THE FEHMARNBELT TUNNEL Annual Report 2019 CONTENTS Preface 3 Management Report 4 Key figures and financial ratios 21 Statement of comprehensive income 22 Balance sheet 23 Statement of changes in equity 25 Cash flow statement 26 Notes 27 Statement by the Board of Directors and Board of Management 50 The independent auditor‘s report 51 Board of Directors and Board of Management 54 Femern A/S Annual Report 2019 Preface agreement on the commencement of the con- struction works in Denmark. The Fehmarnbelt project is making good pro- With the agreement, Femern A/S was re- gress and commenced parts of the actual quested to seek to conclude supplementary construction phase of the tunnel project in agreements with the two main contractor con- 2019. sortia, Fehmarn Link Contractors (FLC) and Fehmarn Belt Contractors (FBC) to launch a On 6 February 2019, Femern A/S received series of construction activities in Denmark. the signed German plan approval for the Feh- marnbelt project from the approval authority On 27 September 2019, Femern A/S con- in Schleswig-Holstein. cluded a supplementary agreement with the contractor consortium FBC on the establish- The issuing of the plan approval in Schleswig- ment of a work harbour, etc. at Rødbyhavn. Holstein marked a crucial milestone for the The Agreement entered into force on 1 No- implementation of the Fehmarnbelt project, vember 2019. Hence, the construction phase which has thus received both political and ad- of the tunnel project commenced . ministrative approval in Germany. In parallel with the negotiations with the main In accordance with German practice, the plan contractors, Femern A/S has continued to approval has been appealed to the German work with the preparation of the construction Federal Administrative Court where a court phase. process is now at hand. In both Denmark and Germany, Femern A/S The Federal Administrative Court has stated has carried out a series of specific construc- that the final, oral proceedings in the judicial tion preparatory activities in relation to the process will take place in September - Octo- fixed link across the Fehmarnbelt. ber 2020. This is consistent with the overall time schedule for the Fehmarnbelt Fixed Link Work on preparatory activities for the con- project. struction works at Rødbyhavn will be com- pleted in 2020. In the light of the positive development in the German approval process, on 26 March Read more about Femern A/S and the Feh- 2019, the political parties behind the Feh- marnbelt project at www.femern.dk, where marnbelt project entered into a political you can also subscribe to the company's newsletter . Peter Frederiksen Claus F. Baunkjær Chairman of the Board Managing Director, CEO Femern A/S Femern A/S 3 Annual Report 2019 Femern A/S Management Report has thus now been granted political and ad- ministrative approval in Germany, and there is also agreement between Femern A/S and Femern A/S is responsible for planning and the relevant German authorities regarding the constructing the fixed link across Fehmarn- manner in which the construction work should belt on behalf of the Danish state, as well as be implemented in practice. providing the data needed for the plan ap- proval of the coast-to-coast link. The German plan approval was presented to the public in the spring of 2019 allowing for The overall framework for the company's complaints to be lodged against the plan ap- work is laid down by the agreement signed in proval to the Federal Administrative Court. It September 2008 between Denmark and Ger- is customary in Germany to appeal to the many on plan approval, financing, construc- German Federal Administrative Court con- tion and operation of a fixed link across the cerning plan approval of major infrastructure Fehmarnbelt between Rødbyhavn and Putt- projects. garden. At the time of expiry of the deadline for ap- The treaty has been approved in Germany by peals on 8 May 2019, a total of eight com- an act passed in the Bundestag and Bundes- plaints were lodged against the plan ap- rat in 2009, and, in Denmark, the Danish Par- proval. The complaints were directed against liament has passed a planning act “Act on the the plan approval and consequently, the Ger- project engineering of a fixed link across the man approval authority in Schleswig-Hol- Fehmarnbelt with associated landworks”, stein. As project proponent, Femern A/S is April 2009. also a subpoenaed party of the Federal Ad- ministrative Court. The Danish Parliament passed the "Act on the construction and operation of a fixed link The complaints will be dealt with directly by across the Fehmarnbelt with associated land- the Federal Administrative Court. After re- works in Denmark" on 28 April 2015. The ceipt of the complaints against the plan ap- Construction Act is the final Danish environ- proval, the Federal Administrative Court has mental approval for the project. given the complainants on opportunity to sub- mit detailed complaint arguments to the Fed- The total economic