Annual report 2008 - Dantherm

Annual report 2008

ContentsDantherm group profile......................................................... 3Financial highlights for the group...................................... 5Dantherm group worldwide................................................. 6Group chart as at 31 December 2008................................ 7Management’s review............................................................. 8Shareholder information.................................................17Corporate Governance.....................................................22Environment........................................................................25Risk assessment..................................................................27Financial review.......................................................................30Statement of the Board of Directors andBoard of Executives on the annual report.....................35Auditor’s report.......................................................................36Board of Directors and Board of Executives..................37Financial statements of the Dantherm groupIncome statement...............................................................41Balance sheet........................................................................42Statement of changes in equity.....................................44Cash flow statement..........................................................45Notes for the group............................................................46Financial statements for the parent Dantherm A/SIncome statement...............................................................88Balance sheet........................................................................89Statement of changes in equity.....................................91Cash flow statement..........................................................92Notes for the parent...........................................................93Contact details...................................................................... 101

IndexDantherm group profileBusiness foundationThe Dantherm group is an important internationalplayer in the global market for industrial air handling.Dantherm offers products, solutions, installation andservice based on a simple and strong mission – cleanair for people – which unites all the group’s companiesworldwide.Business segmentsThe Dantherm group operates within three businesssegments:Air HandlingDevelopment, production, sale and servicing ofproducts and control technology for air handling.Our primary products and solutions include dehumidifiers,ventilation systems, warm air heaters,mobile air-handling equipment and air-conditioningequipment for telecom networks, including primarilymobile telephone stations.PowerDevelopment, production, sale and servicingof products based on hydrogen and fuel celltechnology. The primary products and solutionscomprise power backup and micro power plants.The activities within this business segment arestill in a development phase with modest revenueand negative earnings – but also with considerablepotential.FiltrationProject development, production, installation, saleand service for industrial companies. The companiesin this business segment deliver products andcomplete solutions for air cleaning in the formof filters, ventilators, controls and pipes for theprotection of both the production environmentand the external environment.DanthermAir HandlingRevenue 2008: DKK 747.8mOperating profit 2008: DKK 9.6mPowerRevenue 2008: DKK 5.5mOperating loss 2008: DKK -25.2mFiltrationRevenue 2008: DKK 1,262.9mOperating profit2008: DKK 52.3mDantherm AirHandling groupT&O StelectricDantherm PowergroupDantherm FiltrationgroupDantherm group profile3

IndexMarket positionThe Dantherm group has factories and salescompanies in several western and eastern Europeancountries as well as in the US and Asia. Danthermthus offers products, solutions, installation andservice in most of the world. Within the Air Handlingbusiness segment, the group is a leading globalsupplier of OEM products for the telecom sectoras well as a leading European supplier within theFiltration business segment. The Power businesssegment is one of the world’s first suppliers ofcommercial power backup solutions based onhydrogen and fuel cell technology.Primary customer groupsThe Dantherm group mainly sells its productsand solutions to providers of telecom networksand to companies in the process industry.Approx. 85% of the group’s sales take placeto customers outside Denmark.StrategyIn the coming years, attitudes and statutoryrequirements concerning air handling and efficientenergy use are expected to become strictereverywhere. Even in countries which so far have notgiven priority to protecting the environment, there isan emerging realisation of the fundamental need ofhumans for clean air both indoors and out of doors.The aim of the Dantherm group is to create continuedglobal growth with a strong local presence, makingthe most of the group’s potential.The Dantherm group wants to exploit and consolidateexisting and new business segments withinindustrial air handling through carefully managedgrowth. Through this growth, the group aims tosupplement its current product programme, spreadrisk and realise synergies. Therefore, the Danthermgroup will, also in future, be the preferred businesspartner within these business areas, thereby helpingto create clean air for people.Dantherm group profile4

IndexFinancial highlights for the groupDKK ’000 2004 2005 2006 2007 2008KEY FIGURESIncome statement:Revenue 1,461,793 2,895,694 1,982,940 2,154,495 2,016,260Earnings before depreciation, amortisation etc. (EBITDA) 102,676 147,295 89,773 121,459 73,734Earnings before amortisation of goodwill (EBITA) 76,871 116,644 39,147 66,917 16,271Amortisation/impairment loss relating to goodwill 0 40,000 0 0 0Operating profit (EBIT) 76,871 76,644 39,147 66,917 16,271Net financials -19,316 -3,609 -29,219 -36,010 -35,748Profit/loss before tax 57,555 73,035 9,928 30,907 -19,477Profit/loss for the year from discontinued operations - - -26,238 1,506 0The group’s share of the profit/loss for the year 33,377 59,426 -4,977 35,539 -17,903Balance sheet at year-end:Balance sheet total 1,020,584 1,794,057 1,843,683 1,481,110 1,395,355Equity 410,018 525,208 488,230 516,679 466,958Invested capital 638,011 1,025,201 1,058,616 1,003,602 913,062Cash flows:Cash flow from operating activities 94,346 -43,595 5,925 42,963 140,352Cash flow from investing activities -79,102 -236,556 -66,443 -61,154 -80,926– Of which acquisitions/sales of subsidiaries and activities -75,087 -190,196 -8,394 0 -1,426– Of which acquisitions of property, plant and equipment -36,586 -56,167 -60,851 -35,850 -49,406Cash flow from financing activities 18,233 91,317 -57,206 -5,428 -7,815RATIOSFinancial ratios:Growth rate 6.1% 98.1% -31.5% 8.7% -6.4%Profit margin 5.3% 2.6% 2.0% 3.1% 0.8%Return on invested capital 13.6% 14.0% 3.8% 6.5% 1.7%Equity interest 38.5% 28.2% 26.7% 35.1% 33.6%Average no. of employees 1,278 2,816 2,135 2,312 2,303Share-related ratios:Earnings per share (EPS), DKK 5.05 8.31 -0.69 4.97 -2.51Cash flow per share, DKK 5.07 -26.41 -12.92 15.81 7.25Dividend per share, DKK 0.90 0.90 0.00 1.50 0.00Equity value at year-end, DKK 58.9 70.4 68.4 72.4 65.2Share price at year-end, DKK 88.9 128.2 104.3 135.8 44.4Price/equity value 1.51 1.82 1.52 1.88 0.68Number of shares of DKK 50 each at year-end (’000) 6,667 7,191 7,191 7,191 7,191The ratios are prepared in accordance with the Danish Society of Financial Analysts’ ‘Recommendations and Financial Ratios 2005’.Reference is also made to the ratio definitions on page 58.Financial highlights for the group5

IndexManagement’s reviewClean air for peopleEven on the most overcast of days, the sun stillshines somewhere, and at some point eithersooner or later its welcome and life-giving rays willpenetrate the cloud cover. In slightly the same way,the current global financial crisis, which has forcedDantherm and most other industrial companiesto shift down a gear, will be replaced by growthin the hopefully not too distant future.In Dantherm’s case, this reversal may occur earlierthan for many other companies. This is becauseof the clear relationship between the solutionsand products which Dantherm supplies and thesentiment currently sweeping the world. The trendamong politicians, scientists and the populationin general is clear: We must improve the climate andthe environment, reduce CO 2emissions and, to thegreatest possible extent, free ourselves from ourdependency on polluting, fossil fuels. This trendvery closely matches Dantherm’s product rangeand solutions.Putting words into actionThe objective of wanting to improve the climateand the environment is far more than just wishesand catchwords. It is what is actually happening inthe world at large when, for example, the EU passeslegislation and rules that, through a mix of coercionand carrot-dangling, force companies, publicauthorities and citizens to limit air pollution inparticular. Or when one of the biggest countriesin Europe, Germany, launches a large-scale andambitious programme to renovate older housing,which in future will be equipped with ventilationsystems that are designed to both reduce pollutionand enhance the indoor climate. This is just to nametwo of countless examples of how needs are arisingfor precisely the products and solutions whichDantherm offers, based on know-how acquired over50 years. Even in times of crisis, where grey is theoverriding colour, there are still glimmers of lightin the gloom.Weak second halfA pretty good start, but an end that could have beenbetter – much better. This summarises 2008 for theDantherm group as a whole. 2008 was also a yearwhich saw the necessary measures and changesbeing made when required by developments andcircumstances. At the same time, a number ofinitiatives have been taken which are geared forthe future, and which will strengthen the groupin central areas.At the beginning of 2008, the managementexpected revenue of DKK 2,300-2,400m and a profitbefore tax of DKK 40-60m. Instead, the year endedwith group revenue of over DKK 2,000m and a lossbefore tax of DKK -19m. In other words, revenue isapprox. 15% lower than expected at the start of theyear and subsequently produced a loss which canonly be regarded as unsatisfactory.These figures conceal varying fortunes for thethree business segments which make up theDantherm group:• Air Handling had a poor 2008, where revenueand earnings throughout the year were significantlylower than expected.• Power had a year which, in terms of results,met expectations. The business segment Poweris still in a development and build-up phase whichdemands considerable investments and whererevenue is modest and operating results negative.Management’s review8

Index• Filtration, on the other hand, successfully managedto retain the growth of recent years, and the first sixmonths in particular saw increases in both revenueand earnings. Both the revenue and the operatingprofit for 2008 are slightly better than in 2007.Financial and economic crisisWhen the financial crisis and then the economic andbusiness crises swept across the world, very fewcompanies remained unaffected, including theDantherm group, where the bulk of revenue stemsfrom investment products. As in previous years,higher revenue and earnings were expected in thesecond half of the year relative to the first. But asearly as the third quarter, it was clear that this wouldnot be the case. It therefore proved necessary toadjust the outlook for 2008 downwards two times,the first time in August when a minor fall in revenueand earnings was expected, and again in November2008. Here, the outlook for the year was reducedeven further to a level that more or less correspondsto the overall results for the year.The explanation for this development is theeconomic slowdown which occurred in a numberof the Dantherm group’s primary markets, and whichdeteriorated further as the months passed. EvenChina, which has otherwise boasted impressive ratesof growth now for many years, was hit by the globalcrisis. This obviously had a knock-on effect on theDantherm group, which has placed many of itsactivities in China.Necessary adjustmentThe company’s production capacity and capacitycosts were adapted throughout 2008 to counter theeffects of the declining revenue. This has meant, forexample, that the Dantherm group has been forcedto dismiss a considerable number of employees.At the end of 2008, the number of employeeshad thus been reduced to 2,180 worldwide.This corresponds to a reduction in the size of theworkforce by more than 7% in the course of 2008.Focus and balanceFor the Dantherm group, the financial crisis hasmeant an even sharper focus on costs, liquidity andinvestments in all business segments.There is widespread appreciation throughout theorganisation of the importance of being careful andacting responsibly in relation to costs. Such thrift isalso evident in relation to investments. More thanever before, managements are assessing potentialinvestments critically in relation to the paybackhorizon before deciding whether or not to go aheadwith the investments.The objective is to take a balanced approach,so that within certain business segments and areasit is possible to accept longer payback timescompared to others. One example is the businesssegment Power, which has a particularly largemarket potential. A condition for being able toexploit this potential will usually be that investmentsare made which in most cases have a paybackhorizon in excess of the one-to-two years, which isnormally the criterion for investments within otherbusiness segments.For a group like Dantherm, a positive cash flowis as important as the bottom line. In the Danthermgroup’s three business segments, both managementsand employees are therefore devoting considerableefforts to, for example, reducing inventories to whatis absolutely necessary. Applying Lean thinkingthroughout the organisation eliminates waste andreduces funds tied up.This is an exercise which the group companies havealready – and successfully – worked with, but whichwill be even more crucial in the coming years. Likeother companies, Dantherm must look to the futureand expect to have to finance developmentactivities and other initiatives itself to a higherdegree than previously.Management’s review9

IndexOutlook for 2009The outlook for the forthcoming year is more unpredictablethan ever. Consequently, the Danthermgroup has, in the first few months of 2009, implementeda number of additional cost-cutting measures.These include reducing the total number ofemployees in the group by a further 200 on the basisof redundancies which have already been effected.Moreover, 350 employees are part of a work-sharingscheme. In general, no adjustments will be made towages and salaries in 2009 apart from the contractualobligations undertaken by the Dantherm group.Focus is mainly on short-time planning and executionwith a view to improving cash flows, minimisinginvestments, reducing costs and ensuring earnings.The Dantherm group expects 2009 to be a difficultyear with lower revenue than in 2008. Consequently,the cost reductions initiated will be continued andexpanded, and focus will be on cash flows, which areexpected to be positive. Furthermore, efforts have beenput into finding one or more industrial or financialpartners for the fuel cell activities with a view tostrengthening the development of Dantherm Power.The outlook is associated with considerable uncertaintyand risks, as much of the group’s revenue isdependent on investments made by industry andthe public sector. In the current financial and economiccrisis, this can have consequences for bothexisting and future projects.Business segments in theDantherm groupAs a result of the intensified focus on fuel celltechnology, at the beginning of 2008 the Danthermgroup decided to turn these activities into a separatebusiness segment.Consequently, the group is now organised intothe following business segments:The previous business segment Products for AirHandling has been split into two segments, AirHandling and Power. At the same time, the businesssegment Process Ventilation is now called Filtrationso it better matches the names of all the companies.Moreover, staff functions have been centralised,so they are now activities directly under groupmanagement. This has led to further rationalisationsand streamlining as, among other things, the numberof employees has been reduced. The staff functionsare physically located at Jegstrupvej in Skive,Denmark, where Dantherm originally started out50 years ago.Clean air for peopleNew groupings or not – the three businesssegments which make up the Dantherm groupare united in pursuing the same mission: To createclean air for people – in the shape of products,solutions, installation and service.Air HandlingDKKm 2007 2008Revenue 930.6 747.8Operating profit (EBIT) 51.9 9.6Profit margin 5.6% 1.3%Decline – but also grounds for optimismWithin the business segment Air Handling,Dantherm saw a fall in revenue of almost 20%in 2008 relative to 2007. The first quarter developedas expected, but activity levels started to declinein the second quarter, for which reason a numberof cost-cutting measures were immediatelyimplemented. Historically, revenue in the secondhalf of the year has always exceeded revenue in thefirst, but this was not the case in 2008. The declinein revenue in the first six months became moremarked in the second half, which resulted in anunsatisfactory operating profit of just DKK 9.6m.New businesssegmentsFormer businesssegmentsCompanies involvedAir Handling Products for Air Handling Dantherm Air Handling groupand T&O StelectricPower Products for Air Handling Dantherm Power groupFiltration Process Ventilation Dantherm Filtration groupManagement’s review10

IndexFall in sales to the telecom industryIt is primarily sales to the telecom industry whichhave been lower than both last year and what wasexpected. The decline affected a number ofcompanies within the Air Handling group – from theUS and Denmark to Sweden and China. The marketfor compact heat management solutions for thetelecom industry is characterised by a few largecustomers. Sales to these customers can varyenormously, and as the time-span from when theorder is placed until delivery is very short, considerablepositive and negative fluctuations can occur.After a long period of increasing sales of dehumidifyingproducts, this product area also saw a fallduring the year. This is because of fewer incidencesof flooding in the group’s primary markets, butlargely also due to declining levels of activity inthe construction sector in the wake of the globalfinancial crisis.Within the business segment’s other product areas,including domestic and comfort ventilation solutionsas well as mobile equipment for the armed forcesand international aid organisations, levels of activitywere at roughly at the same level as in 2007.Cutting costsProduction capacity and capacity costs have beenadapted in the companies affected to counter theeffects of declining revenue within the abovementionedproduct areas. At the same time, variousmeasures have been implemented which haveraised contribution ratios.Neither Dantherm nor the world at large realisticallyexpects the global crisis to be over within the nextfew months. All companies in the Dantherm groupare consequently doing what they can to maintainand strengthen their efforts to ensure morestreamlining while also continuously tailoringproduction to current needs.Another product area which is expected to seeconsiderable growth in the coming years is ventilationunits. Much focus is therefore being devoted tothis area, and strategic considerations are going intowhere and how to best develop this product area.Energy-saving solutionsDespite the decline seen by the business segmentAir Handling, there is still reason to be optimistic.The business segment supplies a number ofproducts and solutions that match the stronglyincreasing level of attention being paid to climatechange and the environment.An example of this is the new ventilation productsfor private homes which have been developed andoptimised in recent years. The products have beendeveloped in collaboration with some of the leadingproviders in the market. Sales of Dantherm’s domesticventilation products are effected via severalestablished suppliers who supply the rest of the completeventilation solution to the building. Danthermmanufactures high-quality products which arereliable and effective, and which have a low energyconsumption, low noise levels and a high degree ofuser-friendliness. This is, among other things, thanksto the experience and expertise within ventilation,cooling and exchange technology which Danthermhas built up during its many years as a developerand manufacturer of solutions for swimming baths,offices, shops and other commercial buildings.Another example is Dantherm Air Handling’sefficient and energy-saving solutions for electronicscooling. Based on 50 years of experience with airhandling, Dantherm supplies a number of optimisedand compact solutions for controlling the temperatureof electronics. On account of growing environmentalawareness and increasing energy prices, telecomnetwork operators are being forced to reducetheir energy consumption, and this is another areawhere Dantherm Air Handling provides solutions.Management’s review11

IndexPowerDKKm 2007 2008Revenue 2.8 5.5Operating profit (EBIT) -15.0 -25.2Profit margin - -Modest revenue but huge potentialIn 2007, the Dantherm group chose to intensifyits focus on the development of fuel cell solutions.The activities are combined in the business segmentPower, which in 2008 generated total revenueof DKK 5.5m and an operating loss of DKK -25.2m.In other words a big minus on the back of modestrevenue. The activities in this business segment arestill in a development phase, and the operating losswas therefore expected. In 2009, it is also expectedthat Dantherm Power will return a loss of aboutthe same size.Dantherm Power engages in the development andapplication of fuel cell solutions which are expectedto play a key role in the energy supply of the future.Fuel cells are an extremely efficient and environmentallyfriendly technology for generating electricitycompared to the methods which have been usedto date. This applies to production, consumptionand disposal. The big advantage of hydrogenas an alternative energy carrier is that it burnscompletely cleanly, and the waste product is cleanand harmless water.Clean air for peopleWhile also having the potential to develop intoan important player with considerable revenue andearnings, Dantherm Power lives up to the Danthermgroup’s vision of ensuring clean air for people.Dantherm Power started in 2003 as a developmentproject in Dantherm Air Handling with the aim ofdeveloping and producing a fuel cell-based powerbackup solution to replace the well-known batteryand diesel generator solutions. After three years,the first power backup solutions based on fuel cellswere presented. In 2007, the activities in Power weredemerged in a separate subsidiary, and in 2008,among other things as part of a change to howthe group is organised, it became a separatebusiness segment on a par with Air Handlingand Filtration.First moverAs far as concrete results are concerned, DanthermPower has come a long way, and today the companyis regarded as one of the leading players within thecommercial application of hydrogen and fuel celltechnology. In summer 2008, Dantherm Powerreceived a both prestigious and technicallychallenging order to supply a 100 kW hydrogenand fuel cell-based power supply unit to theCanadian energy company BC Hydro. DanthermPower secured the order following a public tenderon purely commercial terms and in competitionwith other companies.Later in the year, Dantherm Power had anotherbreakthrough. The company was asked to supplya number of cabinet solutions with climate controlas well as a hydrogen-based power backup solutionfor Denmark’s new emergency network SINE. It isthe first time in the world that a hydrogen and fuelcell-based power backup solution has been suppliedto a complete nationwide security network,otherwise known as a TETRA network.In addition to power backup solutions, DanthermPower also develops micro power plants based onfuel cells and hydrogen technology. DanthermPower participates in the Danish Micro CombinedHeat and Power project, which develops and testsfuel cells in micro power plants for private homes.The micro power plants produce both electricity andheating, and therefore utilise the energy moreefficiently than natural gas or oil-fired boilers. Inaddition, during the first six months of 2009,Dantherm Power is supplying sixteen micro powerplants to H2 College in Herning, Denmark. H2College is a hall of residence consisting of 66 flats,where the energy supply is based on sustainableenergy and hydrogen and fuel cells for electricityand heating.Management’s review 12

IndexFiltrationDKKm 2007 2008Revenue 1,221.1 1,262.9Operating profit (EBIT) 47.0 52.3Profit margin 3.8% 4.1%Progress despite crisisIn the business segment Filtration, Danthermmaintained the growth of recent years in termsof both revenue and operating profit in 2008.This has been achieved despite the financial crisiswhich has gripped the world, but growth was lowerthan last year. Revenue for 2008 totalled DKK 1,262.9magainst DKK 1,221.1m last year, up 3.4%. The operatingprofit for 2008 was DKK 52.3m relative to a profitof DKK 47.0m last year.The overall growth is primarily attributable to thecompanies in Germany, Denmark and China.Conversely, the companies in France, the US andThailand saw a decline in sales compared to 2007.In these markets, primarily sales to the woodindustry declined. The Dantherm Filtration group’scompanies are continuously striving to reducedependency on a few industries, such as the woodand furniture industry. In 2008, the market situationin Thailand was affected by the unrest in the countryand, consequently, a number of cost cuts were madein the Thai company.The restructuring of the Swedish subsidiary at theend of 2007 has, as expected, already borne fruitin 2008, and the loss has been turned into a profit.The Danish company saw a growth in revenue ofalmost 10%, thereby achieving a revenue of almostDKK 300m. The increase in activity also meant animprovement in earnings, which were the best ever.In 2008, the Chinese company, which was establishedin 2006, reported continued growth inrevenue and earnings from last year. The increasingenvironmental awareness of the Chinese authoritiesand among the Chinese population is boostingdemand for efficient filter solutions.Establishment in RussiaWithin the past few years, Dantherm Filtration’s Germansubsidiary has increased its revenue by about75%. A significant part of this growth has been wonin the Russian and eastern European markets.To maintain growth in the Russian market, which isvery large geographically, a strategic decision wasmade in 2007 to establish a company and an organisationin Russia. This decision was realised at the endof 2007/beginning of 2008, when Dantherm Filtrationopened two departments within the space ofonly a few months at two locations in Russia: A salesand representation office in Moscow and a sales andproject department in Krasnoyarsk.The opening of the two departments happenedin conjunction with two large Russian trade shows –and with colourful festivities to reflect the importantrole which the two departments will play in future inthe realisation of the expectations Dantherm Filtrationhas of the Russian market.Expanding the factory in GermanyHowever, it is not only beyond the national boundariesthat Dantherm Filtration’s German department isexpanding. It is also happening on its home turf inFriesenheim. The former premises had become toosmall and prevented any further streamlining of production.The existing buildings were therefore renovatedwhile production capacity was increased by 30%.Growth marketsThis in no way puts a stopper to Dantherm Filtration’sgrowth plans. The goal is to be locallyrepresented on the most important growth markets,where investments are being made in industrialproduction. Of the four BRIC countries, Danthermstill does not have its own offices in Brazil and India.In 2008, surveys have been conducted to determinethe sales possibilities in both India and Brazil. Bothmarkets are deemed to offer significant potentialfor sales of efficient solutions for air cleaning. Againstthis background initiatives have been launched toestablish a local representation in both India andBrazil in 2009, after which Dantherm will berepresented in all four BRIC countries.Management’s review 13

