DFDS ANNUAL REPORT
2 DFDS ANNUAL REPORT 2011
HEADER
DFDS IS NORTHERN EUROPE’S LARGEST INTEGRATED
SHIPPING AND LOGISTICS COMPANY.
DFDS SEAWAYS OPERATES A NETWORK OF 25 ROUTES
WITH 50 FREIGHT AND PASSENGER SHIPS, WHILE DFDS
LOGISTICS PROVIDES FREIGHT SOLUTIONS IN EUROPE WITH
TRAILERS, CONTAINERS, AND RAIL.
DFDS HAS 5,100 EMPLOYEES IN 20 COUNTRIES WITH
REVENUES OF EUR 1.6 BN. THE COMPANY WAS FOUNDED
IN 1866, IS HEADQUARTERED IN COPENHAGEN, AND LISTED
ON NASDAQ OMX COPENHAGEN.
3DFDS ANNUAL REPORT 2011
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REVE NUE
(DKK bn)
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2010
2009
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DFDS GROUP, PRE-TAX PROFIT
(DKK M)
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100
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700
600
0
2010
2007
2008
2009
2011
RETURN ON INVESTED CAPITAL (ROIC)
(%)
5
4
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2
1
6
7
8
9
10
00
2010
2007
2008
2009
2011
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MANAGEMENT REPORT
Key Figures
Foreword
Connecting Europe
Vision, strategy and goals
Market and competitors
Management report
Growth Strategy
The DFDS Way
Shipping Division
Logistics Division
Risk factors
Shareholder information
CR Report
Financial Review
FINANCIAL STATEMENTS
Income statement
Comprehensive income
Balance sheet
Statement of changes in equity
Cash flow statement
Notes
DFDS Group Companies
Statements
MANAGEMENT REPORT, OTHER
Fleet List
Commercial duties
Executive Managment
Definitions & Glossary
4 DFDS ANNUAL REPORT 2011
KEY FIGURES DFDS GROUP
KEY FIGURES
DKK MILLION
2011
EUR m
1
2011 2010 2009 2008 2007
Income statement
Revenue
2
1,560 11,625 9,867 6,555 8,194 8,310
1,047 7,798 6,921 4,805 - -
581 4,330 3,353 1,970 - -
68 503 407 220 668 720
- - - - 3,799 3,680
- - - - 1,636 1,623
- - - - 1,779 1,932
- - - - 647 703
- - - - 963 986
- - - - 38 106
Operating profit before depreciation EBITDA
2
201 1,495 1,273 804 1,011 1,311
190 1,416 1,221 822 - -
23 171 74 42 - -
12 92 22 60 56 62
- - - - 784 914
- - - - 81 133
- - - - 194 249
- - - - 31 12
- - - - 31 56
- - - - 8 9
Profit on disposal of non-current assets, net 3 26 5 18 45 37
Operating profit EBIT before special items 112 835 580 245 467 758
Special items 12 91 102 71 n.a. n.a.
Operating profit EBIT 124 925 682 174 467 758
Financing, net 25 183 135 154 246 232
Profit before tax 100 742 547 20 221 526
Profit for the year 99 735 522 89 253 412
Profit for the year after minority interests 98 731 509 86 247 400
Profit for analytical purposes 96 716 507 23 227 485
Capital
Total assets 1,717 12,795 13,849 9,298 8,610 9,610
DFDS AS’ share of the equity 927 6,906 6,339 3,641 3,414 3,538
Total equity 935 6,964 6,396 3,688 3,484 3,653
Net interest bearing debt 343 2,555 3,887 4,067 3,425 3,828
Invested capital, average 1,348 10,042 9,061 7,762 7,663 8,107
Average number of employees - 5,096 4,862 3,924 4,301 4,427
Cash flow
Cash flow from operating activities before finance and after tax 191 1,419 929 836 983 1,264
Cash flow from investments 29 219 1,521 1,265 345 151
Acquisition of companies, activities and minority interests 1 8 1,417 39 40 35
Other investments 30 227 104 1,226 305 116
Free cash flow 220 1,638 592 429 638 1,113
Operations and return
Number of operating ships 49 57 51 60 64
Revenue growth, % 17.8 50.5
3
20.0 1.4 10.5
EBITDA-margin, % 12.9 12.9 12.3 12.3 15.8
Operating margin, % 8.0 6.9 2.7 5.7 9.1
Invested capital turnover rate, times 1.16 1.09 0.84 1.07 1.03
Return on invested capital ROIC p.a., % 8.6 7.2 2.1 5.8 8.6
Return on equity p.a., % 10.8 10.2 0.7 6.5 14.5
Capital and per share
Equity ratio, %
54.4 46.2 39.7 40.5 38.0
Financial gearing, times
0.37 0.61 1.12 1.00 1.08
Earnings per share EPS, DKK
50 47 11 32 52
Dividend per share, DKK
14.0 8.0 0.0 0.0 15.0
Number of shares at the end of the period, '000
14,856 14,856 8,000 8,000 8,000
Share price at the end of the period, DKK 355 418 358 399 790
Market value, DKK mill. 5,274 6,210 2,864 3,192 6,320
1
Applied exchange rate for euro as of 31 December 2011: 7,4505
2
During 2010 a new business area structure was introduced and comparative figures per business area are only available from 2009.
3
37% relates to the acquistition of the NorfolklineGroup.
4
Includes two newbuildings for delivery in 2012
5DFDS ANNUAL REPORT 2011
FOREWORD
STRONG 2011 READY FOR
CHALLENGING 2012
Goals for 2011 achieved
In 2011, we succeeded in achieving our
two most important strategic objec-
tives: The planned synergies from the
integration of Norfolkline were reached,
and more, and the earnings from logistics
activities improved significantly.
Record results increase dividend
Annual pre-tax profit for the DFDS Group
was a record DKK 742m. Activities that
do not support Group strategy were dive-
sted, and DFDS entered 2012 as a more
focused and financially strong company.
Without compromising our capacity
to fund future growth, we propose to
increase the annual dividend to DKK 14
per share, equivalent to a payout of DKK
208m.
Contingency for possible mild
recession in 2012
DFDS is strongly positioned, but there
is evidence to suggest that 2012 will
be impacted by a mild recession. In the
first months of the year, demand in the
markets around the North Sea has been
declining, while the Baltic area remains
robust, driven by growth in Russia and
the surrounding countries.
Since August 2011, we have been work-
ing on a contingency plan to address any
decline in freight volumes, which are es-
sential for our financial performance. We
have a plan, and the organisation is ready
to meet any new challenges.
New routes, new competition
The Baltic route network was expan-
ded by two new routes in 2011, and in
February 2012, we launched a new route
between Dover and Calais. Following the
opening of a new competing route in Ja-
nuary 2012, competition has increased in
the freight market between Sweden and
the UK. A number of initiatives have been
launched to meet the new competition.
Just as DFDS is in motion, so is the world
around us.
We are moving closer to our customers
In 2012, DFDS will move even closer
to our customers. To improve customer
service and add value to customers, we
are striving to optimise our understan-
ding of customer needs and execution of
customer service. The Customer Focus
improvement project will start at the
beginning of Q2. The project will involve
the whole Group, and preparations are
underway.
Adding value through social
responsibility
DFDS’s first comprehensive report on
corporate responsibility CR is contained
in this annual report. Continued develop-
ment of DFDS’ role as a responsible
corporate citizen should contribute to ad-
ding value to our customers, employees,
partners, shareholders and other stake-
holders, as well as to the environment.
Our ambition is to be our stakeholders’
preferred partner.
DFDS is ready for new growth
Market conditions in 2012 are expected
to be less favourable than in 2011. We
therefore foresee limited organic growth
– but, on the other hand, we envisage
opportunities to grow through acquisiti-
ons. DFDS is ready for new growth, also
financially.
A huge effort from our staff, close col-
laboration with our partners, and, not
least, our loyal customers have enabled
us to make much greater progress than
anticipated in 2011. Thank you all for
your contribution and co-operation.
NIELS SMEDEGAARD
President & CEO
BENT ØSTERGAARD
Chairman of the board
6 DFDS ANNUAL REPORT 2011
HEADER
ALMA-ATA
ILYTCHOVSK
MINSK
HELSINKI
HALLSBERG
STOCKHOLM
TAULOV
TRONDHEIM
LÜBECK
VERONA
BARI
DAVENTRY
BALLINA
Rail Service 26.10.2011
GRANGEMOUTH
HANNOVER
UST-LUGA
ST. PETERSBURG
RIGA
PALDISKI
KLAIPEDA
SASSNITZ
COPENHAGEN
FREDERICIA
ESBJERG
AARHUS
KARLSHAMN
GOTHENBURG
KAPELLSKÄR
KRISTIANSAND
BREVIK
OSLO
BERGEN
SKOGN
HAMBURG
CUXHAVEN
KIEL
ANTWERP
ROTTERDAM (VLAARDINGEN)
AMSTERDAM (IJMUIDEN)
BRUGGE
ZEEBRUGGE
FAGNANO (VA)
BILBAO
CALAIS
DUNKIRK
DOVER
CHATHAM
TILBURY
FELIXSTOWE
AVONMOUTH
IMMINGHAM
LIVERPOOL
NEWCASTLE
ROSYTH
CLYDEPORT
GREENOCK
WATERFORD
DUBLIN
BELFAST
HARWICH
GHENT
HALDEN
MOSS
BOULOGNE SUR MER
BRUGGE
RATTINGEN
RHOON
HAMINA
IPSWICH
PETERBOROUGH
HELSINGBORG
MOSCOW
LARKHALL
CONNECTING EUROPE
The network combines sea and land transport. 80% of revenues are
generated by freight and 20% by passengers.
The route network comprise routes dedicated to freight and routes
combining passengers and freight. An important success factor is
deployment of ships that satisfies customer’s needs and demand on
individual routes allowing for a combination of satisfied customers
and sound finances.
On the freight side DFDS’ organisation includes local sales offices
and own transport companies. The latter are mostly specialised in
transport solutions combining several modes of transport – sea, road
and rail.
Passenger trips are increasingly sold via the internet, where our goal
is to make it as easy and inspiring as possible for customers to book
their ideal trips.
The capacity of the largest freight ships is 3,0005,000 lanemetres
of freight, while the capacity on combined ships is 1,5003,000
lanemetres. These ships typically have room for 6001,200
passengers. Passenger ships typically have room for 1,5002,000
passengers with a capacity for freight of 1,0001,500 lanemetres.
DFDS’ TRANSPORT NETWORK IS
DRIVEN BY 5,100 EMPLOYEES
CREATING SOLUTIONS FOR FREIGHT
CUSTOMERS AND PASSENGERS
7DFDS ANNUAL REPORT 2011
HEADER
ALMA-ATA
ILYTCHOVSK
MINSK
HELSINKI
HALLSBERG
STOCKHOLM
TAULOV
TRONDHEIM
LÜBECK
VERONA
BARI
DAVENTRY
BALLINA
Rail Service 26.10.2011
GRANGEMOUTH
HANNOVER
UST-LUGA
ST. PETERSBURG
RIGA
PALDISKI
KLAIPEDA
SASSNITZ
COPENHAGEN
FREDERICIA
ESBJERG
AARHUS
KARLSHAMN
GOTHENBURG
KAPELLSKÄR
KRISTIANSAND
BREVIK
OSLO
BERGEN
SKOGN
HAMBURG
CUXHAVEN
KIEL
ANTWERP
ROTTERDAM (VLAARDINGEN)
AMSTERDAM (IJMUIDEN)
BRUGGE
ZEEBRUGGE
FAGNANO (VA)
BILBAO
CALAIS
DUNKIRK
DOVER
CHATHAM
TILBURY
FELIXSTOWE
AVONMOUTH
IMMINGHAM
LIVERPOOL
NEWCASTLE
ROSYTH
CLYDEPORT
GREENOCK
WATERFORD
DUBLIN
BELFAST
HARWICH
GHENT
HALDEN
MOSS
BOULOGNE SUR MER
BRUGGE
RATTINGEN
RHOON
HAMINA
IPSWICH
PETERBOROUGH
HELSINGBORG
MOSCOW
LARKHALL
PORTS OF CALL & SALES AGENCIES
LOGISTICS OFFICES
RAIL SERVICES
ALMA-ATA
ILYTCHOVSK
MINSK
HELSINKI
HALLSBERG
STOCKHOLM
TAULOV
TRONDHEIM
LÜBECK
VERONA
BARI
DAVENTRY
BALLINA
Rail Service 26.10.2011
GRANGEMOUTH
HANNOVER
UST-LUGA
ST. PETERSBURG
RIGA
PALDISKI
KLAIPEDA
SASSNITZ
COPENHAGEN
FREDERICIA
ESBJERG
AARHUS
KARLSHAMN
GOTHENBURG
KAPELLSKÄR
KRISTIANSAND
BREVIK
OSLO
BERGEN
SKOGN
HAMBURG
CUXHAVEN
KIEL
ANTWERP
ROTTERDAM (VLAARDINGEN)
AMSTERDAM (IJMUIDEN)
BRUGGE
ZEEBRUGGE
FAGNANO (VA)
BILBAO
CALAIS
DUNKIRK
DOVER
CHATHAM
TILBURY
FELIXSTOWE
AVONMOUTH
IMMINGHAM
LIVERPOOL
NEWCASTLE
ROSYTH
CLYDEPORT
GREENOCK
WATERFORD
DUBLIN
BELFAST
HARWICH
GHENT
HALDEN
MOSS
BOULOGNE SUR MER
BRUGGE
RATTINGEN
RHOON
HAMINA
IPSWICH
PETERBOROUGH
HELSINGBORG
MOSCOW
LARKHALL
8 DFDS ANNUAL REPORT 2011
VALUE PROPOSITION, STRATEGY AND GOALS
VALUE PROPOSITION,
STRATEGY AND GOALS
The DFDS value proposition
DFDS operates the widest and most
reliable integrated shipping and logistics
network in Europe.
Our customers value the easy access and
positive experience of our freight and pas-
senger services.
The people of DFDS continue to deliver
efficient and innovative transportation
services for our customers as they have
done since 1866.
Strategy principles
DFDS’ strategy is based on four principles:
1. Build European shipping and
logistics network
2. Integrated value-added solutions for
freight customers and passengers
3. Securing freight volumes through
logistics activities and strategic
port access
4. Constant focus on quality and
efficiency in operations.
Strategic priorities and focus
2011: Following the acquisition of Nor-
folkline in July 2010, integration became
DFDS’ highest strategic priority in 2011. The
results of the integration have fully met ex-
pectations and are described on page 1617.
Another priority in 2011 was to turn
around earnings from logistics activities.
This goal was achieved through an im-
provement of Logistics Division’s return
on invested capital to 9.7% from 27.7%
in 2010, corresponding to a turnaround
in operating profit EBIT before special
items of DKK 111m.
2012 The strategic priorities for 2012
focus on two areas:
– Achieving targets for improvement
and efficiency projects
– Ensuring that the organisation is ready
and able to adapt to market changes
on the basis of a contingency plan
– Opening of the new Dover-
Calais route
– Further development of two
new routes opened in the Baltic
Sea in 2011
– Proactive pursuit of consolidation
and expansion opportunities via the
acquisition of activities and companies
Efficiency strategy
DFDS’ operating model is based on
standardisation of the Group’s business
processes. In parallel with the integra-
tion of Norfolkline, the efficiency of the
organisation was improved by centra-
lising Group functions cutting across
business areas: IT, supply chain, technical
maintenance, manning of ships and fi-
nance. DFDS has a presence in around 20
countries, in several of which both freight
and passenger businesses are operated.
The previously separate administrative
functions have now been merged, or are
in the process of being merged, based on
a uniform concept for joint operations.
Since 2008, focused efficiency and
improvement projects have been an
integral part of DFDS’ strategy. In 2012,
four improvement and efficiency projects
will be launched, directed at improving
and streamlining the business unit Chan-
nel; efficiency in transport and logistics
activities; reducing the amount of funds
tied up in working capital; and improving
customer satisfaction and adding value
for customers. The projects are described
in greater detail on page 11.
Growth strategy
To offer transport customers more
efficient solutions, including wider
geographical coverage, DFDS’ strategy
is to expand the network of sea- and land
transport. Rolling out DFDS’ operating
model to more markets will also reduce
unit costs through economies of scale.
Expansion of both the sea- and land-
transport parts of the network will
mainly be achieved by the acquisition
of companies and activities, including
joint ventures. See also page 16.
Business structure
DFDS’ business structure consists of two
divisions: Shipping Division and Logistics
Division. Corporate functions are grouped
into two areas: People & Ships and Finance.
Sales of freight solutions that cut across
business areas and the network in general
are co-ordinated through Freight Sales
Solutions.
Corporate Responsibility CR strategy
To bring greater focus to DFDS’ CR work,
a CR strategy was drawn up in 2011.
CR governance via a new CR Commit-
tee reporting to Group Management will
embed the CR strategy in the organisa-
tion. The ambition is to continuously
create improvements through CR adding
value for DFDS’ stakeholders and support
DFDS’ position as their preferred partner.
Ongoing efforts to lessen environmental
impact are also included in the strategy.
See the complete CR report on p. 3855.
Financial objective
DFDS’ objective is a return on invested ca-
pital of approx. 10%. This can be compared
with the Group’s capital cost, which at the
beginning of 2012 was calculated at 6.5%.
The management report outlines the
current and long-term progress towards
reaching these targets.
9DFDS ANNUAL REPORT 2011
MARKET AND COMPETITORS
MARKET AND COMPETITORS
DFDS’ market
DFDS works as part of the European
transport sector, focusing on Northern
Europe, Eastern Europe and Russia.
DFDS’ routes link ports in the Baltic and
in the North Sea and combine transport
of freight and passengers, depending on
market requirements. DFDS operates
liner services with fixed schedules. DFDS’
transport and logistics activities prima-
rily operate in the same markets covered
by the route network. These services also
support the capacity utilisation of the
route network by specialising in transport
solutions that involve shipping.
DFDS’ competitors
DFDS’ routes compete with other ferry
operators in the North Sea and Baltic
Sea. The main competitors are Cobelfret,
Color Line, P&O Ferries, Stena Line and
Scandlines. The routes also compete with
alternative transport modes, ie. road and
rail, and air transport for passengers. In ad-
dition comes the Eurotunnel on the Chan-
nel. DFDS’ transport and logistics activities
are primarily focused on full- and part-load
transport to markets around the North Sea.
The main competitors are major European
haulage companies such as DHL, DSV and
Kuhne & Nagel, as well as regional and
niche-oriented forwarders and hauliers.
DFDS’ OPERATING MODEL COMBINES SHIPPING AND LAND
TRANSPORT OF FREIGHT AND PASSENGERS. APPROXIM-
ATELY 80% OF REVENUES ARE GENERATED BY FREIGHT
Market development
The shipping segment of the Northern
European passenger market slowed down
in most areas, with an overall decline of
0.5%. The decline on the Channel was pri-
marily due to the more aggressive pricing
policy adopted by Eurotunnel. The total
number of passengers on the Dover Strait
rose by 2.2% in 2011. On the freight
market growth was positive in the Baltic
Sea and declining in the North Sea. The
latter was affected by DFDS’ reduction of
capacity through the consolidation of two
routes. On the Dover Strait, the number of
freight units rose by a total of 5.5%, split
between zero growth in the ferry market
and an increase of 16.0% in Eurotun-
nel’s volumes, driven by an aggressive
pricing policy aimed at achieving a higher
market share.
NORTHERN EUROPE: INTERNATIONAL PASSENGER AND FREIGHT VOLUMES
Passengers Freight units*
2011 2010 ∆ 1110 2011 2010 ∆ 1110
Baltic North 18.0 17.8 1.2% 0.6 0.6 6.5%
Baltic South 11.2 11.4 1.2% 1.8 1.7 4.6%
Kattegat 17.1 17.2 0.6% 0.8 0.8 0.3%
North Sea 2.2 2.2 0.3% 1.3 1.3 3.2%
English Channel, Dover Strait 12.7 12.9 1.7% 2.1 2.1 0.1%
English Channel, West 3.1 3.1 2.3% 0.3 0.3 2.7%
Total shipping 64.3 64.6 0.5% 6.8 6.8 1.0%
Great Belt Bridge 14.8 14.8 0.0% 0.4 0.3 9.1%
Eurotunnel 9.1 8.4 8.3% 1.3 1.1 16.0%
Total bridge and tunnel 23.9 23.2 3.0% 1.6 1.4 14.4%
Source: Shippax, own figures. Figures are incomplete as several shipping companies do not submit information.
* A freight unit corresponds to approx. 13 lane metres
Key customer groups Market segments Success criteria
FREIGHT
accompanied trailers)
industrial goods
automotive, steel, paper, chemicals
and manufacturers of refrigerated goods
contract logistics
PASSENGERS
and without a car
conferences
and safety
10 DFDS ANNUAL REPORT 2011
MANAGEMENT REPORT
MANAGEMENT REPORT
Financial performance
Pre-tax profit improved by 35,7% to DKK
742m.
The improved financial performance
reflects a general improvement in market
conditions in Northern Europe, Eastern
Europe and Russia, as well as positive
contributions from synergies and impro-
vement projects.
The market trend was positive in both
the Baltic Sea and the North Sea in H1. In
H2, market growth continued in the Baltic
Sea, while slowing in the markets around
the North Sea.
In addition, net income from Special
items was DKK 91m. These consisted of
large, non-recurring items, accounting
profits from the sale of activities and as-
sets, and integration and project costs.
Adjusted for special items, pre-tax profit
was DKK 651m, an increase of 46.3%
compared to 2010.
Performance improved in both divisions,
most markedly in Logistics, where a decisi-
ve turnaround was achieved. The Logistics
Division’s EBIT before special items rose
to DKK 109m, from DKK 2m in 2010. This
improvement was based on the realisation
of synergies, including the effects of the
Headlight improvement project.
The Shipping Division’s EBIT before spe-
cial items rose by 27.8% to DKK 847m,
from DKK 663m in 2010. The improve-
ment was primarily driven by market
growth, particularly in the Baltic Sea, and
from the realisation of synergies.
The pre-tax profit for 2011 of DKK 742m
was 6.0% higher than the most recent
expectations for financial performance,
which were for a pre-tax profit of DKK
700m.
Revenue for the year was DKK 11.6bn,
an increase of 17.8% compared to 2010.
This is primarily attributed to the full-ye-
ar effect of the acquisition of Norfolkline,
but also to organic growth, particularly
in freight activities. Revenue growth was
one percentage point lower than pre-
viously envisaged, due to changes in the
elimination of revenue between divisions.
The divisions’ revenues were therefore in
line with the previous expectations.
The average number of employees incre-
ased, primarily due to the full-year effect
of the acquisition of Norfolkline, by 4.8%
to 5,096 in 2011.
The Group’s total assets were reduced
by 7.6% to DKK 12.8bn at the end of
2011. The reduction is primarily due to a
lowering in net-interest-bearing debt to
DKK 2.6bn from DKK 3.9bn, a reduction
of DKK 1.4bn. The ratio between net-
interest-bearing debt and operating profit
EBITDA was therefore reduced to 1.7 by
year end. Equity was DKK 7.0bn at the
end of 2011, corresponding to an equity
ratio of 54.4%.
DFDS thus has a strong financial base for
generating new and profitable growth.
See page 1617 for further details of
DFDS’ growth strategy and the integration
of Norfolkline.
Business development and operations –
significant events
Sales of non-core activities: In order to
further focus the Group portfolio, three
activities that did not underpin the DFDS
strategy were sold in 2011:
The debt free selling price of DKK
110m yielded a profit of DKK 83m,
which is included in the income state-
ment under “Special items”.
sold in June. The debt free selling price
of DKK 182m yielded a profit of DKK
48m, which is included in the income
statement under “Special items”. The
port terminal was surplus to require-
ments after the integration with
Norfolkline.
were discontinued in Q3 2011, when
contracts were sold and chartered ves-
sels returned. This generated a profit of
DKK 5m.
Closure of unprofitable Irish routes and
sale of ships: Following the sale of two
routes on the Irish Sea in late 2010,
the two remaining routes DublinBir-
kenhead/Heysham, as well as a port
terminal in Dublin and sales operations,
were discontinued at the end of January
2011. The two routes had incurred
heavy losses due to significant over-
capacity on the Irish Sea, and it proved
impossible to develop a business plan
to improve results substantially. Nor
was it possible to sell off the routes.
The routes deployed three owned ves-
sels deployed, and a ro-pax ship was
transferred to the Baltic Sea, a ro-ro ship
was transferred to routes between Hol-
land and England, and a ro-pax vessel
was sold.
One-off costs totalling DKK 30m were
incurred in 2011 relating to the closure of
these activities. Proceeds from the sale of
a ship was DKK 179m and an accounting
gain of DKK 17m. Both items are included
under “Special items” in the income
statement.
New routes and more capacity in the
Baltic Sea: Continued improvement in the
economies of Russia and the neigh-
bouring countries led to sustained high
growth in the Baltic Sea freight market
in 2011, and the size and capacity of the
network of routes were expanded:
Klaipeda in Lithuania was upgraded
with the deployment of a newly charte-
red ro-pax ship in September 2011
Karlshamn in Sweden and Klaipeda in
Lithuania was increased in February
2011 with the reallocation of a ro-pax
ship from the Irish Sea
acquired between Kapellskär in Swe-
den and Paldiski in Estonia
HIGHER PROFIT DRIVEN BY INCREASED VOLUMES,
SYNERGIES AND MORE EFFICIENT OPERATIONS
11DFDS ANNUAL REPORT 2011
MANAGEMENT REPORT
2011 between Kiel in Germany and Ust
Luga in Russia
charter agreement with Polferries
on the route between Swinoujsce
in Poland and Ystad in Sweden was
terminated.
Approval of port agreement in Gothen-
burg: In October 2010, DFDS signed
a joint agreement with C. Ports SA to
acquire Älvsborg Ro/Ro AB, which has
signed a 25-year concession agre-
ement on the operation of the Älvsborg
and Arendal ro-ro port terminals in
Gothenburg. Ownership is split 65%
DFDS AS, 35% C. Ports SA. Completion
of the deal is subject to approval by
the competition authorities, which is
still pending.
Delivery of two new freight ships: As
part of an extension of co-operation bet-
ween DFDS and the Danish and German
defence forces regarding the supply
of ship capacity for military transport
newbuildings with a freight capacity of
3,000 lane metres will be delivered in
July and October 2012. They replace
two chartered ships, which will be
redelivered.
Passenger ship sold: The passenger
ship Princess Maria was chartered for
a three-year period, starting in April
2010, to Inflot Cruise and Ferry Ltd., a
company based in St. Petersburg, Rus-
sia. The agreement included a purchase
option, which was exercised in Q3 2011,
resulting in a profit of DKK 9m, which
has been posted under “Profits from the
sale of long-term assets”.
Important events after 2011
On 24 January 2012 a new freight route
opened between Gothenburg and Killing-
holme in direct competition with DFDS’
route between Gothenburg and Imming-
ham. The route was opened by a Swedish
forwarding company. It is expected that
the addition of capacity to the transport
market between Sweden and the UK
will entail a considerable negative profit
impact for DFDS in 2012.
In the beginning of February 2012, DFDS
and Louis Dreyfus Armateurs entered into
an agreement with the Port of Calais con-
cerning calling at Calais for the purpose
of opening a route between Calais and
Dover on 17 February 2012. Since the
opening, the route has been serviced by
one ship, NORMAN SPIRIT. Deployment of
an additional ship on the route is planned.
Improvement and efficiency projects
in 2011 and 2012
Since 2008, several major improvement
and efficiency projects have targeted are-
as where thorough changes are required
to improve performance. The projects
involve a combination of reducing costs,
improving sales work and customer ser-
vice and making organisational changes.
In 2011, focus was on two major improve-
ment and efficiency projects:
Project Headlight 1: Included eight
northern European locations in the
business areas Nordic Transport,
Continental Transport and European
Contract. The focus was on optimising
processes and policies for customer
service, operational planning, procu-
rement of haulage and establishing
a joint equipment pool. The target of
an annual improvement in earnings of
DKK 60m was achieved and forms part
of integration synergies
Project Light Crossing: Covers the
DoverDunkirk route, with a focus on
management processes, systems, reve-
nue optimisation, staffing and optimisa-
tion of bunker consumption. The project
is expected to be completed mid2012.
The target is an annual improvement in
earnings of up to DKK 75m.
In 2012, focus will be on four large impro-
vement and efficiency projects:
Project Headlight 2: The project will
be extended to cover the remaining 12
locations in the Logistics Division with
completion towards the end of 2012.
The target is an additional improve-
ment in earnings of up to DKK 40m
Project Light Crossing: As mentioned
above this project is expected to be
completed in mid2012
Project Customer Focus: The project
aim is to strengthen DFDS’ customer
relations on the basis of a better under-
standing of the context for purchasing
decisions and customer satisfaction re-
garding the service provided by DFDS.
It will also prioritise opportunities for
enhancing value creation for the custo-
mer. The results of the project are ex-
pected to become visible in 2013 as a
general increase in focus on customers,
attraction of new customers, improved
customer retention rates and a greater
degree of engagement with existing
customers. Efficiency of customer-
service processes is also expected
to improve
Project Light Capital: The project aims
to reduce cash tied up in working
capital. A target will be set in Q2 2012
and the first results are expected to be
achieved in Q3 2012.
CEO
FREIGHT SALES SOLUTIONS
HR CREWING TECHNICAL
PEOPLE & SHIPS
SUPPLY CHAIN IT FINANCE
FINANCE
NORDIC
TRANSPORT
CONTINENTAL
TRANSPORT
EUROPEAN
CONTRACT
INTERMODAL
NORDIC
CONTRACT
LOGISTICS DIVISION
NORTH SEA BALTIC SEA CHANNEL PASSENGER
SHIPPING DIVISION
12 DFDS ANNUAL REPORT 2011
Contingency plan for change in 2012
During the summer of 2011, renewed
uncertainty emerged about the economic
outlook in the financial markets. During
the second half of the year, growth in
freight volumes in the North Sea slowed
down. There are, however, still no signs of
a steep decline in freight volumes, as pre-
viously occurred in late 2008 and 2009.
Nonetheless, in August 2011, DFDS began
developing a contingency plan for any
such eventuality. The plan contains 54
measures aimed at mitigating the effects
of a decline in freight volumes of 5%,
10% or 20%. The actions include cost
cutting and structural changes, e.g. clo-
sing routes, the implementation of which
would be conditional on a substantial
decline in volume.
Financial objective
Return on invested capital ROIC, inclu-
ding special items, increased to 8,6% in
2011 from 7.2% in 2010. Excluding spe-
cial items, the return was 7.7% in 2011
compared to 6.1% in 2010.
The Group’s objective is to achieve a
return on invested capital of approx.
10%. DFDS’ cost of capital, or minimum
required rate of return, was calculated at
6.5% in early 2012.
The return on the Group’s invested capital
in 2012 is expected to be on a level with
the cost of capital. Logistics Division’s
return is expected to exceed the objec-
tive, while Shipping Division’s return is
expected to be below the objective.
It is thus first and foremost the Shipping
Division’s return that must be improved.
This improvement is to be generated
mainly by the business areas North Sea
and Channel, where the return in 2012 is
expected to be lower than 10%. One area
of particular focus will be the North Sea,
where approximately half of the Group’s
invested capital is deployed.
The North Sea achieved a satisfactory
level of return in 2011, but due to a com-
bination of declining volumes and greater
competition on routes between Sweden
and the UK, as well as rising variable cost
levels, it is envisaged that the return will
be reduced in 2012. The return on routes
between England and the Continent,
including investment in port terminals, is
also lower than the objective. To improve
the return, both measures to improve
operational efficiency and structural
measures are being considered.
Channel’s return was just 1.1% in 2011
due to a particularly difficult market and
competitive conditions. Price pressure in
the freight market was significant during
the year, due to SeaFrance’s struggle
to escape bankruptcy and Eurotunnel’s
pursuit of a higher market share. Higher
bunker costs also impacted earnings. A
stabilisation of the market situation on
the English Channel is expected to sup-
port a higher level of earnings.
Within the Logistics Division, returns for
Continental Transport and Intermodal are
expected to be lower than the objective
in 2012. In 2011, a significant turnaround
was achieved in Continental Transport’s
earnings, and this positive trend is
expected to continue in 2012, when a
return in line with the cost of capital is
expected. Intermodal’s return is also ex-
pected to improve in 2012, but achieving
a return in line with the objective will
require improvement to the still difficult
market conditions for container activities
between Ireland and the Continent.
BUSINESS MODEL, ASSETS AND
CAPITAL INTENSITY
The business model spans high
and low capital intensity
DFDS’ business model combines shipping,
forwarding and logistics, which involves
different capital intensity in the different
business areas: highest in shipping, lo-
west in forwarding/logistics. The turnover
rate of invested capital was thus 0.9
times in the Shipping Division in 2011,
and 4.6 times in the Logistics Division.
The difference in capital intensity bet-
ween the divisions is partly due to a high
share of owned assets in the Shipping
Division, primarily ships and port termi-
RETURN ON INVESTED CAPITAL ROIC 2011
Invested
capital,
DKK m ROIC 2011, %
Variance vs
capital cost
1
, %
Variance vs
objective
2
, %
Variance vs
objective, DKK m
DFDS Group 9,906 8.6 2.1 1.4 139
Divisions & business units
Shipping Division 8,865 10.2 3.7 0.2 18
North Sea 4,622 9.5 3.0 0.5 23
Baltic Sea 1,364 18.7 12.2 8.7 119
Channel 1,185 1.1 5.4 8.9 105
Passenger 1,140 11.9 5.4 1.9 22
Non-allocated items 744 5.0 11.5 15.0 112
Logistics Division 910 9.7 3.2 0.3 3
Nordic Transport 124 38.5 32.0 28.5 35
Continental Transport 161 5.5 1.0 4.5 7
European Transport 177 29.5 23.0 19.5 35
Intermodal 184 3.9 2.6 6.1 11
Nordic Contract 219 15.2 8.7 5.2 11
Non-allocated items 45 72.6 79.1 82.6 37
Non-allocated, Group 131 31.0 37.5 41.0 54
1
DFDS’ cost of capital was calculated at 6.5% beginning 2011
2
DFDS’ objective is a return of 10.0%
MANAGEMENT REPORT
13DFDS ANNUAL REPORT 2011
nals, contingent in part on their longevity.
The lifespan of ro-ro-based freight and
passenger tonnage is 2535 years, and
the duration of port-terminal leases is
typically 3050 years.
Ro-ro tonnage is also mostly built to meet
the needs of specific routes or regions. It is
therefore built to a lesser degree on spe-
culation as opposed to more standardised
tonnage, e.g. bulk, container and tanker.
Ro-ro-based tonnage, especially passen-
ger ships, is targeted to specific require-
ments concerning the allocation of a
vessel’s capacity between passenger and
freight; configuration of passenger areas;
loading capacity for heavy duty freight;
suspended decks for cars; sailing speed;
and ramps, including requirements for
loading/unloading speed.
Due to this degree of specialisation, ships
are often used on the same route for a great
deal of their lifespan. Small ro-ro freight
ships are the least specialised tonnage, and
are therefore easier to re-allocate between
routes. More specialised tonnage often
requires modification before re-allocation.
Due to the combination of long lifespan
and specialisation of tonnage, shipping
companies’ share of ownership of ro-ro-
based tonnage is typically high, and the
charter market for ro-ro-based tonnage
is generally less liquid and efficient than
container, tank).
Forwarding and logistics are generally less
capital-intensive than shipping. In addition,
the market for leasing of cargo-carrying
equipment, e.g. containers and trailers, is
large and efficient. This facilitates ongoing,
effective decisions on ownership or lea-
sing of assets used in operations.
Composition of invested capital
At the end of 2011, total invested
capital was DKK 9,906m, of which 82%
consisted of ships, including newbuil-
dings. Port terminals, land and buildings
amounted to 7%. The capital was split
between divisions with Shipping Division
employing DKK 8,865m, corresponding to
89% of the Group’s total capital. Logistics
Division’s capital amounted to DKK
910m, 9% of total capital.
Capital intensity and EBIT margin
per business area
The business areas’ capital intensity in
2011, expressed as the turnover rate of
average invested capital, ranged from
0.98.9. Based on the objective of a return
on invested capital of 10%, the variation in
capital intensity leads to different targets
for business areas’ EBIT margins.
In the Shipping Division, the objective
requires EBIT margins of 1013%, with
the exception of Passenger, where the
requirement is an EBIT margin of 6.5%.
This is lower than the requirements for
other shipping areas because ships have
been written off over a longer period due
to a higher average age.
In the Logistics Division, the objective re-
quires EBIT margins just below 2% for the
three forwarding and logistics areas, as well
as Intermodal, where operations include
container shipping with 100% chartered
tonnage. In Nordic Contract, ownership of
60% of the tonnage used implies a higher
required EBIT margin than in the other
areas.
Investments in 2011 and future
investment needs
Invested capital was reduced by 7.6% in
2011, as depreciation and sales of assets
exceeded investment. Moreover, working
capital was reduced.
Total gross investments amounted to
DKK 804m in 2011, of which DKK 376m
was related to two ro-ro freight newbuil-
dings for delivery in 2012. In 2012, an
additional DKK 450m will be invested in
the newbuildings before delivery. Other
investments of DKK 200m are expected,
primarily for maintenance of ships,
cargo-carrying equipment and IT systems
development, bringing total investment
to DKK 650m in 2012.
The two newbuildings will be deployed on
the North Sea’s network of routes, repla-
cing two chartered ships that are redelive-
red in 2012. This will lead to an increase
in the area’s invested capital in 2012.
DFDS currently has no other significant
investment commitments. In the business
areas North Sea and Baltic Sea, no need
CAPITAL INTENSITY AND REQUIRED EBITMARGINS 2011
Capital
intensity,
times
1
EBIT-margin
2011, %
EBIT-margin
2
required by
objective, %
Variance
objective vs
required
margin, %
DFDS Group 1.2 7.2 8.6 1.5
Divisions & business units
Shipping Division 0.9 10.9 11.4 0.5
North Sea 0.8 13.2 13.3 0.1
Baltic Sea 1.0 18.2 9.9 8.3
Channel 0.8 1.6 12.7 11.1
Passenger 1.5 8.2 6.5 1.7
Non-allocated items 0.8 10.8 12.0 22.8
Logistics Division 4.6 2.5 2.2 0.4
Nordic Transport 5.3 4.5 1.9 2.7
Continental Transport 5.4 1.1 1.8 0.7
European Transport 5.4 5.6 1.8 3.8
Intermodal 5.7 0.7 1.7 1.0
Nordic Contract 1.8 8.9 5.5 3.4
1
Revenue divided by average invested capital. A low number signifies high capital intensity, and vice versa
2
Calculated as objective, 10% return requirement, divided by capital intensity
MANAGEMENT REPORT
14 DFDS ANNUAL REPORT 2011
RETURN ON INVESTED CAPITAL (ROIC)
AND CAPITAL COST (WACC)
(%)
8
6
7
4
5
2
3
9
2007
2008
2009
2010
2011
1
WACC
ROIC
0
FLEET OVERVIEW AND KEY FIGURES 2011
Total ships Ro-ro ships Ro-pax ships
Passenger
ships
Container
and sideport
ships
Ownership
share, %
Average age
of owned
ships, yrs
DFDS Group 49 24 12 5 8 n.a. n.a.
Divisions & Business Units
Shipping Division
1
37 21 12 4 n.a. 73 n.a.
North Sea 20 19 1 n.a. n.a. 65 9
Baltic Sea 9 2 7 n.a. n.a. 78 15
Channel 4 n.a. 4 n.a. n.a. 75 5
Passenger 5 n.a. 1 4 n.a. 100 19
Logistics Division 8 n.a. n.a. n.a. 8 38 n.a.
Intermodal 3 n.a. n.a. n.a. 3 0 n.a.
Nordic Contract 5 n.a. n.a. n.a. 5 60 12
Chartered out ships 2 1 n.a. 1 n.a. 100 20
Newbuildings
2
2 2 n.a. n.a. n.a. 100 n.a.
1
In the sum one ro-pax ship, which is shared between North Sea and Passenger, is eliminated
2
To be delivered in 2012
PROFIT EXPECTATIONS 2012 PER DIVISION
Division
Revenue
growth
Operating profit EBITDA
before special items Comments
Shipping Division Ca. 0% 1,2201,270
by increased competition and generally declining volumes on
the North Sea market
by increased competition. General increase in bunker cost from
higher oil price
Logistics Division Ca. 0% 180
to balance lower revenue from paper logistics
Non-allocated items n.a. 100
DFDS Group total Ca. 0% 1,3001,350
REVENUE PER DIVISION, 2011
SHIPPING DIVISION (64%)
LOGISTICS DIVISION (36%)
INVESTED CAPITAL (NET ASSETS) 2011,
DKK M
(%)
40
20
10
30
50
90
70
80
60
NET WORKING CAPITAL
GOODWILL
OTHER IMMATERIAL ASSETS
CARGO CARRYING EQUIPMENT
SHIPS
OTHER ASSETS
TERMINALS, LAND AND BUILDINGS
0
100
MANAGEMENT REPORT
15DFDS ANNUAL REPORT 2011
for investment in new tonnage is foreseen
in the next couple of years. Optimisation
of tonnage on the Channel may require
investments. At the end of 2012, the ave-
rage age of Passenger’s tonnage will be 23
years, with an estimated technical lifespan
of min. 30 years. The need for replacement
of this tonnage is being assessed.
Corporate governance
DFDS AS is subject to Danish law and
listed on the NASDAQ OMX Copenhagen.
DFDS’ corporate governance is therefore
based on Danish legislation and regulati-
ons, including Danish company law; the
rules of NASDAQ OMX Copenhagen; the
last Danish version of the recommenda-
has been part of the duty of disclosure
requirements for listed companies since
2006; the company’s statutes; and other
relevant rules.
The following information on corpo -
rate governance is available at
www.dfdsgroup.com:
governance, http://www.dfdsgroup.com/
about/governance/
http://www.dfdsgroup.com/about/
governance/articles/
AGM, http://www.dfdsgroup.com/
investors/annualgeneralmeeting/
previousagm/
Corporate Responsibility CR
The ambition for DFDS’ CR programme is
to continuously create value for our sta-
keholders and be their preferred partner.
At the end of 2011, DFDS set up a com-
mittee on corporate responsibility CR
Committee) in order to embed the work
within the Group’s management and orga-
nisation. The committee’s objective is to
manage the CR programme with reference
to Executive Management. Also appointed
were an officer with global responsibility
for sustainability in the DFDS Group and a
chair of the CR Committee.
See pages 3855 for the CR report, which
contains details of policies, programmes
and results.
Safety and security
The safety of our passengers, crew and
freight, as well as the security of our
ships and port facilities, are of paramount
importance to DFDS.
Our safety and security work is regulated
by international and national codes,
and by the additional objectives and
requirements set by DFDS itself. As per
International Safety Management ISM
guidelines, all safety measures and con-
ditions are regularly reported to all ships.
In addition, all ships regularly report back
on incidents on board.
The main events in 2011 were fires in the
chimney systems of two ships while in
dock, and a vehicle fire on the car deck on
the DoverDunkirk route. All three fires
were quickly and effectively extinguished
by DFDS’ own crews. On the Amster-
damNewcastle route, a passenger fell
overboard and was quickly rescued by
the ship’s own lifeboat and crew.
The CR report on pages 4546 provides
more in-depth information about DFDS’
safety and security work.
Profit expectations 2012
Profits for most of DFDS’ activities are
expected to be unchanged or improved
in 2012. The Logistics Division is overall
expected to achieve improved profits in
2012.
The Shipping Division expects unchanged
profits in three of four business areas
spite of an increasing oil price. The busi-
ness area North Sea will be negatively
impacted by increased competition.
