norrköping and the projects. Therefore, market conditions which are already significant. In 1999, museum Tre Kronar, located below the negatively affect the division’s ventilation the company reported an extremely satis- Royal Castle in Stockholm. In addition, activities, which are largely targeted at factory operating profit, a testimony to Backlunds has been cooperating closely new construction. On the other hand, determined and competent efforts. with Totalinstallatören as concerns elec- electrical activities focus mainly on re- trical installations for ICA’s new freshwa- pairs and service. Consequently, market In 1999, the company executed a num- ter terminal in Järfälla, Stockholm. developments had a milder impact on ber of major new construction projects, this part of the division’s activities. including for Biomedicinsk Center in In 1999, Prenad International contin- Lund and the extension of the flight- ued its strategy in Poland by supplying In 1999, the division realized a turnover technical installations of the Armed all-in technical installations for hotels, of DKK 485m. Despite the weakening ac- Forces in Ängelholm. In addition, a num- etc. The conversion of the four star Hotel tivity level in the ventilation area, the divi- ber of major projects for the region’s ma- Forum represented the most significant sion succeeded in maintaining last year’s jor housing companies were completed, project. high activity level. In 1999, electrical ac- including Bomässen H99. tivities in southern Sweden reflected a Outlook for 2000 sustained highly satisfactory organic Totalinstallatören is a well-known ven- The ongoing initiatives, aimed at devel- growth of 9%. tilation company in southern Sweden. oping the division’s business systems fur- The company experienced a rough year ther, will be sustained. In addition, the di- The 1999 performance was on a par with due to keen competition on prices, which vision will continue to develop the organ- last year’s profit. Ventilation activities re- led to an operating loss. ization so as to be capable of assuming flected a downturn in terms of profit, installation jobs that integrate all techni- ending the year with a negative result. At the end of 1999, a major shake-up of cal trades. However, electrical activities continued the company was implemented, and at their sweeping progress. Particularly in the same time a new management team During the next few years, the installa- southern Sweden the results achieved took over. The objective is to make coop- tion sector is projected to move towards paralleled the best performance in the in- eration across the division stronger in the bigger units. The division will take an ac- dustry. division’s electrical activities, at the same tive part in this development. time creating a better balance between Order intake for the year reached DKK the activities targeted at new construc- The market in general is projected to de- 469m. At the beginning of the new year, tion and the more service-related activi- velop positively this year. Consequently, the division’s volume of orders stood at ties. the division expects growth in turnover DKK 109m compared to DKK 117m a and an improved operating profit. year ago. In anticipation of climbing In 1999, the company was in charge of prices, the division has opted for caution implementing a number of major ventila- when it comes to taking on new assign- tion tasks. The ventilation contract for Technical works at the Sound Link toll gate, built by Prenad. ments. the Sound tunnel was executed jointly with Semco Danmark. In addition, the At end-1999, the number of employees company installed a big ventilation and was 557, in line with last year’s figure. cooling plant at ICA, which is building a

17 VISION C.W. Obel Maritime intends to be a significant supplier of technical systems, equipment, installations and service for the international maritime sector.

Poul Nørby, President

C.W. Obel Maritime Technical Installations and Service

18 Core Business Norse Electronics’ key customer groups At the beginning of year 2000, the order Business activities focus on the design, include rig and operator companies, the book totalled DKK 159m compared to manufacture, installation and servicing of international seismic fleet and public and DKK 168m at the beginning of 1999. The systems within the following business local companies in the Stavanger area. average staff in the financial year num- areas: Tele-/ satellite communications, bered 1,064, and at 31 December 1999 fire fighting systems, fluid control and The company is headquartered in Tananger the division had a staff of 982 persons. switchboards. To this should be added and has branches in Kristianssund and total service concepts for the marine, Bergen. Effective 1 December 1999, the division shipyard and offshore sector. acquired the telecommunications busi- Semco Technology supplies hydraulic ness Protobase Ltd. in Norwich, the UK. The division is represented worldwide, control systems for drilling rigs - both Protobase is a major supplier of all-in either through subsidiaries or via agents. topside and subsea - plus chemical dos- telecommunications solutions to the in- Its customer base includes international ing and fire fighting systems to the na- ternational offshore industry, and its cus- oil companies, operators and contractors tional and international offshore mar- tomers include Shell, Mærsk Olie og Gas within the offshore sector, plus interna- kets. and British Petroleum. The company tional shipping companies and shipyards. forms part of the division’s international- Primary customer groups include con- ization strategy within the focus area: Financial highlights tractors, engineering companies and oil Telecommunications for the marine and companies in the Northern European off- offshore industry. 1999 shore markets. Turnover 801 Following the acquisition of Protobase, Operating profit8The company is headquartered in Forus the company covers offshore industry in Profit margin 1.0 and has branches in Oslo and Norwich, the entire North Sea, and the way has al- the UK. so been paved for penetrating selected Semco Maritime Danmark supplies international markets. technical systems, equipment, installa- Protobase is a major supplier of all-in tion and service incorporating fire fight- telecommunications solutions to the in- Semco Maritime Danmark experi- ing, switchboards and electromechanical ternational offshore industry and is head- enced a less satisfactory year, due to the solutions to the international maritime quartered in Norwich, the UK. difficult market situation. Synergies from sector. the amalgamation of the marine and off- shore activities in Odense and Esbjerg Major Events in 1999 The business unit offers integrated proj- and the positive development in sales of C.W. Obel Maritime’s turnover totalled ects, right from initial design to the instal- fire fighting systems impacted favourably DKK 801m in 1999, a slight decline of lation phase and the associated service on profit developments. 2% on 1998. The slipping turnover is and maintenance. chiefly due to the adverse effect of low At mid-year, the division acquired a prod- oil prices on the offshore market in the Semco Maritime Danmark’s most impor- uct program from Unitor’s Danish fire de- first half of 1999, with the ensuing low tant customer groups include shipping partment. Together with existing prod- activity level in almost all the division’s companies, shipyards, contractors and ucts within fire fighting for the marine business areas. The operating profit end- operating companies in the national and and offshore markets, the program will ed up at DKK 8m, a minor decrease com- international offshore markets. open new vistas for greater international- pared to the previous financial year. The ization and a wider customer base. profit for the year is unsatisfactory. The business unit is headquartered in Es- bjerg and has branches spread through- In addition, the business unit has estab- The division’s Danish business unit re- out Denmark. Abroad, it is represented lished a branch for marine service in ported a rise in profits compared to the by companies in the USA, viz. in Florida Copenhagen, so that in future the service previous year, however without reaching and California. concepts can be offered to shipyards and the desired earnings level. The Norwe- shipowners in the North Sea, the Katte- gian companies recorded a profit both Norse Electronics is a leading supplier in gat, the Skagerrak and the Baltic. below last year’s level and the budget. Scandinavia of complete satellite com- Despite the weak business trends in both munications solutions to the internation- Significant projects/orders include the the Norwegian and Danish offshore in- al offshore industry. In addition, in the following: dustry, the division as a whole only Stavanger area, Norse Electronics is also a • Transmission and communications recorded a slight decline in profits com- significant provider of electrical installa- equipment for the Sound Link. pared to last year. tion works on the mainland.

19 C.W. Obel Maritime

• Start-up of the service and mainte- dinary costs relating to company acquisi- An increasing optimism in the offshore nance contract with Statoil in the Siri tions and the establishment of a sales of- market, grounded in the relatively high Field in the Danish offshore sector fice in the UK. oil prices and positive contribution from • Start-up of delivery of SemSafe, a wa- the acquired activities in the UK and Nor- ter-mist-based fire extinguishing sys- In 1999, Semco Technology acquired ac- way, leads the division to expect a sub- tem, to the Meyer Werft in Germany tivities in the company Chemical Injection stantial rise in profits compared to 1999. • Modifications to the drilling rig Mærsk Systems AS, which has been designing Endeavour and manufacturing chemical injection Semco Maritime Danmark forecasts an • Delivery of switchboards to the Lindø systems for the oil and gas market for ten increase in supplies to the Danish off- Yard’s S-series of container vessels and years. Thus, Semco Technology has ex- shore industry, since the inclination to in- switchboards to Volgograd Shipbuild- panded both its product range and cus- vest in the Danish oil industry is anticipat- ing, Dalian New Shipyard and Jiangnan tomer potential and is now well ed to increase.On the other hand, the Shipyard. equipped to counter competition on Danish shipyard industry is expected to both the national and the international sustain the closure trends characterizing Norse Electronics reported a less satis- offshore markets. the past few years, and for this reason, factory year, since low oil prices seriously activity and turnover in the Danish mar- curtailed the inclination to invest in the With a view to increased internationaliza- ket are forecast to continue declining. primary market, the Norwegian offshore tion, Semco Technology has also estab- sector. lished a sales office in the UK, as London The areas Fire Fighting and Marine Ser- continues to be the metropol for the vice are projected to develop positively Significant events in 1999 include the im- multinational contracting companies in during year 2000, since the strategy is to plementation of a new business system, the offshore line. increase efforts/focus on the interna- which will constitute the platform for fu- tional maritime market. As opposed to the ture control/expansion of the firm. The Significant projects include the following: Danish shipyard industry, global expecta- company established a branch in Bergen, • Fire fighting systems for Esso Jotun tions are favourable, both with respect to which will handle the servicing of cus- FPSO-vessel and for Explorer 1, a the market for new buildings and for the tomers in the local area. In addition, drilling vessel conversion and repairs market. Norse Electronics developed a video con- • Hydraulic power units for the follow- ference system as a supplementary prod- ing subsea projects: The Girassol proj- In addition, continued focus on the busi- uct to the company’s existing communi- ect in Angola, the VASPA project in ness unit’s market potential, both nation- cation system offers. Last, but not least, Brasil and the Gullfaks satellite project ally and internationally, and ongoing im- Norse Electronics established the sub- in Norway. provements in the efficiency of working sidiary, RigNet Operation AS. processes and the introduction of new Outlook for 2000 and more up-to-date business systems Significant projects/orders include the Once the existing business base had been are also expected to bring about higher following: adapted to the vision and strategy for the turnover and earnings in year 2000. • Telecommunications, data and naviga- coming three-year period, the division al- tion packages for the platforms Åsgard located additional resources to the four B, Jotun B, the production vessel strategic competence areas - Telecom, Balder and the drilling rig Vest Venture Marine Service, Fluid Control and Fire • Electro- and automation project in an Fighting. office building, ordered by Halliburton • Establishment and commissioning of Intelsat Ku-band ground-based sta- Renovating project for the government- owned icebreakers Isbjørn and Thorbjørn, tion. Semco Maritime in Frederikshavn.

1999 was also a less satisfactory year for Semco Technology, due to the reluc- tance to invest in new construction proj- ects in the Norwegian offshore sector. The company focused on increasing in- ternationalization and expanding its product program. Earnings followed an unsatisfactory pattern throughout the year, basically due to the low activity lev- el, but to some extent also to the extraor-

20 Because of the current relatively high oil AS and the subsequent potential for pen- The strategic competency areas’ (Telecom, Marine prices, Norse Electronics expects to im- etrating the operating market for off- Service, Fluid Control and Fire Fighting) total share plement a number of new offshore in- shore with these products also means of turnover was 63.5% in 1999. Growth project- ed to increase to 80% in 2002 in these areas. vestments in projects relating to the Nor- positive expectations as concerns the wegian continental shelf. This is expected business area Fluid Control Systems in to contribute to positive developments year 2000. 1999 on the onshore market in Norway, thus impacting positively on the company’s Semco Technology expects positive de- 37% project and service areas. velopments in the sale of fluid control Share from systems and fire fighting systems in the other Norse Electronics also expects a rising international market following the estab- activities activity level in the newly-established lishment of a sales office in the UK, business concept RigNet. With this con- where its key accounts are based. cept the division can now, like several of its largest competitors, also join the out- Given the positive market outlooks and sourcing trend spreading throughout the incipient results from the implemented 63% offshore industry and subsequently enter initiatives, the operating profit for year Share of into framework agreements regarding 2000 is expected to improve significantly competency data operation. compared to the previous year. areas

In general, Norse Electronics expects to Together with the other telecom depart- 2002 improve profit performance in year 2000 ments in the division, Protobase expects 20% compared to the previous year. to increase its existing market share in Share from the offshore industry in the entire North other activities For Semco Technology, the outlook for Sea. Considering its close relations to sev- year 2000 is to initiate postponed field eral of the largest multinational oil com- expansion projects and some new invest- panies, Protobase is also expected to ments in the course of the year, which serve as the dynamo in the division’s in- will raise the company’s potential - espe- ternationalization strategy within tele- cially in the second half of the year - for and satellite communications. participating in new projects within the 80% high-pressure hydraulics and fire fighting Share of areas. competency areas Synergy from the acquisition of dosing systems from Chemical Injection Systems

C.W. Obel Maritime supplies all CO2 fire-fighting systems and smoke detection systems to all Lindø’s newbuildings.

21 VISION C.W. Obel Industriteknik intends to be the first-choice partner in Scandinavia in terms of technical and mechanical installations and service. The company will achieve this objective through constant development of skills and quality and by creating value for customers.

