Hovedstadens Letbane I/S Annual Report 2017 Hovedstadens Letbane I/S Metrovej 5 DK-2300 S CVR number: 36032499

T +45 3311 1700 E [email protected]

Read more about Greater Copenhagen Light Rail at dinletbane.dk

Layout, e-Types Printing, GraphicUnit ApS ISBN number: 978-87-92378-29-3 Annual Report 2017

Contents

Management’s Report 05 Greater Copenhagen Light Rail’s employees 20 Foreword 05 Greater Copenhagen Light Rail’s Results and Expectations 06 Board of Directors 22 Key Figures for Greater Copenhagen Greater Copenhagen Light Rail’s Light Rail 10 Executive Board 24

Greater Copenhagen Light Rail 12 Annual Accounts 27 The Light Rail and urban development 13 Accounting Policies 28 New station at Delta Park in Profit and Loss Account 31 Vallensbæk 13 Balance Sheet 32 Statement of Changes in Equity 34 Hovedstadens Letbane I/S Status of the work on the Light Rail 14 Metrovej 5 Cash Flow Statement 36 DK-2300 Copenhagen S Selection of contractors 15 Notes 37 CVR number: 36032499 New quality assurance 16 T +45 3311 1700 Expropriation activities 16 E [email protected] Endorsements 43 Knowledge of the Light Rail 16 Read more about Greater Copenhagen Management Endorsement 43 Light Rail The Light Rail is classified as a at dinletbane.dk megaproject 17 Independent Auditors’ Report 44

Layout, e-Types Printing, GraphicUnit ApS Company Management 19 Appendix to the Management’s Report 49 ISBN number: 978-87-92378-29-3 Greater Copenhagen Light Rail’s Long-Term Budget 50 compliance and CSR Report 20

3 Greater Copenhagen Light Rail at one of the 29 coming stations along the line. Annual Report 2017 Management’s Report

Foreword

The work on the Light Rail in 2017 did not In the Light Rail , a large num- lead to any changes in the financial basis. ber of meetings were held with residents Greater Copenhagen Light Rail was able to and utility line owners, in preparation for maintain the overall budgets unchanged, the construction work. In the eight munici­ while the invitations to tender for the palities in which the Light Rail will run, all ­major contracts and the preparation of inspections of properties and sites were the final decision by the owners toenter ­ completed and approved. This means that into contracts could take place within the the expropriation process can begin in 2018. framework laid down by the owners for the ­construction budget of DKK 502 million Traffic plans during the construction period in 2017. were also prepared in the course of the year, and the final details concerning the align- One of the major milestones in 2017 was the ment fell into place. This meant, among other completion of the extensive procurement things, that the 28-kilometre long Light Rail process. Invitations to tender in accordance will have an extra 29th station. In Vallensbæk with EU regulations were held for eight Light Municipality, it was decided to construct an Rail contracts. This was a process charac- additional station, Delta Park, of which the terised by constructive negotiation. Both most important function will be to improve the winning bids and the other bids were the infrastructure and the development of the of high quality and Greater ’s largest business area. Light Rail looks forward to fruitful cooper- ation with the winning contractors in the Towards the end of the year, the EY firm of coming years. accountants undertook external quality ­assurance of the project’s aggregated risk Parallel to the invitations to tender, the and reserve requirements. extensive work was undertaken of prepar- ing the company and its surroundings for Thank you to all partners and employees. the forthcoming construction phase. The framework has been laid for cooperation We hope that you enjoy reading the report! with contractors, authorities and utility line owners. Before the contractors can start Birgitte Brinch Madsen work, buried utility lines along Ring 3 must Chair of the Board of Directors be realigned, and sites and properties must be expropriated in order to make areas avail- Henrik Plougmann Olsen able for the construction work. CEO

5 Annual Report 2017 Management’s Report

Results and expectations

Result for the year Development in equity The result for 2017 Greater Copenhagen Light Rail will not have Hovedstadens Letbane I/S was established “ any passenger revenue until the Light Rail on 19 June 2014. The Danish State repre- was in accordance opens. sented by the Danish Ministry of Trans- port, Building and Housing, the Capital with expectations.” During the first years, the company’s ac- Region and Lyngby-Taarbæk Municipality, counts will therefore show a deficit due to , Municipality, the very significant investments in the con- Rødovre Municipality, Municipality, struction of the Light Rail, without any pas- Alberts­lund Municipality, Brøndby Munici- senger revenue. pality, Høje­- Municipality, Munici­pality, Vallensbæk Munici­pality and The company’s finances are planned on the Ishøj Municipality contributed DKK 3.5 billion basis of this strategy, which was also applied on the company’s establishment. The com- to the Great Belt Fixed Link, the Øresund pany’s book loss of DKK 30 million has been Fixed Link, the Copenhagen Metro and the deducted from equity, which amounted to Fehmarn Belt Fixed Link. DKK 3,035 million at the end of 2017.

The result for 2017 was in accordance with expectations. Equity (DKK million) The result for 2017 before depreciation and write-downs is a loss of DKK 2 million. Depre­ , ciation and write-downs totalled DKK 99 3,424 3,332 3,193 million in 2017, and concern write-downs on 3,065 3,035 the construction of the Light Rail. The result , before financial items is hereafter a loss of DKK 101 million. Financial items account for , income of DKK 71 million. The result for the year is a loss of DKK 30 million. ,

*        

*Opening balance sheet, 1 January 2014

6 Annual Report 2017 Management’s Report

One consequence of the accounting policies Long-term economic applied by Hovedstadens Letbane I/S is that development equity would be expected to continue to be reduced in the following years, culminating Hovedstadens Letbane I/S prepared an up- with the establishment of the major civil dated long-term budget in December 2017. ­engineering contracts, expected to take The long-term budget shows the expecta- place in the first quarter of 2018. tions of the long-term economic develop- ment in the company. The long-term budget As a consequence, the company will record shows that the company’s net debt is ex- a liability in the accounts equivalent to the pected to reach its maximum level in 2032, negative value of the cash flows from the pro- at approximately DKK 3.9 billion (in current ject. This provision will affect the operating prices). See the graph below. result for the year in question significantly, just as most of the equity contributions can The debt is expected to be repaid in 2059, be expected to have been allocated at this which is in accordance with the previous time. This is in accordance with the assump- expectations. tions made at the time of the establishment of the company. Investment in the Light Rail Hovedstadens Letbane I/S is a partnership in which the owners are 100 per cent liable Investments in the construction of the Light for the company. Any negative equity capi- Rail totalled DKK 102 million in 2017, of which tal would thus not as such entail a need for DKK 93 million concerned capital investments further contributions from the owners, as and DKK 9 million concerned operations­- Hovedstadens Letbane I/S would still be able related capital investments. In 2017, a write- to service its debt as planned. down of DKK 99 million was made concerning the construction of the Light Rail, and the net book value of the Light Rail is stated as DKK 0 in the balance sheet. This is a consequence of how the investment in the Light Rail will not be fully recovered via future revenue such Equity Long-term budget (DKK million) (DKK million) Revenue Expenses Debt

,

,

,

 Note: In budgetary terms, reinvestment                   -,  in rolling stock, mechanical and -, electrical installations is assumed in 2047, -, cf. the company’s long-term budget -, (Appendix to the Management Report) - ,

7 Annual Report 2017 Management’s Report

as passenger revenue, etc., and is therefore of Light Rail trains, the establishment of the written down on an ongoing basis to the Control and Maintenance Centre, trial opera- ­expected recoverable value of the Light Rail, tion, strategic spare parts and reinvestments. with due consideration of the planned capital The operations-related capital investments investments. The write-down that has been are financed by the Capital Region and the made is in accordance with expectations. 11 municipalities involved via their payment, once the Light Rail has been put into opera­ The write-down is based on an estimate of tion, of annual operating contributions for a the value of the Light Rail according to the total value of approximately DKK 1 billion, as assumptions applied by the company in the well as an expected operating surplus at a current long-term budget, as well as the value totalling approximately DKK 0.3 billion. expectations of the future level of interest See the graph at the centre right. rates (discounting factor). The tables show that both the company’s In conjunction with its establishment, the capital investments and the operations-­ company’s owners made contributions to related capital investments are expected to the financing of the capital investments. The be defrayed during the 2014-2024 period, Based on the current Danish State, represented by the ­Ministry of while the related financing, from the owners “ Transport, Building and Housing, finances via owner contributions as instalments and long-term budget, the approximately DKK 1.4 billion, and the ­Capital operating contributions, and as passenger Region and the 11 municipalities involved revenue from the operation of the Light company expects the ­finance the remaining approximately DKK Rail, is expected to be contributed to the 2.1 billion. On the company’s establishment, company as annual payments. During the loans to be repaid in the dates of the payment of the respective period until these payments have financed full by 2059.“ deposits were determined in the payment the overall Light Rail, the difference will agreements with the individual owners. See be financed by raising loans. Based on the the graph in the top right-hand corner. current long-term budget, included as an Appendix to the Management Report, the The operations-related capital investments company expects the loans to be repaid in concern investments for the procurement full by 2059.

