Novenco A/S. Annual report for CVR no

Transcription

1 Annual report for 2006 The annual report has been presented and approved at the company s annual general meeting on / Chairman

2 Contents Page Statement by the supervisory and executive boards on the annual report 1 Independent auditors report 2 Company information 4 Group chart 5 Financial highlights 6 Management s review 7 Accounting policies 10 Income statement for the year ended 31 December 19 Balance sheet at 31 December 20 Statement of changes in equity 22 Consolidated cash flow statement for the year ended 31 December 24 Notes to the annual report 25 Annual report 2006

3 Statement by the supervisory and executive boards on the annual report On this day, the supervisory and executive boards have considered and approved the annual report of for the financial year ended 31 December The annual report has been presented in accordance with the Danish Financial Statements Act. In our opinion, the accounting policies applied are appropriate and the accounting estimates made are reasonable. Moreover, we find the overall presentation of the annual report to be true and fair. In our opinion, the annual report thus provides a true and fair view of the group s and parent company s assets and liabilities, financial position and results of the group and parent company operations and consolidated cash flows. We recommend that the annual report be approved by the annual general meeting. Næstved, 28 February 2007 Executive Board Karsten Bjerregaard Jens Friis Bredo Hagberg Supervisory Board Hans Karl Erik Petersson Chariman Thomas Jarl Dywremose Birgitte Nielsen Anders Bruun-Schmidt Lars Fejer Jørn Ole Krøll Jesper Walin Annual report

4 Independent auditors report To the shareholders of We have audited the annual report of for the financial year ended 31 December 2006, consisting of the statement by the supervisory and executive boards, management s review, accounting policies, income statement, balance sheet, statement of changes in equity and notes to the consolidated annual report and the parent company s annual report as well as the consolidated cash flow statement. The annual report has been presented in accordance with the Danish Financial Statements Act. Management s responsibility for the annual report The management is responsible for preparing and presenting an annual report that gives a true and fair view in accordance with the Danish Financial Statements Act. This responsibility includes designing, implementing and maintaining internal controls relevant to the preparation and presentation of an annual report that gives a true and fair view that is free from material misstatement whether due to fraud or error as well as selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances. Auditors responsibility and basis of opinion Our responsibility is to express an opinion on the annual report based on our audit. We conducted our audit in accordance with Danish standards of auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance that the annual report is free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Annual Report. The procedures selected depend on the auditor s judgement, including the assessment of the risk of material misstatement of the annual report, whether due to fraud or error. In making this risk assessment, the auditor considers internal controls relevant to the company s preparation and presentation of an annual report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company s internal control. An audit also includes evaluating the appropriateness of accounting policies applied by the management and the reasonableness of accounting estimates made by the management, as well as evaluating the overall presentation of the annual report. Annual report

5 Independent auditors report In our opinion, the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Our audit has not resulted in any qualifications. Opinion In our opinion, the annual report gives a true and fair view of the group s and parent company s assets, liabilities and financial position as at 31 December 2006 and of the results of the group and parent company operations and consolidated cash flows for the financial year ended 31 December 2006 in accordance with the Danish Financial Statements Act. Næstved, 28 February 2007 PricewaterhouseCoopers Statsautoriseret Revisionsaktieselskab Claus Kjær Poulsen state-authorised public accountant Jesper Bo Winther state-authorised public accountant Annual report

6 Company information Company Industrivej 22 DK-4700 Næstved Telephone: Fax: address: Website: CVR no.: Accounting period: 1 January - 31 December Financial year: 59th financial year Municipality of domicile: Næstved Supervisory board Hans Karl Erik Petersson, Chariman Thomas Jarl Dywremose Birgitte Nielsen Anders Bruun-Schmidt Lars Fejer Jørn Ole Krøll Jesper Walin Executive board Karsten Bjerregaard Jens Friis Bredo Hagberg Audit PricewaterhouseCoopers Toldbuen 1 DK-4700 Næstved Annual report

7 Group chart Parent company, Næstved, Denmark Nom. DKK 40,000,000 Consolidated subsidiaries 100% Novenco AS, Oslo, Norway Nom. NOK 8,000, % Novenco B.V. Bergschenhoek, Holland Nom. EUR 18, % Novenco Fire Fighting ApS Næstved, Denmark Nom. DKK 500, % Novenco UK Ltd. Worcestershire, England Nom. GBP 1 Associates 22,73% Novenco Nippon Ltd. Kobe, Japan Nom. JPY 110,000,000 20,1% Hi-Air Korea Co., Ltd. Kimhae City, Kyungnam, Korea Nom. KRW 1,196,000,000 20,67% Airvenco Sdn. Bhd. Kuala Lumpur, Malaysia Nom. MYR 5,400,000 Annual report

8 Financial highlights Seen over a 2-year period, the group s development can be described by the following financial highlights: Group DKK 1,000 DKK 1,000 Key figures Income statement Revenue 761, ,697 Profit/loss from ordinary operating activities 25,868-27,609 Profit/loss before financial income and expenses, net 18,763-25,813 Profit from financial income and expenses, net 12,184 1,320 Net profit/loss for the year 22,241-19,466 Balance sheet Balance sheet total 484, ,018 Equity 120, ,726 Cash flows Cash flows from: - operating activities -72,191 32,733 - investing activities -38,414-1,206 - of which investment in property, plant and equipment 13,752 5,942 - financing activities 89,273 11,400 Changes in cash and cash equivalents -21,332 42,926 Number of employees Ratios (per cent) Gross margin ratio Operating margin Return on capital employed Equity ratio Return on equity The key figures and ratios have been calculated in accordance with the recommendations issued by the Danish Society of Financial Analysts. Please see the definitions in the section on accounting policies. Annual report

