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2019

Color Line’s vision is to be ANNUAL REPORT Europe’s best cruise and passenger ferry company. Color Group Annual Report 2019 Principal figures and key figures

COLOR HYBRID THE WORLD’S PRINCIPAL FIGURES BIGGEST PLUG-IN HYBRID AND KEY FIGURES Color Group AS *Incl. implementation of IFRS-16 GROUP (IFRS) CONSOLIDATED 2019 2018 2017 2016 2015 2019 «This is a great day for DEVELOPMENT IN TRAFFIC Passengers 3 850 623 3 780 748 3 805 023 3 850 947 3 860 663 Norwegian shipping and Cars 961 102 927 640 918 081 913 676 919 697 Freight units (12m-equivalents) 177 085 182 632 180 480 175 680 169 335 a great day for Norway’s Number of sailings 6 324 6 123 6 095 6 157 6 031

INCOME STATEMENT (in NOK mill.) 1) (in EUR mill.) maritime industry» Operating revenues 5 320 5 141 4 968 4 896 4 587 540 Prime Minister and sponsor of the new ship, Operating expenses -4 215 –3 924 -3 788 -3 747 –3 753 -427 Erna Solberg, speaking during the naming ceremony Operating profit bef. depreciation, amortisation, charter and leasing costs 1 105 1 217 1 180 1 149 833 112 in Sandefjord on 23 August 2019 Ordinary depreciation and amortisation -567 –371 -336 -319 –343 -58 Other exceptional items -30 0 0 0 –5 -3 Charter, leasing costs 0 –160 -213 -214 –208 0 Earnings before interest and taxes (EBIT) 509 686 630 616 277 52 Net financial items -235 –161 -190 -101 –145 -24 Pre-tax earnings 274 525 440 516 132 28 Tax expenses -54 –85 -68 -89 23 -5 Net profit for the year 220 439 372 426 155 22

BALANCE (in NOK mill.) Current assets 1 645 2 094 1 504 1 837 1 625 167 Non-current assets 8 360 6 473 5 704 5 641 5 896 848 Total assets 10 005 8 567 7 208 7 478 7 522 1 015 Current liabilities 2 317 1 900 1 071 1 488 2 123 235 Non-current liabilities 5 081 3 898 3 166 3 087 3 027 515 Liabilities 629 704 781 817 735 64 Equity 1 978 2 065 2 190 2 087 1 637 201 Total liabilities and equity 10 005 8 567 7 208 7 478 7 522 1 015

LIQUIDITY (in NOK mill.)/FINANCIAL STRENGTH (%) Cash and cash equivalents as at 31 Dec. 2) 1 929 2 398 829 1 438 972 196 Cash flow from operations 637 958 863 799 314 65 Equity ratio % 20 24 30 28 22 Net interest-bearing debt 5 153 3 810 3 176 3 326 3 913 523

EMPLOYEES/SUNDRY EXPENSES Number of man-years 2 460 2 376 2 351 2 330 2 287 Cost of wages 1 426 1 359 1 328 1 278 1 285 145

Definitions: 1) Translated into EUR, exchange rate as at 31 Dec. 2019 2) Including non-utilized credit facilities

M/S Color Hybrid operates on a regular service between Sandefjord and Strömstad, departing Sandefjord twice daily. The ship was custom-built for this route and efficient traffic and logistics solutions are in place both onboard ship and ashore. Shipbuilders Ulstein Verft built the new vessel and it has won a number of awards for innovation and green technology. M/S Color Hybrid operates entirely without emissions when sailing up and down the fjord leading into Sandefjord. 5 About Color Line Color Group Annual Report 2019 Color Group Annual Report 2019 About Color Line

ABOUT COLOR LINE

Color Line is Norway’s largest – and one of Europe’s leading – companies in the field of European short-sea shipping, employing just under 2 500 man-years in four countries. The company operates four international services between seven ports in Norway, Sweden, Denmark and Germany.

Color Line is now the only shipping company headquartered Color Line is well-placed to capitalise on key market trends in Norway operating international freight and passenger within the company’s core areas of business: cruise and freight. traffic to and from Norway using Norwegian-registered ships. The ships offer conference facilities, hotel accommodation, Norway is a peninsula in Europe and shipment by sea restaurants, shops and entertainment. In addition, the plays a vital role in the flow of goods between Norway company develops travel and adventure tourism concepts and the rest of Europe. Efficient, environmentally-friendly in collaboration with the domestic travel and tourism seaborne transportation is essential to the nation’s industry, industries in the countries in which the company operates. trade and travel and tourism, and Color Line is the biggest Freight and forwarding services are supplied by the individual operator within short-sea travel and tourism into Cargo Division. The company has developed intermodal and out of Norway solutions, including a goods train operated in collaboration All the food outlets offer seasonal dishes featuring a high proportion of Norwegian ingredients. Color Line’s seven-vessel fleet is modern and has with KombiVerkehr that runs between Kiel in Germany and an environmentally profile and is the result of a clear Verona in Italy as well as six other freight nodes in Europe. strategy of differentiation. The ships feature a high degree Color Line’s vision is to be Europe’s leading provider of of product standardization, the aim of which is to secure cruise and transport services. The company’s goal is that CONTENTS cost-effective operations and maintenance. On the route sustainability should be at the heart of everything we plan between Oslo and Kiel in Germany, the shipping company and do. Predictability and internationally-competitive frame­ operates two ships offering quality cruises and freight work conditions provide the security needed for continued PRINCIPAL FIGURES AND KEY FIGURES 5 shipment, as well as the ro-ro vessel M/S Color Carrier. The investment from a Norwegian base in new and innovative, ABOUT COLOR LINE 7 services between Kristiansand and Larvik in Norway and environmentally-friendly profile. Annual turnover is in the Hirtshals in Denmark, and the service between Sandefjord region of NOK 5.3 billion and in 2019 the company’s fleet THE SHIPS 8 and Strömstad in Sweden, offer retail sales and efficient carried almost four million passengers and 177 000 units of PLOTTING A SUSTAINABLE COURSE 10 transport services. freight (12 m equivalents). ■ DIGITALISATION 16 M/S SuperSpeed 1 and 2 operate between Larvik and Kristiansand, respectively, and Hirtshals. Skagen and Aalborg are both a 40-minute drive from Hirtshals. CORPORATE RESPONSIBILITY 20 FROM ROAD TO SEA AND RAIL 24 LOCALISED TRAVEL AND TOURISM 26 MILESTONES IN 2019 28 DIRECTORS' REPORT 2019 31 INCOME STATEMENT/BALANCE SHEET/CASH-FLOW/CHANGE IN EQUITY 36 NOTES 2019 42 CORPORATE GOVERNANCE 76 DECLARATION BY THE MANAGEMENT 78 AUDITOR'S REPORT 79

ANNUAL REPORT 2019 Photographs: Arild Danielsen, Brunvoll/Per Eide Studio, Color Line AS, Felix Razin-Hallberg, Fossum IF, Glenn Walmann, goteborgco.se, Håvard Storvestre, Indav Oy/Kimmo Häkkinen, Jan Hempel, Jon Andersen, Jalla Film, Kurt Engen, NTB/Scanpix, Munchmuseet, Michael Damsgaard, The National Museum, Octocopterfilm/Glenn Walmann, Salto/Fjellanger Widerøe Foto AS, SHIPPAX/G. Giannakis, Ulstein Verft and Øivind Haug. Number printed: 250 Date: March 2020 Printed by: 07 Media Paper: Arctic volume White. Typographical errors may occur. SuperSpeed 1 og SuperSpeed 2 i Hirtshals

6 7 Ships Color Group Annual Report 2019 Color Group Annual Report 2019 Ships

THE SHIPS Travellers on the cruise ships M/S Color Magic and M/S Color Fantasy between Oslo and Kiel can enjoy international entertainment in dedicated show lounges, water parks, shops, restaurants, casinos, spas and fitness centres. The services between Kristiansand and Larvik in Norway and Hirtshals in Denmark, and between Sandefjord and Strömstad in Sweden, offer shopping and fast and efficient transportation. With the newly-acquired ro-ro ship M/S Color Carrier the company is doubling its freight capacity on the Oslo to Kiel route and expanding freight as a business area. CRUISE M/S Color Fantasy M/S Color Magic OSLO–KIEL OSLO–KIEL

TRANSPORT AND SHOPPING M/S Color Viking M/S Color Hybrid SANDEFJORD–STRÖMSTAD SANDEFJORD–STRÖMSTAD

M/S SuperSpeed 1 M/S SuperSpeed 2 KRISTIANSAND–HIRTSHALS LARVIK–HIRTSHALS CARGO M/S Color Carrier OSLO–KIEL M/S Color Carrier OSLO–KIEL

Color Line’s combined annual freight capacity on the three ships operating between Norway and Germany is 80 000 trailers. In Kiel, the company has developed intermodal solutions, including a goods train operated in collaboration with KombiVerkehr that runs between Kiel in Germany and Verona in Italy as well as six other freight nodes in Europe.

8 9 Plotting a sustainable course Color Group Annual Report 2019 Color Group Annual Report 2019 Plotting a sustainable course

Maritime Forecast to 2050, plays a decisive role in growth and sustainable trade world- was published by DNV GL in wide. More than 80 per cent of the goods traded between 2019. According to the report, continents are carried by sea, while international shipping ammonia could replace a quarter of heavy oil and accounts for 2–3 per cent of global climate emissions. diesel the use of ammonia Because shipping does not form part of the climate as potentially the most quotas of individual nations, the industry is dependent on promising of all emission-free technologies. international regulations applicable to all ships to ensure that competition conditions are equal for all. The UN ma- ritime organisation, the IMO, plays an important role and Norway is an active contributor. In 2018, the IMO resolved that emissions from international shipping must be reduced by at least 50 per cent by 2050 relative to 2008 and down to zero as soon as possible during this century. Moreover, the organisation resolved that shipping must be 40 per cent less carbon intensive in 2030. During 2020, the IMO will be following up the targets on the agenda. on how this budget commitment will be met and, under the On 25 October 2019, Norway signed the climate treaty agreement, the transport sector must make the biggest with the European Union. Norway will work together with emission reductions. the EU on cutting emissions over the next decade to 2030 As part of the Green Shipping Programme, Color Line In 2019, Color Hotel Skagen received the international eco-certification Green Key. with the objective of achieving a reduction of at least 40 and M/S Color Fantasy will take part in a pilot study on the per cent. The treaty contains an emission budget for each use of ammonia as an alternative to fossil fuels for larger PLOTTING A SUSTAINABLE year in this period. Norway is required to file annual reports ships. The aim of the pilot study is to produce and imple- COURSE THE NORWEGIAN MARITIME CLUSTER IS A WORLD LEADER Norway is a world leader in the development and implementation of green technology in the design and production of components for ships. In a report published in 2019, Menon Economics estimates that in 2018 green turnover in the The sea links Norway to the rest of Europe and lies there to be freely used as a shipping industry in Norway totalled NOK 28 billion.

motorway, ready salted and with no queues. This is the foundation for Color Line’s M/S Color Hybrid is the world’s largest plug-in hybrid ship. 18 out of 25, or 72 per cent, of sub-contracted deliveries to the ship were by companies in the Norwegian maritime cluster. Suppliers included Brunvoll, Rolls-Royce, Kongsberg, business. Siemens, Fosen Yards and Telenor. According to Menon’s calculations, deliveries by Norwegian suppliers totalled NOK 1 billion. Shipbuilders Ulstein Verft delivered the vessel to Color Line on 1 August 2019 and the ship was put into regular service on the Sandefjord to Strömstad route on 16 August. Color Line has developed into a major operator and plays an agreed not to release sewage water into the vulnerable Baltic important role in the flow of goods and passengers between Sea. This agreement formed part of the WWF Baltic Sea Norway and the rest of Europe. Efficient and eco-friendly Shipping Initiative. The company has also been a pioneer in seaborne transportation is essential for Norwegian industry, the use of technology designed to reduce emissions of climate trade and travel and tourism. gases and other harmful emissions into the atmosphere. No matter how vast and inexhaustible the ocean appears Having already used shore-based power supplies for to be, it can only take so much, and everyone who uses some years, Color Line took a further giant step forward the ocean has a responsibility to ensure that it is managed by launching the world’s biggest plug-in hybrid ship on the sustainably. route between Sandefjord and Strömstad in 2019. The ship In 2008, Color Line signed a voluntary agreement with uses a shore-based power supply both while lying in port the World Wildlife Fund, WWF, under which the company and for charging its batteries in Norway. A shore-based power supply is expected to be in place in Sweden before long, and with this M/S Color Hybrid will have reached the UN and IMO «Sound ocean policy and a sustainable target of a 40 per cent reduction in emissions by 2030. ocean economy are vital for achieving the Color Line can with some justification link its vision UN Sustainable Development Goals. statement to the ocean. Over the coming years the company will boost its profitability by offering its customers a maritime Norway has a knowledge-based, integrated product that includes unique and targeted offerings within and responsible ocean management, and retail, adventure tourism and travel based on customer promotes an international framework for insight, sustainability and innovation. sustainable ocean management». Brunvoll AS delivered the gear system, propellers A sustainable future and bow and stern thrusters for M/S Color Hybrid. The Norwegian Government's updated ocean strategy Shipping faces a dilemma in that on the one hand it consumes Blue Opportunities, 2019 substantial quantities of fossil fuels, while on the other it ➤

