Annual Report 2010

Chr. filtenborgs Plads 1 · DK-8000 Aarhus C Phone +45 86 11 22 22 · telefax +45 86 11 33 22 e-mail [email protected] · www.schouw.dk ANNUAL REPORT 2010

ANNUAL REPORT 2010 Content ADDreSSeS

Statements

94 Statement by the board of directors Published March 2011 by Aktieselskabet Schouw & Co. translation: fokus translations and the management reportagephotos: Morten fauerby, www.mortenfauerby.dk this publication is a translation of the statutory Danish Annual report 2010. 95 Independent auditor’s report Portraits: lorentsen fotografi, www.lorentsen.dk the original Danish text shall be controlling for all purposes, the pictures in the Annual report are taken in Denmark. and in cases of discrepancy, the Danish wording shall be applicable. Design, production and print: Datagraf A/S Content ADDreSSeSIntro 1

Active ownership supporting global opportunities

BioMar Group A/S Aktieselskabet Schouw & Co. Værkmestergade 25, 6 Chr. filtenborgs Plads 1 DK-8000 Aarhus C DK-8000 Aarhus C Phone +45 86 20 49 70 Phone +45 86 11 22 22 e-mail [email protected] telefax +45 86 11 33 22 www.biomar.com e-mail [email protected] www.schouw.dk Company registration (CVR) Fibertex Personal Care A/S no. 63965812 Svendborgvej 2 DK-9220 Aalborg Øst Phone +45 72 29 97 22 Martin Professional A/S e-mail [email protected] olof Palmes Allé 18 www.fibertexpersonalcare.com DK-8200 Aarhus n Phone +45 87 40 00 00 e-mail [email protected] Fibertex Nonwovens A/S www.martin.com Svendborgvej 16 DK-9220 Aalborg Øst Phone +45 96 35 35 35 Xergi A/S e-mail [email protected] Hermesvej 1 www.fibertex.com DK-9530 Støvring Phone +45 99 35 16 00 e-mail [email protected] Consolidated report Portfolio companies Financial statements The year 2010 was one of progress, but We exerciseP. Grene active A/S ownership by con- ue to growwww.xergi.com the scope of our international also one with a number of challenges. We stant focusingKobbervej on three 6 main areas for our business activities. We see increasing the 1 Intro 20 Global expansion 48 CONSOLIDATED FINANCIAL STATEMENTS are nearing the end of the global economic businesses:DK-6900 profitable Skjern growth, efficient use level of internationalisation of our Group 2 Key figures 22 BioMar 49 Statement of income and comprehensive income crisis, although several of our businesses of capital andPhone being +45 primed96 80 85 for00 the future. as the Incubabest way A/S to secure value creation 3 Highlights 24 BioMar in Costa rica 50 Balance sheet are still feeling its effects. In recente-mail years, [email protected] we have reduced our and developmentChr. filtenborgs going Plads forward. 1 4 our businesses 26 fibertex 52 Cash flow statement Prospects are positive for the next working capitalwww.grene.dk substantially and generally 2011DK-8000 will be Aarhus a year Cin which we will 6 Management’s report 28 fibertex Personal Care in Malaysia 53 Statement of changes in equity couple of years, and we see good oppor- achieved more efficient capital utilisation. again bePhone looking +45 86ahead, 11 22 trying22 to identify 8 Income statement and cash flows 30 fibertex nonwovens in South Africa 54 notes tunities for sustaining improvements and We have given priority to improving profit- winninge-mail strategies [email protected] and opportunities. 10 Balance sheet 32 Grene growth. ability ratherHydra-Grene than increasing A/S revenue. We willwww.schouw.dk continue to develop our focused, 11 outlook 34 Grene in russia 74 PARENT COMPANY FINANCIAL STATEMENTS As a whole, Schouw & Co. emerged from DespiteBækgårdsvej the very difficult 36 global eco- large and powerful portfolio companies 12 Board of Directors 36 Hydra-Grene 75 Statement of income and comprehensive income 2010 with very satisfactory improvements nomic conditions,DK-6900 weSkjern have made quite from their positions among the very best 13 executive management 38 Hydra-Grene in China 76 Balance sheet to both revenue and earnings, but many of substantialPhone investments +45 97 35 in 05 new 99 production of their market peers. 14 Investor information 40 Martin 77 Cash flow statement our businesses still have a substantial po- capacity, ine-mail R&D [email protected] product innovation, We will concentrate our manage- 16 Management Bodies 42 Martin in uSA 78 Statement of changes in equity tential to enhance their performance. We quality developmentwww.hydra.dk and in developing ment resources on continuing to develop 18 Code of Corporate Governance 44 Xergi 79 notes have ambitious long-term targets for all of our organisations and employees. We have and improve our businesses’ strategic 19 the financial reporting process 46 financial investments our businesses, and we make a consistent made the fully deliberate choice of future- platforms, and we will provide support 47 Incuba 88 Accounting policies and dedicated effort to meet them. proofing our business platforms and prim- to invest in both organic and acquisitive Making sure that we operate all of our ing them for continued development, even growth while also maintaining efficient businesses efficiently and that they adapt during times of crisis. The result is that use of capital and tight control of costs Statements both to market conditions and general today our businesses are strongly posi- and profitability. economic developments is a big priority tioned and they have the capability to move 94 Statement by the board of directors for us. In recent years, we have trimmed to new marketsPublished and March attract 2011 by Aktieselskabet new customers. Schouw & Co. translation: fokus translations and the management and aligned our businesses, so that they During reportagephotos:2010, we expanded Morten fauerby, considerably www.mortenfauerby.dk Jens Bjerg Sørensen this publication is a translation of the statutory Danish Annual report 2010. 95 Independent auditor’s report are now all strongly positioned strategi- and made Portraits:substantial lorentsen investments fotografi, www.lorentsen.dk outside President the original Danish text shall be controlling for all purposes, the pictures in the Annual report are taken in Denmark. and in cases of discrepancy, the Danish wording shall be applicable. cally, operationally and financially. Denmark, Design,and in production the future and print: we Datagraf will contin A/S - 2 Key figures

Key figures

GROUP SUMMARY (DKK million) 2010 2009 2008 2007 2006

Revenue 9,450.8 8,439.7 9,821.2 8,150.3 7,370.2 EBITDA 752.8 587.9 756.5 764.3 788.8 EBIT before goodwill impairment 368.6 192.4 337.6 438.8 471.5 Operating profit (EBIT) 368.6 190.0 124.4 438.8 471.5 Profit/(loss) after tax in associates (0.6) (11.4) 4.0 (3.0) 4.2 Profit/loss from divestment of equity investments 1.1 0.0 21.4 0.0 282.9 Value adjustment of financial investments** (518.1) 40.6 (871.5) 1,466.8 692.4 Net financials before value adjustment of financial investments (92.2) (117.7) (143.5) (136.5) (102.9) Profit/(loss) before tax (241.2) 101.5 (865.2) 1,766.1 1,348.1 Tax on the profit/(loss) for the year 114.6 (28.5) (38.3) (102.4) (107.9) Profit for the year from continuing operations (126.6) 73.0 (903.5) 1,663.7 1,240.2 Profit for the year from discontinuing operations 166.8 77.9 0.1 19.5 74.6 Profit/(loss) for the year 40.2 150.9 (903.4) 1,683.2 1,314.8

Share of equity attributable to shareholders of Schouw & Co. 4,391.6 4,454.5 4,414.7 4,972.4 3,460.6 Minority interests 3.5 298.9 220.2 669.1 380.8 Total equity 4,395.1 4,753.4 4,634.9 5,641.5 3,841.4 Total assets 8,899.9 9,658.5 10,153.2 10,316.4 7,465.8 Net interest-bearing debt 2,166.4 2,280.7 2,996.4 2,641.3 2,071.6 Working capital 1,614.0 1,455.4 2,208.3 1,842.4 1,596.0

Other financial data Average number of employees 3,166 3,334 3,743 3,541 3,352 Cash flow from operating activities 444.4 1,191.2 273.0 281.4 420.3 Investment in property, plant and equipment 472.3 208.4 335.2 308.8 536.7 Depreciation of property, plant and equipment 318.3 322.2 328.0 300.5 293.2 Return on equity (%) (0.5) 2.5 (19.1) 39.2 43.0 ROIC (%) 10.0 5.7 7.9 10.8 14.2 Equity ratio (%) 49.4 49.2 45.6 54.7 51.5 EBITDA margin (%) 8.0 7.0 7.7 9.4 10.7 EBIT margin (%) 3.9 2.3 1.3 5.4 6.4

Per share data* Earnings per share (of DKK 10) (0.97) 4.43 (35.34) 70.74 52.76 Diluted earnings per share (of DKK 10) (0.97) 4.43 (35.34) 70.45 52.56 Dividend per share (of DKK 10) 3.00 3.00 3.00 3.00 3.00 Net asset value per share (of DKK 10) 183.93 177.15 168.25 215.42 147.99 Share price at year end (of DKK 10) 133.50 94.45 76.21 220.70 180.09 Price/net asset value 0.73 0.53 0.45 1.02 1.22 P/E neg. 21.32 neg. 3.12 3.41 Market capitalisation 3,187.5 2,375.0 1,999.7 5,094.3 4,211.0

The financial ratios have been calculated in accordance with ”Recommendations & Ratios 2010”, issued by the Danish Society of Financial Analysts. * Key ratios per share have been adjusted to reflect the issue of bonus shares. ** Financial investments consist of the holdings of shares in Vestas and Lerøy. See note 14. Highlights 3

Highlights in 2010

n 2010 was a year of improvement in n Grene generated 8% revenue growth terms of both revenue and earnings. The and very satisfactory EBIT growth of 56% Revenue performance was highly satisfactory, but to DKK 48 million, lifting the EBIT margin growth a substantial potential for improvement from 2.7% in 2009 to 3.9% in 2010. remains. n Hydra-Grene was the only Schouw & n Consolidated revenue was up by 12% Co. business to report declines in both 12% and EBIT almost doubled relative to 2009. revenue and earnings. Its revenue fell to At DKK 369 million, EBIT was at the upper DKK 391 million while EBIT dropped to end of the most recent guidance range of DKK 56 million. Nevertheless, the EBIT DKK 310–370 million. margin was satisfactory at 14%.

n Working capital increased by DKK 159 n Martin lifted its revenue by 11% to DKK EBIT million on 2009, but it fell when expressed 715 million and EBIT by DKK 131 million growth in proportion to revenue. The Group’s net to an EBIT loss of DKK 69 million. These interest-bearing debt fell by DKK 114 mil- were satisfactory improvements, but lion to DKK 2,166 million. clearly the negative performance is not 94% satisfactory. n Financial investments had a negative impact of DKK 518 million, resulting in a n In November 2010, BioMar divested consolidated loss before tax of DKK 241 its 50.7% ownership stake in Sjøtroll million. Havbruk, generating net proceeds from the transaction of DKK 512 million. n BioMar generated revenue growth Net interest-bearing due to price increases for its raw materi- n Schouw & Co.’s guidance for 2011 is for debt/EBITDA als. EBIT outperformed the most recent an improvement in consolidated revenue guidance, amounting to DKK 200 million of more than 15% to around DKK 11 bil- compared with DKK 191 million in 2009. lion. EBIT is expected to be in the DKK 450–525 million range, indicating 20-40% 2.9 x n Fibertex reported an overall revenue improvement. improvement of 22% and EBIT of DKK 144 million, performing better than the most recent guidance. The figure consists of a DKK 161 million EBIT profit in Fibertex Personal Care and a DKK 17 million EBIT Dividend loss in Fibertex Nonwovens. per share 3 DKK 4 Our businesses

Our businesses

BioMar Fibertex Personal Care Fibertex Nonwovens Grene

FACTS BioMar is the world’s FACTS fibertex Personal FACTS fibertex is among FACTS Grene is a logistics and third-largest manufacturer Care is among the five largest Europe’s leading manufac- trading business operating in of quality feed for the fish manufacturers of spunbond/ turers of nonwovens, i.e. the sale of spare parts and ac- farming industry. The core spunmelt nonwovens for the non-woven textiles used for a cessories for the agricultural business areas are feed for personal care industry, mainly number of different industrial sector as well as sales, service salmon, trout, sea bass and nappies, sanitary towels and purposes. and projects for industry. sea bream. incontinence products. GEOGRAPHY Head office GEOGRAPHY Head office GEOGRAPHY BioMar is head- GEOGRAPHY Head office in in Aalborg, Denmark. in Skjern, Denmark. Central quartered in Aarhus, Denmark Aalborg, Denmark. Production Production facilities in warehouse facilities in and operates production facilities in Denmark and Denmark, the Czech Republic Denmark, Poland and Russia. facilities in Norway, Scotland, Malaysia and printing facili- and South Africa. Denmark, France, Spain, ties in Germany. MARKETS Core markets Greece and Chile. MARKETS Core markets in in Denmark and the rest of MARKETS Core markets: Europe, secondary markets in the Nordic region as well as MARKETS Core markets: Europe and Asia. Africa and North America. Poland, Russia and the Baltic Europe and South America. States. OWNERSHIP fibertex was OWNERSHIP fibertex was OWNERSHIP In 2005, Schouw founded in 1968 and was founded in 1968 and was OWNERSHIP Grene was & Co. took a 68.8% majority in- acquired by Schouw & Co. acquired by Schouw & Co. in founded by Chr. C. Grene in terest in BioMar, then a listed in 2002. The Personal Care 2002. 1915 and was acquired by company. BioMar became a activities have been a part of Schouw & Co. in 1988. wholly owned subsidiary fol- Fibertex since 1998 and was www.fibertex.com lowing a merger in 2008. hived off as an independent www.grene.com portfolio company of Schouw www.biomar.com & Co. in 2011.

www.fibertexpersonalcare.com

Revenue in DKK million 5,419 Our businesses 5

Other investments

Financial investments Schouw & Co. has two ownership stakes that are not considered to be of a long-term strategic nature: of 4 million shares in Vestas and of 1 million shares in the Norwegian fish farming company Lerøy. At December 31, 2010, these financial Hydra-Grene Martin Xergi investments were recognised in the finan- FACTS Hydra-Grene is a FACTS Martin is the world’s FACTS Xergi is a leading sup- cial statements under specialised trading and engi- leading manufacturer of plier of biogas and combined investments at a carry- neering company whose core computer-controlled effect heating systems. Its core busi- ing amount of DKK 894 business is trading and pro- lighting, which is sold to the ness consists of technology million. ducing hydraulic components entertainment and experience development, system design and systems development for industries in most parts of the and installation as well as Incuba industry as well as related world. Martin is also a signifi- turnkey system operation and Schouw & Co. holds a consulting services. cant manufacturer of smoke maintenance. 49% stake in Incuba machines. A/S, a development GEOGRAPHY Head office in GEOGRAPHY Head office and venture operation Skjern, Denmark. Production GEOGRAPHY Head office in Støvring, near Aalborg, supporting entrepre- facilities in Denmark and in Aarhus, Denmark and pro- Denmark neurial environments China. duction facilities in Denmark, and investing actively in the UK and China. MARKETS Core markets: new companies. Incuba MARKETS Core markets Europe and the USA. is accounted for as an in Denmark and the rest of MARKETS Core markets: associated company. Europe as well as Asia. Europe, North America and OWNERSHIP Xergi has The carrying amount at Asia. worked in this business area December 31, 2010 was OWNERSHIP Hydra-Grene 25 years and has been owned DKK 53 million. was an independent member OWNERSHIP Schouw & Co. on a fifty/fifty basis by Schouw of the Grene group from 1974 became the main shareholder & Co. and Dalgasgroup since Property to 2009, when the company of Martin in 1999 and the sole 2004. In addition to opera- was hived off from Grene and owner in 2001. tional properties of the became an independent port- www.xergi.com portfolio companies, folio company of Schouw & Co. www.martin.com Schouw & Co. owns a few other properties, www.hydra.dk which are recognised under property, plant and equipment at a carrying amount of DKK 83 million at December 31, 2010.

1,237 413 1,237 391 715 118 The link to the consolidated revenue is shown in note 1. 6 Management’s report

Management’s report

Highlights from the wind turbine industry, whereas substantially at BioMar in Norway and at Improvements in revenue and earnings sales to other industry customers im- Fibertex Personal Care in Malaysia. Both was the main story of 2010. The Group’s proved relative to 2009. The lower rev- projects are scheduled to become opera- businesses encountered major challenges enue also impacted earnings, but EBIT tional in 2011. during the year, but they were generally remained satisfactory and ahead of the In addition, all of our businesses have handled in a satisfactory manner. most recent guidance. on a smaller scale launched initiatives Most of our businesses adapted to a Xergi lifted its revenue, but due to aimed at creating profitable growth. Many new level of business activity following delayed and postponed projects, the of them target new growth areas outside recent years’ economic slowdown. Costs company was unable to meet the growth the traditional European markets. and capacity have been aligned with projections expressed at the beginning of In 2010, Fibertex began preparations market demand, and the businesses have the year. Ongoing capacity adjustments for a demerger of the company, and ef- created a platform from which to restore and tight cost management has been the fective from the turn of the year, Fibertex growth. recipe for Xergi in achieving a modest Personal Care and Fibertex Nonwovens BioMar reported a substantial revenue earnings improvement, and its full-year have become separate businesses in a improvement, driven by rising raw mate- EBIT was in line with the most recent move intended for both of them to better rials prices and and the resulting higher guidance. pursue their potential. selling prices. The minor decline in the Martin is the company of the Group In September 2010, BioMar signed an underlying volumes mainly derived from that has been most severely hit by the agreement to divest its 50.7% ownership developments in the Norwegian market. global economic downturn. In response interest in the Norwegian fish farm- Accordingly, the revenue advance did not to the dramatic fall in demand seen in ing business Sjøtroll Havbruk to Lerøy have much effect on earnings, but EBIT 2009, the company has now implemented Seafood Group. The transaction was improved and the results were ahead of a number of comprehensive initiatives in closed on November 11, 2010, after all the most recent guidance. order to adapt to the new situation. conditions had been met. Fibertex’ Personal Care activities re- Demand remains very sluggish in a BioMar took an ownership interest in ported substantial volume improvements, number of key areas, but Martin never Sjøtroll in 2004 as part of a refinancing so- and the higher raw materials prices theless managed to lift its revenue. The lution, and with the current selling price, helped to lift revenue further. The com- improvement has temporarily been BioMar achieved a return on its invest- pany’s output capacity is limited at the curbed by deteriorated supply power due ment of about 17% per annum. moment, but additional capacity will be- to a shortage of electronics components For accounting purposes, Schouw & come operational in Malaysia in late 2011. and difficulties running-in new proce- Co. has treated Sjøtroll Havbruk as dis- The sound capacity utilisation triggered dures in connection with outsourcing continued operations, recognising the a substantial earnings improvement, and parts of the production. financial results in the income statement Fibertex’ overall EBIT ended higher than Martin lifted its financial results by a under ’profit/loss from discontinued its most recent guidance. substantial margin relative to 2009, and operations’, which is measured after tax. Unlike the Personal Care activities, EBIT was within the most recent forecast Accordingly, the divestment of Sjøtroll Fibertex’ industrial nonwovens activities range. However, the company continued had no effect on EBIT. are relatively cyclical. A number of the in- to record a substantial loss, which is of dustrial areas are still reporting subdued course not satisfactory. Special risks demand, and total sales were in line with Schouw & Co. is an industrial conglomer- last year in terms of both volume and Group developments ate whose business activities are distrib- revenue. During the years preceding 2008, before uted on a number of business areas and a Grene reported a substantial revenue the world was struck by the economic portfolio of securities. By diversifying its improvement in the agro business with crisis, the companies of the Schouw & Co. businesses, the Group spreads its ordi- a good performance in all countries of Group had generally invested massively nary business risk exposure related to its operation, but a setback in the industrial in expanding capacity and facilities. individual business areas. activities in Denmark. Overall, Grene re- The Group still commands good However, several of the Group’s busi- ported a strong earnings improvement production capacity relative to market ness areas rely on certain raw materials and its EBIT was at the upper end of the demand, but early signs of growth oppor- and are thus sensitive to major fluctua- most recent forecast range. tunities were detected in several areas tions in the prices of such raw materials. Hydra-Grene reported lower revenue. in 2010. As a result, the Group has taken This applies especially to BioMar and the The decline was due to weaker demand steps to expand production capacity two Fibertex businesses. Management’s report 7

Events after the on customary conditions. The acqui- balance sheet date sition is not reflected in the profit Immediately before the 2010 an- guidance expressed in the Annual nual report was released, Fibertex Report, but it is expected to con- Nonwovens concluded negotiati- tribute to the consolidated profit ons to acquire 85% of the shares in already from 2011. Guidance for the French nonwovens manufacturer acquired business will be provided Tharreau Industries at a price valuing no later than in the Q1 2011 interim the full share capital at the equiva- report. lent of DKK 297 million. Other than as set out elsewhere short-term maturities, while part carries Tharreau Industries commands in this Annual Report, Schouw & floating interest rates, resulting in overall strong know-how and capabilities, Co. is not aware of events occurring ordinary risk. especially in the automotive industry, after December 31, 2010, which are It is important to Schouw & Co. to have and has strong relations with key expected to have a material impact a prudent valuation of the Group’s assets, customers. on the Group’s financial position or and that individual companies cannot The agreement was concluded outlook. jeopardise the overall Group. The majority of the company’s activities are located in Denmark and elsewhere in For all of the Group’s companies, the the Group does not insure against losses Europe, but it also has substantial assets economic slump continues to stir up on receivables. outside of Europe, primarily in Malaysia uncertainty with respect to debtors. All The parent company and the indi- and Chile. Group businesses are very attentive to vidual companies of the Group have The Group generally takes out ordinary following up on debtors. As a general rule, interest-bearing debt, part of which has insurance cover in respect of its assets.

Picking line at Grene in Skjern, Denmark. 8 Management’s report

Income statement and cash flows

Revenue vement by Martin and a slight decline of Calculated net of the effect of the Consolidated revenue was up by DKK DKK 6 million in Hydra-Grene. financial investments, net financial ex- 1,011 million from DKK 8,440 million in BioMar, Fibertex and Grene provided penses fell by DKK 26 million to DKK 92 2009 to DKK 9,451 million, an increase of positive performances, reporting EBIT million. The decline being the result of 12%. The improvement was driven by a improvements of DKK 9 million, 27 million the Group’s lower average net interest- number of factors, including the return and DKK 17 million, respectively. bearing debt relative to 2009 and the level to normal of a number of markets fol- of interest rates being lower in 2010 than lowing the global economic downturn of Income from investments it was in 2009. 2008-2009, which generally had a positive in associates effect on the year’s sales. In addition, a There was a net loss from investments Income tax number of important foreign exchange in associates after tax of just under DKK Schouw & Co. incurred a loss on conti- rates to Danish kroner were higher than 1 million against a loss of DKK 11 million nuing operations before tax for the year in 2009, meaning that foreign units’ reve- in 2009. The aggregate figure for 2010 of DKK 241 million. Tax on the financial nue in their local currencies was trans- consists of minor results in all associates . results for the year was an income of lated to a higher amount in Danish kro- DKK 115 million, which was largely at- ner. This served to lift the consolidated Financial income and expense tributable to capitalised tax loss carryfor- revenue by about DKK 500 million. In The Group’s financial items amounted to wards. The deviation from a normal tax addition, selling prices closely related or a net expense of DKK 610 million, compa- rate of 25% was mainly due to prior-year contractually tied to raw materials prices red with a net expense of DKK 77 million losses being capitalised. lifted revenue due to higher raw materi- in 2009. The fall in net financial items was als prices for Fibertex and BioMar. primarily due to value adjustments of Profit/loss of discontinued financial investments comprising shares operations Operating profit (EBIT) in Vestas and the Norwegian fish farming Profit from discontinued operations Operating profit (EBIT) was DKK 369 mil- company Lerøy. The net value adjustment includes profits from companies which lion, an increase of DKK 179 million from of DKK 518 million breaks down into a ne- have been put up for sale and for which DKK 190 million in 2009. However, the gative value adjustment on Vestas shares an active sales effort is being made. These overall change is composed of very dif- of DKK 554 million and a positive value activities consisted of a 50.7% stake in ferent performances by the Group’s busi- adjustment of DKK 36 million on Lerøy Norwegian fish farming business Sjøtroll ness areas; from a DKK 131 million impro- shares. Havbruk, which was sold to the listed

The Group’s capital resources credit facilities that can in principle be amounted to DKK 2,626 million, of Equity strength and capital resources terminated at short notice. At the end of which 37% was categorised as non- have generally become the subject of the financial year, 65% of the net interest- current and 63% as current liabilities. increased attention due to the global bearing debt was non-terminable loans Some 75% of the Group’s total debt is economic slump. In a situation like and credit facilities. In addition, the floating rate. In terms of currencies, that, it is very reassuring to know that Group has unutilised credit facilities of 28% is in Danish kroner and 47% is the Schouw & Co. Group has a rela- DKK 550 million that are non-terminable in euros. The rest is denominated in tively high equity ratio and therefore until 2013. local currencies in markets where the only moderate financial gearing. Schouw & Co. also endeavours to Group has material business activities. Recent years’ substantial, posi- maintain close relationships with a small In addition to its strong solvency tive cash flows have served to further number of large, well-established finan- position and well-established rela- strengthen this position, while also cial business partners. tions with its financial business enabling the Group to make new The consolidated net interest-bearing partners, Schouw & Co. has a highly investments, repay debt as well as ac- debt amounted to DKK 2,166 million at liquid investment at its full disposal quire treasury shares and pay stable December 31, 2010, of which DKK 210 consisting of the holdings of 4,000,000 dividends. million was attributable to the parent shares in Vestas and 1,000,000 shares The Schouw & Co. Group’s debt company. in Lerøy. consists of non-terminable loans and The total interest-bearing debt Management’s report 9

Norwegian fish farming business Lerøy in a transaction agreed at the end of Accounting policies September. The selling price of the shares In 2010, Schouw & Co. imple- in Sjøtroll was agreed at NOK 540 million, mented IFRS 3 and IFRS 27 as well consisting of NOK 409 million in cash and as changes to existing accounting 1 million shares in Lerøy, which in the standards. This and a few reclas- agreement were valued at NOK 131.50 per sifications have only affected a share. few aspects of presentation. The The transaction was closed following changes have no effect on neither final authority approval on November profit/loss for the year nor equity. 11, 2010. At that time, the selling price Apart from the above, the ac- amounted to NOK 569 million, because counting policies are unchanged by the closing date the value of the Lerøy from last year. shares had appreciated to NOK 161 million. Net of costs and tax totalling approximately NOK 8 million, selling price Fibertex, which both have large capacity- amounted to NOK 561 million, equal to increasing facilities under construction DKK 518 million. and scheduled for completion in 2011. The profit from discontinued opera- Investments in intangible fixed assets, tions for 2010 amounted to DKK 167 mil- much of which involved development lion. The amount consisted of the profit costs for Martin, amounted to DKK 42 mil- after tax in Sjøtroll Havbruk until closing lion against DKK 55 million in 2009. of DKK 131 million before minority in- There were positive cash flows of DKK terests and the Group’s profit after tax 362 million from discontinued opera- of DKK 36 million from the sale of the tions relating to the divestment of the ownership interest. Of the DKK 131 mil- ownership interest in Sjøtroll Havbruk. lion profit for the year, DKK 64 million was The selling price amounted to DKK 518 attributable to Sjøtroll’s minority share- million. The main reason for the cash flow holders. In 2009, the share of the profit being less than the selling price was the from Sjøtroll before minorities amounted fact that part of the proceeds was paid by to DKK 78 million, with DKK 38 million shares in Lerøy. being attributable to minorities. With the cash flows from operating activities, at DKK 444 million, being less Cash flow statement than the investment for the year of DKK Cash flows from operations for the year 484 million, the debt reduction and distri- amounted to DKK 444 million compared butions to shareholders totalling DKK 313 with DKK 1,191 million in 2009. Cash million were made possible by the cash flows from operations for the year before proceeds from Sjøtroll. The interest-bear- changes in working capital improved ing debt was reduced by DKK 86 million by DKK 230 million to DKK 755 million. in 2010 while dividends of DKK 75 million Following the substantial reduction in were distributed to the shareholders and 2009, working capital grew to DKK 162 DKK 154 million was used to buy treasury million in 2010, equal to an 11% increase shares. or by slightly less than the increase in Cash and cash equivalents at year revenue. end, comprising bank deposits, increased The overall net cash flows for the year by DKK 27 million to stand at DKK 452 almost doubled from DKK 246 million million at December 31, 2010. Part of the in 2009 to DKK 484 million in 2010. The increase consisted of DKK 18 million in DKK 238 million increase was due exclu- positive foreign exchange adjustment of sively to investments in property, plant the cash holding. and equipment, mainly in BioMar and 10 Management’s report

Balance sheet

Assets shares in Lerøy, which at December 31, Schouw & Co.’s equity including minority The Schouw & Co. Group’s total as- 2010 were recognised under current as- interests amounted to DKK 4,395 million sets amounted to DKK 8,900 million at sets at a value of DKK 189 million. at December 31, 2010, compared with DKK December 31, 2010 compared with DKK Non-current receivables rose by DKK 7 4,753 million a year earlier. 9,659 million at December 31, 2009. The million to DKK 113 million, of which DKK DKK 759 million drop in total assets cov- 91 million involved an investment grant Treasury shares ers a number of material and opposing relating to Fibertex in Malaysia. At December 31, 2009, Schouw & Co. held factors. Current assets increased by DKK 354,638 treasury shares, correspond- The factor impacting total assets 654 million, of which increases in in- ing to 1.39% of the share capital. During the most in 2010 was the divestment of ventories and receivables amounted to 2010, Schouw & Co. acquired an additional the discontinued operations in Sjøtroll DKK 284 million and DKK 141 million, 1,305,440 treasury shares at an aggre- Havbruk. Sjøtroll’s total assets of DKK respectively. The higher inventories gate price of DKK 154 million. A total of 1,208 million was consolidated at the and receivables are of course a reflec- 36,803 treasury shares were sold for the beginning of the year. At the end of the tion of the 12% growth in consolidated Group’s employee share scheme in 2010. year, this value had been eliminated and revenue. Securities recognised in cur- Accordingly, Schouw & Co. held 1,623,275 replaced by the proceeds from the sale. rent assets increased by DKK 189 mil- treasury shares at December 31, 2010, cor- Property, plant and equipment in- lion, as mentioned due to the addition responding to 6.37% of the share capital. creased by DKK 288 million in 2010, mainly of Lerøy shares. Cash and cash equiva- The portfolio of treasury shares is recog- due to greater investment activity and lents amounted to DKK 452 million at nised at DKK 0. foreign exchange adjustments of assets. December 31, 2010, an increase of DKK 36 Investments were DKK 472 million in 2010, million. Liabilities of which depreciation and impairment The Group’s total liabilities increased by charges amounted to 321 million. Foreign Equity DKK 102 million to DKK 4,505 million at exchange adjustment of assets based Consolidated equity including minorities December 31, 2010, of which interest-bear- outside Denmark increased the value in fell by a net amount of DKK 358 million ing debt amounted to DKK 2,626 million, DKK-terms by DKK 104 million. Most of the in 2010. The change consisted of several which was DKK 76 million less than last 2010 increase related to assets under con- opposing factors. Foreign exchange ad- year. Trade payables and other payables struction, involving BioMar’s new produc- justments in foreign units had a positive increased by DKK 271 million to DKK 1,691 tion line in Norway and Fibertex Personal effect of DKK 193 million. On the other million at December 31, 2010. Care’s new production line in Malaysia. hand, the reduction of minority interests Intangible assets amounted to DKK had a DKK 295 million negative effect due 1,075 million, which was in line with last to the divestment of Sjøtroll Havbruk. In year. Goodwill on acquisition remains the addition, dividends paid to shareholders largest single item. and the purchase of treasury shares had In other non-current assets, invest- a negative impact on equity in ments in associates fell by DKK 36 million the amount of DKK 229 mil- from DKK 130 million to DKK 94 million. lion. After giving effect to The fall was mainly due to the reclas- the profit for the year sification of BioMar’s 50%-ownership of of DKK 40 million, Alitec Pargua from an associate to a joint venture that is now consolidated on a pro- rata basis. Securities fell by DKK 368 million, driven by two major factors: First of all, the Group’s holding of Vestas shares depreciated by DKK 554 million. The holding of 4,000,000 Vestas shares carried a value of DKK 704 million at December 31, 2010. The second factor relates to the divestment of Sjøtroll Havbruk, as part of the selling price was paid by way of 1,000,000 Management’s report 11

Outlook

Outlook BioMar expects to generate fair vol- The aggregate of the individual com- The aftermath of the global economic ume sales growth in Norway and Chile. pany profit forecasts continues to produce downturn is still affecting many of the Also, its revenue may grow further due a very broad range for the consolidated markets where the Group operates, but to higher raw materials prices, although guidance. For 2011, we expect EBIT in the 2010 was also a year of new growth op- this is not expected to have any notable range of DKK 450–525 million, which im- portunities. During the past two years, effect on profit. BioMar projects a sub- plies a substantial improvement on 2010. Schouw & Co. has given priority to earn- stantial earnings improvement relative As in previous years, earnings will be ings rather than growth, but going for- to 2010. unevenly distributed over the year. We ward our ambition remains to develop As Fibertex Personal Care will have expect to report only a minor consolidated the Group through organic growth and limited output capacity until the end of profit in the first quarter, mainly due to acquisitions. 2011, any revenue change that may mate- seasonality in BioMar’s and Martin’s busi- It is very important that the Group’s rialise will largely derive from changes in nesses. Earnings are expected to improve businesses retain their competitive raw materials prices. Fibertex Personal in the second quarter, but most of the strength, also in difficult years, by making Care’s earnings were lifted by favourable year’s earnings are expected to be gener- the necessary investments in capacity, developments in raw materials prices ated in the third quarter, and the fourth development and innovation. In 2010, we early in 2010, which are not expected to quarter is also expected be profitable. made substantial investments outside of be repeated in 2011. Accordingly, the com- Consolidated financial items for 2011 Denmark in order to expand the level of pany expects its full-year EBIT to decline are expected to be an expense in the re- our international business activity, and relative to 2010. gion of DKK 110 million, excluding the ef- the Schouw & Co. Group is generally well Fibertex Nonwovens projects revenue fects from financial investments. positioned to pursuing a more expansive growth in 2011. Also, the effects of the strategy. efficiency-improving measures imple- However, the Group intends to remain mented are beginning to show, and EBIT focused on optimising its existing opera- is expected to improve to around break tions and phase out non-strategic activi- even. Forecast Actual ties not generating sufficient profitability Grene and Hydra-Grene both expect to DKK million 2011 2010 and on remaining dedicated to achieving generate revenue improvements on 2010. BioMar 240-260 200 effective use of our capital resources. Grene expects to improve EBIT relative to Fibertex Personal Care 145-155 161 2010, while Hydra-Grene projects EBIT in Fibertex Nonwovens 0 (17) line with 2010. Grene 50-60 48 Martin expects to sustain the revenue Hydra-Grene 50-60 56 Martin (0-25) (69) and earnings improvements in 2011 and Xergi (50%) 0 (5) to bring EBIT towards break even. Others (10) (5) Xergi expects to improve in terms of EBIT 450-525 369 both revenue and EBIT. Associates (5-10) 0 Overall, Schouw & Co. expects to gen- Financial investments - (518) erate consolidated revenue in the range Other financial items (110) (92) of DKK 11 billion in 2011. Revenue may Profit before tax 330-410 (241) change quite substantially due to changes in raw materials prices, but this is not expected to have any notable or immedi- ate effect on profit. As in recent years, Schouw & Co. ap- Dividends plies a profit forecast range for each The Board of Directors intends to individual business. The widest forecast recommend to the shareholders in ranges are found with Martin due to the general meeting that a dividend of very volatile market conditions it contin- DKK 3 per share of DKK 10 nominal ues to face and with BioMar because that value be paid in respect of the 2010 company’s large volumes mean that even financial year, equal to total divi- small percentage changes can have a sig- dend payments of DKK 77 million. nificant impact on earnings. 12 Board and management

Board of Directors

Chairman Deputy Chairman Board member Board member Jørn Ankær Thomsen Erling Eskildsen Niels Kristian Agner Erling Lindahl Born 1945. Elected to the Board Born 1941. Elected to the Board Born 1943. Elected to the Board Born 1945. Elected to the Board in 1982. Term expires in 2014. in 1988. Term expires in 2012. in 1998. Term expires in 2014. in 2000. Term expires in 2012.