A number of measures is being im-
plemented to counter the increased
competition as well as difficult market
conditions in general, including a higher
cost of bunker.
In February 2012, DFDS opened a new
route with one ship between Dover and
Calais. The route is not expected to make
a positive contribution to operating profit
EBIT in 2012.
As per 2011, freight activities are ex-
pected to make up approximately 80%
of DFDS’ revenue in 2012. Growth in the
freight market is expected to be highest
in the Baltic region, around 24%, and
lowest in the North Sea, where declining
volumes are expected, depending on the
market area. Growth in the passenger
market is expected to follow a similar
pattern.
Significant changes in EU, sparked by the
current debt crisis in several member
states, constitute a risk to the profit
expectation, just as significant increases
in the oil price and currency changes
constitute a risk.
On this background, the expectations for
the Group’s key figures for 2012 are as
follows:
Revenue: Expected to remain on a level
with 2011 as the increase from the
addition of the DoverCalais route will
balance lower revenues in North Sea as
a result of increased competition and
expectations of a general decline in
volumes on the North Sea
Bunker costs: Approx. 69% of bunker
consumption is expected to be hedged
by bunker surcharges and financial
hedging. It is estimated that a price
change of 1% will entail a financial
impact of approximately DKK 6.0m
compared to the oil price level mid-
February 2012, which was approxim-
ately USD 700 per ton
EBITDA before special items: Expected
to be DKK 1.3001.350m 2011: DKK
1.495m). The expected performance
per division is shown on p. 14
EBIT before special items: After depre-
ciation of approx. DKK 700m, operating
profit is expected to be DKK 600650m
2011: DKK 835m)
Pre-tax profit before special items
and tax: A profit is expected of DKK
450500m 2011: DKK 651m)
Special items: No special items are
expected 2011: Net income DKK 91m)
Investments: Total planned invest-
ments are expected to be around DKK
650m in 2012, of which the final two
payments for two freight newbuildings
account for around DKK 450m. The
remaining investments mainly concern
docking of ships and cargo-carrying
equipment. Optimization of tonnage
on the English Channel may in addition
require investments.
MANAGEMENT REPORT
16 DFDS ANNUAL REPORT 2011
GROWTH
DFDS IS READY FOR NEW GROWTH
DFDS has generated profitable growth
in recent years through a combination
of acquisitions and organic growth. The
acquisition of Norfolkline has contributed
to transforming DFDS since mid2010. In
parallel with the integration of Norfolk-
line, the DFDS operating model has been
simplified, based on uniform processes
throughout the company. This supports
rapid integration of new activities and
profitable growth.
DFDS’ growth strategy is focused on
profitable growth, which means that
activities that do not improve the return
on invested capital over a certain period
are restructured, sold off or discontinued.
The growth strategy also emphasises
that activities must support DFDS’ overall
strategy. The latter was not the case for
DFDS Canal Tours and the dry-bulk activi-
ties in Norway, and both were thus sold
to strategic buyers in 2011.
The European market for sea and land
transport as a whole remains fragmented.
As a result, DFDS primarily expects to
achieve growth in the next few years
via acquisitions, complemented by
organic growth.
The growth strategy focuses on:
through the acquisition of companies
and activities, including partnerships
customer service, including capacity
expansion.
As described below, the integration of
Norfolkline, including the sale of non-
core areas and surplus assets, is nearing
completion. DFDS’ operating model and
organisation is therefore now ready to
generate new profitable growth from both
shipping and logistics activities.
THE ACQUISITION OF NORFOLKLINE –
INTEGRATION AND VALUE CREATION
Transformation of DFDS
The acquisition and integration of
Norfolkline has transformed DFDS since
mid2010:
Europe’s largest combined shipping
and logistics company
DKK 5bn, or 77%, to DKK 11.6bn
since 2009
increased by about a third to 5,100
since 2009
have been adapted to the new organi-
sation
achieved critical mass with revenue
of DKK 4.3bn
has been extended to include activities
on the English Channel
section of the North Sea has been
improved with the addition of three
freight routes
introduced.
Synergies and costs
At the end of 2011, the total annual
synergies reached DKK 220m, divided
into five main activity areas based on a
total of 82 projects, see table on page
17. Most of the projects were com-
pleted by the end of 2011, although IT
projects are scheduled to be completed
in 2012 as planned.
As shown in the table, synergies for
Logistics and Other in particular have
exceeded expectations. The Headlight im-
provement project helped improve syner-
gies in Logistics, including a reduction in
haulage costs, a joint trailer pool lowered
equipment costs and focus on customer-
level yield management improved.
Other synergies are primarily related to
greater savings arising from the merging
of offices and other organisational
changes.
At the end of 2011, total integration
costs were DKK 147m, which represents
a saving in comparison to the original
cost estimate of approximately DKK
175200m.
Restructuring creates value
Two restructurings were implemented to
ensure that the acquisition of Norfolkline
would lead to profitable growth:
the Irish Sea were discontinued by the
sale of routes and ships and closure of
routes. A ro-pax ship was transferred to
DFDS’ route network in the Baltic Sea
Maasvlakte, Rotterdam.
Total proceeds from the sale of routes,
ships and the port terminal were DKK
715m, equivalent to 28% of the total
debt-free purchase price for Norfolkline,
which was DKK 2.6bn.
Valuable experiences
The successful integration can be at-
tributed to thorough preparation, a high
degree of involvement of employees
in both companies, prioritising internal
and external communication, as well as
detailed reporting and following up on
integration projects. These experiences
have been incorporated into The DFDS
an important platform for future growth
strategy.
GROWTH STRATEGY, INTEGRATION AND VALUE CREATION
COST SYNERGIES FROM INTEGRATION OF DFDS AND NORFOLKLINE
Activity Area of integration
Expected annual
synergies, DKK m
Realized annual synergies
2011, DKK m
Shipping
7080 80
Logistics
3040 61
IT
3040 11
Procurement
3540 38
Other
and other functions
1520 30
Total synergies 180220 220
17DFDS ANNUAL REPORT 2011
GROWTH
SYNERGIES
(DKK m)
JAN
2011
FEB APR MAY JUL AUG OCT NOVJAN
2010
FEB MAR APR MAY JUN AUG OCT NOV TOTAL
50
100
150
250
200
0
Announcement
of transaction
Kick-off
integration
planning
Closing of
transaction
and upgrade
of synergies
to DKK
180-220m
Organisational
restructuring
announced
Divestment of two
routes on Irish Sea
Project Headlight
kick-off
Divestment of
Maasvlakte port
terminal
Closing of two
remaining routes
on Irish Sea
DEC
2009
JUL SEP DEC MAR JUN SEP DEC
QUARTERLY REALIZED SYNERGIESACCUMULATED REALIZED SYNERGIESEXPECTED ACCUMULATED SYNERGIES
18 DFDS ANNUAL REPORT 2011
THE DFDS WAY
THE DFDS WAY
DFDS has successfully undergone major
changes in recent years. We merged
DFDS and Norfolkline, adding more than
a thousand new employees, through
focused improvement projects we deci-
sively turned around several business
areas, and we have improved DFDS’
earnings.
We have come a long way in a short
time and have developed a way of doing
things that works – The DFDS Way.
CUSTOMER
DRIVEN
CONTINUOUS
IMPROVEMENT
BEST
PRACTICE
LEVERAGING
SCALE
PERFORMANCE
CULTURE
OPERATING MODEL
The DFDS Way is common platform for
all employees, it plots a course and a
direction for our operating model and
our behaviours. It is a promise that we
give each other to create value for our
customers and other DFDS stakeholders.
The DFDS Way builds on our experi-
ences. Together with our value pro-
position and strategy, The DFDS
Way forms part of the core of the
way DFDS is managed.
See The DFDS Way video at www.dfdsgroup.com
BY DOING THINGS A LITTLE BETTER EVERY DAY,
WE BECOME A STRONGER COMPANY
19DFDS ANNUAL REPORT 2011
THE DFDS WAY
WE CARE WE SERVE
OUR CUSTOMERS WITH
PASSION WE LISTEN
BEFORE MAKING
DECISIONS WE DO
WHAT WE SAY WE’LL
DO IF WE SEE A
PROBLEM, WE FIX IT
WE LEARN, DEVELOP,
AND IMPROVE
EVERY DAY
BEHAVIOURS
SHIPPING DIVISION
22 DFDS ANNUAL REPORT 2011
SHIPPING DIVISION
BUSINESS AREA OVERVIEW
North Sea Baltic Sea Channel Passenger
Share of Shipping Division
revenue 2011
44% 18% 13% 24%
Routes
Immingham
Copenhagen/Klaipeda
St Petersburg
October 2011
februar 2012
Ships
Port terminals
1
Customer segments
vehicles, paper, steel,
chemicals)
vehicles, forestry products)
without cars
Primary market areas
CIS countries
Europe
Main competitors
1
Subject to approval by competition authorities
STRONG 2011 SUPPORTED BY SYNERGIES AND MARKET
GROWTH OUTLOOK FOR 2012 IS MORE SUBDUED
Business Area Heads:
Passenger
Market overview
Growth was unevenly spread out across
the year and market regions.
The Shipping Division operates the DFDS
route network, divided into four business
areas: North Sea, Baltic Sea, Channel
and Passenger.
DIVISION MANAGEMENT
Head of Division:
President, Shipping Division
Growth momentum from the end
of 2010 continued into Q1 of 2011
whereafter growth levelled off in the
North Sea region. In the Baltic region
demand stayed robust throughout
the year supported by the Russian
economy and an ongoing dispute
between Poland and Russia concer-
ning road licenses for hauliers driving
through Poland.
23DFDS ANNUAL REPORT 2011
SHIPPING DIVISION
The general uncertainty and slow down
in Europe began to impact activity level
in the North Sea region in Q2. Over
the summer renewed and continuing
uncertainty on financial markets has
contributed to dampen growth. Espe-
cially demand on the freight market
between UK and Sweden weakened
during the year. In 2012 freight volumes
in the Baltic region are expected to
continue growing at a level of 24%.
Freight volumes in the North Sea region
are overall expected to decline by
03%, although some market areas are
expected to achieve moderate growth in
volumes. The competitive pressure on
the Channel freight market is expected
to ease during 2012.
Competition on the freight market is, in
general, set to increase in 2012 as the
supply of freight capacity continues to ex-
ceed demand. Surplus tonnage has since
the beginning of 2012 been deployed
between Sweden and UK on a new route
putting pressure on volumes and rates.
Passenger markets remained fairly robust
in 2011 and this trend is expected to
continue in 2012, although demand in the
UK market is expected to weaken further
during the coming year mitigated by the
London Olympics.
Network
DFDS’ network connects Europe through
two integrated divisions, DFDS Seaways
& DFDS Logistics, working together to
provide cost effective and innovative sup-
ply chain solutions for customers.
The network comprises more than 350
weekly shipping departures, strate-
gically located terminals and hubs,
integrated rail services linking shipping
and logistics networks, and IT solutions
supporting network optimization and
efficiency. The network currently covers
20 countries.
Strategic priorities & follow-up
The primary strategic priorities and acti-
ons of 2011 were:
-
nation of synergies, volume and rate
growth, yield and product mix manage-
ment, and improved collaboration with
DFDS Logistics increased operating
profit EBIT before special items by
27.8% in 2011
Severe competitive pressure had redu-
ced earnings in the Channel business
unit and in May an improvement and
efficiency project, Light Crossing, was
launched to support earnings. The
project is expected to be completed
by mid 2012
terminals: In 2011 focus was on mana-
ging the new operational set-up of the
consolidation of two freight routes and
port terminal operations at both ports,
and the conversion of a combined
route to a pure freight route. The total
result of these actions have been a
significant profit improvement which
is part of integration synergies.
2012 presents a number of opportunities
and challenges considering the different
market prospects in the Baltic and North
Sea regions.
Growth is expected to continue in the
Baltic region, and the further development
of two new routes, respectively opened
and acquired in 2011, is a key priority as is
utilizing the capacity added to the network
in 2011. Further expansion of activities in
the region is also a priority. In the North
Sea region, growth is expected to be sub-
dued and decline in some areas. Moreover,
capacity has been added to the market
in both 2011 and the beginning of 2012
which increases competitive pressure.
Longer term, a priority is to assess the
desired level of the ownership share of
freight vessels as this level has increased
to more than 60% in recent years, and
the number of vessels chartered out has
been reduced. The flexibility of the fleet
with regard to adaptation to short term
market changes has thus been lowered in
recent years.
On the Channel, the main priorities are to
achieve the goals of project Light Cros-
sing and to optimise the joint operation
of two routes with the addition of the
new DoverCalais route opened in Fe-
bruary 2012.
ACTIVITY DEVELOPMENT BY
BUSINESS AREA
North Sea
Important events 2011:
of two routes and port terminals
the year
After strong volume growth in Q1 of
10.0%, adjusted for the addition of three
Norfolkline routes in mid 2010, growth
came to a standstill in Q2 and Q3, and
decreased further in Q4.
Volume growth was weakest between
Sweden and UK as demand softened in UK
and the competitiveness of Swedish ex-
ports was reduced by a stronger currency
compared to 2010. Growth between Swe-
den and the Continent was more resilient
driven by automotive volumes, which was
also the case for volumes between Ger-
many and UK. The growth in other market
areas was relatively flat. The overall rate
level was above 2010 with pricing more
firm in some areas than others.
Two major route changes were im-
plemented at the end of 2010 with a
full-year impact in 2011. The consolida-
tion of two routes to one route between
made a significant positive contribution
to the business units improved perfor-
mance. The impact forms part of the
was converted into a pure freight route
with a share of passengers from the for-
mer combined route transferred to DFDS’
passenger route between Amsterdam and
Newcastle. The new freight route strugg-
led to meet expectations in 2011.
Competition increased during 2011 on
the trade between UK and the Continent
with major competitors deploying larger
and newer ships. In January 2012, a new
freight route between Sweden and UK
was opened by a Swedish forwarding
company adding around 30% more capa-
city to the market. As demand in this mar-
ket softened during 2011, the additional
capacity is expected to impact earnings
negatively on DFDS’ two routes between
Sweden and UK significantly in 2012.
The customer mix was stable with a high
share of industrial customers on the
Scandinavian routes. The automotive
sector performed well in 2011 while paper
and steel volumes were more subdued.
Baltic Sea
Important events 2011:
Volume growth remained strong across
routes throughout the year supported by a
high level of demand from the Russian eco-
nomy trading with Germany and Sweden.
Volumes on the corridor between Germany
and Lithuania were also boosted by Polish
restrictions imposed on road licenses for
Russian hauliers. The overall rate level
was above 2010 with firm pricing in most
markets supported by yield management
of peak and off-peak departures.
24 DFDS ANNUAL REPORT 2011
Several changes to the route network
were implemented during 2011. In May
a new route between Germany and
Russia was opened and a route between
Estonia and Sweden was acquired in Oc-
tober. In addition, tonnage and capacity
was upgraded on the routes between
Lithuania and Germany/Sweden. The
charter agreement with Polferries
concerning the route between Sweden
and Poland expired in October and a rail
slot charter between Germany and Lit-
huania was terminated. 2012 will thus
be impacted with the full-year effect of
these changes.
Competition increased during 2011 as
competitors added capacity on the cor-
ridor between Germany and the Baltic
countries. Volume growth is expected to
continue in 2012, albeit at a lower level
of around 24%.Growth is also contingent
on the flow of Russian hauliers between
land and sea.
Accompanied traffic still exceeds unac-
companied traffic in the region. Freight is
predominantly a mixture of machinery,
construction materials and trailers car-
rying consumer products. The imbalance
of volumes between Scandinavia and the
Baltic markets became more pronounced
in 2011, and this trend is expected to
continue.
Irish Sea
Important events 2011:
of January 2011
The exit from the Irish Sea market was
completed in Q1 2011 and entailed one-
off costs of DKK 30m which are reported
as part of special items.
English Channel
Important events 2011:
planned
Total freight volumes on the Dover
Strait increased by 6% and by 0% for
the ferry operators. Eurotunnel’s market
share thus increased in 2011 as the
tunnel operator deployed an aggressive
price policy to regain market share lost
since a fire broke out in the tunnel at
the end of 2008. The push for market
share was especially focused in Q1
and Q2. SeaFrance also gained market
share in the first half of the year through
low pricing as the company sought to
increase revenues to avoid liquidation.
The exceptional competitive pressure
in 2011 resulted in a decrease in freight
rates of more than 10%.
Total passenger volumes on the Dover
Strait increased by 2% and decreased
by 2% for the ferry operators. Eurotun-
nel thus also gained market share on
the passenger market, although to a
lesser extent. Competitive pressure on
the passenger market was less severe
and average seafare per passenger was
maintained on a level with 2010. In mid
November SeaFrance ceased sailings,
creating an overflow of especially
freight volumes, and in January 2012
the company was declared bankrupt.
In November 2011 DFDS deployed a
fourth ship on the DoverDunkirk service
which contributed to increasing freight
and passenger volumes in Q4 2011.
In February 2012 the fourth ship was
transferred to a new route between
Dover and Calais.
SHIPPING DIVISION 2011 2010
DKK m Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY
Revenue 1,704 2,025 2,160 1,909 7,798 1,162 1,465 2,332 1,962 6,921
Operating profit before depreciation
EBITDA and special items 150 429 533 304 1,416 109 332 526 254 1,221
Share of profit of associates 0 0 0 0 0 0 1 1 0 0
Profit/loss on disposal of non-current assets 0 1 9 5 15 0 0 0 2 2
Depreciation and impairment 146 145 138 155 584 120 120 175 145 560
Operating profit EBIT before special items 4 285 404 154 847 11 213 350 111 663
Operating profit margin EBIT, % 0,2 14,2 18,9 7,9 10,9 0,9 14,5 15,0 5,7 9,6
Special items, net 54 69 11 20 133 0 0 16 390 374
Operating profit after special items EBIT 58 354 393 174 980 11 213 334 501 1,037
Invested capital, average 9,231 8,881 8,881 8,904 9,018 7,178 7,122 8,395 9,607 8,134
Return on invested capital ROIC p.a., % 1,0 12,3 16,8 14,8 10,2 0,5 11,4 14,3 20,7 12,0
Lanemetres, '000 5,358 5,350 5,360 5,828 21,896 2,442 2,674 6,635 6,578 18,329
Passengers, '000 718 1,153 1,613 943 4,427 327 483 1,631 938 3,379
An efficiency and improvement project,
Light Crossing, was launched in May 2011
and is expected to run until mid 2012. The
goal of the project is to improve annual
earnings by DKK 75m through cost reduc-
tion, revenue enhancement and organi-
sational changes. Most of the project’s
impact will be achieved in 2012 with full
effect in 2013. Just above 10% of the
project’s goal was achieved in 2011 with
contributions from more efficient bunker
consumption and improved margins on
onboard sales. Bunker consumption per
sailing was reduced by 5% in 2011 and
introduction of new propeller blades will
generate further savings in 2012.
The liquidation of SeaFrance is expected
to contribute to a stabilisation of the
competitive situation during 2012. This
is expected to support an improvement in
earnings in combination with a positive
impact from project Light Crossing.
Passenger
Important events 2011:
Demand on the main passenger markets,
Norway, Denmark, Germany, Holland,
and UK, was stable in 2011 with total
passenger volumes up by 0.8% while the
number of departures was 1.5% lower due
to dockings. The number of passengers per
departure was thus up by 2.3%. Volume
growth was strongest on Amsterdam-
Newcastle where volume was boosted
by passengers formerly travelling on the
-
ted to a pure freight route at the beginning
of 2011. This positive impact, which was
part of integration synergies, was most
SHIPPING DIVISION
25DFDS ANNUAL REPORT 2011
apparent in the first three quarters of the
year as demand on the UK market became
increasingly softer during the year.
A rising oil price increased the bunker cost
by 21% or DKK 46m. The higher cost of
bunker was mitigated by 5% lower con-
sumption per sailing as a result of bunker
saving initiatives, including installation of
new propeller blades on two ships. Just
below 20% of the higher bunker cost was
covered by surcharges.The remainder of
the cost increase was absorbed by lower
depreciations, following a write-down in
2010, increased revenues from seafare and
spending onboard and improved margins.
A new joint passenger booking system,
to be used in all business units trans-
porting passengers, is underway and a
first pilot was tested on EsbjergHarwich.
Full scale implementation is expected to
start in Q3 2012 and will run into 2013
before completion. No major changes in
the competitive situation are expected in
2012, although a continued weakening
of demand in the UK market will impact
earnings and the ability to offset further
increases in bunker costs.
Financial performance
Revenue increased by 12.7% to DKK
7,798m in 2011 primarily due to the full-
year effect of the addition of Norfolkline
and increased activity in Baltic Sea.
Operating profit before depreciations
EBITDA and special items increased by
16.0% to DKK 1,416m in 2011. EBITDA-
margin improved to 18.2% from 17.6%
in 2010 driven by business units North
Sea and Baltic Sea, and a positive impact
from the closing of the Irish Sea business
unit. Operating profit EBIT before special
items was DKK 847m, an increase of
27.8%. Special items amounted to an
income of DKK 133m consisting of ac-
counting profits of DKK 188m from sale
of companies and assets, and integration
costs of DKK 56m.
The invested capital was on average DKK
9,018m in 2011, an increase of 10.9%
primarily due to the full-year effect of
the addition of Norfolkline. The return
on invested capital was 10.2% in 2011
including special items.
SHIPPING DIVISION 2011 2010
DKK m Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY
North Sea
Revenue 877 910 854 873 3,514 617 746 926 873 3,162
EBIT 101 143 125 94 463 88 119 112 61 380
Invested capital 4,688 4,447 4,723 4,622 4,697 4,077 3,784 4,533 4,701 4,248
ROIC, % 8.6 13.7 9.6 7.7 9.5 8.6 12.8 9.3 4.9 7.6
Lanemetres freight, '000 2,650 2,637 2,631 2,589 10,507 1,627 1,785 2,727 2,805 8,944
Passengers, '000 - - - - - - - 22 11 33
Baltic Sea
Revenue 299 344 374 348 1,365 229 269 305 241 1,044
EBIT before special items 45 73 84 46 248 4 51 76 16 147
Invested capital 1,203 1,434 1,521 1,364 1,334 1,227 1,286 1,581 1,334 1,354
ROIC, % 15.0 20.4 20.3 12.7 18.7 1.2 16.6 18.2 4.5 10.4
Lanemetres freight, '000 840 832 859 908 3,439 662 732 755 772 2,921
Passengers, '000 87 122 151 89 449 76 110 144 95 425
Irish Sea
Revenue 21 - - - 21 - - 220 176 396
EBIT before special items 23 7 4 14 6 - - 28 50 78
Invested capital 196 265 58 191 196 - - 527 218 373
ROIC, % 46.1 2.4 22.4 26.9 2.6 - - 20.1 86.3 33.7
Lanemetres freight, '000 - - - - - - - 1,324 1,143 2,467
Passengers, '000 - - - - - - - 71 34 105
Channel
Revenue 181 240 301 239 961 - - 290 213 503
EBIT before special items 21 10 47 21 15 - - 48 10 58
Invested capital 1,278 1,239 1,259 1,185 1,245 - - 1,373 1,252 1,313
ROIC, % 6.5 3.2 13.5 6.6 1.1 - - 13.2 3.0 4.3
Lanemetres freight, '000 1,716 1,750 1,739 2,184 7,389 - - 1,687 1,722 3,409
Passengers, '000 383 647 1,029 543 2,602 - - 964 487 1,451
Passenger
Revenue 295 492 598 394 1,779 286 476 582 374 1,718
EBIT before special items 82 75 147 6 146 83 65 157 7 146
Invested capital 1,140 1,146 1,190 1,140 1,172 1,506 1,555 1,273 1,177 1,441
ROIC, % 28.7 26.2 44.9 2.1 11.9 22.0 20.8 46.6 2.2 11.6
Lanemetres freight, '000 133 150 132 148 563 132 158 142 137 569
Passengers, '000 247 383 432 314 1,376 251 373 430 311 1,365
Non-allocated items
Revenue 46 65 52 215 378 35 35 50 96 216
EBIT before special items 16 45 5 15 41 20 22 15 67 10
SHIPPING DIVISION
LOGISTICS DIVISION
28 DFDS ANNUAL REPORT 2011
LOGISTICS DIVISION
SIGNIFICANT TURNAROUND ACHIEVED IN 2011 –
MORE COMPETITIVE AND AGILE BUSINESS PROCESSES
WILL DRIVE FURTHER IMPROVEMENT IN 2012
BUSINESS AREA OVERVIEW
Nordic Transport
Continental
Transport European Contract Intermodal Nordic Contract
Share of Logistics
Division’s revenue,
2011
15% 31% 20% 24% 10%
Main Activities
Forwarding, mainly
full and part loads:
SwedenUK
Russia
Forwarding, mainly
full and part loads:
Scandinavia
Contract logistics:
retail distribution
Container routes:
Rail transport services:
Benelux
Paper shipping logistics:
Continent/Spain
Equipment Trailer Pool serving Nordic Transport and
Continental Transport
vessels
Warehouses
Sales offices
Customer
segments
logistics
controlled
and ambient cargo for
retailers / manufacturers
Primary
competitors
Continental Group)
29DFDS ANNUAL REPORT 2011
LOGISTICS DIVISION
The Logistics Division operates DFDS’
land transport and logistics activities,
divided into five business areas: Nordic
Transport, Continental Transport,
European Contract, Intermodal and
Nordic Contract
DIVISION MANAGEMENT
Head of Division:
Logistics Division
Business Area Heads:
Market Overview
Activity in key markets remained at
similar levels to 2010, however, focus on
returning DFDS Logistics to profitability
resulted in reduced volumes in some
areas where prevailing prices did not
provide the required returns. Competition
remains intense in all markets served,
and when costs increases are created by
macro economic factors , it is challenging
to obtain compensation from customers
on a like for like basis. It is therefore
essential to continuously strive for ef-
ficiency improvements
Significant growth was achieved with a
number of the largest customers across
a broad range of sectors. The only major
loss was a management contract which
was taken ‘in-house’ on the expiry of the
contract. Industrial and retail transport
transport balances did not follow a consi-
stent pattern throughout the year which
made optimization on a daily basis more
difficult to achieve.
Performance in refrigerated sectors
remains stable and continued close col-
laboration with customers contributes
to ensure this position is maintained and
developed in 2012.
The level of demand is more difficult
to predict in 2012 due to the economic
conditions impacting all countries within
Europe. The aim is to improve upon DFDS
Logistics’ competitive position and busi-
ness model to ensure that good results
can be achieved regardless of market
conditions.
Network
During 2011, DFDS Logistics built upon
the integrated network to ensure efficiency
and the ability to offer better services to
customers. In the early part of the year, the
individual trailer fleets were consolidated
in to one shared pool for the business
units Nordic Transport and Continental
Transport. The economies of scale allowed
a substantial reduction in the overall trai-
ler fleet without reducing capabilities.
An investment of DKK 55m was made in
over 240 dry trailers to develop the fleet
and ensure the ease of transfer between
the different markets in Scandinavia and
Continental Europe.
Towards the end of 2011, UK transport
planning functions for the business units
Nordic Transport and Continental Transport
was moved to one central point in Imming-
ham, UK. This has enabled an optimization
of planning, reduction of empty mileages
and enhanced services to customers.
Continuous Improvement:
Project Headlight
During the year, several significant initia-
tives were taken across DFDS Logistics to
support the improvement to profitability.
The key initiative was Project Headlight.
The project was focused on the trailer
-
nental Transport and European Contract)
where existing processes were improved
and standardised across the business in
order to leverage scale.
Strategic Priorities
Many effective changes were thus imple-
mented through the entire year due to a
great effort by the employees of DFDS
Logistics. It was the positive reaction
to these changes that helped to deliver
the first step in the turnaround of the
Division.
Strategic Priorities in 2012
DFDS Logistics has successfully delivered
the first phase of a turnaround and retur-
ned the business to an overall satisfactory
level of profitability during 2011. The
turnaround was driven by focus on internal
factors such as costs, processes and orga-
nisation. The outcome is a very competiti-
ve product offering and focus in 2012 will
be to increase commercial activity in order
to carry more traffic for our customers and
leverage the business model.
In addition, priorities for 2012 are:
profitability.
THE MAIN INITIATIVES AND ACTIONS OF PROJECT HEADLIGHT WERE
Initiative Actions
Control
the drive for continuous improvement.
per KM of haulage.
for haulage including quality assurance
Processes
management exercises.
and agreed
and measuring conversion rates
30 DFDS ANNUAL REPORT 2011
improvement developed in Project
Headlight by extending the project to
all remaining parts of DFDS Logistics.
high value transport sector and look for
“bolt on” acquisitions to enhance the
product offering to customers.
-
ment System – Velocity.
Nordic Transport
Following on from the successful inte-
gration of Norfolkline during late 2010,
Nordic Transport made improvements to
profitability in all units during 2011. This
was achieved despite lower volumes pri-
marily due to yield management exercise
initiated in Project Headlight.
The business unit developed new traffic
relations with Russia and Lithuania du-
ring 2011, an area which is expected to
provide the unit with further growth op-
portunities in the coming years and at the
same time generates more cargo to DFDS
Seaways’ route network in the Baltic.
The final part of the year saw gradual
improvements in the volumes between
Scandinavia and the UK, mainly due to
winning business from new customers.
Continental Transport
Continental Transport delivered improved
results in all areas during 2011. The lower
cost haulage model that was developed in
Headlight was initiated in the HollandUK
business and was a key element in re-
turning this business to profit. In October
a new operational system was imple-
mented with limited impact on customers
which improved efficiency and produ-
ctivity. UK transport planning was also
LOGISTICS DIVISION 2011 2010
DKK m Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY
Revenue 1,116 1,149 1,064 1,001 4,330 518 549 1,156 1,130 3,353
Operating profit before depreciation
EBITDA and special items 33 42 40 56 171 5 13 19 37 74
Share of profit of associates 1 1 2 2 0 0 0 5 0 5
Profit/loss on disposal of non-current assets 1 0 4 5 10 1 1 2 2 2
Depreciation and impairment 18 17 18 19 72 17 18 27 21 83
Operating profit EBIT before special items 15 26 28 40 109 11 4 1 14 2
Operating profit margin EBIT, % 1,3 2,3 2,6 4,0 2,5 2,1 0,1 0,1 1,2 0,1
Special items, net 6 2 3 3 14 0 0 20 194 214
Operating profit after special items EBIT 9 24 25 37 95 11 4 21 180 216
Invested capital, average 953 927 896 894 921 875 895 1.079 1.107 975
Return on invested capital ROIC p.a., % 3,4 9,0 10,6 18,1 9,7 5,9 2,1 10,4 81,8 27,7
Tons, '000 378 259 243 251 1.131 389 420 422 391 1.622
Units, '000 88,9 90,1 85,2 81,2 345,4 41,2 43,6 95,0 91,7 271,5
STRATEGIC PRIORITY 2011
Priority Result
of Norfolkline
which was more than expected and delivered in
advance of targets.
turnaround of DFDS Logistics returning an EBIT-
margin of 2.5%
0.3m, against a loss of DKK 15.8m in 2010.
Trade between Holland and Ireland
rates increasing and over capacity. These factors off-
set improvements implemented at the end of 2010.
transport
-
mance from BU European Contract in 2011.
sector
revenue in this segment by 30% during 2011.
of new Transport Management
System – “Velocity”
Rail business was moved on to the Phoenix ope-
rational system to develop more synergies within
the division. Velocity development resources were
reduced to accomplish this and therefore design
and production phase is still ongoing with expecta-
tion that it will be completed by 2012 and a pilot
site implemented by the end of the year.
DFDS Seaways
a competitive advantage in dealing with DFDS.
LOGISTICS DIVISION
31DFDS ANNUAL REPORT 2011
LOGISTICS DIVISION 2011 2010
DKK m Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY
Nordic Transport
Revenue 173 179 163 147 662 97 105 182 137 521
EBIT before special items 6 7 6 11 30 2 4 8 8 6
Invested capital 79 80 70 124 73 45 53 70 12 45
ROIC, % 11.6 33.0 32.0 32.7 38.5 54.1 26.4 42.3 265.7 12.5
Units, '000 10,1 9,3 9,5 10,1 39,0 5,9 6,2 12,5 10,8 35,4
Continental Transport
Revenue 377 366 346 314 1,403 152 164 413 347 1,076
EBIT before special items 0 6 4 5 15 0 4 2 1 7
Invested capital 281 227 240 161 254 212 223 505 356 301
ROIC, % 0.7 10.7 6.9 12.3 5.5 0.2 6.8 1.7 1.3 2.1
Units, '000 30,1 29,2 26,1 25,2 110,6 15,3 15,8 32,1 30,2 93,4
European Contract
Revenue 212 225 221 235 893 - - 220 221 441
EBIT before special items 9 12 13 16 50 - - 9 22 31
Invested capital 157 152 159 177 159 - - 24 151 88
ROIC, % n.a. 29.3 31.3 34.1 29.5 - - 146.3 54.9 33.1
Units, '000 19 20,3 20,4 21,2 80,9 - - 19,5 20,0 39,5
Intermodal
Revenue 270 310 269 262 1,111 173 203 289 304 969
EBIT before special items 0 4 1 3 8 3 0 3 7 7
Invested capital 164 219 193 184 193 242 342 252 204 252
ROIC, % 6.9 6.6 2.1 6.9 3.9 0.3 0.3 3.8 12.2 2.6
Units, '000 29,7 31,3 29,2 24,7 114,9 20,0 21,6 30,9 30,7 103,2
Nordic Contract
Revenue 114 113 110 102 439 102 100 124 123 449
EBIT before special items 6 9 13 11 39 5 3 4 2 4
Invested capital 259 241 223 219 241 382 297 366 262 340
ROIC, % 6.9 14.5 22.0 19.2 15.2 5.9 4.0 3.9 3.4 1.1
Tons, '000 378 259 243 251 1,131 389 420 422 391 1,622
Non-allocated items
Revenue 23 22 23 19 87 3 3 6 18 18
EBIT before special items 6 12 9 6 33 5 7 7 10 29
LOGISTICS DIVISION
moved to the main Hub in Immingham to
take advantage of scale. This will support
delivery of a better return in 2012.
The Ghent operation delivered an
excellent step in the turnaround of this
business during 2011 with a small profit
in part due to the initiatives in Project
Headlight. In order to stay competitive in
this very challenging market, the business
model was changed and own drivers and
trucks were replaced by sub-contractors
on international trade which follows the
strategy of the rest of the Division. As
a consequence 34 drivers were made
redundant.
The activities in Brugge and Hamburg
both delivered good results, and are both
expected to improve further in 2012.
These units now deliver the best returns
of the business unit.
32 DFDS ANNUAL REPORT 2011
European Contract
In Scotland the aquaculture volumes were
marginally below expectation and the
levels attained in 2010. Salmon prices
dropped in the second half of the year
and, in particular, exports to Europe were
affected by strong supply from Norway.
Good vehicle utilization helped to ensure
margins were maintained. The outlook for
2012 and beyond remains positive.
Business performance in Northern Ireland
was satisfactory with yield management
initiatives through the Headlight project
and some new customer volume provi-
ding for improvement on the previous
year. Reduced imports to Ireland resulted
in changes to the usual trade patterns and
required adjustments to the operation
and tariff model.
In 2011 the Peterborough business again
enjoyed considerable volume growth from
its major blue chip customers. Develop-
ment of new business with existing custo-
mers combined with strong operational
controls resulted in a good performance.
Intermodal
After various operational and organiza-
tional changes profitability was achieved
within all Intermodal Rail activities con-
necting Scandinavia, Benelux, Germany
and UK with Italy. Especially Sweden,
Denmark and UK have shown growth and
higher EBIT margins. We expect further
improvement in 2012 within all Rail
traffic areas.
The Norwegian container activities con-
necting the Oslo Fjord and the West Coast
with the Continent and UK improved both
volumes and earnings and further posi-
tive development is expected in 2012.
The Oslo Fjord service continue to be
operating in a vessel sharing agreement
VSA with Samskip and Unifeeder.
DFDS Suardiaz Line DSL, a 5050 joint
company with Valpores Suardiaz Logistica,
Spain, operating a door/door container
service between Ireland, UK and Spain
based on a vessel sharing agreement with
Mac Andrews. In spite of the very difficult
conditions on the Irish and Spanish market
profitability was stabilized in 2011. Further
improvement is expected for 2012.
DFDS Contract Logistics Ireland improved
results further compared to 2010, and the
outlook for 2012 is likewise positive.
DFDS Logistics Container Line operating
the Continental/Irish container service, in
a vessel sharing agreement VSA with
Samskip, had another difficult year with
increases in charter rates and bunker
costs, especially in the first two quarters,
which have been difficult to pass on to
the customers. As a consequence of the
disappointing development, capacity was
reduced from four to three vessels at the
end of October. At the same time, redu-
ced charter costs were negotiated for all
three vessels which resulted in a positive
EBIT in November. As from January there
are no long term commitments on charter
vessels. The market is still influenced by
some overcapacity which is impacting
freight rates and profitability. Compared
to previous years operational flexibility
is now higher with limited fixed costs,
which together with the new DFDS Lo-
gistics network, gives an opportunity to
bring this activity back to profit in 2012.
Nordic Contract
During 2011 the Chartering activity,
which consisted of five bulk carriers, was
sold to Wilson. This allowed management
to focus on the core activity in Nordic
Contract supporting delivery of excellent
results in the Sideport shipping activity.
During 2011 a key paper industry custo-
mer reduced volumes due to a factory fire,
but this was compensated by additional
volumes from others which were carried
in our vessels. The paper industry is pre-
sently characterized by uncertainty due to
over supply in the market. The situation is
monitored closely to ensure adaptation of
the business model accordingly.
Financial performance
Revenue increased by 29.2% to DKK
4,330m in 2011 mainly due to the full-ye-
ar effect of the integration of Norfolkline.
Operating profit before depreciations
EBITDA and special items was incre-
ased by 130.9% to DKK 171m in 2011.
The EBITDA-margin increased to 4.0%
from 2.2% in 2010. Higher profits in all
business areas contributed to improving
the margin.
Operating profit EBIT before special
items was DKK 109m, an increase of DkK
111m. Special items amounted to a cost
of DKK 14m, including integration costs
and costs related to the improvement and
efficiency Project Headlight.
The average invested capital was DKK 921
m in 2011, a reduction of 5.4%. In 2011,
the return on invested capital reached
9.7% including special items.
LOGISTICS DIVISION
33DFDS ANNUAL REPORT 2011
RISK FACTORS
RISK FACTORS
Macro-economic and market risks
The market for sea transport of freight
and passengers is affected by the general
level of demand and by the state of the
economy. Significant drops in demand
will in most situations lead to overca-
pacity and increased price pressure in
the market. Partly in order to counteract
these cyclical risks, part of the ro-ro
freight fleet consists of chartered vessels.
The aim is that a certain proportion of the
chartered tonnage will be for contracts
of less than a year with the option of
extensions, which facilitates the return
of tonnage at short notice. All of the pas-
senger ships are owned by DFDS, which
limits the options for adapting passenger
capacity in the short term. The container
fleet is all chartered. Logistics activities
make widespread use of subcontractors
for land transport, and leased equipment,
leading to a high proportion of variable
costs and therefore substantially lower
cyclical risk.
DFDS’ geographic diversification across
Northern Europe as well as activities
aimed at Russia and the surrounding
countries reduces dependence on
developments in any single region. The
number of routes and other activities also
helps balance commercial risks.
The market for sea transport of freight
and passengers is also affected by
industry-specific conditions, including
changes in the market for alternative
forms of transport, such as road, rail and
air, the latter of which mainly impacts
upon the passenger sector. In addition,
the market is influenced by changes in
local and regional competition, including
the opening of competing routes and the
deployment of additional capacity on
existing routes.
A significant proportion of the freight on
some routes stems from a small number
of customers. The risk inherent in such
RISK MANAGEMENT IS AN INTEGRAL PART OF THE
GOVERNANCE OF DFDS AS RISKS AND OPPORTUNITIES
ARE WEIGHED UP ON AN ONGOING BASIS. ALL MAIN
RISKS ARE REPORTED TO THE BOARD OF DIRECTORS
relationships is partly limited by entering
into long-term partnership agreements.
Risks associated with business
development and investments
Business development and investment
risks stem from DFDS’s growth strategy,
the acquisition of tonnage) and growth
through the acquisition of companies and
activities. The most important risks as-
sociated with organic growth are related
to capacity utilisation on the existing
route network when deploying new or
larger tonnage. Acquisitions of companies
and activities involve significant risks,
which increase in line with the size of
the investment and the complexity of the
subsequent integration process.
Risks associated with all forms of busi-
ness development are managed by means
of in-depth planning and decision-making
processes based on internal policies and
guidelines for investment, including a
required rate of return.
The tonnage market
DFDS mainly charters freight tonnage,
which involves risks associated with pri-
ce trends and the availability of sufficient
tonnage in relation to the company’s ne-
eds. Similar risks are also relevant when
chartering out excess tonnage. In addition,
certain risks are associated with price
trends and the time periods involved in
ordering newbuildings.
Due to the ongoing process of replacing
and renewing the DFDS fleet, the sale of
tonnage or the annulment of contracts
may result in gains, losses and costs
that are not included in annual profit
forecasts.
Security and environment risks
DFDS uses freight and passenger ships,
port terminals, warehouses and cargo
carrying equipment and other operating
34 DFDS ANNUAL REPORT 2011
RISK FACTORS
Risks Policies Hedging 2012
Bunkers
2012: 476,000 tons
1,736m
anticipated consumption for the next four quarters
surcharges for passengers)
– Financial instruments
prices of 1% compared to the price
level at midFebruary 2012 will entail
an impact on financial performance of
approximately DKK 6.0m
– The commercial hedging level is
assumed to be 75% for freight
and 40% for passengers Total
commercial hedging: 65%
– Financial hedging amounts to 4%
Interest
rates
-
rily increases
and proportion of fixed-term
loans, long-term charter contracts
are included under fixed-interest
loans
DKK 161m in 2011
charter contracts
of fixed-interest loans, including inte-
rest-rate swaps and charter contracts,
compared to net-interest-bearing debt)
compared to the price level at mid-
February 2012 would entail an impact
on financial performance of approxim-
ately DKK 23.3m
Currency
the impact on the profit and loss
account of value adjustments of
financial assets and liabilities in
foreign currencies
for assets and liabilities
and GBP 20m are hedged using price-adjustment
agreements
2012 are as follows:
– SEK: DKK 198m
– GBP: DKK 0m
– NOK: DKK 99m
changes in exchange rates, which
have an impact on earnings when
revenues and expenses are not
incurred in the same currency
aggregated to facilitate mutual hedging
cost structures in local currencies
is invoiced in foreign currency
2012 are estimated as follows:
hedged, apart from bunker costs in USD
Liquidity
payments
by drawing rights
sought in the form of corporate bonds or similar
holdings of DKK 864m at the end of
2011, and short- and long-term drawing
rights on DKK 498m.
institutions
-
ned by the credit ratings of the banks concerned.
-
ing with fixed limits
35DFDS ANNUAL REPORT 2011
RISK FACTORS
equipment, all of which involve operatio-
nal risks. These risks are controlled and
minimised partly through compliance
with safety requirements and routines,
as well as preventative work, and partly
through insurance against risk.
Environmental and safety measures are
based on DFDS’ environmental and safety
policies, as well as official regulations
and customer demand. Changes in these
factors can increase costs. The Group is
insured against environmental risks as far
as possible, and participates in preparato-
ry legislative procedures through industry
organisations.
for safety and environmental risks as well
as DFDS control practices and prevention
efforts.
Political and legal risks
DFDS’ activities are affected by legal
and regulatory changes regarding the
shipping and transport sector as well as
the overall conditions for infrastructure
in northern Europe. In addition to political
bodies, DFDS is subject to International
Maritime Organisation IMO conventions.