IndexFrom local company toglobal groupDantherm was founded in 1958 and thus celebratedits 50th anniversary in 2008. In the past 50 years,Dantherm has developed from a small localcompany to a global group with 2,200 employeesand 28 companies in thirteen countries.So there was every reason to celebrate the anniversary,but everyone agreed that it should happenin a different and more rewarding way than byinviting guests to the usual speeches, red carpetsand canapés. Instead, Dantherm organised aconference with the theme Clean air for people.At the conference, a number of leading experts eachdescribed the challenges which they think the worldfaces in terms of ensuring clean air for people.Many business partners had accepted the invitationto the conference, to which there was a lot ofpositive response.For Dantherm group employees, the anniversarywas celebrated in different ways depending on therespective cultures and traditions in the individualcountries. This resulted in a wide range of eventswhere employees were able to learn more aboutDantherm’s development and history.Finally, an anniversary book was published which, inwords and pictures, tells the Dantherm story. This isan interesting account of Dantherm’s developmentand about some of the many people who, in theirown way, have contributed to this development.Dantherm – still developingFor the Dantherm group, the global crisis has meantthat many activities have had to be scaled downor put on hold. However, this does not alter theoverall picture of the company as a group whichis continuing to develop both in terms of itsactivities and geography within the individualbusiness segments.Development department in ChinaIn 2008, Dantherm Air Handling establisheda development department in China nextto Dantherm’s factory in Suzhou. This Chinesedevelopment department brings Danthermphysically closer to both its existing and potentialsuppliers, customers and business partners.The aim is still to ensure and improve the competitivenessof the Dantherm group, and this can,among other things, be achieved by optimisingcost prices for the components used in Danthermproducts as well as by having efficient productionin low-cost countries. This will benefit bothDantherm’s factories in China and the group’sother companies around the world.Russia, India and BrazilIn addition to expanding and modernising itsfactory in Germany, Dantherm Filtration hasestablished two new departments, one in Moscowand the other in Krasnoyarsk.Dantherm Filtration also has plans to establisha department in India and another in Brazil. Bothcountries have high rates of industrial growth andtherefore need solutions to create clean air forpeople and machines – the business area whereDantherm Filtration is the global market leader.New company in the USOne of tomorrow’s big markets for DanthermPower’s hydrogen and fuel cell solutions is expectedto be North America.Dantherm Power is currently engaged in a largeand prestigious project in Canada, which will bedelivered mid-2009. This is expected to give riseto further work in Canada, while the US is alsoshowing a great deal of interest in the solutionsfrom Dantherm Power. It is for this reason thatDantherm Power has established its own salescompany in the US. The company is locatedin Spartanburg, South Carolina – in connectionwith the company which Dantherm Air Handlinghas run in the US for several years.Management’s review 14

IndexDanish subsidiaryThe company has also seen corporate expansionin Denmark. Dantherm Air Handling has taken overthe controlling interest in the small but innovativedevelopment company Danamics ApS, which is nowan independent subsidiary in the Dantherm group.Danamics ApS has developed a new method forelectronics cooling, and Dantherm Air Handling’smanagement sees a number of synergies incooperating with the other business areas withinthe Air Handling segment.Employees are the mostimportant resourceMachinery, technology and IT systems are essentialin a modern company such as Dantherm, but it doesnot change the fact that our employees are and willremain the company’s most important resource.It has therefore been a very painful process whenthe individual companies in the group have beenforced to dismiss many employees in recent months.Painful, but also necessary to maintain a healthy andsustainable company which still has more than 2,000employees around the world.As a modern and future-oriented company,Dantherm feels obliged to look after the well-beingof its employees. Primarily for the sake of theemployees themselves, but also because healthy,well-functioning, motivated and competentemployees are necessary to run a competitivecompany. Consequently, in 2008 the Danthermgroup implemented a number of measures whichhave proved popular with employees.On top of training and professional development,the offers include fitness schemes, pension schemes,health insurance, first-aid courses etc.Labour market effortsDantherm is working closely with the municipalinstitutions on taking a responsible approach tojob sampling, flexitime, integration etc. A proportionof the workforce is thus employed through sociallabour market efforts.Education and trainingDantherm cooperates with educational institutionsto give lower secondary school children theopportunity to try their hands at work experience aswell as students at higher levels such as productiontechnologists or engineers. This gives the companythe chance to make good contacts with potentialemployees, and it helps the students to clarify theircareer path.One of the events in 2008 was a so-called WOFIE(Workshop for Innovation and Entrepreneurship)event at Aalborg University, where participatingstudents worked in groups with various entrepreneurialprojects that were finally assessed by a panelof judges that included experts from Dantherm.The actual selection of the best projects was heldin a festive spirit, with cash prizes sponsored by theDantherm Foundation. The event attracted a lotof attention, which reinforced the already closecollaboration between Aalborg University andDantherm.Professional and personaldevelopmentA key precondition for a company’s developmentis that its employees are able to develop, bothprofessionally and personally. This is especially truein a company like Dantherm, which over the pastten years has grown from a national Danishcompany to an international group.To meet the challenges brought on by such anexpansive pace of development, Dantherm ismaking a priority of continually launching developmentand educational programmes for employeesat all levels. This is taking place within the frameworkof the Dantherm Academy which, in addition topromoting employees’ personal and professionaldevelopment, will also strengthen the inter-organisationalcollaboration in the group and build upnetworks for exchanging experience, knowledgeand ideas.Management’s review15

IndexTomorrow’s leaders and specialists fromwithin our own ranksFor several years, Dantherm has had a managementdevelopment programme and a project managementprogramme which are both modular andconcluded with an exam. Moreover, the first stageof the Dantherm group’s Propeller programme waslaunched in 2008. The Propeller programmeis designed to identify tomorrow’s leaders andspecialists from within the company, targetingyoung employees with the potential to occupykey positions in the group’s companies in thecoming years.In addition to training talented employees in thegroup, the aim of the Propeller programme is,of course, also to retain young employees withleadership and specialist potential. It is Dantherm’sambition to be an attractive workplace for competentand ambitious employees.Eighteen young and talented employees areparticipating on the first Propeller course.They represent all parts of the group, both interms of production and geographical location.Management’s review 16

IndexShareholder informationDantherm sharesDantherm A/S is listed on NASDAQ OMXCopenhagen and trades under the abbreviationDANTH and the ISIN code DK0010223692. Its sharesare included in the SmallCap+ index.In 2008, the highest and lowest share prices were149.5 and 40.9, respectively. At the end of thefinancial year, the share price was 44.4, against 135.8at the end of 2007. Adjusted for dividend paid out,this corresponds to a fall of 66.2% relative to theend of 2007. At the end of the financial year,the company’s market value was DKK 320mcompared to DKK 977m at the end of 2007.As at 31 December 2008, the company’s sharecapital was DKK 359,528,700. 7,190,574 shares witha nominal value of DKK 50, each carrying one vote.Trading in the company’s shares amounted toDKK 124m in 2008, which is significantly lower thanin 2007, where the trading amounted to DKK 835m.Dividend policyDantherm’s dividend policy is to allocate approx.30% of the consolidated net profit for the year tothe shareholders – with due account being takenat all times of the group’s expansion plans andfinancial and cash position. The company also aimsto maintain an equity interest of at least 30%.Trading and price development 2007/2008250250DKK per share2001501005020015010050Trading per month (DKKm)0JanuaryFebruaryMarchAprilMayJuneJulyAugustSeptemberOctoberNovemberDecemberJanuaryFebruaryMarchAprilMayJuneJulyAugust2007 2008SeptemberOctoberNovemberDecember0Trading per monthPrice, end of yearShareholder information17

IndexShareholder compositionAt the end of the financial year, Dantherm had approx.3,900 registered shareholders, which corresponds toan increase of approx. 400 shareholders during 2008.A total of 90.4% of the share capital in Dantherm washeld by registered shareholders at the end of 2008.The following shareholders are included in thecompany’s register under Section 28 of the DanishCompanies Act (Aktieselskabsloven). The statedownership percentages are those most recentlyregistered by the company as at 31 December 2008.Share analystsThe Dantherm share is monitored by:Danske Equitieswww.danskebank.dkGudme Raaschou Bank A/Swww.gr.dkSEB Enskildawww.enskilda.dkShareholder informationNumber of shares Capital (%)D. F. Holding, Skive A/S*) 1,286,200 17.9Hans R. Olsen, North Somerset, England 807,955 11.2Nils Olsen, Gråsten, Denmark 777,324 10.8LD Equity 1 K/S, Copenhagen K 671,000 9.3Shareholders holding more than 5% 3,542,479 49.3Other 3,567,569 49.6Treasury shares 80,526 1.17,190,574 100.0* Owned by the Dantherm FoundationTreasury sharesThe Board of Directors of the company has beenauthorised by the general meeting to let thecompany buy treasury shares up to a total nominalvalue of 10% of the share capital. The considerationpaid must not deviate by more than 10% from thecurrent listed share price at the time of the purchase.This authorisation is valid until the next annualgeneral meeting on 30 April 2009.As at 31 December 2008, the group held treasuryshares with a nominal value of DKK 4,026k,corresponding to 1.1% of the share capital.The holding of treasury shares has been increasednominally by DKK 1,500k relative to the end of2007 to cover a share option scheme for membersof the Board of Executives and other senioremployees.WebsiteDantherm encourages investors and otherinterested parties to visit the company’s websitewww.dantherm.com, which contains informationof interest to investors. It is also possible to requestelectronic information about the company fromthe website. This service is also available tointerested parties who are not shareholders.2008 in briefAs has been the case in previous years, the companymanagement has decided to prepare a brief summaryof the group’s annual report so as to best meet theinformation needs of different stakeholders. ‘2008 inbrief’ provides a quick overview of the Danthermgroup’s development and results for the year.The present complete annual report is also availableat www.dantherm.com, where further informationabout the group can also be found.Shareholder information18

IndexAll the company’s registered shareholders receivea written invitation to the general meeting anda printed copy of ‘2008 in brief’.Amendments to the Articles of AssociationThe company’s Articles of Association are amendedaccording to the provisions of the Danish CompaniesAct (Aktieselskabsloven).Internal regulations about insider knowledgeand trading in the company’s sharesIn accordance with the Danish Securities Trading Act(Værdipapirhandelsloven), Dantherm maintains aninsider register listing people who are considered to beprivy to insider knowledge of the company by virtue oftheir position. The company has prepared a set of internalregulations for these people and their related parties.The people covered by the internal regulations aremembers of the Board of Directors and the Boardof Executives, and employees of Dantherm A/S.The regulations also apply to people outside thegroup who work for or represent the group, andwho regularly, or on isolated occasions, have accessto insider knowledge. Members of the Board ofDirectors or the Board of Executives and managementemployees in any Dantherm subsidiary, whosepositions are expected to entail access to insiderknowledge, are also covered by the regulations.The people specified above are only permitted tobuy and sell shares in Dantherm for a period of fourweeks after the publication of the company’s annualand interim reports or interim financial reports.The Board of Directors considers at its meetingswhether there are any matters that would preventmembers from buying or selling shares in Danthermin the prescribed period.Insider shareholdingsShares in Dantherm held by insiders and their relatedparties as at 31 December 2008:Insider groupNumber ofsharesMarketvalue (DKK’000)Board of Directors and 1,615,162 71,778Board of ExecutivesOther insiders 147,343 6,548Total 1,762,505 78,326General meetingThe general meeting will be held onThursday 30 April 2009 at 3 pm in the officesof the subsidiary Dantherm Air Handling A/S,Marienlystvej 65, 7800 Skive, Denmark.Shareholder information 19

IndexCompany announcements 2008Date No. Subject27-11 19 Financial calendar for 200927-11 18 Interim report 1 January – 30 September 200803-11 17 Downward adjustment of outlook for 200806-10 16 Breakthrough for Dantherm Power10-09 15 Insider trading08-09 14 Insider trading02-09 13 Insider trading29-08 12 Insider trading26-08 11 Insider trading22-08 10 Insider trading19-08 9 Major shareholder notification from A. P. Møller-Mærsk A/S19-08 8 Interim report 1 January – 30 June 200826-06 7 Large Canadian order for fuel cell solution06-05 6 Major shareholder notification from PKA A/S25-04 5 Proceedings at annual general meeting 200825-04 4 Interim report 1 January – 31 March 200809-04 3 Complete proposals for the annual general meeting in 200809-04 2 Notice convening the annual general meeting31-03 1 Announcement of Financial statements 2007Financial calendar for 2009Announcement of financial statements 2008 25 March 2009General meeting 30 April 2009Interim report 1 January – 31 March 2009 30 April 2009Interim report 1 January – 30 June 2009 21 August 2009Interim report 1 January – 30 September 2009 27 November 2009Shareholder information20

IndexInvestor relations policyDantherm aims to pursue an open and active informationpolicy in relation to all external stakeholdersand to promote dialogue with investors, stockbrokers,analysts and other stakeholders.By making efforts to achieve high levels of informationabout the company’s activities, strategies,expectations and risk position, Dantherm seeksto provide the share market with an objectivefoundation for pricing the company’s shares.The management has established principles for groupcommunication to ensure that internal and externalstakeholders have equal access to up-to-date andaccurate information about the company, its currentposition and its expectations for the future.To keep the company’s shareholders and stakeholdersin the financial market informed, the managementwill as a minimum strive to publish quarterly reportsvia NASDAQ OMX Copenhagen. In order to complywith these formal and informal commitments to theshare market (including NASDAQ OMX Copenhagen),the management will also immediately publishinformation about important circumstances whichmay be assumed to be material to the pricing theDantherm share.During 2008, Dantherm presented one webcastat NASDAQ OMX Copenhagen. The presentationis available at www.dantherm.com under InvestorRelations/Presentations.Dantherm also participated in several informationmeetings and presentations for investors andanalysts during 2008, arranged by the company’spartners and share analysts. The management ispositive about participating in meetings withinvestors, stockbrokers, share analysts, financialjournalists etc. in order to keep them updatedon the company’s strategy and activities. However,in order to comply with its information obligations,Dantherm does not wish to participate in investormeetings for a period of three weeks prior to thepublication of financial statements.All registered shareholders in Dantherm willautomatically receive a summary of the company’sannual report for 2008 and the notices conveninggeneral meetings. Like all employees of the group,shareholders will regularly receive the group’s newsmagazine, Connection. Registered shareholders canalso receive interim reports by mail if they contactthe company. The website www.dantherm.comis updated regularly and extended to includerelevant information to help present an up-to-datepicture of the group.Through a market maker agreement, Danthermhas ensured that there is always a modest spreadbetween the buying and selling price of thecompany’s shares, and that it is also possibleto deal in smaller numbers of shares.D. F. Holding, Skive A/S, is subject to the samerestrictions in trade with the company’s sharesas the company and its Board of Directors.Investor relations contactPoul Arne JensenPresident & CEOTel.: +45 99 14 90 00Shareholder information21

IndexCorporate GovernanceThe Board of Directors and the Board of Executivesof Dantherm A/S strive to carry out good corporategovernance. They endeavour at all times to ensurethat the group’s management structure and controlsystems are expedient and satisfactory. The managementhas decided to follow the recommendationsof NASDAQ OMX Copenhagen on corporategovernance, except for the Board of Director’sself-assessment. This exception will be explainedin further detail at the end of this section.General meetingThe general meeting is the highest-rankingauthority in the company. The annual generalmeeting is held in April.The Board of Directors calls the general meetinggiving at least fourteen days’ notice. The invitationcontains an agenda of items to be considered.The agenda and proposals for consideration aresent to all registered shareholders.Composition of the Board of DirectorsThe Board of Directors has eleven members ofwhom seven are elected for a period of one yearat a time at the general meeting, while fourmembers are elected by the group’s employeesin Denmark in accordance with Danish companylegislation. The employee representatives have thesame rights and obligations as the members electedby the general meeting and are elected for a periodof four years. The most recent election among theemployees was held in 2007.All board members elected at the general meetingare independent of the company.The Board of Directors regularly assesses thecomposition and number of board members.The Board of Directors finds the composition andthe number of board members adequate in relationto the company’s current needs.Further information about the composition andcompetencies of the Board of Directors can befound in the annual report’s section on the Boardof Directors.Work of the Board of DirectorsThe Board of Directors is responsible for the generalmanagement of Dantherm and for verifying whetherthe work of the management complies with theadopted objectives, strategies and procedures.The Board of Directors convenes at least five timesa year according to a fixed meeting schedule.One of these meetings is dedicated to determiningthe objective and strategies of the group and theindividual business segments. The Board of Directorsmay also call extraordinary meetings if demanded bycircumstances. Seven board meetings were held in 2008.The Board of Directors’ rules of procedure form thebasis of its work. The rules of procedure are updatedat least once a year.The Board of Directors has established guidelinesfor the Board of Executives’ reporting to the Boardof Directors. The Board of Executives thus keepsthe Board of Directors informed about the businesssegments’ development and profitability, financialstanding and other operational matters. Thisinformation is provided systematically at meetingsand through written and oral communication.Corporate Governance22

IndexThe Board of Directors elects a chairman and deputychairman who constitute the chairmanship together.The duties, obligations and responsibilities of the chairmanshipare stated in the rules of procedure andinclude the planning of board meetings in collaborationwith the Board of Executives of the company.The Board of Directors may set up an ad hoccommittee to handle special tasks.Remuneration policyThe Board of Directors discusses and regularlyassesses the principles of remuneration to the Boardof Executives to ensure that they comply with thecommon practice for comparable companies andreflect the efforts required.To ensure matching interests between the Boardof Executives, executive employees and theshareholders, an agreement has been made forbonus pay which may constitute up to 30% of thebasic pay. The payment of bonus is conditional uponthe fulfilment of a number of agreed objectives.No extraordinary severance programmes have beenagreed with the Board of Directors, the Board ofExecutives or executive employees. Some executiveemployees are entitled to compensation in the eventof an acquisition or takeover by an external company.The Board of Directors receives a fixed remuneration.Remuneration may also be paid for ad hoc work.In 2007, the group established a two-year shareoption programme for members of the Boardof Executives and a small number of executiveemployees. The Board of Directors has decidednot to extend the programme in 2009.The remuneration paid to the management is describedin further detail in a note to the annual report.Auditing committeeAs early as 2005, the Board of Directors of Danthermdecided to appoint an auditing committee, whichhas been working ever since. Based on the recommendationsof NASDAQ OMX Copenhagen, theBoard of Directors has outlined terms of referencefor the work of the auditing committee.The terms of reference of the auditing committeeare approved annually by the Board of Directors.In 2008, the terms of reference were updated inconnection with the amendments to the DanishAuditing Act (Revisionsloven).Reporting to the Board of Directors, the auditingcommittee’s primary task is to monitor the company’saccounting and financial reporting systemto ensure the reliability of its accounting andfinancial information. Moreover, the auditingcommittee is charged, among other things, withmonitoring the statutory auditing and with checkingthe independence of the auditors. The Board ofDirectors’ proposal concerning the appointmentof auditors is thus based on a recommendationfrom the auditing committee.The work of the committee is exclusively preparatory,and important matters are considered anddecided by the Board of Directors.The members of the committee are elected by theBoard of Directors for a period of one year at a time.The members must be independent and haveknowledge of accounting and financial matters.The chairman of the Board of Directors must notbe a member of the committee. The auditingcommittee held a total of four meetings in 2008.AuditBased on the recommendation of the Board ofDirectors, the general meeting appoints a firmof state-authorised public accountants for one yearat a time. Prior to the recommendation to thegeneral meeting, the Board of Directors and withit the auditing committee assess the auditors’independence and competence.The auditors regularly report on the progress of theaudit in a long-form audit report which is submittedto the Board of Directors.As a minimum, the auditors participate in one boardmeeting annually, and in 2008 they also participatedin all the meetings of the auditing committee.Corporate Governance23

IndexCapital and share structureThe Board of Directors regularly assesses thecomposition of the company’s capital and sharestructure. These are assessed in relation to thecapital required by the group to implement theagreed strategy. The Board of Directors believesthat an equity interest of at least 30% is in theinterest of the company and the shareholders.There is only one share class in the company.Deviation from OMX NASDAQ Copenhagen’srecommendations on corporate governanceAccording to the recommendations on corporategovernance issued by OMX NASDAQ Copenhagen,the self-assessment must be carried out annually.The Board of Directors of Dantherm carries outregular assessments as and when deemed necessary.The Board of Directors carries out a regular assessmentof the composition of the Board of Directorsand the way it works and carries out its duties,among other things. This includes evaluating thecooperation between the Board of Directors andthe Board of Executives. The self-assessmentis carried out by the chairmanship and is basedon questionnaires. The consequences of theassessment are discussed by the Board of Directors.In 2008, a self-assessment was carried out inaccordance with the above-mentioned guidelines.Corporate Governance24

IndexEnvironmentIn continuation of Dantherm’s vision of ensuringclean air for people, the group wishes to stand out inevery way as a responsible company complying withall statutory requirements and industrial standardsapplying to the individual companies in the group.The companies of the group aim to be at theforefront in the environmental area. Therefore,Dantherm wants to be among the first to implementenvironmental improvements which benefit boththe internal and the external environment, while thegroup’s companies will contribute to ensuringbroad-scale resource optimisation.The overall environmental policy of the Danthermgroup is to ensure that the individual groupcompanies choose the most rational and environmentallyfriendly production methods and equipment,taking into account both the environmentand the profitability and competitiveness of thecompanies. It is group policy not to move environmentallyharmful processes to other countries toreduce the environmental impact in Denmark.The group companies endeavour to use environmentallyfriendly products and materials. This alsoincludes designs, packaging etc. which can berecycled. The companies are careful to only useproducts and materials which have life cycles that,as a minimum, meet internationally recognisedenvironmental standards.Environmental certificatesThe environmental certificates ensure an ongoingintegrated focus on both general and specificimprovements to the companies’ internal andexternal environments – including the workenvironment.As the first company in the Dantherm group,Dantherm Air Handling in Denmark was certifiedin accordance with the ISO 14001 standard in 2000.Subsequently, another six of the company’sproduction units have been certified in accordancewith the ISO 14001 standard, and approximatelyhalf of the group’s production units have thus beencertified in accordance with this standard. In 2008,the Dantherm Filtration group’s companies inDenmark and Poland obtained certification inaccordance with the ISO 14001 standard.The non-certified companies follow the group’sgeneral environmental policy.Quality certificatesThe aim of quality certifications is to ensure that thecompanies maintain a constant focus on customerrequirements and improving business performance.ISO 9001At the end of 2008, 85% of the Dantherm group’sproduction units were certified in accordance withthe ISO 9001 standard.In 2008, the Dantherm Air Handling group’scompany in Sweden and the Dantherm Filtrationgroup’s companies in Denmark and Poland werecertified in accordance with the ISO 9001 standard.ATEXThe ATEX directive specifies minimum occupationalhealth and safety provisions for employees at risk ofbeing exposed to danger from explosive atmospheresdue to e.g. gas or dust. The companies withinthe business segment Filtration supply solutions forthe purification of air that may contain gas or dust.Therefore, the quality systems at the followingEnvironment25

Indexcompanies are ATEX-certified: Dantherm FiltrationA/S in Denmark, Dantherm Filtration Ltd. in the UK,Dantherm Filtration Sp.z.o.o in Poland and DanthermFiltration SAS in France.RoHSThe EU’s RoHS directive (Restriction on HazardousSubstances) came into force on 1 July 2006.The purpose of the directive is to regulate the useand disposal of six environmentally hazardoussubstances in electronic and electrical equipment.The directive is aimed, in particular, at the consumermarket and consumer electronics and thereforedoes not include medico equipment, militaryequipment, surveillance and control equipment andservice on products produced before 1 July 2006.The directive is closely related to the WEEE directive(Waste Electrical and Electronic Equipment) whichsets goals for the collection, recycling and disposalof electronic waste.Despite the fact that very few of the Danthermgroup’s products are covered by the RoHS directive,the group has chosen, within the business areaAir Handling, to offer RoHS-compatible productsto thereby meet customer requirements and tocontribute to a cleaner environment.Environment 26