Educational background: Managing director of Givesco B.Sc. (Bus.Adm.) from the Mechanical engineer from LL.M., University of Copenhagen. A/S, the main shareholder of Copenhagen Business School Sønderborg Technical College, Attorney and partner of Schouw & Co. and professional board member. Denmark. Managing Director of Gorrissen Federspiel Law Firm. Chairman of the company’s audit Momenta ApS. Member of the Member of the company’s audit Directorships committee. company’s audit committee. committee. Chairman Carletti A/S, Dan Cake A/S, Givesco Bakery A/S, Leighton Directorships Directorships Foods A/S. Directorships Chairman G.E.C. Gad A/S, Chairman Incuba Science Park A/S, Board member Danish Industrial Chairman Aida A/S, Carlsen SP Group A/S, SP Moulding A/S. Kontorhuset Svendborg A/S, Lindl Equipment A/S, Givesco A/S, P. Grene Byggecenter Løgten A/S, Th. C. Carlsen Deputy Chairman G.E.C. Gads Group A/S, Venti A/S. A/S, Hydra-Grene A/S, Hydra-Grene Løgten A/S, Carlsen Supermarked Boghandel A/S, Indeks Retail Invest Board member Incuba A/S, Incuba Holding A/S, OK Snacks A/S, Struer Løgten A/S, Danish Industrial A/S. Venture I K/S, Lübker Square K/S, Brød A/S, Søndergaard Give A/S. Equipment A/S, DB 2001 A/S, Fibertex Board member Dantherm A/S, D.F. Momenta Invest A/S, Moprre A/S. Nonwovens A/S, Fibertex Personal Executive management Danish Holding, Skive A/S, G.E.C. Gads Forlag Executive management Momenta Care A/S, F.M.J. A/S, GAM Holding Industrial Equipment A/S, Givesco A/S, A/S, GW Energi A/S. ApS, Momenta Invest A/S. A/S, GAM Wood A/S, Givesco A/S, Søndergaard Give A/S. Investeringsforeningen Danske Shares held in Schouw & Co. Shares held in Schouw & Co. Invest, Kildebjerg Ry A/S, Løgten Shares held in Schouw & Co. Holds 18,200 shares in Schouw & Co. Holds 75,800 shares in Schouw & Co. Midt A/S, Martin Professional A/S, Holds 1,004,462 shares in Schouw OPA Ortopædisk Hospital Aarhus A/S, & Co. Schouw & Co. Finans A/S, Søndergaard Independence as a board member Independence as a board member Give A/S. Niels Kristian Agner is no longer consi- Erling Lindahl is considered to be Independence as a board member Deputy Chairman Carletti A/S, P. dered to be independent, having ser- independent. Grene A/S. Erling Eskildsen is not considered to be ved more than 12 years on the Board. independent due to his affiliation with Board member BioMar Group A/S, Dan the main shareholder Givesco A/S and Cake A/S, Danske Invest Management the fact that he has served more than A/S, Develco Products A/S, 12 years on the Board. Ejendomsselskabet Blomstervej 16 A/S, GFKJURA 883 A/S, Givesco Bakery A/S, Hydra-Grene A/S, Hydra-Grene Holding A/S, Vestas Wind Systems A/S.

Shares held in Schouw & Co. Holds 27,220 shares in Schouw & Co.

Independence as a board member Jørn Ankær Thomsen is not considered to be independent due to his affiliation with the main shareholder Givesco Directorships in other Danish public A/S, his affiliation to a law firm which limited companies and other key acts as an adviser to the company and management positions. Shareholdings the fact that he has served more than include each board member’s or execu- 12 years on the Board. tive’s shares in Schouw & Co. and those held by their connected persons. Board and management 13

Executive management

Board member Board member President Vice President Kjeld Johannesen Jørgen Wisborg Jens Bjerg Sørensen Peter Kjær Born 1953. Elected to the Board Born 1962. Elected to the Board Born in 1957. Appointed in 2000. Born in 1956. Appointed in 1993. in 2003. Term expires in 2011. in 2009. Term expires in 2013. Business graduate, Niels Brock BSc, Electronic Engineering, Business diploma (HD), Marke MSc from the Aarhus School of Business College, Business diplo- Engineering College of Aarhus, ting economics, Copenhagen Business and CEO of OK a.m.b.a. ma (HD), Marketing economics, Business diploma (HD), Business School. CEO of Danish Copenhagen Business School, IEP Marketing economics, Aarhus Crown. Directorships – Insead Executive Programme, School of Business, MBA from Chairman Danoil Exploration A/S, Insead, France. IMD, Lausanne, Switzerland. Directorships DK-Benzin A/S, Kamstrup A/S, OK Plus A/S and Samfinans A/S. Chairman Tulip Food Company A/S. Directorships Directorships Deputy Chairman Energi- og olie- Deputy Chairman DAT-Schaub a.m.b.a. Chairman BioMar Group A/S, Chairman Erhverv Aarhus, forum. Board member Dansk Industri, Center for Ledelse, Dovista A/S, Helsingforsgade 25 Aarhus A/S, Board member Miljøforeningen af DAT-Schaub Holding A/S, Landbrug & P. Grene A/S, Hydra-Grene A/S, Østjysk Innovation A/S. 1992. Fødevarer. Hydra-Grene Holding A/S. Board member DB 2001 A/S, Den Executive management OK a.m.b.a. Executive management Danish Crown Deputy Chairman Fibertex Nonwovens Gamle By, P. Grene A/S, Grene A/S, Leverandørselskabet Danish A/S, Fibertex Personal Care A/S, Martin Danmark A/S, Grene Industri-service Crown a.m.b.a. Shares held in Schouw & Co. Professional A/S, Xergi A/S. A/S, Grene Sp. z o.o., Hydra-Grene A/S, Holds 10,000 shares in Schouw & Co. Board member Aida A/S, Hydra-Grene Holding A/S, Lastas A/S, Xergi A/S. Shares held in Schouw & Co. DB 2001 A/S, F.M.J. A/S, Incuba A/S, Købmand Herman Sallings Fond, Executive management DB 2001 A/S, Holds 10,000 shares in Schouw & Co. Independence as a Schouw & Co. Finans A/S, Trygheds Incuba A/S. board member gruppen SMBA, VKR Holding A/S. Independence as a Jørgen Wisborg is Executive management Schouw & Co. Shares held in Schouw & Co. board member considered to be Finans A/S. Holds 24,260 shares in Schouw & Co. Kjeld Johannesen is considered independent. to be independent. Shares held in Schouw & Co. Holds 49,804 shares in Schouw & Co. 14 Investor information

Investor information

Capital and share structures Pursuant to the provisions of Section 31 The shares of Aktieselskabet Schouw Register of shareholders of the Danish Securities Trading Act, the & Co. are listed on NASDAQ OMX The company’s registrar is: three shareholders Givesco A/S, Direktør Copenhagen under securities identifica- Computershare A/S Svend Hornsylds Legat and Erling tion/ISIN code DK0010253921. Kongevejen 418 Eskildsen, who holds 3.94%, are considered The company has 25,500,000 issued DK-2840 Holte as a single shareholder of Schouw & Co. shares of DKK 10 nominal value, equal to The three shareholders hold in aggregate a total share capital of DKK 255,000,000 46.85% of the shares in the company. Shareholder structure nominal value. Each share carries one Members of the Board of Directors and Schouw & Co. has some 7,600 registered vote, for a total of 25,500,000 voting the Executive Management of Schouw & Co. shareholders of whom the following are rights. and their connected persons held a total listed in the company’s register in ac- The company’s Board of Directors of 1,145,682 and 74,064 shares, respectively, cordance with section 56 of the Danish reviews the company’s capital and share in the company at December 31, 2010. Companies Act: structures at appropriate intervals. The company’s Board of Directors gives pri- Givesco A/S 28.09% Treasury shares ority to retaining a high equity ratio in Direktør Svend Hornsylds Legat 14.82% At December 31, 2010, the company held order to ensure the necessary financial Aktieselskabet Schouw & Co. 6.37% 1,623,275 treasury shares, equal to 6.37% of versatility. ATP 5.75% the share capital.

Schouw & Co.’s announcements to the Danish FSA and NASDAQ OMX Copenhagen since January 1, 2010. The announcements are available at the company’s web site, www.schouw.dk. 05.11.2010. No. 8. Interim report – third 20.04.2010. No. 3. quarter of 2010 Announcement on proxies issued to the 19.08.2010. No. 6. 11.11.2010. No. 9. Board of Directors First half year Closing of sale of BioMar’s of Schouw & Co. of 2010 shares in Sjøtroll Havbruk 28.09.2010. 20.04.2010. No. 4. No. 7. 22.11.2010. No. 10. Annual general meeting BioMar Schouw & Co.’s holding of treasury shares of Schouw & Co. divesting its now represents 5.00% of the share capital 04.01.2010. No. 1. ownership Transfer of Vestas 11.03.2010. No. 2. 06.05.2010. No. 5. interest 23.12.2010. No. 11. shares to wholly- Annual Interim report – first in Sjøtroll Schouw & Co.’s financial owned subsidiary report 2009 quarter of 2010 Havbruk. calendar for 2011

140 DKK

135 DKK Price performance on NASDAQ OMX 130 DKK Copenhagen 125 DKK

120 DKK

115 DKK

110 DKK

105 DKK

100 DKK

n Schouw & Co. shares 95 DKK n OMXC20 index relative to Schouw & Co. shares 90 DKK n MidCap index relative to Schouw & Co. shares 85 DKK

Jan 10 Feb 10 Mar 10 Apr 10 May 10 Jun 10 Jul 10 Aug 10 Sep 10 Oct 10 Nov 10 Dec 10 Jan 11 Feb 11 Investor information 15

The market value of the holding of Investor relations policy treasury shares was DKK 217 million at Schouw & Co. aims to create value and December 31, 2010. The portfolio of treas- achieve results to match the best of our ury shares is recognised at DKK 0. industry peers. The company’s investor relations policy Share price performance is to provide reliable information and The Schouw & Co. share closed the year to maintain professional relations with at a price of DKK 133.50 (official year-end shareholders and the market so as to en- price), corresponding to an increase of sure that investors always have the neces- 41.3% since December 31, 2009. sary information to make an assessment Accordingly, the total market capi- of the Group’s true values at any time. talisation of the company’s listed share Schouw & Co. complies with the duty capital amounted to DKK 3,404 million at of disclosure rules of NASDAQ OMX the close of the financial year. Adjusted Copenhagen. for the holding of treasury shares, the The company’s annual and interim company’s market capitalisation was DKK reports and its stock exchange announce- 3,188 million at December 31, 2010. ments of the last three years are available from its web site, www.schouw.dk, where Incentive programmes users can also subscribe to the company’s Since 2003, Schouw & Co. has operated a news service. share-based incentive programme com- Schouw & Co. holds presentations when re- prising the Executive Management and leasing the company’s annual and half-yearly senior managers, including the executive reports. Such presentations are web cast in managements of subsidiaries. order to ensure that all investors have equal Under the share-based incentive pro- access. Presentations are available for subse- gramme, Schouw & Co. awarded, in March quent viewing on the company’s website. 2010, a total of 34,000 share options to Schouw & Co. also occasionally holds members of the Executive Management meetings with investors and other parties. (two persons) and a total of 148,000 share Presentations from such meetings are also options to other senior managers, includ- available from the company’s web site. ing the executive managements of sub- Schouw & Co. observes a three-week sidiaries (fourteen persons). silent period ahead of releasing financial The share options are exercisable dur- reports. During such periods, our financial ing a 24-month period following the pub- communications are subject to special re- lication of Schouw & Co.’s full-year profit strictions. announcement for the 2011 financial Any queries to the company’s year at a strike price of DKK 107.30 plus a management should be e-mailed to: 4% premium per annum from the date of [email protected]. grant until the date of exercise. The overall guidelines for incentive programmes approved by the company’s Website shareholders in general meeting are Schouw & Co.’s web site – www. available from the company’s website, schouw.dk – contains announce- www.schouw.dk. ments to the Copenhagen Stock Exchange, full-year and interim financial statements, as well as more detailed information on the Group. On the web site, interested parties can also subscribe to the company’s news service. 16 Management Bodies

Management Bodies

The Board of Directors For reasons of principle, the Chairman The Executive Management of Schouw & Co. of the Board, Jørn Ankær Thomsen, does of Schouw & Co. The Board of Directors of Schouw & Co. not participate in business regarding the The members of the Executive consists of six shareholder-elected mem- holding of shares in Vestas Wind Systems Management of Schouw & Co. are Jens bers who elect a chairman and a deputy A/S. Bjerg Sørensen, President, and Peter chairman from among their number. Kjær, Vice President. The members of Board members are elected for terms The Audit Committee the Executive Management are regis- of four years and for purposes of conti- of Schouw & Co. tered with the Danish Commerce and nuity the individual members are up for The Board of Directors of Schouw & Companies Agency. election in different years. When a new Co. has appointed an audit committee The Executive Management is in Board candidate is nominated, emphasis consisting of Niels Kristian Agner (chair- charge of the day-to-day management of is on the potential new member possess- man), Jørn Ankær Thomsen and Erling the company both at parent company and ing the professional knowledge and ex- Lindahl. consolidated level and complies with the perience to contribute to maintaining the Erling Lindahl is considered to be guidelines and directions issued by the necessary scope of competence on the independent, whereas Jørn Ankær Board of Directors. Board and on the potential new member Thomsen is not considered to be inde- The day-to-day management does being able to act independently of special pendent due to his affiliation with the not include any transactions that, con- interests. main shareholder Givesco A/S and his sidering the company’s circumstances, The Board of Directors carries out an affiliation to a law firm which acts as an are of an unusual nature or of material annual self-assessment, applying a struc- adviser to the company. Niels Kristian importance. Such transactions can only tured model. The chairman is responsible Agner was independent during the first be made by the Executive Management for carrying out the assessment, and the half of 2010, but at the annual general upon specific authority from the Board of results are discussed by the entire Board. meeting in April he had served on the Directors unless awaiting a decision by The Board of Directors is responsi- Board for 12 years and is therefore the Board of Directors would cause sig- ble for the overall management of the no longer considered an independent nificant disadvantage to the activities of company, which includes appointing the member in accordance with the defini- the company. members of the Executive Management, tions of Recommendations on Corporate laying down guidelines for and exercis- Governance as issued by NASDAQ OMX ing control of the work performed by Copenhagen. the Executive Management, organising All three members are considered the company’s business in a responsible to meet the requirements under the manner, defining the company’s business Auditors’ Act on accounting qualifica- concept and strategy and evaluating the tions. adequacy of the company’s capital contin- The Audit Committee’s task is mainly gency programme. to monitor the work and processes relat- The duties of the Board are set out in ing to the financial reporting process. The the company’s rules of procedure, and Committee assists the Board in assess- Board meetings are conducted in accord- ments and controls relating to auditing, ance with a fixed master agenda, which accounting policies, systems of internal over the full year ensures compliance controls, financial reporting, etc. with the Board’s rules of procedure. The Audit Committee held five meet- The Board of Directors held six Board ings in 2010. meetings, a conference call and a two-day Board seminar in 2010, corresponding to the ordinary level of Board activity in the company. Ordinary Board meetings are scheduled at least six months in advance. Board meetings are normally attended by all members of the Board and the Executive Management. Management Bodies 17

Management of the Remuneration policy portfolio companies Schouw & Co.’s remuneration policy is in- The Schouw & Co. Group has a decentral- tended to firmly align the interests of the Financial calendar 2011 ised corporate structure, under which members of the Board of Directors and the individual portfolio companies enjoy the Executive Management with those of April 14, 2011 a large degree of independence and have the shareholders and the company. Annual General Meeting their own individual organisation and The remuneration policy is a means of management in charge of the company’s ensuring that the remuneration provided May 5, 2011 operations. Each portfolio company is will always reasonably reflect the com- Release of Q1 2011 interim report structured as focused sub-groups with pany’s performance and current situa- their own subsidiaries. tion. In addition, it is intended to promote August 18, 2011 The boards of directors of the ulti- the long-term goals for safeguarding the Release of H1 2011 interim report mate company of the individual portfolio company’s interests. companies are generally composed of a The remuneration policy and the over- November 3, 2011 representative from each of the Board of all guidelines for incentive programmes Release of Q3 2011 interim report Directors and the Executive Management can be found on the company’s website, of Schouw & Co. along with external www.schouw.dk. board members who have a special interest in and knowledge of the particular portfolio company’s business area. The boards of directors of a portfolio company’s underlying subsidiaries are generally composed of managers and employees from the portfolio company, possibly with a representative of the Executive Management of Schouw & Co. or external board members. To support the individual managements of the portfolio companies, Schouw & Co. has issued a set of general guidelines for its subsidiaries. 18 Code of corpora te governance

Code of corporate governance

Code of corporate governance This involves a few matters in relation to Schouw & Co. generally respects the Schouw & Co. complies with the the composition of the supreme manage- ten principles on human rights, labour rules applying to companies listed on ment body and certain information about standards, the environment and anti- NASDAQ OMX Copenhagen, which in- individual remuneration. corruption as expressed in the UN Global clude a code on corporate governance A detailed account of the company’s Compact. The full wording of the ten as set out in “Corporate Governance position on each individual item of principles is provided on Schouw & Co.’s Recommendations”. the Recommendations on Corporate website, www.schouw.dk. The Board of Directors and the Governance from NASDAQ OMX It is important to Schouw & Co. that Executive Management of Schouw & Co. Copenhagen is provided on Schouw & the Group’s businesses endeavour to com- see corporate governance as a natural Co.’s website www.schouw.dk/cg. ply with the principles of human rights, part of running a responsible business. labour standards, the environment and Corporate governance considerations Statutory report on corporate anti-corruption and that they seek assu- and the interaction with the company’s social responsibility rance on reasonable standards when ap- stakeholders is a constant priority, and This statutory report on corporate social pointing business partners and suppliers. considering the company’s corporate responsibility (CSR) covers the reporting The principles on the environment governance policy is a recurring item in period from January 1 – December 31, may require that a balance is struck bet- the annual business of the Board meet- 2010 and forms part of the 2010 Annual ween cost and effect, but generally the ings. Report. Group believes that it maintains high Schouw & Co. believes it complies Schouw & Co. requires that all of the standards when it comes to ensuring in all material respects with the in- Group’s companies comply with legis- reasonable environmental issues and tentions of “Corporate Governance lation and regulations applying in the limiting environmental risks. In addition, Recommendations” as issued by NASDAQ countries and local communities in which the Group addresses environmental con- OMX Copenhagen. they operate. However, no policies have ditions from a business criteria aspect However, there are a few areas in been adopted for voluntary incorporation with due consideration for the long-term which Schouw & Co. does not apply the of corporate social responsibility into the perspectives and the Group’s good repu- corporate governance recommendations. companies’ strategies and activities. tation.

Production at Martin in Frederikshavn, Denmark The Financial reporting process 19

The financial reporting process

Statutory report The management of the portfolio Audit As part of its statutory report on corpora- company’s ultimate entity is in charge of Each year, the shareholders in annual ge- te governance, the company is required to preparing and implementing reasonable neral meeting appoint external auditors report on the main features of the Group’s and appropriate procedures and policies following a recommendation by the Board internal control and risk management for the company and for ensuring a syste- of Directors. Ahead of each recommen- systems in relation to the financial repor- matic and responsible controlling of the dation, the Board of Directors makes ting process. portfolio company’s subsidiaries. a critical assessment of the auditor’s To support the individual managements independence and competencies, etc., in Group structure of the portfolio companies, Schouw & Co. accordance with the Recommendations of The Schouw & Co. Group consists of a has issued a set of general guidelines for Corporate Governance issued by NASDAQ number of legal corporate entities in its subsidiaries. OMX Copenhagen. an operational structure consisting of In addition, the parent company Auditors appointed by the sharehol- the parent company Schouw & Co. and a Schouw & Co conducts follow-ups on its ders in general meeting serve as auditors number of subsidiary portfolio companies directly-owned companies with a view to of all of the Group’s major subsidiaries each structured as focused sub-groups ensuring that the financial reporting pre- and associates. In a few foreign units, with their own subsidiaries. sents a true and fair view without material however, local auditors may be appointed Each individual portfolio company has misstatement. for practical reasons, but audits in all a high degree of autonomy as well as its The Board of Directors of Schouw & Co. group entities are conducted in accor- own organisation and management in has appointed an Audit Committee, whose dance with instructions issued by the sha- charge of its operations. tasks include monitoring the work and pro- reholder-appointed auditor with a focus Subsidiaries of the portfolio compa- cesses relating to the financial reporting. on high-risk and material areas. nies operate activities that are identical to Shareholder-appointed auditors re- or closely related to the general activities Preparation of consolidated port in writing in the form of long-form of the portfolio company, facilitating the financial statements audit reports to the entire Board of establishment of uniform systems and The preparation of consolidated financial Directors at least once a year, and im- procedures in the portfolio company. statements is based on the Group’s finan- mediately on becoming aware of any cial reporting manual, which is intended to matters to be brought to the attention of ensure a uniform application of accounting the Board of Directors. The independent policies throughout the Group that is in auditor attends the meeting at which accordance with the international finan- the Board considers the draft annual cial reporting standards, IFRS/IAS, under report, holding a private session with which Schouw & Co. prepares its financial the Board and without the Executive statements. Management attending, as proposed The financial reporting manual is in the Recommendations on Corporate updated on an ongoing basis by the pa- Governance. rent company Schouw & Co. as and when The independent auditor also attends required by amendments to accounting meetings of the audit committee, which standards and legislation. The financial are normally concluded with a private ses- reporting manual is available in electronic sion of the audit committe without the at- form to Group users. tendance of the day-to-day management. Reporting of financial data from the Group’s subsidiaries takes place in accor- Internal audit dance with the instructions provided by On the recommendation of the audit com- the parent company in standard reporting mittee, the Board of Directors of Schouw & packages transferred electronically into Co. has resolved not to appoint an internal the parent company’s financial consolida- auditor, as it is not considered necessary tion system, thus reducing the risk of ma- given the size and structure of the Group. nual errors. 20 Global expansion

Expansion in 2010 BioMar · Costa Rica Fibertex Personal Care · Malaysia Fibertex Nonwovens · South Africa Grene · Russia Hydra-Grene · China Martin · USA

Growth through global expansion

Profitable growth is Schouw & Co. applies a model of owner- “Growth must be profitable, and we fundamental to long-term ship focusing on three main areas for its will only invest in new capacity or go into value creation, and all of business: profitable growth, efficient use new markets, if the potential and the Schouw & Co.’s businesses of capital and future-proofing. Enhancing investment can give us the return we are are pursuing international profitability has been a priority in recent looking for.” years, but given the positive prospects International expansion was on the expansion, supported for the global economy, growth will again agenda of every Schouw & Co. business by a positive outlook. rank as a prominent objective. in 2010. Consolidating the “We’re not interested in businesses “Schouw & Co. is strongly positioned in leading positions will that do not have a substantial growth certain European markets and we gener- create strong, powerful potential. Offering the opportunity for ate around three quarters of our revenue and focused businesses. growth is one of the most important ele- from countries in Europe. I see big per- ments of long-term value creation,” says spectives and opportunities in investing Schouw & Co.’s CEO Jens Bjerg Sørensen, and growing our businesses outside while also emphasising that he does not Denmark and the traditional markets of want growth at any price: western Europe. Our portfolio companies Global expansion 21

must be focused, big players and hold a established and gradually expanded op- enormous growth perspectives given the leading position in their niche or indus- erations in Malaysia, and in 2011, it will fact that it has an agricultural area about try,” says Jens Bjerg Sørensen. increase its output capacity by more than 50 times the size of Denmark’s. BioMar recently decided to begin pro- 50%. The Asian market for nonwovens for Hydra-Grene is following the global ducing feed for a fish species new to the the personal care industry has seen dou- wind turbine industry and will commence company. The operation will be based in ble-digit growth in recent years, and the production in China in 2011. Costa Rica, which is a new geographical strong growth is expected to continue. Due to its market-leading position, market. Backed by its extensive expe- Grene and Fibertex Nonwowens Martin generates about one third of its rience in food safety and traceability are both strongly positioned in eastern revenue in the USA, and thanks to a con- in production, BioMar can contribute Europe, but they will now both be expand- sistent effort on the US market, Martin unique competencies that pave the way ing in new, exciting markets. Fibertex has, among other things, grown its con- for long-term growth in a market that is Nonwovens has set up operations in cert segment market by 20%. as big as BioMar’s core business area of South Africa aiming to play a part of the salmon feed. substantial expansion of that country’s Since being acquired by Schouw & infrastructure in the coming years. Grene Co. in 2002, Fibertex Personal Care has is expanding in Russia, a country with 22 Biomar · Report

Revenue (DKK million)

2008 2010 5,419 5,321 2009 4,854

2007 BioMar 2006 3,677 3,274

Financial performance provement was due to the sustained focus on margins and tight BioMar grew its revenue from DKK 4,854 million in 2009 to DKK cost management, coupled with a moderate positive effect from 5,419 million in 2010. The improvement was attributable to rising foreign exchange rates. raw materials prices and the resulting higher selling prices, whe- In September 2010, BioMar signed an agreement to divest reas the underlying volumes declined slightly. its ownership interest in the Norwegian fish farming business The volume setback was mainly attributable to the important Sjøtroll Havbruk to Lerøy Seafood Group. The transaction was Norwegian market, as temporary production difficulties and a closed on November 11, 2010, producing cash proceeds of DKK change in the buying patterns of certain major customers produ- 363 million and 1 million shares in Lerøy. As BioMar recognises ced an unsatisfactory performance, in the first half year. However, Sjøtroll Havbruk under discontinued operations, the transaction the effects were largely offset in the second half of the year. did not affect the full-year EBIT. See management’s report for Sales in Continental Europe in 2010 fell slightly because of more information. exceptionally low water temperatures in the northern part of the BioMar continues the efforts to optimise its working capital. region early and late in the year and due to a deliberate decision Despite rising raw materials prices, the company managed to not to accept orders from certain customers involving an exces- keep its working capital at a stable level. It stood at DKK 369 sive risk of loss. Chile, on the other hand, again reported impro- million at year-end 2010, compared with DKK 326 million a year vements after the severe market decline in 2009 due to disease in earlier. fish stocks. Net interest-bearing debt fell by DKK 272 million to DKK 239 Despite the volume downturn and the challenges in Norway, million at the end of the year, the change strongly driven by the EBIT improved from DKK 191 million in 2009 to DKK 200 million sale of the shares in Sjøtroll Havbruk. In addition, BioMar distri- in 2010, which was better than the most recent guidance. The im- buted the DKK 50 million in dividends to Schouw & Co. in 2010. Biomar · Report 23

DKK million 2010 2009

Volume (thousands of tonnes) 706 710 Revenue 5,419 4,854 - from the North Sea 2,672 2,561 - from the Americas 1,325 984 - from Continental Europe 1,422 1,309 Cost of sales (4,235) (3,705) Business development Gross profit 1,184 1,149 The Chilean fish feed market contracted by more than 40% in 2009 due to widespread outbreaks of disease in Atlantic salmon stocks, but the situation reversed in 2010. The market improved overall, and new, stricter regulations governing fish farming provide foundation for sustainable growth. DKK million 2010 2009 The market growth combined with the in-house efficiency improvements implemented in Chile in 2009 produced fair-sized INCOME STATEMENT earnings growth. Revenue 5,419.1 4,853.7 After several years of decent growth rates, the Norwegian Gross profit 701.7 691.1 market failed to perform to expectations in 2010. The overall EBITDA 321.5 317.9 Norwegian market for fish feed was largely unchanged relative Depreciation 122.0 127.3 to 2009, mainly due to unusually low water temperatures in both Operating profit (EBIT) 199.5 190.6 the early and the late months of the year. Share of profit from associates 0.0 (0.5) In Continental Europe, demand developed differently in the Financial items, net 1.6 (50.2) various segments, but the overall market for fish feed was lar- Profit before tax 201.1 139.9 gely unchanged from the year before. Tax for the period (40.3) (41.1) After the end of 2010, BioMar has set up a joint venture in Profit from continued operations 160.8 98.8 Costa Rica for the production of feed for the tilapia fish species. Profit from discontinuing operations 166.8 77.9 The project is a step in the Going for Profitable Global Growth Profit for the period 327.6 176.7 strategy and an investment with substantial long-term perspec- tive. CASH FLOWS Outlook Cash flows from operating activities 170.9 603.4 Cash flows from investing activities (235.6) (88.4) In spite of the sluggish trend in volume growth in 2010, Norway Cash flows from financing activities (296.7) (467.4) is still expected to be an important growth market in the years ahead. BioMar’s current capacity is not big enough for the BALANCE SHEET company to capitalise on this growth potential, which underlines Intangible assets * 339.0 331.8 the importance of the capacity expansion currently under way at Property, plant and equipment 968.8 760.1 the factory in northern Norway. The extension is scheduled for Other non-current assets 71.8 121.0 completion in the early summer of 2011 and will thus be avail Cash and cash equivalents 393.7 368.0 able to BioMar before the onset of the high season. Other current assets 1,705.7 1,285.5 The market in Chile is performing well and although it will Assets held for sale 0.0 1,207.6 probably take a couple of years for the market to recover to Total assets 3,479.0 4,074.0 previous levels for salmon farming, indications are for a good improvement in 2011. Assuming a largely unchanged market Equity 1,635.7 1,648.5 share, this indicates that BioMar also anticipates improvements Interest-bearing debt 632.7 879.4 in Chile in 2011, even though building up biological production Other creditors 1,210.6 1,044.2 such as in fish farming will always be subject to uncertainty. Liabilities classified as held for sale 0.0 501.9 No major changes are expected to the situation in Total liabilities and equity 3,479.0 4,074.0 Continental Europe, but there are positive signs for the fish farming industry of southern Europe, and BioMar anticipates Average number of employees 709 685 some improvement in 2011. Based on the outlook for decent growth in Norway and Chile FINANCIAL KEY FIGURES and stable developments in its other markets, BioMar expects EBITDA margin 5.9% 6.5% to lift EBIT to DKK 240–260 million in 2011. The revenue perfor- EBIT margin 3.7% 3.9% mance will depend on the underlying volumes as well as on how ROIC 16.9% 15.4% prices of raw materials develop. As a result, the full-year revenue Working capital 368.9 325.5 outlook is subject to above-normal uncertainty, but with pro- Net interest-bearing debt 239.0 511.4 spects of a higher price level for raw materials in 2011, revenue is expected to be well over DKK 6 billion. * Excluding goodwill on consolidation in Schouw & Co. of DKK 430.2 million. The 50% owned company Alitec Pargua has in 2010 been reclassified from an associate to a joint venture consolidated on a pro-rata basis. 24 Biomar in cost a rica

BioMar Aquacultura Corporation S.A. Camino a Bebedero~as Paso Hondo Can Provincia de Guanacaste, Costa Rica

Feed for new fish species in new markets

BioMar has the right set of tools when it comes to producing quality fish feed for professional fish farming operations with a key emphasis on food safety and sustainability.