10 11 Plotting a sustainable course Color Group Annual Report 2019 Color Group Annual Report 2019 Plotting a sustainable course

ment an ammonia fuel solution for Color Line vessels. to Norsk Gjenvinning, which in turn delivers the waste and safeguarding HACCP (hygiene) and for extending shelf The goal of the Green Shipping Programme is to quickly to Greve Biogass in Vestfold for use in the production of life. With this in mind, Color Line has invested in plastic balers find feasible solutions that will secure efficient and environ- biogas/power. on board the ships to insure efficient recycling. mentally-friendly shipping operations for the future. The studies and pilot schemes that form part of the Green Shipping Oslo–European Green Capital Recycling electronic waste Programme will be of decisive importance to the phasing in Oslo is an important port for Color Line and the company’s Color Line recycles all electronic waste and has concluded of zero and low emission operations in the shipping industry headquarter is located in the terminal at Hjortnes. Oslo was an agreement with Revac AS, one of Norway’s largest in the period leading up to 2030, with important climate, the 2019 European Green Capital and Color Line was one of processes of EE waste (electrical and electronic appliances/ environmental and health gains for the industry from reduced the partner participants. Color Line is also a member of the products). climate emissions. Industry for Climate network organised by Oslo’s Climate Agency. The network is part of the larger national initiative, Research for healthier oceans Cooperation between the public authorities Cities of the Future. The planet is facing major environmental problems associated The Winnow system for reducing food waste on board ship was installed in 2019. and industry According to the City Government’s Policy Statement with pollution and the accumulation of waste materials in Color Line is the only shipping company headquartered in 2019-2023, Oslo’s goal is to cut climate emissions by 95 per marine environments. In its Sustainable Development Goals, Norway operating international freight and passenger traffic cent by 2030. With the aid of shore-based power supplies the UN stresses the importance of securing scientific know- using Norwegian-registered ships. Long term, predictable and the electrification of oil-fired boilers, Color Line has ledge about the health of the world’s oceans. Color Line is and internationally-competitive framework conditions are already achieved the City Government’s targets for the a long-term collaborator with the Norwegian Institute for environmental technology on M/S Color Hybrid will be a prerequisite for continued prosperity. Both the subsidy company’s two cruise ships during their time in port in Oslo. Water Research (NIVA) on environmental measurements, introduced on other ships in the fleet. scheme for Norwegian seafarers and a precisely-targeted Color Line and the Port of Oslo are both participants in in a project known as Ferrybox. • Thermal recovery solutions for heating and cooling will public policy system with efficient environmental reward the Green Shipping Programme, which amongst its other The Ferrybox system has already been installed on be developed further. schemes are of decisive importance. activities is conducting a pilot study on the use of ammonia some of the company’s ships and in 2019 was fitted to the • Battery packs will be installed to enable propulsion engines as an alternative to fossil fuels. Ammonia could replace fossil M/S Color Hybrid. The collaboration with NIVA includes a to be used more efficiently (peak shaving) and the use of M/S Color Hybrid – the world’s largest plug-in fuels in larger ships. collection system that is part of an EU project known as auxiliary engines will be reduced (spinning reserve). hybrid JeriCO-NEXT, the aim of which is to measure quantities of • Silicon-based hull paint will be used to reduce water • Built by Ulstein Verft, designed by Fosen Yard, over 70 per Food waste microplastics in seawater. resistance. cent of deliveries made by the Norwegian maritime cluster. Norway’s goal is to reduce food waste by 50 per cent by In collaboration with NIVA, Color Line has installed • Naming ceremony in Sandefjord on 23 August 2019, 2030 and to follow the sustainability targets defined by the interactive screens on board M/S Color Fantasy enabling Lean Marine sponsor: Prime Minister Erna Solberg. UN. Between September and December 2019, Color Line passengers to learn about climate and the environment and Lean Marine is a system for automated fuel saving and data • The capacity of the approximately 70 tonne batteries is trialled the renowned Winnow system with the aim of cutting to explore the research project and see for themselves the analysis solutions that was installed on M/S Color Fantasy 5 MWh, enabling the ship to sail for one hour at a speed food waste on the ships in the fleet by 20 per cent. The findings of the seawater collection programme. and M/S Color Magic in December 2019 and January 2020, of 12 knots. system weighs and registers food waste from the ships’ respectively. The system monitors the propulsion system • When a shore-based power supply is in place in Sweden, restaurants, enabling production to be systematically The road ahead for Color Line and ensures that power is used optimally by avoiding M/S Color Hybrid will very soon be able to achieve the adapted to consumption. • Experiences and solutions produced by the use of new overconsumption. UN and IMO target of a 40 per cent reduction in emissions in 2030. The use of plastics on the ships • Thermal reservoirs and thermal recovery (capacity 5 MWh). Systematic processes have been put in place to reduce the • Delivery of waste to a biopower plant on shore. Food consumption of plastics on board the company’s ships. In waste generated on board M/S Color Hybrid is delivered many contexts, plastic is a very useful product for packaging The Ferrybox concept is installed on the ships and enables seawater samples to be collected. As shown in the illustration, the sensors measure sea temperature, salinity, oxygen, algae concentrations, particle content and oil in the surface water. Weather observations and more sophisticated SHORE-BASED POWER SUPPLY sensors provide measurements of potentially toxic algae, ocean acidification, nutrient salts, seawater temperatures and micro-plastic content. Ships need access to substantial amounts of power even when lying in port. Traditionally, ships have produced their

own electrical power with the aid of shipboard diesel engines. This generates emissions of CO2, particles, sulphur dioxide and nitrogen oxide even when the vessel is in port.

Installation of shore-based power 2011: Oslo. ENOVA and the Port of Oslo contributed 30 per cent of the required funding 2014: Kristiansand. Approximately 50 per cent of the required funding received from the NOx Fund. 2016: Larvik. Approximately 50 per cent of the required funding received from the NOx Fund. 2017: Sandefjord. Approximately 50 per cent of the required funding received from the NOx Fund. 2019: Kiel. 2020: Framnes Sandefjord.

Color Line has been a pioneer in the installation of shore-based power supplies and now uses shore-based power supplies

in all the Norwegian ports at which the company’s ships call. This saves a total of 10,000 tonnes of CO2 each year as well as bringing major reductions in NOx, Sox, particles and noise. One of the most important measures by the Norwegian authorities has been the introduction of reduced electricity charges for commercial vessels in force from April 2018. ➤ ➤

12 13 Plotting a sustainable course Color Group Annual Report 2019 Color Group Annual Report 2019 Plotting a sustainable course

GREEN STEPS Color Line works systematically in areas in which extensive corporate responsibility is a prerequisite. A commitment to the environ­ ment characterises all the company’s

strategies and this commitment will The Sustainable Development Goals are a call for action by all countries – poor, rich and middle-income – to promote prosperity continue to be strengthened in the future. while protecting the planet.

Color Line Cruises M/S Color Carrier M/S Color Viking M/S Color Hybrid M/S SuperSpeed 1 M/S SuperSpeed 2

Electrification of Agreement with the Fitting of scrubbers oil-fired boilers on World Wildlife Fund Fitting of on M/S SuperSpeed M/S Color Hybrid M/S Color Color Hotel Skagen M/S Color Fantasy. on voluntarily avoiding City of Oslo’s Baltic Sea scrubbers on 1, M/S Color Magic wins Next Gener- Hybrid voted awarded Green This helps to reduce emissions of raw sewage Environmental Clean Maritime M/S Super- and M/S Color ation Ship Award Ship of the Year Key international emissions while the into the Baltic Sea. Prize. Award. Speed 2. Fantasy. at Nor-Shipping. at Nor-Shipping. eco-certification ship is in port.

2008 2009 2011 2012 2014 2014 2015 2016 2017 2019 2019 2019

The research collaboration with Installation of shore- Installation of Confederation of Installation of Installation of Installation of Launch of Installation of NIVA started with measurements based power supply in shore-based Norwegian shore-based shore-based shore-based M/S Color Hybrid shore-based power of the marine environment. Oslo. This plant in the power supply Enterprise power supply power supply power supply – the world’s supply at Framnes Port of Oslo was one in Kristiansand. environmental in Larvik. in Sandefjord. in Kiel. largest plug-in in Sandefjord. Used of the first in world to award for Logistics hybrid ship. by M/S Color Viking. provide high-voltage and Transport. shore-based power NIVA to large ships. cooperation extended to include Ro-ro vessel M/S Color M/S Color Hybrid. Carrier launched and a new eco-friendly cargo route between Oslo and Kiel is opened. Intermodal solutions have been developed and goods are carried by train directly from the port of Kiel to Verona and other major European cities.

14 15 Digitalisation Color Group Annual Report 2019 Color Group Annual Report 2019 Digitalisering DIGITALISATION

The digitalisation of society has an impact on the way in which we do our work. New technologies are being introduced at a faster rate than in the past, offering new opportunities for the customer and bringing changes to the duties and wor- king days of everybody employed by Color Line.

Captain Asbjørn Heide Larsen and During 2019, Color Line introduced a number of new sys- rent building regulations, in amongst other ways through Jan Magnar Sollid on board M/S Color Hybrid. tems designed to meet the expectations and needs of our the use of geothermal energy and solar panels. customers. Understanding how to use new digital solutions The new warehousing and logistics facility centralises requires a new mindset on the part of our guests as well the and increases the efficiency of all the warehousing func- people working with these systems on a day-to-day basis. tions involved in supplying the company’s fleet. Centralising Like moving from the Stone Age to the Satellite Age This process of readjustment has been an area of focus for these operations will provide efficiency and quality boosts Color Line in recent years, for example in our personnel at every stage of the chain. For example, data is exchanged from one day to the next. training processes. In 2019, all our managers and middle between ship and shore every 15 minutes. This provides Jan Magnar Sollid, Captain of M/S Color Hybrid managers underwent a two-day management course desig- automatic contact between the shops on board ship and the ned to give them ownership of the company’s vision of being warehouse in Denmark enabling prices and offerings to be Europe’s leading provider of cruise and transport services. checked quickly and precisely. The ordering of goods is now ships are largely met through personal service provided by Customer satisfaction and optimisation is the goal, both an entirely digital process, rather than manual as in the past. the company’s personnel. In March, the company launched a when service is provided in person and when it is delivered M/S Color Hybrid is the first of our ships to be equipped with new booking solution on its webpages for desktop and tablet via modern communications platforms and systems. a new onboard system, which will bring efficiency improve- devices. With the launch of this new system Color Line has ments and provide a better customer experience. upgraded the booking process on all digital platforms and Efficiency improvements and centralisation work will continue to improve the customer’s experience of At the end of 2019/start of 2020, the company moved into Enhanced customer service this process. a new central warehousing and logistics facility in Hirtshals. Pre-departure communication with customers is done digi- With the introduction of automatic number plate recog- The facility meets the environmental requirements of cur- tally, whereas the needs of guests once they on board our nition during vehicle boarding and self-service check-in, the boarding process has been speeded up considerably. In collaboration with Telenor Maritime the ships have New warehousing and logistics facility in Hirtshals. Centralisation and digitalisation allow goods to be transferred to the ships efficiently and precisely. been equipped with the world’s fastest shipboard wi-fi network. New technological solutions have been introduced to improve the availability of our on-board offerings, including an app for booking tables in restaurants and for receiving updates about shopping and activities. Color Line has an active and precisely-formulated social media presence. The aim is to stimulate a desire to travel and to strengthen loyalty and familiarity with the company’s brand and offerings. The company’s social media presence is also important from a customer service perspective.

There are 230 screens on board M/S Color Hybrid, and they can all be controlled remotely from the offices in Oslo and Sandefjord. COLOR CLUB The Color Club loyalty programme allows the company to reward guests who use Color Line regularly. Color Club membership has increased steadily since the start in 2001 and in December 2019 the number of active members had reached approximately 193 000. Members receive a variety benefits, such as discounts and special offers on travel. As part of the programme, members can save bonus points and qualify for discounts on goods in the shops on board Color Line ships. Membership costs NOK 160 a year. ➤

16 17 Digitalisation Color Group Annual Report 2019 Color Group Annual Report 2019 Digitalisering

Product development on board The development of restaurant and food concepts is a continuous process. All our food outlets offer seasonal dishes featuring a high proportion of Norwegian ingredients. Our entertainment offerings are also in constant develop- ment. On the Sandefjord to Strömstad service the company launched a new offering in 2019 featuring popular entertain- ment concepts several times a week. During the school holidays, the needs of families with children are at the forefront of our mind and the entertainment reflects this. The shops and their product ranges are renewed on a regular basis. In Perfume & Cosmetics representatives are on hand to offer guests tips and advice on make-up and new fragrances. ■

The duty-free shops offer a wide selection of goods. On the Oslo-Kiel service the shows are changed twice a year. Hamburg is just a short drive or train ride away from Kiel.

There are restaurants and food outlets to suit every taste. The promenades on the cruise ships feature shops, bars and cafes. Aqualand is perfect for all age groups and features a whirlpool bath, Captain Kid, Frida and Valentina are a great hit with our younger guests. baby pool, water chutes and a counter-current pool.

Color Hotel Skagen is Skagen’s only four-star hotel. Sweden is the most popular foreign holiday destination for Norwegians. Color Line works closely with LEGOLAND® Billund Resort and several other attractive holiday centres and destinations.

18 19 Corporate Responsibility Color Group Annual Report 2019 Color Group Annual Report 2019 Corporate Responsibility

Captain Erling B. Hansen has been a seafaring man for 50 years. Color Line received the Norwegian Maritime Competence Foundation’s Maritime Competence and Training Award in 2019.

activities and meeting places for children and young people on alcohol sales, the ban on advertising, age limits and in particular, with the donations to these organisations playing the excise duty policy. The government will continue these CORPORATE RESPONSIBILITY an important role in promoting wellbeing and social develop- primary strands of its alcohol policy and has no plans to ment in the local communities of the children. For 2019, change the system of duty-free sales. 85 organisations will share a total of some NOK 17 million. The report estimates that duty-free sales on board ferries Color Line’s most important corporate responsibility is the company’s contribution Gaming on board Color Line’s ships is subject to strict represent approximately 2 per cent of total alcohol sales in to the creation of value, innovation and jobs in the four countries in which the control procedures and the company’s Compliance Officer Norway and notes that it is reasonable to assume that the monitors gaming activities to ensure that these control system of duty-free sales is of importance to the profitability company is active: Norway, Sweden, Denmark and Germany. procedures are followed. Gaming is conducted in separate of the ferry services and that some services would cease to staffed premises with entry restricted to the over-18s. The operate if they were no longer able to offer duty-free sales company has mechanisms in place to counteract irrespon- on board the ships. Color line is the biggest individual operator within short that the framework conditions under which Norwegian sible gaming and a special e-learning course has been Alcoholic beverages are served in the bars, restaurants sea travel and tourism carrying foreign tourists to Norway shipowners operate should contribute to the maintenance produced for employees on how Color Line will ensure that and cafes on board the company’s ships. Most of the sales and Norwegian tourists to Sweden, Denmark and Germany. of the existing route structure. With a view to supporting gaming activities are conducted responsibly. The course involve wine and beer. In addition, alcoholic beverages The value created onshore is substantial. For example, each the competitiveness of Norwegian shipping it was therefore includes information on gambling addiction, prevention of and tobacco are sold in the shops on the ships during the krone spent by foreign tourists on board Color Line’s ships decided that shipboard gaming should be permitted. addiction, and training in the company’s internal control voyage. Tobacco sales are conducted in separate screened- generates NOK 5 for the shore-based travel and tourism Gaming on board is subject to the regulations of 1 January procedures. In addition, a close and continuous dialogue is industry in Norway. According to the REISEPOL research 2009 and these regulations are overseen by the Norwegian conducted directly with the Norwegian Gaming and Foundation project, if total ripple effects are included the figure is NOK 11. Gaming and Foundation Authority. The gaming and games Authority as well as through participation in the Forum for Color Line’s donations are helping to develop and create activities and meeting places aimed at children and young people (Foto: Fossum IF). Menon Economics conducted a value creation and ripple offered on board ship are an important part of Color Line’s Responsible Gaming which is organised by the Foundation. effect analysis of the construction of the world’s largest entertainment offering and consists of slot machines and According to the Norwegian Gaming and Foundation plug-in hybrid ship and calculated the overall effect on various forms of table games. Authority, no negative social consequences of gaming on board employment to be almost 950 man-years and the total Each year, the shipping company distributes a statutorily- Color Line ships have been registered on the Help Line or value created to be in the region of NOK 840 million. The determined percentage of earnings from onboard gambling other acknowledged systems for handling gambling addiction. ship, M/S Color Hybrid, was built at Ulstein Verft and more to cultural, sporting and other voluntary organisation in than 70 per cent of the subcontracted deliveries were by Norway. Since the introduction of the scheme in 2009 Sales of alcoholic beverages and tobacco products companies in the maritime cluster in Norway. The shipyard a total of almost NOK 190 million has been donated to on board the ships are strictly controlled delivered the vessel on 1 August 2019. charitable purposes, including the Bellona Foundation, In connection with last year’s National Budget, the Storting the children's choir of the Norwegian Opera and Ballet, the instructed the Norwegian government to present a full Shipboard gaming Norwegian Trekking Association, the Norwegian Society for report on the duty-free sales scheme during this present In 2009, Color Line was granted a licence to organise casino Sea Rescue, Ridderrennet (the world’s largest annual winter parliamentary period, including a review of the socio-political and other gambling operations onboard its ships plying sports event for visually-impaired and disabled participants), issues. Compared with most European countries, Norway’s between Norway and foreign destinations. In their grounds and to a wide range of local sports clubs. In making these policy on alcohol is restrictive. The most conspicuous mea- for granting the licence, the authorities stressed the fact contributions Color Line is helping to develop and create sures in place are the licensing system, the state monopoly ➤

