ÅRSRAPPORT 2004 Freja ejendomme A/S

ings to be used for various museum activities. An ideas
competition was planned towards the end of the year
for a future residential dwelling development outside
the present prison wall. However, the municipality of
Horsens has deferred a decision on the conditions that,
in Freja’s opinion, should be set out before such a
competition.
We are still working intently on finding parties interested
in renting and investing in the former
Randers Barracks. The future use of the property is
therefore yet to be determined.
NEW ACCOUNTING POLICIES
This is the first Annual Report that Freja presents
under the International Financial Reporting
Standards, IFRS.
The most significant change in connection with the
transition to the new standards relates to the valuation
of the properties not yet sold, as the properties
currently for sale are treated as inventories. This
means that the properties are not revalued, even
where there is a clear indication that the value of
the property is higher than cost.
As a result of this change, two revaluations made in
previous years have been reversed, resulting in a
DKK 42.2 million reduction of equity.
RISKS
During the year, the Company’s operations have not
been subject to particular risk, and the Company is
therefore not considered to be exposed to either
technical or financial risk. The Company is not exposed
to any financing risk. All the Company’s property
transactions are denominated in DKK, and the
Company’s need to draw on credit lines is modest.
Some of the Company’s properties are polluted and
therefore pose a potential environmental hazard.
When the Company takes over a property, the
expected future clean-up costs are included in its
valuation. Costs that may change over the course
of the project. All known and anticipated environ-
60
mental costs have been deducted from the value of
individual properties in the balance sheet.
CORPORATE GOVERNANCE
The Company continues to follow the debate about
corporate governance and about management and
direction of state-owned public limited companies.
In January 2004, a report, "The State as Shareholder"
was released under government auspices by a number
of ministries. The report examines the corporate
governance requirements specifically for stateowned
public limited companies. Based on this, and
with reference to the report’s recommendations,
Freja’s Board of Directors has found it natural to
re-examine its corporate governance.
The Board of Directors considers that with the implemented
adjustments, Freja complies with both the
recommendations of the Nørby Committee and the
recommendations of the "The State as Shareholder"
report. The Company plans to perform a new, independent
assessment of corporate governance issues
when a revised edition of the Nørby Committee’s
Report is available. It will in all likelihood be incorporated
in the Annual Report for 2005.
OUTLOOK FOR 2005
It can be difficult to predict the development of the
Company’s sales over the next year, although the
demand for residential construction rights, particularly
in the Copenhagen area, is expected to remain
high. The demand for business construction rights in
this area is expected to be stagnant or slightly down,
which is indicative of the situation in the rest of the
country as well.
One of the implications of the transition to new
accounting policies is that the recognition of the
proceeds from a sale may be deferred beause the
formal recognition requirements are not met.
Based on the above general expectations and a
concrete assessment of the sales expected to be
effected as well as recognised before year end, Freja
expects a profit for 2005 of around DKK 100 million.