Annual report Blue Vision A/S. Registration No / Blue Vision annual report 2011

Transcription

1 / Blue Vision annual report 2011 KPMG Statsautoriseret Revisionspartnerselskab. Medlem af KPMG International Cooperative ("KPMG International"), et schweizisk kooperativ, som alle KPMG-firmaer er selvstændige og uafhængige medlemmer af.

2 ABCD Blue Vision A/S Contents Statement by the Board of Directors and the Executive Board 2 Independent auditors' report 3 Management commentary 5 Company details 5 Highlights 7 Business concept and objectives 9 The year in outline 10 Group chart 14 Financial highlights for the Group 15 Operating review 16 Statement on going concern 19 Shareholder information 19 Operating and financial review 29 Consolidated financial statements for the period 1 January 31 December 31 Income statement 31 Statement of comprehensive income 32 Balance sheet 33 Cash flow statement 35 Statement of changes in equity 36 Summary of notes to the consolidated financial statements 37 Notes 38 Parent company financial statements for the period 1 January 31 December 67 Income statement 67 Statement of comprehensive income 67 Balance sheet 68 Cash flow statement 70 Statement of changes in equity 71 Summary of notes to the parent company financial statements 72 Notes 73 Financial ratios 82 / Blue Vision annual report

3 Statement by the Board of Directors and the Executive Board Today, the Board of Directors and the Executive Board have discussed and approved the annual report of Blue Vision A/S for The annual report has been prepared in accordance with International Financial Reporting Standards as adopted by the EU and Danish disclosure requirements for listed companies. In our opinion, the consolidated financial statements and the parent company financial statements give a true and fair view of the Group's and the Company's financial position at 31 December 2011 and of the results of the Group's and the Company's operations and cash flows for the financial year 1 January 31 December In our opinion, the Management commentary includes a fair review of the development in the Group's and the Company's operations and financial conditions, the results for the year and the Company's financial position, and the position as a whole for the entities included in the consolidated financial statements, as well as a description of the more significant risks and uncertainty factors that the Group and the Company face. We recommend that the annual report be approved at the annual general meeting. Copenhagen, 30 March 2012 Executive Board: Vilhelm Boas Director Board of Directors: Frederik Westenholz Chairman Jørgen Glistrup Henrik Andersen Lars Fogh 2

4 Independent auditors' report Blue Vision A/S Registration No To the shareholders of Blue Vision A/S Independent auditors' report on the consolidated financial statements and the parent company financial statements We have audited the consolidated financial statements and the parent company financial statements of Blue Vision A/S for the financial year 1 January 31 December The consolidated financial statements and the parent company financial statements comprise income statement, statement of comprehensive income, balance sheet, statement of changes in equity, cash flow statement and notes, including a summary of significant accounting policies for the Group as well as for the parent company. The consolidated financial statements and the parent company financial statements are prepared in accordance with International Financial Reporting Standards as adopted by the EU and Danish disclosure requirements for listed companies. Management's responsibility for the consolidated financial statements and the parent company financial statements Management is responsible for the preparation of consolidated financial statements and parent company financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the EU and Danish disclosure requirements for listed companies. Management is also responsible for such internal control that Management determines is necessary to enable the preparation of consolidated financial statements and parent company financial statements that are free from material misstatement, whether due to fraud or error. Auditors' responsibility Our responsibility is to express an opinion on the consolidated financial statements and the parent company financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing and additional requirements under Danish audit regulation. This requires that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance as to whether the consolidated financial statements and the parent company financial 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 statements. The procedures selected depend on the auditors' judgement, including the assessment of the risks of material misstatement of the consolidated financial statements and the parent company financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the Company's preparation of consolidated financial statements and parent company financial statements that give 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 used and the reasonableness of accounting estimates made by Management, as well as evaluating the overall presentation of the consolidated financial statements and the parent company financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Our audit has not resulted in any qualification. Opinion In our opinion, the consolidated financial statements and the parent company financial statements give a true and fair view of the Group's and the Company's financial position at 31 December 2011 and of the results of the Group's and the Company's operations and cash flows for the financial year 1 January 31 December 2011 in accordance with International Financial Reporting Standards as adopted by the EU and Danish disclosure requirements for listed companies. 3

5 Independent auditors' report Statement on the Management commentary Pursuant to the Danish Financial Statements Act, we have read the Management commentary. We have not performed any further procedures in addition to the audit of the consolidated financial statements and the parent company financial statements. On this basis, it is our opinion that the information provided in the Management commentary is consistent with the consolidated financial statements and the parent company financial statements. Copenhagen, 30 March 2012 KPMG Statsautoriseret Revisionspartnerselskab Niels Erik Borgbo State Authorised Public Accountant Søren Christiansen State Authorised Public Accountant 4