Investments in 2017 Investment at (DKK million) 31 December 2017 (DKK million)



 

Capital investments Operations-related capital investments

8 Annual Report 2017 Management’s Report

Timing difference between capital investments and revenue (owner contributions) (DKK million)

 Revenue (owner contributions) Capital investments







                             

Timing differences between operations-related capital investments and revenue (DKK million)

 Operating profit Operations-related capital investments







                             

Financial Highlights and Key Figures 2017

All figures in DKK million 2014 2015 2016 2017

Result before depreciation and write-downs -1.8 -2.0 -2.3 -2.5 Depreciation and write-downs -90.3 -204.6 -158.3 -99.3 Result before financial items -92.1 -206.6 -160.6 -101.8 Result for the year -92.1 -140.2 -128.0 -30.4 Balance sheet total 3,740 3,725 4,004.3 3,923.7 The year’s investment in the Light Rail 90.3 208.0 160.6 101.8 Equity 3,332.0 3,193.0 3,065.3 3,034.9 Solvency ratio 89% 86% 77% 77%

Equity ratio = Equity at the end of the year x 100/total assets

9 Annual Report 2017 Key Figures for Greater Copenhagen Light Rail

Key Figures for Greater Copenhagen Light Rail

Investment Long-term budget (DKK million) Capital investments (DKK million) 4,781 Budget (2017 prices) 84 -3,888 275

Operations-related capital investments 1,443 Budget (2017 prices)

Total 6,224 Total budget including adjustment reserve of DKK 1,106 million (2017 prices) 2014 2030 2059

The Light Rail will run The Light Rail will every five minutes have 29 stations along during daytime hours, the 28-km stretch, and every ten minutes which will be served in the evenings and by 27 Light Rail trains. 29 at weekends. 28 10 27 Annual Report 2017 Key Figures for Greater Copenhagen Light Rail

13-14 million passengers are expected to use the Light Rail on an annual basis. For comparison, the “Kystbanen” (coastal line between Copenhagen and Elsinore) had just over 9 million passengers in 2016.

A Light Rail train can carry 200-230 passengers. This corresponds to around four city buses.

4,000 daily individual journeys are expected to be made using the Light Rail, rather than private vehicles, once the Light Rail opens.

11 Annual Report 2017 Greater Copenhagen Light Rail

Greater Copenhagen Light Rail

Hovedstadens Letbane I/S is tasked with For most of its alignment, the Light Rail will building and operating the Light Rail along run on its own track, separated from the Ring 3. rest of the traffic at the side or middle of the road. At a few locations, due to the lack of The Light Rail will make it easy, rapid and space it will mingle with other traffic. comfortable to travel across Greater Copen­ hagen. The Light Rail will run every five A Light Rail service is a quiet and environ- minutes in daytime hours, with no fixed mentally friendly means of transport. The timetable, and with connections to S-trains trains run on electricity, with plenty of space at six stations. It will stop close to DTU for 200-230 passengers in each train, which (the Technical University of ), and corresponds to the number of passengers in ­Herlev and Glostrup Hospitals, besides a around four city buses. large number of other workplaces, shops and cultural and sporting venues and, not least, residential areas.

The Light Rail will run every five minutes during daytime hours – without a timetable, just like the Metro.

12 Annual Report 2017 Greater Copenhagen Light Rail

The Light Rail platforms will either be laid on each side of the tracks or in the middle of the tracks, called Furthermore, an analysis by COWI for the City an island platform, as shown in the The Light Rail and urban development of Copenhagen, the Greater ­Copenhagen illustration here. Recruitment Service, Metroselskabet and Greater Copenhagen Light Rail will ­entail Greater Copenhagen Light Rail shows that a new 28-kilometre development area the establishment of the Light Rail is ex- ­between Lyngby and Ishøj. pected to have a direct employment effect of around 2,300 FTEs and an indirect employ- The Light Rail will increase the areas’ acces- ment effect of around 2,200 FTEs. sibility and create a basis to attract private investment, because many companies and private individuals will be keen to locate New station at Delta Park in close to sustainable and effective public Vallensbæk Municipality transport systems. In 2017, the municipal council of Vallensbæk Greater Copenhagen There is a strong interest in the business com- Municipality decided to buy an additional “ munity to develop the areas along the Light station at Delta Park. This will give busi- Light Rail will include Rail. This is the conclusion after the Incen- nesses and residents in the area easy ac- tive consultancy updated their investment cess to the Light Rail. With the new station, a new 28-kilometre analysis from October 2016. At that time, the Greater Copenhagen Light Rail will have 29 estimate was DKK 20 billion, but the updated stations instead of the 28 originally planned. development area analysis from September 2017 shows that in- between Lyngby and vestments for DKK 32 billion have been made In 2015, the Light Rail’s environmental impact or are planned in the municipalities along the was investigated. At that time, Delta Park Ishøj.” forthcoming Light Rail. The same investment was already included as part of the investi- analysis assesses that the Light Rail can help gation basis, and the station was included as to attract up to 36,500 new jobs and up to an option in the Act on the Construction of 32,000 new residents towards 2032. the Greater Copenhagen Light Rail.

13 Annual Report 2017 Key Figures for Greater Copenhagen Light Rail

Status of the work on the Light Rail

2018 2019 Approval by the Construction work begins owners in Q1 2018 Expropriations, realignment of utility lines and preparatory work

14 Annual Report 2017 Key Figures for Greater Copenhagen Light Rail

Selection of contractors

At the meeting of the Board of Directors of Greater Copenhagen Light Rail announced Greater Copenhagen Light Rail on 10 January,­ the winning contractors for the eight Light the Board of Directors approved the result Rail contracts in total for which tenders of the invitation to tender and the recom- were invited. mendation to the owners to approve the financial basis for the execution of the Light After approval by the owners in Q1 2018, Rail in Ring 3. Greater Copenhagen Light Rail will enter into contracts with the winning contractors.

2023 2024 Construction work begins Test run is started Inauguration of Greater Copenhagen Light Rail

15 Annual Report 2017 Greater Copenhagen Light Rail

New quality assurance In 2017, inspections as part of the expropria- tion process took place in all municipalities, EY has assessed that At the end of 2017, the Minister for Transport, along the entire alignment of the Light Rail. “ Building and Housing requested Greater It is therefore expected that the expropria- both the Light Rail’s ­Copenhagen Light Rail to undertake an ex- tion activities will be initiated in the spring ternal assessment of the Light Rail project’s of 2018. base estimate and aggregated risk and the derived reserve requirements after the invitation to tender There has been good dialogue with the af- the risk register and had been held. The assessment was to build fected parties and the areas inspected for risk process are at an further on the external review of the Light use in the construction phase and opera- Rail project’s construction finances that was tion of the Light Rail were approved by the appropriate and fair undertaken by EY in the summer and autumn ­Expropriation Commissioner with only a few of 2016. On receipt of the Minister’s request, comments. There will be continuous as- level at the current the company initiated cooperation with EY sessment of the need for further initiatives to achieve quality assurance of the updated to ensure a good dialogue with the general stage of the project.” risk register and thereby the ­aggregated risk, public, including residents’ meetings, press as well as the derived reserve requirements. relations, etc.

On the basis of their work, EY has assessed that both the Light Rail’s base estimate and Knowledge of the Light Rail the risk register and risk process are at an appropriate and fair level at the current A strategy for communication, dialogue and stage of the project. Together with the result cooperation with stakeholders during the of the invitation to tender, the quality assur- construction phase was prepared in 2017. ance was included in the Board of Directors’ The strategy sets out key messages and recommendation to the owners as the basis ­action areas, with special focus on the target for the final decision on the Light Rail project. groups of road users, businesses/commer- cial operators, and neighbours. The strategy has been approved by the Board of Directors Expropriation activities and aims to ensure that the target groups receive a high service level, with relevant, The company uses expropriation to acquire consistent and responsive communication areas to be used for the construction and throughout the entire construction phase. operation of the Light Rail. Expropriation This applies to both the realignment of ­utility entails that a number of properties along lines and the construction work. the Light Rail’s alignment have to release sites on a permanent or temporary basis.­ The strategy has been set up with input Compensation is paid, as determined by the from the owners and a wide range of stake- Expropriation Commission, which serves as holders, with collection of data concerning an impartial third party in the expropria- companies and residents in the Light Rail tion process. Expropriation can also have municipalities. An external survey carried the consequence that the use of proper- out among residents and employees in ties ­adjacent to the Light Rail is subject the location municipalities shows, among to limitations by imposing encumbrances. other things, that two thirds are familiar In these cases too, expropriation releases with Greater Copenhagen Light Rail. The compensation. Around 550 properties are primary source of this knowledge is local affected by expropriation, of which around media, which are also residents’ preferred 30 per cent are expected to be commercial source of information about the Light Rail. properties. The survey also shows that 76 per cent of

