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Faerch Group A/S Rasmus Færchs Vej 1 7500 Holstebro Denmark 38812424 2019-05-22 Nils Smedegaard Andersen 2018-01-01 2018-12-31 2017-07-24 2017-12-31 <table xmlns="http://www.w3.org/1999/xhtml" style="border-right: 0px; border-top: 0px; border-left: 0px; width: 650px; border-bottom: 0px; border-collapse: collapse" width="100%"><tr><td colspan="1">Business model</td></tr><tr><td colspan="1">Faerch has a platform-oriented business model that drives a cost leadership position via standardisation, while providing the industry’s broadest and most innovative product range to our customers. Combination of standardised manufacturing processes with a high level of operational flexibility to achieve a diverse product range, enables Faerch to provide customers with innovative quality solutions, delivered on time, and at competitive prices.</td></tr><tr><td colspan="1">In-depth material expertise and process know-how allow optimisation and reduce material loss in the production processes. It also generates an ability to use and re-use recyclable raw materials for development of sustainable offerings across product categories. In addition, Faerch’s material knowledge allows us to continue to push boundaries of our tray attributes to the benefit of customers – for example, dual color, high impact strength, 1 mm stacking height, sealing properties or glass clear transparency.</td></tr><tr><td colspan="1">To maintain and grow our position in the market, while evolving with our stakeholders, Faerch takes a long-term approach to our own development. By competing in carefully selected markets and applications where we know we can make a difference, and by maintaining significant investments in research, quality equipment and motivated employees, Faerch is committed to staying true to our business model - our DNA.</td></tr></table><br><table xmlns="http://www.w3.org/1999/xhtml" style="border-right: 0px; border-top: 0px; border-left: 0px; width: 650px; border-bottom: 0px; border-collapse: collapse" width="100%"><tr><td colspan="1">Achieving circularity in food packaging</td></tr><tr><td colspan="1">Sylvain Raux</td></tr><tr><td colspan="1">Director of Group Sustainability and External Affairs</td></tr><tr><td colspan="1">In recent years, concerns about global challenges have increased. This has given rise to a debate about plastic packaging. As a responsible company producing packaging we are not only obliged to produce and recycle in a sustainable manner but also to provide the public and consumers with fact-based and objective information. This includes difficult and complex questions like: “What is the best material for food packaging”?</td></tr><tr><td colspan="1">Customers expect food suppliers to make sustainable environmental choices. Food packaging should keep products safe and fresh. It should reduce food waste as well as environmental impact. As a leading manufacturer of plastic packaging for the food industry, we are committed to make a positive difference and to raise the standards of sustainable food packaging.</td></tr><tr><td colspan="1">Today, sustainability is a competitive imperative and a key to survival. But at Faerch, it is not something new. It has been embedded in our corporate strategy, daily operations and priorities for years.</td></tr><tr><td colspan="1">To create change we need to focus on sustainability- driven innovation. And we need to bring innovation closer to the market. In July 2018, we acquired the Dutch recycling company 4PET. With the acquisition, we succeeded in integrating a circular economy in which materials flow in a “closed loop”. We are now able to sort and process disposed PET trays of all colours, and to transform them into raw material for new food contact products. In other words, we have achieved 100% recycling of the same material, for the same use, turning used food trays into a valuable resource rather than waste.</td></tr><tr><td colspan="1">On the following pages, you will read about our 2018 activities and progress across our five focus areas. Naturally, there is still room for improvement. And that is why we continue to challenge our approach to sustainability. However, we are convinced that we are on the right path and I am looking forward to continuing the journey and to pushing the boundaries even further.</td></tr><tr><td colspan="1">Sylvain Raux</td></tr><tr><td colspan="1">Director of Group Sustainability and External Affairs</td></tr></table><br><table xmlns="http://www.w3.org/1999/xhtml" style="border-right: 0px; border-top: 0px; border-left: 0px; width: 650px; border-bottom: 0px; border-collapse: collapse" width="100%"><tr><td colspan="2">Sustainability governance structure</td></tr><tr><td colspan="2">Sustainability is one of Faerch’s core values and we operate with responsibility, integrity and fundamental respect for labour rights, environmental and climate consideration, principles of anti-corruption and fair competition.</td></tr><tr><td colspan="2">We support the principles of the UN Global Compact, OECD’s Principles of Corporate Governance, the UN Sustainability Development Goals and recognised best practice.</td></tr><tr><td colspan="2">Managing performance</td></tr><tr><td colspan="2">To ensure continual progress towards our sustainability goals, Faerch has a formal sustainability governance structure that sets a clear framework for our priorities, roles and responsibilities. The structure provides a solid foundation for developing and anchoring our sustainability strategy and targets across the Group, and it ensures that sustainability is embedded in our long-term, corporate strategy, daily operations and priorities.</td></tr><tr><td colspan="2">The governance structure is divided into four levels</td></tr><tr><td colspan="2">The executive management level, business unit level, regional level and local level. Through policies, standards, management systems, procedures and risk management, we ensure that sustainability is truly embedded throughout the entire Faerch Group.</td></tr><tr><td colspan="2">Executive management level</td></tr><tr><td colspan="2">- Setting direction for the comprehensive long-term work related to Faerch’s sustainability development.</td></tr><tr><td colspan="2">Business unit level</td></tr><tr><td colspan="2">- Resource allocation to enhance continuous sustainability development in the individual business units</td></tr><tr><td colspan="2">- Reporting on non-financial data.</td></tr><tr><td colspan="2">Regional level</td></tr><tr><td colspan="2">- Specific focus areas supporting Faerch’s ambition levels and priorities</td></tr><tr><td colspan="2">- Stakeholder engagement and collaboration.</td></tr><tr><td colspan="2">Local level</td></tr><tr><td colspan="2">- Implementation of concrete initiatives and improvements in line with the Group’s overall long-term plans and vision.</td></tr><tr><td colspan="2">Assessing our areas of priority</td></tr><tr><td colspan="2">Faerch operates in a constantly changing world, and we need to be aware of and react to the external changes that can impact our business. Assessing materiality helps us identify and prioritise the sustainability issues that matter the most to our business and stakeholders. And it helps us channel our resources and activities to the areas where we can have the strongest impact.