9 Management s review The annual report of for 2006 has been presented in accordance with the provisions of the Danish Financial Statements Act governing large reporting class C enterprises. The financial statements and consolidated financial statements have been prepared using the same accounting policies as last year. Principal activity is the largest supplier of heating, ventilation and air conditioning systems for the construction and shipbuilding industries. The Novenco Group is a global supplier of ventilation products and systems and fire fighting equipment for industrial and marine purposes. The Novenco Group has 59 years of experience within the ventilation industry. Ownership structure At 31 December 2006, the entire share capital of the company was held by NovCo Holding II A/S, which is owned by NovCo Holding I A/S. Novenco s absolute owner, Dania Capital K/S, took over the share capital on 28 February In connection with the sale to Dania Capital K/S, was converted from a private limited company into a limited company, no costs were incurred in relation to this conversion. Net profit for the year The Novenco Group reported revenues of DKK 761 million for the year 2006, which is a rise of 36 per cent compared with Revenues were positively affected by the takeover of the activities of Novenco B.V., Holland at the beginning of the year. During the financial year, changed the estimated date of recognition of major projects. Previously, the percentage of completion method was applied for projects in excess of DKK 3,000 thousand, however, in this financial year the threshold was lowered to DKK 1,000 thousand. Consequently, recognised further revenues from operations of DKK 5,372 thousand and costs of DKK 4,319 thousand, which resulted in an increased contribution margin of DKK 1,053 thousand. Operating profit amounted to DKK 26 million, up from a loss of DKK 28 million for The positive development was driven by an improvement in the group s gross margin ratio, rising revenues and the takeover of the activities of Novenco B.V. The group s consolidated profit was negatively affected by the incurrence of DKK 8 million of non-recurring costs relating to the sale of the enterprise by YORK Denmark ApS to Dania Capital K/S. Annual report

10 Management s review Market overview 2006 was characterised by a strong willingness to invest in the markets serviced by the Novenco Group, driven by growing global trade, relatively high oil prices and a relatively low level of interest, which had a positive impact on the business areas Cargo, Offshore and Carpark. In December, Novenco was informed that all tests of Fire Fighting s Water Mist system (IMO Res. A 800/19) had been passed and that the Lloyd s certificate was being prepared. Production and process standards is certified under ISO 9001:2000. In 2006, the company successfully completed recertification of the quality system. Investments During the financial year, investments in property, plant and equipment amounted to DKK 14 million, which primarily related to investments in the production plant at the factory in Næstved and IT investments to improve and further develop the internal business procedures of the group. Development during the year The past year and follow-up on last year s outlook In the annual report for 2005, Novenco expected rising revenues and improved financial results and these expectations were fulfilled with the results achieved. Financial resources The company considers the financial resources to be adequate to carry out the formulated plans. Special risks operating and financial risks General risks The general risks are tied to the global world economy as the company has activities all over the world. Financial risks As a result of the company s equity ratio and financial resources, the risk of exposure to interest rate fluctuations is limited. Annual report

11 Management s review Currency risks As a significant portion of revenues are made up of export sales, the company is sensitive towards changes in exchange rates. Goods are purchased using mainly Danish kroner and in the subsidiaries their local currencies. Currency risks associated with selling in foreign currencies are hedged by forward exchange contracts. Credit risks It is company policy to always secure payment from external customers either through a bank guarantee, a letter of credit or a current credit rating of the customer. Objectives and outlook At the doorway to 2007, the company has a strong order book and expects the increase in revenue and financial results to continue. The group s associates have been put up for sale, and the management expects the selling price to correspond to at least the carrying amounts. Following a sale of Hi-Air, a significant portion of the proceeds will be distributed to the parent company as the parent company must pay 85 per cent of the amount to the previous owner, YORK Denmark ApS. The parent company made provisions of DKK 50 million to settle accounts with YORK Denmark ApS. Basis for earnings Research and development In 2006, the development costs within the company increased compared with previous years. Significant investments have been made in the fire fighting area with a view to obtaining the necessary certificates to be able to increase revenue in this area. External environment To make sure that Nocenco always meets external environmental requirements in relation to the nature of the company (metal-working industry), Novenco has chosen to be environmentally certified (ISO 14001:2004) together with a compulsory environmental approval. Novenco has established action plans to reduce consumption in order to reduce our CO2 emission and use of common resources, among other things. Events occurring after the end of the financial year After the end of the financial year, no significant events have occurred which may have a significant effect on the financial statements for Annual report

