Annual Report 2008-09 Report

Per Aarsleff A/S

annual report

Per Aarsleff A/S Main office Lokesvej 15 DK-8230 Åbyhøj Denmark

Tel +45 8744 2222 Fax +45 8744 2249

CVR-no. 24 25 77 97

Copenhagen office Industriholmen 2 DK-2650 Hvidovre Denmark

Tel +45 3679 3333 Fax +45 3679 3300 [email protected] www.aarsleff.com This annual report is a translation of Per Aarsleff A/S’s official Danish annual report. The original Danish text shall take precedence and in case of discrepancy the Danish wording shall prevail.

Company profile 3 Aarsleff supplies infrastructure 3 Cooperation and synergy 4 Infrastructure specialists 6 Railway work 8 International activities 10 Industrialisation in Pipe Technologies 12 Industrialisation in Piling 14

Management’s Review 19 Highlights and financial ratios for the Group 19 The year in brief 20 The future 21 The past year in Construction 22 The past year in Pipe Technologies 24 The past year in Piling 26 Information to shareholders 28 Corporate governance in Aarsleff 30 Risk assessment 32 Internal control and risk management in financial reporting 34 Knowledge resources 36 Occupational health and safety, quality and the external environment 37 Positions held by the Executive Management and Board of Directors 38

Endorsements 40 Management’s Statement 40 Independent auditor’s report 40

Consolidated Financial Statements 52 Accounting policies 52 Financial review 58 Income statement 59 Balance sheet 60 Cash flow statement 62 Statement of changes in equity, Group 63 Statement of changes in equity, Parent Company 64 photographers Overview of notes 65 Dieter betz Notes to the Annual Report 66 ole brikner Highlights and financial ratios for Kuno Byrdorf the Group (euro) 91 Peter clausen Ralf Kornmann Companies in the Aarsleff Group 92 Jakob Mark Addresses 94 Lentokuva Vallas Oy Jan Kofod Winther Photos taken by employees 3

Installing foundations at Rødsand 2.

Aarsleff supplies infrastructure – projects and industrialised processes

A precondition for sound financial growth in society is the Industrialisation and optimisation existence of the best possible infrastructure; Aarsleff wants Throughout the years, Aarsleff has made a targeted effort to contribute to this. We work as a general infrastructure to optimise processes. This means that we have industrial- contractor, and particularly in Construction we focus ised a number of products and services. This concerns on infrastructure both in Denmark and abroad. In Pipe piling and trenchless pipe renewal. In both areas, we have Technologies and Piling, we focus on industrialisation. carried out a cost optimisation of all stages.

Infrastructure in Denmark and abroad Joint competencies Aarsleff is a general infrastructure contractor. The activi- Aarsleff has established subsidiaries that are independent ties include construction of roads, tunnels, reservoirs and companies but at the same time part of the total competen- pipelines. Other infrastructure competencies comprise cies of the Aarsleff Group. harbours, ferry berths, coastal protection, embankments The companies share the goal of exploiting the joint and offshore foundations. We have more than 40 years of competencies and create synergy in the business and prod- experience in cofferdams and underground structures, and uct development. we have built up comprehensive geotechnical qualifica- Nationally as well as internationally, Aarsleff makes tions. a targeted effort to establish competent and competitive Aarsleff specialises in railway work. The extensive expe- consortia and working relationships capable of tendering rience and competencies built up over the years are now for large jobs in Denmark and abroad. gathered in Aarsleff Rail A/S, which is an amalgamation of the railway work organisations of the parent company, Petri & Haugsted as and Wicotec A/S. 4

Cooperation and synergy – open, professional and creative cooperation

Excavating for foundations at Rødsand 2.

Aarsleff wants to be a cooperative partner who is highly Synergy yields results professional, committed, careful, cost conscious and flexible. Aarsleff wants to trade on the synergy between the spe- We have built up a number of specialised competencies cialised products and the companies within the Group. within Construction, Piling and Pipe Technologies. They are The daily effort by which employees share knowledge and all part of the vision of supplying the best product. cooperate across organisational boundaries yields better solutions. This creates openness and a will to communicate Cooperation is a natural thing for Aarsleff internally as well as externally. An open dialogue promotes In our experience, the best cooperative working relation- innovation and initiative – all preconditions for a sound and ship is gained when the customer joins forces with the forward-looking product development. consultant and the contractor to perform a given task. In addition to the technical qualifications, the coopera- One common contractor’s culture tive concept is deep-rooted in the individual employee. This We are tied together by one common contractor’s culture, is reflected by openness, trust and the will to cooperate formulated through a practical set of values. The Aarsleff professionally on the individual projects. Aarsleff gladly culture is strong and down-to-earth. participates as an active sparring partner in framework We are characterised by keeping our word, and we are a agreements, partnering and Public Private Partnerships reliable partner in all situations. We deliver on time and as (PPPs). agreed. Our flexible project organisation makes it possible to adjust the work to most foreseen and unforeseen events. Optimisation of projects Partners to the Aarsleff Group on complex construction The employees are the foundation contracts will benefit from the specialised competencies Aarsleff is characterised by having competent, flexible, we have built up over many years. We have gathered a team diligent and enterprising employees. These are the values of highly qualified employees with a special expertise in which we find should characterise cooperation at a profes- developing and planning optimum projects. We can contrib- sional level. This applies to the small details as well as in ute consultancy and optimisation already in the planning the overall perspective. phase. We achieve this by trusting the individual employee We want to be successful on each individual project. An and through our project organisation, which picks the best important tool in this connection is our project manage- team for the specific jobs. ment which is characterised by openness and a flexible attitude to achieve the best result.

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Glimpses of the year cooperation and synergy

london array offshore wind farm In November, Aarsleff signed a contract for the execution of the world’s largest offshore wind farm. The project is carried out in an equally shared consortium with German Bilfinger Berger GmbH. Aarsleff is the leading party, and the wind farm is built 20 kilometres off the coasts of Kent and Essex in the Thames estuary. The wind farm’s total energy production corresponds to the consumption of 750,000 homes. The contract has a value of approx. DKK three billion and includes production and installation of 177 monopile foundations as well as installation of wind turbines.

Offshore wind farms Rødsand 2 and Sprogø In cooperation with German Bilfinger Berger GmbH, Aarsleff has executed the foundations for the offshore wind farms Rødsand 2 and Sprogø. The Rødsand 2 contract consisted of production and installation of 92 prefabricated foundations which weigh about 1,300 tons each. These 92 foundations and the seven foundations for the Sprogø project were produced in Poland by means of a new production system which allowed us to produce six foundations in the same amount of time as it used to take to produce four. The contracts had a total value of DKK 700 million.

Partnering cooperation with the municipality of Aarhus continues Aarsleff has signed contracts for framework agreements in partnering concerning sewer renewal by means of excavation in the centre of Aarhus as well as No-Dig renewal of sewers in the whole district. The contracts are a continuation of previous four-year contracts running over a new six-year period until the end of 2015. The total value of the contracts is expected to be around DKK 50 million per year. 6

Infrastructure specialists – infrastructure is the foundation of society

Project Culture Harbour Kronborg.

Aarsleff works as a general infrastructure contractor. We concrete works in connection with tunnels, reservoirs and specialise in earthwork and construction work, under- underground parking. ground structures and marine construction. Within all three areas, we have many years of experience from big as Geotechnical specialities and equipment well as small projects. All three areas are deeply rooted in Aarsleff has translated the geotechnical challenges into our contractor’s culture. a number of specialised competencies. For instance, we handle groundwater lowering, horizontal drilling, verti- Earthwork and construction work cal drilling and soil anchors. This requires well-educated Aarsleff possesses special qualifications to build roads, tun- employees with a vast experience and special-purpose nels, gas pipelines and major sewers. We have also built up machines that have been adjusted to the varying condi- specialised knowledge in establishing communication lines tions. and high-tension lines. Synergy and corporate culture Marine construction Aarsleff has many years of experience in building up spe- For more than 40 years, Aarsleff has developed the com- cialised competencies for a specific infrastructure area. We petencies and equipment to build harbours, ferry berths, have a corporate culture by which initiative and adaptability coastal protection, embankments and offshore foundations. are part of everyday life. Our organisation is flexible and In addition, we execute a number of specialised jobs such as competencies are used across the Group. sea crossings and dredging works. There is a natural, close working relationship between the parent company and the subsidiaries Petri & Haugsted Underground structures as, Wicotec A/S, Dan Jord A/S and Brødrene Hedegaard A/S. Since the 1960s, Aarsleff has established cofferdams and We work together to execute large, prestigious contracts, underground structures. We handle major, complex assign- and we are also highly focused on executing minor and ments which call for a unique specialised knowledge of medium-sized contracts efficiently and cost-consciously, for geotechnical works. The underground structures comprise example as operation and service contracts.

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Glimpses of the year infrastructure specialists

Project Kronborg Culture Harbour The modern cultural centre with the castle as a landmark is expected to be ready in 2012. Aarsleff has exposed the old fortifications and built a new ravelin – an outer fortifica- tion – and established a new moat. In several places, the soil around the old shipyard located at the harbour was contami- nated, however, the soil could still be reused for building into the new ravelin. The concrete bridge deck for the ravelin bridges was prefabricated at land, covered with azobe wood and installed on DN610- millimetre-steel pipes with a sheet pile wall in between.

Reservoir pipe near Odense In the town of Bellinge near Odense, Aarsleff has carried out a new large reservoir pipe in partnering with Odense Water Ltd. The purpose was to prevent overflow from Bellinge to Odense River as a consequence of the large amounts of rainwater which are anticipated due to climate changes. Up to 90% of the previous overflows are expected to disappear with the new pipe which has a volume of approx. 2,500 cubic metres. The reservoir pipe is about 650 metres long, and since the closest neighbours live within a distance of four metres, we found it important to carry out the work without disturbance to the local area.

Cable work In the summer of 2009, Petri & Haugsted as prolonged the expiry of a framework agreement with TDC to the end of 2011. In addition to new installation of main cable trenches and service lines, the work involves operational work in connection with repair of cable faults in central Copenhagen and environs from Greve to Hillerød. Also, this year Petri & Haugsted as signed a new agreement with SEAS-NVE on burial of 10 kV cables in field areas on the islands of Sealand, Lolland and Falster. 8

Railway work – infrastructure on rails

Railway cutting at Vesterport station.

For many years now, Aarsleff has contributed a number Aarsleff Rail A/S wants to be a competitive railway contrac- of solutions to railway works. By forming a new company tor possessing the expertise to carry out a wide range of Aarsleff Rail A/S in 2009, Aarsleff further develops the extensive railway work both in own production as well as in railway field from the existing Banekonsortiet I/S where consortia with other international railway contractors. the parties are the parent company and the subsidiaries Wicotec A/S and Petri & Haugsted as. Thus, Aarsleff takes Future organisation the consequences of the coming years’ big challenges in Future jobs within railway construction, rehabilitation and this field by forming a competitively strong, independent maintenance work are to be executed in close cooperation public limited company. and by using specialised employee skills and specialised equipment. A large market potential In the railway field, we have such specialised employee The Danish railway system is about to undergo large and resources and qualifications as well as the required special ambitious renewal and rehabilitation work. The politi- equipment. cal ambition is to renew the railway system to prepare Denmark for more traffic, higher speed limits and enhanced Top training and information safety. Working with infrastructure on rails places heavy demands on the qualifications and knowledge sharing of the employ- The challenges of the future ees. At Aarsleff, we invest many resources in providing the The railway work is an interesting technical challenge that required training to the individual employees of Aarsleff calls for a wide spectrum of skills from track work, bridges, Rail A/S. traction current, high-tension current, remote control and The targeted organisation of Aarsleff Rail A/S reflects general interlocking systems. the focus that Aarsleff has on establishing synergy between Aarsleff has extended its specialised skills within many specialised competencies of the Group. this area in spite of a fluctuating market in recent years.

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Glimpses of the year Railway work

Aarsleff Rail A/S As of 1 May 2009, the Aarsleff Group formed Aarsleff Rail A/S as an independent public limited company thereby pooling all railway expertise from Per Aarsleff A/S, Petri & Haugsted as and Wicotec A/S. Together, we have many years of experience with railway construction as well as cable work, interlocking technical systems and traction current installations in connection with railway work and the railway network infrastructure. In this way, we now stand stronger and more focused in a growing market, and we are well-prepared for the future jobs.

Renovation of railway cutting The structures of the railway cutting at Vesterport Station dates back to the 1920s and were dimensioned for the vehicles of the time. Therefore, a renovation and safety upgrade is required and in May, the joint venture Pihl-Aarsleff Brokonsortie I/S with Aarsleff as the leading party started replacing and reinforcing the underlying concrete walls of the railway cutting. At the same time, a thorough renovation of the concrete of the retaining wall of the railway cutting is carried out, and the balusters are replaced by rein- forced and more modern structures. The contract has a value of approx. DKK 40 million and is expected to be completed in September 2010.

Track renewal Odense-Svendborg In cooperation with the Dutch company Strukton Rail, Aarsleff has been in charge of renewing the stretch between Odense and Svendborg. The project consisted of 27 kilometres of track relaying and ballast cleaning of 20 kilometres of tracks. In addition, the job comprised a wide range of interlocking systems, cable work and traction current work carried out by Aarsleff Rail A/S’s technical contractor Wicotec A/S. The job put greater demands on Aarsleff Rail A/S’s skills than before, but experience from previous projects helped solve the project according to plan. 10

International activities – synergy across frontiers

Road project, Tanzania.

Aarsleff is an international company organised with foreign International partnerships subsidiaries. As part of the Aarsleff Group, any competence Aarsleff is part of international partnerships through which of the Group is readily available to the individual subsidiar- we participate in turnkey contracts and as a specialised ies. This means that a national working relationship with contractor on specific projects. We participate in extensive an Aarsleff subsidiary also constitutes cooperation with an and professional consortia with Danish and foreign coop- international Group. erative partners. It is clear that Aarsleff and its employees benefit from Synergy across frontiers cooperating across frontiers in international partnerships We use our experience from the Danish domestic market to and consortia. strengthen our position on the foreign markets. Through our subsidiaries, we build up a solid foundation which A reliable partner draws on our experience across frontiers. The Aarsleff culture is based on professionalism, initia- We aim at establishing a uniform and international tive and a short chain of command. This characterises our project culture. Therefore, we focus on providing training project managers, our employees and the way we work and education to local manpower. – nationally as well as internationally. We are a reliable partner who implements projects professionally, irrespec- The world is our market tive of where in the world these take place. Aarsleff considers the world its place of work. We especially Despite cultural and regional differences, there is an give a high priority to the countries around the Baltic Sea unambiguous attitude towards professional contracting where we have established subsidiaries. and a will to exploit the business-related synergy possibili- In addition to this, we will be present around the world ties on the international market. and be involved in specific contracts. Aarsleff is prepared to Aarsleff makes a targeted effort to establish competent continue the development of the working relationship with and competitive consortia and working relationships that Danish as well as foreign partners. are able to tender for major international contracts.

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Glimpses of the year international activities

Potable water for Sri Lanka The construction of a new potable water treatment plant in the city of Colombo in Sri Lanka is well under way. The plant will have a daily water treatment capacity of 191,000 cubic metres of surface water from the river Kelani, but the plant will be prepared for enlargement to twice its present size. Aarsleff is responsible for all structural engineering work, and the contract is worth DKK 365 million. The plant is to be completed in October 2010.

Road project in Tanzania In Tanzania, Aarsleff is carrying out a major road project which requires much machinery and a considerable amount of manpower from the local community. All preliminary work has now been completed, and the extensive construction work has begun and over the next 24 months, the production will take place. An average of seven kilometres of road per month is to be constructed, and the project can thus be completed according to plan in 2011.

Combined wall in Estonia In connection with the extension of Port of Muuga in Tallinn, Aarsleff has executed a combined wall consisting of tubular steel piles with intermediary sheet piles. We have installed 422 tubular steel piles with a diameter up to 1.67 metres and driven the 32-tons-heavy piles 45 metres down into the seabed. One end of the combined wall will link into the terminal’s existing quay, while the other end will combine with a new 800-metre-long breakwater. The wall and breakwater will form an enclosed basin, which is to be filled with 1.2 million cubic metres of sand. Thereby, the terminal area is extended by 180,000 square metres. 12

Industrialisation in Pipe Technologies – high tech product development and synergy

Aarsleff CIPP Lining, Skive.

Aarsleff is among the leading companies in the world that are applied on an ongoing basis. Development of new within trenchless pipe renewal. For more than 25 years, we materials is handled and tested by competent employees. have built up specialised knowledge and further developed Completed renewal jobs are also inspected and documented the trenchless pipe renewal method which is based on the by the laboratory. principle of installing a new lining in existing pipes and pipelines. Quality assurance The method comprises horizontal pipes in the ground Aarsleff is in the lead when it concerns the demands for and vertical pipes in buildings. We renew wastewater pipes, increased quality. Therefore, Aarsleff in Denmark is affili- drinking water pipes, industrial process pipes, vertical ated with the DTVK Scheme for TV Inspection, the Control pipes and ducts in buildings as well as manholes. Scheme for Pipeline Rehabilitation and ISO certifications for quality as well as the environment. Method development The extensive quality assurance is also reflected in labo- Aarsleff currently develops new technology and units that ratory tests and tests of excavated pipes. We expect a ser- take up minimum space and cause the least possible incon- vice life of minimum 100 years for an Aarsleff CIPP Lining. venience to the traffic and the citizens. In addition to CCTV vehicles for inspection and docu- Industrialisation in Pipe Technologies mentation, we use purpose-built units which are small, The constant development of method, product and quality mobile factories. The mobile units can be used irrespective has produced a highly industrialised product based on a of the site conditions. This makes it possible for Aarsleff sound economy. to offer turnkey solutions and install complete, new lin- The gain from the industrialisation in Pipe Technologies ings and transitional profiles in places that are normally is a high-quality product with low costs and a high common inaccessible, e.g. narrow backyards, train platforms and standard in Denmark and abroad. A development that is basements. strengthened by synergy processes between departments, subsidiaries and through the joint export organisation in Product development Denmark. All materials are produced at our own factory in Hasselager, and Aarsleff’s laboratory performs a control of the products

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Glimpses of the year industrialisation in Pipe Technologies

New pipe system at the brewery Hancock At the brewery Hancock Bryggerierne A/S in Skive, Aarsleff has renewed the pipe system after a production stop caused by a collapsed sewer pipe. To begin with, our work involved renewing the sewer pipe, but the decision was reassessed as we found out that major parts of the sewer system ran under the brewery. To avoid similar situations in future, the inside pipes were renewed by means of Aarsleff CIPP Lining, and the outside pipes were replaced by conventional excavation.

Pipe renewal in Poland In the city of Bydgoszcz in Poland, Aarsleff was responsible for design and execution of an approx. seven-kilometre-long sewer system. We renewed the sewer system with Aarsleff CIPP Lining and sliplining with GPR pipes in dimension DN1.6-2.2 metres. The contract was carried out on time, and while carrying out the project we designed and constructed a new system for transportation of big pipes inside the host pipeline as well as a method for fast grouting of annular spaces. The development of methods strengthens our competencies in connection with future similar renewal projects.

New technology for renewal of downpipes Aarsleff has developed a technology that ensures completely tight connections between horizontal laterals and vertical downpipes in residential buildings – no matter whether it is kitchen downpipes or toilet downpipes. This spring, we carried out Aarsleff CIPP Lining of internal toilet and kitchen downpipes, laterals and hidden or embedded pipes from floor drains. We completed the job in eight weeks and renewed a total of eight downpipes with 80 laterals for toilet and floor drains. Also, we renewed 46 floor drains. 14

Industrialisation in Piling – cost-conscious product development

Foundation work at Poland’s new national stadium.

Today, Aarsleff is the leading and trendsetting contractor in Industrialisation at sea Northern Europe within production and driving of concrete We have a wide range of experience from many years of piles, establishment of complete cofferdams as well as harbour and bridge projects in Denmark and abroad. Our installation of sheet piles. We want to keep this position and expertise includes sheet piling, which is often executed develop further. under very difficult and alternating weather conditions. Aarsleff aims at industrialising and standardising a number of piling products. This concerns the production Machines for all types of work and driving of concrete piles as well as installation of sheet We consider it a very important competitive parameter to piles. be able to offer a large and flexible train of machines. We aim at using our experience in the development of new Own production of piles methods and equipment. Therefore, we have allocated As part of this industrialisation, Aarsleff aims at a uniform many technical resources to the ongoing adjustment of the pile production certified for quality. It is against this back- large train of machinery. ground that we have established our own pile factories in It is important for us to execute our work with an abso- Denmark, England, Poland and Sweden. lute minimum of noise and vibration in consideration of the We continuously work on optimisation of processes and surrounding environment. cost minimisation of the production. Cooperation and synergy Industrialisation on land Industrialisation means standardised products that On land, we have specialised in piling and sheet piling jobs. are used across the Aarsleff Group. These are primarily Our region of operation is Northern Europe where the soil marketed in Denmark, Germany, England, Poland and conditions are highly varied and require specific adjust- Sweden. In these countries, we are represented by own ments. The many years of experience enable us to supply subsidiaries. an industrialised product which at the same time is flexible and adjustable to the conditions in question. We also carry Industrialisation and flexibility out a number of foundation activities in connection with Aarsleff offers a highly industrialised product and tailored wind turbine foundations. solutions to special foundation jobs. The decisive thing for us is to be able to supply the right product at the right price and quality.