20 21 Corporate Responsibility Color Group Annual Report 2019 Color Group Annual Report 2019 Corporate Responsibility

off areas in the shipboard shops. The company applies funds of the Foundation are also used for skills building and policies. The company has unambiguous procedures for company’s procurement activities follow the applicable quota restrictions on sales of both alcoholic beverages and recruit­ment programmes, as well as for projects in the areas following up and reporting matters of concern as well as principles governing human rights, labour standards, tobacco as provided for in the applicable quota provisions of health, environment and safety in the maritime industries. an external whistle-blower channel that is monitored by environmental protection and anti-corruption. Furthermore, on the services between the Nordic countries. PwC Advokater AS. Color Line’s business is conducted in accordance with During 2019, Color Line put measures in place to bring Security and emergency planning the applicable industry-specific regulations, such as the its sales into compliance with the provisions of the European Good emergency planning is high on the list of priorities of Anti-money laundering procedures International Ship and Port Facilities Security Code (ISPS), Union’s Tobacco Product Directive, which came into force the public authorities. This can be achieved in among other The revised Anti-Money Laundering Act that came into force the International Safety Management Code (ISM) and the on 20 May 2019. The objective of this directive is to improve ways by conducting realistic exercises in the appropriate in 2018 extended the area of application of the legislation ILO’s Maritime Labour Convention (MLC). Suppliers too are internal control procedures relating to the production, surroundings. Color Line plays its part by making its ships compared to previous law and now specifically provides required to comply with these regulations, and, in addition, shipment and sale of tobacco goods within the European available for use as arenas for exercises when the armed that operators of gaming services are also subject to the all deliveries of goods and services must be in compliance Union. Under the new directive, Color Line is required to forces, police, Joint Rescue Coordination Centre, local new Act. Anti-corruption measures form a key part of Color with the IMO/SOLAS regulations and EC/EU directives. register the actual shipment route of tobacco goods. authorities or other agencies are practising handling critical Line’s compliance work and this work maintains a particular situations, accidents or terrorist situations. These exercises focus on gaming and entertainment activities conducted on External boards and committees An important training organisation provide effective and necessary training for the parties con- board our ships. The Compliance function takes a systematic The company is a member of a range of boards and com- Color Line is a major employer, deploying a total of almost cerned in handling and coordinating critical situations. risk-based approach in its work and gives priority to the mittees, including the Norwegian Shipowners’ Association, 2 500 man-years in four countries. The company works day-to-day need to secure good management and appropriate Norwegian Logistics and Freight Association, the Foundation systematically to make a career path at sea an attractive Data protection and information security internal control procedures. Color Line’s Compliance for Norwegian Maritime Expertise, Interferry, and DNV GL’s option. In 2019, Color Line was honoured with the Foundation Over the last few years, Color Line has worked systematically Officer presents an annual report to the Audit Committee Ferry Committee. At international level, Color Line is repre- for Norwegian Maritime Expertise’s Maritime Competence and to ensure that the company is in compliance with the new summarising the work on securing efficient internal control sented on the Norwegian-German Chamber of Commerce Training Award. Training is an important part of the shipping GDPR regulations. Customers expect Color Line to take data and the work on ensuring compliance with internal and and the Trade Council for Germany. In the area of travel and company’s drive to secure the right skills and expertise for protection and privacy seriously and the company works external laws, regulations, policies and procedures. tourism, Color Line is represented on the decision-making the future and to gain access to mariners at all levels. It is continuously to improve and develop rigorous routines and bodies of VisitOSLO and the Norwegian Travel Forum, amongst with this goal in mind that the company invests in education systems to ensure that personal data is processed efficiently, Supplier Code of Conduct other organisations. Color Line is a partner in Oslo City both at technical colleges and university colleges. The as well as working continuously on identification, evaluation, Color Line conducts its business in accordance with the Council’s «Business for Climate» compact, and in the Green company has been training apprentices continuously since documentation and appropriate measures relating to the provisions of the UN Global Compact, the world’s most Shipping Programme, and also heads the «Ammonia as fuel» 1996. In practice, this means that over 1000 apprentices various data protection and privacy issues facing the extensive initiative on corporate responsibility, and the pilot project. ■ have been trained by Color Line during this time. These company. Over the last year the company has maintained are largely personnel on the deck and engine room, although a particular focus on identifying and handling new forms of in recent years apprentice kitchen and waiting staff have GDPR problems that occur during the development of new Color Line takes part in exercises together with the authorities in the countries in which the company operates. also received training. products and digital tools. Color Line operates a programme for recruiting cadets All Color Line personnel are required to take a digital to work on the company’s ships during the summer months. training course on data protection. In addition, gatherings This is to give the students both practical experience and are held for managers and middle managers to increase time at sea between the end of one academic year and the their skill sets and to identify new problems. start of the next. At present, the role of Data Protection Officer is held by Color Line also has a scheme under which young people Color Line’s Compliance Officer. In addition, the company are able to spend a few days in placements on company ships has dedicated data protection resources across the business to give them an insight into the maritime industry. who follow up on any GDPR issues that may arise. In recent years, a key focus of the company’s recruitment work has been to encourage more young women to pursue Zero-tolerance of corruption careers in the maritime sector. Color Line has a zero-tolerance policy towards corruption The company is the biggest contributor to the Foundation and dishonesty in any form. A set of ethical guidelines has for Norwegian Maritime Expertise. Under the subsidy scheme been drawn up to provide support for our personnel in their for NOR-registered ferries operating in international day-to-day interactions with guests, suppliers and colleagues. waters, Color Line has committed itself to making monthly The procedures are incorporated in the management system contri­butions to the Foundation. Over the last 10 years of the company and implemented in all companies in the these contributions have totalled almost NOK 100 million. Group. All our personnel undergo a mandatory The Foundation was established to give apprentices and e-learning programme on the company’s ethical guidelines cadets opportunities in the Norwegian maritime sector. The and procedures are in place to ensure compliance with our

The shipment of freight by sea is a public transport system for goods. M/S Color Carrier plies the route between Oslo and Kiel.

22 23 Color Line Cargo Color Group Annual Report 2019 Color Group Annual Report 2019 Color Line Cargo

«To achieve climate neutrality, a 90% reduction in transport FROM ROAD TO emissions is needed by 2050. The Combined Transport Directive SEA AND RAIL will be revised to turn it into an effective tool to support multimodal freight operations involving rail and waterborne Color Line Cargo is the business unit responsible for the shipment of freight transport, including short-sea shipping». on the company’s seven vessels on the ferry routes into and out of Norway, European Green Deal, December 2019 Sweden, Denmark and Germany.

Transferring more freight movement from road to sea will developed intermodal solutions, including a goods train result in less traffic on roads, fewer accidents, lower emis- service operated in collaboration with KombiVerkehr sions and reduced road wear. Forecasts for the economy between Kiel in Germany and Verona in Italy. In addition, and for population development indicate a 35-40 per cent shipment by rail is available from the port of Kiel to six other growth in freight shipment measured in tonnes/km in the freight nodes in Europe. In Kiel, freight units are loaded period leading up to 2040. This is the background to the directly from train to ship and vice versa. This makes sense decision by the Norwegian government introduce a subsidy logistically since efficiency is increased and energy con- scheme in the National Budget for transitioning goods from sumption and climate emissions are lower than in the case road to sea. of shipment by road. This intermodal solution allows freight from Europe to reach Oslo in less than 48 hours. Trans­

M/S Color Carrier and intermodal solutions ferring freight from road to sea reduces emissions of CO2 Color Line’s investment in the ro-ro vessel M/S Color Carrier substantially compared with the emission levels that would to operate on the service between Oslo and Kiel came about be generated had the cargo had been carried by road. as a result of a variety of factors, including the Norwegian government’s subsidy scheme. This scheme will encourage Freight and forwarding services the transition of freight shipment from road to sea and Color Line’s business concept is the movement of people reduce the commercial risk of the operators concerned. and goods between Norway, Sweden, Germany and Denmark. M/S Color Carrier been specially designed to carry large In total, Color Line’s seven ships carry a total of 1.4 million numbers of unmanned trailers. In addition, the vessel is able tonnes of freight to and from Norway every year. The largest to handle hazardous consignments, as well as large and quantities of freight are shipped on M/S SuperSpeed 2 between heavy cargoes. This means that very many consignments Larvik and Hirtshals. that would otherwise have been carried on the road network In order to ensure the efficient distribution of freight, from Europe to Norway can now be transported by sea. Color Line offers extensive forwarding services, ensuring The ship was put into service in January 2019. that all customs clearance and imports of goods attracting An important innovative step was taken in October when customs duties proceed in accordance with the customs Color Line linked up with the European rail network. Working regulations in force in each individual country – in practice, together with key freight customers, the company has the EU. ■

TThe investment in the ro-ro ship is in line with the company’s M/S COLOR CARRIER ambition to continue to develop sustainable and environmentally- – FROM ROAD TO SEA friendly solutions for Norwegian shipping. ● July 2018 – Color Line purchases a new ro-ro ship ● January 2019 – M/S Color Carrier is launched and the company doubles its freight shipment capacity between Oslo and Kiel ● Length 154.5 m ● Beam 22.7 m ● Draft 7.15 m ● 12 433 BRT ● Ice class 1A Super ● 20 knots normal speed ● Built in 1998, Fosen Yard, Norway

24 25 Localised travel and tourism Color Group Annual Report 2019 Color Group Annual Report 2019 Localised travel and tourism

LOCALISED TRAVEL AND TOURISM

Color Line is a major travel and tourism operator with ships that ply routes between Norway, Sweden, Denmark and Germany all year round. With Color Hotel Skagen and strategic partnerships in the travel and tourism industry, the company is an important player in an expanding industry.

The travel and tourism industry is experiencing growth worldwide and Norway has everything needed in order to take part in this growth. Color Line shares the view of the travel and tourism industry and the authorities that further growth must be on neighbouring, international markets. The company has a well established position in Denmark, Sweden, Germany and the Netherlands.

Localised travel and tourism – sustainable growth Rauland is an important destination for the company’s Danish tourists, Visitor numbers to Oslo continue to increase and during 2020 and 2021 especially during the winter. The destination is tailored to the needs of the new Central Deichman Library, the new Munch Museum and the new in neighbouring areas Color Line’s guests and has abundant capacity. National Museum will all open. No operator carries more foreign visitors to Norway by sea than Color Line. In 2019, the company launched the world’s largest plug-in-in hybrid ship on the service In Denmark, the company partners a number of travel and that will increase demand for culturally based travel and The ministries of Culture and of Trade, Industry and Fisheries published their ® Strategi between Sandefjord and Strömstad in Sweden. During tourism destinations and suppliers, including Legoland tourism experiences. Culture and events take place all year strategy for culture, travel and tourism parts of the voyage emission levels are at zero and the Billund Resort, Lego House and Visit Northern Jutland, round and can play a part in increasing activity levels and in 2019.

service offers an environmentally friendly and attractive as well as the company’s own Color Hotel Skagen. sales outside the high season. With the opening of the new Strategi for kultur og reiseliv cruise through three national parks. Sweden is Norway’s Munch Museum in 2020 and the new National Museum in Noreg som attraktiv kulturdestinasjon biggest travel and tourism market and vice versa and Cultural tourism Oslo in 2021 the influx of international tourists is expected during the last four months of 2019 Color Hybrid proved Color Line has long had strategic collaboration agreements to increase. Color Line plays an active part in the travel and to be a great success, recording an increase in traffic of with key providers of cultural and adventure tourism activities. tourism community, inter alia through the Norwegian Travel over 30 per cent. By way of example, the company signed agreements with Forum, VisitOSLO and USUS in Southern Norway, the aim SuperSpeed 1 and SuperSpeed 2 sail between Larvik and the Norwegian Opera and Ballet in 2013 and with the Munch being to create a more rounded travel and tourism product Kristiansand in Norway and Hirtshals in Denmark. The cross­ Museum in 2014. «Strategy: Norway as an attractive cultural and ensuring a more closely-targeted joint marketing strategy ing from Norway to Denmark takes just over three hours. nation» (2019) aims to encourage the promotion of measures internationally. ■

600 000 FOREIGN VISITORS ARRIVE IN NORWAY ON COLOR LINE SHIPS EVERY YEAR

Annually, 600 000 foreign tourists come to Norway on Color Line ships. On average, a foreign visitor stays in Norway for 10.8 days according to Innovation Norway’s tourism survey. This means that Color Line’s operations contribute 6.5 million guest days per year, which in turn generates tourism consumption, including payment for travel, to a value of some NOK 10 billion per annum (source: Norwegian Travel Forum).

No other operator carries more foreign visitors to Norway by sea than Color Line acquired the hotel in 1996 and renamed it Color Hotel Skagen. Color Line works closely with LEGOLAND® Billund Resort. Color Line. The hotel is now the largest in Skagen and the town’s only four-star hotel.

26 27 Milestones Color Group Annual Report 2019 Milestone Color Group Annual Report 2019

MILESTONES IN 2019 In 2019, the ro-ro vessel M/S Color Carrier was put into service between Kiel and Oslo. A collaboration with German railway company KombiVerkehr secures efficient intermodal freight shipment from the port of Kiel to major cities in Europe. M/S Color Hybrid was put into service on the Sandefjord to Strömstad route. In Hirtshals in Denmark, Color Line opened a new central warehousing and logistics facility, and a new digital onboard system for efficient interaction has been launched. COLOR FANTASY

• 19 • 2004-20

Voted «2019 Shipping company of «Denmark in the town M/S Color Hybrid Opening of direct rail M/S Color Fantasy the Year operating into and out of square». Color Line crowned Ship of link between Kiel and celebrates 15th Norway» at Grand Travel Awards invites Denmark’s travel the Year during Verona and other major Anniversary. 2019. and tourism industry Nor-Shipping. European cities. to Kristiansand.

