ANNUAL REPORT 2020 Photo: Nicky Bonne PUBLISHED BY EDITORIAL INPUT ENDED COWI Holding A/S February 2021 Parallelvej 2 2800 Kongens Lyngby REPRODUCTION Denmark Permitted with appropriate Tel 56 40 00 00 source references. Fax 56 40 99 99 www.cowi.com ISSN 1904 8734 www.cowiholding.com CONTENTS 3 MANAGEMENT’S REVIEW STATEMENTS ON THE ANNUAL REPORT 10 COWI's business model 04 12 COWI’s services 60 60 Statement by the Board of 14 Financial ratios Directors and Executive Board 16 Financial review 61 Independent auditor’s report 20 Outlook for 2021 COWI HOLDING A/S COWI HOLDING A/S CONSOLIDATED FINANCIAL COMPANY INFORMATION STATEMENTS 2020 22 64 65 COWI’s organisation 23 Profit and loss account 67 COWI’s Board of Directors 24 Balance sheet 26 Statement of changes in equity 27 Cash flow statement 28 Notes COWI HOLDING A/S (PARENT COMPANY) 49 FINANCIAL STATEMENTS 50 Accounting policies 51 Profit and loss account 52 Balance sheet 54 Statement of changes in equity 55 Notes MANAGEMENT’S REVIEW As the global COVID-19 pandemic, and resulted in all-time high customer remainder of our emissions. On top of subsequent restrictions, caused declin- satisfaction (measured as Net Promotor this, COWI's commitment to a sustain- ing economic development and severe Score (NPS)). At the same time, we able future and to being a frontrunner in market uncertainties, COWI delivered a managed to achieve a 60+ per cent the green transition was confirmed as it very satisfactory result in 2020; in fact, win-rate among our top priority project was decided to reduce corporate travel the best ever. The progress was first tenders. This resulted in a record-high permanently. Going forward, once the and foremost a result of strengthened order book of DKK 4.3 billion. pandemic-related lockdowns have been customer relationships, enabling con- lifted, the ambition is to reduce air travel tinued business with both public and Moreover, our satisfactory performance, for internal meetings by 50 per cent and private customers, as well as improved reflected in significant EBIT margin air travel on projects by 25 per cent, project execution, which led to fewer improvement and strong operating cash compared to 2019 levels. In addition, write-downs and disputes. flow, was linked to robust billability and COWI's car fleet will be converted to improvements in our project execution, electric or hybrid cars. Progress was also achieved due to the after an unsatisfactory high level of changes and priorities introduced at project write-downs in 2019. In 2020, THE GREEN TRANSITION the beginning of 2020 to ensure that we continued to launch new tools for IN FOCUS COWI would get back on track from the project managers and leaders to help In general, 2020 saw a significant disappointing result in 2019. them improve the quality of our project increase in both public and private execution and strengthen risk manage- entities announcing plans to invest in At the beginning of 2020, we imple- ment to the benefit of our customers the green transition. For instance, in mented one of the biggest organisa- and COWI. In addition, leaders dedi- Denmark, COWI was involved in back- tional changes in COWI's history, ensur- cated more time to support and coach ground studies leading to the political ing that our organisational set-up best project managers to deliver projects on decision to invest in an energy island supports our focus on growth in our time and with consistent high quality. in the North Sea, and was chosen as core markets (Scandinavia, the UK and knowledge partner in a significant and North America) as well as growth within In the past year, we also made note- ground-breaking Power-to-X project in the green transition. This enabled us to worthy progress on Arkitema and the which some of Denmark’s largest cor- better allocate focus and resources to COWI Group’s joint market approach, porations partnered. These projects can the business segments and geographi- and 25 per cent of Arkitema’s revenue spearhead the green transition while cal areas with the most potential, while came from joint projects with colleagues creating jobs and new value chains to withdrawing from areas with subpar across the Group. reinforce Denmark’s role as a green returns or too high risks of doing busi- energy leader. ness. The divestment of our mapping All in all, COWI, and not least our business was such an example, as was employees, showed a tremendous our decision to minimise our business in adaptability to new and often very chal- NEW DIGITAL SERVICES the Middle East. lenging working and market conditions. LAUNCHED Therefore, we are very pleased with The digitalisation of COWI, our services However, the reorganisation primarily both our performance and the results and processes accelerated in 2020. revolved around strengthening cus- in 2020. For instance, all business lines now tomer and market focus and setting the have a digital director leading