16 Annual Report 2017 Greater Copenhagen Light Rail

Lyngby-Taarbæk Municipality’s residents’ meeting on the Light Rail at DTU in August 2017 was well-attended.

residents expect Greater Copenhagen Light Light Rail was represented at the Culture Rail to proactively provide information Night in Glostrup, and was also part of the about the project. The many inputs from Ministry of Transport, Building and Housing’s­ An external survey the data collection are incorporated into the Culture Night event in Copenhagen. “ strategy for communication, dialogue and of residents and cooperation with stakeholders during the construction phase. At the request of the Greater Copenhagen Light Rail employees in the municipalities, the strategy assumes that is classified as a megaproject the municipalities will play a prominent role location municipalities in instigating communication concerning In 2017, Greater Copenhagen Light Rail was shows, among other the Light Rail. classified as a megaproject by the Ministry of Transport, Building and Housing. This clas- things, that two In 2017, Greater Copenhagen Light Rail at- sification is primarily due to the fact that tended numerous events to present the the Light Rail project has an exceptional thirds are aware of Light Rail and answer questions about the number of different interfaces and mutual project. The company provided informa- interdependencies compared to other ongo- Greater Copenhagen tion at the People’s Meeting on , ing projects. On the basis of this classifica- Light Rail.” gave presentations at four business network tion, the Ministry of Transport, Building and meetings along the alignment, and held an Housing conducts extraordinary inspection information meeting for utility line own- of the project that lies beyond the custom- ers and the emergency services. Greater ary inspection of construction projects. Copenhagen Light Rail also attended and Every quarter, a report on the progress of gave a presentation at a residents’ meet- the project is prepared, in order to ensure ing concerning the Light Rail in Lyngby. The transparency for the project’s finances, meeting was organised by Lyngby-Taarbæk time schedule and activities, risks and other Municipality, and attendance and interest in conditions. The report also presents the the project were significant. Greater Copen- semi-annual Status of the Civil Engineering hagen Light Rail also attended Liv i Lyngby, and Construction Projects, which is sub- which is a town festival organised by Lyngby-­ mitted to the Folketing (Parliament) by the Taarbæk Vidensby. Greater Copenhagen Ministry of Transport, Building and Housing.

17 At six of the Light Rail stations, passengers can switch to S-trains. When the Light Rail opens, on an annual basis 13-14 million passengers are expected to use this transport option. Annual Report 2017 Company Management

Company Management

Greater Copenhagen Greater Copenhagen Light Rail, at that time of the EIA report and the engineering design “ called Ring 3 Letbane I/S, was established for Greater Copenhagen Light Rail. Light Rail will handle in June 2014 as authorised by Act no. 165 of 26 February 2014. Greater Copenhagen Greater Copenhagen Light Rail is owned by both the operation and Light Rail will handle both the operation and the Danish State, represented by the Danish construction of the Light Rail in Ring 3. On Minister for Transport, Building and Housing, construction of the the transition from construction to opera- the Capital Region and 11 municipalities: Ishøj Light Rail in Ring 3.” tion, the Danish State will withdraw from Municipality, Vallensbæk Municipality, Hvid­ the company, which will be continued by ovre Municipality, Municipality, the Capital Region and the municipalities. Brøndby Municipality, Rødovre Municipality, Høje-Taastrup Municipality, Herlev Munici- On 26 May 2016, the Act on a Light Rail in pality, Gladsaxe Municipality, Glostrup Muni­ Ring 3 was amended to also be a Construc- cipality and Lyngby-Taarbæk Municipality. tion Act. The Act was proposed on the basis The Board of Directors of Greater Copen- hagen Light Rail is the company’s supreme authority, and is responsible for ensuring Ownership of Greater Copenhagen Light Rail that the company fulfils the objectives laid down in legislation. The composition of the Board of Directors was adjusted in accord- Danish State 40% ance with the political parties’ agreement Capital Region 26% of 12 May 2016, which was the basis for the Lyngby-Taarbæk Municipality 7.48% adoption of the Construction Act. In accord- ance with this agreement, the Danish State Gladsaxe 7.51% must hold a majority in the Board of Direc- Herlev 4.01% tors. On the amendment of the Articles of Rødovre 1.19% Association adopted on 9 November 2016, Glostrup 4.28% the Board of Directors was increased from seven to nine members. Albertslund 1.94% Brøndby 2.48% The Board of Directors has nine members, Høje-Taastrup 0.51% who are appointed for a period of four years. Hvidovre 0.54% Five members are appointed by the Danish State, while two members are appointed Vallensbæk 1.87% by the Capital Region. The municipalities Ishøj 2.19% jointly appoint two members.

19 Annual Report 2017 Company Management

In 2017, six meetings of the Board of Direc- Greater Copenhagen tors were held, as well as one seminar for Light Rail’s compliance the Board of Directors, one partnership and CSR Report meeting, and three quarterly meetings for the Greater Copenhagen Light Rail partners. In 2017, together with the annual accounts, Greater Copenhagen Light Rail presented a In accordance with Greater Copenhagen compliance test for corporate governance, Light Rail’s Articles of Association, the Board as well as a CSR Report on social responsi- of Directors submits quarterly reports to the bility. The owners approved the compliance Together with the partners after the end of each quarter of the test at the partnership meeting in 2017. “ financial year, and subsequently quarterly Annual Accounts meetings are held between the company’s Corporate governance owners and the Chair of the Board of Direc- In 2017, on the basis of the Danish State’s for 2017, Greater tors. The documents are publicly available ownership policy and Recommendations on at dinletbane.dk Corporate Governance from the Committee Copenhagen Light on Corporate Governance, Greater Copen- Rail presented a On the establishment of Greater Copen­hagen hagen Light Rail published a series of corpo- Light Rail, the 11 municipalities entered into rate documents, including a compliance test, compliance test an ownership agreement concerning the es- combined in Greater Copenhagen Light Rail’s tablishment of a Mayors’ Forum. The Mayors’ corporate governance compendium, which is for corporate Forum coordinates the municipalities’ elec- available at dinletbane.dk. The publication tion of representatives to the Board of Direc- of these documents will ensure the greater governance, as well as tors, and also prepares the municipalities’ transparency of Greater Copenhagen Light a CSR Report on social attendance of quarterly meetings, the part- Rail’s corporate governance. nership meeting and meetings of the Board responsibility.” of Directors. The municipalities thereby The compliance test showed that the com- together constitute a single partner on an pany’s management documents generally equal footing with the other two partners, comply with the applicable rules. which are the Danish State and the Capital Region. In 2017, six meetings of the Mayors’ Social responsibility Forum were held. In 2017, Greater Copenhagen Light Rail publis­ hed the company’s first annual CSR Report, Greater Copenhagen Light Rail shares an which presented Greater Copenhagen Light organisation with Metroselskabet, and in Rail’s CSR work and future ambitions for accordance with legislation, Metroselskabet the company’s development in this area. In makes the necessary employees and other mid-2016, Greater Copenhagen Light Rail resources available to undertake the ac- adopted the UN Global Compact, and its tivities of Greater Copenhagen Light Rail, social responsibility report in accordance including for the performance of financing, with Section 99 a(7) of the Danish Finan- administration, engineering design, procure- cial Statements Act is presented in Greater ment and contractual tasks concerning the Copenhagen Light Rail’s 2017 CSR Report. Light Rail in Ring 3. Greater Copenhagen Greater Copenhagen Light Rail’s CSR Report Light Rail pays Metroselskabet for handling is available at dinletbane.dk these tasks, on a cost-price basis.

20 Annual Report 2017 Company Management

Along most of the route, the Light Rail will run in its own track, shielded from other traffic. In this case, at the side of Greater Copenhagen The gender distribution of the Board of the road. Light Rail’s employees ­Directors of Greater Copenhagen Light Rail In accordance with the Act on the Greater is 66 per cent men and 33 per cent women. Copenhagen Light Rail, the company has The Board of Directors is nominated by the only one employee, namely the CEO, who company’s owners. is the CEO of Metroselskabet at any time. At the end of the financial year, Metrosel- Metroselskabet is subject to a statutory ob- skabet employed a staff of 330, compared ligation to make the necessary employees to 325 in 2016. There are also around 174 and other resources available to undertake advisers attached to – and often located in Greater Copenhagen Light Rail’s activities, – the company’s head office, and around 129 as described above. The overall gender dis- more loosely affiliated advisers who work tribution of the employees is 40 per cent from elsewhere in Denmark and from vari- women and 60 per cent men. Around 10 ous parts of the world. per cent of the employees are non-­Danish ­nationals, primarily from neighbouring The employees have a wide range of educa­ European­ countries. tional backgrounds. This includes engineers in many different fields, land surveyors, geolo­ The Light Rail’s use of resources in terms of gists, architects and computer scientists, as Metroselskabet’s employees corresponds well as a number of social sciences gradu- to approximately 19 FTEs. ates. There is a need for knowledge-inten- sive resources, in the form of a large number Of the five executive directors, 40 per cent of highly-specialised employees engaged are men and 60 per cent are women. The in concrete works, electrical installations gender distribution of the full company and safety, as well as environmental and management is 59 per cent men and 41 per risk management, and occupational health cent women. This is a change since 2016, and safety. when the distribution was around 64 per cent men and 36 per cent women.