The IMO is the UN body responsible for
maritime issues, primarily safety and the
environment.
Changes in laws and regulations regar-
ding DFDS’ overall conditions can lead to
negative consequences, including higher
costs. This risk is linked to the require-
ment of lowering the sulphur content in
bunkers to 0.1% in 2015 in the Baltic and
the North Sea.
This is accounted for in the environmen-
tal section of the CR report 5052.
Other significant political risks concern
changes to taxation arrangements for
staff at sea, loss of duty-free sales in
Norway if the country were to join the
EU, the cancellation of VAT exemption on
tickets and on-board sales and change of
tonnage tax schemes.
DFDS is actively monitoring develop-
ments in these areas, including through
participation in industry organisations.
FINANCIAL RISKS
As an international company, DFDS is
exposed to financial risks relating to
changes in exchange rates, interest rates,
oil prices and other factors. Such risks are
managed in accordance with DFDS’ agreed
policy for financial risk management. De-
cisions about risk management are discus-
sed regularly by Executive Management,
and the Board of Directors is regularly
informed about risks and hedging.
In connection with the acquisition of
Norfolkline in 2010, a major overhaul was
instigated of DFDS’ loan portfolio, including
the establishment of three-year certified
drawing rights. The overall financial
structure and financial needs are thus well
balanced. DFDS also owns several ships
without collateral, as a result of which
refinancing risks are considered to be li-
mited. The main focus in 2011 has been on
ensuring future transparency in liquidity.
DFDS’ shipping activities involve a relati-
vely high degree of capital intensity, and
demand for transport services is cyclical
to a certain degree. Together, this implies
a risk of large fluctuations in earnings,
and financial flexibility is therefore main-
tained through a solid capital structure.
At the end of 2011, DFDS’ equity ratio
was 54% and this ratio is expected to
increase during 2012. In light of DFDS’
growth strategy and the current increased
uncertainty about the future macro out-
look, the capital structure is deemed to
be satisfactory.
The table on page 34 accounts for DFDS’
financial risks. In addition, please refer
to note 28. For individual risk areas, the
following can be highlighted:
Bunkers: In the freight area, oil-price
risks are hedged to a large extent
by price-adjustment clauses in
transport contracts. The degree of
hedging is also affected by capacity
utilisation, i.e. all things being equal,
greater utilisation will lead to a
higher coverage ratio. It is estimated
that a price change of 1% will entail
a financial impact of approximately
DKK 6.0m compared to the oil price
level midFebruary 2012, which was
approximately USD 700 per ton
Interest rates: The proportion of net
fixed-interest loans was 58% at the
end of 2011, which is consistent with
the target of a hedging level of 4070%
Currency: To date, transaction risks
have not been hedged. They relate
primarily to SEK, NOK, GBP and USD.
Due to turmoil in the Eurozone EUR
risks are monitored continuously, but
not hedged
Liquidity: At present, the risks are
estimated to be limited. DFDS systema-
tically and regularly conducts internal
credit assessments of all financial
counterparts. The internal credit as-
sessment is based on ratings from in-
ternational credit-rating agencies. The
Board of Directors approves general
limits on deposits, etc. with counter-
parts on this basis
36 DFDS ANNUAL REPORT 2011
SHAREHOLDER INFORMATION
SHAREHOLDER INFORMATION
Share capital
DFDS AS’ share capital remained
unchanged at DKK 1,486m during 2011.
The share capital consists of one class of
shares distributed on 14,856,081 shares,
each with a nominal value of DKK 100.
The DFDS share is listed on NASDAQ
OMX Copenhagen.
Price, market value and revenue
The DFDS share price at the end of
2011 was 355, down 15% from the
end of 2010. By comparison, an index
fell by 16% in 2011. The NASDAQ OMX
Copenhagen total index OMXC fell by
18% in 2011.
DFDS’ Peer Group Index consists of the
following companies: DSV DK, Finn-
lines SF, Irish Continental Group IE,
Tallink ES and Viking Line SF.
The market value of the total share capi-
tal at year-end 2011 was DKK 5,274m.
The market value of the turnover in
DFDS shares was DKK 925m in 2011, an
increase of 119% compared to 2010.
Shareholders
At the end of 2011, DFDS had 15,490 re-
gistered shareholders with an ownership
share of 93.7% of the share capital. The
Lauritzen Foundation was the principal
shareholder at the end of 2011, with a
holding of 36.3%.
Shareholders abroad owned 3.4% of the
share capital at the end of 2011 compa-
red with 2.1% at the end of 2010.
Dividend
DFDS’ dividend policy aims for an annual
dividend corresponding to approximately
30% of annual net profit. The annual di-
vidend is determined with due conside-
ration to DFDS’ investment requirements
and a satisfactory capital structure.
The Board of Directors proposes
payment of a dividend for 2011 of
DKK 14 per share.
Investor relations
IR and Corporate Planning
Tel.: +45 33 42 33 59
E-mail: soeren.broendholt@dfds.com
Shareholder Secretariat
Maria Breitenstein, Executive assistant
Tel.: +45 33 42 34 53
E-mail: maria.breitenstein@dfds.com
Financial calendar
Annual General Meeting
29 March 2012 at 14:00
Radisson SAS Falconer Hotel
and Conference Centre
Falkoner Allé 9
DK2000 Frederiksberg, Denmark
Announcement of results in 2012
Q1: 22 May
H1: 21 August
Q3: 15 November
SHARE RELATED KEY FIGURES
2011 2010 2009 2008 2007
Earnings per share, DKK 50 47 11 32 52
Dividend per share, DKK 14 8 0 0 15
Dividend payout ratio, % 28 17 0 0 29
Dividend yield, % 3.9 1.9 0.0 0.0 1.9
PE ratio, times 7 9 33 12 15
Equity per share, DKK 469 427 455 427 442
Price/book value, times 0.76 0.98 0.79 0.93 1.79
Share price, DKK:
Price at year-end 355 418 358 399 790
Price high 480 423 416 785 950
Price low 353 309 250 290 692
Market value, DKK mill. 5,274 6,210 2,864 3,192 6,320
No. of shares at year-end, mill. 14.9 14.9 8.0 8.0 8.0
ANALYSTS COVERING THE DFDS SHARE
CARNEGIE BANK
Stig Frederiksen
Tel.: +45 3288 0258
E-mail: [email protected]
DANSKE MARKETS EQUITIES
Tel.: +45 4512 8036
E-mail: [email protected]
HANDELSBANKEN CAPITAL MARKETS
Dan Togo Jensen
Tel.: +45 4679 1246
E-mail: [email protected]
NORDEA MARKETS
Finn Bjarke Petersen
Tel.: +45 3333 5723
E-mail: finn.bjarke.petersen@nordea.com
SEB ENSKILDA
Nikolaj Kamedula
Tel.: +45 3328 3314
E-mail: nikolaj.kamedula @ enskilda.dk
37DFDS ANNUAL REPORT 2011
SHAREHOLDER INFORMATION
INDEXED PRICE DEVELOPMENT FOR DFDS SHARE AND INDEX, 2011
(INDEX)
JAN
2011
FEB MAR APR MAY JULJUN AUG SEP OCT NOV DEC
2011
80
90
100
120
110
DFDS
ALL SHARE INDEX OMX COPENHAGEN (OMXCPI)
PEER GROUP INDEX
70
DFDS SHARE: PRICE DEVELOPMENT AND TRADING, 2011
(SHARE PRICE, DKK)
350
400
450
500
DFDS TRADING VOLUME, NO. OF SHARES
300
JAN
2011
FEB MAR APR MAY JULJUN AUG SEP OCT NOV DEC
2011
0.4
0.8
1.2
1.6
0
(NO. OF SHARES, M)
COMPANY ANNOUNCEMENTS 2011
Dato Meddelelse
19122011 Financial calender 2012
15122011 Major Shareholder Announcement
12122011 New bid for assets of SeaFrance not submitted
16112011 Bid for assets of SeaFrance not accepted
16112011 Continued progress for DFDS
07112011 Invitation to conference call for Q3 report on
16 november 2011
14092011 DFDS expands Baltic Route Network
23082011 Reporting of transactions in DFDS' shares and
associated securities by senior employees and
their related parties
22082011 Reporting of transactions in DFDS' shares and
associated securities by senior employees and
their related parties
18082011 Q2 better than expected
09082011 Invitation to conference call for half-year report
on 18 August 2011
26072011 Bid for assets of Seafrance
22062011 Sale of port terminal in Rotterdam
09062011 Focus on performance and value creation
strengthened through option programme
13052011 Strong growth in revenue and results
28042011 Invitation to conference call for Q1 report on
13 may 2011
13042011 DFDS AS – summary of annual general meeting,
13 april 2011
07042011 Reporting of transactions in DFDS' shares and
associated securities by senior employees and
their related parties
25032011 Election of employee representatives and alternates
to the board of directors of DFDS AS
22032011 Reporting of transactions in dfds' shares and
associated securities by senior employees and
their related parties
18032011 Reporting of transactions in dfds' shares by related
parties
18032011 Notice to convene annual general meeting DFDS AS
17032011 Strong 2010 for DFDS
14032011 Sale of Canal Tours
01032011 Invitation to conference call for DFDS' annual report
2010
03022011 Sale of ro-pax ship and circulation of tonnage
13012011 Closure of routes on Irish Sea
11012011 Management awarded
03012011 Change in Profit Expectations for 2010
OWNERSHIP STRUCTURE, END 2011 SHARE OF CAPITAL, %
Lauritzen Foundation
1
36.3
A.P. Moeller – Maersk
1
31.3
Other institutional and financial investors 17.8
Other registered shareholders 6.2
Own shares 2.4
Non-registered shareholders 6.0
Total 100.0
1
Based in Copenhagen
CR REPORT
40 DFDS ANNUAL REPORT 2011
CR REPORT
CORPORATE RESPONSIBILITY
AT DFDS
Executive message
“ DFDS is responsible for many employ-
ees, their working conditions, their
safety and their health at work. We help
to safeguard the infrastructure and sup-
ply of goods. We are responsible for our
passengers’ safety, for our customers’
freight, and for operating as responsibly
as possible in relation to the environ-
ment. We are responsible for managing
the investments made in DFDS – and
much more”.
“ Our responsibility is recognised in a
range of policies covering these areas.
In this, our first comprehensive report
on CR, we present policies, actions, and
our progress covering our corporate
responsibility efforts. Hopefully our
commitment will come through in this
report and at the same time improve
the transparency of our work. We aim
to improve continuously from here,
step by step: That is The DFDS Way”.
“ We aim to create value for stakeholders
through being a good ‘corporate citizen’,
and we want all DFDS citizens – from
the Board to individual employees – to
contribute actively by making responsi-
bility part of their daily working life.”
Niels Smedegaard,
President and CEO
Our new approach to Corporate
Responsibility
We have embarked on a journey to
manage CR risks and opportunities syste-
matically. A clear strategy has been set,
with targets for short and medium-term
performance improvements, andwe are
committed to working with our stakehol-
ders to reach these targets.
Our CR Strategy
The ambition of our CR strategy is to
create and protect value for our stake-
holders supporting DFDS’ position as a
preferred supplier and employer.
Our ‘roadmap’ to creating value for DFDS
and its stakeholders from CR involves
working with others. We engage with policy
makers, for example on sulphur emissions;
we participate in international industry fo-
rums on security and safety; we work with
suppliers, for example on efficient bunker
refuelling; and we are managing communi-
ty relations such as around our Rotterdam
terminal. See below for more information
on who we engage with, the issues that
are important to them and what we do -
and plan to do - about them.
All of our CR efforts depend on the col-
laboration of our colleagues across the
company on land and sea. Without them,
little can be achieved. But in order to har-
ness the collaborative energy reliable pro-
cesses and systems must be in place. Over
the past two years, we have strengthened
our capacity for CR in our operations by
sharing best practices and improving in-
ternal communications on CR. An example
is the emerging human resources HR
management system which will allow
more systematic management of people,
policies and goals. Another example is the
new supply chain management database
which will allow us to refine our under-
standing and partnerships relating to key
risks and opportunities in the value chain.
An executive CR strategy workshop was
held in November 2011. Key topics were
the structure CR-work, measurability and
transparency, and integrating CR into
daily operations while creating business
value. There is scope for innovation and
we found that we engage with external
parties on many issues relating to CR. A
comparison with peer companies of per-
formance on five key CR issues showed
that DFDS is well positioned for future
development of CR.
DFDS HAS TAKEN THE FIRST STEPS TO UNITE CORPORATE
RESPONSIBILITY CR AND OPERATIONS TO CREATE
VALUE FOR OUR STAKEHOLDERS AND OUR COMPANY
WHAT ARE OUR
KEY CR ISSUES?
scale to deliver CR
security of employees,
customers and passengers
management, including
fair employment terms
greenhouse gases
customers on CR issues
Governance of CR
To govern DFDS’ CR strategy relating to
stakeholder identification, reviewing
stakeholder relationships, and an overall
CR policy, a new CR corporate governance
has been launched with arrangements
including:
senior people responsible for driving
and managing CR at DFDS
sponsor of the new Committee
-
tee ECM sets the long term ambition
with our CR Committee driving the
programme.
Clear terms of reference for the Commit-
tee are being developed. It will meet at
least quarterly and will invite external
stakeholders to two of these meetings.
The Chairman of the CR Committee will
report progress twice yearly to the ECM,
and annually to the Board of Directors.
The members of the CR Committee will
41DFDS ANNUAL REPORT 2011
CR REPORT
BOARD OF DIRECTORS
EXECUTIVE MANAGEMENT
CR COMMITTE
SHIPPING
DIVISION
LOGISTIC
DIVISION
PEOPLE & SHIPS FINANCE
WORKING WITH OUR NEIGHBOURS
Our Rotterdam terminal is next door to a residential
area. We used to receive about 30 complaints a
month from local residents. Noise and road traffic
movements can be a nuisance. We set out to explain
more about our role in the port and what we are doing.
We launched a local community newsletter in 2010
for some 2,000 residents to keep them informed of
our latest developments. As a result, across 2011,
complaints dropped from around 30 per month to
just a handful, and some months none at all.
discuss and make decisions on key CR
topic areas such as human resources,
procurement, environment, health &
safety, ethical conduct. The objectives of
the Committee will be to drive forward
the development of CR policies, com-
mitments and goals, regular stakeholder
mapping and engagement, CR issues
prioritisation, annual CR reporting and
the assessment of signing up to the UN
Global Compact, which DFDS expect to
do in 2012.
Working with stakeholders
Creating value from CR for DFDS and its
stakeholders involves stakeholder enga-
gement processes – working with others
and being accountable. A stakeholder is a
person or organisation who we influence,
or who can influence us, including voice-
less ones such as the environment and
future generations.
Our new CR governance therefore builds
on engaging with external stakeholders.
Dialogue and collaboration can help
tackle CR challenges such as emissi-
ons control and fair labour conditions.
Collaboration can create opportunity:
systematically understanding the
changing requirements of customers
regarding wider issues can help differen-
tiate a transport supplier, for example.
Open engagement with employees can
yield productivity improvements. Con-
sideration of the way we interact with
ports, logistics hubs and local commu-
nities can protect commercial value and
reputation.
Who are DFDS’ stakeholders and what
do they expect of us? The table below
lists our stakeholder groups, the ways we
engage with them and our opinion of the
key outcomes relevant to CR.
What’s material to our CR
Strategy and Report?
Through workshops and benchmar-
king we identified a range of issues
42 DFDS ANNUAL REPORT 2011
The table below lists our stakeholder groups, the ways we engage with them and our opinion of the key outcomes relevant to CR.
Stakeholder Who they are How we engage Key engagement issues Progress during 2011 Plans for 20122013
Customers/
Passengers
customer satisfaction survey and analysis
in 2012
booking and information system
ships when docking
Employees/
Unions
Management system SMS
continuous training
Regulators and government
(land & sea)
including emissions reductions, introduction
of low sulphur fuels, improvements to
anti-foul paints, responsible ship scrapping,
waste management
sulphur scrubber on TOR FICARIA
technologies
Financial
Lauritzen Foundation
by the Danish association of financial analysts
Industry organisations
welfare meetings
and industry associations
of low sulphur fuels in shipping fleet
eg. PEARL SEAWAYS
SEAWAYS
PEARL SEAWAYS
consumption reductions to be decided in 2012
include DFDS Logistics CO
2
emissions
Suppliers
implemented in 2011
begun in 2011
Communities where we operate
warehouses, offices and other facilities
with ports incl. land connections for electricity so
engines can be shut down in port to reduce noise
and emissions
where we operate
Media, NGO’s and others
incl. emissions and responsible scrapping of ships
CR REPORT
43DFDS ANNUAL REPORT 2011
The table below lists our stakeholder groups, the ways we engage with them and our opinion of the key outcomes relevant to CR.
Stakeholder Who they are How we engage Key engagement issues Progress during 2011 Plans for 20122013
Customers/
Passengers
customer satisfaction survey and analysis
in 2012
booking and information system
ships when docking
Employees/
Unions
Management system SMS
continuous training
Regulators and government
(land & sea)
including emissions reductions, introduction
of low sulphur fuels, improvements to
anti-foul paints, responsible ship scrapping,
waste management
sulphur scrubber on TOR FICARIA
technologies
Financial
Lauritzen Foundation
by the Danish association of financial analysts
Industry organisations
welfare meetings
and industry associations
of low sulphur fuels in shipping fleet
eg. PEARL SEAWAYS
SEAWAYS
PEARL SEAWAYS
consumption reductions to be decided in 2012
include DFDS Logistics CO
2
emissions
Suppliers
implemented in 2011
begun in 2011
Communities where we operate
warehouses, offices and other facilities
with ports incl. land connections for electricity so
engines can be shut down in port to reduce noise
and emissions
where we operate
Media, NGO’s and others
incl. emissions and responsible scrapping of ships
CR REPORT
44 DFDS ANNUAL REPORT 2011
IMPORTANCE TO STAKEHOLDER
HIGH
Emergency response
Customer H&S and security
Fair employment/Provide good jobs
Greenhouse gas emissions
Compliance
MEDIUM
Noise Business ethics
Community donations
CR governance
Employee training/career dev’t
Local air emissions
Marine pollution
energy, water etc)
Responsible policy advocacy
Responsible procurement
Ship disposal
Accessibility to stakeholders
Internal and external communication
Financial results
Global air emissions
Financial reporting
Employee Diversity
Collaborating with Customers
on CR issues
Efficient and effective infrastructure
LOW
Ship registry GRI LT1
Biodiversity/ecological protection
LOW MEDIUM HIGH
IMPORTANCE TO DFDS
that matter the most and that may
influence the decisions, actions and
performance of employees, customers
and other stakeholders. The relative
importance of these issues was then
positions on issues). Corporate risk was
also taken into consideration in this
review. The grid below shows the most
important issues identified as a result
of this work.
Determining CR priorities is a dynamic
process and we are committed to impro-
ving our understanding of where focus
should be and how CR issues should be
managed. Processes are being developed
to invite and gather feedback to help
refine the understanding of material
issues.
About this Report
The scope of the information and data
in the CR section of this Annual report
“CR Report”) covers DFDS’ operations
in Northern Europe, including 47 ships,
port terminals and offices. CO
2
data are
based on bunker documentation and
does not currently include energy or CO
2
data from logistics operations and of-
fices. The CR Report does not cover any
joint venture operations or activities of
partner organisations. The information
in this CR Report meets the require-
ments of the amendments to the Danish
Financial Statements Act 2009 and is
subject to internal data management
systems and audit. The data covers the
financial year January to December
2011. We did not seek external inde-
pendent assurance for the CR Report
content and will review options for the
next CR Report. The report is guided
by the principles of report content and
quality from the Global Reporting Initia-
tive GRI Sustainable Development
CR REPORT
45DFDS ANNUAL REPORT 2011
SAFETY AND SECURITY
Highlights
rating recorded in 2011
incident reporting
data systems
maintained
Our approach
Part of DFDS’ customer service is to
ensure systematic implementation and
monitoring of safety standards. Safety
processes build on continuous impro-
vement and sharing of best practices. In
our approach to managing health and
safety H&S, employees, passengers,
freight customers and regulators are key
stakeholders.
Corporate safety and security objectives
and requirements are determined by
national and international regulations.
Under the International Safety Manage-
ment ISM code and the International
Ship and Port Facility Security Code
ISPS, all maritime safety measures and
security factors must be reported for all
ships on an ongoing basis, and all ships
must report any incidents on board. This
can be anonymously under a ‘no blame’
policy according to safety guidelines. In
our logistics business we are guided by
industrial and highways regulations as
standard.
The ISM code aims to ensure that all
relevant standards are respected, and
that safety contingency plans work. This
applies to safety equipment, safe ship
construction, management procedures,
training of the crew, drills, document con-
trol, and formal safety monitoring, struc-
tured management reviews and auditing.
The ISM code also requires a designated
person ashore to ensure safe operations
and a link between the shore-based
management and the captain and crew
onboard. Safety and security audits are
held on all ships in the fleet at least once
a year. Findings are shared to promote
best practice. In addition inspections are
also carried out as a separate task during
the year.
DFDS’ Health, Safety and Environment
Policy, revised in 2009, strives to deliver
improvement through active demonstra-
tion of commitment and leadership at
all levels in the shipping and logistics
businesses. This means practicing what
we preach, where all managers behave
in a way that demonstrates safety and
accountability.
Our security management is governed by
the International Ship and Port Facility
Security ISPS Code, which helps protect
against terrorist attacks and other disrup-
tions. Shipping and logistics are subject
to security inspections on a regular
basis. Audits are held in conjunction with
safety audits. The fleet regularly takes
part in exercises with different countries’
emergency services, in order to train staff,
exchange experiences and ensure the
ships are prepared for any eventuality.
We monitor accidents, incidents and near-
misses at sea and discuss the outcomes
of regular audits on a monthly basis.
This approach involves clear targets for
shipping safety at business unit level.
Our Marine Standards experts, People
and Ships VPs and CEO meet to formally
review H&S and security once a month.
Core to this process is to review H&S
data collected from ships in readiness for
inspection by maritime authorities.
We engage on safety and security with
relevant national and international
stakeholders, National Maritime and
Port Authorities, the Danish Shipowners’
Association, British Chamber of Ship-
ping, International Chamber of Shipping’s
Passenger Ship Panel and the Nordic
Committee for Passenger Ship Safety
on H&S meetings of Work Councils and
work with suppliers to identify safety
opportunities.
Progress in 2011
All vessels and logistics operations
are surveyed and certified according to
international, EU and national legislation,
including internal audits and inspections
on safety and security according to
company procedures.
In 2011 the Lost Time Injury Frequency
LTIF
1
was 2.9, down from 6.6 in 2010.
31.7 near misses on average per vessel
was recorded, up from 13.4 in 2010.
This increase reflects a higher level of
awareness on safety and the number
of near misses reported is expected to
continue to increase in coming years
based on more focus in this area. There
were zero fatalities in 2011 in either our
land or sea based operations. Following
integration of Norfolkline, H&S systems
were merged by April 2011.
DFDS Logistics’ operations are also
getting safer as the Lost Time Injury
Frequency LTIF was 13.9, down from
16.4 in 2010. On several sites greater
emphasis is placed on accident poten-
tial, near misses, safe work operating
procedures and daily personal aware-
ness tours carried out by Supervisors
and Team Leaders.
THE SAFETY OF PASSENGERS, CREW AND FREIGHT,
AND THE SECURITY OF SHIPS AND PORT FACILITIES,
IS OF PARAMOUNT IMPORTANCE TO DFDS
1
Lost Time Injury Frequency is the frequency of lost work days per one million exposure hours. A lost work day is time lost from an injury which results in an individual being
unable to carry out any of their duties or to return to work on a scheduled work shift on the day following the injury.
CR REPORT
46 DFDS ANNUAL REPORT 2011
2
3
Former Norfolkline operations’ data are included in the calculations from July 2010
4
www.telegraph.co.uk/news/uknews/8744567Woman-rescued-fromNorthSea-after-falling-from-ferry.html
The following vessels recorded no lost
time accidents for 180 days or more by
the end of December 2011:
Days
Britannia Seaways 908
Primula Seaways 796
Ficaria Seaways 605
Petunia Seaways 413
Ark Futura 373
Anglia Seaways 314
Flandria Seaways 278
Delft Seaways 274
Dover Seaways 190
Dunkerque Seaways 189
Princess Seaways 183
For 2011 two separate fires during dock
stays were reported, one on PRINCESS
SEAWAYS and a second on FICARIA SEA-
WAYS. The incidents showed the effec-
tiveness of the automatic extinguishing
system, the crew’s preparedness, and the
collaboration with the local fire service.
A 23-year-old woman fell overboard from
PRINCESS SEAWAYS, UK rescue services
were scrambled but the ferry’ s own
rescue team saved her within minutes.
She was checked for hypothermia and
kept overnight before being released
to a hospital on shore for observation.
“Incredibly professionally, DFDS managed
to turn the vessel around, using their
man overboard drill, and find her quickly”
Flight Sergeant Rick Jones, RAF Search
and Rescue
4
.
In early 2012 LIVERPOOL SEAWAYS was
detained in Karlshamn, Sweden until
deficiencies were corrected, including
evacuation ladders that were too short.
Immediate safety management meetings
were completed to learn from this and
improve safety processes.
In our logistics business, an internal H&S
audit at DFDS Belfast Logistics in 2011
showed a 30% year on year improve-
ment from the benchmark standard. We
continued our programme of H&S training
to deliver such performance elsewhere.
The overall target is to reduce accidents
to zero.
We recorded that the port terminals of
Dover and Dunkirk had not had a Lost
Time Accident in the previous 12 months
from January 2011. We attribute this to
regular ‘drip feed’ H&S training by all 160
staff regularly via the internet and face-
to-face. Tailored training is also offered to
deal with safety in proximity to moving
vehicles. Reporting of near misses is
also at a high at Dover, showing strong
awareness and proves that training is vi-
tal. Our DFDS Scandic Terminal in Esbjerg
achieved 180 days without a serious
work accident or LTA in April 2011, which
is supported by focused training on minor
accidents.
Training for situations requiring first aid
is also maintained. For example, each
year, hundreds of officers and all crew
are trained to various levels in paramedic
care and basic or advanced first aid. On
all passenger and cargo ships extensive
drills are conducted each week based
on around 15 different scenarios such
as marine evacuation.
With regard to security arrangements,
the tragic Norwegian shooting inci-
dent in July 2011 required activation
of our security alert and corporate
response which worked according to
plan. Ship Security Plans deal with all
security related processes, including
risks such as piracy. The security audit
programme also showed that systems
are in compliance with International
and EU regulations.
Future steps / Commitments 2015
lost time accidents
in 2014
Shipping incidents reported
2
2011 2010 2009
31.7 13.4 4.8
Lost time injury frequency LTIF 2.9 6.6 8.0
Fatalities 0 0 0
Logistics incidents reported
3
2011 2010 2009
Lost time injury frequency LTIF 13.9 16.4 n.a.
Fatalities 0 0 0
CR REPORT
47DFDS ANNUAL REPORT 2011
PEOPLE AND
COMMUNITY
Highlights
employees in logistics
DFDS and 84% feel a strong sense of
loyalty to DFDS
Our approach
Our approach to people management
is guided by the values of The DFDS
Way. Human resources HR and CR are
closely linked, focusing on a number of
issues: attraction and retention, health,
safety and security, training and career
development, diversity, and fair labour
conditions.
Our People & Ships corporate function
covers all HR for shipping and logistics
operations, including the people in the
Technical organisation. Personnel at
sea and on land work under numerous
collective bargaining agreements CBA
which differ according to seniority, crew
rating/pay grade, and flag flown. DFDS
Logistics uses many subcontractors
who are subject to terms and conditions
to help manage quality, efficiency and
safety at work.
Many common policies are in place
for all business units, covering areas
such as international leadership, staff
appraisals, training and development,
pay and bonuses, working time,
employee wellbeing, recruitment,
labour standards, ethics, grievance and
company cars. Specific policies are
in place in shipping to cover alcohol/
drugs, crew development and officer
succession. Where policies are not yet
aligned across the group programmes
are underway, for example for diversity
and retention.
We actively connect HR to corporate re-
sponsibility: our new Director for Environ-
ment and Sustainability, who’s also the
Chair of the new CR Committee, reports
to the Executive Vice President of People
and Ships. By doing so, we aim to deliver
high quality H&S management at sea and
on land which respects The DFDS Way.
There are three HR directors reporting to
EVP People & Ships working in partners-
hip with local managers.
DFDS is responsive to local HR manage-
ment needs based on good levels of enga-
gement and sensitivity to local conditi-
ons. Employees are a key stakeholder and
our satisfaction survey is an important
tool. Other engagement includes working
with employees on H&S committees, on
work councils and union representation.
Each business unit develops its own
training plan for career development and
safety training, for example. Many will
include contractors, particularly in our
logistics business.
With respect to community relations, our
activities are mainly localised, taking
root through the energy of the volunteers
involved, and achieving their own mom-
entum. DFDS’ weekly newsletter informs
about the community relations projects
carried out across the company for all to
see. Often flourishing from grass roots
levels, these activities demonstrate our
values and inspire others to act similarly.
This is accompanied by a number of cor-
porate initiatives as well as support from
the Lauritzen Foundation.
PROGRESS IN 2011
People
We employ 5,100 people, up from 4,862
in 2010. The headcount has grown
mainly as a result of the full-year effect of
the Norfolkline acquisition. Around 46%
of these are at sea. Our head office is in
Copenhagen. Across Northern Europe we
operate more than 50 offices. We employ
600 officers, more than 100 naviga-
tors, a similar number of engineers and
electricians and 1,799 ship assistants. In
our logistics business we employ 1,049
people including more than 25 business
managers, 60 sales and marketing staff
and 150 drivers. We make use of over
1,000 freight transport subcontractors
every day .
Our priorities are identified as managing
retention, attracting talent, leadership
development, and diversity. Progress is
being made with a new HR management
system, supported by an integrated IT da-
tabase. It will support tracking of emplo-
yees, profiles, skills, succession, pay and
benefits. We continue to participate in
industry and governmental programmes
to attract employees, including recru-
itment programmes with universities
and through social media. DFDS is well
regarded by its labour relations stakehol-
ders, which is important to attracting and
retaining talented people.
We invest in training and development as
a core part of what we do. A total of 340
employees have since 2009 completed
training course. Also, business units have
‘tool-box’ safety training talks on a regu-
lar basis according to local requirements.
And DFDS Logistics in Peterborough, UK,
for example, is an approved centre for
Driver Training.
The growth of The DFDS Way comes with
training on it, during which feedback is
gathered on how we manage business
ethics and the emerging Code of Conduct.
Also launched in 2011, The DFDS Way
OUR AIM IS TO BE A PREFERRED EMPLOYER, TO BE
VALUED BY OUR EMPLOYEES AND TO BE TRUSTED
BY THE HOST COMMUNITIES WHERE WE OPERATE
CR REPORT
48 DFDS ANNUAL REPORT 2011
DISTRIBUTION OF EMPLOYEES ON
LAND AND SEA
NO. OF EMPLOYEES
2.000
1.000
3.000
4.000
5.000
6.000
2011
0
LAND
SEA
2009
2010
EMPLOYEES PER COUNTRY, 2011
(%)
40
20
10
30
50
100
90
70
80
60
UK/IRELAND
DENMARK
BALTIC COUNTRIES/RUSSIA
HOLLAND/BELGIUM
SWEDEN/NORWAY
GERMANY, FRANCE, ITALY
0
Award rewards initiatives, projects and
actions that embody The DFDS Way in
practice.
On diversity, we have no women in post
at the level of Vice President and above.
We are setting up projects to understand
more about gender and other factors
affecting diversity at DFDS and how to
encourage women and others in ma-
nagement and leadership. The emerging
HR management system will provide
baseline data for managing diversity. We
expect to report on developments in the
next CR report.
A thriving workforce is helped by a
healthy lifestyle. DFDS promotes and
supports initiatives on wellbeing at work.
In 2011, the DFDS House exercise-at-work
campaign encouraged daily exercise and
the TOR FUTURA was the overall winner
in the Danish Government Seamen’s
Service Seafarer Fitness campaign.
Whilst we strive to develop and reward
the workforce, DFDS is always subject to
the economic and market forces affecting
operations. In case of redundancies we
adopt a sensitive and professional ap-
proach guided by the values in The DFDS
Way. The closure in 2011 of the Dublin-
TRACKING EMPLOYEE SATISFACTION
Staff satisfaction surveys was started in 2008.
The 2011 employee satisfaction survey closed
with a response rate of 74%. Overall, employees
say they are satisfied with DFDS but improve-
ments can be made. Out of a possible 7 points we
scored 5.2 overall 74%, no change from 2009
-
tion of Norfolkline). Overall DFDS employees feel
a strong sense of loyalty to the company with
a score of 5.9 84%, up from 5.8 in 2009. Each
Executive Management Team member received
survey results for his area of responsibility, which
will be cascaded to managers at the next level and
so on through the organisation.
“ Our employee survey achieved a record response
rate, helps engagement with colleagues, and con-
tributes to the stakeholder and risk management
processes we are developing”
Henrik Holck, EVP HR.
GENDER DISTRIBUTION EMPLOYEES, 2011
(%)
FEMALES (26 %)
MALES (74 %)
CR REPORT
49DFDS ANNUAL REPORT 2011
Birkenhead and DublinHeysham Routes
in the Irish Sea directly affected 50 col-
leagues in Dublin. We worked to mitigate
the consequences of the redundancies.
We consulted the Dutch Works Council
and the Trade Union representing the Of-
ficers of one of our ships that was moved
between routes and re-staffed. Similarly
we re-flagged the FLANDRIA SEAWAYS
and consulted in an open manner with
the Works Council and Nautilus during
2011 to resolve outstanding issues..
Due to challenges relating to growing
competition and increasing oil prices
for example, business activities have
been adjusted. In 2011, this required us
to make 31 redundancies in the English
Channel business unit, and 34 in the
logistics site in Ghent. In both cases we
formally advised unions of our analyses.
Engagement with the unions has been
very open and we are committed to en-
gaging with the unions and staff affected.
Those affected were invited to discuss
any questions with the HR Director
concerned.
No fines, prosecutions or breaches of re-
gulations relating to HR, including equal
opportunities and human rights, were
recorded in 2011.
Community
It is the compelling energy of our people
which is at the heart of our community
relations work. At the corporate level we
complement their efforts with corpo-
rate initiatives such as High:Five, the
Christmas lunch for the homeless and
the contribution to Denmark’s National
Fundraising Day.
Our commitment to employing selected
young offenders continued in 2011 with
net). The aim is to give participants an
opportunity to return to normal life. Cur-
rently five young people are employed
by DFDS. High:Five is part subsidized by
government and to date DFDS has wor-
ked with around 25 young people, 60%
of whom find permanent employment.
Christmas lunches for homeless people
were held again in December and at-
tracted a high level of participation.
Colleagues from the office in Oslo and
CROWN OF SCANDINAVIA invited 216
homeless people for a lunch and along
with a lottery of 234 practical gifts paid
for by DFDS. Meanwhile in Copenhagen
nearly 200 homeless people came aboard
PEARL SEAWAYS to enjoy a Christmas
lunch. The crew served the free lunch and
also raised 8,000 DKK 1,100 Euros) for
gifts for the guests. The event was organi-
sed with Netbuss and The Mission Among
the Homeless, from Copenhagen. As part
of Denmark’s National Fundraising Day
in aid of Africa in 2011 we donated DKK
50,000 6,700 Euros) in addition to DKK
3,800 500 Euros) collected from staff in
two days.
As described in the stakeholder
engagement section, the Rotterdam
terminal management adopted an active
approach to community relations by
publishing and distributing a tailored
newsletter for their neighbours. The aim
was to inform local residents and help
reduce complaints. Following its launch
in 2010, the number of complaints each
month dropped from around 30 per
month to just a handful, and sometimes
none at all. “By communicating clearly
and on time about what residents can
expect from us, we can manage a lot
of complaints in advance” Rob Olbertz,
Route Director NetherlandsUK.
Finally, the Lauritzen Foundation
provides an invaluable support to DFDS
employees past and present. The Founda-
tion awards grants to former and present
employees of DFDS and for a variety of
cultural, entrepreneurial, educational and
Future steps / Commitments 2015
-
mation system across the Group
policies relating to Diversity
and Retention, 2012
Diversity programme
CR REPORT
50 DFDS ANNUAL REPORT 2011
Highlights
2
emissions
by 10% over a five year period
Environment chairs new Corporate
Responsibility Committee
investment in 2011
by incentivizing employees
Our approach
DFDS’ Environmental Policy, for-
mulated in 2007, commits to the
protection and conservation of the en-
vironment. Key commercial risk factors
include environmental regulation and
energy price inflation and volatility.
The Environmental Policy guides on
analysis of compliance costs, innova-
tion, and the corporate response to
regulatory change. For example, with
respect to the IMO MARPOL Annex VI
regulations on reducing sulphur oxide
emissions from ships to 0.1% by 2015,
we are working hard to come up with
a technical solution as well as a more
balanced political outcome.
On land we are obliged to meet climate
change legislation, such as the Carbon
Reduction Commitment CRC in the
UK, a Government scheme to encourage
energy efficiency by medium to large
sized electricity users. At port facilities
and terminals we are improving the
energy efficiency of buildings, plant
and equipment and reviewing on-site
renewable energy sources.
Our teams follow procedures to imple-
ment environmental management day-
to-day. As part of customer service we
renewed the ISO 14001 EMS certification
at Belfast, Brugge, Ghent, Gothenburg and
Helsingborg logistics operations.
Specifically, the Environmental Policy
included a commitment to a 10%
reduction in CO
2
emissions 20082012,
based on a per capacity unit consump-
tion per nautical mile. Compliance with
all applicable regulations is constantly
ensured where we operate. We also
commit to eliminating environmental
pollution spills completely. We are ai-
ming to maximise resource efficiency,
cut waste, and assess precisely which
environmental investments will be
practicable. The Policy also commits
to enhancing a culture of environmen-
tal awareness where colleagues are
comfortable to highlight opportunities
to innovate, or where things are not
going to plan.
DFDS’ new Sustainability and Environ-
ment department directs environmen-
tal efforts at Group and local levels,
ensuring a common quality and The
DFDS Way for working on sustainability
and corporate responsibility at sea and
on land.
Where we instigate commercial manage-
ment initiatives we seek to understand
and maximise the environmental bene-
fits, for example through SeaPlanner and
Project Headlight. In 2011 environmental
technology investments amounted to
DKK 69 million.
PROGRESS IN 2011
Carbon intensity
We have achieved the CO
2
emissions goal
one year ahead of schedule. The main
source of CO
2
emissions is burning marine
fuel oil, known as bunker. It is measured
in grams per gross tons per nautical mile
year target was set for the end of 2012
to cut CO
2
emissions by 10%. In 2011 the
average consumption in g/GTNm was
9.3% lower than in 2007 for the entire
fleet including Norfolkline vessels. Exclu-
ding Norfolkline vessels the average con-
FUEL CONSUMPTION FOR DFDS FLEET 2007-2011
(AVERAGE FUEL CONSUMPTION G/GT/NM)
Q1
2007
Q1
2008
Q1
2009
Q1
2010
Q4
2010
5.4
5.6
5.8
6.0
6.2
6.4
5.2
FLEET EXCLUDING NORFOLKLINE VESSELS
FLEET INCLUDING NORFOLKLINE FROM JAN 1
ST
2010
ENVIRONMENT
OUR PRIMARY GOAL IS TO REDUCE EMISSIONS AND BUILD
PARTNERSHIPS WITH STAKEHOLDERS TO ENSURE THAT
ENVIRONMENTAL REGULATIONS DEVELOP EFFECTIVELY
AND SENSIBLY
CR REPORT
51DFDS ANNUAL REPORT 2011
sumption decreased by 11.4% from 2007
to 2011. New goals regarding marine and
logistics fuel consumption reductions will
be decided during 2012.
In 2011, average fuel consumption was
6.3% lower than in 2010 including
Norfolkline vessels 4.3% lower excluding
Norfolkline vessels). Total absolute
consumption changes over time as the
fleet grows or shrinks, or according to
changing weather conditions on a route,
for example. A relative figure is used to
measure consumption to express perfor-
mance per unit of capacity. See p 124
for the DFDS fleet list for 2011. The data
recording system is being developed to
include DFDS Logistics CO
2
emissions.
DFDS’ bunker saving programme
comprises various projects. Core to it
is ship speed; while keeping to sailing
schedules. Work is also focused on faster
loading and unloading, equipment power
efficiency, ballast and ship’s trim control,
new energy-efficient propellers, waste
heat recycling, hull cleaning for improved
hydrodynamics, as well as more efficient
heating, ventilation, air-conditioning and
lighting on board. Energy-efficient route
calculation is helped by ‘SeaPlanner’,
specialist software, now installed on 23
DFDS ships and which recommends the
most energy efficient speed and route.
New propellers on PEARL SEAWAYS, for
example, have shown fuel savings of up
to 9.6% in the testing period. The design
is being installed on other vessels to
reduce fuel use. Such initiatives are major
investments but the payback period is
relatively short due to high oil prices.
Benefits are also derived from working
with suppliers to find synergies and im-
prove efficiency. Our VendorManaged In-
ventory VMI project aims to improve the
efficiency of bunker delivery. The supplier
can save on fuel, by optimising its barge
movements. This partnership project will
share information and responsibility with
the supplier. If the supplier can choose
the delivery schedule, this will allow
flexibility and lower costs for DFDS and
the supplier.
On land, the port and terminal facilities
and distribution hubs are also becoming
more energy-efficient. We continue
to benefit from Energy Management
Teams EMT: at Larkhall and Belfast for
example, new, more efficient refrigeration
was installed with anticipated annual
electricity savings of 30%. We continue
to use more environmentally-efficient
trailers and reefers, and work with
customers such as ASDA supermarkets in
the UK to run double-decker trailers for
improved greenhouse gas emissions per
carried pallet.
Collaboration continues with suppliers
in order to introduce more fuel-efficient
trucks . In Ireland for example, EURO 5
trucks will cut CO
2
emissions further
compared to the EURO 3 vehicles. We are
working to replicate this throughout the
logistics business.
Air emissions
The shipping industry is subject to very
active legislative developments on air
emissions, and in particular sulphur
content in marine fuel oil is subject to
international regulatory controls. The
North Sea and the Baltic Sea, where
DFDS operates, are a so-called Sulphur
Emission Control Areas SECAs). In 2015,
limits for sulphur levels in bunkers oil in
SECAs, reducing the sulphur content from
a maximum of 1.0% to 0.1%. Bunkers oil
with maximum 0.1% sulphur content is
between 40% and 70% more expensive
than bunker oil with 1.0% sulphur
implying a potential price increase on
seafreight of 2030% which could have
a substantial impact on sea traffic in
Northern Europe, particularly on routes in
direct competition with land based traffic.
This could lead to a modal shift, where
sea traffic to a greater extent is replaced
by road traffic causing further congestion
on European roads, thus contradicting
the EU policy of moving traffic “from road
to sea”. The shipping industry supports
stricter regulations, but is also exploring
opportunities to adapt a modified policy.
A solution could be to allow the use of
bunker with a 0.5% sulphur level as stu-
dies show that the environmental impact
of 0.5% vs 0.1% is insignificant.
Nevertheless, DFDS is taking a pragmatic
and innovative course and also exploring
solutions using new technology. DFDS
teamed up with specialist supplier Alfa
Laval to trial new scrubber technology
in 2009, and became the first company
to fit a large sulphur scrubber in a ship.