12 Accounting policies General aspects The annual report of has been presented in accordance with the provisions of the Danish Financial Statements Act pertaining to large reporting class C enterprises. The accounting policies have been consistently applied. The annual report for 2006 has been presented in DKK thousand. Consolidated financial statements The consolidated financial statements include (parent company) and the enterprises (group enterprises) which are controlled by the parent company. Control is presumed to exist when the parent company, directly or indirectly, owns more than 50 per cent of the voting rights or in any other way can or does exercise a controlling influence. Basis of consolidation The consolidated financial statements have been prepared on the basis of the accounts of and its subsidiaries. The consolidated financial statements have been prepared by adding together items of a uniform nature. Intercompany income and expenses, intercompany balances and dividends as well as profit and loss from intercompany transactions have been eliminated on consolidation. The accounts used for consolidation purposes have been prepared in accordance with the group s accounting policies. In the consolidated financial statements, the items of subsidiaries are recognised in full. Business combinations Newly acquired or newly established enterprises are recognised in the consolidated financial statements as of the date of acquisition. On the acquisition of new enterprises, the purchase method is applied according to which the identifiable assets and liabilities of the newly acquired enterprises are measured at their fair values at the date of acquisition. Recognition and measurement Assets are recognised in the balance sheet if it is probable that future economic benefits will flow to the group and the value of the asset can be measured reliably. Annual report

13 Accounting policies Liabilities are recognised in the balance sheet when they are probable and can be measured reliably. Assets and liabilities are measured at cost on initial recognition. Assets and liabilities are subsequently measured as described for each item below. Certain financial assets and liabilities are measured at amortised cost implying the recognition of a constant effective cost to maturity. Amortised cost is calculated as initial cost less any deductions and with addition/deduction of the accumulated amortisation of the difference between the cost price and the nominal amount. In this way, capital losses and gains are allocated over the term to maturity. On recognition and measurement, any gains, losses and risks arising before the time when the annual report is presented and proving or disproving matters existing on the balance sheet date are taken into account. Income is recognised in the income statement as earned and includes value adjustments of financial assets and liabilities measured at fair value or amortised cost. Moreover, costs incurred to obtain the revenue for the year, including depreciation and amortisation, impairment losses and provisions and reversals hereof due to changes in accounting estimates are recognised in the income statement. Leasing All lease agreements are considered operating leases. Payments in connection with operating leases are recognised using the straightline method in the income statement over the term of the leases. Foreign currency translation On initial recognition, transactions in foreign currencies are translated using the exchange rate ruling at the date of the transaction. Receivables, payables and other monetary items in foreign currencies, which have not been settled at the balance sheet date, are translated using the rate of exchange ruling at the balance sheet date. Any exchange differences arising between the rate of exchange ruling at the date of the transaction and the rate of exchange ruling at the date of payment and the balance sheet date, respectively, are recognised in the income statement as financial income and expenses, net. The balance sheet items of foreign enterprises are translated to Danish kroner at the rate of exchange ruling at the balance sheet date and the income statements at the rate of exchange ruling at the date of the transaction. Any currency translation differences arising from translation of the balance sheet items of foreign enterprises at the beginning of the year at the rates of exchange ruling at the balance sheet date and from translation of income statements from average rates of exchange to the rates of exchange ruling at the balance sheet date are recognised directly in equity. Annual report

14 Accounting policies Correspondingly, currency translation differences arising from changes made directly in the equity of foreign units are also recognised directly in equity. Derivative financial instruments Derivative financial instruments are initially recognised in the balance sheet at cost and are subsequently measured at fair value. Positive and negative fair values of derivative financial instruments are included under other receivables and other payables, respectively. Changes in the fair value of derivative financial instruments designated as and qualifying for recognition as a hedge of the fair value of a recognised asset or liability are recognised in the income statement together with changes in the value of the hedged asset or liability. Changes in the fair value of derivative financial instruments designated as and qualifying for recognition as a hedge of future cash flows are recognised directly in equity. Income and expenses relating to such hedging transactions are transferred from equity on realisation of the hedged asset or liability and are recognised in the same item as the hedged asset or liability. Changes in the fair value of any derivative financial instruments that do not qualify for hedge accounting are currently recognised in the income statement as financial income or expenses, net. Income statement Revenue Income from the sale of goods for resale and finished goods is recognised in the income statement if delivery took place before the year-end and provided that the income can be stated reliably and payment is expected to be made. Revenue is recognised exclusive of VAT and net of discounts relating to sales. Contract work in progress is recognised using the percentage of completion method, according to which the value of the orders executed is included in revenue at a computed value of the work completed. Production costs Production costs comprise the costs incurred to obtain the revenue for the year. The cost includes raw materials, consumables, direct labour costs and indirect production costs such as maintenance and depreciation, etc. as well as operation, administration and management of factories. Included within production costs are research and development costs which do no meet the criteria for capitalisation and amortisation of capitalised development costs. Annual report

15 Accounting policies Selling and distribution costs Selling and distribution costs comprise costs of distribution and sales campaigns regarding goods sold during the year, including costs relating to sales personnel, marketing and depreciation/amortisation as well as loss on trade debtors. Administrative expenses Administrative expenses comprise costs relating to the management, the administrative staff, office expenses, insurance, depreciation/amortisation, etc. Other operating income and expenses Other operating income and other operating expenses comprise items of a secondary nature in relation to the principal activity of the enterprise. Share of profit/loss in subsidiaries and associates The proportionate share of the results of the individual subsidiaries and associates less unrealised intercompany profits and less impairment loss relating to goodwill is recognised in the income statement. Correspondingly, the share of tax in subsidiaries and associates is recognised under tax on profit for the year. Newly acquired enterprises are included in the income statement from the date of acquisition. Enterprises which have been sold are recognised in the income statement in the year of sale up to the date of disposal. Financial income and expenses, net Financial income and expenses include interest, financial expenses relating to financial leasing, realised and unrealised translation adjustments, marketable securities adjustments, amortisation of mortgage loans as well as additions and tax allowances under the on-account tax scheme. Tax Tax for the year, which comprises current tax for the year and changes in deferred tax, is recognised in the income statement with the share attributable to the net profit or loss for the year and directly in equity with the share attributable to items recognised directly in equity. The group is taxed jointly with the parent company. Current Danish corporate income taxes are allocated between the jointly taxed Danish companies in proportion to their taxable incomes (full absorption with refunds for tax losses). Annual report