6 Management commentary Company details Blue Vision A/S Tuborg Boulevard 12, Hellerup Denmark Telephone: Fax: Website: info@blue-vision.dk Registration No.: Established: 20 September 2002 Financial year: 1 January 31 December Registered office: Gentofte Board of Directors Frederik Westenholz (chairman) Jørgen Glistrup Henrik Andersen Lars Fogh Executive Board Vilhelm Boas Auditors KPMG Statsautoriseret Revisionspartnerselskab Osvald Helmuths Vej 4 DK-2000 Frederiksberg Annual general meeting The annual general meeting is to be held on 30 April 2012 at 9:00, c/o Accura, Tuborg Boulevard 1, 2900 Hellerup, Denmark. 5

7 Management commentary Strandpromenaden 33, Copenhagen Mikkelborg Park, Hørsholm. Roret, Snekkersten 6

8 Management commentary Highlights The disposal of two investment properties in 2011 (transferred in Q1 2012) under conditional agreements at values exceeding the carrying amounts at the date of the publication of the interim report for Q supports the Group's valuation of the investment properties. The Copenhagen City Council's approval of the final local development plan for Strandpromenaden provides the basis for the performance of the planned residential project. In 2011, the Blue Vision Group recorded a loss of DKK 17.0 million (2010: DKK loss of 1.4 million). When corrected for fair value adjustments of interest rate swaps and investment properties, the loss amounts to DKK 12.3 million, which is similar to the expectations of a loss of DKK million at the date of the publication of the interim report for Q The loss reflects a lack of critical mass in the property portfolio and a postponement in project sales relating to Strandpromenaden. At the board meeting on 30 March 2012, the Board of Directors of Blue Vision A/S decided to exercise the authority granted to the Board in the Company's articles of association to carry out a capital increase of DKK million by issuing B shares. The B shares will be issued with the same rights as the existing shares with preemption right for the existing shareholders but will be subscribed for by partial payment of the subscription proceeds. The subscription will be carried out by means of payment of 25% of the subscribed capital at the date of subscription, corresponding to DKK million. At 30 March 2012, Blue Vision A/S has raised an additional subordinate loan of DKK 60 million. The subordinate loan is subject to a limitation in the right of disposal so that the proceeds may only be used for securing the financing of operations in accordance with the prepared budget for the coming year, contributing to the refinancing of the Group's project in Strandpromenaden A/S, repayment of established subordinate loans from Kiwi Deposit Holdings A/S and Intrinsic Property Holdings A/S (31 December 2011: DKK 8.8 million) and own financing of new investments in accordance with the Company's strategy. For 2012, the Group expects results before financing and value adjustments from all existing activities of approx. DKK 0, excl. the profit from the expected disposal of assets during the year. When taking into account the upcoming capital increase and the subordinate loan of DKK 60 million, a pro forma balance sheet for the Blue Vision Group at 31 December 2011 can be specified as follows (subscription costs amount to DKK 2 million). 7

9 Management commentary Pro forma balance sheet at 31 December 2011 DKK' (at max. (at min. capital capital increase) increase) ASSETS Total non-current assets 425,385 70% 425,385 63% 425,385 84% Unpaid share capital (B shares) 51,052 8% 113,676 17% 0 0% Other current assets 90,251 15% 90,251 13% 38,465 8% Assets held for sale 43,911 7% 43,911 7% 43,911 9% Total assets 610, % 673, % 507, % EQUITY AND LIABILITIES Share capital 143,853 23% 227,352 34% 75,784 15% Other reserves 1,882 0% 1,882 0% 3,882 1% Total equity 145,735 23% 229,234 34% 79,666 16% Subordinate loans 45,983 8% 25,108 4% 9,214 2% Total equity and subordinate loans 191,718 31% 254,342 38% 88,880 18% Other non-current liabilities 316,771 52% 316,771 47% 316,771 62% Current liabilities 62,359 10% 62,359 9% 62,359 12% Liabilities directly associated with assets held for sale 39,751 7% 39,751 6% 39,751 8% Total liabilities 418,881 69% 418,881 62% 418,881 82% Total equity and liabilities 610, % 673, % 507, % The Group's goal of a net asset value growth rate of 15% in the coming years requires addition of investment properties and projects of approx. DKK 1 billion. From the end of 2012, the Group's equity ratio is expected to amount to at least 20% of the Group's balance sheet total. 8

10 Management commentary Business concept and objectives Business concept The Blue Vision Group's business concept is to invest in and develop real property for the purpose of creating added value. The Group primarily focuses on the following objects: Primarily residential properties in Denmark and southern Sweden. Residential properties with positive operating cash flows. Properties with the potential for further development. Other investment properties. Long-term objective The Blue Vision Group's long-term objective is to increase the market value by means of acquisitions and project development on the Danish real estate market for the purpose of creating a competitive return on the shareholders' invested capital. It is the Group's objective to become a significant player on the Danish real estate market within investment in and project development of residential and office building of high quality. Financial objective The Blue Vision Group's financial objective for the coming years is still to: ensure an annual growth rate in book value per share of at least 15% ensure an equity ratio of the Group's equity of at least 20% of the balance sheet total ensure a natural flow of projects with a high potential for value increases. The negative development in the real estate market and the financial markets in 2011 is expected to continue in 2012, however, seeing an improvement of the situation during the year. The development will be decisive as to whether the Group can commence the sales, investment and development activities necessary to fulfil the goal in the short term. 9