Scrubbers remove Sulphur dioxide and
particulate matter from ship exhaust
gases. The wash-water is discharged
harmlessly under licence. The project is
led by our Technical Organisation with
close involvement of the ship’s crew and
the Danish EPA. The test project on FICA-
RIA SEAWAYS shows good results. There
are some limiting factors affecting how
and where such scrubbers can be used.
These include scrubber size and weight,
installation complexity, ship stability and
age. We are actively engaging with the EU
on assistance to fund environmental in-
vestment. The European Maritime Safety
Agency and other relevant authorities are
involved in the testing and audit of the
results of the equipment.
“ Operators will not be able to pass on hig-
her fuel costs to customers with a choice
of transport modes, which will inevitably
CUT FUEL, GET FIT!
In October 2011 VILNIUS SEAWAYS won the DFDS
Bunker Prize for reducing fuel use and emissions.
The prize motivates the crew to save fuel - the
vessel with the best performance wins a cash
prize to improve crew facilities onboard. The
crew decided to use the prize money to upgrade
their gym equipment amongst other appliances.
“I think that crew members here and on other
ships will be motivated to achieve even more
fuel savings in the future,” said the ship’s Captain
Konstantin Telik.
CR REPORT
52 DFDS ANNUAL REPORT 2011
push up to 50% of cargo off short-sea
ships and back on to the road network.
It’s also clear that the ongoing revision
of the EU Directive must put provisions
in place as to what should happen if
low-sulphur fuel is simply not available
to operators in 2015”
Johan Roos, Executive Director,
Interferry European Office
1
.
Alternative fuels are also being consi-
dered. Liquefied Natural Gas LNG may
be appropriate on some new vessels,
although the supply chain, pricing and
the actual implementation needs further
investigation and development. Whilst
we are ready to invest, we and our peers
fear that a switch to alternative scenarios
for our fleet will take longer than the EU
Directive deadline allows.
To combat local air emissions in ports,
shipping companies since 2010 have not
been permitted to use oil with sulphur
content greater than 0.1% when in port.
Local sulphur air pollution levels have
reduced by 90% as a result. In some ports
using catalytic converters. Now we are
going further by investigating installation
of on-shore power supply OPS so that
the auxiliary engines can be stopped com-
pletely when the ship is in port. We are
analysing and considering investments
-
ding options for EU funding, to install OPS
equipment in Vlaardingen, Immingham,
Ghent, Esbjerg and Gothenburg, and on
the ships that use these ports.
Managing waste, recycling ships
Almost every activity on board and in a
logistics centre generates waste. The oil,
chemicals and water used for cleaning
purposes must be handled in accordance
with environmental regulations. On
board a ship, such discharge is collected
as bilge water below the engine room.
Before it can be released, it must first be
decontaminated to meet environmental
standards. We are in the final phase
of testing a new bilge water cleaning
system on PEARL SEAWAYS. Not only is
it successful, it is more efficient, more re-
liable, faster, cheaper to run and certified
to IMO rules.
Scrapping a vessel is a regulated
process, guided by IMO’s proposed
Hong Kong Convention 2009. DFDS is
committed to responsible scrappage. The
TOR ANGLIA was scrapped using a certi-
fied shipyard in China in 2010. In 2011
LISCO GLORIA was declared a total loss
following an extensive fire the previous
year. The ship, a 20,600 ton ferry under
a Lithuanian flag, will be recycled at
Klaipėda in Lithuania.
Future steps / Commitments 2015
logistics fuel consumption reductions
to be decided during 2012
developed to include DFDS Logistics
CO
2
emissions
power supplies
LIMITS FOR PERMITTED SULPHUR CONTENT IN BUNKERS
(%)
2009 2010 2012 2015 2020
1
2
3
5
4
SECA
GLOBAL
0
CR REPORT
1
DFDS is member of Interferry European Office.
53DFDS ANNUAL REPORT 2011
CUSTOMERS
Highlights
-
lers, containers, and other
cargo every year on 25 routes
awards won in 2011
customer service
Our approach
DFDS constantly strives to deliver the
right solutions to customers through
continuous improvement of our network
in co-operation with carefully selected
partners.
DFDS’ staff work hard to understand
customers’ experiences of how we work.
Our customer ethics is a key value of The
DFDS Way. Delivery of this ethos is helped
across the business to meet, share best
practices and to learn from each other.
Customers increasingly expect us to be
accountable for our social and environ-
mental responsibilities; this is evident
from tenders for example. We respond
to this by using specialists across DFDS
for their expert knowledge of certain
industries. Cost and service levels are
the main focus areas; environmental and
social issues are also discussed.
For freight customers, we provide clear
and up-to-date information on freight
com). This includes routes and schedu-
les, terminal services, customer service,
and specific supply chain solutions for
example relating to chemicals, forest pro-
ducts, metals or automotive customers.
Recently, a new online customer satis-
faction reporting system has enabled the
creation of reports for each ship over any
time period. Management teams now
have the latest customer feedback sent
to them by email every week. We operate
to a wide range of service standards
and know that customer demands differ
across different sectors as diverse as
seafood, metals, beverages, forest pro-
ducts and project cargo. At the heart of
the service at DFDS are specialist teams
designing bespoke solutions to meet
customer expectations through quality
and innovation.
Our freight safety management system is
designed for best practice and continuous
improvement. The high quality of our
products and services is guaranteed by
regular customer surveys and continual
improvement schemes. We ensure that
shipping schedules and other performan-
ce KPIs are met. We test our operations
through internal and independent audit
and certification. As an example, we
regularly have food hygiene inspections
from Port Health Authorities, and pride
ourselves on the safety of our food.
For our passengers we put together dif-
ferent teams in DFDS to share benefits
of collaboration on working practices in
response to changing expectations of our
services. For example, our joint Passen-
ger Competence Centre aims to identify,
develop and disseminate best practices,
taking into account customers’ specific
local needs. We offer information online
in 14 languages.
Travel information, contact points inclu-
ding ‘instant chat’, passenger terms and
conditions, credit card policy, brochures
and guides, restaurant reservations and
tips on driving abroad are all provided for
passengers via our websites.
PROGRESS IN 2011
Our business-to-business customers
DFDS offers more than 350 shipping de-
partures each week. Our comprehensive
network of strategically placed termi-
nals and hubs operates around 8,000
trailers, containers, cassettes and swap
bodies and a total warehouse capacity
of 120,000 m
2
. DFDS integrates with rail
services and runs computerised solutions
to maximise efficiency.
Our challenge is to increase customer
service without increasing costs. We are
introducing common IT systems for pas-
senger and freight, and we are simplifying
our contact procedures. We invested
DKK 60m €8.1m) in our Logistics fleet
in 2011 and we work continuously with
our customers to develop initiatives that
save costs and increase efficiencies. One
example is ’back-hauling’, where every
effort is made to fill capacity in return
journeys.
We are proud of the awards we have won
including:
-
tor 2010 awarded to DFDS Seaways by
The World Travel Awards for the fifth
year in a row
award for Best Intermodal Provider.
The judges were particularly impres-
sed by our environmentally-efficient
solutions
of the Dutch Ministry of Infrastruc-
ture and the Environment, awarded
our Rotterdam operation a 10,000
Euro prize for the most innovative
solution to reduce the number of tyre
breakdowns with trucks and trailers.
Our service offers customers regular
tyre checks and inflating services for
trailers, thereby improving safety and
reducing emissions.
DFDS’ focus on customer service and
responsible operations helps ensure
continuity of supply during any extreme
weather such as the unusually cold and
snowy conditions across the UK at the
end of 2010 and the succession of severe
storms that hit the North Sea region in
autumn 2011. Maintaining a safe service
meant there would be some delays and
OUR AIM IS TO CREATE AND PROTECT VALUE FOR
OUR FREIGHT CUSTOMERS AND PASSENGERS,
AND TO BE THEIR PREFERRED SUPPLIER
CR REPORT
54 DFDS ANNUAL REPORT 2011
so our Logistics teams kept in close con-
tact with our customers to agree shipping
volumes and prioritise deliveries. Our
performance has also been recognised
by awards and commendations from a
number of key customers including Opel
and ASDA.
Our passengers B2C
Around 4.4m people travel with DFDS
every year. Sea travel is convenient for
travelling by car and a relaxing part of
a journey. Overnight cruises also offer a
maritime experience and good value for
money.
Passenger service awards won include:
‘World’s Leading Ferry Operator Award
2011’ at the World Travel Awards in
Doha on 11 January
based on an extensive survey of 82 of
the country’s biggest customer service
centres. DFDS won the “ship travel”
category for the second year running,
and finished overall in third place
-
ways as its Recommended Provider
for ferry travel. DFDS scored above
average in all aspects, especially ease
of booking and value for money
ferry operator’ in the Virgin Holidays
Responsible Tourism Award 2011. The
International Centre for Responsible
Tourism recognised DFDS’s com-
mitment to setting up and funding a
collaborative project with whale and
dolphin conservation charity, ORCA, to
monitor wildlife and develop marine
protection zones in the North Sea.
Passenger engagement is encouraged
using online questionnaires. We recently
saw an increase of more than 400% over
the traditional paper version on one route
alone, with over 20,000 responses. We
want to understand further, and improve,
the customer experience. Fostering open
and transparent dialogue is crucial to this.
We welcome the chance to show how we
work. Indeed, a BBC documentary ‘Food
Fighters’ filmed on PRINCESS SEAWAYS
showcased the processes that goes
into making food safe. Our kitchens
and restaurants were hailed as an
example of best practice.
Customers receive messages on impor-
tant issues such as safety, both onboard
and ashore. DFDS transports tens of thou-
sands of people going on skiing holidays
in Norway. With the Danish national ski-
ing club and other partners we offered a
24-page booklet on ski safety to all skiing
passengers when they check in. The book-
let provides practical advice to reduce the
risk of injury and a smartphone applica-
tion to access safety information and to
test safety knowledge.
With respect to our ferry business, we
note that other varied projects make
a valuable contribution to the wider
customer experience. The ORCA initiative,
over three years, involved more than 100
marine wildlife surveys onboard and a
new Wildlife Watching mini-cruise. We
wanted to go beyond our statutory obli-
gations and find where we could make a
difference to marine conservation.
DFDS Seaways also funded two Wildlife
Officers to raise awareness of whales,
dolphins and porpoises in the North Sea,
while collecting information to support
sightings undertaken by a team of ORCA
surveyors each month. They run deck
watches with customers on wildlife mini-
cruises using the NewcastleAmsterdam
ferry route, and provide a range of educa-
tional information.
An educational service was started by our
Lithuania office to introduce reading cor-
ners on REGINA SEAWAYS and LISCO MA-
XIMA. Shelves for books and frames for
magazines were mounted; Klaipeda city
libraries and some employees donated
the books and the Magazines Printing
Group offered magazines for free.
Future steps / Commitments 2015
beginning of Q2 2012 to run for the
rest of 2012
their journey on a map of Northern
Europe showing real-time position of
ships, including arrival information
management system to provide more
information such as energy efficiency
per unit shipped to help measure and
reduce the carbon footprint of custo-
mer and own operations.
CR REPORT
55DFDS ANNUAL REPORT 2011
SUPPLIERS
Highlights
47 vessels: around 5,000 purchase
orders each month
3,100 trailers
management tools in place, and
under development
ethical Code of Conduct
Our approach
DFDS’ supply chain connects many sup-
pliers, modes of transport and countries.
Within it we strive to create and protect
commercial value affected by issues re-
lating to security, product safety, quality,
environmental protection and social re-
sponsibility. DFDS’ Supply Chain Manage-
ment SCM teams aim to help minimize
the risk and maximize the security of the
supply network and reduce acquisition
and administration costs through working
together across the DFDS Group.
The SCM function sits within the Fi-
nance division of DFDS. SCM comprises
procurement, demand and supply and
special project functions. Its day-to-day
work directly affects the profitability
of DFDS and suppliers: it involves price
negotiations, contractual arrangements,
risk management, working with business
units, inventory management and monito-
ring. To ensure regulatory compliance, we
revise our supply chain policies and our
ethical code for suppliers.
We assess our supply base for its cost-
effectiveness, resilience, safety and other
risks. On land and at sea, DFDS demands
that suppliers operate in a decent and
respectful manner. In the shipping
business, for example, our audit pro-
gramme checks that a supplier is on the
relevant maritime authority database as
required under the EU Marine Equipment
Directive 1996. A supplier will achieve
the Wheelmark and be included in the
database if it satisfies the criteria. DFDS
follows the Global Ship Management
System approach to check that a sup-
plier meets safety and environmental
requirements – that it has achieved its
Wheelmark.
Since 2009, the DFDS Supplier Code of
Conduct has been a part of all DFDS’
purchasing and business agreements. Ul-
timately, when a contract is signed with
a supplier in our shipping and logistics
businesses, the DFDS Supplier Code of
Conduct is attached to it. This outlines
DFDS’ commitments to applying ethical
principles in business and respecting
human rights.
The DFDS Supplier Code of Conduct
To do business with DFDS a supplier must
comply with all applicable international
conventions and national legislation in
the country where the work or service is
being performed, and specifically it must
respect the following:
or involuntary labour
workplace
Principles and Rights at Works
-
tion on grounds of race, religion,
age, nationality, sexual orientation
or gender
and anti-bribery, including all sub-
contractors and business partners
in the country where the product is
manufactured or the service performed.
During the discussion on DFDS’ strategic
approach to CR and the identification of
our key material issues, responsible pro-
curement is identified as having potential
impact on brand, reputation, relationships
and customer orders. Our supply chain
teams work closely with suppliers on a
day-to-day basis and suppliers’ feedback
and innovations are valued by DFDS.
Progress in 2011
In 2011 the SCM team numbered 17 people
working out of Denmark, UK and Lithuania.
In 2011 we established a new centralised
SCM operation and a new integrated
purchasing system is under development.
Whilst contracts are managed locally, a
corporate SCM database will allow detai-
led corporate-level analysis of supplier
profiles, numbers, issues, feedback and
benchmarks, for example. The database is
due for release in 2012 and 2013.
Alongside The DFDS Way, collaboration
and engagement are central to responsi-
ble procurement. We can report a good
start on a new shared approach to how we
work with suppliers on bunker delivery.
Our Vendor Managed Inventory VMI pilot
project intends to reduce costs, improve
service, share risks and rewards, exchange
information openly and enhance trans-
parency and trust. It’s a strategic alliance
where the supplier makes re-fuelling
decisions for the buyer. As well as cost
and sales benefits it will help improve
punctuality and security of supply.
In 2011 we adopted a new ‘efficient trailer
working group’ in our logistics business.
The group has ensured that the policies,
procedures, investments, efficiency and
cost associated with our 3,100 trailers are
consistent and appropriate for DFDS’ nee-
ds. Policies for review will cover purchase
and disposal, trailer mix, standardising
equipment, maintenance. The group coor-
dinates with our Project Headlight, which
is reviewing all aspects of equipment
operation, supplier agreements and trailer
procurement in 2012.
Future steps / Commitments 2015
in 2012 and 2013
internal agreement
IN THE SUPPLY CHAIN. ROBUST RELATIONSHIPS WITH
SUPPLIERS ENSURES RESPONSIBLE AND EFFICIENT
SERVICES TO CUSTOMERS
CR REPORT
56 DFDS ANNUAL REPORT 2011
FINANCIAL REVIEW
FINANCIAL REVIEW
Introduction
DFDS’ activities are organised in two
areas in the Shipping Division and five
business areas in the Logistics Division.
To facilitate comparisons, important
non-recurring items are shown in a se-
parate line, Special items, in the income
statement.
Revenue
Revenue increased by 17.8% to DKK
11,625m in 2011. Most of the increase
was due to the full-year effect of the
acquisition of Norfolkline in July 2010,
which impacted revenue growth in both
divisions.
Shipping Division’s revenue increased
by 12.7% to DKK 7,798m. The most
important full-year effects were related
to an increase of Channel’s revenue to
DKK 962m, from DKK 494m in 2010.
Revenue on the Irish Sea was reduced by
DKK 354m to DKK 22m after activities
were discontinued in late January 2012.
Approximately half of the increase of
DKK 384m in North Sea’s revenue was
due to the estimated full-year effects
of the addition of three routes, one of
which was merged with an existing route,
and conversion of one route to a pure
freight route. The remaining increase
in North Sea revenue was driven by a
strengthening of the SEK, price increases
increased volumes on several routes.
Revenue in the business area Baltic Sea
increased by 33.4%, driven by 17.7%
higher freight volumes, increased revenue
from bunker surcharges and price increa-
ses. The revenue from the opening of two
new routes was offset by the termination
of a route between Poland and Sweden.
Passenger’s revenue increased by 3.6%
to DKK 1,779m.
The Logistics Division’s revenue incre-
ased by 29.2% to DKK 4,330m, repre-
senting an increase of DKK 978m. The
increases in revenue in the business areas
Nordic Transport, Continental Transport,
European Contract and Intermodal were
mainly driven by the full-year effect of
the acquisition of Norfolkline. The fifth
business area, Nordic Contract, was unaf-
fected by the addition of Norfolkline, but
impacted by the discontinuation of the
area’s dry-bulk activities, which reduced
revenue compared to 2010.
EBITDA before special items
Operating profit before depreciation
EBITDA and special items increased by
17.5% to DKK 1,495m, based on growth
in both divisions, including the full-year
effect of the addition of Norfolkline.
Shipping Division’s EBITDA increased by
16.1% to DKK 1,416m based on progress
in all business areas except Channel. The
improvement in North Sea’s financial
performance was driven by synergies
from the consolidation of routes and port
terminals, as well as higher freight rates.
Baltic Sea’s improved financial perfor-
mance was primarily driven by higher
freight volumes that increased capacity
utilisation. Irish Sea’s improvement was
due to the closure of the business area in
Q1 of 2011. Channel’s result lower than
in 2011 due to the exceptionally difficult
competitive environment, which led to
a reduction in freight rates of over 10%.
Passenger’s profit was maintained on a
level with 2010.
Logistics Division’s EBITDA increased by
130.9% to DKK 171m based on progress
in all business areas. In the business
areas Nordic Transport and Continental
Transport, the improved performance was
driven by synergies and greater focus on
profitability rather than volume. European
Contracts’ performance was improved by
increasing the efficiency of operations
and by focusing more closely on the profi-
tability of contracts. Intermodal’s result
increase was due to more efficient opera-
tions, including progress in rail activities.
Nordic Contracts’ profit increased due
to higher paper volumes and improved
operations, which in 2010 were affected
by costs for restructuring activities and
technical problems.
Non-allocated items amounted to a cost
of DKK 92m, an increase of DKK 70m,
of which DKK 25m was attributable to a
transfer of the income from a chartered
passenger ship from Non-allocated
items to the Shipping Division as per 1
January 2011. The remainder of the va-
riance was due to one-off costs related
to losses on receivables and insurance
receivables plus bonus payments and
project costs.
Profit/loss on sale of assets
Profit from the sale of ships, properties
and terminals amounted to DKK 26m, of
which DKK 9m stemmed from an option
being exercised by the counterpart on a
chartered out passenger ship. Sales of
cargo-carrying equipment led to a profit
of DKK 10m and the discontinuation of
dry-bulk activities in the business area
Nordic Contract resulted in a profit of
DKK 5m from the sale of bulk contracts.
Depreciation, write-downs and EBIT
Total depreciation and write-downs
were reduced by 2.3% to DKK 686m,
with the full-year effect of the acqui-
sition of Norfolkline more than offset
by lower depreciation due to the sale
of three ships following closure of the
business area Irish Sea, the write-
down of ships in 2010, the sale of a
port terminal and the end of deprecia-
tion on a chartered out passenger ship
following the exercise of a purchase
option.
57DFDS ANNUAL REPORT 2011
FINANCIAL REVIEW
REVENUE
DKK m 2011 2010 ∆ % ∆
Shipping Division 7.798 6.921 12,7 877
Logistics Division 4.330 3.353 29,1 977
Eliminations etc. 503 407 23,6 96
DFDS Group 11.625 9.867 17, 8 1.758
OPERATING PROFIT BEFORE DEPRECIATIONS EBITDA AND SPECIAL ITEMS
DKK m 2011 2010 ∆ % ∆
Shipping division 1.416 1.221 16,0 195
Logistics division 171 74 131,1 97
Non-allocated items 92 22 n.a. 70
DFDS Group 1.495 1.273 17,5 222
EBITDA-margin, % 12,9 12,9 n.a. 0,0
SPECIAL ITEMS
DKK m 2011 2010
Transaction costs re acquisition of Norfolkline - 35
Integration costs re Norfolkline 72 96
Accounting profit from:
Ship declared total loss after fire 17 273
Sale of routes on Irish Sea - 200
Sale of DFDS Canal Tours AS 83 -
Sale of DFDS Seaways Maasvlakte BV 48 -
17 -
Sale of office building, Lithuania 23 -
Write-down of:
Goodwill - 120
Ships - 120
Associated company, DailyFresh Logistics CV 25 -
DFDS Group 91 102
Operating profit EBIT before special
items was DKK 835m, an increase of
43.8%.
Special items
Special items generated a net income of
DKK 91m in 2011.
The background to special items was as
follows:
-
line amounted to DKK 72m in 2011,
of which DKK 30m was related to the
closure of the business area Irish Sea.
Costs associated with the improvement
projects Headlight and Light Crossing
amounted to DKK 22m in 2011.
– In October 2010, a fire broke out
on the ro-pax ship Lisco Gloria. In
January 2011, it was declared a
total loss by DFDS’ underwriters
and in March 2011 a compensation
of DKK 525m was paid. This led to
recognition in 2010 of an accounting
gain after costs of DKK 273m. As a
result of lower costs than estimated,
the gain was adjusted upwards by
DKK 17m in 2011.
– DFDS Canal Tours was sold in
March 2011, resulting in a profit
of DKK 83m.
– DFDS’ port terminal in Maasvlakte,
Rotterdam, was sold at a profit of
DKK 48m in June 2011.
– Following the closure of two routes
on the Irish Sea, a ro-pax vessel
was sold at a profit of DKK 17m
in April 2011.
– An office building in Lithuania
was sold at a profit of DKK 23m
in April 2011.
– DFDS’ investment in DailyFresh Lo-
gistics CV was written down by DKK
25m in 2011 as a result of reduced
earnings.
58 DFDS ANNUAL REPORT 2011
CAPITAL STRUCTURE
(%-SHARE OF CAPITAL)
50
25
75
100
2011
0
NET INTEREST-BEARING
DEBT
EQUITY AND DEFERRED
TAX
2007
2008
2009
2010
REVENUE AND INVESTED CAPITAL
(DKK BN) (TIMES)
8
6
2
10
12
2011
0
4
0.8
0.6
0.2
1.0
1.2
0
0.4
2010
2007
2008
2009
REVENUE
AVERAGE INVESTED
CAPITAL
TURNOVER RATE,
INVESTED CAPITAL
FREE CASH FLOW
(DKK M)
500
2,000
1,500
2011
-500
2010
2007
2008
2009
1,000
0
Q3
Q4
400
300
200
100
500
DFDS GROUP - EBITDA BEFORE
SPECIAL ITEMS PER QUARTER
(DKK M)
600
Q1
Q2
0
2009 2010 2011
DFDS Group 2011 2010
DKK m Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY
Revenue 2,698 3,071 3,110 2,746 11,625 1,611 1,951 3,359 2,946 9,867
Operating profit before depreciation
EBITDA and special items 171 458 561 305 1.495 104 346 539 284 1.273
Share of profit of associates 1 1 2 2 0 0 1 4 0 5
Profit/loss on disposal of non-current assets 1 2 12 11 26 1 1 2 1 5
Depreciation and impairment 171 169 162 184 686 145 150 212 196 703
Operating profit EBIT before special items 0 292 413 130 835 40 198 333 89 580
Operating profit margin EBIT, % 0.0 9.5 13.3 4.7 7.2 2.5 10.1 9.9 3.0 5.9
Special items, net 46 66 14 7 91 4 17 63 186 102
Operating profit EBIT 46 358 399 123 925 44 181 270 275 682
Profit before tax 7 301 332 102 742 62 140 225 244 547
Invested capital, average 10,314 9,843 9,838 9,896 10,042 7,965 7,931 9,329 10,722 9,061
Return on invested capital ROIC p.a., % 1.6 12.8 15.3 5.5 8.6 2.3 8.7 11.7 9.4 7.2
FINANCIAL REVIEW
59DFDS ANNUAL REPORT 2011
Operating profit EBIT after special items
was therefore DKK 925m, an increase of
35.7%.
Financing
The net cost of financing increased by
35.9% to DKK 183m as a result of lower
income from net currency adjustments.
The net interest cost was reduced by
21.5% to DKK 129m due to a reduction
in average net interest-bearing debt of
23.8%.
In 2011, net currency adjustments
amounted to a cost of DKK 7m, compared
to an income of DKK 61m in 2010. The
cost of financing was thus increased by
DKK 68m in 2011.
Other financial costs for 2011 increased
by DKK 15m to DKK 39m., primarily
due to full-year effects of amortisation
of costs related to loan restructurings
completed in 2010.
Tax and annual profit
Pre-tax profit was DKK 742m, an impro-
vement of 35.7%.
The DFDS Group’s shipping activities
are subject to tonnage tax in Denmark,
Norway, the Netherlands and Lithuania.
Tax on the annual profit amounted to DKK
8m, of which current tax was DKK 29m
and deferred tax constituted an income of
DKK 6m. Adjustments to previous years’
taxes represented an income of DKK 15m.
Annual net profit was DKK 735m compa-
red to DKK 522m in 2010.
Investments
Net investments for the year amounted to
an income of DKK 219m.
Gross investments in assets totalled
DKK 804m, including payments for the
construction of two new freight ships at
DKK 376m. Moreover, DKK 209m was
invested in maintenance and docking
of ships. Other investments in assets
amounted to DKK 219m, included
cargo-carrying equipment, the extension
of a port terminal in Rotterdam, IT and
other items.
Sales of assets amounted to an income
of DKK 272m, of which DKK 179m
stemmed from the sale of a ro-pax ship
and DKK 93m from the sale of an office
building, cargo-carrying equipment, and
other assets.
Sales of companies led to an income of
DKK 223m, of which DKK 110m stemmed
from the sale of DFDS Canal Tours AS
and DKK 123 m from the sale of DFDS
Seaways Maasvlakte B.V.
Also included is an insurance compen-
sation for a ship declared a total loss of
DKK 525m.
Assets, invested capital and return
on invested capital
Total assets were reduced by 7.6% to
DKK 12,795m, corresponding to a fall
of DKK 1,054m. Long-term assets were
reduced by DKK114m as depreciation
and sales of assets and companies
outweighed the addition of gross
investments.
In addition, short-term assets were redu-
ced by DKK 940m, primarily due to the
receipt of an insurance payment of DKK
525m for a ship declared a total write-off.
Cash funds were reduced by DKK 153m,
and assets held for sale were reduced
by DKK 135m. Liquidity from these and
other items was used to reduce interest-
bearing debt.
At the end of 2011, invested capital
amounted to DKK 9,906m, a reduction of
7.8% compared to the previous year. Ave-
rage invested capital amounted to DKK
10,042m in 2011, an increase of 10.8%
compared to 2010 due to the full-year ef-
fect of the acquisition of Norfolkline. The
average return on invested capital was
8.6% in 2011. Adjusted for special items,
the return was 7.7%.
Financing and capital structure
Interest-bearing debt was reduced by
27.8% to DKK 3,582m at the end of 2011,
corresponding to a reduction of DKK
1,380m. Net-interest-bearing debt was
reduced by 34.3% to DKK 2,555m.
At the end of 2010, the ratio of net
interest-bearing debt to operating profit
EBITDA was 1.7.
Cash flow
Cash flow from operating activities,
to DKK 1,419m due to higher earnings
from operations and a reduction of cash
tied up in working capital. Cash flow
from investments was an income of DKK
219m, and free cash flow from operations
was a positive DKK 1,638m.
The positive free cash flow was used to
reduce net short and long term debt by
DKK 1,457m, pay the net cost of financing
at DKK 174m. and dividend of DKK 117m.
Cash flow from financing activities was
thus negative with DKK 1,792m in 2011.
Impairment test
When indications of loss of value arise,
an impairment test is conducted on the
Group’s ships, based on their expected
future net cash flow and on external bro-
kers’ evaluations. In 2011, these tests did
not result in any write-downs. The tests
are described in note 38.
Equity
DFDS’ equity increased by 8.9% to DKK
6,906m at the end of 2011. The increase
was largely attributable to the transfer of
DFDS’ share of the annual profit of DKK
735m. Including minority interests of DKK
58m, equity amounted to DKK 6,964m at
the end of 2011.
The equity ratio at the end of the year
was 54.4%, an increase of 8.2 ppt compa-
red to 2010.
Parent company’s financial performance
Net profit for the parent company DFDS
AS was DKK 731m. Total assets at
year-end amounted to DKK 11,702m
and equity was DKK 5,366m.
FINANCIAL REVIEW
FINANCIAL STATEMENTS 2011
DFDS ANNUAL REPORT 2011
INCOME STATEMENT
1 JANUARY 31 DECEMBER
62
Parent Company Consolidated
DKK ’000 DKK ’000
2010 2011 Note 2011 2010
5,214,936 6,524,331 1,2 Revenue 11,624,577 9,867,045
Costs
2,553,228 3,394,116 3 Operating costs 7,040,500 5,666,213
953,760 1,055,722 Charter hire 623,625 741,814
596,287 617,153 4 Staff costs 1,915,463 1,712,704
456,110 622,672 5 Costs of sales and administration 549,605 473,166
4,559,385 5,689,663 Total costs 10,129,193 8,593,897
655,551 834,668 Operating profit before depreciation EBITDA and special items 1,495,384 1,273,148
- - 14 Share of profit/loss of associates 75 4,763
243 10,149 6 Profit on disposal of non-current assets 25,736 4,714
11,12 Depreciation and impairment
255,722 248,420 Depreciation ships 542,799 540,964
54,380 55,086 Depreciation other non-current assets 130,949 155,800
5,500 995 Impairment losses of ships and other non-current assets 12,484 5,500
315,602 304,501 Total depreciation and impairment 686,232 702,264
340,192 540,316 Operating profit EBIT before special items 834,813 580,361
405,859 89,385 7 Special items, net 90,669 101,527
65,667 629,701 Operating profit EBIT 925,482 681,888
291,798 311,381 8 Financial income 32,218 83,126
173,867 216,195 8 Financial expenses 215,578 218,049
52,264 724,887 Profit before tax 742,122 546,965
17,061 6,522 9 Tax on profit 7,566 24,754
69,325 731,409 Profit for the year 734,556 522,211
Profit for the year is attributable to:
69,325 731,409 Equity holders of DFDS AS 730,986 508,680
- - Non-controlling interests 3,570 13,531
69,325 731,409 Profit for the year 734,556 522,211
10 Earnings per share
Basic earnings per share EPS of DKK 100 in DKK 49.96 46.50
Diluted earnings per share EPSD of DKK 100 in DKK 49.93 46.35
Proposed profit appropriation
118,849 207,985 Proposed dividends, DKK 14.00 per share 2010: DKK 8.00 per share)
49,524 523,424 Retained earnings
69,325 731,409
63DFDS ANNUAL REPORT 2011
COMPREHENSIVE INCOME
1 JANUARY 31 DECEMBER
Parent Company Consolidated
DKK ’000 DKK ’000
2010 2011 Note 2011 2010
69,325 731,409 Profit for the year 734,556 522,211
Other comprehensive income
Value adjustment of hedging instruments
46,581 32,624 Value adjustments for the year 32,607 47,452
0 0 Value adjustment transferred to revenue 0 1,346
12,429 6,466 Value adjustment transferred to operating expenses 6,466 13,658
37,080 23,944 Value ajdustment transferred to financial expenses 24,667 39,719
0 0 Tax on other comprehensive income
1
0 97
7,519 507 Foreign exchange adjustments relating to foreign enterprises 2,818 49,554
8,002 6,900 Unrealized value adjustment of securities 6,900 8,036
0 7,520
Realized value adjustment of securities transferred to the income state-
ment 7,520 906
2,445 2,327 Other comprehensive income after tax 4,912 45,288
71,770 729,082 Total comprehensive income 729,644 567,499
Total comprehensive income for the year is attributable to:
71,770 729,082 Equity holders of DFDS AS 726,194 553,720
- - Non-controlling interests 3,450 13,779
71,770 729,082 Total comprehensive income 729,644 567,499
1
The majority of amounts included in Other comprehensive income relates to Group companies which are taxed under tonnage tax schemes. There are no tax on this.
DFDS ANNUAL REPORT 2011
BALANCE SHEET 31 DECEMBER
ASSETS
64
Parent Company Consolidated
DKK ’000 DKK ’000
2010 2011 Note 2011 2010
58,264 92,019 Goodwill 362,697 343,340
2,384 1,591 Other non-current intangible assets 3 165
52,825 63,999 Software 64,765 52,826
4,336 21,997 Development projects in progress 22,558 4,336
117,809 179,606 11 Non-current intangible assets 450,023 400,667
9,564 5,825 Land and buildings 104,404 146,166
23,578 21,945 Terminals 623,839 584,115
3,012,048 2,990,836 Ships 7,510,702 8,142,404
99,278 145,989 Equipment, etc. 359,920 319,470
203,385 574,725 Assets under construction and prepayments 583,237 210,902
3,347,853 3,739,320 12 Non-current tangible assets 9,182,102 9,403,057
1,486,014 1,341,039 13 Investments in subsidiaries - -
223 223 14 Investments in associates 6,120 32,031
1,558,262 1,878,731 15 Receivables 110,613 19,048
25,407 21,486 16 Securities 22,750 26,674
0 0 19 Deferred tax assets 122,150 126,321
3,069,906 3,241,479 Other non-current assets 261,633 204,074
6,535,568 7,160,405 Non-current assets 9,893,758 10,007,798
79,163 106,523 17 Inventories 147,208 126,393
3,856,090 3,766,846 15 Receivables 1,700,128 2,318,588
91,702 42,891 Prepayments 97,209 152,079
388,018 33,698 16 Securities 33,698 388,018
242,045 591,559 Cash 897,364 696,007
4,657,018 4,541,517 Current assets 2,875,607 3,681,085
0 0 34 Assets held for sale 25,276 159,970
4,657,018 4,541,517 Total current assets 2,900,883 3,841,055
11,192,586 11,701,922 Assets 12,794,641 13,848,853
65DFDS ANNUAL REPORT 2011
BALANCE SHEET 31 DECEMBER
EQUITY AND LIABILITIES
Parent Company Consolidated
DKK ’000 DKK ’000
2010 2011 Note 2011 2010
1,485,608 1,485,608 18 Share capital 1,485,608 1,485,608
77,911 94,255 Reserves 130,504 112,202
3,934,290 3,767,104 Retained earnings 5,342,817 4,846,640
118,849 207,985 Proposed dividends 207,985 118,849
5,460,836 5,366,442 Equity attributable to equity holders of DFDS AS 6,905,906 6,338,895
- - Non-controlling interests 57,675 57,525
5,460,836 5,366,442 Equity 6,963,581 6,396,420
3,617,766 2,789,312 23 Interest bearing liabilities 3,050,813 3,950,177
0 0 19 Deferred tax 168,389 180,999
12,703 13,951 21 Pension and jubilee liabilities 245,856 253,608
0 25,803 22 Other provisions 29,963 50,695
3,630,469 2,829,066 Non-current liabilities 3,495,021 4,435,479
1,423,902 2,787,773 23 Interest bearing liabilities 531,616 1,012,426
75,285 91,412 Trade payables 483,102 518,414
0 0 22 Other provisions 63,725 86,284
0 15,526 26 Corporation tax 39,583 37,675
561,310 554,039 24 Other payables 1,117,142 1,254,158
40,784 57,664 25 Deferred income 100,871 107,997
2,101,281 3,506,414 Current liabilities 2,336,039 3,016,954
5,731,750 6,335,480 Liabilities 5,831,060 7,452,433
11,192,586 11,701,922 Equity and liabilities 12,794,641 13,848,853
DFDS ANNUAL REPORT 2011
STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED 1 JANUARY 31 DECEMBER
66
Reserves
DKK ’000
Share
capital
Translation
reserve Hedging
Revaluation
of secu-
rities
Treasury
shares
Retained
earnings
Proposed
dividends
Equity
attributable
to equity
holders of
DFDS AS
Non-
controlling
interests Total
Equity at 1 January 2011 1,485,608 32,610 57,829 2 21,761 4,846,640 118,849 6,338,895 57,525 6,396,420
Comprehensive income
for the year
Profit for the year 730,986 730,986 3,570 734,556
Other comprehensive income
Value adjustments for the year 32,607 32,607 32,607
Value adjustment transferred
to operating expenses 6,466 6,466 6,466
Value adjustment transferred
to financial expenses 24,640 24,640 27 24,667
Foreign exchange adjustments
relating to foreign enterprises 2,671 2,671 147 2,818
Unrealized value adjustment
of securities 6,900 6,900 6,900
Realized value adjustment of
securities transferred to the
income statement 7,520 7,520 7,520
Other comprehensive income
after tax 0 2,671 1,501 620 0 0 0 4,792 120 4,912
Total comprehensive income 0 2,671 1,501 620 0 730,986 0 726,194 3,450 729,644
Transactions with owners
Increase of capital 0 11 11
Disposal of non-controlling
interests 2,382 2,382 3,292 910
Proposed dividends 2 07,985 20 7,985 0 0
Dividends paid 117,108 117,108 117,108
Dividends own shares 1,741 1,741 0 0
Vested re. share-based
payment 2,403 2,403 2,403
Purchase of own shares 13,510 31,839 45,349 45,349
Other adjustments 1,511 1,511 19 1,530
Total transactions with
owners 2011 0 0 0 0 13,510 234,809 89,136 159,183 3,300 162,483
Equity at 31 December 2011 1,485,608 35,281 59,330 622 35,271 5,342,817 207,985 6,905,906 57,675 6,963,581
The majority of amounts included in Other comprehensive income relates to Group companies which are taxed under tonnage tax schemes. There are no tax on this.
The Company’s share capital, which is not divided into different classes of shares, is divided into 14,856,081 shares of DKK 100 each.
All shares rank equally. There are no restrictions on voting rights. The shares are fully paid up.
67DFDS ANNUAL REPORT 2011
STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED 1 JANUARY 31 DECEMBER
Reserves
DKK ’000
Share
capital
Translation
reserve Hedging
Revaluation
of secu-
rities
Treasury
shares
Retained
earnings
Proposed
dividends
Equity
attributable
to equity
holders of
DFDS AS
Non-
controlling
interests Total
Equity at 1. Januar 2010 800,000 81,969 62,452 8,940 33,675 3,009,850 3,640,694 47,088 3,687,782
Comprehensive income
for the year
Profit for the year 508,680 508,680 13,531 522,211
Other comprehensive income
Value adjustments for the year 47,452 47,452 47,452
Value adjustment transferred
to revenue 1,346 1,346 1,346
Value adjustment transferred
to operating expenses 13,658 13,658 13,658
Value adjustment transferred
to financial expenses 39,666 39,666 53 39,719
Tax on other comprehensive
income 97 97 97
Foreign exchange adjustmens
relating to foreign enterprises 49,359 49,359 195 49,554
Unrealized value adjustment of
securities 8,036 8,036 8,036
Realized value adjustment of
securities transferred to the
income statement 906 906 906
Other comprehensive income
after tax 0 49,359 4,623 8,942 0 0 0 45,040 248 45,288
Total comprehensive income 0 49,359 4,623 8,942 0 508,680 0 553,720 13,779 567,499
Transactions with owners
Increase of capital
1
685,608 1,395,595 2,081,203 2,081,203
Addition of non-controlling
interests by acquisition of
enterprises 0 1,003 1,003
Disposal of non-controlling 1,131 1,131 2,341 1,210
Sale of warrents 16,243 16,243 16,243
Proposed dividends 118,849 118,849 0 0
Vested re. share-based
payment 837 837 837
Sale of treasury shares related
to exercise of share options 3,000 7,032 10,032 10,032
Treasury shares applied by
acquistion of enterprises
2
8,914 24,327 33,241 33,241
Other adjustments 1,794 1,794 2 1,796
Total transactions with
owners 2010 685,608 0 0 0 11,914 1,328,110 118,849 2,144,481 3,342 2,141,139
Equity at 31 December 2010 1,485,608 32,610 57,829 2 21,761 4,846,640 118,849 6,338,895 57,525 6,396,420
1
Costs for preparation of Capital increase of DKK 35.8 million has reduced this amount. The costs are primarily emissionsbanks, legal advisors and auditors.
2
Treasury shares applied as a part of payment of acquisition of the Norfolkline Group.
The majority of amounts included in Other comprehensive income relates to Group companies which are taxed under tonnage tax schemes. There are no tax on this.
The Company’s share capital, which is not divided into different classes of shares, is divided into 14,856,081 shares of DKK 100 each.
All shares rank equally. There are no restrictions on voting rights. The shares are fully paid up.
DFDS ANNUAL REPORT 2011
STATEMENT OF CHANGES IN EQUITY
PARENT COMPANY 1 JANUARY 31 DECEMBER
68
Reserves
DKK ’000 Share capital Hedging
Revaluation
of securities
Treasury
shares
Retained
earnings
Proposed
dividends Total
Equity at 1 January 2011 1,485,608 57,088 938 21,761 3,934,290 118,849 5,460,836
Comprehensive income for the year
Profit for the year 0 0 0 0 731,409 731,409
Other comprehensive income
Value adjustments for the year 32,624 32,624
Value adjustment transferred to operating expenses 6,466 6,466
Value adjustment transferred to financial expenses 23,944 23,944
Exchange rate adjustment, Goodwill 507 507
Unrealized value adjustment of securities 6,900 6,900
Realized value adjustment of securities transferred to
the income statement 7,520 7,520
Other comprehensive income after tax 0 2,214 620 507 0 2,327
Total comprehensive income 0 2,214 620 0 731,916 0 729,082
Transactions with owners
Proposed dividends 2 07,985 207,985 0
Dividends paid 117,108 117,108
Dividends own shares 1,741 1,741 0
Vested re. share-based payment 2,403 2,403
Purchase of own shares 13,510 31,839 45,349
Group internal acquisition of freight- and passenger
routes
1
661,667 661,667
Other adjustments 1,755 1,755
Total transactions with owners 2011 0 0 0 13,510 899,102 89,136 823,476
Equity at 31 December 2011 1,485,608 59,302 318 35,271 3,767,10 4 207,985 5,366,442
1
Related to acquisition of freight- and passenger routes from DFDS Seaways B.V.
The majority of amounts included in Other comprehensive income relates to Group companies which are taxed under tonnage tax schemes. There are no tax on this.
The Company’s share capital, which is not divided into different classes of shares, is divided into 14,856,081 shares of DKK 100 each.
All shares rank equally. There are no restrictions on voting rights. The shares are fully paid up.
69DFDS ANNUAL REPORT 2011
STATEMENT OF CHANGES IN EQUITY
PARENT COMPANY 1 JANUARY 31 DECEMBER
Reserves
DKK ’000 Share capital Hedging
Revaluation
of securities
Treasury
shares
Retained
earnings
Proposed
dividends Total
Equity at 1 January 2010 800,000 60,016 8,940 33,675 2,749,357 0 3,464,606
Change in accounting policies 217,085 217,085
Equity at 1 January 2010 after change 800,000 60,016 8,940 33,675 2,532,272 0 3,247,521
Comprehensive income for the year
Profit for the year 69,325 69,325
Other comprehensive income
Value adjustments for the year 46,581 46,581
Value adjustment transferred to operating costs 12,429 12,429
Value adjustment transferred to financial expenses 37,080 37,080
Exchange rate adjustment, Goodwill 7,519 7,519
Unrealized value adjustment of securities 8,002 8,002
Other comprehensive income after tax 0 2,928 8,002 0 7,519 0 2,445
Total comprehensive income 0 2,928 8,002 0 76,844 0 71,770
Transactions with owners
Increase of capital
1
685,608 1,395,595 2,081,203
Sale of warrents 16,243 16,243
Proposed dividends 118,849 118,849 0
Vested re. share-based payment 837 837
Sale of treasury shares related to exercise of share
options 3,000 7,032 10,032
Treasury shares applied by acquistion of enterprises
2
8,914 24,327 33,241
Other adjustments 11 11
Total transactions with owners 2011 685,608 0 0 11,914 1,325,174 118,849 2,141,545
Equity at 31 December 2010 1,485,608 57,088 938 21,761 3,934,290 118,849 5,460,836
1
Costs for preparation of Capital increase of DKK 35.8 million has reduced this amount. The costs are primarily emissionsbanks, legal advisors and auditors.