21 Annual Report 2017 Company Management

Board of Directors of Greater Copenhagen Light Rail

Birgitte Brinch Madsen Trine Græse Helle Busck Fensvig Chair of the Board of Directors Vice Chair Board member Appointed as of 10 November 2016 Appointed as of 24 August 2017 Appointed as of 10 November 2016

Appointed by the Danish State Chair of Borgmesterforum Appointed by the Danish State Director (the Mayors’ Forum) CEO, Arnold Busck A/S Date of birth: 1963 Appointed by Borgmesterforum Date of birth: 1965 Remuneration in 2017: DKK 300,000 (the Mayors’ Forum) Remuneration in 2017: DKK 100,000 Mayor, Gladsaxe Municipality Other offices held: Date of birth: 1961 Other offices held: ——Chair of the Board of Directors of Intech Remuneration: DKK 70,652 Chair of the Board of Directors of International A/S Neptun Ejendomme A/S ——Board member of Metroselskabet Other offices held: ——Board member of Fonden DBK ——Board member of Investeringsfore­ ——Chair of LOOP CITY ——Board member of Detail Forum ningen Danske Invest and related funds ——Member of the Board of Directors of ——Board member of ——Board member of the North Sea Fund NOVAFOS Holding A/S. Boghandlerforeningen ——Board member of DEIF A/S ——Board member of Orbicon A/S ——Board member of EUDP (the Energy Technology Development and ­Demonstration Programme) Board member of GUDP (the Green Develop- ment and Demonstration Programme)

Finn Rudaizky Jens Mandrup John Steen-Mikkelsen Vice Chairman Board member Board member Appointed as of 1 February 2017 Appointed as of 1 January 2018 Appointed as of 10 November 2016

Appointed by the Capital Region Appointed by the Capital Region Appointed by the Danish State Member of the City Council of Copenhagen Owner, CopenHistory CEO, Danske Færger A/S and Date of birth: 1942 Regional Council member, Capital Region Bornholmstrafikken Holding A/S Remuneration in 2017: DKK 183,333 Date of birth: 1977 Date of birth: 1955 Remuneration in 2017: DKK 0 Remuneration in 2017: DKK 100,000 Other offices held: ——Member of the Social Affairs Committee Other offices held: Other offices held: of the City of Copenhagen ——Chairman of the Transport Committee • Chairman of Bilfærgernes Rederiforening in the Capital Region • Board member of Interferr • Board member of Samsø-Linien A/S

22 Annual Report 2017 Company Management

Henrik Rasmussen Mogens Therkelsen Niels Hald Board member Board member Board member Appointed as of 1 January 2018 Appointed as of 10 November 2016 Appointed as of 10 November 2016

Appointed by Borgmesterforum Appointed by the Danish State Appointed by the Danish State (the Mayors’ Forum) Director/Chairman, Mt Holding ApS of CEO, Danish Brewers’ Association Mayor, Vallensbæk Municipality 12 September 2012 Date of birth: 1952 Date of birth: 1971 Date of birth: 1946 Remuneration in 2017: DKK 100,000 Remuneration in 2017: DKK 0 Remuneration in 2017: DKK 100,000 Other offices held: Other offices held: Other offices held: ——Board member of Dansk Retursystem A/S ——Chairman of Væksthus ——Chairman of the Board of Directors of ——Board member of Den Skandinaviske Hovedstadsregionen H.P. Therkelsen A/S Bryggerhøjskole ApS ——Member of the Finance Committee ——Member of the DI Infrastructure, ——Brewers of Europe, Unesda and EFBW ——Delegate to the Municipal Political DI Transport and DI Freight committees ——Member of the Employer Panel for Summit ——Chairman of Union Bank, Flensburg ­Nutrition, Exercise and Sports, ——Member of Vallensbæk Employment ——Board member of Flensborg Avis University of Copenhagen Forum ——Board member of Frøslevlejrens ——Member of the Election Board, Efterskole Folketing elections ——Member of the Danish/German ——Member of the Election Board, Transport Commission referendums ——Board member of FDE Fonden ——Member of the Election Board, European Parliament elections ——Member of the Election Board, ­municipal and regional elections ——Board member of Strandparken I/S ——Board member of VEKS ——Member of the Board of Represen­ tatives of HMN Naturgas I/S ——Board member of Vestforbrænding I/S ——Board member of HOFOR Vand Holding A/S and HOFOR Spildevand Holding A/S ——Board member of BIOFOS Holding A/S Partici- Attendance of Board meetings in 2017 pated Absent

Birgitte Brinch Madsen, Chair 6 - Karin Søjberg Holst*), Vice Chair 2 - Trine Græse**), Vice Chair 4 - Finn Rudaizky, Vice Chair 5 1 Søren P. Rasmussen 4 2 Annie Hagel 6 - Helle Busck Fensvig 6 - Niels Hald 6 - Mogens Therkelsen 6 - John Steen-Mikkelsen 5 1

*) Resigned on 23 August 2017 **) Appointed as of 24 August 2017

23 Annual Report 2017 Company Management

Former members of the Board of Directors

Karin Søjberg Holst Annie Hagel Vice Chair Board member Resigned on 23 August 2017 Resigned on 31 December 2017

Chair of Borgmesterforum Appointed by the Capital Region (the Mayors’ Forum) Regional Council member, Capital Region Appointed by Borgmesterforum Freelance journalist (the Mayors’ Forum) Date of birth: 1950 Mayor, Gladsaxe Municipality Remuneration in 2017: DKK 100,000 Date of birth: 1945 Remuneration in 2017: DKK 129,348 Other offices held: ——Member of the Health Services Other offices held: Coordination­ Committee, ——Chair of Gladsaxe Business Council Capital Region ——Board member of Vestforbrænding I/S ——Member of the Committee for Cohesive ——Board member of HMN Naturgas I/S Patient Treatment, Capital Region

Søren P. Rasmussen Henrik Thorup Board member Board member Resigned on 31 December 2017 Resigned on 31 January 2017

Appointed by Borgmesterforum Appointed by the Capital Region (the Mayors’ Forum) Vice Chairman, Capital Region Member of the Municipal Council, Vice Chairman, Statsrevisorerne Lyngby-Taarbæk Municipality (the State auditors) Date of birth: 1967 Date of birth: 1946 Remuneration in 2017: DKK 100,000 Remuneration in 2017: DKK 16,667

Other offices held: Other offices held: ——Chairman of the Children and ——Member of the Executive Committee, Youth Committee, Lyngby-Taarbæk Capital Region Municipality ——Board member of Danish Regions ——Member of the Finance Committee, ——Board Member of the Pension Fund Lyngby-Taarbæk Municipality for Nurses, PKA ——Member of the Social and Health ——Member of the National Dentistry Services Committee, Lyngby-Taarbæk Complaints Board Municipality ——Member of the Local Tax Appeals ——Member of the Urban Planning Tribunal in Nærum Committee,­ Lyngby-Taarbæk ——Member of the Local Authorities’ Municipality Wage Board ——Member of the Culture and Leisure ——Chairman of the Licensing Board of Committee, Lyngby-Taarbæk Municipality Municipality

24 Annual Report 2017 Company Management

Executive Management of Greater Copenhagen Light Rail

Henrik Plougmann Olsen CEO

Hovedstadens Letbane I/S and ­Metroselskabet I/S

Other offices held: ——Board member of Rejsekort A/S ——Board member of Banebranchen (the Danish Rail Trade Association) ——Board member of Københavns Madhus ——Member of the Employer Panel at IFSK (Department of Political Science and Government), University of Copenhagen ——Board member of DGI-byen

The Company’s Executive Management is supported by a Board of Executives comprising:

Anne-Grethe Foss Director

Erik Skotting Technical Director

Rebekka Nymark Customer Director

Louise Høst Planning and Labour Market Director

25

Annual Report 2017 Annual Accounts

Annual Accounts

27 Annual Report 2017 Annual Accounts

Accounting Policies

Basis of accounting presentation of the Annual Report, and which confirm or invalidate conditions exist- The Annual Report for Hovedstadens Let- ing on the Balance Sheet date, are taken into bane I/S has been prepared in accordance account. with the stipulations of the Danish Financial Statements Act for class D enterprises. The The Profit and Loss Account includes income format of the Profit and Loss Account has as it is earned, while costs are recorded as been adjusted in order to better show how the amounts relating to the financial year. the results have been generated. Value adjustment of financial assets and The accounting period is 1 January – 31 liabilities measured at fair value is also re- December 2017. The Annual Report is pre- corded in the Profit and Loss Account. sented in DKK (thousands). The accounting policies applied are unchanged from the Foreign currency translation previous year. When first recorded, transactions involv- ing foreign currency are translated at the General information on recognition and exchange rate as of the transaction date. measurement Accounts receivable, debts and other Assets are recorded in the Balance Sheet ­monetary items in foreign currency that when it is probable that future economic have not been settled on the Balance Sheet benefits will accrue to the partnership, and date are translated at the exchange rate as the assets’ value can be measured reliably. of the Balance Sheet date. Exchange rate differences arising between the exchange Liabilities are recorded in the Balance Sheet rate as of the transaction date and the when it is probable that future economic rate on the payment date or Balance Sheet benefits will be deducted from the partner- date, respectively, are recorded as financial ship, and the liabilities’ value can be meas- items in the Profit and Loss Account. Fixed ured reliably. assets purchased in foreign currency are ­translated at the exchange rate as of the When first recorded, assets and liabilities transaction date. are measured at cost. Subsequently, assets and liabilities are measured as described Derivative financial instruments below for each item. Derivative financial instruments are meas- ured at cost when first recorded in the On recognition and measurement, predict- Balance Sheet, and subsequently at fair able losses and risks arising prior to the value. Derivative financial instruments are