11 Management commentary The year in outline Operations In 2011, the Blue Vision Group recorded a loss of DKK 17.0 million (2010: DKK loss of 1.4 million). The results for the year were positively affected by fair value adjustments of investment properties in connection with the conditional sale (completed in 2012) of two properties of DKK 4.2 million, negatively affected by fair value adjustments of financial liabilities of DKK 0.3 million and negatively affected by fair value adjustments of interest rate swaps of DKK 8.6 million. When corrected for these fair value adjustments, the loss amounts to DKK 12.3 million compared to the expectations of a loss of approx. DKK 11.0 to 16.0 million at the date of the publication of the interim report for Q At 31 December 2011, the Group's equity amounted to DKK 79.7 million (31 December 2010: DKK 53.1 million). In 2011, equity was increased by DKK 43.0 million by means of a capital increase. The Group's interest expense in 2011 of DKK 27.9 million is primarily attributable to loan financing in Blue Vision A/S, interest on payable acquisition price for Strandpromenaden and interest paid to credit institutions relating to mortgage debt regarding the Group's investment properties. The year was characterised by a significantly negative development in the Danish real estate market and the financial markets in the period. In the originally published expectations for 2011, significant gains from sales activities of specific shares of the Group's residential properties, etc., were included. As a result of the market development, these sales activities were not carried out, and they resulted in downwards adjustments in the expectations for 2011 during the year. The results for 2011 are not satisfactory considering the originally published expectations for the year. Financing In 2011, the Blue Vision Group financed its operations and the costs for the further development of Strandpromenaden by drawing on the Group's cash bank deposits and raising loans. During the year, refinancing of these loans was made by means of returns on the Group's activities and raising of subordinate loans from a number of Blue Vision A/S' shareholders. The Blue Vision Group's activities in the Seaside Holding Group are primarily financed by long-term mortgage credit financing with hedging of the interest rate level in connection with interest rate swaps. The operation of the properties provides positive cash flows to the Group. The financing of the activities in 2012 has been provided by raising an additional subordinate loan of DKK 60 million in March 2012, see note 28 to the consolidated financial statements. Investments Apart from project investments in Strandpromenaden A/S, the Blue Vision Group did not make any investments in

12 Management commentary Investment properties In the consolidated financial statements for 2011, the properties have been measured at fair value at 31 December 2011, which has been determined as follows: For the properties Roret and Mikkelborg Park, the fair value was determined based on the average selling price per m 2 for similar flats in the buildings which had been sold within the past 12 months prior to the balance sheet date. It is still the intention in the future to optimise these leases on an ongoing basis with the possibility of selling units when the market conditions warrant it. In Q4 2011, the properties at Ole Suhrs Gade and Skovgårdsvej were sold under a conditional sales agreement for final transfer in Q At the date of the agreement, the fair value was adjusted to the selling price. The properties were transferred in Q Strandpromenaden is measured at original cost on acquisition from Freja Ejendomme A/S plus development costs incurred. In the coming years, the Group will continue its work to carry out a large building project at the area for the purpose of subsequent lease for residential use. Special risks apart from any generally occurring risks in the industry As a player in the real estate market, the Blue Vision Group is subject to the general development of this market, which is dependent on interest rate and economic developments. None of these risks are different from any generally occurring risks in the industry. Events in 2011 On 22 February 2011, Kiwi Deposit Holdings A/S and ALMC hf. announced that they wished to convert the debt instruments of originally DKK 28.4 million and DKK 20.0 million, respectively, into share capital. For the purpose of utilising the option to convert added interest on the two loans, in accordance with the Board of Directors' authority, the parent company issued additional convertible debt instruments on interest accrued up until 14 March 2011 of DKK thousand and DKK thousand, respectively. On 14 March 2011, the two lenders announced that they also wished to convert these debt instruments into shares in Blue Vision A/S. According to the agreement, the conversion price was determined at per share of nom. DKK 100. On 14 March 2011, the Board of Directors of Blue Vision A/S decided to raise the Company's share capital by nom. DKK 30,783,500, distributed on 307,835 shares of DKK 100 by conversion of the above-mentioned debt instruments. Subsequently, the share capital amounts to DKK 75,783,500, and as a consequence of the conversion, the Group's equity increased by DKK 42.6 million. In connection with the conversion, ALMC hf. became a shareholder in Blue Vision A/S with a shareholding corresponding to 16.8% of the share capital and the voting rights. On 14 April 2011, the Copenhagen City Council approved the final local development plan for Strandpromenaden 33-39, Copenhagen Ø. 11