16 Accounting policies Balance sheet Intangible assets Development costs comprise costs, salaries and amortisation directly and indirectly attributable to the company s development activities. Development projects clearly defined and identifiable involving a demonstrable technical rate of utilisation, adequate resources and a potential future market or a development opportunity in the enterprise, and where the intent is to produce, market or employ the project, have been recognised as intangible assets provided that the cost can be stated reliably and that there is sufficient certainty that the value in use of future earnings will cover the production, distribution and administration costs as well as the actual development costs. Other development costs are recognised in the income statement as incurred. Capitalised development costs are measured at cost less accumulated amortisation or at a lower recoverable amount. Capitalised development costs are amortised on a straight-line basis after the completion of the project over the estimated useful economic life. The amortisation period is 5-20 years. Property, plant and equipment Property, plant and equipment are measured at cost less accumulated depreciation and impairment losses. Depreciation is provided on a straight-line basis over the useful lives of the assets: Buildings Plant and machinery Other fixtures and fittings, tools and equipment years 4-12 years 3-12 years Annual report

17 Accounting policies Profits and losses derived from the disposal of property, plant and equipment are stated as the difference between the selling price less selling expenses and the carrying amount at the time of selling. Profits or losses are recognised in the income statement as an adjustment to depreciation and impairment losses or under other operating income to the extent that the selling price exceeds the original cost. Impairment of fixed assets The carrying amount of intangible assets and property, plant and equipment is reviewed annually to determine whether there is any indication of impairment exceeding the write-downs in connection with general amortisation and depreciation. If any such indication exists, an impairment test will be carried out to determine whether the recoverable amount is lower than the carrying amount and a write-down to this lower recoverable amount will be made. This impairment test is conducted on an annual basis of in progress development projects, irrespective of whether there is an indication of impairment. The recoverable amount of the asset is determined as the higher of the net selling price and its value in use. If the recoverable amount cannot be determined for the individual asset, the assets are assessed in the smallest group of assets for which a reliable recoverable amount can be determined based on a total assessment. Goodwill, head office property and other assets, where it is not possible to determine a separate value in use as the asset itself does not generate future cash flows, are subject to a review for impairment together with the group of assets to which they can be attributed. Investments in subsidiaries and associates Investments in subsidiaries and associates are recognised and measured according to the equity method, which means that the investments are measured at the proportionate share of the equity value of the enterprises plus or less non-amortised positive and negative consolidated goodwill, respectively, and plus or less unrealised intercompany gains and losses. The parent company s share of the results for the year of the enterprises, after elimination of unrealised intercompany gains and losses and plus or less amortisation of consolidated goodwill and negative consolidated goodwill, respectively, are recognised in the income statement. Subsidiaries and associates with a negative equity value are measured at zero value, and any receivables from these enterprises are written down by the parent company s share of the negative equity value insofar as they are deemed uncollectible. If the negative equity value exceeds the receivables, the remaining amount is recognised under provisions to the extent that the parent company has a legal or constructive obligation to cover the liabilities of the enterprise in question. Annual report

18 Accounting policies Net revaluation of investments in subsidiaries and associates is transferred to the net revaluation reserve to the extent that the carrying amount exceeds the cost. Inventories Inventories are measured at cost using the FIFO method or the net realisable value for the individual product line, whichever is lower. The net realisable value of inventories is calculated as the selling price less the costs of completion and costs incurred to execute sale and determined with due consideration of marketability, obsolescence and movements in the expected selling price. The cost of goods for resale, raw materials and consumables comprises the cost price plus delivery costs. The cost of manufactured finished goods and work in progress comprises the cost of raw materials, consumables, direct labour costs and indirect production costs. Indirect production costs comprise indirect materials and labour costs as well as maintenance, depreciation and impairment of the machinery, factory buildings and equipment used in the manufacturing process and the cost of administration and management of factories. Receivables Receivables are measured at amortised cost or at net realisable value, if lower, calculated on the basis of an individual assessment of each receivable. Prepayments Prepayments under assets comprise paid-up expenses relating to the subsequent financial year. Contract work in progress Large contract orders are measured at the selling price of the orders executed at the balance sheet date (the percentage of completion method). Other/small projects are recognised using the method of recognising income as invoiced. Provisions are made for expected losses on onerous contracts. Prepayments received from customers are offset against contract work in progress to the extent that the prepayments correspond to the value of work in progress. Proposed dividend Dividend is recognised as a liability at the time of approval by the general meeting. Annual report