IndexTo improve competitiveness and avoid potentialthreats from low-cost countries, the group hasestablished a sourcing or purchasing departmentin China for the purpose of monitoring the globalmarket – in particular in order to assess and exploitthe opportunities for involving subsuppliers in theFar East.Key employeesThe Dantherm group pursues a proactive trainingpolicy with a view to developing and retaining theindividual employee.The group enters into contractual agreements withexecutive employees and other key employees,which may contain both non-competition clausesand bonus programmes to contribute to theemployees’ sense of loyalty and thereby keep theirknowledge in the company.Technological developmentThe Dantherm group operates in sectors which arecharacterised by ongoing technological productdevelopment. It is important for the development ofthe group to keep an eye on technological developmentsto ensure that new products can replaceproducts which are nearing the end of their lifecycle. To ensure future competitiveness andearnings, the Dantherm group engages both ininnovation as such and also in the upgrading of itsproduct programmes.In 2007, the group management decided to intensifyits fuel cell activities. Dantherm Power, which iswhere the group’s fuel cell activities are conducted,won its first commercial orders in 2008. However, itremains uncertain when the fuel cell technology willachieve a commercial breakthrough on a large scale,and Dantherm Power is thus still expected to recordlosses running into two-digit millions in 2009. In2008, Dantherm Power returned an operating loss ofDKK -25.2 million, which is part of the group’s consolidatedresults for the year. In addition to theoperating loss, a total of DKK 19m was invested indevelopment projects in progress in 2008.Insurance policyIn respect of insurance of buildings and movableproperty and insurance against operating losses,the group’s risks in the general insurance area arecovered via insurance and coinsurance. Theinsurance policy is adjusted periodically togetherwith an independent insurance broker and, eachyear, the Board of Directors assesses the group’soverall risks.Financial risksThe overall framework for managing the financial riskshas been defined by the Board of Directors. It is grouppolicy to identify and hedge all significant financialrisks in an expedient way and not to engage in activespeculation in financial risks.Reference is also made to note 32 on page 84 for amore detailed description of the financial risks andthe handling of these risks.Currency risksIt is group policy to hedge all significant currencyrisks arising from foreign currency contracts wherethe cash flow can be predicted with sufficientaccuracy, the exception however being contracts inEUR. Translation risks in relation to the measurementof foreign net investments are generally not hedged.Targeted efforts are being made to capitalise theforeign subsidiaries in order to reduce the translationrisk. At regular intervals, the group’s managementconsiders whether loans need to be arranged forbalancing larger net investments where the intereston the currency in question is lower than theinterest on DKK.As a result of the group’s still growing internationalactivities, developments between the DKK exchangerate and the exchange rates of the various reportingcurrencies of the group companies are becomingincreasingly important for the operating profit asmeasured in DKK. The total net position in currenciesother than DKK and EUR has changed from a netreceivable of DKK 13m at the end of 2007 to a netliability of DKK 19m at the end of 2008.Risk assessment28

IndexInterest rate risksPart of the group’s bank financing consists of variableinterestloans. This involves a risk of interest paymentsbeing changed, both in the short and in the long term.See note concerning payables to credit institutions.The company regularly assesses the expediency ofentering into agreements fully or partly hedging theinterest rate risk. Agreements have therefore beenmade with a view to hedging the interest rate risk inrespect of selected bank loans. At the end of 2008,the share of fixed-interest loans constituted 64%against 53% at the end of 2007. The managementaims for between 50% and 75% of the group’sinterest-bearing debt to be in the form of fixed-interestloans. Hedging the variable interest rate risk does notcover any changes in the interest margin. A 1 percentagepoint increase in interest levels will reducethe group’s profit before tax by approx. DKK 2m.Credit risksThe group management regularly assesses thefinancial situation of its debtors and takes out debtorinsurance in the individual companies to the extentnecessary. Overall, approx. 49% of the total debtorbalance as at 31 December 2008 is insured(36% in 2007).Financial resourcesOne element in the group’s financial planning is toalways ensure the presence of adequate financialresources, while at the same time minimising capitalcosts. Therefore, financing is organised for the groupto have adequate credit facilities at its disposal.At the end of 2008, the group had unutilised cashreserves of DKK 212m against DKK 179m at theend of 2007.Risk assessment29

IndexFinancial reviewRevenueThe group’s revenue totalled DKK 2,016m, down 6.4%or DKK 138m relative to last year. The revenue realisedmeets the latest outlook. The total decline in revenuerelates fully to the business segment Air Handling, asrevenue increased in the other business segments.Air HandlingThe revenue in 2008 within the business segmentAir Handling was DKK 747.8m, which is DKK 182.8mor 19.6% lower than last year’s revenue. It is primarilysales to the telecom industry which were lower in2008 relative to 2007, and this accounts for aboutthree-quarters of the decline.Furthermore, revenue from dehumidifying productswas lower than last year. The drop comes after a longperiod of growing sales of dehumidifying productsand is primarily attributable to declining buildingactivity and to less flooding in the group’s mainmarkets. Sales in the business segment’s otherproduct areas are on a par with 2007.The fall in sales to the telecom industry affectedalmost all the companies within the Air Handlinggroup, but the biggest share of the fall relates tothe Danish subsidiary.PowerThe business segment Power generated modestrevenue of DKK 5.5m in 2008. The revenue primarilycomprises sales of power backup units and micropower plants based on fuel cell technology.FiltrationRevenue in the business segment Filtration totalledDKK 1,262.9m for 2008 against DKK 1,221.1m in 2007,up 3.4%. The overall growth is attributable to thecompanies in Germany, Denmark and China.Conversely, the companies in France, the US andThailand saw a decline in sales compared to 2007.The German company saw growth in revenueof just under 30% relative to 2007, with revenuefor 2008 almost reaching DKK 400m. The growthis primarily attributable to increasing sales in Russiaand the eastern European markets.The Danish company realised growth in revenueof almost 10%, thereby achieving revenue of almostDKK 300m. In 2008, the Chinese company, whichwas established in 2006, reported continued growthin revenue from last year.Costs of raw materials and consumablesThe group’s costs of raw materials and consumablesfell by DKK 102.4m, down 8.7%. The fall is primarilyattributable to the decline in revenue of 6.4%.Staff costsIn 2008, staff costs increased by 2.3% to DKK 623.8m.This increase is due to pay and remunerationadjustments made at the beginning of the year.The average number of employees in the Danthermgroup has fallen marginally from an average of2,312 employees in 2007 to 2,303 in 2008. However,looked at over the year, the development is quitedifferent. At the beginning of 2008, the employeesnumbered more than 2,350, but by the end ofthe year there were 2,180 employees in theDantherm group.Financial review30

IndexAverage no. of employees2008 2007Denmark 874 885Rest of the EU 752 730North America 191 184Asia 459 486Other countries 28 27Total 2,303 2,312Depreciation, amortisation, impairment lossesand write-downsDepreciation, amortisation, impairment losses andwrite-downs for the year increased from DKK 54.5m in2007 to DKK 57.5m in 2008. In comparison with 2007,there was an increase in the depreciation of investmentsin property, plant and equipment. Depreciation,amortisation, impairment losses and write-downs forthe year include a write-down of both completed andin-progress development projects totalling DKK 3.6m.Operating profit/lossThe realised operating profit (EBIT) of DKK 16.3m doesnot meet the management’s expectations. Comparedwith 2007, the operating profit decreased within thebusiness segments Air Handling and Power, while thebusiness segment Filtration developed positively:DKKmOperatingprofit/lossBusiness segment 2008 2007Air Handling 9.6 51.9Power -25.2 -15.0Filtration 52.3 47.0Not allocated -20.4 -17.0Dantherm group total 16.3 66.9Operating profit from the business segment AirHandling amounted to DKK 9.6m against DKK 51.9min 2007. This negative development was due to a fallin revenue of almost 20%.The business segment Power returned an operatingloss of DKK -25.2m in 2008. Relative to 2007, theoperating loss deteriorated by DKK 10m, which is,however, in line with the original plans and outlookfor this development area.Within the business segment Filtration, the grouprealised a satisfactory operating profit of DKK 52.3min 2008 against an operating profit of DKK 47.0m in2007. The positive development is primarily attributableto the activities in Denmark, Germany, Chinaand Sweden, while the companies in France andThailand have not been developing satisfactorily.Net financialsIn 2008, the net financials represented a total netexpense of DKK 35.7m, which is basically on a parwith 2007. In relation to 2007 however, significantchanges to foreign exchange gains and losses areseen as a result of volatile exchange rates. Financialincome includes interest of DKK 4.9m received inrespect of the adjustment of tax for previous years.Profit before taxIn 2008, the Dantherm group saw an unsatisfactoryloss before tax of DKK -19.5m. In relation to 2007,where the group’s profit before tax was DKK 30.9m,this represents a fall of DKK 50m. The Ioss includesan increased level of investment in fuel cell activitiesin the region of DKK 10m. However, the loss isprimarily impacted by lower revenue within thebusiness segment Air Handling.The results are in line with the most recently announcedoutlook, in which the management estimated a lossbefore tax of between zero and DKK -20m.Tax for the yearTo the loss before tax of DKK -19.5m is added a totaltax income of DKK 1.9m, resulting in a loss ofDKK -17.6m. The tax income partly comprises anadjustment of deferred tax in accordance with thegroup’s accounting policies and partly an adjustmentof tax in respect of previous years.Financial review31

IndexTo this is added a further recognition of tax assetsin one of the company’s foreign subsidiaries wherethe earnings performance was better than expectedin the previous recognition. As for the foreignsubsidiaries, recognition is made on the basis ofa minimum of two consecutive years with a profit.A conservative recognition is made on the basis ofthe earnings outlook and subject to the rules onlimitation in the relevant country.As for the Danish joint taxation, deferred tax assetsare recognised to the extent that it is probable thatfuture taxable income will be obtained with a viewto utilising the temporary differences and nonutilisedtax losses.At the end of 2008, the Dantherm group hadnon-recognised tax losses of DKK 218m againstDKK 221m at the end of 2007.Due to a changed interpretation of the Danish taxlegislation on the recognition of constructioncontracts, the group requested in 2007 that theprevious Danish tax statements be reviewed again.The tax authorities have accepted the request,which has meant a reduction in tax in respect ofprevious years. In addition to the tax reduction,interest has been received in respect of overpaidtax in the period amounting to DKK 4.9m. The sumis included in the net financials.Profit/loss for the year from discontinuedoperationsIn October 2007, the Dantherm group divested thefollowing activities and assets:The finishing line activitiesBusiness segmentComfort Ventilation & EngineeringThe indirect equity interest in RoyalScandinavia A/SAnnouncementno. 8/2007(Announcementno. 9/2007)(Announcementno. 10/2007)The business segment Comfort Ventilation &Engineering and the indirect equity interest inRoyal Scandinavia A/S were therefore classified inDantherm’s annual report for 2007 as discontinuedoperations in accordance with IFRS 5.The above-mentioned divestments have no impacton the Dantherm group’s annual financial statementsfor 2008.Net loss for the yearOverall, the loss after tax for 2008 was DKK -17.6magainst a profit in 2007 of DKK 33.7m.Pursuant to the group’s dividend policy, the Boardof Directors recommends to the annual generalmeeting that no dividend be paid for the 2008financial year.Earnings and dividend per shareDKK Earnings per share Dividend per share9876543210-1-2-32004 2005 200720062008GoodwillAt the end of the year, consolidated goodwill isrecognised in the balance sheet at DKK 102.3m,down DKK 4.4m relative to 2007. The change inrelation to 2007 is due entirely to the translationadjustment of goodwill relating to the two Swedishsubsidiaries.Development projectsNew products are mainly developed within thebusiness segments Power and Air Handling,but development activities are also being carriedout within the business segment Filtration. At theend of 2008, completed development projectsamounted to DKK 18.8m, which represents anincrease of DKK 4.2m relative to the end of 2007.The increase is due to projects which have beencompleted and consequently shifted from developmentprojects in progress.Financial review32

IndexDevelopment projects in progress increased byDKK 18.9m to DKK 50.4m at the end of 2008.The increase primarily relates to the developmentof solutions based on fuel cell technology, to thedevelopment of a new series of domestic ventilationsolutions and the takeover of the controlling interestin Danamics ApS.For details on the impairment of developmentprojects, see the explanation under note 12.Property, plant and equipmentThe total value of the group’s property, plant andequipment is at the same level as in 2007. At the endof 2008, the combined value amounted toDKK 404.9m. Investments were primarily madein the group’s production facilities and machinery.The most important investments were made withinthe business segment Filtration, and consisted ofinvestments in the production facilities in Germany,Poland and Denmark.Other non-current assetsThe group’s other non-current assets have fallenby DKK 7.6m in relation to last year. The value of thegroup’s other non-current assets totals DKK 37.6mand relates primarily to deferred tax. As regards therecognition of deferred tax, please see the sectionon tax for the year and the comments under note 20.InventoriesInventories decreased by DKK 10.2m in the course ofthe year, from DKK 307.5m at the beginning of the yearto DKK 297.3m at the end of the year. The reduction ininventories can partly be attributed to the businesssegment Filtration and partly to Air Handling, wherethe level of activity – especially in the second half of2008 – was lower than during the same period in 2007.ReceivablesCompared with 2007, the Dantherm group’sreceivables fell from DKK 443.6m to DKK 343.2m,down DKK 100.4m. Most of the fall relates to thebusiness segment Air Handling where, as mentionedabove, there was less activity compared to 2007.Moreover, the business segment Filtration achieveda reduction of receivables of approx. DKK 40m.Construction contracts are basically unchangedrelative to 2007.AssetsNon-current assetsDKKm2,0001,8001,6001,4001,2001,0008006004002000Equity and liabilitiesEquityDKKm2,0001,8001,6001,4001,2001,0008006004002000Non-current liabilitiesCurrent assets2004 2005 2006 2007 2008Current liabilities2004 2005 2006 2007 2008Equity and equity ratioAt the end of 2008, the group’s equity amountedto DKK 469.0m excluding minority interests. Witha balance sheet total of DKK 1,395.4m, this correspondsto an equity interest of 33.6%. The objectiveof the management is for the group to have anequity interest of at least 30%.Compared to the end of 2007, the group’s share ofequity has been reduced by DKK 51.6m, of whichDKK 10.7m concerns dividend paid for the 2007financial year. The loss for the year reduces equityFinancial review33

Indexby DKK 17.9m, while the purchase of shares to coverthe share option programme accounts for DKK 4.0m.Foreign currency translation adjustment of netinvestments in foreign subsidiaries amounts toDKK -10.4m, which primarily relates to investmentsin GBP and PLN. Finally, there is a combined valueadjustment of hedging instruments of netDKK -8.4m, which concerns the hedging of variableinterestliabilities.Invested capitalAt the end of the year, invested capital in the Danthermgroup totalled DKK 913.1m. Compared with last year,the funds tied up fell by DKK 90.5m, which is mainlyattributable to a decrease in receivables.In 2008, the net interest-bearing debt was reducedby DKK 41.7m to DKK 446.1m at the end of 2008.Long-term debt is unchanged relative to the endof 2007 and accounts for 64% of the net interestbearingdebt.Invested capital and ROICInvested capitalDKKm ROIC %1,200301,000800ROIC2520Cash flowsThe cash flows from operating activities werepositive at DKK 140.4m against DKK 43.0m last year.Liquidity has improved, primarily as a result ofreduced receivables.Cash flows from investing activities amount toDKK -80.9m against DKK -61.2m last year. In 2008,a total of DKK 42.8m was invested in intangibleassets. Public grants of DKK 11.0m have beenreceived and set off, and the group’s net investmentthus amounts to DKK 31.8m. The investmentsprimarily consist of development projects. Investmentsin property, plant and equipment amountedto DKK 49.4m and primarily consist of investmentsin the group’s production facilities and machinery.Cash flows from financing activities are more or lessneutral. In other words, there is a balance betweenthe repayment of and the arrangement of noncurrentliabilities. The proceeds from the raisingof non-current liabilities, which amount toDKK 35.2m, are DKK 14.2m lower than theinvestment in property, plant and equipmentof DKK 49.4m.All in all, the group’s draw on liquidity was reducedby DKK 51.6m from DKK -178.5m at the end of 2007to DKK -126.4m at the end of 2008.60040020015105Events after the end of the financial yearNo important events have occurred after the endof the financial year which influence the 2008financial statements.02004 2005 2006 2007 20080Financial review34

IndexStatement of the Board of Directors and Boardof Executives on the annual reportToday, the Board of Directors and Board of Executives have considered and approved the 2008 annual reportof Dantherm A/S.The annual report has been prepared in accordance with International Financial Reporting Standards asadopted by the EU and additional Danish disclosure requirements for annual reports of listed companies.We consider the accounting policies used to be appropriate. Accordingly, the annual report gives a true andfair view of the group’s and the parent’s financial position at 31 December 2008 and of the results of thegroup’s and the parent’s operations and cash flows for the financial year 1 January – 31 December 2008.We also find that the management’s review contains a true and fair account of the development in the group’sand the parent’s activities and financial affairs, the results of the period and the group’s and the parent’sfinancial position as a whole as well as a description of the main risks and uncertainties facing the group andthe parent.We recommend that the annual report be adopted by the annual general meeting.Skive, 25 March 2009Board of Executives:Poul Arne JensenPresident & CEOBoard of Directors:Walther V. PaulsenChairmanKresten Dyhrberg NielsenDeputy ChairmanNiels Kr. Agner Jens Jørn Hansen Conni-Dorthe LaursenJørgen Møller-Rasmussen Hans R. Olsen Nils R. OlsenPer F. Pedersen Johan Johnsen Rosenkilde Preben TolstrupStatement of the Board of Directors and Board of Executives on the annual report35

IndexIndependent auditor’s reportTo the shareholders of Dantherm A/SWe have audited the annual report of Dantherm A/S for the financial year 1 January – 31 December 2008, which comprises the statementof the Board of Directors and Board of Executives on the annual report, management’s review, income statement, balance sheet,statement of changes in equity, cash flow statement for the year then ended and notes for the group as well as for the parent.The annual report has been prepared in accordance with the International Financial Reporting Standards as adopted by the EUand additional Danish disclosure requirements for annual reports of listed companies.The Board of Directors and Board of Executives’ responsibility for the annual reportThe Board of Directors and Board of Executives are responsible for the preparation and fair presentation of this annual report inaccordance with International Financial Reporting Standards as adopted by the EU and additional Danish disclosure requirementsfor annual reports of listed companies. This responsibility includes: designing, implementing and maintaining internal control relevantto the preparation and fair presentation of an annual report that is free from material misstatement, whether due to fraud or error;selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.Auditor’s responsibility and basis of opinionOur responsibility is to express an opinion of this annual report based on our audit. We conducted our audit in accordance withDanish Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the auditto obtain reasonable assurance whether the annual report is free from 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 risks of material misstatement in the annualreport, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’spreparation and fair presentation of the annual report 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 entity’s internal control. An audit also includes evaluatingthe appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors andBoard of Executives, as well as evaluating the overall presentation of the annual report.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.OpinionIn our opinion, the annual report gives a true and fair view of the group’s and the parent’s financial position at 31 December 2008and of the results of the group’s and the parent’s operations and cash flows for the financial year 1 January – 31 December 2008 inaccordance with International Financial Reporting Standards as adopted by the EU and additional Danish disclosure requirements forannual reports of listed companies.Skive, 25 March 2009BeierholmStatsautoriseret RevisionsaktieselskabGl. Skivevej 73DK-8800 ViborgMogens AndersenState-Authorised Public AccountantAuditor’s report36

IndexBoard of Directors and Board of Executivesin Dantherm A/SChairman of the Board of DirectorsWalther V. Paulsen, DirectorBorn 1949Member of the Board of Directors since 2000Reelected until 2009Chairman of the Board of Directors of:Hotel Koldingfjord A/SDeputy Chairman of the Boardof Directors of:Brdr. Hartmann A/SC.W. Obel A/SMember of the Board of Directors of:Arkil Holding A/SArkil A/SDan-Ejendomme A/SDan-Ejendomme Holding A/SDanske Invest Administration A/SSanistål A/SVital Petfood Group A/SVPG Holding A/SCompetencies:MSc (Business Economics)Former Deputy Director of Amagerbankenand President and CEO of Carlsberg.Now mainly engaged in board work.Deputy ChairmanKresten Dyhrberg Nielsen, LawyerBorn 1939Member of the Board of Directors since 2002Reelected until 2009Member of the Board of Executives of:Storvang Letland Holding A/SEBH-FondenChairman of the Board of Directors of:Cava Plastics A/SCSK Stålindustri A/SD.F. Holding, Skive A/SFinans- og Ejendomsselskabet Aalykke A/SGrotumsgade Aalborg A/SHCK Holding Aalborg A/SHosta Industries A/SJBH A/SLobipack A/SMelsen Tryk A/SNordic Computer Invest A/SScanima A/SSigurd Müller Vinhandel A/SMember of the Board of Directors of:Ejendomsselskabet Aalborg SønderparkFrejlev Byggeselskab A/SKnud Eskildsen International A/SStorvang Letland Holding A/SHold Co A/SCompetencies:Many years of experience as a corporatelawyer.Now mainly engaged in board work.Board memberNiels Kristian Agner, DirectorBorn 1943Member of the Board of Directors since 2002Reelected until 2009Member of the auditing committeeChairman of the Board of Directors of:G.E.C. Gad A/SSP Group A/SSP Moulding A/SMember of the Board of Directors of:Aktieselskabet Schouw & Co.D.F. Holding, Skive A/SG.E.C. Gad Boghandel A/SG.E.C. Gads Forlag A/SGreen Wind Energy A/SG.W. Energi A/SIndex Retail Invest A/SCompetencies:BCom., Bsc (Business Economics)Former member of the Boardof Executives of Gyldendal.Most recently Managing Director of DanskKapitalanlæg Aktieselskab.Now mainly engaged in board work.Shareholdings:Holding of Dantherm shares as per31 December 2008: 10,000.Board of Directors and Board of Executives37

IndexBoard memberJørgen Møller-Rasmussen, CEOBorn 1947Member of the Board of Directors since 1999Reelected until 2009Chairman of the auditing committeePresident & CEO and member of theBoards of Directors of the subsidiaries of:Dalhoff Larsen & Hornemann A/SChairman of the Board of Directors of:Intervare A/SCompetencies:President and CEO of listed company withextensive international activities.Considerable experience within theconstruction sector.Board memberHans Rosenkrands OlsenBorn 1944Member of the Board of Directors since 2002Reelected until 2009Member of the Board of Directors of:D.F. Holding, Skive A/SCompetencies:BSc in Engineering.Knowledge of the sector, internationaltrade and an employee and member ofthe Board of Directors of the group ofmany years’ standing.Shareholdings:Holding of Dantherm shares as per31 December 2008: 807,955.Board memberNils Rosenkrands Olsen, DirectorBorn 1950Member of the Board of Directors since 2002Reelected until 2009Member of the Board of Executives of:Blackwing Business Angels A/SChairman of the Board of Directors of:Airline Software Applications ApS – ASAErling Høi-Nielsen A/SFractum ApSMember of the Board of Directors of:Blackwing Business Angels A/SD. F. Holding, Skive A/SGrabow Maskinsystemer A/SSorbisense A/SWeissenborn A/SCompetencies:MSc (Business Economics)Former Managing Director ofCimber Air Data A/S.Mainly engaged in entrepreneurialactivities and board work.Shareholdings:Holding of Dantherm shares as per31 December 2008: 777,324.Board memberPreben Tolstrup, President & CEOBorn 1959Member of the Board of Directors since 2008Elected until 2009Chairman of the Board of Directors of:Barto Holding A/SAdept Water Technologies A/SPresident & CEO and member of theBoard of Directors of:LOGSTOR GroupCompetencies:MBA, Executive program from theUniversity of Virginia, USABSc in EngineeringFormer CEO of FLS Industries A/S and ABBPower GenerationShareholdings:Holding of Dantherm shares as per31 December 2008: 7,570Board of Directors and Board of Executives38