2
Treasury shares applied as a part of payment of acquisition of the Norfolkline Group.
The majority of amounts included in Other comprehensive income relates to Group companies which are taxed under tonnage tax schemes. There are no tax on this.
The Company’s share capital, which is not divided into different classes of shares, is divided into 14,856,081 shares of DKK 100 each.
All shares rank equally. There are no restrictions on voting rights. The shares are fully paid up.
DFDS ANNUAL REPORT 2011
CASH FLOW STATEMENT
1 JANUARY 31 DECEMBER
70
Parent Company Consolidated
DKK ’000 DKK ’000
2010 2011 Note 2011 2010
655,551 834,668 Operating profit before depreciation EBITDA and special items 1,495,384 1,273,148
58,266 0 Cashflow effect from special items related to operating activities 72,178 165,778
1,086 31,022 29 Adjustments for non-liquid operating items, etc. 38,281 2,090
228,982 115,500 30 Change in working capital 101,929 68,456
806 1,452 Payment of pension liabilities and other provisions 38,334 58,381
826,547 979,738 Cash flow from operating activities, gross 1,448,520 982,623
192,910 281,778 Interest received 77,912 90,137
198,322 239,595 Interest paid 251,915 234,523
353 2,677 Taxes paid 29,138 53,791
820,782 1,024,598 Cash flow from operating activities, net 1,245,379 784,446
255,424 710,151 Purchase of ships included ships under constructions 585,101 315,752
0 0 Disposal of ships 179,263 14,978
165 79,248 Acquisition of other non-current tangible assets 166,918 99,164
42,235 7,783 Sale of other non-current tangible assets 93,149 9,204
24,089 50,937 Acquisition of non-current intangible assets 52,216 26,141
0 233,090 32 Cashflow effect from special items related to investing activities 233,090 298,116
0 0 Insurance compensation regarding total loss on ship 525,000 0
20,720 7,432 32 Acquisition of enterprises and activities 7,432 1,416,855
0 661,667 Group internal acquisition of activities - -
0 6,213 Capital increases - -
0 0 Disposal of subsidiaries, associates and activities 0 8,710
4,172 42,215 Dividends received from subsidiaries - -
0 0 14 Dividends received from associates 612 6,211
338,461 1,232,560 Cash flow to/from investing activities 219,447 1,520,693
1,723,518 429,348 Proceeds from loans secured by mortgages in ships 429,348 1,723,518
669,645 1,408,214 Payment and instalments of loans secured by mortgages in ships 1,523,856 775,807
381,292 16,924 Change in other non-current investments 16,924 12,559
51,433 2,725 31 Change in other financial loans, net 8,365 1,288,818
4,182 5,035 Payment of financial lease liabilities 15,528 13,970
55,190 0 Change in operating credits 354,253 71,889
2,524,855 1,323,700 Change in Group internal financing - -
606 910 33 Acquisition of non-controlling interests 910 606
10,032 0 Exercise of share options 0 10,032
2,081,203 0 Net proceeds from increase of sharecapital 0 2,081,203
16,243 0 Sale of treasury shares related to exercise of share options 0 16,243
0 45,349 Purchase of own shares 45,349 0
0 117,018 Dividends paid 117,018 0
143,793 196,171 Cash flow to/from financing activities 1,619,007 1,667,347
626,114 11,791 Net increase (decrease) in cash and cash equivalents 154,181 931,100
8,529 630,063 Securities, cash and cash equivalents and securities at 1 January 1,084,025 154,592
4,580 6,985 Foreign exchange adjustments of securities, cash and cash equivalents 1,218 1,667
630,063 625,257 Securities, cash anc cash equivalents at 31 December 931,062 1,084,025
1
The ship QUEEN OF SCANDINAVIA is in 2011 reclassified from non-current assets to interest bearing receivables, due to the accounting treatment has changed to financial lease by lessess
decision of using the option to purchase by taking over the ship at 29 March 2015. This result in no cash effect related to ships.
As of 31 December 2011 the cash and cash equivalents includes bonds registred
at the Copenhage Stock Exchange DKK 34 million 2010: DKK 388 million) in both
the Parent Company and the Group.
The above mentioned cannot directly be derived from the Income statement
and the balance sheet.
NOTES
NOTES TO THE IN COME STATEMENT
72 1
Segment information
74 2
Revenue
74 3
Cost of sales
74 4
Staff costs
75 5
Costs of sales and administration
75 6
Profit on disposal of non-current assets
76 7
Special items, net
77 8
Financial items, net
78 9
Tax
79 10
Earnings per share
NOTES TO THE BALANCE SHEET
80
82
11
12
Non-current intangible assets
Non-current tangible assets
85 13
Investments in subsidiaries
86 14
Investments in associates
87 15
Receivables
89 16
Securities
89 17
Inventories
89 18
Holding of treasury shares
90 19
Deferred tax
91 20
Share options
93 21
Pension and jubilee liabilities
96 22
Other provisions
96 23
Interest-bearing liabilities
97 24
Other payables
97 25
Deferred income
97 26
Corporation tax
98 27
Information on financial instruments
99 28
Financial and operational risks
NOTES TO THE STATEMENT OF CASH FLOW
104
104
29
30
Non-liquid operating items
Change in working capital
104 31
Change in other loans, net
105 32
Acquisition and sale of enterprises and activities
108 33
Acquisition of non-controlling interests
NOTES ADDITIONAL INFORMATION
108
108
34
35
Assets held for sale
Guarantees and contingent liabilities
109 36
Contractual commitments
111 37
Related party transactions
112 38
Impairment tests
114 39
Events after the balance sheet date
114 40
Critical accounting estimates and assessments
115 41
Accounting Policies
122 42
Company overview
DFDS ANNUAL REPORT 201172
Note 1 Segment information
The segments together with allocation of operating profit, assets and liabilities
etc. are identical with the internal reporting structure of the Group. The costs of
the segments are the directly registered costs including a few systematically al-
located indirect costs, primarily concerning group functions.
The accounting policy regarding the preparation of the individual segment,
including transactions between segments, is in accordance with the accounting
policies of the Group. Non-allocated costs are therefore a reflection of the general
functions, which cannot reasonably be allocated to the segments. The costs con-
sist primarily of cost concerning the Executive Board and Board of Directors but
also parts of Group functions like Treasury, Investor relation, Legal, Communica-
tion, Financial Control and depreciation on the Group’s IT-systems. In addition the
elimination of transactions between segments is included. Transactions between
segments are concluded at arm’s length.
Segment assets includes assets, which are directly related to the segment, inclu-
ding non-current intangible, non-current tangible and other non-current assets,
inventories, receivables, prepayments, cash in hand and at bank of group enterpri-
ses and deposits at the Parent Company. Segment liabilities include current and
non-current liabilities.
Shipping Division operate DFDS’ sea-based transport divided into five business
areas: North Sea, Baltic Sea, English Channel and Passenger. Irish Sea was closed
in the 1st quarter of 2011.
The Shipping Division’s activities are operation of ro-ro and ro-pax tonnage,
but also operation of the passenger ships. In addition operation of the harbour
terminals along the Groups main routes are included. The customers for ro-ro
and ro-pax tonnage are mainly transportation and shipping companies as well as
manufacturers of heavy industrial goods with a high demand for sea transpor-
tation. The main customers for Passenger cover passengers with own cars, Mini
Cruises, conferences and tour operators.
Logistics Division operate DFDS’ logistic activities divided into five Business
areas: Nordic Transport, Continental Transport, European Contract, Intermodal
and Nordic Contract.
The Logistics Division’s activity is full- and part load transportation solutions,
also warehousing and logistics solutions for larger customers. In addition the di-
vision operates lo-lo tonnage and railways transport of primarily containers. The
customers are primarily importers/exporters and manufacturers of heavy indu-
strial goods with a high demand for sea transportation or railway transportation.
DKK ’000
Shipping
Division
Logistics
Division
Non-
allocated Total
2011
External revenue 7,274,263 4,305,646 44,668 11,624,577
Intra-group revenue 523,971 24,488 272,295 820,754
Total revenue 7,798,234 4,330,134 316,963 12,445,331
Operating expenses, external 6,154,338 3,596,549 378,306 10,129,193
Intra-group operating expenses 227,932 562,513 30,309 820,754
Operating profit before depreciation EBITDA and special items 1,415,964 171,072 91,652 1,495,384
Share of profit/loss of associates 8 67 0 75
Net profit on disposal of tangible assets 15,192 9,951 593 25,736
Depreciation of ships and other non-current fixed assets 575,753 71,859 26,136 673,748
Impairment losses of ships and other non-current fixed assets 8,690 0 3,794 12,484
Operating profit EBIT before special items 846,705 109,097 120,989 834,813
Special items, net 132,624 14,125 27,830 90,669
Operating profit EBIT 979,329 94,972 148,819 925,482
Financial items, net 183,360
Profit before tax 742,122
Tax on profit 7,566
Profit for the year 734,556
Total assets exclusive assets held for sale 10,023,206 1,727,187 1,018,972 12,769,365
Non-liquid operating items 27,562 3,008 7,711 38,281
Capital expenditures of the year 715,689 62,747 62,546 840,982
Assets held for sale, reference is made to note 34 0 0 25,276 25,276
Liabilities 2,363,972 1,076,310 2,390,778 5,831,060
73DFDS ANNUAL REPORT 2011
Note 1 Segment information (continued)
DKK ’000
Shipping
Division
Logistics
Division
Non-
allocated Total
2010
External revenue 6,497,506 3,330,569 38,970 9,867,045
Intra-group revenue 423,881 21,946 231,825 677,652
Total revenue 6,921,387 3,352,515 270,795 10,544,697
External operating expenses 5,501,662 2,817,849 274,386 8,593,897
Intra-group operating expenses 199,224 460,565 17,863 677,652
Operating profit before depreciation EBITDA and special items 1,220,501 74,101 21,454 1,273,148
Share of profit/loss of associates 299 5,062 0 4,763
Net profit on disposal of tangible assets 2,442 2,272 0 4,714
Depreciation of ships and other non-current fixed assets 554,606 83,074 59,084 696,764
Impairment losses of ships and other non-current fixed assets 5,500 0 0 5,500
Operating profit EBIT before special items 662,538 1,639 80,538 580,361
Special items, net 374,486 214,098 58,861 101,527
Operating profit EBIT 1,037,024 215,737 139,399 681,888
Financial items, net 134,923
Profit before tax 546,965
Tax on profit 24,754
Profit for the year 522,211
Total assets exclusive assets held for sale 10,778,499 1,870,477 1,039,907 13,688,883
Non-liquid operating items 1,349 3,193 2,452 2,090
Capital expenditures of the year 2,845,737 150,374 66,533 3,062,644
Assets held for sale, reference is made to note 34 131,823 0 28,147 159,970
Liabilities 6,226,685 954,118 271,630 7,452,433
Geographical breakdown
The Group does not have a natural geographic split on countries, since the Group,
mainly Shipping Division, is based on a connected route network in Northern
Europe, where the routes support each other with sales and customer services
located in one country whereas the actual revenue is created in other countries.
It is consequently not possible to present a meaningful split of revenues and
non-current assets by country. The split is therefore presented by water and
geographical areas, in which DFDS operates.
The adjusted split results in six geographical areas: North sea, Baltic sea, The
English Channel, The Continent, Nordic, UKIrland. The Group’s business model
results in the routes not directly owning the vessels, but solely charters the
ships from a vesselpool. The vessels are frequently moved within the Goup’s
routes. It is therefore not possible to estimate the exact value of the non-current
assets per geographical area. Instead a adjusted allocation has been used.
DKK ’000
North sea
1
Baltic sea
The English
Channel
The
Continent Nordic UKIreland Total
2011
Total revenue 4,988,846 1,353,800 943,509 1,865,502 1,502,292 970,628 11,624,577
Non-current assets 6,222,895 1,723,275 1,208,734 234,861 357,079 146,914 9,893,758
2010
Total revenue 4,992,162 1,058,865 482,600 1,464,869 1,201,827 666,722 9,867,045
Non-current assets 6,713,442 1,276,016 1,264,363 277,290 339,912 136,775 10,007,798
1
The business unit Irish Sea was closed in the 1st quarter of 2011, and is represented in the total revenue with DKK 20 million 2010: DKK 359 million) and DKK 0 million within non-current
assets 2010: DKK 397 million).
Information on significant customers
Neither the Group or the Parent Company have single or related customers, that individually, or seen as a group, represents more than 10% of net revenue.
DFDS ANNUAL REPORT 201174
Parent Company Consolidated
DKK ’000 DKK ’000
2010 2011 Note 2 Revenue 2011 2010
848,813 859,959 Sale of goods on board ships 951,996 966,458
3,968,756 5,180,637 Sale of service 10,447,373 8,621,439
327,691 327,913
Rental income from timecharter and bareboat of ships
and operating equipment 225,208 279,148
69,676 155,822 Other operating income
1
0 0
5,214,936 6,524,331 Total revenue 11,624,577 9,867,045
1
Primarily concerns invoicing of corporate functions.
Parent Company Consolidated
DKK ’000 DKK ’000
2010 2011 Note 3 Cost of sales 2011 2010
1,278,863 1,732,886 Cost of sales in operating costs 2,280,057 1,793,949
172 143 Change in inventory write-downs for the year 279 508
1,279,035 1,733,029 Total cost of sales 2,279,778 1,794,457
Cost of sales consists of bunkers and cost of sales related to sale of goods and services on board.
Parent Company Consolidated
DKK ’000 DKK ’000
2010 2011 Note 4 Staff costs 2011 2010
491,657 531,293 Wages and salaries 1,488,828 1,320,888
35,660 35,293 Defined contributions plans 77,297 76,509
336 1,710 Defined benefit plans, see Note 21 10,638 358
34,895 30,837 Social security costs, etc. 161,747 152,405
838 2,403 Share based payment, see Note 20 2,403 838
32,901 15,617 Other staff costs 174,550 161,706
596,287 617,153 Total staff costs 1,915,463 1,712,704
Of this, remuneration for the Executive Board
15,265 17,812 Wages and salaries 17,812 15,265
1,840 989 Defined contributions plans 989 1,840
838 1,505 Share based payment 1,505 838
250 561 Other staff costs 561 250
18,193 20,867 20,867 18,193
Remuneration for the Parent Company’s Board of Directors
and Audit Committee
750 750 Chairman 750 750
674 950 Deputy chairmen 950 674
2,250 2,467 Other members of the Board of Directors 2,467 2,250
3,674 4,167 4,167 3,674
1,467 1,508 Average number of employees 5,096 4,862
Remuneration to the chairman of the Audit Committee amount to DKK 100k
2010: DKK 100k) and remuneration to other members of the Audit Committee
amount to DKK 50k 2010: DKK 50k) each. No remuneration is paid to members
of other committees.
If members of the Executive Board resigns in accordance with a takeover of the
Group, a special remuneration will be paid corresponding to 1 years salary. Bey-
ond this no unusual agreements have been entered into with the Executive Board
regarding terms of pension and retirement.
75DFDS ANNUAL REPORT 2011
Parent Company Consolidated
DKK ’000 DKK ’000
2010 2011 Note 5 Costs of sales and administration 2011 2010
141,731 142,152 External selling costs 205,349 190,146
189,856 218,930 Intra-group selling costs - -
124,523 261,590 Other costs 344,256 283,020
456,110 622,672 Total costs of sales and administration 549,605 473,166
Of this, the fee for auditor appointed
at the Annual General Meeting:
1,450 1,675 Audit fees 6,544 7,363
4,587 60 Other assurance engagements
1
76 4,912
1,222 1,911 Tax and VAT services 2,639 2,442
359 798 Non-audit fees 843 667
7,618 4,444 Total fees to KPMG 10,102 15,384
1
From this DKK 0.0 million relates to prospectus 2010: DKK 4.6 million).
Parent Company Consolidated
DKK ’000 DKK ’000
2010 2011 Note 6 Profit on disposal of non-current assets 2011 2010
Gain on disposal of property, plant and equipment
0 9,111 Ships 9,111 8,875
0 614 Land and buildings 1,237 552
243 445 Equipment, etc. 15,556 5,265
243 10,170 Gain on disposal of property, plant and equipment 25,904 14,692
Loss on disposal of property, plant and equipment
0 0 Ships 0 6,896
0 21 Equipment, etc. 168 3,082
0 21 Loss on disposal of property, plant and equipment 168 9,978
243 10,149 Total profit on disposal of non-current assets 25,736 4,714
DFDS ANNUAL REPORT 201176
Parent Company Consolidated
DKK ’000 DKK ’000
2010 2011 Note 7 Special items, net 2011 2010
25,863 0
Gain regarding the fire on the ship LISCO GLORIA, where the insurance
compensation exceeds the net book value and cost derived from the
fire, ect.
0 272,668
0 0
Adjustment of gain regarding the ship LISCO GLORIA, due to higher
insurance coverage of salvage
17,531 0
0 80,361
Gain regarding sale of DFDS Canal Tours AS
82,728 0
0 26,310
Gain regarding sale of terminal company DFDS Seaways Maasvlakte B.V.,
which as per 31 December 2010 where included under ’Assets held for
sale’
47,754 0
0 0
Gain regarding sale of office building in Lithuania
23,689 0
0 0
Gain regarding sale of the ship DUBLIN SEAWAYS
16,710 0
0 0
Gain regarding sale of the northern routes in the Irish Sea after reduction
of redundancy, incl. adjustments as a result of ”Completion Statements”
345 200,289
0 0
Costs related to the closure of the southern routes in the Irish Sea -
mainly redundancy payments
29,831 0
12,919 0
Consultancy- and transaction costs regarding the acquisition of the
Norfolkline-group
0 35,554
19,484 0
Integration costs relating to acquisition of the Norfolkline-group,
including severance pay, payment for early termination of port contract,
branding, consulting fees, etc.
20,814 96,671
0 0
Costs related to restructuring and streamlining of processes in respec-
Crossing)
21,533 0
60,000 0
Impairment of goodwill and ships, see note 38
25,220 240,205
287,593 17,286 Value adjustment on investments in group enterprises, see note 38
- -
405,859 89,385 Special items, net 90,669 101,527
If special items had been included in operating profit before
special items, they would have recognized as follows:
0 0 Operating costs 196 29,274
1,442 0 Staff costs 35,486 49,320
30,961 6,079 Costs of sales and administration 41,544 52,631
32,403 6,079 Operating profit before depreciation EBITDA and special items 77,226 131,225
25,863 112,750 Profit on disposal of non-current assets 193,115 472,957
60,000 0 Impairment of ships and other non-current assets 25,220 240,205
287,593 17,286 Value adjustment on investments in group enterprises - -
405,859 89,385 90,669 101,527
77DFDS ANNUAL REPORT 2011
Parent Company Consolidated
DKK ’000 DKK ’000
2010 2011 Note 8 Financial items, net 2011 2010
9,647 24,965 Interest income from cash, ect. 32,170 16,852
122,226 234,755 Interest income from subsidiaries - -
150,684 140,401 Interest expenses, credit institutions, etc. 160,737 180,537
4,304 37,868 Interest expenses for subsidiaries - -
23,115 81,451 Interest, net 128,567 163,685
300,176 136,042 Foreign exchange gains 152,608 234,002
144,822 126,644 Foreign exchange losses 159,697 173,023
155,354 9,398 Foreign exchange gains and losses, net 7,089 60,979
0 7,520 Realized capital gains/losses on securities 7,520 906
0 139 Gain on disposal of subsidiaries, associates and activities 0 1,845
0 0 Gain on disposal of subsidiaries where control is lost 0 3,051
0 0
Impairment and reversal of impairment losses on
non-current financial assets 5,000 5,000
4,172 42,215 Dividends from subsidiaries - -
399 48 Other dividends 48 399
0 0 Defined benefit plans, see Note 21 6,265 7,892
18,879 30,267 Other financial income and expenses, net 38,967 23,714
14,308 4,337 Other financial income and expenses, net 47,704 32,217
117,931 95,186 Financial items, net 183,360 134,923
Financial items, net is divided into:
291,798 311,381 Financial income 32,218 83,126
173,867 216,195 Financial expenses 215,578 218,049
117,931 95,186 Financial items, net 183,360 134,923
The Parent Company makes forward exchange transactions, etc., on behalf of
all subsidiaries, and therefore foreign exchange gains and losses in the Parent
Company also consists of the Group’s gross transactions. Transactions entered into,
on behalf of subsidiaries, are transferred to the subsidiaries on back-to-back terms.
Financial items, net is related to financial instruments measured at amortizised cost.
Other financial income and expenses contains bank charges regarding conversion
of the Groups loan portfolio, including amortization of capitalized bank charges
related to borrowings.
DFDS ANNUAL REPORT 201178
Parent Company Consolidated
DKK ’000 DKK ’000
2010 2011 Note 9 Tax 2011 2010
0 0 Current tax 16,209 26,043
12,873 12,475 Current joint tax contributions 12,475 12,873
0 0 Deferred tax for the year 6,010 12,184
29,934 18,997 Adjustment to corporation tax in respect of prior years 16,752 8,640
0 0 Adjustment to deferred tax in respect of prior years 1,644 6,565
17,061 6,522 Tax for the year 7,566 24,657
Tax for the year is recognised as follows:
17,061 6,522 7,566 24,754
0 0 Tax on other comprehensive income 0 97
17,061 6,522 Tax for the year 7,566 24,657
Tax in the income statement can be broken down as follows:
52,264 724,887 Profit before tax 742,122 546,965
221,571 547,019 Of this, tonnage income 566,519 391,569
169,307 177,868 Result before tax (company taxation) 175,603 155,396
42,327 44,467 25% tax of profit before tax 43,901 38,849
- - Adjustment of calculated tax in foreign subsidiaries compared to 25% 4,907 1,985
Tax effect of:
71,897 33,890 Non-taxable items 23,064 9,209
0 0 Tax asset, not recognised 5,574 15,585
18,493 0 Utilisation of non-capitalised tax asset 2,044 22,830
29,934 18,997 Adjustments of tax in respect of prior years 15,108 2,075
18,857 8,420 Corporation tax of ordinary income 4,352 22,305
1,796 1,898 Tonnage tax 3,214 2,449
17,061 6,522 Tax in the income statement 7,566 24,754
32.6 0.9 Effective tax rate 1.0 4.5
24.6 1.7 Effective tax rate before adjustment of prior years’ tax 3.1 4.9
Tax on changes in other comprehensive income
can be broken down as follows:
0 0 Deferred tax 0 97
0 0 Tax on changes in other comprehensive income 0 97
The Parent Company has in 2011 paid net joint taxation contribution regarding
prior years of DKK 2.6 million. The parent company has not paid Danish corpora-
tion tax in 2010.
The Parent Company and its Danish subsidiaries are within the Danish Act of com-
pulsory joint taxation with LF Investment ApS and J. Lauritzen AS and these two
companies’ Danish affiliated companies. DFDS AS is liable for the tax of its own
taxable income. LF Investment ApS is the administration company in the joint
taxation and settles all payments of corporation tax with the tax authorities.
The shipping activities performed in the Danish, Lithuanian, Dutch, Norwegian and
English enterprises in the Group are included in the tonnage tax scheme where
the taxable income related to transportation of passenger and goods is calculated
based on the tonnage employed during the year. Taxable income related to other
activities is taxed following the ordinary taxation rules.
Adjustment of prior years tax in 2011 primarily concerns the final interpretation
of the judgement on the tax case against DFDS AS, which led to an additional
income of 19 million in 2011 related to the years 20022009 compared to the
included income of 30 million in 2010 related to the years 20052009.
Adjustment of prior years’ tax in 2010 primarily concerns Norway where two
methods for fiscal consideration of non-taxed reserves were proposed prior to
transition to new tonnage tax scheme in 2010. As per 31 December 2009 no rules
existed, since the regulations had been overruled. As per 31 December 2010 DKK
25,4 million has been accrued as deferred tax to be paid without interests equally
over three years with the first payment due in 2011. In addition, the Danish Natio-
nal Tax Tribunal has delivered a judgement on the tax case against DFDS AS. The
interpretation of the judgement is still not settled with regards to a few financially
insignificant areas, however the priliminary outcome determines that DFDS AS
for the years 20052009 must take DKK 30 million as income, which has been
included in 2010.
79DFDS ANNUAL REPORT 2011
Consolidated
DKK ’000
Note 10 Earnings per share 2011 2010
Profit for the year 734,556 522,211
Attributable to non-controlling interests 3,570 13,531
Equity holders of DFDS AS 730,986 508,680
Weighted average number of issued ordinary shares 14,856,081 11,230,811
Weighted average number of treasury shares 223,536 291,527
Weighted average number of ordinary shares 14,632,545 10,939,284
Weighted average number of share options issued 6,377 34,339
14,638,922 10,973,623
Basic earnings per share EPS of DKK 100 in DKK 49.96 46.50
Diluted earnings per share EPSD of DKK 100 in DKK 49.93 46.35
DFDS ANNUAL REPORT 201180
Note 11 Non-current intangible assets
Consolidated
DKK ’000 Goodwill
Other
non-current
intangible assets Software
Development
projects in
progress Total
Balance at 1 January 2011 464,596 60,963 174,837 4,336 704,732
Foreign exchange adjustments 122 6 44 20 64
Transfers 0 0 33,276 33,276 0
Additions 33,506
1
0 738 51,478 85,722
Disposals 14,302
2
0 22,409 0 36,711
Cost at 31 December 2011 483,678 60,957 186,486 22,558 753,679
Amortisation and impairment losses at 1 January 2011 121,256 60,798 122,011 0 304,065
Foreign exchange adjustments 70 6 17 0 59
Amortisation charge 0 162 21,107 0 21,269
Impairment charge 0 0 995 0 995
Disposal 205 0 22,409 0 22,614
Amortisation and impairment losses at 31 December 2011 120,981 60,954 121,721 0 303,656
Carrying amount at 31 December 2011 362,697 3 64,765 22,558 450,023
1
Addition of Goodwill in 2011 is primarily related to the purchase of the route KapellskärPaldiski.
2
Disposal of Goodwill in 2011 is primarily related to the sale of DFDS Canal Tours AS.
Balance at 1 January 2010 352,490 180,095 143,862 5,954 682,401
Foreign exchange adjustments 11,950 3,709 0 0 15,659
Transfers 0 0 10,051 10,051 0
Addition on acquisition of enterprises 0 0 7,776 0 7,776
Additions 108,808
3
0 13,148 8,433 130,389
Disposals 8,652 122,841 0 0 131,493
Cost at 31 December 2010 464,596 60,963 174,837 4,336 704,732
Amortisation and impairment losses at 1 January 2010 8,593 164,872 84,427 0 257,892
Foreign exchange adjustments 1,110 3,485 5 0 4,600
Amortisation charge 0 15,282 37,579 0 52,861
Impairment charge classified as special items 120,205 0 0 0 120,205
Disposal 8,652 122,841 0 0 131,493
Amortisation and impairment losses at 31 December 2010 121,256 60,798 122,011 0 304,065
Carrying amount at 31 December 2010 343,340 165 52,826 4,336 400,667
3
Addition of goodwill in 2010 relates to the acquisition of the Norfolkline Group.
The carrying amount of the goodwill in the Group is allocated to the following cash generating units:
DKK m 2011 2010
North Sea and Baltic Sea 2010: also Irish Sea) 200.5 166.9
Nordic transport and Continental transport 39.8 39.8
Intermodal 122.4 122.5
Canal Tours AS 0 14.1
Total 362.7 343.3
Regarding impairment tests and impairment losses of goodwill, references is made
to note 38.
The carrying amount of completed software and development projects in progress
primary relates to software to Passenger Shippings on-line booking, a new freight-
and planning system to Logistics Division and economic- and management
reporting systems.
81DFDS ANNUAL REPORT 2011
Note 11 Non-current intangible assets (continued)
Parent Company
DKK ’000 Goodwill
Other
non-current
intangible assets Software
Development
projects in
progress Total
Balance at 1 January 2011 58,264 56,440 167,060 4,336 286,100
Foreign exchange adjustments 507 0 0 0 507
Transfers 0 0 33,276 33,276 0
Additions 33,248 0 0 50,937 84,185
Disposals 0 0 14,638 0 14,638
Cost at 31 December 2011 92,019 56,440 185,698 21,997 356,154
Balance at 1 January 2011 0 54,056 114,235 0 168,291
Amortisation charge 0 793 21,107 0 21,908
Impairment charge 0 0 995 0 995
Disposals 0 0 14,638 0 14,638
Amortisation and impairment losses at 31 December 2011 0 54,849 121,699 0 176,548
Carrying amount at 31 December 2011 92,019 1,591 63,999 21,997 179,606
Balance at 1 January 2010 268,008 50,707 143,861 5,954 468,530
Change in accounting policies 217,085 0 0 0 217,085
Foreign exchange adjustments 7,341 3,349 0 0 10,690
Transfers 0 0 10,051 10,051 0
Additions 0 2,384 13,148 8,433 23,965
Cost at 31 December 2010 58,264 56,440 167,060 4,336 286,100
Balance at 1 January 2010 0 46,988 84,426 0 131,414
Foreign exchange adjustments 0 3,171 0 0 3,171
Amortisation charge 0 3,897 29,809 0 33,706
Amortisation and impairment losses at 31 December 2010 0 54,056 114,235 0 168,291
Carrying amount at 31 December 2010 58,264 2,384 52,825 4,336 117,809
The Parent Companys carrying amount of Goodwill DKK 92.0 million 2010: DKK
58.3 million) is related to the acquisition of one freight- and passenger route in
2011 and the acquisition of one route in 2005.
The carrying amount of completed software and develompent projects in
progress relates primarily to software to Passenger Shippings on-line booking,
a new freight- and planning system and economic and management reporting
systems.
DFDS ANNUAL REPORT 201182
Note 12 Non-current tangible assets
Consolidated
DKK ’000
Land and
buildings Terminals Ships Equipment etc.
Assets under
construction and
prepayments Total
Balance at 1 January 2011 181,845 737,371 12,054,888 781,836 210,902 13,966,842
Foreign exchange adjustments 1,109 5,551 8,602 5,303 151 20,716
Transfers 34,972 40,999 189,357 5,141 200,525 0
Additions 4,684 42,317 20,034 115,516 572,709 755,260
Disposals 31,146 0 875,153
2
42,909 0 949,208
Cost at 31 December 2011 121,520 826,238 11,397,728 864,887 583,237 13,793,610
Balance at 1 January 2011 35,679 153,256 3,912,484 462,366 0 4,563,785
Foreign exchange adjustments 20 3,470 5,476 2,944 0 11,910
Transfers 6,932 6,932 0 0 0 0
Depreciation charge 4,947 30,051 543,476 74,682 0 653,156
Impairment charge 0 8,690
1
0 0 0 8,690
Disposals 16,598 0 574,410
2
35,025 0 626,033
Depreciation and impairment losses
at 31 December 2011 17,116 202,399 3,887,026 504,967 0 4,611,508
Carrying amount at 31 December 2011 104,404 623,839 7,510,702 359,920 583,237 9,182,102
Including assets held under finance leases 0 0 0 74,516 0 74,516
Interest capitalized in cost for the year 0 0 0 0 7,75 8 7,758
1
Impairment charge is related to leasehold improvements of a rented terminal area, where the income generating agreement with the external customer has discontinued, which lead to leasehold
improvement of the terminal area has been impaired.
2
The ship QUEEN OF SCANDINAVIA has been reclassified to financial lease. In addition to this the ship DUBLIN SEAWAYS and the channel boats in DFDS Canal Tours AS has been sold.
83DFDS ANNUAL REPORT 2011
Note 12 Non-current tangible assets (continued)
Consolidated
DKK ’000
Land and
buildings Terminals Ships Equipment, etc.
Assets under
construction and
prepayments Total
Balance at 1 January 2010 105,285 435,502 10,179,495 703,767 9,268 11,433,317
Foreign exchange adjustments 4,288 12,259 296,600 19,115 2 332,264
Transfers 174 0 76,944 174 76,944 0
Addition on acquisition of enterprises 70,461 420,867 1,934,091 79,522 1,871 2,506,812
Additions 42,291 2,154 48,347 48,170 276,705 417,667
Disposals 2,460 0 480,589 30,649 0 513,698
Transfer from assets classified as held for sale 37,846 133,411 0 38,263 0 209,520
Cost at 31 December 2010 181,845 737,371 12,054,888 781,836 210,902 13,966,842
Balance at 1 January 2010 29,964 157,034 3,315,544 404,946 0 3,907,488
Foreign exchange adjustments 1,009 4,336 68,057 16,448 0 89,850
Depreciation charge 6,783 23,836 543,409 72,320 0 646,348
Impairment charge 0 0 5,500 0 0 5,500
Impairment charge included in special items 0 0 120,000 0 0 120,000
Disposals 370 0 140,026 15,455 0 155,851
Transfer to assets classified as held for sale 1,707 31,950 0 15,893 0 49,550
Depreciation and impairment losses
at 31 December 2010 35,679 153,256 3,912,484 462,366 0 4,563,785
Carrying amount at 31 December 2010 146,166 584,115 8,142,404 319,470 210,902 9,403,057
Including assets held under finance leases 0 0 0 87,031 0 87,031
The carrying amount of ships includes passenger ships, DKK 1,250 million 2010:
DKK 1,454 million), of which components with high decrease in value amounts to
DKK 319 million 2010: DKK 369 million) and components with minor decrease in
value amounts to DKK 931 million 2010: DKK 1,085 million).
The interst for the year included in the cost in the Group are calculated by using a
specific interest rate. The specific interest rate for this year’s capitalized interest is
approximately 2.93.2% p.a. 2010: There were no capitalized interest).
Assets under construction and prepayments include DKK 558 million 2010:
DKK 182 million)in prepayments for two ro-ro newbuildings for delivery in 2012,
which are part of the extended contract entered into in November 2010 with the
Danish and German defense.
The Income Statement includes depreciation charge on ships of DKK 542.8 mil-
lion 2010: DKK 541.0 million). Of this amortisation of profit/loss on sale and
lease back transactions amounts to DKK 0.7 million 2010: DKK 2.4 million).
On the basis of the impairment tests performed in 2011 there has been no
impairment of ships 2010: Impairment of two passengerships DKK 60.0 million
and impairment of DKK 60.0 million of three sideports ships, a total of DKK
120.0 million).
For further information regarding impairment reference is made to note 38.
DFDS ANNUAL REPORT 201184
Parent Company
DKK ’000
Land and
buildings Terminals Ships Equipment etc.
Assets under
construction and
prepayments Total
Balance at 1 January 2010 20,927 72,805 5,474,886 207,856 7,071 5,783,545
Transfers 174 0 42,350 174 42,350 0
Additions 0 165 21,927 38,273 238,664 299,029
Disposals 0 0 56,624 1,026 0 57,650
Cost at 31 December 2010 20,753 72,970 5,482,539 245,277 203,385 6,024,924
Balance 1 January 2010 9,345 47,592 2,205,893 129,032 0 2,391,862
Depreciation charge 1,844 1,800 255,722 17,030 0 276,396
Impairment charge 0 0 5,500 0 0 5,500
Impairment charge included in special items 0 0 60,000 0 0 60,000
Depreciation on disposals 0 0 56,624 63 0 56,687
Depreciation and impairment losses at
31 December 2010 11,189 49,392 2,470,491 145,999 0 2,677,071
Carrying amount at 31 December 2010 9,564 23,578 3,012,048 99,278 203,385 3,347,853
Including assets held under finance leases 0 0 0 33,650 0 33,650
The carrying amount of ships includes passenger ships, DKK 1,250 million 2010:
DKK 1,430 million), of which components with high decrease in value amounts to
DKK 319 million 2010: DKK 369 million) and components with minor decrease in
value amounts to DKK 931 million 2010: DKK 1,061 million).
The interst for the year included in the cost in the Parent Company are calculated
by using a specific interest rate of approximately 2.9 3.2% p.a. 2010: There
were no capitalized interest).
Assets under construction and prepayments include DKK 558 million 2010:
DKK 182 million) in prepayments for two ro-ro newbuildings for delivery in
2012, which are part of the extended contract entered into in November 2010
with the Danish and German defense.
On the basis of the impairment tests performed in 2011 there has been no im-
pairment of ships 2010: Impairment of two passengerships DKK 60.0 million).
For further information regarding impairment reference is made to note 38.
Note 12 Non-current tangible assets (continued)
Parent Company
DKK ’000
Land and
buildings Terminals Ships Equipment etc.
Assets under
construction and
prepayments Total
Balance at 1 January 2011 20,753 72,970 5,482,539 245,277 203,385 6,024,924
Transfers 0 0 160,796 5,141 165,937 0
Additions 238 173 176,402 75,717 537,277 789,807
Disposals 10,042 0 629,061
1
9,015 0 648,118
Cost at 31 December 2011 10,949 73,143 5,190,676 317,120 574,725 6,166,613
Balance at 1 January 2011 11,189 49,392 2,470,491 145,999 0 2,677,071
Depreciation charge 795 1,806 248,420 30,585 0 281,606
Depreciation on disposals 6,860 0 519,071
1
5,453 0 531,384
Depreciation and impairment losses
at 31 December 2011 5,124 51,198 2,199,840 171,131 0 2,427,293
Carrying amount at 31 December 2011 5,825 21,945 2,990,836 145,989 574,725 3,739,320
Including assets held under finance leases 0 0 0 28,729 0 28,729
Interest capitalized in cost for the year 0 0 0 0 7,758 7,75 8
1
The ship QUEEN OF SCANDINAVIA has been reclassified to financial lease.
85DFDS ANNUAL REPORT 2011
Parent Company
DKK ’000
Note 13 Investments in subsidiaries 2011 2010
Cost at 1 January 1,869,302 1,847,976
Additions 6,213 21,326
Disposals 142,916 0
Cost at 31 December 1,732,599 1,869,302
Accumulated impairment losses at 1 January 383,288 95,695
Impairment losses 42,486 302,741
Reversal of impairment losses from previous years 25,200 15,148
Disposals 9,014 0
Accumulated impairment loss at 31 December 391,560 383,288
Carrying amount at 31 December 1,341,039 1,486,014
For an overview of the Group’s ownership interests in subsidiaries reference is
made to note 42.
Besides the above investments in subsidiaries, DFDS AS considers receivables
of DKK 1,668 million 2010: DKK 1,654 million) as part of the net investment in
subsidiaries. The foreign exchange adjustment of this is an income of DKK 14.4
million 2010: income of DKK 118.9 million) which is recognised directly in equity
in the consolidated financial statements. In the financial statements for the Parent
Company the foreign exchange adjustment is recognised in the income statement
classified as financial income and expenses, net.
The carrying amount of the Parent Company’s investment in the Group’s subsi-
diaries are tested for impairment when there are indicators that their value may
be impaired. The impairment tests has led to a DKK 42.5 million 2010: DKK
302.7 million) impairment loss.
In 2011 impairment losses of investments in subsidiaries recognised prior years
at DKK 25.2 million has been reversed 2010: DKK 15,1 million).
For further information regarding impairment test, references is made to note 38.
DFDS ANNUAL REPORT 201186
Parent Company Consolidated
DKK ’000 DKK ’000
2010 2011 Note 14 Investments in associates 2011 2010
223 223 Cost at 1 January 29,520 1,329
0 0 Foreign exchange adjustment 72 73
0 0 Disposals 0 320
0 0 Addition on adquisition of enterprises 0 28,364
0 0 Transferred to other types of assets 0 74
223 223 Cost at 31 December 29,448 29,520
- - Value adjustments at 1 January 2,511 3,454
- - Foreign exchange adjustment 68 237
- - Disposals 0 324
- - Share of profit for the year 75 4,763
Impairment losses 25,220 0
- - Dividends received from associates 612 6,211
- - Transferred to other types of assets 0 592
- - Value adjustments at 31 December 23,328 2,511
223 223 Carrying amount at 31 December 6,120 32,031
DKK ’000 The Groups Share
2011 Domicile Ownership Revenue
Profit for
the year Total assets
Total
liabilities Equity
Profit for
the year
Suardiaz DFDS Autologistics NV Gent 50.0%
1
0 16 372 8 182 8
Oslo Containerterminal AS Oslo 33.3% 79,118 809 19,394 12,277 2,371 270
DFDS Suardiaz Line Ltd. Immingham 50.0%
1
153,864 74 28,922 79,144 25,111 37
KST Terminal AS Oslo 40.0% 22,459 956 4,506 2,948 623 382
DailyFresh Logistics C.V. Maasdijk 33.3% 525,506 537 60,544 51,712 2,944 179
18,991 112
Of which investments in associates with negative value 25,111 37
6,120 75
1
Owned by the Parent Company.
DKK ’000 The Groups Share
2010 Domicile Ownership Revenue
Profit for
the year Total assets
Total
liabilities Equity
Profit for
the year
Suardiaz DFDS Autologistics NV Gent 50.0%
1
0 16 390 8 191 8
Oslo Containerterminal AS Oslo 33.3% 32,006 96 16,283 8,229 2,682 32
Seafront Projects AS Kristiansand 34.0%
3
29,098 280 0 0 0 95
DFDS Suardiaz Line Ltd. Immingham 50.0%
1
137,608 3,272 28,190 79,218 25,513 1,636
KST Terminal AS Oslo 40.0%
2
15,986 976 10,473 8,352 849 391
DailyFresh Logistics C.V. Maasdijk 33.3%
4
227,359 14,201 87,440 2,505 28,309 4,734
SCF Lines Ltd. Sankt Petersborg 50.0%
5
1,742 582 0 0 0 291
6,518 3,127
Of which investments in associates with negative value 25,513 1,636
32,031 4,763
1
Owned by the Parent Company
2
KST Terminal AS was a subsidiary until 31 March 2010, where owner and the majority of votes was reduced to 40.0%, here after it is classified as investments in associates.
3
Seafront Projects AS was investments in associated until 1 April 2010, where the enterprise was sold.
4
Ownership acquired in connection with the acquisition of the NorfolklineGroup at 12 July 2010.
5
SCF Lines Ltd. was investments in associated until 1 September 2010, where additional 49% was bought and the enterprise became a subsidiary.
87DFDS ANNUAL REPORT 2011
Parent Company Consolidated
DKK ’000 DKK ’000
2010 2011 Note 15 Receivables 2011 2010
1,558,262 1,802,090 Receivables from subsidiaries - -
0 76,641 Other non-current receivables 110,613 19,048
1,558,262 1,878,731 Total non-current receivables 110,613 19,048
119,896 145,817 Trade receivables 1,410,601 1,496,390
3,131,553 3,016,384 Interest bearing receivables from subsidiaries
1
- -
545,250 478,553 Other receivables from subsidiaries - -
4,486 4,931 Receivables from associates 7,756 7,833
0 0 Corporation tax and joint taxation contribution, receivable 9,783 12,049
2,669 71,847 Derivative financial instruments, forward transactions and bunker hedges 71,847 2,669
0 0 Insurancecompensation regarding LISCO GLORIA 0 525,000
52,236 49,314 Other receivables and current assets 200,141 274,647
3,856,090 3,766,846 Total current receivables 1,700,128 2,318,588
5,414,352 5,645,577 Total current and non-current receivables 1,810,741 2,337,636
1
The carrying amount of Interest beraring receivables from subsidiaries relate to current credit facilities that are made available to subsidiaries.