Lars Christiansen, President

C.W. Obel Industriteknik Technical Installations and Service

from 1 March 2000

22 Core Business dustries, steelworks, melting works and structures, ISO-KAP for valves and C.W. Obel Industriteknik ranks among combined heat and power plants flanges and new structures for fire insula- Scandinavia’s biggest companies in its throughout Scandinavia. The business tion. field and focuses on technical and me- unit is one of Scandinavia’s leading sup- chanical installations for the process in- pliers of shutdown services where dead- At end-1999, the business unit com- dustry, combined heat and power plants, lines and manning are paramount. prised Norisol in Denmark at five regional the offshore sector, the shipyard industry Furthermore, the business unit solves addresses, CWO Norisol in Sweden at six and other industries in Denmark, Sweden particularly complex projects and carries regional addresses and Norisol in Norway and Norway where the division’s top- out maintenance work where know-how at two regional addresses. In all three notch skills are in demand. The division is and hydraulic tightening of bolts, on-site countries, proximity to industrial centers engaged in the entire process from engi- machinery milling as well as retubing of and customers is crucial neering and know-how via production heat exchangers and condensers are . for fitting to subsequent service and essential. maintenance. Major Events in 1999 At end-1999, C.W. Obel Industriservice C.W. Obel Industriteknik reported a Activities have been divided into two ob- comprised Skandinavisk Industriservice turnover of DKK 906m for 1999, mainly vious business units with each their own (SIS), operating from three locations in thanks to organic growth of 16% com- speciality, viz. Industrial Services and Insu- Denmark; CWO WIAB in Lysekil, Sweden, pared with 1998. lation Services. However, the two units with the subsidiaries, Hallmek and perform many tasks jointly across national Roneco Montage; as well as the Fjeld- The operating profit is regarded as very borders and areas of activity. stad-group, Norway, with its parent com- satisfactory and much higher than in pre- pany, Fjeldstad, and the subsidiaries, vious years. The division aims to be one of the best Nopicon in Stokke and Norstell in Sta- and best qualified within its areas of ac- vanger. The order book was reduced during the tivity. A long-standing tradition of quality year, standing at DKK 233m on the verge services and professional workmanship, C.W. Obel Isoleringsteknik (Insulation of 2000, down from DKK 373m a year combined with extensive know-how and Services) provides know-how, products earlier. The order intake for the year top-of-the-line competencies in the and services for the prevention of energy worked out at DKK 766m. The average areas, has paved the way for steadily in- loss, sound and noise adjustment and number of employees in the division’s creasing activities in the Scandinavian fire-proofing for a wide range of cus- business units totalled 1,539, and at markets. The presence of companies at tomers in Scandinavia. The business unit 31 December 1999, the number of em- various locations in Denmark, Sweden offers its products and services to the ployees was 1,291. and Norway provides a solid foundation petro-chemical industry onshore and off- for a strong service orientation and high shore, combined heat and power plants, C.W. Obel Industriservice recorded a resource flexibility, making it possible to the food industry, shipyards, the pharma- turnover of DKK 500m for 1999, a 7% handle all types of tasks from small ad- ceutical industry and major construction rise on 1998. justments to large-scale and complicated projects. projects. The operating profit was very satisfacto- The business unit holds a strong expertise ry, and CWO WIAB in Sweden delivered a Financial highlights in and know-how of traditional heat/cold particularly good performance. In 1999, insulation, in terms of both pipe and tank the business unit completed implementa- 1999 systems, production plants, turbine or Turnover 906 water and ventilation installations. Sound Operating profit42insulation, noise attenuation and fire in- Profit margin 4.6 sulation are other areas in which the business unit is highly competent. In C.W. Obel Industriservice (Industrial Denmark, the unit also lets industrial Services) intends to be a significant part- scaffolding. ner for the Scandinavian process industry, with the most important services includ- During the past year, the business unit ing engineering, manufacturing and as- has focused strongly on further develop- sembling of steel structures, process pipe ing its supplementary special products, systems, furnaces, tanks, pressure tanks such as the well-known Norisol Turbine System with, for instance, special and industrial scaffolding. Hence, the Noise insulation and decoration business unit offers its services to the oil reusable cushion panels for turbine insu- in one at Fredericia Bryggeri. Designed ® industry (on/offshore), the petro-chemi- lation, Insuflex , lightweight insulation by Per Arnoldi and made by Norisol. cal industry, the forestry and cement in- for fire insulation of offshore and marine

23 C.W. Obel Industriteknik

Ørbæk Most’s production premises, containing, for instance, a cold store insulated for temperatures down to minus 20 degrees. The insulation was carried out by Norisol.

tion of a business system based on the di- In addition, the companies of C.W. Obel Insulation Services also handles large vision’s shared technological platform. In Industriservice handled a large number of projects across national borders, and March last year, Skandinavisk Industriser- tasks – both jointly and separately. Some Norwegian projects, in particular, have vice acquired all the activities of Per Pe- of these include the following: requested assistance, in the form of crew tersen Rør- og Industrimontage A/S in • Piping project at Statoil, Mongstad from the other two Scandinavian coun- Middelfart and now has a permanent • New convection box at Statoil, tries, for instance. base in Jutland and Funen. Fjeldstad sold Kalundborg off the remaining stake in the surface • Shutdown at Scanraff, Lysekil Independently, the three companies have treatment company, Visman AS, Sta- • Repair of tanks at Esso, Tønsberg completed a number of tasks during the vanger, in June, at the same time as buy- • New factory for Haldor Topsøe, year, including the following: ing another 39% of the shares in the en- Frederikssund gineering company, Nopicon, so Fjeld- • Shutdown at Shell, Gothenburg Denmark stad now has a 90% interest in the com- • Shutdown at Preem, Gothenburg • Boiler and pipe insulation for the REFA pany. Moreover, an agreement for the • Shutdown at Nynäs, Nynäshamn incineration plant, Nykøbing Falster purchase of the last 10% of the shares • Shutdown at Borealis, Stenungsund • Pipe, ventilation and fire insulation at during the next few years has been con- • Scaffolding project at Kværner Unibank, Copenhagen cluded. The last acquisition of 1999 was Rosenberg, Stavanger • Shutdown at Statoil, Kalundborg made in September when CWO WIAB • Scaffolding project at UMOE, • Conversion of block 2, Stigsnæs Værket acquired the entire share capital of Haugesund • M/S Skåne and M/T Tissilaq, Fredericia Roneco Montage AB in Gothenburg for • Mounting work at Cementa Slite, Værft the purpose of gaining a regional Gotland • Renovation work, scaffolding, foothold. • Evaporation system at FDO, Denmark Storestrømsbroen • Six 20,000 m3 tanks for Ventspils • Pipe insulation and fire extinguishing The year 1999 was the second full oper- Nafta, Latvia. at MD Foods, Taulov ating year of C.W. Obel Industriservice • Revision at Sønderjyllands and the year when it became viable to C.W. Obel Isoleringsteknik recorded a Højspændingsværk handle large tasks jointly across national turnover of DKK 408m for 1999, up 27% • Production premises at Ørbæk Most borders through combined utilization of on the year before. The business unit did • Supply of materials and mounting, know-how and resources. not acquire or sell off any companies in Aalborg Boilers, Russia. 1999. The operating profit is considered In Norway, Fjeldstad, assisted by Skandi- very satisfactory, and the nice increase Sweden navisk Industriservice (SIS), performed a was mainly driven by Norisol Norge. • Ship insulation at Fosen Værft, large assembly job for Norsk Hydro at Scan Marine in Norway Sture Terminalen near Bergen. All the companies of this business unit • Revision at the nuclear power plant, have now implemented decentral busi- Oskarshamn In Sweden, CWO WIAB and SIS joined ness systems on a shared technological • Piping and process plant at Borealis, forces to undertake a large rebuilding platform, allowing follow-up on projects. Stenungsund. and extension project for Borealis at “Cracker Expansion” in Stenungsund. Norway This is one of the biggest piping projects • Jotun drill ship for Kværner completed in recent years in Sweden by a •Åsgard B platform for Kværner* local company. • Kårstø gas terminal for Statoil* • Revamp project for Hydro.

* the projects will continue in 2000.

Tanks at Ventspils Nafta, Latvia. Design and projecting were carried out by Skandinavisk Industriservice.

24 Outlook for 2000 New and user-friendly products were C.W. Obel Industriservices turnover The number of new large projects is likely launched in 1999 when cushion projects broken down by countries to fall, and the division’s turnover and for valves, fire-proof plates and fire solu- profits are therefore set to decline. tions for piping attracted a lot of atten- Denmark tion in the market. DKK 89m The order book of Industrial Services is Sweden somewhat slimmer than a year ago, and Norisol is expected to continue to take an DKK 186m the next year’s activities in the Scandina- active part in the structural adjustments vian market are generally expected to be offered by the market. somewhat lower than in 1999.

C.W. Obel Industriservice intends to implement a joint quality assurance sys- Norway tem based on ISO 9000 in the course of DKK 224m 2000. The structural rationalization in the industry is likely to continue during the next couple of years, and C.W. Obel In- C.W. Obel Isoleringstekniks turnover dustriservice plans to take active part in broken down by countries this process.

Hence, an agreement has been conclud- Sweden DKK 86m ed with the shareholders of OIS Contract- ing AS, Kristiansand, for the purchase of the entire share capital of the company with effect on the accounts from 1 March 2000. Before that C.W. Obel Denmark Maritime owned 33% of the company. DKK 192m

This being the case, the turnover for Norway 2000 is estimated to match that for DKK 130m 1999. Profits should be slightly lower, but still satisfactory.

C.W. Obel Isoleringsteknik’s order book is also slimmer than a year ago, and activities in the Norwegian market are ex- pected to decline. So, the division’s turnover is estimated to fall during the next year, although profits should remain at a satisfactory level.

As in the case of Industrial Services, a large number of the technical staff at In- sulation Services will attend an in-house group training program in project man- agement over the next couple of years with a view to increasing safety and prof- itability and ensuring the quality of serv- Inspection of insulation at Strømfjord HG 265 ices. – turnkey contractor was Norisol.

CWO WIAB and Skandinavisk Industriservice staff at "Cracker Expansion" in Stenungsund. 25 Lars Christiansen, President

Poul Nørby, President

Other Companies include undertakings which were segregated in connection with implementation of the Group’s strategic program since they do not, geo- graphically, product-wise or customer- wise, fit into the focus strategy adopted in the spring of 1999. These companies will be sold off as and when the right terms can be obtained.

Skandinavisk Miljø Service The company was taken over by Invest Miljø A/S Danmark and Lurgi Lentjes Bischoff GmbH in Germany on 30 Sep- tember 1999. The sale meant that the Other Companies Group realized a DKK36m profit, of which DKK 14m has been credited to the profit and loss account and DKK 22m was included in the consolidated equity as a reversal of goodwill on consolidation written down earlier.

DGT*Volmatic Core Business DGT*Volmatic is one of the world’s lead- ing companies in the segment for tech- Companies reporting to nology for controlled indoor and outdoor Lars Christiansen, President vegetation. Customers include market gardens, nurseries, greenhouse contrac- tors, plantations, golf clubs as well as properties and equipment requiring spe- cial climate and watering control.

The business unit is a full-line supplier of technical solutions, ranging from product development over production to installa- tion and service.

The parent company is situated in Val- lensbæk and the Danish service and sales department in Odense. The company Company reporting to sells the majority of its products through Poul Nørby, President distributors worldwide, but has also es- tablished its own sales and service com- panies in Germany, France and the USA.

26 SGD-Bera’s universal +8 scaffold erected as tail dock for Maersk Air’s Boeing 737.

Major Events in 1999 1998. The sale of complete compart- The average number of employees was DGT*Volmatic realized a turnover of DKK ments generates a significant proportion 167 for 1999, and the number of em- 83m in 1999 – more or less the same as of the company’s turnover, which ad- ployees stood at 193 at 31 December in 1998. An increasing share of sales is versely affects the company’s earnings 1999. generated in overseas markets since sev- capacity. So, in spite of the high turnover, eral European markets are stagnant or the company’s profit is less satisfactory. Outlook for 2000 actually declining. In these circum- At the beginning of the year, Semco The company’s products have gained a stances, the profit achieved is considered Vakuumteknik was converted into an in- foothold for new types of projects, which highly satisfactory. The average staff dependent public limited company, with- may have a positive impact on turnover. numbered 86 in 1999, and the number out any change in the organization or ac- The restructuring is almost complete, so of staff stood at 90 at the end of the year. tivities as such. profits should be boosted over the next The managing director left the company years. in the first half of the year, and the con- The number of employees averaged 62 in troller was appointed managing director 1999, and the number of employees Brockmeyer GmbH in the interim. stood at 62 at the end of the year. Core Business Brockmeyer primarily concentrates on in- Outlook for 2000 Outlook for 2000 stallation, service and maintenance proj- The recent establishment of the legal en- The prices of railway compartments are ects for the housing, institutional and en- tity, DGT*Volmatic North America, Inc., likely to remain very low the next year, so ergy sectors and on tailor-made concepts should pave the way for a boost in sales the company is considering its strategic for servicing and maintaining power and in the US market. Over the turn of the options for extending its activities to in- weak current installations in the hospital year, the company’s German arm execut- clude sanitary systems for ships and sector. ed a very large order placed by a new re- buildings. These new activities are not search station in Erfurt, Germany, which foreseen to affect the coming year’s Brockmeyer GmbH is headquartered in helps DGT*Volmatic remain a significant turnover and profits, which should be in Duisburg and has its department for en- supplier of this type of sophisticated line with those for 1999. gineering, service and sales in Frohburg. equipment. Trends in the near and Euro- pean markets are likely to decline, so the SGD-Bera Major Events in 1999 business unit is only expected to record a Core Business In 1999, Brockmeyer generated a slight increase in total turnover and de- SGD-Bera is Denmark’s largest company turnover of DKK 239m, about 25% be- rived results. within rental and sale of scaffolds. Its low the previous year’s level. main activities are located in Denmark Semco Vakuumteknik and its products are exported to Sweden The drop in turnover is solely attributable Core Business and the UK, among other countries. to the pronounced shrinking of core busi- Semco Vakuumteknik is a leader in the ness, as the company, in future, will re- manufacture and supply of closed sani- The parent company is situated in Hvid- frain from taking on major building and tary systems for mobile units in the rail- ovre, but regional offices are located at construction projects falling outside the way segment. Only a relatively small four addresses in Denmark. In Norway, scope of the core business contained in number of big companies throughout the subsidiary SBI conducts rental busi- Brockmeyer’s new business strategy. The most of the world manufacture railway ness in Oslo, while a Polish subsidiary, company generated a significant increase carriages, and they all buy the company’s Isopol in Katowice, is the center for pro- in profit compared with the 1998 finan- products. In addition, a large number of duction and rental in its local area. cial year, but the profit is, in itself, still un- national railway companies rely on Sem- satisfactory. co Vakuumteknik’s maintenance and Major Events in 1999 service. SGD-Bera’s turnover for 1999 came to The staff averaged 377 for the year, and DKK 82m and the profit was improved the number of employees was 380 at the The company is located in Odense and its thanks to recent years’ strategic mea- end of the financial year. international business is conducted sures. However, the profit remains unsat- through a network of distributors with a isfactory. Outlook for 2000 wide global coverage. Finally, Semco With effect from 1 January 2000, the ac- Vakuumteknik manufactures its products In early 1999, the company’s manage- tivities of Brockmeyer GmbH were sold under a license in Italy. ment, administration and sales relocated through a management buyout to the to the new premises at Avedøre Holme. company’s day-to-day management. This Major Events in 1999 So they now share a domicile with the leaves the administration company, Sem- Semco Vakuumteknik’s 1999 turnover rental activities in Greater Copenhagen. co Verwaltungs GmbH, which comprises worked out at DKK 94m, on a par with let property and dormant companies.