</td></tr><tr><td colspan="2">In 2018, we conducted a re-evaluation of our materiality assessment from 2016 that identified our main economic, environmental, ethical and social impacts. The assessment engaged both external and internal stakeholder groups. The materiality matrix below shows the 14 most important issues that were identified, their relevance to our stakeholders, their influence on our business, as well as their link to the UN Sustainable Development Goals. We still believe that these 14 issues are relevant and important to Faerch today, and they therefore continue to form the basis for our defined 5 focus areas.</td></tr><tr><td colspan="2">Our key stakeholders</td></tr><tr><td>-</td><td>Our customers (food producers, distributors and retailers)</td></tr><tr><td>-</td><td>NGOs</td></tr><tr><td>-</td><td>End-users</td></tr><tr><td>-</td><td>Employees</td></tr><tr><td>-</td><td>Local communities</td></tr><tr><td colspan="2">Our 5 focus areas</td></tr><tr><td colspan="2">Based on the materiality assessment</td></tr><tr><td colspan="2">Sustainable packaging</td></tr><tr><td colspan="2">Food safety</td></tr><tr><td colspan="2">Responsible operations</td></tr><tr><td colspan="2">People & organisations</td></tr><tr><td colspan="2">Business ethics</td></tr><tr><td colspan="2">Our focus areas & ambition levels</td></tr><tr><td colspan="2">Our planet is facing severe economic, social and environmental challenges. Holding a leading position within plastic packaging and recycling for the food industry, we need to take responsibility and define priorities and actions for our business, today and in the future.</td></tr><tr><td colspan="2">Based on our materiality assessment, we have identified 5 main focus areas that are material to our business. These are directly linked to 5 UN Sustainable Development Goals where we believe we can create the biggest impact.</td></tr><tr><td colspan="2">For each focus area, we have established a long-term level of ambition supported by actions. Our ambition is to be the leader in sustainable packaging and food safety. Each focus area has defined KPIs supporting our long-term ambition and sustainable development.</td></tr><tr><td colspan="2">Sustainable packaging</td></tr><tr><td colspan="2">Be the leader in “closing-the-loop” and plastic recyclability</td></tr><tr><td colspan="2">Food safety</td></tr><tr><td colspan="2">Be the leader in methods and products, which protect food, extend shelf life and reduce food waste</td></tr><tr><td colspan="2">Responsible operations</td></tr><tr><td colspan="2">To minimise CO2 emissions from own activities</td></tr><tr><td colspan="2">People & organisations</td></tr><tr><td colspan="2">To secure workplace with focus on employee development</td></tr><tr><td colspan="2">Business ethics</td></tr><tr><td colspan="2">To ensure orderly and responsible business practice</td></tr><tr><td colspan="2">The UN Sustainable Development Goals</td></tr><tr><td colspan="2">In 2015, the United Nations drew up a roadmap for peace and prosperity for people and the planet, now and in the future. This resulted in 17 Sustainable Development Goals (SDGs) that represent an unprecedented opportunity to take sustainability to a new level.</td></tr><tr><td colspan="2">While we support all the SDGs, we focus our efforts on the goals and targets that are the most important to our business and where we believe we can make the most meaningful contribution. As we move forwards, we will continue to add actions and initiatives to support the SGDs.</td></tr><tr><td colspan="2">Closing the loop on food trays</td></tr><tr><td colspan="2">Large quantities of plastic waste end up in oceans and landfills causing significant economic and environmental damage. Public concerns are growing, and it is time to change. We need to rethink the way we design, produce and dispose of plastic food packaging. We need to stop wasting resources and make sure that plastic packaging is properly collected at the end of its life and reused in a circular economy.</td></tr><tr><td colspan="2">Plastic food packaging keeps our food safe and fresh. But it comes with a cost to the environment if it is thrown away and not reused. As a leading manufacturer of plastic packaging for the food industry, we acknowledge our responsibility and we are committed to make a difference. For years, sustainability and the use of rPET have been embedded in our corporate strategy and it is an integrated part of our daily operations and priorities.</td></tr><tr><td colspan="2">With a position as an industry leading supplier, we are able to make an important contribution to sustainability on a global level. Our aim is to lead, not follow, in the use of recycled plastic. And we are constantly working to bring recyclability to the next level.</td></tr><tr><td colspan="2">Tray-to-tray recycling on an industrial scale</td></tr><tr><td colspan="2">Creating circularity in food packaging has topped our agenda for many years. In 2018, we took a huge step in closing the loop on food trays with the acquisition of Dutch 4PET Group, a leading sheet manufacturer with unique recycling capabilities. With the acquisition, we have become one of the world's first integrated plastic packaging suppliers to achieve a circular economy for food trays on an industrial scale.</td></tr><tr><td colspan="2">With the recycling system and infrastructure offered by 4PET, we are able to sort and process disposed plastic trays of all colours, and transform them into raw material for new food contact products. In other words, we have achieved 100% recycling of the same material, for the same use, turning used food trays into a valuable resource rather than waste.</td></tr><tr><td colspan="2">Tray-to-tray: How does it work?</td></tr><tr><td colspan="2">Used plastic trays of any colour are collected, sorted, washed and grinded and turned into food-approved pellets and flakes in a food grade EFSA approved process. These are then processed into new trays in the same quality you know and expect from Faerch. With no loss of micro plastic into the environment. We ship the trays to our customers. Packed with food, they go back to the stores where the circle begins again.</td></tr><tr><td colspan="2">Using recycled plastic material</td></tr><tr><td colspan="2">Since 2010, we have significantly increased our use of recycled plastic material in our recipes and products. Today, over 70% of our produced volume of PET material is based on recyclability. And with the technology and systems offered at 4PET, we are able to take recycling to the next level by integrating a closed loop where used trays are returned to our sites as flakes. And a new lifecycle begins.</td></tr><tr><td colspan="2">Recycling of black food trays</td></tr><tr><td colspan="2">Faerch has worked with several industrial players, organisations and supermarket chains to improve the recyclability of black food trays. The aim has been to reduce the amount of plastic that ends up in incineration plants or landfill sites and to find qualified methods for sorting and reusing black plastic. Since 2012, we have offered a black CPET ID packaging material that is detectable by the NIR (Near InfraRed) optical sorting equipment currently used by most recycling companies. Where the right infrastructure is in place, trays produced from CPET ID can be sorted from mixed household waste, cleaned and used as recycled raw material.