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Glimpses of the year industrialisation in Piling

National stadium in Poland This spring, Aarsleff carried out the foundation work for Poland’s new national stadium in Warsaw – the largest one-off piling contract in Poland so far. In spite of adverse soil conditions, we managed to reduce the tight work schedule from 120 to 93 working days, as Denmark and the UK assisted the Polish organisation with piling rigs and delivery of some of the 8,000 piles. A good example of one company cooperation that characterises our company.

Tietgen’s Agony Aarsleff has carried out a secant pile wall as foundation and construction pit for a five-storey building which is planned next to the Marble Church in Copenhagen. The area is known as Tietgen’s Agony because the Danish financier never managed to finish the building plans back in his days. We bored a total of 130 piles with a diameter of 520 millimetres and made extra reinforcement iron and reinforcement mesh to secure the building as much as possible against the construction of the planned city circle line station nearby.

Geotechnical investigations During the year, Aarsleff’s geotechnical department in joint venture with the consulting company GEO carried out extensive drillings and predrillings in connection with the city circle line in Copenhagen. A total of 518 drillings in preliminary investigations have been carried out of which 16 were in connection with cable relocations. Also, we have carried out core drillings and taken soil and water samples for a precise mapping of the underground. The drillings provide the project engineers with an optimal basis for designing the underground stations, ventilation shafts and tunnels. 16

company profile 17 18

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Highlights and financial ratios for the Group

(DKK ‘000) 2004/2005 2005/2006 2006/2007 2007/2008 2008/2009

Income statement Revenue 3,416,024 3,781,589 4,288,556 5,327,435 4,871,473 Of this figure, work performed abroad 1,296,020 1,413,949 1,555,906 1,596,572 1,716,042 Operating profit 66,790 113,967 175,700 288,695 210,137 Profit before interest 69,134 127,120 186,122 301,101 223,816 Financials, net -9,379 -16,914 806 -21,009 -15,470 Profit before tax 59,755 110,206 186,928 280,092 208,346 Profit for the year 44,730 92,705 148,031 210,250 156,135

Balance sheet Long-term assets 841,718 1,006,813 1,059,941 1,247,532 1,321,899 Short-term assets 1,151,203 1,433,212 1,666,622 1,967,802 1,835,430 Total assets 1,992,921 2,440,025 2,726,563 3,215,334 3,157,329

Equity 825,399 912,140 1,049,979 1,251,639 1,350,698 Non-current liabilities 214,618 315,206 362,530 398,941 422,302 Current liabilities 952,904 1,212,679 1,314,054 1,564,754 1,384,329 Total equity and liabilities 1,992,921 2,440,025 2,726,563 3,215,334 3,157,329

Cash flow statement Cash flows from operating activities 154,763 117,690 239,853 390,212 464,521 Cash flows from investing activities -128,128 -282,232 -171,653 -316,688 -271,039 Of this figure, investment in property, plant and equipment, net -179,880 -223,468 -166,903 -308,496 -298,303 Cash flows from financing activities -41,770 78,659 -12,335 -17,261 -10,806 Change in liquidity for the year -15,135 -85,883 55,865 56,263 182,676

Financial ratios Gross margin ratio, % 11.5 12.0 12.7 13.8 14.0 Profit margin (EBIT margin), % 2.0 3.0 4.1 5.4 4.3 Net profit ratio (pre-tax margin), % 1.7 2.9 4.4 5.3 4.3 Return on invested capital (ROIC), % 6.6 9.7 13.1 19.9 14.2 Return on equity (ROE), % 5.6 10.7 15.1 18.3 12.2 Equity interest, % 41.4 37.4 38.5 38.9 42.8 Earnings per share (EPS), DKK 21.8 44.8 71.5 101.8 76.4 Share price per share of DKK 20 at 30 September, DKK 458 504 770 488 576 Share price/equity value, DKK 1.15 1.14 1.52 0.81 0.88 Dividend per share, DKK 2.40 4.80 4.80 4.80 4.80

Number of employees 2,373 2,670 2,839 3,181 3,217

Financial ratios for the Group have been calculated in accordance with the “Recommendations and financial ratios of the Danish Society of Investment Professionals 2005”. Please see page 57 for financial ratio definitions. 20

T h e y e a r i n b r i e f

The compensation reservoir in the street of Carl Blochs Gade in Aarhus is carried out as a partnering project with Aarhus Municipality and two firms of consulting engineers.

The consolidated profit for the financial year 2008/2009 was Cash flows from operating activities with deduction DKK 208 million before tax against DKK 280 million the year of investments constitute a positive liquidity flow of DKK before. Earnings expectations were DKK 200 million before 193 million against a positive liquidity flow of DKK 74 mil- tax at the beginning of the financial year. Results are in line lion last year. Total investments reached DKK 298 million. with expectations. Interest-bearing liabilities less interest-bearing assets Revenue totalled DKK 4,871 million compared to DKK totalled a net debt of DKK 87 million against a net debt of 5,327 million last financial year. The reduced level of activity DKK 271 million at 30 September 2008. is according to expectations at the beginning of the year. In Construction, the profit before interest amounted to Danish revenue reached DKK 3,155 million compared DKK 130 million compared with DKK 167 million last year. with DKK 3,730 million last financial year. The foreign part In Pipe Technologies, the profit before interest amounted of revenue amounted to DKK 1,716 million against DKK to DKK 48 million compared with DKK 4 million last year. In 1,597 million last financial year. Piling, the profit before interest amounted to DKK 46 mil- The profit for the year is DKK 156 million after tax com- lion compared with DKK 130 million last year. pared with DKK 210 million last year. Net profit ratio of the Group is 4.3% compared to 5.3% Declining demand and the fact that idle capacity from last financial year. Equity was 43% of the balance sheet the building sector has moved to the civil engineering sec- total against 39% at the end of the previous financial year. tor have intensified competition during the year. The effect The number of full-time employees is 3,217 against 3,181 is reflected in the year-end results but has somewhat been last year. delayed by contracts in progress at the beginning of the The Board of Directors recommends that the dividend financial year. The impact has been strongest on Piling’s remains unchanged at DKK 4.80 per share corresponding to activities due to low activity within the building sector. DKK 11 million.

MANAGEMENT’S REVIEW 21

T h e f u t u r e

In cooperation with Dutch Strukton Rail, Aarsleff Rail A/S renewed 27 kilometres of tracks between Odense and Svendborg.

For the coming financial year, a profit before tax of DKK nology in the installation process. The development of prod- 140 million is anticipated. The level of activity is expected ucts and methods will be more focused on strengthening to fall just short of the 2008/2009 level. A period of rapid our competitive position. We will strive to increase energy economic expansion was succeeded by a general slow- efficiency and reduce CO2 emission in our production. down in 2007/2008 which was adversely affected by the Piling, which will be affected by the negative effects international economic crisis. The earnings expectations of the low activity in the building sector, will focus its for 2009/2010 reflect the effect of the slowdown which to efforts on creating a good starting position when the some extent has been delayed by the completion of long- activities once again resumes a more normal level. Piling term contracts from the period of economic boom. If the will strengthen its leading market positions and exploit economic crisis accelerates and, contrary to expectations, the market potentials on its primary markets Denmark, affects public investments negatively, it may influence the England, Germany, Poland and Sweden. We plan to further consolidated profit even more. develop our specialised geotechnical activities, and we will Investments provided for in the budget amount to DKK continue to standardise and make industrial pile manufac- 285 million of which approx. DKK 50 million is for the com- turing more efficient. pletion of an office construction currently in progress. At In the market of civil engineering work and pipe the gateway to the new financial year, the volume of orders renewal, we have good experience making long-term coop- is lower compared to last year. eration agreements on execution of work in multi-annual As for civil engineering projects, 2009/2010 will be framework agreements within renewal, maintenance and characterised by positioning and submission of tenders operation. We wish to further develop these activities aimed for large infrastructure projects which are to be executed at the public and the private sector. in Denmark in future years. The same applies to one-off projects within our core competencies for execution Capitalisation and dividend policy abroad. We maintain our policy of selective order intake, Based on the relatively heavy investments in the special- and the focus is on the areas where profitability is propor- ised segments and in consolidation and growth targets as tional to effort and risk. We will continue our work within stated above, a long-term dividend policy has been adopted. the Group of ensuring a professional completion of each It consists of a fixed dividend of DKK 4.80 per share of DKK individual project. The cooperation between divisions and 20. The reason for this is a wish to be able to finance our subsidiaries will be intensified with a view to being able to growth and at the same time be able to maintain our equity carry out major, complex civil engineering projects with the interest of 40-45%. If growth over a period cannot take most significant project parts as own production. place in a profitable manner, the investment activity will Within pipe renewal, we will continue to concentrate our be changed. Moreover, the dividend and share acquisition activities within market and product development focusing policy will be reconsidered. on Europe, and we will continuously incorporate new tech- 22

The past year in Construction

Segment results came to DKK 130 million before interest or 4.3% of revenue. The profit slightly exceeds expectations. Revenue fell by 10% to DKK 2,990 million.

The primary employment area in Construction is to estab- Wicotec A/S carries out technical installations in a wide lish, maintain and operate society’s transport and energy sense, technical service as well as cable works and district infrastructure with Denmark and the area around Malmö heating installations. The company has increased focus on as our platform. The order intake for foreign projects is technical contracts, and together with the subsidiaries E. more selective and lies within the area of more specialised Klink A/S and Danklima A/S the activities form a whole. The activities. profit is below expectations. The decline in revenue concerns the Danish market Dan Jord A/S’s activities include civil engineering work, and is in line with expectations. A period of rapid econo- paving work, sports fields including golf courses as well as mic expansion was succeeded by a general slowdown in service work. The company has an increasing number of 2007/2008 and subsequently adversely affected by the jobs within operating and maintenance activities. The profit economic crisis. We saw a declining level of activity in the is significantly above expectations. municipal sector, but we hope that the reorganisation of Brødrene Hedegaard A/S undertakes operational the operating activities will bring the level back to normal. tasks for Copenhagen Airports where the level of activity Idle capacity from the building sector has moved to the civil has been declining. In spite of this, employment has been engineering sector and has intensified competition. We maintained, by and large. The operating profit has met have seen a tendency that long-term contracts in progress expectations. at the beginning of the year have delayed the effect of the In Sweden, activities were positively influenced by a matters mentioned above, reflected in the year-end results. reversed provision resulting from the settlement of a pre- During the course of the year, we have continued our viously executed contract. The activities in the company’s work of obtaining projects where the contractor is involved primary market area in Malmö have been under pressure at an early stage and where our work comprises design, but at year-end, a significant improvement in the order planning and execution. Agreements have been made intake has been achieved. The profit is significantly above with the local authorities of Aarhus, Odense, Copenhagen, expectations at the beginning of the year. Kolding and Malmö. The railway activities have been strengthened with the The future formation of Aarsleff Rail A/S which is an amalgamation In the new financial year, we expect a slightly lower level of of the railway work organisations of the Parent Company, activity and a profit before interest of 3% of revenue. Long- Petri & Haugsted as and Wicotec A/S. term earnings expectations are for a profit before interest Within offshore wind turbine foundations, the Horns Rev at 4%, and long-term expectations to revenue development 2 contract has been completed while the Rødsand 2 project will follow economic trends and market openings. in progress. Also, seven foundations north of the island of Sprogø have been executed for Sund & Bælt Holding A/S in record time.

Subsidiaries Petri & Haugsted as specialises in cable works and communication lines. The framework agreements with SEAS-NVE and TDC have been prolonged. The results exceed expectations.

Excavating ballast stones at the Rødsand 2 project where we have installed a total of MANAGEMENT’S REVIEW 91 wind turbine foundations. 23 A

A 155

The past year in Pipe Technologies

34 Segment results came to DKK 48 million before interest or 5.0% of revenue. The profit 36 exceeds expectations. Revenue increased by 11% to DKK 961 million.

A 38

42 44 In spite of increased internationalisation of Pipe New adjustments have been made, and a more normal and

Technologies’ activities, the Danish market is overall still profit-yielding operation is expected in the future year. 46 of great importance; among other things because No-Dig For a long period, the activities in the Baltic countries A

methods are more widely adopted in Denmark than in other comprised construction of wastewater treatment plants 48 countries. Most of the pipe system is owned by the local and water supply plants. In recent years, there has been

authorities whose activities within pipe renewal have been growing awareness of No-Dig renewal of wastewater pipes, 50

declining during the last part of the financial year. Also, pri- and an important contract was carried out in Riga during 52 vate and industrial pipeline owners have shown restraint in the course of the year. The economic crisis has had a con-

A the present financial circumstances. Declining raw material siderably negative impact in the region but orders already 54 prices and general efficiency improvement have partly obtained ensure continued stability. A

compensated for these matters, but earnings were under In the other Eastern European countries and in Russia, A

pressure during the last quarter. the development during the year has progressed as 56 A number of framework agreements with local authori- planned. In Moscow, customised pipe segments are pro-

BK:3.09 DK: D4510XP 58 ties in Denmark have been prolonged or renewed during duced to the local market, and operations have been steady. M 27

the year. Due to continuity, these contracts provide special At year-end, new agreements have been made, for example 60 opportunities of proceeding with already initiated effi- on a couple of major projects in Russia, securing the near

62 ciency work. In some cases, specific targets have been set future. A BK:2.96 DK:4.53 D01290K A A for obtaining continuous savings which are equally shared In Taiwan, operations have progressed as planned. In Sri

A between the client and the contractor. Lanka, a major one-off multi-annual contract is well under

A In the rest of Europe, we have market leading positions way, carried out in cooperation with Construction. in the countries where we have been present for a long At our production plant in Hasselager, we manufacture time, for example in the countries around the Baltic Sea and impregnate the polyester felt liners that are part of our A and in CentralA Europe. In England and Holland, we are production. In line with previous years, we have developed

currently setting up businesses. Generally, the demand is and tested new methods for material composition and relatively steady, however, the financial situation of the curing, and general efficiency improvement work has been 28

local authorities Ahas put a damper on the level of activity continued. A A 30

everywhere. Germany is the biggest market where the activities are equally shared with an American partner. The future 32 There has been a small growth in both revenue and profit. In the new financial year, we expect an unchanged level

For a period, Poland has had major EU-backed projects of activity and a profit before interest of 4.5% of revenue.

A 23 which have resulted in an unusually high level of activity Long-term earnings expectations are for a profit before 25 and extraordinarily high earnings. In Finland, major one-off interest at 6%, and long-term expectations to revenue

A contracts have contributed to results above expectations. development are 5 to 10% per year. 27 The Swedish company saw a disappointing operating loss.

M A BK:1.97 DK: D4502XP

A A

A A 26 BK:2.06 DK:3.28 D01120K

A ø800bt-24.6$ A MANAGEMENT’S REVIEW 33

31 Aø800bt-23.7$ D BK:1.44 DK:3.32 D01010K 29

kanal 3200x1700 27 25 In Fredericia, we renewed a renewed we Fredericia, In a with line sewer 110-metre by Lining CIPP Aarsleff 23-tons method. No-Dig the of means four place took renewal The the of one underneath metres junctions. busiest town's In Aarhus, we prolonged a prolonged we Aarhus, In with agreement partnering concer- authorities local the sewers of renewal No-Dig ning municipality. entire the in

27 A 34 27 23 A 36 A 38 A 40 26

42 A 28 29 44 46 25 48 62 50 60 52 58 54 56 31

30 A

A 27

A A 33

D01290K DK:4.53 BK:2.96 A M

D4510XP DK: BK:3.09 A

D01120K

155 DK:3.28 A BK:2.06

ø800bt-24.6$

D01010K DK:3.32 BK:1.44 ø800bt-23.7$ A

D kanal 3200x1700

D4502XP DK: M BK:1.97

A A

A A A A A A A A A A A A A A A A 26

The past year in Piling

Segment results came to DKK 46 million before interest or 5.0% of revenue. The profit does not meet expectations. Revenue fell by 21% to DKK 920 million.

Firstly, the Piling segment consists of the activities that are beginning of the year. At year-end, the market conditions related to the highly industrialised system of production remain unchanged, but we are anticipating an improve- and driving of precast concrete piles which is marketed ment during the new financial year. in Denmark, England, Germany, Poland and Sweden. In The German organisation has grown during the last addition, the segment contains related geotechnical work couple of years, especially in the southern parts of the and an increasing number of project-based activities that country. The total volume sold on the German market is involve foundation work. These are carried out in integral now bigger than in Denmark. There has been a small profit. cooperation with Construction. The Polish market was less affected by the crisis and in Within piling for construction work and related work, addition, major infrastructure projects have been initiated, the downturn in the economy has had a negative effect. for example in connection with the hosting of the European Within piling for other infrastructure work, the effects were Football Championship in 2012. After modernisations and more moderate at the beginning of the year but lately, the expansion of capacity, the new factory in Kutno has now general downturn has left its mark here also. The develop- been commissioned. The Polish railway network is being ment of central urban areas in Denmark has stopped, and upgraded, for example by installing new catenary lines, there is low demand for underground structures. Overall, resulting in a consistent level of activity. The overall level the activities connected with wind turbine foundation have of activity has been slightly higher than anticipated at the increased and counteracted the above-mentioned tenden- beginning of the year, and results exceed expectations. cies. In Sweden, Gothenburg is the basis for production and In the course of the year, we have continuously carried installation of piles. During the year, conditions of compe- out productivity improvements, for example by incorpo- tition were very fierce in a restricted market. Under these rating the same standards, methods and equipment in the circumstances, there was an operating loss, but the order four pile factories. intake has improved in the last months of the year. In Denmark, the last part of the year saw only partial Together with Construction, the division has carried out capacity utilisation, and adjustments have been made a number of marine construction projects in Estonia and to some extent. The specialised section for geotechnical the Caribbean as well as offshore wind turbine foundations drillings experienced a high level of activity, for example in for the Horns Rev 2 project. connection with investigations for the Copenhagen metro. In England, the economic crisis has had a greater impact The future than in other countries as almost all parts of the market are In the new financial year, we expect an unchanged level affected. The unusually low activity has resulted in signifi- of activity and a profit before interest of 3.5% of revenue. cant reductions. Thus, the number of employees has been Long-term expectations are for a profit before interest almost halved during the year. The results are a loss in the at 6% of revenue, and long-term expectations to revenue region of DKK 19 million which is more than expected at the development are 5 to 10% per year.

Foundation work at a new football stadium in Aachen, Germany.

MANAGEMENT’S REVIEW 27 28

Information to shareholders

Share capital Treasury shares The share capital is DKK 45.3 million divided into DKK 2.7 At the end of the financial year, the holding of treasury sha- million A shares and DKK 42.6 million B shares. res amounts to 195,808 B shares of a nominal value of DKK The B share capital is quoted on NASDAQ OMX 3.9 million and an acquisition cost of DKK 49.2 million. Copenhagen A/S. The B share capital is distributed on sha- The market capitalisation of treasury shares as at 30 res of a nominal value of DKK 20 and at 30 September 2009, September 2009 is DKK 112.9 million. it comprises 2,130,000 shares. The B shares are negotiable The holding of treasury shares has been acquired to instruments issued to bearer but can be registered in the increase the financial flexibility in connection with future name of the holder in the company’s register of sharehol- acquisitions. ders. The A shares carry 10 times the voting rights compared Market capitalisation to the B shares. The A shares are non-negotiable instru- The market capitalisation of the company shares totalled ments. DKK 1,193 million on 30 September 2009.

Shareholders Capitalisation and dividend policy All A shares are owned by the fund Per og Lise Aarsleffs Based on the relatively heavy investments in the specia- Fond. lised segments and in consolidation and growth targets as Shareholders who own more than 5% of the share capi- stated above, a long-term dividend policy has been adopted. tal or control 5% of the voting rights are stated at the top of It consists of a fixed dividend of DKK 4.80 per share of DKK the following page. 20. The reason for this is a wish to be able to finance our As at 18 December 2009, the members of the Board of growth and at the same time be able to maintain our equity Directors held a total of 3,862 shares. interest of 40-45%. If growth over a period cannot take As at 18 December 2009, 3,708 shareholders had been place in a profitable manner, the investment activity will registered, corresponding to approx. 71% of the share be changed. Moreover, the dividend and share acquisition capital. policy will be reconsidered. The voting rights at the general meeting are conditional on the shareholders, prior to the convening of the general meeting, having been registered in the company’s register of shareholders or having applied for registration and having documented the acquisition of shares.