IndexBoard member – employeerepresentativeJens Jørn HansenBorn 1959Member of the Board of Directorssince 2007Elected until 2011Board member – employeerepresentativeConni-Dorthe LaursenBorn 1956Member of the Board of Directorssince 2007Elected until 2011Board member – employeerepresentativePer Friis PedersenBorn 1956Member of the Board of Directorssince 2003Reelected until 2011Shareholdings:Holding of Dantherm shares as per31 December 2008: 105Board member – employeerepresentativeJohan Johnsen RosenkildeBorn 1962Member of the Board of Directorssince 2007Elected until 2011President & CEO of Dantherm A/SPoul Arne JensenBorn 1948Member of the Board of Directors of:HansenGroup A/SInnovation Midtvest A/SShareholdings:Holding of Dantherm shares as per31 December 2008: 5,500Board of Directors and Board of Executives39

IndexContents – Financial statementsof the Dantherm groupIncome statement........................................................................... 41Balance sheet..................................................................................... 42Statement of changes in equity............................................. 44Cash flow statement...................................................................... 45Notes1. Accounting policies.............................................................. 462. Accounting estimates and assessments.................. 593. Segment information........................................................... 614. Revenue........................................................................................ 635. Costs............................................................................................... 636. Share-based remuneration............................................... 657. Public grants.............................................................................. 668. Financial income..................................................................... 669. Financial expenses................................................................. 6610. Tax.................................................................................................... 6711. Earnings per share.................................................................. 6812. Intangible assets...................................................................... 6913. Property, plant and equipment..................................... 7214. Investments in associates.................................................. 7315. Other securities and investments................................. 7416. Inventories.................................................................................. 7417. Receivables................................................................................. 7418. Construction contracts....................................................... 7519. Share capital............................................................................... 7520. Deferred tax................................................................................ 7621. Pensions and similar obligations................................... 7722. Provisions..................................................................................... 7923. Payables to credit institutions......................................... 8024. Trade payables and other payables............................ 8025. Income tax.................................................................................. 8026. Contingent liabilities............................................................. 8127. Security......................................................................................... 8128. Contractual obligations...................................................... 8129. Acquisition of subsidiaries and activities................. 8230. Cash and cash equivalentsand short-term bank debt................................................. 8231. Discontinued operations................................................... 8332. Financial risks and instruments...................................... 8433. Related parties.......................................................................... 86Contents – Financial statements of the Dantherm group40

IndexIncome statement – groupnote 2008 2007DKK ’000 DKK ’000Revenue 3, 4 2,016,260 2,154,495Costs of raw materials and consumables 5 1,076,769 1,179,196Other external expenses 5, 7 241,935 244,059Staff costs 5, 6 623,822 609,781Profit before depreciation, amortisationand impairment losses (EBITDA) 73,734 121,459Depreciation, amortisation and impairment of property,plant and equipment and intangible assets 12, 13 57,463 54,542Operating profit (EBIT) 16,271 66,917Share of net profit/loss in associates 14 0 -1,241Financial income 8 21,886 12,852Financial expenses 9 -57,634 -47,621Profit/loss from continuing operations before tax -19,477 30,907Tax on profit/loss for the year from continuing operations 10 -1,866 -2,800Net profit/loss for the year from continuing operations -17,611 33,707Net profit for the year from discontinued operations 31 0 1,506NET PROFIT/LOSS FOR THE YEAR -17,611 35,213To be distributed as follows:Shareholders of Dantherm A/S -17,903 35,539Minority interests 292 -326-17,611 35,213Earnings per shareEarnings per share (EPS) 11 -2.5 4.9Diluted earnings per share (EPS-D) 11 -2.5 5.0Earnings per share from continuing operations 11 -2.5 4.7Diluted earnings per share from continuing operations 11 -2.5 4.7Income statement 41

IndexAssets – groupnote 31.12.08 31.12.07DKK ’000 DKK ’000Non-current assetsIntangible assetsGoodwill 102,342 106,784Completed development projects 18,763 14,534Patents and licences 3,886 4,947Prepayments and development projects in progress 50,419 31,523Total intangible assets 7, 12 175,410 157,788Property, plant and equipmentLand and buildings 284,033 286,664Leasehold improvements 8,389 8,299Plant and machinery 77,411 66,966Other plant, fixtures and fittings, tools and equipment 21,744 16,595Prepayments and assets in progress 13,345 27,202Total property, plant and equipment 13 404,922 405,726Other non-current assetsInvestments in associates 14 0 909Other securities and investments 15 1,126 1,478Deferred tax 20 35,650 42,037Other receivables 17 864 783Total other non-current assets 37,640 45,207Total non-current assets 617,972 608,721Current assetsInventories 16 297,312 307,511Receivables 17 343,192 443,606Construction contracts 18 64,515 57,685Income tax receivable 25 1,103 12,019Prepayments 8,542 4,898Cash 30 62,719 46,670Total current assets 777,383 872,389TOTAL ASSETS 1,395,355 1,481,110Assets 42

IndexEquity and liabilities – groupnote 31.12.08 31.12.07DKK ’000 DKK ’000EquityShare capital 6, 19 359,528 359,528Reserve for hedging transactions -3,634 4,728Reserve for foreign currency translation adjustment -11,272 -621Retained earnings 124,347 146,161Proposed dividend 0 10,786Dantherm A/S shareholders’ share of equity 468,969 520,582Minority interests -2,011 -3,903Total equity 466,958 516,679LiabilitiesNon-current liabilitiesDeferred tax 20 141 7,959Pensions and similar obligations 21 8,315 9,053Provisions 22 6,093 8,814Credit institutions 23 286,531 282,124Total non-current liabilities 301,080 307,950Current liabilitiesProvisions 22 26,668 18,640Credit institutions 23 222,292 252,378Construction contracts 18 89,583 58,433Trade payables and other payables 24 280,679 309,942Income tax payable 25 2,810 6,613Deferred income 5,285 10,475Total current liabilities 627,317 656,481Total liabilities 928,397 964,431TOTAL EQUITY AND LIABILITIES 1,395,355 1,481,110Contingent liabilities 26Security 27Contractual obligations 28Notes without reference 29, 31, 33Equity and liabilities 43

IndexStatement of changes in equity – groupShareholders of Dantherm A/Sreserve forforeign Reserve forreserve for currency financialhedging translation assets held Retained Proposed MinorityDKK ’000 Share capital transactions adjustment for sale earnings dividend interests TotalEquity as at 1 January 2007 359,528 855 5,622 707 125,095 0 -3,577 488,230Changes in equity in 2007Foreign currency translation adjustment, foreign enterprises 0 0 -6,243 0 0 0 0 -6,243Value adjustment of hedging instruments, end of year 0 5,118 0 -707 0 0 0 4,411Tax on value adjustment of hedging instruments 0 -1,245 0 0 97 0 0 -1,148Net gains/losses recognised directly in equity 0 3,873 -6,243 -707 97 0 0 -2,980Net profit/loss for the year 0 0 0 0 24,753 10,786 -326 35,213Total income 0 3,873 -6,243 -707 24,850 10,786 -326 32,233Provisions for share options 0 0 0 0 812 0 0 812Purchase of treasury shares 0 0 0 0 -4,596 0 0 -4,596Total changes in equity in 2007 0 3,873 -6,243 -707 21,066 10,786 -326 28,449Equity as at 31 December 2007 359,528 4,728 -621 0 146,161 10,786 -3,903 516,679Equity as at 1 January 2008 359,528 4,728 -621 0 146,161 10,786 -3,903 516,679Changes in equity in 2008Additions relating to the acquisition of subsidiaries 0 0 0 0 0 1,600 1,600Foreign currency translation adjustment, foreign enterprises 0 0 -10,445 0 0 0 0 -10,445Value adjustment of hedging instruments, end of year 0 -11,151 0 0 0 0 0 -11,151Tax on value adjustment of hedging instruments 0 2,789 -206 0 0 0 0 2,583Net gains/losses recognised directly in equity 0 -8,362 -10,651 0 0 0 1,600 -17,413Net profit/loss for the year 0 0 0 0 -17,903 0 292 -17,611Total income 0 -8,362 -10,651 0 -17,903 0 1,892 -35,024Dividend paid 0 0 0 0 121 -10,786 0 -10,665Purchase of treasury shares 0 0 0 0 -4,032 0 0 -4,032Total changes in equity in 2008 0 -8,362 -10,651 0 -21,814 -10,786 1,892 -49,721Equity as at 31 December 2008 359,528 -3,634 -11,272 0 124,347 0 -2,011 466,958Statement of changes in equity 44

IndexCash flow statement – groupnote 2008 2007DKK ’000 DKK ’000Profit/loss from continuing operations before tax -19,477 30,907Adjustment for non-cash operating items etc.:Depreciation, amortisation and impairment losses 57,463 54,542Other operating items, net -11,276 6,511Share of net profit loss in associates 0 1,241Provisions -5,885 -12,248Financial income -21,886 -12,852Financial expenses 57,634 47,621Cash flows from primary operations before change in working capital 56,573 115,722Change in inventories 10,199 4,650Change in receivables 89,859 -22,932Change in trade payables etc. -3,303 -20,667Cash flows from primary operations 153,328 76,773Interest income received 7,465 12,852Interest expenses paid -28,740 -36,612Cash flows from ordinary operations 132,053 53,013Income tax paid 8,299 -10,050Cash flows from operating activities 140,352 42,963Purchase of intangible assets 12 -31,828 -31,802Purchase of property, plant and equipment 13 -49,406 -35,850Purchase of financial assets 14 -289 -2,150Sale of intangible assets 12 0 1,400Sale of property, plant and equipment 13 2,023 5,807Sale of financial assets 15 0 1,441Acquisition of subsidiaries and activities 29 -1,426 0Cash flows from investing activities -80,926 -61,154Loan financing:Lease payments in respect of assets held under finance leases -19,518 -19,475Proceeds from the raising of non-current liabilities 35,209 37,574Repayment of non-current liabilities -10,409 -18,931Minority interests received and paid, net 1,600 0Shareholders:Dividend paid -10,665 0Purchase of treasury shares -4,032 -4,596Cash flows from financing activities -7,815 -5,428Cash flows from discontinued operations 31 0 136,736Cash flows for the year 51,611 113,117Cash and cash equivalents, beginning of year -178,474 -294,916Foreign currency translation adjustment of cash and cash equivalents 464 3,325Cash and cash equivalents, end of year -126,399 -178,474Cash at the end of the year comprises:Cash 30 62,719 46,670Short-term bank debt 30 -189,118 -225,144Cash and cash equivalents, end of year -126,399 -178,474For a description of financial resources, please see note 32.Cash flow statement 45

Index1. Accounting policies of the groupDantherm A/S is a public limited company registeredin Denmark. The annual report for the period1 January – 31 December 2008 comprises theconsolidated financial statements of Dantherm A/Sand its subsidiaries (the group) as well as separatefinancial statements of the parent.The 2008 annual report of Dantherm A/S has beenprepared in accordance with International FinancialReporting Standards as adopted by the EU andadditional Danish disclosure requirements for annualreports of listed companies, cf. NASDAQ OMXCopenhagen A/S’s disclosure requirements forannual reports of listed companies and theexecutive order on the adoption of IFRS issuedpursuant to the Danish Financial Statements Act.Furthermore, the annual report meets the InternationalFinancial Reporting Standards prepared by the IASB.Basis of preparationThe annual report is presented in DKK rounded offto the nearest DKK ’000.The annual report has been prepared on the basisof the historical cost convention, except for the factthat the following assets and liabilities are measuredat fair value: Derivatives and any financial instrumentsin the trading portfolio and any financial instrumentsclassified as held for sale.Any non-current assets and disposal groups held forsale are measured at the lower of carrying amountbefore the changed classification and fair value lessselling costs.The accounting policies, which are described below,have been applied consistently during the financialyear and in relation to the comparative figures.The accounting policies have been appliedconsistently with the previous years.New accounting regulationIASB has issued the following new standards(IAS and IFRS) and interpretations (IFRIC), which arenot mandatory for Dantherm A/S in connection withthe preparation of the 2008 annual report: IAS 1, 23and 27, IFRS 2, 3 and 8 and EU 12-14. Only IFRS 8 hasbeen adopted by the EU.Dantherm A/S expects to implement the newstandards and interpretations when they becomemandatory in 2009 and 2010, respectively. Except forthe standards mentioned below, none of the newstandards or interpretations is expected to materiallyaffect the financial reporting of Dantherm A/S.IAS 1 (updated in 2007), ‘Presentation of FinancialStatements’, applies to financial years commencingon 1 January 2009 or later. According to this standard,the presentation of the primary statements ischanged in 2009.IAS 23 (updated in 2007), ‘Borrowing Costs’ appliesto financial years commencing on 1 January 2009or later. According to this standard, borrowing costsmust be recognised in the cost of a qualifying asset(intangible assets, property, plant and equipmentand inventories).In connection with the manufacturing of largequalifying assets with a long manufacturing period,IAS 23 (updated in 2007) is expected to affect thefinancial reporting of Dantherm A/S. This may,among other things, affect the development ofcommercial products based on fuel cell technology.Notes46

IndexIFRS 3 (updated in 2007), ‘Business Combinations’,(and the concurrent updating of IAS 27, ‘Consolidatedand Separate Financial Statements’) applies tofinancial years commencing on 1 July 2009 or later.The Dantherm group wants to exploit and consolidateexisting and new business segments withinindustrial air handling through organic andacquisitive growth.Dantherm expects a number of the technical adjustmentsto the acquisition method in IFRS 3 to onlyhave a minor effect on the financial reporting (IFRS 3and IAS 27 have not yet been adopted by the EU).IFRS 8, ‘Operating Segments’, concerning segmentinformation applies to financial years commencingon 1 January 2009 or later. This standard will onlyaffect the presentation of the group’s segments andnot the recognition and measurement in the annualreport. According to the new standard, the presentationof both business and geographical informationis no longer required. Only segment informationused by the management in its reporting andinternal control of the group must be presented.This means the information about the company’sgeographical segments may be omitted as of 2009.Accounting policiesConsolidated financial statementsThe consolidated financial statements cover theparent, Dantherm A/S, and subsidiaries in whichDantherm A/S has a controlling influence on thefinancial and operational policies of such enterprisewith a view to obtaining a return or other advantagesfrom its activities. A controlling interest isobtained by directly or indirectly owning orcontrolling more than 50% of the voting rights or inany other way controlling the enterprise in question.Enterprises in which the group has a substantial,but not controlling influence, are considered to beassociates. A substantial interest is typically obtainedby directly or indirectly owning or controlling morethan 20%, but less than 50%, of the voting rights.When assessing whether Dantherm A/S has acontrolling or a substantial interest, potential votingrights which may be exercised at the balance sheetdate are taken into consideration. A group chart isshown on page 7.The consolidated financial statements consolidatethe financial statements of the parent and itssubsidiaries calculated according to the group’saccounting policies and eliminating intra-groupincome and expenditure, shareholdings, intra-groupbalances and dividends and realised and unrealisedgains and losses on intra-group transactions.Unrealised gains on transactions with associates areeliminated in proportion to the group’s ownershipshare in the enterprise. Unrealised losses areeliminated in the same way as unrealised gainsto the extent that no impairment exists.Investments in subsidiaries are set off against theproportionate share of the subsidiaries’ fair valueof identifiable net assets and recognised contingentliabilities at the acquisition date.In the consolidated financial statements, the itemsof subsidiaries are recognised in full. The minorityinterests’ shares of the net profit/loss for the year andof the equity in subsidiaries which are not whollyowned are recognised as part of the group’s resultsand equity, respectively, but are listed separately.Business combinationsNewly acquired or newly founded enterprises arerecognised in the consolidated financial statements asfrom the date of acquisition. Divested or discontinuedenterprises are recognised in the consolidatedincome statement up until the time of divestmentor discontinuation. Comparative figures are notadjusted for newly acquired enterprises. Discontinuedoperations are presented separately, cf. below.In the event of the acquisition of new enterprisesin which the parent obtains a controlling influence,the acquisition method is used. The identifiableassets, liabilities and contingent liabilities of theacquired enterprises are measured at fair value at thedate of acquisition. Identifiable intangible assets arerecognised if they can be separated or arise out of acontractual right, and the fair value can be measuredreliably. Deferred tax on the reassessments made isNotes47

Indexrecognised. The date of acquisition is the date at whichthe parent actually gains control of the acquiredenterprise. Positive differences between the costof the enterprise and the fair value of the acquiredidentifiable assets, liabilities and contingent liabilitiesare recognised as goodwill under intangible assets.Goodwill is not amortised, but is tested for impairmentonce a year. The first impairment test is carriedout by the end of the year of acquisition. In connectionwith the acquisition, goodwill is attributed tothe cash-generating units, which subsequently formthe basis of an impairment test. Goodwill and fairvalue adjustments relating to the acquisition ofa foreign unit using a functional currency other thanthe Dantherm group’s presentation currency aretreated as assets and liabilities belonging to theforeign unit and translated into the functionalcurrency of the foreign unit at the exchange rateapplicable at the transaction date. Negativedifferences (negative goodwill) are recognised inthe income statement at the date of acquisition.The cost of an enterprise consists of the fair valueof the agreed consideration plus expenses directlyattributable to the acquisition. If parts of theconsideration are conditional upon future events,these parts are recognised in the cost in so far as theevents are likely to occur and the consideration canbe measured reliably. If, at the date of acquisition,uncertainty exists with regard to the measurementof acquired identifiable assets, liabilities andcontingent liabilities, initial recognition is carried outon the basis of a preliminary determination of fairvalues. If it turns out subsequently that the identifiableassets, liabilities and contingent liabilities hada different fair value at the date of acquisition thaninitially assumed, goodwill is adjusted up until oneyear after the acquisition. The effect of the adjustmentsis recognised in equity at the beginning ofthe year, and the comparative figures are restated.Goodwill is then solely adjusted as a result ofchanges in the estimated contingent consideration,unless any material errors are identified. However,a subsequent realisation of the deferred tax assetsof the acquired enterprise, which were not recognisedat the date of acquisition, entails recognitionof the tax benefit in the income statement as well asimpairment of the carrying amount of goodwill tothe amount that would have been recognisedif the deferred tax asset had been recognisedas an identifiable asset at the date of acquisition.Gains or losses from the divestment or discontinuationof subsidiaries and associates are calculated asthe difference between the selling price or the disposalconsideration and the carrying value of net assets,including goodwill, at the time of the divestmentas well as the selling or decommissioning costs.Presentation of discontinued operationsDiscontinued operations constitute a considerablepart of the enterprise if activities and cash flows canbe separated from the rest of the business in termsof operations and accounting, and if the unit haseither been divested or separated as held for saleand the sale is expected to be realised within oneyear according to a formal plan.The net profit/loss from discontinued operations,value adjustments after tax of related assets andliabilities and gains or losses on divestments are presentedas a separate item in the income state menttogether with comparative figures. In the notes,revenue, costs, value adjustments and tax for the discontinuedoperations are stated. Assets and relatedliabilities of discontinued operations are stated asseparate items in the balance sheet without restatementof comparative figures, while the main itemsare specified in the notes.Cash flows from operating, investing and financingactivities for the discontinued operations are statedin a note.Assets held for saleAssets held for sale comprise non-current assets anddisposal groups held for sale. Disposal groups aregroups of assets which must be disposed of in onesingle transaction by means of a sale or a similartransaction. Liabilities relating to assets held for saleare liabilities directly related to such assets which willbe transferred in connection with the transaction.Assets are classified as ‘held for sale’ when thecarrying amount of such assets will mainly berecovered through a sale within one year accordingto a formal plan rather than through continued use.Notes48

IndexAssets or disposal groups held for sale are measuredat the lower of carrying amount at the time ofclassifying such assets or disposal groups as ‘held forsale’ or fair value less selling costs. Assets are notdepreciated and amortised as from the time whenthey are classified as ‘held for sale’.Impairment losses arising as a result of the firstclassification as ‘held for sale’ and gains and lossesfrom the subsequent measurement at the lower ofcarrying amount and fair value less selling costs arerecognised in the income statement under the itemsconcerned. Gains and losses are stated in the notes.Assets and related liabilities are stated as separateitems in the balance sheet, while the main items arespecified in the notes.Foreign currency translationA functional currency is determined for each of thereporting enterprises in the group. The functionalcurrency is the currency which is used in the primaryfinancial environment in which the individualreporting enterprise operates. Transactionsdenominated in currencies other than the functionalcurrency are foreign currency transactions.On initial recognition, transactions denominated inforeign currencies are translated into the functionalcurrency at the exchange rate applicable at thetransaction date. Exchange rate differences betweenthe exchange rate applicable at the transaction dateand the exchange rate at the date of payment arerecognised in the income statement under financialincome or expenses.Receivables, payables and other monetary itemsdenominated in foreign currencies are translatedusing the exchange rate applicable at the balancesheet date. The difference between the exchangerate applicable at the balance sheet date and theexchange rate applicable at the date at which thereceivable or payable arose or the exchange rateapplied in the latest annual report is recognisedin the income statement under financial incomeor expenses. On recognition in the consolidatedfinancial statements of foreign enterprises witha functional currency which differs from DanthermA/S’s presentation currency, income statements aretranslated using the exchange rate applicable at thetransaction date, and balance sheet items aretranslated using the exchange rate applicable at thebalance sheet date. An average exchange rate forthe individual months is used as the exchange rateapplicable at the transaction date to the extent thatthis does not materially affect the financial statements.Foreign exchange differences arising fromthe translation of the equity of foreign enterprisesat the beginning of the year using the exchangerates applicable at the balance sheet date and thetranslation of income statements from the exchangerates applicable at the transaction date using theexchange rates applicable at the balance sheet dateare recognised directly in equity.Foreign currency translation adjustment of balanceswith foreign enterprises which are considered to bepart of the total net investment in the enterpriseconcerned is recognised directly in equity in theconsolidated financial statements.Similarly, foreign exchange gains and losses arerecognised directly in equity in the consolidatedfinancial statements for the parts of loans andderivative financial instruments which have beenraised for hedging the net investment in suchenterprises and which effectively hedge againstcorresponding similar foreign exchange gains andlosses on the net investment in the enterprises.In the event of the full or partial divestment offoreign units or in the event of the repayment ofbalances which are considered to be part of the netinvestment, the share of the accumulated foreigncurrency translation adjustments which arerecognised directly in equity and which may beattributable thereto is recognised in the incomestatement along with any gains or losses resultingfrom the divestment.Derivative financial instrumentsDerivative financial instruments are recognisedas from the trading day and are measured in thebalance sheet at fair value. The fair value of derivativefinancial instruments is included in otherreceivables under current assets (positive fair values)Notes49