January February March April May June July August September October November December 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019

Launch of Launch of a new Opening of shore- First departure and naming Opening of the new ro-ro ship booking solution based power supply of M/S Color Hybrid. Launch central warehousing M/S Color Carrier. for desktops and system in Kiel. of the company’s new and logistics facility tablets. DOBS onboard system. in Hirtshals.

28 29 Directors’ Report and Financial Statement Color Group Annual Report 2019 Color Group Annual Report 2019 Directors’ Report and Financial Statement

With sister ship M/S Color Fantasy, M/S Color Magic is the world’s largest car-carrying cruise ship. Directors' Report 2019 Color Group AS

ABOUT THE GROUP Color Line took delivery of the world’s largest plug-in Color Group AS is the parent company of Color Line AS. hybrid vessel on 1 August 2019. The ship sets a new benchmark Color Line AS is Norway's largest – and one of Europe's lead- for what an eco-friendly vessel should be and represents ing – companies in the field of short-sea shipping, employing a genuine renewal of the shopping and entertainment almost 2 500 man-years in four countries. The company experience for travellers between Norway and Sweden. has a fleet of seven vessels and operates four international The ship is 160 meters long and is able to carry 2 000 pass­ services between seven ports in Norway, Germany, Denmark engers and approximately 500 cars, providing a substantial and Sweden. The company is now the only shipping company increase in capacity on the service between Norway and headquartered in Norway operating international freight Sweden. The new ship was put into service on 16 August and passenger traffic to and from Norway using Norwegian- as a replacement for M/S Bohus, which has been sold to a registered ships. Portuguese shipping company and is now plying a route in Color Line’s vision is to be Europe’s leading provider of the Mediterranean. cruise and transport services. Our goal is that sustainability Color Line’s tonnage is modern and cost-effective with should be at the heart of everything the company plans and a high degree of product standardisation. The total number does. Predictability and internationally-competitive frame­ of passengers carried in 2019 was 3 850 623 (3 780 748 work conditions provide the security needed for continued in 2018). The business strategy of the company is primarily investment from a Norwegian base in new and innovative, to enhance customer value rather than grow volume, and the environmentally-friendly solutions. achievement of this goal has in part been made possible by the Norway is a peninsula in Europe and efficient seaborne investment in efficient modern revenue and booking systems. transportation is essential to sectors such as Norwegian trade The volume of freight carried (12m-equivalents) totalled and industry and Norwegian travel and tourism. In recent 177 085 units as compared with 182 632 in 2018. years, Color Line has strengthened its market position by In addition to the information on corporate responsibility applying a clear strategy of differentiation. On the service contained in the Director’ Report, a detailed description of the between Oslo and Kiel in Germany, the company operates company’s values and exercise of corporate responsibility two ships offering high-quality cruises and freight shipment, can be found in the sections of the annual report headed as well as a dedicated ro-ro freight shipment concept. The «Corporate responsibility» and «Plotting a sustainable course». routes between Kristiansand and Larvik in Norway and A settlement has been reached in the legal dispute with Hirtshals in Denmark, and between Sandefjord and Strömstad, Nye Kystlink AS and all claims against Color Group AS and offer retail sales and efficient transport services. Color Line AS have been withdrawn. The ships (with the exception of M/S Color Carrier) offer conference facilities, hotel accommodation, restaurants, shops and entertainment. In addition, the company provides THE ANNUAL FINANCIAL STATEMENTS travel and adventure tourism packages, as well as freight and forwarding services. Color Line is one step ahead of Accounting policies general developments in European short-sea shipping and Color Group AS is a Norwegian limited company head­ in recent years has invested substantial sums in new ships, quartered in Oslo. The consolidated accounts are presented infrastructure, booking solutions and innovative environ- mental technology. Birthday parties, weddings and anniversaries of any size can be With regular and daily sailings between seven ports in accommodated onboard ship. Norway, Denmark, Germany and Sweden, Color Line is a key player in the development of a modern, environmentally friendly, and forward-looking seaborne transportation industry. The commitment of the authorities and the inter- national community to bringing down climate gas emissions lies at the heart of the business of the company. The ro-ro vessel M/S Color Carrier was put into service on the Oslo to Kiel route in January 2019. The new ship (which is fitted with scrubber technology) furthers the company’s ambition of continuing to develop sustainable and eco-friendly solutions and its addition to the fleet has almost doubled seaborne freight capacity between Oslo and Kiel.

30 31 Directors’ Report and Financial Statement Color Group Annual Report 2019 Directors’ Report and Financial Statement

of IFRS 16 effective from 1 January 2019 the reporting of 31 December 2019 in the amount of approximately NOK 883 to NOK -1 412 million. The Group's total liquidity reserve as charter costs/leasing has changed relative to 2019 and million) as compared with NOK 8 567 at 31 December 2018. at 31 December 2019, including granted drawing rights and preceding years), as compared with the NOK 686 million The increase in the value of the balance sheet can primarily liquid securities, stood at approximately NOK 1 929 million. reported in 2018. The 2019 figure includes the settlement in be attributed to the delivery of M/S Color Hybrid in August Ordinary planned instalments in 2020 on the Group's the legal dispute between Nye Kystlink AS and Color Group 2019. Equity capital at 31 December 2019 stood at NOK 1 978 interest-bearing debt to credit institutions and bond debt AS / Color Line AS. Group net financial expenses in 2019 million, compared with NOK 2 065 million at year-end 2018. amount to approximately NOK 1 187 million. were NOK -235 million (which figure includes the charging The equity ratio was approximately 20 per cent (down of interest expense on lease payments of approximately primarily as a result of the effects of the implementation of Financial risk NOK -41 million following the implementation of IFRS 16 IFRS 16). The equity capital of the parent company as at 31 The Group is exposed to foreign exchange risk related to effective from 1 January 2019), as compared with NOK December 2019 was NOK 1 796 million, as compared with fluctuations in the value of the Norwegian krone (NOK) -161 million in 2018. Moreover, net financial items in 2019 NOK 1 941 million in 2018 and makes up approximately 26 against other currencies, particularly the USD, EUR and included a negative effect in the amount of approximately per cent of the balance sheet total of the parent company. DKK. The Group is also exposed to interest rate risk and NOK 10 million for realised and unrealised values relating to Long-term mortgage debt on ships/terminals/hotels changes in the price of bunker fuel products. The Group currency loans, fixed-interest-rate contracts, interest-rate has a repayment profile of 12 to 15 years. Total outstanding makes use of financial instruments to mitigate the risk of derivatives, and currency hedging contracts, and a positive mortgage debt/unsecured borrowing on ships/terminals/ fluctuations in its cash flow. In connection with the delivery net unrealised and realised gain on shares of approximately hotels as at 31 December 2019 is NOK 5 550 million. Net of M/S Color Hybrid the company took up an option to take M/S Color Fantasy and M/S Color Magic offer a full cruise experience NOK 11 million. outstanding book debt less bank deposits, cash and market- out CIRR fixed-rate contracts (fixed for 12 years) for the full on the Oslo to Kiel service. Net financial items also include profits of NOK 18 million traded shares stood at NOK 5 153 million as at 31 December amount of the funding: approximately NOK 691 million at a on investments in an associate company (an ownership 2019 (which includes the drawing down of debt in relation fixed rate of 2.14 per cent and EUR 31 million at a fixed rate in accordance with International Financial Reporting Standards stake of approximately 39 per cent in the limited company to M/S Color Hybrid of approximately NOK 990 million in of 0.84 percent from Export Credit Norway. Moreover, (IFRS) as adopted by the European Union and mandatory for ONS Ship Finance AS, owner of M/S SuperSpeed 2). August 2019), compared with NOK 3 810 million at year-end the company entered into total cross currency interest the financial year commencing on 1 January 2019 or later, as The profit for the year after tax for 2019 is NOK 220 million, 2018. The increase in net interest bearing debt also includes rate/currency swap agreements NOK to EUR equivalent well as the Norwegian information requirements that follow as compared with NOK 439 million in 2018. extraordinary payments to shipbuilders Ulstein Verft in to approximately NOK 500 million maturing in October from the Norwegian Accounting Act as at 31 December 2019. Net profit amounts to NOK 313 million, the increase 2019, as well as sundry project costs in relation to M/S Color 2020. Approximately 66 per cent of the estimated bunker The accounts of the parent company are presented in accor- primarily being due to the favourable development in the Hybrid, including a new onboard system, and a recently fuel costs of the company in 2020, and approximately dance with the Norwegian Accounting Standard (NAS). value of the company’s future bunker fuel hedging contracts completed central warehousing and logistics facility in 63 per cent in 2021, and approximately 31 per cent in 2022 on the preceding year. Hirtshals in Denmark. The newbuilding M/S Color Hybrid, are hedged by means of derivative contracts for bunker Results reported by the Group and the parent The parent company, Color Group AS, reported royalty which was delivered in August 2019, has 12-year ECA finan- fuel. At reporting date, the company had various currency company revenues of NOK 158 million and an operating profit before cing arranged through the Norwegian Export Credit Guaran- derivative contracts in place, as well as holdings of foreign Operating revenues totalled NOK 5 320 million in 2019, depreciation and amortisation of NOK 145 million. Earnings tee Agency and Export Credit Norway and DNB Bank. In currencies on deposit, relating to budgeted operations in as compared with NOK 5 141 in 2018. Operating expenses before interest and taxes for the parent company amounted September 2019, Color Group issued a new unsecured 2020. The parent company’s primary risk exposure is to amounted to NOK -4 215 million, as against NOK -3 924 to NOK 125 million, compared with NOK 554 million in 2018. bond loan (COLG16) in the amount of NOK 800 million currency risk and interest rate risk related to borrowings. million in 2018, the difference being chiefly attributable to The profit after tax in 2019 was NOK 100 million, as compared with maturity in October 2024. In connection with this The Group has limited market risk exposure, as its increased bunker fuel costs as a consequence a higher oil with NOK 428 million in 2018. The proposal of the Directors issue the company partially repurchased COLG12 (maturity business is directed at a market comprising a large number price and the weaker Norwegian currency than last year, is that the profit for the year after the payment of a group June 2020): NOK 56 million and COLG13 (maturity December of customers. higher operating costs associated with the new ro-ro vessel contribution of NOK 401 million (after tax) should be trans- 2020): NOK 115 million. The loan was listed on Oslo Stock On the basis of the above report on the results and M/S Color Carrier after January 2019, as well as non-recurring ferred to other equity. In connection with the decision Exchange in December 2019. financial position of the Group and parent company, the costs relating to the introduction of M/S Color Hybrid. concerning the payment of a group contribution, the Directors Bond loans listed on Oslo Stock Exchange mature in Directors confirm that the annual financial statements Operating expenses for 2019 also included the positive effects have concluded that the liquidity and equity of the company the period 2020 to 2024. Total outstanding net bond loans have been prepared on the assumption that operations will amounting to approximately NOK 20 million deriving from the viewed in relation to its operations and plans for the future booked as at 31 December 2019 amount to NOK 3 189 continue as a going concern, Moreover, the Directors are of transitioning of the pension system for maritime personnel will remain satisfactory after the payment of the contribution. million. It is the intention that net outstanding bond loans the opinion that the annual financial statements provide a from a defined benefit scheme to a defined contribution Hedge accounting is used in connection with bunker fuel (approximately NOK 816 million) maturing in 2020 will be true picture of the assets, liabilities, financial position and scheme. The operating profit before depreciation, amortisation purchases for the ships. Concluded hedging contracts are redeemed in full from available liquidity within the Group. profits or losses of the parent company and the Group. and charter hire amounted to NOK 1 105 million in 2019 reported at fair value at reporting date and form part of the M/S SuperSpeed 2 is owned indirectly by limited company (which also includes the positive effects of the implementation total comprehensive income for the year that is charged to ONS Ship Finance AS (in which Color Line AS has an owner­ of IFRS 16 effective from 1 January 2019 in the amount of equity. The market value of concluded hedge business relating ship holding of approximately 39 per cent). The ship is on WORKING ENVIRONMENT AND PERSONNEL NOK 46 million) as compared with NOK 1 217 in 2018. This to deliveries of bunker fuel in 2020 and 2021 at 31 December lease to Color Line Transport AS (under a bareboat charter In 2019, the Group employed a total of 2 460 man-years. figure also includes the negative effects of the extraordinary 2019 was NOK -32 million (after tax). agreement) until 2025. The company’s loan agreements Absence due to illness in the Group in 2019 was approxima- interruption of the operations of M/S Bohus for a period contain covenants related to liquidity, equity and debt- tely 4.3 per cent for shore-based personnel (4.0 per cent in (and the positive effects of the subsequent sale of the Balance sheet and funding servicing ratio. The company was in compliance with all 2018), and approximately 6.2 per cent for seagoing personnel vessel). Underlying operations were satisfactory but were Color Group AS focuses on securing diversified, long-term commitments at 31 December 2019. (7.3 per cent in 2018). impacted adversely by a freight market that was weaker and predictable financing. The Directors consider the working environment in the than in the preceding year. The company is continuing to As at 31 December 2019, the total value of the balance Cash flow Group to be good and will continue to maintain a sharp see an increase in income per passenger and in operational sheet of the Group amounted to NOK 10 005 million (with In 2019, the Group’s cash flow from operational activities focus on working conditions and on absence due to illness efficiency. Earnings before interest and taxes in 2019 for the the implementation of IFRS 16 with effect from 1 January totalled NOK 637 million. For the parent company the figure amongst shore-based and seagoing personnel in line with Cruise Division and the Transport Division amounted to 2019, the reporting of long/short term lease liabilities was NOK -113 million. Net cash flow from financing activities the policy of the company. The work of the Group in the NOK 208 million and NOK 301 million, respectively, making (primarily because of the long term lease on the vessel M/S totalled NOK 236 million, and NOK -437 million for the parent areas of values, management principles and working for a total of NOK 509 million (with the implementation SuperSpeed 2) have been recorded in the balance sheet at company. Net cash flow from investment activities amounted conditions reflects developments in society as a whole.