28 Annual Report 2017 Annual Accounts

recorded under other accounts receivable Balance Sheet and liabilities, respectively. Tangible fixed assets Any changes in the fair value of derivative Construction of the Light Rail financial instruments that are classified as Construction of the Light Rail is measured as and fulfil the conditions for the hedging of the costs incurred for preliminary ­studies, the fair value of a recorded asset or liability as well as the value of own work, until the are recorded in the Profit and Loss Account date that the asset is ready for use The Light together with changes in the value of the Rail is not subject to depreciation during its hedged asset or liability. construction, but annual write-downs are made in relation to the recoverable value, cf. For derivative financial instruments that the section on the valuation of fixed assets. do not fulfil the conditions for treatment as hedging instruments, the changes in fair Valuation of fixed assets value are reported in the Profit and Loss The book value of fixed assets is reviewed Account on an ongoing basis as financial annually in order to determine whether items. there is any indication of impairment over and above that expressed by depreciation. If so, an impairment test is made to determine Profit and Loss Account whether the recoverable amount is lower than the book value, and write-down to this Income lower recoverable value is implemented. The value of own work includes the staff costs and other costs for the year that, on The recoverable value is either the net sales an estimate basis, may be attributed to the price less sales costs or the capital value, construction of the Light Rail. The amount whichever is higher. On the calculation of is included in the cost of the construction the capital asset value, the estimated future of the Light Rail. cash flows are discounted back to present value. Staff costs Staff costs consist of the remuneration of The write-down is in principle recorded in the Board of Directors. the Profit and Loss Account. In instances where the write-down can be attributed to Other external costs a provision already recorded, and is thereby Other external costs include administration already recorded in the Profit and Loss costs, including office supplies, etc. and the ­Account, the write-down is set off against handling of the Client organisation. the provisions, as an expression of the use thereof. Financial items Financial items include interest and realised­ and non-realised exchange rate adjustments, Current assets as well as value adjustments of the partner- ship’s loans, investments and derivative fi- Accounts receivable nancial instruments, measured at fair value. Accounts receivable are recognised in the Balance Sheet at amortised cost. Write- Corporate tax down is undertaken to meet expected The partnership is not liable to pay corpo- losses. rate tax.

29 Annual Report 2017 Annual Accounts

Liquid resources Provisions are measured as the best esti- Liquid resources include cash and depos- mate of the costs necessary to settle the its, short-term bank deposits and securities liabilities on the Balance Sheet date. Provi- with a remaining life at the time of acquisi- sions are measured at current value. tion of less than 3 months and which can readily be converted into cash equivalents, The principles described under the section and for which there is only a slight risk of on the valuation of fixed assets state that changes in value. Securities and invest- the value of the light railway is depreciated ments are measured at fair value on the with due consideration of the calculated Balance Sheet date. ­recoverable value of the light railway. If write- down cannot take place within the book value of the asset in question, however, an Liabilities accounting provision is made to cover the outstanding obligation. Long-term debt Long-term debt is measured at cost at the time of raising the loans, equivalent to the Cash Flow Statement proceeds received less transaction costs defrayed. The debt is subsequently meas- The Cash Flow Statement for the partner- ured at amortised cost, unless the fair value ship is presented according to the indirect of the debt is hedged. method and shows cash flows relating to operations, investments and financing, as Debts that are hedged for changes in fair well as the partnership’s available funds at value, and for which the effect of this hedg- the start and end of the year. ing can be documented, are subsequently measured at fair value. Changes in fair value Cash flows relating to operating activities are recorded in the Profit and Loss Account are calculated as the operating profit ad- together with changes in the fair value of the justed for non-cash operating items. hedging instruments. Cash flows relating to investment activities The short-term element of the long-term include payments in connection with the debt is recorded under repayment of long- construction of the light railway and invest- term debt commitments. ments in securities.

Other financial liabilities Cash flows relating to financing activities Other financial liabilities, which include bank include changes in accounts receivable, loans, trade creditors and other debt, are trade creditors and other debts, as well as measured at amortised cost, which is usu- net financing expenses. ally equivalent to nominal value. Available funds include liquid resources and Provisions short-term securities. Provisions are recorded when the partner- ship has a legal or actual liability as a result of an event during the financial year or previ- ous years, and it is probable that discharge of the liability will entail a withdrawal from the partnership’s resources.

30 Annual Report 2017 Annual Accounts

Profit and Loss Account

Profit and Loss Account for the period 1 January – 31 December 2017

All figures in DKK thousands Note 2017 2016

Income Value of own work 22,091 19,361

Total income 22,091 19,361

Expenses Staff costs 1 -1,301 -1,128 Other external costs -23,266 -20,551

Total costs -24,567 -21,679

Result before depreciation and write-downs -2,476 -2,318

Write-downs Write-downs 2 -99,355 -158,302

Total write-downs -99,355 -158,302

Result before financial items -101,831 -160,620

Financial items Financial income 3 92,271 36,980 Financial expenses 3 -20,871 -4,380

Total financial items 71,400 32,600

Result for the year -30,431 -128,021

31 Annual Report 2017 Annual Accounts

Balance Sheet

Assets as at 31 December 2017

All figures in DKK thousands Note 2017 2016

Fixed assets Tangible fixed assets Construction of the Light Rail 4 0 0

Total tangible fixed assets 0 0

Total fixed assets 0 0

Current assets Receivables, Danish State 5 1,050,552 1,192,864 Receivables, Capital Region 5 1,233,209 1,203,931 Receivables, municipalities 5 1,411,632 1,398,850 Other receivables 5 11,066 10,527 Liquid resources 6 217,261 198,131

Total current assets 3,923,719 4,004,302

Total assets 3,923,719 4,004,302

32 Annual Report 2017 Annual Accounts

Liabilities as at 31 December 2017

All figures in DKK thousands Note 2017 2016

Equity Start of the year 3,065,303 3,193,324 Additions for the year -30,431 -128,021

Total equity 3,034,872 3,065,303

Long-term debt Long-term debt 7 803,157 784,089

Total long-term debt 803,157 784,089

Short-term debt Short-term element of long-term debt 7 0 103,687 Trade creditors 6,993 16,942 Accrued items 339 239 Prepaid purchases 8 78,217 33,378 Other debt 9 139 662

Total short-term debt 85,688 154,909

Total debt 888,845 938,998

Total liabilities 3,923,719 4,004,302

Proposed distribution of profit 10 Events occurring after the balance sheet date 11 Contingent liabilities 12 Auditors’ and consulting fees 13 Related parties 14

33 Annual Report 2017 Annual Accounts

Statement of Changes in Equity

Owner Result carried All figures in DKK thousands contributions forward Total

Start of 2016 3,451,784 -258,460 3,193,324 Result for the year carried forward 0 -128,021 -128,021

Start of the year 2017 3,451,784 -386,480 3,065,303 Result for the year carried forward 0 -30,431 -30,431

End of the year 3,451,784 -416,911 3,034,872

Ownership Specification of owner contributions interest Contribution Danish State 40% 1,380,476 Capital Region 26% 897,567 Lyngby-Taarbæk Municipality 7.48% 258,223 Gladsaxe Municipality 7.51% 259,397 4.01% 138,501 Rødovre Municipality 1.19% 41,081 4.28% 147,891 1.94% 66,903 Brøndby Municipality 2.48% 85,683 Høje-Taastrup Municipality 0.51% 17,606 0.54% 18,780 Vallensbæk Municipality 1.87% 64,556 Ishøj Municipality 2.18% 75,119

Total owner contributions 100% 3,451,784

34 Annual Report 2017 Annual Accounts

In the agreement in principle on the construction and operation of a Light Rail in Ring 3 of 20 June 2013, the parties have agreed to contribute to the financing of the capital investments. The financing of the capital investments is determined on the basis of the ownership shares at the time of establishment. The ownership shares are maintained up to the commencement of operations.