27 VISION C.W. Obel Ejendomme aims to be an important property company in Copenhagen and Aalborg. C.W. Obel Ejendomme intends to invest in prime properties at attractive locations, which are mainly let for office, shop and educational purposes. C.W. Obel Ejendomme will offer high-quality premises with an attractive layout and a high service level.

Søren Hofman Laursen, President

C.W. Obel Ejendomme Properties

28 Core Business project totals 22,261 m2, for which At the end of 1999, the portfolio of prop- C.W. Obel Ejendomme invests in proper- Nokia has signed a lease for phase 1 of erties comprised 152,367 m2 – 75,829 m2 ties in central Copenhagen and Aalborg. 13,761 m2. The lease includes an option in Copenhagen and 76,538 m2 in The properties are primarily let for office, for phase 2 of 8,500 m2. Moreover, an Aalborg. The breakdown of the premises shop and educational purposes as well as agreement has been concluded with PFA can be seen on page 31. to public institutions and private enter- Byg for the purchase of phase 1, and PFA prises. Byg will also take over phase 2, if com- Warehouse properties are mostly old in- pleted. The profit earned by C.W. Obel dustrial properties presently having an at- The strategy of C.W. Obel Ejendomme is Ejendomme on phase 1 is considerable. tractive location in relation to the expect- to invest in quality properties, i.e. proper- In addition to the site included in the ed urban development, so they are likely ties of high standard in terms of architec- Nokia project, C.W. Obel Ejendomme has to be converted to other purposes in the ture, construction and layout, with an at- other building options in the area, so de- course of a number of years. tractive location in relation to the urban velopments will continue in 2000. development anticipated in Copenhagen The occupancy rate stood at 98 at the and Aalborg. C.W. Obel Ejendomme also has two end of the year. The vacancy rate applies building options for Christianshavn. The to small leases and is attributable to a Financial highlights for the sites were developed in 1999, and an natural turnover in lessees. division, excluding Semco agreement has been concluded with Ejendomsselskab Modern Times Group MTG A/S (TV3, C.W. Obel Ejendomme makes a con- etc.) for the erection of a new administra- tinued effort to sign long-term leases in DKK mill. 1999 1998 tive head office of about 3,200 m2. Fur- order to minimize vacancies, which lead Profit before depreciation 54,781 53,145 thermore, the existing domicile of the to lower operating profits. Hence, at Profit on sale of properties 41,005 0 Aon insurance brokers will be extended end-1999, only 23% of the company’s Profit on ordinary with around 1,600 m2 of impressive new rental income may be lost if lessees vacate operations 84,655 42,437 office space. Construction is underway the premises within one year, and 34% Book value 743,931 761,389 and scheduled for completion in June of the total rental income is ensured for a Book value per m2 4,882 4,800 and September this year. period of at least four years. The certainty of rental income appears from the chart Major Events in 1999 The strategy of C.W. Obel Ejendomme is on page 31. 1999 was a favourable year for the Da- to invest solely in properties in Copen- nish property market. Rents continued to hagen and Aalborg. Hence, agreements The average number of employees for rise for well-situated office space and the were entered into in 1999 for the sale of 1999 was 21, and at 31 December 1999, vacancy rate, especially in Copenhagen, two small properties in Holte and Farum; the number of employees totalled 22, in- was markedly reduced. In Copenhagen, the latter, however, will not be taken over cluding nine janitorial staff members. few premises are vacant and these are until 1 March 2000. Then C.W. Obel mostly of poor standard and secondary Ejendomme will own properties and sites location. only in central Copenhagen and Aalborg.

C.W. Obel Ejendomme, not including Concurrently with its development activi- Semco Ejendomme, reported income in ties, the company continued to improve the size of DKK 97m, up from DKK 96m the properties’ maintenance standards in the year before. The operating profit 1999, and all properties are now in per- came to DKK 55m, compared with DKK fect repair, so it should also be possible to 53m for 1998. The profit before tax was attract well-reputed lessees interested in DKK 65m, against DKK 20m for 1998. signing long-term leases in future, there- Brøstes Gaard in Sales of projects and properties generat- by ensuring a constant occupancy rate Christianshavn has been ed profits of DKK 41m. and steadily rising earnings. completely renovated.

C.W. Obel Ejendomme worked intensive- In 1999, C.W. Obel Ejendomme also as- ly in 1999 on developing the company’s sisted the other divisions of the Group construction opportunities in Sydhavnen with the projecting of new buildings, a and Christianshavn. In cooperation with few major renovation tasks and the sell- Højgaard & Schultz a/s, C.W. Obel Ejen- off of several of the properties not used domme performed project planning for a for the Group’s own activities. new corporate domicile for the Nokia Group in the Sydhavnen dock area. The

29 C.W. Obel Ejendomme

Aalborg The area near the Christianshavn proper- Outlook for 2000 The Møllegade construction project was ty complex has been subject to major C.W. Obel Ejendomme still holds an at- completed in the spring of 1999, and the construction, including the erection of tractive building option at the Aalborg beautiful property is now used for hous- Unibank’s new headquarters, homes be- waterfront. Rents in Aalborg have taken ing units, shops and offices. The comple- hind the Christians Church and the Mini an upturn during the past year, so the tion means that C.W. Obel Ejendomme Metro. These activities are expected to be company will commence development of now owns a complex stretching from Al- completed within the next couple of the site in 2000, with a view to erecting a gade to Danmarksgade where the years, and, in the opinion of C.W. Obel new building within a few years. Mølleå Arcade complex ends. While the Ejendomme, the area will then be an at- Aalborg local authorities were improving tractive residential and non-residential In Copenhagen, the company intends to the layout of the square Mølle Plads, area with a central location in a stimulat- continue developing its opportunities in making it “greener” and with more pop- ing environment. Sydhavnen to pave the way for complet- ular appeal, the interiors of the buildings ing additional construction projects to in Rantzausgade were mildly renovated Semco Ejendomsselskab the extent they are financially interesting. indoors with a view to letting the premis- C.W. Obel Ejendomme is also responsible Furthermore, the company will regularly es for shop and housing purposes, and for the management of Semco Ejen- monitor the property market for oppor- the area now represents a harmonious domsselskab ApS. Semco Ejendomssel- tunities to acquire attractive investment whole. skab owns a number of properties used properties. as domiciles for Semco Danmark. The other two property complexes in Aal- C.W. Obel Ejendomme believes the let- borg, the former tobacco factory and the In addition, the company owns a few ex- ting market will remain favourable in former textile factory, have developed as ternally leased properties. An agreement 2000. The rental outlook is not likely to expected and are now fully let, primarily has been concluded for the sale of these change much in 2000. Hence, the oper- to public lessees under long-term leases. properties, at which time Semco Ejen- ating profit is set to improve. Expecta- domsselskab will become solely an inter- tions do not include the effects of the Copenhagen nal property company. sale of any construction projects. The property market in Copenhagen de- veloped very positively in 1999. In spite The company reported an operating loss of the large number of housing starts in of DKK 11m for 1999. The book value of central Copenhagen, the vacancy rate the company’s properties was DKK 176m has fallen sharply. C.W. Obel Ejendomme at end-1999. The loss for the year is has also experienced this trend, since all strongly affected by the completion of a of its large premises are now let. Vacan- comprehensive renovation and modern- cies in Copenhagen are related to a few ization program for the most important small premises expected to be leased domiciles. shortly.

C.W. Obel Ejendomme bought Brøstes Gaard in Christianshavn in 1997. Reno- vation of the property was completed in 1999, and the property now fits in nicely with the special ambience of Christian- shavn. Moreover, new leases have been signed for most of the premises.

The construction of the new building in Møllegade, Aalborg, was completed in 1999.

30 Breakdown of premises, end-1999

4% 10% Other Shop

10% Housing

12% Ware- 64% house Office and education

Vacancy risk

23% st In cooperation wiht Højgaard & Schultz, 1 year 34% C.W. Obel Ejendomme performed project After year 4 planning for a new corporate domicile for the Nokia Group in Sydhavnen. The project has been sold to PFA.

16% 2nd year

8% 4th year 19% 3rd year

UdviklingenTrend of occupancy i udlejningsprocenten rate

%

100 C.W. Obel Ejendomme builds a new domicile for Modern Times Group / TV3 at Christianshavn. 95

90

85

80 1995 1996 1997 1998 1999

31 Associated Companies

The business area “Associated Compa- The advance in profits is attributable nies” comprises C.W. Obel’s ownership mainly to the House of Prince Group, of major shareholdings, ranging from where earnings from foreign activities, 20% to 50% in several leading compa- above all, are gaining increasing impor- nies, including Skandinavisk Holding A/S tance to the Group. Prince, the largest (35%) and A/S Motortramp (27.2%). cigarette brand in Scandinavia, recorded a slight setback in its market share from The Skandinavisk Holding A/S Group 45.7% to 44.7% in 1998/99. In Den- is composed of two sub-groups, viz. mark, the Prince family’s market share Skandinavisk Tobakskompagni A/S and declined marginally compared to the pre- Skandinavisk Industries A/S. vious year. The bulk of the decline was offset by growth in House of Prince’s Since the financial year of Skandinavisk other markets. In Sweden, sales of Prince Holding ends on 30 June, its profits for rose by 21.8%, resulting in a market the 1998/1999 financial year are includ- share of 28.8%. This once more makes ed in C.W. Obel’s 1999 accounts. Prince the best selling cigarette brand in Sweden. On the markets outside Scandi- Skandinavisk Tobakskompagni’s pri- navia, sales rose 44%. House of Prince’s mary focus is to manufacture and sell to- duty-free sales of cigarettes declined bacco products through the companies 4.9% compared to 1997/98. Duty-free House Of Prince (cigarettes), Nobel Hold- sales within the EU ceased at 1 July 1999, ing (cigars), Orlik Tobacco Company which will have a certain negative impact (smoking tobacco) and J.L. Tiedemanns, on House of Prince’s future earnings. Norway’s biggest manufacturer of ciga- rettes, smoking tobacco and cigar prod- J.L. Tiedemanns’ total volume of ciga- ucts. In addition, the Group sells and dis- rettes was 2bn units. The volume of tributes consumer goods through the smoking tobacco sold in Norway was sub-group Dagrofa A/S. 2,096 tons. Prince is Norway’s largest cig- arette brand, with a market share of In the 1998/99 financial year, the Skandi- 55.1%. Sales of cigarettes in Norway navisk Tobakskompagni Group generat- showed a decline of 3.5%, and J.L. ed a highly satisfactory profit before tax Tiedemanns’ total market share dipped and the share attributable to minority from 76.1% to 75.9%. In Norway, J.L. shareholders of DKK 1,875m versus DKK Tiedemanns’ market share of smoking 1,473m the previous year. The post-tax tobacco rose to 87.7% versus last year’s profit aggregated DKK 1,232m against 87.5%. Within the product categories DKK 916m in 1997/98. The 1998/99 fig- snuff and tobacco products, J.L. Tiede- ures are not immediately comparable manns had a market share of 99.7% and with last year’s figures, as they do not in- 69.2%, respectively. clude J.L. Tiedemanns. J.L. Tiedemanns’ contribution to the post-tax profit Cigar products from Nobel Holding are amounted to DKK 225m. sold worldwide, and the Group’s most important trademarks are Café Créme A proposal for Skandinavisk Tobakskom- and Nobel Petit products. Sales of Henri pagni’s acquisition of J.L. Tiedemanns Winterman’s brands advanced by 25m against the simultaneous issuing of new units to 664m units in 1998/99. The in- series II-shares in Skandinavisk Tobaks- crease was concentrated mainly in France kompagni to Andresen Holding AS, and southern Europe. Total sales of the equal to 17.2% of the share capital, was Nobel brands dropped by 31m units to adopted at the Extraordinary General 319m units. Of these, Danish sales ac- meeting in December 1998. J.L. Tiede- counted for 150m units in 1998/99 ver- manns forms part of the Skandinavisk To- sus 170m units in 1997/98. bakskompagni Group, effective as from 1 July 1998.