Indexand other payables under current liabilities (negativefair values), respectively, and a set-off of positive andnegative values is made only when the enterpriseis entitled to and intends to settle several financialinstruments net. The fair value of financial instrumentsis calculated on the basis of current marketdata and recognised valuation methods.Changes in the fair value of derivative financialinstruments which are classified as and meet theconditions for hedging future cash flows and whicheffectively hedge changes in the value of thehedged item are recognised in equity undera separate reserve for hedging transactions. Oncethe hedged transaction is realised, the gain or losson such hedging transaction is transferred fromequity and recognised under the same item as thehedged item. As for derivative financial instrumentswhich do not meet the conditions for treatment ashedging instruments, changes in the fair values arerecognised on a continuous basis under netfinancials in the income statement.Some contracts involve conditions which correspondto derivative financial instruments. Suchincorporated financial instruments are recognisedseparately and are measured at fair value if theydiffer significantly from the contract in questionunless the entire contract has been recognised andis measured at fair value on an ongoing basis.Income statementRevenueRevenue from the sale of goods for resale andfinished goods is recognised in the incomestatement, pro vided that passing of risk to the buyerhas taken place before the end of the year, andprovided that the income can be measured reliablyand is expected to be received. Revenue fromservices which involve service sales is recognisedin accordance with the completed contract methodat the time of performing such service. Revenueis measured at fair value excluding VAT and taxes collectedon behalf of a third party less discounts andrebates. Generally, the Dantherm group does notaccept returns, so no provisions are made forreturned goods.Construction contracts where services with a highdegree of individual adaptation are delivered arerecognised in revenue as performed wherebyrevenue corresponds to the selling price of the workperformed during the year (the production method).Revenue is recognised when total income and expensesand the stage of completion of the constructioncontract at the balance sheet date can be calculatedreliably, and when it is probable that the economicbenefits, including payment, will flow to the group.Public grantsPublic grants comprise grants and financing ofdevelopment and investment activities etc. Grantsare recognised when there is reasonable assurancethat they will be received.Grants for research and development costsrecognised in the income statement are set offdirectly against the costs which the grant is to cover.Grants for the purchase of assets and developmentprojects are set off against the cost of the assetseligible for grants.Remissible loans granted by public authorities forthe financing of development activities arerecognised under liabilities until it is likely that theconditions for the remission of debt can be met.Share of net profit/loss in associatesThe proportionate share of the associates’ profit/lossafter tax and minority interests and after eliminationof the proportionate share of intercompany gainsand losses is recognised in the consolidated incomestatement.Financial income and expensesFinancial income and expenses comprise interest,capital gains and losses as well as write-downs ofsecurities, payables and foreign currency transactions,amortisation of financial assets and liabilities as wellas supplements and compensation under the tax prepaymentscheme etc. Financial income and expensesalso comprise realised and unrealised gains andlosses concerning derivative financial instrumentswhich cannot be classified as hedging agreements.Notes50

IndexTax on profit/loss for the yearThe company is subject to the Danish rules oncompulsory joint taxation of the Danish companiesof the Dantherm group. Subsidiaries are includedin the joint taxation as from the time when they areincluded in the consolidated financial statementsand up until the time when they are excluded fromthe consolidation. The company acts as theadministration company for the joint taxation andconsequently settles all income tax payments withthe Danish tax authorities. In connection with thesettlement of the joint taxation contribution, thecurrent Danish income tax is distributed betweenthe jointly taxed companies in proportion to theirtaxable income. Companies which utilise tax lossesin other companies pay joint taxation contributionsto the parent corresponding to the tax base of theutilised losses, while companies whose tax losses areutilised by other companies receive joint taxationcontributions from the parent corresponding tothe tax base of the utilised losses (full distribution).Tax for the year which consists of the current incometax for the year, the joint taxation contribution forthe year and changes in deferred tax – also as aresult of a change in the tax rate – is recognised inthe income statement with the portion attributableto the net profit/loss for the year and directly inequity with the portion attributable to amountsrecognised directly in equity.AssetsIntangible assetsGoodwillOn initial recognition, goodwill is recognised at costin the balance sheet as described under ‘Businesscombinations’. Subsequently, goodwill is measuredat cost less accumulated impairment losses.No amortisation of goodwill is made.The carrying amount of goodwill is allocated tothe group’s cash-generating units at the date ofacquisition. The definition of cash-generating unitsfollows the internal management and financialcontrol structure.Development projects, patents and licencesClearly defined and identifiable developmentprojects where the technical degree of utilisation,adequate resources and a potential future marketor use in the enterprise can be demonstrated, andwhere the intention is to produce, market or use theproject, are recognised as intangible assets, providedthat the cost can be calculated reliably and thereis sufficient certainty that future earnings or the netselling price can cover the production, selling andadministration costs as well as the developmentcosts. Other development costs are recognisedin the income statement as incurred.Development costs are measured at cost lessaccumulated amortisation and impairment losses.The cost comprises salaries, amortisation and othercosts which are attributable to the company’sdevelopment activities.Finance costs are not included in the cost. Grantsrelating to development projects are deducted fromthe costs incurred. Upon completion of thedevelopment work, development projects areamortised according to the straight-line methodover their estimated useful lives. The amortisationperiod is 3-6 years. The basis of amortisation is alsoreduced with any impairment losses. Patents andlicences are measured at cost less accumulatedamortisation and impairment losses. Patents andlicences are amortised according to the straight-linemethod over the shorter of the remaining patent orcontract period and useful life, the maximum being,however, six years. The basis of amortisation isreduced with any impairment losses.Property, plant and equipmentLand and buildings, leasehold improvements,plant and machinery as well as other plant, fixturesand fittings, tools and equipment are measuredat cost less accumulated depreciation and impairmentlosses.The cost comprises the purchase price and any costsdirectly attributable to the purchase until the dateNotes51

Indexwhen the asset is available for use. For internallymanufactured assets, cost comprises direct andindirect costs of materials, components, subsuppliersand wages and salaries. Finance costs are notincluded in the cost.Leased assets where the group obtains actualbenefits and risks associated with the ownershipof such asset are capitalised as assets held underfinance leases. The cost is calculated at the lower ofthe fair value of the asset and the present value ofthe future minimum lease payments. For calculatingthe present value, the internal rate of interest of thelease is used as the discount rate or an approximationof this value. The corresponding finance leasecommitments are recognised under liabilities. Leasecosts relating to operating leases are recognised onan ongoing basis in the income statement over theterm of the lease.Subsequent costs relating to, e.g., the replacementof components of property, plant and equipmentare included in the carrying amount of the assetconcerned when it is probable that the incurrencewill bring future financial benefits to the group.The carrying amount of the replaced componentswill no longer be recognised in the balance sheetand is transferred to the income statement. All otherordinary repair and maintenance costs are recognisedin the income statement as incurred.Property, plant and equipment are depreciatedaccording to the straight-line method over theexpected useful lives of the assets as follows:Building components15-30 yearsLeasehold improvements5 yearsPlant and machinery3-8 yearsOther plant, fixtures and fittings,tools and equipment3-7 yearsLand is not depreciated.The basis of depreciation is calculated taking into accountthe residual value of the asset and is reduced byany impairment losses. The residual value is calculatedat the date of acquisition and reassessed annually.If the residual value exceeds the carrying amountof the asset, the asset is no longer depreciated.In connection with a change in the depreciationperiod or the residual value, the depreciation effectis recog nised prospectively as a change in theaccounting estimate.Investments in associatesInvestments in associates are measured in theconsolidated financial statements according to theequity method whereby the investments are measuredin the balance sheet at the proportionate shareof the enterprises’ equity value calculated accordingto the group’s accounting policies less or plus theproportionate share of unrealised intra-group gainsand losses plus the carrying amount of goodwill.SecuritiesSecurities which are not included in the group’strading portfolio are classified as held for sale,recognised at cost under non-current assets on thetrading day and subsequently measured at fair valuecorresponding to the share price of listed securitiesand at an estimated fair value calculated on the basisof market data and recognised valuation methodsfor unlisted securities. Unrealised value adjustmentsare recognised directly in equity, except for impairmentlosses resulting from impairment and reversalthereof. Upon realisation, the accumulated valueadjustment recognised in equity is transferred to netfinancials in the income statement.Impairment of non-current assetsGoodwill and intangible assets with indefinableuseful lives are tested for impairment at least oncea year. Development projects in progress are alsotested for impairment once a year.The carrying amount of goodwill is tested forimpairment together with the other non-currentassets in the cash-generating unit to which goodwillhas been allocated and is impaired to the lower ofrecoverable amount and carrying amount in theincome statement. The recoverable amount is usuallycalculated as the present value of the expectedfuture cash flows from the enterprise or activity(cash-generating unit) to which goodwill is attached.Deferred tax assets are assessed annually and areonly recognised to the extent that it is probablethat they will be utilised.Notes52

IndexThe carrying amount of other non-current assets areassessed annually to determine whether there is anyindication of impairment. If such an indication exists,the recoverable amount of the asset is calculated.The recoverable amount is the higher of the fairvalue of the asset less the expected costs of disposaland the value in use. The value in use is calculated asthe present value of the expected future cash flowsfrom the asset or the cash-generating unit of whichthe asset is a part.An impairment loss is recognised when the carryingamount of an asset or a cash-generating unit exceedsthe recoverable amount of such asset or cashgeneratingunit. Impairment losses are recognised inthe income statement under the item relating to theimpairment loss. Impairment of goodwill is recognisedunder special items in the income statement.Impairment of goodwill is not reversed. Impairmentof other assets is reversed to the extent that theconditions and estimates leading to the impairmenthave changed. Impairments are only reversed to theextent that the new carrying amount of the assetdoes not exceed the carrying amount of the assetafter amortisation had the asset not been impaired.InventoriesInventories are measured at cost in accordance withthe FIFO method. If the net realisable value is lowerthan the cost, inventories are written down to thislower value. The cost of goods for resale as wellas raw materials and consumables comprises theacquisition price plus delivery costs.The cost of manufactured goods and work inprogress comprises the cost of raw materials,consumables, direct labour costs and productionoverheads. Production overheads comprise indirectmaterials and wages and salaries as well as themaintenance and depreciation of the machinery,factory buildings and equipment used in theproduction process as well as factory administrationand management costs.The net realisable value of inventories is calculatedas the selling price less completion costs and costsincurred to make the sale and is fixed with dueregard to negotiability, obsolescence and developmentsin the expected selling price.ReceivablesReceivables are measured at amortised cost. If anindication of impairment exists, provisions for baddebts are made. Write-downs are made on anindividual basis.Receivables for which no objective indication ofimpairment exists on an individual basis are assessedon a portfolio basis to determine whether an objectiveindication of impairment exists. The portfoliosare primarily based on the registered office andcredit rating of the debtors in accordance with thegroup’s credit management policy. The objectiveindicators used for portfolios have been defined onthe basis of historical bad debts.If an objective indication of impairment exists for aportfolio, an impairment test is carried out, in whichthe expected future cash flows are estimated on thebasis of historical bad debts adjusted for currentmarket conditions and individual conditions relatedto the individual portfolio.Write-downs are calculated as the differencebetween the carrying amount and the present valueof expected cash flows, including the realisablevalue of any security received. The effective rateof interest on the individual receivable or portfoliois used as a discount rate.The recognition of interest on receivables writtendown as income is calculated for the value writtendown using the effective rate of interest on theindividual receivable or portfolio.Construction contractsConstruction contracts in progress are measuredat the selling price of the work performed lesson-account invoices and any expected losses.Construction contracts are characterised by theproducts manufactured being highly individualisedin terms of design. Furthermore, a binding contractmust have been concluded prior to the commencementof the work which will result in a fine ordamages in case of a cancellation.Notes53

IndexThe selling price is measured on the basis of thestage of completion at the balance sheet date andthe total expected income from the individualcontract. The stage of completion is determined onthe basis of an assessment of the work performed.When it is probable that the total contract costsof a construction contract will exceed the totalcontract revenue, the expected loss includinga proportionate share of the indirect costs of theconstruction contract is expensed immediately.When the selling price of a construction contractcannot be measured reliably, the selling price ismeasured as the costs incurred to the extent that itis probable that such costs will be recovered.Construction contracts where the selling price of thework performed exceeds on-account invoices andexpected losses are recognised under receivables.Construction contracts where on-account invoicesand expected losses exceed the selling price arerecognised under liabilities. Prepayments fromcustomers are recognised under liabilities. Sellingcosts and costs incurred in securing contracts arerecognised in the income statement as incurred.Prepaid expensesPrepaid expenses are measured at amortised cost.EquityDividendProposed dividend is recognised as a liability at thetime of adoption by the annual general meeting(time of declaration). Expected dividend payable forthe year is shown as a separate item under equity.Treasury sharesPurchase and selling prices as well as dividend fromtreasury shares are recognised directly in retainedearnings under equity. Proceeds from the saleof treasury shares and the issue of shares inDantherm A/S in connection with the exerciseof share options or employee shares are recogniseddirectly in equity.Reserve for hedging transactionsReserve for hedging transactions includes theaccumulated net change in the fair value of hedgingtransactions which meet the criteria for hedgingfuture cash flows and where the hedged transactionhas not yet been realised.Reserve for foreign currency translationadjustmentReserve for foreign currency translation adjustmentin the consolidated financial statements comprisescurrency translation differences arising from thetranslation of financial statements of foreignenterprises from their functional currencies tothe Dantherm group’s presentation currency(Danish kroner).In the event of full or partial realisation of the netinvestment, the foreign currency translation adjustmentsare recognised in the income statement.Reserve for financial assets held for saleUnrealised value adjustments of financial assets heldfor sale are recognised directly in equity, except forwrite-downs resulting from impairment and reversalthereof. Upon realisation, the accumulated valueadjustment recognised in equity is transferred to netfinancials in the income statement. Reserve forfinancial assets held for sale is part of the free reserves.LiabilitiesPension obligationsThe group has made pension agreements andsimilar agreements with most of the group’semployees.Obligations concerning defined-contribution plansare recognised in the income statement in the periodin which they are earned, and payments due arerecognised in the balance sheet under otherpayables. For defined-benefit plans, an annualactuarial calculation is made of the value in use offuture benefits to be paid under the plan. The valuein use is calculated on the basis of assumptions ofthe future development in wage/salary levels,interest rates, inflation and mortality, among otherthings. The value in use is solely calculated for thebenefits earned by the employees through theiremployment so far with the group. The actuariallycalculated value in use less the fair value of any assetsattached to the plan is recognised in the balancesheet under pension obligations, cf. however, below.Notes54

IndexDifferences between the expected development inpension assets and liabilities and the realised valuesare called ‘actuarial gains’ or ‘actuarial losses’.In connection with the transition to IFRS, accumulatedactuarial gains and losses were fully recognisedin the opening balance sheet as at 1 January 2004.If sub sequent accumulated actuarial gains or lossesat the beginning of a financial year exceed the largernume rical value of 10% of the pension obligationsand of 10% of the fair value of the pension assets,the surplus amount is recognised in the incomestatement over the concerned employees’ expectedaverage remain ing duration of employment withthe company. Actu arial gains or losses which do notexceed the limits mentioned above are not recognisedin the income statement or the balance sheet,but are stated in the notes.Any change in benefits that concern the employees’employment so far with the company results in achange in the actuarially calculated value in use,which is regarded as a historical cost. Historical costsare expensed immediately if the employees havealready obtained the right to the changed benefit.If not, they are recognised in the income statementover the period in which the employees will obtainthe right to the changed benefit. If a pension plan isa net asset, the asset is only recognised to the extentthat it corresponds to non-recognised actuariallosses, future repayments from the plan or leads toreduced future contributions to the plan.Share option programmesThe value of services received in return for optionsgranted is measured at the fair value of such options.As regards equity-settled share options, the fairvalue is measured at the time of granting and isrecognised in the income statement under staffcosts over the period in which the right to theoptions is earned (the vesting period). The counteritem is recognised directly in equity.In connection with the initial recognition of theshare options, an estimate is made of the numberof options to which the employees are expected toearn a right. Subsequently, an adjustment is made ofthis estimate to the effect that the total recognitionis based on the actual number of options to whichthe employees have earned a right.The fair value of the options granted is estimatedon the basis of the Black-Scholes model. In connectionwith the calculation, account is taken of theterms and conditions applying to the share optionsgranted.Current tax and deferred taxIn accordance with the joint taxation rules,Dantherm A/S will, as the administration company,assume liability for the subsidiaries’ income taxvis-à-vis the Danish tax authorities in step withthe payment of joint taxation contributions bythe subsidiaries.Current tax payable and receivable is recognisedin the balance sheet as tax calculated on the taxableincome for the year, adjusted for tax on the taxableincome of previous years and tax paid on account.Joint taxation contributions payable and receivableare recognised in the balance sheet under balanceswith group enterprises.Deferred tax is measured using the balance sheetliability method on the basis of all temporary differencesbetween the carrying amount and tax baseof assets and liabilities. However, no recognitionis made of deferred tax on temporary differencesconcerning non-amortisable goodwill and officeproperties for tax purposes and other items wheretemporary differences – except for acquisitions –have occurred at the date of acquisition without influencingthe results or the taxable income. In caseswhere the tax base can be calculated according todifferent taxation rules, the deferred tax is measuredon the basis of the use of the asset or the discontinuationof the liability planned by the management.Deferred tax assets, including the tax base of taxlosses allowed for carry-forward, are recognisedunder other non-current assets at the value at whichthey are expected to be used, either in the form ofa set-off against tax on future earnings or in the formof a set-off against deferred tax liabilities within thesame legal tax unit and jurisdiction.Notes55

IndexAn adjustment is made of deferred tax concerningeliminations of unrealised intra group gains andlosses.Deferred tax is measured on the basis of the tax rulesand tax rates in the respective countries which willbe applicable under the legislation in force at thebalance sheet date when the deferred tax isexpected to crystallise as current tax. The changein deferred tax as a result of changes in tax ratesis recognised in the income statement.cost using the effective rate of interest method.Accordingly, the difference between the proceedsand the nominal value is recognised in the incomestatement under financial expenses over the termof the loan. Financial liabilities also include thecapitalised remaining lease obligation in respectof finance leases measured at amortised cost. Otherliabilities are measured at amortised cost.Deferred incomeDeferred income is measured at amortised cost.ProvisionsProvisions primarily comprise warranty commitmentsand restructuring commitments. Provisionsare recognised when the group, as a result of anevent having occurred before or at the balancesheet date, has incurred a legal or constructiveobligation and it is probable that financial resourcesmust be spent in order to meet such obligation,and the size of the amount can be estimated reliably.In this context, the Dantherm group prepares anestimate based on the most likely outcome of thematter. In situations where the most likely outcomecannot be estimated reliably, such matters arerecognised as a contingent liability.Warranty commitments are recognised in step withthe sale of goods and services on the basis ofwarranty costs incurred in previous financial years.Restructuring costs are recognised as liabilities whena detailed formal plan for the restructuring has beenpublished at the balance sheet date at the latestvis-á-vis the stakeholders affected by the plan.A provision is recognised in respect of onerouscontracts when the expected benefits of a contractfor the group are smaller than the inevitable costsrelated to such contract (onerous contracts).Financial liabilitiesAmounts owed to credit institutions etc. are recognisedat the date of borrowing at the net proceedsless transaction costs paid. In subsequent periods,the financial liabilities are measured at amortisedCash flow statementThe cash flow statement shows the cash flowsdivided into cash flows from operating activities,investing activities and financing activities for theyear as well as changes in cash and cash equivalentsfor the year and cash and cash equivalents at thebeginning and end of the year. The effect on cashflow of the acquisition and divestment of enterprisesis recognised separately under cash flows frominvesting activities. In the cash flow statement, cashflows relating to acquired enterprises are recognisedas from the time of acquisition, and cash flowsrelating to divested enterprises are recognised untilthe time of divestment.Cash flows from operating activitiesCash flows from operating activities are calculatedaccording to the indirect method as the profit/lossbefore tax adjusted for non-cash operating items,changes in working capital, interest paid and incometax paid.Cash flows from investing activitiesCash flows from investing activities comprisepayments in connection with the acquisition anddivestment of enterprises and activities, thepurchase and sale of intangible assets, property,plant and equipment and other non-current assetsas well as the purchase and sale of securities notrecognised as cash and cash equivalents.Notes56

IndexCash flows from financing activitiesCash flows from financing activities comprisechanges to the size and composition of share capitaland costs incidental thereto as well as the arrangementof loans, the repayment of interest-bearingdebt, the purchase and sale of treasury shares andthe payment of dividend to shareholders. Cash flowsfrom assets held under finance leases are recognisedas payment of interest and repayment of debt.Cash and cash equivalentsCash and cash equivalents comprise cash, shorttermbank debt and securities with a term tomaturity of less than three months which can easilybe converted into cash and to which only animmaterial risk of value changes attaches.Segment income and expenditure as well assegment assets and liabilities comprise the itemswhich are directly attributable to the individualsegment and the items which can be allocated tothe individual segment on a reliable basis. Nonallocateditems mainly comprise assets and liabilitiesas well as income and expenditure concerning thegroup’s administrative functions, investing activities,income taxes etc.Assets in the segment comprise assets used directlyin the operations of the segment. Typically, theseinclude all assets except for securities and cash andcash equivalents. Segment liabilities compriseliabilities derived from the operations of thesegment, including trade payables and otherpayables.Segment informationInformation is provided on business segments, whichis the group’s primary segmentation format, andgeographical markets – the secondary format. Thesegments follow the group’s risks as well as its managementstructure and financial control. The segmentinformation has been prepared in accordancewith the accounting policies applied by the group.Notes57

IndexRatiosThe ratios have been prepared in accordancewith the Danish Society of Financial Analysts’‘Recommendations and Financial Ratios 2005’.Financial ratios:Growth rateProfit margin (EBIT (%))Invested capital including goodwillChange in revenue x 100Last year’s revenueOperating profit/loss (EBIT) x 100RevenueEquity + minority interests + netinterest-bearing debt – investments inassociates – securitiesReturn on invested capital before tax (ROIC)Operating profit/loss before amortisation of goodwill(EBITA) x 100Average invested capital including goodwillEquity interestEquity excluding minority interests, end of year x 100Total equity and liabilities, end of yearShare-related ratios:Earnings per share (EPS)Cash flow per share (CFPS)Dividend per shareEquity value, end of yearPrice/equity value, end of yearThe group’s share of the net profit/loss for the yearAverage no. of sharesTotal cash flows for the yearAverage no. of sharesProposed dividend to shareholdersAverage no. of sharesEquity excluding minority interests, end of yearNumber of shares, end of yearShare price, end of yearEquity value, end of yearNotes58

Index2. Accounting estimates and assessmentsIn the calculation of the carrying amount of certainassets and liabilities, an estimate must be made asto how future events will affect the value of suchassets and liabilities at the balance sheet date. Themanagement bases its estimates on historical experienceand other assumptions which are deemedto be reasonable under the given circumstances.The assumptions may be incomplete or inaccurate,and unexpected events or circumstances may arise.Furthermore, the company is affected by risks anduncertainties which may lead to the actual resultsdeviating from the estimates.It may be necessary to change estimates made inprevious years due to changes in the conditions onwhich such estimates were based or as a result ofnew knowledge or subsequent events.As part of the application of the group’s accountingpolicies, the management makes assessments inaddition to estimates which may have a significantimpact on the amounts recognised in the annualreport. The management of Dantherm A/S deemsthe following estimates and assessments to be significantfor the financial reporting, including as partof the application of the group’s accounting policies.Impairment test carried out on goodwillAt least once a year, the carrying amount of goodwillis tested for impairment together with the othernon-current assets in the cash-generating unit towhich goodwill has been allocated. The value iscalculated as the present value of the expectedfuture net cash flows from the enterprise to whichgoodwill is related and on the basis of the budgetfor 2009, strategy figures for 2010-2012 and a terminalvalue. Naturally, the estimate of the expectedcash flows several years in to the future is subject tosome uncertainty. The uncertainty is reflected in thediscount rate selected. See note 12 for a descriptionof the impairment test carried out on goodwill.Development projectsThe carrying amount of development projects inprogress is, as a minimum, tested for impairmentonce a year and impaired to the recoverable amountin the income statement if the carrying amount exceedsthe present value of the expected future netcash flows from such development work. See note12 for a description of the impairment test carriedout on development projects.The Dantherm group operates in a market withan ever-increasing focus on the climate and whichmakes ever heavier demands on the company’sproducts in terms of flexibility, energy consumptionand performance.Dantherm’s objective is to be a leading player withinthe field of clean air for people, and this means that thecompany must be at the forefront of technologicaldevelopments. Consequently, Dantherm improvesand develops its products on a continuous basis.In addition to Dantherm’s traditional product areas,the management has chosen to focus on thedevelopment of new and innovative solutionswhere fuel cells are used in backup systems for thetelecom industry, among other things. The developmentof environmentally friendly solutions based onfuel cells is expected to increase in the coming years.The commercial use of fuel cells is still beingdeveloped, and the future use of fuel cell solutionsis thus subject to some uncertainty. The fuel cellNotes59