13 Management commentary On 29 April 2011, Blue Vision A/S held its annual general meeting where the present Board of Directors was re-elected and expanded by two new members, Henrik Andersen and Lars Fogh. At 2 May 2011, Blue Vision A/S moved into new office premises and, thus, changed its address. On 27 June 2011, Blue Vision A/S entered into new loan agreements with the shareholders Kiwi Deposit Holdings A/S, Intrinsic Property Holdings A/S and Blue Estate Holding A/S on new loans for the refinancing of a part of the Company's shortterm debt and ongoing financing of operations. The loans are subordinate to all other debt, and interest is added to the loans until maturity. In July 2011, Blue Vision A/S received loan proceeds of DKK 6.5 million from the two shareholders. On 1 August 2011, the Blue Vision Group repaid a short-term loan for operational purposes, which, including interest, amounted to DKK 5.2 million. At the meeting of the Board of Directors of the parent company held on 19 August 2011, the Board of Directors decided to commence the work on carrying out a rights issue. On 20 October 2011, the wholly-owned subsidiary Skovgårdsvej ApS entered into a conditional agreement on the sale of the company's property Skovgårdsvej 20 A-F in Charlottenlund at a price of DKK 20.8 million cash, which is 20% above the carrying amount stated in the most recently published interim report. Due to the obligation to make a general offer, the transfer date was determined at 1 March 2012 at the latest. On 4 November 2011, an extraordinary general meeting was held in Blue Vision A/S. Shareholders representing 84% of the Company's voting shares attended the extraordinary general meeting. The proposal made under item 2 on the agenda regarding authorisation to the Company's Board of Directors was adopted with the following addition to the Company's articles of association, clause 4.1.a: "Until 3 November 2016, the Company's Board of Directors is authorised, on one or more occasions, to increase the Company's share capital by up to nom. DKK 250,000,000 by issuing new not fully paid B shares at market price or a favourable price by cash payment with pre-emption right for the Company's existing shareholders. The new B shares are to be issued as not fully-paid shares in a new independent share class in accordance with section 33(1) of Consolidation Act No. 322 of 11 April 2011 on public and private limited companies. The B shares must be non-negotiable instruments registered in the name of the holder and be registered as such in the Company's register of shareholders. The B shares will not be issued in dematerialised form through VP SECURITIES A/S. The B shares must confer on the holders a right to receive dividends and other rights in the Company from the date of registration of the capital increase with the Danish Business Authority. The Board of Directors may demand that unpaid share capital regarding B shares be paid on demand. Four weeks must be allowed for payment. Any claims against subscribers and subsequent acquirers of B shares may be executed in accordance with section 478(1)(v) of the Danish Administration of Justice Act. The new B shares will not be admitted for trading and public listing at NASDAQ OMX Copenhagen A/S." 12

14 Management commentary On 24 November 2011, the wholly-owned subsidiary Ole Suhrs Gade ApS entered into a conditional agreement on the sale of the company's property Ole Suhrs Gade in Copenhagen at a price of DKK 24.0 million cash, which is 5% above the carrying amount stated in the most recently published interim report. Due to the obligation to make a general offer, the transfer date was determined at 1 March 2012 at the latest. 13

15 Management commentary Group chart All companies are wholly-owned subsidiaries in the Blue Vision Group at 31 December

16 Management commentary Financial highlights for the Group Income statement (DKK'000) Revenue 15, Administrative expenses -6,891-5, Operating profit/loss 1,493-5, Fair value adjustment of investment properties and financial liabilities 3,960 8, Loss from finance income and costs -27,842-5, Loss from continuing operations before tax -22,389-1, Tax on loss from continuing operations 5, Loss from continuing operations -16,978-1, Profit/loss from discontinued operations ,297-92, Profit/loss for the year -16,978-1,415-12,036-92, Balance sheet (DKK'000) Investment properties 303, , Investment properties under construction 100,062 95, Project portfolio 35,000 35,000 52, Share capital 75,784 45, , , ,863 Equity 79,666 53,064 53,468 56, ,922 Assets 507, ,261 75, , ,994 Financial ratios Loss before tax calculated as a percentage of average equity Loss after tax calculated as a percentage of average equity Profit/loss after tax per number of shares, end of year (DKK) Loss after tax per average number of shares ex. treasury shares (DKK) Solvency ratio Earnings per share (EPS basic), DKK Earnings per share diluted (EPS diluted), DKK Number of shares Outstanding number of shares, end of year 757, ,000 1,308,625 1,308,625 1,308,625 Outstanding number of shares ex. treasury shares, end 757, ,897 of year 1,308,625 1,225,076 1,225,076 Average number of outstanding shares ex. treasury 695,342 1,285,098 shares 1,235,520 1,225,076 1,225,076 Per share of nom. DKK 100 (stated in DKK) Net asset value (as submitted to OMX Nordic Exchange Copenhagen, end of year) N/A N/A N/A Book value per share (BVPS) Market price (most recent trading) * Market price/net asset value (*Most recent market price 37 before reduction of share capital) Earnings per share and diluted earnings per share have been calculated in accordance with IAS 33. Other financial ratios are calculated in accordance with the Danish Society of Financial Analysts' guidelines on the calculation of financial ratios "Recommendations and Financial Ratios 2010". For financial ratio definitions, please see page