BioMar has not only established business The country is Costa Rica and the tonnes of so-called gro- in a new country, it has also started pro- species is the white fish of tilapia, a fresh wer feed for the tilapia ducing feed for a fish species that pre- water species that is very popular in fish. That is about 8% of viously it has not supplied feed for to any the USA and other markets. The means BioMar’s total annual great extent. BioMar is already a top-class is the construction of a feed factory in production of feed in feed manufacturer for species such as sal- the north-western part of the country 2010 of around 700,000 mon, trout, sea bass and sea bream, but as a joint venture with a local partner tonnes. our strategy is to supply feed for new spe- in Costa Rica, whose main shareholder ”We’ve delivered fry cies and to penetrate new markets. The is AquaChile – BioMar’s joint venture Torben Svejgård, feed to tilapia farmers company has now taken the first practical partner in Chile. When completed in 2012, CEO, BioMar for some time but the step towards realising this strategy. the factory will have a capacity of 50,000 production of grower feed requires local presence,” says BioMar CEO, Torben Svejgård. Tilapia farming accounts for approximately 4% of global production. This may not seem like much, but it is the same size as BioMar’s current markets which mainly comprise salmonids.

Professional production ”We’ve decided to go into feed production for tilapia because we are confident that with our expertise, we can make a difference. A number of producers in Central America farm high-quality tilapia and supply the fish fresh to the US market. We 25

Tilapia as a farmed fish

Tilapia is a white fish and unlike salmon, its meat is very lean. It typically weighs up to would like to participate in professionally to be present in markets where we can 800-900 grams, whereas salmon weighs 3 to operated projects serving high-quality contribute to professionalising operations 5 kilos. The species most popular for farming is the Nile tilapia. and environmentally conscious consu- while also making a profit,” says Torben While the tilapia is among the five most mers. These consumers prioritise food Svejgård. He sees a business potential in important farmed fish in the world, it is safety and sustainability and we can con- several professional fish farming markets largely unknown as a food fish in Europe. In tribute to that,” says Torben Svejgård. that are substantially larger than BioMar’s return, the tilapia is the fifth most bought fish in the USA and every American eats When it comes to aquaculture, today’s current markets. almost 1 kilo of this species per year. It is salmon farming has become extremely served whole or in fillets. professionalised. That requires superior- Large perspectives quality feed and puts heavy demands on If this project goes according to plan and food safety. All BioMar’s feed products if the economic calculations prove cor- are produced according to methods rect, BioMar will be on the outlook for new supporting sustainability and ensuring projects, not only in Latin America but Facts about BioMar full traceability in the value chain, both also in the Middle East, Asia and Africa. At upstream and downstream. At the same the same time, BioMar will be prepared BioMar is the world’s third-largest manufacturer of quality feed for industrialised, time, BioMar has developed cost-efficient to develop feed for new species if they are sustainable fish farming in Europe and Chile. recipes and production management farmed professionally: BioMar holds a leading position in all its systems to ensure the correct and most ”We see large perspectives in a world markets. One in four fish farmed in Europe or cost-efficient feed composition: where the purpose of farming new species Chile is raised on feed from BioMar. Globally, BioMar supplies feed for more than 25 fish ”In other words, we have the right is to contribute to solving the challenge of species in around 50 countries. 97% of set of tools when it comes to producing feeding the fast-growing global population BioMar’s production is sold outside Denmark. high-quality feed and we would like to put which has grown by 1 billion people in just Around 600 of the company’s 700 employees them to good use in new markets and in ten years and is currently growing at a rate work abroad. The group management con- the farming of new species. We believe of three people per second. Professional sists of three Danes, two Norwegians and two Chileans. we can develop better solutions than the fish farming will be part of that solution ones currently available and we want and we are eager to contribute.” 26 Fibertex · Report

Fibertex

Financial performance Fibertex generated revenue of DKK 1,650 million in 2010, compared with DKK 1,350 million in 2009. The improvement was driven by an increase in volume sales by Fibertex Personal Care, with Fibertex Nonwovens reporting volumes in line with last year. Fibertex Personal Care has not been notably affected by the general economic downturn. Rather, with its entire production output consistently being sold out all through the year, the division was able to compensate for the rising raw materials prices through the structure of its sales contracts. The activities in Fibertex Nonwovens are more cyclical, as some markets recorded decent growth rates while others suffe- red periods of sluggish demand. The traditional industry markets stabilised during the year, but sales of geotextiles for infrastructure projects, for example, were affected by poor weather conditions in Europe, especially in the first quarter. In addition, struction of a whole new high-capacity line that is scheduled for the markets were affected throughout the year by surging raw production start-up in the fourth quarter of 2011. materials prices, which Nonwowens was only able to find partial At the beginning of 2010, Fibertex Nonwovens had production compensation for though price increases at a certain time lag. facilities in Denmark and the Czech Republic. Early in the year, EBIT improved from DKK 117 million in 2009 to DKK 144 mil- the division also established a factory in South Africa in coop- lion in 2010, which was better than the most recent guidance. The eration with the Industrialisation Fund for Developing Countries improvement derived from the positive performance by Fibertex (IFU) and local business partners for the purpose of manufac- Personal Care. turing and selling needlepunched products, mainly geotextiles Fibertex increased its working capital tie-up to DKK 385 mil- but also products for South Africa’s growing auto industry. The lion at December 31, 2010 from DKK 276 million last year. Net in- South African unit is recognised in the financial statements terest-bearing debt increased to DKK 779 million at December 31, under associates. 2010 from DKK 714 million last year. Included in this amount was Going forward, Fibertex Nonwovens intends to lift its compe- DKK 30 million in dividends distributed by Fibertex to Schouw & titive strength and production platform in the Czech Republic by Co. in 2010. way of an upgraded production line relocated from Denmark in 2010. The project is expected to be fully implemented in the first Business Development half year of 2011. Fibertex Personal Care has production facilities in Denmark and Malaysia and is well-renowned for its quality and innovation in Demerger of Fibertex both Europe and Asia. Revenue from specialty products improved In many ways, Fibertex Personal Care and Fibertex Nonwovens in 2010, including from supersoft products, products with high are two very different businesses, and physically they have ope- performance leakage barriers, as well as print products that rated separately for quite some time. Fibertex can deliver through its partly-owned business Innowo In order to optimise the development of both businesses, Print in Germany. Fibertex has resolved to demerge the two units effective from Fibertex Personal Care has begun to expand capacity in the beginning of 2011. As a result, the Personal Care operations Malaysia. Additional capacity was installed in 2010 through the have been hived off into a separate company, Fibertex Personal expansion of an existing line, and Fibertex approved the con- Care A/S, reporting directly to Schouw & Co., while the industrial activities have remained in the existing company under the name of Fibertex Nonwovens A/S.

Fibertex Personal Care Revenue (DKK million) Outlook 2010 As a natural consequence of the demerger, Schouw & Co. will 1,237 2008 provide separate reporting on the two businesses going forward. 2007 1,090 Fibertex Personal Care anticipates a growing market, espe- 1,008 2009 935 cially in Asia, where a healthy balance between supply and 2006 demand is expected in 2011. Fibertex Personal Care will have a 785 limited output capacity in 2011, but the start-up of the new high- Fibertex · Report 27

DKK million 2010 2009

Revenue 1,650 1,350 Of which from Personal Care 1,237 935 - Denmark 756 564 - Malaysia 481 371 Of which from Industrial Nonwovens 413 415 - Denmark 226 256 - Czech Republic 187 159

DKK million 2010 2009

INCOME STATEMENT Revenue 1,649.9 1,350.1 Gross profit 310.5 273.5 EBITDA 287.2 250.4 Depreciation 143.2 132.9 capacity line in Malaysia will lift capacity at the end of the year. Impairment 0.0 0.1 In addition, Fibertex Personal Care continues to see good oppor- Operating profit (EBIT) 144.0 117.4 tunities for organic expansion in Asia. Share of profit from associates (0.3) 0.0 As a result, Fibertex Personal Care expects to generate re- Financial items, net (26.4) (26.4) venue of approximately DKK 1.4 billion and EBIT in the range of Profit before tax 117.3 91.0 DKK 145-155 million in 2011. EBIT was DKK 161 million in 2010. Tax for the period (19.2) (22.0) Fibertex Nonwovens anticipates moderate growth rates in Profit for the period 98.1 69.0 2011. Demand is recovering in the industrial markets, but the market is expected to remain extremely competitive with chal- CASH FLOWS lenging raw materials prices. Cash flows from operating activities 148.6 283.1 On the other hand, Fibertex Nonwovens stands to benefit Cash flows from investing activities (185.4) (57.4) from its completed efficiency-improving measures and incre- Cash flows from financing activities 40.7 (231.5) ased sales of new products launched in recent years. Also, the company will seek to capitalise on the opportunities for profita- BALANCE SHEET ble growth through organic expansion and acquisitions. Intangible assets * 30.8 31.8 Fibertex Nonwovens expects to generate revenue of around Property, plant and equipment 1,159.8 1,048.2 DKK 500 million and EBIT of close to break even in 2011. In 2010, Other non-current assets 121.6 108.0 EBIT was a loss of DKK 17 million. Cash and cash equivalents 23.5 18.6 Immediately before the 2010 annual report was released, Other current assets 592.6 450.3 Fibertex Nonwovens concluded negotiations to acquire 85% Total assets 1,928.3 1,656.9 of the shares in French nonwovens manufacturer Tharreau Industries at a price valuing the full share capital at the equiva- Equity 788.3 628.2 lent of DKK 297 million. Interest-bearing debt 802.8 732.1 Tharreau Industries commands strong know-how and ca- Other creditors 337.2 296.6 pabilities, especially in the automotive industry, and has strong Total liabilities and equity 1,928.3 1,656.9 relations with key customers. The agreement was concluded on customary conditions. The Average number of employees 718 719 acquisition is not reflected in the profit guidance set out above, but it is expected to contribute to the consolidated profit already FINANCIAL KEY FIGURES from 2011. EBITDA margin 17.4% 18.5% EBIT margin 8.7% 8.7% Fibertex Nonwovens ROIC 10.4% 8.6% Revenue (DKK million) Working capital 384.5 276.2 Net interest-bearing debt 779.3 713.5

2007 * Excluding goodwill on consolidation in Schouw & Co. of DKK 80.1 million 2006 583 2008 533 500 2009 2010 415 413 28 Fibertex Personal Care in mala ysia

Fibertex Personal Care Sdn. Bhd. Jalan Mekanikal 1 Nilai 3 Industrial Park 71800 Nilai Negeri Sembilan, Malaysia

Expanding to meet demand

Supplying products of exceptional and consistent quality and consistently improving and developing products and professionalising the services is an indispensable requirement for Fibertex Personal Care, regardless of where its production is located.

Demand in Asia for Fibertex Personal tonnes per year. Today, Fibertex produces Asian market, at the same time future- Care’s spunbond and spunmelt nonwoven around 35,000 tonnes in Malaysia with proofing the factory’s ability to deliver products is much greater than what the sales amounting to some DKK 480 million. high-quality products. company’s factory in Malaysia is able to ”All producers of nonwovens for the produce – even with four-shift operations Close partnership breeds success personal care industry are characterised and current expansions. As a result, man- ”The new line will provide jobs for an- by delivering large quantities of very agement has speeded up an expansion of other 55 employees,” says Mikael Staal few products. In order to be unique, it is the factory, which is located in the west- Axelsen, CEO of Fibertex Personal therefore necessary to provide service ern part of Malaysia, 50 kilometres from Care. The strong expansion is a step in and supply products of exceptional and the capital of Kuala Lumpur. Fibertex’s strategy to meet demand in the consistent quality from all of our produc- In 2010, the construction of a whole tion sites while at the same time improv- new state-of-the-art production line ing and developing the products and was initiated as a supplement to the two professionalising the service. Finally, our existing lines producing lightweight success depends on our ability to ensure nonwoven fabrics used in the production close collaboration with the few but very of disposable nappies, sanitary towels large and global companies in the per- and incontinence products for the Asian sonal care industry,” says Mikael Staal market. Axelsen. This DKK 300 million expansion comes on top of the establishment of the DKK 40 Products must meet tough million extra module on one of the exist- consumer demands ing lines, which was put into operation Fibertex Personal Care established the in June 2010. The new production line is factory in Malaysia in 2003 in order to scheduled to be operational at the end serve the strongly growing Asian market of 2011. Once completed, the expansion in the best possible way. Today, Fibertex will increase capacity by around 22,000 Personal Care is among the largest within 29

Boom for disposable nappies in Asia

The potential for nonwovens in China, its field in South East consumption is growing strongly because South East Asia and India is huge. The use Asia and the largest the standard of living continues to im- of disposable nappies and other personal care products remains low in these markets. non-Japanese supplier prove and once you’ve started using these Today, some 20–30% of Asian babies use in Japan, which is also products, you don’t stop. At the same disposable nappies, while in Europe the rate the largest single mar- time, consumers won’t accept inferior is close to 100%. On the other hand, growth ket for the Malaysian quality which means that there is a huge is expected to continue in the years ahead. For example, the Chinese consumption of factory: potential for us as subcontractor. Also, disposable nappies has seen double-digit ”We have gained we must be at the forefront of product growth throughout a number of years and Mikael Staal Axelsen, that position among development in order to deliver the best growth is expected to continue on that level CEO, Fibertex other things because possible quality. If we are not, someone in the years ahead. Personal Care we have consistently else will be ready to take our place. This developed our pro market is extremely competitive,” says ducts, so they meet Japanese demands Mikael Staal Axelsen who expects that for ever softer and lighter products,” says India in particular will be one of the major Facts about Fibertex Mikael Staal Axelsen. growth areas in the years ahead. Personal Care By supplying a product quality from The Malaysian factory, which is under the factory in Malaysia matching that Danish management, focuses strongly on Fibertex Personal Care manufactures of products supplied from factories in creating the best possible conditions for nonwovens, i.e. lightweight fabrics used in Denmark, Fibertex Personal Care meets its 140 employees in order to attract the the personal care industry in Europe and Asia – mainly consumables in the production not just Japanese but also other Asian best and most qualified people: of babies’ nappies but also for sanitary consumers’ demand for high-quality ”Like in a Danish production, it is es- towels, incontinence products and products products: sential to create a zero defect culture in for the pharmaceutical industry. 98% of ”The proportion of consumers in the company. It is the consistency, qual- Fibertex Personal Care’s production is sold South East Asia, China and India buying ity, reliability of supply and the generally abroad. Around 140 of the 300 employees work abroad. disposable nappies and other personal high level of service that is to differenti- care products is still relatively small. But ate us from our competitors.” 30 Fibertex Nonwovens in south africa

Fibertex South Africa (Pty) Ltd. 16 Van Eck Avenue Hammarsdale 3700 Local ZA-KwaZulu Natal, South Africa production of high-quality needlepunched products

Fibertex Nonwovens is the only manufacturer in South Africa capable of offering products of a western European standard at competitive prices. The market spans all of southern Africa, and there is a big potential for expansion to other markets.

Fibertex Nonwovens’ newest factory is facture, there is always company is local, our employees are South based in the South African port of Durban, a running-in period on African, our production and administra- also called “the Gate to Africa”. Since the sales side. It might tion is state-of-the-art, and as the only the 2009/2010 turn of the year, 50 local take up to three years South African manufacturer of nonwo- employees have manufactured and sold before the factory’s vens we can offer quality products of a needlepunched products primarily in the capacity is fully utilised western European standard. That makes form of geotextiles for construction of, and it yields a satisfac- us unique,” explains Jørgen Bech Madsen. among other things, roads and railways, tory return,” says CEO and fibre products for the car industry. Jørgen Bech Madsen. Jørgen Bech Madsen, Geotextiles for roads and railways A total of 2,500 tons or 10% of Fibertex All of 2010 was spent CEO, Fibertex Production of geotextiles, which are Nonwovens Nonwovens’ total production of nonwo- building up markets needlepunched nonwoven fabrics used for vens is manufactured at the state-of-the- and establishing con- erosion prevention and for stabilisation art factory which is expected to generate tacts through very proactive sales efforts. purposes in large construction projects, annual revenue of DKK 60–65 million be- The South African company is a joint is an important field for the South African ginning from 2011. ownership between Fibertex Nonwovens, company. South Africa as well as other “Evidently, we are still in the start-up the Industrialisation Fund for Developing countries in the region such as Angola, phase. With the type of products we manu- Countries (IFU) and the South African Mozambique and Kenya are making rather company Safyr, which is partly owned massive investments to improve their by local industry specialists and partly infrastructures. The sale of products by Industrial Development Corporation for construction of roads and railways (IDC) – the South African equivalent to will therefore be key, while the products Vækstfonden (a Danish state investment will also be sold in connection with the fund aiming to create new growth compa- construction of combined heating power nies). Fibertex has invested about DKK 25 plants and airports, for setting up mines million in the company. and for coastal protection projects. “We have a very strong position in “Because of the mining industry in relation to our African customers. Our particular, the engineering know-how is [LEDEORDLEDEORDLEDEORD] 31

Billions of Rand being invested in infrastructure

South Africa has decided to invest billions of Rand in its infrastructure over the coming years. Nearly 10% of its gross domestic pro- very well-developed in many of the African dustry is very interested in local and conduct, equal to DKK 200bn in round figures, countries. They are accustomed to using sequently cheaper products of the same will be set aside annually for investments geotextiles and know how important high quality: in this field, which will cover new construction and restoration of roads and railways, they are to safety, among other things. “Our factory will be able to meet these extension of ports and airports, damming of This means that the need to explain and requirements within a short period of rivers, improvement of the drinking water promote our products is less pronounced time because all necessary certifications distribution, the sewage system and con- there than in a number of other countries,” will be in place very soon.” struction of water reservoirs and purificati- on plants, but also erection of new hospitals says Jørgen Bech Madsen. Employing The car industry has recovered after and schools. This financial boost is expected local manpower, its high product quality the economic downturn in 2009, and a to have a massive impact on the country’s due to state-of-the-art technology and number of national subsidy schemes have economy and its industrial development. management systems and its competitive now sparked an interest from the car in- prices have helped the South African com- dustry in producing cars in South Africa. pany get off to a good start: Several European and Japanese car “The factory operates according to the manufacturers such as Mercedes, BMW, same standards and procedures as our VW and Nissan already using Fibertex Facts about Fibertex other factories. That means we can be products today, have production facili- Nonwovens sure to have proper working conditions ties in South Africa. In fact, South Africa Fibertex Nonwovens manufactures needle and at the same time contribute to lift- has considerable car exports because the punched products for a wide range of ing social standards,” says Jørgen Bech manufacturers focus on production of industrial applications such as furniture, Madsen. right-hand driven cars. Geographically, bedding, carpets, filtration, automobile and composites, but also DIY-products for house South Africa has a central location in and garden and geotextiles for construction Car industry holding great potential relation to left-hand traffic markets. In of roads, for example. By far the main part Selling products to the fast growing South addition to countries in southern parts of of Fibertex Nonwovens’ production is taking African car industry, which today imports Africa, these markets are Australia, New place abroad, and 90% of the products are all needle punched products – including Zealand, Japan, Indonesia and India. sold to foreign buyers. Around 300 of the 415 employees work abroad. from Europe – also holds great potential “As a subcontractor, there lies a great for Fibertex. For this reason, the car in- potential for us,” says Jørgen Bech Madsen. 32 Grene · Report

Revenue (DKK million)

2008 1,307 2010 2007 1,237 1,185 2009 1,140 2006 Grene 1,001

Financial performance Reducing the working capital tie-up remained a big concern The year 2010 started off as a challenging period in the wake of in 2010. Nevertheless, the positive sales performance produced the economic downturn, but as the year progressed the many a relatively small increase in this item from DKK 358 million at initiatives taken in 2009 began to bear fruit. Cost reductions, or- December 31, 2009, to DKK 370 million at December 31, 2010. The ganisational alignments and structural change have been central net interest-bearing debt fell from DKK 449 million at December issues at Grene, but the company is nevertheless also geared for 31, 2009, to DKK 442 million at December 31, 2010. further expansion. Grene generated revenue of DKK 1,237 million in 2010, com- Business development pared with DKK 1,140 million in 2009. The revenue improvement The Agro business is operated by the Grene companies in the was attributable to the Agro business and its good performance Nordic region, Poland and most recently in Russia, where Grene in all country markets, whereas the year was a setback for Grene runs the activities in cooperation with Dutch business partner Industri-service. Kramp Groep. EBIT was DKK 48 million compared with DKK 31 million in The agricultural industry remains under pressure, especially 2009, which was at the upper end of the most recent forecast in Denmark. Debt rates are high, settlement prices are relatively range. The earnings for the year were strongly driven by the per- low and there is general uncertainty as to political initiatives as formance in Denmark and Sweden, where Grene produced highly well as a number of other matters that are having negative ef- satisfactory results. On the other hand, the results were adverse- fects on the sector. ly affected by the performance of Grene Industri-service and the In recent years, there has been a growing tendency to buy costs of establishing and developing the activities in Russia. according to current needs during the season, rather than the Grene · Report 33

DKK million 2010 2009

Revenue 1,237 1,140 - of which Industry 267 305 - of which Agro 970 835 - in Denmark 281 257 - in Poland 429 368 previous trend of pre-season buying to anticipated needs. This - in Sweden 133 99 change in buying patterns fits in well with Grene’s logistics set- - in Norway 67 58 up. Its comprehensive product offering and speedy delivery puts - in Finland 33 27 Grene in an even better position to act as a remote warehouse - other agro 27 26 for both dealers and end users. The operations in Russia continued the good performance and sales have developed better than expected. From the outset, Grene Kramp has concentrated its sales efforts on Russia’s large agro conglomerates, the largest dealers of imported machinery DKK million 2010 2009 and the largest pig producers. Russia is among the world’s largest agricultural markets, and INCOME STATEMENT Grene Kramp is the first pure wholesaler of agricultural spare Revenue 1,237.0 1,140.3 parts in the country. Gross profit 391.5 348.0 The activities of the Industry business are based mainly in EBITDA 79.6 61.6 Denmark and handled by Grene Industri-service and Grene Depreciation 29.3 28.3 Industri-OEM. Impairment 2.1 2.5 Grene Industri-service has clearly felt the effects of the eco- Operating profit (EBIT) 48.2 30.8 nomic slump, and the financial performance of recent years has Profit from divestments 1.1 0.0 been unsatisfactory. As a result, a lot of effort has been put into Financial items, net (11.0) (15.7) adapting the business to the new market conditions. Going for- Profit before tax 38.3 15.1 ward, Grene Industri-service will be focused on electroservices Tax for the period (10.5) (6.1) and the business could build a position as Denmark’s largest Profit for the period 27.8 9.0 and most dedicated operator in this field. As part of adapting its operations, Grene Industri-service divested its department for CASH FLOWS electric panels and automation effective September 1, 2010. Cash flows from operating activities 41.9 131.5 Grene Industri-OEM, an independent business unit under Cash flows from investing activities (27.4) (41.5) Grene in Denmark, serves OEM customers and large industrial Cash flows from financing activities (14.7) (83.1) aftermarket customers. Other focus areas are industry dealers and the construction industry. During the past few years, BALANCE SHEET the division’s sales and product strategy has evolved towards Intangible assets 32.1 17.4 specialising in selected product areas, and Grene Industri-OEM Property, plant and equipment 305.6 304.1 will not be directly affected by the alignments made in Grene Other non-current assets 12.4 9.3 Industri-service. Cash and cash equivalents 15.9 15.4 Outlook Other current assets 492.1 466.4 Total assets 858.1 812.6 Grene continues to see good development opportunities in the company’s business areas. Grene made a number of necessary Equity 255.5 218.6 adjustments in both 2009 and 2010, and the company is now well Interest-bearing debt 458.1 464.2 positioned to meet the market challenges. Other creditors 144.5 129.8 In the agro field, the negative trend that began when the Total liabilities and equity 858.1 812.6 crisis set in has been reversed, and all country markets are developing well. Grene Industri-service has restructured and Average number of employees 915 925 refocused its operations, and the previous unsatisfactory performance is expected to improve already in 2011. FINANCIAL KEY FIGURES The Russian market is developing well, but investments made EBITDA margin 6.4% 5.4% in the new activities in Russia are not expected to make a posi- EBIT margin 3.9% 2.7% tive contribution to the 2011 results. ROIC 7.4% 5.3% Grene expects to generate revenue of around DKK 1.3 billion Working capital 370.2 358.2 and EBIT in the range of DKK 50-60 million in 2011. Net interest-bearing debt 442.2 448.8 34 Grene in russia

OOO ”Grene Kramp” 107045, Kolokolnikov pereulok 9, bld. 3 Moscow, Russia

Local management opens doors to growth market

Grene Kramp is the first pure wholesaler of agricultural spare parts in Russia, and the company stands out from the competition by carrying its goods in stock. The company has the potential to become the biggest of the Grene companies.

With its 7,000 m2, Grene Kramp’s new import spare parts on ”Based on the revenue that we’ve been warehouse in Chekhov 55 kilometres demand. able to generate as a ”greenfield” com- south of the Russian capital of Moscow is pany in our first full year of operation, I the size of a football field and 12 metres Early entry in the see the potential for very strong future high. It is a state-of-the-art, purpose- Russian market growth,” says Carsten Thygesen. designed building with temperature con- ”Compared to many The company’s Russian manager has trol and anti-dust floors. But according to other western been the one to open doors and establish Grene CEO, Carsten Thygesen, the ware- European companies, relations with customers. Without rela- house is more than that: we entered the Russian Carsten Thygesen, tions, it’s hard to do business in Russia. ”First and foremost, the warehouse market at an early CEO, Grene Making ”a good offer” is far from enough. and the fact that we built it and are oper- stage. We drew on our ”Ever since we made the decision to ating it using only Russian workers is a experiences from the Polish market, enter the Russian market, we knew that signal to our customers that we are in the where we also established a presence at we had to take a long-term approach and Russian market to stay. We have gone into an early stage, but that is precisely why spend time building a strong foundation this market because we see it as a long- we’ve always been one step ahead of the for our activities. For instance, 95% of term business case.” competition. Today, our Polish company When Grene established the Russian is the market leader in Poland with rev- company three years ago together with enue of around DKK 430 million and also its long-standing Dutch business partner Grene’s largest subsidiary,” says Carsten Kramp Groep, it was well aware of the Thygesen, who believes that Grene Kramp fact it would take time and involve a lot of Russia is more than likely to take over challenges. Grene Kramp is the first pure this position during the next five to ten wholesaler of agricultural spare parts in years. Already in 2011, Russian revenue Russia. Also, Grene Kramp distinguishes is expected to reach DKK 65-75 million. In itself by carrying the spare parts in stock, 2010, revenue amounted to DKK 40 mil- while most other wholesalers in Russia lion: 35

The world’s fifth-largest agricultural area

Russia has the fifth-largest agricultural area in the world, only surpassed by the USA, Australia, Brazil and China. The cultivated agricultural area in Russia is 123 million hectares but there is a corresponding area which could potentially be cultivated. By comparison, Denmark has 2.7 million hectares of agricultural land with no expansion potential. There are 586,000 tractors in all spare parts on the shelves of Grene same time providing the service of hav- Russia, compared to 123,000 in Denmark. Kramp’s warehouse are imported. This ing the products in stock,” says Carsten Russia has 158,000 harvesters; Denmark has 23,000. There are 50 agro conglomerates in makes it essential that our products pass Thygesen. Russia with at least two farms and at least quickly through customs so we have Also, the Russian company puts a lot 45,000 hectares of cultivated land, 200 pig hired people who are experts on that. into composing a product range appropri- farms with more than 10,000 sows and 3,500 And in relation to our customers, it is ate for the Russian market which differs farms with more than 5,000 hectares of cultivated land. In comparison, the largest farm crucial that all material is translated into from western European markets and is in Denmark has 3,284 hectares of cultivated Russian, that the website and e-shop are much more similar to the US market. land and 2,000 sows is considered a large in Russian and that everyone in the or- Everything is big scale but at the same pig farm. ganisation speaks Russian. This way, we time, a lot of the equipment is worn out are perceived as a Russian company and and needs to be replaced over the next in fact, all our employees are Russian.” few years. Moreover, Russia wants to expand its agricultural production in order Products suiting the market to become self-sufficient and in time Facts about Grene Today, the company’s Russian product begin to export agricultural products; to Grene is the Nordic region’s leading sup- range comprises 10,000 items and now China, for example. plier of spare parts and accessories for the that the authorities have permitted an ”We want to be part of this develop- agricultural sector, industrial sector and expansion of the warehouse to a total ment and we stand out from our competi- garden, park and forestry area and is seeing strong growth in several European markets. of 22,000 m2, if required, Grene Kramp is tors thanks to our warehousing capacity, In the industrial sector, Grene sells compo- geared for growth: wide range of products and not least our nents and technical articles to small and ”More and more of the large machin- level of service and efficiency, which is medium-sized manufacturers of anything ery dealers and the major farms, includ- otherwise a rare factor in Russia. All of from food products to furniture and the ing the large agro conglomerates and pig this makes us very positive on the future parts of industry that need a turnkey solution and not just a single product. Around farmers, are approaching us because as prospects of our business,” says Carsten 600 of the 900 employees work abroad. wholesalers we can ensure availability Thygesen. across brands and products while at the 36 Hydra-grene · Report

Hydra-Grene

Financial performance Hydra-Grene generated revenue of DKK 391 million in 2010, compared with DKK 417 million in 2009. The decline was due to weaker demand from the wind turbine industry, whereas sales to other industry customers improved relative to 2009. EBIT for the year was DKK 56 million against DKK 63 million in 2009. The profit performance remained high despite the downturn and was better than the most recent guidance. The overall working capital tie-up rose from DKK 160 million at December 31, 2009, to DKK 175 million at December 31, 2010, due to a deliberate build-up of inventories to a level deemed necessary in order to have sufficient delivery capacity for the late part of the year. Net interest-bearing debt rose from DKK 17 million at December 31, 2009, to DKK 38 million at December 31, 2010. Included in this amount was a DKK 50 million dividend payment made by Hydra-Grene to Schouw & Co.

Business Development Hydra-Grene’s principal business is to sell components and accessories for hydraulics, industrial hoses and related areas, including the supply of assembled goods such as hydraulic pump units and system solutions as well as the production of alumi- nium valve blocks. Recent years’ trends towards selling increasingly complex products and system solutions to major customers are very demanding on a supplier’s organisation and quality management. Hydra-Grene has responded by consistently adapting to the requirements of its large customers. In 2010, for example, the company was certified to the ISO 9001 standard by Bureau Veritas. The company sells most of its products and services to the Danish market, but sales to international customers are growing, especially to customers in the wind turbine industry. Hydra-Grene consistently endeavours to improve the company’s opportunities by following major customers around the world. One way is to establish bridgeheads in relevant markets, as this is also an opportunity to sell products to local customers in product areas where Hydra-Grene has special expertise. In 2009, the company began selling products for the wind turbine industry in China, establishing small scale production there in 2010 which it is now expanding as demand grows. In 2010, the Chinese business relocated to new premises leased together with four other Danish sub-contractors to the wind turbine in- Revenue (DKK million) dustry. Hydra-Grene has opened a sales office in India and although activity there is still moderate, India is a market with a substan- 2008 531 tial potential. Also in 2010, the company established a business 2007 in the USA with a view to servicing the US market in the future. 440 2009 417 2010 2006 391 362 Outlook In 2010, Hydra-Grene experienced a postponement of orders 37

DKK million 2010 2009

INCOME STATEMENT Revenue 391.4 417.2 Gross profit 133.9 137.0 EBITDA 67.1 74.0 Depreciation 10.9 11.4 Operating profit (EBIT) 56.2 62.6 Share of profit from associates 0.2 (0.1) Financial items, net (1.1) (2.5) Profit before tax 55.3 60.0 Tax for the period (14.0) (15.2) Profit for the period 41.3 44.8

CASH FLOWS Cash flows from operating activities 35.3 113.1 Cash flows from investing activities (5.8) (3.9) Cash flows from financing activities (19.0) (110.6)

BALANCE SHEET Intangible assets 0.9 1.6 Property, plant and equipment 109.4 113.9 Other non-current assets 1.4 1.2 Cash and cash equivalents 11.3 20.3 Other current assets 228.4 205.1 Total assets 351.4 342.1

Equity 237.8 247.1 Interest-bearing debt 49.3 37.7 Other creditors 64.3 57.3 Total liabilities and equity 351.4 342.1 expected from the wind turbine industry until 2011 and growing demand in several areas from other industry customers. During Average number of employees 174 175 the past year, the company has made the necessary adjustments, and its solution-provider capabilities make Hydra-Grene well po- FINANCIAL KEY FIGURES sitioned to adapt to the changing market demand. EBITDA margin 17.1% 17.7% Industry demand is expected to be stable in 2011 with an in- EBIT margin 14.4% 15.0% crease in activity in certain areas. Demand from the wind turbine ROIC 20.7% 21.1% industry is expected to pick up in 2011, with a growing proportion Working capital 175.4 160.3 of the business taking place outside of Denmark. Net interest-bearing debt 38.0 17.4 Hydra-Grene expects to generate revenue of around DKK 450 million and EBIT in the range of DKK 50-60 million in 2011. 38 Hydra-Grene in china

Hydraulics Equipment Accessory (Tianjin) Co. Ltd Room 1206, Di Yang Tower, No. H2, Dongsanhuan Beilu, Chaoyang District, Beijing 100027, P.R. China

Local production opens doors

Hydra-Grene has used its experience from Denmark to introduce production and control procedures ensuring that the quality of its products is the same regardless of whether production takes place in Denmark or in China.