None of the trade receivables with collateral are overdue on 31 December 2011 2010: none). The collateral is bank guaranties.
The carrying amount of receivables is in all material respects approximate to the fair value.
Age distribution of overdue, but not written down, trade receivables:
Days past due:
18,012 12,419 Up to 30 days 299,071 301,435
5,744 5,038 3160 days 72,974 54,998
1,794 1,184 6190 days 9,845 17,221
313 1,394 91120 days 8,910 6,382
1,836 1,569 More than 120 days 23,088 9,436
27,699 21,604 413,888 389,472
Write-downs included in above receivables:
20,229 6,255 Write-downs at 1 January 60,879 32,728
- - Foreign exchange adjustment 402 120
0 0 Addtion on acquisition of enterprises 0 22,645
5,215 3,019 Write-downs 15,646 29,059
15,308 452 Realised losses 24,578 16,337
3,881 4,081 Reversed write-downs 10,781 7,336
6,255 4,741 Write-downs at 31 December 40,764 60,879
Age distribution of written down trade receivables:
Days past due:
470 0 Up to 30 days 5,462 29,042
0 68 3160 days 3,926 1,428
0 42 6190 days 445 1,816
0 0 91120 days 1,189 6,339
5,785 4,631 More than 120 days 29,742 22,254
6,255 4,741 40,764 60,879
Write-downs and realised losses are recognised in operational cost in the income statement.
Write-downs on trade receivables are caused by customers bankrupcy as well as uncertainty about the customers ability and willingness to pay.
DFDS ANNUAL REPORT 2011
Note 15 Receivables (continued)
Financial leasing receivables (lessor)
financial lease contract. The receivable can be specified as follows:
DKK ’000
2011
Minimum lease
payments
Hereof financing
element Carrying amount
01 year 31,131 9,136 21,995
1 to 5 years 87,754 11,113 76,641
After 5 years 0 0 0
Total 118,885 20,249 98,636
The financial lease receivable is related to the ship QUEEN OF SCANDINAVIA which is chartered out on a bare boat contract with a purchase option.
In 2011 the lessee has called the purchase option and the ownership of the vessel will be transferred to the lessee in March 2015. There are no comparative figures for
2010.
88
89DFDS ANNUAL REPORT 2011
Parent Company Consolidated
DKK ’000 DKK ’000
2010 2011 Note 16 Securities 2011 2010
388,018 33,698 Listed bonds 33,698 388,018
6,894 2,973 Listed shares 2,973 6,894
16,924 17,782 Other shares and equity investments 19,046 18,191
1,589 731 Other investments 731 1,589
413,425 55,184 Total securities 56,448 414,692
Classified as follows:
25,407 21,486 Non-current securities 22,750 26,674
388,018 33,698 Current securities 33,698 388,018
413,425 55,184 Total securities 56,448 414,692
Securities in both the Parent Company and the Group are non-current assets clas-
sified as ’available for sale’.
Other shares and equity investments as well as other investments consist of some
minor unlisted enterprises and holdings. These assets are not adjusted to fair
value because the fair value cannot be measured reliable. Instead the securities
are recognised at cost reduced by write-downs, if any.
During 2011 the majority of the bonds have been drawn.
Parent Company Consolidated
DKK ’000 DKK ’000
2010 2011 Note 17 Inventories 2011 2010
41,970 67,242 Bunkers 89,265 72,729
39,310 41,255 Goods for sale and raw materials for restaurants 60,117 56,117
2,117 1,974 Write-down of inventories 2,174 2,453
79,163 106,523 Total inventories 147,208 126,393
Note 18 Holding of treasury shares (number of shares) 2011 2010
Holding of treasury shares at 1 January 217,614 336,751
Disposals related to share options used 0 30,000
Treasury shares applied as part of payment of acquisition of the NorfolklineGroup, cf. note 33 0 89,137
Acquisition of treasury shares 135,100 0
Holding of treasury shares at 31 December 352,714 217,614
Market value of treasury shares at 31 December, DKK ’000 125,213 90,963
At the Annual General Meeting in April 2011 the Board of Directors was autho-
rised - until the Annual General Meeting 2012 – to acquire treasury shares at a
nominal value totalling 10% of the DFDS AS’ share capital.
Acquisition of treasury shares during 2011 treasury shares amounts to a total
payment of DKK 45.3 million.
The Parent Company’s holdings of treasury shares at 31 December 2011 are
352,714 shares 2010: 217,614 shares), corresponding to 2.37% 2010: 1.46%
of the Parent Company’s share capital. Treasury shares have originally been
acquired to cover a share option scheme for employees.
DFDS ANNUAL REPORT 201190
Parent Company Consolidated
DKK ’000 DKK ’000
2010 2011 Note 19 Deferred tax 2011 2010
0 0 Deferred tax at 1 January 54,678 59,398
- - Foreign exchange adjustments 353 17,472
0 0 Additions on aquisition of enterprises / sale of enterprises 4,519 16,767
0 0 Deferred tax for the year recognised in the income statement 6,010 12,087
0 0 Deferred tax for the year recognised in other comprehensive income 0 97
0 0 Utilisation of tax losses between jointly taxed companies 799 0
0 0 Adjustments regarding prior years recognised in the income statement 1,644 6,565
0 0 Deferred tax at 31 December, net 46,239 54,678
Deferred tax is recognised in the balance sheet as follows:
0 0 122,150 126,321
0 0 168,389 180,999
0 0 Deferred tax at 31 December, net 46,239 54,678
By joining the tonnage taxation scheme, DFDS AS is subject to the requirements
of the scheme until 2012. DFDS AS is not expected to withdraw from the scheme
and consequently no deferred tax relating to assets and liabilities subject to
tonnage taxation has been recognised. If DFDS AS withdraws from the tonnage
taxation scheme, deferred tax in the amount of maximum DKK 252 million 2010:
396 million) may be recognised.
DFDS AS has no tax losses carried forward 2010: DKK 0 million).
Consolidated
DKK ’000
2011
Balance sheet at
1 January
Foreign
exchange
adjustments
Additions on
aquisition of
enterprises
/ sale of
enterprises
Deferred tax
for the year
recognised in
the income
statement
Utilisation
of tax losses
between
jointly taxed
companies
Adjustments
regarding
prior years
recognised in
the income
statement
Balance
sheet at 31
December
Ships 168,438 1,529 4,588 5,254 0 0 160,125
Land and buildings, terminals and other equipment 14,619 99 69 1,499 0 0 15,471
Provisions 55,091 1,190 0 3,880 0 3,261 49,140
Tax losses carried forward 65,687 698 0 3,279 799 9,341 78,206
Other 7,601 93 0 142 0 5,541 2,011
54,678 353 4,519 6,010 799 1,644 46,239
2010
Balance sheet at
1 January
Foreign
exchange
adjustments
Additions on
adquisition of
enterprises
/ sale of
enterprises
Deferred tax
for the year
recognised in
the income
statement
Deferred tax
for the year
recognised
in other com-
prehensive
income
Adjustments
regarding
prior years
recognised in
the income
statement
Balance
sheet at 31
December
Ships 139,060 22,658 0 773 0 5,947 168,438
Land and buildings, terminals and other equipment 15,290 7 1,733 2,413 0 2 14,619
Provisions 40,967 2,140 16,793 4,809 0 0 55,091
Value of hedging instruments 97 0 0 0 97 0 0
Tax losses carried forward 48,745 2,831 1,863 12,605 0 357 65,687
Other 5,143 222 156 2,651 0 259 7,601
59,398 17,472 16,767 12,087 97 6,565 54,678
Parent Company
DFDS AS has no deferred tax.
91DFDS ANNUAL REPORT 2011
Note 20 Share options
The decision to grant share options is made by the Board of Directors. Share
options have been granted to the Executive Board and some executive employees.
Each share option gives the holder of the option the right to acquire one existing
share in the Parent Company of nominal DKK 100. The share option scheme
equals a right to acquire 0.9% of the share capital 2010: 0.6% if the remaining
share options are exercised.
Share options granted in 2007 have been granted at an exercise price equal to the
average share price of the Parent Company’s shares in December the year before
the grant with an addition of 5%.
Share options granted as from 2008 have been granted at an exercise price equal
to the average share price of the Parent Company’s shares 20 days before the
grant with an addition of 5%.
Vesting is done on a straight line basis over a period of three years from the date
of grant for share options granted in 2010 and 2011. Share options granted in
2007, 2008 and 2009 are fully vested from the date of grant. Special conditions
apply regarding illness and death and if the capital structure of the Parent
Company is changed, etc.
The share options can be exercised when a minimum of 3 years and a maximum
of 5 years have elapsed since the grant dates. The options can only be exercised
within a period of 4 weeks after publication of annual or interim reports.
Share options granted can only be settled with shares. A part of the treasury
shares is reserved for settling the outstanding share options.
Consolidated
2011
Executive Board
Number
Executive
employees
Number
Terminated
employees
Number Total
Average
exercise
price per
option
DKK
Average fair
value per
option
DKK
Total fair
value
DKK ’000
Outstanding at the beginning of the year 55,750 0 30,000 85,750 503.93 83.63 7,171
Granted during the year 20,000 32,405 0 52,405 456.22 27.15 1,423
Exercised during the year 0 0 0 0 0.00 0.00 0
Outstanding at the end of the year 75,750 32,405 30,000 138,155 485.84 20.95 2,895
Of this exercisable at the end of the year 20,000 0 30,000 50,000 620.58 0.16 8
2010
Executive Board
Number
Executive
employees
Number
Terminated
employees
Number Total
Average
exercise
price per
option
DKK
Average fair
value per
option
DKK
Total fair
value
DKK ’000
Outstanding at the beginning of the year 30,000 0 60,000 90,000 563.56 28.44 2,560
Granted during the year 25,750 0 0 25,750 334.40 103.34 2,661
Exercised during the year 0 0 30,000 30,000 334.40 85.74 2,572
Outstanding at the end of the year 55,750 0 30,000 85,750 503.93 83.63 7,171
Of this exercisable at the end of the year 10,000 0 20,000 30,000 607.20 263.52 1,875
DFDS ANNUAL REPORT 201192
Note 20 Share options (continued)
No share options have been exercised during 2011. At exercise of share options in
2010 the average weighted share price amounts to 377.
The cost of the year related to share based payment is recognised in the Group’s
and in the Parent Company’s income statement with DKK 2.4 million 2010: DKK
0.8 million).
The calculated fair values are based on the BlackScholes formula for measuring
share options.
The outstanding options at 31 December 2011 have an average weighted time
to maturity of 2.2 years 2010: 2.6 years).
Assumptions concerning the calculation of fair value at time of granting:
Consolidated
Year of granting Exercise price
Market price
at grant date
Expected
volatility
Risk-free
interest rate
Expected
dividend per
shareDKK
at grant date
Expected
term
Fair value
per option
at time of
granting
465.00 435.0 35.73% 2.42% 12 99.61
442.00 445.0 30.33% 2.06% 10 99.88
2010 334.40 334.8 34.20% 2.87% 10 103.34
2009 357.28 334.4 31.28% 2.86% 10 85.60
2008 640.64 618.6 25.57% 4.13% 15 158.34
2007 607.20 704.0 23.53% 3.90% 7.5 263.52
The expected volatility for 20072010 is based on the historic volatility for the
past 5 years while the expected volatility for 2011 to the Executive employees
and the Executive Board is based on the historic volatility for the past 3 and 2 ye-
ars respectively. The risk free interest rate is based on 5 year Danish government
bonds.
93DFDS ANNUAL REPORT 2011
Note 21 Pension and jubilee liabilities
The Group contributes to defined contribution plans as well as defined benefit
plans. The majority of the pension plans are funded through payments of annual
premiums to independent insurance companies responsible for the pension
Group has no legal or constructive obligation to pay further contributions irrespec-
tive of the funding of these insurance companies. Pension costs from such plans
are charged to the income statement when incurred.
In the United Kingdom and the Netherlands the Group has pension plans, which
are defined benefit plans and are included in the balance sheet as shown below.
In addition there are minor defined benefit plans in Norway, Belgium, Italy,
Germany, Denmark and Sweden.
Some of the pension plans in Sweden are multi-employer plans, which covers
a large number of enterprises. The plans are collective and are covered through
premiums paid to Alecta. The Swedish Financial Accounting Standards Council’s
employer defined benefit plan. Presently, it is not possible to obtain sufficient in-
formation from Alecta to assess the plans as defined benefit plans. Consequently,
the pension plans are similary to prior years treated as defined contribution plans.
The contributions made amounts to DKK 5.8 million in 2011 2010: DKK 2.3
million). The collective funding ratio at Alecta amounts to 113% as per December
DKK 5.7 million. DFDS’ share of the multi-employer plan is at a maximum 0.037%
and the liability follows the share of the total plan.
In the below the calculation of the defined benefit plans is specified in accordance
with actuarial methods.
Parent Company Consolidated
DKK ’000 DKK ’000
2010 2011 2011 2010
0 0 Present value of funded obligations 870,747 847,859
0 0 Fair value of plan assets 628,420 623,358
0 0 Funded obligations, net 242,327 224,501
5,124 6,181 Present value of unfunded obligations 23,068 24,307
0 0 34,809 3,278
5,124 6,181 Recognised liabilities for defined benefit obligations 230,586 245,530
7,579 7,770 Provision for jubilee liabilities 15,270 8,078
12,703 13,951 Total actuarial liabilities 245,856 253,608
Movements in the net present value for defined
benefit funded and unfunded obligations
5,196 5,124 Balance at 1 January 872,166 518,004
- - Foreign exchange adjustments 17,888 26,524
336 1,710 Current service costs 11,653 5,599
0 0 Calculated interest rate on obligations 43,747 36,805
0 0 22,652 31,064
408 653 Benefits paid 27,945 23,853
0 0 Employee contributions 1,042 566
0 0 Settlements and curtailments 0 614
0 - Addtion on acquisition of enterprises 0 341,331
5,124 6,181 Funded and unfunded obligations at 31 December 893,815 872,166
Movements in the fair value of the defined benefit plan assets
0 0 Balance at 1 January 623,358 333,920
- - Foreign exchange adjustments 11,088 17,033
0 0 Expected return on plan assets 37,482 28,913
0 0 51,742 15,100
0 0 Employer and employee contributions 28,950 19,993
0 0 Benefits paid 20,716 20,684
0 0 Settlements and curtailments 0 15
0 0 Addtion on acquisition of enterprises 0 259,268
0 0 Plan assets at 31 December 628,420 623,358
DFDS ANNUAL REPORT 201194
Parent Company Consolidated
DKK ’000 DKK ’000
2010 2011 Note 21 Pension and jubilee liabilities (continued) 2011 2010
Movements in unrecognised actuarial gains/(losses)
0 0 Balance at 1 January 3,278 13,969
- - Foreign exchange adjustments 1,426 841
0 0 22,652 31,065
0 0 51,742 15,100
0 0 1,015 4,433
0 0 Unrecognised actuarial gains/(losses) at 31 December 34,809 3,278
Expenses recognised as staff costs in the income statement
336 1,710 Current service costs 11,653 5,599
0 0 1,015 4,433
336 1,710 10,638 1,166
0 0 Payments on settlements and curtailments 0 179
0 0 0 629
336 1,710 Total included in staff costs regarding defined contribution plans 10,638 358
Expenses recognised as financial expenses in the income statement
0 0 Calculated interest rate on funded and unfunded liabilities 43,747 36,805
0 0 Expected return on plan assets 37,482 28,913
0 0 Total included in financial expenses regarding defined contribution plans 6,265 7,892
336 1,710
Total expenses for defined benefit plans recognised in the income
statement 16,903 8,250
Actual return on plan assets in the Group’s plans amounts to DKK 14.3 million
2010: DKK 13.8 million). There are no plan assets in the Parent Company’s plans.
The expected return on plan assets is assessed as a limited spread against the
used discount rate for each plan.
2011: DKK 27.9 million) to the defined benefit plans in 2012. The Parent
for 2011: DKK 0.2 million).
Plan assets consist of the following:
0 0 337,176 348,454
0 0 Bonds 223,260 214,686
0 0 Cash and cash equivalents 30,728 11,913
0 0 Properties 31,669 27,410
0 0 Other assets 5,587 20,895
0 0 628,420 623,358
Defined benefit plans - assumptions:
1
1.9% 1.7% Discount rate 4.7% 5.4%
- - Expected return on plan assets 5.3% 5.9%
0.0% 0.0% Social security rate 0.4% 0.4%
0.0% 0.0% Future salary increase 0.7% 0.8%
0.8% 0.8% Future pension increase 2.5% 2.9%
0.8% 0.8% Inflation 2.7% 3.0%
1
All factors are weighted at the pro rata share of the individual actuarial obligation and the expected return on plan assets is weighted at the pro rata share of the individual plan asset.
95DFDS ANNUAL REPORT 2011
Note 21 Pension and jubilee liabilities (continued)
The Group’s obligations for defined benefit plans for the past five years
consists of the following: 2011 2010 2009 2008 2007
Present value of the defined benefit obligation 893,815 872,166 518,004 390,329 566,401
Fair value of plan assets 628,420 623,358 333,920 254,044 432,368
Deficit in the plan 265,395 248,808 184,084 136,285 134,033
Experience adjustments arising on plan liabilities 15,581 26,488 24,553 11,893 107,569
Experience adjustments arising on plan assets 37,532 18,062 33,937 114,563 1,757
The Parent Company’s obligations for defined benefit plans for the
past five years consists of the following: 2011 2010 2009 2008 2007
Present value of the defined benefit obligation 6,181 5,124 5,196 6,214 6,397
It is not possible to assess historical experience to the Parent Companys defined
benefit obligations.
DFDS’s future obligations in the defined benefit plans can be influenced significantly
by changes in the discount rate, the fair value of the plan assets and the expected
return of these, the inflation, the future salary and pension increase, and demo-
graphic changes, such as the expected lifetime or other changes.
DFDS ANNUAL REPORT 201196
Parent Company Consolidated
DKK ’000 DKK ’000
2010 2011 Note 22 Other provisions 2011 2010
0 0 Balance at 1 January 136,979 6,213
0 0 Addition on acquisition of enterprises 0 161,304
0 25,803 Provisions made during the year 53,258 3,717
0 0 Used during the year 88,869 34,255
0 0 Reversal of unused provisions 7,680 0
0 25,803 Other provisions at 31 December 93,688 136,979
Other provisions are expected to be payable in:
0 0 0 1 year 63,725 86,284
0 25,803 1 5 years 29,963 50,695
0 25,803 Other provisions at 31 December 93,688 136,979
The Group’s provision of DKK 93.7 million 2010: DKK 137.0 million), DKK 44.6
million 2010: DKK 118.9 million) relate to charter contracts and IT, DKK 5.2 mil-
lion 2010: DKK 0.0 million) is redelivery obligation regarding leased operating
equipment, DKK 0.0 million 2010: DKK 6.0 million) relates to costs incurred in
connection with a contamination issue, DKK 25.8 million 2010: DKK 0.0 million)
is calculated net present value of earn out agreement regarding the acquisition
of the route PaldiskiKapellskär and DKK 18.1 million 2010: DKK 12.1 million)
regarding other provisions.
Of the reversal of unused provisions DKK 7.7 million 2010: DKK 0.0 million), DKK
6.0 million is related to expected costs regarding a pollution case.
Parent Company Consolidated
DKK ’000 DKK ’000
2010 2011 Note 23 Interest-bearing liabilities 2011 2010
3,546,931 2,733,842 Mortgage on ships 2,962,279 3,817,676
30,004 23,478 Financial lease liabilities 52,836 69,423
40,831 30,010 Payables to subsidiaries - -
0 0 Bank loans 610 20,798
0 1,982 Other non-current liabilities 35,088 42,280
3,617,766 2,789,312 Total interest bearing non-current liabilities 3,050,813 3,950,177
509,178 407,722 Mortgage on ships 449,907 629,886
3,805 5,208 Financial lease liabilities 16,278 15,218
851,284 2,374,099 Payables to subsidiaries - -
59,635 0 Bank loans 54,699 355,417
0 744 Other non-current liabilities 10,732 11,905
1,423,902 2,787,773 Total interest bearing current liabilities 531,616 1,012,426
5,041,668 5,577,0 85 Total interest bearing liabilities 3,582,429 4,962,603
The fair value of the interest-bearing liabilities in the Group amounts to DKK 3,641
million 2010: DKK 4,963 million). The fair value of the interest-bearing liabilities
in the Parent Company amounts to DKK 5,635 million 2010: DKK 5,042 million).
The fair value of the financial liabilities is determined as the present value of
expected future repayments and interest rates. The Group’s actual borrowing rate
for equivalent terms are used as the discount rate.
DKK 172 million of the interest-bearing liabilities in the Group fall due after five
years 2010: DKK 234 million). DKK 146 million of the interest bearing liabilities
in the Parent Company fall due after five years 2010: DKK 117 million). No
exceptional conditions in connection with borrowing are made. The loan agre-
ements can be settled at fair value plus a small surcharge. Reference is made to
note 28 for financial risks etc.
2010 2011 Allocation of currency, principal nominal amount 2011 2010
3,283,348 1,588,114 DKK 1,224,107 3,228,768
1,314,624 2,665,710 EUR 1,146,724 1,177,640
362,675 292,185 SEK 270,449 341,558
44,924 42,920 NOK 89,875 108,292
28,706 191,554 GBP 54,699 104,426
0 796,575 USD 796,575 1,919
7,391 27 LTL 0 0
5,041,668 5,577,0 85 Total interest bearing liabilities 3,582,429 4,962,603
97DFDS ANNUAL REPORT 2011
Parent Company Consolidated
DKK ’000 DKK ’000
2010 2011 Note 24 Other payables 2011 2010
40,647 13,772 Payables to subsidiaries - -
0 0 Payables to associates 0 567
33,549 26,261 Accrued interests 26,261 36,248
5,456 5,651 Public authorities 71,903 65,694
107,621 117,756 Holiday pay obligations, etc, 173,489 180,528
121,582 103,648 Interest swaps, forward transactions and bunker hedges 103,648 120,908
252,455 286,951 Other payables 741,841 850,213
561,310 554,039 Total other payables 1,117,142 1,254,158
Parent Company Consolidated
DKK ’000 DKK ’000
2010 2011 Note 25 Deferred income 2011 2010
40,784 57,664 Prepayments from customers 99,012 105,455
0 0 Other deferred income 1,859 2,542
40,784 57,66 4 Total other payables 100,871 107,997
Parent Company Consolidated
DKK ’000 DKK ’000
2010 2011 Note 26 Corporation tax 2011 2010
0 0 Balance at 1 January 25,626 18,077
- - Foreign exchange adjustment 116 1,360
0 19,371
Opening adjustment regarding classification of due jointly taxation
23,359 0
- - Additions on aquisition of enterprises / sale of enterprises 1,424 5,430
0 12,475 Tax for the year recognised in the income statement 28,013 38,916
353 18,997 Adjustment, prior years recognised in the income statement 16,752 8,640
353 2,677 Corporation taxes payments for the year 29,138 53,791
- - Transferred to other interest-bearing liabilities 0 24,274
0 15,526 Corporation tax at 31 December, net 29,800 25,626
Corporation tax recognised in the balance sheet
0 0 9,783 12,049
0 15,526 39,583 37,675
0 15,526 Corporation tax at 31 December, net 29,800 25,626
2011:
Further information regarding adjustment to tax previous years see note 9.
2010:
The increase in corporation taxes paid in the year is mainly related to activities
for LogisticsDivision in connection to the acquired NorfolklineGroup.
DFDS ANNUAL REPORT 201198
Parent Company Consolidated
DKK ’000 DKK ’000
2010 2011 Note 27 Information on financial instruments 2011 2010
Carrying amount per category of financial instruments
2,406 3,518 Financial assets used for hedge 3,518 2,406
263 68,329 68,329 263
5,653,728 6,165,289 2,636,258 3,030,974
413,425 55,184 Financial assets available for sale 56,448 414,692
69,803 63,491 Financial liabilities used for hedge 63,491 69,803
48,992 40,157 40,157 51,779
5,446,391 5,995,481 Financial liabilities measured at amortised cost 4,833,633 6,367,371
504,636 193,191 Total 2,172,728 3,040,618
Fair value hierarchy of financial instruments
The table below ranks financial instruments carried at fair value by valuation
method. The different levels have been defined as follows:
• Level 1: Quoted prices in an active market for identical type of instrument,
• Level 2: Quoted prices in an active market for similar assets or liabilities or other
valuation methods where all material input is based on observable market data.
• Level 3: Valuation methods where possible material input is not based on
observable market data.
DKK ’000 Parent Company Consolidated
2011 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3
Financial assets used for hedge 0 3,518 0 0 3,518 0
0 68,329 0 0 68,329 0
Financial assets available for sale 36,671 0 18,513 36,671 19,777
Financial liabilities used for hedge 0 63,491 0 0 63,491 0
0 40,157 0 0 40,157 0
Total 36,671 31,801 18,513 36,671 31,801 19,777
2010 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3
Financial assets used for hedge 0 2,406 0 0 2,406 0
0 263 0 0 263 0
Financial assets available for sale 394,912 0 18,513 394,912 0 19,780
Financial liabilities used for hedge 0 69,803 0 0 69,803 0
0 48,992 0 0 51,779 0
394,912 116,126 18,513 394,912 118,913 19,780
Financial assets and liabilities used for hedge are all measured at level 2. Refe-
rence is made to note 28 for description of the valuation method. Financial assets
available for sale measured at level 1 are listed shares and is measured at the
quoted prices.
Financial assets available for sale measured at level 3 consist of other shares
and equity investments as well as other investments. These are some minor
unlisted enterprises and holdings. They are measured at cost reduced by write-
downs, if any.
99DFDS ANNUAL REPORT 2011
Note 28 Financial and operational risks
DFDS’ risk management policy
The most important financial risk factors for DFDS are oil, interest rate, currency,
investments and liquidity. It is the policy of the Group not to enter into active spe-
culation in financial risks. The intention of the financial risk management of the
Group is only to manage the financial risks attached to operational and financing
activities.
The Group uses forward exchange contracts and currency options to hedge foreca-
sted transactions in foreign currencies. Furthermore, the Group uses interest rate
swaps to hedge the forecasted transactions related to interest transactions as well
as forward oil contracts to hedge the forecasted oil expenses.
The Board of Directors annually approves the financial risk management policy
and strategy. Please refer to the section Risk factors in the Management report.
Financial risks
Currency risks
Financial currency risks arise from translation of net investments in foreign
-
-
nuously to ensure compliance with the financial risk management policy.
DFDS actively aim to reduce currency exposure by matching the currency positi-
ons, obtaining multi currency loans and by directing all currency balance positi-
Transaction risks
The Group’s and the Parent Company’s most substantial currency balance posi-
tion is in SEK. A strengthening of SEK, GBP and NOK, as indicated below, against
the DKK at 31 December would have increased/decreased equity and profit or
loss by the amounts presented below. This analysis is based on foreign currency
exchange rate variances that the Group considered to be reasonably possible at
the end of the reporting period. The analysis assumes that all other variables,
in particular interest rates, remain constant. As all subsidiaries are operating
in their own functional currency no effect will occur on the equity. Hedge is
only done in the Parent Company. The Parent Company is furthermore exposed
against fluctuations in EUR vs. DKK. Due to the recent turbulence in the EURO
zone this risk is regularly monitored.
Parent Company Consolidated
DKK ’000 DKK ’000
2010 2011 Hypothetical effect of reasonable possible change against DKK 2011 2010
0.0 0.0 SEK, equity effect, 10% strengthening 0.0 0.0
14.7 13.3 SEK, profit or loss effect, 10% strengthening 13.3 14.7
0.0 0.0 GBP, equity effect, 10% strengthening 0.0 0.0
1.1 2.6 GBP, profit or loss effect, 10% strengthening 2.6 1.1
0.0 0.0 NOK, equity effect, 10% strengthening 0.0 0.0
13.4 10.6 NOK, profit or loss effect, 10% strengthening 10.6 13.4
In 2011 future cash flows have been hedged which have effected the equity by
DKK 2.5 million. A 10% strengthening in USD would have effected the equtily
positively by DKK 5 million.
The sensitivity analysis on currency risk has been prepared under the assumpti-
ons that the effect is calculated on the balance sheet items at the balance sheet
date; the included hedges are 100% effective and based on the actual market
situation and expectations to the development in the currencies.
Translation risks
Translation risks relate to translation of profit and loss and equity of foreign
group enterprises into DKK. These risks are to some extent covered by loans in
the respective foreign currencies. Derivatives are to some extent used to hedge
translation risks.
The Group’s most substantial translation risks are GBP, SEK and NOK. A decrease
in these currencies of 10% compared to the level at year-end 2011 would in
respect of GBP have decreased the result by DKK 84.4 million 2010: DKK 139.9
million), in respect of SEK by DKK 50.8 million 2010: DKK 66.7 million) and in
respect of NOK by DKK 43.1 million 2010: DKK 40.2 million).
Interest rate risks
DFDS is primarily exposed to interest rate risks through the loan portfolio. The
intention of the interest rate risk management is to limit the negative effects of
interest rate fluctuation on the earnings. It is DFDS’ strategy that 4070% of the
net loan portfolio must be fixed-rate loans when taking contracted interest rate
swaps and long term charter agreements into consideration.
amounts to DKK 2,685 million at year-end 2011 2010: DKK 4,192 million), of
which the fixed-rate debt amounts to DKK 919 million at year-end 2011 2010: DKK
1,113 million). Thereby the fixed interest-bearing debt share is 34% at year-end
2011 2010: 27% including the effect of interest rate swaps etc. If the long term
charter agreements are included the fixed interest-bearing debt increase to 58%.
An increase in the interest rate of 1%-point compared to the actual interest rate in
2011 would, other things being equal, have increased net interest payments about
DKK 25 million for the Group in 2011 2010: DKK 29 million). The effect would
have been DKK 24 million 2010: DKK 33 million) for the Parent Company. A
decrease in the interest rate would have had a similar positive effect.
The total interest-bearing debt except bank overdrafts had an average time to
maturity of 4.2 years 2010: 3.4 years), and consists primarily of syndicated
floating rate bank loans with security in the ships. The financing is obtained at
the market interest rate with addition of a marginal rate reflecting DFDS’ finan-
cial strength. As part of the financial strategies in DFDS interest rate swaps with
a principal amount totalling DKK 876 million 2010: DKK 1,023 million) have
been entered into in order to change part of the floating-rate bank loans to fixed-
rate bank loans. The interest duration of the Group’s debt portfolio is 1.2 2010:
0.7. As from 2011 charter liabilities have been included.
An increase in the interest rate of 1%-point compared to the actual interest rate
at balance sheet date would, other things being equal, have had a hypothetical
positive effect on the equity reserve for hedging by DKK 16 million 2010: DKK
26 million). This is due to the interest rate swaps entered to hedge variable inte-
rest rate loans. A decrease in the interest rate would have had a similar negative
effect. The sensitivity analysis is based on the assumption that the effectiveness
of the included hedges will stay unaffected by the change in the interest rate.
DFDS ANNUAL REPORT 2011100
Note 28 Financial and operational risks (continued)
Oil risks
Financial oil risks in the DFDS Group are caused by oil swaps used to hedge
bunker costs.
An increase in the bunker price of 10%-point compared to the actual bunker price
at balance sheet date would, other things being equal, have had a hypothetical
positive effect on the equity reserve for hedging of DKK 6.0 million 2010: DKK
2.2 million). This is due to the oil contracts for future delivery entered to hedge
the cost for bunkers. A decrease in the bunker price would have had a similar
negative effect.
The sensitivity analysis on oil contracts has been prepared under the assumpti-
ons that the effect is calculated on the oil contracts entered at the balance sheet
date; the hedges are 100% effective and based on the actual market situation and
expectations to the development in the bunker prices.
Liquidity risks
DFDS aims to maintain a minimum cash resource of DKK 400 million, which is
regarded sufficient for the current operation. The cash resources are managed
at Group level, and 12-months rolling cash forecasts are prepared on a monthly
basis. The cash resources at 31 December 2011 is DKK 1,362 million 2010: DKK
1,219 million). The central treasury department manages excess liquidity and cash
resources. Cash at bank and in hand are primarily placed in the short money mar-
ket as well as short term bonds, and due to banks are drawn mostly on overdraft
facilities.
The following are the contractual maturities of financial liabilities, including
estimated interest payments and excluding the impact of netting agreements:
Consolidated
DKK ’000
2011 01 year 13 years 35 years
More than
5 year
Non-derivative financial assets
Liquidity in banks 897,364 0 0 0
Bonds 31,968 0 0 0
Non-derivative financial liabilities
Mortgages on ships 565,194 1,892,067 1,135,853 139,894
Bank loans 21,577 0 0 610
Bank overdrafts 33,339 0 0 0
Other interest-bearing loans 10,591 10,598 447 24,977
Financial lease liabilities 18,542 43,756 12,660 0
Trade payables 483,102 0 0 0
Derivative financial assets
Forward exchange contracts used for hedging 70,479 0 0 0
Oil contracts 1,368 0 0 0
Derivative financial liabilities
Interest swaps 27,003 36,915 1,768 0
Forward exchange contracts used for hedging 40,156 0 0 0
198,325 1,983,336 1,150,728 165,481
2010 01 year 13 years 35 years
More than
5 year
Non-derivative financial assets
Liquidity in banks 696,007 0 0 0
Bonds 382,054 - - -
Non-derivative financial liabilities
Mortgages on ships 789,218 2,136,507 1,852,480 212,988
Bank loans 60,850 21,098 0 0
Bank overdrafts 295,782 0 0 0
Other interest-bearing loans 11,305 18,033 470 24,732
Financial lease liabilities 16,975 37,685 39,829 0
Trade payables 518,414 0 0 0
Derivative financial assets
Forward exchange contracts used for hedging 263 0 0 0
Oil contracts 2,406 0 0 0
Derivative financial liabilities
Interest swaps 32,788 40,858 7,256 0
Forward exchange contracts used for hedging 51,779 0 0 0
696,381 2,254,181 1,900,035 237,720
101DFDS ANNUAL REPORT 2011
Note 28 Financial and operational risks (continued)
Parent Company
DKK ’000
2011 01 year 13 years 35 years
More than
5 year
Non-derivative financial assets
Liquidity in banks 584,280 0 0 0
Bonds 31,968 0 0 0
Non-derivative financial liabilities
Mortgages on ships 515,571 1,763,129 1,024,692 139,894
Bank loans 744 1.543 438 0
Financial lease liabilities 6,339 12,275 12,660 0
Trade payables 91,412 0 0 0
Derivative financial assets
Forward exchange contracts used for hedging 70,479 0 0 0
Oil contracts 1,368 0 0 0
Derivative financial liabilities
Interest swaps 27,003 36,915 1,768 0
Forward exchange contracts used for hedging 40,156 0 0 0
6.870 1,813.862 1,039,558 139,894
2010 01 year 13 years 35 years
More than
5 year
Non-derivative financial assets
Liquidity in banks 242,045 0 0 0
Bonds 382,054 - - -
Non-derivative financial liabilities
Mortgages on ships 659,837 2,037,097 1,747,815 120,073
Bank loans 60,264 0 0 0
Financial lease liabilities 4,783 13,300 20,492 0
Trade payables 75,286 0 0 0
Derivative financial assets
Forward exchange contracts used for hedging 263 0 0 0
Oil contracts 2,406 0 0 0
Derivative financial liabilities
Interest swaps 30,953 39,519 7,256 0
Forward exchange contracts used for hedging 51,779 0 0 0
256,134 2,089,916 1,775,563 120,073
Payables to subsidiaries is disclosed in note 23.
DFDS ANNUAL REPORT 2011102
Note 28 Financial and operational risks (continued)
Assumptions for the maturity table:
The maturity analysis is based on undiscounted cash flows including estimated
interest payments. Interest payments are estimated based on existing market
conditions.
The undiscounted cash flows related to derivative financial liabilities are pre-
sented at gross amounts unless the parties according to the contract have a right
or obligation to settle at net amount.
Credit risks
DFDS’s primary financial assets are trade receivables, other receivables, cash at
bank and in hand and derivative financial instruments.
The credit risk is primarily attributable to trade receivables and other receivables.
The amounts in the balance sheet are stated net of provision for bad debts, which
has been estimated based on a specific assessment of the present economic
situation for the specific customer.
DFDS’s risks regarding trade receivables are not considered unusual and no material
risk is attached to a single customer or cooperative partner. According to the Group’s
policy of undertaking credit risks, current credit ratings of all major customers and
other cooperative partners are performed. A few counterparties have provided gua-
rantees for payments and delivery of ships for the benefit of DFDS. These guaran-
tees constitute totally DKK 548 million in 2011 2010: DKK 185 million). Besides
the provisions mentioned in Note 15 no other provisions on receivables have been
done and no insurance cover has been taken out on any of the receivables.
Internal credit ratings are prepared on a systematical and current basis for all
financial counterparties. The internal credit rating is based on ratings from
international credit rating companies. On the basis of the internal credit rating the
Board of Directors have approved general limits for deposits etc. with financial
counterparties. Futhermore, DFDS has a legal right to set off receivables and
liabilities with financial counterparties and consequently, DFDS has no credit risks
associated with financial counterparties as of 31 December 2011 or 2010.
Capital management
The Group continuously assesses the need for adjustment of the capital structure
to balance the requirement of increased return on invested capital and the
flexibility in order to realise the strategic goals against the increased uncertainty
connected with loan capital. Adjustment of the capital structure is continuously
assessed based on the economical situation, the net debt in proportion to the
At year end 2011 the equity’s share of the total liabilities for the Group was 54%
2010: 46%. Based on the present uncertain market conditions, the aim is to
have an equity ratio of 40% as a minimum.
The Group’s cost of capital WACC was calculated at 6.5% 2010: 6.5% and the
return on invested capital ROIC was 8.6% 2010: 7.2%.
The Group’s dividend policy is to distribute around 30% of the DFDS shareholders’
share of the Group’s profits, however, taking into consideration any significant
investments etc. Proposed dividends for 2011 amount to DKK 14,00 per share
equal to 28% of the profits 2010: DKK 8,00 per share or 23% of the profits).
Consolidated
DKK ’000
2011
Expected timing of recycling to profit and loss of gains/
losses recognised in the equity
Expected future
transactions Hedge instrument
Time to
maturity
Notional princi-
pal amount 01 year 13 years 35 years
More than
5 years Fair value
Interest Interest swaps 05 years 876,427 26,084 35,145 1,592 0 63,492
Goods purchased
Oil contracts for forward
06 months
18,000 1,368 0 0 0 1,368
Goods purchased and
sale
Forward exchange
contracts 06 months 49,612 2,150 0 0 0 2,150
26,866 35,145 1,592 0 64,274
Consolidated
DKK ’000
2010
Expected timing of recycling to profit and loss of gains/
losses recognised in the equity
Expected future
transactions Hedge instrument
Time to
maturity
Notional princi-
pal amount 01 year 13 years 35 years
More than
5 years Fair value
Interest Interest swaps 05 years 1,023,082 18,182 37,822 4,214 0 69,803
Goods purchased
Oil contracts for forward
06 months 8,000 2,406 0 0 0 2,406
15,776 37,822 4,214 0 67,397
For 2011 a cost of DKK 0.7 million 2010: cost DKK 1.9 million) is recognised in
the income statement due to inefficiency.
The fair values on interest swaps have been calculated by discounting the expected
future interest payments. The discount rate for each interest payment is estimated
on the basis of a swap interest curve, which is calculated based on a wide spread of
market interest rates.
The fair values on forward contracts are based on interest curve calculations in
DFDS Treasury system. Calculations are based on a spread of market interest rates
in the various currencies. Calculation on Oil contracts are based on Morgan Stanley’s
quoted forward curve.
103DFDS ANNUAL REPORT 2011
Note 28 Financial and operational risks (continued)
Parent Company
DKK ’000
2011
Expected timing of recycling to profit and loss of gains/
losses recognised in the equity
Expected future
transactions Hedge instrument
Time to
maturity
Notional princi-
pal amount 01 year 13 years 35 years
More than
5 years Fair value
Interest Interest swaps 05 years 876,427 26,084 35,145 1,592 0 63,492
Goods purchased
Oil contracts for forward
06 months
18,000 1,368 0 0 0 1,368
Goods purchased and
sale
Forward exchange
contracts 06 months 49,612 2,150 0 0 0 2,150
26,866 35,145 1,592 0 64,274
Parent Company
DKK ’000
2010
Expected timing of recycling to profit and loss of gains/
losses recognised in the equity
Expected future
transactions Hedge instrument
Time to
maturity
Notional princi-
pal amount 01 year 13 years 35 years
More than
5 years Fair value
Interest Interest swaps 05 years 944,582 17,787 37,493 4,214 0 67,016
Goods purchased
Oil contracts for forward
06 months 8,000 2,406 0 0 0 2,406
15,381 37,493 4,214 0 64,610
For 2011 a cost of DKK 0.7 million 2010: cost DKK 1.9 million) is recognised in
the income statement due to inefficiency in hedging of expected future cash flows.
The fair values on interest swaps have been calculated by discounting the
expected future interest payments. The discount rate for each interest payment is
estimated basis a swap interest curve, which is calculated based on a wide spread
of market interest rates. The fair values on forward contracts are based on interest
curve calculations in DFDS Treasury system. Calculations are based on a spread
of market interest rates in the various currencies. Calculation on Oil contracts are
based on Morgan Stanley’s quoted forward curve.
Operational risks
Operational risks arise from the cash flow transactions. The size of the transacti-
ons made through the financial year is affected by the change in different market
rates such as interest and foreign exchange rates. Currency risks are monitored
continuously to ensure compliance with the financial risk management policy.
Currency cash flow risks
Approximately 84% of DFDS’ revenues are invoiced in unhedged foreign cur-
rencies 2010: 85% with the most substantial net income currencies being
SEK, GBP and NOK. USD was the most substantial net expense currency. EUR is
considered as minor risk bearing due to the currency peg. However, due to the
recent turbulence in the EURO zone the position is regularly monitored. For other
entities than the Parent Company the currencies used are primarily their functio-
nal currency. The table below shows the unhedged currency cash flow exposure.
Parent Company Consolidated
DKK ’000 DKK ’000
2010 2011 Profit or loss effect of reasonable possible change against DKK 2011 2010
34.7 37.0 SEK, profit or loss effect, 10% weakening 37.6 36.3
9.9 11.1 NOK, profit or loss effect, 10% weakening 10.9 9.9
2.2 7.6 GBP, profit or loss effect, 10% weakening 12.0 11.4
43.8 48.4 USD, profit or loss effect, 10% strengthening 63.8 59.6
Oil risks
The cost of bunkers constitutes a specific and significant operational risk partly
due to large fluctuations in bunker prices and partly due to the total annual
bunker costs of approximately DKK 1,742 million or 15% of the Group’s turnover
2010: DKK 1,343 million or 14% of the Group’s turnover).
In the freight sector, bunker costs are primarily hedged by price-adjustment clau-
ses BAF in freight contracts. In the passenger sector, fluctuations in the cost of
bunkers are reflected in the ticket price to the extent possible. In addition, hedging
transactions, primarily oil swaps, are used to manage risk of the remaining bunker
costs.
The bunker consumption in 2011 was approximately 484,000 tons 2010:
483,000 tons). An increase of 10% in the price of bunker compared to the level
at year-end 2011 would have meant increased costs for the Group of DKK 25.6
million 2010: DKK 30.8 million), and increased cost for the Parent Company of
DKK 23.8 million 2010: DKK 24.9 million).