MANAGEMENT’S REVIEW 29

Shareholders Number of shares Percentage of capital Percentage of votes

Arbejdsmarkedets Tillægspension, Hillerød 226,324 9.99 6.89 Danske Bank, København K 124,231 5.48 3.78 Danske Invest, København Ø 116,506 5.14 3.55 Per og Lise Aarsleffs Fond, Åbyhøj – A shares 135,000 5.96 41.11 Per og Lise Aarsleffs Fond, Åbyhøj – B shares 12,553 0.55 0.38 Treasury shares 195,808 8.64

Stock exchange announcements 9 October 2008 Aarsleff adjusts profit expectations upwards 31 October 2008 Major shareholder announcement 5 November 2008 Major shareholder announcement 7 November 2008 Aarsleff lands Poland’s biggest pile contract so far 17 November 2008 Aarsleff and Insituform Technologies, Inc. have reached a settlement 19 December 2008 Preliminary announcement of the Financial Statements for 2007/2008 29 January 2009 Annual General Meeting of Per Aarsleff A/S 5 February 2009 Aarsleff wins new offshore wind turbine contract 26 February 2009 Interim Report for the period 1 October – 31 December 2008 28 May 2009 Interim Report for the period 1 October 2008 – 31 March 2009 28 August 2009 Interim Report for the period 1 October 2008 – 30 June 2009 13 October 2009 Major shareholder announcement 3 November 2009 Aarsleff signs contract for the world’s largest offshore wind farm 7 December 2009 Aarsleff enters into agreement with Insituform Technologies, Inc. 18 December 2009 Preliminary announcement of the Financial Statements for 2008/2009

Financial calendar 29 January 2010 Annual General Meeting is held at the Group headquarters, Lokesvej 15, Aabyhoej, at 13:00 4 February 2010 Dividend paid to shareholders 24 February 2010 Preliminary announcement of the Financial Statements for Q1 of 2009/2010 26 May 2010 Preliminary announcement of the Financial Statements for H1 of 2009/2010 31 August 2010 Preliminary announcement of the Financial Statements for Q3 of 2009/2010 20 December 2010 Preliminary announcement of the Financial Statements for 2009/2010 30

Corporate governance in Aarsleff

Aarsleff’s Board of Directors and Executive Management colleagues within the business and our employees. Aarsleff attach great importance to good corporate governance. offers attractive work places in which safety, job satisfac- With few exceptions, the Management has therefore tion and lifelong development are given pride of place. decided to follow the recommendations of NASDAQ OMX Through our work, Aarsleff wants to compare with the Copenhagen A/S on good corporate governance. best within the business. This goes for the professional implementation of our work as well as profitable growth, Relations to shareholders competitiveness and a sound financial situation. Aarsleff was founded in 1947, and revenue as well as profit The Aarsleff Code of Conduct states the general have been growing steadily ever since. The company was principles of the company’s way of working. The Board introduced to NASDAQ OMX Copenhagen A/S in 1984. of Directors of the company has approved the principles, Subsequently, the share capital has been further increased which have subsequently been communicated to the and today totals DKK 45.3 million, distributed on 2.7 million employees. Aarsleff’s Code of Conduct can be accessed at unlisted A shares carrying a voting right of 10 per share and Aarsleff’s homepage – www.aarsleff.com. 42.6 million listed B shares carrying a voting right of one The Aarsleff Code of Conduct determines the rules of per share. good behaviour with respect to employees, environment It is the opinion of the Management that such distribu- and ethics as a condition of any cooperation in which tion of the voting rights provides the required peace and Aarsleff participates. decision-making competence for the company to reach its The principles and rules have been prepared in accord- strategic goals, the results of which are reflected in the ance with the UN’s Universal Declaration of Human Rights, positive development of the company. the ILO Convention and UNICEF’s Convention on the Rights The supreme authority of the company is vested in the of the Child. General Meeting. The Board of Directors convenes the shareholders to the General Meeting with sufficient notice. Openness and transparency The convening notice also contains information about the Aarsleff has established an Investor Relations Policy for the items on the agenda. communication of information to shareholders, investors and partners. The policy is available to all interested parties Relations to partners at www.aarsleff.com. The mission statement of the Aarsleff Group involves a wish The Group publishes quarterly reports on the financial to be known for… results and communicates on a current basis with investors • being people who can be trusted and other partners. • giving job satisfaction and development a high priority At www.aarsleff.com elaborating information on the • possessing the engineering and contracting qualifica- business areas of the Group as well as on the financial situ- tions of the future ation in Danish and in English can be found. • having high standards of project management and professional cooperation Tasks and responsibilities of the Board of Directors • being a professional and reliable business partner The Board of Directors determines the mission statement • considering the world our place of work. as well as the general objectives and strategies for the Aarsleff Group. The Board of Directors handles the manage- Aarsleff’s mission statement materialises, in relation to rial control of the company and evaluates the work of the our partners, in the professionalism shown in the execu- Executive Management on a current basis. tion of our work and through our respect for customers,

MANAGEMENT’S REVIEW 31

Board meetings are held at least five times a year with No incentive programmes have been established for the participation of the Executive Management. The chair- the Board of Directors, the Executive Management or man and the deputy chairman are responsible for the satis- other executive employees. The Group has no share option factory function of the Board of Directors at all times. schemes or similar. The section on shareholder information In accordance with article 31 of the Danish Act on in the annual report contains information on the Board of Registered and State-Authorised Public Accountants, Directors’ total holding of shares in the company, but the an Audit Committee consisting of three board members Board of Directors does not consider it useful to disclose has been established. In addition, the Committee’s work information on individual members’ holdings. shall include nomination to the Board of Directors and No extraordinary redundancy schemes or other agree- remuneration to the Board of Directors and the Executive ments imposing extraordinary obligations on the company Management. The Committee usually holds three meetings have been made with the Board of Directors, the Executive per year. Management or other executive employees. The business procedure of the Board of Directors is The policy on remuneration of the Board of Directors reviewed annually to ensure that it satisfies the demands and the Executive Management has not been changed as of the company. Guidelines have been prepared as to the compared to the last financial year and is not expected to reporting from the Executive Management to the Board of be changed in this present financial year or the coming Directors as well as for the communication between the financial year. Board of Directors and the Executive Management. The company has not, in accordance with the recommendations, specified the remuneration to the individual Composition of the Board of Directors board members or the remuneration to the individual The Board of Directors consists of four external board members of the Executive Management, as the Board of members, elected by the General Meeting for one year at a Directors does not find such specification relevant and time. In addition, there are two board members elected by appropriate. the staff for a four-year term. The Board of Directors carries out a self-assessment Risk management process once a year directed by the Chairman. The annual report includes separate information on the In the procedures for recommendation of new candi- most significant commercial and financial risks that may dates to the Board of Directors, we try to safeguard the affect the company. principle of representing all important competencies so that the Board can continue to carry out its work in the best Audit possible way. For the audit of the annual report, the General Meeting of In the business procedure the company has established the company elects one state authorized public accountant an age limit for the work of the board members of the com- for a period of one year, following a recommendation from pany. Board members cannot be elected or re-elected after the Board of Directors. the year they turn 70. Prior to the recommendation, the Audit Committee performs an assessment of the auditor’s competence and Remuneration of the Board of Directors and the Executive independence. Management The Board of Directors and the Executive Management receive a fixed annual remuneration which is stated in the annual report. 32

R i s k a s s e s s m e n t

Commercial risks Foreign exchange risks Within our specialised fields, we execute a number of It is the Group’s policy to reduce its foreign exchange risks, routine jobs involving a large degree of repetition. One of as individual projects and markets are assessed with a the effects of the repetition is the possibility to control and view to hedging. Normally, currency overdraft facilities reduce errors and risks. A systematic work is carried out are established on the basis of a current calculation of the to identify and remove sources of error, and the repetition foreign exchange exposure of the most important curren- provides an opportunity to monitor, control and inspect the cies. Moreover, forward exchange contracts and options are work. used. Short and long-term receivables from group enter- In addition to this, we minimise risks on large one-off prises are not hedged. projects by entering into joint venture agreements. By doing so, a harmonisation of the organisational capacity Interest rate risks as well as reduced effects from unsuccessful projects can At the end of September 2009, the Group’s interest-bearing be obtained. As far as possible, we cooperate with already liabilities less interest-bearing assets totalled approx. DKK known partners. In connection with projects in unknown 87 million. In order to minimise interest as well as risks, we markets, we frequently seek a local partner for the project have entered into cash pool and interest netting agree- in order to minimise the risk of first errors. ments in DKK, SEK, EUR and GBP with the Group’s Danish A special form of hedging consists in integrating the bank. design and planning. Traditionally, a contractor does not become part of a project until a firm of consulting engineers Credit risks has completed the design, and the tender phase is over. The majority of the Group’s customers consist of public or However, there is a tendency to involve the contractor early semi-public clients and as such, the exposure to financial when initiating the designing. In some instances, this form losses is at a minimum. The Group’s receivables from the of cooperation leads to partnering contracts and in other sale to other customers have been exposed to the usual instances to design and construct contracts. We actively credit risk. Therefore, a credit rating of the customers is participate in this development process. carried out prior to commencement of a contract. To the extent that it is appropriate and possible, receivables from Financial risks sale are hedged via bank and insurance guarantees and The Aarsleff Group has performed a considerable amount letters of credit. of work abroad in recent years. This entails exposure to a number of financial risks concerning both profit and Liquidity and borrowing risks balance sheet. The risks are monitored and controlled cen- It is Group policy to have a significant cash reserve. The trally within Per Aarsleff A/S in accordance with the foreign stable and good financial position of the Group entails a exchange and interest rate policy adopted by the Board of high creditworthiness which is reflected in appropriate Directors. The policy involves a low risk profile, so that risks credit facilities and loan commitments, short-term as well will only occur on the basis of business matters. as long-term.

MANAGEMENT’S REVIEW 33

number of employees

3,500

3,000

2,500

2,000

1,500

1,000

0 04/05 05/06 06/07 07/08 08/09 27 A 34 27 23 34 A 36 A 38 A 40 26

42 A 28 29 44 46 25 48 62 50 60 52 58 54 56 31

30 A

A 27 A A 33 Internal control and risk management 32 D01290K DK:4.53 in financial reporting BK:2.96 A M

D4510XP DK: BK:3.09 A

D01120K

155 DK:3.28 A BK:2.06

Aarsleff’s internal controls and risk management relating and finance policy as wells as risk management and the to financial reporting are made with a view to present- company’s code of business conduct. ing financial statements that comply with International The Executive Management approves other policies and Financial Reporting Standards (IFRS), as adopted by the procedures, and the responsible functions issue guidelines EU, and additional Danish disclosure requirements of listed and monitor the use of all policies and procedures. The ø800bt-24.6$ companies. organisational structure and internal guidelines together The internal controls and risk management systems with laws and other rules form the control environment. have been made with a view to providing reasonable and D01010K DK:3.32 fair security that errors and defects in the financial state- Risk assessment BK:1.44 ø800bt-23.7$ A ments are discovered and rectified so that the annual Aarsleff’s Executive Management carry out an annual risk

report provides a true and fair view without material analysis with a view to assessing key risks in the financial D kanal 3200x1700 misstatements as well as with a view to ensuring that the reporting process, including a separate assessment of the choice and use of accounting policies are appropriate and risk of material misstatement of the annual report due to that accounting estimates are performed responsibly. fraud. The Aarsleff Group’s internal control and risk manage- The risk assessment, which is allocated to items and ment systems relating to financial reporting have been individual processes in the financial reporting, forms the updated in the financial year 2008/2009 and are now based basis of the determined risk management policy which is to D4502XP DK: M on the internationally recognised COSO framework. The ensure that relevant risks are managed and reduced to an BK:1.97

framework has been implemented in the parent company acceptable level. and is being implemented in the rest of the Group. A

Control activities A Control environment The aim of the control activities is to prevent, discover and The Board of Directors has appointed an audit committee correct any errors and irregularities. The activities are inte-

whose primary purpose is to assist the board in monitoring grated in the company’s accounting and reporting proce-

financial reporting and the adequacy of the Group’s inter- dures and include for example procedures for certification, A nal controls and risk management systems. authorisation, approval, reconciliation, analyses of results, The audit committee has supervisory responsibilities separation of incompatible functions, controls concerning and reports to the entire Board. The responsibility for the IT applications and general IT controls. A

A day-to-day maintenance of effective internal controls and Aarsleff’s concept of internal controls determines stan- a risk management system in connection with financial dards for control activities concerning financial reporting. reporting rests with the Executive Management. Managers The purpose of these standards is to provide security for at different levels are responsible within their respective and maintain a uniform level for internal control concern- A areas. ing financial reporting in the Group. A Responsibility and powers are defined in the Board of A A

A Director’s instructions to the Executive Management, poli- Information and communications cies, procedures and code. The Board of Directors approves Aarsleff maintains information and communications sys- A the company’s primary policy for communications, treasury tems to ensure that the presentation of accounts is A A A A A A A MANAGEMENT’S REVIEW 27 A 34 27 23 A 35 36 A 38 A 40 26

42 A 28 29 44 46 25 48 62 50 60 52 58 54 56 31

30 A

A 27 A A 33

D01290K DK:4.53 BK:2.96 A M

D4510XP DK: BK:3.09 A

D01120K

155 DK:3.28 A BK:2.06

correct and complete. Accounting rules, procedures and other reporting instructions are updated as needed and reviewed at least once a year. We find it important that they are available – together with other policies which are relevant for the internal control of financial reportingø800bt-24.6$ – for relevant employees. The Aarsleff Group’s accounting policies are specified in accounting and reporting instructions submitted to the D01010K DK:3.32 Group’s subsidiaries each year. BK:1.44 ø800bt-23.7$ A

Monitoring D kanal 3200x1700 Aarsleff uses a comprehensive management control system to monitor the company’s results which makes it possible at an early stage to detect and correct any errors and irregularities in financial reporting, including disclosed weaknesses in internal controls, lack of compliance with procedures and policies etc. D4502XP DK: M Compliance with accounting policiesBK:1.97 is currently moni-

tored at group level and other operating levels by independent controllers. This includes an annual review and A

assessment of whether the control designA of relevant subsidiaries complies with the standards of the Aarsleff Group’s concept for internal controls.

An annual assessment of the control design and the

effectiveness hereof is carried out. The auditA committee is informed of the result. Similarly, the audit committee receives observed control weaknesses and recommendations from the auditor elected at the annual general A

A meeting. The audit committee monitors that the Executive Management reacts efficiently to weaknesses or shortcom- ings and that measures relating to risk management and internal controls in connection with the financial reporting A are implemented as planned. A A A A A A A A A A A A 27 A 34 27 23 36 A 36 A 38 A 40 26

42 A 28 29 44 46 25 48 62 50 60 52 58 54 56 31

30 A

A 27 A A 33 Knowledge resources 32 D01290K DK:4.53 BK:2.96 A M

D4510XP DK: BK:3.09 A

D01120K

155 DK:3.28 A BK:2.06

The foundation of Aarsleff’s organisation is versatile civil To support the one company strategy and improve lead- engineering and contracting competencies, combined with ership competencies, we have initiated a number of train- an organisation and common contractor’s culture that ing courses entitled “Your personal leadership”, in which create a platform for exploitation of the synergy poten- leaders across the Group participate. tial across divisions and subsidiaries. Our one company In connection with our efforts to improve occupational ø800bt-24.6$ strategy aims at securing the best position in the market health and safety, we have implemented a number of by means of the complementary competencies available in training courses entitled “The manager’s responsibility the Group, thus allowing us to submit competitive tenders for occupational health and safety”, directed at all leaders; D01010K DK:3.32 for demanding and complex jobs that involve a high degree from directors to foremen. BK:1.44 ø800bt-23.7$ A of own production. Tenders are increasingly invited for We have established a central competence centre within

jobs where the total responsibility for the execution of the trenchless pipe renewal at our factory in Hasselager. The D kanal 3200x1700 project lies with one contractor who solves the job entirely purpose is to support our goals of continued growth and from design, planning and execution to – and often inclu- product and method development on the basis of the most sive of – subsequent maintenance. optimum competencies. We assign priorities to the development of the project Within the piling segment, we have established a central manager and this always remains in focus within one-off knowledge centre in Hasselager. The goal is to support projects and service contracts as well as for the develop- the continued development of this business segment, for D4502XP DK: M ment of employees and project managers with specialised instance concerning compliance with requirements in BK:1.97

competencies. We attach importance to developing the terms of noise, vibration and the environment. specialist skills of our employees, at all levels, within civil In general, we continue our focus on ensuring job A

engineering design principles, methods of execution, geo- satisfaction, personal development and development of A technical conditions, materials and the use of specialised personal competencies at all levels in a straightforward equipment. With the purpose of solving the coming years’ and open culture in which our employees have freedom,

major infrastructure jobs, we give high priority to the devel- take responsibility and show respect.

opment and recruiting of highly qualified project managers A with general competencies for projects at an international high level. A A A A A A A A A A A A A A A MANAGEMENT’S REVIEW 27 A 34 27 23 A 37 36 A 38 A 40 26

42 A 28 29 44 46 25 48 62 50 60 52 58 54 56 31

30 A

A 27 A A 33 32 Occupational health and safety, quality D01290K DK:4.53 BK:2.96 and the external environment A M

D4510XP DK: BK:3.09 A

D01120K

155 DK:3.28 A BK:2.06

Our goal for 2009 was to obtain occupational health consumption. When handling materials, we will seek accidents per million man-hours Based on reports at 31 December 2009 and safety certification. In 2009, Per Aarsleff A/S to avoid waste and excessive consumption. When

was awarded occupational health and safety certifi- selecting machines, we will take into consideration 60 cation according to the OHSAS 18001 standard. We fuel efficiency and noise level, and through efficient 50 consider good planning and careful preparation a ø800bt-24.6$planning in general we will seek to minimise the 40 30

contributory precondition for a good occupational employment of resources. We will pay attention to 20 health and safety environment. We ensure that correct handling of waste and to possible recycling. 10 aspects relating to occupational health and safety Applying our accomplished competencies as 0 D01010K 04/05 05/06 06/07 07/08 08/09 DK:3.32 are considered already in the design phase and in a general infrastructureBK:1.44 contractor, we actively DA statistics of building and construction ø800bt-23.7$ A the selection of method. During our working day, participate in providing solutions that contribute

we ensure order, tidiness and a systematic layout towards positive climateD impacts,kanal 3200x1700 for instance in of the individual workplaces. We are committed to connection with the construction of wind farms and improving occupational health and safety on an extension of railway networks. ongoing basis. In 2009, Aarsleff introduced a new curing The goal for 2009 was a reduction of the number method for CIPP Lining in connection with No-Dig of accidents compared to the number of accidents in pipe renewal in dimensions of up to DN200 based 2007 and to obtain an incidence of accidents below on LED light characterised by a high wavelength D4502XP DK: M the average of the business in 2007. TheBK:1.97 number of and improved energy efficiency. LED technology

accidents per million working hours in 2008/2009 is experiencing a rapid development, and the goal is markedly below the level of both 2006/2007 and for Aarsleff’s development in this field is to reduce A

2007/2008. The total incidence of accidentsA is 27.1 for the CO2 emission of our current methods by 75% in the financial year against the average of the busi- 2029. ness of 31.7 in 2007. Both goals concerning number Concurrently with the occupational health and

of accidents for 2008/2009 have thus been met. safety certification work in the parent company, the

The goal for 2009/2010 is to achieve a continuedA management systems for occupational health and reduction in the number of accidents and to be safety, quality and the environment are continu- below average of the business for 2008. ously developed in the parent company as well as We are aware that our activities affect our sur- in the subsidiaries Wicotec A/S, Petri & Haugsted A

A roundings. In both the design phase and in the selec- as, Dan Jord A/S, Centrum Pæle A/S and Brdr. tion of method, we will seek to minimise adverse Hedegaard A/S. environmental impacts, CO2 impact and energy A A A A A A A A A A A A A 27 A 34 27 23 A 36 A 38 38 A 40 26

42 A 28 29 44 46 25 48 62 50 60 52 58 54 56 31

30 A

A 27 A A 33

D01290K DK:4.53 BK:2.96 A Positions held by the ExecutiveM Management D4510XP DK: and Board of Directors BK:3.09 A

D01120K

155 DK:3.28 A BK:2.06

Executive Management State Authorized Public Accountant Niels S. Møller, B.Sc. Eng. (hon). Ebbe Malte Iversen, 58 years old Deputy Chairman, 65 years old

Dansk Byggeris Eksportsektion (Chairman) Chairman of Per Aarsleff A/S’s Audit Committee ø800bt-24.6$ DHI, Dansk Hydraulisk Institut Joined the Board of Directors in 2001 egetæpper a/s Erik Dam Holding A/S (Chairman) Erik Dam A/S (Chairman)

B.Sc. Eng. Lars M. Carlsen, 48 years old Stibo-Fonden D01010K DK:3.32 BK:1.44 ø800bt-23.7$ No external managerial posts A Vice-Managing Director Andreas Lundby, 59 years old

D kanal 3200x1700 Board of Directors Joined the Board of Directors in 2009 B.Sc. Eng. Palle Svejstrup, Chairman, 70 years old Andelssmør a.m.b.a. (Chairman) Member of Per Aarsleff A/S’s Audit Committee Arla Foods a.m.b.a. Joined the Board of Directors in 1999 Arla Foods Finance A/S Campinggården A/S (Chairman) Arla Foods Holding A/S egetæpper a/s (Chairman) Arla Foods Ingredients a.m.b.a. (Chairman) Stibo-Fonden (Chairman) Arla Foods International A/S D4502XP DK: M BK:1.97

A A

From the left: Palle Svejstrup , Niels S. Møller, Ebbe Malte Iversen, Andreas Lundby, Carsten Fode, Lars M. Carlsen, Søren Kristensen and Leif Endersen. A A A A A A A A A A A A A A A