19 Accounting policies Provisions Provisions are recognised when the group has a legal or constructive obligation as a result of an event occurring on or before the balance sheet date and it is probable that an outflow of economic benefits will be required to settle the obligation. Warranty commitments are measured at net realisable value and include provisions for general and expected specific warranty commitments. Liabilities other than provisions Payables to mortgage banks and credit institutions are recognised initially at the proceeds received net of transaction expenses incurred. Liabilities other than provisions are subsequently measured at amortised cost, corresponding to the capitalised value, using the effective interest rate so that differences between the proceeds and the nominal value are recognised in the income statement as financial income and expenses over the period of the borrowing. Other liabilities other than provisions, which comprise trade payables and payables to group enterprises and associates and other payables, are measured at amortised cost, which usually equals the nominal debt. Tax and deferred tax Under the joint taxation rules, the subsidiaries liability to the tax authorities for their own corporate income taxes is settled concurrently with the payment of the joint taxation contributions to the management company. Joint taxation contributions payable and receivable are recognised in the balance sheet under balances with group enterprises. Deferred tax is measured under the balance sheet liability method comprising all temporary differences between the carrying amount and the tax base of assets and liabilities. Deferred tax assets, including the tax base of tax loss carry-forwards, are recognised at the value at which they are expected to be utilised either by elimination in tax on future earnings or by setoff against deferred tax liabilities within the same legal tax unit and jurisdiction. Deferred tax is measured in accordance with the tax rules and tax rates in the various countries that will apply under the legislation in force at the balance sheet date when the deferred tax is expected to crystallise as current tax. Annual report

20 Accounting policies Cash flow statement The cash flow statement shows the group s cash flows from operating, investing and financing activities for the year, changes in cash and cash equivalents and cash and cash equivalents at the beginning and end of the year. Cash flow from operating activities Cash flows from operating activities are determined as the net profit or loss for the year adjusted for changes in working capital and non-cash operating items such as depreciation, amortisation and impairment losses and provisions. The working capital comprises current assets less current liabilities other than provisions exclusive of the items included in cash and cash equivalents. Cash flow from investing activities Cash flows from investing activities include cash flows from the acquisition and disposal of intangible assets, property, plant and equipment and investments. Cash flow from financing activities Cash flows from financing activities comprise cash flows from raising and repayment of longterm liabilities other than provisions and payments to and from the shareholders. Cash and cash equivalents Cash and cash equivalents comprise the items Cash under current assets. The cash flow statement cannot be derived using only the published financial data. Explanation of financial ratios Gross margin ratio = Operating margin = Gross profit x100 Revenue Profit/loss before financial income and expenses,net Revenue x100 Return on capital employed = Equity ratio = Return on equity = Profit/loss beforefinancial income and expenses,net x100 Total assets Equity at year - end x100 Total assets Profit/loss for the year x100 Average equity Annual report

21 Income statement for the year ended 31 December Group Parent company Note DKK 1,000 DKK 1,000 DKK 1,000 DKK 1,000 Revenue 1 761, , , ,734 Production costs , , , ,381 Gross profit 142,074 56,075 70,815 36,353 Selling and distribution costs ,903-50,294-41,792-38,334 Administrative expenses 18,19-52,303-33,390-33,421-30,640 Profit/loss from ordinary operating activities 25,868-27,609-4,398-32,621 Other operating income 0 1, , , ,687 Other operating expenses -8, ,490 0 Profit/loss before financial income and expenses, net 18,763-25,813-10,818-30, Income from investments in subsidiaries before tax ,304 5,741 Income from investments in associates before tax 3 17,659 9,308 17,659 9,308 Financial income 4 1,109 1, Financial expenses 5-6,584-9,468-7,768-9,069 Profit/loss from ordinary activities before tax 30,947-24,493 30,947-24,493 Corporate income tax 6 0-8, , , , Net profit/loss for the year 22,241-19,466 22,241-19,466 Distribution of net profit Proposal for the distribution of net profit Proposed dividend for the financial year 15,000 0 Net revaluation reserve according to the equity method -9,964 11,184 Retained earnings 17,205-30,650 22,241-19,466 Annual report

22 Balance sheet at 31 December Assets Group Parent company Note DKK 1,000 DKK 1,000 DKK 1,000 DKK 1,000 Completed development projects 11,881 9,679 11,881 9,679 Development projects in progress 9,478 5,143 9,478 5,143 Intangible assets 7 21,359 14,822 21,359 14,822 Land and buildings 39,077 33,428 31,897 33,428 Plant and machinery 11,016 12,634 10,904 12,634 Other fixtures and fittings, tools and equipment 11,045 5,405 10,246 4,648 Property, plant and equipment under construction 131 3, ,953 Property, plant and equipment 8 61,269 55,420 53,178 54,663 Investments in subsidiaries ,526 47,499 Investments in associates 10 64,352 52,703 64,352 52,703 Other receivables 6,287 4,863 1,490 1,500 Investments 70,639 57, , ,702 Total fixed assets 153, , , ,187 Raw materials and consumables 18,232 26,559 18,232 26,559 Work in progress 17,135 27,529 8,214 26,451 Finished goods and goods for resale 3,438 1,546 1,097 1,546 Inventories 38,805 55,634 27,543 54,556 Trade receivables 143,640 95,194 73,521 44,050 Contract work in progress 11 94,667 24,532 57,444 24,532 Receivables from group enterprises ,986 29,112 Deferred tax asset 16 9,572 9,615 21,603 17,751 Other receivables 10,915 9,921 7,107 4,267 Prepayments 12 7,359 2,130 6,412 1,514 Dividends receivable ,786 0 Receivables 266, , , ,226 Cash 25,852 47,184 11, Total current assets 330, , , ,871 Assets 484, , , ,058 Annual report