DFDS ANNUAL REPORT 2011104
Parent Company Consolidated
DKK ’000 DKK ’000
2010 2011 Note 29 Non-liquid operating items 2011 2010
260 27,052 Change in provisions 51,043 386
172 143 Change in write-down of inventories for the year 279 508
336 1,710 Defined benefit plans in the income statement 10,638 358
838 2,403 Fair value of the share options in the income statement 2,403 838
1,086 31,022 Non-liquid operating items 38,281 2,090
Parent Company Consolidated
DKK ’000 DKK ’000
2010 2011 Note 30 Change in working capital 2011 2010
15,082 27,217 Change in inventories 20,536 14,313
174,029 113,467 Change in receivables 221,719 59,054
70,035 29,250 Change in current liabilities 99,254 4,911
228,982 115,500 Change in working capital 101,929 68,456
Parent Company Consolidated
DKK ’000 DKK ’000
2010 2011 Note 31 Change in other loans, net 2011 2010
89,360 1,263 Installments and repayments of loans 12,353 1,350,586
37,927 3,988 Raising of loans 3,988 61,768
51,433 2,725 Change in other loans, net 8,365 1,288,818
105DFDS ANNUAL REPORT 2011
Note 32 Acquisition and sale of enterprises and activities
Acquisition of activities 2011
On 14 September 2011 DFDS acquired the freight- and passenger route Paldiski
Scandinavian Lines, which is incorporated from this point of time. The route has
been acquired 100% by DFDS AS, while there has been established an agency
company, in which the seller has a nominal ownership share of 33%, but the
right to 49% of the revenue. The route extends DFDS’ route network in the Baltic
Sea to the Stockholm region, and to the east the route offers access to Tallinn
and Estonia, and not least to Russia and the CIS countries.
DFDS paid DKK 7.5 million to acquire the route and the agency. In addition to
this, an earn-put agreement has been entered with the seller, accordingly DFDS
must pay 50% of the routes accumulated result for the comming 5,5 years,
however only the part which exceeds the initial payment of DKK 7.5 million
Acquisition of companies and activities 2010
On 12 July 2010, DFDS acquired all of the shares of Norfolk Holdings B.V., the
parent company in the Norfolkline Group. Prior to the acquisition, Norfolkline
was a leading shipping and logistics company with a strong marine-based route
network in the North Sea, English Channel and Irish Sea, combined with substan-
tial logistics activities in Northern Europe. Norfolkline’s activities were divided
between the business areas Ferry and Logistics, each of which had its own sepa-
rate management and organisation. The Ferry business area encompassed the
transport of freight units, passengers and passenger vehicles in ro-ro and ro-pax
vessels on the northern European routes. The Logistics area consisted primarily
of door-to-door delivery of full and partial trailer loads in Europe, focusing on the
UK, Ireland, Germany, the Benelux countries, Italy and Scandinavia. The Logistics
area made use of the Ferry area for marine tranport to an appropriate extent. To
support its activities, the Ferry area had a port terminal in Vlaardingen near Rot-
terdam in the Netherlands, which is centrally located in relation to the transport
of goods to and from the Netherlands and Germany. The Group also operated
port terminals in Dunkirk, Liverpool, Dublin and Belfast.
Following the acquisition, the Ferry area has been incorporated into the DFDS
Group’s Shipping segment, while the Logistics activities have been incorporated into
the DFDS Group’s Logistics segment.
2010
On the basic of the expectations to the earnings the discounted cashflow of the
agreed earn-out agreement, is settled to DKK 25.8 million. The total purchase
price are preliminary settled to DKK 33.3 million, which is recognised as goodwill.
The recognised goodwill is tax deductible but is included in the tonnage tax
activities, therefore no tax deductions will be generated in the taxable income. No
assets or liabilities has been taken over in connection with the acquisition.
DKK 23.1 million, of the total of DKK 11,624.6 million in revenues for the DFDS
Group in 2011, relates to the acquired freight- and passenger route. DKK 1.3 mil-
lion, of the total of DKK 742.1 million in pre-tax profit for the DFDS Group in 2011,
relates to the acquisition.
If the acquisition had occurred at the beginning of the financial year, total
revenues for the year would amount to approximately DKK 11,729.5 million, and
pre-tax profit to approximately DKK 738.1 million.
By combining two complementary companies, the acquisition has created
Northern Europe’s leading sea-based transport network. The acquisition of Nor-
folkline extends the DFDS ro-ro route network by two new markets, the English
Channel and the Irish Sea, while in the North Sea it will be possible to combine
the activities. The possibilities of securing much greater volume across the entire
network have also been enhanced.
shares in DFDS after the implementation of a capital increase on 12 July 2010,
implementation of the capital increase on 12 July 2010.
The purchase price and the fair value of the acquired assets and liabilities on the
acquisition date may be calculated as follows:
Fair value, acquisition date DKK million
Non-current intangible assets 8
Ships 1,961
Land and buildings 116
Terminals 377
Other non-current tangible assets 83
Non-current tangible assets 2,545
Capital shares in associated companies 28
Total non-current assets 2,573
Interest-bearing debt 747
Pensions 209
Other provisions 47
Negative market value of charter agreement etc. 1,003
Total non-current liabilities 3,576
Interest-bearing debt 997
Suppliers of goods and services 84
Negative market value of charter agreement etc. 11
Other current liabilities 82
Total current liabilities 1,174
DFDS ANNUAL REPORT 2011106
Note 32 Acquisition and sale of enterprises and activities (continued)
2010
Fair value, acquisition date DKK million.
Interest-bearing debt 223
Suppliers of goods and services 258
Negative market value of charter agreement etc. 70
Other current liabilities 496
Total current liabilities 1,047
Forpligtelser i alt 2,221
Fair value of acquired net assets 1,355
Goodwill 109
Total Purchase price 1,464
Acquired cash funds 47
Liquidity, net 1,417
Elements of the total cost price may be itemised as follows:
DKK million
Cash Payment 1,431
33
Total 1,464
-
senting a fair value of DKK 33 million, calculated on the basis of the market price
of the shares on the exchange day DKK 372.92.
The acquired assets, liabilities and contingent liabilities have been included at
their fair value on the acquisition date, in accordance with the provisions of IFRS
3. Any adjustments to the fair values will be recognised within 12 months
of the acquisition.
The goodwill associated with the takeover of the Norfolkline Group amounts to
DKK 109 million, which represents the value of the synergies in the acquired
businesses, primarily through the amalgamation of IT systems and sales channels,
better utilisation use of ships and reduced costs for corporate functions. The good-
will has been allocated to the North Sea business area. The recognised goodwill is
not tax-deductible.
The fair value of the acquired vessels on the acquisition date has been calculated
on the basis of evaluations obtained from independent brokers, minus the esti-
mated sales costs. The evaluations obtained have been compared with and asses-
sed in relation to other relatively comparable sales in the market around the time
of the acquisition, as well as current charter rates for comparable ships around the
time of the acquisition and comparable ships in the DFDS fleet.
Trade receivables have been recognised at the acquisition date at a market value
of DKK 747 million. Gross receivables at market value before writing-down were
DKK 782 million on the acquisition date, of which DKK 31 million had already
been written down before the acquisition date.
The purchase price allocation identifies certain charter agreements, etc., in which
the agreed payments are estimated to have exceeded the market price on the
acquisition date, making the agreements unfavourable. All of the agreements
will expire in H2 2012. It is estimated that these agreements, etc., had a total
discounted value on the acquisition date of DKK 152m, which has been recogni-
sed as long and short-term prepayments.
The Group incurred transaction and integration costs relating to the acquisition
totalling DKK 60 million, of which DKK 35 million has been recognised in 2010
under “Special items”, while DKK 25 million was recognised in 2009. Transac-
tion and integration costs for legal advisers, accountants, consultants and other
specialists.
DKK 2,516 million of the total of DKK 9,867 in revenues for the DFDS Group in
2010 relates to the acquired Norfolkline Group. DKK 197 million of the total
of DKK 547 million in pre-tax profit for the DFDS Group in 2010 relates to the
acquired Norfolkline Group.
If the acquisition had occurred at the beginning of the financial year, total
revenues for the year would amount to approximately DKK 12,097 million, and
pre-tax profit to approximately DKK 595 million.
107DFDS ANNUAL REPORT 2011
Note 32 Acquisition and sale of enterprises and activities (continued)
Sale of companies and activities 2011
On 14 March 2011, The Group sold DFDS Canal Tours AS. The sale resulted in an
accounting gain of DKK 82.7 million. The company was, until the date of the sale,
part of the Shipping segment.
On 22 June 2011, The Group sold the Port terminal DFDS Seaways Maasvlakte
B.V., Rotterdam. The sale resulted in an accounting gain of DKK 47.8 million.
Until the date of the sale, the companys non-current assets was classified as as-
sets held for sale. The company was previous part of the Shipping segment.
DKK million
Carrying amount
at date of sale
Tangible assets 14
Intangible assets 155
Other current assets 16
Current liabilities 82
Carrying amount of net assets 103
Transaction-related costs 6
Gain on sale of the activity 130
Actual cash payment 239
Including not paid sales price 6
Net liquidity effect 233
The gain is classified as “Special items” in the income statement, reference is made to note 7.
Sale of companies and activities 2010
On 1 December 2010, The Group sold two routes in the northern part of the Irish
Sea to Stena Line. The sold activities consisted of the BelfastBirkenhead and Bel-
Stena Line also took over operation of the port terminals in Belfast, Birkenhead
and Heysham. The activity and the two ships were part of the Shipping-segmentet.
Stena Line acquires a company that owns and operates the routes and the two
ships. The total sales price on a debt-free basis, excluding working capital,
amount to DKK 354 million EUR 47.5, and resulted in an accounting gain of
DKK 200 million in 2010.
DKK million
Regnskabsmæssig værdi
på salgstidspunktet
Tangible assets 145
Inventories 8
Other current assets 9
Interest-bearing debt, current 65
Current liabilities 5
Carrying amount of net assets 92
Transaction-related costs 9
Gain on sale of the activity 200
Actual cash payment 301
Including not paid sales price 3
Net liquidity effect 298
The gain is classified as “Special items” in the income statement, reference is made to note 7.
DFDS ANNUAL REPORT 2011108
Parent Company Consolidated
DKK ’000 DKK ’000
2010 2011 Note 33 Acquisition of non-controlling interests 2011 2010
606 910 AB DFDS LISCO 910 606
606 910 Cash flow from acquisition of non-controlling interests 910 606
Acquisition of shares in AB DFDS Lisco during 2011 amounts to DKK 0.9 million
2010: DKK 0.6 million), equivalent to an ownership of 0.2% 2010: 0.2%, where
after the company is owned 96.4% 2010: 96.2.
Negative goodwill of DKK 2.4 million 2010: DKK 1.1 million) is recognised
directly in the statement of changes in equity in the line ’disposal of non-control-
ling interests’ in the item ’retained earnings’.
Parent Company Consolidated
DKK ’000 DKK ’000
2010 2011 Note 34 Assets held for sale 2011 2010
0 0 Non-current assets 25,276 159,970
0 0 Total assets held for sale 25,276 159,970
2011
On the 22 June the terminal activities in Maasvlakte has been disposed of in con-
nection with a sale of the share capital in DFDS Seaways Maasvlakte B.V. The sale
resulted in an accounting gain of DKK 47.8 million which is recognised in Special
Items, referring to note 7.
There are discussions with interested buyers of the prior Norfolkline domicile in
Scheveningen which is expected to be sold during 2012. The domicile is therefore
still recognised as an asset held for sale and the carried amount at 31 December
2011 has been impaired by DKK 2.8 million to DKK 25.3 million.
2010
Assets regarding the terminal in Maasvlakte and the former Norfolkline head of-
fice in Scheveningen are put up for sale in December 2010 and are expected
to be sold during 2011.
Note 35 Guarantees and contingent liabilities
Guarantees amount to DKK 377.9 million 2010: DKK 114.0 million) for the
Group. Guarantees amount to DKK 631.5 million 2010: DKK 461.1 million) for
the Parent Company. In addition, the Parent Company has provided an unlimited
guarantee for a subsidiary to cover any obligations under a Payment Service
Agreement for creditcard payments.
Group companies have provided bank guarantees for the benefit of the Parent
Company in the amount of DKK 0.0 million 2010: DKK 900.9 million).
The Group and the Parent Company are in 2010 as well as in 2011 part of various
legal disputes. The outcome of these disputes is not considered likely to influence
the Group or the Parent Company significantly, besides what is already recognised
in the balance sheet.
In terms of the contaminated land in one of the Group companies discovered in
2005, there is still no obligation to clean the land. If such obligation should occur,
the Group has the possibility to get the cost adjusted in the original purchase
price for the company.
The seller of the land has made a deposit of DKK 24.0 million on a bank account
to cover this.
109DFDS ANNUAL REPORT 2011
Parent Company Consolidated
DKK ’000 DKK ’000
2010 2011 Note 36 Contractual commitments 2011 2010
363,775 362,789 Contracting of ships and rebuildings, term 01 year 362,893 363,775
363,775 0 Contracting of newbuildings and rebuildings, term 15 years 0 363,775
727,550 362,789 Total contracting obligations 362,893 727,550
Contractual commitments in 2010 and 2011 relate to the purchase of two new ro-ro ships
for delivery in 2012, which is part of the extended contract entered into in November
2010 with the Danish and German defense.
2010 2011 Operating lease commitments (lessee) 2011 2010
Minimum lease payments
18,831 18,561 01 year 34,559 32,742
77,321 74,245 15 years 107,943 88,287
77,321 55,684 After 5 years 55,684 108,816
173,473 148,490 Total buildings 198,186 229,845
12,753 12,992 01 year 89,697 103,786
53,175 53,955 15 years 352,474 394,447
127,412 113,633 After 5 years 1,186,186 1,367,696
193,340 180,580 Total terminals 1,628,357 1,865,929
675,510 888,413 01 year 345,420 477,251
812,251 1,359,232 15 years 881,074 883,693
529,110 345,606 After 5 years 345,606 529,110
2,016,872 2,593,251 Total ships 1,572,100 1,890,054
55,169 40,967 01 year 61,697 93,952
51,655 32,633 15 years 103,588 102,900
0 0 After 5 years 4,239 0
106,824 73,600 Total equipment etc. 169,524 196,852
Total minimum lease payments are expected to fall due as follows:
762,263 960,933 01 year 531,373 707,731
994,402 1,520,065 15 years 1,445,079 1,469,327
733,843 514,923 After 5 years 1,591,715 2,005,622
2,490,508 2,995,921 Total minimum lease payments 3,568,167 4,182,680
The specified payments are not discounted.
Operating lease- and rent costs recognised in the income statement amount for
the Group to DKK 923.7 million for 2011 2010: DKK 759.2 million) and for the
Parent Company to DKK 1,173.8 million for 2011 2010: DKK 817.3 million).
Operating lease contracts on ships are typical made with lease terms between
one and nine years. The main part of the lease contracts on ships includes an
option to extend the lease term. Lease contracts on other assets are normal
lease contracts including a minimum lease term after which the lease term
can be terminated by giving 112 months notice.
DFDS has not entered any substantial agreements, which will be effected,
changed nor expired, if the control over the company is changed as a conse-
quence of an effected takeover bid.
DFDS has a purchase option on the chartered ship REGINA SEAWAYS. The
contract has been entered in 2011.
DFDS ANNUAL REPORT 2011110
Note 36 Contractual commitments (continued)
Parent Company Consolidated
DKK ’000 DKK ’000
2010 2011 Operating lease commitments (lessor) 2011 2010
Minimum lease payments
Ships and equipment
44,587 85,656 01 year 158,109 104,993
267,699 378,548 15 years 647,035 377,823
362,418 301,197 After 5 years 301,197 362,418
674,704 765,401 Total ships and equipment 1,106,341 845,234
The specified minimum payments are not discounted.
Operational lease- and rent income recognised in the income statement amount
for the Group to DKK 225.2 million in 2011 2010: DKK 279.1 million) and for the
Parent Company to DKK 327.9 million in 2011 2010:DKK 327.7 million).
The contracts are entered on usual conditions.
2010 2011 Financial lease commitments (lessee) 2011 2010
Minimum lease payments
6,056 6,056 01 year 19,304 20,160
30,828 24,807 15 years 56,302 74,548
36,884 30,863 Total minimum lease payments 75,606 94,708
3,075 2,177 Hereof financing element 6,492 10,067
33,809 28,686 Total 69,114 84,641
Presentation in the balance sheet
3,805 5,208 Current liabilities 16,278 15,218
30,004 23,478 Non-current liabilities 52,836 69,423
33,809 28,686 Total 69,114 84,641
In 2011 the finance lease contracts included in the balance sheet are all
related to cargo carrying equipment. The lease contracts are entered
during 2009 and they expire in 2014.
111DFDS ANNUAL REPORT 2011
Note 37 Related party transactions
The Group’s related parties exercising control are Lauritzen Fonden, Copenhagen,
which through a shareholders agreement controls more than 50% of the votes
in DFDS AS. The members of the Board of Directors and the Executive Board at
Lauritzen Fonden are also related parties.
Furthermore, related parties comprise all companies owned by Lauritzen Fonden,
DFDS’s subsidiaries and associates, reference is made to Note 42 and Note 14,
and these companies’ Executive Board and Board of Directors, executive emplo-
yees and close members of the family of those.
in ships and commissions etc.), which are eliminated on consolidation, usual
-
sclosed in Note 20 and the below transactions, no related-party transactions
have been carried out during the year.
Consolidated
DKK ’000
2011
Sale of
services
Purchase of
services
Purchase
of assets Receivables Liabilities
Associates 25,386 12,659 0 7,756 0
2010
Associates 3,090 13,590 0 7,833 567
Parent Company
DKK ’000
2011
Sale of
services
Purchase of
services
Purchase
of assets Receivables Liabilities
Dividends
received
from subsi-
diaries
Associates 4,441 0 0 4,931 0 0
Subsidiaries 552,413 1,723,464 750,134 2,280,643 2,417,881 42,215
2010
Associates 0 0 0 4,486 0 0
Subsidiaries 390,021 1,055,307 0 2,103,512 932,762 4,172
DFDS ANNUAL REPORT 2011112
Note 38 Impairment tests
Introduction
As a minimum goodwill is tested for impairment at year end. Other non-current
tangible, intangible and financial assets are tested if there is any indication of
impairment.
Definition of cash-generating units
The breakdown of cash-generating units takes its starting-point in the internal
structure of the two segments, Shipping and Logistics, and their business areas,
including the strategic, operational and sales-related control of these, both separa-
tely and across business areas, and the nature of the customer services provided.
Based on this the following eight cash generating units has been identified:
Shipping:
Logistics:
Non-current tangible and intangible assets are attributed to the above cash-
generating units, unless this cannot be done with a reasonable degree of certainty.
Software and other assets which cannot with reasonable certainty be attributed to
one or more of the above cash-generating units are tested for impairment on the
basis of Group earnings.
For a breakdown of goodwill on cash generating units, references are made to
note 11.
Basis for impairment testing and calculation of recoverable amount
Impairment testing is performed on the basis of management-approved budgets
and business plans. Key parameters are trends in revenue, EBIT margin, future
investments and growth expectations in the terminal period. These parameters
are set specifically for each individual cash-generating unit.
In the impairment test for cash-generating units, the recoverable amount of the
unit is compared with its book value. The recoverable amount is the higher value
of its value in use and net realisable value. If the recoverable amount is less than
the book value, the latter is written down to the lower value.
The value in use is calculated as the discounted value of the future net cash
flows per cash-generating unit. Net realisable value is calculated as the fair
value of non-current assets, less the estimated sales costs.
The net realisable value of the Group’s main assets, ships, is determined on
the basis of the average of several independent broker valuations. The task of
the brokers is to assess the value of the individual ships in a “willing buyer -
willing seller” situation. Due to the world economic and financial situation, the
assessments obtained as of 31 December 2011 were undertaken in a volatile
and uncertain market with few comparable transactions, for which reason these
valuations are subject to greater uncertainty than would be the case in a normal
and stable market. As assessments have been obtained from various brokers, the
management considers an average of these to be the best and most valid expres-
sion of the ships’ net realisable value.
Determination of discount rate
area) on the basis of a risk-free rate, plus a risk premium associated with the
individual business areas. The risk-free interest rate is set at a 10-year Danish
risk-free rate at year-end. The risk premium is calculated as a general equity
market risk premium of 5%, multiplied by the non-leveraged beta value of each
cash-generating unit. Further risk premium may be added if special conditions
and/or uncertainties indicates a need hereto.
The non-leveraged beta values are calculated by obtaining the non-leveraged
beta values of peer-group companies for each business area via the Bloomberg
database. The validity of each peer-group company’s non-leveraged beta value is
assessed, in order to remove those with the lowest validity. There are generally
few peer-group companies, as values are available only for listed companies.
The pre-tax discount rates used in the two segments are within the following
ranges:
2011 2010
Shipping 6.6% 8.0% 6.5% 8.0%
Logistics 7.1% 12.1% 7.0% 10.4%
113DFDS ANNUAL REPORT 2011
Note 38 Impairment tests (continued)
Sensitivity analysis
As part of the preparation of impairment tests, sensitivity analyses are prepared
on the basis of relevant risk factors and scenarios that management can deter-
mine with reasonable reliability.
Sensitivity analyses are prepared by altering the estimates within the area of
probable outcomes. None of these calculations have given rise to adjustments of
the following results of the impairment tests prepared.
Order of recognising impairments
If a need for impairment is identified, goodwill is the first to be written down, fol-
lowed by the primary non-current tangible and intangible assets in the individual
cash-generating units. Impairments are distributed according to the book value of
the assets, unless this results in a write-down to a value below the net realisable
Impairment tests for 2011
On the basic of the impairment tests prepared it has not been deemed necessary
to write-down the cash generating units in 2011.
The Group’s investment in the associated Dutch logistic enterprise DailyFresh
has shown a significant decrease in the financial performance in 2011 including
negative results in Q4. It is expected that this negative development will continue
and consequently, the goodwill related to the investment has been written
down by DKK 25 million. After this the investment is recognised at the Group’s
proportionate share of the net asset value in DailyFresh. The write down has been
recognised under Special items.
2010 :
As a consequence of the impairment tests prepared it is considered necessary to
recognise the following write-downs:
There was indication of impairment on the two passenger vessels on the
Amsterdam - Newcastle route, and the impairment test showed a need to write
down one ship by DKK 20 million and the other by DKK 40 million, as their book
value exceeded both their value in use and the average of the broker valuations
obtained. One ship has been written down to value in use, while the other has
been written down to its net realisable value, based on an average of two broker
valuations obtained.
The impairment test of Sideport activity carried out in the business area “Nordic
Contract”, together with the associated attributable goodwill of DKK 30 million,
show a need to write down goodwill in full and to write down the three sideport
ships by a total of DKK 60 million, as their book values exceeded both their va-
ship). The three ships have been written down to their net realisable values.
The impairment tests of the goodwill attributable to the cash-generating unit
“Nordic Transport and Continental Transport” showed a need to write down DKK
30 million of the total goodwill of DKK 58 million, as the book value exceeded
the value in use.
The impairment tests of the goodwill attributable to the cash-generating unit
“Intermodal” showed a need to write down DKK 60 million of the total goodwill
of DKK 179 million, as the book value exceeded the value in use.
Write-downs for the year amounted in total to DKK 240 million, and are recogni-
sed under Special Items.
Impairment tests of investments in subsidiaries and associated companies
(Parent Company)
Impairment tests are carried out for each subsidiary or associated company
in the Parent Company if there is indication of impairment. The individual
companies are regarded as the lowest cash-generating units.
The estimated value in use is based on cashflows according to the management-
approved budget for the coming financial year. Expectations towards the cash
flows are adjusted for uncertainty on the basis of historical results, and take into
account expectations towards possible future fluctuations in cash flows.
The Parent Company uses a discount rate determined for each subsidiary or as-
sociate, according to the business area to which it belongs. The applied discount
rates for 2011 and 2010 are shown in the table above.
In 2011 investments in subsidiaries have been written down by DKK 42.5 mil-
lion in total. DFDS Logistics Contracts SARL has been written down by DKK 1.0
million, DFDS Logistics Container Line B.V. by DKK 40.0 million and DFDS Sea-
ways GmbH by DKK 1.5 million, as the calculated value in use of the individual
investment were lower than the book value.
Furthermore, in 2011 previous write downs have been fully or partly reversed
by DKK 25.2 million in total. Regarding DFDS Seaways NV DKK 0.2 million has
been reversed, and for DFDS Seaways AS DKK 25.0 million has been reversed, as
their calculated value in use exceeded the book value.
2010:
In 2010 write downs of DKK 302.7 million are recognised regarding the invest-
ments in DFDS Logistics Container Line B.V. DKK 196.6 million), DFDS Logistics
NO DKK 91,7 million) and other shareholdings by DKK 14.4 million, as the
calculated value in use of the individual shareholdings were lower than their
book value.
In 2010, previous write downs of DKK 15.1 million in relation to DFDS Logistics
GmbH were reversed, as the calculated value in use exceeded the book value.
DFDS ANNUAL REPORT 2011114
Note 39 Events after the balance sheet date
On 24 January 2012 one of DFDS’s customers started operating a new ro-ro route
between Göteborg and Killingholme. The route will be in competition with DFDS’s
route between Göteborg and Immingham.
On 17 February 2012 DFDS started operating a new route between Dover and
Calais in coorperation with Louis Dreyfus Armateurs. Initially the route will be
serviced by one ship, NORMAN SPIRIT, but it is planned to add a second ship
to the route.
Besides the above there have been no significant events after
31 December 2011.
Note 40 Critical accounting estimates and assessments
In the process of preparing the consolidated financial statements, the Group’s
management undertakes a number of accounting estimates and assessments, and
formulates assumptions which provide the basis for recognition and measure-
ment of the assets, liabilities, revenues and expenses of the Group and the Parent
Company. These estimates, assessments and assumptions are based on historical
experience and other factors which the management considers reasonable under
the circumstances, but which by their nature are uncertain and unpredictable.
The assumptions may be incomplete or inaccurate, and unanticipated events or
circumstances may occur, for which reason the actual results may deviate from
the stated estimates and assessments. For a detailed description of the Group’s
accounting policies, reference is made to note 41.
In the opinion of the management, the following accounting estimates and assess-
ments are critical in the preparation of the annual report.
Uncompleted deliveries (mainly in Logistics Division)
The net revenue encompasses the year’s completed freight deliveries and ser-
vices, as well as the movements in the value of uncompleted freight deliveries.
Direct costs consist of costs incurred to achieve the net revenue for the year.
At the conclusion of interim periods, including year-end, assessments and evalua-
tions are undertaken of uncompleted freight deliveries, including the accruals of
revenues and direct costs. These assessments are based on historical experience,
etc.
Business Combinations
When other enterprises are acquired, the assets, liabilities and contingent liabili-
ties of the acquired enterprises are recognised in accordance with the acquisition
method described in IFRS 3. In determining the market value of the acquired
assets, liabilities and contingent liabilities, management undertakes certain
estimates and assessments.
The unallocated acquisition price is recognised in the balance sheet as goodwill
and allocated to the Group’s cash-generating units on the basis of the manage-
ment’s assessment.
Impairment testing of goodwill and other non-current intangible assets
Impairment testing of goodwill and other non-current intangible assets, which
primarily relate to IT and customer portfolios and relations, is undertaken at least
once every year, and in case of indication of impairment. The impairment tests are
based on the expected future cash flow for the cash-generating unit in question.
For a further description of impairment testing of goodwill and other non-current
intangible assets, reference is made to note 38.
Impairment testing of ships, including the assessment of useful life
and scrap value
Critical accounting estimates and assessments regarding ships include the
decomponing of the ship’s cost price on the basis of the expected useful life
of its component elements; the ship’s expected maximum useful life in the
company, its scrap value and impairment test. The expected useful life of ships
in the company and their scrap values are reviewed and estimated at least once
annually. Impairment tests are also carried out when there is any indication of
impairment.
For further details of estimates and assessments relating to ships, please see
the description of accounting policies in Note 41 and note 38, which mention
impairment testing
Provision for bad debts
Receivables are assessed at the amortised cost price after deduction of write-
downs to meet expected losses. Provisions are made for losses due to the custo-
mer’s inability to pay. Should the customer’s ability to pay deteriorate further in
the future, further write-downs may be necessary.
The need to write down receivables, and the adequacy of such write-downs,
is assessed by the management on the basis of historical data and customer
payment patterns, age distributions, dubious receivables, customer concentrati-
ons, customer creditworthiness, and any collateral received.
Pensions and similar liabilities
The Group’s defined pension schemes are calculated on the basis of a number
of key actuarial assumptions, including discount rate, the anticipated returns
on the schemes’ assets, the anticipated rate of increase in wages and pensions,
anticipated mortality, etc. Even moderate alterations in these assumptions can
bring about significant changes in pension liabilities.
The value of the Group’s defined pension schemes is based on calculations
undertaken by external actuaries.
Deferred taxable assets
Deferred taxable assets, including the tax value of tax losses to be brought
forward, are recognised to the extent that the management assesses that the tax
asset can be utilised through positive income in the foreseeable future. Assess-
ment is performed annually on the basis of forecasts, business initiatives and
structural adjustments for the coming year.
115DFDS ANNUAL REPORT 2011
The 2011 annual report has been prepared in accordance with International Finan-
cial Reporting Standards as adopted by the EU and additional Danish disclosure
requirements for annual reports of listed companies.
On 1 March 2012, the Board of Directors and Executive Management Board con-
sidered and approved the 2011 annual report of DFDS AS. The annual report will
be presented to the shareholders of DFDS AS for approval at the Group’s ordinary
annual general meeting on 29 March 2012.
Basis for preparation
The annual report is presented in Danish Kroner DKK which is the Parent
Company’s functional currency.
The annual report has been prepared on the historical cost basis except for the
following assets and liabilities measured at fair value: derivatives and financial
instruments classified as available-for-sale.
Non-current assets and assets held for disposal classified as held for sale are
measured at the lower of the book value before the changed classification and the
fair value less costs to sell.
Change in accounting policies for the Parent Company
The accounting policies for the Parent Company are unchanged compared to last
year except form new accounting policy regarding recognition and measurement
of the Parent Company’s acquisitions and disposals of activities and companies
under common control. As from 1 January 2011 these transactions will be
recognised and measured according to the ’book value method’ as it is transacti-
ons under common control, which formerly was done according to the ’purchase
accounting method’. According to the ’book value method’ all differences between
the book value of the acquired assets and liabilities and the purchase price will
be recognised directly in the equity whereas a positive difference according to
the ’purchase accounting method’ has to be allocated to the acquired assets and
liabilities and the remaining difference recognised as goodwill.
The effect of the change is that goodwill as of 1 January 2010 is reduced by DKK
217 million and a corresponding reduction of the equity. Total assets is reduced
by DKK 217 million. Goodwill as of 1 January 2011 is reduced by DKK 217 mil-
lion and the equity is reduced with a corresponding amount. Total assets as of 1
January 2011 is also reduced by DKK 217 million. As of 31 December 2011 the
Parent Company’s acquisition of the two ro-ro routes from Vlaardingen in Holland
equity reducing the equity by DKK 662 million. The total reduction of the equity
as of 31 December 2011 amount to DKK 879 million.
Thee changed accounting policy is incorporated in the 2011 annual accounts of
the Parent Company including adjusted comparatives. The change is not relevant
for the Group as the affected transactions are fully eliminated.
New International Financial Reporting Standards and Interpretations
With effect from 1 January 2011, the Group has adopted the following new Inter-
national Financial Reporting Standards and Interpretations:
and IAS 1, 27, 34 and IFRIC 13
minimum funding requirements and their interaction’
The new standards, amendments and interpretations have no effect on recognition
and measurement. Other accounting policies for the Group’s consolidated annual
accounts for 2011 are unchanged in relation to the previous year while the Parent
Company’s accounting policies are changed as above mentioned in the section
’Change in accounting policies for the Parent Company’.
Effect of adopted but not yet implemented accounting regulation
The IASB has issued the following new standards and interpretations which were
not yet compulsory at the time of preparation of DFDS’ consolidated annual ac-
counts and annual accounts for 2011:
Financial Assets’ 1 July 2011
financial assets and financial liabilities’ 1 January 2013*
disclosures on transition to IFRS 9’ 1 January 2015*
Derecognition 1 January 2015*
Note 40 Critical accounting estimates and assessments (continued)
Leasing agreements
The company has entered into leasing/charter agreements for ships, buildings and
other equipment, under the usual conditions for such agreements. On the basis of
separate assessments of the individual contracts at the time of inception, the ma-
nagement assesses whether each agreement should be considered as a financial
or an operational leasing agreement.
Derivatives
When entering into agreements involving derivatives, the management assesses
whether the instruments in question provide and satisfy the conditions for effec-
tive hedging, including whether the hedging involves recognised assets and liabi-
lities, projected future cash flows, or financial investments. Monthly effectiveness
tests are carried out, and any inefficiency is recognised in the income statement.
Special items
The use of special items includes managerial assessments in order to ensure
separation from other income statement items, cf. the accounting policies. In
general, special items encompass significant items not directly attributable to
the Group’s operating activities, such as restructuring costs in connection with
fundamental process, structural and managerial readjustments, as well as any
disposal gains or losses arising in this connection. Major non-recurring items
are also classified under this heading. Reference is made to Note 7 for a further
itemisation and description of special items.
Provisions and contingencies
The management assesses current provisions and contingencies on an ongoing
basis, together with the likely outcome of pending or potential legal proceedings,
etc. Such outcomes depend on future events, which are inherently uncertain.
In assessing the likely outcome of significant legal proceedings, tax issues, etc.,
the management consults external legal advisers and studies the outcome of
previous cases.
Note 41 Accounting Policies
DFDS ANNUAL REPORT 2011
rights issues’ 1 January 2014*
1 January 2013*
* = Not yet approved by the EU
The DFDS Group expects to adopt these standards and interpretations as they
become mandatory.
The amendment to IAS 19 ’Employee benefits’ among others results in the
abolishment of the corridor-method. It will no longer be permitted to postpone
recognition of actuarial gains and losses regarding defined benefit schemes. The
actuarial gains and losses on the net defined pension liabilities or assets must
be recognised in other comprehensive income when occurred. The change of this
standard which is not yet approved by the EU is expected to be implemented in
2013 and could potentially have significant effect on the annual report in the
coming financial years. If the change was amended as of 31 December 2011 it
would have reduced the equity by DKK 35 million and increased staff costs by
DKK 1 million.
In the opinion of the management all other new standards and interpretations will
not materially impact annual reports in the coming financial years.
Critical accounting policies
The management of DFDS considers the applied accounting policies for the con-
solidated financial statement and business combinations, non-current intangible
assets, ships, contribution-based pension schemes, operational lease versus
financial lease and derivative financial instruments to be the most important for
the Group. The individual areas are described bellow, together with other applied
accounting policies.
Significant estimates and judgements in connection with the application of the
Group’s accounting policies are mentioned in Note 40.
DESCRIPTION OF ACCOUNTING POLICIES
Consolidated financial statements
The consolidated financial statements include the financial statement of DFDS AS
sheet date, directly or indirectly holds more than 50% of the voting rights or
companies are referred to as the Group.
Companies that are not subsidiaries, but in which the Group holds between 20%
and 50% of the voting rights or in some other way exerts significant influence on
the operational and financial management, are treated as associates, reference is
made to note 42.
The consolidated financial statements are based on the financial statement of the
Parent Company and the subsidiaries and are prepared by combining items of a
uniform nature and eliminating inter-company transactions, shareholdings, balan-
ces and unrealised inter-company profits and losses. The consolidated financial
statements are based on financial statements prepared by applying the Group’s
accounting policies.
Investments in subsidiaries are set off against the proportionate share of the
subsidiaries’ net asset value at the acquisition date.
The Group’s investments in associates are recognised in the consolidated financial
statements at the proportionate share of the associates’ net asset value. Unrea-
lised inter-company profits and losses from transactions with associates and
jointly controlled entities are eliminated to the extent of the Group’s interest in
the entity.
Minority interests
In the consolidated financial statements, the items of subsidiaries are recognised
in full. The minority interests’ proportionate shares of the subsidiaries’ results
and equity are adjusted annually and recognised separately in the proposed profit
appropriation and statement of changes in equity.
Business combinations
Enterprises acquired or formed during the year are recognised in the consolidated
financial statements from the date of acquisition or formation. Enterprises dispo-
sed of are recognised in the consolidated financial statements until the date of
disposal. The comparative figures are not adjusted for acquisitions or disposals.
Acquisitions of enterprises in which the Parent Company will be able to exercise
control are recognised using the purchase method. The identifiable assets, liabili-
ties and contingent liabilities of newly-acquired enterprises are assessed at their
fair value on the acquisition date. Identifiable intangible assets are recognised
if they are separable or arise from a contractual right. The deferred tax on any
revaluations is included.
The acquisition date is the date on which DFDS AS obtains actual control of the
acquired enterprise.
value of minority interests in the acquired enterprise and the fair value of any
previously acquired shareholdings, and, on the other hand, the fair value of the
acquired identifiable assets, liabilities and contingent liabilities are recognised
as goodwill under intangible assets. Goodwill is not depreciated, but is tested
annually for impairment. The first impairment test is performed before the end of
the acquisition year.
On acquisition, goodwill is assigned to the cash-generating units, which sub-
sequently form the basis for the impairment test. The distribution of goodwill
between cash-generating units is described in notes 11 and 38.
Goodwill and fair value adjustments in connection with the acquisition of a
foreign unit with a functional currency other than the DFDS Group’s presentation
currency are treated as assets and liabilities of the foreign unit, and are translated
and converted at first recognition to the functional currency of the foreign unit at
the exchange rate on the transaction date. Negative goodwill is recognised in the
income statement at the acquisition date.
The purchase price of an enterprise is the fair value of the agreed payment in the
form of assets acquired, liabilities assumed, and equity instruments issued. If any
portion of the purchase price is contingent on future events or on the fulfilment of
agreed conditions, this part of the purchase price is recognised at its fair value on
the acquisition date. Costs attributable to business combinations are recognised
directly in the income statement at the time incurred.
Positive and negative balances from the acquirees may be adjusted until 12
months from the date of the acquisition, provided that the initial recognition
was preliminary or incorrect. All other adjustments are recognised in the income
statement.
If control is acquired in several steps, those capital interests which the company
held immediately prior to the last transaction in which control was obtained are
regarded as having been sold and immediately re-purchased at fair value on the
acquisition date. Any difference between the “sales price” and the book value of
these capital interests will result in an accounting gain or loss on the interests
already held. These gains or losses are recognised under financial items.
Incremental acquisition after control has been achieved, i.e. the purchase of mino-
rity interests, is recognised directly in equity.
Gains or losses on subsidiaries and associates disposed of are stated as the
difference between the sales amount or disposal costs and the book value of net
Note 41 Accounting Policies (continued)
116
117DFDS ANNUAL REPORT 2011
Note 41 Accounting Policies (continued)
assets at the date of disposal, including the book value of goodwill, accumulated
exchange gains and losses previously recognised in the equity plus anticipated
disposal costs. Exchange rate adjustments attributable to the Group’s ownership
interest, and which are recognised directly in equity, are included in the profit
statement. Any retained participating interests are measured at their fair value at
the time at which the controlling influence was lost.
In the divestment of partially-owned foreign subsidiaries, that part of the foreign
currency translation reserve which relates to the minority interests is not transfer-
red to the income statement.
-
prises and activities are measured and recognised in accordance with the ”book
value method” by which differences, if any, between purchase price and book
value of the acquired enterprise/activity are recognised directly in equity.
TRANSLATION OF FOREIGN CURRENCIES
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are mea-
sured using the currency of the primary economic environment in which the entity
operates. The consolidated financial statements are presented in Danish Kroner
DKK, which is the functional and presentation currency of the Group.
Translation of transactions and balances
Foreign currency transactions are translated into the functional currency using the
exchange rate prevailing at the date of transaction. Foreign exchange gains and
losses resulting from the settlement of such transactions and from the translation at
year-end exchange rates of monetary assets and liabilities denominated in foreign
currencies are recognised in the income statement, except when deferred in equity as
qualifying for cash flow hedges.
Translation differences on non-monetary items are reported as part of the fair value
gain or loss.
Fixed assets acquired in foreign currency are translated at the exchange rate
prevailing at the date of transaction. Gains and losses on hedges relating to the
acquisition of fixed assets are recognised as part of the fixed asset.
Translation of group companies
Financial statements of foreign subsidiaries are translated into Danish Kroner
at the exchange rates at the balance sheet date for assets and liabilities and at
average exchange rates for income statement items.
in a separate reserve in the equity.
In the divestment of 100%-owned foreign units, exchange differences which have
accumulated in equity via other overall income, and which are attributable to the
unit, are reclassified from “Reserve for exchange rate adjustments” to the income
statement together with any gains or losses associated with the disposal.
In the divestment of partially-owned foreign subsidiaries, that part of the foreign
currency translation reserve which relates to the minority interests is not transfer-
red to the income statement.
In the partial divestment of foreign subsidiaries without relinquishment of control,
a proportionate amount of the currency translation reserve is transferred from the
Parent Company’s equity share to that of the minority shareholders.
In the partial divestment of associated companies and joint ventures, the propor-
tion of the accumulated currency translation reserve recognised in other overall
income is reclassified to the result for the period.
Repayment of balances that are considered part of the net investment are not in
themselves regarded as the partial divestment of the subsidiary.
Derivative financial instruments
Derivative financial instruments are recognised in the balance sheet at fair values
on the transaction date. The fair values of derivative financial instruments are
presented as other receivables if positive or other liabilities if negative. Netting
of positive and negative derivative financial instruments is only performed if the
company is entitled to and has the intention to settle more derivative financial
instruments as a net. All fair values are computed on the basis of current market
data and generally accepted valuation methods.
Fair value hedge
Changes in the fair value of derivative financial instruments designated as and
qualifying for recognition as a fair value hedge of recognised assets and liabilities
are recognised in the income statement together with changes in the value of the
hedged asset or liability with respect to the hedged portion. Hedging of future
cash flows according to agreements, except for foreign currency hedges, is treated
as a fair value hedge of a recognised asset and liability.
Cash flow hedge
Changes in the portion of the fair value of derivative financial instruments designa-
ted as and qualifying as a cash flow hedge and which effectively hedge changes in
the value of the hedged item are recognised in the comprehensive income. The ef-
fective part of the change in the fair value is recognised as a separate equity reserve
until the cash flow hedge impacts the income statement. If the hedged transaction
results in gains or losses, amounts previously recognised in equity are transferred to
the same item in the income statement as the hedged item.
For derivative financial instruments that do not qualify for hedge accounting, the
hedge is dissolved. As soon as the cash flow hedge affects the income statement,
the accumulated changes in fair value that are previously recognised in equity are
transferred to the income statement.
For derivative financial instruments that are no longer realised, the accumulated
changes are transferred immediately to the income statement.
Net investment hedge
Changes in the fair value of derivative financial instruments used to hedge net
investments in foreign subsidiaries or associates and which effectively hedge cur-
rency fluctuations in these companies are recognised in the consolidated financial
statements directly in a separate translation reserve in equity.
Other derivative financial instruments
For derivative financial instruments that do not fulfil the requirements of being
handled as hedge instruments, the changes in fair value are recognised succes-
sively in the income statement as financial income and expenses.
Government grants
Government grants related to funding for investments are offset against the cost
of the non-current fixed asset and reduce the depreciation of the assets for which
the grants are awarded.
Rental and lease matters
When contracts for hire and lease of ships, buildings and operating assets are of
an operational nature, rental payments are recognised in the income statement for
the period to which they relate. The remaining rental liability and lease obligati-
ons under such contracts are disclosed as contingent liabilities.
Assets held under financial leases are recognised in the balance sheet and depre-
ciated in the same way as the Group’s other non-current assets.