32 33 Directors’ Report and Financial Statement Color Group Annual Report 2019 Color Group Annual Report 2019 Directors’ Report and Financial Statement

EQUAL OPPORTUNITIES/DISCRIMINATION There were no accidents involving serious personal emissions are expected to be low. This will entail an efficiency gains. The facility meets current environmental

It is Color Line's objective that there should be full equality injuries in 2019. efficiency enhancement in terms of CO2 emissions and requirements, in amongst other ways by means of the use in the workplace between female and male employees. Foreign authorities conducted 16 PSC (Port State Controls) energy consumption relative to the increase in capacity. of geothermal energy and solar panels. Moreover, the company makes every effort to satisfy the re- inspections in 2019. On average, only 1.19 deviations were Color Line has had an unbroken line of apprenticeship quirements of the Anti-discrimination and Accessibility act, registered per inspection, as compared with the industry schemes in place since 1996. The company is one of Norway's as well as the Equal opportunity and Anti-discrimination act. average for RoPax ships in Europe of approximately 2.42. ENERGY EFFICIENCY largest maritime training organisations, with almost 50 This applies both in its treatment of existing employees and In April 2018, the IMO adopted a resolution that by 2030 all app­rentices and cadets on the decks and engine rooms of

in the recruitment of new personnel to departments that have ships must cut CO2 emissions by 40 per cent relative to 2008 its fleet and just under 40 apprentices in its hotel operations. traditionally been staffed primarily by either men or women. BORDER CONTROLS IN 2019 levels. This requirement is one of the maritime industry’s re- In recognition of this work, Color Line received the Maritime Of the 1 857 man-years employed by the Group at sea, The requirement imposed by the Norwegian government sponses to the 2015 Paris Agreement. In order to comply with Competence and Training Award from the Norwegian Maritime 754 are worked by women. Of a total of 230 management that border controls be conducted on passenger ships in this requirement, the company invests annually in targeted Competence Foundation at the Haugesund Conference on positions, 50 are held by women. The percentage of women traffic into and out of Norway remained in force in 2019 and individual measures within the fleet aimed at bringing about 10 February 2020. in shipboard management positions is relatively low because according to current provisions will continue to apply until energy-efficient rationalisations (one example being the Color Line’s vision is to be Europe’s leading provider of technical/maritime jobs have traditionally been dominated May 2020. In 2019, the company, aided by its own personnel shore-based power supply system in Kiel). As well as these cruise and transport services. Our goal is that sustainability by men and the availability of women with the necessary and hired-in security personnel, conducted passport checks individual measures, Color Line is active in a number of should be at the heart of everything the company plans and certificates is limited. All positions onboard ship are (identity checks) on 100 per cent of all passengers boarding development programmes. These include the Norwegian does. The Group’s investment over many years in a new and remunerated at standard pay rates, irrespective of gender. in ports outside Norway. Since the introduction of the consortium Green Shipping Programme at «Sustainability efficient fleet, new technology for digitalising customer process­ Of the 603 man-years employed by the Group on shore, provisional measure in November 2015, the documents of 2020», which is a national technology programme. Color Line es, and innovative transport solutions mean that the company 55 per cent are worked by women. There are two women in some 7.2 million passengers from outside Norway have been will head a pilot study that will look at the use of ammonia as is well-prepared for the transition to a more sustainable society Color Line's Group management team. Women hold 42 per checked and 2 081 persons (or 0.03 per cent) have been refused a fuel for ships. The use of ammonia could potentially bring with competitive technologies and new business models.

cent of shore-based management positions. Several shore- permission to enter Norway, on the grounds that they have about dramatic reductions in CO2 emissions, but there are Predictability and internationally-competitive frame­ based departments have standard pay rates in place and a not held, or have held inadequate, identity papers. certain technological challenges that will first need to be work conditions provide the security needed for continued continuous process is under way to achieve equality of pay overcome. This national programme will give the company investment from a Norwegian base in new and innovative, within all trades and positions. access to other pilot studies into alternative fuel types to fossil environmentally-friendly solutions. CLIMATE GAS EMISSIONS fuels. In addition, in the Spring of 2020 Color Line will be Color Line reported climate gas emissions from its shipping conducting an in-house study named «Sustainability 2020», SAFETY AND EMERGENCY PREPAREDNESS operations to the EU MRV database in 2018. This database the aim of which will be to prepare the company for a future OUTLOOK Color Line Marine AS (CLM) is Color Line’s maritime opera- was introduced in 2019 and all affected shipowners in Europe in which climate gas emissions are lower that today’s level, in tions company (ISM code company) responsible for ensuring are required to report their emissions. Emission figures were line with the IMO’s resolution. The effects of the coronavirus (COVID-19) outbreak that maritime operations are conducted in compliance with published for the first time on 1 July 2019 and can be accessed Color Line is at present experiencing increasingly adverse the applicable legislation and requirements and that safety on a public database on the European Union’s Thetis portal effects of the coronavirus (COVID-19) outbreak. The manage­ on board the ships and at the ISPS terminals is safeguarded. (https://mrv.emsa.europa.eu/#public/emission-report). THE BOARD OF DIRECTORS, CORPORATE ment has put in place extensive cost-cutting measures both This also involves work on preventing situations that might Corresponding figures for 2019 must be reported by GOVERNANCE AND SHAREHOLDERS onboard ship and ashore (such as temporarily laying off result in injury and harm to life, health and the environment. 30 April 2020 and will be published on 1 July 2020. The O.N. Sunde AS indirectly owns 100 per cent of the company's personnel and cutting pay) to cover the expected loss of The ships and the onshore contingency group conduct report will show both absolute figures and relative figures 71 800 000 shares. income. Effective as at today’s date, all passenger vessels have

regular exercises in accordance with the applicable statutory (for example CO2 / passenger*nautical mile) in relation to Director and Group President Olav Nils Sunde and his family been with­drawn from service for an indefinite period, including requirements. The company also conducts exercises in colla- the number of passengers and the amount of freight carried indirectly own 100 per cent of the shares of O.N. Sunde AS. the Oslo–Kiel, Larvik–Hirtshals, Kristiansand–Hirtshals, boration with the police, armed forces and emergency rescue by the company in 2019. The company's corporate governance policy is based on and Sandefjord–Strömstad services. The cargo business services in the countries in which the company operates. The reporting of climate gas emissions to the EU in 2019 the Norwegian Code of Practice for Corporate Governance. will continue to operate some of its services, namely In 2019, Color Line was represented on national and will reflect the changes in the structure of the fleet resulting Further information on corporate governance can be found M/S Color Carrier on the Norway to Germany route and international research projects and bodies working to promote from the introduction of M/S Color Carrier in January 2019, in the section headed «Corporate Governance 2019». M/S SuperSpeed 2 (with a minimum crew) on the Norway safety at sea and marine environmental protection measures. the sale and phasing out of M/S Bohus and the introduction to Denmark route. The financial consequences for Color The company is working to ensure that requirements and of M/S Color Hybrid in August. Group AS are not yet clear because of the uncertainty regulations in these areas are as far as possible equal and In addition to the increase resulting from the expansion OUTLOOK/EVENTS AFTER attaching to the course that the virus outbreak will take. are practised equally in the company’s operating areas and of the fleet by one vessel, Color Line introduced the following THE BALANCE SHEET DATE The company is following the guidelines issued by national markets in Europe. measures in relation to climate gas emission in 2019: On 4 February 2020, the company opened its new central and international authorities at all times. With reference warehousing and logistics facility in Hirtshals in Denmark, to Note 13 (maturity/instalments on debt in 2020 of 1. The introduction in June 2019 of a shore-based power which centralises and increases the efficiency of the supply approximately NOK 1 187 million), and Note 17 (available In collaboration with Telenor Maritime the ships have been equipped with the world’s fastest shipboard wi-fi network. supply for Color Line ships calling at the port of Kiel. The chain to the ships using online communication and automated liquidity of approximately NOK 1 929 million) the Directors projected effect for the year as a whole is a reduction of processes. The inventory status and supply needs of the ships are of the view that the company can meet the situation

approximately 2 500 tonnes of CO2 / year. are updated every 15 minutes, which will offer substantial that has arisen. 2. The introduction of the battery hybrid M/S Color Hybrid which uses both shore-based power and charges its batt­ Oslo, 16 March 2020 eries while in port in Sandefjord. The ship was put into service in August 2019 and use of the shore-based power supply commenced on 20 December 2019. As a conse­ quence, this measure will have a limited effect on the climate gas accounts for the year. Because of the ship’s Morten Garman Olav Nils Sunde Alexander Sunde Bjørn Paulsen hybrid properties, M/S Color Hybrid’s climate gas Chairman of the Board Director/Group President Director Director

34 35 Directors’ Report and Financial Statement Color Group Annual Report 2019 Color Group Annual Report 2019 Directors’ Report and Financial Statement

During holiday time the ships become «The Family Ship» offering fun and entertainment for families with children. Income statement/ Comprehensive income statement Color Group AS

PARENT COMPANY (NAS) Amounts in NOK '000 GROUP (IFRS) 2019 2018 Note 2019 2018 157 957 151 404 Sales revenues 3,7 5 320 261 5 141 167 157 957 151 404 Total operating revenues 5 320 261 5 141 167

0 0 Cost of sales 6,12 -1 941 909 -1 707 197 -3 754 -9 145 Cost of wages 4,18,19,20 -1 426 192 -1 359 498 -9 280 -9 102 Other operating expenses 6,7,15,19 -847 060 -857 149 -13 034 -18 247 Total operating expenses -4 215 161 -3 923 844 144 923 133 157 Operat. profit bef. depreciation, amortisation, other exceptional items, charter and leas. exp. 1 105 100 1 217 323 0 0 Depreciation and amortisation 4,8,9,10 -566 551 -371 352 -30 000 0 Other exceptional items 2 -30 000 0 0 0 Charter and leasing expenses 4 0 -160 455 114 923 133 157 Earnings before interest and taxes (EBIT) 508 549 685 516

289 839 641 200 Financial income 6,16,17,27 72 307 85 616 -279 267 -220 463 Financial expense 16,17 -306 861 -246 380 10 572 420 737 Net financial income/expense -234 554 -160 764

125 495 553 894 Pre-tax income 273 995 524 752

-25 191 -125 447 Tax expense 24 -54 153 -85 326

100 304 428 447 Profit/loss for the year 219 842 439 426

Comprehensive income statement Profit for the year 219 842 439 426

Other income and expenses Other items that can be reclassified subsequently to profit and loss Currency translation differences -1 491 –1 964 Net gain/loss bunker fuel hedging 82 951 –174 410

Other items that cannot be reclassified subsequently to profit and loss Estimate variances pensions 11 853 –18 850

Total other income and expenses net after tax 93 313 –195 224

Total comprehensive income for the year 313 155 244 202

36 37 Directors’ Report and Financial Statement Color Group Annual Report 2019 Color Group Annual Report 2019 Directors’ Report and Financial Statement

M/S Color Magic and M/S Color Fantasy pass under the Storebælt or Great Belt Bridge at about 05:00 and 18:00.

Balance sheet/ Statement of financial position Color Group AS

PARENT COMPANY (NAS) Amounts in NOK '000 GROUP (IFRS) PARENT COMPANY (NAS) Amounts in NOK '000 GROUP (IFRS) 2019 2018 Assets Note 2019 2018 2019 2018 Equity and liabilities Note 2019 2018 Non-current assets Contributed capital Intangible assets 143 600 143 600 Share capital (71 800 000 shares, nominal value NOK 2.- per share) 6,21,22 143 600 143 600 0 0 Software and licences 9 389 950 377 099 1 478 436 1 478 436 Share premium 22 1 478 436 1 478 436 4 000 4 000 Goodwill and other intangible assets 4,9,10 671 301 671 301 1 622 036 1 622 036 Total contributed capital 1 622 036 1 622 036 4 000 4 000 Total intangible assets 1 061 251 1 048 400 0 0 Other reserves 22 -20 763 –102 236 Property, plant and equipment 173 749 319 119 Other equity 22 376 454 545 394 0 0 Construction work in progress 8,13 25 565 258 147 1 795 785 1 941 155 Total equity 1 977 726 2 065 194 0 0 Right-of-use asset 15 877 518 0 Liabilities 0 0 Land, buildings and other real estate 4,8,13 500 625 443 450 0 0 Liabilities 4,20 0 38 103 0 0 Fixtures and equipment 4,8,13 66 603 70 717 9 509 9 638 Deferred tax 23 629 600 665 918 0 0 Ships 2,4,8,13 5 485 881 4 326 145 9 509 9 638 Total liabilities 629 600 704 021 0 0 Total property, plant and equipment 6 956 192 5 098 459 Non-current liabilities Financial fixed assets 1 710 655 964 214 Debt to credit institutions 13,17 1 989 667 1 337 889 4 014 345 4 014 345 Investments in subsidiaries 5,6 0 0 3 189 099 3 063 122 Bond loans 13,17 2 373 099 2 560 122 0 0 Investments in associate 27 298 352 280 843 0 0 Lease liabilities 15 717 844 0 1 989 193 1 049 286 Non-current receivables and investments 6,11,17,20 44 403 45 472 4 899 754 4 027 336 Total non-current liabilities 5 080 610 3 898 011 6 003 538 5 063 631 Total financial fixed assets 342 755 326 315 Current liabilities 6 007 538 5 067 631 Total non-current assets 8 360 198 6 473 174 29 219 17 143 Trade payables and other current liabilities 6,14,17 909 323 910 838 Current assets 0 0 Current share of non-current liabilities 13,17 1 187 000 833 000 0 0 Inventories 12 163 385 159 373 0 0 Current lease liabilities 15 165 491 0 391 652 155 027 Accounts receivable and other receivables 6,17 1 018 279 943 999 55 680 156 238 Other financial liabilities 14,17 55 680 156 237 64 244 52 637 Market-traded shares 17 64 244 52 637 84 899 173 381 Total current liabilities 2 317 494 1 900 075 326 513 876 215 Liquid reserves 17,25 399 324 938 118 6 789 947 6 151 510 Total equity and liabilities 10 005 430 8 567 301 782 409 1 083 879 Total current assets 1 645 232 2 094 127 6 789 947 6 151 510 Total assets 10 005 430 8 567 301

Oslo, 16 March 2020

Morten Garman Olav Nils Sunde Alexander Sunde Bjørn Paulsen Chairman of the Board Director/Group President Director Director

38 39 Directors’ Report and Financial Statement Color Group Annual Report 2019 Color Group Annual Report 2019 Directors’ Report and Financial Statement

Cash flow statement Statement of changes in equity Color Group AS Color Group AS Group IFRS figures

PARENT COMPANY (NAS) Amounts in NOK '000 GROUP (IFRS) Amounts in NOK '000 2019 2018 FOR THE PERIOD 1 JANUARY TO 31 DECEMBER Note 2019 2018 Share Share Translation Hedging Retained Total 200 328 704 834 Profit before interest and tax 454 011 679 660 capital premium differences reserve earnings -189 437 -178 810 Interest paid -214 981 -182 778 Equity 1 Jan 2018 143 600 1 478 436 12 733 61 406 493 580 2 189 755 113 054 27 870 Interest received 34 965 27 870 0 0 Depreciation, amortisation and write-downs 8,9 566 551 371 352 Profit for the year 439 426 439 426 0 0 Gains on sale of fixed assets -13 141 0 Other income and expenses -1 964 -174 410 -18 850 -195 224 0 77 913 Change in value financial assets 5 788 0 Total income 0 0 -1 964 -174 410 420 576 244 202 999 0 Change in value financial fixed assets 17 999 0 Group contribution/dividend to owner company -368 762 -368 762 0 -3 154 Change in value non-current financial liabilities 0 0 0 152 946 Change in value financial liabilities 0 0 Equity 31 Dec. 2018 143 600 1 478 436 10 768 -113 004 545 394 2 065 194 5 153 3 564 Unrealised foreign exchange gain/loss, currency loans 16 5 153 3 564 0 0 IFRS 16 lease payments and interest 15 -127 653 0 Profit for the year 219 842 219 842 0 0 Loss investment in associate company -17 509 -29 112 Other income and expenses -1 479 82 951 11 853 93 325 0 0 Other changes 27 553 –6 566 Total income 0 0 -1 479 82 951 231 695 313 167 -164 040 -530 415 Group contribution recorded as financial income 0 0 Group contribution/dividend to owner company -400 635 -400 635