32 Orlik Tobacco Company, one of the In Germany, Labofa Büromöbel once In 1999, the shipping company sold m.v. largest players worldwide on the pipe to- more posted a substantial loss, despite “Nordpol” and m.v. “Nordkap” (50,000 bacco market, retained a market share in increased turnover. In addition, the Vario dwt/1994) at a fair price. In July, the part- 1998/99 of about 81% in a sliding Dan- Group recorded increased turnover, al- ners in Nortide Ltd. sold m.t. “Nordfarer” ish market for smoking tobacco. though the profit was down on last year. to Vietnamese interests. Nortide Ltd. was subsequently regrouped, such that coop- Dagrofa, Denmark’s largest consumer On average, the Skandinavisk Industries eration is today shared equally between goods wholesaler in Denmark, has been Group had a staff of 1,818 employees Dampskibsselskabet “Norden” A/S and working throughout most of the finan- during the 1998/99 financial year. Denholm Shipping Group of Glasgow. At cial year on combining the bulk of the end-1999, m.t. “Nordasia” was sold to non-tied grocer sector into one big, pow- The owners behind Skandinavisk Holding Rederiet St. Frederikslund, which then erful unit. Shortly before the close of the have decided that they want to exclude sold the vessel under a long-time charter financial year, Centralkøb A/S and Dagro- the company from the ongoing interna- party to Dampskibsselskabet “Norden” fa A/S signed an agreement to establish a tionalization and consolidation of the A/S. joint company, Super-Gros a.s., at 1 Janu- European office furniture industry. Con- ary 2000. sequently, the decision has been made to In 1999, the shipping company launched seek to divest the office furniture compa- a major new building program within dry On average, the Skandinavisk Tobaks- nies in the Skandinavisk Industries bulk as well as tankers, with the new units being added to the fleet during kompagni Group employed 5,876 per- Group, and in future to focus on the con- year 2000 and 2001. sons in the 1998/99 financial year. tract and institutional furniture market, handled by Fritz Hansen A/S. As a result of the rising activity level in Skandinavisk Industries is one of the the Far East economies, demand was largest office and institutional furniture The A/S Motortramp Group carries on greater for raw materials as well as semi- groups in Europe. It is composed of the shipping activities and its vessels are manufactured goods in the second half companies Fritz Hansen and Labofa in owned by the subsidiary Dampskibs- of 1999. With this increased demand and Denmark, Gispen in Holland, Arenson in selskabet “Norden” A/S, which serves as stockpiling, demand for sea transport of the UK and Vario and Labofa Büromöbel the operating company proper. bulk goods grew. At the same time, the in Germany. high scrapping level in 1998 continued in The shipping company operates in the 1999, which in aggregate improved the The Group reported a pre-tax profit of tramp trade worldwide in both dry and rate level in the fourth quarter of 1999. DKK 17m versus last year’s DKK 146m wet bulk. loss. The profit was affected by extraordi- For the tanker market, 1999 was charac- nary writedowns of buildings and pro- In the course of 1999, the shipping com- terized by turmoil and opposing trends. duction plants of DKK 47m and the result pany’s tanker division underwent a reju- OPEC’s agreement with three non-OPEC of non-continuing activities in the venation process, with old product ton- countries to limit oil production resulted amount of DKK 104m. nage being disposed of while at the same in a downturn in transport needs with time contracts were sought for product the ensuing trimming of freight rates. The Arenson Group in the UK realized a tonnage. The Aframax sector was like- The low rates and doubled bunker prices profit substantially up on the previous wise expanded with modern tonnage. meant such poor earnings that scrapping year, despite declining turnover, due in of tonnage in 1999 reached the highest part to efficiency improvements. The Gis- The dry bulk sector continued to expand level in the past six years. pen Group in the Netherlands also re- its activities, primarily within the Handy- In this light, Motortramp ended the year ported lower turnover, but continues max sector, in step with mounting con- with a satisfactory result, viz. a DKK 18m showing a satisfactory profit. tract volumes. Handymax tonnage was profit versus a DKK 71m loss the previous divested, and contracts for new tonnage year. In Denmark, Fritz Hansen recorded a were concluded. higher turnover and also increased prof- Global market conditions have improved its. Munch Møbler, the subsidiary, more At the beginning of year 2000, the ship- to a certain extent, which is expected to than doubled its turnover and recorded a ping company controlled 30 units to- benefit global trade. At the same time, profit compared to last year’s loss. Labofa talling approx. 2,050,000 dwt, of which the shipping company has positioned realized a slightly lower turnover than 21 are dry bulk vessels (approx. 1,516,000 itself during the 1999 so as to provide an last year and an unsatisfactory profit, one dwt) and 9 are tankers (approx. 534,000 excellent backup for making the most of reason being extraordinary costs con- dwt). Of these the company owns 3 ves- future market fluctuations. Consequently, nected to rationalizing the factories. sels (approx. 403,000 dwt). the shipping company forecasts a sub- stantially improved profit for year 2000, incl. sales gains, compared to 1999.

33 Shareholder Information

C.W. Obel’s Share 1999 Appropriation of Profits 1 January 1999 = index 100. The Supervisory Board proposes the distribution of an 18% dividend similar 140 to last year.

130 Profit appropriation breaks down as fol-

120 lows: (DKK million) 110 18% dividend 36.6 Transfer to reserves 266.1 100 302.7

90 This proposal has been incorporated into the accounting figures, yielding an equity 80 Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. capital at 31 December 1999 of DKK C.W. Obel's Share KFX index Industrial index 1,296m.

Share capital C.W. Obel’s share capital is composed of: Turnover

A-shares, nom. DKK 20,205,000 1000 pcs 120 B-shares, nom. DKK 187,248,700 Total, nom. DKK 207,453,700

100 A-shares 202,050 of DKK 100 each 80 B-shares 1,872,487 of DKK 100 each

60 The voting ratio of A- and B-shares is 40 10:1.

20 Auditors PricewaterhouseCoopers 0 Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. KPMG C. Jespersen

Annual General Meeting List of Stock Exchange Announcements C.W. Obel’s annual general meeting will be held on Monday, 15 May 2000 at 2 Announcement no. Date Subject p.m. at Aalborg Kongres & Kultur Center 99-01 23 Feb. Skandinavisk Tobakskompagni-Group semi-annual report in Aalborg. 99-02 26 Feb. Date for circulation of the summary of the 1998 Financial Statements 99-03 19 Mar. Announcement of the Financial Statements Ownership 99-04 19 Apr. Publication of the date of the Annual General Meeting Pursuant to the requirements of the Da- 99-05 19 Apr. Submission of Financial Statements and notice of Annual General Meeting nish Companies Act, we wish to disclose 99-06 03 May Announcement after Annual General Meeting that the following shareholders are regis- 99-07 18 Jun. Change in the Board of Management of C.W. Obel Group tered as owners of at least 5% of the 99-08 22 Jun. C.W. Obel sells site and construction project in Sydhavnen share capital or hold shares representing 99-09 09 Jul. Date for circulation of semi-annual report at least 5% of the total number of votes: 99-10 16 Aug. New Polish orders running into millions for C.W. Obel Group 99-11 25 Aug. Adoption of the semi-annual report by the Supervisory Board The Labour Market Supplementary 99-12 27 Sep. Skandinavisk Industries for sale after profits announcement Pension Fund (ATP), Hillerød 99-13 03 Nov. Continued progress for Skandinavisk Tobakskompagni-Group 99-14 10 Nov. C.W. Obel Group sells Skandinavisk Miljø Service A/S Det Obelske Familiefond, Aalborg 99-15 03 Dec. C.W. Obel Group takes over UK telecommunications company 99-16 14 Dec. C.W. Obel Group establishes share option scheme for Group executive C.W. Obel A/S owns 40,453 B-shares, staff corresponding to 1.95% of the share

34 capital. No subsidiaries own shares in Financial Analysts Shareholder Value C.W. Obel A/S. C.W. Obel has bought The following financial analysts monitor Shareholder Value gained a real foothold own shares to cover the Group’s existing C.W. Obel B-shares: in Denmark in 1999. As part of its ongo- and future share option programs. ing work on the strategic development of Den Danske Bank the Group, in 1999 the C.W. Obel Group Investor Relations Peter Kondrup completed or embarked on a number of Throughout 1999, C.W. Obel intensified [email protected] measures, which fully comply with the its investor relations with a view to in- +45 3344 0000 general ideas of Shareholder Value. creasing focus on the C.W. Obel share These include: and the Group’s activities. BG Markets Jonas Guldborg Hansen This set of accounts shows the financial In addition to investor meetings held [email protected] highlights of each division. In connection with shareholders and financial analysts, +45 4330 6104 with the described changes in the Group’s the activities comprised the following: legal structure, financial information Dansk Aktieanalyse about the divisions will be publicly avail- On 17 May, the C.W. Obel Group and the +45 3296 0960 able with effect from the year 2000. Danish Society of Financial Analysts host- ed an all-day gathering for financial ana- Jyske Bank As a result of the Group’s strategic focus lysts. Thirty-nine financial analysts at- Niels Høy Nielsen on technical installations and the mari- tended the gathering, where the Group [email protected] time sector, five of the Group’s compa- and its divisions were presented. In pre- +45 8922 2864 nies have been put up for sale. The first senting the divisions, the Group intended of these companies was sold in 1999 and to illustrate the competencies and place- Return another was sold after the closing of the ment in the markets of its business units. In 1999, C.W. Obel shares continued to accounts. The presentation of the Group included a outperform both the KFX Index and the review of the latest developments and a KF-Industry Index. Hence, the share price The C.W. Obel Group established a share briefing on the numerous relations exist- climbed from 722 on 1 January 1999 to option program in 1999 for the Group ing across the business units of the divi- 891 on 31 December 1999, correspond- Management and announced that the sions. After the presentation, the partici- ing to a rise of more than 23%. By way program would be further extended in pants paid visits to Skandinavisk Indus- of comparison, the KFX Index went up the Group in 2000. tries’ subsidiary, Fritz Hansen, and the some 16% and the KF-Industry Index Danish-Swedish tunnel, the latter includ- about 15%. During the period, C.W. ing a tour of the project. Obel distributed an 18% dividend, or about 2.5% in relation to the market On 19 May, the C.W. Obel Group hosted price on 1 January 1999. a similar, but smaller, evening gathering for the Danish Shareholders Association, In the months of January and February where the Group and its divisions were the share price decreased and at 1 March presented. 2000, the share price had reached a level of 846. Investor Relations on the Internet At the C.W. Obel Group’s homepage (www.cwobel.com), visitors can obtain information about share prices and monitor the trend of share prices. It is also possible to subscribe to financial newsletters released by C.W. Obel. The information includes stock exchange announcements, notices of summaries of financial statements, annual accounts and semi-annual financial statements.

35 Accounting Report and General Financial Analysis

Turnover ly weak throughout the year in the The increase recorded by Technical Instal- In 1999, the Group’s turnover amounted southern parts of Sweden. This mainly lations and Service is attributable to C.W. to DKK 4,485m, in line with the year be- had an impact on the division’s ventila- Obel Industriservice where the higher fore. This comes from a 17% rise in the tion activities, which are aimed at new level of activity has had a positive impact. turnover of C.W. Obel Industriteknik, construction. C.W. Obel Maritime’s DKK Moreover, the greater focus on complet- which was offset by a 12% fall in Other 801m turnover represented a minor de- ing projects has helped lift the operating Companies. The remaining three divi- crease of 2% on 1998. The division’s level profit. Finally, Insulation Services, Norisol sions, Semco Danmark, Semco Sverige of activity should be viewed against the Norge, in particular, has shown a satisfac- and C.W. Obel Maritime, have all record- backdrop of a low level of investment in tory performance. ed a turnover on a par with the year be- the Norwegian offshore market caused fore. by low oil prices. Compared to 1998, Semco Danmark’s operating profit declined in 1999, one Trend of the turnover in the divisions Other Companies generated a turnover reason being large writedowns on a proj- 1997, 1998 and 1999. of DKK 560m for 1999, corresponding to ect and keen competition on the market, a fall of 79% compared with 1998. The particularly within HVAC area. fall is primarily due to the restructuring of Other Companies Brockmeyer in Germany, which only The advance reported by C.W. Obel Ejen- C.W. Obel Industriteknik completed small local projects in 1999. domme is related to a gain stemming C.W. Obel Maritime from the development and sale of a con-

Semco Sverige The main part of the acquisitions or ac- struction project on some of the division’s

Semco Danmark tivities was concentrated towards the sites in Sydhavnen. This gain is partially end of the year, so they have only had a offset by costs incurred by Semco Ejen- 5000 small impact on the turnover for the year. domsselskab ApS for the maintenance of a couple of Semco Danmark’s domicile 4000 Total rent revenues recorded by C.W. properties. Disregarding this, the operat- Obel Ejendomme remain unchanged at ing profit recorded by C.W. Obel Ejen- 3000 DKK 100m in 1999. domme is on a par with that for 1998.