23 Balance sheet at 31 December Liabilities and equity Group Parent company Note DKK 1,000 DKK 1,000 DKK 1,000 DKK 1,000 Share capital 40,000 40,000 40,000 40,000 Net revaluation reserve according to the equity method 58,779 47,130 63,030 77,293 Retained earnings 22,058 29,596 17, Equity , , , ,726 Provisions for warranty commitments 14 2,619 3,789 2,067 3,789 Provisions 2,619 3,789 2,067 3,789 Mortgage debt Credit institutions 103, ,492 0 Long-term liabilities other than provisions , , Mortgage debt 0 1, ,700 Credit institutions 4,337 16,156 4,337 16,156 Prepayments received from customers 35,586 9,794 15,306 9,794 Trade payables 128, ,096 84,376 44,764 Payables to group enterprises , ,729 Other payables 73,549 52,057 61,460 47,700 Proposed dividend for the financial year 15, ,000 0 Current liabilities other than provisions 257, , , ,843 Liabilities other than provisions 360, , , ,543 Liabilities and equity 484, , , ,058 Contingent liabilities and other financial commitments 17 Remuneration for the auditors elected by the annual general meeting 18 Employees 19 Related parties and ownership structure 20 Annual report

24 Statement of changes in equity Group Net revaluation according to the Share equity Retained capital method earnings Total DKK 1,000 DKK 1,000 DKK 1,000 DKK 1,000 Equity at 31 December ,000 34,557 83, ,820 Adjustment at the beginning of the year Adjusted equity at 1 January ,000 34,557 82, ,550 Transferred via distribution of net profit 0 7,757-27,223-19,466 Foreign currency translation adjustment relating to foreign subsidiaries 0 6,208 1,316 7,524 Entry on shareholders equity in subsidiaries Dividend received associates 0-1,532 1,532 0 Reversal of value adjustments of hedging instruments at the beginning of the year ,485-15,485 Change in deferred tax at the beginning of the year ,536-13,536 Adjusted equity at 1 January ,000 47,130 29, ,726 Transferred via distribution of net profit 0 14,195-6,954 7,241 Foreign currency translation adjustment relating to foreign subsidiaries, etc ,593-3,130 Dividend received associates 0-2,009 2,009 0 Equity at 31 December ,000 58,779 22, ,837 Annual report

25 Statement of changes in equity Parent company Net Revaluation according to the Share equity Retained capital method earnings Total DKK 1,000 DKK 1,000 DKK 1,000 DKK 1,000 Equity at 31 December ,000 62,857 54, ,820 Adjustment at the beginning of the year 0-2,879 2, Adjusted equity at 1 January ,000 59,978 57, ,550 Transferred via distribution of net profit 0 11,184-30,650-19,466 Foreign currency translation adjustment relating to foreign subsidiaries 0 7, ,523 Entry on shareholders equity in subsidiaries Dividend received associates 0-1,532 1,532 0 Reversal of value adjustments of hedging instruments at the beginning of the year ,485-15,485 Change in deferred tax at the beginning of the year ,536-13,536 Adjusted equity at 1 January ,000 77, ,726 Transferred via distribution of net profit 0-9,964 17,205 7,241 Foreign currency translation adjustment relating to foreign subsidiaries, etc. 0-2, ,130 Dividend received associates 0-2,009 2,009 0 Equity at 31 December ,000 63,030 17, ,837 Annual report

26 Consolidated cash flow statement for the year ended 31 December Note DKK 1,000 DKK 1,000 Net profit/loss for the year 22,241-19,466 Adjustments 21-1,045-2,262 Change in working capital ,054 60,134 Cash flows from operating activities before items under financial income and expenses, net -78,858 38, Financial income and expenses, net -5,475-7,988 Cash flows from ordinary activities -84,333 30, Corporate income tax paid 12,142 2,315 Cash flows from operating activities -72,191 32,733 Payments to acquire property, plant and equipment -13,758-5,956 Receipts from sale of property, plant and equipment 6 14 Payments to acquire intangible assets -10,384-3,377 Receipts from sale of intangible assets 0 6,932 Acquisition of subsidiaries 23-15,871 0 Dividend, investments (net excluding tax) 1,593 1,180 Cash flows from investing activities -38,414-1,207 Repayments of long-term debt -2,400-1,707 Incurrence of debt with credit institutions 103,492 0 Change in bank loans -11,819 13,107 Cash flows from financing activities 89,273 11,400 The year s cash flow from operating, investing and financing activities -21,332 42,926 0 Cash and cash equivalents at the beginning of the year 47,184 4,258 Cash and cash equivalents at the end of the year 25,852 47,184 Annual report

27 Notes to the annual report 1 Revenue Group Parent company DKK 1,000 DKK 1,000 DKK 1,000 DKK 1,000 Business areas 2006 Cargo 244, , , ,311 Offshore 144, ,636 37,559 29,933 Car Park 93,396 26,023 28,662 26,222 Buildings 84,222 87,764 81,233 80,010 Special Solutions 67,256 22,492 39,591 22,428 Cruise & Ferry 50,617 65,281 54,557 65,096 Service & Parts 37,749 38,237 41,926 46,558 Navy 32,695 16,373 14,209 1,509 Yachts 6,632 4,679 6,632 4,667 Others 10 2, , , , ,734 Annual report