Incentive plans
The Group has set up equity-settled and cash-settled share-based compensation
plans. Part of the Company’s holding of treasury shares is used under the Group’s
share option plan.
The value of services received in exchange for incentive plans is measured at the
fair value of the options granted.
DFDS ANNUAL REPORT 2011
Fair value is measured at the grant date for equity-settled plans. Fair value is
measured at each balance sheet date and when vested for cash-settled plans. The
fair value is recognised as a staff cost over the period in which the options vest
The number of share options expected to be exercised by employees is estimated
in the initial recognition in accordance with the service conditions described in
Note 20. Subsequent to initial recognition, the estimate is adjusted on a continu-
ing basis to reflect the actual number of exercised share options.
The fair value of granted share options for equity-settled plans and cash-settled
plans is estimated using the BlackScholes option-pricing model. Vesting conditi-
ons are taken into account when estimating the fair value of the share options.
Key figures
Key figures are calculated in accordance with the Danish Society of Financial
Analysts’ guidelines, “Recommendations and Financial Ratios 2010”. The key
figures stated in the survey of consolidated financial highlights are defined on the
“Definitions and Glossary” page.
INCOME STATEMENT
Revenue
Revenue from passenger conveyance, sea freight transport and land transport, etc.,
is recognised in the income statement at the time of delivery to the customer, which
is the time of transfer of the risk.
Revenue is measured at fair value, excluding value added tax and after deduction of
trade discounts.
Costs
When passenger conveyance, sea freight and land transport etc. are recognised as
income, related costs are recognised in the income statement.
Operating costs related to ships
The operating costs of the ships comprise costs os sales related to catering, ship
fuel consumption including hedging and cost of sales for ship maintenance that
are not capitalised under non-current tangible assets.
Charter hire
Charter hire comprises costs related to bareboat and time charter agreements.
Staff costs
Wages, salaries, social security contributions, paid annual leave and sick leave,
bonuses, and non-monetary benefits are accrued in the year in which the associ-
ated services are rendered by employees of the Group. Where the Group provides
long-term employee benefits, the costs are accrued to match the rendering of the
services by the employees concerned.
Other costs of operation, sales and administration
Other costs of operation, sales and administration comprise operating costs
concerning land-based activities, including the lease, rental and maintenance of
operating equipment. In addition, costs of sales, marketing and administration are
included.
Profit/loss on disposal of non-current assets
Profit/loss on disposal of non-current assets is determined as the difference bet-
ween the selling price or the disposal price and the book value of net assets at the
date of disposal, including costs in connection with dismissal of staff on the ships
and other disposal costs, such as obligations related to harbour dues and lease of
terminal areas, etc.
Profit from investments in associated companies
The Group’s income statement includes the pro rata share of the result in the
associated companies after tax and minority interests after elimination of pro rata
share of inter-company profit/purchase.
Special items
In general, special items include significant income and expenses not directly
attributable to the Group’s operating activities, such as comprehensive process
restructuring or basic structural and managerial adjustments, as well as any
disposal gains or losses arising in this connection, and which are of significance
over time. In addition, other significant non-recurring amounts are classified under
this item, including impairment of goodwill and ships, transaction, consultant and
integration costs related to major business combinations, and gains and losses on
the disposal of activities.
These items are listed separately, in order to provide a more correct picture of
Group operating profit.
Financial income and expenses
Financial income and expenses comprise interest income and expenses, realised
and unrealised gains and losses on payables and transactions denominated in
foreign currencies, realised gains and losses on securities, as well as the amorti-
sation of financial assets and liabilities including financial leasing commitments
as well as surcharges and allowances under the tax prepayment scheme DK.
Also included are realised and unrealised gains and losses on derivative financial
instruments that are not designated as hedges.
Tax
Tax for the year comprises income tax, tonnage tax, and joint taxation contribu-
tion for the year of Danish subsidiaries as well as changes in deferred tax for the
year. The tax expense relating to the profit/loss for the year is recognised in the
income statement, and the tax expense relating to amounts directly recognised
in equity is recognised directly in equity. Additionally, adjustments to prior years
are included.
The current payable Danish corporation tax is allocated by the settlement of a
joint taxation contribution between the jointly taxed companies in proportion
to their taxable income. In connection with the settlement the companies with a
negative taxable income receive a joint taxation contribution from companies that
have used the tax losses to reduce their own taxable profit.
Tax computed on the taxable income and tonnage tax for the year is recognised
in the balance sheet as tax payable or receivable or joint taxation contribution for
Danish companies, taking account of on-account payments. In accordance with
the Danish regulations on joint taxation, associated companies’ own corporation
tax liabilities towards the Danish tax authorities are settled concurrently with the
payment of the joint taxation contribution to the company that manages the joint
taxation.
Deferred tax is measured on all temporary differences between the book value
and the tax base of assets and liabilities. However, deferred tax is not recognised
on temporary differences relating to goodwill that is not tax deductible, where
temporary differences arise at the date of acquisition without affecting either
profit/loss for the year or taxable income.
Deferred tax relating to assets and liabilities subject to tonnage taxation is recog-
nised to the extent that deferred tax is expected to occur.
Deferred tax assets are recognised at the expected value of their utilisation.
Adjustment is made to deferred tax resulting from elimination of unrealised intra-
group profits and losses.
Deferred tax is measured on the basis of the expected use and settlement of the
individual assets and liabilities, and according to the tax rules and at the tax rates
applicable at the balance sheet date when the deferred tax is expected to crystal-
lise as current tax. The change in deferred tax as a result of changes in tax rates is
recognised in the income statement.
Note 41 Accounting Policies (continued)
118
119DFDS ANNUAL REPORT 2011
ASSETS
Current assets are defined as:
normal course of DFDS’ operating cycle, or
within twelve months of the balance sheet date, or
All other assets are defined as non-current assets.
Non-current intangible and tangible assets
Generally the following applies unless otherwise specified:
-
cumulated amortisation/depreciation and impairment.
salaries.
available for use is included in cost. Cost also comprises gains and losses on
transactions designated as hedges of non-current tangible assets.
expected residual value.
straight-line basis to the estimated residual value over the expected useful life
at DFDS.
year. In estimating the expected useful life for ships it is taken into considera-
tion that DFDS is continuously spending substantial funds on ongoing mainte-
nance.
is recognised prospectively as a change in the accounting estimate.
Goodwill
At initial recognition goodwill is recognised in the balance sheet at cost, as descri-
bed in the section ‘Business combinations’. Subsequently, goodwill is measured at
cost less accumulated impairments. Goodwill is not amortised.
An impairment test is performed annually in connection with the presentation of
next year’s budget.
The book value of goodwill is allocated to the Group’s cash-generating units at the
time of acquisition. Allocation of goodwill to cash-generating units is described in
notes 11 and 38.
Development projects
Development projects, primarily the development of IT software, are recognised
as non-current intangible assets if the following criteria are met:
and administrative expenses; and
The amortisation of capitalised development projects starts after the completion
of the development project and is provided on a straight-line basis over the ex-
pected useful lifetime, normally 35 years, but in certain cases up to 10 years.
Other non-current intangible assets
Other non-current intangible assets comprise the value of customer relations or
similar identified as a part of acquisitions, and have definable useful lifetimes.
Other non-current intangible assets are measured at cost less accumulated amor-
tizations/depreciations and impairment. Depreciation is provided on a straight-line
basis over the expected useful lifetime, normally 35 years, but in certain cases up
to 10 years.
Ships
The rebuilding of ships is capitalised if the rebuilding can be attributed to:
Expenses for improvements and maintenance are recognised in the income
statement as incurred, including general maintenance work, to the extent the work
other costs are capitalised.
Docking costs are capitalised and depreciated on a straight-line basis over the
period between two dockings. In most cases, the docking interval is 2 years for
passenger ships and 2½ years for freighters and ro-pax ships.
Gains or losses on the disposal of ships are determined as the difference between
the selling price less the selling costs and the book value at the disposal date.
Gains or losses on the disposal of ships are recognised as gain/loss on disposal of
ships, buildings and terminals.
Passenger and ro-pax ships
Due to differences in the wear of the components of passenger and ro-pax ships,
the cost of these ships is divided into components with low wear, such as hulls
and engines, and components with high wear, such as parts of the hotel and
catering area.
Freighters
The cost of freighters is not divided into components, since the depreciation on
the components of these ships is evenly distributed over time.
Depreciation, expected useful lifetime and residual value
The average depreciation period for components with low wear is 30 years for
passenger ships and 25 years for ro-pax ships from the year in which the ships
were built. The depreciation period for freighters is 25 years from the year in
which the ships were built.
For passenger and ro-pax ships, components with high wear are depreciated
over 1015 years. For ships, the residual value of components with high wear is
determined as DKK 0.
Other non-current tangible assets
Other non-current tangible assets comprise buildings, terminals and machinery,
tools and equipment and leasehold improvements.
The expected useful lifetimes are as follows:
Buildings 2550 years
Terminals etc. 1040 years
Equipment etc. 410 years
Leasehold improvements are max. depreciated over the term of the lease
Gains or losses arising from the disposal of buildings, terminals, equipment and
leasehold improvements are determined as the difference between the selling
price less the disposal costs and the book value at the date of disposal. The gains
on the disposal of these non-current assets are recognised in the income state-
ment as ‘Profit on disposal of tangible assets’.
Assets held under financial leases
Assets held under financial leases are recognised in the balance sheet at the lower
of fair value and the present value of the minimum lease payments. The capita-
Note 41 Accounting Policies (continued)
DFDS ANNUAL REPORT 2011
lised minimum lease payments are recognised in the balance sheet as a liability
and the interest element of the lease payments is recognised in ‘financial costs’
in the income statement. Assets held under financial leases are depreciated and
written down as the Company’s own non-current assets, however not exceeding
the term of the lease.
Profits on “sale and lease-back” are deferred and recognised over the lease term
for financial leases. For operational leases, any profits on sale are recognised
in the income statement immediately, if the sales price equals the fair value of
the asset. Otherwise, the profits are deferred and amortised over the term of the
operational lease.
Investments in associates (Group)
Investments in associates are measured in the consolidated annual accounts
under the equity method, whereby the investments in the balance sheet are mea-
sured at the proportionate share of the enterprises’ net asset values, calculated
in accordance with the accounting policies of the Group, with the addition of the
book value of goodwill, and after deduction or addition of the proportionate share
of unrealised intra-group profits and losses.
Associates with negative net asset values are measured at DKK 0. If the Group
has a legal or actual commitment to cover the associate’s deficit, the liability is
recognised.
Any receivables from the associates are written down to the extent that the recei-
vables are considered to be irrecoverable.
Other assets
Other non-current assets and current assets are on initial recognition measured at
cost. Subsequently these assets are measured as one of the following categories:
recognised through the income statement.
recognised through the equity.
change of value is recognised through the income statement.
Investments in subsidiaries and associates (Parent Company)
Investments in subsidiaries and associates are measured at cost in the balance
sheet.
Dividends from subsidiaries and investments in associates are recognised in
the Parent Company’s income statement for the year in which the dividends are
declared. The cost of investments in subsidiaries and associates are written down
to the extent that the dividends are considered repayment of the investment.
Impairment
The book values of non-current intangible, tangible and financial assets are conti-
nuously assessed, at least once a year, to determine whether there is an indication
of impairment. When such impairment is present the recoverable amount of the
asset is assessed. The recoverable amount is the higher of the net selling price
and the net present value of the future net cash flow expected from the asset
net cash flow the asset is expected to generate either by itself or from the lowest
cash-generating unit to which the asset is allocated.
Impairment tests of the Group’s assets are performed once a year, typically in De-
cember. DFDS performs tests in between the annual tests if there is an indication
of impairment. Reference is made to note 38 for method description.
Securities
Securities held as part of the investment portfolio are designated as ‘available-for-
sale’ and are measured at fair value, which for listed securities is the fair price at
the balance sheet date. The recognition are made on the trade date.
The following measurement are made to fair value, which are equivalent to
the market price for listed securities. When it is not possible to give a reliable
estimate of the fair value for non-listed securities, they are recognised at cost less
impairment losses.
Unrealised value adjustments on securities are recognised as a separate reserve
in the income statement under ‘Financial items’. When securities are realised,
the accumulated value adjustment recognised directly in equity under ‘Financial
income or expenses’ is transferred to the income statement.
Inventories
Inventories, including catering supplies, are measured at cost based on the
weighted average cost method or the net realisable value if this is lower. Invento-
ries including bunkers are measured at cost based on the FIFO method for bunkers
and average prices for the remaining inventories. The net realisable value is
recognised if lower than the cost.
Receivables
Receivables are recognised at amortised cost less impairment losses. Write-down
is performed on an individual basis.
Other receivables comprise calculated receivables on hedges, insurance receivab-
les on loss or damage of ships, financial leased receivables, outstanding balances
for chartered ships, interest receivable, etc.
Prepayments
The item includes cost incurred no later than the balance sheet date but which
relates to subsequent years, e.g. prepaid charters, rents, etc.
Assets held for sale
Assets held for sale comprise non-current assets and disposal groups that are
classified as held for sale. Disposal groups are groups of fixed assets subject to be
sold or otherwise disposed of in a single transaction. Liabilities related to assets
held for sale comprise liabilities directly attached to these assets and which will
follow the assets when disposed. Assets are designated as ‘held for sale’ when the
book value is primarily recovered by sale within 12 months in accordance with a
plan, instead of through continued usage.
Assets or disposal groups ‘held for sale’ are measured at the lowest value of t
he book value at the time of designation as ‘held for sale’ or the fair value less
sales costs. Assets are not depreciated from the date they are designated as
‘held for sale’.
Impairment losses from the initial classification of the non-current assets as held
for sale, as well as gains and losses from subsequent measurement of the lowest
value of the book value or the fair value less sales costs, are recognised in the
income statement. Gains and losses are described in the notes.
Assets and associated liabilities are reported in separate lines in the balance
sheet, and the principal items are specified in the notes.
EQUITY
Dividends
Proposed dividends are recognised as liabilities at the date on which they are
-
dend payment for the year is disclosed as a separate item under equity.
Note 41 Accounting Policies (continued)
120
121DFDS ANNUAL REPORT 2011
Treasury shares
The cost of acquisition, consideration and dividends received from treasury shares
is recognised directly in retained earnings in the equity. Accordingly, profits from
sale of treasury shares are not recognised in the income statement. Holdings of
treasury shares are recognised in the balance sheet at zero value. The nominal
Reserve for exchange rate adjustments
The reserve for exchange rate adjustment comprises currency translation differen-
ces from translating annual accounts from a foreign currency into Danish Kroner
and exchange rate adjustments related to assets and liabilities, which are included
in the Group’s net investments.
Reserve for hedging
The reserve for hedging comprises the accumulated net change in the fair value
of hedging which qualifies as future cash flow hedging, and where the hedged
transaction is not yet realised.
Reserve for revaluation of securities
The reserve for revaluation of securities comprises accumulated changes in the
fair value of the securities classified as ‘available-for-sale’. The reserve is dis-
solved and transferred to the income statement when the investment is sold or
written down.
LIABILITIES
Current liabilities are:
operating cycle, or
All other liabilities are classified as non-current liabilities.
Pension obligations and other non-current obligations
Contributions to defined contribution plans are recognised in the income state-
ment in the period to which they relate, and any contributions outstanding are
recognised in the balance sheet as other payables.
Defined benefit plans are subject to an annual actuarial estimate of the present
value of future benefits under the defined benefit plan. The present value is de-
termined on the basis of assumptions about the future development in variables
such as salary levels, interest rates, inflation and mortality. The present value is
determined only for benefits earned by employees from employment in the Group.
The actuarial present value less the fair value of any plan assets is recognised in
the balance sheet under pensions, cf. below.
Any difference between the expected development in plan assets and the defined
benefit obligation and actual amounts results in actuarial gains or losses. If the
cumulative actuarial gains or losses exceed the greatest of 10% of the defined
benefit obligation or 10% of the fair value of the plan assets, the gains or losses
are recognised in the income statement over the expected remaining working
lives of the employees until pension payments are made. Actuarial gains or losses
not exceeding the above limits are not recognised in the income statement.
If changes in benefits relating to services rendered by employees in previous
years result in changes in the actuarial present value, the changes are recognised
in the income statement for the year as historical costs, provided employees have
already earned the changed benefits. If employees have not earned the benefits,
the historical costs are recognised in the income statement over the period in
which the employees earn the changed benefits.
Pension plans, considered as a net asset, are recognised as assets only if the asset
equals the value of future repayments, or it will result in reduced payments.
Other non-current personnel obligations include jubilee benefits, etc.
Other provisions
Other provisions are recognised where a legal or constructive obligation has been
incurred as result of past events and it is probable that this will lead to an outflow
of resources that can be reliably estimated. Provisions are recognised for the es-
timated ultimate liability that is expected to arise, taking into account the foreign
currency effects and the time-related monetary value.
Interest-bearing liabilities
Amounts owed to mortgage credit institutions and banks, relating to loans which
the Group expects to hold to maturity, are recognised at the date of borrowing, at
the net proceeds received less the transaction costs paid.
In subsequent periods, interest-bearing liabilities are measured at amortised cost,
corresponding to the capitalised value using the effective interest rate. Accor-
dingly, the difference between the proceeds and the nominal value is recognised
in the income statement under ‘financial costs’ over the term of the loan.
Interest-bearing liabilities also include the capitalised residual obligation on finan-
cial leases. Other liabilities are recognised at amortised cost.
Other payables
Other payables comprise amounts owed to staff, including wages, salaries and ho-
liday pay. Amounts owed to the public authorities include payable tax at source,
VAT, excise duties, real property taxes, etc., and amounts owed in connection
with the purchase/disposal of ships, buildings and terminals, interest expenses,
fair value of hedges, amounts due in respect of losses on ships and costs related
to shipping operations, etc. Other payables include amounts owed in relation to
contribution-based pension schemes.
Deferred income
Includes payments received no later than at the balance sheet date, but which
relate to income in subsequent years.
Cash flow statement
The cash flow statement has been prepared using the indirect method, and shows
the consolidated cash flow from operating, investing, and financing activities for
the year, and the consolidated cash and cash equivalents at the beginning and end
of the year.
The cash flow effect of acquisition and disposal of enterprises is shown separately
in cash flows from investing activities.
Cash flow from the acquisition of enterprises is recognised in the cash flow
statement from the date of acquisition. Cash flow from the disposal of enterprises
is recognised up to the date of disposal.
Cash flow from operating activities is calculated on the basis of the profit/loss
before amortisation and depreciation and financing, net and adjusted for non-cash
operating items, changes in working capital, payments relating to financial items
and corporation tax paid. Cash flow from investment activities includes payments
in connection with the acquisition and disposal of enterprises and activities and
of non-current intangible assets, tangible assets and investments. Cash flow from
financing activities includes changes in the size or composition of the Group’s
share capital, payment of dividends to shareholders and the obtaining and
repayment of mortgage loans and other long-term and short-term debt. Cash and
cash equivalents comprise cash.
Segment information
The segment information has been compiled in conformity with the Group’s ac-
counting policies, and is in accord with the internal management reports.
Note 41 Accounting Policies (continued)
DFDS ANNUAL REPORT 2011122
Note 42 Company overview
Company Ownership share 2011* Country City Currency Share Capital
Operating – and holding Companies
DFDS Seaways NV Belgium Gent EUR 62,000
DFDS Logistics NV Belgium Gent EUR 297,472
DFDS Logistics Services NV Belgium Brugge EUR 1,996,503
Aukse Multipurpose Shipping Ltd. 96.4 Cyprus Limassol EUR 1,709
Lisco Optima Shipping Ltd. 96.4 Cyprus Limassol EUR 1,709
Rasa Multipurpose Shipping Ltd. 96.4 Cyprus Limassol EUR 1,709
Tor Botnia Shipping Ltd. 96.4 Cyprus Limassol EUR 1,000
Tor Finlandia Shipping Ltd. 96.4 Cyprus Limassol EUR 1,000
Lisco Maxima Shipping Ltd. 96.4 Cyprus Limassol EUR 1,000
Mare Blue Shipping Ltd. 96.4 Cyprus Limasol EUR 1,000
DFDS AS Denmark Copenhagen DKK 1,485,608,100
DFDS Baltic Line AS Denmark Copenhagen DKK 503,000
DFDS Russia ApS Denmark Copenhagen DKK 127,000
DFDS Stevedoring AS Denmark Esbjerg DKK 502,000
DFDS Logistics AS Denmark Taulov DKK 10,000,000
DFDS Seaways Newcastle Ltd England Harwich GBP 8,050,000
DFDS Seaways Plc. England Immingham GBP 25,500,000
DFDS Logistics Partners Ltd. England Immingham GBP 150,000
DFDS Logistics Services Ltd England Immingham GBP 100
DFDS Seaways Holding Ltd. England Immingham GBP 250,000
DFDS Logistics Contracts Ltd England Ipswich GBP 2,571,000
DFDS Logistics Ltd England Belfast GBP 165,210
DFDS Seaways OÜ 64.5 Estonia Tallinn EUR 3,800
DFDS Logistics OY Finland Hamina EUR 59,000
Halléns France SA France Paris EUR 7,000
DFDS Logistics SARL France Boulogne sur Mer EUR 30,000
DFDS Logistics Contracts SARL France Dunkirk EUR 50,000
New Channel Company S.A.S. 82.0 France Le Havre EUR 1,000
DFDS Logistics BV the Netherlands Gravenhage EUR 453,780
DFDS Seaways Terminals BV the Netherlands Gravenhage EUR 72,000
DFDS Shipping BV the Netherlands Gravenhage EUR 18,400
DFDS Holding BV the Netherlands Gravenhage EUR 40,000,000
DFDS Seaways BV the Netherlands IJmuiden EUR 18,000
DFDS Logistics Container line BV the Netherlands Rotterdam EUR 18,151
LHT Transport BV the Netherlands Rotterdam EUR 21,000
DFDS Dailyfresh BV the Netherlands Rotterdam EUR 15,882
DFDS Logistics Contracts Ltd Ireland Dublin EUR 200
DFDS Logistics Ltd Ireland Dublin EUR 3
DFDS Logistics Contracts SRL Italy Genova EUR 77,000
DFDS Logistics SPA Italy Milan EUR 140,000
DFDS Seaways SIA Latvia Riga LVL 70,000
AB DFDS Lisco 96.4 Lithuania Klaipeda LTL 332,547,434
Laivyno Technikos Prieziuros Base 96.4 Lithuania Klaipeda LT L 1,500,000
UAB Krantas Travel 96.4 Lithuania Klaipeda LT L 400,000
UAB LISCO Shipping Logistics 96.4 Lithuania Klaipeda LTL 100,000
DFDS Logistics AS Norway Lilleaker NOK 1,538,000
Moss Container Terminal AS Norway Moss NOK 1,000,000
DFDS Logstics Rederi AS Norway Oslo NOK 24,990,000
DFDS Seaways AS Norway Oslo NOK 12,000,000
NorthSea Terminal AS 66.0 Norway Oslo NOK 1,000,000
SCF DFDS Lines Ltd 99.0 Russia Kaliningrad RUR 20,000
DFDS Seaways AB Sweden Gothenburg SEK 25,000,000
DFDS Logistics Services AB Sweden Gothenburg SEK 1,100,000
DFDS Logistics AB Sweden Gothenburg SEK 500,000
DFDS Seaways Holding AB Sweden Gothenburg SEK 100,000
Buhus Terminal Holding AB Sweden Gothenburg SEK 50,000
DFDS Seaways GmbH Germany Cuxhaven EUR 25,000
Germany Hamburg EUR 102,000
DFDS Logistics GmbH Germany Hamburg EUR 525,000
DFDS Logistics Services GmbH Germany Hofheim EUR 35,000
DFDS Seaways Baltic GmbH 96.4 Germany Kiel EUR 25,565
17 Dormant companies
* Unless otherwise indicated, the companies are 100% owned.
123DFDS ANNUAL REPORT 2011
STATEMENTS
STATEMENT BY THE EXECUTIVE BOARD AND THE BOARD OF DIRECTORS
The Board of Directors and the Executive Board have today considered and appro-
ved the annual report of DFDS AS for the financial year 1 January - 31 December
2011.
The annual report has been prepared in accordance with International Financial
Reporting Standards as adopted by the EU and additional Danish disclosure
requirements in the Danish Financial Statements Act.
In our opinion the consolidated financial statements and the parent company financial
statements give a true and fair view of the Group’s and the parent company’s assets,
liabilities and financial position at 31 December 2011 and of the results of the Group’s
and the parent company’s operations and cash flows for the financial year 1 January
- 31 December 2011.
Further, in our opinion, the Management’s review includes a true and fair account
of the development in the Group’s and the parent company’s operations and
financial matters, of the result for the year and of the Group’s and the parent
company’s financial position as well as a description of the most significant risks
and elements of uncertainty facing the Group and the parent company.
We recommend that the annual report be approved at the Annual General Meeting.
Copenhagen, 1 March 2012
EXECUTIVE BOARD
Niels Smedegaard Torben Carlsen
President & CEO Executive Vice President & CFO
BOARD OF DIRECTORS
Bent Østergaard Vagn Sørensen Søren Skou Annette Bjerregaard
Chairman Deputy Chairman Deputy Chairman
Jens Knudsen Jill Lauritzen Melby Anders Moberg Tony Smidt
Ingar Skaug Lene Skole Kent Vildbæk
INDEPENDENT AUDITORS’ REPORT
To the shareholders of DFDS AS
Independent auditors’ report on the consolidated financial statements
and the parent company financial statements
We have audited the consolidated financial statements and the parent company
financial statements of DFDS AS for the financial year 1 January – 31 December
2011. The consolidated financial statements and the parent company financial
statements comprise income statement, statement of comprehensive income, ba-
lance sheet, statement of changes in equity, cash flow statement and notes, inclu-
ding a summary of significant accounting policies for the Group as well as for the
parent company. The consolidated financial statements and the parent company
financial statements are prepared in accordance with International Financial
Reporting Standards as adopted by the EU and Danish disclosure requirements
for listed financial institutions.
Management’s responsibility for the consolidated financial statements
and the parent company financial statements
Management is responsible for the preparation of consolidated financial state-
ments and parent company financial statements that give a true and fair view in
accordance with International Financial Reporting Standards as adopted by the EU
and Danish disclosure requirements for listed financial institutions and for such in-
ternal control that Management determines is necessary to enable the preparation
of consolidated financial statements and parent company financial statements
that are free from material misstatement, whether due to fraud or error.
Auditors’ responsibility
Our responsibility is to express an opinion on the consolidated financial statements
and the parent company financial statements based on our audit. We conducted
our audit in accordance with International Standards on Auditing and additional
requirements under Danish audit regulation. This requires that we comply with ethi-
cal requirements and plan and perform the audit to obtain reasonable assurance as
to whether the consolidated financial statements and the parent company financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the
amounts and disclosures in the consolidated financial statements and the parent
company financial statements. The procedures selected depend on the auditors’
judgement, including the assessment of the risks of material misstatement of the
consolidated financial statements and the parent company financial statements,
whether due to fraud or error. In making those risk assessments, the auditors
consider internal control relevant to the Company’s preparation of consolidated
financial statements and parent company financial statements that give a true and
fair view in order to design audit procedures that are appropriate in the circumstan-
ces, but not for the purpose of expressing an opinion on the effectiveness of the
Company’s internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting estimates made
by Management, as well as evaluating the overall presentation of the consolidated
financial statements and the parent company financial statements.
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.
Opinion
In our opinion, the consolidated financial statements and the parent company finan-
cial statements give a true and fair view of the Group’s and the parent company’s
financial position at 31 December 2011 and of the results of the Group’s and the
parent company’s operations and cash flows for the financial year 1 January – 31
December 2011 in accordance with International Financial Reporting Standards as
adopted by the EU and Danish disclosure requirements for listed financial institutions.
Statement on the Management’s review
Pursuant to the Danish Financial Statements Act, we have read the Manage-
ment’s review. We have not performed any further procedures in addition to the
audit of the consolidated financial statements and the parent company financial
statements. On this basis, it is our opinion that the information provided in the
Management’s review is consistent with the consolidated financial statements
and the parent company financial statements.
Copenhagen, 1 March 2012
KPMG
Statsautoriseret Revisionspartnerselskab
Henrik Kronborg Iversen
State Authorised Public Accountant
Torben Bender
State Authorised Public Accountant
124 DFDS ANNUAL REPORT 2011
FLEET LIST
FREIGHT SHIPS RORO
Year built GT Lanemeter Deployment
Ficaria Seaways 200609 37,939 4,650 GothenburgBrevikImmingham
Tor Freesia 200509 37,722 4,650 GothenburgBrevikImmingham
Tor Begonia 200409 37,722 4,650 GothenburgBrevikImmingham
Primula Seaways 2004 32,289 3,831 GothenburgBrevikGent
Petunia Seaways 2004 32,289 3,831 GothenburgBrevikGent
Magnolia Seaways 2003 32,289 3,831 GothenburgBrevikGent
Selandia Seaways 1998 24,196 2,772 GothenburgTilbury
Suecia Seaways 199911 24,196 2,772 VlaardingenFelixstowe
Britannia Seaways 200011 24,196 2,772 VlaardingenFelixstowe
Ark Futura 199600 18,725 2,308 On charter
Flandria Seaways 2000 13,073 1,692 VlaardingenFelixstowe
Anglia Seaways 2000 13,073 1,692 VlaardingenImmingham
Tor Botnia 2000 11,530 1,899 KielKarlshamnSt. Petersburg
Tor Finlandia 2000 11,530 1,899
Maas Viking
2
2009 29,004 3,663 VlaardingenImmingham
Humber Viking
2
2009 29,004 3,663 VlaardingenImmingham
Tor Corona
2
2008 25,609 3,322 FredericiaCopenhagenKlaipeda
Hafnia Seaways
2
2008 25,609 3,322 CuxhavenImmingham
Fionia Seaways
2
2009 25,609 3,322 EsbjergImmingham
Jutlandia Seaways
2
2010 25,609 3,322 EsbjergImmingham
Tor Dania
2
197895 21,491 2,562 CuxhavenImmingham
Transpulp
2
2006 23,128 2,774 GothenburgTilbury
FREIGHT SHIPS RORO FOR DELIVERY IN 2012
Year built GT Lanemeter TEU
4
2012 33,300 3,000 342
2012 33,300 3,000 342
ROPAX SHIPS
3
Year built GT Lanemeter Passengers Deployment
Dunkerque Seaways 2005 35,923 2,000 1,000 DoverDunkirk
Delft Seaways 2006 35,923 2,000 1,000 DoverDunkirk
Dover Seaways 2006 35,923 2,000 1,000 DoverDunkirk
Regina Seaways
1
2010 25,518 2,496 550 KielKlaipeda
Lisco Maxima 2009 25,518 2,496 550 KielKlaipeda
Lisco Optima 1999 25,206 2,300 328 KarlshamnKlaipeda
Dana Sirena 200203 22,382 2,056 623 EsbjergHarwich
Liverpool Seaways 1997 21,856 2,200 340 KarlshamnKlaipeda
Patria Seaways 1991 18,332 1,710 222 PaldiskiKapellskär
Kaunas 198994 25,606 1,539 262 KielSassnitzUstLuga
Vilnius Seaways 198793 22,341 1,700 132 SassnitzKlaipeda
Norman Spirit
2
1992 28,833 1,784 1,100 DoverDunkirk
FLEET LIST
PER 31.12.2011
125DFDS ANNUAL REPORT 2011
FLEET LIST
PASSENGER SHIPS
Year built GT Lanemeter Passengers Deployment
Pearl Seaways 19890105 40,039 1,482 2,166 CopenhagenOslo
Crown of Scandinavia 199405 35,498 1,370 2,026 CopenhagenOslo
King Seaways 19879306 31,788 1,410 1,534 AmsterdamNewcastle
Princess Seaways 19869306 31,356 1,410 1,364 AmsterdamNewcastle
Princess Maria
198100 34,093 1,050 1,762 On charter
SIDEPORT SHIPS
Year built BT TEU
4
Deployment
Lysvik Seaways 199804 7,409 160 Oslo FjordContinent/UK
Lysbris 199904 7,409 160 Oslo FjordContinent/UKSpain/UK
Lysblink 200003 7,409 160 Oslo FjordContinent/UKSpain/UK
Lystind
2
199000 4,471 56 Western NorwayNorthern Ireland/Scotland
Tistedal
2
1996 4,464 129 Western NorwayUKContinent
CONTAINER SHIPS
Year built BT TEU
4
Deployment
Dana Hollandia
2
2002 6,370 698 IrelandContinent
Endeavor
2
2005 7,642 750 UKIrelandSpain
Rheintal
2
1996 3,824 390 NorwayContinent
1
2
3
Ro-pax: Combined ro-ro and passenger ship
4
TEU: 20 foot container unit
FLEET, OWNED AND CHARTERED
SHIPS, END 2011
(GROSS TONS)
RO-RO SHIPS (52 %)
RO-PAX SHIPS (30 %)
PASSENGER SHIPS (13 %)
SIDEPORT AND CONTAINER SHIPS (3 %)
CONTAINER SHIPS (2 %)
OWNED SHIPS, AVERAGE AGE END 201
1
(NO. OF YEARS)
5
10
15
20
25
0
PASSENGER SHIPS (EX. QOS)
RO-PAX SHIPS
RO-RO SHIPS
OWNERSHIP SHARES OF FLEET,
END 2011
(%)
10
30
50
70
100
0
20
40
60
80
90
RO-RO SHIPS
RO-PAX SHIPS
PASSENGER SHIPS
SIDEPORT AND CONTAINER SHIPS
CONTAINER SHIPS
126 DFDS ANNUAL REPORT 2011
COMMERCIAL DUTIES
COMMERCIAL DUTIES
BOARD OF DIRECTORS
Bent Østergaard, Chairman
and Remuneration Committee
Silo, Frederikshavn Maritime Erhverv-
spark AS, J. Lauritzen AS, Kayxo AS,
NanoNord AS
-
UK, Withs Fond, Mama Mia Holding
AS, Royal Arctic Line AS, Meabco AS,
Meabco Holding AS
The Board of Directors is of the opinion
that Bent Østergaard possesses the
following special competences: Interna-
tional management experience, board
experience from international and listed
companies, and expertise in shipping
and finance As a result of his executive
functions for the company’s principal
shareholder, the Lauritzen Foundation
-
ard cannot be considered independent as
per the recommendations on corporate
governance.
Vagn Sørensen, Deputy Chairman
Remuneration Committee and Audit
Committee
VOS Invest ApS
AS, FLSmidth AS, FLSmidth & co AS,
KMD AS, KMD Equity Holding AS, KMD
Holding AS, Scandic Hotels AB, Select
Service Partner Ltd., TDC AS
-
ganza AS, CP Dyvig & Co AS, Koncert-
virksomhedens Fond, Det Rytmiske
Musikhus Fond, Lufthansa Cargo AG,
Royal Caribbean Cruises Ltd.
COMMERCIAL DUTIES OF THE BOARD OF DIRECTORS
AND EXECUTIVE BOARD AS OF 1 MARCH 2012
The Board of Directors is of the opinion that
special competences: International manage-
ment experience, board experience from
international and listed companies, and
expertise in aviation and service industries.
Søren Skou, Deputy Chairman
and Remuneration Committee
AP Moller – Maersk AS
Autoliners Holdings AS
Tankers Owners Pollution Federa-
tion Limited ITOPF, Lloyds Register,
International Council of Containership
Operators ICCO
The Board of Directors is of the opinion
special competences: International
management experience and expertise
in shipping, logistics and procurement.
Anders Moberg, Board member
OBH Nordica AB
OY, Amor GmbH, BYGGmax AB, HEMA
BV, Husqvarna AB, ITAB AB, Rezidor AB,
The Board of Directors is of the opinion
that Anders Moberg possesses the follo-
wing special competences: International
management experience, board experi-
ence from international and listed compa-
nies, and expertise in the retail sector.
Ingar Skaug, Board member
Bery Maritime AS, Ragni Invest AS
BLG GmbH & Co. KG.
The Board of Directors is of the opinion that
Ingar Skaug possesses the following special
competences: International management ex-
perience, board experience from international
and listed companies, and expertise in ship-
ping, logistics, aviation and service industries.
Ingar Skaug has been a Board member for
more than 12 years. According to the re-
commendations on corporate governance, he
cannot therefore be considered independent.
Jill Lauritzen Melby, Board member
The Board of Directors is of the opinion that
Jill Lauritzen Melby possesses the following
special competences: Expertise in financial
management.
Due to family relations to the company’s
principal shareholder, the Lauritzen
Lauritzen Melby cannot be considered inde-
pendent according to the recommendations
on corporate governance.
Lene Skole, Board member
Coloplast Ejendomme AS, Tryg AS
The Board of Directors is of the opinion that
Lene Skole possesses the following special
competences: International management
experience, including from a listed company,
and expertise in economics and accounting.
127DFDS ANNUAL REPORT 2011
COMMERCIAL DUTIES
Annette Bjerre Bjerregaard, staff
representative
Annette Bjerre Bjerregaard has no ma-
nagerial or executive positions in other
companies.
Jens Otto Knudsen, staff representative
Jens Otto Knudsen has no managerial or
executive positions in other companies.
Tony Tranekjer Smidt, staff
representative
Tony Trankjer Smidt has no managerial or
executive positions in other companies.
Kent Vildbæk, staff representative
-
cutive positions in other companies.
EXECUTIVE BOARD
Niels Smedegaard, President and CEO
Foundation, The Danish Trace Council,
the Danish Shipowners’ Association,
Den Danske Banks Advisory Bard, The
Tietgen Foundation and The European
Community Shipowners’ Association
Torben Carlsen, Executive Vice
President & CFO
AB, Envikraft AS, Envikraft Invest AS,
NIELS SMEDEGAARD
TORBEN CARLSEN
KENT VILDBÆK
JILL LAURITZEN MELBY
LENE SKOLE
ANDERS MOBERG
BENT ØSTERGAARD SØREN SKOUVAGN SØRENSEN
ANNETTE BJERRE
BJERREGAARD
JENS OTTO KNUDSEN
TONY TRANEKJER SMIDT
INGAR SKAUG
128 DFDS ANNUAL REPORT 2011
HEADER
EXECUTIVE
MANAGEMENT
TORBEN CARLSEN 1965
HENRIK HOLCK 1961
People & Ships
129DFDS ANNUAL REPORT 2011
HEADER
NIELS SMEDEGAARD 1962
PEDER GELLERT PEDERSEN 1958
Shipping Division
EDDIE GREEN 1958
Logistics Division
TORBEN CARLSEN 1965
130 DFDS ANNUAL REPORT 2011
DEFINITIONS & GLOSSARY
DEFINITIONS & GLOSSARY
Operating profit before
depreciation EBITDA
Profit before depreciation and impairment on long-term
tangible assets
Operating profit
EBIT
Profit after depreciation and impairment on long-term tangible
and intangible assets
Operating profit
margin
Operating profit EBIT x 100
Revenue
Net operating profit
after taxes NOPAT
Operating profit EBIT minus payable tax for the period,
adjusted for the tax effect of net interest costs
Invested capital
minus non-interest bearing liabilities) plus long-term intangi-
ble and tangible assets minus jubilee and pension liabilities
and other provisions
Return on invested
capital ROIC
Net operating profit after taxes NOPAT x 100
Average invested capital
Weighted average
cost of capital WACC
Average capital cost for liabilities and equity, weighted ac-
cording to the capital structure
Profit for analytical
purposes
Profit for the year excluding regulation of taxes from previous
years and remittance of deferred taxes
Free cash flow Cash flow from operations, net excluding interest costs, net
minus cash flow from investments
Return on equity p.a.
Profit for analytical purposes x 100
Average equity excluding minority interests
Equity ratio
Equity x 100
Total assets
Earnings per share
EPS
Profit for analytical purposes
Weighted average number of shares
PE ratio
Share price at the end of the year
Earnings per share EPS
Dividend per share
Dividend for the year
Number of shares at year-end
Dividend payout ratio
Dividend for the year
Profit for analytical purposes
Dividend yield
Dividend per share
Share price at the end of the period
Book value per share
Equity excluding minority interests at the end of the year
Number of shares at the end of the year
Market-to-book value
MB
Share price at the end of the year
Book value per share at year-end
Bareboat charter: Lease of a ship without crew, for an
agreed period.
Bunker: Oil-based fuel used in shipping.
Door-to-door transport: Transportation of goods from
origin to final destination by a single freight forwar-
der. The freight forwarder typically uses third-party
suppliers, such as a haulage contractor, for the actual
transportation.
Chartering: Lease of a ship.
Non-allocated items: Central costs which are not
distributed among the divisions.
Intermodal: Transport using several different types of
Lane metre: An area of ship deck one lane wide and
one metre long. Used to measure freight volumes.
Logistics: Sea and land-based transport, storage and
distribution of freight, and associated information
processing.
Lo-lo: Lift on-lift off: Type of ship for which cargo is
lifted on and off.
Northern Europe: The Nordic countries, Benelux, the
United Kingdom, Ireland, Germany, Poland, the Baltic
nations, Russia and other SNG countries.
Production partnership (Vessel Sharing Agreement):
Agreement between two or more parties on the distri-
bution and use of a ship’s freight-carrying capacity.
Ro-pax: Combined ro-ro freight and passenger vessel.
Ro-ro: Roll on-roll off: Type of ship for which freight is
driven on and off.
Short sea: Shipping between destinations in a defined
geographic area. Its converse is deep-sea shipping, i.e.
sailing between continents.
Sidedoor vessels: Type of ship in which loading/unloa-
ding takes place via the ship’s side.
Space charter: Third-party lease of space on a ship
deck.
Stevedoring: Loading and unloading of ships.
Time charter: Lease of a ship with crew, for an agreed
period.
Tonnage tax: Taxation levied on ships according to
ship displacement.
Trailer: An unpowered vehicle pulled by a powered
vehicle for the transport of goods.
Chartering-out: Leasing out of a ship.
131DFDS ANNUAL REPORT 2011
HEADER
DFDS was founded in 1866, the result of an initiative by C.F. Tiet-
gen to merge the three largest Danish steamship companies of
the day. The company celebrated its 145th anniversary in 2011.
From its inception, DFDS was involved in domestic as well as
international shipping, carrying both freight and passengers. The
international services covered the North Sea and the Baltic, later
expanding to the Mediterranean. Towards the end of the 19th cen-
tury, routes were also established to the USA and South America.
The passenger routes to the USA closed in 1935.
As land-based transport increased, haulage and logistics became
integral parts of DFDS’ business. From the mid60s, considerable
land activities were built up in extension to the route network.
In 1982, a passenger route was opened between New York and
Miami. However, it failed to live up to expectations and was
discontinued at great cost in 1983. After that, the DFDS Group
was restructured, with activities in the Mediterranean and routes
to the USA and South America divested.
Land-based haulage and logistics was developed via organic
growth and acquisitions. By the late 1990s, DFDS Dan Transport
had become one of the largest land-based transport companies
in Northern Europe. In order to concentrate the Group’s resources,
a new strategy was adopted. The emphasis was on shipping, and
Dan Transport was sold in 2000.
The route network for passengers and freight also developed via
been generated through investment in tonnage, particularly by
In July 2010, DFDS acquired Norfolkline and became Northern
Europe’s largest combined shipping and logistics company.
EDITING DFDS AS
DESIGN & LAYOUT KONTRAPUNKT AS
THE HISTORY OF DFDS
132 DFDS ANNUAL REPORT 2011
HEADER
DFDS AS
Sundkrogsgade 11
DK2100 Copenhagen Ø
Tel. +45 3342 3342
Fax. +45 3342 3311
www.dfds.com
CVR 14 19 47 11
Addresses of DFDS’ subsidiaries, locations and
offices are available from DFDS websites.
This annual report has been translated into English
from the Danish version. In case of discrepancies,
the Danish version shall prevail.