</td></tr><tr><td colspan="2">Faerch signs up to The UK Plastics Pack</td></tr><tr><td colspan="2">In May 2018, Faerch signed up to the UK Plastics Act, a bold initiative set to transform the UK plastic industry. By bringing together the entire plastics value chain behind a common set of ambitious targets, the new Pact will move us towards a circular system which keeps plastic in the economy and out of the environment.</td></tr><tr><td colspan="2">As part of our commitment to the UK Plastics Pact, we will invest in further innovation, research and new business models to rethink and redesign the packaging we deliver to the food industry, as well as encourage more reuse.</td></tr><tr><td colspan="2">The goal is to build a stronger recycling system where we as industry take more responsibility for our waste and ensure that plastic packaging can be effectively recycled and made into new products and packaging.</td></tr><tr><td colspan="2">Sustainability in our value chain</td></tr><tr><td colspan="2">Faerch is a leading manufacturer of plastic packaging and we are aware that the scale of our business and our activities have far-reaching environmental, social and economic impacts.</td></tr><tr><td colspan="2">A circular economy</td></tr><tr><td colspan="2">Creating circularity in food packaging has topped our agenda for many years and in 2018, we took a significant step in closing the loop on food trays with the acquisition of 4PET Group. The acquisition enables 100% recycling of the same material, for the same use, turning used food trays into a valuable resource rather than waste. When a tray is consumed, it is disposed, collected and processed into a new tray - and the circle repeats itself.</td></tr><tr><td colspan="2">To reduce negative impacts and to make sure that we continue to add value and deliver competitive advantages to our customers, we have defined a set of actions to each stage in our value chain.</td></tr><tr><td colspan="2">Suppliers & Sourcing</td></tr><tr><td>•</td><td>Supplier Code of Conduct</td></tr><tr><td>•</td><td>Supplier audits</td></tr><tr><td>•</td><td>Responsible packaging activities</td></tr><tr><td colspan="2">Product Development</td></tr><tr><td>•</td><td>Delivering technical solutions for Cradle-to-Cradle</td></tr><tr><td>•</td><td>Packaging to extend food shelf life and reduce food waste</td></tr><tr><td>•</td><td>Reducing packaging weight</td></tr><tr><td>•</td><td>Reducing stacking height</td></tr><tr><td>•</td><td>Meeting high standards & going beyond food safety legislation</td></tr><tr><td>•</td><td>Innovative mono material solutions improving recyclability</td></tr><tr><td colspan="2">Production</td></tr><tr><td colspan="2">Extrusion/Thermoforming</td></tr><tr><td>•</td><td>Raw material: Recycled plastic</td></tr><tr><td>•</td><td>Reducing energy consumption through specific environmental projects</td></tr><tr><td>•</td><td>Minimising plastic waste in the production</td></tr><tr><td>•</td><td>Investing in energy effective technology</td></tr><tr><td>•</td><td>Implementing specific activities to reduce work-related accidents</td></tr><tr><td>•</td><td>Training our employees in occupational health</td></tr><tr><td colspan="2">Logistics</td></tr><tr><td>•</td><td>Reducing shipment by producing trays closer to customer locations</td></tr><tr><td>•</td><td>Compiling transportation by delivering more trays in one truckload due to reduced stacking height</td></tr><tr><td>•</td><td>Optimising vehicle motors</td></tr><tr><td>•</td><td>Reducing outer packaging</td></tr><tr><td colspan="2">At the customer</td></tr><tr><td>•</td><td>Helping customers to extend food shelf life and optimise their packaging solutions</td></tr><tr><td>•</td><td>Working with retailers on improving recycling rates of plastic trays</td></tr><tr><td>•</td><td>Bringing new knowledge on sustainable packaging to our customers</td></tr><tr><td>•</td><td>Testing packaging used in a closed loop system</td></tr><tr><td>•</td><td>Helping customers reduce their CO2 footprint by offering alternatives to aluminium foil and cans</td></tr><tr><td>•</td><td>Training our employees in anti-corruption and fair competition</td></tr><tr><td colspan="2">At the end-user</td></tr><tr><td>•</td><td>Convenient packaging for single household, helping reduce food waste</td></tr><tr><td>•</td><td>Long shelf life reducing food waste</td></tr><tr><td>•</td><td>Positive food experience</td></tr><tr><td colspan="2">MAIN IMPACTS</td></tr><tr><td colspan="2">Minimising plastic waste</td></tr><tr><td colspan="2">Minimising CO2 emissions</td></tr><tr><td colspan="2">Reducing work-related accidents</td></tr><tr><td colspan="2">Sustainable development goals</td></tr><tr><td colspan="2">The UN's 2030 Sustainable Development Goals have created a framework for addressing sustainability issues and creating a plan of actions in the areas of critical importance to the global society.</td></tr><tr><td colspan="2">We are committed to making the SDGs operational and to identifying future business opportunities. By reviewing the areas of importance determined by the materiality assessment, we explore how we can support the SDGs linking them to our value chain and our business.</td></tr><tr><td colspan="2">Currenctly, the Faerch business will focus on how we can make the biggest impact on the five UN SDG's highlighted in the table.</td></tr><tr><td colspan="2">Materiality Area</td></tr><tr><td colspan="2">Reduction of CO2 emissions</td></tr><tr><td colspan="2">Sustainable Development Goal</td></tr><tr><td colspan="2">13. Take urgent action to combat climate change</td></tr><tr><td colspan="2">Sustainable Development Target</td></tr><tr><td colspan="2">13.2 Integrate climate change measures into policies, strategies and planning</td></tr><tr><td colspan="2">Faerch’s Focus Area</td></tr><tr><td colspan="2">Sustainable Packaging</td></tr><tr><td colspan="2">Faerch’s KPI</td></tr><tr><td colspan="2">CO2 emissions with increased use of recycled plastic.</td></tr><tr><td colspan="2">Value chain involvement</td></tr><tr><td colspan="2">Supplies & Sourcing</td></tr><tr><td colspan="2">Product Development</td></tr><tr><td colspan="2">Production</td></tr><tr><td colspan="2">Materiality Area</td></tr><tr><td colspan="2">Recycled plastic</td></tr><tr><td colspan="2">Sustainable Development Goal</td></tr><tr><td colspan="2">12. Ensure sustainable consumption and production patterns</td></tr><tr><td colspan="2">Sustainable Development Target</td></tr><tr><td colspan="2">12.4 Achieve the environmentally sound management of chemicals and all wastes throughout their life cycle and significantly reduce their release to air, water and soil in order to minimise their adverse impacts on human health and the environment.</td></tr><tr><td colspan="2">Faerch’s Focus Area</td></tr><tr><td colspan="2">Sustainable Packaging</td></tr><tr><td colspan="2">Faerch’s KPI</td></tr><tr><td colspan="2">Quantity of recycled plastic used in production</td></tr><tr><td colspan="2">Value chain involvement</td></tr><tr><td colspan="2">Product Development</td></tr><tr><td colspan="2">Production</td></tr><tr><td colspan="2">Materiality Area</td></tr><tr><td colspan="2">Technical solutions for waste sorting</td></tr><tr><td colspan="2">Sustainable Development Goal</td></tr><tr><td colspan="2">9. Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation.</td></tr><tr><td colspan="2">Sustainable Development Target</td></tr><tr><td colspan="2">9.4 Upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies and industrial processes.</td></tr><tr><td colspan="2">Faerch’s Focus Area</td></tr><tr><td colspan="2">Sustainable Packaging</td></tr><tr><td colspan="2">Faerch’s KPI</td></tr><tr><td colspan="2">Development of Cradle-to-Cradle approach through a colour pigment – black ID – to identify and sort back trays in mixed household waste.</td></tr><tr><td colspan="2">Value chain involvement</td></tr><tr><td colspan="2">Customers</td></tr><tr><td colspan="2">End-users</td></tr><tr><td colspan="2">Materiality Area</td></tr><tr><td colspan="2">Reduction of food waste</td></tr><tr><td colspan="2">Sustainable Development Goal</td></tr><tr><td colspan="2">12. Ensure sustainable consumption and production patterns</td></tr><tr><td colspan="2">Sustainable Development Target</td></tr><tr><td colspan="2">12.3 Reduce food waste at the retail and consumer levels and reduce food losses along production and supply chains.</td></tr><tr><td colspan="2">Faerch’s Focus Area</td></tr><tr><td colspan="2">Food safety</td></tr><tr><td colspan="2">Faerch’s KPI</td></tr><tr><td colspan="2">Number of reported cases of migration tests</td></tr><tr><td colspan="2">Improvement sealing properties of trays to prolong food shelf life and reduce food waste.</td></tr><tr><td colspan="2">Value chain involvement</td></tr><tr><td colspan="2">Suppliers & Sourcing</td></tr><tr><td colspan="2">Product Development</td></tr><tr><td colspan="2">Customers</td></tr><tr><td colspan="2">End-users</td></tr><tr><td colspan="2">Materiality Area</td></tr><tr><td colspan="2">Recycled plastic</td></tr><tr><td colspan="2">Sustainable Development Goal</td></tr><tr><td colspan="2">12. Ensure sustainable consumption and production patterns</td></tr><tr><td colspan="2">Sustainable Development Target</td></tr><tr><td colspan="2">12.5 Substantially reduce waste generation through prevention, reduction, recycling and reuse.</td></tr><tr><td colspan="2">Faerch’s Focus Area</td></tr><tr><td colspan="2">Responsible Operations</td></tr><tr><td colspan="2">Faerch’s KPI</td></tr><tr><td colspan="2">Plastic waste as percentage of raw materials.</td></tr><tr><td colspan="2">Value chain involvement</td></tr><tr><td colspan="2">Product Development</td></tr><tr><td colspan="2">Production</td></tr><tr><td colspan="2">Materiality Area</td></tr><tr><td colspan="2">Effective production</td></tr><tr><td colspan="2">Sustainable Development Goal</td></tr><tr><td colspan="2">7. Ensure access to affordable, reliable, sustainable and modern enegy for all</td></tr><tr><td colspan="2">Sustainable Development Target</td></tr><tr><td colspan="2">7.2. Increase substantially the share of renewable energy</td></tr><tr><td colspan="2">Faerch’s Focus Area</td></tr><tr><td colspan="2">Responsible Operations</td></tr><tr><td colspan="2">Faerch’s KPI</td></tr><tr><td colspan="2">Energy consumption</td></tr><tr><td colspan="2">100 % powered by electricity from renewable energy sources</td></tr><tr><td colspan="2">Value chain involvement</td></tr><tr><td colspan="2">Production</td></tr><tr><td colspan="2">Logistics</td></tr><tr><td colspan="2">Materiality Area</td></tr><tr><td colspan="2">Safe workplace</td></tr><tr><td colspan="2">Sustainable Development Goal</td></tr><tr><td colspan="2">8. Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all.</td></tr><tr><td colspan="2">Sustainable Development Target</td></tr><tr><td colspan="2">8.8 Protect labour rights and promote safe and secure working environments for all workers.</td></tr><tr><td colspan="2">Faerch’s Focus Area</td></tr><tr><td colspan="2">People and organisation</td></tr><tr><td colspan="2">Faerch’s KPI</td></tr><tr><td colspan="2">Accident frequency</td></tr><tr><td colspan="2">Value chain involvement</td></tr><tr><td colspan="2">Production</td></tr><tr><td colspan="2">Supporting international standards</td></tr><tr><td colspan="2">Our progress and reporting are based on the principles of the UN Declaration of Human Rights, the ILO conventions and the UN Global Compact.</td></tr><tr><td colspan="2">Even though Faerch has not joined the UN Global Compact, we see it as an important framework for our sustainability efforts. To meet fundamental responsibilities in areas of human rights, labour, environment and anti-corruption, we therefore align our strategies, policies and procedures to its principles and guidelines.</td></tr><tr><td colspan="2">The table below illustrates how we approach and implement the ten principles of the UN Global Compact.</td></tr><tr><td colspan="2">Our Policies</td></tr><tr><td colspan="2">Sustainability Policy</td></tr><tr><td colspan="2">Human Rights Policy</td></tr><tr><td colspan="2">Statement on the Prevention of Slavery and Human Trafficking</td></tr><tr><td colspan="2">Trade Sanctions in the Product Supply</td></tr><tr><td /><td>Agreements for raw materials and packaging</td></tr><tr><td colspan="2">How the Policy Supports the UN Global Compact</td></tr><tr><td colspan="2">Ensuring continuous growth and development supporting and respecting the protection of internationally proclaimed human rights and good business ethics.</td></tr><tr><td colspan="2">Example of Policy Implementation</td></tr><tr><td colspan="2">Anchoring sustainability by ensuring that roles and responsibilities related to sustainable development in in Faerch are defined and communicated through Group Form on Sustainability Governance.</td></tr><tr><td colspan="2">Monitoring and measuring progress towards sustainability through Group Procedure on non-financial data on sustainable development.</td></tr><tr><td colspan="2">Ensuring that our economic and financial transactions are in line with the applicable economic sanction laws and international trade restrictions, including providing information to our distributors about product final destination.</td></tr><tr><td colspan="2">Our Policies</td></tr><tr><td colspan="2">Supplier Code of Conduct</td></tr><tr><td colspan="2">How the Policy Supports the UN Global Compact</td></tr><tr><td colspan="2">Ensuring responsible supplier management, defining and communicating expectations to our suppliers in terms of developing responsible business practices.</td></tr><tr><td colspan="2">Example of Policy Implementation</td></tr><tr><td colspan="2">Carrying out supplier audits of top suppliers of raw materials, additives, colours, packaging and supplementary range.</td></tr><tr><td colspan="2">Our Policies</td></tr><tr><td colspan="2">Environment, Health & Safety Policy</td></tr><tr><td colspan="2">How the Policy Supports the UN Global Compact</td></tr><tr><td colspan="2">Reducing own footprint, meeting high health & safety standards and creating a workplace culture based on commitment and responsibility.</td></tr><tr><td colspan="2">Example of Policy Implementation</td></tr><tr><td>•</td><td>IS014001 Management System</td></tr><tr><td>•</td><td>Risk assessment of production equipment</td></tr><tr><td>•</td><td>Prevention of work-related injuries through analysis tools.