28 Notes to the annual report 2 Income from investments in subsidiaries Group Parent company DKK 1,000 DKK 1,000 DKK 1,000 DKK 1,000 Share of profits in subsidiaries before tax ,304 5, ,304 5,741 3 Income from investments in associates Share of profits in associates before tax 17,659 9,308 17,659 9,308 4 Financial income 17,659 9,308 17,659 9,308 Foreign currency translation adjustments Other financial income 769 1, ,109 1, Financial expenses Interest expenses group enterprises 0 0-1,364 0 Foreign currency translation adjustments 0-6, ,507 Other financial expenses -6,584-2,961-6,404-2,562-6,584-9,468-7,768-9,069 Annual report

29 Notes to the annual report 6 Corporate income tax Group Parent company DKK 1,000 DKK 1,000 DKK 1,000 DKK 1,000 Current tax for the year -12,558-4,218-12,558-4,218 Deferred tax for the year 3,852 9,245 3,852 9,245 Total tax for the year -8,706 5,027-8,706 5,027 Allocated as follows: Tax on net profit/loss for the year -8,706 5,027-8,706 5,027-8,706 5,027-8,706 5,027 Tax on net profit/loss for the year can be explained as follows: Calculated percentage tax on net profit/loss for the year before tax 28.0 % 28.0 % 28.0 % 28.0 % Tax effect of: Higher/lower tax rate in foreign subsidiaries Higher/lower tax rate in foreign associates -0.2 % 4.7 % -0.2 % 4.7 % -3.0 % -7.0 % -3.0 % -7.0 % Adjustment of provision for deferred tax 3.4 % % 3.4 % % Other adjustments -0.1 % 0.0 % -0.1 % 0.0 % Effective tax rate 28.1 % % 28.1 % % Annual report

30 Notes to the annual report 7 Intangible assets Group Completed development projects Development projects in progress DKK 1,000 DKK 1,000 Cost at 1 January 18,476 5,143 Adjustment at the beginning of the year -5,122 0 Additions during the year 6,049 9,478 Disposals during the year 0-5,143 Cost at 31 December 19,403 9,478 Impairment losses and amortisation at 1 January -8,797 0 Adjustment at the beginning of the year 5,122 0 Impairment losses for the year 0 0 Amortisation for the year -3,847 0 Impairment losses and amortisation at 31 December -7,522 0 Carrying amount at 31 December 11,881 9,478 Amortised over 5 20 years DKK 1,000 DKK 1,000 Impairment losses and amortisation of intangible assets are recognised in the income statement under the following items: Production costs 3,847 7,793 3,847 7,793 Annual report

31 Notes to the annual report 7 Intangible assets (continued) Parent company Completed development projects Development projects in progress DKK 1,000 DKK 1,000 Cost at 1 January 18,476 5,143 Adjustment at the beginning of the year -5,122 0 Additions during the year 6,049 9,478 Disposals during the year 0-5,143 Cost at 31 December 19,403 9,478 Impairment losses and amortisation at 1 January -8,797 0 Adjustment at the beginning of the year 5,122 0 Impairment losses for the year 0 0 Amortisation for the year -3,847 0 Impairment losses and amortisation at 31 December -7,522 0 Carrying amount at 31 December 11,881 9,478 Amortised over 5 20 years DKK 1,000 DKK 1,000 Impairment losses and amortisation of intangible assets are recognised in the income statement under the following items: Production costs 3,847 7,793 3,847 7,793 Annual report

32 Notes to the annual report 8 Property, plant and equipment Group Land and buildings Plant and machinery Other fixtures and fittings, tools and equipment Property, plant and equipment under construction DKK 1,000 DKK 1,000 DKK 1,000 DKK 1,000 Cost at 1 January 51,828 62,490 30,125 3,953 Translation adjustment at year-end rate Additions during the year 13,479 1,485 11,711 0 Disposals during the year 0 0-1,389-3,822 Cost at 31 December 65,301 63,975 40, Impairment losses and depreciation at 1 January -18,400-49,856-24,720 0 Addition Novenco, B.V. -5, ,678 0 Translation adjustment at year-end rate Impairment losses for the year Depreciation for the year -1,934-2,611-3,364 0 Impairment losses and depreciation on assets disposed of 0 0 1,383 0 Impairment losses and depreciation at 31 December -26,224-52,959-29,262 0 Carrying amount at 31 December 39,077 11,016 11, Depreciated over years 4-12 years 3-12 years DKK 1,000 DKK 1,000 Impairment losses and depreciation on property, plant and equipment are recognised in the income statement under the following items: Production costs 3,934 4,201 Distribution costs Administrative expenses 3,331 1,944 7,909 6,604 According to the public land assessment as at 1 January 2006, the value of land and buildings in Denmark amounts to DKK 103,000 thousand. Annual report