MANAGEMENT’S REVIEW 27 A 34 27 23 A 36 A 38 A 39 40 26

42 A 28 29 44 46 25 48 62 50 60 52 58 54 56 31

30 A

A 27 A A 33

D01290K DK:4.53 BK:2.96 Attorney Carsten Fode, 60 years old A M

D4510XP Joined the Board of Directors in 1992 DK: BK:3.09 A/S 48 A AVK Gummi A/S AVK Holding A/S (Chairman) BCA Auto Auktion A/S D01120K

155 DK:3.28 A B4Restore A/S (Chairman) BK:2.06 Carl Hansen & Søn Møbelfabrik A/S (Chairman) Chris-Invest A/S CICO Invest A/S Dansk Bygningsanalyse A/S (Chairman) DMS Invest A/S (Chairman) Good Food Group A/S Meinertz A/S (Chairman) Orifarm A/S Redgreen A/S (Chairman) Silentor A/S (Chairman) ø800bt-24.6$ 5. MAJ A/S

Foreman Leif Endersen (staff-elected), 46 years old

D01010K Joined the Board of Directors in 2000 DK:3.32 BK:1.44 ø800bt-23.7$

A No external managerial posts

D kanal 3200x1700 Plant Driver Søren Kristensen (staff-elected), 49 years old Joined the Board of Directors in 2008 No external managerial posts

D4502XP DK: M BK:1.97

A A

A A A A A A A A A A A A A A A A 40

endorsements

Management’s Statement Independent auditor’s report

The Board of Directors and the Executive Management have today To the shareholders of Per Aarsleff A/S considered and adopted the annual report of Per Aarsleff A/S for We have audited the Consolidated Financial Statements, the 2008/2009. Financial Statements and Management’s Review of Per Aarsleff The annual report is prepared in accordance with International A/S for the financial year 1 October 2008-30 September 2009, page Financial Reporting Standards as adopted by the EU. Moreover, 19-93. The Consolidated Financial Statements and the Financial the annual report is prepared in accordance with additional Statements comprise Income Statement, Assets, Liabilities and Danish disclosure requirements for listed companies. Equity, Statement of Changes in Equity, Cash Flow Statement In our opinion, the Consolidated Financial Statements and and Notes for both the Group and the Parent Company. The the Financial Statements give a true and fair view of the finan- Consolidated Financial Statements and the Financial Statements cial position at 30 September 2009 of the Group and the Parent are prepared in accordance with International Financial Company and of the results of the Group and Parent Company Reporting Standards as adopted by the EU and additional Danish operations and cash flows for 1 October 2008-30 September 2009. disclosure requirements for listed companies. Management’s In our opinion, Management’s Review includes a true and fair Review is also prepared in accordance with Danish disclosure account of the development in the operations and financial cir- requirements for listed companies. cumstances of the Group and the Parent Company, of the results for the year and of the financial position of the Group and the Management’s responsibility Parent Company as well as a description of the most significant Management is responsible for the preparation and fair presen- risks and elements of uncertainty facing the Group and the Parent tation of the Consolidated Financial Statements and the Financial Company. Statements in accordance with International Financial Reporting We recommend that the annual report be adopted at the Standards as adopted by the EU and additional Danish disclosure Annual General Meeting. requirements for listed companies. This responsibility includes: designing, implementing and maintaining internal control Aarhus, 18 December 2009 relevant to the preparation and fair presentation of Consolidated Financial Statements and Financial Statements that are free Executive Management from material misstatement, whether due to fraud or error. The responsibility also includes selecting and applying appropriate accounting policies, and making accounting estimates that are Ebbe Malte Iversen Lars M. Carlsen reasonable in the circumstances. Furthermore, Management is responsible for preparing a Management’s Review that includes Board of Directors a true and fair account in accordance with Danish disclosure requirements for listed companies.

Palle Svejstrup Niels S. Møller Andreas Lundby Auditor’s responsibility and basis of opinion Chairman Our responsibility is to express an opinion on the Consolidated Financial Statements, the Financial Statements and Management’s Review based on our audit. We conducted our audit Carsten Fode Leif Endersen Søren Kristensen in accordance with Danish Auditing Standards. Those Standards Staff-elected Staff-elected require that we comply with ethical requirements and plan and

endorsements 41

perform the audit to obtain reasonable assurance whether the well as a description of the most significant risks and elements of Consolidated Financial Statements, the Financial Statements and uncertainty facing the Group and the Parent Company in accor- Management’s Review are free from material misstatement. dance with Danish disclosure requirements for listed companies. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Aarhus, 18 December 2009 Consolidated Financial Statements, the Financial Statements and Management’s Review. The procedures selected depend on PricewaterhouseCoopers the auditor’s judgment, including the assessment of the risks of Statsautoriseret Revisionsaktieselskab material misstatement of the Consolidated Financial Statements, the Financial Statements and Management’s Review, whether due to fraud or error. In making those risk assessments, the Niels Jørgen Lodahl Claus Lindholm Jacobsen auditor considers internal control relevant to the Company’s State Authorized State Authorized preparation and fair presentation of Consolidated Financial Public Accountant Public Accountant Statements and Financial Statements and to the preparation of a Management’s Review that includes a true and fair account in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Management, as well as evaluating the overall presentation of the Consolidated Financial Statements, the Financial Statements and Management’s Review. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Our audit has not resulted in any qualification.

Opinion In our opinion, the Consolidated Financial Statements and the Financial Statements give a true and fair view of the financial position of the Group and the Parent Company at 30 September 2009 and of the results of the Group and Parent Company operations and cash flows for the financial year 1 October 2008-30 September 2009 in accordance with International Financial Reporting Standards as adopted by the EU and additional Danish disclosure requirements for listed companies. Moreover, in our opinion, Management’s Review includes a true and fair account of the development in the operations and financial circumstances of the Group and the Parent Company, of the results for the year and of the financial position of the Group and the Parent Company as 42

ANNUAL REPORT 2008-09 43

Lake crossing of gas pipeline in Finland. 44

ANNUAL REPORT 2008-09 45

Wind turbine foundations at Nørrekær Enge. 46

ANNUAL REPORT 2008-09 47

Wind turbine foundations for the Rødsand 2 project. 48

ANNUAL REPORT 2008-09 49

Moving earth at Amager Commons. 50

ANNUAL REPORT 2008-09 51

Establishment of major cofferdam in Copenhagen. 52

Accounting policies

Basis of accounting Joint ventures The annual report of Per Aarsleff A/S for 2008/2009, comprising The Group participates in a number of joint ventures, including the financial statements of the Parent Company and the consoli- consortia and working partnerships, in which none of the partici- dated financial statements, has been prepared in accordance with pating parties has controlling interest. International Financial Reporting Standards (IFRS) as adopted by In joint ventures which are classified as jointly controlled the EU and additional Danish disclosure requirements for listed operations, revenue and expenses as well as assets and liabili- companies, cf. the financial reporting requirements of NASDAQ ties relating to the jointly controlled operations are recognised OMX Copenhagen A/S regarding listed companies and the IFRS in the financial statements of the Parent Company and in the notification issued according to the Danish Financial Statements consolidated financial statements according to the joint venture Act. In addition, the annual report complies with the International agreement. Financial Reporting Standards (IFRS) issued by the IASB. Joint ventures which are classified as jointly controlled enti- The annual report is presented in Danish kroner (DKK), which ties are recognised as pro rata consolidation in the consolidated is considered the primary currency for the Group’s activities and financial statements. In the financial statements of the Parent the functional currency for the Parent Company. Company, investments in jointly controlled entities are recognised The annual report was prepared on the basis of historical cost at cost. prices, except for certain financial instruments which are measured at fair value. Significant accounting policies are described Business combinations below. The purchase method is used for the acquisition of subsidiaries Compared to last year, declared dividend from subsidiaries and and associates. Identifiable assets, liabilities and contingent liabil- associates in the income statement for the Parent Company has ities of the enterprises acquired are measured at fair value at the been reclassified from financial income to profit in subsidiaries date of acquisition. Identifiable intangible assets are recognised if and profit in associates, respectively. Comparative figures have they can be separated and the fair value can be calculated reliably. been adjusted. Deferred tax on revaluations made is recognised. The accounting policies are unchanged from last year. The cost of an enterprise consists of the fair value of the remuneration paid with addition of the expenses directly attribut- Description of significant accounting policies able to the acquisition. If the final fixing of the remuneration is conditional upon one or more future events, these adjustments Consolidated financial statements are recognised in cost only if the event concerned is likely to occur The consolidated financial statements comprise the Parent and the effect on the cost can be calculated reliably. Company Per Aarsleff A/S and the subsidiaries which are control- Positive differences between cost and fair value (goodwill) on led by the Parent Company. The Parent Company is considered acquisition of subsidiaries are recognised in intangible assets to be in control when the Group directly or indirectly holds more and are tested for impairment on an annual basis. On acquisition, than 50% of the votes or otherwise is able to exercise or actually goodwill is transferred to the cash-generating units, subsequently exercises control. forming the basis of an impairment test. Positive differences Enterprises in which the Group holds between 20% and 50% of (goodwill) on acquisition of associates are recognised in the bal- the votes and exercises significant influence but not control are ance sheet under investments in associates. Negative differences classified as associates and are recognised at net asset value. (negative goodwill) are recognised as income in the income state- The consolidated financial statements are prepared on the ment at the date of acquisition. basis of financial statements for the Parent Company and the indi- Enterprises acquired are recognised from the date of acquisi- vidual subsidiaries by combining accounting items of a uniform tion, while enterprises sold are recognised up until the date of nature. At the consolidation, elimination is made of intercompany sale. income and expenses, unrealised intercompany profits/losses, If the fair values of assets and liabilities taken over subse- accounts and settlement of internal shareholdings. Investments quently turn out to deviate from the values calculated at the date in subsidiaries are set off against the Parent Company’s share of of acquisition, goodwill in this respect is adjusted until 12 months the fair value of the subsidiaries’ identifiable net assets and recog- after the acquisition. nised contingent liabilities at the date of acquisition.

noterAccounting policies 53

Translation policies Leases A functional currency is determined for each of the reporting enti- Lease contracts whereby the Group bears substantially all the ties. The functional currency is the currency used in the primary risks and rewards of ownership are treated as finance leases. financial environment in which the individual entity is operating. Other lease contracts are treated as operating lease contracts. Transactions in other currencies than the functional currency are The Group’s lease contracts are all classified as operating leases. transactions in foreign currencies, which are translated into the Payments in connection with operating leases are recognised in functional currency at the exchange rates at the date of transac- the income statement over the lease period. tion. Receivables and payables in foreign currencies are translated State grants into the functional currency at the official exchange rates at the State grants comprise grants for projects and investments etc. balance sheet date. Exchange differences arising between the Grants for projects are systematically booked as income in the transaction date rates and the rates at respectively the dates of income statement to offset the expenses for which they compen- payment and the balance sheet date are recognised in financials, sate. Grants for investments are set off against the costs of the net in the income statement. assets for which grants are provided. The balance sheets and goodwill of foreign consolidated enterprises are translated at the exchange rate at the balance sheet INCOME STATEMENT date while the income statements are translated at the exchange rate prevailing at the date of transaction. Exchange differences Revenue arising upon translation of the equity of foreign subsidiaries and Revenue comprises finished contract work and contract work in associates at the beginning of the year at the exchange rates at progress as well as the sale of goods for resale and finished goods. the balance sheet date as well as at the translation of income Revenue from the sale of goods for resale and finished goods statements from the exchange rates prevailing at the date of is recognised in the income statement if delivery has taken place transaction to the exchange rates at the balance sheet date are before the end of the year. Revenue is measured exclusive of value taken directly to equity as a special reserve for foreign currency added tax and price reductions directly related to the sale. translation adjustments. Contract work in progress is recognised in revenue at the rate of completion, which means that revenue equals the selling price Derivative financial instruments of the work completed for the year (percentage-of-completion Derivative financial instruments are recognised in the balance method). sheet at fair value. Positive and negative fair values of derivative financial instruments are included in other receivables and other Production costs debt respectively. Fair values are determined on the basis of mar- Production costs comprise direct and indirect expenses paid to ket data as well as generally accepted valuation methods. achieve revenue for the year, including expenses for materials, Changes in the fair values of derivative financial instruments consumables, wages and salaries, leases, amortisation, deprecia- that are designated and qualify as fair value hedges of a recog- tion and impairment losses, subcontractor expenses, expenses nised asset or a recognised liability are recognised in the income for planning and submission of tender as well as provision for bad statement as are any changes in the fair value of the hedged asset debts in respect of work in progress and warranty obligations for or the hedged liability. finished contracts. Changes in the fair values of derivative financial instruments that are designated and qualify as hedges of expected future cash Administrative expenses and selling costs flows are recognised directly in equity. At realisation of the hedged Administrative expenses and selling costs comprise expenses for transaction, gains or losses concerning such hedging transactions management and administration, including expenses for admin- are transferred from equity and recognised in the same account- istrative staff, Management, office supplies, insurance, sales and ing item as the hedged instrument. marketing as well as depreciation. For derivative financial instruments not qualifying as hedges, changes in the fair value are recognised currently in financials, Other operating income and expenses net in the income statement. Other operating income and expenses comprise accounting items of a secondary nature in relation to the activities of the company. 54

Accounting policies

Profit/loss on investments in associates in the consolidated BALANCE SHEET financial statements The share of profit/loss after tax in associates is recognised in the Intangible assets consolidated income statement after adjustment for unrealised Goodwill is initially recognised in the balance sheet at cost. intercompany gains/losses and less any impairment of goodwill. Subsequently, goodwill is measured at cost less accumulated impairment losses. Goodwill is not amortised, but is tested for Dividend on investments in subsidiaries and associates in the impairment at least once a year and in case there is an indication financial statements of the Parent Company of impairment, and is written down to the recoverable amount Dividend from investments in subsidiaries and associates are over the income statement if the carrying amount is higher. recognised as profit in subsidiaries and profit in associates in the The carrying amount of goodwill is allocated to the cash gener- income statement of the Parent Company in the financial year in ating units of the Group on the date of acquisition. which the dividend is declared. To the extent dividend exceeds Patents and other intangible assets are measured at cost less accumulated earnings after the date of acquisition, the dividend is accumulated amortisation and less any accumulated impairment however recognised as write-down of the cost of the investment. losses. Amortisation is calculated on a straight-line basis over the period of the agreement or a shorter useful life, at present corre- Financials, net sponding to 5-7 years. The basis of amortisation is reduced by any Financial income and expenses comprise interest, capital gains impairment losses. and losses on securities as well as accounts and transactions in foreign currencies, amortisation of financial assets and liabilities Property, plant and equipment as well as extra payments and repayment under the on-account Property, plant and equipment are measured at cost less accumu- taxation scheme etc. Moreover, realised and unrealised gains and lated depreciation and less any accumulated impairment losses. losses concerning derivative financial instruments that cannot be Cost comprises the cost of acquisition and expenses directly classified as hedging agreements are included. related to the acquisition up until the time when the asset is ready for use. In case of assets of own construction, cost comprises Tax on profit/loss for the year direct and indirect expenses for labour, materials, components Per Aarsleff A/S is comprised by the Danish rules on compulsory and sub-suppliers. Financing expenses in the period of construc- joint taxation of the Danish companies of the Group. Subsidiaries tion are not recognised. are included in the joint taxation from the time when they are Depreciation is calculated on a straight-line basis over the use- included in the consolidation in the consolidated financial ful lives of the assets, which are: statements and until the time when they are excluded from the consolidation. Production buildings 20 years Per Aarsleff A/S is the administration company in respect of Administration buildings 50 years the joint taxation and consequently settles all payments of corpo- Plant and machinery 8-10 years ration tax with the tax authorities. Other plant, fixtures and operating equipment 5-10 years The tax effect of the joint taxation with the subsidiaries is allocated to Danish enterprises showing profits or losses in pro- No depreciation is made on land. portion to their taxable incomes (full allocation with reimburse- The basis of depreciation is determined in consideration of the ment of tax losses). The jointly taxed companies are included in a scrap value of the asset and is reduced by any impairment losses. Danish tax prepayment scheme. The scrap value is determined at the date of acquisition and is Tax on profit for the year consists of current tax for the year reassessed on an annual basis. and deferred tax for the year. The tax attributable to profit for Property, plant and equipment are written down to recoverable the year is recognised in the income statement, whereas the tax amount if this is lower than the carrying amount. attributable to equity entries is recognised directly in equity. Gains and losses on the sale of property, plant and equipment Changes in deferred tax as a consequence of changed tax rates are recognised in the income statement under production costs are recognised in the income statement. or administrative expenses, or other operating income/expenses respectively, and are calculated as the difference between the

Accounting policies 55

selling price less selling expenses and the carrying amount at the extent that the new carrying amount of the asset does not exceed time of the sale. the carrying amount of the asset after amortisation/depreciation, had the asset not been written down. Investments in associates in the consolidated financial statements Receivables from subsidiaries and associates Investments in associates are measured under the equity method. Receivables under long-term assets held to maturity are mea- In the balance sheet, the investments are measured at the sured at amortised cost reduced by any impairment losses. proportionate share of the net asset value of the enterprises with deduction or addition of unrealised intercompany gains Inventories and losses, and with addition of the carrying amount of goodwill. Inventories are measured at the lower of cost under the FIFO Associates with a negative net asset value are measured at DKK 0. method and net realisable value for the individual item groups. Any legal or constructive obligation of the Group to cover the The cost of raw materials, consumables and goods for resale negative balance of the associate is recognised in debt. equals landed cost. Any receivables from associates are written down to the extent The cost of finished goods comprises the cost of materials and the receivable is considered irrecoverable. direct labour with addition of indirect production costs. Financing expenses in the construction period are not recognised. Investments in subsidiaries and associates in the financial statements of the Parent Company Receivables Investments in subsidiaries and associates are measured at cost. Receivables are measured at amortised cost less provisions for Where the cost exceeds the recoverable amount, the investment is bad and doubtful debts. written down to its lower recoverable amount. The cost is reduced to the extent that dividend received exceeds accumulated earn- Work in progress ings after the date of acquisition. Contract work in progress is measured at the selling price of the work performed less invoicing on account and write-downs to Impairment of long-term assets meet expected losses. The carrying amounts of intangible assets, property, plant and The selling price is based on the stage of completion at the bal- equipment as well as other long-term assets are assessed at least ance sheet date and the total expected income on the individual once a year in order to determine whether there is any indica- work in progress. The stage of completion is determined on the tion of impairment. If so, the recoverable amount of the asset basis of an assessment of the work completed. is assessed. The recoverable amount of goodwill and intangible When it is probable that total expenses exceed total income assets with indefinite useful lives is however always assessed on from work in progress, provision is made to meet the total an annual basis. expected loss on the contract. When the selling price cannot be If the asset does not generate cash flows independently, the measured reliably, the selling price is measured at the lower of recoverable amount of the smallest cash-generating unit of which costs incurred and net realisable value. the asset is part is determined. Contracts on which the selling price of the work performed The recoverable amount is the higher of the fair value of an exceeds invoicing on account and expected losses are recognised asset less expected selling expenses and value in use, which is the in receivables. Contracts on which invoicing on account and discounted value of expected future cash flows generated by the expected losses exceed the selling price are recognised in debt. asset. Prepayments from customers are recognised in debt. Impairment losses are recognised in the income statement Expenses relating to sales and tender work to obtain contracts when the carrying amount of an asset exceeds the recoverable are expensed in the income statement in the financial year in amount of the asset. which they are incurred. Impairment losses on goodwill are not reversed. Impairment losses on other assets are reversed to the extent that there have Prepayments been changes in the assumptions and estimates resulting in the Prepayments recognised in short-term assets include expenses impairment loss. Impairment losses are only reversed to the incurred concerning subsequent financial years. 56

Accounting policies

Equity current tax. Where the tax base can be determined according to alternative taxation rules, deferred tax is measured on the basis Proposed dividend of the planned use of the asset or the settlement of the obligation, Dividend is recognised in debt at the time of adoption at the respectively. General Meeting. Proposed dividend that is expected paid for the Provision is made for deferred tax to cover the retaxation of financial year is disclosed as a separate equity item. tax losses in foreign companies that are estimated to materialise. Deferred tax assets, including the tax base of tax-loss carryfor- Treasury shares wards, are recognised at the value at which the asset is expected Purchase and sales prices as well as dividend for treasury shares to be realised, either by elimination in tax on future earnings or by are recognised in equity. set-off against deferred tax. Deferred tax assets and tax liabilities are presented offset Reserve for foreign currency translation adjustment within the same legal tax entity. The reserve for foreign currency translation adjustment in the consolidated financial statements comprises exchange differ- Financial liabilities ences arisen on the translation of financial statements of foreign Mortgage debt and payables to credit institutions are recognised entities from their functional currencies to the Group’s reporting at the raising of the loan at the proceeds received less transac- currency (Danish kroner). tion expenses paid. In subsequent periods, financial obligations In case of realisation, in whole or in part, of the net investment, are measured at amortised cost, corresponding to the capitalised exchange rate adjustments are recognised in the income state- value when using the effective interest rate, so that the difference ment. between the proceeds and the nominal value is recognised in the income statement over the term of the loan. Provisions Other liabilities comprising debt to suppliers, group enter- Provisions are recognised when the Group has an obligation in prises and associates as well as state grants and other debt are consequence of events occurred in the financial year or in previ- measured at amortised cost. ous years, when it is probable that settlement of the obligation will result in consumption of financial resources and when the Deferred income obligation can be calculated reliably. Deferred income, recognised in liabilities, include payments On measurement of provisions, the expenses necessary for set- received concerning income in subsequent financial years. tling the obligation are discounted if this has a material effect on the measurement of the obligation. CASH FLOW STATEMENT Warranty obligations are recognised as the contracts are com- The cash flow statement of the Group is prepared according to the pleted and are measured based on experience. indirect method based on the profit/loss before tax for the year. The cash flow statement shows the cash flows for the year Corporation tax and deferred tax broken down by operating, investing and financing activities and As the administration company, Per Aarsleff A/S takes over the how these cash flows have affected the cash and cash equivalents liability for the settlement of the corporation taxes of the subsidi- of the Group. aries with the tax authorities as the subsidiaries effect payment of their joint taxation contributions. Cash flows from operating activities Deferred tax is measured under the balance-sheet liability Cash flows from operating activities are calculated as the profit/ method of all temporary differences between the carrying amount loss for the year before tax adjusted for non-cash operating and the tax base. However, deferred tax is not recognised in items, changes in working capital, payments concerning financial respect of temporary differences concerning non-tax depreciable income and expenses and corporation tax. goodwill and other items – apart from business acquisitions – where temporary differences have arisen at the time of acquisi- Cash flows from investing activities tion without affecting the profit for the year or the taxable income. Cash flows from investing activities comprise purchase and sale Deferred tax is measured on the basis of the tax rules and the of enterprises, purchase and sale of intangible assets, property, tax rates that will be effective under the legislation at the balance plant and equipment and other non-current assets, dividend paid sheet date when the deferred tax is expected to crystallise as from associates as well as purchase and sale of securities that are

Accounting policies 57

not recognised as cash and cash equivalents. Cost is measured Definition of financial ratios including acquisition costs and selling prices less trade charges. Cash flows concerning acquired enterprises are recognised from Gross profit Gross margin ratio = the date of acquisition, and cash flows concerning sold enterprises Revenue are recognised until the time of sale. Operating profit Profit margin (EBIT margin) = Cash flows from financing activities Revenue Cash flows from financing activities comprise changes in the size Net profit ratio Profit before tax and composition of the Group’s share capital, related expenses, = (pre-tax margin) Revenue raising of loans and repayment of interest-bearing debt as well as payment of dividend to shareholders. Operating profit Return on invested capital = (ROIC) Average invested capital including Cash and cash equivalents goodwill and minority interests Cash and cash equivalents comprise cash as well as securities with a time to maturity less than three months at the time of Profit for the year exclusive of minority shareholders acquisition, which can readily be converted into cash and cash Return on equity (ROE) = equivalents and which only carry an insignificant risk of changes Average equity exclusive of minority interests in value.