As from the Light Rail’s transition to passenger operations, the Capital Region and the municipalities furthermore make annual contributions to cover the annual operating expenses, including operations-related capital investments, after deduction of passenger revenue. The Capital Region finances 43 per cent of the contributions to operations, while 57 per cent is financed by the municipalities. The municipalities have not yet agreed on the distribution of the contributions to operations, cf. the agreement in principle. When the distribution between the municipalities has been agreed, this distribution will form the basis for determining the municipalities’ annual contributions to operations.

On 31 May 2016, the Folketing (Parliament) adopted Act no. 657 of 8 June 2016 on the Construction of a Light Rail in Ring 3. Pursuant to the Act and the subsequent amendments to the company’s Articles of Association, the Capital Region and the municipalities have extended their adjustment reserves to 30 per cent, equivalent to the Danish State, and contributed a further DKK 395.0 million (DKK 379.3 million in 2013 prices) to the company.

In relation to Act no. L165 of 26 February 2014 on the Construction of a Light Rail in Ring 3 and the Act to amend the Act on the Construction of a Light Rail in Ring 3, the Act on Metroselskabet I/S and Udviklingsselskabet By & Havn I/S, and Act no. 657 of 8 June 2016 concerning traffic companies, the contributed equity is provided as follows:

Capital All figures in DKK thousands Danish State Region Municipalities Total

Contributions, cf. Section 1(3) (2014) 1,794,738 1,001,236 1,309,308 4,105,282 Contributions, cf. Section 1(4) (2016) 0 171,526 223,493 395,019 Contributed adjustment reserve (2014) -138,087 -103,669 -135,567 -377,323 Contributed adjustment reserve (2016) 0 -171,526 -223,493 -395,019 Adjustment reserve under State auspices -276,174 0 0 -276,174

Total contributions 1,380,476 897,567 1,173,741 3,451,784

35 Annual Report 2017 Annual Accounts

Cash Flow Statement

All figures in DKK thousands 2017 2016

Cash flows from operating activities Staff costs -1,301 -1,128 Other external costs -23,266 -20,551

Total cash flows from operating activities -24,567 -21,679

Cash flows from investment activities Investment in the construction of the Light Rail -77,264 -138,941

Total cash flows from investment activities -77,264 -138,941

Cash flows from financing activities Loans raised, net (excluding market value adjustment) 0 0 Long-term debt -84,619 394,790 Accounts receivable 99,714 -238,221 Short-term debt 34,467 12,418 Net financing costs 71,400 32,600

Total cash flows from financing activities 120,961 201,587

Change in available funds 19,131 40,966 Available funds, start of the year 198,131 157,164

Available funds, end of the year 217,261 198,131

The Cash Flow Statement cannot be derived directly from the other elements of the Annual Accounts.

36 Annual Report 2017 Annual Accounts

Notes

Note 1 Staff costs The Board of Executives of Metroselskabet I/S is also the Board of Executives of Hovedstadens Letbane I/S. The Board of Executives does not receive remuneration from Hovedstadens Letbane I/S.

During the year the company has not employed any other employees than the Board of Executives. Metroselskabet I/S makes the necessary employees and other resources available to undertake the activities of Hovedstadens Letbane I/S, including administration, engineering design, procurement and contractual tasks concerning the Light Rail in Ring 3, and debt and asset management for Hovedstadens Letbane I/S. An administration fee is paid for this.

Staff costs include remuneration of the company’s Board of Directors at TDKK 1,300.

Note 2 Write-downs

All figures in DKK thousands 2017 2016

Write-down of capital investments 90,653 142,090 Write-down of operations-related capital investments 8,701 16,213

Total write-downs 99,355 158,302

Note 3 Financial items

All figures in DKK thousands 2017 2016

Financial income 92,271 36,980 Financial expenses -20,871 -4,380

Total financial items 71,400 32,600

37 Annual Report 2017 Annual Accounts

Note 4 Construction of the Light Rail

Capital Operations-related All figures in DKK thousands investments capital investments Total

Acquisition sum Start of the year 422,183 56,515 478,696 Additions for the year 90,653 8,701 99,355 Disposals for the year 0 0 0

End of the year 512,836 65,216 578,051

Depreciation and write-downs Start of the year -422,183 -56,515 -478,696 Write-downs for the year -90,653 -8,701 -99,355

End of the year -512,836 -65,216 -578,051

Book value at the start of the year 0 0 0

Book value, end of the year 0 0 0

The construction of the Light Rail comprises the costs of the preparatory work. The capital investments of DKK 512.8 million include costs of DKK 50.7 million concerning the purchase of properties in connection with expropriations.

The value of the fixed asset has been written down to DKK 0. This is a consequence of how the Light Rail is written down on an ongoing basis to the facility’s expected recoverable value, with due consideration of the planned capital investments.

38 Annual Report 2017 Annual Accounts

Note 5 Accounts receivable, current assets

Capital All figures in DKK thousands Danish State Region Municipalities Total

Start of the year 1,192,864 1,203,931 1,398,850 3,795,646 Additions for the year (interest accrual) 29,008 29,278 33,985 92,271 Additions for the year (purchase agreements) 0 0 42,560 42,560 Disposals for the year (payments) -171,321 0 -63,763 -235,084

End of the year 1,050,552 1,233,209 1,411,632 3,695,392

Specification of receivables 2016 2017 Danish State 1,192,864 1,050,552 Capital Region 1,203,931 1,233,209 Municipalities 1,398,850 1,411,631

Total receivables 3,795,646 3,695,392

On the establishment of the partnership, payment agreements have been made with the company’s owners, the Danish State, the Capital Region and the 11 municipalities, concerning the payment of annual contributions. The contributions are paid by the owners under the payment agreements concluded.

The Danish State has entered into a payment agreement for the payment of their contributions in eight instalments during the 2014-2021 period. The Capital Region has entered into a payment agreement for a large payment in 2019, and a fixed annual payment during the 2020-2059 period. Finally, the 11 municipalities have entered into payment agreements for a large payment in 2014-2016, and a fixed annual payment during the 2017- 2056 period. It has been agreed that the annual payments are subject to adjustment according to the assumption index under the Danish Finance Act for construction up to the start of operations, and thereafter according to the net price index. The net book value of the payment agreements is compiled at amortised cost, in accordance with the accounting policies.

Accounts receivable also include purchase agreements cf. Note 8.

Of the receivable as at 31 December 2017, DKK 3,366 million will fall due for payment later than 31 December 2018.

Accounts receivable also include VAT receivable of DKK 3 million.

39 Annual Report 2017 Annual Accounts

Note 6 Liquid resources

All figures in DKK thousands 2017 2016

Cash and bank deposits 217,261 198,131

Total liquid resources 217,261 198,131

Note 7 Long-term debt

Loans Contributed All figures in DKK thousands (short-term) adjustment reserve Total

Start of the year 103,687 784,089 887,777 Additions for the year (interest accrual) 0 19,068 19,068 Disposals for the year (loan redemption) -103,687 0 -103,687

End of the year 0 803,157 803,157

Specification of long-term debt 2016 2017 Danish State 142,386 145,849 Capital Region 278,422 285,193 Municipalities 363,281 372,116

Total long-term debt 784,089 803,157

Of the company’s long-term debt, DKK 803 million falls due after five years.

On 31 May 2016, the Folketing (Parliament) adopted Act no. 657 of 8 June 2016 on the Construction of a Light Rail in Ring 3. Pursuant to the Act and the subsequent amendments to the company’s Articles of Association, the Capital Region and the municipalities have extended their adjustment reserves to 30 per cent, equivalent to the Danish State, and contributed a further DKK 395.0 million (DKK 379.3 million in 2013 prices) to the company. The Capital Region and the municipalities’ adjustment reserves, as well as 10 per cent of the Danish State’s 30 per cent adjustment reserve, are contributed to the partnership together with the contribution to the financing of the capital investments.

The adjustment reserve is tied in budgetary terms, so that this reserve can only be utilised in the same ratio as the parties’ ownership interests, and only after submission to the owners.

After the final compilation of the total construction costs, the unutilised element of the reserves will be required to be repaid to the owners in the same ratio as their respective ownership interests and contributed adjustment reserves.

40 Annual Report 2017 Annual Accounts

Note 8 Prepaid purchases The company has entered into a number of purchase agreements with the company’s owners. At the present time, the purchase agreements are included as prepaid purchases. On the establishment of the major construction contracts, the prepaid purchases will be transferred to the construc- tion of the Light Rail.

Note 9 Other debt

All figures in DKK thousands 2017 2016

Payable PAYE tax, etc. 139 147 Interest accruals 0 515

Total other debt 139 662

Note 10 Proposed distribution of profit

All figures in DKK thousands 2017 2016

Carried forward to the following year -30,431 -128,021

Note 11 Events occurring after the Balance Sheet date After the close of the financial year, no events of significance to the Annual Report for 2017 have occurred.

Note 12 Contingent liabilities The construction of the Light Rail in Ring 3 entails expropriation, compensation and similar, for which the partnership pays the owners/residents affected. The size of the future compensation has not yet been determined.