33 Notes to the annual report 8 Property, plant and equipment (continued) Parent company Land and buildings Plant and machinery Other fixtures and fittings, tools and equipment Property, plant and equipment under construction DKK 1,000 DKK 1,000 DKK 1,000 DKK 1,000 Cost at 1 January 51,828 62,490 25,635 3,953 Additions during the year ,343 1,264 Disposals during the year ,086 Cost at 31 December 51,828 63,341 33, Impairment losses and depreciation at 1 January -18,400-49,856-20,987 0 Impairment losses for the year Depreciation for the year -1,531-2,581-2,745 0 Impairment losses and depreciation at 31 December -19,931-52,437-23,732 0 Carrying amount at 31 December 31,897 10,904 10, Depreciated over years 4-12 years 3-12 years DKK 1,000 DKK 1,000 Impairment losses and depreciation on property, plant and equipment are recognised in the income statement under the following items: Production costs 3,671 4,201 Distribution costs 0 0 Administrative expenses 3,186 1,843 6,857 6,044 According to the public land assessment as at 1 January 2006, the value of land and buildings in Denmark amounts to DKK 103,000 thousand. Annual report

34 Notes to the annual report 9 Investments in subsidiaries Parent company DKK 1,000 DKK 1,000 Cost at 1 January 17,336 17,336 Additions during the year 41,939 0 Cost at 31 December 59,275 17,336 Revaluations at 1 January 30,163 25,421 Foreign currency translation adjustment -1,752 1,316 Net profit for the year 22,626 3,426 Dividend to parent company -46,786 0 Revaluations at 31 December 4,251 30,163 Carrying amount at 31 December 63,526 47,499 Investments in subsidiaries can be specified as follows: Name Registered office Share capital Voting share and ownership interest Novenco AS Oslo, Norway MNOK 8 100% Novenco B.V. Bergschenhoek, Holland TEUR % Novenco Fire Fighting ApS Næstved, Denmark MDKK % Novenco UK Ltd. Worcestershire, England GBP 1 100% All foreign subsidiaries are recognised and measured as separate entities. Annual report

35 Notes to the annual report 10 Investments in associates Group Parent company DKK 1,000 DKK 1,000 DKK 1,000 DKK 1,000 Cost at 1 January 5,573 5,573 5,573 5,573 Cost at 31 December 5,573 5,573 5,573 5,573 Revaluations at 1 January 47,130 34,557 47,130 34,557 Foreign currency translation adjustment , ,208 Net profit for the year 14,195 7,757 14,195 7,757 Capital adjustment Dividend to parent company -2,009-1,532-2,009-1,532 Revaluations at 31 December 58,779 47,130 58,779 47,130 Carrying amount at 31 December 64,352 52,703 64,352 52,703 Investments in associates can be specified as follows: Name Registered office Share capital Voting share and ownership interest Novenco Nippon Ltd. Kobe, Japan MJPY % Hi-Air Korea Co., Ltd. Kyungnam, Korea MKRW 1, % Airvenco Sdn. Bhd. Kuala Lumpur, Malaysia TMYR 5, % All foreign subsidiaries and associates are recognised and measured as separate entities. Annual report

36 Notes to the annual report 11 Contract work in progress Group Parent company DKK 1,000 DKK 1,000 DKK 1,000 DKK 1,000 Contract work in progress included under assets 94,667 24,532 57,444 24,532 Prepayments received included under liabilities and equity -35,586-9,794-35,586-10,748 59,081 14,738 21,858 13,784 Profit on payments received on account recognised in work in progress 44,787 8,514 19,845 10, Prepayments Prepayments are prepaid expenses relating to rent, IT support, IT licences and non-received royalty income, etc. 13 Equity The company s share capital amounts to DKK 40,000,000. The share capital is not divided into shares. 14 Provisions for warranty commitments Provisions for warranty commitments relate to expected costs of warranty commitments and service costs. The commitment consists partly of a specific provision and partly of a general provision calculated on the basis of the revenue. Warranty commitments 2,619 3,789 2,067 3,789 2,619 3,789 2,067 3, Liabilities other than provisions Liabilities other than provisions relate to payables to credit institutions. Liabilities other than provisions fall due as follows: Within 1 year 0 1, ,700 Between 1 and 5 years 38, , After 5 years 65, , ,492 2, ,492 2,400 Annual report

37 Notes to the annual report 16 Deferred tax Parent company DKK 1,000 DKK 1,000 Goodwill Equipment 10,178 13,942 Capitalised development costs -2,216-2,128 Capitalised software(sap implement.) 0 3,375 Buildings -3,047-3,110 Natural gas installation Provisions for bad debts General warranty provisions 579 1,061 Provisions for losses on projects in progress 7,712 3,166 Recognised profit on payments received on account -5,557-2,819 Exchange loss on repayment of loan 11 0 Capitalised tax loss 12,478 2,348 Other adjustment 0 1,056 Deferred tax has been provided for at a rate of 28%, corresponding to the current tax rate. 21,603 17, Contingencies and other financial commitments The following binding agreements, falling due within 5 years, have been concluded: Group Parent company DKK 1,000 DKK 1,000 DKK 1,000 DKK 1,000 Rental obligations 4,553 2,213 2,102 2,213 Operational leases 6,321 9,691 3,572 3,512 IT contracts 1, , Other supplier agreements 68,312 27,296 51,900 27,296 Total liabilities 80,443 39,346 58,831 33,167 Annual rent/lease payments amount to 6,231 3,633 3,185 3,633 Annual report