Since its establishment in 1974, Hydra- that end, Hydra-Grene is making every from Denmark, while Grene has been a Danish company serv- effort to boost sales to the wind turbine the employees in the ing Danish customers. Nevertheless, due industry in the years ahead. Chinese company were to its status as a major sub-contractor to in charge of assembly the wind turbine industry, the company First steps towards globalisation and preparation. In has been putting globalisation on the ”Our globalisation process began when 2010, the company agenda over the past couple of years. To we took steps to continue supplying our posted revenue of products to the large customers we have more than DKK 20 among wind turbine manufacturers as Erik Lodberg, CEO, million and there are they moved onto the global market. Our Hydra-Grene expectations of strong close collaboration with the wind turbine revenue growth in industry continues to offer a great earn- 2011 based on the setting up of actual ings potential for us and we’re even able production of hydraulic hoses and pipes to supplement this collaboration with our as well as cleaning services. At a later independent efforts in markets where the stage, this production will be supple- utilisation of wind power will be priori- mented by other production while the de- tised in the coming years. We have taken livery of finished products from Denmark the first careful steps in our globalisation will continue. Hydra-Grene’s products for strategy with the establishment of produc- the wind turbine industry comprise lubri- tion facilities in China together with four cation and filter systems for wind turbine other Danish sub-contractors to the wind gearboxes, hose and pipe solutions and turbine industry,” says CEO Erik Lodberg. cooling systems. The Chinese company, which is located around 80 kilometres from the capital Sales to Chinese manufacturers of Beijing, was opened in June 2010. The largest customers are western Initially, the products were delivered European wind turbine manufacturers 39

Strongest growth in wind turbines

China has set its mind on becoming a big player in the manufacturing of wind turbines. And when the world’s most populous producing wind turbines in China but the suring that the quality of our products is nation has set its mind on something, it will ambition is to sell products to the Chinese the same regardless of whether produc- happen. According to a new report from China Wind Energy Association (CWEA), manufacturers as well: tion takes place in Denmark or in China. strong growth is expected for the Chinese ”We have established the first contacts The Chinese wind market is develop- wind power market. CWEA estimates that and it seems that Hydra-Grene is an ating rapidly and Chinese wind turbine China installed 15,000 megawatt of wind tractive sub-contractor thanks to our manufacturers are mushrooming. power in 2010 which means that China has surpassed the USA and become the 20 years of experience in this market. ”Right now, there are more than 50 world’s largest wind power market with an We know the product requirements and manufacturers in a very immature mar- installed wind capacity of more than 40,000 deliver high-quality products. Also, we ket. As we see it, in a few years there will megawatt. enjoy a favourable position because the be between five and ten major players left name of Denmark has a positive ring to it in the large Chinese market. Our ambition and signals innovation when it comes to is for Hydra-Grene to be a sub-contractor wind turbines,” says Erik Lodberg. At the to some of them within our field of exper- same time, he is fully aware of how essen- tise,” says Erik Lodberg. Facts about Hydra-Grene tial it is for Hydra-Grene to consistently The supplies to the wind turbine Hydra-Grene is a trading and engineering deliver the high-quality products that industry is also the reason why Hydra- company trading in, developing and have always characterised the company’s Grene set up a sales office in the USA last manufacturing hydraulic components and products, and also, that you can only get year. At the same time, its sales office systems to the industrial sector in Denmark, not least the wind turbine industry. At into the Chinese market if you set up pro- in India increased activities and is now the same time, the company is focusing duction in China: working on setting up local production by strongly on increasing sales to the rest ”We would like to open the doors to the 2012 based on the Chinese model: of the world. In 2010, more than 25% of Chinese growth market while at the same ”We’ve already rented the premises,” Hydra-Grene’s production was sold outside time maintaining the high quality stand- says Erik Lodberg. Denmark. The aim is to grow this to 30% to 40% within five years. 12 of the 175 emplo- ards. For this reason, based on our expe- yees work abroad. rience in Denmark, we have introduced production and control procedures en- 40 Martin · Report

Martin

Financial performance relative to 2009. EBITDA improved by DKK 112 million, ending the 2010 was a challenging year for Martin, as the company imple- year at a profit of DKK 6 million. mented a number of very comprehensive initiatives in order to EBIT improved from a loss of DKK 200 million in 2009 to a loss consolidate the adjustments made after 2009, when the econom- of DKK 69 million in 2010. EBIT for the year was in line with the ic slump cut back demand by historic proportions. most recent guidance, but clearly the negative performance is not The alignment process has been extensive, but was com- satisfactory. pleted with a view to maintaining the competitive strength. For Despite the increase in activity, Martin reduced its working example, Martin kept its development budget at a high level in capital to DKK 316 million from DKK 334 million at December 31, order to distinguish itself from the competition and to be able to 2009. The net interest-bearing debt fell from DKK 468 million at accelerate operations once the market returns to normal. December 31, 2009, to DKK 445 million at December 31, 2010. Martin lifted its revenue to DKK 715 million from DKK 647 million in 2009. The improvement was driven by a steady increase in Business Development market activity, and Martin lifted its year-over-year performance Growing demand combined with the concurrent outsourcing of in each of the four quarterly periods of the year. parts of production hampered Martin’s supply power in 2010. A The higher revenue combined with a rising contribution mar- number of difficulties in connection with running-in new proce- gin and lower costs produced a substantial EBITDA improvement dures for the outsourcing of print production and metal working Martin · Report 41

Revenue (DKK million)

2007 1,173 2006 2008 1,027 1,045 affected planning and final assembly operations at the factories, and the higher global demand for electronics components cau- 2010 sed longer lead times. With production assignments outsourced, 2009 715 activity at one of the two factories in Frederikshavn, Denmark, 647 has now been discontinued, reducing the company’s complexity. Sales improved in 2010 despite the effects of the weaker supply power. About half of the growth was achieved in the US market, while Asia and the Middle East also improved and Europe was unchanged. Martin has restored a strong foothold in Russia, where the company opened a representative office in 2010. Sales DKK million 2010 2009 in Russia more than tripled relative to 2009 making this Martin’s largest export market, apart from markets where the company INCOME STATEMENT has own sales subsidiaries. Revenue 714.8 646.8 On the product side, Moving Heads remain the main sales Gross profit 116.3 14.9 driver. Three new products launched on the market in this cat- EBITDA 5.9 (106.5) egory in the second half of the year were strong contributors Depreciation 69.6 72.4 to the improvement, including the MAC 350 Entour, a product Impairment 5.3 21.3 based on LED technology developed in collaboration with Aalborg Operating profit (EBIT) (69.0) (200.2) University and with the support of the Danish National Advanced Share of profit from associates (0.1) (1.2) Technology Foundation. In September, the MAC 350 Entour won Financial items, net (17.4) (30.4) the Confederation of Danish Industry’s Product Award 2010. Profit before tax (86.5) (231.8) Martin is strongly positioned in connection with the shift to Tax for the period 20.6 54.8 the LED technology that is generally underway in the market. Profit for the period (65.9) (177.0) Innovation and new products make up one of the parameters of success that will underpin growth, and Martin generates just CASH FLOWS over 40% of its revenue from products launched within the last Cash flows from operating activities 50.3 46.6 24 months. Cash flows from investing activities (26.7) (47.2) The running-in difficulties experienced in connection with Cash flows from financing activities (26.1) 0.7 the restructuring of the supply chain impacted the earnings ability during the year, causing weaker efficiency utilisation and BALANCE SHEET additional logistics costs. Nevertheless, the contribution ratio Intangible assets 150.4 167.0 improved relative to last year and overall costs were lower, indi- Property, plant and equipment 156.6 183.8 cating that much of the identified potential from the transforma- Other non-current assets 25.2 30.2 tion strategy has now been achieved. Cash and cash equivalents 4.8 7.3 Other current assets 465.0 502.9 Outlook Total assets 802.0 891.2 Sustained improvements in the global economy and the investment climate will help bring the markets back to normal, and Equity 195.4 247.3 Martin expects revenue growth in 2011 on a level with 2010. The Interest-bearing debt 449.3 475.4 new LED-based products as well as a number of upcoming mega Other creditors 157.3 168.5 events, such as the 2012 London Olympics, are expected to lift Total liabilities and equity 802.0 891.2 demand. Also, the growing project sales are helping to underpin growth. Average number of employees 609 785 Based on the estimated growth, Martin expects to generate revenue in 2011 of around DKK 800 million and EBIT in the range FINANCIAL KEY FIGURES of a DKK 25 million loss to break even. Notwithstanding the im- EBITDA margin 0.8% -16.5% provement projected relative to 2010, the expected EBIT for 2011 EBIT margin -9.7% -31.0% is not considered as reflective of the company’s full potential, ROIC Neg. Neg. and the goal remains for Martin to bring the EBIT margin close Working capital 315.7 334.1 to 10% within a few years. Net interest-bearing debt 444.5 468.2 42 Martin professional in THE USA

Martin Professional, Inc. 700 Sawgrass Corporate Parkway Sunrise, FL 33325, U.S.A.

Efficient service and innovation to secure orders

A large part of Martin’s future US business will be generated from projects involving permanent installations. Its unique products and the Fort Lauderdale sales office provide the ideal platform for expansion over the next few years.

With its sales office, workshop and ware- lights are produced not in the USA but in of mind, as they say. house in Ft. Lauderdale in southern Denmark. With revenue of over DKK 200 They want the spotlight Florida and sales offices and workshops million in 2010, the USA is Martin’s lar- on the superstar and in Las Vegas and Los Angeles, Martin has gest single market, accounting for some they want it to work built a position as market leader in the 30% of total business. every time. We make that USA within its field of computer-control- Martin’s largest business area in the happen,” says Christian led effect lighting, despite the fact that its USA is the sale of computer-controlled Engsted, Martin, ex- lights to rental companies, which rent plaining the growth out equipment for concerts and concert Christian Engsted, of around 20% in this tours, and for various business activities, CEO, Martin segment in 2010. Martin such as product launches, exhibitions products are used in and other external and internal events. eight out of ten concerts in the USA and the Unfortunately, US businesses, like many sales of computer-controlled lights picked other businesses around the world, re- up substantially in 2010: duced their activity levels substantially ”The reason is that the stages have in 2009 and also in 2010, resulting in a grown considerably larger. The rig height drastic decline in demand for Martin’s on American stages which used to be 6 me- products. There have been only weak tres is now often 12 metres. This requires signs of improvement in 2011. In return, larger and stronger lights and we happen developments in the concert business to have the best product for that, the MAC have been positive. III,” says Christian Engsted, adding that the concert organisers also appreciate Products and services Martin’s product development and innova- provide stability tion capabilities. More than 40% of Martin’s ”US concert organisers love our products sales in the US market is based on products as well as our services. We supply peace launched within the past two years. 43

Instead of launching a new product Christian Engsted. As a result, the com- in the usual way through trade fairs and pany has a market share of around 60% Land of the big concerts by calling on customers, Martin’s new- of the dynamic light solutions supplied to est product, which is also its smallest newbuild cruise vessels. In 2010, Martin The USA is the land of big concerts. Each light to date, the MAC 101 LED-based supplied equipment to Allure of the Seas, year, more than 2,300 bands are on tour and moving head, was first presented as which is currently the world’s largest there are around 15,000 concerts per year in the USA. While largely all kinds of businesses the core product of the more than 200 cruise vessel: have been hit by the economic crisis, the US moving head lamps used at MTV’s Music ”Our next goal is to supply lighting concert business has proven to be surpris- Video Awards show in Los Angeles in to cruise vessels which are being refur- ingly strong. For instance, ticket sales have September 2010. The launch was a huge bished. This market is twice as big as the grown by 8% on average over the past 20 success and by the end of the year, Martin market for newbuildings.” years – regardless of economic crises. had orders for more than 3,000 of these Martin has also managed to gain a small moving head lamps. good foothold in the other areas of the commercial market in the USA. This ap- Supplier to cruise liners plies particularly to the decoration of Also in the USA, Martin pursues its stra- retail shops and lighting solutions for Facts about Martin tegy from 2008 of supplying the commer- lounges and clubs – not least in Las Vegas: Martin is the world’s largest manufacturer cial market within five business areas: ”Developments suggest that our US of computer-controlled effect lighting for theme parks, cruise liners, retail shops business going forward will be generated the global entertainment industry. Martin’s and shopping centres, hotels and resorts, from projects involving permanent instal- lights are furthermore used for lighting of buildings, bridges, and other landmarks, for and stadiums and arenas. lations. The potential is huge and we have creating entertainment in theme parks, at ”Our US office is located only 50 the ideal platform to play an important hotels and on board cruise liners, as well as kilometres from Miami, the hub of the role in the years ahead,” says Christian in restaurants and shopping centres. 98% of cruise industry which we have system- Engsted. Martin’s products are sold abroad. 275 of the 600 employees work outside Denmark. atically built up business relations with throughout the past three years,” says 44 Xergi · Report

Xergi

Financial performance As a project-driven business, Xergi relies on the specific conditions applying to each individual biogas project. In most countries, biogas is considered a new technology, and caution in the lending markets is still making project financing difficult to obtain. In addition, biogas plant projects are being hampered by the lack of specific framework conditions in the individual countries. While suffering delays and postponements in Denmark and France in 2010, Xergi completed its first biogas plant in the United Kingdom during the year. Combined with a number of minor shipments made and tight cost management, this contrib- uted strongly to limiting the effect of the shortfall of orders. Xergi generated revenue of DKK 118 million in 2010, compared with DKK 92 million in 2009. EBIT for the year was a loss of DKK 10 million against a DKK 12 million loss in 2009, which was in line with the most recent guidance. In Xergi’s business model, the net working capital is mainly an indication of the difference between prepayments from customers and the value of work in progress. The net working capital may display significant short-lived fluctuations, but is typically at around zero. Net interest-bearing debt amounted to DKK 26 million at December 31, 2010, as compared with DKK 22 million at December 31, 2009. The company’s two owners made a capital contribution in equal amounts for a total of DKK 20 million in 2010, which had a positive effect on the interest-bearing debt. In order to ensure Xergi’s financial strength, in February 2011, the owners increased the equity by an additional DKK 10 million through a cash contribution. The capital increase is not reflected in total assets at December 31, 2010.

Business Development Xergi continued to expand its position and investments in the the expanding Turkish market. Xergi expects French market in 2010. The market is in a start-up phase, and to apply this licencing strategy in other mar- the actual number of projects established is not in line with pro- kets. jections, but the politicians are expected to introduce a higher The substantial uncertainty in respect of settlement price on electric power than the existing one. Xergi funding terms prevailing in all markets in has set up its own legal unit in France staffed with local employ- 2011 has brought ees and thus controls all aspects of shipping and installing turn- a lot of atten- key systems in the country. tion to all costs. The UK market is developing favourably, enjoying the benefits Jørgen Ballermann, The company 50%-owned of the British government’s efforts to reduce carbon emissions. CEO, Xergi remains at the Xergi has been present in the UK market for energy plants since incubation stage, Xergi is owned on a fifty/ fifty basis by Schouw 1997, and in 2009, the company won its first order for a major however, and will to a certain extent & Co. and Dalgasgroup biogas plant to be handed over in 2010. The company is regularly have to continue working the mar- (Hedeselskabet) and expanding in collaboration with project developers and utility kets and pursuing product develop- is recognised in the companies and expects that a sound market for its technology ment, even if sales opportunities in Schouw & Co. consolidated financial statements will develop in the future. the short term are not quite in line on a pro-rata basis. Xergi signed a licencing agreement with a Turkish business with expectations. partner in 2010 for the supply of know-how and technology for The company’s R&D department Xergi · Report 45

Revenue (DKK million)

2006 167 2007 142 2010 118 2008 2009 94 92

DKK million 2010 2009

INCOME STATEMENT Revenue 117.6 92.5 Gross profit 15.4 11.6 EBITDA (7.6) (10.0) Depreciation 2.0 1.8 Operating profit (EBIT) (9.6) (11.8) Share of profit from associates (0.1) 0.0 Financial items, net (1.4) (1.3) Profit before tax (11.1) (13.1) Tax for the period (0.4) 2.7 Profit for the period (11.5) (10.4)

CASH FLOWS Cash flows from operating activities (21.9) (23.7) Cash flows from investing activities (2.3) (2.0) Cash flows from financing activities 18.7 8.6

BALANCE SHEET Intangible assets * 17.2 16.2 Property, plant and equipment 2.8 3.4 Other non-current assets 29.6 30.0 is based at the Agro Business Park in Foulum, Jutland. One of Cash and cash equivalents 4.7 10.4 its projects is to further develop the patented NiX technology, in Other current assets 44.1 48.2 which Xergi acquired a 50% interest. The technology is intended Total assets 98.4 108.2 to enhance the profitability of manure-based biogas plants. Equity 28.9 40.3 Outlook Interest-bearing debt 31.1 32.4 Xergi expects to complete negotiations for orders for biogas Other creditors 38.4 35.5 projects in the UK and in France in the spring of 2011. The timing Total liabilities and equity 98.4 108.2 of the final approval of these projects will depend on government approvals and the final financing commitments. Average number of employees 62 70 Based on current projections, Xergi expects to generate revenue of DKK 140–170 million and an EBIT of around break FINANCIAL KEY FIGURES even in 2011, implying a substantial improvement on 2010. EBITDA margin -6.5% -10.8% Prospects for biogas remain promising going forward. There EBIT margin -8.2% -12.8% is generally strong support for renewable energy, including ROIC Neg. Neg. for biogas which is making positive contributions to limiting Working capital 7.2 15.3 emissions, handling nutrients and to enhancing the security of Net interest-bearing debt 26.3 22.0 energy supplies. * Excluding goodwill on consolidation in Schouw & Co. of DKK 6.8 million 46 Financial investments

Financial investments

The Schouw & Co. Group’s financial invest- The market capitalisation of the hol- and in part because the commitment has ments consisted of two significant stakes ding was DKK 704 million at December 31, attracted positive attention to Schouw & Co. at the end of 2010; shares in Vestas Wind 2010. Systems, which were transferred from The ownership interest in Vestas is Lerøy Schouw & Co. to the subsidiary Schouw rooted in historical developments. Schouw At December 31, 2010, the Group held & Co. Finans A/S on January 4, 2010 and & Co. has been involved in the wind tur- 1,000,000 shares in Lerøy, equal to a 1.83% shares in Lerøy Seafood Group held by the bine industry since 1994, originally as a ownership interest. The shares in Lerøy Norwegian subsidiary BioMar AS. main shareholder of the then Micon A/S, were acquired in connection with the sale which became NEG Micon A/S through a of Sjøtroll Havbruk in the autumn of 2010 Vestas 1997 merger with the then listed company and were a part of the payment in that The Group held 4,000,000 shares in Vestas Nordtank Energy Group A/S. In 2004, NEG transaction. at December 31, 2010, which was unchan- Micon became a part of Vestas and on the On closing of the divestment of Sjøtroll ged from the beginning of the year and occasion of that combination, Schouw & Havbruk on November 11, 2010, the shares equal to a 1.96% ownership interest. Co. became a less influential shareholder were recognised in the financial state- The official share price was DKK 176.10 of the new company. ments at a value of NOK 160.50 per share, at December 31, 2010, while it was recog- Over the years, the commitment to the and at the end of the year, the share price nised at 314.59 at December 31, 2009. The wind turbine industry has been of conside- had appreciated to NOK 198.50 per share. resulting unrealised negative value ad- rable importance to Schouw & Co., in part The resulting unrealised positive value justment of DKK 554 million attributable because the proceeds from the accumu- adjustment of DKK 36 million attributable to 2010 has been recognised under conso- lated sale of wind turbine shares exceed to 2010 has been recognised under consoli- lidated financial items. the total investment by DKK 1,174 million, dated financial items. Incuba 47

Incuba

Schouw & Co. holds a 49.0% ownership interest in the development and venture company Incuba A/S, whose other shareholders are the Aarhus University Research Foundation and NRGi a.m.b.a. Incuba is engaged in development activities through a 26.9% ownership interest in Østjysk Innovation A/S, a government-approved innovation environment with investments in more than 40 business start-ups, and in the venture capital area through its 32.6% ownership interest in Incuba Venture I K/S, a venture fund in the process of being wound up. Incuba also has a 38.2% ownership interest in Scandinavian Micro Biodevices ApS, a company producing point-of-care veterinary diagnostic products that is developing gradually from being a venture operation into being a company with actual operations. In addition, Incuba holds a 26.3% interest in Incuba Science Park A/S, which runs three science parks in Aarhus, Denmark: the original science park next to the University of Aarhus, the biotech-med science park next to Aarhus University Hospital, and the IT science park at Katrinebjerg. Combined, the three science parks extend over a total floor space of just over 30,000 m2, of which 27,800 m2 is leased to 125 different ten- ants (businesses, university and hospital departments as well as trade promotion). Incuba Science Park is also part of a consortium that is currently involved in the construction of Navitas Park at the Port of Aarhus, which is a 38,000 m2 research, training and entrepreneurship centre dedicated to energy and related technologies. In addition to a science park, Navitas Park will house more than 2,300 students when completed in 2014. Incuba reported a slight loss after tax for 2010, close to breaking even. The loss was attributable to the venture activities, whereas development operations and the science park operations were profitable. 48 Consolidated financial statements Consolidated statement 49 6.3 0.0 4.43 4.43 2.88 2.87 0.0 0.0 0.0 (2.5) (3.8) 79.7 37.6 77.9 77.9 38.1 73.0 (11.4) (28.5) (17.4) 2009 136.9 150.9 287.8 208.1 287.8 190.0 101.5 150.9 112.8 150.9 148.0 (900.5) (420.5) (155.0) 8,439.7 1,479.7 (6,960.0) 6.1 0.0 1.1 (0.97) (0.97) (5.12) (5.10) (5.6) (0.6) (0.3) 40.2 68.2 20.9 68.0 40.2 40.2 64.2 13.7 (24.0) (12.1) (39.8) 2010 186.6 226.8 226.8 158.6 166.8 114.6 194.8 368.6 (910.1) (408.0) (678.3) (241.2) (126.6) 9,450.8 1,671.4 (7,779.4) January 31 1 - December Tax on other comprehensive income Other comprehensive income after tax Total recognised comprehensive income Profit for the year Total recognised comprehensive income Attributable to Shareholders of Schouw & Co. Minority interests Profit for the year from discontinuing operations Earnings per share (DKK) Diluted earnings per share (DKK) Earnings per share from continuing operations (DKK) (DKK) Diluted earnings per share from continuing operations Other operating income Distribution costs Administrative expenses Goodwill impairment Other operating expenses Profit/(loss) after tax in associates equity investments Profit from divestment of Financial income Financial expenses Profit before tax Tax on profit for the year Profit for the year Profit for the year Comprehensive income Exchange rate adjustment of foreign subsidiaries Revenue Cost of sales Gross profit Operating profit (EBIT) Attributable to Shareholders of Schouw & Co. Minority interests to cost of sales Value adjustment of hedging instruments transferred Profit for the year from continuing operations to financials Value adjustment of hedging instruments transferred during the year Value adjustment of hedging instruments recognised Other comprehensive income from associates All amounts in millions of Danish kroner. Statement of income and comprehensive income income and comprehensive of income Statement 2 5 3 8 3 5 6 7 9 10 11 11 11 11 10 3, 4 1, 29 3, 12 Note 50

Balance sheet · Assets at December 31

2010 2009 Note Goodwill 904.0 889.8 Patents, licences and rights 42.8 54.0 Completed development projects 98.4 104.0 Development projects in progress 30.1 23.5 3, 12 Intangible assets 1,075.3 1,071.3

Land and buildings 1,249.7 1,216.9 Leasehold improvements 10.1 10.6 Plant and machinery 1,029.7 1,102.2 Other fixtures, tools and equipment 98.5 96.1 Assets under construction, etc. 399.0 72.8 3, 13 Property, plant and equipment 2,787.0 2,498.6

6 Equity investments in associates 94.1 129.9 14 Securities 736.9 1,294.3 19 Deferred tax 134.1 44.5 16 Receivables 112.5 105.9 Other non-current assets 1,077.6 1,574.6

Total non-current assets 4,939.9 5,144.5

15 Inventories 1,505.4 1,221.9 16 Receivables 1,799.8 1,659.0 24 Income tax receivable 4.9 3.8 17 Construction contracts 8.3 5.6 14 Securities 190.0 0.7 28 Cash and cash equivalents 451.6 415.4 Total current assets 3,960.0 3,306.4

1, 29 Assets held for sale 0.0 1,207.6

Total assets 8,899.9 9,658.5

All amounts in millions of Danish kroner. Consolidated statement 51 5.2 6.4 49.0 35.6 54.7 76.5 (14.3) (79.7) 2009 145.8 499.8 501.9 255.0 298.9 1,129.4 1,365.5 1,056.7 1,420.6 3,037.7 4,403.2 9,658.5 4,217.0 4,454.5 4,753.4 0.6 4.7 0.0 3.5 40.2 73.1 33.6 51.4 76.5 (24.7) 2010 967.7 185.4 255.0 113.3 1,125.8 1,457.0 1,691.1 3,379.0 4,504.8 8,899.9 3,971.5 4,391.6 4,395.1 at December 31 at December All amounts in millions of Danish kroner. Income tax Provisions sale Liabilities associated with assets classified as held for Notes without reference Deferred tax Pensions and similar liabilities Credit institutions Other liabilities Non-current liabilities Current portion of non-current debt Credit institutions Construction contracts Trade payables and other payables Current liabilities Total liabilities Total liabilities and equity Balance sheet · Liabilities and equity equity and Liabilities · sheet Balance Share capital Hedge transaction reserveHedge transaction Exchange adjustment reserveExchange adjustment Retained earnings Proposed dividend to the parent company Share of equity attributable Minority interests Total equity 18 24 20 19 20 21 21 21 17 23 1, 29 Note 30-36 21, 22 52

Cash flow statement January 1 - December 31

2010 2009 Note Profit before tax (241.2) 101.5 Adjustment for operating items of a non-cash nature, etc. 3 Depreciation and impairment losses 384.3 398.1 Other operating items, net 4.7 (56.3) Provisions (3.7) (6.3) Income from investments in associates after tax 0.6 11.4 Financial income (68.0) (77.9) Financial expenses 678.3 155.0 Cash flows from operating activities before changes in working capital 755.0 525.5

25 Changes in working capital (161.7) 794.4 Cash flows from operating activities 593.3 1,319.9

Interest income received 38.5 44.9 Interest expenses paid (127.1) (158.5) Cash flows from ordinary activities 504.7 1,206.3

24 Income tax paid (60.3) (15.1) Cash flows from operating activities 444.4 1,191.2

26 Purchase of intangible assets (42.2) (55.1) Sale of intangible assets 1.8 2.1 26 Purchase of property, plant and equipment (471.2) (207.9) Sale of property, plant and equipment 23.1 41.8 Acquisition of minority interests in subsidiaries 0.0 (1.0) 6 Acquisition of associates 0.0 (13.8) 27 Divestment of subsidiaries 4.2 0.0 Loan to associates (2.5) (5.2) Purchase of securities (2.0) (13.8) Sale of securities 4.5 6.9 Cash flows from investing activities (484.3) (246.0)

Debt financing: Repayment of non-current liabilities (505.3) (558.1) 26 Proceeds from incurring financial liabilities 26.2 57.2 Increase (repayment) of debt to credit institutions 393.4 (227.8) Shareholders: Costs regarding capital reduction/increase 0.0 (0.1) Additional minority shareholders, net 1.4 0.0 Dividend paid (74.9) (76.4) Purchase / sale of treasury shares, net (153.6) (101.3) Cash flows from financing activities (312.8) (906.5)

29 Cash flows from discontinuing operations 361.9 2.2

Cash flows for the year 9.2 40.9 Cash and cash equivalents at January 1 424.5 383.9 Value adjustment of cash and cash equivalents 17.9 (0.3) 28 Cash and cash equivalents at December 31 451.6 424.5

All amounts in millions of Danish kroner. Consolidated statement 53 6.3 9.5 6.1 6.8 (0.1) (1.0) (0.3) 13.7 12.1 40.2 (17.4) (76.4) (39.8) (74.9) 148.0 150.9 287.8 194.8 226.8 (101.3) (169.3) (363.4) (153.6) (585.1) 4,634.9 4,753.4 4,395.1 Total equity

0.0 0.0 0.0 0.0 0.0 0.0 4.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3.5 (1.0) (1.0) (0.2) 41.6 38.1 79.7 64.2 68.2 220.2 298.9 Minority interests (363.4) (363.6) 6.3 9.5 0.0 6.1 6.8 0.0 Total (0.1) (0.3) 13.7 12.1 (17.4) (76.4) (39.8) (24.0) (74.7) 106.4 112.8 208.1 190.8 158.6 (101.3) (168.3) (153.6) (221.5) 4,414.7 4,454.5 4,391.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 84.0 76.5 76.5 76.5 76.5 76.5 76.5 (84.0) (84.0) (76.5) (76.5) dividend Proposed

6.2 0.0 0.0 9.5 7.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 6.8 1.8 0.0 36.3 42.5 24.9 (59.3) earnings Retained (101.3) (100.5) (100.5) (153.6) (145.0) 4,233.8 4,217.0 3,971.5 0.0 2.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.2 0.0 0.0 0.0 0.0 0.0 0.0 reserve (79.7) 100.2 102.2 190.8 193.0 113.3 (181.9) Exchange adjustment

0.0 4.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3.9 0.0 0.0 0.0 0.0 0.0 0.0 (1.2) (0.3) Hedge 13.7 12.1 (17.4) (13.1) reserve (14.3) (39.8) (10.4) (24.7) transaction

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Share capital (25.0) (25.0) 280.0 255.0 255.0 All amounts in millions of Danish kroner. Equity at January 1, 2009 Statement of changes in equity of changes Statement Other comprehensive income in 2009 Other comprehensive income of foreign subsidiaries Exchange rate adjustment Value adjustment of hedging instruments Value adjustment of hedging recognised during the year Tax on other comprehensive income Tax on other comprehensive Profit for the year Total recognised comprehensive income Total recognised comprehensive Transactions with the owners Share-based payment, net Dividend distributed Capital decrease Addition/disposal of minority interests Addition/disposal of minority Treasury shares bought/sold Transactions with the owners for the period Equity at December 31, 2009 Other comprehensive income in 2010 Exchange rate adjustment of foreign subsidiaries Value adjustments of hedging instruments transf. to cost of sales Value adjustments of hedging instruments transf. Value adjustments of hedging instruments transferred to financials Value adjustments of hedging instruments transferred Value adjustment of hedging instruments recognised during the year Other comprehensive income from associates Tax on other comprehensive income Profit for the year Total recognised comprehensive income Transactions with the owners Share-based payment, net Dividend distributed Addition/disposal of minority interests Treasury shares bought/sold Transactions with the owners for the period Equity at December 31, 2010 Hedge transaction reserve The hedge transaction reserve transactions that meet the criteria for hedging future cash flows contains the accumulated net change in the fair value of hedging and for which the hedged transaction has yet to be realised. Exchange adjustment reserve The exchange adjustment reserve a functional contains all foreign exchange adjustments arising on the translation of financial statements for units that have in such foreign exchange adjustments relating to assets and liabilities representing a part of the Group’s net investment currency other than Danish kroner, net investments in such units. units, as well as foreign exchange adjustments relating to hedging transactions used to hedge the Group’s January 31 1 - December Cash flow statement statement flow Cash 54 Notes to the financial statements

NOTE 1 - Segment reporting

Schouw & Co. is an industrial conglomerate consisting of a number of sub-groups operating in various industries and independently of the other sub-groups. The group management monitors the financial developments of all material sub-groups on a regular basis. Based on management control and financial management, Schouw & Co. has identified six reporting segments whose financial results, assets or revenue account for 10% or more of the respective consolidated figure. These are all independent reporting segments and they comprise BioMar, Fibertex, Grene, Hydra-Grene, Martin and Sjøtroll.

Included in the reporting segments are revaluations of assets and liabilities made in connection with Schouw & Co.’s acquisition of the segment in question and consolidated goodwill arising as a result of the acquisition. The operational impact of depreciation/amortisation and write-downs on the above revaluations or goodwill is also included in the profit presented for the reporting segment.

All transactions between segments were made on an arm’s length basis.

Geographical segment information indicates the group’s revenue and assets by national market. The list shows the individual countries in which the group’s revenue or assets account for 5% or more of consolidated revenue or consolidated total assets. As Schouw & Co.’s consolidated revenue is generated in some 100 different countries, a very large proportion of the revenue derives from the ”Other Europe” and ”Other world” categories.