2000 The Group’s total order intake for 1999 The rise in operating profit generated by amounted to DKK 4,002m, down from Other Companies is ascribable to all com- DKK 4,126m the year before. The vol- panies, but the German activities. The 1000 ume of orders at end-1999 was DKK turnover of the production companies 1,243m, compared with DKK 1,726m for has been virtually constant, so the rise 0 1997 1998 1999 the year-earlier period. In particular, the was achieved through tight cost control. decline in order volume at end-1999 was The German company Brockmeyer re- ascribable to a fall in the number of ported a loss for 1999 slightly higher In C.W. Obel Industriteknik, which gener- large-scale projects. than in 1998. The loss springs from provi- ated a turnover of DKK 906m in 1999, sions made at end-1999 for expected the performance of Industrial Services Operating Profit losses in connection with the sale of the was positively influenced by two large The trend of the operating profit from activities on 1 January 2000. The ordinary projects in CWO WIAB, Sweden, and 1998 to 1999 is shown in the following operations of Brockmeyer showed satis- Fjeldstad, Norway. The increase in Insula- table, broken down into business sectors factory progress in 1999. tion Services’ turnover is mainly attribut- and Other Companies: able to Norisol Norge, which, as in 1998, Development costs include a rise in IT nearly doubled its turnover. The increase DKK million 1999 1998 costs. In particular, resources have been should be seen in the light of generally Semco Danmark 35 allocated to improving and standardizing subdued activity in the Norwegian mar- Semco Sverige 6 the Group’s IT systems and business rou- ket in 1999. C.W. Obel Maritime 8 tines, and the costs of ensuring year C.W. Obel Industriteknik 42 2000 compliance for the Group’s existing Technical Installations and Service 91 68 Semco Danmark came short of boosting systems have been high. C.W. Obel Ejendomme, its 1999 turnover, which worked out at including Semco Ejendomsselskab 79 57 DKK 1,777m, because activity on a few Other Companies -16 -29 large projects was slower in 1999 com- Development costs -18 pared with the year earlier. Semco Group costs -26 -22 Sverige recorded a turnover of DKK Operating profit 110 74 485m for 1999. The market was general-

36 Financial Items Profit for the Year Financial net costs worked out at DKK The post-tax profit for 1999 amounts to 54m in 1999, up from DKK 51m in 1998. DKK 303m, which is 49% higher than in Total financial net costs for 1999 include 1998. unrealized net capital losses of DKK 12m on the Group’s portfolio of shares and Balance Sheet bonds compared with a net capital gain The balance sheet total at 31 December of DKK 3m in 1998. 1999 stood at DKK 3,704m versus DKK 3,821m a year earlier, and can be broken The total financial net costs of DKK 54m down as follows: should be seen in relation to the total in- terest-bearing net liquidity, i.e. cash and securities less deduction for interest- Share of Share of bearing short- and long-term debt, Assets (DKK million) 1999 balance sheet 1998 balance sheet standing at DKK 1,012m and DKK 893m, Tangible fixed assets 1,341 36 1,355 35 respectively, at the beginning and end of Financial fixed assets 638 17 550 14 1999. Based on the average interest- Stocks, etc. 363 10 415 11 Debtors 969 26 897 23 bearing net debt over the year, total net Cash and securities 393 11 604 17 interest amounted to about 5.7%, or Total assets 3,704 100 3,821 100 4.4% excluding capital losses. Liabilities Equity, incl. minority shareholders 1,296 35 1,075 28 Associated Companies Provisions 131 3 100 3 The profit shares from Associated Com- Interest-bearing short- and long-term debt 1,286 35 1,616 42 panies rose from DKK 280m in 1998 to Short-term non-interest-bearing debt 991 27 1,030 27 DKK 343m in 1999. This improvement is Total liabilities 3,704 100 3,821 100 due to the progress of all Associated Companies. The profit on ordinary opera- tions before tax reported by Skandinavisk Tobakskompagni was up 27% to DKK 1,875m for the period 1 July 1998 to 30 June 1999. Skandinavisk Industries re- ported a rise in the profit on ordinary op- erations before tax of DKK 163m, from a loss of DKK 146m in 1997/98 to a profit of DKK 17m for 1998/99. Motortramp realized a profit on ordinary operations before tax of DKK 18m for the 1999 fi- nancial year compared with a loss of DKK 71m in 1998.

Profit on Ordinary Operations Before Tax The profit on ordinary operations before tax stands at DKK 413m, up 37% on 1998’s DKK 303m.

Taxes for the Year Total taxes for 1999 amount to DKK 109m, equal to 27% of the profit on or- dinary operations before tax compared with 34% in 1998. The comparatively low tax payment is due in whole or in part to tax-free gains on equities and properties sold and utilization of tax losses relating to prior years.

37 Accounting Report and General Financial Analysis

On the asset side, small changes are seen Cash Flow before Financing Portfolio in the relative shares of the individual bal- Activities In 1999, Danish interest rates were gen- ance-sheet categories since cash and se- The cash flows for 1999 and 1998 bro- erally on an uptrend, in terms of both curities has dropped from DKK 604m in ken down into main items are: short- and long-term interest rates. 1998 to DKK 393m – a fall in the relative Trends were on occasion turbulent, pri- share from 17% in 1998 to 11% in (DKK million) 1999 1998 marily in the short segment. 1999. This decline stems from a reduc- Cash flow from tion of the bond portfolio and the estab- operating activities 123 35 The Group’s general principle for the lishment of cash pool schemes. Purchase and sale of tangible portfolio is that the interest risk exposure and financial fixed assets, must be limited; consequently, C.W. On the liabilities side, the fall in cash and companies and activities -110 -138 Obel’s portfolio of DKK 278m consists of securities also causes a fall in interest- Dividend received 158 159 short-term government bonds and mort- bearing short- and long-term debt from Cash flow before gage-credit bonds. The weighted adjust- DKK 1,640m in 1998 to DKK 1,286m in financing activities 171 56 ed duration of the bond portfolio 1999. Hence, the Group has lowered its amounted to 4.34 at the end of 1999. net interest-bearing debt by DKK 119m The DKK 115m improvement can be bro- from DKK 1,012m in 1998 to DKK 893m ken down into the following main items: The return on the financial portfolio has in 1999, a 12% reduction. been affected by substantial unrealized (DKK million) capital losses, but if allowance is made The solvency ratio improved from 28% in Improvement in profit for the direct interest yield and the unre- 1998 to 35% in 1999. A writedown of before depreciation and tax 46 alized rise in the market value of the port- goodwill connected to the acquisition of Increase in financial items -3 folio’s share of Group interest-bearing activities and shares in subsidiaries ad- Taxes paid and provisions 29 debt which, according to the accounting versely affected the trend of the equity Decline in funds tied up policies of the Group, is not to be booked capital by an aggregate DKK 37m. This is in operating capital 15 as income, the return is satisfactory. partially offset by a reversal of goodwill Decline in investment in tangible of DKK 22m previously written down in fixed assets and purchase and sale The Group’s liquid funds at 31 December of companies and activities 28 connection with the sale of Skandinavisk 1999 of DKK 109m are spread over a Miljø Service A/S. In addition, the equity Total improvement 115 wide range of business units and various capital was adversely influenced by a currencies. Except from partly owned ac- writedown totalling DKK 38m on own Financial Comments tivities, all the Group’s business units are shares. General taking part in cash pool schemes or in- C.W. Obel’s policy for the Group’s finan- terest netting agreements comprising the Portfolio of Work in Progress cial activities is to obtain a satisfactory re- local currency of the individual business The portfolio of work in progress calcu- turn and to minimize the impact of non- unit. lated at cost at 31 December 1999 stood operational risks, with due regard to the at DKK 1,683m, down from DKK 1,717m size and likelihood of risk compared with Banks a year earlier. the costs of hedging such risk. In 1999, C.W. Obel combined the Group’s credit facility needs in four cash The profit on account carried to income This being the case, the result of C.W. pool schemes in the Group’s two Danish at the end of 1999 amounts to DKK Obel’s financing activities in 1999 was banks represented in Denmark, Sweden 259m, or 13.3%, versus DKK 287m, or satisfactory in the light of generally rising and Norway. The two banks are exten- 14.3%, at the end of 1998. interest rates in the year. sively represented in the geographical areas where the C.W. Obel Group is The portfolio of work in progress at 31 The principal responsibility of C.W. Obel’s located and operates. December 1999 includes a large project central finance function is to optimize in Semco Danmark, which will have a the Group’s financial structure and to en- Moreover, the initiatives taken to ensure negative impact on the profit on account sure that the Group’s considerable finan- that the Group’s business units make use percentage. If the portfolios at the end of cial strength benefits all units of the of efficient cash management routines, 1999 and 1998 are adjusted for this proj- Group. Furthermore, the central finance such as electronic payments transfer sys- ect, the percentages will be 15.9% and function must regularly establish and re- tems fully integrated with their general 14.0%, respectively. duce the Group’s financial and exchange- ledger systems, were continued in 1999. rate risks.

38 Bank facilities The Group’s guarantee programs aggre- Insurance program In addition to the C.W. Obel Group’s bi- gate DKK 976m, of which DKK 626m has When projects are initiated, C.W. Obel lateral loan agreements totalling DKK been utilized. wants to ensure that the necessary pre- 1bn spanning several years, the Group cautions have been taken to cover insur- has several banking facilities at its dis- Foreign exchange able risks associated with the project. posal. Overall, the Group’s credit facilities The overall strategy of the C.W. Obel Thus, to ensure uniform coverage of other run into DKK 1.5bn. At the end of 1999, Group is to limit and hedge foreign ex- risks in all the business units of the Group, DKK 906m had been drawn under the change risks. In general, the C.W. Obel an international group insurance program facilities, of which DKK 288m was in Group’s activities are based on local has been implemented. foreign currency. turnover, and consequently the need is basically limited. The Group is constantly At the end of 1998, the bulk of the taking steps to limit foreign exchange Group’s short-term debt was converted risks; if these efforts are insufficient, the into fixed-interest loans. Loans totalling risk is hedged or forward contracts con- 1 DKK 600m were converted into 3 /2- and cluded. 1 5 /2- year fixed-interest loans. At 31 December 1999, C.W. Obel had a Mortgage-credit loans portfolio of forward contracts totalling The Group’s financing of operating prop- DKK 20m, more than a 50% reduction of erties and letting properties amounts to the amount at 31 December 1998, the DKK 371m and is based on 10- and 20- main reason being the sale of Skandi- year mortgage-credit loans; the term to navisk Miljø Service A/S since this compa- maturity is determined on the basis of an ny’s activities, to some extent, were assessment of a number of factors, in- hedged by forward contracts. cluding the intended use and the term of the relevant lease agreement. In connec- Moreover, the introduction of the euro tion with the general rise in interest rates has reduced the need for some of the in 1999, remortgaging was carried out Group’s export companies to hedge for- for several existing loans, and the eign exchange risks, because the possibil- Group’s capitalized capital losses were ity of matching is greater. sharply reduced in connection with capi- tal gains on this remortgaging. The Group’s general principle is to limit the impact of fluctuating foreign ex- At 31 December 1999, the Group had change rates on the Group’s equity capi- liquid funds and unutilized credit facilities tal by matching net investments in for- totalling DKK 1,001m. eign subsidiaries with financing in the same currency. Guarantees In connection with the Group’s operating activities, various types of guarantees need to be issued. The C.W. Obel Group has achieved a number of synergies by establishing two international guarantee programs and ensured that the Group’s combined financial strength gives the in- dividual group companies a comparative advantage. Period Facility Of which utilized (DKK million) (DKK million) Bank credits < 3 years 1,013 524 Bank credits > 3 years 510 391 Mortgage credits 20 years 371 371 1,894 1,286 Securities 284 Liquid funds 109 Unutilized credit facilities 608 1,001 Net debt at 31 December 1999 893