</td></tr><tr><td colspan="2">Our Policies</td></tr><tr><td colspan="2">People Policies</td></tr><tr><td>•</td><td>Health Promotion Policy</td></tr><tr><td>•</td><td>Employee Development Policy</td></tr><tr><td colspan="2">How the Policy Supports the UN Global Compact</td></tr><tr><td colspan="2">Ensuring equal opportunities at the workplace, eliminating discrimination in respect of employment and occupation and recognising the right to collective bargaining.</td></tr><tr><td colspan="2">Example of Policy Implementation</td></tr><tr><td colspan="2">Initiating health promoting initiatives; performing external training; defining individual development plans (as a part of Employee Performance and Development Review); supporting employee intercultural & professional development through international secondments.</td></tr><tr><td colspan="2">Our Policies</td></tr><tr><td colspan="2">Legal Compliance Policy</td></tr><tr><td>•</td><td>Gifts Policy</td></tr><tr><td>•</td><td>Anti-corruption Policy</td></tr><tr><td>•</td><td>Fair Competition Policy</td></tr><tr><td>•</td><td>Procurement Policy</td></tr><tr><td colspan="2">How the Policy Supports the UN Global Compact</td></tr><tr><td colspan="2">Working against corruption in all its forms, increasing employees’ understanding of the rules and minimising the risk of breaking the rules.</td></tr><tr><td colspan="2">Example of Policy Implementation</td></tr><tr><td colspan="2">Training in fair competition and anti-corruption, including e-learning programme.</td></tr><tr><td colspan="2">Sustainable packaging</td></tr><tr><td colspan="2">The focus area “Sustainable packaging” involves everything we do to minimise the environmental impact of our products. In terms of manufacturing, it is important that we look at the composition of our products and continuously aim to increase the share of recycled plastic in our product recipes and production processes and aim to integrate a true closed loop where used trays are collected and processed into new trays.</td></tr><tr><td colspan="2">This will help us reduce plastic waste and CO2 emissions. Our aim is to take a leading position in the use of recycled plastic.</td></tr><tr><td colspan="2">Scope</td></tr><tr><td colspan="2">Manufacturing and recycling of plastic trays creating a closed loop within food packaging.</td></tr><tr><td colspan="2">Guidelines</td></tr><tr><td colspan="2">European Strategy for Plastics in a Circular Economy.</td></tr><tr><td colspan="2">Reuse and recyclability of own materials in own operational setup and the market, reaching a true “closed loop".</td></tr><tr><td colspan="2">Impact</td></tr><tr><td colspan="2">Impact waste</td></tr><tr><td colspan="2">Impact mitigation by optimising design proposals to minimise material consumption, by developing partitioned packaging, and by designing trays with smaller portion sizes to avoid dispose of surplus food.</td></tr><tr><td colspan="2">CO2 emissions</td></tr><tr><td colspan="2">Impact mitigation by increasing the share of recycled plastic in our product formulas and manufacturing processes; by rethinking product composition in existing and new products, material and processes.</td></tr><tr><td colspan="2">Risk & challenges</td></tr><tr><td colspan="2">Plastic waste management, mainly outside Europe, remains an immense challenge. We need to build a new mentality and customer behaviour moving away from the throwaway culture.</td></tr><tr><td colspan="2">Food safety</td></tr><tr><td colspan="2">Food safety is essential to our business. Our aim is to maintain a leading position in methods and products designed to protect food and to ensure high standards of safety and quality. We continuously develop methods and routines to approve and re-check the food contact status for products being manufactured. It is our ambition to meet the highest approval level supported by detailed migration tests.</td></tr><tr><td colspan="2">Scope</td></tr><tr><td colspan="2">Continuously developing methods and approaches to improve food contact safety; optimise the benefits from protecting food; and reduce the environmental impact of plastic packaging.</td></tr><tr><td colspan="2">Guidelines</td></tr><tr><td colspan="2">Commission Regulation (EU) No. 20/2011.</td></tr><tr><td colspan="2">Guidelines of best practice on the risk assessment of NI AS in food contact materials and articles (July 2015, ILSI-Europe report).</td></tr><tr><td colspan="2">Europe Strategy for Plastics in a Circular Economy (16 January 2018).</td></tr><tr><td colspan="2">Impact</td></tr><tr><td colspan="2">CO2 emissions</td></tr><tr><td colspan="2">Impact mitigation by developing skin-vacuum packaging solutions that enable increase in food product shelf life and by this obtain waste reduction. Totally, this contributes positively to minimising our carbon footprint.</td></tr><tr><td colspan="2">Risk & challenges</td></tr><tr><td colspan="2">It may be difficult for end-users to distinguish between different types of plastic packaging and their purpose. We need to improve our external communication letting our stakeholders know what we are doing to protect food and to ensure high standards of food safety and quality.</td></tr><tr><td colspan="2">Responsible operations</td></tr><tr><td colspan="2">The focus area “Responsible operations” involves everything we do to ensure that our production is effective. We are aware that the reach and scale of our activities can impact the environment, society and people. It is therefore important to keep our factory footprints as low as possible.</td></tr><tr><td colspan="2">To ensure that we significantly reduce the environmental impact of producing, using and disposing our packaging solutions, we continuously pursue new ways and methods to reduce emissions and to improve resource consumption and waste management.</td></tr><tr><td colspan="2">Scope</td></tr><tr><td colspan="2">Ensure that our production is effective in the way we utilise resources and by this, minimising our environmental footprint.</td></tr><tr><td colspan="2">Guidelines</td></tr><tr><td colspan="2">Group Quality Policy</td></tr><tr><td colspan="2">Group Environment, Health & Safety Policy</td></tr><tr><td colspan="2">IS014001 Management System</td></tr><tr><td colspan="2">Impact</td></tr><tr><td colspan="2">Plastic waste</td></tr><tr><td colspan="2">Impact mitigation by establishing a common solution for transparent and comparable reporting on waste management.</td></tr><tr><td colspan="2">CO2 emissions</td></tr><tr><td colspan="2">Impact mitigation by defining and implementing specific projects; investing in sustainable technology, optimising transportation and minimising imperfections resulted in repeated work.</td></tr><tr><td colspan="2">Risk & challenges</td></tr><tr><td colspan="2">It is important that we strive to strike a balance between sustaining a high level of product quality while also ensuring high production efficiency and responsible manufacturing processes.</td></tr><tr><td colspan="2">People & organisation</td></tr><tr><td colspan="2">Health & safety</td></tr><tr><td colspan="2">We strongly believe that it is our people and organisation that bring our values to life and generate our business results. Their commitment to our business and our customers is vital to the success and long-term growth of our business. People & Organisation is therefore an important focus area.