Sjøtroll (Discontinuing Total reportable segments 2010 BioMar Fibertex Grene Hydra-Grene Martin operations) Total External revenue 5,419.1 1,649.9 1,230.5 363.0 714.7 484.3 9,861.5 Intra-group revenue 0.0 0.0 6.5 28.4 0.1 172.2 207.2 Segment revenue 5,419.1 1,649.9 1,237.0 391.4 714.8 656.5 10,068.7 Depreciation 122.0 143.2 29.3 10.9 69.6 0.0 375.0 Impairment 0.0 0.0 2.1 0.0 5.3 0.0 7.4 EBIT 199.5 144.0 48.2 56.2 (69.0) 194.0 572.9 Income from investments in associates after tax 0.0 (0.3) 0.0 0.2 (0.1) 0.9 0.7 Financial income 40.4 4.3 8.8 0.6 13.1 2.3 69.5 Financial expenses (38.8) (30.7) (19.8) (1.7) (30.5) (14.9) (136.4) Profit before tax 201.1 117.3 38.3 55.3 (86.5) 182.3 507.8 Segment assets 3,909.2 2,008.4 858.1 351.4 802.0 0.0 7,929.1 Including goodwill 734.3 104.4 11.5 0.0 47.0 0.0 897.2 Equity investments in associates 0.0 25.2 0.0 1.4 9.8 0.0 36.4 Segment liabilities 1,843.3 1,140.0 602.6 113.6 606.6 0.0 4,306.1 Cash flows from operating activities 170.9 148.6 41.9 35.3 50.3 161.0 608.0 Cash flows from investing activities (235.6) (185.4) (27.4) (5.8) (26.7) (59.7) (540.6) Cash flows from financing activities (296.7) 40.7 (14.7) (19.0) (26.1) (102.3) (418.1) Capital expenditure 242.4 193.6 35.0 5.8 38.8 59.7 575.3 Average number of employees 709 718 915 174 609 288 3,413

Sjøtroll (Discontinuing Total reportable segments 2009 BioMar Fibertex Grene Hydra-Grene Martin operations) Total External revenue 4,853.7 1,350.1 1,134.3 394.2 646.6 461.9 8,840.8 Intra-group revenue 0.0 0.0 6.0 23.0 0.2 219.0 248.2 Segment revenue 4,853.7 1,350.1 1,140.3 417.2 646.8 680.9 9,089.0 Depreciation 127.3 132.9 28.3 11.4 72.4 0.0 372.3 Impairment 0.0 0.1 2.5 0.0 21.3 0.0 23.9 EBIT 190.6 117.4 30.8 62.6 (200.2) 161.5 362.7 Income from investments in associates after tax (0.5) 0.0 0.0 (0.1) (1.2) 0.0 (1.8) Financial income 9.9 5.9 10.0 0.3 12.1 0.2 38.4 Financial expenses (60.1) (32.3) (25.7) (2.9) (42.5) (51.7) (215.2) Profit before tax 139.9 91.0 15.1 60.0 (231.8) 110.0 184.2 Segment assets 3,296.6 1,737.1 812.6 342.1 891.2 1,207.6 8,287.2 Including goodwill 716.9 104.4 13.3 0.0 48.4 97.5 980.5 Equity investments in associates 41.6 20.0 0.0 1.2 8.9 0.0 71.7 Segment liabilities 1,923.6 1,028.7 594.0 95.0 643.8 507.8 4,792.9 Cash flows from operating activities 603.4 283.1 131.5 113.1 46.6 78.4 1,256.1 Cash flows from investing activities (88.4) (57.4) (41.5) (3.9) (47.2) (31.0) (269.4) Cash flows from financing activities (467.4) (231.5) (83.1) (110.6) 0.7 (45.3) (937.2) Capital expenditure 93.8 55.7 54.7 4.7 53.0 36.2 298.1 Average number of employees 685 719 925 175 785 277 3,566

All amounts in the notes in millions of Danish kroner. Consolidated statement 55 8.2 4.1 (6.5) 46.2 17.9 17.2 46.2 58.7 89.2 63.4 33.9 (32.5) 2009 2009 2009 322.9 416.7 184.2 279.6 248.3 234.1 143.9 101.5 397.0 (680.9) (110.1) (110.0) (318.7) 9,089.0 8,368.1 1,916.3 8,439.7 8,439.7 3,569.9 8,287.2 3,994.7 9,658.5 4,792.9 4,905.1 (2,686.8) 8.4 58.8 13.4 18.4 17.3 58.8 55.5 34.8 (38.6) 2010 2010 2010 491.3 474.7 101.4 507.8 435.4 260.7 228.3 255.0 926.6 484.3 (656.5) (559.6) (262.1) (182.3) (241.2) (320.4) 9,361.3 1,806.6 9,450.8 9,450.8 3,862.3 7,929.1 3,608.6 8,899.9 4,306.1 4,504.8 Intangible and fixed assets Intangible and fixed (3,564.4) 10,068.7 68.4 2009 925.9 759.6 482.5 102.1 784.6 1,153.9 2,093.0 2,069.7 8,439.7 Revenue 2010 874.2 551.5 123.3 101.4 1,131.8 2,120.3 1,255.4 2,272.4 1,020.5 9,450.8 Revenue Segment reporting (continued) Segment reporting Reconciliation of segment revenue: Revenue from reporting segments Reconciliation of revenue, profit before tax, assets and liabilities Reconciliation of revenue, profit before tax, assets NOTE 2 - Sale of goods NOTE 1 - Revenue from non-reporting segments Sale of services Geographical segment Geographical Denmark Revenue from the mother company Rental income Norway Group elimination Market value of work in progress Chile Revenue from discontinuing operations (Sjøtroll) Revenue U.K. Group revenue, see consolidated income statement Poland Reconciliation of profit before tax: Profit before tax from reporting segments Malaysia Profit from non-reporting segments Chech republic Profit from the mother company Other Europe Profit before tax from discontinuing operations (Sjøtroll) Other World Group elimination Total Profit before tax, see consolidated income statement ography are based on the physi ography are based on the - while data on intangible and fixed assets by ge are based on customers’ geographical location, The data on revenue by geography cal location of the assets. Reconciliation of segment assets Assets from reporting segments Assets from non-reporting segments Assets from the mother company Group elimination Assets, see consolidated balance sheet Reconciliation of segment liabilities Liabilities from reporting segments Liabilities from non-reporting segments Liabilities from the mother company Group elimination Liabilities, see consolidated balance sheet Joint ventures are recognised in the consolidated financial statement with the following amounts: Current assets DKK 98.2 million (2009 DKK 29.3 million), non- Joint ventures are recognised in the consolidated financial statement with the following amounts: Current million), non-current liabilities DKK 0.4 million (2009 current assets DKK 32.5 million (2009 DKK 24.8 million), current liabilities DKK 150.4 million (2009 DKK 33.1 DKK 52.1 million). Xergi A/S, Grene Kramp Holding A/S DKK 0.8 million), revenue DKK 309.6 million (2009 DKK 46.2 million) and expenses DKK 317.8 million (2009 and Alitec Pargua S.A. are the only joint venture companies. Notes to the financial statements financial to the Notes 56 Notes to the financial statements

2010 2009 NOTE 3 - Costs

Cost of sales Cost of sales for the year includes cost of goods sold of (6,588.7) (5,649.8) Cost of sales for the year includes inventory impairments of (44.0) (72.7) Cost of sales for the year includes reversed inventory impairments of 30.0 26.7

Staff costs Remuneration to the Board of Directors of Schouw & Co. (2.8) (2.7) Wages and salaries (889.9) (936.1) Defined contribution pension plans (63.2) (72.4) Other social security costs (69.0) (61.7) Share-based payment (7.2) (9.5) Total staff costs (1,032.1) (1,082.4)

Including staff costs capitalised and recognised in plant, machinery and development projects 14.0 14.8 Staff costs recognised in the income statement (1,018.1) (1,067.6)

Staff costs are recognised as follows Production (465.7) (518.4) Distribution (359.0) (358.8) Administration (193.4) (190.4) Staff costs recognised in the income statement (1,018.1) (1,067.6)

Average number of employees 3,166 3,334

Determination of remuneration to the Board of Directors and the Executive Management Aktieselskabet Schouw & Co. has prepared a remuneration policy describing the guidelines for the remuneration to members of the company’s Board of Directors and Executive Management. The remuneration to board members consists of a fixed basic fee of DKK 175,000, which has not been changed in 2007–2010. The Board of Directors proposes to raise the basic fee to DKK 200,000 for 2011. The remuneration policy is available on the company’s website. Remuneration to the Board of Directors includes a fee to the audit committee of DKK 0.3 million (2009: DKK 0.3 million). Staff costs include salaries and bonuses of DKK 6.3 million (2009: DKK 5.6 million), pension contributions of DKK 0.2 million (2009: DKK 0.2 million) and share- based payment of DKK 0.9 million (2009: DKK 1.1 million) to members of the Management Board. The Management Board also has a car at their disposal. Members of the Management Board do not have any unusual employment or contractual terms. Staff costs include salaries and bonuses of DKK 20.3 million (2009: DKK 18.8 million), pension contributions of DKK 1.5 million (2009: DKK 1.6 million) and share-based payment of DKK 2.9 million (2009: DKK 3.4 million) to the registered executive managements of directly owned subsidiaries. No severence payments were made to senior managers of the Schouw & Co. Group in 2010 or 2009.

Share-based payment: Share option programme The company has an incentive programme for the Management and senior managers, including the executive management of subsidiaries. The programme entit- les participants to acquire shares in Schouw & Co. at a price based on the officially quoted price at around the time of grant plus a calculated rate of interest (4%) from the date of grant until the date of exercise.

Fair value Fair value in Strike price in DKK total in DKK Can be Can be Outstanding options Management Other Total in DKK per option (1) millions (1) exercised from exercised to Granted in 2008 * 36,000 144,000 180,000 224.85 37.83 6.8 March 2010 March 2012 Granted in 2009 36,000 184,000 220,000 78.61 21.27 4.7 March 2011 March 2013 Outstanding options at December 31, 2009 72,000 328,000 400,000 Granted in 2010 34,000 148,000 182,000 125.53 24.38 4.4 March 2012 March 2014 Outstanding options in total at December 31, 2010 106,000 476,000 582,000 (*) The number of options has been adjusted for bonus share issue. (1) At the date of grant

The following assumptions were applied in calculating the fair value of outstanding share options at the date of grant: 2010 grant 2009 grant 2008 grant Expected volatility 37.41% 56.54% 29.47% Expected term 48 mths. 48 mths. 48 mths. Expected dividend per share DKK 3 DKK 3 DKK 3 Risk-free interest rate 4.00% 4.00% 4.00%

The expected volatility is calculated on the basis of 12 months historical volatility based on average prices. If the optionholders have not excercised their share options within the period specified, the share options will lapse without any compensation to the holders. Exercise of the share options is subject to the holders being in continuing employment during the above-mentioned periods. If the share option holder leaves the company’s employ before the date of acquiring the right, the holder may in some cases have a right to exercise the share options early during a four-week period following Schouw & Co.’s next following profit announcement. In the event of early exercise, the number of share options will be reduced proportionately. The fair value of share options is calculated at a theoretical market value at the time of grant using the Black & Scholes formula. The fair values of the 2008 grant, 2009 grant and the 2010 grant are DKK 6.8 millions, DKK 4.7 millions and DKK 4.4 million, respectively. The calculated market value is recognised in the income statement over the vesting period. Consolidated statement 57 5.4 1.2 1.6 1.3 9.5 1.7 0.6 0.7 0.1 3.1 (3.4) (0.7) (5.4) (9.5) (8.3) (2.5) 41.7 (98.2) (50.7) (52.0) (15.6) (39.4) (24.6) 2009 2009 (107.2) (322.2) (398.1) (331.6) (398.1) 5.4 0.7 1.2 1.6 8.9 2.1 0.6 0.5 0.3 3.5 0.0 (0.5) (0.5) (6.2) (7.2) (5.3) (2.2) 42.3 (92.4) (48.4) (98.5) (58.5) (40.9) (23.5) 2010 2010 (318.3) (384.3) (319.9) (384.3) Costs (continued) Fees to auditors appointed by the general meeting NOTE 3 - its treasury & Co. allocated 36,803 of In 2010, Schouw - on the basis of a per Employee shares are granted in Group companies. for employee share schemes shares number of shares at no consideration equivalent to the estimated performance the conditions are met, the employees receive a variable formance-driven model. If a right to receive shares at a value at the date of grant of DKK 2.3 million, for the 2010 financial year and employees have obtained value. The condition was met in blocked accounts until the end of the seventh calendar year following grant. in the income statement for 2010. The shares are held which amount is expensed Notes to the financial statements financial to the Notes NOTE 4 - payment: Employee shares Share-based Audit fees, KPMG Share-based payment is recognised as follows: Share-based payment is recognised Production Non-audit fees, KPMG Distribution Fees for tax- and VAT-related services, KPMG Administration Fees for other services, KPMG Share-based payment is recognised in the income statement Share-based payment is recognised Total fees, KPMG Research and development costs Research and development costs incurred are shown below: Research and development costs expensed and development Research and development costs incurred Audit fees, other accountants Development costs recognised under intangible assets Non-audit fees, other accountants Amortisation and impairment losses on recognised development costs Amortisation and impairment losses on recognised Fees for tax- and VAT-related services, other accountants Research and development costs for the year recognised in the income statement Research and development costs for the year recognised Fees for other services, other accountants Depreciation/amortisation and impairment Amortisation of intangible assets Total fees, other accountants Impairment of intangible assets Depreciation of property, plant and equipment Depreciation of property, Impairment of property, plant and equipment Impairment of property, Total depreciation/amortisation and impairment Depreciation/amortisation and impairment is recognised in the income statement as follows: Depreciation/amortisation and impairment is recognised Production Distribution Administration Goodwill impairment Total depreciation/amortisation and impairment 58 Notes to the financial statements

2010 2009 NOTE 5 - Other operating income and expenses

Gains on the disposal of property, plant and equipment and intangible assets 10.5 20.7 Government grants 6.4 9.6 Other operating income 4.0 7.3 Total other operating income 20.9 37.6

Losses on the disposal of property, plant and equipment and intangible assets (1.3) (3.8) Other operating expenses (4.3) 0.0 Total other operating expenses (5.6) (3.8)

Fibertex has recognised an investment grant of DKK 6.4 million in 2010 (2009: DKK 5.6 million), related to the establishment of the factory in Malaysia. The grant is primarily conditional on a tax profit to be generated over the next years by Fibertex in Malaysia, which is regarded as very likely to happen. Other grants are not subject to special conditions.

NOTE 6 - Equity investments in associates 2010 2009

Cost at January 1 141.0 115.2 Additions 0.0 26.1 Disposals (41.4) (0.3) Cost at December 31 99.6 141.0

Adjustments at January 1 (11.1) (7.1) Foreign exchange adjustments 6.6 10.9 Other changes in equity (0.2) 0.0 Elimination of intra-group gains 0.0 (3.8) Disposals for the year (0.2) 0.3 Profit/(loss) after tax in associates (0.6) (11.4) Adjustments at December 31 (5.5) (11.1) Carrying amount at December 31 94.1 129.9

2010 Attributable to the group Ownership Profit for Profit for Name Registered office Revenue Total assets Liabilities Equity interest the year the year Incuba A/S Aarhus, Denmark 49.02% 0.0 (0.5) 124.1 16.4 52.8 (0.2) Martin Professional (HK) Ltd. Hong Kong, China 46.20% 19.8 (3.5) 13.2 5.3 3.6 (1.7) Martin Professional Japan Ltd. Tokyo, Japan 40.00% 41.2 3.0 20.8 9.1 4.7 1.2 Finini ApS Haarup, Denmark 49.90% N/A 0.6 17.0 13.9 1.5 0.3 Dansk Afgratningsteknik A/S Skjern, Denmark 30.00% N/A 0.5 9.1 4.6 1.4 0.1 GFE Patent A/S Langå, Denmark 25.00% 0.0 (0.2) 24.0 4.3 4.9 0.0 Fibertex South Africa Ltd. Durban, South Africa 26.00% 0.0 (1.2) 149.2 36.6 25.2 (0.3) The group share of equity and profit in total 94.1 (0.6)

2009 Attributable to the group Ownership Profit for Profit for Name Registered office Revenue Total assets Liabilities Equity interest the year the year Incuba A/S Aarhus , Denmark 49.02% 0.0 (19.7) 114.1 5.5 53.2 (9.6) Martin Professional (HK) Ltd. Hong Kong, Kina 46.20% 25.0 0.3 14.0 3.4 4.9 0.1 Beacon AB Umeå, Sweden ------(0.2) Martin Professional Japan Ltd. Tokyo, Japan 40.00% 26.6 (0.3) 13.7 6.6 2.8 (0.1) Finini ApS Haarup, Denmark 49.90% N/A (2.1) 15.7 13.3 1.2 (1.0) Dansk Afgratningsteknik A/S Skjern , Denmark 30.00% N/A (0.2) 9.6 5.3 1.2 (0.1) GFE Patent A/S Langå , Denmark 25.00% N/A 0.0 23.3 3.4 5.0 0.0 Alitec Pargua S.A. Pargua, Chile 50.00% 562.9 (0.9) 237.6 154.5 41.6 (0.5) Fibertex South Africa Ltd. Durban, South Africa 26.00% 0.0 0.0 0.0 0.0 20.0 0.0 The group share of equity and profit in total 129.9 (11.4)

Alitec Pargua S.A. has in 2010 been reclassified to a proportionally consolidated company. There is no recognised goodwill regarding associates. Consolidated statement 59 6.6 0.4 4.0 3.7 Total Total Total Total (1.5) (0.1) 35.9 40.9 21.5 32.9 68.0 77.9 (30.5) (23.6) (554.0) (123.0) (100.6) (155.0) (678.3) 0.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 (2.7) 35.9 40.9 36.1 40.9 (10.2) (10.2) (554.0) (556.7) Fair value Fair value Fair value Fair value adjustments adjustments adjustments adjustments 2010 2010 2009 2009 0.0 0.0 0.0 8.5 6.6 0.4 0.0 0.0 0.0 0.0 (8.5) 19.2 15.1 19.6 (20.3) (20.9) (10.3) (28.8) (31.2) Currency Currency Currency Currency transaction transaction transaction transaction adjustments adjustments adjustments adjustments 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4.0 3.7 (1.5) (0.1) 12.8 13.7 16.8 17.4 (90.3) (90.4) (114.5) (116.0) Interests Interests Interests Interests Financial income Profit from divestment of equity investments Profit from divestment Financial expenses NOTE 7 - Notes to the financial statements financial to the Notes Financial assets measured at fair value through profit or loss NOTE 9 - Financial assets measured at fair value through profit or loss Financial assets measured at fair value throughFinancial assets measured profit or loss NOTE 8 - Loans and receivables investments were divested in No equity investments a gain of DKK 1.1 million. Republic in 2010, recording in Grene Kramp Czech its ownership interest The Group divested 2009. Loans and receivables Loans and receivables Loans and receivables Financial liabilities measured at amortised costs Financial liabilities measured at amortised costs Financial liabilities measured at amortised costs Financial liabilities measured Financial liabilities measured at amortised costs Non-financial assets or liabilities Non-financial assets or liabilities Non-financial assets or liabilities Non-financial assets or liabilities Total financial income Total financial income Total financial income Total financial income Capitalised borrowing costs amounted to DKK 5.2 million in 2010 based on an average rate of interest of 3.0% p.a. In 2009, capitalised borrowing costs amounted Capitalised borrowing costs amounted to DKK 5.2 million in 2010 based on an average rate of interest of to DKK 1.9 million based on an average rate of interest of 5.0% p.a. 60 Notes to the financial statements

2010 2009 NOTE 10 - Tax on the profit for the year

Tax for the year is composed as follows: Tax on the profit for the year 114.6 (28.5) Tax on other comprehensive income 6.1 6.3 Tax in total 120.7 (22.2)

Tax on the profit for the year has been calculated as follows: Current tax (49.7) (60.9) Deferred tax 164.3 35.0 Adjustment of prior-year tax charge 0.0 (2.6) Tax recognised in the income statement in total 114.6 (28.5)

Specification of the tax on the profit for the year: Calculated 25% tax of the profit for the year 60.3 (25.4) Adjustment of calculated tax in foreign subsidiaries relative to 25% 5.9 (1.9) Tax effect of non-deductible amortisation and impairment of goodwill 0.0 (0.9) Tax effect of non-deductible costs and non-taxable income 9.8 6.0 Tax effect of adjustment of prior-year tax charge 6.1 (2.6) Tax effect of non-capitalised tax asset (3.5) (3.7) Tax effect of deferred tax regarding previous years recognised this year 36.0 0.0 Tax recognised in the income statement in total 114.6 (28.5)

Effective tax rate 47.5% 28.1%

The tax effect of a deferred tax regarding previous years recognised this year primarily derives from a capitalised loss in Schouw & Co. Finans.

2010 Tax on items taken directly to other comprehensive income Before tax Tax After tax Exchange adjustments of foreign units, etc. 194.8 2.2 197.0 Value adjustment of hedging instruments transferred to cost of sales 13.7 (3.8) 9.9 Value adjustment of hedging instruments transferred to financials 12.1 (3.0) 9.1 Value adjustment of hedging instruments for the year (39.8) 10.6 (29.2) Other comprehensive income from associates (0.3) 0.1 (0.2) Tax on items taken directly to other comprehensive income in total 180.5 6.1 186.6

2009 Tax on items taken directly to other comprehensive income Before tax Tax After tax Exchange adjustments of foreign units, etc. 148.0 2.0 150.0 Value adjustment of hedging instruments for the year (17.4) 4.3 (13.1) Tax on items taken directly to other comprehensive income in total 130.6 6.3 136.9

NOTE 11 - Earnings per share (DKK) 2010 2009

Share of the profit for the year attributable to shareholders of Schouw & Co. (24.0) 112.8 Of which profit for the year from continuing operations (126.4) 73.2 Of which profit for the year from discontinuing operations 102.4 39.6

Average number of shares 25,500,000 27,082,192 Average number of treasury shares (793,147) (1,639,411) Average number of outstanding shares 24,706,853 25,442,781

Average dilutive effect of outstanding share options * 72,140 28,023 Diluted average number of outstanding shares 24,778,993 25,470,804

Earnings per share in Danish kroner of DKK 10 (0.97) 4.43 Diluted earnings per share in Danish kroner of DKK 10 (0.97) 4.43 Earnings per share in Danish kroner of DKK 10 from continuing operations (5.12) 2.88 Diluted earnings per share in Danish kroner of DKK 10 from continued operations (5.10) 2.87 Earnings per share from discontinuing operations (DKK) 4.15 1.55 Diluted earnings per share from discontinuing operations (DKK) 4.13 1.56

* See note 3 for information on options that may cause dilution. Consolidated statement 61 8.4 0.2 0.6 (0.4) (2.7) (5.3) Total (0.9) (0.6) 21.8 44.8 28.2 50.6 55.5 11.0 Total (32.5) (58.5) (13.2) (15.6) (52.0) 904.0 889.8 (388.6) (426.7) (330.5) (388.6) 1,459.9 1,502.0 1,075.3 1,366.4 1,459.9 1,071.3 6.8 0.2 6.8 0..0 0.0 0.0 2.1 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.0 (2.1) (1.2) (0.9) (0.1) (1.2) (1.2) 24.7 42.3 30.1 30.1 31.0 41.3 24.7 23.5 Xergi (35.0) (47.6) progress projects in Development 0.6 0.0 0.0 0.0 0.3 0.4 0.0 0.0 (0.7) (4.4) (2.1) (0.6) 11.5 13.3 42.0 16.3 98.4 48.2 (16.3) (43.1) (81.5) (11.8) (37.7) 235.6 261.9 188.8 235.6 104.0 Grene projects (131.6) (163.5) (131.6) 3-5 years 3-7 years 2010 2009 Completed development

3.6 1.7 1.4 0.0 7.3 0.2 9.5 0.0 0.0 (7.6) (0.4) (2.0) (0.9) (0.1) 92.1 47.0 48.4 90.8 42.8 81.3 12.3 92.1 11.0 54.0 (38.1) (15.4) (48.0) (11.0) (33.8) (14.3) (38.1) licences Martin Patents, and rights 3-10 years 3-15 years 0.8 0.0 0.0 0.0 0.0 0.0 2.5 0.0 1.5 0.0 0.0 0.0 0.0 0.0 0.0 (6.5) (2.5) 17.4 40.7 104.4 104.4 904.0 889.8 (217.7) (215.2) (215.2) (217.7) Goodwill 1,107.5 1,119.2 1,065.3 1,107.5 Fibertex 734.3 716.9 BioMar Intangible assets An impairment test was performed in 2010 on the carrying The test amount of completed development projects and of development projects in progress. Estimated recoverable amounts are based on calculations determined through for 2011- the application of projected cash flows on the basis of expectations Cost at January1, 2010 NOTE 12 - Notes to the financial statements financial to the Notes Goodwill in 2010 Foreign exchange adjustment Goodwill in 2009 Additions Development projects, patents, licenses and proprietary rights and proprietarySchouw & Co. recognised development costs of DKK 128.5 million and DKK 42.8 million in patents, licenses 2010. rights at December 31, revealed indications of impairment, because the carrying 5.3 million amount was greater than the recoverable amount. The impairment test resulted in a DKK write-down (2009: DKK 13.0 million), which amount has been recognised in cost of sales. 2014. The required rate of return was based on a WACC before tax at the level of from 7.9%-9.3% (9,4%-10,2% in 2009). In addition, a growth rate of 2% (2% in 2009) was The required rate of return was based on a WACC before tax at the level of from 7.9%-9.3% (9,4%-10,2% analyses have been made to calculate the value subject to each company achieving 100%, 90%, 80% used to extrapolate each company’s cash flow.Sensitivity of lowered of its forecast cash flows, combined with alternative, higher WACC values (of +0.5 and + 1.0 percentage point). Combinations and 70%, respectively, rates of return do not imply a need for write-down. EBIT and increased WACC indicate a minor need for a write-down. The projected earnings levels and required the value of goodwill is unchanged. Accordingly, The management of Schouw & Co. has tested the value in use of the carrying the amounts against goodwill in the above group companies. In the test performed, period. The free cash flow after tax has been applied executive management of each company was asked to indicate the expected free cash flows for the budget amount was subsequently compared with the carryingto a discounted cash flow model for the purpose of estimating such company’s value and goodwill, which amount recognised in the Schouw & Co. consolidated financial statements. Disposals Disposals on company divestment Transferred/reclassified Cost at December 31, 2010 Amortisation and impairment at JanuaryAmortisation and impairment 1, 2010 Foreign exchange adjustment Impairment Amortisation Amortisation and impairment of disposed assets Amortisation and impairment Disposals on company divestment Amortisation and impairment at December 31, 2010 Carrying amount at December 31, 2010 Amortised over Cost at January 1, 2009 Foreign exchange adjustment Additions Disposals Transferred/reclassified Cost at December 31, 2009 Amortisation and impairment at January 1, 2009 Foreign exchange adjustment Impairment Amortisation Amortisation and impairment of disposed assets Transferred/reclassified Amortisation and impairment at December 31, 2009 Carrying amount at December 31, 2009 Amortised over Goodwill year-on-year increase resulting from an exchange Schouw & Co. recognised goodwill of DKK 904.0 million at December 31, 2010. This was a DKK 14.2 million 2010. The total goodwill of DKK 904 million is distributed adjustment and a minor net disposal. A goodwill impairment test showed no indication of impairment in as shown below. 62 Notes to the financial statements

NOTE 13 - Property, plant and equipment 2010

Other fixtures, Land and Leasehold Plant and tools and Assets under buildings improvements machinery equipment construction Total Cost at January 1, 2010 1,586.5 29.0 2,438.3 350.4 72.8 4,477.0 Foreign exchange adjustment 53.6 0.7 128.5 8.8 2.0 193.6 Additions 22.0 2.1 78.4 39.1 330.7 472.3 Disposals (1.1) (0.3) (101.0) (27.0) (4.3) (133.7) Disposals on company divestment 0.0 0.0 (0.2) (0.3) 0.0 (0.5) Transferred/reclassified 24.6 0.0 25.5 2.1 (2.2) 50.0 Cost at December 31, 2010 1,685.6 31.5 2,569.5 373.1 399.0 5,058.7

Depreciation and impairment at January 1, 2010 (369.6) (18.4) (1,336.1) (254.3) 0.0 (1,978.4) Foreign exchange adjustment (12.5) (0.4) (70.8) (5.8) 0.0 (89.5) Transferred/reclassified 0.0 0.0 0.0 0.1 0.0 0.1 Depreciation and impairment of disposed assets 0.7 0.3 91.3 23.9 0.0 116.2 Impairment (2.1) 0.0 0.0 (0.1) 0.0 (2.2) Disposals on company divestment 0.0 0.0 0.1 0.3 0.0 0.4 Depreciation (52.4) (2.9) (224.3) (38.7) 0.0 (318.3) Depreciation and impairment at December 31, 2010 (435.9) (21.4) (1,539.8) (274.6) 0.0 (2,271.7)

Carrying amount at December 31, 2010 1,249.7 10.1 1,029.7 98.5 399.0 2,787.0

Of which assets held under finance lease 0.0 0.0 0.0 2.1 0.0 2.1

Depreciated over 10-50 years 2-10 years 3-12 years 2-8 years

2009

Other fixtures, Land and Leasehold Plant and tools and Assets under buildings improvements machinery equipment construction Total Cost at January 1, 2009 1,510.1 26.6 2,390.0 338.5 70.8 4,336.0 Foreign exchange adjustment 33.6 0.0 83.2 6.0 (0.3) 122.5 Additions 54.8 3.2 48.2 24.2 78.0 208.4 Disposals (30.1) (1.4) (141.1) (17.5) 0.0 (190.1) Transferred/reclassified 18.1 0.6 58.0 (0.8) (75.7) 0.2 Cost at December 31, 2009 1,586.5 29.0 2,438.3 350.4 72.8 4,477.0

Depreciation and impairment at January 1, 2009 (316.5) (15.7) (1,174.0) (227.0) 0.0 (1,733.2) Foreign exchange adjustment (15.5) (0.1) (59.9) (4.3) 0.0 (79.8) Transferred/reclassified 0.0 0.0 (2.1) 2.1 0.0 0.0 Depreciation and impairment of disposed assets 19.9 0.3 130.9 14.0 0.0 165.1 Impairment (8.3) 0.0 0.0 0.0 0.0 (8.3) Depreciation (49.2) (2.9) (231.0) (39.1) 0.0 (322.2) Depreciation and impairment at December 31, 2009 (369.6) (18.4) (1,336.1) (254.3) 0.0 (1,978.4)

Carrying amount at December 31, 2009 1,216.9 10.6 1,102.2 96.1 72.8 2,498.6

Of which assets held under finance lease 0.0 0.0 5.8 2.3 0.0 8.1

Depreciated over 10-50 years 3-10 years 3-12 years 3-8 years

Land and buildings include assets classified as investment properties. See note 10 to the parent company financial statements.

In 2010, the group entered into contracts for the purchase of property, plant and equipment for future delivery for an amount of DKK 234.4 million (2009: DKK 115.4 million).

Properties with an indication of impairment have been tested for impairment. The write-down to the recoverable amount for the year amounted to DKK 2.1 million (2009: DKK 8.3 million). Consolidated statement 63 - 1.7 2.0 5.2 1.0 0.0 (7.9) (2.5) (0.3) 49.9 85.7 13.8 20.8 39.1 36.6 2009 2009 105.9 390.9 344.3 781.1 251.1 353.9 130.3 903.1 940.4 (120.8) 1,547.3 1,221.9 1,764.9 1,294.3 1,258.4 1,258.4 1,295.0 0.0 1.8 7.7 2.0 0.0 0.0 0.0 (4.5) (0.1) 50.5 23.6 33.2 2010 2010 112.5 607.8 353.9 102.5 847.1 241.5 353.2 122.0 940.4 383.7 736.9 704.4 189.3 893.7 926.9 (119.5) (556.6) 1,666.0 1,505.4 1,912.3 Non current assets 6.6 0.0 0.0 0.0 6.5 0.0 0.2 0.0 0.0 0.7 (0.1) (5.9) (0.1) (5.8) 2009 6.5 0.0 5.2 0.0 0.0 0.0 0.0 0.0 (5.8) 36.0 30.2 2010 148.1 159.8 190.0 Current assets Receivables Inventories Securities NOTE 16 - NOTE 15 - NOTE 14 - Notes to the financial statements financial to the Notes Receivables non-current Raw materials and consumables Securities measured at fair value Cost at January 1 Financial investments: (non-current securities) Shares in Vestas Trade receivables Work in progress Reclassification Shares in Lerøy (current securities) Other current receivables Finished goods and goods for resale Foreign exchange adjustment Financial investments in total Inventories in total Receivables from associates Other securities Additions Cost of inventories for which impairment losses have been recognised Accruals and deferred income Disposals Securities in total Accumulated impairment losses on inventories Receivables in total Cost at December 31 59 per share). At DKK 704.4 mil 59 per share). At DKK 704.4- at a price of DKK 176.10 per share (2009: DKK 314. company held 4,000,000 shares in Vestas recognised At December 31, 2010, the million. 31, 2010. The original acquisition cost of the shares in Vestas is DKK 313.4 corresponded to the market price at December lion, the fair value of the holding the share). At DKK 189.3 million, at a price of NOK 198.50 per share (DKK 189.25 per company held 1,000,000 shares in Lerøy recognised At December 31, 2010, the Sjøtroll The shares in Lerøy were received in connection with the divestment of to the market price at December 31, 2010. fair value of the holding corresponded in the cost) was DKK 148.1 million. Management regularly monitors changes of the transaction, the value of the shares (acquisition in 2010. At the closing date a finan- value and value adjustments are recognised in the income statement as financial investments. Holdings are recognised at fair fair value of the company’s securities are classified as “available for sale”. cial income or expense. Other Net sales value For receivables falling due within one year after the end of the financial year, the nominal value is assessed to correspond to the fair value. For receivables falling due within one year after the end of the financial year, (2009: DKK 82.7 million). The amount is expected to be Non-current receivables include a recognised investment grant with a present value of DKK 91.2 million received during the period 2011–2018 as a positive taxable income is achieved in Fibertex Malaysia. Adjustments at January 1 Reclassification Foreign exchange adjustment Disposals on divestment Adjustments recognised in the income statement Adjustments recognised in equity Adjustments at December 31 Carrying amount at December 31 64 Notes to the financial statements

2010 2009 NOTE 16 - Receivables (continued)

Impairment losses on trade receivables Impairment losses at January 1 (188.5) (127.6) Exchange adjustments (4.2) (4.8) Reversed impairment losses 6.8 7.9 Impairment losses for the year (45.4) (67.2) Realised loss 7.7 3.2 Impairment losses at December 31 (223.6) (188.5)

Trade receivables Due between 2010 Not due 1-30 days 31-90 days >91 days Total Trade receivables not considered to be impaired 1,331.5 155.1 53.3 55.3 1,595.2 Trade receivables individually assessed to be impaired 45.9 13.9 10.0 224.6 294.4 Impairment losses on trade receivables (12.6) (4.0) (5.1) (201.9) (223.6) Trade receivables net 1,364.8 165.0 58.2 78.0 1,666.0

Proportion of the total receivables which is expected to be settled 88.2% Impairment percentage (of impaired receivables) 27.5% 28.8% 51.0% 89.9% 76.0%

Due between 2009 Not due 1-30 days 31-90 days >91 days Total Trade receivables not considered to be impaired 1,238.3 127.3 45.0 68.7 1,479.3 Trade receivables individually assessed to be impaired 0.6 8.6 17.0 230.3 256.5 Impairment losses on trade receivables 0.0 (1.5) (3.0) (184.0) (188.5) Trade receivables net 1,238.9 134.4 59.0 115.0 1,547.3

Proportion of the total receivables which is expected to be settled 89.1% Impairment percentage (of impaired receivables) 0.0% 17.4% 17.6% 79.9% 73.5%

Generally, 15.6% (2009: 14.8%) of the receivables are impaired to some extent at the balance sheet date. Of impaired receivables, the group has depreciated the amount receivable by 76.0% in 2010. There is a constant focus on follow-up on overdue debtors.

In respect of trade receivables, customers have provided collateral in the amount of DKK 91.5 million (2009: DKK 120.4 million). Most of the DKK 91.5 million collateral provided relates to BioMar. The collateral provided consists mainly of assets such as fish stocks and fish farming equipment.

2010 2009 Collateral breaks down as shown below: Collateral on receivables not due for payment. 66.8 84.9 Collateral on receivables due for payment which have not been individually impaired. 17.0 14.6 Collateral on receivables due for payment which have been individually impaired. 7.7 20.9

NOTE 17 - Construction contracts

Sales value of construction contracts 67.3 65.0 Invoiced on account (59.6) (64.6) Construction contracts in total 7.7 0.4

Construction contracts (assets) 8.3 5.6 Construction contracts (liabilities) (0.6) (5.2) Construction contracts in total 7.7 0.4 Consolidated statement 65 1.0 0.7 (5.1) (4.7) (0.6) (4.1) 29.4 13.3 (35.0) (44.5) (27.7) (17.0) 2009 (55.7) 2009 6.29% 4.18% 1.39% 144.4 101.3 145.8 101.3 163.7 101.3 -0.19% -8.89% - 5.4 0.0 0.0 8.5 (3.4) (0.1) (2.7) 73.1 23.5 (61.0) (61.0) (27.4) (28.7) 2010 2010 (61.0) 1.39% 5.12% 6.37% 101.3 158.2 -0.14% (164.3) (134.1) (192.3) Percentage of share capital (2.9) 33.8 2009 260.0 101.3 (324.6) - Cost (3.2) 33.9 2010 153.6 184.3 2009 (528,530) 3,546,380 17,605,090 11,469,820 (25,000,000) - Nominal value 2010 (368,030) 3,546,380 13,054,400 16,232,750 2009 (52,853) 354,638 1,760,509 1,146,982 (2,500,000) - 2010 Number of shares (36,803) 354,638 1,305,440 1,623,275 Share capital Deferred tax hare capital was increased by the decision of a capital decrease. In 2008 share capital was increased been reduced by 2,500,000 shares in connection with The share capital has in 2009 in connection with the merger of BioMar Holding and Schouw & Co. with a bonus share issue and 3,060,000 shares 12,470,000 shares in connection Treasury shares NOTE 18 - Notes to the financial statements financial to the Notes NOTE 19 - rank equally. of DKK 10 each. All shares shares with a nominal value consists of 25,500,000 The share capital Deferred tax at January 1 Foreign exchange adjustment January 1 Deferred tax adjustment at January 1 Deferred tax for the year recognised in profit for the year Deferred tax for the year recognised in profit for the Bought Transfer of income tax payable, January 1 Deferred tax for the year recognised in equity Group employee share scheme Net deferred tax at December 31 Deferred tax is recognised in the balance sheet as follows: Deferred tax (asset) Decrease of share capital Deferred tax (liability) Net deferred tax at December 31 December 31 Deferred tax pertains to: Intangible assets Property, plant and equipment Property, The Group’s holding of treasury 2010 (2009: DKK 33.5 million) shares had a market value of DKK 216.7 million at December 31, Costs incurred in 2009 in connection with the capital reduction amounted to DKK 0.1 million. Costs incurred in 2009 in connection with the capital The company acquires treasuryand share option programmes. shares for allocation to the Group’s employee share schemes Schouw & Co. has been authorised by the shareholders in general meeting to acquire up to 5,100,000 treasurySchouw & Co. has been authorised by the shareholders shares, equal to 20.0% of the share capital. general meeting, at which time a proposal will be made to renew it. The authorisation is valid until the company’s next annual Current assets Equity Provisions Other liabilities Recaptured losses Tax loss carry-forwards Net deferred tax at December 31 There are no deferred tax liabilities that have not been recognised in the balance sheet. Tax losses with an aggregate tax value of DKK 44.5 million (2009: DKK 83,5 There are no deferred tax liabilities that have not been recognised in the balance sheet. Tax losses with an million) have not been capitalised, because it is considered unlikely that they will be realised. Tax assets in Schouw & Co. Finans of DKK 76.3 million (2009 DKK 0.0 million), BioMar of DKK 32.2 million (2009 DKK 20.7 million), Xergi of DKK 8.4 million (2009 DKK Tax assets in Schouw & Co. Finans of DKK 76.3 million (2009 DKK 0.0 million), BioMar of DKK 32.2 million (2009 and Schouw & Co. of DKK 4.6 million (2009: DKK 0.0 8.5 million), Martin of DKK 8.0 million (2009 DKK 11.9 million), Grene of DKK 4.6 million (2009: DKK 3.2 million) have been capitalised. Taxable profit is expected to absorb the tax asset. million) respectively, 66 Notes to the financial statements

NOTE 19 - Deferred tax (continued)

Changes in temporary differences during the year 2010

Foreign Recognised Balance exchange in profit Recognised B a l a n c e at Jan. 1 adjustment for the year in equity at Dec. 31 Intangible assets 29.4 0.1 (6.0) 0.0 23.5 Property, plant and equipment 163.7 11.5 (17.0) 0.0 158.2 Receivables (18.3) (0.5) (5.6) 0.0 (24.4) Inventories (7.5) (0.9) 4.7 0.0 (3.7) Other current assets (1.9) (0.1) 2.7 0.0 0.7 Equity (0.6) 0.0 0.6 (0.1) (0.1) Provisions (4.1) (0.1) 1.5 0.0 (2.7) Other liabilities (17.0) (0.6) (7.8) (3.3) (28.7) Recaptured losses 13.3 0.0 (4.8) 0.0 8.5 Tax losses (55.7) (4.0) (132.6) 0.0 (192.3) Changes in temporary differences in total 101.3 5.4 (164.3) (3.4) (61.0)

2009

Foreign Recognised Balance exchange in profit Recognised B a l a n c e at Jan. 1 adjustment for the year in equity at Dec. 31 Intangible assets 18.9 (0.1) 10.6 0.0 29.4 Property, plant and equipment 172.1 2.4 (10.8) 0.0 163.7 Receivables (4.2) 0.0 (14.1) 0.0 (18.3) Inventories (3.3) 0.3 (4.5) 0.0 (7.5) Other current assets (3.7) 0.0 1.8 0.0 (1.9) Equity 0.6 0.0 (0.6) (0.6) (0.6) Provisions (3.3) 0.0 (0.8) 0.0 (4.1) Other liabilities (3.6) (0.2) (9.1) (4.1) (17.0) Recaptured losses 27.8 0.0 (14.5) 0.0 13.3 Tax losses (56.9) (1.4) 2.6 0.0 (55.7) Changes in temporary differences in total 144.4 1.0 (39.4) (4.7) 101.3

NOTE 20 - Pensions and similar liabilities

It is group policy to fund all pension liabilities and predominantly to avoid defined benefit plans. The acquisition of the majority holding in BioMar Holding at December 31, 2005 included defined benefit obligations, which were included in the consolidated balance sheet of Schouw & Co. at December 31, 2005.

Changes in recognised liability: 2010 2009 Net liability at January 1 24.5 26.1 Paid out (0.5) (1.6) Net liability at December 31 24.0 24.5

The pension obligation was calculated at DKK 24.0 million at December 31, 2010. The entire amount relates to Schouw & Co.’s liability to fund supplementary pensions under the previous practise of the KFK pension funds. The entire obligation is related to people who were on the labour market at September 30, 2002 and who transfered to employment with the consortium that took over the divested grain and feed operations (the former KFK). Some uncertainty applies as to the amount of the pension obligation. Accordingly, final funding of this liability may impact future financial results in a positive or negative direction. Amounts recognised in the consolidated income statement in respect of defined contribution plans and defined benefit plans are shown in note 3 to the financial statements

Provisions January 1 17.5 22.1 Used during the year (8.9) (8.3) Reversed during the year 0.0 (7.4) Provisions made for the year 5.7 11.1 At December 31 14.3 17.5

Expected to fall due within: Current 4.7 6.4 Non-current 9.6 11.1 At December 31 14.3 17.5

Provisions made comprise warranty commitments. For certain products, the Group has a contractual commitment to provide warranties of from 12 to 24 months. Under these warranties, the Group undertakes to replace or repair goods that do not function satisfactorily. The statement of expected expiry dates is based on previous experience of when claims for repair are typically received or goods are returned.

Pension and similar liabilities are recognised in the balance as: Non-current liabilities 4.7 6.4 Current liabilities 33.6 35.6 Pension and similar liabilities in total 38.3 42.0 Consolidated statement 67 1.9 6.5 0.0 8.4 15.5 2009 2009 2009 887.9 241.5 499.8 499.8 856.8 288.1 1,056.7 1,056.7 2,701.4 2,701.8 2,701.4 1.1 1.3 0.0 2.4 15.7 2010 2010 2010 Carrying amount Carrying amount 738.5 229.2 185.4 185.4 653.8 329.6 1,457.0 1,457.0 2,625.8 2,625.7 2,625.8 0.3 0.0 0.5 0.0 0.8 45.6 97.6 47.5 2009 2009 190.7 0.0 0.0 0.0 0.0 0.0 37.6 42.2 2010 2010 110.6 190.4 Rate of interest Rate of interest DKK 31% 2.2 7.0 0.0 9.2 2009 2009 545.4 954.4 335.6 1,056.7 2,892.1 2009 EUR 52% Other 2% Payment 1.1 1.3 0.0 2.4 2010 2010 Lease payment 223.0 764.4 371.8 CZK 7% 1,457.0 2,816.2 NOK 3% USD 2% PLN 3% DKK 28% 2010 EUR 47% Other 2% Interest-bearing debt Interest-bearing CZK 8% NOK 9% NOTE 21 - Notes to the financial statements financial to the Notes Debt recognised in the balance sheet: Debt recognised (non-current) Credit institutions Debt to mortgage-credit institutions (non-current) Debt to mortgage-credit institutions Expire in 0-1 year Interest-bearing debt maturity profile Interest-bearing debt maturity planned repayment Overdraft facilities without Other liabilities (non-current) Current portion of non-current liabilities Current portion of non-current 1-5 years Less than 1 year Credit institutions (current) Interest-bearing debt in total 1-5 years > 5 years Fair value of the interest bearing debt Fair value of the interest bearing More than 5 years Total Total The fair value of the liabilities relating to assets held under finance leases corresponds to the carrying amount. The fair value is an estimate of the present value of future cash flows applying a market rate for similar leases. Accordingly, liabilities regarding assets held under finance leases are included under debt to credit institutions: Accordingly, Percentage breakdown of total interest-bearing debt by currency Percentage breakdown of total interest-bearing debt Weighted average effective rate of interest of the year were 3.1% (2009: 3.7%) Weighted average effective rate of interest of the year sheet date were 3.0% (2009: 2.9%) Weighted average effective rate of interest on the balance In the above, the interest rate on variable rate debt is fixed as the spot rate. In the above, the interest rate on variable rate debt USD 3% PLN 3% 68 Notes to the financial statements

NOTE 21 - Interest-bearing debt (continued)

Interest rate risk The Group hedges parts of the interest rate risk on its debt subject to a case-by-case assessment. Such assessments include, in addition to expectations for interest rate developments, the amount of the total floating rate debt relative to equity. Hedging normally consists of interest rate swaps and rate caps. All interest rate swaps and rate caps are used to hedge underlying loans/credit facilities.

2010 2009

Fixed rate Floating rate Fixed rate Floating rate debt debt Total debt debt Total Interest bearing debt 215.6 2,410.2 2,625.8 300.8 2,400.6 2,701.4 Hedging 447.3 (447.3) 0.0 456.9 (456.9) 0.0 Net exposure 662.9 1,962.9 2,625.8 757.7 1,943.7 2,701.4 Share in percent 25.2% 74.8% 28.0% 72.0%

Included in fixed-rate debt are items that are not interest reset within the next 12 months. If interest rates rise by 1%, the annual interest expense would increase by about DKK 15 million after tax (2009: DKK 15 million).

Hedging expires in: 0-1 year 111.8 (111.8) 21.2 (21.2) 1-5 years 187.1 (187.1) 302.5 (302.5) > 5 years 148.4 (148.4) 133.2 (133.2) Total 447.3 (447.3) 456.9 (456.9)

NOTE 22 - Other liabilities 2010 2009

Deposits (non-interest bearing) 3.6 7.0 Corporate bonds (interest bearing) 15.7 15.5 Accruals and deferred income 32.1 32.2 Other liabilities in total 51.4 54.7

Schouw & Co. have issued corporate bonds in 2008 and 2009. The bond issued on December 31, 2009 has a nominal value of 7.6 million, a coupon of 2.5% per annum and runs until December 31, 2014. The bond issued on December 31, 2008 has a nominal value of 8.3 million, a coupon of 4.5% per annum and runs until 31 December 2013.

NOTE 23 - Trade payables and other payables

Trade payables 1,347.9 1,027.8 Customer prepayments 7.2 1.1 Other payables 317.8 376.5 Accruals and deferred income 18.2 15.2 Trade payables and other payables in total 1,691.1 1,420.6

Trade payables and other liabilities largely all fall due within one year.

NOTE 24 - Income tax

Net income tax payable at January 1 45.2 (6.3) Exchange adjustments at January 1 3.3 (0.2) Current tax for the year including jointly-taxed subsidiaries 49.7 60.9 Prior-year adjustments 0.0 2.5 Transferred from deferred tax at January 1 0.0 5.0 Tax payable recognised in equity (2.6) (1.6) Corporate income tax paid during the year (60.3) (15.1) Net income tax payable at December 31 35.3 45.2

Which is distributed as follows: Income tax receivable (4.9) (3.8) Income tax payable 40.2 49.0 Net income tax payable at December 31 35.3 45.2 Consolidated statement 69 ------9.1 0.0 (0.4) (0.5) 55.5 55.1 57.2 57.2 (34.7) 2009 358.8 415.4 470.3 424.5 208.4 794.4 207.9 0.0 0.2 0.1 3.5 1.2 3.5 1.5 1.1 5.4 4.2 (2.6) (1.1) (1.3) (0.4) (1.1) (0.7) (1.2) 44.8 42.2 27.5 26.2 2010 451.6 204.0 451.6 472.3 471.2 (243.6) (122.1) (161.7) Divestment of subsidiaries and activities Adjustment for non-cash transactions Cash and cash equivalents Changes in working capital Changes in working NOTE 28 - NOTE 27 - Carrying amount at the time of divestment of: Intangible assets NOTE 26 - NOTE 25 - Notes to the financial statements financial to the Notes Purchase of intangible assets, see note 12 Purchase of intangible assets, Cash and cash equivalents at December 31 comprise: Cash Change in inventories Property, plant and equipment Property, Of which had not been paid at the balance sheet date/adjustment for the year Of which had not been paid Change in receivables Cash classified as assets held for sale Receivables Amount paid in relation to intangible assets Amount paid in relation to Change in trade payables and other payables Change in trade payables and Cash in total Cash and cash equivalents Purchase of property, plant and equipment, see note 13 Purchase of property, Changes in working capital in total Changes in working capital Trade payables Of which had not been paid at the balance sheet date/adjustment for the year Of which had not been paid Other liabilities Amount paid in relation to purchase of property, plant and equipment purchase of property, Amount paid in relation to Net assets sold Incurring financial liabilities Disposal of goodwill regarding divested companies Of which lease debt Gain / loss from divestment of equity investments before cost of sale Gain / loss from divestment of equity investments before Proceeds from incurring financial liabilities Dissolution of reserve for exchange rate adjustments in respect of the company divested SELLING PRICE Of which cash and cash equivalents Cash selling price In 2010 Grene sold the joint venture company Grene Kramp Czech. Rep. No companies has been divested in 2009. In 2010 Grene sold the joint venture company Grene 70 Notes to the financial statements

2010 2009 NOTE 29 - Discontinuing operations and assets held for sale

Profit from discontinued operations Profit/loss before tax in Sjøtroll Havbruk. See note 1 182.3 110.0 Tax on profit/loss in Sjøtroll Havbruk (51.1) (32.1) Profit/loss after tax in Sjøtroll Havbruk 131.2 77.9 Gain of the divestment of Sjøtroll Havbruk before tax 37.6 - Tax on the divestment of Sjøtroll Havbruk (2.0) - Profit from discontinued operations 166.8 77.9

Cash flows from discontinued operations Cash flows from Sjøtroll Havbruk. See note 1 (1.0) 2.2 Cash proportion of proceeds from the divestment of Sjøtroll Havbruk (less selling costs) 362.9 - Cash flows from discontinued operations 361.9 2.2

Of the total proceeds of DKK 518 million, DKK 370 million was paid in cash and DKK 148 million was paid in listed shares in Lerøy Seafood Group.

Profit from discontinued operations consists of the profit/loss in Sjøtroll Havbruk until the date of divestment in November 2010 and the accounting gain on the transaction.

NOTE 30 - Categories of financial assets and liabilities

Financial assets Non-current assets Other securities and investments (Vestas) 704.4 1,258.4 Fair value recognised in the income statement (1) 704.4 1,258.4

Other investments and securities (other equity holdings) 32.5 36.0 Available-for-sale financial assets (3) 32.5 36.0

Other receivables 112.5 105.9 Receivables 112.5 105.9

Current assets Other securities and investments (Lerøy) 189.3 0.0 Fair value recognised in the income statement (1) 189.3 0.0

Trade receivables 1,666.0 1,547.3 Other receivables 110.2 90.9 Cash and cash equivalents 451.6 415.5 Receivables 2,227.8 2,053.7

Other receivables (derivative financial instruments) 1.4 0.1 Trading portfolio (2) 1.4 0.1

Financial liabilities Non-current liabilities Debt to mortgage-credit institutions 229.2 241.5 Other (debt) to credit institutions 738.5 887.9 Other liabilities 19.3 22.5 Financial liabilities measured at amortised cost 987.0 1,151.9

Current liabilities Debt to mortgage-credit institutions 13.0 12.8 Other (debt) to credit institutions 1,629.4 1,543.7 Trade payables 1,347.9 1,027.8 Financial liabilities measured at amortised cost 2,990.3 2,584.3

Other debt (derivative financial instruments) 33.0 28.2 Trading portfolio (2) 33.0 28.2

1) Listed shares, stated at market value of shareholding (level 1). 2) Financial instrument stated in accordance with generally accepted valuation techniques based on observable data (level 2) measured by eksternal credit institutions. 3) Unlisted shares, stated at estimated value (level 3). Consolidated statement 71

4) 4) 0.1 0.0 8.4 0.3 0.2 4.0 0.1 (0.9) (0.2) (0.4) (2.6) (0.3) (2.3) (0.4) (0.9) (0.5) (2.4) (3.0) Effect on Effect on profit for profit for the year the year

3) 3) rate rate 0.1% 0.1% 5.0% 1.5% 0.1% 6.0% 2.0% 1.3% 4.0% 1.0% 0.4% 14.0% 17.0% 16.0% 16.0% 20.0% 18.0% 11.0% in exchange in exchange Likely change Likely change 6.0 1.5 1.7 (8.8) (2.6) 52.5 19.1 20.2 24.0 (18.9) (38.0) (22.3) (45.5) (13.4) (27.1) hedging hedging (851.9) (197.5) (282.0) Position after Position after

2) 2) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 14.4 29.5 36.8 28.2 85.5 37.9 81.9 11.3 26.1 financial financial Hedged by Hedged by instruments instruments 1) 1) (2.1) 19.1 (23.2) (18.9) (23.5) (38.0) (39.4) (26.7) (33.0) (36.2) (61.7) (22.3) (45.5) (13.4) (38.4) (851.9) (197.5) (282.0) hedging hedging Position before Position before Financial risks Financial risks DKK / EUR EUR / DKK The group’s foreign exchange risk recognised in the balance sheet at December 31, 2010 The group’s foreign exchange risk recognised in the Currency NOTE 31 - Notes to the financial statements financial to the Notes - risk at December 31, determined by aggregating the gross currency risks of the individual group compa Set out in the table below is the Group’s overall exchange developments of the exchange rates during the last threenies. ’Likely change in exchange rate’ is based on historical years. t to currency risk. Fibertex has of equity into Danish kroner is subject to currency risk. Fibertex investments in foreign subsidiaries, for which the translation The Group has a number of hedged. in Fibertex in the Czech Republic . No other net investments have been (DKK 193.4 million) to hedge the net investment raised a loan of CZK 655 million policy is not to hedge a net investment. group Generally, Currency risk mainly forward the group applies a number of financial instruments, In order to limit currency risk, and currency options. The individual currency transactions & Co. It is group policy to hedge accordance with guidelines determined by Schouw and hedge current and future currency positions in group companies manage 6–12 months forward. flows in currencies not closely correlated with EUR material expected currency The group’s risk management policy The group’s risk Group is exposed rates. In addition, the in exchange and interest Group is exposed to changes and financing, the of its operations, investments Due to the nature Group’s financial the conduct speculation in financial risks. Accordingly, of Vestas and Lerøy shares. Group policy is not to actively to fluctuations in the price its operations and investments. the management of financial risk relating to management exclusively involves USD / DKK DKK / NOK CZK / DKK EUR / DKK USD / DKK USD / GBP CZK / DKK USD / NOK USD / GBP USD / MYR USD / NOK EUR / PLN EUR / RUB CLP / USD EUR / NOK 1) A positive net position implies debt, a negative net position implies receivables. 2) Positive principal amounts on forward a sale. currency contracts indicate a purchase of the currency in question. Negative principal amounts indicate 3) Increase in per cent in the currency exchange rate. 4) A decrease in the currency exchange rate would reverse the sign. NOK / GBP The group’s foreign exchange risk recognised in the balance sheet at December 31, 2009 The group’s foreign exchange risk recognised in the Currency 72 Notes to the financial statements

NOTE 31 - Financial risks (continued)

Currency hedging agreements regarding future transactions Net amounts outstanding for currency hedging agreements at December 31, for the Group and the parent company, which satisfy the requirements for hedge accounting.

2010 2009 Capital Maximum Capital Maximum gain/- (loss) number of gain/- (loss) number of Notional recognised months to Notional recognised months to Currency principal 1) in equity expiry principal 1) in equity expiry USD / DKK 41.2 (0.3) 2 79.8 (0.5) 2 NOK / DKK 15.1 0.1 2 0.6 0.6 2 USD / GBP 91.6 (0.8) 2 102.5 0.2 2 EUR / GBP 1.4 (0.1) 2 3.5 0.2 2 DKK / GBP 4.3 0.1 2 2.2 0.1 2 USD / NOK 123.7 (4.4) 2 185.2 (1.8) 2 DKK / NOK 0.0 0.0 0 9.2 (0.3) 2 GBP / EUR 2.0 0.0 2 10.8 0.5 2 MYR / EUR (99.5) (2.7) 5 0.0 0.0 0 EUR / NOK 120.5 (4.8) 2 20.1 (0.2) 2 Other 6.6 (0.3) 2 0.0 0.0 0 Recognised in equity in total (13.2) (1.2)

1) Positive principal amounts on forward currency contracts indicate a purchase of the currency in question. Negative principal amounts indicate a sale. Forward currency contracts relate to hedging of goods sold and goods purchased.

Hedging of future cash flows is primarily done in BioMar, where considerable contracts are often made on the purchase of fish oil and fish meal in currencies other than the functional currency of Group companies. At the time of purchase, it is therefore custom to hedge the currency risk on every purchase of raw materials. 2010 2009 Capital Maximum Capital Maximum gain/- (loss) number of gain/- (loss) number of recognised months to recognised months to Hedging agreements regarding future transaction recognised in equity in equity expiry in equity expiry Currency hedging (13.2) 5 (1.2) 2 Interest rate hedging (20.1) 192 (17.8) 204 Hedging agreements before tax (33.3) (19.0) Tax on hedging agreements 8.6 4.7 Hedging agreements after tax (24.7) (14.3)

Financial investments. Schouw & Co. is exposed to fluctuations in the price of Vestas and Lerøy shares. Price developments in 2010 had a negative effect of DKK 554.0 million on the Vestas shares and a positive effect of DKK 35.9 million on the Lerøy shares. Note 14 contains a more detailed description of developments in the value of Schouw & Co.’s shares in Vestas and Lerøy. Risks on raw material. Risk on raw materials prices is not hedged by way of financial instruments. Interest rate risk. The Group hedges parts of the interest rate risk on its debt subject to a case-by-case assessment. Interest rate risk is further described in note 21. Credit risk. The Group’s credit risk is primarily related to trade receivables (see note 16) and cash deposits. The Group is not exposed to significant risks concerning individual customers or business partners. The Group’s policy for undertaking credit risks involves an ongoing credit assessment of all major customers. At December 31, 2010, the maximum credit risk considering the collateral provided was DKK 2,026.1 million (trade receivables less collateral + cash). Liquidity risk. It is group policy when raising loans to maximise flexibility by diversifying borrowing in respect of maturity/renegotiation dates and counterparties, with due consideration to costs. The Group’s cash reserves consist of cash, readily marketable shares in Vestas and Lerøy undrawn credit facilities. The Group’s objective is to have sufficient cash resources to allow it to continue in an adequate manner to operate the business and to react to unforeseen fluctuations in its cash holdings.

2010 2009 Breakdown of the group’s cash resources at December 31: Operating credit facility 2,881.7 2,582.4 Drawn operating credits, see note 21 (1,457.0) (1,056.7) Cash and cash equivalents, see note 28 451.6 415.4 Financial investments 893.7 1,258.4 Cash resources 2,770.0 3,199.5

The Group’s credit facilities have mainly been raised with large Scandinavian banks, with whom the Group has had a longstanding relationship. Most operating credits can be terminated at short notice, with the exception of the DKK 800 million credit facility, which is interminable on the part of the bank until June 30, 2013, subject to compliance with covenants. The maturity profile of the Group’s interest-bearing debt is shown in note 21.

Capital management Schouw & Co. gives priority to having a high equity ratio in order to ensure financial versatility. The company’s significant undrawn credit limits and its highly liquid portfolio of securities means that it has substantial cash resources. See the table above. The Group’s dividend policy normally calls for a pay-out ratio of 20–30%, although it may be less than 20% in years with a large positive value adjustment on the holding of Vestas shares, or it may by higher than 30% in years with large positive cash flows. Otherwise, the dividend declared will always take account of the Group’s plans for growth and its liquidity requirements. Consolidated statement 73 Total Total 18.5 24.1 2009 100.5 117.5 162.8 328.1 372.9 281.8 818.5 827.5 650.6 255.6 9.8 8.7 0.0 0.0 Cars Cars 10.1 10.2 19.9 18.9 25.0 2010 716.3 713.9 331.1 0.0 Ships Ships 45.3 68.3 79.4 240.7 362.7 124.7 671.7 2010 2009 0.1 0.0 18.2 11.0 13.0 11.3 31.3 22.3 Machinery Machinery 27.2 29.5 60.3 65.9 18.4 10.2 105.9 105.6 Property Property New accounting regulations Events after the balance sheet date Related party transactions Contingent liabilities and guarantees Operational leases and rent commitments Operational leases NOTE 36 - to IFRSs May 2010) and new and updated interpretation IASB has issued a number of new and revised IFRS standards (IFRS 1, IFRS 9, IAS 24, IAS 32 and Improvements (IFRIC 14 and IFRIC 19), are not mandatory stan- for Schouw & Co. when preparing the annual report 2010. Schouw & Co. expects to implement the new accounting dards and interpretations when they become mandatory Schouw & Co. under the IASB’s effective dates. Changes are unlikely to materially impact the accounting of Schouw & Co. has registered the following shareholders as holding more than 5% of the share capital: Givesco A/S (28.09%), Direktør Svend Hornsylds Legat Schouw & Co. has registered the following shareholders as holding more than 5% of the share capital: Givesco (14.82%), Aktieselskabet Schouw & Co. (6.37%), ATP (5.75%) NOTE 35 - Other than as set out in note 3, there were no other related party transactions. The Group has in 2010 granted Incuba A/S an additional loan of DKK 2.5 million (2009: DKK 5.2 million) and received management fee of DKK 0.1 million (2009: DKK The Group has in 2010 granted Incuba A/S an additional loan of DKK 2.5 million (2009: DKK 5.2 million) and 0.1 million). Related parties also comprise subsidiaries and associates, see note 6 to the consolidated financial statements and note 5 to the parent company financial statements, Related parties also comprise subsidiaries and associates, see note 6 to the consolidated financial statements Board and senior management in those companies. in which Schouw & Co. has a controlling influence, as well as members of the Board of Directors, Management Management remuneration and share option programmes are described in note 3. NOTE 34 - Board and senior management as well as their Under Danish legislation, Givesco A/S, Svinget 24, DK-7323 Give, members of the Board of Directors, the Management individuals mentioned above have material interests. family members are considered to be related parties. Related parties also comprise companies in which the NOTE 33 - 0-1 year 0-1 year NOTE 32 - Notes to the financial statements financial to the Notes Immediately before the 2010 annual report was released, Fibertex Nonwovens signed a conditional agreement to acquire 85% of the shares in French nonwovens Immediately before the 2010 annual report was released, Fibertex Nonwovens signed a conditional agreement after December 31, 2010, which are expected to manufacturer Tharreau Industries. Other than as set out above, Schouw & Co. is not aware of events occurring have a material impact on the Group's financial position or outlook. Land and buildings with a carrying amount of The following assets have been provided as security to credit institutions: The following assets have been provided as security Guarantees Contingent liabilities number of legal disputes. Management believes that the results of these legal disputes will not impact the The Schouw & Co. Group is currently a party to a small and liabilities that have been recognised in the balance sheet at December 31, 2010. Group’s financial position other than the receivables leases and rent commitments non-terminable operating Payments for Plant and machinery with a carrying amount of 1-5 years 1-5 years Current assets Other guarantees > 5 years > 5 years The collateral set out above represents the Group’s debt to credit and mortgage-credit institutions of DKK 1,064.1 million (2009: DKK 1,376.3 million). The collateral set out above represents the Group’s - million debt to credit institutions by way of shares in certain subsidiaries. These subsidiaries are recogni The Group has provided collateral security for DKK 586.3 assets of DKK 1,711.5 million. sed in the consolidated financial statements with net Total Total Payments for non-terminable operating leases and rent commitments Payments for non-terminable An amount of DKK 120,8 million (2009: DKK 120.3 million) relating to operating leases has been recognised in the consolidated income statement for 2010. An amount of DKK 120,8 million (2009: DKK 120.3 million) on expiry. No contingent rents are No contingent rents are leases. Lease periods are typically for 2-8 years with a renewal option on expiry. The Group leases tools and equipment under operating payable under the leases. 74 Parent company financial statements Parent company 75 0.0 0.0 0.0 0.4 (5.4) (2.0) (0.2) (1.6) (1.2) 17.9 15.9 76.5 (21.3) 2009 107.8 (212.5) (110.1) (110.3) (186.8) (110.3) (110.3) (111.5) 0.1 9.7 1.5 0.3 (0.2) (5.5) (1.6) (2.8) (1.0) 18.4 16.8 76.5 (22.2) 2010 137.1 (393.7) (262.1) (252.4) (328.9) (252.4) (252.4) (253.4) January 31 1 - December Other operating expenses Operating profit (EBIT) Financial income Financial expenses Profit before tax Administrative expenses Tax on profit for the year income and comprehensive of income Statement Revenue Cost of sales Other operating income Gross profit Profit for the year Proposed allocation of profit share) Proposed dividend, DKK 3 per share (2009: DKK 3 per Retained earnings Profit for the year Comprehensive income to financials Value adjustment of hedging instruments transferred during the year Value adjustment of hedging instruments recognised Tax on other comprehensive income Other comprehensive income after tax Profit for the year All amounts in millions of Danish kroner. Total recognised comprehensive income 1 4 7 8 9 2 4 2, 3 Note 76

Balance sheet · Assets, Liabilities and equity at December 31

2010 2009 Note Land and buildings 14.8 14.8 Investment properties 68.6 68.8 Plant and machinery 0.0 0.0 Other fixtures, tools and equipment 2.0 3.1 10 Property, plant and equipment 85.4 86.7

5 Equity investments in subsidiaries and joint ventures 3,236.9 2,368.4 6 Equity investments in associates 62.4 62.4 13 Deferred tax 10.7 1.6 11 Receivables from subsidiaries 85.4 0.0 12 Securities 2.3 2.4 Other non-current assets 3,397.7 2,434.8

Total non-current assets 3,483.1 2,521.5

11 Receivables from subsidiaries 117.4 209.4 11 Other receivables 8.1 5.3 12 Securities 0.0 1,258.4 21 Cash and cash equivalents 0.0 0.1 Total current assets 125.5 1,473.2

Total assets 3,608.6 3,994.7

2010 2009 Note 14 Share capital 255.0 255.0 Hedge transaction reserve (2.2) (1.2) Retained earnings 2,795.0 3,267.4 Proposed dividend 76.5 76.5 Total equity 3,124.3 3,597.7

15 Pensions and similar liabilities 24.0 24.5 16 Credit institutions 83.6 88.6 17 Other liabilities 19.0 18.8 Non-current liabilities 126.6 131.9

16 Current portion of non-current debt 5.0 5.0 16 Credit institutions 316.1 188.1 16 Payables to subsidiaries 1.0 35.2 18 Trade payables and other payables 7.2 8.9 19 Income tax 28.4 27.9 Current liabilities 357.7 265.1

Total liabilities 484.3 397.0

Total liabilities and equity 3,608.6 3,994.7

20 Contingent liabilities and guarantees 23-24 Notes without reference

All amounts in millions of Danish kroner. Parent company 77 0.8 0.5 0.1 0.0 0.0 0.0 0.0 0.2 0.0 (1.7) (5.3) (0.7) (5.8) (0.6) (5.2) (2.4) (3.5) (0.1) (0.1) 19.5 17.1 19.0 48.2 41.7 57.2 (11.1) (10.3) (56.4) (76.4) (92.9) (58.9) 2009 212.5 113.2 (110.1) (107.8) 0.0 0.9 1.0 4.6 1.4 1.1 0.5 0.4 7.1 5.1 0.1 0.0 0.0 0.0 0.1 0.0 (0.5) (0.1) (7.9) (4.1) (2.5) (0.3) (5.1) (0.1) (10.5) (25.5) (74.7) 2010 393.7 130.0 122.5 128.0 (262.1) (137.1) (146.4) (123.7) January 31 1 - December Cash and cash equivalents at December 31 All amounts in millions of Danish kroner. Adjustment for operating items of a non-cash nature, etc.: operating items of a non-cash Adjustment for Other operating items, net Provisions Changes in working capital Joint taxation contribution received and net tax paid Cash flows from operating activities plant and equipment Purchase of property, Profit before tax Profit before and impairment losses Depreciation Financial income activities Cash flows from operating plant and equipment Sale of property, Financial expenses Interest income received Interest expenses paid Capital increase in subsidaries and joint ventures Received liquidation proceeds Dividend from subsidiaries Sale of securities Purchase of securities Cash flows from operating activities before changes in working capital Cash flows from operating Loans to associate Cash flows from investing activities Cash flows from ordinary activities Debt financing: Repayment of non-current liabilities Proceeds from incurring financial liabilities Increase (repayment) of debt to credit institutions Increase (repayment) of intra-group balances Shareholders: Costs regarding capital increase/decrease Dividend paid Purchase / sale of treasury shares ect. Cash flows from financing activities Cash flows for the year Cash and cash equivalents at January 1 Value adjustment of cash and cash equivalents statement flow Cash 2 21 22 19 Note 78 Statement of changes in equity

Hedge transaction Retained Proposed Share capital reserve earnings dividend Total equity

Equity at January 1, 2009 280.0 0.0 3,513.3 84.0 3,877.3

Other comprehensive income in 2009 Value adjustment of hedging instruments 0.0 (1.6) 0.0 0.0 (1.6) Tax on other comprehensive income 0.0 0.4 0.0 0.0 0.4 Profit for the year 0.0 0.0 (186.8) 76.5 (110.3) Total recognised comprehensive income 0.0 (1.2) (186.8) 76.5 (111.5)

Transactions with the owners Share-based payment, net 0.0 0.0 5.8 0.0 5.8 Dividend distributed 0.0 0.0 7.6 (84.0) (76.4) Capital decrease (25.0) 0.0 24.9 0.0 (0.1) Treasury shares sold 0.0 0.0 3.9 0.0 3.9 Treasury shares bought 0.0 0.0 (101.3) 0.0 (101.3) Transactions with the owners for the period (25.0) 0.0 (59.1) (84.0) (168.1)

Equity at December 31, 2009 255.0 (1.2) 3,267.4 76.5 3,597.7

Other comprehensive income in 2010 Hedging instruments transferred to financials 0.0 1.5 0.0 0.0 1.5 Value adjustment of hedging instruments recognised during the year 0.0 (2.8) 0.0 0.0 (2.8) Tax on other comprehensive income 0.0 0.3 0.0 0.0 0.3 Profit for the year 0.0 0.0 (328.9) 76.5 (252.4) Total recognised comprehensive income 0.0 (1.0) (328.9) 76.5 (253.4)

Transactions with the owners Share-based payment, net 0.0 0.0 4.8 0.0 4.8 Dividend distributed 0.0 0.0 1.8 (76.5) (74.7) Treasury shares sold 0.0 0.0 3.5 0.0 3.5 Treasury shares bought 0.0 0.0 (153.6) 0.0 (153.6) Transactions with the owners for the period 0.0 0.0 (143.5) (76.5) (220.0)

Equity at December 31, 2010 255.0 (2.2) 2,795.0 76.5 3,124.3

Hedge transaction reserve The hedge transaction reserve contains the accumulated net change in the fair value of hedging transactions that meet the criteria for hedging future cash flows and for which the hedged transaction has yet to be realised.

All amounts in millions of Danish kroner. Parent company 79 0.0 0.0 0.0 0.0 0.0 0.0 3.5 (0.3) (1.8) (0.1) (9.0) (0.2) (0.8) (0.4) (1.4) (1.0) (0.8) (0.8) (0.2) (0.6) (0.8) 14.4 17.9 10 (13.0) 2009 0.1 0.1 3.7 (0.3) (1.9) (0.1) (0.2) (0.2) (0.1) (0.2) (0.2) (0.8) (1.1) (0.8) (0.8) (0.1) (0.9) (0.2) (0.7) (0.9) 10 14.7 18.4 (10.5) (14.4) 2010 Other operating income and expenses Fees to the auditor by the general meeting Costs Revenue NOTE 4 - NOTE 3 - NOTE 2 - NOTE 1 - Notes to the financial statements financial to the Notes Other operating income Audit fees, KPMG Staff costs of Directors of Schouw & Co. Remuneration to the Board Management fee Management Total other operating income Non-audit fees, KPMG Rental income etc. Rental income Wages and salaries Losses on the disposal of property, plant and equipment and intangible assets Losses on the disposal of property, Total revenue Fees for tax- and VAT-related services, KPMG Other social security costs Total other operating expenses Fees for other services, KPMG Defined contribution pension plans Defined contribution pension All amounts in the notes in millions of Danish kroner. Share-based payment Total fees, KPMG Total staff costs Average number of employees More information on salaries, pensions and share-based payment to the Management Board of Schouw & Co. is provided in note 3 to the consolidated financial More information on salaries, pensions and share-based statements. under administrative expenses. Staff costs including share-based payment are recognised Share option program 3 to the consolidated financial statements. Details of the share option plan are provided in note Employee shares In 2010, Schouw & Co. allocated 480 of its treasury shares are granted on the basis of a performance-driven model. shares for employee share schemes. Employee number of shares at no consideration equivalent to the estimated performance value. The condition If the conditions are met, the employees receive a variable obtained a right to receive shares at a value of DKK 40 thousand (2009: DKK 28 thousand), which amount was met for the 2009 financial year and employees have are held in blocked accounts until the end of the seventh calendar year following grant. is expensed in the income statement for 2010. The shares Depreciation/amortisation and impairment plant and equipment Depreciation of property, Impairment of property, plant and equipment Impairment of property, Total depreciation/amortisation and impairment Depreciation/amortisation and impairment are recognised in the income statement as follows: Depreciation/amortisation and impairment are recognised Production Administration Total depreciation/amortisation and impairment 80 Notes to the financial statements

2010 2009 NOTE 5 - Investments in subsidiaries/joint ventures

Cost at January 1 2,855.3 2,669.5 Capital contributions made during the year 1,258.9 185.0 Reclassified during the year 0.0 0.8 Disposals during the year (20.2) 0.0 Cost at December 31 4,094.0 2,855.3

Impairment at January 1 (486.9) (285.7) Impairment during the year (385.1) (201.2) Disposals during the year 14.9 0.0 Impairment at December 31 (857.1) (486.9) Carrying amount at December 31 3,236.9 2,368.4

Registered Ownership Ownership Company office interest 2010 interest 2009 BioMar Group A/S Aarhus 100% 100% Fibertex A/S Aalborg 100% 100% Fibertex Personal Care A/S (etablished in 2010) Aalborg 100% - Martin Professional A/S Aarhus 100% 100% P. Grene A/S Skjern 100% 100% Hydra-Grene Holding A/S Skjern 100% 100% Aktieselskabet af 1. april 1988 (liquidated in 2010) Aarhus - 100% Schouw & Co. Finans A/S Aarhus 100% 100% Xergi A/S Støvring 50% 50%

Early January 2010 Schouw & Co.’s holding of Vestas shares were transferred to Schouw & Co. Finans A/S. The value of the holding was DKK 1,258.4 million. In light of the loss reported by Schouw & Co. Finans A/S in 2010, the investments have been tested for impairment, resulting in a write-down of DKK 385.1 million. The need for write- down is attributable to the decrease in value of the holdning of Vestas shares.

NOTE 6 - Equity investments in associates

Cost at January 1 66.5 66.5 Cost at December 31 66.5 66.5

Adjustments at January 1 (4.1) (3.6) Impairment for the year 0.0 (0.5) Adjustments at December 31 (4.1) (4.1) Carrying amount at December 31 62.4 62.4

Registered Ownership Ownership Company office interest 2010 interest 2009 Incuba A/S Aarhus 49,02% 49,02%

Investments in associates are measured at the lower of cost and fair value in the parent company’s balance sheet.

NOTE 7 - Financial income 2010

Financial assets measured at Non-financial fair value through Loans and assets or profit or loss receivables liabilities Total Interest income, etc. 0.0 0.4 0.1 0.5 Interest income from subsidiaries 0.0 6.6 0.0 6.6 Dividends from subsidiaries 0.0 0.0 130.0 130.0 Total financial income 0.0 7.0 130.1 137.1

2009

Financial assets measured at Non-financial fair value through Loans and assets or profit or loss receivables liabilities Total Interest income, etc. 0.0 0.0 0.5 0.5 Interest income from subsidiaries 0.0 18.4 0.0 18.4 Unrealised capital gains on securities 40.7 0.0 0.0 40.7 Dividends from subsidiaries 0.0 0.0 48.2 48.2 Total financial income 40.7 18.4 48.7 107.8 Parent company 81 0.4 0.2 1.7 0.0 0.0 0.0 0.0 0.4 (0.2) (8.2) (0.5) (0.1) (8.8) (0.3) (2.0) (1.9) (0.2) (0.2) (1.6) -0.2% (1.2) Total Total 27.5 (27.7) 2009 (385.1) (201.2) (393.7) (212.5)

9.7 0.0 0.3 0.0 0.0 0.0 0.0 0.6 9.1 9.7 8.2 9.7 3.7% 1.5 1.1 0.7 (0.5) (0.4) (2.8) (2.1) 10.0 65.5 (64.0) 2010 (385.1) (201.2) (385.1) (201.7) assets or assets or liabilities liabilities 2010 2009 Non-financial Non-financial 0.0 0.0 0.0 (8.2) (0.1) (8.8) (0.3) (2.0) (8.6) (10.8) Loans and Loans and receivables receivables Financial expenses Tax on the profit for the year Write-down on investments in subsidaries Write-down on investments NOTE 8 - Notes to the financial statements financial to the Notes NOTE 9 - Write-down on investments in subsidaries Write-down on investments Tax for the year is composed as follows Tax on the profit for the year Interest expenses, etc. Write-down on investments in associates Tax on other comprehensive income Interest expenses to subsidiaries Interest expenses, etc. Tax in total Foreign exchange loss Interest expenses to subsidiaries Tax on the profit for the year has been calculated as follows Tax on the profit for the year has been calculated as Current tax Total financial expenses Total financial expenses Deferred tx The write-down in 2010 concerns Schouw & Co. Finans see note 5. In 2009, the write-down consisted of DKK 180.0 million in Martin and DKK 21.2 million in Xergi. The write-down in 2010 concerns Schouw & Co. Finans Tax recognised in the income statement in total Specification of the tax on the profit for the year Calculated 25% tax of the profit for the year Tax effect of non-taxable income Tax effect of adjustment of prior-year tax charge Tax recognised in the income statement in total Effective tax rate Tax included in other comprehensive income Value adjustment of hedging instruments transferred to financials Non-taxable income and non-deductible expenses relate primarily to non-deductible write-downs of subsidiaries and non-taxable dividend from subsidiaries. Non-taxable income and non-deductible expenses relate primarily to non-deductible write-downs of subsidiaries Tax on value adjustment of hedging instruments transferred to the income statement Value adjustment of hedging instruments transferred to the income statement after tax Value adjustment of hedging instruments for the year before tax Tax on value adjustment of hedging instruments for the year Value adjustment of hedging instruments for the year after tax 82 Notes to the financial statements

2010 NOTE 10 - Property, plant and equipment Other fixtures, Land and Investment- tools and buildings properties equipment Total Cost at January 1, 2010 17.6 97.5 7.2 122.3 Additions 0.0 0.0 0.1 0.1 Disposals 0.0 0.0 (0.8) (0.8) Cost at December 31, 2010 17.6 97.5 6.5 121.6

Depreciation and impairment at January 1, 2010 (2.8) (28.7) (4.1) (35.6) Depreciation 0.0 (0.2) (0.6) (0.8) Impairment 0.0 0.0 (0.1) (0.1) Depreciation of disposed assets 0.0 0.0 0.3 0.3 Depreciation and impairment at December 31, 2010 (2.8) (28.9) (4.5) (36.2)

Carrying amount at December 31, 2010 14.8 68.6 2.0 85.4

Depreciated over 25 years 20 years 3-8 years

2009

Other fixtures, Land and Investment- tools and buildings properties equipment Total Cost at January 1, 2009 17.6 97.5 6.6 121.7 Additions 0.0 0.0 0.7 0.7 Disposals 0.0 0.0 (0.1) (0.1) Cost at December 31, 2009 17.6 97.5 7.2 122.3

Depreciation and impairment at January 1, 2009 (2.8) (28.5) (3.6) (34.9) Depreciation 0.0 (0.2) (0.6) (0.8) Depreciation of disposed assets 0.0 0.0 0.1 0.1 Depreciation and impairment at December 31, 2009 (2.8) (28.7) (4.1) (35.6)

Carrying amount at December 31, 2009 14.8 68.8 3.1 86.7

Depreciated over 25 years 20 years 3-8 years

At December 31, 2010, Schouw & Co. owned the following three properties in Denmark: Chr. Filtenborgs Plads 1, Aarhus, the Group’s head office; Hovmarken 8, Lystrup outside Aarhus, which is recognised as an investment property following the 2006 divestment of Elopak Denmark A/S; and Sadelmagervej 24, Vejle, which is also recognised as an investment property. The latter property has been sold with a scheduled takeover date of April 1, 2011 at an accounting gain of DKK 0.8 million, which amount will be recognised in the 2011 financial statements. At the current rent level, the investment property Hovmarken 8 generates rental income of DKK 14.7 million and has operating costs of DKK 1.8 million. A capitalisation of the net rental income at a discounting factor of 8% p.a. indicates a fair value of the investment property of approximately DKK 160 million (2009: DKK 170 million) . The discounting factor is determined as the average bond yield (15–25 years of maturities) at December 31, 2010 plus a risk premium of 3.5 percentage points. The carrying amount of the property was DKK 67.0 million at December 31, 2010.

2010 2009 NOTE 11 - Receivables

Receivables from subsidiaries 202.8 209.4 Other receivables 8.0 5.2 Accruals and deferred income 0.1 0.1 Receivables in total 210.9 214.7

Breakdown of receivables: Non-current receivables 85.4 0.0 Current receivables 125.5 214.7 Receivables in total 210.9 214.7

The company recognised no impairment charges on receivables during the financial year.

For receivables falling due within one year after the end of the financial year, the nominal value is assessed to correspond to the fair value. Parent company 83 5.2 4.7 0.6 1.9 1.7 5.2 2.4 1.0 2.4 (3.5) (3.2) (3.6) (5.4) (1.6) (1.6) (3.2) (3.6) (1.6) (1.0) (2.5) 40.7 (10.0) (10.7) 2009 Dec. 31 Dec. 31 314.5 315.8 905.8 945.0 1,258.4 1,258.4 1,260.8 1,260.8 Balance at Balance at

1.8 0.0 0.1 1.9 (0.5) (6.8) (1.8) (9.1) 4.7 0.0 0.0 2.3 2.3 0.0 0.0 2.3 0.0 0.0 2.3 2.3 0.0 (1.6) (9.1) (5.4) (10.7) (10.0) (10.7) 2010 315.8 945.0 (313.5) (945.0) Recognised in Recognised in 2010 2009 profit for the year profit for the year

Jan. 1 Jan. 1 3.4 5.2 (3.2) (3.2) (3.7) (3.6) (3.5) (1.6) Balance at Balance at Securities Deferred tax Notes to the financial statements financial to the Notes Property, plant and equipment Property, NOTE 13 - NOTE 12 - Changes in temporary differences during the year plant and equipment Property, Cost at January 1 Deferred tax at January 1 Other liabilities Other liabilities Additions Deferred tax for the year recognised in profit for the year Deferred tax for the year recognised in profit for the Tax losses Tax losses Reclassification Net deferred tax at December 31 Changes in temporary differences in total Changes in temporary differences in total Disposals Deferred tax pertains to: plant and equipment Property, Cost at December 31 Other liabilities Adjustments at January 1 Tax losses Reclassification Net deferred tax at December 31 Disposals on divestment There are no deferred tax assets or liabilities that have not been recognised in the balance sheet. There are no deferred tax assets or liabilities that have Adjustments of the year recognised in the income statement Adjustments of the year recognised Adjustments at December 31 Adjustments at December Carrying at December 31 amount Recognised in the balance sheet under long-term securities Recognised in the balance Recognised in the balance sheet under short-term securities Recognised in the balance Shares in Vestas Wind Systems A/S Other securities Securities in total At the beginning of 2010, the holding of shares in Vestas Wind Systems was transferred as a non-cash contribution to Schouw & Co. Finans see note 5. At the beginning of 2010, the holding of shares in Vestas 84 Notes to the financial statements

NOTE 14 - Share capital

The share capital consists of 25,500,000 shares with a nominal value of DKK 10 each. All shares rank equally.

In April 2008, the share capital was increased by 12,470,000 shares in connection with a bonus share issue and by 3,060,000 shares following the merger of BioMar Holding and Schouw & Co.

The share capital was reduced by 2,500,000 shares in August 2009.

Number of Nominal Percentage of Treasury shares shares value Cost share capital January 1, 2009 1,760,509 17,605,090 260.0 6.29% Bought 1,146,982 11,469,820 101.3 4.18% Group employee share scheme (52,853) (528,530) (2.8) -0.19% Decrease of share capital (2,500,000) (25,000,000) (324.6) -8.89% December 31, 2009 354,638 3,546,380 33.9 1.39% Bought 1,305,440 13,054,400 153.6 5.12% Group employee share scheme (36,803) (368,030) (3.2) -0.14% December 31, 2010 1,623,275 16,232,750 184.3 6.37%

In 2010, Schouw & Co. sold treasury shares worth DKK 3.5 million in settlement of the Group’s employee share scheme. Schouw & Co. acquired treasury shares worth DKK 153.6 million in 2010.

Schouw & Co. has been authorised by the shareholders in general meeting to acquire up to 5,100,000 treasury shares, equal to 20.0% of the share capital. The authorisation is valid until the company’s next annual general meeting, at which time a proposal will be made to renew it.

The company acquires treasury shares for allocation to the Group’s employee share schemes and share option programmes. At December 31, 2010, the holding of treasury shares had a market value of DKK 216.7 million (2009 DKK 33.5 million).

NOTE 15 - Pensions and similar liabilities

It is company policy to fund all pension liabilities, so as predominantly to avoid defined benefit plans. The pension liability was assumed by Schouw & Co. in connection with the merger with BioMar Holding.

2010 2009 Changes in recognised liability: Net liability at January 1 24.5 26.1 Paid out (0.5) (1.6) Net liability at December 31 24.0 24.5

The pension obligation was calculated at DKK 24.0 million at December 31, 2010. The entire amount relates to that company’s liability to fund supplementary pensions under the previous practise of the KFK pension funds. The entire obligation is related to people who were on the labour market at September 30, 2002 and who transfered to employment with the consortium that took over the divested grain and feed operations (the former KFK). Some uncertainty applies as to the amount of the pension obligation. Accordingly, final funding of this liability may impact future financial results in a positive or negative direction.

Amounts recognised in the consolidated income statement in respect of defined contribution plans and defined benefit plans are shown in note 3 to the consolidated financial statements. Parent company 85 3.3 1.5 7.4 8.9 5.0 0.0 5.0 Total 88.6 15.5 15.5 18.8 25.1 29.2 74.9 2009 2009 2009 322.3 213.2 188.1 322.3 322.3 322.4 322.3

3.3 0.8 6.4 7.2 5.0 1.0 5.0 83.6 15.7 15.7 19.0 36.8 62.5 (49.9) 2010 2010 2010 Carrying amount 306.8 317.1 316.1 256.9 421.4 421.3 421.4 Variable rate debt 2009

0.0 2.4 9.2 9.6 Fixed 15.5 49.9 65.4 21.2 2009 rate debt 0.0 0.0 2.5 8.5 8.1 Total 19.1 Rate of interest 2010 421.4 421.4

7.4 38.3 84.6 (50.0) 2009 405.8 213.2 355.8 343.5 Variable rate debt 2010

7.5 Fixed 15.6 50.0 65.6 45.3 70.6 Payment 2010 317.1 440.5 rate debt Trade payables and other payables Other liabilities Interest-bearing debt Interest-bearing NOTE 17 - NOTE 18 - Interest bearing debt NOTE 16 - Notes to the financial statements financial to the Notes Trade payables Deposits (non interest-bearing) Debt recognised in the balance sheet: Debt recognised (non-current) Credit institutions Corporate bonds (interest-bearing) Other payables Other liabilities (non-current) Interest-bearing debt maturity profile Interest-bearing debt maturity planned repayment Overdraft facilities without Hedging Other liabilities in total Trade payables and other payables in total Current portion of non-current liabilities Current portion of non-current Credit institutions (current) Less than 1 year Net exposure Payables to subsidiaries (current) Payables to subsidiaries (current) 1-5 years An increase in interest rates of 1% would cause the annual interest expense to rise by about DKK 2.7 million after tax (2009: DKK 1.9 million). An increase in interest rates of 1% would cause the annual to rise by DKK 2.9 million after tax (2009: DKK 2.0 million). The fair value of the interest rate swap has been An increase in interest rates of 1% would cause equity on the basis of observablecalculated using generally accepted valuation techniques 2). The interest rate has a term to maturity of 8.5 years. data (level Fixed rate debt includes items, for which the rate of interest will not be reset within the next year. Fair value More than 5 years Total Interest rate risk risk on its debt subject to a case-by-case assessment. Such assessments include, in addition to expecta The parent company hedges parts of the interest rate Hedging normally consists of interest rate swaps and rate caps. the total floating rate debt relative to equity. tions for interest rate developments, the amount of Distribution of interest-bearing debt by currency: DKK 40%, EUR 60% (2009: DKK 28%, EUR 72%). Distribution of interest-bearing debt by currency: DKK Weighted average effective rate of interest of the year was 2.5% (2009: 3.1%). Weighted average effective rate of interest of the year sheet date was 2.4% (2009: 1.9%). Weighted average effective rate of interest on the balance On variable rate debt, the used rate of interest is the spot rate. On variable rate debt, the used rate of interest is the 86 Notes to the financial statements

2010 2009 NOTE 19 - Income tax payable

Income tax payable at January 1 27.9 10.5 Current tax for the year recognised in the income statement (0.6) (1.7) Tax payable recognised in equity (0.3) (0.4) Joint taxation contribution received and net tax paid 1.4 19.5 Income tax payable at December 31 28.4 27.9

NOTE 20 - Contingent liabilities and guarantees

Contingent liabilities The parent company is management company for the jointly-taxed Danish subsidiaries.

Guarantees The following assets have been provided as security to credit institutions: Land and buildings with a carrying amount of DKK 81.8 million (2009: DKK 82.0 million) Bail for affiliate mortgage loans represents DKK 12.3 million (2009: DKK 13.1 million)

NOTE 21 - Cash and cash equivalents

Cash and cash equivalents 0.0 0.1 Cash in total 0.0 0.1

NOTE 22 - Changes in working capital

Change in receivables 7.7 (6.1) Change in trade payables and other payables (3.1) 0.8 Changes in working capital in total 4.6 (5.3)

NOTE 23 - Financial risks

The parent company’s risk management policy Due to the nature of its operations, investments and financing, the parent company is exposed primarily to changes in the level of interest rates. Interest rate risks are described in greater detail in note 16.

The parent company’s financial management exclusively involves the management of financial risk relating to its operating and investment activities.

Currency risk The parent company’s foreign exchange risks involve foreign businesses of subsidiaries. The parent company does not hedge these investments. The parent company also has limited exposure to foreign exchange risk relating to EUR-denominated net debt. Considering the relatively small fluctuations in the DKK/EUR exchange rate, however, this is considered to be a limited risk.

The parent company’s foreign exchange risks recognised in the balance sheet at December 31, 2010

Net position Hedged by Likely change before financial Net position in exchange Effect on profit Currency hedging 1) instruments after hedging rate 2) for the year 3) EUR/DKK 140.7 0.0 140.7 0.1% 0.1

The parent company’s foreign exchange risks recognised in the balance sheet at December 31, 2009

Net position Hedged by Likely change before financial Net position in exchange Effect on profit Currency hedging 1) instruments after hedging rate 2) for the year 3)) EUR/DKK 104.0 0.0 104.0 0.1% 0.1

1) Positive net positions means debt, negative net positions means receivables. 2) Increase in per cent in the currency exchange rate. 3) A decrease in the currency exchange rate would reverse the sign.

Credit risk Parent company credit risk relates primarily to receivables from affiliated companies and secondarily to cash deposits.

Parent company 87

0.1 2009 (25.1) 175.8 856.7 200.9 (188.1) 1,258.4 1,927.1 0.0 0.0 (1.0) 2010 856.8 540.7 117.4 116.4 (316.1) Related party transactions Financial risks (continued) Financial risks NOTE 24 - NOTE 23 - the necessary the company always has To ensure that to be able to settle that may arise and on opportunities for investments resources to capitalise cash & Co. financial institutions, under which they provide credit lines to Schouw has entered into several agreements with recognised obligations agreed, the company Notes to the financial statements financial to the Notes rent leverage as well as an long-term loans from an assessment of its current leverage as well as an borrowings on short term drawing facilities and It is company policy to diversify cash resources consist of cash, readily marketable shares in Vestas (in 2009), and expected future interest rate level. The company’s assessment of the current affiliated companies and undrawn credit facilities. short-term receivables from resources at December 31 were composed as follows The parent company’s cash Operating credit facility Subsidiaries below: Information on trading with subsidiaries is provided of DKK 3.6 million (2009: DKK 3.4 million). The parent company has received a management fee 31 is DKK 202.8 million (2009: DKK 209.4 million). Parent company receivables from subsidiaries at December is DKK 1.0 million (2009: DKK 35.2 million). Parent company debt to subsidiaries at December 31 The parent company has received dividends of DKK 130.0 million (2009: DKK 48.2 million) from subsidiaries. Management Board, senior management, major Other than as set out above, no transactions were made during the year with members of the Board of Directors, shareholders or any other related parties. Associates Information on trading with associates is provided below: of DKK 0.1 million (2009: DKK 0.1 million) The parent company has received a management fee at December 31, 2010 (2009: DKK 5.2 million) The parent company has a receivable of DKK 7.7 million or 2009. No dividends were received from associates in 2010 Board of directors, management and employees are described in note 3 to the consolidated financial statements. Management remuneration and share option programmes Related parties are described in note 34 to the consolidated financial statements. Related parties are described in note 34 to the consolidated Liquidity risks Drawn operating credits, see note 16 Drawn operating credits, see Shares in Vestas (2009: quote 314.59) Shares in Vestas (2009: quote Cash and cash equivalents, see note 21 Cash and cash equivalents, Cash resources Other receivables / debt to group companies: Other receivables / debt to Receivables from group companies Current liabilities to group companies Net receivables (debt) Operating credits can be terminated at short notice. financial liabilities is shown in note 16. The maturity profile of the parent company's interest-bearing 88 Accounting Policies

nised as goodwill under intangible assets. In the event of uncertainty regarding Accounting policies measurement, goodwill may be adjusted until 12 months after the acquisition. Goodwill is not amortised, but is tested for impairment annually. The first impairment test is performed before the end of the year of acquisition. On acquisition, The annual report of Schouw & Co. for but not control are classified as associ- goodwill is transferred to the cash-gener- 2010 is presented in accordance with ates. Significant influence is generally ating units which will subsequently form the International Financial Reporting achieved by directly or indirectly holding the basis for future impairment tests. Standards (IFRS) as adopted by the EU or having the disposal of more than 20%, On initial recognition, minority inter- and additional Danish disclosure require- but less than 50%, of the voting rights. In ests are either recognised at their fair ments for the annual reports of listed the determination of whether Schouw & value or at their pro-rata share of the fair companies. Co. has control or a significant influence, value of the acquired company’s identifi- The annual report also complies with potential voting rights exercisable at the able assets, liabilities and contingent the International Financial Reporting balance sheet date are included. liabilities. Accordingly, for the former Standards (IFRS) issued by IASB. Schouw & Co. has joint ventures in option, goodwill is recognised relating to Apart from as set out below, the ac- which it holds 50% of the shares and in minority interests of the acquired busi- counting policies are unchanged from the which management is a joint responsibil- ness, while for the latter option, goodwill policies applied last year. ity. Such joint ventures are consolidated relating to minority interests is not rec- Effective from January 1, 2010, on a pro-rata basis. ognised. The measurement of minority Schouw & Co. implemented IFRS 3 The consolidated financial statements interests is determined on a case-by-case “Business combinations” and IAS 27 have been prepared by aggregating the basis and disclosed in the presentation “Consolidated and separate financial financial statements of the parent com- of acquired businesses in the notes to the statements”. With the implementation, pany and the individual subsidiaries and financial statements. the Group has changed its accounting joint ventures prepared in accordance Any gains or losses on the disposal of policy for the treatment of consideration with the Group’s accounting policies. subsidiaries and associates are stated as paid for acquired businesses, introduced Intra-group income and expenses, share- the difference between the sales sum or full recognition of goodwill also when not holdings, intra-group balances and divi- the proceeds from the winding-up and taking over all of an acquired business, dends and realised and unrealised gains the carrying amount of net assets, includ- and changed the accounting treatment and losses on transactions between the ing goodwill, at the date of disposal net of of step acquisitions and the acquisition consolidated companies are eliminated. expenses for selling or winding-up. and divestment of minority interests. In Unrealised gains on transactions with accordance with the transition regula- associates are eliminated in proportion Foreign currency translation tions, the changes will apply exclusively to the Group’s share of the enterprise. A functional currency is determined to transactions made after January 1, Unrealised losses are eliminated in the for each of the reporting enterprises of 2010. The changes have not affected the same way as unrealised gains, to the ex- the Group. The functional currency is annual report. tent that no impairment has occurred. the currency in the primary economic Effective January 1, 2010, Schouw & environment in which the reporting en- Co. also implemented amendments to Business combinations tity operates. Transactions in currencies existing accounting standards, includ- Newly acquired or newly established other than the functional currency are ing IAS 39, IFRS 2 as well as parts of companies are recognised in the consoli- transactions in foreign currencies. “Improvements to IFRS May 2008” and dated financial statements from the date On initial recognition, transactions parts of “Improvements to IFRS April of acquisition. Companies divested or denominated in foreign currency are 2009” and new and revised interpreta- wound up are consolidated in the income translated at the exchange rate ruling tions (IFRIC 9, IFRIC 18). The implementa- statement until the date they are divested on the transaction date. Exchange differ- tion did not affect recognition or meas- or wound up. Comparative figures are not ences arising between the exchange rate urement. adjusted to reflect acquisitions or divest- at the transaction date and the exchange The annual report is presented in ments. Discontinued operations are pre- rate at the date of actual payment are re Danish kroner. sented as a separate item. See below. cognised in the income statement under The purchase method is applied on financial income or financial expenses. acquisitions if the parent company gains Receivables, payables and other BASIS OF PRESENTATION control of the company acquired. Assets, monetary items denominated in foreign liabilities and contingent liabilities in currency are translated at the exchange Basis of consolidation companies acquired are measured at rates ruling at the balance sheet date. The financial statements of the Group their fair value at the date of acquisition. The difference between the exchange consolidate the financial statements of Intangible assets are recognised if they rate ruling at the balance sheet date and Schouw & Co. and subsidiaries controlled can be separated or arise from a contrac- the exchange rate ruling at the date when by Schouw & Co. Control is achieved by tual right. Deferred tax on revaluations the receivable or payable arose or the directly or indirectly holding or having made is recognised. exchange rate applied in the most recent the disposal of more than 50% of the For business combinations, any excess annual report is recognised in the income voting rights or otherwise exercising a of the consideration paid for the business statement under financial income or fi- controlling influence over the relevant and the value of minority interests over nancial expenses. enterprise. Enterprises in which the the fair value of the acquired assets, lia- On consolidation of enterprises with Group exercises significant influence bilities and contingent liabilities is recog- functional currencies other than Danish Accounting Policies 89