39 Accounting Policies

General At the date of acquisition the difference be- been applied for subsidiaries which have en- The consolidated accounts and the annual ac- tween acquisition price and equity value of the tered into long-term contracts, and the value counts of the Parent Company for 1999 have acquired undertaking is calculated after an ad- of the output of the year, including a prudently been prepared in accordance with the Danish justment of the individual assets and liabilities calculated profit, is thus recognised in the profit Company Accounts Act and the guidelines is- to values which reflect the values of both as- and loss account as the work progresses. Ex- sued by the Copenhagen Stock Exchange on sets and liabilities to C.W. Obel A/S. pected losses on unfinished long-term con- the financial reporting of listed companies. tracts are charged to the profit and loss ac- The accounting policies are unchanged from In situations where the acquisition price ex- count. The stage of completion of long-term last year. ceeds the calculated net asset value at the date contracts is determined as the proportion of of acquisition, the difference will be written off costs incurred to date as compared to the total In 1999, the Group bought own shares, for against reserves in the year of acquisition as budgeted costs for the completion of the con- which reason a section has been included re- goodwill on consolidation. Any negative differ- tract. garding valuation of own shares. In addition, a ence (badwill), which can be attributed to fu- section dealing with provisions has been in- ture operating losses, is recorded under provi- Other income from the sale of goods and ser- cluded. This does not reflect a change in ac- sions. vices is recognized in the profit and loss ac- counting policies compared to the past, but count if delivery has been made before the end rather amounts to a clarification. Minority interests of the year. The calculation of the consolidated profit or Consolidation loss and shareholders’ equity should include a Result of holdings in subsidiaries/ The consolidated accounts comprise the Parent separate description of the proportionate associated companies Company C.W. Obel A/S and all companies in share of the subsidiaries' profit or loss and The result of holdings in subsidiaries/associat- which the Parent Company holds more than capital and reserves which is attributable to ed companies comprises the proportionate 50 per cent of the share capital or in any other minority interests. shares of the profits or losses before taxation in way has a controlling interest. subsidiaries/associated companies, cf. last Foreign currency year's annual accounts. The proportionate The consolidated accounts have been pre- Assets and liabilities expressed in foreign cur- share of tax in subsidiaries/associated compa- pared on the basis of the individual companies' rencies are translated into Danish kroner (DKK) nies is included in taxation in the profit and loss accounts by adding items of a uniform nature at the exchange rates ruling at the balance account. and subsequently eliminating intercompany sheet date or at the rate at which they have turnover, profits, interest, dividends, accounts been hedged. Realized and unrealized ex- Interest income and interest expenses and shareholdings. change rate gains are included in the profit Dividends are recorded as income in the year in and loss account except in the situations listed which dividend is declared and distributed. The Holdings in associated companies are stated at below. interest income and interest expenses which the proportionate share of the equity value of relate to the financial year are included in the such companies with a proportional deduction The profit and loss accounts of foreign sub- profit and loss account. Realized capital gains of unrealized intercompany profits. Joint ven- sidiaries are translated into Danish kroner at and losses on securities are included in the tures, which are comparable to associated the exchange rate at the transaction date, profit and loss account together with unreal- companies, are proportionally consolidated. whereas the balance sheet is translated at the ized losses in relation to the purchase price. rates ruling at the balance sheet date. Any ex- Associated companies are undertakings in change adjustments of the net worth of the Unrealized gains on securities are posted to the which the Group holds between 20 and 50 per subsidiaries at the beginning of the year and revaluation reserve under shareholders equity cent of the capital without having a controlling long-term accounts with subsidiaries are taken after deducting deferred taxation. interest. directly to shareholders’ equity. Differences be- tween the subsidiaries' net income at the ex- Depreciation Immaterial associated companies are included change rate at the transaction date and the Tangible fixed assets are depreciated over their in the consolidated accounts separately at his- balance sheet date are also taken directly to estimated useful lives. Based on the purchase torical costs. shareholders’ equity. prices, depreciation charges are pro-rated per month, as follows: Newly acquired undertakings are included in Unrealized exchange adjustments on forward the consolidated accounts and the accounts of contracts which are entered into for the pur- Industrial properties Not exceeding 50 years the Parent Company from the date of acquisi- pose of hedging income and expenses in the Leasing properties Not exceeding 100 years tion. coming years are postponed until the sale Fixtures in buildings 10 to 25 years which the contracts are hedging is invoiced. Leasehold improvements Not exceeding Undertakings, which have been sold or discon- Other exchange adjustments are included in 10 years tinued, are included in the profit and loss ac- the profit and loss account. Technical plant and machinery 5 years count up to the date of sale or discontinuation. Other plant, operating Comparative figures and key figures have not Profit and Loss Account equipment, furniture and fittings 3 to 5 years been adjusted for newly acquired undertak- Net turnover Motorcars 5 to 7 years ings or undertakings which have been sold. The percentage-of-completion method has Rental equipment 10 years

40 Capitalized market value losses in connection Balance Sheet prices at the end of the year. However, callable with the conversion of mortgage credit loans Tangible fixed assets bonds bought below par value are included at are depreciated over the shorter of the term of Tangible fixed assets are stated at historical cost prices that do not exceed par value. the new loan and the term to maturity of the less depreciation charges and, for specific prop- loan redeemed. erties, plus revaluations made in previous years. Provisions Provisions are made for pension commitments Assets with a cost of less than DKK 8,900 per Expenses paid for the purpose of improving that are not insurance-backed. Provisions are unit are charged to the profit and loss account the property compared to the standard at the computed as the capitalized value of the anti- in the year of acquisition date of acquisition are capitalized and amor- cipated future pension commitments. tized as additions to the historical cost of the Maintenance of properties property. Similarly, expenses paid for major im- Provisions for warranty work, etc. are made to Costs paid in connection with maintaining the provement of large leasehold premises when the extent that - once orders are completed for standard of the properties are charged to the signing new leasing contracts are capitalized accounting purposes - any claims from cus- profit and loss account after the completion of and amortized. tomers remain unsettled, or if there is any risk the maintenance work. that claims under a warranty may be made, or Subsidiaries/associated companies if any other claims have been threatened or are Taxation Holdings in subsidiaries and associated compa- likely to arise. Provisions for corporation tax payable in the nies are valued according to the equity method, following year are made on the basis of the ex- i.e. at a value corresponding to the proportion- Cash flow statement pected taxable income. ate share of such companies’ capital and re- The consolidated cash flow statement is drawn serves less unrealized intercompany profits. up according to the indirect method of presen- Furthermore, provisions for deferred tax liabili- Subsidiaries with a negative equity value are tation. The cash flow is classified by the three ties are made to meet the tax that may become stated at DKK 0. In addition, amounts owed by activities, operating, investing and financing payable as a result of differences between the such subsidiaries are written down by the Par- activities, and it shows the group's cash and result according to the annual accounts and ent Company's share of the negative equity val- cash equivalents at the beginning of the year the taxable income, and to meet any tax which ue. Any remaining commitment is included in and at year-end. may accrue in connection with the sale of as- the balance sheet under short-term creditors. sets at their book value. However, no provi- The consolidated cash flow statement is ad- sions are made for deferred taxation on indus- Own shares justed for additions and disposals of assets and trial properties. Nor do provisions for deferred Sale and acquisition of own shares are posted liabilities in connection with the acquisition tax liabilities include contingent tax on hold- to other reserves under shareholders’ equity. and disposal of undertakings. ings in subsidiaries and associated companies. Deferred tax is calculated in accordance with Stocks Cash flows arising from operating the current tax rules, based on a corporate tax Stocks are stated at the lower of historical cost activities rate of 32%. in accordance with the FIFO method and net – are calculated on the basis of the profit or realizable value. loss before depreciation and are adjusted for The Parent Company is taxed jointly with a non-cash items and changes in the operating number of wholly-owned Danish subsidiaries. The cost of work in progress and finished capital. Adjustments are made for taxes paid. Both current and deferred Danish corporation goods includes direct costs of materials and taxes for the jointly-taxed Danish companies labour. Finished goods of own production also Cash flows from investing activities are fully provided for in the Parent Company include a charge for production overheads. Ob- – comprise payments generated from acquisi- because the Parent Company pays the corpora- solete or slow-moving items are written down. tion and sale of fixed assets and securities in- tion tax for the jointly-taxed companies. The cluded in investing activities. Cash flows from Group's Danish jointly-taxed subsidiaries are Work in progress on behalf of third parties is investing activities also include dividends re- therefore not subject to Danish corporation tax. stated at direct production costs plus the profit ceived from associated companies and net in- calculated for each individual job. Progress vestments in respect of acquisition and dis- Sale/lease-back billings and provisions relating to potential posal of undertakings. Profit on sale/lease-back contracts entered into losses are not included. Progress billings in ex- is included as a provision in the balance sheet cess of the completed share of the contracts Cash flows from financing activities and is taken to income as the leasing instal- are recorded separately and stated as prepay- – comprise payments to and receipts from ments are received. ments under short-term creditors. shareholders and raising and repayment of mortgage loans and other long-term loans. Development costs Debtors Development costs and expenses for license Debtors are stated at nominal value less provi- Cash and cash equivalents rights are charged to the profit and loss ac- sions for bad debts. The provisions are based – include cash at bank and in hand and other count when incurred. on an individual evaluation of the debtors. items included in the group's short-term cash management, including listed securities and Other financial fixed assets bank debt. Listed bonds and shares included under cur- rent assets are recorded at the officially quoted

41 ResultatiopgørelseSignatures and Auditors’ for 1999 Report

Copenhagen, 29 March 2000

Management

Mogens Hugo Jørgensen (President and CEO)

Supervisory Board

Hans Werdelin Frederik Chr. Obel Morten Balling (Chairman) (Deputy Chairman)

Steen Engel Erik Højby Hansen Hans Chr. Mølau (Employee Representative) (Employee Representative)

Anders Obel Birger Riisager Finn Sørensen (Employee Representative)

Auditors’ Report included, based on an assessment of Opinion We have audited the consolidated ac- materiality and risk, an examiniation of In our opinion, the consolidated accounts counts and annual accounts of C.W. the basis and evidence supporting the and annual accounts have been presented Obel A/S for 1999 as presented by amounts and other disclosures in the in accordance with the accounting management. accounts. Furthermore, we assessed the requirements of Danish legislation and accounting policies applied and esti- give a true and fair view of the assets and Basis of Opinion mates made by management and evalu- liabilities, financial position and result for We planned and performed our audit in ated the overall adequacy of the presen- the year of the Group and the Parent accordance with generally accepted tation of information in the accounts. Company. auditing standards as applied in Denmark to obtain reasonable assurance that the Our audit did not give rise to any qualifi- accounts are free from material errors or cations. omissions. Our audit

Copenhagen, 29 March 2000

PricewaterhouseCoopers KPMG C. Jespersen

Jørgen Cramon Jørgen Antonsen Arne Nielsen Per Ejsing Olsen State Authorised Public Accountant State Authorised Public Accountant State Authorised Public Accountant State Authorised Public Accountant

42 42 Consolidated Profit and Loss Account

Group Parent Company Note (DKK ’000) 1999 1998 1999 1998

1 Net turnover 4,484,923 4,457,548 Cost of sales (1,802,249) (2,001,824) Gross profit 2,682,674 2,455,724

Rental and other operating income 154,026 121,726 99,882 45,321 2 Staff costs (2,137,614) (1,969,299) (29,030) (12,545) 3 Other external costs (494,387) (449,661) (22,679) (37,931) Profit before depreciation 204,699 158,490 48,173 (5,155)

10 Depreciation on fixed assets (94,374) (84,033) (6,469) (5,342) Profit/loss before financial items 110,325 74,457 41,704 (10,497)

4 Income from other investments 991 162 5 Financing income 38,754 54,600 40,071 34,747 5 Financing expenses (93,470) (106,097) (59,962) (52,854) Profit on ordinary operations 56,600 23,122 21,813 (28,604) excluding subsidiaries and associated companies

Sale of subsidiaries 14,180 Share of profits from subsidiaries 44,001 55,919 6 Share of profits from associated companies 342,523 279,519 345,747 278,516 Profit on ordinary operations before tax 413,303 302,641 411,561 305,831

7 Tax on profit for the year, group companies (5,190) 10,452 (5,190) 10,171 Tax on profit for the year, associated companies (103,675) (113,646) (103,675) (113,365) Consolidated profit 304,438 199,447 302,696 202,637

Attributable to minority interests (1,742) 3,190 C.W. Obel’s share of the profit for the year 302,696 202,637 302,696 202,637

43 Assets

Balance Sheet at 31 December 1999 Group Parent Company Note (DKK ’000) 1999 1998 1999 1998

Fixed assets: 10 Tangible fixed assets: Land and buildings 1,073,017 1,117,327 312,093 340,339 Plant and machinery 76,588 44,912 - - Other plant, operating equipment, fixtures and fittings 144,408 150,570 9,122 4,339 Equipment for lease 29,293 23,864 - - Assets in course of construction 18,328 18,538 13 5,249 1,341,634 1,355,211 321,228 349,927

11 Investments: Holdings in subsidiaries 474,240 633,187 6 Holdings in associated companies 636,437 547,825 635,133 544,543 Other securities and holdings 1,255 2,428 - - 637,692 550,253 1,109,373 1,177,730 Total fixed assets 1,979,326 1,905,464 1,430,601 1,527,657

Current assets: Stocks, etc.: 8 Stocks 174,439 192,403 - - 9 Work in progress on behalf of third parties 188,747 221,686 - - 363,186 414,089 - -

Debtors: Trade debtors 835,200 803,626 - 654 Amounts owed by subsidiaries - - 466,652 358,886 7 Corporation tax 2,646 - 5,704 5,938 Other debtors 114,247 78,410 43,772 15,021 Prepayments and accrued income 16,201 15,219 - - 968,294 897,255 516,128 380,499

Securities: Bonds 278,462 382,484 278,462 227,888 Shares 5,508 5,480 5,100 5,100 283,970 387,964 283,562 232,988

Cash at bank and in hand 109,146 216,387 89,785 164,515 Total current assets 1,724,596 1,915,695 889,475 778,002

Total assets 3,703,922 3,821,159 2,320,076 2,305,659

44 Liabilities

Balance Sheet at 31 December 1999 Group Parent Company Note (DKK ’000) 1999 1998 1999 1998

12 Shareholders’ equity: Share capital 207,454 207,454 207,454 207,454 Revaluation reserves 4,358 12,490 4,358 5,783 Other reserves and retained profit 1,084,291 851,532 1,084,291 858,239 Total shareholders’ equity 1,296,103 1,071,476 1,296,103 1,071,476

Minority interests 421 3,692 - -

Provisions: 7 Deferred tax 23,132 26,187 14,734 21,745 Guarantee obligations 36,674 35,451 - 3,000 13 Other provisions 71,020 37,958 18,683 9,477 Total provisions 130,826 99,596 33,417 34,222