Equity, at year-end SEGMENT INFORMATION Equity interest = Total liabilities and equity, Segment information is presented in respect of business seg- at year-end ments and geographical segments as primary and secondary segment respectively. The segment information follows the risks, Profit for the year exclusive of minority shareholders accounting policies and internal financial control of the Group. Earnings per share (EPS) = Average number of shares Segment assets comprise assets which are used directly in the in circulation operation of the segment. Segment liabilities comprise provisions and non-interest- Share price, at year-end Share price /equity value = bearing liabilities derived from the segment operations. Equity value, at year-end

FINANCIAL RATIOS Earnings per share and diluted earnings per share are calculated in accordance with IAS 33. Other financial ratios have been prepared in accordance with the “Recommendations and financial ratios of the Danish Society of Investment Professionals 2005”. 58

Financial review

The annual report of Per Aarsleff A/S for 2008/2009, comprising The profit before tax is DKK 208.3 million against DKK 280.0 the financial statements of the parent company and the consoli- million last year. dated financial statements, has been prepared in accordance with Tax on profit for the year amounts to DKK 52.2 million corre- International Financial Reporting Standards (IFRS) as adopted by sponding to a tax rate of 25%. Tax for the year consists of a current the EU and additional Danish disclosure requirements for listed tax expense of DKK 39.2 million and a tax expense of DKK 13.0 companies, cf. the financial reporting requirements of NASDAQ million in the form of adjustments of deferred tax. OMX Copenhagen A/S regarding listed companies and the IFRS The consolidated profit for the year is DKK 156 million after tax notification issued according to the Danish Financial Statements against DKK 210 million last year. Act. In addition, the annual report complies with the International Financial Reporting Standards (IFRS) issued by the IASB. Balance sheet The consolidated balance sheet total amounts to DKK 3,157 mil- Income statement lion at 30 September 2009. This corresponds to a decrease of DKK Consolidated revenue for 2008/2009 fell by DKK 456 million or 58 million compared to the DKK 3,215 million balance sheet total 8.6% from DKK 5,327 million to DKK 4,871 million. The decline is at the end of last financial year. according to expectations at the beginning of the financial year On the asset side, long-term assets have increased by DKK 74 and is mainly due to a low level of activity in Denmark. million, and inventory and receivables have decreased by a total of Danish revenue thus fell by DKK 575 million or 15.4% from DKK 274 million. Cash increased by DKK 141 million. DKK 3,730 million to DKK 3,155 million. Work performed abroad During the financial year, the consolidated interest-bearing increased by DKK 119 million or 7.5% from DKK 1,597 million to liabilities less assets decreased from DKK 271 million to DKK 87 DKK 1,716 million in the financial year. The increase in exports million or by DKK 184 million. originates from Construction with DKK 106 million, from DKK 419 Equity amounts to DKK 1,351 million at 30 September 2009 million to DKK 525 million and Pipe Technologies with DKK 106 against DKK 1,252 million at the end of the previous financial year. million, from DKK 489 million to DKK 595 million. Piling’s exports decreased by DKK 93 million from DKK 689 million to DKK 596 mil- Equity, DKK million 2008/2009 2007/2008 lion. Equity at the beginning of the year 1,252 1,050 Production costs, which comprise direct production costs and Dividend paid -10 -10 other production costs as well as depreciation on plant and profit Translation adjustments of investments in from the sale of non-current assets, fell from DKK 4,591 million to foreign subsidiaries and associates -48 -3 DKK 4,189 million or by DKK 402 million corresponding to 8.8%. Translation adjustments concerning The gross profit decreased by DKK 54 million. derivative financial instruments -2 0 Administrative expenses and selling costs increased from DKK Transferred from the profit of the year 156 210 456 million to DKK 471 million or by DKK 15 million corresponding Tax on changes in equity 1 0 to 3.3%. Other operating income and expenses have developed Minority interest 3 5 from an income of DKK 8.1 million last financial year to an expense Equity at year-end 1,351 1,252 of DKK 0.1 million, corresponding to a decline of DKK 8.2 million. In 2007/2008, the item mainly concerned profit from the sale of a Cash flow statement site area. Cash flows from operating activities amount to DKK 465 million Operating profit came to a positive DKK 210 million against against DKK 390 million last year or an increase of DKK 75 million. DKK 289 million last year or a decrease of DKK 79 million. Cash flows from investing activities were negative at DKK 271 Profit in associates increased by DKK 1.3 million from DKK 12.4 million in the financial year compared to a negative amount of million last year to DKK 13.7 million this year. DKK 317 million last year. Financial income and expenses is a net expense of DKK 15.5 Cash flows from financing activities were negative at DKK 11 million compared with a net expense of DKK 21.0 million last million compared to a negative amount of DKK 17 million last year. year or a decrease of DKK 5.5 million owing to a generally lower The change in liquidity for the year thus constitutes a positive interest-rate level and improved liquidity. amount of DKK 183 million.

Financial review 59

Income statement 1 /1 0 -3 0 / 9 Group Parent Company

Note (DKK ‘000) 2008/2009 2007/2008 2008/2009 2007/2008

4 Revenue 4,871,473 5,327,435 2,826,008 3,147,278 5, 6 Production costs -4,189,276 -4,590,752 -2,499,622 -2,776,353 Gross profit 682,197 736,683 326,386 370,925 5-7 Administrative expenses and selling costs -471,454 -456,086 -241,154 -216,070 5, 8 Other operating income and expenses -606 8,098 -81 504 Operating profit 210,137 288,695 85,151 155,359 Profit in subsidiaries 90,903 29,000 13 Profit in associates 13,679 12,406 6,682 2,978 Profit before interest 223,816 301,101 182,736 187,337 9 Financial income 4,287 6,817 4,847 1,299 9 Financial expenses -19,757 -27,826 -11,232 -11,527 Profit before tax 208,346 280,092 176,351 177,109 10 Tax on profit for the year -52,211 -69,842 -17,445 -37,635

Profit for the year 156,135 210,250 158,906 139,474

The profit for the year accrues to The shareholders of Per Aarsleff A/S 158,156 210,560 158,906 139,474 Minority shareholders -2,021 -310

In total 156,135 210,250 158,906 139,474

Proposal for profit sharing Dividend to shareholders 10,872 10,872 Transferred from the profit for the year 148,034 128,602

In total 158,906 139,474

11 Earnings per share (DKK) Earnings per share 76.4 101.8 76.8 67.4 Diluted earnings per share 76.4 101.8 76.8 67.4 60

Balance sheet A s s e t s Group Parent Company

Note (DKK ‘000) 30/9 2009 30/9 2008 30/9 2009 30/9 2008

Goodwill 40,987 40,987 1,116 1,116 Patents and other intangible assets 7,396 9,974 4,901 6,450 12 Intangible assets 48,383 50,961 6,017 7,566 Land and buildings 373,755 352,128 197,483 181,859 Plant and machinery 745,091 641,112 318,701 259,574 Other plant, fixtures and operating equipment 49,593 50,915 10,679 10,728 Property, plant and equipment in progress 13,748 41,613 3,575 11,270 12 Property, plant and equipment 1,182,187 1,085,768 530,438 463,431 13 Investments in subsidiaries 382,717 328,339 13 Investments in associates 83,405 99,292 27,832 48,394 Receivables from subsidiaries 33,149 30,918 Receivables from associates 0 6 0 6 10 Deferred tax 7,924 11,505 0 0 Other long-term assets 91,329 110,803 443,698 407,657

Long-term assets 1,321,899 1,247,532 980,153 878,654

14 Inventories 143,661 181,313 43,910 41,056

16 Contracting debtors 912,523 1,183,827 394,061 616,996 15 Work in progress 266,239 235,473 113,552 94,946 Receivables from subsidiaries 224,269 222,001 Receivables from associates 12,149 3,579 12,149 3,579 Other receivables 38,766 40,535 27,576 24,195 Corporation tax receivable 3,878 4,519 0 3,171 Prepayments 12,621 14,394 542 264 16 Receivables 1,246,176 1,482,327 772,149 965,152

Cash 445,593 304,162 430,536 285,492

Short-term assets 1,835,430 1,967,802 1,246,595 1,291,700

Total assets 3,157,329 3,215,334 2,226,748 2,170,354

Balance sheet 61

Equity and liabilities G r o u p Parent Company

Note (DKK ‘000) 30/9 2009 30/9 2008 30/9 2009 30/9 2008

Share capital 45,300 45,300 45,300 45,300 Reserve for foreign currency translation adjustment -45,419 1,236 Hedging reserve -1,173 -687 -1,173 -687 Retained earnings 1,338,451 1,190,278 881,715 732,739 Proposed dividend 10,872 10,872 10,872 10,872 Equity, shareholders of Per Aarsleff A/S 1,348,031 1,246,999 936,714 788,224 Minority interests' share of equity 2,667 4,640 17 Equity 1,350,698 1,251,639 936,714 788,224 Mortgage debt 138,352 139,415 104,165 104,213 Credit institutions 26,391 26,204 26,055 26,114 18 Provisions 51,766 50,013 48,966 50,013 10 Deferred tax 205,793 183,309 109,934 95,253 Non-current liabilities 422,302 398,941 289,120 275,593 Mortgage debt 990 1,156 0 0 Credit institutions 367,194 408,439 282,436 215,573 15 Work in progress 217,950 278,753 183,622 248,588 18 Provisions 24,121 22,676 21,775 15,126 Trade payables 432,513 542,500 238,162 317,942 Payables to subsidiaries 118,881 133,162 Payables to associates 42 69 42 69 Corporation tax payable 5,873 4,945 663 0 Other debt 335,646 306,216 155,333 176,077 Current liabilities 1,384,329 1,564,754 1,000,914 1,106,537

Total liabilities 1,806,631 1,963,695 1,290,034 1,382,130

Total equity and liabilities 3,157,329 3,215,334 2,226,748 2,170,354

Notes without reference 1 Accounting estimates and assessments 2 New accounting standards and interpretations 3 Segment information 19 Credit, interest rate and foreign exchange risk and use of financial instruments 20 Contingent liabilities and other financial obligations 21 Related party transactions 62

Cash flow statement 1 /1 0 -3 0 / 9 G r o u p Parent Company

Note (DKK ‘000) 2008/2009 2007/2008 2008/2009 2007/2008

Cash flow from operating activities Profit before interest 223,816 301,101 182,736 187,337 Profit in subsidiaries and associates -97,585 -31,978 Depreciation, amortisation and impairment loss 165,124 149,860 76,321 69,924 22 Other adjustments -14,796 -43,614 3,509 -20,503 23 Change in working capital 129,290 22,237 5,489 76,644 Cash flow from operating activities before financials and tax 503,434 429,584 170,470 281,424 Interest received 4,287 6,817 4,847 1,299 Interest paid -19,757 -27,826 -11,232 -11,527 Cash flow from ordinary activities 487,964 408,575 164,085 271,196 Paid corporation tax -23,443 -18,363 2,206 -2,293 Cash flow from operating activities 464,521 390,212 166,291 268,903

Cash flow from investing activities 25 Investments in subsidiaries 0 -9,434 -54,378 -65,655 Investments in property, plant and equipment -333,071 -367,157 -161,090 -75,811 Investments in intangible assets -39 -148 0 -5,344 Investments in other non-current assets 0 -2,438 0 0 Sale of property, plant and equipment 34,768 58,661 21,403 33,083 Loans to subsidiaries -2,262 -27,376 Loans to associates -48 850 0 0 Dividends from subsidiaries and associates 27,351 2,978 118,254 31,978 Cash flow from investing activities -271,039 -316,688 -78,073 -109,125

Cash flow from financing activities Repayment and reduction of long-term debt -876 -7,331 -107 -5,115 Dividend paid -9,930 -9,930 -9,930 -9,930 Cash flow from financing activities -10,806 -17,261 -10,037 -15,045

Change in liquidity for the year 182,676 56,263 78,181 144,733

Opening liquidity -104,277 -160,540 69,919 -74,814 Change in liquidity for the year 182,676 56,263 78,181 144,733

24 Closing liquidity 78,399 -104,277 148,100 69,919

Cash flow statement 63

Statement of changes in equity G r o u p

Reserve for foreign currency Share capital translation Hedging Retained Proposed (DKK ‘000) A shares B shares adjustment reserve earnings dividend In total

Equity at 1 October 2007 2,700 42,600 4,565 -393 989,635 10,872 1,049,979

Change in equity 2007/2008 Foreign currency translation adjustment of foreign companies -3,329 13 -3,316 Reversal of fair value adjustments of derivative financial instruments, transferred to the income statement (financials, net) 393 393 Fair value adjustments of derivative financial instruments -687 -687 Net gain/losses recognised directly in equity 0 0 -3,329 -294 13 0 -3,610 Profit for the year exclusive of minority shareholders 199,688 10,872 210,560 Total comprehensive income 0 0 -3,329 -294 199,701 10,872 206,950 Dividend paid -10,872 -10,872 Dividend, treasury shares 942 942 Total change in equity in 2007/2008 0 0 -3,329 -294 200,643 0 197,020

Equity, shareholders of Per Aarsleff A/S 2,700 42,600 1,236 -687 1,190,278 10,872 1,246,999

Minority interests' share of equity 4,640

Equity at 30 September 2008 2,700 42,600 1,236 -687 1,190,278 10,872 1,251,639

Change in equity 2008/2009 Foreign currency translation adjustment of foreign companies -46,655 -53 -46,708 Reversal of fair value adjustments of derivative financial instruments, transferred to the income statement (financials, net) 839 839 Fair value adjustments of derivative financial instruments -2,459 -2,459 Tax on changes in equity 1,134 1,134 Net gain/loss recognised directly in equity 0 0 -46,655 -486 -53 0 -47,194 Profit for the year exclusive of minority shareholders 147,284 10,872 158,156 Total comprehensive income 0 0 -46,655 -486 147,231 10,872 110,962 Dividend paid -10,872 -10,872 Dividend, treasury shares 942 942 Total change in equity in 2008/2009 0 0 -46,655 -486 148,173 0 101,032

Equity, shareholders of Per Aarsleff A/S 2,700 42,600 -45,419 -1,173 1,338,451 10,872 1,348,031

Minority interests’ share of equity 2,667

Equity at 30 September 2009 1,350,698 64

Statement of changes in equity Parent Company

Share capital Hedging Retained Proposed (DKK ‘000) A shares B shares reserve earnings dividend In total

Equity at 1 October 2007 2,700 42,600 -393 603,195 10,872 658,974

Changes in equity 2007/2008 Reversal of fair value adjustments of derivative financial instruments, transferred to the income statement (financials, net) 393 393 Fair value adjustments of derivative financial instruments -687 -687 Net gain/loss recognised directly in equity 0 0 -294 0 0 -294 Profit for the year 128,602 10,872 139,474 Total comprehensive income 0 0 -294 128,602 10,872 139,180 Dividend paid -10,872 -10,872 Dividend, treasury shares 942 942 Total changes in equity in 2007/2008 0 0 -294 129,544 0 129,250

Equity at 30 September 2008 2,700 42,600 -687 732,739 10,872 788,224

Changes in equity 2008/2009 Reversal of fair value adjustments of derivative financial instruments, transferred to the income statement (financials, net) 839 839 Fair value adjustments of derivative financial instruments -2,459 -2,459 Tax on changes in equity 1,134 1,134 Net gain/loss recognised directly in equity 0 0 -486 0 0 -486 Profit for the year 148,034 10,872 158,906 Total comprehensive income 0 0 -486 148,034 10,872 158,420 Dividend paid -10,872 -10,872 Dividend, treasury shares 942 942 Total changes in equity in 2008/2009 0 0 -486 148,976 0 148,490

Equity at 30 September 2009 2,700 42,600 -1,173 881,715 10,872 936,714

There are no restrictions on equity. The share premium account of DKK 177.8 million has been transferred to retained earnings.

Statement of changes in equity 65

Overview of notes

Note Page

1 Accounting estimates and assessments 66 2 New accounting standards and interpretations 67 3 Segment information 68 4 Revenue 69 5 Depreciation, amortisation and impairment loss 69 6 Staff costs 69 7 Remuneration for the auditors appointed by the General Meeting 70 8 Other operating income and expenses 70 9 Financial income and expenses 70 10 Corporation tax 71 11 Earnings per share 72 12 Intangible assets and property, plant and equipment 73 13 Investments in subsidiaries and associates 76 14 Inventories 77 15 Work in progress 77 16 Receivables 77 17 Equity 78 18 Provisions 78 19 Credit, interest rate and foreign exchange risks and use of financial instruments 79 20 Contingent liabilities and other financial obligations 86 21 Related party transactions 87 22 Other adjustments – Cash flow statement 88 23 Change in working capital – Cash flow statement 88 24 Liquidity – Cash flow statement 88 25 Acquisitions 89 66

Notes to the Annual Report

Note

1 Accounting estimates and assessments

Estimation uncertainty Determining the carrying amount of some assets and liabilities requires estimates concerning future events. The estimates made are based on assumptions which the Management assesses to be reliable but which by their very nature are associated with uncertainty and unpredictability as unexpected events or circumstances may arise which may change the basis of the assumptions made.

Aarsleff is subject to risks and uncertainties which may lead to actual results differing from these estimates. Specific risks for the Aarsleff Group are discussed in the section Risk Assessment on page 32 of the Management’s review. The most significant accounting estimates in the annual report 2008/2009 are presented below.

Construction contracts An essential prerequisite for using the percentage-of-completion method is that a reliable assessment of the revenue and expenses of the individual contracts can be made. However, expected revenue and expenses on a construction contract may change as the contract is performed, and uncertainties are resolved. Also, during the execution of the contract, revisions may occur, and the preconditions for the execution of the contract may turn out not to be fulfilled.

Aarsleff’s internal business processes, management control and calculation tools together with the project management’s knowledge and experience support the reliable measurement of work in progress in accordance with the percentage-of-completion method.

Impairment test When testing for indicators of impairment of goodwill and other long-term assets, a number of assumptions are used in the calculations.

Estimates of future expected cash flows are based on budgets and business plans for the next 3-5 years and projections for subsequent years. Key parameters are revenue development, profit margin, future reinvestments and growth as well as the applied average cost of capital. The international economic crisis increases the uncertainty about the assumptions made.

Impairment tests of goodwill is further described in note 12.

Deferred tax assets Aarsleff recognises deferred tax assets, including the tax base of tax-loss carryforwards, if it is assessed that there is sufficient documentation that these tax assets can be utilised in the foreseeable future.