Indexsolutions have been well received by the market,and the development of new products is goingaccording to plan. Dantherm’s use of fuel cells is notlimited to power backup solutions, and productswithin other areas are thus being developed.For further information, please see the descriptionunder Risk assessment in the section Technologicaldevelopment.The future net cash flows are estimated by theproject manager, the person responsible for salesand a representative from the finance function andare, of course, subject to some uncertainty.ProvisionsThe group has warranty commitments in respect ofgoods and plant sold under warranties valid for 1 to5 years. The commitments have been calculated onthe basis of historical warranty costs and are subjectto some uncertainty due to the dependency onfuture events. Other provisions, contingent assetsand contingent liabilities, including the most likelyoutcome of pending or future court cases, areassessed on a continuous basis. The outcomedepends on future events, which are naturally uncertain.When assessing the most likely outcome ofcourt cases and tax matters etc., the managementincludes internal and external legal advisers as wellas outcomes known from case law. A specificationof provisions appears from note 22.Application of the production methodThe group has concluded a large number of contractswhich, for accounting purposes, are treatedaccording to the production method. On the conclusionof contracts, it is assessed separately whethera contract meets the criteria specified for recognitionaccording to the production method. Thisassessment is to some extent based on a subjectivejudgement. Contracts treated according to theproduction method contain an on-account mark-upfixed on the basis of an assessment of the expectedprofit on the project and the stage of completion.The on-account mark-up is fixed by the project managertogether with the finance function. To someextent, the assessment of the on-account mark-updepends on future events and is therefore subject tosome uncertainty. Please see note 18.InventoriesIn the ordinary course of business, the group plansmaterials from subsuppliers for processing in thegroup in such a way that the expected customerdemands can be met. In many cases, it is difficult toensure a completely error-free planning of materialsto meet future customer demand, for which reasonsituations may arise in which materials purchasedor manufactured for the inventory are no longerexpected to be demanded. Consequently, writedownsfor obsolescence in respect of the inventoriesare made. Inventories are written down on the basisof historical scrappings due to obsolescence as wellas knowledge and estimates of slow-moving items.The value of future scrappings or losses on sales atnet realisable value may deviate from the writedownsmade, but the management assesses thatthe estimates made in respect of obsolescence arereasonable and expedient. Please see note 16.Recognition of deferred tax assetsIn connection with the recognition of deferred taxassets, a separate assessment is made of whetherit is expected that the asset can be set off againsttax on future earnings or against deferred taxliabilities. The assessment is based on the companies’budget and strategy figures and is subject tothe rules on limitation in the relevant country.Please see note 20. Naturally, such assessment issubject to some uncertainty.Notes60

IndexNotes – group3. Segment informationThe Dantherm group is an important international player in the global market for industrial air handling. The group offersproducts, solutions, installation and services within the most important areas of industrial air handling.Its business activities are divided into the following three business segments:Air Handling:the Dantherm Air Handling group and T&O StelectricPower:the Dantherm Power groupFiltration:the Dantherm Filtration groupThe division into business segments corresponds to the financial control and management structure.Comments on the 2007 comparative figures:At the end of Q3 2007, the Dantherm group divested the company Glenco A/S with its related subsidiaries as well as an indirectinvestment in Royal Scandinavia A/S. Both activities were classified as discontinued operations in the 2007 financial statements.Discontinued operations cover figures for the period 1 January 2007 – 30 September 2007 (nine months).Activities – primary segment 2007Dantherm DiscontinuedDKK ’000 Air Handling Power Filtration Not allocated group operationsRevenue 932,412 2,774 1,225,634 0 2,160,820 798,856Internal revenue -1,823 0 -4,502 0 -6,325 0Revenue 930,589 2,774 1,221,132 0 2,154,495 798,856Operating profit/loss 51,860 -14,967 46,956 -16,932 66,917 12,349Share of profit/loss inassociates -1,241 0 0 0 -1,241 0Segment assets 677,063 27,092 711,725 65,230 1,481,110 304,525Capital investments 17,291 14,970 36,537 1,004 69,802 2,435Depreciation and amortisation 31,827 153 22,188 374 54,542 4,486Segment liabilities 125,377 14,304 259,594 565,156 964,431 267,561Investments in associates 909 0 0 0 909 0Cash flows from operating activities 53,283 -16,259 34,188 -28,249 42,963 56,137Cash flows from investing activities -13,149 -14,970 -29,955 -3,080 -61,154 97,095Cash flows from financing activities 4,428 19,989 -25,121 -4,724 -5,428 -16,496Average no. of employees 1,040 19 1,247 6 2,312 903Geographically – secondary segment 2007segmentCapitalDKK ’000 Revenue assets investmentsDenmark 224,836 789,076 32,796eu countries 1,296,107 420,211 20,077Asia 269,476 149,274 13,529the US 183,564 95,390 1,178other countries 180,512 27,159 2,222Dantherm group 2,154,495 1,481,110 69,802Discontinued operations 798,856 304,525 2,435Total for the segments 2,953,351 1,785,635 72,237Notes 61

IndexNotes – group3. Segment information – continuedActivities – primary segment 2008DanthermDKK ’000 Air Handling Power Filtration Not allocated grouprevenue 772,434 5,511 1,266,281 0 2,044,226Internal revenue -24,593 0 -3,373 0 -27,966Revenue 747,841 5,511 1,262,908 0 2,016,260Operating profit/loss 9,560 -25,163 52,270 -20,396 16,271Segment assets 558,746 56,062 676,623 103,924 1,395,355Capital investments 27,915 19,514 35,744 9,369 92,542Depreciation and amortisation 31,177 654 24,516 1,116 57,463Segment liabilities 106,763 7,449 286,627 527,558 928,397Cash flows from operating activities 73,373 -24,179 106,964 -15,806 140,352Cash flows from investing activities -31,396 -19,471 -29,555 -504 -80,926Cash flows from financing activities -2,287 -11 4,745 -10,262 -7,815Average no. of employees 941 37 1,318 7 2,303Geographically – secondary segment 2008segmentCapitalDKK ’000 Revenue assets investmentsDenmark 294,242 595,470 68,686eu countries 1,148,053 531,495 16,566Asia 183,049 142,735 2,675the US 173,605 105,390 3,935other countries 217,311 20,265 680Continuing operations 2,016,260 1,395,355 92,542transactions between segments are carried out at arm’s length.Notes 62

IndexNotes – group4. Revenue2008 2007DKK ’000 DKK ’000trade payables 1,509,108 1,428,183Selling price of the year’s production under construction contracts 507,152 726,3122,016,260 2,154,4955. CostsCosts of raw materials and consumablespurchased supplies for the year 1,057,560 1,167,299Change in inventories 10,199 4,650Write-down of inventories for the year 12,008 12,127reversed write-downs of inventories -2,998 -4,8801,076,769 1,179,196reversed write-downs of inventories concern goods which have either been sold,used for production or scrapped.Fee for auditors appointed by the general meetingtotal fee for Beierholm 2,725 3,115total fee for other auditors 2,247 2,4054,972 5,520this can be specified as follows:Audit 3,037 3,666other assurance services 14 0tax and VAT consultancy services 178 0Consultancy services in connection with acquisition 18 0other consultancy services 1,725 1,8544,972 5,520Research and development costsresearch and development costs incurred 45,531 45,600Development costs recognised under intangible assets -31,130 -28,401Amortisation and impairment of recognised development costs 11,807 10,36126,208 27,560Staff costsremuneration for the Board of Directors of the parent 2,275 2,234Wages and salaries 532,400 519,254Defined-contribution plans 26,018 23,273Defined-benefit plans 688 -304other social security expenses 62,441 65,324623,822 609,781Average no. of employees 2,303 2,312Notes 63

IndexNotes – group2008 2007DKK ’000 DKK ’0005. Costs – continuedRemuneration for the Board of Directors, the Board of Executives and otherexecutive employeessalaries and remuneration:Board of Directors of the parent 2,275 2,234Board of Executives of the parent 2,513 2,868other executive employees 9,040 9,34913,828 14,451Pension contributionsBoard of Directors of the parent 0 0Board of Executives of the parent 244 234other executive employees 508 540752 774share-based remunerationBoard of Directors of the parent 0 0Board of Executives of the parent 0 531other executive employees 0 1,8270 2,358Total remunerationBoard of Directors of the parent 2,275 2,234Board of Executives of the parent 2,757 3,633other executive employees 9,548 11,71614,580 17,583The remuneration for the Board of Executives comprises a fixed salary and a bonus which is conditional upon the fulfilment of a number ofobjectives defined in advance. In 2008, the fixed salary, including the value of free car, amounted to DKK 2,513k. In addition, the Board ofExecutives of the parent has received pension contributions of DKK 244k. No bonus will be paid to the Board of Executives based on the 2008financial year. Bonus earned in the 2007 financial year totalled DKK 474k.The Board of Directors is remunerated for the work performed only. Each member of the Board of Directors receives DKK 150k. In additionto this, the Chairman and the Deputy Chairman receive an allowance of 200% and 100%, respectively. In 2008, no allowance has been paid forthe performance of extraordinary tasks. Members of the auditing committee receive an annual remuneration of DKK 75k each. In addition to this,the Chairman receives an allowance of 33%. All rates are unchanged relative to 2007.Other executive employees comprise key staff who are not members of the Board of Executives of the parent, and who are responsiblefor the group’s business segments.This key staff is limited to the Boards of Executives of the activities mentioned and comprises six persons, which is unchanged relative to 2007.Notes 64

IndexNotes – group6. Share-based remunerationIn 2007, Dantherm A/S established a two-year share option programme for the Board of Executives (one person) and executive employees (eight persons).The share option programme comprises 66,135 share options as at 31 December 2008. Each share option entitles the owner to buy one existingshare with a nominal value of DKK 50 in Dantherm A/S. The outstanding options correspond to 0.9% of the share capital if the share optionsare exercised.The share options were granted in connection with the approval of the annual report for the previous financial year by the Board of Directors.The persons concerned were able to obtain a right to buy a number of shares for an amount corresponding to up to half the annual fixedremuneration including pension, but excluding benefits in the financial year of the granting.The granting was subject to the following criteria:• 50% was granted without conditions.• Up to 50% was granted in accordance with the fulfilment of a number of agreed targets for the previous financial year.In 2007, only the 50% granted without conditions was granted. In 2008, share options were granted to some of the employees concerned basedon targets fulfilled. None of the persons concerned obtained full granting.The exercise price was fixed as the average price for a period of ten days after publication of the company’s annual report plus 5% per year.The share options may be exercised in a period from three to six years after the granting. Consequently, options granted in 2008 may be exercisedbetween 2011 and 2014.The options can only be exercised for a period of four weeks after publication of an annual or interim report.The options can only be settled in shares. A part of the company’s holding of treasury shares has been reserved for the settlement of options granted.A provision was made in the 2007 financial statements for the value of share options issued in 2008 on the basis of the 2007 results. The Board ofDirectors of Dantherm chose not to extend the programme in 2008, for which reason the 2008 financial statements do no contain costs incidentalto share option programmes.Fair value Total fairOther Average per option valueBoard of Executives executive exercise price at the time at the timeof the parent employees Total per option of granting of grantingno. no. no. DKK DKK DKK ’000Outstanding options at the beginning of 2007 0 0 0Granted 6,063 22,485 28,548 142 28 812Forfeited 0 0 0Exercised 0 0 0Expired 0 0 0Outstanding options at the end of 2007 6,063 22,485 28,548 1422008Granted 8,788 28,799 37,587 179 36 1,346Forfeited 0 0 0Exercised 0 0 0Expired 0 0 0Outstanding options at the end of 2008 14,851 51,284 66,135 163Number of options to be exercised atthe end of 2007 0 0 0Number of options to be exercised atthe end of 2008 0 0 0In 2007, the cost concerning share options recognised in the income statement totalled DKK 2,692k. Of this, DKK 1,880k concerned the expectedgranting in 2008. The value calculated at the time of granting in 2008 totalled DKK 1,346k. The difference has been set off against staff costs in 2008.Notes 65

IndexNotes – groupThe calculated fair values on granting have been based on a Black-Scholes model for the valuation of options.The assumptions for the statement of fair value at the time of granting are as follows:2008 2007Average share price (DKK) 133.61 106.13Exercise price (DKK) 179.06 142.23Expected volatility 30.0% 30.0%Expected term to maturity 6 years 6 yearsRisk-free interest rate 4.0% 4.0%The exercise price is adjusted for dividend paid.2008 2007DKK ’000 DKK ’0007. Public grantPublic grants received during the year 11,019 1,667recognised as follows:recognised under development projects in progress for the year 11,019 1,66711,019 1,667In 2008, Dantherm Power A/S received development grants from both national and regional energy researchprogrammes. Dantherm Power has qualified for such funds as the company is developing energy-efficient systemsolutions and energy technology which have a huge business and environmental potential. A common characteristicof the different energy research programmes from which Dantherm Power A/S receives grants is that the projectprocesses are subject to the EU framework for state aid for research and development and innovation (2006/C323/01).8. Financial incomeInterest, cash and securities 2,489 1,760Foreign exchange gains 13,276 10,704other financial income 4,896 21Market value adjustment and gain on securities 1,225 36721,886 12,8529. Financial expensesInterest, bank and mortgage debt etc. 34,366 36,064Foreign currency translation adjustment and foreign exchange loss 23,268 11,55757,634 47,621Notes 66

IndexNotes – group10. Tax2008 2007DKK ’000 DKK ’000Tax for the year comprises:tax on profit/loss for the year -1,866 -2,800tax on changes in equity -2,583 1,148tax on discontinued operations 0 0-4,449 -1,652tax on profit/loss for the year comprises:Current tax 2,074 19,355Adjustment of deferred tax -779 -14,806Adjustment of deferred tax due to changed assessment of tax assets -3,371 -4,724Adjustment of deferred tax due to reduction of income tax rate 3,874 -274Adjustment of tax in respect of previous years -3,664 -2,351-1,866 -2,800tax on profit/loss for the year comprises:profit/loss before tax -19,477 30,907tax rate 25% 25%Calculated tax on profit/loss before tax -4,869 7,727Adjustment of calculated tax in foreign group enterprises relative to current tax rate -2,886 -5,992Adjustment of deferred tax due to reduction of income tax rate 3,874 -274Income in foreign companies with local losses -10,882 -6,649losses in foreign companies where the tax base is not recognised 8,835 4,251other taxes (not income-dependent) 3,004 5,022tax effect of:non-deductible costs and non-taxable income, net -930 915Change in the valuation of tax losses in addition to the earnings performance 5,652 -5,449Adjustment of tax in respect of previous years -3,664 -2,351-1,866 -2,800effective tax rate 10% -9%The tax income partly comprises an adjustment of deferred tax in accordance with the group’s accounting policies and partlyan adjustment of tax in respect of previous years. To this should be added a further recognition of tax assets in one of thecompany’s foreign subsidiaries where the earnings performance was better than expected in the previous recognition. As forthe foreign subsidiaries, recognition is made on the basis of a minimum of two consecutive years with a profit. Recognitionis made on the basis of earnings expectations and subject to the rules on limitation in the relevant country.As for the Danish joint taxation, deferred tax assets are recognised to the extent that it is probable that future taxable incomewill be obtained with a view to utilising the temporary differences and non-utilised tax losses.Due to a changed interpretation of the Danish tax legislation on the recognition of construction contracts, the group requestedin 2007 that the previous Danish tax statements be reviewed again. The request was met, and the group received boththe surplus tax and an interest allowance. The tax amount has been recognised under the adjustment of tax in respectof previous years, while the interest amount has been recognised under financial income.Notes 67

IndexNotes – group2008 2007DKK ’000 DKK ’00011. Earnings per sharenet profit/loss for the year -17,611 35,213Minority interests’ share of the consolidated results -292 326The Dantherm A/S group’s share of net profit/loss for the year -17,903 35,539Average no. of shares 7,190,574 7,190,574Average no. of treasury shares -71,731 -37,704Average no. of shares in circulation 7,118,843 7,152,870Average dilution effect of outstanding share options 0 23,419Average no. of diluted shares in circulation 7,118,843 7,176,289Earnings per share (EPS) of DKK 50. -2.5 4.9Diluted earnings per share (EPS-D) of DKK 50. -2.5 5.0The calculation for 2007 of earnings per share for continuing and discontinued operationswas based on the same key figures as earnings per share:Dantherm shareholders’ share of:Profit/loss from discontinued operations 0 1,506Profit/loss from continuing operations -17,611 33,707Net profit/loss for the year -17,611 35,213See also note 6 for a description of share-based remuneration, which may potentially dilute the earnings per share in future.Notes68

IndexNotes – group12. Intangible assets PrepaymentsCompletedand developmentdevelopment Patents projectsDKK ’000 Goodwill projects and licences in progress TotalCost as at 1 January 2007 173,034 29,437 16,567 16,128 235,166Disposals in relation to discontinued operations -65,738 0 -317 0 -66,055Foreign currency translation adjustment -512 -105 -51 0 -668reclassification 0 7,487 0 -7,487 0Additions 0 3 5,065 28,401 33,469Grants 0 0 0 -1,667 -1,667Disposals 0 -908 0 -3,852 -4,760Cost as at 31 December 2007 106,784 35,914 21,264 31,523 195,485Amortisation and impairment losses as at1 January 2007 40,000 15,483 12,004 0 67,487Disposals in relation to discontinued operations -40,000 0 -223 0 -40,223Foreign currency translation adjustment 0 -155 19 0 -136Amortisation 0 6,509 4,517 0 11,026Impairment losses 0 0 0 3,852 3,852Amortisation and impairment losses, disposals 0 -457 0 -3,852 -4,309Amortisation and impairment losses as at31 December 2007 0 21,380 16,317 0 37,697Carrying amount as at 31 December 2007 106,784 14,534 4,947 31,523 157,788Cost as at 1 January 2008 106,784 35,914 21,264 31,523 195,485Additions relating to the acquisition of a subsidiary 0 0 0 5,089 5,089Foreign currency translation adjustment -4,442 -425 46 -81 -4,902reclassification 0 13,467 0 -13,467 0Additions 0 1,981 698 40,168 42,847Disposals 0 0 -13,500 -747 -14,247Grants 0 0 0 -11,019 -11,019Cost as at 31 December 2008 102,342 50,937 8,508 51,466 213,253Amortisation and impairment losses as at1 January 2008 0 21,380 16,317 0 37,697Foreign currency translation adjustment 0 38 -9 0 29Amortisation 0 8,165 1,814 0 9,979Impairment losses 0 2,591 0 1,047 3,638Amortisation and impairment losses, disposals 0 0 -13,500 0 -13,500Amortisation and impairment losses as at31 December 2008 0 32,174 4,622 1,047 37,843Carrying amount as at 31 December 2008 102,342 18,763 3,886 50,419 175,410Selling price of disposed assets 0 0 0 0 0Carrying amount 0 0 0 747 747Gains/losses on disposal 0 0 0 -747 -747to be amortised over 3-6 years 3-6 yearstrademarks included in goodwill total 1,416Notes 69

IndexNotes – groupGoodwill:As at 31 December 2008, the management carried out an impairment test of the carrying amount of goodwill.An impairment test is, as a minimum, carried out once a year if events or changed circumstances indicate that the carryingamount is higher than the recoverable amount.The factors deemed by the group to entail an impairment test comprise:• Significantly reduced earnings relative to historical and/or expected future results.• Significant changes to the group’s use of the assets or to the overall business strategy.• Significant negative trends for the industry or the economy to which the goodwill attaches.The carrying amount of goodwill as at 31 December 2008 is distributed on the cash-generating units as follows:Dantherm Air Handling A/S DKK 69.6mKontrollelektronik Dantherm Air Handling AB DKK 22.6mT&O Stelectric A/S DKK 5.0mDantherm Filtration AB DKK 5.1mTotal for the group DKK 102.3mIn the impairment test, the recoverable amount, corresponding to the discounted value of expected future cash flows,is compared to the carrying amount of the individual cash-generating units.Expected future cash flows are based on the budgets and strategy plans for 2009-2012 approved by the managementas well as on a terminal value.The discount rate used to calculate the recoverable amount of all cash-generating units was 8-10% before tax in 2008and reflects the risk-free interest rate plus specific risks weighted in relation to the equity interest.Dantherm Air Handling A/S, Kontrollelektronik Dantherm Air Handling AB and T&O Stelectric A/S all operate within theAir Handling business segment. In 2008, all three companies realised earnings which were lower than expected. Despite theseearnings, the impairment tests carried out did not give rise to any changed assessment of the carrying amount.Completed development projects:Development costs comprise salaries, amortisation and other costs which are attributable to the company’s developmentactivities. Upon completion of the development work, development projects are amortised according to the straight-linemethod over their estimated useful lives. Significant differences between the expected and the realised sales of the developedproducts result in an assessment of whether a need for impairment exists.On the basis of lower-than-expected sales and earnings in respect of a ventilation product series, the associated developmentcosts previously capitalised have been written off.Notes 70

IndexDevelopment projects in progress:The group’s development projects are primarily related to the Power and Air Handling business segments. The projects mainlyconcern the development of products based on fuel cell technology, ventilation products and telecom products.At the end of the financial year, the need for an impairment of development projects in progress was assessed.The need for impairment is assessed on the basis of the expected future cash flows, which are estimated by the project manager,the person responsible for sales and a representative from the finance function on the basis of business plans and budgetsprepared for the most important development projects. Expectations for the future are based on historical experience fromsimilar products, knowledge of customer interest and specific order indications in case of customised products. Naturally,such assessment is subject to some uncertainty.In connection with the assessment of the need for impairment of projects in progress at the end of 2008, the managementdecided to impair a number of small projects within the Power business segment. These projects are not part of the projectedfocus areas, for which reason the capitalised development costs have been written off.Comments on the 2007 comparative figures:In 2007, the management of the subsidiary Dantherm Air Handling A/S decided to stop the development of a new standardproduct portfolio within temperature control of electronics. Consequently, the previously capitalised development costswere written off.For further information, please see the description under Risk assessment in the section Technological development.Notes71

IndexNotes – group13. Property, plant and equipment Other plant, Prepaymentsfixtures and and assetsDKK ’000 Land and Leasehold Plant and fittings, tools underbuildings improvements machinery and equipment construction TotalCost as at 1 January 2007 341,535 25,780 180,302 68,588 8,418 624,623Disposals in relation to discontinuedoperations 0 -17,300 -3,202 -19,778 0 -40,280Foreign currency translation adjustment -1,369 0 -1,322 -996 -106 -3,793reclassification 1,083 -206 -8,095 -2,264 8,406 -1,076Additions 2,706 3,575 13,632 4,336 11,601 35,850Disposals 0 -531 -2,865 -7,833 -370 -11,599Cost as at 31 December 2007 343,955 11,318 178,450 42,053 27,949 603,725Depreciation and impairment losses as at1 January 2007 45,065 3,739 98,863 37,577 0 185,244Disposals in relation to discontinued operations 0 -2,505 -2,342 -10,069 0 -14,916Foreign currency translation adjustment -330 -110 -2,505 -3,099 -30 -6,074reclassification 0 0 12 -1,767 679 -1,076Depreciation 12,556 2,085 19,054 6,276 98 40,069Depreciation and impairment losses, disposals 0 -190 -1,598 -3,460 0 -5,248Depreciation and impairment losses as at31 December 2007 57,291 3,019 111,484 25,458 747 197,999Carrying amount as at 31 December 2007 286,664 8,299 66,966 16,595 27,202 405,726of which assets held under finance leases 121,173 0 17,770 729 0 139,672Cost as at 1 January 2008 343,955 11,318 178,450 42,053 27,949 603,725Foreign currency translation adjustment -7,308 356 -2,192 -2,899 -94 -12,137reclassification 14,071 -280 10,420 14 -24,225 0Additions 993 2,393 20,822 15,483 9,715 49,406Disposals 0 0 -20,846 -21,714 0 -42,560Cost as at 31 December 2008 351,711 13,787 186,654 32,937 13,345 598,434Depreciation and impairment losses as at1 January 2008 57,291 3,019 111,484 25,458 747 197,999Foreign currency translation adjustment -2,523 82 -2,149 -2,459 0 -7,049reclassification 0 -265 677 335 -747 0Depreciation 12,910 2,562 19,909 8,356 0 43,737Depreciation and impairment losses,disposals 0 0 -20,678 -20,497 0 -41,175Depreciation and impairment losses as at31 December 2008 67,678 5,398 109,243 11,193 0 193,512Carrying amount as at 31 December 2008 284,033 8,389 77,411 21,744 13,345 404,922of which assets held under finance leases 116,140 0 28,609 454 12,327 157,530To be depreciated over 15-30 years 5 years 5-8 years 3-7 years - -Selling price of disposed assets 0 0 460 1,563 0 2,023Carrying amount 0 0 168 1,217 0 1,385Gains/losses on disposal 0 0 292 346 0 638no changes have been made to significant estimates of property, plant and equipment.Notes 72