Creditors: Long-term creditors: 14 Mortgage debt 347,791 383,698 64,637 71,947 Bank loans 773,979 970,851 764,122 970,851 Other long-term creditors 33,475 23,115 6,347 6,651 Total long-term creditors 1,155,245 1,377,664 835,106 1,049,449

Short-term creditors: Short-term portion of long-term creditors 23,368 38,589 7,310 6,943 Bank debt 140,670 223,188 46,393 13,791 Prepayments from customers 116,176 193,625 2,110 - Trade creditors 321,958 295,423 9,360 2,303 Amounts owed to subsidiaries - - 34,323 82,124 7 Corporation tax - 1,072 - - Other short-term creditors 452,309 441,692 19,340 7,962 Accruals and deferred income 30,232 37,445 - 47 Dividends 36,614 37,697 36,614 37,342 Total short-term creditors 1,121,327 1,268,731 155,450 150,512

Total creditors 2,276,572 2,646,395 990,556 1,199,961

Total liabilities 3,703,922 3,821,159 2,320,076 2,305,659

15 Securities pledged 16 Contingent liabilities

45 Cash Flow Statement for the Group

Note (DKK ’000) 1999 1998

Cash flow from operating activities: Profit for the year before depreciation 204,699 158,490 Financial items, net (54,670) (51,740) Change in provisions 34,285 (9,249) Taxation paid (5,158) 8,990 Cash flow before change in operating capital 179,156 106,491

Change in stocks and work in progress (24,457) (44,633) Change in short-term debtors (72,255) (125,735) Change in short-term creditors, etc. 40,494 98,887 Change in operating capital (56,218) (71,481)

Total cash flow from operating activities 122,938 35,010

Cash flow from investing activities: Dividend from associated companies 158,465 158,788 17 Acquisition and sale of companies and activities (9,632) (2,707) Acquisition and sale of tangible fixed assets (62,601) (138,855) Acquisition of own shares (37,749) - Net investments in financial fixed assets 93 4,082 Total cash flow from investing activities 48,576 21,308

Cash flow before financing activities 171,514 56,318

Cash flow from financing activities: Dividend paid to shareholders (37,697) (31,692) Raising of long-term loans - 226,451 Repayment of short-term loans (20,124) (144,850) Repayment of long-term loans (221,109) (40,311) Total cash flow from financing activities (278,930) 9,598

Total cash flow (107,416) 65,916

Cash and cash equivalents at the beginning of the year 381,163 311,919 Regulations of cash and cash equivalents at the beginning of the year and cash from acquired companies (21,301) 3,328 Cash and cash equivalents, end of year 252,446 381,163

comprising: Cash 109,146 216,387 Listed securities 283,970 387,964 Bank debt for financing of operations (140,670) (223,188) Total 252,446 381,163

46 NoterNotes

Group Parent Company (DKK '000) 1999 1998 1999 1998

1. Net turnover Market value of completed contracts 4,395,841 3,774,136 Market value of work in progress, year-end 1,942,182 2,003,892 Market value of work in progress, beginning of year (2,003,892) ( 1,547,576) Exchange rate adjustments (39,030) 35,390 Market value of work in progress, acquisition (424) - Turnover in respect of contracts 4,294,677 4,265,842

Other turnover 190,246 191,706 Total net turnover 4,484,923 4,457,548

Net turnover broken down by markets Denmark 2,382,576 2,323,022 Abroad 2,102,347 2,134,526 4,484,923 4,457,548 2. Staff costs Wages and salaries (1,906,277) (1,769,279) (27,587) (12,282) Pensions and pension contributions (56,909) (40,396) (544) (164) Social security costs (174,428) (159,624) (899) (99) (2,137,614) (1,969,299) (29,030) (12,545) Total remuneration in the Group of: The Supervisory Board of the Parent Company (1,375) (1,313) (1,375) (1,313) The Management of the Parent Company (3,095) (3,928) (3,095) (3,928) Average number of full-time employees 6,400 6,149 38 14

The Group Management and a number of executive staff members have an option to purchase 13,834 shares from the company’s portfolio of own shares at the price of 850. The options may be exercised from 15 September 2002 until six weeks after the announcement of the Financial Statements for 2004.

3. Fees for the auditors appointed at the General Meeting Fees for statutory audit: PricewaterhouseCoopers 220 205 KPMG C. Jespersen 185 175 Services other than audit: PricewaterhouseCoopers 679 403

4. Income from other investments Capital gains and dividends 991 162 991 162 0 0

5. Financing income and expenses Interest received 33,375 41,003 39,973 32,972 Capital gains and dividends 5,379 13,597 98 1,775 38,754 54,600 40,071 34,747

concerning subsidiaries 18,177 15,308 Interest paid (75,611) (94,955) (45,092) (50,983) Capital losses and writedowns (17,859) (11,142) (14,870) (1,871) (93,470) (106,097) (59,962) (52,854)

concerning subsidiaries (3,911) (3,485)

47 Notes

Group Parent Company (DKK '000)

6. Share of profits from associated companies Profit for the Book Profit for the Book Ownership year before tax value year before tax value Skandinavisk Holding A/S, Søllerød 35.0% 340,795 550,122 340,795 550,122 A/S Motortramp, Stensved 27.2% 4,952 85,011 4,952 85,011 Other associated companies (3,224) 1,304 - - 342,523 636,437 345,747 635,133

1999 1998 1999 1998 7. Taxation In the profit and loss account, income tax is expensed as follows: Tax expensed in subsidiaries - - (8,429) (6,858) Adjustment, prior years (313) 399 743 (1,148) Adjustment of taxation rates - 2,601 - 2,515 Provisions for accrued tax (3,249) (7,099) - - Adjustment for deferred tax (1,628) 14,551 2,496 15,662 (5,190) 10,452 (5,190) 10,171

Provisions for deferred tax in the balance sheet: Balance, beginning of year 26,187 46,475 21,745 42,312 Adjustment, prior years 619 (3,124) (1,486) (2,378) Adjustment of taxation rates - (2,601) - (2,515) Transferred from subsidiaries - - 2,371 - Adjustments for sales of companies (5,485) (12) (5,400) (12) Additions from acquisitions of companies 183 - - - Transferred from the profit and loss account 1,628 (14,551) (2,496) (15,662) 23,132 26,187 14,734 21,745

Corporation tax recorded as creditor/debtor: Balance beginning of year 1,072 (17,742) (5,938) (19,264) Adjustment, prior years (974) 2,725 72 1,022 Adjustments for sales of companies (835) - - - Tax paid in 1999 (5,158) 8,990 162 12,304 Transferred from the profit and loss account 3,249 7,099 - - (2,646) 1,072 (5,704) (5,938)

Deferred tax on buildings as a result of higher depreciation for tax purposes than for accounting purposes amounts to DKK 29.1m. No provision has been made for this amount in the balance sheet. Sales of land and buildings at book value will generate additional taxation, and no provision has been made for this item, either.

8. Stocks Raw materials and consumables 144,409 162,391 Finished goods and goods for sale 30,030 30,012 174,439 192,403

9. Work in progress on behalf of third parties Cost of materials and payroll costs 1,683,497 1,717,045 Share of expected profit 258,685 286,847 On account invoicing to customers (1,753,435) (1,782,206) 188,747 221,686

48 NoterNotes

Group Parent Company (DKK '000)

10. Tangible fixed assets Other plant, Other plant, operating Assets operating Assets equipment, in course equipment, in course Land and Plant and fixtures, Equipment of con- Land and fixtures, of con- buildings machinery and fittings for leases struction buildings and fittings struction

Cost at 1 January 1999 1,330,018 125,605 344,692 46,064 18,538 412,284 7,132 5,249

Exchange rate adjustment 4,523 7,393 4,499 756 - - - - Additions/disposals from acquisition/sale of companies 859 3,809 5,051 - - - - - Reclassification 1,625 20,521 (28,168) 2,699 - Additions during the year 48,346 45,181 57,081 7,974 18,123 6,962 7,457 13 Disposals during the year (80,043) (12,976) (48,745) (4,132) (18,333) (36,205) (1,821) (5,249) Cost at 31 December 1999 1,305,328 189,533 334,410 53,361 18,328 383,041 12,768 13

Revaluations at 1 January 1999 6,707 ------

Revaluations for the year ------Disposals for the year (6,707) ------Revaluations at 31 December 1999 0 0 0 0 0 0 0 0

Depreciation at 1 January 1999 219,398 80,693 194,123 22,200 - 71,945 2,793 -

Exchange rate adjustment 658 3,889 2,638 406 - - - - Additions/disposals from acquisition/sale of companies - (863) (2,347) - - - - - Reclassification 696 13,835 (14,613) 311 - - - - Depreciation for the year 26,335 18,383 44,729 4,927 - 4,667 1,802 - Exchange rate adjustment of depreciation 56 434 237 33 - - - - Reversed depreciation, etc. (14,832) (3,426) (34,765) (3,809) - (5,664) (949) - Depreciation at 31 December 1999 232,311 112,945 190,002 24,068 0 70,948 3,646 0 Net book value at 31 December 1999 1,073,017 76,588 144,408 29,293 18,328 312,093 9,122 13

The public valuation of the Group's properties amounts to DKK 1,040,433 and DKK 399,836 for the Parent Company's properties, to which should be added a book value of DKK 73,928 regarding land and buildings in the Group without public valuations. Of the total book value of land and buildings as at 31 December 1999, the capitalized market value losses amount to DKK 6,735.

49 Notes

Group Parent Company (DKK ‘000)

11. Investments Holdings in Other Holdings in associated securities and Holdings in associated companies holdings subsidiaries companies

Cost at 1 January 1999 74,596 4,293 1,355,658 68,983 Exchange rate adjustments 534 (52) - - Additions during the year 1,000 59 58,046 - Disposals during the year - (1,664) (214,000) - Cost at 31 December 1999 76,130 2,636 1,199,704 68,983

Revaluation at 1 January 1999 477,440 - 92,225 475,560 Exchange rate adjustments 192 - - Adjustment during the year 90,940 - (19,869) 90,590 Revaluation at 31 December 1999 568,572 0 72,356 566,150

Writedowns at 1 January 1999 4,211 1,865 814,696 - Exchange rate adjustment 400 2 - - Additions during the year 3,654 1,144 (16,876) - Disposals during the year - (1,630) - - Writedowns at 31 December 1999 8,265 1,381 797,820 0

Net book value at 31 December 1999 636,437 1,255 474,240 635,133

12. Shareholders' equity Share Revaluation Retained capital reserves profit Total

Parent Company's equity at 1 January 1999 207,454 5,783 858,239 1,071,476

Adjustment of securities (1,425) (1,425) Exchange rate adjustment of subsidiaries 5,075 5,075 Adjustment of associated companies 6,983 6,983 Added value from acquisition of subsidiaries (36,813) (36,813) Disposal of added value from sale of subsidiaries 22,474 22,474 Acquisition of own shares (37,749) (37,749) Profit for the year 302,696 302,696 Dividend for the financial year ( 36,614) (36,614) Equity of Parent Company and Group at 31 December 1999 207,454 4,358 1,084,291 1,296,103

The share capital comprises:

A-shares (unlisted) 202,050 shares of DKK 100 each 20,205,000

B-shares 1,872,487 shares of DKK 100 each 187,248,700 Total share capital 207,453,700

Own shares Number of shares Nominal value % of share capital Cost price

Acquired during 1999 40,453 4,045 1.95% 37,749 Holding at 31 December 1999 40,453 4,045 1.95% 37,749

Of these, 13,834 shares were acquired to cover a share option agreement concluded with the Group Management. The balance will be held to cover future share option obligations.

50 Notes

Group Parent Company (DKK '000) 1999 1998 1999 1998

13. Other provisions Allocated gain from sale/lease back 3,300 8,643 - - Pension commitments 11,576 8,777 - - Other provisions 56,144 20,538 18,683 9,477 71,020 37,958 18,683 9,477

14. Mortgage debt Mortgage debt maturing more than 5 years after the balance sheet date amounts to 244,872 254,395 31,326 41,462

15. Securities pledged Comprising: As security for a foreign bank commitment - 2,123 security in current assets has been furnished at a book value of - 13,968 Properties have been mortgaged 358,165 405,518 71,947 78,890 as security for mortgage loans at a book value of 468,987 525,660 67,534 82,837

16. Contingent liabilities The Group companies have undertaken contractual obligations customary to the line of business. These obligations have been partially covered by guarantees from credit insurance companies, etc.

Guarantees for work performed usually cover a period from 1 to 5 years. Guarantees for subsidiaries' commitments towards credit insurance companies up to DKK 857m 494,521 533,385 Guarantees for the commitments of subsidiaries towards customers for up to DKK 161m 41,663 35,326 Guarantees for bank debt in subsidiaries, maximum 91,985 30,468 Other guarantees 71,306 3,908

Leasing obligations: Leasing installments for payment 2000-2006 38,064 63,226

Participation in joint ventures with joint and several liability: Debt 59,391 79,000

Financial instruments: In order to secure debt and loans in foreign exchange, forward transactions have been entered into in DEM, USD, GBP, NLG and NOK at 31 December 1999 20,042 44,947

At end-1998, the Danish Competition Authority issued a report showing that a number of Danish electrical installation companies were guilty of bid coordination. No accounting provisions have been made in 1999 for any fine, as the matter is still under consideration by the Authority and the Danish Public Prosecutor for Special White-Collar Crimes.