17 Management commentary Operating review Results for the year and equity In 2011, the Blue Vision Group recorded a loss of DKK 17.0 million (2010: DKK loss of 1.4 million). The results for the year were positively affected by fair value adjustments of investment properties in connection with the conditional sale (completed in 2012) of two properties of DKK 4.2 million, negatively affected by fair value adjustments of financial liabilities of DKK 0.3 million and negatively affected by fair value adjustments of interest rate swaps of DKK 8.6 million. When corrected for these fair value adjustments, the loss amounts to DKK 12.3 million compared to the expectations of a loss of approx. DKK 11.0 to 16.0 million at the date of the publication of the interim report for Q At 31 December 2011, the Group's equity amounted to DKK 79.7 million (31 December 2010: DKK 53.1 million). In 2011, equity was increased by DKK 43.0 million by means of a capital increase. Outlook for the Group for will still be influenced by a general focus on optimisation and consolidation of the Group's existing activities. This is primarily the case for the further development, construction and sale of the project in Strandpromenaden A/S and the continued focus on optimisation of operations of the investment properties in the Seaside Holding Group. Depending on the development on the real estate market and the financial markets, a significant expansion in the Group's investment activities, primarily investment in new investment properties, is expected in The financing hereof will be based on an appropriate distribution between first mortgage credit financing and own financing. The Group's own financing will be raised by means of a new subordinate loan in March In addition, the Group will use the share of the proceeds from the capital increase adopted by the Board of Directors of Blue Vision A/S in accordance with the authority granted to the Board which is not used for repaying subordinate loans. The Blue Vision Group expects revenue from the existing activities in the form of rental income of DKK million in The results from these renting activities are expected to amount to DKK 3-4 million for the same period. In 2012, the operation of Strandpromenaden A/S will still be affected by the further development of the building project and will contribute a loss of approx. 2 million to the results for For 2012, the Group expects results before financing and value adjustments from all existing activities of approx. DKK 0, excl. the profit from the expected disposal of assets during the year. Earnings expectations for 2012 are expected not to meet the general goal for the Group for the coming years as a consequence of the latest development in the real estate market. Apart from optimisation of earnings from the existing activities, the objective for 2012 will be to secure the Group by establishing the necessary external financing and consolidating equity as well as increasing the Group's activity level, earnings and volume. 16

18 Management commentary From the end of 2012, the Group's equity ratio is expected to amount to at least 20% of the Group's balance sheet total. Line of business The Blue Vision Group focuses on investments and property development in the Danish and southern Swedish real estate markets primarily within residential housing buildings. In 2011, the development in the real estate market within the Group's focus area was characterised by a low level of activity, and the prolonged financial crisis mean that it is still difficult to obtain attractive financing for investments in real property. The development is expected to continue in 2012; however, with an increasing relaxation in the financial markets and thus an increase in the number of transactions in the real estate market. Thus, the objective will still be to further develop the Group's portfolio and opportunistically utilise the developments in the real estate market. Financial risks Interest rate risks The Group has entered into interest rate swaps, primarily for the purpose of controlling interest rate risks on mortgage loans in the Seaside Holding Group. The Group has fixed-rate financial liabilities towards a related party. The Group's bank deposits are placed in current accounts. Liquidity risks The Group's liquidity reserve at 31 December 2011 consists of cash at bank and in hand. In March 2012, the Group raised a subordinate loan of DKK 60 million. Intellectual capital By virtue of the Company's Board of Directors and Executive Board and a number of leading shareholders, Blue Vision A/S has wide experience and know-how within investment in real property and general financing of acquisition and sale of real property, including development of large property projects within residential and non-residential construction. In addition, the Group uses a number of external architects and contractors in the development and performance of property projects. Incentive programmes The Blue Vision Group has no incentive programmes. 17

19 Management commentary Events after the balance sheet date At 1 February 2012, the Group's property at Skovgårdsvej 21 in Charlottenlund was transferred to a new owner. The property was sold under a conditional sales agreement in November 2011 solely conditioned on the obligation to make a general offer to the lessees of the property not triggering transfer to these lessees. The sale of the property will have no effect for accounting purposes in Moreover, at 1 March 2012, the Group's property at Ole Suhrs Gade in Copenhagen was transferred to a new owner. The property was sold under a conditional sales agreement in November 2011 solely conditioned on the obligation to make a general offer to the lessees of the property not triggering transfer to these lessees. The sale of the property will have no effect for accounting purposes in At 30 March 2012, Blue Vision A/S has raised an additional subordinate loan of DKK 60 million. The subordinate loan is subject to a limitation in the right of disposal so that the proceeds may only be used for securing the financing of operations in accordance with the prepared budget for the coming year, contributing to the refinancing of the Group's project in Strandpromenaden A/S, repayment of established subordinate loans from Kiwi Deposit Holdings A/S and Intrinsic Property Holdings A/S (31 December 2011: DKK 8.8 million) and own financing of new investments in accordance with the Company's strategy. The proceeds are deposited in a bank account opened by Blue Vision A/S. The proceeds deposited in the account at any time are provided as collateral to the lender who must approve the use of the proceeds on an ongoing basis in accordance with the above-mentioned limitation in the utilisation of the loan. The loan will mature on 30 March 2015 with roll-up interest of 5% per year. In connection with an upcoming capital increase, the loan will be repaid in instalments at an amount corresponding to 25% of the subscribed capital at the end of the subscription period. In addition, the loan is interest-only until final maturity. At the board meeting on 30 March 2012, the Board of Directors of Blue Vision A/S decided to exercise the authority granted to the Board in the Company's articles of association to carry out a capital increase of DKK million by issuing B shares. The B shares will be issued with the same rights as the existing shares with pre-emption right for the existing shareholders but will be subscribed for by partial payment of the subscription proceeds. The subscription will be carried out by means of payment of 25% of the subscribed capital at the date of subscription, corresponding to DKK million. Subsequently, the subscription for the new B shares will be offered by way of granting of pre-emption rights to existing shareholders in the ratio 1:2 with a pre-emption right to subscribe for 1,515,678 shares at a subscription price of DKK 100 per B share of nom. DKK 100 each. Apart from this, no significant events have occurred after 31 December