41 Annual Report 2017 Annual Accounts

Note 13 Auditing and consulting fees

All figures in DKK thousands 2017 2016

Office of the Auditor General 65 55 Deloitte 44 75

Statutory audit in total 109 130

Deloitte 12 15

Other endorsements in total 12 15

Deloitte, VAT and tax advisory services 0 175 Deloitte, other advisory services 0 65

Consulting fees in total 0 240

Note 14 Related parties Hovedstadens Letbane I/S’ related parties are the company’s owners, Board of Directors, Executive Management and Metroselskabet I/S.

Transactions with related parties take place on market terms.

In 2017, Hovedstadens Letbane I/S paid administration fees to Metroselskabet I/S concerning Metroselskabet’s administration and running of the client organisation for Greater Copenhagen Light Rail, cf. the Order concerning settlement between Hovedstadens Letbane I/S and Metroselskabet I/S. Metroselskabet I/S makes the necessary employees and other resources available to undertake Hovedstadens Letbane I/S’ activities.

42 Annual Report 2017 Endorsements

Endorsements

Management Endorsement Board of Directors

The Board of Directors and the Executive Management have today examined and Birgitte Brinch Madsen approved the Annual Report for 2017 for (Chair) Hovedstadens Letbane I/S. Finn Rudaizky Trine Græse The Annual Report has been prepared (Vice Chair) (Vice Chair) in accordance with the Danish Financial Statements Act (accounting class D) and Helle Busck Fensvig Mogens Therkelsen the provisions of the Articles of Association concerning the presentation of financial Niels Hald Jens Mandrup statements. John Steen-Mikkelsen Henrik Rasmussen It is our opinion that the accounting poli- cies applied are appropriate, and that the annual financial statements give a true and fair view of the company’s assets, liabilities, Executive Management financial position, profit and cash flows. It is also our opinion that the Management’s Report provides a true and fair account of Henrik Plougmann Olsen the circumstances covered by the report.

We recommend that the Annual Report be adopted by the partners.

Copenhagen, 22 February 2018

43 Annual Report 2017 Endorsements

Independent auditors’ reports

Auditors’ report on the The auditor general is independent of Hoved­ financial statements stadens Letbane in accordance with Section 1(6) of the Danish Auditor General Act and Opinion the approved auditor is independent of We have audited the financial statements of Hovedstadens Letbane in accordance with Hovedstadens Letbane I/S for the financial the International Ethics Standards Board year 1 January to 31 December 2017, which of Accountants’ Code of Ethics for Profes- comprise the income statement, balance sional Accountants (IESBA Code) and the sheet, statement of changes in equity, cash additional requirements applicable in Den- flow statement and notes, including a sum- mark, and we have fulfilled our other ethical mary of significant accounting policies. responsibilities in accordance with these The financial statements are prepared in requirements. ­accordance with the Danish Financial State- ments Act. We believe that the audit evidence we have obtained is sufficient and appropriate to pro- In our opinion, the financial statements give vide a basis for our opinion. a true and fair view of Hovedstadens Let- bane’s financial position at 31 December 2017 Management’s responsibilities for the and of the results of its operations and its financial statements cash flows for the financial year 1 January Management is responsible for the prepara- to 31 December 2017 in accordance with the tion of financial statements that give a true Danish Financial Statements Act. and fair view in accordance with the Danish Financial Statements Act, and for such in- Basis for opinion ternal control as Management determines We conducted our audit in accordance with is necessary to enable the preparation of International Standards on Auditing (ISAs) financial statements that are free from ma- and the additional requirements applicable terial misstatement, whether due to fraud in Denmark as well as generally accepted or error. public auditing standards as the audit is based on the provisions of the Danish Act on In preparing the financial statements, a Light Rail on Ring 3 and the Danish Audi- ­Management is responsible for assessing tor General Act. Our responsibilities under Hovedstadens Letbane’s ability to continue those standards and requirements are fur- as a going concern, disclosing, as applica- ther described in the “Auditors’ responsi- ble, matters related to going concern and bilities for the audit of the financial state- using the going concern basis of accounting ments” section of our report. in preparing the financial statements unless

44 Annual Report 2017 Endorsements

Management either intends to liquidate misrepresentations, or the override of Hoved­stadens Letbane or to cease opera- internal control. tions, or has no realistic alternative but to do so. ——Obtain an understanding of internal con- trol relevant to the audit in order to de- Auditors’ responsibilities for the audit of sign audit procedures that are appropri- the financial statements ate in the circumstances, but not for the Our objectives are to obtain reasonable as- purpose of expressing an opinion on the surance about whether the financial state- effectiveness of Hovedstadens Letbane’s ments as a whole are free from material mis- internal control. statement, whether due to fraud or error,­ and to issue an auditors’ report that includes ——Evaluate the appropriateness of account- our opinion. Reasonable assurance is a high ing policies used and the reasonableness level of assurance, but is not a guarantee of accounting estimates and related dis- that an audit conducted in accordance with closures made by Management. ISAs and the additional requirements appli- cable in Denmark and generally accepted ——Conclude on the appropriateness of public accounting standards, see the Danish Management’s use of the going concern Act on a Light Rail on Ring 3 and the Danish basis of accounting in preparing the fi- Auditor General Act, will always detect a nancial statements and, based on the material misstatement when it exists. Mis- audit evidence obtained, whether a ma- statements can arise from fraud or error and terial uncertainty exists related to events are considered material if, individually or in or conditions that may cast ­significant the aggregate, they could reasonably be ex- doubt on Hovedstadens Letbane’s abil- pected to influence the economic decisions ity to continue as a going concern. If we of users taken on the basis of these financial conclude that a material uncertainty statements. exists, we are required to draw atten- tion in our auditors’ report to the related As part of an audit conducted in accordance disclosures in the financial statements with ISAs and the additional requirements or, if such disclosures are inadequate, to applicable in Denmark and generally ac- modify our opinion. Our conclusions are cepted public accounting standards, see based on the audit evidence obtained up the Danish Act on a Light Rail on Ring 3 and to the date of our auditors’ report. How- the Danish Auditor General Act, we exercise ever, future events or conditions may professional judgement and maintain an at- cause Hovedstadens Letbane to cease titude of professional scepticism through- to continue as a going concern. out the audit. We also: ——Evaluate the overall presentation, struc- ——Identify and assess the risk of material ture and contents of the financial state- misstatement of the financial statements, ments, including disclosures in the notes, whether due to fraud or error, design and and whether the financial statements perform audit procedures responsive to represent the underlying transactions those risks and obtain audit evidence that and events in a manner that gives a true is sufficient and appropriate to provide a and fair view. basis for our opinion. The risk of not de- tecting a material misstatement resulting We communicate with those charged with from fraud is higher than for one result- governance regarding, among other matters, ing from error as fraud may involve col- the planned scope and timing of the audit lusion, forgery, intentional omissions, and significant audit findings, including any

45 Annual Report 2017 Endorsements

significant deficiencies in internal control that Report on other legal and we identify during our audit. regulatory requirements

Statement on the management Statement on compliance audit and commentary performance audit Management is responsible for the manage- Management is responsible for ensuring ment commentary. that the transactions covered by the finan- cial statements are in accordance with the Our opinion on the financial statements does appropriations, laws and other regulations, not cover the management commentary, agreements and usual practice, and that fi- and we do not express any form of assurance­ nancial consideration has been made when conclusion thereon. managing the funds and operations covered by the financial statements. Management is In connection with our audit of the financial also responsible for setting up systems and statements, our responsibility is to read the processes supporting economy, productiv- management commentary and, in doing so, ity and efficiency. consider whether the management com- mentary is materially inconsistent with the As part of our audit of the financial state- financial statements or our knowledge ob- ments, it is our responsibility to perform tained in the audit or otherwise appears to compliance audit as well as performance be materially misstated. audit of selected subject matters in accord- ance with the public auditing standards. In Moreover, it is our responsibility to consider our compliance audit, we test the selected whether the management commentary pro- subject matters to obtain reasonable assur- vides the information required under the ance about whether the examined transac- Danish Financial Statements Act. tions covered by the financial statements comply with the appropriations, laws and Based on the work we have performed, we other regulations, agreements and usual conclude that the management commentary practice. In our performance audit, we make is in accordance with the financial state- an assessment to obtain reasonable assur- ments and has been prepared in accordance ance about whether the systems, processes with the requirements of the Danish Finan- or transactions examined support the exer- cial Statements Act. We did not identify any cise of sound financial management in the material misstatement of the management administration of the funds and operations commentary. covered by the financial statements.

If, based on the procedures performed, we conclude that material critical comments should be made, we are required to report this in this statement.

We have no significant critical comments to report in this connection.