17. Acquisition and sale of companies and activities Companies and activities acquired and sold in 1999 are mentioned in the annual report Acquired Sold Tangible fixed assets 10,239 (3,733) Stocks and work in progress 3,956 (3,004) Debtors 13,822 (25,342) Cash 3,094 (13,869) Provisions, etc. (183) 8,822 Long-term debt (139) 1,449 Short-term debt (12,305) 27,588 Net assets 18,484 (8,089) Goodwill and consolidation goodwill 36,840 (37,603) Value of acquisitions/disposals 55,324 (45,692)

51 List of Rental Properties

Address Floorage m2 Type

Teglholmsgade 2 and • Scandiagade 13-17, Copenhagen SV 18,586 Commercial Sydhavnsgade 15, Copenhagen SV Site Vestergade 1, Copenhagen K 907 Commercial and Residential Vestergade 2, Copenhagen K 4,911 Commercial Pilestræde 40 and • Sværtegade 1, Copenhagen K 1,183 Commercial and Residential Gl. Mønt 8, • Chr. IX's Gade 2-6, • Store Regnegade 1-5 and • Ny Østergade 21-25, Copenhagen K 10,777 Commercial and Residential Vordingborggade 18-22, • Korsørgade 1-3 and • Randersgade 60, Copenhagen Ø 10,463 Commercial and Residential Strandgade 4-4C, Copenhagen K 8,099 Commercial and Residential Overgaden neden Vandet 7, Copenhagen K 6,770 Commercial Overgaden neden Vandet 9 A-C, • Wildersgade 10B, Copenhagen K 7,330 Commercial Brøstes Gaard, • Overgaden oven Vandet 8-10 and • Store Søndervoldstræde 3-9, Copenhagen K 2,523 Commercial Halfdansgade 8, Copenhagen S 4,280 Commercial Badehusvej 5, Aalborg 30,360 Commercial Badehusvej 10, Aalborg 336 Residential Badehusvej 16, Aalborg 1,761 Commercial Badehusvej 18, Aalborg 2,196 Commercial Kastetvej 2, Aalborg 704 Commercial Kastetvej 4, Aalborg 1,151 Commercial Kastetvej 26, Aaborg 20,853 Commercial Kastetvej 28-30, Aalborg 1,449 Residential Møllegade 19/Rantzausgade 1A, Aalborg 747 Commercial and Residential Rantzausgade 1B, Aalborg 426 Commercial and Residential Rantzausgade 3-5, Aalborg 606 Commercial and Residential Rantzausgade 7, Aalborg 309 Commercial and Residential Danmarksgade 25, Aalborg 864 Commercial and Residential Danmarksgade 27B, Aalborg 1,278 Commercial and Residential Mølleå-Arkaden, • Møllegade 13-17, • Mølleå 1-7 and 2-16, Aalborg 8,063 Commercial and Residential Algade 17 and • Møllegade 2 710 Commercial and Residential Algade 19, • Møllegade 4 and 6 A-B, Aalborg 3,679 Commercial and Residential Møllegade 8, Aalborg 1,046 Commercial and Residential Total at the end of 1999 152,367

52 Group Companies at 31 December 1999

Companies Ownership Location

C.W. Obel A/S (Parent Company) Copenhagen, Denmark • Semco A/S Brøndby, Denmark •• A/S Brdr. Jeppesen VVS-Entreprise Gentofte, Denmark •• Unit Industri A/S Hørsholm, Denmark •• Svend Erik Laursen A/S Århus, Denmark •• SSB Storebælt I/S (65%) Odense, Denmark •• SSB Øresund I/S (65%) Brøndby, Denmark •• Semco Contracting/C.G. Jensen I/S (50%) Brøndby, Denmark •• DOMS A/S Glostrup¸ Denmark •• Semco GmbH Duisburg, Germany •• Brockmeyer GmbH Duisburg, Germany ••• Brockmeyer Teknische Anlagengesellschaft mbH Kirchheim, Germany ••• EFA GmbH Schwerin, Germany ••• REAC GmbH Erfurt, Germany •• Esbjerg Oilfield Services/Semco Maritime I/S (50%) Esbjerg, Denmark •• Protobase Ltd. Norwich, UK •• Semco Maritime, Inc., Florida Ft. Lauderdale, USA •• Semco Maritime, Inc., California California, USA •• Semco Norge AS Stavanger, Norway ••• Norse Electronics AS Stavanger, Norway •••• Norphone AS Bergen, Norway •••• RigNet Operation AS Stavanger, Norway ••• Norse Electronics Kristiansund AS Kristiansund, Norway ••• OIS Contracting AS (33%) Kristiansand, Norway ••• Semco Technology AS Stavanger, Norway • Semco Sverige (division) Brøndby, Denmark •• Backlunds Elservice AB Stockholm, Sweden •• Prenad AB Malmö, Sweden •• Prenad International AB Stockholm, Sweden •• Semco Polska S.A. Warszaw, Poland ••• Prenad Polska Sp.z.o.o Warszaw, Poland •• Totalinstallatören AB Malmö, Sweden • C.W. Obel Industriteknik A/S Brøndby, Denmark •• CWO WIAB AB Lysekil, Sweden ••• Hallmek AB Lysekil, Sweden ••• Roneco Montage AB Gothenburg, Sweden •• Norisol A/S Skælskør, Denmark ••• Norisol Norge AS Porsgrunn, Norway ••• CWO Norisol Sverige AB Stenungsund, Sweden •• Fjeldstad AS Melsomvik, Norway ••• Nopicon AS (90%) Tønsberg, Norway ••• Norstell AS Stavanger, Norway •• Skandinavisk Industriservice A/S Ringsted, Denmark • DGT*Volmatic A/S Vallensbæk, Denmark •• DGT*Volmatic France, S.A.R.L Quatremare, France • Semco Vakuumteknik A/S Odense, Denmark • SGD-Bera A/S Hvidovre, Denmark •• Isopol Sp.z.o.o Katowice, Poland •• Skandinavisk Bygg-Industriservice AS Oslo, Norway • C.W. Obel Ejendomme A/S Copenhagen, Denmark • Semco Ejendomsselskab ApS Brøndby, Denmark • C.W. Obel Finans A/S Brøndby, Denmark • SM af 12.1.1995 A/S Esbjerg, Denmark • C.W. Obel Inc. Connecticut, USA • Skandinavisk Holding A/S (35%) Søllerød, Denmark • A/S Motortramp (27.2%) Stensved, Denmark

53 Addresses

C.W. Obel Semco Danmark Semco Sverige C.W. Obel Maritime Group Management

Vestergade 2 Semco Danmark Semco Sverige C.W. Obel Maritime Protobase Ltd. DK-1456 Copenhagen K Park Allé 373 Abildager 2 Svendborgvej 226 34 Hurricane Way Tel +45 3333 9797 DK-2605 Brøndby DK-2605 Brøndby DK-5260 Odense S Norwich NR6 6HE Fax +45 3333 9779 Tel +45 4322 1100 Tel +45 4322 1100 Tel +45 6568 3300 UK www.cwobel.com Fax +45 4322 1133 Fax +45 4322 1485 Fax +45 6568 3670 Tel +44 1603 788 751 www.semco.dk Fax +44 1603 788 064 Abildager 2 Backlunds Semco Maritime DK-2605 Brøndby Semco Region East El-Service AB Danmark Semco Maritime, Inc., Tel +45 4322 1357 Semco Copenhagen Enebybergsvägen 14 Brolæggervej 1 CA Fax +45 4322 1358 Park Allé 373 S-182 36 Danderyd DK-6710 Esbjerg V 1891 North Gaffey DK-2605 Brøndby Tel +46 8 622 3000 Tel +45 7916 6666 Street Tel +45 4322 1100 Fax +46 8 622 3099 Fax +45 7515 6580 San Pedro Fax +45 4322 1101 www.backlundsel.se www.maritime.semco.dk CA 90731 USA Semco Region South Prenad AB Semco Norge AS Tel +1 310 521 1160 Semco Odense Industrigatan 33 Fabrikkveien 25 Fax +1 310 521 1165 Svendborgvej 226 Box 16005 N-4033 Forus DK-5260 Odense S S-200 25 Malmö Tel +47 5181 1200 Tel +45 6568 3300 Tel +46 40671 7100 Fax +47 5181 1205 Fax +45 6595 7375 Fax +46 40671 7101 www.prenad.se Semco Technology AS Semco Region North Fabrikkveien 25 Semco Århus Prenad Postbox 153 Finlandsgade 33 International AB N-4033 Forus DK-8200 Århus N Orrvägen 26-28B Tel +47 5181 1200 Tel +45 8930 2233 Box 8015 Fax +47 5181 1201 Fax +45 8930 2299 S-192 08 Sollentuna Sweden Semco Marine Inc. Semco Telecom Tel +46 8 92 9302 3721 S.W. 47th Avenue Park Allé 373 Fax +46 8 92 0790 Suite 309 DK-2605 Brøndby Ft. Lauderdale, Tel +45 4322 1100 Totalinstallatören AB 33314 Florida Fax +45 4322 1380 Stenyxegatan 25A USA Box 9194 Tel +1 954 792 9666 Semco Services S-200 39 Malmö Fax +1 954 321 6517 Park Allé 373 Tel +46 40 671 8000 DK-2605 Brøndby Fax +46 40 671 8001 Norse Electronics AS Tel +45 4322 1100 Tankbåtveien 2 Fax +45 4322 1199 Postbox 30 N-4056 Tanager DOMS A/S Tel +47 5164 6700 Formervangen 28 Fax +47 5164 6701 DK-2600 Glostrup www.norse.no Tel +45 4329 9400 Fax +45 4343 1012 www.doms.dk

54 C.W. Obel Other Companies C.W. Obel Industriteknik Ejendomme

C.W. Obel DGT*Volmatic A/S Isopol Sp.z.o.o Copenhagen Branch Industriteknik Vejlesvinget 2-4 ul. Konduktorska 42 Vestergade 2 Abildager 2 DK-2665 Vallensbæk PL-40-155 Katowice DK-1456 DK-2605 Brøndby Strand Tel +48 322 53 72 02 Copenhagen K Tel +45 4322 1234 Tel +45 4373 1100 Fax +48 322 53 72 02 Tel +45 3333 9494 Fax +45 4322 1235 Fax +45 4373 0110 Fax +45 3333 9411 www.volmatic.com www.cwobel-ejen- Skandinavisk domme.dk Industriservice A/S DGT*Volmatic A/S Odinsvej 33 Michelstrasse 12 A Aalborg Branch DK-4100 Ringsted D-53757 St. Augustin 3 Badehusvej 5 Tel +45 5766 6000 Tel +49 224 191 490 DK-9000 Aalborg Fax +45 5761 9505 Fax +49 224 191 4930 Tel +45 9813 4499 www.cwosis.dk Fax +45 9813 7233 DGT*Volmatic France CWO WIAB AB Sarl Verkstadsgatan 4 4, Route d’Evreux Box 124 F-27400 Quatremare S-453 23 Lysekil Tel +33 232 505 708 Tel +46 523 199 90 Fax +33 232 505 136 Fax +46 523 199 99 www.wiab.se DGT*Volmatic North America, Inc. Fjeldstad AS 5311 Creek Shadows P. O. Box 4 Kingwood N-3160 Stokke TX 77339 Tel +47 3333 6988 USA Fax +47 3333 6020 Tel +1 281 361 4202 Fax +1 281 361 4203 Norisol A/S Industrivej 33 Semco DK-4230 Skælskør Vakuumteknik A/S Tel +45 5819 5050 Svendborgvej 226 Fax +45 5819 6060 DK-5260 Odense S www.norisol.dk Tel +45 6568 3300 Fax +45 6595 7374 Norisol Norge AS Elvegaten 17 SGD-Bera A/S Lahelle Hammerholmen 34 N-3901 Porsgrunn DK-2650 Hvidovre Tel +47 3557 2800 Tel +45 3677 1311 Fax +47 3555 4261 Fax +45 3677 1318

CWO Norisol SBI AS Sverige AB Stavangergaten 40 Hantverkaregatan 14 N-0467 Oslo S-444 32 Stenungsund Tel +47 2222 2380 Tel +46 3036 9250 Fax +47 2222 2340 Fax +46 3038 4770

55 56 CWO2400025Arsbe_omsUK _RT.qx4 29/06/00 12:12 Side 2

Contents

Vision ...... 1

Financial Summary - The Group ...... 2

Annual Report for the Group and the Parent Company ...... 4

Supervisory Board and Management - Other Executive Staff Members ...... 10

Semco Danmark ...... 12

Semco Sverige ...... 16

C.W. Obel Maritime ...... 18

C.W. Obel Industriteknik ...... 22

Other Companies ...... 26

C.W. Obel Ejendomme ...... 28

Associated Companies ...... 32

Shareholder Information ...... 34

Accounting Report and General Financial Analysis ...... 36

Accounting Policies ...... 40

Signatures and Auditors’ Report ...... 42

Consolidated Profit and Loss Account ...... 43

Assets ...... 44

Liabilities ...... 45

Cash Flow Statement for the Group ...... 46

Notes ...... 47

List of Rental Properties ...... 52 C.W. Obel · April 2000

Group Companies ...... 53 Design: Bysted Hovedkvarteret A/S

Addresses ...... 54 Printing: Repro & Tryk A/S CWO2400025Arsbe_omsUK _RT.qx4 29/06/00 12:12 Side 1

C.W. Obel A/S

CVR - no. 39980614

Vestergade 2 DK-1456 Copenhagen K Tel. +45 3333 9797 Fax +45 3333 9779 www.cwobel.com

Annual Accounts 1999