</td></tr><tr><td colspan="2">We are committed to maintaining high standards of health and safety across the Group’s business units and we continue to implement new initiatives to help us ensure that our workplace is attractive. We believe this is key to achieving our long-term objectives.</td></tr><tr><td colspan="2">Scope</td></tr><tr><td colspan="2">Maintaining high standards of health & safety at our workplace.</td></tr><tr><td colspan="2">Guidelines</td></tr><tr><td colspan="2">Environment, Health & Safety Policy</td></tr><tr><td colspan="2">Health Promotion Policy</td></tr><tr><td colspan="2">Impact</td></tr><tr><td colspan="2">Work-related accidents/heavy lifting</td></tr><tr><td colspan="2">Impact mitigation by automating work processes in the operation areas and investing in equipment to remedy risk of manual movements and muscular strain.</td></tr><tr><td colspan="2">Risk & challenges</td></tr><tr><td colspan="2">It is important to continue addressing safety performance as a key element of our operations and to prevent workplace hazards and occupational risk in a busy working environment.</td></tr><tr><td colspan="2">People</td></tr><tr><td colspan="2">Scope</td></tr><tr><td colspan="2">Ensuring our position as a responsible company by focusing on employee development and successor planning.</td></tr><tr><td colspan="2">Guidelines</td></tr><tr><td colspan="2">Human Rights Policy (incl. health & safety; training & development; and diversity).</td></tr><tr><td colspan="2">- People Policies incl. Employee Development Policy).</td></tr><tr><td colspan="2">Impact</td></tr><tr><td colspan="2">Opportunities for individuals</td></tr><tr><td colspan="2">Creating the preconditions for equal rights and opportunities for employee development.</td></tr><tr><td colspan="2">Risk & challenges</td></tr><tr><td colspan="2">To catch up with the recent years’ strong growth, it is important that we develop our people and structures further.</td></tr><tr><td colspan="2">We need to develop our people and systematise career and successor planning in both the production and office area.</td></tr><tr><td colspan="2">It is important to ensure a smooth onboarding process for all new employees.</td></tr><tr><td colspan="2">Performance progress</td></tr><tr><td colspan="2">Systematise Career Development and Successor Planning</td></tr><tr><td colspan="2">With the acquisition of two new companies; CGL Pack in France and the Dutch recycling company 4PET, 2018 was a year of further growth. It has therefore become increasingly important to systematise our tools and procedures within employee development and successor planning and to consolidate our practices across our business units.</td></tr><tr><td colspan="2">Despite the fact that we have a comprehensive on-boarding process and induction, we have seen a need for further mentoring of new employees at certain levels. This aims to ensure that new employees are succeeding in their new roles in a very fast-paced business.</td></tr><tr><td colspan="2">Career Development</td></tr><tr><td colspan="2">At Faerch, we practice career development through internal recruitment.</td></tr><tr><td colspan="2">We see it as our responsibility to encourage employees to improve their skills in their daily work and remain aware of the opportunities available for their continued development.</td></tr><tr><td colspan="2">We believe that the expansion of our activities has broaden the options for career development.</td></tr><tr><td colspan="2">At the same time, it has established a basis for good and trustworthy collaboration between employees from different business units.</td></tr><tr><td colspan="2">Therefore, in 2018, we carried out an organisational review to systematise people development and successor planning - especially of our management and key players. In 2019, we will follow-up on local and site level.</td></tr><tr><td colspan="2">Our business is constantly changing and to keep up, we need to develop the skills of our employees. It is important that we are able to identify potential and to encourage employees to take on more responsibility and new roles. In addition, we need to ensure that successors are available for key players through individual development plans.</td></tr><tr><td colspan="2">In 2018, at group level, 27% of our employees experienced career development with 56% in business unit North & Central and 14% in business unit UK & lreland.</td></tr><tr><td colspan="2">In 2019, we have a target of 50% internal recruitments and to develop and implement a traineeship to attract graduate talents.</td></tr><tr><td colspan="2">Employee Development</td></tr><tr><td colspan="2">Career development, internal recruitments</td></tr><tr><td colspan="2">2014: 25 %</td></tr><tr><td colspan="2">2015: 32 %</td></tr><tr><td colspan="2">2016: 30 %</td></tr><tr><td colspan="2">2017: 29 %</td></tr><tr><td colspan="2">2018: 27 %</td></tr></table> <table xmlns="http://www.w3.org/1999/xhtml" style="border-right: 0px; border-top: 0px; border-left: 0px; width: 650px; border-bottom: 0px; border-collapse: collapse" width="100%"><tr><td colspan="1">Diversity</td></tr><tr><td colspan="1">We want to ensure a workplace with equal opportunities and where differences are valued. We have a clear objective to enhance diversity in our workforce, regardless of age, gender, sexual orientation, nationality, ethnic background and religion. To attract candidates from a broad, diverse applicant pool, our recruitment process promotes fairness and equality.</td></tr><tr><td colspan="1">One of our focus areas is to provide equal opportunities for women and men, valuing and respecting individual differences. Different recruitment platforms are applied to implement this effort.</td></tr><tr><td colspan="1">Our policy on gender proportion aims to increase the number of women at management level and to improve the representation of women in management at Faerch in general, in accordance with Danish Company Act No. 610 of 28 April 2015, Section 139a. In practice, we strive, as far as possible, to include both female and male candidates in both internal and external recruitment. In addition, we promote women’s and men’s equal career opportunities, covering the company’s hiring procedures, recruitment and parental leave conditions.</td></tr><tr><td colspan="1">We aim to encourage and develop our female employees to obtain a Manager and/or a Senior Manager position, as well as to recruit more women with the potential of achieving a managerial position. In 2018, we had more internal promotions of female managers e.g. from Production Co-ordinator to Team Leader and Production Manager.</td></tr><tr><td colspan="1">Gender Proportion among the Members of the Board of Directors</td></tr><tr><td colspan="1">It was not required to find any new members of the Group’s Board in 2018. The current members of the Board have not changed. The Group’s Board continues to be engaged in increasing the total number of female members.