Great Belt A/S
10 September 2001
24 August 2001
Interim Report
For the period 1 January - 30 June 2001
MAIN FIGURES
(DKK 1,000) 1st half-year 1st half-year
2001 2000 2000
PROFIT AND LOSS ACCOUNT
Revenue, road 877,680 826,782 1,771,792
Revenue, rail 288,350 282,700 565,400
Other revenue 3,100 726 3,889
Total net turnover 1,169,130 1,110,208 2,341,081
Operating costs -118,290 -147,115 -292,499
Result before depreciation 1,050,840 963,093 2,048,582
Depreciation -221,116 -211,280 -463,433
Result from ordinary
operations 829,724 751,813 1,585,149
Financial items -794,489 -1,172,654 -2,091,776
Result before tax 35,235 -420,841 -506,627
ASSETS
Fixed assets:
Road link 17,225,187 17,495,793 17,352,413
Rail link 17,215,972 17,389,458 17,305,717
Road and rail links,
total 34,441,159 34,885,251 34,658,130
Other tangible fixed assets 85,860 80,318 76,664
Total tangible fixed
assets 34,527,019 34,965,569 34,734,794
Financial fixed assets 1,573,398 2,059,676 1,879,365
Total fixed assets 36,100,417 37,025,245 36,614,159
Current assets:
Receivables 257,680 250,450 252,306
Liquid funds and 3,772,810 2,116,606 3,659,348
securities
Total current assets 4,030,490 2,367,056 3,911,654
Total assets 40,130,907 39,392,301 40,525,813
LIABILITIES
Equity capital:
Share capital 355,000 355,000 355,000
Result carried forward -3,524,811 -3,021,655 -3,021,655
as primo
Result for the period 35,235 -420,841 -503,155
Total equity capital -3,134,576 -3,087,496 -3,169,810
Debt:
Debenture loans and 42,564,619 41,653,913 43,027,195
bank loans
Other debt 700,864 825,884 668,428
Total debt 43,265,483 42,479,797 43,695,623
Total liabilities 40,130,907 39,392,301 40,525,813
KEY FIGURES
Profit ratio 71.1% 67.8% 67.8%
(ordinary operations)
Rate of return 4.1% 3.8% 3.9%
(ordinary operations)
Return on facility 4.8% 4.3% 4.6%
(ordinary operations)
ACCOUNTING POLICIES APPLIED
The Interim Report is presented in accordance with the accounting policies
applied for the preparation of the annual accounts for 2000.
Profit and Loss Account
Net turnover
Net turnover includes revenue from the facilities, including tolls for road
traffic and fixed fees for the rail link. The tolls and fees have been deter-
mined by the Danish Ministry of Transport.
The completed contract method is used for the calculation of net turnover.
Depreciation
Depreciation of the road and rail links began from the completion of the
construction works and the commissioning of the facilities. The facilities are
depreciated over the expected lifetime using the straight-line method. As
regards the road link, the facilities have been divided into sections with
uniform lifetimes.
* The main part of the facilities comprises the constructions, which are
designed for a minimum lifetime of 100 years. Here the period of
depreciation amounts to 100 years.
* Mechanical installations, crash barriers and road surfaces are depreciated
over 20-50 years.
* Software and electrical installations are depreciated over life-times of
10-20 years.
The rail link is depreciated over a lifetime of 100 years. As the Danish
National Railways Agency is financially responsible for maintenance and for
normal reinvestments, no differentiation of the depreciation period has been
made.
Other assets are included at cost and depreciated on the following basis:
Leasehold improvements, the lease period, but max. 5 years
Machinery, fixtures & fittings 5 years
Administrative computer systems and programmes 0-5 years
Buildings for operational use 25 years
Assets at an original cost of less than DKK 100,000 are expensed in the year of
acquisition.
Financial items
Financial items comprise interest expenses and income from loans and placements.
Interest payments and income are entered in accordance with the amounts relating
to the accounting period.
Financial items also include realised and unrealised foreign currency
adjustments and gains/losses on derivatives.
Taxation
The company is taxed jointly with the parent company, Sund & Baelt Holding A/S,
and A/S 0resund. The company is jointly and severally liable with Sund & Baelt
Holding A/S and A/S 0resund for tax on consolidated taxable income.
Net taxation for the jointly taxed companies is duly apportioned between the
profit-making companies. Companies, which have obtained tax savings through tax
losses in other companies, pay a joint tax contribution to these, corresponding
to the applied loss multiplied by the corporation tax rate.
The Public Works Act for the Fixed Link across Great Belt lays down specific
rules regarding tax loss carry-forward due to the long construction periods. The
carry forward regulations mean that the company is not liable for tax for
several years.
Balance sheet
Road and rail links
During the construction period, the value of the facilities was calculated in
accordance with the following principles:
- Expenses for the facility based on signed agreements and contracts are
capitalised directly.
- Other direct or indirect costs are capitalised as value of own work.
- Net financing costs are capitalised as construction interest.
Significant future repair and maintenance works concerning the completed road
structure will be capitalised and depreciated over the expected economic
lifetime. Ongoing maintenance works will be expensed as incurred.
Receivables from sales
Receivables from sales include claims on customers and outstanding accounts with
payment card companies. Receivables are valued individually and necessary
provision has been made for potential loss.
Assets and liabilities in foreign currencies
Assets and liabilities in foreign currencies are included in the Balance Sheet
after conversion at the exchange rate prevailing on the balance sheet date.
Loans converted by using currency swaps or other derivatives are included at the
exchange rate prevailing on the balance sheet date in the currency to which the
debt has been converted.
Current assets and current liabilities, secured by foreign exchange contracts,
are entered at the forward exchange rate.