kroner, the income statements are trans- Deferred tax assets are reviewed an- equity in a separate exchange adjustment lated at the exchange rates ruling at the nually and recognised only to the extent reserve. transaction date and the balance sheets that it is probable that they will be uti- For derivative financial instruments are translated at the exchange rates rul- lised. that do not qualify for hedge accounting, ing at the balance sheet date. The average The carrying amounts of other non- changes in fair value are recognised as exchange rate for each individual month current assets are tested annually to de- interest income or expenses and similar is used as the transaction date exchange termine whether there is any indication items in the income statement as they rate. Exchange differences arising on the of impairment. If such an indication ex- occur. translation of such enterprises’ opening ists, the recoverable amount of the asset equity at the exchange rates ruling at the is calculated. The recoverable amount is balance sheet date and on the transla- the higher of the fair value of the asset INCOME STATEMENT tion of the income statements from the less expected costs to sell and the value exchange rates ruling at the transaction in use. Revenue date to the exchange rates ruling at the An impairment loss is recognised Revenue from the sale of goods for resale balance sheet date are taken directly to when the carrying amount of an asset or and finished goods is recognised in the equity in a separate exchange adjustment a cash-generating unit exceeds the recov- income statement if transfer of risk to the reserve. erable amount of the asset or the cash- buyer has taken place before year-end Foreign exchange adjustment of bal- generating unit. Impairment losses are and if the income can be reliably meas- ances that are considered as part of the recognised in the income statement as ured. overall net investment in enterprises with production costs, distribution costs or ad- Revenue is measured excluding VAT functional currencies other than Danish ministrative expenses. However, goodwill and other taxes and duties charged on be- kroner, are recognised directly in equity in write-downs are recognised as a separate half of third parties. All discounts granted a separate exchange adjustment reserve item in the income statement. are recognised in revenue. in the consolidated financial statements. Impairment write-downs of goodwill Construction contracts involving Similarly, exchange gains and losses on are not reversed. Impairment of other plant that is to a large degree individu- the part of loans and derivative financial assets is reversed to the extent changes ally designed are included in revenue in instruments effectively hedging the net have occurred to the assumptions and proportion to the work completed, so that investment in such enterprises are in the estimates leading to the impairment. revenue is matched with the sales value consolidated financial statements taken Impairment is only reversed to the extent of the work carried out during the year directly to equity in a separate exchange the new carrying amount of an asset does (the percentage of completion method). adjustment reserve. not exceed the carrying amount the asset On consolidation of associates with would have had net of depreciation, had Cost of sales functional currencies other than Danish the asset not been impaired. Cost of sales comprises costs defrayed to kroner, the pro-rata share of the results achieve the year’s revenue. The trading is translated at the exchange rates ruling Derivative financial instruments companies recognise the cost of goods at the transaction date, and the share of Derivative financial instruments are sold and manufacturing companies rec- equity including goodwill is translated at measured at fair value and recognised in ognise production costs corresponding the exchange rates ruling at the balance the balance sheet under other receivables to the year’s revenue, including direct sheet date. Exchange differences arising or other payables, respectively. The fair and indirect costs for raw materials and on the translation of such share of foreign value of derivative financial instruments consumables, wages and salaries, rent associates’ opening equity at the ex- is calculated on the basis of current and leasing, as well as depreciation and change rates ruling at the balance sheet market data and recognised valuation impairment losses on production equip- date and on the translation of the share methods. ment. of the results from average exchange Changes in the fair value of derivative Cost of sales also includes research rates to the exchange rates ruling at the financial instruments that effectively costs and development costs that do not balance sheet date are taken directly to hedge the fair value of a recognised asset meet the criteria for capitalisation, as equity in a separate exchange adjustment or a recognised liability are recognised in well as amortisation and impairment of reserve. the income statement together with any capitalised development costs. changes in the value of the hedged asset Impairment of non-current assets or hedged liability. Hedging of future cash Distribution costs Goodwill and intangible assets with flows under agreements are treated as Distribution costs include costs incurred undefinite useful lives are tested an- hedging of the fair value of a recognised for distribution of goods sold and for nually for impairment, the first time asset or a recognised liability. sales campaigns, etc. during the year. This before the end of the year of acquisition. Changes in the part of the fair value includes the cost of sales staff, advertis- Development projects in progress are also of derivative financial instruments effec- ing and exhibition costs, as well as depre- tested for impairment annually. tively hedging future cash flows are rec- ciation/amortisation and impairment. The carrying amount of goodwill is ognised in equity in a separate reserve for tested for impairment together with the hedge transactions. On realisation of the Administrative expenses other long-term assets of the cash-gener- hedged transaction, any gains or losses Administrative expenses comprise ex- ating unit to which the goodwill has been relating to such hedge transactions are penses incurred during the year for man- allocated. transferred from equity and included in agement and administration, including The recoverable amount is generally the same item as the hedged item. expenses for administrative staff, office calculated as the present value of the fu- Changes in the fair value of derivative premises and office expenses, and depre- ture net cash flows expected to be derived financial instruments effectively hedging ciation and impairment. from the business or activity (cash-gener- net investments in foreign subsidiaries Administrative expenses also com- ating unit) to which the goodwill relates. or associates are recognised directly in prise write-downs on receivables. 90 Accounting Policies

Employee benefits Profit /loss from divestment of deferred tax, is recognised in the income Equity-settled share options are meas- equity investments in the statement as regards the amount that ured at fair value at the grant date and consolidated financial statements can be attributed to the profit/loss for the their value is recognised in the income Profit/loss from divestment of equity year and posted directly in equity as re- statement under staff costs over the vest- investments is recognised in the con- gards the amount that can be attributed ing period. The balancing item is recog- solidated income statement. The profit/ to movements taken directly to equity. nised directly in equity. loss is calculated as the selling price less To the extent the Schouw & Co. Group On initial recognition of the share op- the carrying amount of the equity invest- benefits from a deduction in the determi- tions, the number of options expected to ment plus or minus foreign exchange nation of taxable income in Denmark due vest is estimated. Subsequently, changes adjustments taken to equity which relate to share-based incentive programmes, in the estimated number of vested op- directly to the equity investment in ques- the tax effect of such programmes is in- tions are adjusted to the effect that the tion and less selling costs. cluded in income tax. Any tax deduction total amount recognised is based on the On the divestment of a company, the exceeding the accounting cost is recog- actual number of vested options. profit/loss is recognised under profit/ nised directly in equity. The fair value of options granted is loss from the divestment of equity invest- estimated using a valuation model that ments if the company sold does not rep- takes into account the terms and condi- resent an independent segment and if its BALANCE SHEET tions of the options granted. revenue, profit/loss or assets represent The value of allotted employee shares less than 10% of consolidated revenue, Intangible assets is recognised under staff costs. The consolidated profit/loss or consolidated At initial recognition goodwill is recog- balancing item is recognised directly in assets. nised in the balance sheet at cost as de- equity. Profit from the sale of other companies scribed in the section ‘Business combina- is recognised in profit from discontinued tions’. Goodwill is subsequently measured Other operating income operations. See separate section on the at cost less accumulated impairment. and expenses presentation of discontinued operations. Goodwill is not amortised. Other operating income and expenses The carrying amount of goodwill is comprise items of a secondary nature Financial income and expenses allocated to the Group’s cash-generating relative to the companies’ activities, in- Financial income and financial expenses units at the date of acquisition. The de- cluding gains and losses on replacement comprise interest, capital gains and termination of cash-generating units is of intangible assets and property, plant losses as well as impairment losses on se- based on the management structure and and equipment. Gains and losses on the curities, payables and transactions in for- the in-house financial management. disposal of intangible assets and prop- eign currencies, amortisation of financial Development projects, patents, licenc- erty, plant and equipment are computed assets and liabilities as well as extra pay- es, etc. Development costs comprise sala- as the difference between the selling ments and repayment under the on-ac- ries, amortisation and depreciation and price and the carrying amount at the date count taxation scheme, etc. Furthermore, other costs attributable to the company’s of disposal. realised and unrealised gains and losses development activities. on derivative financial instruments that Clearly defined development projects Government grants do not qualify as hedge accounting are are recognised as intangible assets where Government grants include grants for recognised. the technical feasibility of the project, the and funding of development work and Financial expenses relating to the con- availability of adequate resources and a grants for investments, etc. Grants for re- struction of non-current assets are recog- potential future market or application search and development costs recognised nised as part of the cost of the asset. opportunity in the company can be dem- directly in the income statement are in- Dividend on investments in subsidi onstrated and where the intention is to cluded in other operating income. aries and associates is recognised in the manufacture, market or use the project if Investment grants in the form of cer- parent company’s income statement in the cost can be measured reliably and it is tain tax-privileged schemes in individual the financial year in which the dividend is probable that the future earnings or the countries are recognised in the balance adopted. net selling prices can cover production sheet under receivables and under accru- and selling expenses, administrative ex- als and deferred income. Grants are rec- Tax on profit for the year penses as well as the development costs. ognised in the income statement under Schouw & Co. is taxed jointly with all its Other development costs are recognised other operating income as the underlying Danish subsidiaries. The current Danish in the income statement as incurred. investments are depreciated. The receiv- income tax liability is allocated among the Recognised development costs are able is reduced as the grant is received companies of the tax pool in proportion measured at cost less accumulated amor- and the accruals and deferred income to their taxable income. Companies uti- tisation and impairment. item is reduced as the grant is recognised lising tax losses in other companies pay On completion of the development in the income statement. joint taxation contributions to the parent work, the development project is amor- company equal to the tax value of the tised on a straight-line basis over the esti- Share of profit/loss after tax in utilised losses, while companies whose mated useful life. The usual amortisation associates in the consolidated tax losses are utilised by other companies period is three to seven years. The basis financial statements receive joint taxation contributions from of amortisation is calculated less any im- The proportionate share of the profit or the parent company equal to the tax value pairment. loss of associates after tax and minori- of the utilised losses (full allocation). The Patents and licenses are measured at ties and elimination of the proportionate jointly taxed companies pay tax under the cost less accumulated amortisation and share of intra-group gains or losses is Danish on-account tax scheme. write-downs. Patents and licences are recognised in the consolidated income Tax for the year, consisting of the amortised on a straight-line basis over statement. year’s current tax and movements in the shorter of the remaining term of the Accounting Policies 91

patent or the agreement and the useful If the depreciation period or the scrap indirect production costs. Indirect costs life. value is changed, the effect on deprecia- of production include indirect materials tion going forward is recognised as a and labour as well as maintenance of and Property, plant and equipment change in accounting estimates. depreciation and impairment of the ma- Land and buildings, investment property, Depreciation is recognised in the chines, factory buildings and equipment plant and machinery, fixtures and fittings, income statement as production costs, used in the manufacturing process as tools and equipment are measured at distribution costs or administrative ex- well as factory management and adminis- cost less accumulated depreciation and penses. trative expenses. impairment. The net realisable value of inventories Cost comprises the purchase price Investments in associates is calculated as the selling price less costs and any costs directly attributable to the in the consolidated of conversion and costs incurred to ex- acquisition until the date when the asset financial statements ecute the sale and is determined having is ready for use. For assets produced in- Investments in associates are measured regard to marketability, obsolescence and house, cost comprises direct and indirect in the balance sheet at the proportionate expected selling price movements. costs of materials, components, third-par- share of the companies’ net asset value ty suppliers and labour. Cost is increased calculated in accordance with the Group’s Receivables by the present value of estimated liabili- accounting policies with the deduction or Receivables are measured at amortised ties for the removal and disposal of the addition of the proportionate share of un- cost. Receivables are written down for asset and restoration of the site on which realised intra-group gains and losses and anticipated losses. Impairment write- the asset was used. The cost of a total with the addition of the carrying amount downs on receivables are recognised in asset is divided into separate components of goodwill. the income statement under administra- that are depreciated separately if such Associates with a negative equity tive expenses. components have different useful lives. value are recognised at zero. Interest expense of constructing a new Receivables from associates are writ- Prepayments and asset and incurred during the construc- ten down to the extent they are deemed accrued income tion period is recognised in the cost of the to be irrecoverable. Prepayments and accrued income include asset. expenses paid in respect of subsequent The cost of assets held under finance Investments in subsidiaries financial years. leases is determined as the lower of the and associates in the parent fair value of the assets and the present company’s financial statements Construction contracts value of future minimum lease payments. Investments in subsidiaries and associ- Receivables are measured at the sales The present value is calculated using the ates are measured at cost. Where the value of the work performed less pro- interest rate implicit in the lease as the recoverable amount is lower than cost, gress billings and expected losses. discount factor, or an approximate value. the investments are written down to this The sales value is measured on the Subsequent costs, such as the cost of lower value. basis of the percentage of completion at replacing components of property, plant the balance sheet date and the aggregate and equipment, are included in the asset’s Securities income expected from each individual carrying amount. The replaced compo- Security holdings which do not enable the contract. The percentage of completion is nents are no longer recognised in the company to exercise control or a signifi- determined on the basis of an assessment balance sheet, and the carrying amount is cant influence, and other securities are of the work performed, which is normally transferred to the income statement. All measured at fair value. calculated as the ratio of costs incurred other ordinary repair and maintenance Value adjustments of listed securities to total expected costs of the particular costs are recognised in the income state- for which changes in fair value are regu- contract. ment when incurred. larly monitored, are recognised under When it is likely that the total costs of Property, plant and equipment is de- financial items in the income statement a construction contract will exceed the preciated on a straight-line basis over when they occur. total expected contract revenue, the ex- the expected useful lives of the assets/ Unlisted securities for which the fair pected loss on the construction contract components, which are expected to be as value is not regularly monitored are clas- is recognised immediately as an expense. follows: sified as available for sale. Securities are When the profit or loss from a con- measured at fair value and value adjust- struction contract cannot be reliably Buildings 10-50 years ments are taken to equity. On realisation, estimated, the fair value is measured only Investment property 20 years accumulated value adjustments are taken for costs incurred to the extent that it is Plant and machinery 3-12 years from equity to financial items in the in- likely such costs will be recovered. Leasehold improvements 2-10 years come statement. Construction contracts for which Other fixtures and fittings, the sales value of the work performed tools and equipment 2-8 years Inventories exceeds progress billings and expected Land is not depreciated Inventories are measured at cost in losses are recognised as receivables. accordance with the FIFO method. Construction contracts for which pro- The depreciable amount is determined Inventories are written down to the lower gress billings and expected losses exceed taking the residual value and any impair- of cost and net realisable value. the sales value are recognised as liabili- ment losses into consideration. The re- The cost of goods for resale, raw ma- ties. sidual value is determined at the acquisi- terials and consumables comprise the Customer prepayments are recog- tion date and reassessed annually. Where purchase price plus delivery costs. nised as liabilities. the residual value exceeds the carrying The cost of finished goods and work in amount, the property ceases to be depre- progress comprises the cost of raw ma- ciated. terials, consumables, direct labour and 92 Accounting Policies

Equity ed to be used, either by setting off tax on before or on the balance sheet date, The hedge transaction reserve contains future earnings or by setting off deferred the Group has a legal or constructive the accumulated net change in the fair tax liabilities within the same legal tax obligation, and it is likely that economic value of hedging transactions that meet entity and jurisdiction. benefits must be given up to meet the the criteria for hedging future cash flows Deferred tax adjustments are made obligation. and for which the hedged transaction has regarding eliminations of unrealised in- In the measurement of provisions, the yet to be realised. tercompany gains and losses. costs necessary to settle the liability are The translation reserve in the con- Deferred tax is measured based on the discounted. The changes in present val- solidated financial statements comprises tax rules and rates in the respective coun- ues for the financial year are recognised exchange differences arising on the tries that will apply under the legislation in financial expenses. translation of the financial statements of in force on the balance sheet date when Warranty commitments are recog- foreign enterprises from their functional the deferred tax asset is expected to crys- nised as the sale of goods and services currencies into Danish kroner including tallise as current tax. Changes in deferred is effected, based on incurred warranty exchange differences on financial instru- tax resulting from changes in tax rates are costs from prior financial years. ments considered to be a part of the net recognised in the income statement. Provisions are recognised in respect of investment or as hedging of the net in- loss-making contracts when the unavoid- vestment. Pension liabilities and similar able costs under a contract exceed the On full or partial realisation of a net in- long-term liabilities expected benefits to the Group from the vestment, foreign exchange adjustments The Group has entered into pension contract. are recognised in the income statement agreements and similar agreements with if the parent company has surrendered most of the Group’s employees. Financial liabilities control of the net investment. Liabilities relating to defined contribu- Debt to credit institutions is recognised The fair value adjustment reserve tion plans are recognised in the income at the raising of a loan as the proceeds comprises value adjustments of available- statement in the period in which they are received less transaction costs. In the for-sale securities that are not regularly earned, and payments due are recognised subsequent periods, financial liabilities monitored. On realisation, accumulated in the balance sheet under other payables. are measured at amortised cost, apply- value adjustments are taken from equity For defined benefit plans, annual ac- ing the “effective interest rate method”, to financial items in the income state- tuarial calculations are made of the net to the effect that the difference between ment. present value of future benefits to be paid the proceeds and the nominal value is The purchase and sale sums of treas- under the plan. The net present value is recognised in the income statement ury shares and dividends thereon are calculated based on assumptions of the under financial expenses over the term of taken directly to retained earnings under future developments of salary, interest, the loan. equity. inflation and mortality rates, among other In addition, the capitalised residual Proceeds from the sale of treasury things. The net present value is only cal- lease liability under finance leases is shares in Schouw & Co. in connection with culated for those benefits earned by the recognised under financial liabilities. the exercise of share options or employee employees through their employment Other liabilities are measured at net shares are taken directly to equity. with the Group to date. The actuarial cal- realisable value. Dividend is recognised as a liability at culation of the net present value less the the time of adoption by the shareholders fair value of any assets related to the plan Deferred income at the annual general meeting (the date is recognised in the balance sheet as pen- Deferred income comprises payments of declaration). Dividends expected to be sion obligations. See below. received relating to income in subsequent declared in respect of the year are stated Pension costs for the year are recog- financial years, including investment as a separate line item under equity. nised in the income statement based on grants. actuarial estimates and financial fore- Income tax and deferred tax casts at the start of the year. Differences Assets and liabilities held for sale Current tax liabilities and current tax between the expected development of Assets held for sale comprise non-current receivables are recognised in the balance pension assets, liabilities and the real- assets and disposal groups held for sale. sheet as calculated tax on the taxable ised values are termed actuarial gains A disposal group is a group of assets to income for the year, adjusted for tax on and losses and are recognised directly in be disposed of, by sale or otherwise, to- prior years’ taxable income and for tax equity. gether as a group in a single transaction. paid under the on-account tax scheme. In connection with a change in benefits Liabilities regarding assets held for sale Deferred tax is calculated in accord- regarding the employees’ employment in are liabilities directly associated with ance with the balance sheet liability the enterprise to date, there is a change those assets that will be transferred in method on all timing differences between in the actuarial calculation of the net pre- the transaction. Assets are classified as the accounting and tax value of assets sent value, which is considered historical “held for sale” if their carrying amount and liabilities. However, no deferred tax is costs. Historical costs are expensed im- will be recovered principally through a recognised on timing differences regard- mediately if the employees have already sale transaction within 12 months in ac- ing non-deductible goodwill and other earned the right to the changed benefits. cordance with a formal plan rather than items for which timing differences have Otherwise, they are recognised in the through continuing use. arisen at the acquisition date without income statement over the period during Assets or disposal groups held for sale affecting the financial results or taxable which the employees earn the right to the are measured at the lower of the carrying income. changed benefits. amount at the date when the assets were Deferred tax assets, including the tax classified as held for sale and fair value value of tax losses carried forward, are Provisions less costs to sell. Assets are not depreci- recognised under other non-current as- Provisions are recognised when, as a con- ated or amortised as from the date they sets at the value at which they are expect- sequence of an event that has occurred are classified as “held for sale”. Accounting Policies 93

Presentation of Cash flows from attributed to each individual segment discontinuing operations discontinuing activities and those items that can be allocated Discontinued operations form a substan- Cash flows from discontinued activities to the individual segments on a reliable tial part of a business if its activities and comprise cash flows from operating, in- basis. Unallocated items mainly comprise cash flows can be clearly distinguished, vesting and financing activities in the dis- assets and liabilities as well as income operationally or for financial reporting continued entity. and costs relating to the Group’s admin- purposes, from the rest of the entity and istrative functions, investing activities, where the entity has either been divested Cash and cash equivalents income tax, etc. or separated out as held for sale and Cash and cash equivalents include cash at Long-term assets in a segment com- such sale pursuant to a formal plan is bank and in hand as well as securities with prise long-term assets used directly in expected to take place within 12 months. a maturity of less than three months at the the operations of the segment, including Discontinued operations also comprise time of acquisition that can immediately intangible assets, property, plant and entities which in relation to an acquisition be converted into cash and that involve in- equipment and investments in associates. have been classified as “held for sale”. significant risk of value fluctuations. Current assets in a segment comprise Profit on discontinued operations current assets used directly in the opera- after tax and value adjustments of related tions of the segment, including invento- assets and liabilities after tax and gains/ SEGMENT REPORTING ries, trade debtors, other debtors, prepay- losses from a sale are reported under a ments and cash. separate line item in the income state- Segment reporting is consistent with the Segment liabilities comprise obliga- ment. internal management reporting. tions that have arisen out of the segment Segment income and segment costs operations, including trade payables and as well as segment assets and liabilities other liabilities. CASH FLOW STATEMENT comprise those items that can be directly

The cash flow statement shows the cash flows for the year distributed on operating, investing, financing and discontinued activities, net changes for the year in cash as well as cash and cash equivalents at the beginning and end of the year. The cash effect of acquisitions and divestments is shown separately under DEFINITIONS OF RATIOS cash flows from investing activities. In the cash flow statement, cash flows concern- Earnings per share (EPS) and diluted earnings per share (EPS-D) are calculated in accor- ing acquired companies are recognised dance with IAS 33. Other key ratios are calculated in accordance with ”Recom mendations from the date of acquisition, while cash and Ratios 2010” issued by the Danish Society of Financial Analysts. flows concerning divested companies are The key ratios in the annual report are calculated in the following manner: recognised until the date of divestment.

Cash flows from Profit for the year excluding minorities operating activities Return on equity Avg. equity excluding minorities Cash flows from operating activities are calculated as the profit for the year be- EBITA fore tax adjusted for non-cash operating Return on invested capital (ROIC) Avg. invested capital excluding goodwill items, changes in working capital, interest paid and income taxes paid. Equity at year end Equity ratio Total liabilities and equity at year end Cash flows from investing activities Profit for the year excluding minorities Cash flows from investing activities com- Earnings per share (EPS) Average number of shares in circulation prise payments made in connection with the acquisition and divestment of compa- Diluted earnings excluding minorities nies and operations and the acquisition Diluted earnings per share (EPS-D) Diluted average number of shares in circulation and disposal of intangible assets, property, plant and equipment as well as the Equity at year end, excluding minority interests purchase and sale of securities not recog- Net asset value per share Number of shares at year end excluding treasury shares nised under cash and cash equivalents.

Market capitalisation at year end Cash flows from Price/net asset value (P/NAV) Equity at year end, excluding minority interests financing activities

Cash flows from financing activities in- Share price at December 31 clude payments to and from sharehold- Price Earnings ratio (PE) Earnings per share ers and related expenses as well as the raising of loans, repayments on interest- Number of shares, excluding treasury shares, bearing debt and the purchase and sale of Market capitalisation multiplied by share price treasury shares. 94 Statement by the board of directors and the management

Statement by the Board of Directors and the Management

To the shareholders of Aktieselskabet Schouw & Co.

The Board of Directors and the Executive Management have today reviewed and approved the annual report of Aktieselskabet Schouw & Co. for the 2010 financial year.

The annual report has been prepared in accordance with the International Financial Reporting Standards as adopted by the EU and Danish disclosure requirements for annual reports of listed companies.

In our opinion, the consolidated and parent company financial statements give a true and fair view of the Group’s and the parent company’s assets, liabilities and financial position at December 31, 2010 and of the results of the Group’s and the parent company’s operations and cash flows for the financial year ended December 31, 2010.

In our opinion, the management’s report includes a fair review of the development and performance of the business and financial position of the Group and the parent company, the financial results for the year as well as the financial position in general of the consolidated companies, together with a description of the principal risks and uncertainties that the Group and the parent company face.

We recommend that the annual report be adopted by the shareholders in general meeting.

Aarhus, March 10, 2011

Executive management

Jens Bjerg Sørensen Peter Kjær CEO

Board of directors

Jørn Ankær Thomsen Erling Eskildsen Niels Kristian Agner Chairman Deputy Chairman

Erling Lindahl Kjeld Johannesen Jørgen Wisborg Independent auditors’ report 95

Independent auditors’ report

To the shareholders of Aktieselskabet Schouw & Co.

We have audited the consolidated financial statements and the ment of the consolidated financial statements and the parent parent company financial statements of Aktieselskabet Schouw company financial statements, whether due to fraud or error. In & Co. for the financial year January 1 – December 31, 2010, pp. making those risk assessments, the auditors consider internal 48-93. The consolidated financial statements and the parent control relevant to the Company’s preparation and presentation company financial statements comprise income statement, of consolidated financial statements and parent company finan- statement of comprehensive income, balance sheet, state- cial statements that give a true and fair view in order to design ment of changes in equity, cash flow statement and notes for audit procedures that are appropriate in the circumstances, but the Group as well as for the parent company. The consolidated not for the purpose of expressing an opinion on the effectiveness financial statements and the parent company financial state- of the Company’s internal control. An audit also includes evalu- ments are prepared in accordance with International Financial ating the appropriateness of accounting policies used and the Reporting Standards as adopted by the EU and Danish disclosure reasonableness of accounting estimates made by Management, as requirements for listed companies. well as evaluating the overall presentation of the consolidated financial statements and the parent company financial statements. In addition to our audit, we have read the Management’s review which is prepared in accordance with Danish disclosure require- We believe that the audit evidence we have obtained is sufficient ments for listed companies and provided a statement hereon. and appropriate to provide a basis for our opinion.

Management’s responsibility Our audit has not resulted in any qualification. Management is responsible for the preparation and presentation of consolidated financial statements and parent company Opinion financial statements that give a true and fair view in accordance In our opinion, the consolidated financial statements and the par- with International Financial Reporting Standards as adopted by ent company financial statements give a true and fair view of the the EU and Danish disclosure requirements for listed companies. Group’s and the parent company’s financial position at December This responsibility includes: designing, implementing and main- 31, 2010 and of the results of the Group’s and the parent com- taining internal control relevant to the preparation and presen- pany’s operations and cash flows for the financial year January tation of consolidated financial statements and parent company 1 – December 31, 2010 in accordance with International Financial financial statements that give a true and fair view and that are Reporting Standards as adopted by the EU and Danish disclosure free from material misstatement, whether due to fraud or error; requirements for listed companies. selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circum- Statement on the Management’s review stances. Management is also responsible for the preparation of a Pursuant to the Danish Financial Statements Act, we have read Management’s review that includes a fair review in accordance the Management’s review. We have not performed any further with Danish disclosure requirements for listed companies. procedures in addition to the audit of the consolidated financial statements and the parent company financial statements. On Auditors’ responsibility and basis of opinion this basis, it is our opinion that the information provided in the Our responsibility is to express an opinion on the consolidated Management’s review is consistent with the consolidated finan- financial statements and the parent company financial state- cial statements and the parent company financial statements. ments based on our audit. We conducted our audit in accordance with Danish Standards on Auditing. Those standards require Aarhus, March 10, 2011 that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance as to whether the con- KPMG solidated financial statements and the parent company financial Statsautoriseret Revisionspartnerselskab statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements and the parent company financial state- Jes Lauritzen Kim R. Mortensen ments. The procedures selected depend on the auditors’ judge- State Authorised State Authorised ment, including the assessment of the risks of material misstate- Public Accountant Public Accountant 96

Group overview selected companies as of March 2011

SELSKABSNAVNCOMPANY NAME HJEMSTEDDOMICILE LANDCOUNTRY EJERANDELOWNERSHIP

Schouw & Co. Finans A/S Aarhus Denmark 100%

BioMar Group A/S Aarhus Denmark 100% BioMar A/S Brande Denmark 100% BioMar Sp.z o.o. Zielona Góra Poland 100% Oy BioMar Ab Vaasa Finland 100% BioMar AB Insjön Sweden 100% Dana Feed A/S Horsens Denmark 100% Dana Feed Sp.z o.o. Koszalin Poland 100% Dana Feed Srl Treviso Italy 100% BioMar S.A.S. Nersac France 100% BioMar Srl Monastier Italy 100% BioMar Iberia S.A. Dueñas Spain 100% BioMar Hellenic S.A. Volos Greece 100% BioMar AS Myre Norway 100% BioMar Ltd. Grangemouth UK 100% BioMar A/S Chile Holding S.A. Puerto Montt Chile 100% BioMar Chile SA Puerto Montt Chile 100% BioMar Aquacultura Corporation S.A. Canas Costa Rica 100% BioMar Aquacorporation Products S.A. Canas Costa Rica 50,0% Alitec Pargua S.A. Pargua Chile 50,0%

Fibertex Personal Care A/S Aalborg Denmark 100% Fibertex Nonwovens Sdn Bhd Nilai Malaysia 100% Innowo Print AG Ilsenburg Germany 15,0%

Fibertex Nonwovens A/S Aalborg Denmark 100% Fibertex, a.s. Svitavy Czech Rep. 100% Fibertex France S.A.R.L. Beauchamp France 100% Elephant Nonwovens - Nao Tecidos U.P., Lda. Estoril Portugal 100% Fibertex Elephant Espana. S.L. Sant Cugat del Vallés Spain 100% Fibertex South Africa Ltd. Durban South Africa 26,0%

P. Grene A/S Skjern Denmark 100% Grene Danmark A/S Skjern Denmark 100% Grene Industri-service A/S Aarhus Denmark 100% Grene Sverige AB Eslöv Sweden 100% Grene AS Oslo Norway 100% Grene Ab OY Kimito Finland 100% Grene Sp.z o.o. Konin Poland 97,6% UAB Grene Siauliai Vilnius Lithuania 100% Grene Kramp Holding A/S Skjern Denmark 50,0% OOO Grene Kramp Nedvizhimost Chehov Russia 100,0% Grene Kramp Russia B.V. Varsseveld Holland 80,0% OOO Grene Kramp Moskva Russia 100,0%

Hydra-Grene Holding A/S Skjern Denmark 100% Hydra-Grene A/S Skjern Denmark 100% Hydra Grene Hydraulics Equipm. Accessory Co., Ltd Tianjin China 100% Hydra Grene India Private Limited Chennai India 100% Hydra-Grene USA Inc. Chicago USA 100% Dansk Afgratningsteknik A/S Skjern Denmark 30,0%

Martin Professional A/S Aarhus Denmark 100% Martin Professional Scandinavia A/S Aarhus Denmark 100% Martin Professional Inc. Sunrise, FL USA 100% Martin Professional Ltd. Louth UK 100% Martin Professional France S.A. Lisses France 100% Martin Professional Italy Spa Bergamo Italy 100% Martin Professional Pte. Ltd. Singapore Singapore 100% Martin Professional GmbH Karlsfeld Germany 100% Martin Professional (HK) Ltd. Hong Kong Hong Kong 46,2% Martin Professional Japan Ltd. Tokyo Japan 40,0% Martin Manufacturing (UK) Ltd. Louth UK 100% Martin Manufacturing Zhuhai Ltd. Zhuhai China 100% Martin Professional Middle East Ltd. Beirut Lebanon 16,7% Martin Professional Argentina S.A. Buenos Aires Argentina 20,0% R&D International NV Landen Belgium 100% Finini ApS Haarby Denmark 49,9%

Xergi A/S Støvring Denmark 50,0% Xergi, Ltd. London UK 100% Xergi Services Ltd. London UK 80,0% Danish Biogas Technology A/S Støvring Denmark 100% Xergi GmbH Bad Saarow Germany 100% Xergi S.A.S. Paris France 100% GFE Patent A/S Langå Denmark 50,0%

Incuba A/S Aarhus Denmark 49,0% Helsingforsgade 25 Aarhus A/S Aarhus Denmark 34,0% Incuba Science Park A/S Aarhus Denmark 26,3% Østjysk Innovation A/S Aarhus Denmark 26,9% Incuba Venture I K/S Aarhus Denmark 32,6% Scandinavian Micro Biodevices Aps Farum Denmark 38,2% Content ADDreSSeS

Statements

ANNUAL REPORT 2010