</td></tr><tr><td colspan="1">Gender proportion on Manager Level</td></tr><tr><td colspan="1">In 2017, due to a structural re-organisation of our company with a subsequent split into the ‘Region ‘Continental Europe’ and the ‘Region UK & Ireland’, we reviewed the approach to report on gender proportion on manager level. In 2017, we reported on the total gender proportion for all managers in the Faerch Group. In this connection, “Senior Manager" and “Manager" were merged into one reporting category.</td></tr><tr><td colspan="1">In 2018, we further strengthened the organisational structure by establishing more business units. However, we are following the same reporting line as in 2017.</td></tr></table> <table xmlns="http://www.w3.org/1999/xhtml" style="border-right: 0px; border-top: 0px; border-left: 0px; width: 650px; border-bottom: 0px; border-collapse: collapse" width="100%"><tr><td colspan="1">Governance</td></tr><tr><td colspan="1">We take on responsibility</td></tr><tr><td colspan="1">Faerch Group is an international organization that is committed to acting as a proper and responsible company at all times, and we have imposed strict requirements on ourselves and our business partners through internal and external policies and guidelines.</td></tr><tr><td colspan="1">Training in fair competition, anti-corruption and GDPR</td></tr><tr><td colspan="1">At Faerch Group, we actively support international anti-corruption and fair competition efforts and are dedicated to upholding the highest standards of integrity and business ethics among our employees and business partners.</td></tr><tr><td colspan="1">Faerch Group has a zero tolerance for corruption and anti-competitive activities.</td></tr><tr><td colspan="1">By implementing guidelines, policies, e-learning and conducting on-site training for executives, managers, sale and procurement departments etc., Faerch Group works actively to combat inappropriate business conduct.</td></tr><tr><td colspan="1">In 2018, 29 employees were trained on-site in anti-corruption and fair competition - against 18 employees in 2017 and 118 employees in 2016. The training of employees is often done in smaller groups of 5-10 employees in order to obtain a good face-to-face dialogue. The training enables our employees to execute business negotiations, attend meetings and social event with knowledge and understanding of basic competition law and anti-corruption law in order to protect themselves and the reputation of Faerch Group.</td></tr><tr><td colspan="1">At Faerch Group, we are processing personal data in many areas and in order to support our employees’ understanding of personal data and how to deal with it, Group Legal has launched a GDPR e-learning program in co-operation with Plesner (a Danish Law firm). In 2018, 292 employees completed the GDPR e-learning course.</td></tr><tr><td colspan="1">In 2019, Group Legal will focus on providing CGL Pack and 4PET with on-site training in Faerch Group policies and internal guidelines within fair competition, anti-corruption and GDPR.</td></tr><tr><td colspan="1">Whistle-blower hotline</td></tr><tr><td colspan="1">Faerch Group’s governance program is designed to identify and prevent serious offences and criminal acts. However, even the most effective compliance procedures cannot fully protect against every conceivable situation.</td></tr><tr><td colspan="1">Consequently, Faerch Group has developed a whistle-blower hotline in co-operation with Plesner that can be used by our customers, business partners and employees to report suspicions or knowledge of unethical conduct and criminal acts.</td></tr><tr><td colspan="1">The whistle-blower hotline was launched 1 December 2018 and can be found on our website.</td></tr><tr><td colspan="1">In 2018, no issues were reported through the whistle-blower hotline.</td></tr><tr><td colspan="1">A good relationship with our suppliers</td></tr><tr><td colspan="1">Faerch Group values long-term supplier relationships based on mutual trusting collaboration. As part of this collaboration and to ensure that our suppliers adhere to the same guidelines as we do, Faerch Group has developed a ‘Supplier Code of Conduct’.</td></tr><tr><td colspan="1">The ‘Supplier Code of Conduct’ reflects the ten principles of the UN Global Compact, which covers human rights, labour rights, the environment and anti-corruption. Today, the conduct has been accepted and signed by more than 475 suppliers.</td></tr></table> <table xmlns="http://www.w3.org/1999/xhtml" style="border-right: 0px; border-top: 0px; border-left: 0px; width: 650px; border-bottom: 0px; border-collapse: collapse" width="100%"><tr><td colspan="1">Management statement</td></tr></table> <table xmlns="http://www.w3.org/1999/xhtml" style="border-right: 0px; border-top: 0px; border-left: 0px; width: 650px; border-bottom: 0px; border-collapse: collapse" width="100%"><tr><td colspan="1">The Executive Management and Board of Directors have today considered and adopted the Annual Report of Faerch Group A/S for the financial year 1 January - 31 December 2018.</td></tr></table> <table xmlns="http://www.w3.org/1999/xhtml" style="border-right: 0px; border-top: 0px; border-left: 0px; width: 650px; border-bottom: 0px; border-collapse: collapse" width="100%"><tr><td colspan="1">The Consolidated Financial Statements are prepared in accordance with International Financial Reporting Standards as adopted by the EU and additional requirements in the Danish Financial Statements Act and the Parent Company Financial Statements are prepared in accordance with the Danish Financial Statements Act. Management’s Review is prepared in accordance with the Danish Financial Statements Act.</td></tr></table> <table xmlns="http://www.w3.org/1999/xhtml" style="border-right: 0px; border-top: 0px; border-left: 0px; width: 650px; border-bottom: 0px; border-collapse: collapse" width="100%"><tr><td colspan="1">In our opinion, the Consolidated Financial Statements and the Parent Company Financial Statements give a true and fair view of the financial position at 31 December 2018 of the Group and the Company and of the results of the Group and Company operations and consolidated cash flows for the financial year 1 January - 31 December 2018.</td></tr></table> <table xmlns="http://www.w3.org/1999/xhtml" style="border-right: 0px; border-top: 0px; border-left: 0px; width: 650px; border-bottom: 0px; border-collapse: collapse" width="100%"><tr><td colspan="1">In our opinion, Management’s Review includes a true and fair account of the development in the operations and financial circumstances of the Group and the Company, of the results for the year and of the financial position of the Group and the Company as well as a description of the most significant risks and elements of uncertainty facing the Group and the Company.