the digital stage for future growth with particular transformation, and each business CARBON NEUTRALITY ACHIEVED focus on energy and transportation unit and department have digital leads IN 2020 in our core markets. Furthermore, supporting the development and imple- In 2019, COWI decided to become we made dedicated efforts to build mentation of digital solutions. On top carbon neutral in 2020 and to reduce continued strong and lasting customer of this, we created a network structure actual direct and indirect CO emissions relationships. This included proactively 2 based on online communities where by more than 70 per cent in 2030 com- reaching out to customers, understand- employees can share and discuss digi- pared to 2008. Carbon neutrality was ing their needs and situation to ensure tal ideas – a type of incubator for de- achieved in 2020 thanks to reduction that our services matched these veloping new digital tools and services. efforts already made, reduced corpo- requirements. Customers responded As an example, the Artificial Intelligence rate travel due to COVID-19 and by very positively to this approach, which Community succeeded in developing acquiring CO2 credits to offset the minor MANAGEMENT’S REVIEW 5 a pilot model for seabed classification SOLID PERFORMANCE STRONG PERFORMANCE based on machine learning used in the IN DENMARK IN BUSINESS LINE NORWAY offshore wind turbine industry. Business Line Denmark delivered a ro- BLURRED BY WEAKENED NOK bust performance on par with the 2019 The performance during the year One outcome of the accelerated digital results, primarily driven by high activity confirmed that we are well-positioned transformation was the development levels in all business units throughout in the Norwegian market within all of BIM KPIs for projects. COWI has the year. The activity level remained business units, and we continued our worked with BIM for years, but the us- high and cooperation across the Group work on the Regjeringskvartalet and, age of BIM in projects varied. With BIM was further strengthened. Significant not least, realised significant additions KPIs for each project above DKK 1 mil- organisational changes were carried on the Fornebu project, the new metro lion in turnover, we accelerated the out in order to strengthen market and line connecting Oslo and the Fornebu level of BIM usage in our projects to customer focus, including reducing peninsula. The strong operational offer our customers a better experience Business Line Denmark's organisation performance was, however, financially during the design phase as we can from six business units to three, with a blurred by a weakened NOK. To further now involve them much earlier in critical fourth nimble unit specialising in inter- boost growth, a new sales training programme was launched, which will decision processes. For instance, we national donor projects. Also, COWI's strengthen our competitiveness in com- can visualise what the built environment mapping business was divested. During ing tenders and tighten relations with will look like and demonstrate how deci- 2020, the Danish business worked existing customers. sions are linked to costs, CO2 emissions hard on strengthening COWI's position- etc. In turn, this will also further improve ing within the green transition and our project execution as we can under- landed contracts for new green flagship BUSINESS LINE SWEDEN stand the customer's requirements for projects such as energy islands and REMAINS CHALLENGED deliverables faster. Power-to-X. At the end of 2020, COWI DESPITE PROGRESS was part of the consortium that won Business Line Sweden experienced a year with a lot of change and focus on RECORD-HIGH EBIT AND the Copenhagen Future Rail Network project for DSB. business improvement. This resulted STELLAR CASH FLOW in a strong development in the perfor- We delivered a record-high result mance by business units Industry and in 2020. Turnover amounted to BUSINESS LINE INTERNATIONAL Transportation, driven by improved pro- DKK 6,430 million, which repre- MADE PROGRESS, BUT ject execution. AEC and Projektbyrån sented a slight decrease compared to PROFITABILITY REMAINED continued to show solid results. DKK 6,623 million in 2019, as a result A CHALLENGE However, this was not able to offset of the divestment of COWI's mapping Business Line International continued its the severe challenges in the Buildings business and a weakened Norwegian turnaround and both the order backlog unit, which experienced a reduction krone. The organic growth was 0.9 per and profitability increased significantly. in business activity and a subsequent cent. The EBITDA margin grew to The UK market especially developed significant loss. A plan to revive the 8.6 per cent from 6.4 per cent in 2019, very positively and COWI landed sev- Buildings unit was established (and will while EBIT for the year was a record- eral significant infrastructure projects.