Change in working capital Equity 31 Dec. 2019 143 600 1 478 436 9 290 -30 053 376 454 1 977 726 0 0 Change in inventories -4 012 2 856 21 484 71 365 Change in accounts receivable and other receivables -68 387 -16 401 -11 607 –37 652 Change in market-traded shares -11 607 –37 652

-88 482 1 292 Change in accounts payable and other current liabilities -1 173 145 374 Aqualand can be found on the cruise ships M/S Color Magic and M/S Color Fantasy. Perfect for children of all ages. -78 605 35 005 Change in working capital 85 179 94 177

-112 548 289 753 Net cash flow from operations 636 557 958 167

0 0 Received, sale of fixtures, equipment 8 25 900 363 0 0 Payments, acquisition of investments ship 8 -1 285 276 -1 137 027 0 0 Payment, advance payment investment ship 8 0 -8 0 0 Payments, purchases of fixtures, equipment 8 -15 342 -38 967 0 0 Payment re. purchase of land, buildings and other real estate 8 -75 359 -22 224 0 0 Payment, investment in construction in progress 8 -20 095 -64 285 0 0 Payments, purchases of other investments 8 -41 448 -18 750 0 0 Net cash flow from investments -1 411 620 -1 280 898

997 199 587 252 Received on raising of new debt to credit institutions 997 199 1 231 935 794 473 1 583 939 Received on raising new bond debt 794 473 1 583 939 -255 911 -1 147 687 Payments, repayments on debt to credit institutions -309 574 -1 157 830 -668 496 -395 724 Payments, repayments on bond debt -668 496 -395 724 0 0 Received on non-current receivable and other receivables 0 217 352 -1 447 466 –552 099 Payments on non-current receivable and other receivables -63 298 0 143 047 37 373 Paid/received dividend/Group contribution -514 035 -493 424 -437 154 113 054 Net cash flow from financing 17 236 269 986 248

-549 702 402 807 Net change in liquid resources -538 794 663 517 876 215 473 408 Liquid resources 1 Jan. 938 118 274 601

326 513 876 215 Liquid resources 31 Dec. 399 324 938 118

40 41 Notes Color Group Annual Report 2019 Color Group Annual Report 2019 Notes

Changes in accounting policies and information of any advance payments or accrued payments. an insignificant value are not included. Rate of interest is The following new and amended standards and inter­ At the date of initial application, the Group applied applied the takes account of the term of the contracts, as Notes 2019 pretations were applied for the first time in 2019: the following practical solutions for leases formerly well as the type of asset and currency. classified as operating leases: Color Group AS IFRS 16 Leases The implementation effect of IFRS 16 The company’s leases comprise ships, terminals, parking ● Exemptions for short-term leases (a lease term With the transition to IFRS 16 the Group recognised NOK 957 areas, office premises, machines, IT equipment, vehicles, of 12 months or less) million in right-of-use assets and NOK 957 million as lease and other office machinery. The lease terms vary. IFRS ● Exemptions for assets of low value liability. The implementation effect of IFRS 16 is presented NOTE 1 ACCOUNTING 16 Leases was issued in January 2016 and replaces IAS 17 ● Exemptions for intangible assets in Note 15. Comparative figures have not been restated. Leases. Up until the 2018 financial year, leases on property, ● Exclusion of any direct costs associated with POLICIES plant and equipment were classified as operating leases. In the measurement of the right of use asset New standards and interpretations that have the case of leases previously classified as operating leases ● The use of hindsight in assessing the term of not entered into force in accordance with the principles laid down in IAS 17 Leases, contracts incorporating options The Group has not elected early adoption of any of the General information the lease liability is measured using IFRS 16 from 1 January standards or interpretations that come into force after Color Group comprises Color Group AS and its subsidiary 2019 onwards. Lease liability is measured as the present The discount rate balance sheet date. companies. Color Group AS is a limited company registered value of remaining leases, discounted by the lessee’s In determining the present value of the lease liabilities, in Norway and headquartered in Oslo. The business of the incremental borrowing rate. the incremental borrowing rate, as it is termed, is applied. IFRIC 23 Uncertainty over income tax treatments Group is largely concentrated on two core areas: Cruise (IFRS16.26 cf. IFRS16.BC162). The incremental borrowing The interpretation clarifies how uncertain tax positions and Transport. The business areas are described in Note 3, The Group as lessee rate is determined by building up a specific synthetic rate of should be reflected in IFRS accounts. Uncertain tax positions Segment Information. IFRS 16 specifies principles for the recognition, measure- interest for each underlying asset. The basis for this rate of occur when there is uncertainty about the way in which cur- ment, presentation and detailing of information on leases. interest is external factors (e.g. currency and term) with the rent tax law should be understood with respect to a specific The standard requires a lessee to recognise assets and addition of company-specific elements (e.g. the company’s transaction or event, and when there is uncertainty as to FRAMEWORK FOR THE PREPARATION OF liabilities for most leases. At the time of implementation debt-to-equity ratio and the nature of its business) and finally whether the tax authorities will approve the tax treatments THE ANNUAL FINANCIAL STATEMENTS of the lease the lessee must recognise the liability to incur asset-specific adjustments (adjustments related to the type of an enterprise. IFRIC 23 is not considered to have effects lease payments and an asset recognising the right to use the of asset etc.). of significance for the company. Group underlying asset during the term of the lease («the right- The consolidated accounts of Color Group AS have been of-use asset»). The standard provides for several practical The lease terms of the contract of lease Other standards prepared in accordance with International Financial solutions relating to recognition and initial application. A In assessing the lease terms of the individual contracts of The IASB has also adopted certain minor changes and Reporting Standards (IFRS) as adopted by the European lessee must present interest expenses associated with the lease, account is taken of any options, in so far as there is clarifi­cations in several other standards. None of these Union and mandatory for the financial year commencing lease liability separate from the depreciation amount for the a reasonable degree of certainty that the options will be amendments is considered to have effects of significance on 1 January 2019 or later, as well as the Norwegian right of use asset. exercised. In assessing the question of whether options will for the company. information requirements which follow from the The Group implemented IFRS 16 effective from 1 January be exercised account has been taken of the fact that some Norwegian Accounting Act as at 31 December 2019. 2019 using the modified retrospective method and comparative of the assets may be linked to other assets (owned as well Preparing the accounts in accordance with IFRS neces- figures have accordingly not been restated. The group is as leased), so that lease terms and times of use are naturally TRANSLATION OF FOREIGN CURRENCY sitates the use of estimates. Moreover, the application of recognised the transitionary effect of the standard as an interrelated. This applies, for example, to ships in relation to The accounts of the individual units in the Group are presented the Group's accounting principles requires management adjustment to the opening balance sheet for 2019. adjacent terminals. in the currency primarily used in the economic area in which to exercise its judgement. The areas involving a higher de- the unit operates (functional currency). The Group's presen- gree of judgement or complexity, or areas where assump- Determining whether a contract is or contains a lease Lease payments tation currency is the Norwegian krone, NOK, and this is also tions and estimates are significant to the consolidated With the transition to IFRS 16 the Group elected for reasons The lease payment applied in the calculation of the lease the parent company's presentation and functional currency. financial statements are duly described in the notes. The of practicality not to reassess whether a contract is or liability includes all fixed costs relating to the contract with the Where subsidiary companies use other functional currencies, consolidated accounts have been prepared on the basis of contains a lease. The Group has applied IFRS 16 only to addition of accruing indirect fixed costs and any obligations amounts are translated into NOK. Balance sheet items the historical cost principle, with adjustments for financial contracts previously classified as leases. to return to original condition by which the company may are translated at the exchange rate applicable at yearend, instruments measured at fair value. The going concern be bound. while income statement items are translated on the basis assumption has been applied in the preparation of the Leases previously classified as operating leases in ac- of average rates of exchange. Translation differences are consolidated accounts. cordance with IAS 17. New contracts of lease recognised in the comprehensive income statement and At the date of initial application of IFRS 16 the Group New contracts are included in the liability. Agreements with are specified separately under equity. The parent company measured lease liabilities at the present value of the The financial statements of the parent company, Color remaining lease payments discounted by what is termed Group AS have been set out in accordance with the the incremental borrowing rate at 1 January 2019. With the introduction of M/S Color Hybrid provisions of the Norwegian Accounting Act of 1998 The incremental borrowing rate is determined by building Color Line has doubled the freight and generally accepted accounting practice in Norway up a specific synthetic rate of interest for each underlying capacity between Norway and Sweden. (Norwegian Accounting Standard, NAS). Unless otherwise asset. The basis for this rate of interest is external factors stated in the description of policies, it is the Group's (e.g. currency and term) with the addition of company-specific accounting policies that are described. Descriptions of elements (e.g. the company’s debt-to-equity ratio and the accounting policies applicable only to the parent company's nature of its business) and finally asset-specific adjustments accounts rendered in accordance with NAS are specified (adjustments related to the type of asset etc.). separately. In addition, the Group recognised right-of-use assets equal to the total of the leases adjusted to take account

42 43 Notes Color Group Annual Report 2019 Color Group Annual Report 2019 Notes

Transactions and balance sheet items assets comprising bank deposits, cash and market-traded Identifiable purchased assets, debt taken on and contingent in the form of cash. The income is recognised in the income Monetary items (assets and liabilities) in foreign currencies shares. The calculation is shown in Note 17 liabilities are recorded in the accounts at fair value at the statement inclusive of credit card fees on the transaction. are translated at the exchange rates on the balance sheet Liquid assets are defined as holdings of cash as well as bank time of acquisition. Identifiable acquired assets, debt taken The fees are recognised as sales costs. date. Foreign exchange gain and loss in connection with the deposits on balance sheet date, short-term investments in on and contingent liabilities are reported at fair value at the translation of monetary items in foreign currencies at yearend liquid securities with maturities of less than three months time of acquisition, independently of any minority interests. Interest earned are recognised in the income statement. Income statement as well as unused drawing rights granted by financial Procurement cost that exceeds the share of the fair value of Interest income is recognised using the effective interest items are translated at the exchange rate applicable at the institutions. The calculation is shown in Note 17. identifiable net assets of the subsidiary company is recorded method as it is earned. time of the transaction. Foreign exchange gains and losses Net cash and liquid assets consist of cash and bank in the balance sheet as goodwill. If procurement cost is arising upon payment of such transactions are recognised in deposits less drawings on bank overdrafts, as well as lower than the fair value of the net assets of a subsidiary Income from dividends the income statement. market-traded shares. The calculation is shown in Note 17. company, the difference is recognised in the income statement Dividends on investments are recognised when the Group Equity ratio is defined as the Group’s book equity on at the time of acquisition. has an unconditional right to receive the dividend. balance sheet date divided by the balance sheet total, Intercompany transactions, balances and unrealised SEGMENT REPORTING expressed as a percentage. Equity and the balance sheet earnings between companies in the Group are eliminated. Public subsidies Segment information is presented on business areas. total are shown in the Balance Sheet. Unrealised loss is eliminated but is assessed as an indicator of Public subsidies are recognised when there is reasonable This structure is based on the format used in reporting Debt-to-equity ratio is calculated as net debt divided impairment in relation to the writing-down of the transferred certainty that the company will fulfil the conditions attaching to Group management. by book equity. The calculation is shown in Note 17. asset. to the subsidies and that the subsidies will in fact be received. Accounting principles applied by subsidiary companies are Public subsidies that compensate the business for costs The values of debt and liquidity are shown as measures of amended as necessary to conform to the Group's accounting are taken to income as and when the costs are incurred. ALTERNATIVE PERFORMANCE MEASURES the financial strength of the Group and all the alternative principles. Subsidies are deducted from the costs that the subsidy is To increase relevance and comparability Color Group uses performance measures are used consistently over time. Any Associates are entities in which the Group has a significant intended to cover. the following alternative performance measures in addition changes in the definitions of the values are also applied to influence, but not control, over financial and operational to those defined in IFRS: the comparative figures. All the alternative performance decisions, normally as a consequence of holding an owner­ measures used by the Group show historical financial values. ship stake of between 20 and 50 per cent. The consolidated FOREIGN EXCHANGE ● Operating profit before depreciation, amortisation, accounts include the Group's share of the profits or losses Foreign exchange contracts in EURO, USD, and DKK are charter hire and leasing expenses of associates recorded according to the equity method from generally linked to the current income and expenses of the ● Net interest-bearing debt PRINCIPLES OF CONSOLIDATION the time at which significant influence is achieved and until Group. Foreign exchange gain/foreign exchange loss on ● Liquid assets Subsidiary companies comprise all units where the Group such time as such influence ceases. settlement is attributed to the relevant income statement ● Net cash and liquid assets has control over the investee, is exposed to, or has rights to When the Group's share of the losses of an associate items in the accounts. See Note 7. The value of current ● Equity ratio variable returns from its involvement with the investee and exceeds the investment, the value reported in the Group's contracts is recorded in the accounts as a financial item. ● Debt-to-equity ratio has the ability to affect the amount of those returns through balance sheet is reduced to zero and further losses will not its control over the investee. be recognised unless the Group has an obligation to cover Operating profit before depreciation, amortisation, charter Subsidiaries are consolidated from the time at which such losses. BORROWING COSTS hire and leasing expenses is recorded in the Income control is transferred to the Group and are excluded from Borrowing costs directly attributable to the acquisition of Statement on the line showing «Operating profit before consolidation when the controlling influence ceases. a qualifying asset are capitalised as part of the cost of the depreciation, amortisation, charter hire and leasing expenses». The purchase method of accounting is applied in PRINCIPLES GOVERNING REVENUE relevant asset until the non-current asset is ready for its Reconciliation of the performance measure is shown in the connection with the acquisition of businesses. RECOGNITION intended use. Borrowing costs of this nature are capitalised Income Statement. Procurement cost in acquisitions is measured as the fair Income from the sale of goods and services is recognised in as part of the asset's procurement cost when it is probable Net interest-bearing debt is defined as total interest- value of assets used as payment, equity capital instruments the accounts at fair value, net of value added tax, discounts that they will result in future financial benefits for the Group bearing debt to credit institutions and bond loans less issued, liabilities incurred in the transfer of control and and reductions. Income from the sale of goods and services and the costs can be measured in a reliable manner. direct expenses associated with the acquisition itself. is recognised at the point at which material risks and rights Borrowing costs attributable to the raising of new loans have passed over to the buyer, the Group no longer has are charged to liabilities in the balance sheet and amortised The spa and fitness centres on M/S Color Magic and M/S Color Fantasy feature up-to-the-minute exercise equipment, whirlpool baths, saunas, ownership of or control over the goods, the income can be over the term of the loan. massage chairs and spa treatments. measured reliably, it is probable that the financial benefit Other borrowing costs are recognised in the income associated with the sale will accrue to the Group and that statement in the period in which they are incurred. costs incurred in connection with the sale can be measured reliably. TAXES Tax costs comprise tax payable and changes in deferred tax. INCOME IS RECOGNISED AS FOLLOWS: Deferred tax/tax asset is calculated on all differences between the value of assets and liabilities in the accounts and the tax Sales of services (travel and freight) value of such assets and liabilities, with the exception of: Sales of travel are recognised at the time of the voyage, which is when risk is transferred. Sales of freight (cargo income) ● Temporary differences related to non-tax-deductible are recognised when the transport stage commences. goodwill. ● Temporary differences related to investments in Sales of goods subsidiary companies when the Group controls the Sales of goods by the Group are recognised when delivery time at which the temporary differences will be of the goods takes place, this being the time of transfer of reversed and when this is not expected to occur risk. Payment for retail purchases is usually by credit card or in the foreseeable future.