The judgement is based on budgets and business plans for the coming three years, including planned commercial initiatives which are made in due consideration of actually realised results.

Contracting debtors As described in note 16, Aarsleff uses individual estimates when assessing the requirement for writing down receivables. Aarsleff’s procedures for credit risk control ensure that credit limits and possible collateral requirements are assessed on an ongoing basis. However, the international economic crisis increases the risk of losses on receivables; a fact which has been taken into consideration when assessing for indicators of impairment.

Warranty obligations The assessment of warranty obligations for completed contracts is based on historical experience with similar work. Aarsleff currently uses new methods and technologies in connection with the execution of contracts. In such cases, the extent to which warranty obligations can be expected is specifically assessed.

Contingent liabilities and lawsuits As part of the contracting business, Aarsleff may become a part in disputes and lawsuits. In such cases, the extent and the probability to which the cases will result in liabilities for Aarsleff are assessed. The assessments are based on available information and legal opinions from consultants. It can be difficult to estimate the final outcome which in the nature of things may deviate from Aarsleff’s assessments.

Assessments as part of the applied accounting policies In applying the Group’s accounting policies, assessments as well as accounting estimates are made which may have a material impact on the amounts recognised in the annual report. This applies to leases and joint venture agreements.

Leases Aarsleff has entered into a number of leases, primarily concerning motorised equipment. The treatment for accounting purposes is subject to the classification of the individual lease. The leases are made on the usual market terms and are classified as operating leases, among other things because the lease term is short compared to the useful life of the assets.

Joint ventures Aarsleff has investments in a number of joint ventures, including consortia and working partnerships where the treatment for accounting purposes is subject to the classification of the individual joint venture. In the consolidated financial statements, all joint ventures are classified as jointly controlled activities. This also applies to the Parent Company except for the intercompany joint venture Aarsleff Rail A/S which is classified as a jointly controlled enterprise which means that the investment is measured at cost.

Notes 67

Note

2 New accounting standards and interpretations

In the annual report for 2008/2009, Per Aarsleff A/S has applied all new and amended standards as well as interpretations which have come into force and been adopted by the EU with effect for this financial year.

The following standards and interpretations are involved:

IFRIC 12 “Service Concession Arrangements” The interpretation concerns rules on takeover of infrastructure assets from public authorities. The interpretation has not had any impact on the Group’s equity and profit/loss.

IFRIC 13 “Customer Loyalty Programmes” The interpretation addresses customer loyalty programmes. The interpretation has not had any impact on the Group’s equity and profit/loss.

IFRIC 16 “Hedges of Net Investments in a Foreign Operation” This interpretation concerns the treatment for accounting purposes of a hedge of a currency risk in a foreign operation. The interpretation has not had any impact on the Group’s equity and profit/loss.

The following standards and interpretations were adopted by IASB and endorsed by the EU, however, they have not yet become effective and have therefore not yet been implemented.

IFRS 8 “Operating Segments” The standard implies that in the future segment disclosures should be provided based on the Company’s management reporting. The standard is not expected to result in material changes to the Group’s segment reporting.

IAS 1 “Presentation of Financial Statements” The standard provides a possibility of presenting a new income statement and includes requirements for presentation of a statement of comprehensive income. Besides changed possibilities and requirements relating to the presentation, the amendment has no effect on the Group’s equity and profit/loss.

IAS 23 “Borrowing Costs” The amendment implies requirements to capitalise borrowing costs on qualifying assets. As the amendment is to be implemented prospectively from the financial year 2009/2010, the amendment is expected only to have an effect on the fixed assets, if any, which are put into use or manufac- tured from and including the financial year 2009/2010.

IAS 27 “Consolidated and Separate Financial Statements” The amendment implies that the difference between the purchase price or the selling price, respectively, and the carrying amount should be disclosed as an equity transaction if the company acquires or sells investments in a subsidiary without giving up control. The application of this amended standard is not expected to have any material effect on the annual report for the coming financial year.

IAS 32 “Financial Instruments: Presentation” This concerns the treatment for accounting purposes of financial instruments subject to mandatory redemption. The application of the amended standard is not expected to have any material effect on the annual report for the coming financial year.

IFRS 2 “Share-based Payment” Addresses the distinction between vesting conditions and restrictions and the treatment for accounting purposes of cancellations. As the Group does not presently have any share-based payment, the standard is not expected to have any material effect on the annual report for the coming financial year.

IFRS 3 “Business Combinations” The amendment to IFRS 3 includes rules on calculation of the consideration for the business acquired, calculation of goodwill and that pre-existing relationships between the acquirer and the business acquired should now be measured at fair value also. Furthermore, the standard includes amendments relating to recognition and measurement of identifiable assets and liabilities as well as new and additional disclosure requirements. Application of the amended standard will not have any material effect on the annual report for the coming financial year.

IFRIC 15 “Agreements for the Construction of Real Estate” The interpretation addresses the rules for when the percentage-of-completion method can be applied in connection with the construction of real estate. The interpretation is not expected to have any impact.

Furthermore, IASB has issued the following amendments to standards and new interpretations, which have not yet been endorsed by the EU at the balance sheet date:

IAS 39 “Financial Instruments” The amendment states that it is not possible to have the time value of an option reflect the hedged risk and that it is only possible to hedge the inflation element of a financial item to the extent it is contractually specified. The application of the amended standard is not expected to have any material effect on the annual report for the coming financial year.

IFRS 7 “Financial Instruments: Disclosures” This implies changed reqirements concerning fair value of financial instruments and cash flow risks. The application of the amended standard is not expected to have any material effect on the annual report for the coming financial year.

IFRIC 17 “Distribution of Non-Cash Assets to Owners” This implies that dividend distributed as non-cash dividend must be measured at fair value. The interpretation is not expected to have any impact.

IFRIC 18 “Transfer of Assets from Customers” This concerns the treatment for accounting purposes of the transfer of fixed assets from customers. The intrepretation is not expected to have any impact. 68

Notes to the Annual Report

Note (DKK million)

3 Segment information The following table shows the three business areas of the Group: Construction, Pipe Technologies and Piling. The information in the table comprises the divisions of the Parent Company, all subsidiaries and shares of joint ventures. Associates are shown separately.

All directly attributable income and expenditure have been allocated to the respective areas. As the areas are supported by staff and joint functions in the Parent Company, comprising group management, administration, Project Development & Design and IT support, the costs connected to these functions have been allocated to the areas on the basis of their drain on the staff and joint functions.

Equity has been assessed as the value of the property, plant and equipment, subsidiaries, goodwill etc. as well as an allocation of other assets and liabilities. Capital expenditure comprises tangible and intangible additions, including additions relating to business combinations.

The segment assets comprise the total assets of the Group less corporation tax receivable, deferred tax assets and cash. Segment liabilities comprise the total liabilities of the Group less mortgage debt, credit institutions, corporation tax payable and deferred tax.

Activities Construction Pipe Technologies Piling Group in total Primary segment 2008/2009 2007/2008 2008/2009 2007/2008 2008/2009 2007/2008 2008/2009 2007/2008 Segment revenue 3,054 3,378 976 915 960 1,164 4,990 5,457 Internal revenue -64 -72 -15 -53 -40 -5 -119 -130 Revenue 2,990 3,306 961 862 920 1,159 4,871 5,327 Of this figure, work performed abroad 525 419 595 489 596 689 1,716 1,597 Operating profit 130 167 34 -8 46 130 210 289 Profit in associates 14 12 14 12 Profit before interest 130 167 48 4 46 130 224 301 Financials, net -16 -21 Profit before tax 208 280 Segment assets 1,133 1,305 695 666 871 924 2,699 2,895 Capital expenditure 146 79 55 60 97 178 298 317 Depreciation, amortisation and impairment loss 72 63 32 39 62 48 166 150 Investments in associates 83 99 83 99 Goodwill 33 33 1 1 7 7 41 41 Equity at year-end 565 471 391 357 395 424 1,351 1,252 Segment liabilities 538 748 254 234 273 220 1,065 1,202 Number of employees: Paid every two weeks 1,410 1,494 314 276 429 439 2,153 2,209 Engineers, technicians and administrative staff 560 517 268 257 236 198 1,064 972 In total 1,970 2,011 582 533 665 637 3,217 3,181

Geographical Denmark Abroad Group in total Secondary segment 2008/2009 2007/2008 2008/2009 2007/2008 2008/2009 2007/2008 Revenue 3,155 3,730 1,716 1,597 4,871 5,327 Segment assets 1,991 2,001 708 894 2,699 2,895 Capital expenditure 170 177 128 140 298 317

Segment assets and capital expenditure abroad comprise subsidiaries and joint ventures abroad.

Notes 69

G r o u p Parent Company

Note (DKK ‘000) 2008/2009 2007/2008 2008/2009 2007/2008

4 Revenue Sale of goods 147,660 169,951 0 0 Income from construction contracts 4,723,813 5,157,484 2,826,008 3,147,278 In total 4,871,473 5,327,435 2,826,008 3,147,278

5 Depreciation, amortisation and impairment loss Amortisation and impairment loss, intangible assets 2,617 8,470 1,549 1,098 Depreciation, property, plant and equipment 162,507 141,390 74,772 68,826 In total 165,124 149,860 76,321 69,924

Depreciation, amortisation and impairment loss are included in the income statement as follows: Production costs 143,689 124,493 68,658 63,552 Administrative expenses and selling costs 21,272 25,204 7,500 6,209 Other operating income and expenses 163 163 163 163 In total 165,124 149,860 76,321 69,924

6 Staff costs Wages, salaries and remuneration 1,280,333 1,260,790 679,221 663,494 Pensions 81,440 77,850 37,824 35,928 Other costs, social security costs etc. 50,299 49,371 15,910 16,290 In total 1,412,072 1,388,011 732,955 715,712

Of this figure, consideration for: Remuneration, Board of Directors 1,859 1,926 1,859 1,926 Remuneration, Executive Management 6,507 5,533 6,507 5,533 In total 8,366 7,459 8,366 7,459

Average number of full-time employees 3,217 3,181 1,375 1,396 70

Notes to the Annual Report G r o u p Parent Company

Note (DKK '000) 2008/2009 2007/2008 2008/2009 2007/2008

7 Remuneration to the auditors appointed by the General Meeting PricewaterhouseCoopers 4,169 2,974 1,973 1,761 Other auditors 1,447 1,077 252 0 In total 5,616 4,051 2,225 1,761

Renumeration to PricewaterhouseCoopers can be specified as follows: Statutory audit 2,123 1,814 854 854 Reasonable assurance engagements 228 85 10 14 Tax consultancy 911 619 633 619 Other services 907 456 476 274 In total 4,169 2,974 1,973 1,761

Renumeration to other auditors can be specified as follows: Statutory audit 874 886 0 0 Tax consultancy 338 42 252 0 Other services 235 149 0 0 In total 1,447 1,077 252 0

8 Other operating income and expenses Other operating income 1,612 8,910 306 667 Other operating expenses -2,218 -812 -387 -163 In total -606 8,098 -81 504

Profit from the sale of land 0 6,746 0 0

9 Financial income and expenses Foreign exchange gain, net 1,681 0 0 0 Bond yields 51 50 0 0 Interest regarding subsidiaries 3,622 419 Interest regarding associates 592 731 592 515 Other interest income 1,963 6,036 633 365 Financial income 4,287 6,817 4,847 1,299

Capital loss on other financial assets 18 35 0 0 Foreign exchange loss, net 0 2,141 413 788 Mortgage interest 6,218 6,406 4,719 4,850 Interest regarding subsidiaries 284 842 Other interest costs 13,521 19,244 5,816 5,047 Financial expenses 19,757 27,826 11,232 11,527

Financials, net -15,470 -21,009 -6,385 -10,228

notes 71

Group Parent Company

Note (DKK ‘000) 2008/2009 2007/2008 2008/2009 2007/2008

10 Corporation tax Total tax for the year can be broken down as follows: Tax on profit for the year 52,211 69,842 17,445 37,635 Tax on changes in equity -1,134 0 -1,134 0 In total 51,077 69,842 16,311 37,635

Tax on profit for the year can be broken down as follows: Current tax 39,161 20,625 -2,817 -8,757 Adjustment of deferred tax and deferred tax asset for the year 13,050 49,217 20,262 46,392 In total 52,211 69,842 17,445 37,635

Tax on profit for the year can be explained as follows: 25% tax calculated on profit before tax 52,087 70,023 44,088 44,278 Tax impact of: Income from abroad -2,434 189 -2,434 189 Deviation concerning subsidiaries 6,044 1,056 -22,444 -8,508 Deviation concerning associates -3,420 -3,102 -1,699 0 Adjustment of tax regarding prior years -506 349 -506 349 Other items 440 1,327 440 1,327 In total 52,211 69,842 17,445 37,635

Deferred tax Deferred tax at 1 October 171,804 97,231 95,253 43,743 Transferred from current tax 13,015 25,356 459 4,083 Investment in subsidiary 0 1,350 Deferred tax for the year recognised in profit for the year 13,050 49,217 14,222 46,077 Deferred tax at 30 September 197,869 171,804 109,934 95,253

The following is recognised: Deferred tax (asset) -7,924 -11,505 0 0 Deferred tax (liability) 205,793 183,309 109,934 95,253 In total 197,869 171,804 109,934 95,253

Deferred tax assets concern the tax base of tax-loss carryforwards which are expected to be utilised within 3 years from the balance sheet date.

Deferred tax concerns: Intangible assets 4,501 3,509 1,225 9 Property, plant and equipment 44,272 34,686 20,488 17,822 Work in progress 160,585 174,964 88,482 111,898 Other short-term assets 170 -249 -261 -158 Provisions -1,899 154 0 0 Other debt -1,836 0 0 0 Tax-loss carryforwards -7,924 -41,260 0 -34,318 Deferred tax at 30 September 197,869 171,804 109,934 95,253

Deferred tax to be recovered within 12 months 119,253 123,660 84,412 60,594 72

Notes to the Annual Report G r o u p Parent Company

Note 2008/2009 2007/2008 2008/2009 2007/2008

11 Earnings per share Profit for the year exclusive of minority shareholders (DKK ‘000) 158,156 210,560 158,906 139,474

Average number of shares (thousands) 2,265 2,265 2,265 2,265 Average number of treasury shares (thousands) 196 196 196 196 Average number of shares in circulation (thousands) 2,069 2,069 2,069 2,069 Average dilution effect of outstanding share options (thousands) 0 0 0 0 Average number of diluted shares in circulation (thousands) 2,069 2,069 2,069 2,069

Earnings per share of DKK 20 (current) 76.4 101.8 76.8 67.4 Earnings per share of DKK 20 (diluted) 76.4 101.8 76.8 67.4

Proposed dividend per share (DKK) 4.8 4.8

notes 73

Note (DKK ‘000)

12 Intangible assets and property, plant and equipment Patents Other plant, Property, and other fixtures and plant and intangible Land and Plant and operating equipment Group at 30 September 2009 Goodwill assets buildings machinery equipment in progress Cost at 1 October 2008 82,054 18,848 449,440 1,338,966 132,942 41,613 Foreign currency translation adjustments -366 -200 -11,827 -41,292 -3,958 -5,616 Additions during the year 0 118 57,710 186,642 19,874 79,080 Disposals during the year 0 -2 -19,109 -60,473 -8,924 -13,737 Transfers 0 0 7,683 79,603 306 -87,592 Cost at 30 September 2009 81,688 18,764 483,897 1,503,446 140,240 13,748

Depreciation, amortisation and impairment losses at 1 October 2008 41,067 8,874 97,312 697,854 82,027 Foreign currency translation adjustments -366 -121 -1,302 -15,795 -1,901 Depreciation and amortisation for the year 0 2,617 14,189 131,075 17,243 Assets sold during the year 0 -2 -57 -54,779 -6,722 Depreciation, amortisation and impairment losses at 30 September 2009 40,701 11,368 110,142 758,355 90,647

Carrying amount at 30 September 2009 40,987 7,396 373,755 745,091 49,593 13,748

Patents Other plant, Property, and other fixtures and plant and intangible Land and Plant and operating equipment Parent Company at 30 September 2009 Goodwill assets buildings machinery equipment in progress Cost at 1 October 2008 7,754 8,681 241,225 670,734 39,350 11,270 Additions during the year 0 0 42,706 102,654 4,779 59,245 Disposals during the year 0 0 -19,212 -90,916 -1,657 -13,940 Transfers 0 0 0 53,000 0 -53,000 Cost at 30 September 2009 7,754 8,681 264,719 735,472 42,472 3,575

Depreciation, amortisation and impairment losses at 1 October 2008 6,638 2,231 59,366 411,160 28,622 Depreciation and amortisation for the year 0 1,549 7,870 62,576 4,326 Assets sold during the year 0 0 0 -56,965 -1,155 Depreciation, amortisation and impairment losses at 30 September 2009 6,638 3,780 67,236 416,771 31,793

Carrying amount at 30 September 2009 1,116 4,901 197,483 318,701 10,679 3,575

In 2008/2009 damages received concerning property, plant and equipment to the total amount of DKK 237,000 against DKK 211,000 in 2007/2008 have been recognised as income. The Parent Company has not received any damages concerning property, plant and equipment in 2008/2009 and 2007/2008.

The Group has committed itself to investing in property, plant and equipment; cf. Contingent liabilities and other financial obligations in note 20. 74

Notes to the Annual Report

Note (DKK ‘000)

12 Intangible assets and property, plant and equipment (continued)

Goodwill Goodwill is the only intangible asset with an indefinite useful life.

As per 30 September 2009, an impairment test of goodwill has been performed. The impairment test was based on the business unit or the segment representing the base level of cash-generating units to which the goodwill on acquisition can be allocated with a fair degree of accuracy. For the acquired activities and companies not being established as independent units but integrated in existing units, it is not possible to perform impairment tests on these individual acquisitions. In the Group’s internal reporting, the accounting value of goodwill in the individual cash-generating units has been allocated to the Group’s business segments.

At the impairment test, the present value of the estimated cash flows from the cash-generating units is compared with the accounting values of the net assets. The estimated cash flows are based on budgets for the years 2009/2010-2013/2014 prepared and approved by the Management in the respective cash-generating units, and on forecasts for the years 2014/2015-2018/2019. The forecasts were elaborated for a 10-year period, as decisions on acquisitions are made on the basis of 10-year forecasts. The tests are based on an expected increase in cash flows of 2-4% (2007/2008: 3-5%) and a discount rate of 8.2% after tax (2007/2008: 8.2%).

The impairment tests have not given rise to impairment of goodwill at the recoverable amount.

Sensitivity tests have been performed to determine the lowest growth or the highest increase in the discount rate for each cash- generating unit without resulting in any impairment losses. Probable changes in the underlying assumptions are not assessed to result in the accounting value of goodwill exceeding the recoverable amount.

The impairment tests included the cash-generating units Per Aarsleff A/S, Wicotec A/S and Centrum Pæle A/S. Information on allocation of goodwill to segments can be found in note 3, Segment information.

notes 75

Note (DKK ‘000)

12 Intangible assets and property, plant and equipment (continued) Patents Other plant, Property, and other fixtures and plant and intangible Land and Plant and operating equipment Group at 30 September 2008 Goodwill assets buildings machinery equipment in progress Cost at 1 October 2007 79,926 13,221 419,437 1,216,845 112,826 19,264 Foreign currency translation adjustments -505 79 -2,401 -230 1,594 753 Additions from acquisition of subsidiary 2,633 5,400 0 400 417 0 Additions during the year 0 158 61,370 217,296 24,928 119,321 Disposals during the year 0 -56 -29,730 -169,913 -9,951 -19,219 Transfers 0 46 764 74,568 3,128 -78,506 Cost at 30 September 2008 82,054 18,848 449,440 1,338,966 132,942 41,613

Depreciation, amortisation and impairment losses at 1 October 2007 35,223 6,342 93,953 692,499 73,495 Foreign currency translation adjustments -135 41 -379 -1,420 497 Depreciation, amortisation and impairment losses for the year 5,979 2,491 12,926 112,769 15,695 Assets sold during the year 0 0 -9,188 -105,994 -7,660 Depreciation, amortisation and impairment losses at 30 September 2008 41,067 8,874 97,312 697,854 82,027

Carrying amount at 30 September 2008 40,987 9,974 352,128 641,112 50,915 41,613

Patents Other plant, Property, and other fixtures and plant and intangible Land and Plant and operating equipment Parent Company at 30 September 2008 Goodwill assets buildings machinery equipment in progress Cost at 1 October 2007 7,754 3,337 252,181 709,259 32,722 6,681 Foreign currency translation adjustments 0 0 0 -3,444 0 0 Additions during the year 0 5,400 12,475 41,518 5,205 72,200 Disposals during the year 0 -56 -23,431 -126,121 -1,222 -15,444 Transfers 0 0 0 49,522 2,645 -52,167 Cost at 30 September 2008 7,754 8,681 241,225 670,734 39,350 11,270

Depreciation, amortisation and impairment losses at 1 October 2007 6,638 1,133 60,433 426,782 25,650 Foreign currency translation adjustments 0 0 0 -748 0 Depreciation and amortisation for the year 0 1,098 7,277 58,110 3,439 Assets sold during the year 0 0 -8,344 -72,984 -467 Depreciation, amortisation and impairment losses at 30 September 2008 6,638 2,231 59,366 411,160 28,622

Carrying amount at 30 September 2008 1,116 6,450 181,859 259,574 10,728 11,270 76

Notes to the Annual Report

Note (DKK ‘000)

13 Investments in subsidiaries and associates

Highlights for considerable associates: The Group has the following considerable investments in associates in the Pipe Technologies segment:

Profit for Group Revenue the year Assets Liabilities 30 September 2009 Pipe Technologies 302,986 13,679 152,408 69,003

30 September 2008 Pipe Technologies 306,651 12,406 153,189 53,897

The most significant associates are Insituform Rohrsanierungstechniken GmbH (ownership interest 50%), PAA International Engineering Corp. (ownership interest 50%), Insituform Linings Plc. (ownership interest 25%) and Arpipe Holding A/S (ownership interest 35%). All companies are unlisted.