20 Management commentary Corporate governance and risk management Blue Vision A/S' Board of Directors and Executive Board always aim at ensuring that the Group's management structure and control systems are appropriate and function satisfactorily. A number of internal policies and procedures have been developed and are maintained on an ongoing basis for the purpose of ensuring active, secure and profitable management of the Group. In August 2011, the Committee on Corporate Governance published updated Recommendations for corporate governance, see _for_god_selskabsledelse.pdf based on the "comply or explain" principle. It is the Board of Directors' opinion that Blue Vision A/S' Management in all material respects complies with the Recommendations for corporate governance considering the Group's size and level of activity. Blue Vision publishes the statutory corporate governance statement for 2011, see section 107b of the Danish Financial Statements Act, on the Company's website ( which contains a statement of how the Group meets the individual requirements of the Recommendations for corporate governance as well as rules on risk management and internal control in respect of the financial reporting. Corporate social responsibility Due to the Group's modest size, the Blue Vision Group has yet to adopt actual policies and prepare a statement on the Group's corporate responsibility. Statement on going concern In connection with the financial reporting, the Board of Directors and the Executive Board assessed whether it is well-founded that the annual report is presented under the going concern assumption. The Board of Directors and the Executive Board concluded that no factors exist at the balance sheet date raising doubt about the Group's and the parent company's ability to continue as a going concern until the end of 2012 at least. The conclusion was based on knowledge of the Group and the parent company, the estimated outlook and the identified uncertainties and risks in this respect (described in the Management commentary and note 1) as well as an examination of budgets, including the expected development in liquidity, capital base, etc. Shareholder information Share capital Blue Vision A/S' share capital amounts to nom. DKK 75,783,500, corresponding to 757,835 shares of nom. DKK 100. The shares are listed on NASDAQ OMX Copenhagen under ID 19

21 Management commentary code DK All shares rank equally. There are no restrictions on the transferability and no restrictions on voting rights. In 2011, the Company saw limited trading in its shares. The Company's articles of association may be amended if the decision is passed by at least 2/3 of both the votes cast and the voting shares represented at the general meeting. In accordance with articles 4 of the articles of association, the Company's Board of Directors is authorised increase the Company's share capital once or several times up to nom. DKK 250,000,000 until 1 October The increase may take place by means of cash payment, conversion of debt or payment in other values than cash, including contribution of an existing enterprise. The increase may be made without pre-emption rights for the Company's existing shareholders if the increase is made at market price. The new shares must be of the same share class and otherwise in all respects be equal to the existing shares in the Company. Moreover, the new shares must be negotiable instruments and bearer shares but may be registered in the Company's register of shareholders. The right to receive dividend and other rights in the Company attached to the new shares take effect from the date prescribed by the Board of Directors; however, no earlier than from the first financial year after the year when the capital increase is registered. Moreover, until 1 October 2014, the Board of Directors is authorised to let the Company issue warrants once or several times. As a maximum, the warrants must grant the right to subscribe for shares of nom. DKK 250,000,000 in the Company; however, as a maximum 50% of the share capital at the date when the decision to issue the warrants is made. The issue may be made without pre-emption rights for the Company's existing shareholders if the issue is made on an arm's length basis. At the same time, the Board of Directors is authorised to increase capital in the Company once or several times in connection with the subsequent exercise of the above-mentioned warrants. The increase may be made without pre-emption rights for the Company's existing shareholders. The new shares must be of the same share class and otherwise in all respects be equal to the existing shares in the Company. Moreover, the new shares must be negotiable instruments and bearer shares but may be registered in the Company's register of shareholders. The right to receive dividend and other rights in the Company attached to the new shares take effect from the date prescribed by the Board of Directors; however, no earlier than from the first financial year after the year when the capital increase is registered. Moreover, until 1 October 2014, the Board of Directors is authorised to, once or several times, let the Company raise loans against bonds or other debt instruments with a right for the lender to convert his claim to shares in the Company (convertible loans). The convertible loan must not exceed DKK 250,000,000; however, as a maximum 50% of the share capital at the date when the decision to raise the loan is made. The convertible loan may be raised without pre-emption rights for the Company's existing shareholders if the borrowing is made on an arm's length basis. At the same time, the Board of Directors is authorised to increase capital in the Company once or several times in connection with a subsequent conversion of the above-mentioned loan. The increase may be made without pre-emption rights for the Company's existing shareholders. The new shares must be of the same share class and otherwise in all respects be equal to the existing shares in the Company. Moreover, the new shares must be negotiable instruments and bearer shares but may be registered in the Company's register of shareholders. The right to receive dividend and other rights in the Company attached to the new shares take effect from the date prescribed by the Board of 20