IndexNotes – group14. Investments in associates 2008 2007DKK ’000 DKK ’000Cost as at 1 January 88,761Additions relating to the purchase of investments 2,150 2,150Disposals relating to the sale of investments -2,150 -88,761Cost as at 31 December 0 2,150Value adjustments as at 1 January -1,241 -39,542Value adjustments in the year 0 -1,241Disposals relating to the sale of investments 1,241 39,542Adjustments as at 31 December 0 -1,241Carrying amount as at 31 December 0 909In 2008, the subsidiary Dantherm Air Handling Holding A/S increased its ownership interest in the development companyDanamics ApS from 40.0% to 72.5%. Consequently, the company is now included and recognised as a subsidiary in theDantherm group. Please see note 29 for further information about the acquisition of subsidiaries and activities.Comments on the 2007 comparative figures:The first 40.0% of the shares in Danamics ApS were acquired in 2007 in the form of a cash contribution of DKK 2,150k.As the company is a development company, the 2007 results were negative. Consequently, the ownership interest was impairedby DKK 1,241k.In October 2007, Dantherm A/S sold the entire indirect investment of 6.8% in Royal Scandinavia A/S to FIH Finance A/S.At the beginning of 2007, the investment was included with DKK 49.2m, corresponding to the proportionate share of the equityvalue and corrected for differences in the accounting policies between the Danish Financial Statements Act and IFRS.The selling price of the investment was DKK 40.0m, and the Dantherm group thus realised a loss of DKK 9.2m in the 2007financial statements.The indirect investment and the earnings impact thereof are classified as discontinued operations.2007 Dantherm A/S’s share ofName, registered office and ownership interest Net loss Net lossfor the year Assets Liabilities Equity for the yearDanamics ApS, Aalborg, 40.0% -504 4,364 2,817 909 -1,241Notes 73

IndexNotes – group15. Other securities and investments 2008 2007DKK ’000 DKK ’000Cost as at 1 January 1,583 6,787Disposals in relation to discontinued operations 0 -4,662Additions 289 41Disposals 0 -583Cost as at 31 December 1,872 1,583Value adjustments as at 1 January -105 -1,702Disposals in relation to discontinued operations 0 3,051reclassified 0 -1,454Value adjustments for the year -641 0Value adjustments as at 31 December -746 -105Carrying amount as at 31 December 1,126 1,478Financial assets classified as held for sale and consisting of listed and non-listed shares calculated at fair value.31.12.08 31.12.0716. Inventories DKK ’000 DKK ’000raw materials and consumables 162,635 163,396Work in progress 42,718 46,117Manufactured goods and goods for resale 80,179 80,164prepayment for goods 11,780 17,834297,312 307,511Carrying amount of inventories recognised at fair value 37,151 8,98917. Receivablestrade receivables 322,254 414,102other receivables 21,802 29,504344,056 443,606Write-downs set off against the amounts above 20,649 19,231receivables falling due after one year 864 783It is estimated that the carrying amount of receivables corresponds to the fair value.no security has been provided for receivables.Write-downs included in the receivables above have developed as follows:Beginning of year, 1 January 19,231 21,356Disposals in relation to discontinued operations 0 -360Net realised provisions and losses in the year 2,493 -328Reversed provision -1,075 -1,437End of year, 31 December 20,649 19,231Notes 74

IndexNotes – group18. Construction contracts 31.12.08 31.12.07DKK ’000 DKK ’000Construction contracts 142,990 152,180on-account invoices -168,058 -152,928-25,068 -748to be recognised as follows:Construction contracts (assets) 64,515 57,685Construction contracts (liabilities) -89,583 -58,433-25,068 -748the above-mentioned on-account invoices include payments withheld by customers in the amount of 0 019. Share capital number nominal valueof shares (DKK ’000)2008 2007 2008 20071 January 7,190,574 7,190,574 359,528 359,52831 December 7,190,574 7,190,574 359,528 359,528the share capital consists of 7,190,574 shares with a nominal value of DKK 50. The shares are not divided into classes.Treasury sharesnumbernominal valueof shares (DKK ’000)2008 2007 2008 20071 January 50,526 14,526 2,526 726Additions 30,000 36,000 1,500 1,80031 December 80,526 50,526 4,026 2,526Treasury shares’ share of the share capital 1.1% 0.7%Dantherm has been authorised by the general meeting to let the company buy treasury shares up to a total nominal valueof 10% of the share capital. The consideration paid must not deviate by more than 10% from the currently listed share priceat the time of purchase.This authorisation is valid until the next annual general meeting on 30 April 2009.The price of the treasury shares purchased in the year was DKK 134.40 per share, corresponding to a total acquisition priceof DKK 4,032k.The treasury shares were purchased to cover the company’s share option programme, cf. note 6.Comments on the 2007 comparative figures:The price of the treasury shares purchased in 2007 was DKK 127.66 per share, corresponding to a total acquisition priceof DKK 4,596k. The treasury shares were purchased to cover the company’s share option programme.Notes 75

IndexNotes – group2008 200720. Deferred tax DKK ’000 DKK ’000Deferred tax as at 1 January -34,078 -25,787Disposals in relation to discontinued operations 0 5,144Additions relating to the acquisition of a subsidiary 654 0Foreign currency translation adjustment 774 460Change in income tax rate 3,874 -274Adjustment of deferred tax in respect of previous years 0 5,909Changed assessment of tax assets -3,371 -4,724Deferred tax for the year recognised in net profit/loss for the year -779 -14,806Deferred tax for the year recognised in equity -2,583 0Deferred tax as at 31 December, net -35,509 -34,078Deferred tax is recognised in the balance sheet as follows:Deferred tax (asset) 35,650 42,037Deferred tax (liability) 141 7,959Deferred tax as at 31 December, net -35,509 -34,078Deferred tax concerns:non-current assets 3,824 11,102Current assets -4,237 -6,726liabilities -752 -114tax losses allowed for carry-forward -34,344 -38,340-35,509 -34,078Deferred tax assets are recognised as tax loss carry-forwards set off against income likely to be realised in future. As for theforeign subsidiaries, recognition is made on the basis of a minimum of two consecutive years with a profit. A conservativerecognition is made on the basis of earnings expectations and subject to the rules on limitation in the relevant country.As for the Danish joint taxation, deferred tax assets are recognised to the extent that it is probable that future taxable incomewill be obtained with a view to utilising the temporary differences and non-utilised tax losses.The group has tax losses of DKK 217.5m (2007: DKK 221.3m), the tax base of which is not recognised in the balance sheetas such losses are not expected to be utilised in the foreseeable future or within the period of limitation.Notes 76

IndexNotes – group21. Pensions and similar obligationsThe pension obligations of Danish enterprises are covered by insurance. This also applies to the pension obligations of someforeign enterprises. Foreign enterprises which are not, or only partially, covered by insurance (defined-benefit plans) determinethe uncovered pension obligations actuarially at present value at the balance sheet date. Such pension plans are covered bypension funds for the employees. In the consolidated financial statements, DKK 8,315k (2007: DKK 9,053k) has been recognisedunder liabilities for covering the group’s obligations vis-à-vis existing and former employees less any pension plan assets.The parent only has defined-contribution plans.In the consolidated income statement, DKK 26,018k (2007: DKK 23,273k) has been expensed in respect of pension plans coveredby insurance (defined-contribution plans). As regards pension plans not covered by insurance (defined-benefit plans), a netamount of DKK 688k has been recognised for the group. This amount includes income of DKK 951k concerning the discontinuationof a defined-benefit plan in Norway.In defined-contribution plans, the employer is under an obligation to pay a specific contribution (e.g. a fixed amount or a fixedpercentage of the pay). In a defined-contribution plan, the group does not expose itself to risks related to the future developmentin interest rates, inflation, mortality and disability.The Dantherm group has defined-benefit plans in Sweden, France and Germany.In most of these countries, multi-employer agreements exist, which are managed by pension companies. Dantherm has noinfluence on how the pension companies hedge their obligations or how the contributions from the plans are invested.Below, the plans of the individual countries and their inclusion in the annual report are outlined.In Sweden, the companies are part of a multi-employer agreement administered by insurance companies.The companies have no influence on the investment of the assets and liabilities of the plans. The pension companies send outan annual statement showing the net liability and basis of calculation. The net liability is included in the pension obligationbelow. The net liability in respect of the Swedish plans amounts to DKK 2,718m against DKK 3,329m in 2007.In addition to the liabilities recognised in the balance sheet, the group has a Swedish plan which, due to lack of accessto information about the pension company Alecta, will be treated as a defined-contribution plan in accordance withIAS 19, no. 30. During the year, costs in relation to the plan of DKK 369k have been expensed against DKK 222k in 2007.The group’s pension obligation in France is based on an actuarial calculation prepared in accordance with French accountinglegislation and converted to IFRS. As in Sweden and Norway, no distribution has been made of the assets and liabilities of theplan, for which reason the net liability has been recognised in the pension obligation below. The net liability in respect of theFrench plan amounts to DKK 3,345m against DKK 2,804m in 2007.Only in Germany, the group has an actual defined-benefit plan. The net pension obligation amounts to DKK 2,146k againstDKK 2,252m in 2007.In Norway, the company has been part of a multi-employer agreement. In 2008, the Norwegian company changed to a definedcontributionplan, and all obligations in respect of the previous defined-benefit plan ceased. The discontinuation of the planmeant that a net adjustment of DKK 951k in respect of the defined-benefit plan was set off against the costs of defined-benefitplans for the year.The Norwegian plan was included in the pension obligation in 2007 with a net liability of DKK 843k, comprising an asset ofDKK 8,133k and a liability of DKK 8,976k, respectively.2008 2007DKK ’000 DKK ’000Present value of defined-benefit plans 8,636 17,551Fair value of the assets related to the plans -321 -8,498Net liability recognised in the balance sheet 8,315 9,053Notes 77

IndexNotes – group21. Pensions and similar obligations – continued 2008 2007DKK ’000 DKK ’000Development in the present value of defined-benefit planObligation as at 1 January 17,551 17,588Disposals on transition to defined-contribution plan -8,976 0Foreign currency translation adjustment -529 -460Pension costs in respect of the current financial year 159 749Calculated interest in respect of liabilities 0 486Actuarial gains and losses -98 217Pension costs in respect of previous financial years 529 -1,029Liability as at 31 December 8,636 17,551Development in the fair value of pension assetsPension assets as at 1 January 8,498 6,790Disposals on transition to defined-contribution plan -8,133 0Foreign currency translation adjustment 53 317Expected return on pension plan assets 0 539Group payments to pension plan assets -97 852Pension assets as at 31 December 321 8,498Return on pension plan assetsActual return on pension plan assets 0 539Expected return on pension plan assets 0 539Actuarial gains/losses on pension plan assets 0 0Pension assets comprise:European bonds 268 365Other 53 8,133Pension assets as at 31 December 321 8,498Pension cost recognised in the income statementPension costs in respect of the current financial year 159 778Calculated interest in respect of liability 0 486Expected return on pension plan assets 0 -539Pension costs in respect of previous financial years 529 -1,029Defined-benefit plans, total 688 -304Defined-contribution plans, total 26,018 23,27326,706 22,969Expected contributions for defined-benefit plans 194 1,000The assumptions for the actuarial calculations as at the balance sheet date are as follows (averages):Average discount rate 5.9% 5.6%Expected return on pension plan assets 8.0% 6.6%Future rate of pay increases 1.0% 3.1%Notes 78

IndexNotes – group2008 200722. Provisions DKK ’000 DKK ’000Warranty commitments as at 1 January 19,529 28,807Disposals in relation to discontinued operations 0 -10,897Translation adjustment -23 -69Used during the year -7,249 -8,307Unused warranty commitment, reversed 287 -162Provisions made for the year 11,016 10,157Warranty commitments as at 31 December 23,560 19,529Other liabilities as at 1 January 7,925 6,612Translation adjustments 106 -65Provisions made for the year 8,681 5,450Used during the year -7,511 -4,072Other liabilities as at 31 December 9,201 7,925Provisions as at 31 December 32,761 27,454The maturities of provisions are expected to be:0-1 year 26,668 18,6401-5 years 5,609 8,493> 5 years 484 321Provisions as at 31 December 32,761 27,454Warranty commitments concern goods sold under warranties as well as the right to return goods within a short time limit.The commitments have been calculated on the basis of the experience of previous years. The costs are expected to be incurredin the course of the warranty period.Other liabilities concern probable losses on construction contracts and construction contracts in progress where the sellingprices agreed do not exceed the expected cost of the total contract costs.Notes 79

IndexNotes – group31.12.08 31.12.0723. Payables to credit institutions DKK ’000 DKK ’000Payables to credit institutions are recognised as follows:Non-current payables 286,531 282,124Current payables 222,292 252,378508,823 534,502Falling due after five years: 120,286 122,411Fair value 508,823 533,416The difference between the carrying amount and the fair value amounts to DKK 0k (2007: DKK 1,086k).The difference in 2007 consisted solely of fixed-interest loans denominated in DKK and USD.The above-mentioned liabilities include finance leases as follows:Finance leases are recognised as follows: 2008DKK ’000 Lease payment Interest Carrying amount0-1 year 18,024 -5,737 12,2871-5 years 68,965 -19,320 49,645> 5 years 111,777 -19,574 92,203198,766 -44,631 154,135Finance leases are recognised as follows: 2007DKK ’000 Lease payment Interest Carrying amount0-1 year 17,118 -4,985 12,1331-5 years 59,181 -15,466 43,715> 5 years 113,736 -17,916 95,820190,035 -38,367 151,66831.12.08 31.12.07DKK ’000 DKK ’00024. Trade payables and other payablesTrade payables 109,814 157,846Other payables 170,865 152,096280,679 309,94225. Income taxIncome tax as at 1 January 5,406 5,976Disposals in relation to discontinued operations 0 1,263Foreign currency translation adjustment -404 -788Change in tax provisions in respect of previous years 3,664 8,260Current tax -2,074 -19,355Tax paid -8,299 10,050Income tax as at 31 December -1,707 5,406To be recognised as follows:Income tax receivable 1,103 12,019Income tax payable -2,810 -6,613-1,707 5,406Notes 80

IndexNotes – group31.12.08 31.12.07DKK ’000 DKK ’00026. Contingent liabilitiesUsual guarantees concerning contract work in progress and completed contract work:Guarantees with Danske Bank 85,947 42,980Other guarantees 0 11,761Pension obligation in divested activity 30,567 33,445The group has provided a rent guarantee to a third party of 0 1,80027. SecurityIn respect of mortgage debt of 52,392 55,252security has been provided in:Land and buildings at a carrying amount of 57,795 62,739In respect of lease debt of 154,135 151,668security has been provided in:Land and buildings at a carrying amount of 116,140 125,764Plant and machinery at a carrying amount of 28,609 33,808Other plant, fixtures and fittings, tools and equipment as well as assets under constructionat a carrying amount of 12,781 513In respect of bank debt owed by the subsidiary T&O Stelectric A/S, security has been providedin the form of a company charge in T&O Stelectric A/S of a maximum of DKK 27,000k.In respect of debt to the Danish state, security has been provided in cash and cash equivalentsat a carrying amount of 442 51328. Contractual obligationsOperating lease payments and leases comprise:0-1 year 17,559 11,9161-5 years 23,499 19,939> 5 years 3,190 1,15744,248 33,012Operating leases recognised in the income statement 13,960 10,427Notes 81

IndexNotes – groupCarryingCarryingFair value amount Fair value amountat the date before at the date beforeof acquisition acquisition of acquisition acquisition2008 200729. Acquisition of subsidiaries and activities DKK ’000 DKK ’000Non-current assets 8,480 3,391 - -Receivables and deferred tax assets 89 89 - -Cash 1,062 1,062 - -Non-current payables -2,808 -2,808 - -Deferred tax -654 618 - -Trade payables -187 -187 - -Other payables etc. -174 -174 - -Acquired net assets 5,808 1,991 - -Of which cash -1,063 - - -Fair value of investment before group establishment -1,719 - - -Minority interests -1,600 - - -Cash acquisition price 1,426 - - -In 2008, Dantherm Air Handling Holding A/S increased its ownership interest in the development company Danamics ApSfrom 40.0% to 72.5%.Consequently, the company is no longer categorised as an associate, but as a subsidiary of the Dantherm group.Danamics ApS has developed a new method for cooling electronics, and synergies are expected to be created from cooperationwith the current business areas within Air Handling. The payment for the increased ownership interest totals DKK 1,991k.31.12.08 31.12.07DKK ’000 DKK ’00030. Cash and cash equivalents and short-term bank debtBank deposit etc. 62,719 46,670Cash and cash equivalents as at 31 December 62,719 46,670Current payables to credit institutions 222,292 252,378Of which current part of leasing and credit institutions -33,174 -27,234Short-term bank debt as at 31 December 189,118 225,144Notes 82

IndexNotes – group2008 200731. Discontinued operations DKK ’000 DKK ’000Revenue - 798,856Costs - -794,251Profit before tax - 4,605Tax on profit/loss for the year - -3,099Net profit for the year from discontinued operations - 1,506Cash flows from operating activities - 56,137Cash flows from investing activities - 97,095Cash flows from financing activities - -16,496Total cash flows from discontinued operations - 136,736Assets - 304,525Capital investments - 2,435Liabilities - 267,561Earnings per share from discontinued operations in DKK - 0.2Diluted earnings per share from discontinued operations in DKK - 0.2Comments on the 2007 comparative figures:The company Glenco A/S and its related subsidiaries and indirect investments in Royal Scandinavia A/S have been classifiedas discontinued operations.As at 1 October 2007, Dantherm A/S sold all its shares in the company Glenco A/S with its related subsidiaries to a consortiumconsisting of executive employees in Glenco A/S and Industri Udvikling II K/S. On the same day, the indirect investment inRoyal Scandinavia A/S was sold to FIH Finance A/S.Both divestments were part of the Dantherm group’s strategic plan to focus on the business activities within industrialair handling.Notes 83

IndexNotes – group32. Financial risks and instrumentsRisk management policy of the Dantherm groupAs a result of its business activities, the results, debt and equity of the Dantherm group are impacted by a number of financialrisks – mainly risks concerning changes in exchange rates and interest rate levels. It is group policy to identify and hedge allsignificant financial risks in an expedient way and not to engage in active speculation in financial risks. Thus, the group’s financialmanagement is only aimed at managing financial risks stemming directly from the operations and financing of the group.For a description of accounting policies and methods applied, including the recognition criteria and basis of measurement,reference is made to the section on accounting policies.Currency risksIt is group policy to hedge all significant commercial currency risks arising from foreign currency contracts where the cash flowcan be predicted with sufficient accuracy. The Danish consolidated enterprises’ exposure in EUR is not hedged due to Denmark’sfixed-rate policy vis-à-vis the EUR. Translation risks in relation to the valuation of foreign net investments are generally nothedged. Targeted efforts are being made to capitalise the foreign subsidiaries in order to reduce the translation risk. At regularintervals and as a minimum once a year, the group’s management considers whether loans need to be taken out for balancinglarger net investments where the interest on the currency in question is lower than the interest on DKK.As a result of the group’s increasing international activities, developments between the DKK exchange rate and the exchangerates of the various reporting currencies of the group companies are becoming increasingly important for the operating profit/loss as measured in DKK. The total net position in currencies other than DKK and EUR has changed from a net receivable ofDKK 14m at the end of 2007 to a net liability of DKK 19m at the end of 2008.The currency risks faced by the group are mainly hedged by income and expenses being incurred in the same currency. The group’s foreignenterprises are not materially influenced by exchange rate fluctuations as both income and expenses are settled in local currencies.The currency risks faced by the group in the balance sheet31 December 2008 Hedged throughDKK ’000 securities forward exchangeand cash andcontracts andCurrency cash equivalents Receivables Payables currency swaps Net positionUSD 2,303 37,781 53,240 0 -13,156GBP 6,007 14,452 14,077 0 6,382SEK 195 15,350 20,006 0 -4,461NOK 778 3,967 9,316 0 -4,571EUR 17,980 228,709 225,920 0 20,769PLN 977 6,055 14,263 0 -7,231CNY 26,823 27,531 24,949 0 29,405CHF 2 0 31,013 0 -31,011THB 6,258 5,353 6,087 0 5,524Other 440 333 250 0 52361,763 339,531 399,121 0 2,17331 December 2007 Hedged throughDKK ’000 securities forward exchangeand cash andcontracts andCurrency cash equivalents Receivables Payables currency swaps Net positionUSD 2,280 41,724 45,826 0 -1,822GBP 3,054 16,677 15,720 0 4,011SEK 5,618 20,455 35,277 0 -9,204NOK 901 12,432 14,768 0 -1,435EUR 7,764 269,209 193,066 0 83,907PLN 1,379 20,108 15,942 0 5,545CNY 18,790 45,623 23,746 0 40,667CHF 2 15 32,632 0 -32,615THB 5,826 14,521 11,460 0 8,887Other 10 5 391 0 -37645,624 440,769 388,828 0 97,565Notes 84

IndexNotes – group32. Financial risks and instruments – continuedThe consolidated income statement is influenced by changes in the exchange rates as, at the end of the year, the results of theforeign group enterprises are translated into Danish kroner on the basis of average exchange rates.As regards investments in foreign units, the group’s equity as at 31 December 2008 would be reduced by DKK 31m(2007: DKK 41m) if all exchange rates were 10% lower than the actual rate. Other currency risks in respect of investmentsin foreign units are of immaterial significance.Interest rate risksIt is group policy to hedge interest rate risks on the group’s loans when it is deemed that interest payments can be hedgedsatisfactorily. Hedging is done by entering into interest rate swaps where variable-interest loans are converted into fixed-interestloans or by raising fixed-interest loans.The management regularly assesses the expediency of entering into agreements fully or partly hedging the interest rate risk.The parent and the subsidiary Dantherm Air Handling A/S have entered into interest rate swaps for hedging the variable interestrate on loans in DKK at a total value of DKK 267,495k (2007: DKK 270,667k).The fair value of the interest rate swaps outstanding at the balance sheet date for hedging the interest rate risk of variableinterestloans amounts to DKK 4,027k (2007: DKK 6,305k).In order to limit the interest rate risk, it is the management’s aim that between 50% and 75% of the group’s interest-bearing debtshould be in the form of fixed-interest loans.At the end of 2008, the share of fixed-interest loans constituted 64% against 58% at the end of 2007.All other things being equal, an increase in interest rate levels of 1% per year relative to the interest rate level at the balance sheetdate would have had a negative impact on the results and equity of approx. DKK 2m. A fall in interest rate levels would have hada corresponding positive impact.Effective interest rateCarrying amountLoan/maturity Fixed/variable 2008 2007 2008 2007DKK Fixed 4.0-6.0% 4.0-5.0% 267,495 270,667DKK Variable 5.0-8.0% 4.0-6.0% 58,823 137,613EUR Fixed 4.0-5.0% 4.0-5.0% 29,295 11,968EUR Variable 4.0-7.0% 4.0-6.0% 17,673 23,633USD Fixed 6.0-7.0% 6.0-7.0% 15,289 15,058USD Variable 1.0-3.0% 5.0-8.0% 57,839 13,371GBP Fixed 6.0-7.0% 2,616 0GBP Variable 3.0-7.0% 6.0-7.0% 2,357 4,062SEK Fixed 4.0-5.0% 4.0-5.0% 4,124 1,930SEK Variable 3.0-5.0% 4.0-5.0% 3,403 5,334CHF Variable 5.0-6.0% 4.0-5.0% 31,013 32,632Other Fixed 4.0-7.0% 4.0-7.0% 9,527 12,376Other Variable 5.0-8.0% 5.0-8.0% 9,369 5,858508,823 534,502Liquidity risksIn connection with the raising of loans, it is group policy to ensure the greatest possible flexibility through a spreading of theloans in terms of date of maturity/renegotiation and counterparts while taking pricing into account. The group’s cash reservesconsist of cash and cash equivalents, securities and undrawn credit facilities. The group aims at having adequate cash resourcesto be able to continue to make expedient arrangements in case of unforeseen fluctuations in liquidity.At the end of 2008, the group had unutilised cash reserves of DKK 212m against DKK 179m at the end of 2007.Notes85