Securities
The securities portfolio is valued at the closing rate. Holdings of own debt
securities in issue are valued at nominal value, so that the valuation of the
holding is symmetrical with the value of the liability item.
Debenture loans and bank loans
Debenture loans and bank loans are entered at nominal value in the Balance Sheet
under Liabilities. Differences between the received net revenue and the loan's
nominal value are capitalised under Financial Fixed Assets. The difference is
taken into the Profit and Loss Account over the maturity of the loan.
Zero coupon bonds are entered in the Balance Sheet under Liabilities at the
received net revenue and revalued over the maturity using the straight-line
method.
Derivatives
Derivatives used for hedging are treated in the same way as the items that are
hedged, allowing for symmetrical recording of gains and losses of the hedged
amounts and the hedging instrument.
Instruments used for conversion of interest or for covering interest risks on
bonds, etc. are not regulated at market value, but are treated as part of the
hedged bond loans. Interest from such derivatives is accrued and recorded
together with interest from the bond loans.
Financial instruments that are settled before the end of the maturity of the
bond loans are recorded gains or losses over the remaining maturity of the bond
loan using the straight-line method.
REPORT FOR FIRST HALF YEAR 2001
The positive trend from the financial year 2000 has been maintained in 2001.
During the 1st half of 2001, traffic on Great Belt increased 4.1% compared to
the first half of 2000. The breakdown for traffic growth is 3.7% for private
motorists and 6.8% for trucks. A slight fall for coach traffic has, however,
been recorded. For the same period, car traffic fell by 0.9% on a national
basis.
Compared to the budget, increased turnover of almost DKK 15 million, i.e.
approx. 2%, was recorded for the road link.
For the 1st half of 2001, Great Belt's market share for East-West traffic saw a
1% increase for private motorists to 86%, while the market share for trucks -
despite a significant volume increase - fell by 1% to 83%. The cause of the
decline is thought to be the operational problems experienced by the Mols ferry
line in the spring 2000. These have now been resolved.
The use of the BroBizz as a method of payment continues to rise. By end June,
approx. 112,000 BroBizzes were in circulation. The proportion of crossings
involving BroBizz currently amounts to an average of 40%. On weekdays, the
proportion is 50%. The widespread use meant that the number of BroBizz lanes was
increased from two to three in each direction from the end of May.
In 2001, the company has continued its endeavours to extend the use of the
BroBizz to other vehicle-related services. The beginning of August saw the start
of a partnership agreement with Scandlines for the use of the BroBizz system on
the company's ferry routes. The system can now be used on the Elsinore-
Halsingborg route and, later this year, will be available on the Rodby-
Puttgarden service. Negotiations are also taking place with other potential
partners.
Revenue from the rail link is in line with the budget and the fees determined by
the Danish Minister of Transport.
Financing expenses totalled DKK 794.5 million, i.e. approx. DKK 450 million
lower than budgeted. For the half year, financing interest, therefore, totalled
4.62% per annum including exchange rate adjustments. The difference can be
attributed to exchange rate adjustments, with gains of 0.30% per annum. The
budget contains a risk buffer to counter against uncertainties relating to
exchange rate developments.
Loans totalling DKK 5.3 billion were taken up during the period.
The result for the period shows a profit of DKK 35.2 million compared to a
budgeted loss of approx. DKK 480 million. As mentioned above, the difference is
largely attributable to the financial result.
Based on the realised result for the 1st half of 2001 and the expectation that
the financial result for the 2nd half year will be on a par with the realised
result for the 1st half year, the result for 2001 is expected to amount to a
loss in the region of DKK 170 million against a previously expected loss of
approx. DKK 840 million. However, there continues to be considerable uncertainty
with regard to exchange rate developments.
As at end June, equity capital was negative, i.e. DKK 3.1 billion. Equity
capital movements for the period solely relate to the result for the 1st half of
2001.
Based on the estimated operating result, equity capital is expected to be re-
established within a time frame of 21 years. Future operating results have been
calculated on the basis of the fees paid by the Danish National Railways Agency
for use of the rail link as determined by the Danish Minister of Transport and
on the traffic forecasts for road traffic.
Under the terms of the Public Works Act, the Danish state has extended separate
guarantees for interest and repayments and other ongoing commitments relating to
the company's loans. Moreover and without further notification of each
particular case, the Danish State guarantees the company's other financial
commitments. The company pays a guarantee commission of 0.15% to the Danish
State.
The pre-conditions regarding the project's profitability have not changed. As
stated in the Annual Report for 2000, it is calculated that Great Belt A/S will
be debt-free approx. 30 years calculated from the bridge's opening in 1998.
However, some uncertainty remains with regard to the debt repayment period,
especially with regard to financing costs and traffic revenue. If financing
expenses rise by 1% the repayment period will be extended to 36 years. If,
however, revenue from car traffic falls by 20%, the repayment period will be
prolonged to 41 years.
Operations are managed by the parent company Sund & Baelt Holding A/S. A share
of Sund & Baelt Holding's costs is reimbursed by the company.
OWNERSHIP
The entire share capital is owned by Sund & Baelt Holding A/S, Copenhagen, which
is wholly owned by the Danish State.
BOARD OF MANAGEMENT AND BOARD OF DIRECTORS
The Board of Management comprises CEO Mogens Bundgaard-Nielsen, who also
constitutes the Board of Management of Sund & Baelt Holding A/S and A/S Oresund.
The Board of Directors comprises Jens Kampmann (Chairman), Michael Pram
Rasmussen (Deputy Chairman), Hans Skov Christensen, Ole Preben Kristensen, Georg
Poulsen and Inge Thygesen.
Copenhagen, August 24, 2001.
Jens Kampmann Mogens Bundgaard-Nielsen
Chairman CEO