30/9 2009 30/9 2008 Investments Investments Parent Company in subsidiaries in subsidiaries Cost at 1 October 328,339 262,684 Additions during the year 54,378 65,655 Disposals during the year 0 0 Cost at 30 September 382,717 328,339

Carrying amount at 30 September 382,717 328,339

Under the item profit in associates in the Parent Company, a write-down of investments in associates of DKK 20.6 million is included in 2008/2009 (2007/2008: DKK 0 million).

notes 77

Group Parent Company

Note (DKK ‘000) 30/9 2009 30/9 2008 30/9 2009 30/9 2008

14 Inventories Raw materials and consumables 90,671 125,155 43,910 41,056 Finished goods 52,990 56,158 0 0 In total 143,661 181,313 43,910 41,056

15 Work in progress Selling price of construction contracts 3,485,259 4,098,114 2,416,151 2,977,702 Invoicing on account -3,436,970 -4,141,394 -2,486,221 -3,131,344 In total 48,289 -43,280 -70,070 -153,642

The following is recognised: Receivables 266,239 235,473 113,552 94,946 Current liabilities -217,950 -278,753 -183,622 -248,588 In total 48,289 -43,280 -70,070 -153,642

Prepayments from customers concerning non-commenced contracts 11,795 73,352 2,470 73,170

Retained payments 10,345 32,314 7,025 23,237

16 Receivables The fair value of receivables is considered to correspond to the carrying amount.

Write-down, contracting debtors at 1 October 19,952 14,438 7,598 3,024 Additions during the year 4,338 10,987 865 4,963 Disposals during the year: - Used -1,966 -4,565 -276 -11 - Reversed -3,791 -908 -852 -378 Write-down, contracting debtors at 30 September 18,533 19,952 7,335 7,598

Write-downs included in receivables recognised in the income statement 4,338 9,823 865 4,800

Write-down of other receivables has not been made.

Current follow-up is made on outstanding receivables. In case of uncertainty in respect of a customer’s ability or will to pay a receivable, and when it is estimated that the receivable is subject to risk, write-down is made to hedge this risk. Individually depreciated contracting debtors and write-downs of these are recorded on separate accounts which are both included in the carrying amount of contracting debtors.

The balance of contracting debtors falls due as follows: Balances not due 651,080 910,595 309,249 508,143 Due balances: Less than 30 days 101,766 132,627 20,623 27,820 Between 30 and 90 days 48,605 57,068 14,069 18,834 More than 90 days 129,605 103,489 57,455 69,797 931,056 1,203,779 401,396 624,594 Write-down -18,533 -19,952 -7,335 -7,598 In total 912,523 1,183,827 394,061 616,996

Receivables falling due more than a year after the balance sheet date 176 393 0 0 78

Notes to the Annual Report G r o u p Parent Company

Note (DKK ‘000)

17 Equity

Share capital The share capital consists of 135,000 A shares at a price of DKK 20 and 2,130,000 B shares at a price of DKK 20. The nominal value is respectively DKK 2.7 million and DKK 42.6 million. The share capital is unchanged compared to 2007/2008.

The A shares carry ten times the voting right of the B shares. The A shares are non-negotiable instruments.

See section on Information to shareholders.

Number of shares Nominal value DKK (‘000) % of share capital Treasury shares (B shares) 2008/2009 2007/2008 2008/2009 2007/2008 2008/2009 2007/2008 Holding at 1 October 195,808 195,808 3,916 3,916 8.64 8.64 Additions during the year 0 0 0 0 0.00 0.00 Disposals during the year 0 0 0 0 0.00 0.00 Holding at 30 September 195,808 195,808 3,916 3,916 8.64 8.64

The purchase of treasury shares has been made to increase the financial flexibility in connection with future acquisitions.

To carry a motion to amend the Articles of Association or to dissolve the company, shareholders representing at least two thirds of the votes cast and two thirds of the voting capital represented at the general meeting shall vote in favour of the resolution.

18 Provisions 30/9 2009 30/9 2008 30/9 2009 30/9 2008 Provisions at 1 October 72,689 94,808 65,139 84,090 Completed contracts transferred from work in progress 5,976 1,102 5,976 1,102 Used during the year -7,293 -40,028 -7,293 -36,351 Reversal of unused warranty commitments -12,161 -7,539 -9,215 -7,539 Provisions for the year 16,676 24,346 16,134 23,837 Provisions at 30 September 75,887 72,689 70,741 65,139

The following is recognised: Non-current liabilities 51,766 50,013 48,966 50,013 Current liabilities 24,121 22,676 21,775 15,126 In total 75,887 72,689 70,741 65,139

Provisions comprise warranty obligations as well as litigation and arbitration proceedings. The information which according to IAS 37 normally should have been disclosed in the annual report has not been included, as the Management finds that such information would be harmful to the company.

notes 79

Note (DKK ‘000)

19 Credit, interest rate and foreign exchange risks and use of financial instruments

Categories of financial instruments

A The Group’s categories of financial instruments

Accounting value Fair value ¹ 30/9 2009 30/9 2008 30/9 2009 30/9 2008 Derivative financial instruments used for cash flow hedging 1,010 0 1,010 0 Financial assets used for hedging 1,010 0 1,010 0

Contracting debtors 912,523 1,183,827 912,523 1,183,827 Work in progress 266,239 235,473 266,239 235,473 Receivables from associates 12,149 3,585 12,149 3,585 Other receivables 37,756 40,535 37,756 40,535 Cash 445,593 304,162 445,593 304,162 Loan and receivables 1,674,260 1,767,582 1,674,260 1,767,582

Derivative financial instruments used for cash flow hedging 3,853 1,389 3,853 1,389 Financial liabilities used for hedging 3,853 1,389 3,853 1,389

Mortgage debt 139,342 140,571 141,934 137,898 Credit institutions 393,585 434,643 394,078 434,159 Work in progress 217,950 278,753 217,950 278,753 Trade payables 432,513 542,500 432,513 542,500 Payables to associates 42 69 42 69 Financial liabilities measured at amortised cost 1,183,432 1,396,536 1,186,517 1,393,379

¹ The fair value of financial assets and liabilities is calculated using discounted cash flow models based on the market interest rates and credit terms applicable at the balance sheet date. 80

Notes to the Annual Report

Note (DKK ‘000)

19 Credit, interest rate and foreign exchange risks and use of financial instruments (continued)

Categories of financial instruments

B The Parent Company's categories of financial instruments

Accounting value Fair value ¹ 30/9 2009 30/9 2008 30/9 2009 30/9 2008 Derivative financial instruments used for cash flow hedging 1,010 0 1,010 0 Financial assets used for hedging 1,010 0 1,010 0

Contracting debtors 394,061 616,996 394,061 616,996 Work in progress 113,552 94,946 113,552 94,946 Receivables from subsidiaries 257,418 252,919 257,418 252,919 Receivables from associates 12,149 3,585 12,149 3,585 Other receivables 26,566 24,195 26,566 24,195 Cash 430,536 285,492 430,536 285,492 Loan and receivables 1,234,282 1,278,133 1,234,282 1,278,133

Derivative financial instruments used for cash flow hedging 3,853 1,389 3,853 1,389 Financial liabilities used for hedging 3,853 1,389 3,853 1,389

Mortgage debt 104,165 104,213 106,757 102,839 Credit institutions 308,491 241,687 309,908 241,293 Work in progress 183,622 248,588 183,622 248,588 Trade payables 238,162 317,942 238,162 317,942 Payables to subsidiaries 118,881 133,162 118,881 133,162 Payables to associates 42 69 42 69 Financial liabilities measured at amortised cost 953,363 1,045,661 957,372 1,043,893

¹ The fair value of financial assets and liabilities is calculated using discounted cash flow models based on the market interest rates and credit terms applicable at the balance sheet date.

Credit risk The Parent Company and the Group are exposed to credit risks relating to receivables and deposits in banks. It is not assessed that there are any credit risks related to cash holdings as the counterparty is banks with good credit rating. The maximum credit risk corresponds to the carrying amount.

By far, the most material part of the Parent Company's and the Group's customers comprise public or semi-public clients in respect of whom the exposure to financial losses is minimal. The trade receivables of the Parent Company and the Group from other customers are subject to the usual credit risk. Therefore, the customers are credit rated before work is commenced. To the extent this is considered expedient and possible, trade receivables are also hedged by bank and insurance guarantees and letters of credit.

The Parent Company and the Group do not have any material risks regarding one customer or cooperative partner.

As was the case at 30 September 2008, the Parent Company's and the Group's write-downs at 30 September 2009 are related alone to financial assets classified as receivables, cf. note 16.

notes 81

Note (DKK ‘000)

19 Credit, interest rate and foreign exchange risks and use of financial instruments (continued)

Liquidity risk It is the Parent Company's and the Group's policy to have a significant cash reserve. The Group's stable and good solvency entails high creditworthiness which is reflected in expedient credit facilities and loan commitments, both in the short and the long term.

For the Parent Company and the majority of the Group's subsidiaries, a cash pool scheme has been set up.

A The Group’s liabilities fall due as follows.

Accounting Contractual 30/9 2009 value cash flow ² Within 1 year 1-2 years 2-5 years After 5 years Non-derivative financial instruments: Mortgage debt 139,342 391,362 11,238 12,659 35,059 332,406 Credit institutions 393,585 397,403 368,722 1,864 26,817 0 Trade payables 432,513 432,513 432,513 0 0 0 Payables to associates 42 42 42 0 0 0

Derivative financial instruments: Derivative financial instruments used for cash flow hedging 3,853 3,877 4,316 -439 0 0 Total liablities 969,335 1,225,197 816,831 14,084 61,876 332,406

² All cash flows are undiscounted and comprise all obligations under agreements concluded, including future interest payments on loans.

Accounting Contractual 30/9 2008 value cash flow ² Within 1 year 1-2 years 2-5 years After 5 years Non-derivative financial instruments: Mortgage debt 140,571 402,257 11,240 12,688 35,070 343,259 Credit institutions 434,643 439,991 409,967 1,618 28,406 0 Trade payables 542,500 542,500 542,500 0 0 0 Payables to associates 69 69 69 0 0 0 Total liablities 1,117,783 1,384,817 963,776 14,306 63,476 343,259

² All cash flows are undiscounted and comprise all obligations under agreements concluded, including future interest payments on loans.

The Group's drain on liquidity can be fully covered by the continuous operating profit and the possibility to make drawdowns on credit facilities and refinancing. 82

Notes to the Annual Report

Note (DKK ‘000)

19 Credit, interest rate and foreign exchange risks and use of financial instruments (continued)

B The Parent Company's liabilities fall due as follows:

Accounting Contractual 30/9 2009 value cash flow ² Within 1 year 1-2 years 2-5 years After 5 years Non-derivative financial instruments: Mortgage debt 104,165 337,148 9,002 8,979 26,933 292,234 Credit institutions 308,491 312,309 283,964 1,528 26,817 0 Trade payables 238,162 238,162 238,162 0 0 0 Payables to subsidiaries 118,881 118,881 118,881 0 0 0 Payables to associates 42 42 42 0 0 0

Derivative financial instruments: Derivative financial instruments used for cash flow hedging 3,853 3,877 4,316 -439 0 0 Total liabilities 773,594 1,010,419 654,367 10,068 53,750 292,234

² All cash flows are undiscounted and comprise all obligations under agreements concluded, including future interest payments on loans.

Accounting Contractual 30/9 2008 value cash flow ² Within 1 year 1-2 years 2-5 years After 5 years Non-derivative financial instruments: Mortgage debt 104,213 346,151 9,002 9,002 26,935 301,212 Credit institutions 241,687 247,035 217,101 1,528 28,406 0 Trade payables 317,942 317,942 317,942 0 0 0 Payables to subsidiaries 133,162 133,162 133,162 0 0 0 Payables to associates 69 69 69 0 0 0 Total liabilities 797,073 1,044,359 677,276 10,530 55,341 301,212

² All cash flows are undiscounted and comprise all obligations under agreements concluded, including future interest payments on loans.

The Parent Company's drain on liquidity can be fully covered by the continuous operating profit and the possibility to make drawdowns on credit facilities and refinancing.

notes 83

Note (DKK ‘000)

19 Credit, interest rate and foreign exchange risks and use of financial instruments (continued)

Interest rate risk The interest rate risk is mainly attributable to interest-bearing liabilities and cash holdings. In order to minimise both interest and risks, cash pool and interest netting agreements have been entered into with the Group's Danish bank in DKK, SEK as well as EUR and GBP.

A The Group’s interest rate risk is tied to the below items. The earliest date of maturity is stated:

Effective interest rate Accounting value Fair value Fixed/ 30/9 2009 30/9 2008 30/9 2009 30/9 2008 30/9 2009 30/9 2008 floating % % DKK ‘000 DKK ‘000 DKK ‘000 DKK ‘000 Cash Floating 1-6 1-6 445,593 304,162 445,593 304,162 Interest-bearing assets in total 445,593 304,162 445,593 304,162

Mortgage debt and credit institutions, non-current Fixed 3-7 3-7 165,733 166,775 168,818 165,007 Credit institutions, current Floating 2-9 3-9 367,194 408,439 367,194 408,439 Interest-bearing liabilities in total 532,927 575,214 536,012 573,446

Net interest-bearing liabilities less assets 87,334 271,052

Payment/maturity profile can be specified as follows: Less than 1 year -77,409 106,782 1-5 years 40,114 29,356 More than 5 years 124,629 134,914 87,334 271,052

An increase in the interest rate level of 1% compared to the interest rate level at the balance sheet date and the net interest-bearing liabilities of the balance sheet would, other things being equal, have had a positive effect on the profit/loss before tax and on equity of the Group of DKK 0.8 million (2007/2008: negative effect DKK 1.0 million). A decrease in the interest rate level would have had a similar, negative effect on profit/loss and equity.

B The Parent Company interest rate risk is tied to the following items. The earliest date of maturity is stated:

Effective interest rate Accounting value Fair value Fixed/ 30/9 2009 30/9 2008 30/9 2009 30/9 2008 30/9 2009 30/9 2008 floating % % DKK ‘000 DKK ‘000 DKK ‘000 DKK ‘000 Cash Floating 1-6 1-6 430,536 285,492 430,536 285,492 Interest-bearing assets in total 430,536 285,492 430,536 285,492

Mortgage debt and credit institutions, non-current Fixed 3-7 3-7 130,220 130,327 134,228 128,559 Credit institutions, current Floating 2-9 3-9 282,436 215,573 282,436 215,573 Interest-bearing liabilities in total 412,656 345,900 416,664 344,132

Net interest-bearing liabilities less assets -17,880 60,408

Payment/maturity profile can be specified as follows: Less than 1 year -148,100 -69,919 1-5 years 32,803 26,114 More than 5 years 97,417 104,213 -17,880 60,408

An increase in the interest rate level of 1% compared to the interest rate level at the balance sheet date and the net interest-bearing liabilities of the balance sheet would, other things being equal, have had a positive effect on the profit/loss before tax and on equity of the Parent Company of DKK 1.5 million (2007/2008: positive effect DKK 0.7 million). A decrease in the interest rate level would have had a similar, negative effect on profit/loss and equity.

To hedge future interest payments, the Group and the Parent Company have entered into interest rate swaps in DKK where floating rate mortgage debt is converted to fixed rate mortgage debt. As at 30 September 2009, interest rate swaps have a fair value of DKK -1.4 million (2007/2008: DKK 0.4 million) which is recognised in equity in accordance with the principles for hedging future cash flows. The time to maturity is 2.5 years. The hedge is 100% efficient. 84

Notes to the Annual Report

Note (DKK ‘000)

19 Credit, interest rate and foreign exchange risks and use of financial instruments (continued)

Foreign exchange risks Foreign exchange risks are monitored centrally in the Aarsleff Group. It is Group policy to reduce its foreign exchange risks, as individual projects and markets are assessed with a view to hedging. Normally, currency overdraft facilities are established on the basis of a current calculation of the foreign exchange exposure of the most important currencies. Moreover, forward exchange contracts and options are used to secure future cash flows in the form of income from construction contracts.

Exchange adjustment of investments in foreign subsidiaries and associates with a different functional currency than that of the Parent Company is recognised directly in equity. Related foreign exchange risks are not hedged.

Short and long-term outstanding amounts in Group enterprises are normally not currency hedged.

A The Group’s balances in foreign currency (excluding currencies in the Euro cooperation) and related hedging transactions are as follows:

30/9 2009 30/9 2008

Financial Financial Net Net Currency assets liabilities position position SEK 97,394 -137,539 -40,145 -30,058 PLN 86,830 -97,900 -11,070 -59,333 GBP 16,096 -59,555 -43,459 -13,147 USD 12,839 -25,651 -12,812 -19,576 RUB 29,085 -14,461 14,624 -5,377 LVL 591 -4,064 -3,473 3,750 LTL 15,920 -551 15,369 4,302 Other 8,137 -2,780 5,357 6,375 266,892 -342,501 -75,609 -113,064

Payment/maturity profile can be specified as follows: Less than 1 year 266,892 -342,165 -75,273 -112,974 1-5 years 0 -336 -336 -90 More than 5 years 0 0 0 0 266,892 -342,501 -75,609 -113,064

The isolated effects at 30 September of an increase in exchange rates of 10% against Danish kroner are specified as follows (amounts before tax):

30/9 2009 30/9 2008

Currency Profit/loss Equity Profit/loss Equity SEK -4,015 -4,015 -3,006 -3,006 PLN -1,107 -1,107 -5,933 -5,933 GBP -4,346 -4,346 -1,315 -1,315 USD -1,281 -1,281 -1,958 -1,958 RUB 1,462 1,462 -538 -538 LVL -347 -347 375 375 LTL 1,537 1,537 430 430 Other 536 536 638 638 -7,561 -7,561 -11,307 -11,307

The above analysis is based on the assumption that all other variables, especially the interest rate, remain constant. The expectations are based on the market data presently available.

A similar decrease in the exchange rates of the above currencies will have the same effect with opposite sign for both profit/loss and equity. The differences between the effects of 2008/2009 and 2007/2008 are exclusively due to differences in the nominal amounts in the individual currencies.

notes 85

Note (DKK ‘000)

19 Credit, interest rate and foreign exchange risks and use of financial instruments (continued)

B The Parent Company's balances in foreign currency (excluding currencies in the Euro cooperation) and related hedging transactions are as follows:

30/9 2009 30/9 2008

Financial Financial Net Net Currency assets liabilities position position SEK 21,935 -36,697 -14,762 -6,909 GBP 11,173 -10,274 899 5,018 USD 12,544 -25,636 -13,092 -19,848 LVL 591 -4,064 -3,473 3,750 LTL 8,697 -111 8,586 -1 Other 8,137 -5,073 3,064 2,037 63,077 -81,855 -18,778 -15,953

Payment/maturity profile can be specified as follows: Less than 1 year 63,077 -81,855 -18,778 -15,953 1-5 years 0 0 0 0 More than 5 years 0 0 0 0 63,077 -81,855 -18,778 -15,953

The isolated effects at 30 September of an increase in exchange rates of 10% against Danish kroner are specified as follows (amounts before tax):

30/9 2009 30/9 2008

Currency Profit/loss Equity Profit/loss Equity SEK -1,476 -1,476 -691 -691 GBP 90 90 502 502 USD -1,309 -1,309 -1,985 -1,985 LVL -347 -347 375 375 LTL 859 859 0 0 Other 306 306 204 204 -1,877 -1,877 -1,595 -1,595

The above analysis is based on the assumption that all other variables, especially the interest rate, remain constant. The expectations are based on the market data presently available.

The Group and the Parent Company have established currency overdraft facilities and forward exchange contracts to hedge future cash flows on construction contracts in GBP, EEK, NOK, PLN, RUB and USD totalling DKK 52.2 million compared to DKK 158.0 million in 2007/2008. At the balance sheet date, these financial instruments have a negative fair value of DKK 2.3 million compared to a negative fair value of DKK 0.7 million at 30 September 2008, which has been recognised in equity. The hedged cash flows are expected to be realised within 23 months against 10 months in 2007/2008.

As regards financial risks, see section on Risk assessment in the Management's Review.

Capital management The need to adjust the capital structure of the Group and the individual subsidiaries is assessed on an ongoing basis so that the capital situation complies with current rules and is adjusted to the business activities and the level of activity.