44 45 Notes Color Group Annual Report 2019 Color Group Annual Report 2019 Notes

Deferred tax assets are recorded in the accounts when it is development is completed. Construction work in progress is within one year from the date of classification. is the rate of interest at balance sheet date on corporate probable that the company will have sufficient taxable profits not depreciated until use of the non-current asset commences. Non-current assets and groups of non-current assets bonds (covered bonds) with approximately the same term to in subsequent periods to utilize the tax asset. Previously and liabilities held for sale are valued at the lower of maturity as the Group's liabilities. The schemes are based unrecognised deferred tax assets are recognised by the previous carrying amount or fair value less costs to sell. on a projected unit credit method. When the benefit payable companies insofar as it has become likely that the company INTANGIBLE ASSETS Depreciation of assets classified for sale ceases from the under a scheme is changed, the share of the increase in can make use of the deferred tax asset. Likewise, the company Intangible assets procured separately are reported in the date of classification. the benefit to which the employee has earned the right is will reduce deferred tax assets insofar as the company no balance sheet at fair value at the time of procurement. Operations that are to be discontinued are reported recognised in the income statement in accordance with the longer considers it probable that it will be able to utilize the Intangible assets are amortised systematically over the separately in the income statement. Figures for the preceding linear method over the remaining earnings period. Costs deferred tax assets. estimated useful life of the assets. If the life of the asset is not year are restated to permit comparison. are recognised in the income statement immediately if the Deferred tax and deferred tax assets are measured limited and its economic life cannot be estimated, the asset employee at the time of awarding has already received an on the basis of anticipated future tax rates payable by is not amortised, but is tested for annual impairment. unconditional right to an increased benefit. the Group companies in which temporary differences INVENTORIES have arisen. Goodwill Inventories comprise goods for resale, consumables and Deferred tax and deferred tax assets are recognised The difference between procurement cost at acquisition bunker fuel and are valued at cost or net realisable value PROVISIONS at nominal value in the balance sheet. and the fair value of net identifiable assets at the time of less costs of sales, whichever is the lower. The FIFO method A provision is recognised when the Group has a legal or acquisition is classified as goodwill. Assets and liabilities is used in determining procurement cost. self-imposed obligation resulting from a past event, it is acquired in business amalgamations are recognised at fair probable that a financial settlement will take place as a con- PROPERTY, PLANT AND EQUIPMENT value in the opening balance sheet of the Group. sequence of this obligation and the size of the amount can Assets intended for long-term use or ownership are recorded Goodwill is recorded in the balance sheet at procurement CASH AND BANK DEPOSITS be measured reliably. When a provision in the accounts is as operating equipment. Property, plant and equipment cost less any accumulated impairment. Goodwill is not Cash and cash equivalents comprise cash in hand and measured by applying the cash flows necessary to settle the mainly comprise ships, port facilities, plots of land, buildings amortised but is tested annually for impairment of value. bank deposits. obligation, the amount recorded in the balance sheet is the and machines/equipment. Property, plant and equipment Impairment testing is conducted by allocating goodwill to present value of these cash flows. Restructuring provisions are recorded at procurement cost including costs associated the cash-generating units in the Group that are expected to are recognised when the Group has approved a detailed and with procurement, less deductions for depreciation and derive benefit from the amalgamation. Value recorded in EQUITY formal restructuring plan and the restructuring has either write-downs for impairment. Subsequent major expenditures the balance sheet is compared with the recoverable amount, Ordinary shares are classified as share capital. Expenses started or been publicised. are added to the value of property, plant and equipment which is the higher of value in use and fair value less costs related directly to the issuing of new shares, less tax, are The provision for restructuring comprises only direct in the balance sheet or are recorded separately when it is to sell. Any impairment is taken to expense and is not recorded as a reduction of the amount received in equity. costs resulting from the restructuring, being the amounts probable that future financial benefits linked to the expense reversed in subsequent periods. Translation differences occur in connection with currency that are necessary for the restructuring and not part of will accrue to the Group and the expense can be measured Goodwill in the parent company is amortised by the differences when consolidating foreign enterprises. the normal operations of the unit. reliably. Periodic maintenance is recorded in the balance straight-line method over estimated useful life. sheet. Other repair, classification and maintenance costs are recorded in the income statement in the period in which Software PENSION LIABILITY AND PENSION COSTS FREQUENT TRAVELLER POINTS the expense is incurred. Plots of land are not depreciated. Costs associated with maintaining computer software The companies in the Group operate different pension The provision for accrued frequent traveller points is Other operating equipment is depreciated in accordance programs are recognised as expense as incurred. Develop- schemes. In general, pension schemes are financed by recognised in the balance sheet at the time the points with the straight-line method so that the procurement cost ment costs that are directly attributable to new functionality payments of premium to life assurance companies. are earned. of the equipment is depreciated to residual value over the and the design and testing of identifiable and unique soft- The shore-based employees have a defined contribution estimated useful life of the asset, which is: ware products controlled by the Group are recognised in pension scheme. The cost of this scheme is equal to the the balance sheet as intangible assets when the criteria for premium paid. The Group is under no obligation, legal or CONTINGENT LIABILITIES AND ASSETS ● Ships 15–35 years doing so are met. Development expenditures that do not otherwise, to pay further contributions should the life Information is provided on material contingent liabilities, except ● Buildings/port facilities 20–30 years meet these criteria are recognised as an expense as incurred. assurance company have insufficient funds to pay all in the case of contingent liabilities where the probability that ● Machines and equipment 4–15 years Development costs previously recognised as an expense personnel the benefits related to pension earnings in the the liability will result in a disbursement is low. A contingent cannot be recognised as an asset in the balance sheet in current or previous periods. asset will not be recorded in the annual financial statements, The useful life of property, plant and equipment and the a subsequent period. The pension scheme for the seagoing employees has but information will be provided if there is some likelihood residual value are re-assessed at every balance sheet date Computer software recognised in the balance sheet been a defined benefit scheme up until the end of 2019 that a benefit will accrue to the Group. and adjusted as necessary. The Group's ships are classified is amortised over its estimated useful life. Amortisation and a defined contribution scheme applies from 1 January into components subject to high wear and tear and compo- commences when the asset is available for use. 2020 onwards. A defined benefit plan is a pension scheme nents subject to low wear and tear. Components subject to in which the pension benefit payable to the employee in EVENTS AFTER THE REPORTING PERIOD high wear and tear are depreciated without residual value. retirement is defined in advance. The pension payable will New information after balance sheet date concerning the Scrap value is estimated every yearend, and any changes NON-CURRENT ASSETS HELD FOR SALE normally depend on one or a number of factors, including company’s financial position at balance sheet date is taken in estimates of scrap value are recorded in the accounts as AND DISCONTINUED OPERATIONS age, number of years of service with the company and pay. into account in the annual financial statements. Events after an estimate change. In the case of replacements, the residual Non-current assets and groups of non-current assets and Pension funds are valued at fair value. Net liabilities relating the reporting period that do not impact on the company's value of the replaced part is estimated. Residual value is liabilities are classified as held for sale if their book value to defined benefit schemes are calculated separately for financial position at balance sheet date but will affect the expensed at the time of replacement. will be recovered through a sales transaction, rather than each scheme by estimating the amount of future benefits company's financial position in the future, are disclosed if Gains and losses on disposals are recognised in the income through continuing use. This condition will be considered to earned by the individual employee through work performed they are of material importance. statement and constitute the difference between the sales have been fulfilled only if a sale is highly probable and the in the year under review and in earlier periods. These future price and value recorded in the balance sheet. non-current asset is available for immediate sale in its present benefits are discounted in order to calculate their present- Construction work in progress is classified as a non- form. Management must have committed the company to day value, and the fair value of the pension funds is deducted FINANCIAL INSTRUMENTS current asset and reported at cost price until production or a sale and the sale must be expected to be implemented in order to ascertain net liabilities. The discount rate applied Financial assets and financial liabilities are recognised in the

46 47 Notes Color Group Annual Report 2019 Color Group Annual Report 2019 Notes

Group balance sheet when the Group becomes a party to Bunker fuel hedging of establishment. Current assets are valued at cost or fair NOTE 3 SEGMENT ­ the contractual conditions applicable to the instrument. The The Group makes use of financial derivatives earmarked value, whichever is the lower. Shares in a trading portfolio Group's financial instruments are classified in the following as hedging instruments in connection with highly probable are valued at fair value on the balance sheet date. Changes REPORTING three categories: fair value through profit or loss, loans and cash flows in connection with the procurement of bunker in value are recognised in the income statement. Current receivables, and financial liabilities at amortised cost. Financial fuel for the ships. The hedging is documented as effective liabilities are recorded in the balance sheet at the nominal Purchases and sales of services within the Group are con- instruments that are long term in nature are recorded as at conclusion of the agreement, in that it counteracts price amount received at time of the transaction. ducted on an arm's length basis. The Group also conducts financial fixed assets and long-term liabilities. changes in the cash flows. Hedge accounting is applied. Any operations outside Norway. Internal income statements ineffective portion of a gain or loss will be recognised in the Operating expenses and balance sheets based on geographical location are not Financial assets income statement immediately. The expenses of the parent company are expensed in the compiled. Financial assets at fair value through profit or loss are Concluded hedging contracts are recorded at fair value same period as the appurtenant income. Goodwill acquired initially recognised in the balance sheet at fair value on the at balance sheet date and changes in fair value are charged by the parent company is amortised by the straight-line The Group's main business areas day the contract is concluded and thereafter measured at to other income and expenses for the period. When the hed- method over estimated life. In legal terms, the Cruise area of business is part of Color fair value at each balance sheet date. Transaction costs are ging contracts are exercised, all earlier gains and losses are Line Cruises AS and markets and sells cruises, conference recognised in the income statement immediately. Trade transferred from equity and included in the cost of bunker travel and hotel packages for individuals, groups and orga- receivables and other short-term receivables are initially fuel. NOTE 2 MAJOR INDIVIDUAL nisations between Norway and Germany. Freight operations recognised at fair value adjusted for transaction costs and are also conducted. In legal term, the Transport area of thereafter at amortised cost corrected for any amounts TRANSACTIONS AND business is part of Color Line Transport AS and markets written down. Current receivables due in less than three POLICIES APPLICABLE ONLY TO and sells cost-effective transport services between Norway, months or receivables assessed as insignificant are not THE PARENT COMPANY EXCEPTIONAL ITEMS Sweden, Denmark and Germany for individuals, groups and normally discounted. Earned services that have not been organisations. In addition to the sale of travel and hotel invoiced are taken to income at balance sheet date and Royalty In 2019, Color Line invested in a new plug-in hybrid ship, packages, freight business is also conducted. recorded as receivables. Operating revenues in the parent company refer for the M/S Color Hybrid. The vessel was built by shipbuilders most part to royalty income, which is recognised in the Ulstein Verft at a cost of NOK 1.3 billion. Financial liabilities income statement when earned. A settlement has been reached in the legal dispute Financial liabilities at fair value through profit or loss are In connection with the reorganisation of Color Group, between Nye Kystlink AS and Color Group AS / Color Line AS. initially recognised in the balance sheet at fair value on the the ferry business of Color Group ASA was transferred day the contract is concluded and thereafter measured at fair to Color Line AS with effect from 1998. The rights to use value at each subsequent balance sheet date. Any transaction the names and trademarks and the use of pre-developed costs are recognised in the income statement immediately. shipping lines, quay rights etc. were not subject to transfer. Interest-bearing loans are initially recognised in the ba- Royalty agreements have been concluded between the The crossing between Sandefjord and Strömstad takes two and a half hours and there are four Color Line sailings a day. lance sheet at fair value less transaction costs. Subsequent companies regulating Color Line's use of rights connected recording is at amortised cost, with any difference between with the ferry business and remuneration for such use. cost and redemption amount being recognised over the term as part of effective interest. Shares in subsidiary companies Trade payables and other current liabilities are measured Investments in subsidiary companies are valued using the at fair value on initial recognition and thereafter at amortised cost method. Group contributions after tax, paid by the parent cost. Current liabilities due within one year or liabilities valued company to subsidiary companies are recorded in the as insignificant are not normally discounted. Income paid in accounts as an increase in the investment in the subsidiary advance on the balance sheet date is recorded as a liability. company. Dividends and Group contributions received from subsidiary companies are recorded in the income statement as returns on the investments in the subsidiary company. Dividend received and paid out and Group contributions Color Line has been training apprentices continuously since 1996. In practice, this means that over 1 000 apprentices have been trained by Color Line during and other contributions are taken to income in the same this time. These have mainly been deck and engine room personnel, although year as the provision is made by the subsidiary company. in recent years apprentice kitchen and waiting staff have also received training. The general rule for valuing and classifying assets and liabilities in the parent company Assets for intended for permanent ownership or use are classified as non-current assets. Other assets are classified as current assets. Receivables for repayment within one year are classified as current assets. Equivalent criteria are applied in the classification of current and non-current liabilities. Non-current assets are valued at procurement cost and written down to fair value when the reduction in value is not considered to be of a short-term nature. Non- current assets having a limited economic life are subject to a depreciation plan. Long-term loans are recorded in the balance sheet at the nominal amount received at the time

48 49 Notes Color Group Annual Report 2019 Color Group Annual Report 2019 Notes

Key figures from the business divisions Amounts in NOK '000 Cruise Transport Cruise Transport Group Group Division Division Division Division 2019 2019 2019 2018 2018 2018 Operating revenues 2 398 912 2 921 349 5 320 261 2 411 999 2 729 168 5 141 167 Operating expenses -1 882 813 -2 332 348 -4 215 161 -1 839 347 -2 084 498 -3 923 844 Ordinary depreciation and amortisation -292 874 -273 677 -566 551 -258 544 -112 808 -371 352 Other exceptional items -15 000 -15 000 -30 000 0 0 0 Charter hire, leasing expenses 0 0 0 -6 380 -154 076 -160 455 Operating profit/segment profit 208 225 300 324 508 549 307 729 377 787 685 516