</td></tr></table> <table xmlns="http://www.w3.org/1999/xhtml" style="border-right: 0px; border-top: 0px; border-left: 0px; width: 650px; border-bottom: 0px; border-collapse: collapse" width="100%"><tr><td colspan="1">We recommend that the Annual Report be adopted at the Annual General Meeting</td></tr></table> Holstebro 2019-05-22 <table xmlns="http://www.w3.org/1999/xhtml" style="border-right: 0px; border-top: 0px; border-left: 0px; width: 650px; border-bottom: 0px; border-collapse: collapse" width="100%"><tr><td colspan="1">Independent auditor’s report</td></tr></table> <table xmlns="http://www.w3.org/1999/xhtml" style="border-right: 0px; border-top: 0px; border-left: 0px; width: 650px; border-bottom: 0px; border-collapse: collapse" width="100%"><tr><td colspan="1">To the Shareholders of Faerch Group</td></tr></table> <table xmlns="http://www.w3.org/1999/xhtml" style="border-right: 0px; border-top: 0px; border-left: 0px; width: 650px; border-bottom: 0px; border-collapse: collapse" width="100%"><tr><td colspan="1">Opinion</td></tr><tr><td colspan="1">In our opinion, the Consolidated Financial Statements give a true and fair view of the Group’s financial position at 31 December 2018 and of the results of the Group’s operations and cash flows for the financial year 1 January to 31 December 2018 in accordance with International Financial Reporting Standards as adopted by the EU and further requirements in the Danish Financial Statements Act.</td></tr><tr><td colspan="1">Moreover, in our opinion, the Parent Company Financial Statements give a true and fair view of the Parent Company’s financial position at 31 December 2018 and of the results of the Parent Company’s operations for the financial year 1 January to 31 December 2018 in accordance with the Danish Financial Statements Act.</td></tr><tr><td colspan="1">We have audited the Consolidated Financial Statements and the Parent Company Financial Statements of Faerch Group for the financial year 1 January - 31 December 2018, which comprise income statement, balance sheet, statement of changes in equity and notes, including a summary of significant accounting policies, for both the Group and the Parent Company, as well as statement of comprehensive income and cash flow statement for the Group (“financial statements”).</td></tr></table> <table xmlns="http://www.w3.org/1999/xhtml" style="border-right: 0px; border-top: 0px; border-left: 0px; width: 650px; border-bottom: 0px; border-collapse: collapse" width="100%"><tr><td colspan="1">Basis for Opinion</td></tr><tr><td colspan="1">We conducted our audit in accordance with International Standards on Auditing (ISAs) and the additional requirements applicable in Denmark. Our responsibilities under those standards and requirements are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Group in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) and the additional requirements applicable in Denmark, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.</td></tr></table> <table xmlns="http://www.w3.org/1999/xhtml" style="border-right: 0px; border-top: 0px; border-left: 0px; width: 650px; border-bottom: 0px; border-collapse: collapse" width="100%"><tr><td colspan="1">Statement on Management’s Review</td></tr><tr><td colspan="1">Management is responsible for Management’s Review.</td></tr><tr><td colspan="1">Our opinion on the financial statements does not cover Management’s Review, and we do not express any form of assurance conclusion thereon.</td></tr><tr><td colspan="1">In connection with our audit of the financial statements, our responsibility is to read Management’s Review and, in doing so, consider whether Management’s Review is materially inconsistent with the financial statements or our knowledge obtained during the audit, or otherwise appears to be materially misstated.</td></tr><tr><td colspan="1">Moreover, it is our responsibility to consider whether Management’s Review provides the information required under the Danish Financials Statements Act.</td></tr><tr><td colspan="1">Based on the work we have performed, in our view, Management’s Review is in accordance with the Consolidated Financial Statements and the Parent Company Financial Statements and has been prepared in accordance with the requirements of the Danish Financial Statement Act. We did not identify any material misstatement in Management’s Review.</td></tr></table> <table xmlns="http://www.w3.org/1999/xhtml" style="border-right: 0px; border-top: 0px; border-left: 0px; width: 650px; border-bottom: 0px; border-collapse: collapse" width="100%"><tr><td colspan="1">Management’s Responsibilities for the Financial Statements</td></tr><tr><td colspan="1">Management is responsible for the preparation of Consolidated Financial Statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the EU and further requirements in the Danish Financial Statements Act and for the preparation of Parent Company Financial Statements that give a true and fair view in accordance with the Danish Financial Statements Act, and for such internal control as Management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.</td></tr><tr><td colspan="1">In preparing the financial statements, Management is responsible for assessing the Group’s and the Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting in preparing the financial statements unless Management either intends to liquidate the Group or the Parent Company or to cease operations, or has no realistic alternative but to do so.</td></tr></table> <table xmlns="http://www.w3.org/1999/xhtml" style="border-right: 0px; border-top: 0px; border-left: 0px; width: 650px; border-bottom: 0px; border-collapse: collapse" width="100%"><tr><td colspan="1">Auditor’s Responsibilities for the Audit of the Financial Statements</td></tr><tr><td colspan="1">Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.</td></tr><tr><td colspan="1">As part of an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark, we exercise professional judgment and maintain professional skepticism throughout the audit. We also</td></tr><tr><td colspan="1">Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.</td></tr><tr><td colspan="1">Obtain an understanding of internal control relevant to the audit 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 Group’s and the Parent Company’s internal control.</td></tr><tr><td colspan="1">Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by Management.</td></tr><tr><td colspan="1">Conclude on the appropriateness of Management’s use of the going concern basis of accounting in preparing the financial statements and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s and the Parent Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group and the Parent Company to cease to continue as a going concern.</td></tr><tr><td colspan="1">Evaluate the overall presentation, structure and contents of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that gives a true and fair view.</td></tr><tr><td colspan="1">Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the Consolidated Financial Statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.</td></tr><tr><td colspan="1">We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.</td></tr></table> Aarhus 2019-05-22 Årsrapport 33771231 PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab Strandvejen 44 2900 Hellerup Revisionspåtegning

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Lars Gade Hansen CEO Arne Holme CTO Jesper Emil Jensen Regional CEO Continental Europe Tom Sand-Kristensen CFO Niels Smedegaard Andersen Chairman Sönke Renk Ronald John Edward Marsh Laurent Bendavid Markus Brettschneider Sven Seidel PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab 33771231 Claus Lindholm Jacobsen State Authorised Public Accountant mne23328 Lars Østergaard State Authorised Public Accountant mne26806 33771231 PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab