Unusual year affects Verdo’s financial results
2019 was an extraordinary year for Verdo, which affects the financial result. The consoli-dated revenue was DKK 2.6 billion (2018: DKK 2.4bn), EBITDA was DKK 99 million (2018: DKK 261m) and the result after tax was DKK -268 million (2018: DKK 85m). This result is deemed unsatisfactory.
Press release, June 2020
2019 was an extraordinary year for Verdo, which affects the financial result. The consoli-dated revenue was DKK 2.6 billion (2018: DKK 2.4bn), EBITDA was DKK 99 million (2018: DKK 261m) and the result after tax was DKK -268 million (2018: DKK 85m). This result is deemed unsatisfactory.
Three exceptional circumstances affected the result for the year: Verdo chose to make provi-sions for the decisions in the heating bill cases (DKK -491 million), the value of the fibre net-work was written down (DKK -194 million), and the business agreement with Eniig resulted in a profit of DKK 365 million.
Without these special items, the revenue generated over the year would have been DKK 3.1 billion and the operating profit (EBITDA) DKK 225 million. A generated cash flow of DKK 201 million in 2019 emphasises Verdo’s sound underlying result for 2019.
Refunds for heating customers
Verdo chose to set aside refunds for heating-bill overcharges to heating consumers in Randers, even though not all cases have been settled and despite the fact that Verdo does not necessarily agree with all the decisions of the Danish Utility Regulator.
“In so doing, Verdo is applying a precautionary principle in making provisions for receiva-bles in continuation of known and proposed decisions,” explains Torben Høeg Bonde, Chairman of the Board of Verdo, adding that Verdo has begun sending refunds to customers.
“Verdo chose to clarify to its customers that all refunds will be made in keeping with the final decisions, in line with customary practice in the sector,” Torben Høeg Bonde says.
Sound operating profit for 2019
Despite the unsatisfactory result, Verdo’s operations during the year have been sound. In 2019, Verdo’s commercial business generated a profit on a par with 2018, and 60% of the group’s total operating profit derives from this.
The Technical Infrastructure Division had its best year ever in terms of both revenue and profit – at the same time becoming the biggest company in Denmark in the area of urban street lighting. Verdo’s technical carbon trading contributes to record turnover in the fuel trading division.
“Despite the exceptional conditions in 2019, Verdo delivered a sound operating result with good cash flow,” says Jakob Flyvbjerg Christensen, CEO, Verdo, adding:
“Verdo is an increasingly stronger, more keenly focused utility company in the areas of heat and water while achieving satisfying results in our commercial activities at the same time.”
Despite the exceptional conditions in 2019, Verdo delivered a sound operating result with good cash flow.
Focus on district heating and water
2019 was an important year for the utility company in terms of focusing its activities on water and heat. The business agreement with Eniig means that Verdo now supplies district heating to 69,000 homes and businesses, making Verdo the fifth biggest heat supplier in Denmark in terms of supplied energy (500 GWh annually).
After taking over Herning’s district heating network, Verdo enhanced its consumer governing body by adding 16 new members of the committee of shareholders, four of whom are new board members.
Verdo’s efforts focused on UN Sustainable Development Goal no. 6, Clean Water and Sanita-tion, have continued by acquiring woodland areas and setting up emergency supplies for regional facilities. In 2019, Verdo was able to demonstrate that it supplies some of the clean-est, cheapest drinking water in Denmark.
Writing down the value of the fibre network
Verdo contributes to the local communities in Randers and Hobro by investing in fibre networks, enabling fast Internet access. The value of the fibre networks is written down in the financial statements for the year, so that it now corresponds to the business area’s earning potential, which adversely affects the financial result for the year.
Closing office in the UK
In 2019, Verdo Renewables’ futile efforts to develop a recovery plan prompted the decision to wind up the company after the closing of the accounts.
Next Level Strategy and focusing on the Sustainable Development Goals
In 2019, Verdo activated a new strategy for the years ahead: Next Level, in which the group focuses its activities on heating, water, technical infrastructure and fuel trading.
“Verdo wants to generate green energy that makes a world of difference. We want to contribute to the green transition and meet the global goal of sustainable development leading up to 2030,” says Jakob Flyvbjerg Christensen, explaining that Verdo has decided to bring particular focus to bear on three of the seventeen UN Sustainable Development Goals and incorporate them into Verdo’s strategy, namely no. 6: Clean Water and Sanitation; no. 7: Affordable and Clean Energy; and no. 13: Climate Action.
Verdo received a new CEO in 2020: Jakob Flyvbjerg Christensen. With Jakob at the helm, Verdo will intensify its long-standing commitment to climate-friendly supplies of energy and water to urban and local communities, particularly focused on attractively priced clean water and sustainable district heating.
Verdo expects the revenue and financial result for 2020 to be in line with 2019, with reservations for any long-term effects of COVID-19, however.
About Verdo
Verdo is an independent, consumer-run energy group headquartered in Randers.
Verdo is a supplier of electricity, water and heat, but it is also involved in commercial areas such as the development, establishment and servicing of green energy facilities, trading in sustainable biofuels and technical infrastructure.