46 Annual Report 2017 Endorsements

Danish Auditor General Business Registration no 77806113 Copenhagen, 22 February 2018

Lone Lærke Strøm Malene Sau Lan Leung Auditor General Head of Department

Deloitte Statsautoriseret Revisionspartnerselskab Business Registration no 33963556

Erik Lynge Skovgaard Jensen Bryndís Símonardóttir State-Authorised Public Accountant State-Authorised Public Accountant Identification no: mne10089 Identification no: mne40064

47

Annual Report 2017 Appendix to the Management’s Report

Appendix to the Management’s Report

49 Annual Report 2017 Appendix to the Management’s Report

and the Capital Region’s annual operating contributions amount to DKK 34 million in Long-term budget 2013 prices. The operating contributions are adjusted to 2018 prices on the basis of a general price projection of 2 per cent p.a.

7. The operating expenses are determined on The following 2018 long-term budget was 2013 prices. The budget estimate has been the basis of the investigation report con- adopted in December 2017. adjusted upwards to 2018 prices on the cerning a Light Rail in Ring 3. The operating Long-term budget assumptions basis of the Ministry of Finance’s capital costs are estimated at DKK 162 million per investment index. The timing distribution annum in 2013 prices. The operating costs of the investments is based on the time are adjusted to 2018 prices on the basis of The long-term budget is stated in current schedule in the Act on the Construction of a general price projection of 2 per cent p.a. prices a Light Rail in Ring 3 of 8 June 2016, with ex- pected passenger operations in 2023/24. Other factors Capital investments 8. Contributions are equivalent to the pay- 1. The capital investments for the estab- Operating result ment agreements concluded with the lishment of a Light Rail in Ring 3 are de- 4. Passenger numbers are determined on the owners on the establishment of the com- termined according to the capital invest- basis of the OTM calculations from the in- pany, concerning contributions to the ment estimate that was the basis for the vestigation report. The agreement in princi- ­financing of the capital investments. The agreement in principle on the construc- ple is based on the passenger scenario with payments are listed at 2018 prices, based tion and operation of a Light Rail in Ring high urban growth. A traffic effect in the first on the Finance Act’s assumption index for 3. This capital investment estimate was two years of operation of 85 per cent and 95 capital investments. DKK 3.4 billion in 2013 prices. The capital per cent, respectively, is assumed. investments have been adjusted upwards 9. The Light Rail is registered for VAT pur- to 2018 prices on the basis of the Finance 5. The basis for the fare assumptions is the poses, so that VAT is deducted from the Act’s assumption index for capital invest- agreement in principle. Start-up of oper- company’s net income from the operation ments. The timing distribution of the in- ations as a consequence of the Act on the of the Light Rail, while the VAT costs of the vestments is based on the time schedule Construction of a Light Rail in Ring 3 of 8 construction of the Light Rail are set off. in the Act on the Construction of a Light June 2016 is assumed to be in 2024. The Rail in Ring 3 of 8 June 2016, with ex- price per new passenger is based on the 10. It is assumed that “other debt”, which pected passenger operations in 2023/24. expectations of the tariff development does not accrue interest, will increase to in the 2009-2020 period (the investiga- approximately DKK 50 million when the 2. Reinvestments in connection with the Light tion). The tariff is projected to DKK 8.81 construction works peak, after which it will Rail in Ring 3 are based on the assumptions per passenger in 2024, in 2013 prices. On fall back to approximately DKK 10 million. in the agreement in principle and for every the same basis, the average fare revenue 10th year amount to DKK 30 million, and per passenger in 2036 is calculated at 11. It is assumed that surplus liquidity accrues for every 25th year to DKK 834 million, in DKK 10.14 in 2013 prices. The fare income interest at a real interest rate of 2 per cent 2013 prices. The reinvestments are listed at is adjusted to 2018 prices on the basis of a p.a., while the net debt accrues interest at 2018 prices on the basis of the Ministry of general price projection of 2 per cent p.a. a real interest rate of 4 per cent p.a. In the Finance’s capital investment index. short term, the company’s actual interest 6. On the Light Rail’s transition to passenger rate expectations are also taken into ac- Operations-related capital investments operations, an annual operating contribu- count. The interest rates solely concern the 3. The operations-related capital invest- tion to cover the annual operating costs interest on the company’s loans and liquid ments in conjunction with the establish- is included, including operations-related resources, and not the index linking of the ment of a Light Rail in Ring 3 are deter- capital investments after deduction of company’s accounts with the owners. mined on the basis of the investigation passenger revenue. The municipalities’ report concerning the Light Rail in Ring 3. ­total annual operating contributions 12. It is assumed that as from 2018 all prices This budget estimate was DKK 1.3 billion in amount to DKK 44 million in 2013 prices, will increase by 2 per cent p.a.

50 Annual Report 2017 Appendix to the Management’s Report

Long-term budget for 2018 for Greater Copenhagen Light Rail – December 2017 (current prices)

Real rate of interest (debt) 4% Interest rate (balance) 2% I n fl a t i o n 2 %

Contributions to the fi nancing of capital investments

All fi gures in

DKK million receivable Accounts debtOther StateDanish Region Municipalities reserves Correction Capital investments erence diff Index Operational investments result Operating Liquidity Interest Movement Net debt, start of the year Net debt, end of the year End of the year 2013 -12 -3 40 - - - -25 0 - - 0 0 0 0 0 2014 -12 31 92 0 66 -79 0 -13 0 84 0 84 0 84 2015 3 9 92 0 67 -179 0 -29 0 -36 0 -36 84 48 2016 15 -21 144 0 68 -143 0 -17 0 46 0 46 48 94 2017 10 171 0 63 -89 0 -15 0 140 -1 140 94 234 2018 10 257 0 65 -777 0 -190 0 -635 -2 -637 234 -403 2019 10 515 197 66 -717 -1 -371 0 -302 -37 -339 -403 -741 2020 -10 293 29 68 -717 -1 -419 0 -758 -71 -829 -741 -1,571 2021 -10 45 59 69 -446 -1 -230 0 -514 -114 -628 -1,571 -2,198 2022 -10 0 60 70 -455 -1 -186 0 -522 -152 -674 -2,198 -2,872 2023 -10 0 61 72 -233 0 -61 0 -172 -181 -353 -2,872 -3,225 2024 471 0 62 73 -935 0 5 0 16 -308 -207 -515 -3,225 -3,740 2025 0 63 75 0 0 0 34 172 -223 -51 -3,740 -3,791 2026 0 65 76 0 0 0 47 188 -226 -38 -3,791 -3,829 2027 0 66 78 0 0 0 54 198 -228 -30 -3,829 -3,858 2028 0 67 79 0 0 0 62 209 -229 -21 -3,858 -3,879 2029 0 69 81 0 0 0 70 220 -230 -10 -3,879 -3,889 2030 0 70 83 0 0 0 79 231 -230 1 -3,889 -3,888 2031 0 71 84 0 0 0 88 243 -230 13 -3,888 -3,875 2032 0 73 86 -43 0 0 97 213 -230 -17 -3,875 -3,892 2033 0 74 88 0 0 0 107 269 -229 40 -3,892 -3,852 2034 0 76 89 0 0 0 118 283 -227 56 -3,852 -3,796 2035 0 77 91 0 0 0 129 297 -223 75 -3,796 -3,721 2036 0 79 93 0 0 0 141 313 -218 95 -3,721 -3,627 2037 0 80 95 0 0 0 144 319 -212 107 -3,627 -3,520 2038 0 82 97 0 0 0 147 325 -205 120 -3,520 -3,400 2039 0 84 99 0 0 0 149 332 -198 134 -3,400 -3,267 2040 0 85 101 0 0 0 152 338 -190 148 -3,267 -3,118 2041 0 87 103 0 0 0 155 345 -181 164 -3,118 -2,954 2042 0 89 105 -52 0 0 159 300 -172 127 -2,954 -2,827 2043 0 90 107 0 0 0 162 359 -163 196 -2,827 -2,631 2044 0 92 109 0 0 0 165 366 -151 215 -2,631 -2,415 2045 0 94 111 0 0 0 168 373 -138 236 -2,415 -2,180 2046 0 96 113 0 0 0 172 381 -123 258 -2,180 -1,922 2047 0 98 116 -1,618 -13 0 175 -1,242 -157 -1,399 -1,922 -3,321 2048 0 100 118 0 0 0 179 396 -191 205 -3,321 -3,116 2049 0 102 120 0 0 0 182 404 -179 225 -3,116 -2,891 2050 0 104 123 0 0 0 186 412 -165 247 -2,891 -2,643 2051 0 106 125 0 0 0 190 421 -150 271 -2,643 -2,373 2052 0 108 128 -63 -1 0 193 365 -135 230 -2,373 -2,143 2053 0 110 130 0 0 0 197 438 -119 318 -2,143 -1,825 2054 0 112 133 0 0 0 201 446 -100 346 -1,825 -1,479 2055 0 115 135 0 0 0 205 455 -79 376 -1,479 -1,102 2056 0 117 138 0 0 0 209 464 -56 408 -1,102 -694 2057 0 119 0 0 0 0 213 333 -36 297 -694 -397 2058 0 122 0 0 0 0 218 339 -18 322 -397 -75 2059 0 124 0 0 0 0 222 346 4 350 -75 275 2060 0 0 0 0 0 0 227 227 16 242 275 517

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