The Group assesses the capital on the basis of the solvency ratio, which is calculated in accordance with the “Recommendations and financial ratios of the Danish Society of Investment Professionals 2005”. The Group aims at reaching a solvency ratio of at least 40%. 86

Notes to the Annual Report Group Parent Company

Note (DKK ‘000) 30/9 2009 30/9 2008 30/9 2009 30/9 2008

20 Contingent liabilities and other financial obligations

Operating leases Future rent and lease payments under non-cancellable contracts (minimum lease payments): Maturity within 1 year 40,392 48,049 16,204 32,105 Maturity between 2 and 5 years 43,052 71,755 26,299 62,551 Maturity over 5 years 30 1,971 0 1,859 In total 83,474 121,775 42,503 96,515

Expensed lease payments for the year 24,223 23,784 18,163 20,577

Operating leasing commitments concern cars, technical plant and machinery as well as furniture and fittings. The term of the contracts in the Parent Company is maximum 7 years at 30 September 2009 as well as at 30 September 2008. The maximum term of the contracts in the Group is 7 years at 30 September 2009 as well as at 30 September 2008.

Capital and purchase commitments Investment in property, plant and equipment 32,793 76,598 9,931 38,937

Contingent liabilities Guarantee for bank debt of subsidiaries 46,042 192,016 Guarantee for bank balances in joint ventures 9,095 9,523 9,095 9,523

Per Aarsleff A/S is jointly and severally liable with the other Danish jointly taxed companies for the total tax payable under the joint taxation until and including the tax year 2005. From 2006, the company is only liable for payments received on account from the subsidiaries. Through the Danish joint taxation, a subsidiary has used losses in a foreign subsidiary. The resulting retaxation liability has been provided for on the basis of a specific assessment, taking into consideration the relationship between using tax losses abroad and retaxation in Denmark.

The Aarsleff Group is engaged in various litigation and arbitration proceedings which are not expected to influence future earnings of the Group negatively.

Collateral The carrying amount of land and buildings that are pledged as security for mortgage debt to credit institutions amounts to 179,952 184,459 128,906 130,320

Warranty obligations primarily concern completed contracts, which are executed against a warranty of normally up to 5 years. The obligation has been determined on the basis of historical warranty expenses.

The Group participates in joint ventures under a joint and several liability. At 30 September 2009, total payables amount to DKK 364.1 million against DKK 662.3 million at 30 September 2008. The company does not expect any losses in addition to those included in the financial statements.

notes 87

a k t i v e r

Note (DKK ‘000)

21 Related party transactions

Associates Joint ventures Management ¹ Group 2008/2009 2007/2008 2008/2009 2007/2008 2008/2009 2007/2008 Income ² 13,182 2,998 221,756 309,223 49 0 Expenses ² -2,523 -6,388 -10,331 -10,968 -1,705 -2,931 Receivables ³ 12,149 3,579 198,627 163,571 0 0 Liabilities ³ -42 -69 -83,800 -108,248 -132 -303

¹ Includes members of the Board of Directors and Executive Management of the Parent Company. The amount concerns fees for Attorney Carsten Fode of Kromann Reumert for various legal assistance. Remuneration for the Management appears from note 6. ² Includes purchase and sale of goods and services. ³ Includes receivables and liabilities in connection with purchase and sale of goods and services.

The fund Per og Lise Aarsleffs Fond is considered to have control over the Group as a consequence of own shareholding and distribution of other shares. No transactions with the Fund took place in 2007/2008 and 2008/2009.

Transactions with subsidiaries have been eliminated in the consolidated financial statements in accordance with the accounting policies.

No unusual agreements or other transactions have been concluded between the Group and related parties.

Subsidiaries Associates Joint ventures Management ¹ Parent Company 2008/2009 2007/2008 2008/2009 2007/2008 2008/2009 2007/2008 2008/2009 2007/2008 Income ² 204,671 141,117 13,182 2,998 199,276 253,310 0 0 Expenses ² -76,211 -120,138 -2,523 -6,388 0 0 -1,369 -2,633 Receivables ³ 224,269 222,001 12,149 3,579 193,933 138,624 0 0 Liabilities ³ -118,881 -133,162 -42 -69 -83,327 -102,958 -132 -303

The financial income and expenses of the Parent Company concerning balances with subsidiaries and associates appear from note 9.

The Parent Company's balance with subsidiaries primarily concerns ordinary trade balances concerning purchase and sale of goods and services. Balances do not carry interest and are entered into on the same terms as with the other customers and suppliers of the Parent Company.

The dividend received by the Parent Company from subsidiaries and associates appears from the income statement and the cash flow statement. 88

Notes to the Annual Report Group Parent Company

Note (DKK ‘000) 2008/2009 2007/2008 2008/2009 2007/2008

22 Other adjustments – Cash flow statement Profit in associates -13,679 -12,406 Provisions 3,198 -22,119 5,602 -18,951 Profit from sale of non-current assets -4,315 -9,089 -2,093 -1,552 In total -14,796 -43,614 3,509 -20,503

23 Change in working capital – Cash flow statement Inventories 37,652 -50,100 -2,854 -6,176 Work in progress, net -91,569 52,436 -83,572 108,265 Receivables 265,687 -97,407 208,480 -113,470 Trade payables, other debt etc. -82,480 117,308 -116,565 88,025 In total 129,290 22,237 5,489 76,644

24 Liquidity – Cash flow statement Cash 445,593 304,162 430,536 285,492 Bank overdraft -367,194 -408,439 -282,436 -215,573 In total 78,399 -104,277 148,100 69,919

Cash is combined as follows: Share of cash in joint ventures 119,589 199,689 115,364 195,695 Other cash 326,004 104,473 315,172 89,797 In total 445,593 304,162 430,536 285,492

notes 89

Note (DKK ‘000)

25 Acquisitions

2008/2009 In the financial year 2008/2009, no acquisitions have been made in the Aarsleff Group.

2007/2008 In the financial year 2007/2008, the Aarsleff Group has made the following acquisition:

As per 1 March 2008, Per Aarsleff A/S acquired 100% of the shares of Brødrene Hedegaard A/S, Kastrup. The company is engaged in property service as well as building and construction.

Fair value at Accounting value the date of acquisition before acquisition Intangible assets 5,400 0 Property, plant and equipment 817 817 Other long-term assets 104 104 Receivables 8,518 8,518 Cash and cash equivalents 1,602 1,602 Non-current liabilities -1,504 -154 Current liabilities -6,534 -6,534 Net assets acquired 8,403 4,353 Goodwill 2,633 Acquisition cost 11,036 Of this figure, cash -1,602 Cash acquisition cost/net cash flow at acquisition cf. Cash flow statement 9,434

From the date of acquisition, the acquired company contributes to consolidated revenue with DKK 97.6 million and to the profit for the year with DKK 3.5 million.

Revenue and profit for the year 2007/2008, calculated as if the acquisition had taken place effective from 1 October 2007, amount to DKK 5,397 million and DKK 212.7 million, respectively.

After recognition of identifiable assets, liabilities and contingent liabilities at fair value, goodwill has been determined at DKK 2.6 million. Goodwill represents the value of existing staff, knowhow and expected synergies from the uniting of interests with the Aarsleff Group. 90

annual report 2008-09 91

Highlights and financial ratios for the Group (euro)

(EUR ‘000) 2004/2005 2005/2006 2006/2007 2007/2008 2008/2009

Income statement Revenue 457,765 507,079 575,305 714,028 654,390 Of this figure, work performed abroad 173,614 189,598 208,723 213,986 230,518 Operating profit 8,950 15,282 23,570 38,693 28,228 Profit before interest 9,264 17,046 24,968 40,356 30,065 Financials, net -1,257 -2,268 108 -2,816 -2,078 Profit before tax 8,007 14,778 25,076 37,540 27,987 Profit for the year 5,994 12,431 19,858 28,180 20,974

Balance sheet Long-term assets 112,715 134,940 142,190 167,205 177,572 Short-term assets 154,347 192,246 223,576 263,741 246,555 Total assets 267,062 327,186 365,766 430,946 424,127

Equity 110,608 122,310 140,854 167,755 181,440 Non-current liabilities 28,760 42,266 48,633 53,469 56,728 Current liabilities 127,694 162,610 176,279 209,722 185,959 Total equity and liabilities 267,062 327,186 365,766 430,946 424,127

Cash flow statement Cash flows from operating activities 20,739 15,781 32,176 52,300 62,400 Cash flows from investing activities -17,170 -37,845 -23,027 -42,445 -36,409 Of this figure, investment in property, plant and equipment, net -24,105 -29,965 -22,390 -41,347 -40,071 Cash flows from financing activities -5,597 10,547 -1,655 -2,313 -1,452 Change in liquidity for the year -2,028 -11,516 7,494 7,542 -37,861

Number of employees 2,373 2,670 2,839 3,181 3,217

Applied translation rate 7.4624 7.4576 7.4544 7.4611 7.4443

Companies in the Aarsleff Group

Company name Domicile Ownership interest %

Construction

Dan Jord A/S Aarhus Denmark Contractors 100 Petri & Haugsted as Rødovre Denmark Contractors 100 Wicotec A/S Taastrup Denmark Contractors 100 E. Klink A/S Skovlunde Denmark Contractors 100 Danklima Entreprise A/S Aarhus Denmark Contractors 100 Brødrene Hedegaard A/S Kastrup Denmark Contractors 100 Aarsleff Rail A/S Aarhus Denmark Contractors 100 ** Atlas A/S Aarhus Denmark Contractors 67 Per Aarsleff GmbH Hamburg Germany Contractors 100 Aarsleff Bygg- och Anläggnings AB Limhamn Sweden Contractors 100 Aarsleff Contractors AB Limhamn Sweden Contractors 100

Pipe Technologies

Danpipe A/S Aarhus Denmark Contractors 100 Aarsleff Rörteknik AB Stockholm Sweden Contractors 100 Aarsleff OY Helsinki Finland Contractors 100 Per Aarsleff ZAO St Petersburg Russia Contractors 100 Per Aarsleff Polska Sp. z o.o. Warsaw Poland Contractors 100 UAB Aarsleff Kaunas Lithuania Contractors 100 Aarsleff S.r.l. Milan Italy Contractors 100 Aarsleff S.L.U. Barcelona Spain Contractors 100 Insituform Rohrsanierungstechniken GmbH Nuremberg Germany Contractors 50 * PAA International Engineering Corp. Taichung Taiwan Contractors 50 * Insituform Linings Plc. Northants United Kingdom Manufacturing firm 25 * Arpipe Holding A/S Aarhus Denmark Holding company 35 *

Piling

Centrum Pæle Holding A/S Vejle Denmark Holding company 100 Centrum Pæle A/S Vejle Denmark Pile production 100 CP Test A/S Vejle Denmark Vibration and noise measurements 100 Centrum Pfähle GmbH Hamburg Germany Contractors 100 Per Aarsleff (UK) Limited Newark United Kingdom Contractors 100 Centrum Pile Limited Newark United Kingdom Pile production 100 Aarsleff Sp. z o.o. Warsaw Poland Contractors 100 KPB Kutno Sp. z o.o. Kutno Poland Pile production 100 Aarsleff Grundläggnings AB Gunnilse Sweden Contractors 100 Centrum Påle AB Älvängen Sweden Pile production 100

Dormant

Aarsleff Holding Ltd. Hong Kong China 100 Aarsleff (Thailand) Ltd. Bangkok Thailand 100 European Pipeline Contractors Limited London United Kingdom 33 *

* Associate ** Owned by Per Aarsleff A/S (33%) and the 100% owned subsidiaries Petri & Haugsted as (33%) and Wicotec A/S (33%)

Companies in the Aarsleff Group 93

G r o u p Parent company

Joint ventures Ownership interest % Sponsor Ownership interest % Sponsor

A.S.R. Projekts 33 33 Arge Dalbensteg Seelandkai Lübeck 33 33 Arge Edgar-Engelhard-Kai 50 50 Arge Eurogate HWS-Liegeplatz 2 50 50 Arge Fino II 50 Arge HWS Deichtor/Stadtdeich 28 28 Arge HWS Oberhafen 28 28 Arge HWS Schluisgrover Hauptdeich 33 33 Arge Jemnitzschleuse Börgerende 50 50 Arge Mittelmole-Marine Warnemünde 50 50 Arge Naßbaggerung Liegeplatz 8 Rostock 33 33 Arge Neubau Liegeplatz 35 Rostock 33 33 Arge Neubau Liegeplatz 36 Rostock 33 33 Arge Neubau Liegeplatz 37 Rostock 33 33 Arge Predöhlkai-Liegeplatz 2 50 50 Arge Schutzmole Süd Marinestützpunkt Warnemünde 50 50 Arge Seelandkai Lübeck 33 33 Arge Strassenbau Stadtdeich 33 33 Arge Veringkanal 33 33 Arge Wasserbau LP8 Warnemünde 40 40 Ballast Nedam-Per Aarsleff Joint Venture V.O.F. 50 50 Pihl-Aarsleff Brokonsortie I/S 50 Yes Costain-China Harbour-Aarsleff JV 33 * 33 * Fourcon J.V. 50 Yes 50 Yes Gasbyggarna Sveapipe 50 Yes 50 Yes Geo Aarsleff JV I/S 50 50 JV Streicher, Aarsleff & Tallqvist 33 Yes 33 KMG-PAA-RN Consortium (Split Joint Venture) 47 47 Malmö Citytunnel Group HB 25 25 Minegruppen I/S (Split Joint Venture) 53 Yes 53 Yes Motorvejskonsortiet Arkil-Aarsleff I/S 50 Yes 50 Yes Nelis Infra-Aarsleff JV 50 50 Pihl-Banekonsortiet I/S 50 Samsøkonsortiet Aarsleff-Kremmer JV I/S 50 Yes 50 Yes Svea Tunnel Joint Venture 50 Yes Aarsleff & Bodo J.V. 50 Yes 50 Aarsleff Bilfinger Berger JV I/S 50 Yes 50 Yes Aarsleff-Gruppen I/S 100 Yes 33 Yes Aarsleff-Interbeton J.V. I/S 50 Yes 50 yes Aarsleff-Kamco J.V. I/S 50 Yes 50 Yes Aarsleff-Salcon J.V. I/S (Split Joint Venture) 50 Yes 50 Yes Aarsleff-VG J.V. I/S 50 Yes 50 Yes Aarsleff-Wicotec J.V. I/S 100 Yes 50 Yes Aarsleff/NCC Modulvogntog I/S (Split Joint Venture) 50 Yes 50 Yes

* Voting rights

According to S 5 (1) of the Danish Financial Statements Act, partnerships in which Per Aarsleff A/S is sponsor have abstained from preparing financial statements as these * Associate partnerships are included in the consolidated financial statements of Per Aarsleff A/S. ** Owned by Per Aarsleff A/S (33%) and the 100% owned subsidiaries Petri & Haugsted as (33%) and Wicotec A/S (33%)

Joint venture partnerS Joint venture-partnere Ab Tallqvist Oy Fr. Holst GmbH & Co. KG Petri & Haugsted as Arkil A/S Geo RBS Skals Joint Stock Company Afcons Infrastructure Limited Damacon A/S Ludwig Freytag GmbH & Co. KG Aug. Prien Bauunternehmung GmbH & Co. KG Interbeton bv Rohde Nielsen A/S Arkil A/S Demex Rådgivende Ingeniører A/S NCC Danmark A/S Ballast Nedam Dredging Josef MöbiusBau AG Salcon Engineering Berhad Beton-Aug. Prien und Bauunternehmung Monierbau Gesellschaft GmbH m.b.H. & Co. KG E. PihlKamco & Søn A/S A.S. SkontoPetri & buveHaugsted SIA as BilfingerBallast Nedam Berger Dredging AG Ed. ZüblinKMG Inseneriehituse AG AS StrabagRBS Skals AG Joint Stock Company VG Entreprenør A/S ChinaBeton- Harbour und Monierbau Engineering Gesellschaft Company m.b.H. (Group) Fr. HolstKremmer GmbH Jensen & Co. KGApS Skonto buve SIA Wicotec A/S CostainBilfinger Building Berger &AG Civil Engineering Limited GeoLudwig Freytag GmbH & Co. KG VG Entreprenør A/S Züblin Spezial Tiefbau GmbH DamaconBrückner GrundbauA/S GmbH GreatMax Lakes Streicher Dredge GmbH & Dock & Co. Co. KG Villy C. Pedersen Entreprise A/S E.China Pihl Harbour& Søn A.S. Engineering Company (Group) KamcoMartin A/S Oetken GmbH & Co. KG Wicotec A/S Ed.Costain Züblin Building AG & Civil Engineering Limited KremmerNCC Danmark Jensen ApSA/S Züblin Spezial Tiefbau GmbH 94

a d d r e s s e s

Per Aarsleff A/S Aarsleff Bygg- och Anläggnings AB Per Aarsleff A/S Latvijas filiale Lokesvej 15 Box 60090 Uriekstes str. 3, 2nd floor 8230 Aabyhoej, Denmark (Visiting address: Geijersgatan 4 A) 1005 Riga, Latvia Tel +45 8744 2222 216 10 Limhamn, Sweden Tel +371 67382 392 Fax +45 8744 2249 Tel +46 40 51 20 50 Fax +371 67382 229 [email protected] Fax +46 40 51 15 94 [email protected] www.aarsleff.com [email protected] www.aarsleff.se Aarsleff S.r.l. Dan Jord A/S Via Renata Bianchi 23/1 Viengevej 8 Danpipe A/S 16152 Genova, Italy 8240 Risskov, Denmark Birkemosevej 32 Tel +39 10 8593794 Tel +45 8621 2655 8361 Hasselager, Denmark Fax +39 10 8593795 Fax +45 8621 1728 Tel +45 3288 4600 [email protected] [email protected] Fax +45 3288 4601 www.aarsleff.it www.danjord.dk [email protected] www.danpipe.dk Centrum Pæle A/S Petri & Haugsted as Groenlandsvej 96 Box 139 Aarsleff Rörteknik AB 7100 Vejle, Denmark Islevdalvej 181 Kung Hans Väg 8 Tel +45 7583 0111 2610 Roedovre, Denmark Box 7092 Fax +45 7572 0546 Tel +45 4488 7700 192 07 Sollentuna, Sweden [email protected] Fax +45 4488 7701 Tel +46 8 594 764 00 www.centrumpaele.dk [email protected] Fax +46 8 594 764 01 www.petri-haugsted.dk [email protected] Centrum Pfähle GmbH www.aarsleff.se Friedrich-Ebert-Damm 111 Wicotec A/S 22047 Hamburg, Germany Roskildevej 338 Aarsleff Oy Tel +49 40 69672 0 Postboks 10 Alhonniituntie 5 Fax +49 40 69672 222 2630 Taastrup, Denmark 01900 Nurmijärvi, Finland [email protected] Tel +45 4332 4229 Tel +358 9 290 2280 www.centrum.de Fax +45 4332 4252 Fax +358 9 290 22850 [email protected] [email protected] Per Aarsleff (UK) Limited www.wicotec-as.dk www.aarsleff.fi Hawton Lane, Balderton Newark, Nottinghamshire Brødrene Hedegaard A/S Per Aarsleff ZAO NG24 3BU, United Kingdom Teknikervej 9-11, Airside Shpalernaya str. 36 Tel +44 1636 611140 Copenhagen Airport 191123 St Petersburg, Russia Fax +44 1636 611142 2770 Kastrup, Denmark Tel +7 812 329 57 91 [email protected] Tel +45 4535 0920 Fax +7 812 329 57 74 www.aarsleff.co.uk Fax +45 4535 0930 [email protected] [email protected] www.aarsleff.ru Aarsleff Sp. z o.o. ul. Lambady 6 Aarsleff Rail A/S Per Aarsleff Polska Sp. z o.o. 02 830 Warsaw, Poland Lokesvej 15 ul. Wiertnicza 131 Tel +48 2264 88835 8230 Aabyhoej, Denmark 02 952 Warsaw, Poland Fax +48 2264 88836 Tel +45 8734 3000 Tel +48 2265 16972 [email protected] Fax +45 8626 1362 Fax +48 2265 16972 www.aarsleff.com.pl [email protected] [email protected] www.aarsleffrail.com www.aarsleff.pl Aarsleff Grundläggnings AB Långavallsgatan 8 Per Aarsleff GmbH UAB Aarsleff 424 57 Gunnilse, Sweden Friedrich-Ebert-Damm 111C Raudondvario pl. 141 Tel +46 31 330 32 30 22047 Hamburg, Germany 47192 Kaunas, Lithuania Fax +46 31 330 32 39 Tel +49 40 694 664 34 Tel +370 37 370717 [email protected] Fax +49 40 694 664 35 Fax +370 37 370717 www.aarsleff.se

addresses This annual report is a translation of Per Aarsleff A/S’s official Danish annual report. The original Danish text shall take precedence and in case of discrepancy the Danish wording shall prevail.

Endorsements 40 Management’s Statement 40 Independent auditor’s report 40

Annual Report 2008-09 Report

annual report

Per Aarsleff A/S Main office Lokesvej 15 DK-8230 Åbyhøj Denmark

Tel +45 8744 2222 Fax +45 8744 2249

CVR-no. 24 25 77 97

Copenhagen office Industriholmen 2 DK-2650 Hvidovre Denmark

Tel +45 3679 3333 Fax +45 3679 3300 [email protected] www.aarsleff.com