22 Management commentary Directors; however, no earlier than from the first financial year after the year when the capital increase is registered. As part of the Company's acquisition of the share capital in Seaside Holding A/S, reg. no , and for the purpose of meeting the Company's obligation to issue convertible debt instruments to ALMC hf., Iceland, company no , of DKK 20,000,000 and DKK 15,000,000, respectively, in accordance with the Share Sale and Purchase Agreement dated 17 November 2010 including Addendum I dated 14 December 2010 and also for the purpose of replacing the Company's subordinate loan, amounting to DKK 28,359,000 including added interest at 30 September 2010, with Kiwi Deposit Holdings A/S, reg. no , with a convertible debt instrument, the Board of Directors decided on 20 December 2010 to exercise its authority granted in the former article 4.4 of the Company's articles of association regarding the issue of convertible bonds. The convertible debt instruments were issued at the following identical terms: 1. The convertible bonds give the right to convert to share capital nom. DKK 39,701,590 distributed on 397,016 shares of DKK 100 per share in the Company; 2. As to the convertible debt instrument of DKK 20,000,000, the right of conversion must be exercised no later than 31 March 2011, while the right of conversion for the other convertible debt instruments of DKK 15,000,000 and DKK 28,359,000 must be exercised no later than 20 December The conversion must take place no later than 30 days after a written notice of the exercise of the right of conversion has been sent to the Company; 3. The new shares must be of the same share class and otherwise in all respects be equal to the existing shares in the Company. The new shares must be negotiable instruments and bearer shares but may be registered in the Company's register of shareholders, see article 3 of the articles of association; 4. The convertible bonds are issued without pre-emption rights for the Company's existing shareholders, and the capital increase in connection with the exercise of the right of conversion in accordance with the issued convertible debt instruments is made without pre-emption rights for the existing shareholders; 5. The right to receive dividend and other rights in the Company attached to the new shares take effect from the date of the conversion; 6. The debt to ALMC hf. of DKK 20,000,000 and DKK 15,000,000 arose on closing of the Company's acquisition of Seaside Holding A/S on 20 December 2010, while the debt to Kiwi Deposit Holdings A/S of DKK 28,359,000 is attributable to a subordinate loan from 13 November The convertible debt instruments of DKK 20,000,000 and DKK 15,000,000 to ALMC hf. grant the right to subscribe for 125,044 shares and 93,784 shares, respectively, of DKK 100, while the convertible debt instrument to Kiwi Deposit Holdings A/S grants the right to subscribe for 178,188 shares of DKK 100 in the Company. In accordance with the convertible debt instruments, the conversion price of all the shares amounts to ; 21

23 Management commentary 8. Increase or reduction of the share capital, issue of new warrants, issue of additional convertible debt instruments, merger or demerger taking place up until the exercise of the right of conversion do not change the rights that will accrue to the holder of the convertible bonds; and 9. If the Company is dissolved by liquidation or bankruptcy, the convertible bonds lose their value. As part of the Company's issue of convertible debt instruments on 20 December 2010 to ALMC hf., Iceland ("ALMC"), company no , of DKK 20,000,000 and DKK 15,000,000, respectively, and for the purpose of replacing the Company's subordinate loan amounting to DKK 28,359,000 including added interest at 30 September 2010 with Kiwi Deposit Holdings A/S ("Kiwi"), reg. no , with a convertible debt instrument, the Board of Directors decided on 25 February 2011 to exercise its authority granted in article 4.3 of the articles of association regarding the issue of three additional convertible debt instruments to cover the interest added to the three above-mentioned debt instruments in the period from the issue to the exercise hereof so that also the interest amount is matched by debt convertible to shares in the Company equally with the principal amount. The three convertible debt instruments issued include: Convertible debt instrument of DKK 338, to ALMC corresponding to the added interest to the original convertible debt instrument issued to ALMC of DKK 20,000,000 in the period 20 December 2010 to 14 March 2011 when the conversion of the debt instrument of DKK 20,000,000 into shares took place. Convertible debt instrument of DKK 4,849, to ALMC corresponding to the added interest to the original convertible debt instrument issued to ALMC of DKK 15,000,000 in the period 20 December 2010 to 20 December 2014 when the conversion is to take place at the latest. Convertible debt instrument of DKK 537, to Kiwi corresponding to the added interest to the original convertible debt instrument issued to Kiwi of DKK 28,359,000 in the period 1 October 2010 to 14 March 2011 when the conversion of the debt instrument of DKK 28,359,000 into shares took place. The convertible debt instruments were issued at identical terms. Pursuant to section 169(2) of the Danish Companies Act, the following was disclosed: 10. The convertible debt instruments grant the right to convert to share capital of no more than DKK 3,579,800; 11. As to the convertible debt instrument of DKK 338, to ALMC, the right of conversion must be exercised no later than on 31 March 2011, while the right of conversion for the other convertible debt instruments of DKK 4,849, and DKK 537, must be exercised no later than on 20 December The conversion must take place no later than 30 days after a written notice of the exercise of the right of conversion has been sent to the Company; 12. The new shares must be of the same share class and otherwise in all respects be equal to the existing shares in the Company. The new shares must be negotiable instruments and 22