framework for the coast- eral Administrative Court. to-coast project in the Construction Act is DKK 55.1 billion (2015 price level). In the up- In July 2019, the German approval authority dated financial analysis presented in Febru- and Femern A/S received the detailed com- ary 2016, the construction budget was calcu- plaint justifications from the Federal Adminis- lated at DKK 52.6 billion. (2015 price level) in- trative Court. During October and November cluding reserves of DKK 7.3 billion. There is 2019, the approval authority and Femern A/S also a central reserve of DKK 2.5 billion. in close coordination provided the Federal Administrative Court with responses to all Plan approval in Germany eight complaints. On 6 February 2019, Femern A/S received In December 2019, the Federal Administra- the signed German plan approval for the Feh- tive Court scheduled the dates for the final, marnbelt project. The issuing of the plan ap- oral proceedings at the Federal Administra- proval in Schleswig-Holstein marks a major tive Court that will take place from September milestone for the implementation of the Feh- to October 2020. marnbelt project. The Fehmarnbelt project 4 Femern A/S Annual Report 2019 The statement of the Federal Administrative Establishment of residential and adminis- Court is in its essence in accordance with trative facilities on Lolland the overall time schedule for the Fehmarn- Ordering of special marine equipment belt project with an anticipated start of con- Other minor preparatory works (PPW) struction work in Germany in 2021. On 27 September 2019, Femern A/S entered The major construction contracts into an agreement with the contractor consor- tium FBC on the establishment of the work On 30 May 2016, Femern A/S entered into harbour, etc. at Rødbyhavn, without com- four major construction contracts for the con- mencing the complete construction contract struction of the Fehmarnbelt tunnel with the with the FBC as a whole. preferred contractors. The contracts were signed with the condition that the construction The agreement entered into force on 1 No- work should only be started when the final vember 2019 and marked an important mile- German plan approval has been obtained or stone for the Fehmarnbelt project with the when The Ministry of Transport and Housing commencement of the tunnel project’s con- makes a decision on this matter. struction phase on the Danish side. Major On 26 March 2019, In the light of develop- physical construction activities in connection ments in the German approval process, the with the establishment of the work harbour political parties behind the Fehmarnbelt pro- will be commenced in 2020. ject (Social Democracy, Venstre - the Liberal Party, the Danish People's Party, Radikale The total economy in the agreement with the Venstre - the Danish Social Liberal Party, the construction consortium FBC is within the po- Socialist People's Party, the Conservative litical agreement of 26 March 2019, and the People's Party and Liberal Alliance) entered costs of the supplementary agreement are into a political agreement on the launching of fully financed within the project construction the construction work in Denmark on the Feh- budget of DKK 52.6 billion (2015 price level). marnbelt Fixed Link. Negotiations with the contractor consortium In the light of the political agreement, Femern FLC on commencement of the establishment A/S was requested to try to reach an agree- of the tunnel element factory, etc. are in pro- ment with the two main contractor consortia, gress. A minor partial agreement with FLC Fehmarn Link Contractors (FLC), that will was signed in January 2020. construct a tunnel element factory, the tunnel itself and the tunnel portals and ramps, and State support case Fehmarn Belt Contractors (FBC), that will es- tablish the work harbour and dredge the tun- On 13 December 2018, the General Court of nel trench in the Fehmarnbelt, as well as land the European Union passed judgement on reclamation, on commencing the following the financing model for the Fehmarnbelt pro- construction activities in Denmark, etc.: ject. With the judgement, the EU Commis- sion's previous state support approval in 2015 Establishment of a work harbour at of the financing of the coast-to-coast project Rødbyhavn was cancelled. The European Commission The construction of parts of the tunnel el- must thus make a new decision on the financ- ement factory at Rødbyhavn ing model for the Fehmarnbelt Fixed Link. Establishment of the tunnel portal on Lol- land 5 Annual Report 2019 Femern A/S As a consequence of the judgement, the EU On the German side, on 12 April 2019, Commission commenced a formal investiga- Femern A/S received a so-called "immediate tion procedure on 5 July 2019 in respect of enforcement" authorisation from the German state support before it can make a new deci- approval authorities in Schleswig-Holstein for sion on the financing of the Fehmarnbelt pro- the implementation of a number of minor pre- ject.