IndexNotes – group32. Financial risks and instruments – continuedCredit risksThe credit risks of the group concern receivables and cash as well as derivative financial instruments with a positive fair value.The maximum credit risk relating to financial assets corresponds to the amounts recognised in the balance sheet.The group has no material risks relating to individual customers or collaboration partners. The group’s policy for the assumptionof credit risks involves the ongoing credit rating of all major customers and other collaboration partners.The net value of trade receivables is distributed as follows in terms of credit quality:2008 2007Denmark 48,290 55,082The EU 197,750 232,127The US 31,925 32,258Asia 32,322 62,460Other countries 11,962 32,175Total 322,249 414,102Of the total debtor balance as at 31 December 2008, 49% is insured against losses (2007: 36%).Trade receivables are distributed as follows in terms of maturities:Not falling due 234,086 279,951Falling due after 0-1 month 46,142 96,369Falling due after 1-2 months 26,648 23,405Falling due after 3 months or more 15,373 14,377Total 322,249 414,102Capital managementThe group regularly assesses the need for adapting the capital structure with a view to balancing a higher required rate of returnon equity with the increased uncertainty associated with loan capital. At the end of 2008, the equity share of total equityand liabilities amounted to 33.6% (2007: 35.1%). The target for the equity interest is a minimum of 30%. Capital is managedat group level.According to the dividend policy of Dantherm A/S, the shareholders should obtain a return on their investment in the formof share price increases and dividends exceeding the return on a risk-free investment in bonds. The payment of dividend shouldtake place taking into account the necessary consolidation of equity as the basis for the group’s further expansion.33. Related partiesDantherm A/S does not have any related parties with a controlling influence. Related parties with a substantial influencecomprise the company’s Board of Directors and Board of Executives as well as members of their families.Furthermore, related parties comprise the group enterprises and associates included in the group chart on page 7.Transactions between related parties comprise loan balances and interest thereon, the purchase and sale of goods and services,management fees and remuneration for the Board of Directors and Board of Executives.The remuneration for the Board of Directors and Board of Executives appears from note 5. Other transactions have beeneliminated in the consolidated financial statements.All transactions are carried out at arm’s length.Notes86

IndexContents – Financial statementsof the parent, Dantherm A/SIncome statement.....................................................................................88Balance sheet...............................................................................................89Statement of changes in equity.......................................................91Cash flow statement................................................................................92Notes1. Accounting policies........................................................................932. Accounting estimates and assessments............................943. Revenue..................................................................................................954. Costs.........................................................................................................955. Special items........................................................................................956. Financial income...............................................................................967. Financial expenses...........................................................................968. Tax..............................................................................................................969. Intangible assets................................................................................9610. Property, plant and equipment...............................................9711. Financial assets...................................................................................9712. Receivables...........................................................................................9813. Share capital.........................................................................................9814. Deferred tax..........................................................................................9915. Payables to credit institutions...................................................9916. Trade payables and other payables...................................10017. Contingent liabilities....................................................................10018. Contractual obligations.............................................................10019. Related parties.................................................................................100Contents – Financial statements of the parent, Dantherm A/S87

IndexIncome statement – parentnote 2008 2007DKK ’000 DKK ’000Revenue 3 30,314 31,431Other external expenses 4 9,889 9,021Staff costs 4 15,625 12,824Profit before depreciation, amortisation and impairment losses (EBITDA) 4,800 9,586Depreciation, amortisation and impairment of property,plant and equipment and intangible assets 9, 10 506 247Special items 5 0 8,281Operating profit (EBIT) 4,294 1,058Value adjustments in associates 0 -5,000Financial income 6 4,966 3,400Financial expenses 7 -14,476 -10,068Loss before tax -5,216 -10,610Tax on profit/loss for the year 8 3,761 12,301Net profit/loss for the year -1,455 1,691Proposed appropriation accountProposed dividend 0 10,786Retained earnings -1,455 -9,095-1,455 1,691Income statement – parent 88

IndexAssets – parentnote 31.12.08 31.12.07DKK ’000 DKK ’000Non-current assetsIntangible assetsPatents and licences 9 46 140Total intangible assets 46 140Property, plant and equipmentOther plant, fixtures and fittings, tools and equipment 10 510 27Leasehold improvements 10 1,154 881Total property, plant and equipment 1,664 908Other non-current assetsInvestments in subsidiaries 11 606,832 576,832Other securities and investments 11 26 26Total other non-current assets 606,858 576,858Total non-current assets 608,568 577,906Current assetsDeferred tax 14 1,644 4,505Receivables 12 14,524 2,256Income tax receivable 0 5,491Prepayments 0 1,000Cash 1 1Total current assets 16,169 13,253TOTAL ASSETS 624,737 591,159Assets – parent 89

IndexEquity and liabilities – parentnote 31.12.08 31.12.07DKK ’000 DKK ’000EquityShare capital 13 359,528 359,528Retained earnings 97,374 101,395Proposed dividend 0 10,786Total equity 456,902 471,709LiabilitiesNon-current liabilitiesCredit institutions 15 56,617 65,192Total non-current liabilities 56,617 65,192Current liabilitiesCredit institutions 15 40,915 19,650Trade payables and other payables 16 68,511 34,608Income tax payable 1,792 0Total current liabilities 111,218 54,258Total liabilities 167,835 119,450TOTAL EQUITY AND LIABILITIES 624,737 591,159Contingent liabilities 17Contractual obligations 18Related parties 19Equity and liabilities – parent 90

IndexStatement of changes in equity – parentRetainedProposedDKK ’000 share capital earnings dividend TotalEquity as at 1 January 2007 359,528 114,273 0 473,801Changes in equity in 2007Net profit/loss for the year 0 -9,095 10,786 1,691Total income 0 -9,095 0 1,691Provision for share options 0 812 0 812Purchase of treasury shares 0 -4,595 0 -4,595Total changes in equity in 2007 0 -12,878 10,786 -2,092Equity as at 31 December 2007 359,528 101,395 10,786 471,709Equity as at 1 January 2008 359,528 101,395 10,786 471,709Changes in equity in 2008Net loss for the year 0 -1,455 0 -1,455Total income 0 -1,455 0 -1,455Dividend paid to shareholders 0 120 -10,786 -10,666Share options 0 1,346 0 1,346Purchase of treasury shares 0 -4,032 0 -4,032Total changes in equity in 2008 0 -4,021 -10,786 -14,807Equity as at 31 December 2008 359,528 97,374 0 456,902Statement of changes in equity – parent 91

IndexCash flow statement – parentnote 2008 2007DKK ’000 DKK ’000Loss before tax -5,216 -10,610Adjustment for non-cash operating items etc.Depreciation, amortisation and impairment losses 506 247Other operating items, net 0 -812Special items 0 8,281Value adjustment of associates 0 5,000Financial income -4,966 -3,400Financial expenses 14,476 10,068Cash flows from primary operations before change in working capital 4,800 8,774Change in receivables 648 49,777Change in trade payables etc. 1,231 -26,655Cash flows from primary operations 6,679 31,896Interest income received 4,966 3,400Interest expenses paid -11,190 -10,068Cash flows from ordinary operations 455 25,228Income tax paid 13,905 -601Cash flows from operating activities 14,360 24,627Purchase of property, plant and equipment -1,168 -1,005Sale of financial assets, net 0 99,500Investments in subsidiaries -30,000 -30,000Cash flows from investing activities -31,168 68,495Loan financing:Repayment of non-current liabilities -11,354 -16,000Change in intercompany accounts with group enterprises 28,656 0Shareholders:Dividend paid -10,666 0Exercise of share options 1,346 0Purchase of treasury shares -4,032 -4,596Cash flows from financing activities 3,950 -20,596Cash flows for the year -20,758 72,526Cash and cash equivalents, beginning of year -8,543 -81,069Cash and cash equivalents, end of year -29,301 -8,543Cash at the end of the year comprises:Cash 1 1Short-term bank debt -29,302 -8,544Cash and cash equivalents, end of year -29,301 -8,543Cash flow statement – parent 92

Index1. Accounting policies of the parentThe financial statements of the parent are preparedin accordance with the requirements of the DanishFinancial Statements Act for the preparation offinancial statements of parents.The 2008 annual report of the parent has beenprepared in accordance with International FinancialReporting Standards as adopted by the EU andadditional Danish disclosure requirements for annualreports of listed companies, cf. NASDAQ OMXCopenhagen’s disclosure requirements for annualreports of listed companies and the executive orderon the adoption of IFRS issued pursuant to theDanish Financial Statements Act.The accounting policies have been appliedconsistently with last year.Accounting policiesIn relation to the accounting policies applied in theconsolidated financial statements, the accountingpolicies of the parent only deviate in the followingrespects:RevenueDividend from investments in subsidiaries andassociates is recognised as income in the incomestatement of the parent in the financial year in whichthe dividend is declared. To the extent that distributeddividend exceeds the accumulated earnings afterthe date of acquisition, the dividend is, however, notrecognised as income in the income statement, but isrecognised as a reduction in the cost of the investment.Furthermore, interest income from any equity-likeloans granted to subsidiaries is included in revenuewith the amount concerning the financial year.Revenue also comprises collected management feesfrom the subsidiaries of the parent.Special itemsSpecial items comprise significant one-off itemswhich have typically not occurred in previous yearsand which are not expected to occur in the comingfinancial years, and/or items of a special naturewhich differ from the ordinary operations of theparent.Investments in subsidiaries and associatesInvestments in subsidiaries and associates aremeasured at cost. If there is any indication ofimpairment, an impairment test is carried out asdescribed in the consolidated financial statements.If the cost exceeds the recoverable amount,impairment is made to this lower value.The cost is reduced by the dividend received whichexceeds the accumulated earnings after the dateof acquisition.New accounting regulationReference is made to page 46 in the consolidatedfinancial statements. None of the standards orinterpretations mentioned is expected to affectthe financial statements of the parent.Notes – parent93

Index2. Accounting estimates andassessments of the parentIn the calculation of the carrying amount of certainassets and liabilities, an estimate must be made as tohow future events will affect the value of such assetsand liabilities at the balance sheet date. Estimateswhich are important to the financial reporting of theparent are, e.g., made when determining the needfor impairment of investments in subsidiaries andassociates.The estimates made are based on assumptionsdeemed reasonable by the management, but whichare, naturally, uncertain and unpredictable. Theassumptions may be incomplete or inaccurate, andunexpected events or circumstances may arise.Furthermore, the company is affected by risks anduncertainties which may lead to the actual resultsdeviating from the estimates. Special risks to theDantherm group are mentioned in note 32 of theconsolidated financial statements.The notes contain information about futureassumptions and other uncertain estimates at thebalance sheet date where there is a considerable riskof changes which may result in a significantadjustment of the carrying amounts of assets orliabilities within the next financial year.The management estimates that the applicationof the parent’s accounting policies does not entailany assessments in addition to estimates whichmay have a significant impact on the amountsrecognised in the annual report.Notes – parent94

IndexNotes – parent3. Revenue4. Costs2008 2007DKK ’000 DKK ’000Dividend received 24,000 25,000Management fee 6,314 6,43130,314 31,431Fee for auditors appointed by the general meetingTotal fee for Beierholm 664 820Total fee for other auditors 0 425664 1,245This can be specified as follows:Audit 250 525Non-audit services 414 720664 1,245Staff costsWages and salaries 12,527 11,285Defined-contribution plans 800 587Other social security expenses 28 13Other staff costs 2,270 93915,625 12,824Average no. of employees 9 7Remuneration for the Board of Directors and Board of ExecutivesBoard of Directors of the parent 2,275 2,134Board of Executives of the parent 2,757 3,6335,032 5,767The remuneration paid to the Board of Executives of the parent includes pension contributions of DKK 244k (2007: DKK 234k).The Board of Directors is remunerated for the work performed only.An agreement has been made concerning bonus pay for the CEO registered with the Danish Commerce and Companies Agency.The agreement may constitute up to 30% of the base salary. The bonus programme contains a bonus which is calculated on thebasis of the company’s financial results and an individual bonus which is based on the fulfilment of a number of agreed targets.No bonus will be paid to the Board of Executives based on the 2008 financial year. In 2007 and 2008, the company establisheda share option programme for members of the Board of Executives and other executive employees.Reference is made to note 6 of the consolidated financial statements for a description of the share-based remuneration.5. Special itemsLoss on the divestment of subsidiary and sale of investments 0 8,2810 8,281Comments on the 2007 comparative figures:On 1 October 2007, Dantherm A/S divested its activities within the business segment Comfort Ventilation & Engineering.The sale resulted in a total loss of DKK 8,281k.Notes – parent 95

IndexNotes – parent2008 2007DKK ’000 DKK ’0006. Financial incomeInterest income from group enterprises 31 1,305Other interest income 4,935 250Foreign exchange gains 0 553Realised gains on securities 0 1,2924,966 3,4007. Financial expensesInterest expenses to group enterprises 1,578 1,700Other interest expenses 7,046 8,368Market value adjustments and losses on securities 5,852 014,476 10,0688. TaxCurrent tax for the year comprises:Current tax for the year -390 0Adjustment of deferred tax 366 -6,834Adjustment of deferred tax due to reduction of income tax rate 0 -68Adjustment of tax in respect of previous years -3,737 -5,399-3,761 -12,301Tax on profit/loss for the year comprises:Loss before tax -5,216 -10,610Tax rate 25% 25%Calculated tax on profit/loss before tax -1,304 -2,653Adjustment of deferred tax due to reduction of tax rate 0 -68Tax on non-taxable income -6,968 -6,260Tax on non-deductible costs etc. -775 2,079Changed assessment of tax assets 9,023 0Adjustment of tax in respect of previous years -3,737 -5,399-3,761 -12,301Effective tax rate 72.1% 115.9%9. Intangible assetsPatents and licencesCost as at 1 January 282 282Cost as at 31 December 282 282Amortisation and impairment losses as at 1 January 142 48Amortisation 94 94Amortisation and impairment losses as at 31 December 236 142Carrying amount as at 31 December 46 140Notes – parent 96

IndexNotes – parent2008 2007DKK ’000 DKK ’00010. Property, plant and equipmentOther plant, fixtures and fittings, tools and equipmentCost as at 1 January 681 681Additions 594 0Cost as at 31 December 1,275 681Depreciation and impairment losses as at 1 January 654 625Depreciation 111 29Depreciation and impairment losses as at 31 December 765 654Carrying amount as at 31 December 510 27Leasehold improvementsCost as at 1 January 1,005 0Additions 574 1,005Cost as at 31 December 1,579 1,005Depreciation and impairment losses as at 1 January 124 0Depreciation 301 124Depreciation and impairment losses as at 31 December 425 124Carrying amount as at 31 December 1,154 88111. Financial assetsInvestmentsOtherin group Investments securities andDKK ’000 enterprises in associates investmentsCost as at 1 January 2007 753,609 88,761 53Additions 30,000 0 0Disposals -147,781 -88,761 0Cost as at 31 December 2007 635,828 0 53Value adjustments as at 1 January 2007 138,996 43,761 27Disposals -80,000 -43,761 0Value adjustments as at 31 December 2007 58,996 0 27Carrying amount as at 31 December 2007 576,832 0 26Cost as at 1 January 2008 635,828 0 53Additions 30,000 0 0Cost as at 31 December 2008 665,828 0 53Value adjustments as at 1 January 2008 58,996 0 27Value adjustments as at 31 December 2008 58,996 0 27Carrying amount as at 31 December 2008 606,832 0 26Notes – parent 97

IndexNotes – parentName Registered Ownership Ownershipoffice interest interestSubsidiaries: 2008 2007ERO A/S Skive, Denmark 100% 100%Dantherm Air Handling Holding A/S Skive, Denmark 100% 100%Dantherm Filtration Holding A/S Mariager, Denmark 100% 100%Dantherm Power A/S Skive, Denmark 100% 100%Comments on the 2007 comparative figures:As at 1 October, Dantherm A/S divested the subsidiary Glenco A/S and the associate Investeringsselskabet RS ApS.31.12.08 31.12.0712. Receivables DKK ’000 DKK ’000Receivables from group enterprises 14,104 118Other receivables 420 2,13814,524 2,25613. Share capitalNumber of shares Nominal value (DKK ’000)2008 2007 2008 20071 January 7,190,574 7,190,574 359,528 359,52831 December 7,190,574 7,190,574 359,528 359,528The share capital consists of 7,190,574 shares with a nominal value of DKK 50. The shares are not divided into classes.Treasury sharesNumber of shares Nominal value (DKK ’000)2008 2007 2008 20071 January 50,526 14,526 2,526 726Additions 30,000 36,000 1,500 1,80031 December 80,526 50,526 4,026 2,526Treasury shares’ share of the share capital 1.1% 0.7%Dantherm A/S has been authorised by the general meeting to let the company buy treasury shares up to a total nominal valueof 10% of the share capital. The consideration paid must not deviate by more than 10% from the currently listed share priceat the time of purchase. This authorisation is valid until the next annual general meeting to be held on 30 April 2009.The price of the treasury shares purchased in the year was DKK 134.40 per share, corresponding to a total acquisition priceof DKK 4,032k.The treasury shares were purchased to cover the company’s share option programme, cf. note 6.Comments on the 2007 comparative figures:The price of the treasury shares purchased in 2007 was DKK 127.66 per share, corresponding to a total acquisition priceof DKK 4,596k.The treasury shares were purchased to cover the company’s share option programme.Notes – parent 98

IndexNotes – parent2008 200714. Deferred tax DKK ’000 DKK ’000Deferred tax as at 1 January -4,505 9,419Change in income tax rate 0 -68Adjustment of deferred tax in respect of previous years 0 -7,022Group refund 2,495 0Deferred tax for the year included in net profit/loss for the year 366 -6,834Deferred tax as at 31 December, net -1,644 -4,505Deferred tax is recognised in the balance sheet as follows:Deferred tax (receivable) -1,644 -4,505Deferred tax as at 31 December, net -1,644 -4,505Deferred tax concerns:Non-current assets -26 1,061Tax losses allowed for carry-forward -1,618 -5,566-1,644 -4,50515. Payables to credit institutions 31.12.08 31.12.07DKK ’000 DKK ’000Payables to credit institutions are recognised as follows:Non-current payables 56,617 65,192Current payables 40,915 19,65097,532 84,842Falling due after five years: 10,169 20,768Of payables to credit institutions, short-term bank debt totals 11,612 11,106Fair value of payables to credit institutions 97,532 84,842The carrying amount corresponds to the fair value of all loans.Effective interest rateCarrying amountLoan/maturity Fixed/variable 2008 2007 2008 2007DKK Variable 7-8% 5-7% 30,000 35,000DKK Fixed 5-6% 4-5% 29,303 8,544EUR Variable 6-7% 6-7% 7,216 8,666CHF Variable 5-6% 4-5% 31,013 32,63297,532 84,842The carrying amount corresponds to the fair value of all loans.Risk management policy of the parentAs a result of its operations, investments and financing, the parent is exposed to changes in foreign exchange rates and interestrate levels. It is parent policy to identify and hedge all significant financial risks in an expedient way and not to engage in activespeculation in financial risks.Currency risksThe parent’s currency risks primarily concern loan financing in EUR and CHF. The company regularly assesses the expediency ofentering into agreements to fully or partly hedge such currency risk. However, contracts in EUR are not hedged.Interest rate risksPart of the parent’s bank financing consists of variable-interest loans. This involves a risk of interest payments being changed, both in theshort and in the long term. The company regularly assesses the expediency of entering into agreements to fully or partly hedge suchinterest rate risk. Agreements have therefore been made with a view to hedging the interest rate risk in respect of selected bank loans.Credit risksThe parent’s credit risks pertain primarily to receivables from subsidiaries, which risks are not hedged.Notes – parent 99

IndexNotes – parent31.12.08 31.12.0716. Trade payables and other payables DKK ’000 DKK ’000Payables to group enterprises 55,666 27,412Trade payables 1,293 792Other payables 11,552 6,40468,511 34,60817. Contingent liabilitiesThe parent is jointly and severally liable with other consolidated enterprises for the group’s bank overdraft facility withthe group’s main bank.Group bank overdraft withdrawals amount to DKK 151,948k.The parent has guaranteed for the subsidiaries’ balances with FIH.Total payables to FIH amount to DKK 200,287k.The parent is jointly and severally liable with the jointly registered consolidated enterprises, Dantherm Air Handling A/Sand ERO A/S for the total VAT commitment.The parent has provided a guarantee for T&O Stelectric A/S’s balance with Sydbank of maximally DKK 2,600k.31.12.08 31.12.0718. Contractual obligations DKK ’000 DKK ’000Leases and operating lease payments comprise:Next year 995 4931-5 years 2,525 1,545After 5 years 1,849 1,7875,369 3,825Operating leases and rent recognised in the income statement 831 49319. Related partiesSee note 33 in the consolidated financial statements for a description of related parties.The parent’s balances with group enterprises are stated in note 12 and note 16 and carry variable market interest rates.Interest income from and interest expenses to group enterprises are stated in note 6 and note 7.The parent has received dividend of DKK 24,000k from subsidiaries.A management fee of DKK 6,314k has been invoiced to the subsidiaries.No provisions were made during the year or in previous years concerning related parties, for which reason no earnings impactis seen in this respect.Notes – parent 100

ParentDantherm A/SJegstrupvej 4DK-7800 SkiveTel. +45 99 14 90 00CVR. no. 30 21 43 15www.dantherm.comAir HandlingDantherm Air Handling A/SMarienlystvej 65DK-7800 SkiveTel. +45 96 14 37 00www.dantherm-air-handling.com• Heating and cooling• Ventilation• Dehumidifiers• Mobile air handling• Heat exchangers• Air-conditioning systems• Combined systems for coolingof heat-sensitive electronics• Service and maintenancePowerDantherm Power A/SMajsmarken 1DK-9500 HobroTel. +45 88 43 55 00www.dantherm-power.com• Fuel cell solutions• Power backup solutions• Micro power plants• Service and maintenanceFiltrationDantherm Filtration A/SIndustrivej 13, AssensDK-9550 MariagerTel. +45 99 68 09 00www.danthermfiltration.com• Industrial air purification• Filters• Ventilators• Cyclones• Pipe systems• Service and maintenanceT&O Stelectric A/SLangelandsvej 6DK-8940 Randers SVTel. +45 86 40 40 44www.tostelectric.dk• Development and productionof electronic control systemswww.bakethecake.dk