24 Management commentary bearer shares but may be registered in the Company's register of shareholders, see article 3 of the articles of association; 13. The convertible debt instruments are issued without pre-emption rights for the Company's existing shareholders, and the capital increase in connection with the exercise of the right of conversion in accordance with the issued convertible debt instruments is made without pre-emption rights for the existing shareholders; 14. The right to receive dividend and other rights in the Company attached to the new shares take effect from the date of the conversion; 15. The debt to ALMC of DKK 338, and DKK 4,849, comprises added interest to convertible debt instruments issued on 20 December 2010 on the closing of the Company's acquisition of Seaside Holding A/S, while the debt to Kiwi of DKK 537, comprises interest added to a subordinate loan granted on 13 November 2009 to the Company of originally DKK 27,387, replaced by a convertible debt instruments on 20 December 2010; 16. The convertible debt instruments of DKK 338, and DKK 4,849, to ALMC hf. grant the right to subscribe for 2,119 shares and 30,319 shares, respectively, of nom. DKK 100, while the convertible debt instrument of DKK 537, to Kiwi grants the right to subscribe for 3,360 shares of DKK 100 in the Company. In accordance with the convertible debt instruments, the conversion price of all the shares amounts to ; 17. Increase or reduction of the share capital, issue of new warrants, issue of additional convertible debt instruments, merger or demerger taking place up until the exercise of the right of conversion do not change the rights that will accrue to the holder of the convertible bonds; and 18. If the Company is dissolved by liquidation or bankruptcy, the convertible bonds lose their value. In connection with the completion of the share capital increase in Blue Vision A/S from DKK 45,000,000 to DKK 75,783,500 in March 2011, ALMC hf. converted the debt instrument of DKK 20.0 million and the debt instrument of DKK 338,984.69, and Kiwi Deposit Holdings A/S converted the debt instrument of DKK 28.4 million and the debt instrument of DKK 537, into new shares in the Company. Until 3 November 2016, the Company's Board of Directors is authorised, on one or more occasions, to increase the Company's share capital by up to nom. DKK 250,000,000 by issuing new not fully paid B shares at market price or a favourable price by cash payment with pre-emption right for the Company's existing shareholders. The new B shares are to be issued as not fully-paid shares in a new independent share class in accordance with section 33(1) of Consolidation Act No. 322 of 11 April 2011 on public and private limited companies. The B shares must be non-negotiable instruments registered in the name of the holder and be registered as such in the Company's register of shareholders. The B shares will not be issued in dematerialised form through VP SECURITIES A/S. The B shares must confer on the holders a right to receive dividends and other rights in the Company from the date of registration of the capital increase with the Danish Business Authority. 23

25 Management commentary The Board of Directors may demand that unpaid share capital regarding B shares be paid on demand. Four weeks must be allowed for payment. Any claims against subscribers and subsequent acquirers of B shares may be executed in accordance with section 478(1)(v) of the Danish Administration of Justice Act. The new B shares will not be admitted for trading and public listing at NASDAQ OMX Copenhagen. According to the Company's articles of association, the Board of Directors is authorised to determine the detailed terms of the capital increases in accordance with the above-mentioned authority and to amend the Company's articles of association as necessary due to the Board of Directors' exercise of the above-mentioned authority. At the board meeting on 30 March 2012, the Board of Directors decided to exercise part of the authority to issue B shares for the purpose of carrying out a capital increase of up to DKK million by issuing B shares in the ration 1:2. It is Management's assessment that the Company's capital and share structure is appropriately prepared and that the Company's Board of Directors by use of e.g. the abovementioned authority may ensure that the capital and share structure is adapted to the shareholders' and Blue Vision A/S' interests on an ongoing basis. Dividends Blue Vision A/S has not established an actual dividend policy. It is expected that the Company's shareholders in the coming years will obtain a return on their investment in the form of increases in the price of the Company' shares. In the future, distribution of dividends will be made in consideration of necessary consolidation of equity as the basis for the Group's continued expansion. The Board of Directors proposes no dividends for 2011 to the Company's annual general meeting. Treasury share policy In accordance with the authority granted by the annual general meeting, Blue Vision A/S may acquire treasury shares at a maximum of nom. DKK 7,578,350, corresponding to 10% of the share capital. At the end of 2011, Blue Vision A/S had 103 shares of nom. DKK