Net financial expenses -234 554 -160 764 Pre-tax income 273 995 524 752

Tax expense -54 153 -85 326 NOTE 4 ESTIMATE UNCERTAINTY Profit for the year 219 842 439 426

Segment assets 3 088 289 4 392 753 7 481 042 3 230 071 3 079 233 6 309 304 The estimates that form the basis for items in the income life. The booking system and Internet platform recorded in Non-allocated assets 2 524 388 2 257 997 statement and balance sheet have been subject to appraisal. the balance sheet represent the most significant value of Total consolidated assets 10 005 430 8 567 301 The estimates are based on assumptions obtained from the software and licences recorded in the balance sheet. external sources such as the Norwegian Accounting Standards Useful life was assessed as 15 years calculated from the Segment assets 1 105 434 2 920 468 4 025 902 1 227 951 1 823 205 3 051 156 Board and the capital market. Estimates are also based on time at which the system was put into operation in 2011. Non-allocated assets 4 001 802 3 450 951 the company's long term-forecasts submitted in connection Changes in investment decisions, market conditions and Total consolidated assets 8 027 704 6 502 107 with the annual budgeting process, as well as the past developments in technology may impact on expected useful experience of the company. Changes in accounting estimates life. This appraisal is performed at the end of each year. In Segment liabilities 61 230 1 284 060 1 345 290 58 041 1 161 097 1 219 138 are reported in the income statement during the period in the opinion of the management, there are no grounds for Non-allocated liabilities 92 230 62 123 which the estimates are changed. Fair values may deviate changing the expected useful life. Total consolidated liabilities 1 437 520 1 281 261 from these estimates. All estimates and assumptions are based on continued operation as a going concern. Goodwill and other non-amortisable intangible

The auditorium features modern audio-visual equipment, 280 comfortable chairs and tablet arms. The room can be sub-divided into two smaller spaces. assets Leasing costs Goodwill is based on the assumption that discounted future In the reporting for 2019, leasing is presented in accordance cash flows are sufficient to cover the present-day value of with IFRS 16. Comparative figures have not been restated. goodwill. Uncertainty attaches to these cash flows. A change Leasing costs that in 2018 were presented on a separate item in assumptions and estimated future cash flows will alter the line in the income statement are evaluated as operational in value of the present-day value of the cash flows. Such changes accordance with the guidelines given in IAS 17. The manage­ could necessitate the writing-down of goodwill. The annual ment have evaluated the leases on the M/S SuperSpeed 1 cash flows on which the calculation is based are built on the and M/S SuperSpeed 2 vessels and in their best judgement long-term forecasts for the company presented in connection have determined that the relevant criteria applicable to with the annual budgeting process. The interest rate assump- operating leases have been fulfilled. tions applied in the calculation are also based on corresponding information available in the market. See also Note 9. Depreciation of operating equipment Depreciation of operating equipment is based upon the Pension liabilities anticipated life of the asset, as well as the estimated residual The calculation of pension liabilities is based on a number of value of the ships. The ships represent the highest-value financial assumptions, as will be seen in the note describing operating equipment. Ships are classified into their component the calculations. The calculations have been carried out by parts and these in turn are depreciated at different rates, as an external actuary and are based on actuarial assumptions the lifetime of the individual components of a ship will vary. that in turn are based on guidelines issued by the Norwegian Changes in investment decisions, market conditions and Accounting Standards Board containing calculation assump- technological development may impact on the depreciation tions for defined benefit pension schemes in accordance period. This appraisal is performed at the end of each year. with IAS 19R. Other assumptions are based in part on market In the opinion of the management, there are no grounds for terms. These assumptions are appraised by management changing the depreciation period. and in their best estimate are considered to be reasonable. Any change in these assumptions will have an effect on future The amortisation of intangible assets profits/losses. The defined benefit pension scheme will Intangible assets are amortised over their expected useful cease with effect from 1 January 2020. See also Note 20.

50 51 Notes Color Group Annual Report 2019 Color Group Annual Report 2019 Notes

NOTE 6 RELATED PARTIES

Color Group AS is owned by ONS Invest II AS, a limited company owned 100 per cent by Olav Nils Sunde and his family through the limited company O.N. Sunde AS. All the companies in the O.N. Sunde Group and its owners are related parties. The Directors, Group President and CEOs of the various business areas are also defined as related parties. Transactions between related parties are recorded in specific accounts in the financial statements.

Related-party transactions with the Group:

Figures in NOK '000 Profit Purchases of goods and services Leasing cost Interest earned TRAFIKKUTVIKLING 2019 2018 2019 2018 2019 2018 O.N. Sunde AS 0 0 0 0 32 598 27 870 ONS Invest II AS 0 0 0 0 0 0 Companies controlled by O.N. Sunde AS 16 201 15 267 110 606 149 085 0 0 Other related parties 1 438 1 044 0 0 0 0 Total 17 639 16 311 110 606 149 085 32 598 27 870

The company purchases clothing and other goods for resale from Voice Norge AS and Gresvig Norge AS on market terms. These companies are part of the O.N. Sunde Group. The company purchases services from a law firm in which the Chairman of the Board, Morten Garman, is a co-owner. Services to a value Each year, some 4 million passengers travel on Color Line’s ships. In addition, the ships carry approx. 900 000 cars and approx. 180 000 freight units. of NOK 1.4 million were purchased in 2019. M/S SuperSpeed 2 is owned by Oslo Line AS. This company in turn is owned by ONS Ship Finance AS and is part of the O.N. Sunde Group. The company charters the ship from Oslo Line AS at an annual rate based on commercial terms corresponding to what could be achieved on an external market. M/S SuperSpeed 1 is owned by Kristiansand Line AS, which until June 2018 was owned by ONS Ship Finance AS. Charter hire up until June 2018 is NOTE 5 SUBSIDIARY COMPANIES included in transactions with related parties. The rate was on commercial terms corresponding to what could be achieved on an external market. The external financing of all companies in the Group is mainly arranged by Color Group AS. The company then lends to the other companies in the The Group comprises the parent company, Color Group AS, and the following directly and indirectly owned subsidiaries: Group. Interest on intercompany accounts is calculated at a rate equivalent to the rate that Color Group AS pays on external loans. Remunerations paid to senior personnel are detailed in Note 19. Figures in NOK '000 Registered Profit Equity Stake Book value in Related parties – balances: office 2019 capital 31.12.2019 balance sheet

Owned by Color Group AS (parent company) Figures in NOK '000 Color Line AS Oslo 163 830 3 318 361 100 4 014 245 Balance sheet items Current receivable Non–current receivable Liabilities Color Hotels AS Oslo 49 1 446 100 100 TRAFIKKUTVIKLING 2019 2018 2019 2018 2019 2018 Total direct ownership 4 014 345 O.N. Sunde AS 663 038 647 351 0 0 0 0 Companies controlled by O.N. Sunde AS 0 0 0 0 -165 -446 Companies owned indirectly Share capital Total 663 038 647 351 0 0 -165 -446 Owned by Color Line AS Color Line Cruises AS Oslo 430 520 100 Color Line Transport AS Oslo 128 284 100 Intercompany balances between the parent company and companies in the Group: Color Line Crew AS Oslo 3 033 100

Color Line Marine AS Sandefjord 2 250 100 Figures in NOK '000 Color Marine Verksted AS Sandefjord 100 100 Non–current receivable Liabilities Bergen Line AS Oslo 100 100 TRAFIKKUTVIKLING 2019 2018 2019 2018 Norway Line AS Oslo 100 100 Color Hotels AS 0 0 -1 487 -1 423 Color Scandi Line AS Oslo 100 100 Color Line AS 1 760 969 473 757 0 0 Scandi Line AS Oslo 100 100 Color Hotel Skagen AS 0 21 558 0 0 I/S Jahre Line Oslo 100 Total 1 760 969 495 295 -1 487 -1 423

Owned by Color Line Cruises AS Receivables from related parties relate largely to loans on which interest is calculated. The O.N. Sunde AS receivable is secured by a charge on shares. Color Line GmbH Kiel 26 (EUR) 100 Other receivables are not secured. No loans have been granted to any member of Group management. There are no open accounts with any member Terminalbygget AS Oslo 100 100 of Group management Outstanding balances between the parent company and companies in the Group relate largely to loan funding granted by the parent to the subsidiary Owned by Color Line Transport AS companies. Interest is calculated on this debt. Color Hotel Skagen AS Skagen 15 700 (DKK) 100 Subsidiary company Color Line AS pays royalties to the parent company. This is recognised as income by the parent company in the amount of NOK 158.0 million (NOK 151.4 million in 2018). Color Line Danmark AS Hirtshals 5 000 (DKK) 100 No provision was made for losses on loans to related parties in 2019 or 2018. Hirtshals Skipsproviantering AS Hirtshals 500 (DKK) 100 Larvik Line AS Oslo 30 100 Kristiansand Line AS Oslo 10 000 100

52 53 Notes Color Group Annual Report 2019 Color Group Annual Report 2019 Notes

NOTE 7 INCOME AND EXPENSES (GROUP) NOTE 8 PROPERTY, PLANT AND EQUIPMENT (GROUP)

Total operating income comprises the following items: Figures in NOK '000 Figures in NOK '000 Investments in Land, buildings and Construction Ships Equipment Total 2019 2018 leased ships other real estate in progress Passenger revenues 4 584 803 4 420 103 Procurement cost Freight revenues 444 840 440 025 Procurement cost as at 1 Jan. 2018 6 139 691 140 684 436 029 1 227 481 193 862 8 137 747 Other 290 618 281 039 Additions 1 118 883 18 152 38 967 22 224 64 285 1 262 511 Total 5 320 261 5 141 167 Disposals 47 941 -53 317 -170 210 -54 0 -175 640 Translation difference 0 0 590 2 662 0 3 252 Procurement cost as at 31 Dec. 2018 7 306 515 105 519 305 376 1 252 313 258 147 9 227 870 Total other operating expense comprises the following items: Figures in NOK '000 Procurement cost as at 1 Jan. 2019 7 306 515 105 519 305 376 1 252 313 258 147 9 227 870 2019 2018 Construction work in progress placed into service 202 878 0 0 26 086 -252 479 -23 515 Cost of technical operation 250 648 248 783 Additions 1 248 416 36 860 15 342 75 359 20 095 1 396 072 Other operating expenses onboard 218 856 213 367 Disposals -136 394 0 -392 -200 0 -136 986 Other operating expenses ashore and others 377 556 394 999 Translation difference 0 0 -583 -2 522 -198 3 303 Total 847 060 857 149 Procurement cost as at 31 Dec. 2019 8 621 415 142 379 319 743 1 351 036 25 565 10 460 138

The Group buys and sells foreign currency based on anticipated income and expenses in the respective currencies. The result of this trading is attributed Accumulated depreciation and write-downs to the relevant income statement items. Depreciation and write-downs as at 1 Jan. 2018 2 778 986 49 369 387 872 763 746 0 3 979 973 Year’s write-downs 249 088 13 822 16 316 43 469 0 322 695 Disposals 8 522 -13 898 -169 961 -29 0 -175 366 Translation differences 0 0 432 1 677 0 2 109 Depreciation and write-downs as at 31 Dec. 2018 3 036 596 49 293 234 659 808 863 0 4 129 411

Depreciation and write-downs as at 1 Jan. 2019 3 036 596 49 293 234 659 808 863 0 4 129 411 Year’s write downs 299 857 18 361 19 315 43 436 0 380 969 The cruise ships offer flexible conference rooms for small and larger groups of up to 330 persons. Disposals -126 194 0 -392 -110 0 126 696 Translation differences 0 0 -442 -1 778 0 -2 220 Depreciation and write-downs as at 31 Dec. 2019 3 210 259 67 654 253 140 850 411 0 4 381 464

Balance sheet values At December 2017 3 360 705 91 315 48 157 463 735 193 862 4 157 774 At December 2018 4 269 919 56 226 70 717 443 450 258 147 5 098 459 At December 2019 5 411 156 74 725 66 603 500 625 25 565 6 078 674

Depreciation method Operating equipment is depreciated according to the straight-line method over the useful life of the equipment. Depreciation is adjusted for residual value, if any.

Depreciation rates 2,85-20 % 10-20 % 10-20 % 5-20 %

Borrowing costs are capitalised with the associated asset and written off over the estimated lifetime of the equipment. Property on leased land is depreciated over the term of the lease.

54 55 Notes Color Group Annual Report 2019 Color Group Annual Report 2019 Notes

NOTE 9 INTANGIBLE ASSETS (GROUP)

Figures in NOK '000 Goodwill and other Software and licences Total intangible assets Procurement cost Procurement cost as at 1 Jan. 2018 671 301 665 170 1 336 471 Additions 0 18 750 18 750 Disposals 0 0 0 Translation difference 0 0 0 Procurement cost as at 31 Dec. 2018 671 301 683 920 1 355 221

Procurement cost as at 1 Jan. 2019 671 301 683 920 1 355 221 Construction work in progress placed into service (from Note 8) 0 23 515 23 515 Additions 0 41 448 41 448 Disposals 0 0 0 Translation difference 0 0 0 Procurement cost as at 31 Dec. 2019 671 301 748 883 1 420 184

Accumulated amortisation and write-downs Amortisation and write-downs as at 1 Jan. 2018 0 258 163 258 163 Year’s amortisation 0 48 658 48 658 Disposals 0 0 0 Translation difference 0 0 0 Amortisation and write-downs as at 31 Dec. 2018 0 306 821 306 821

Amortisation and write-downs as at 1 Jan. 2019 0 306 821 306 821 Year’s amortisation 0 52 112 52 112

Disposals 0 0 0 There are plenty of opportunities for shopping on board. The duty-free shops offer a wide selection of goods. Translation difference 0 0 0 Amortisation and write-downs as at 31 Dec. 2019 0 358 933 358 933

Goodwill and software reasonable relative to anticipated future growth levels in the Balance sheet values All goodwill is acquired through purchases and has been travel and tourism industry. Future cash flows are based on At December 2017 671 301 407 007 1 078 308 of strategic importance in retaining and strengthening the the Group's long-term forecasts as presented in connection At December 2018 671 301 377 099 1 048 400 market positions of the Group. Goodwill is attributed to the with the annual budgeting process. These are based on a At December 2019 671 301 389 950 1 061 251 Transport business segment, which comprises the Sandefjord– moderate level of growth in sales and contribution margin Strömstad service, the Larvik–Hirtshals service and the over the coming years. Kristiansand–Hirtshals service. The present value of future earnings is based on a Goodwill is not amortised. However, goodwill is tested for discount rate after tax of 4.84 per cent. This discount rate is Every year, some 60 000 German Color Line visitors take sightseeing impairment at least annually, or when there are indications based on 10-year government bonds and a market premium tours around Oslo. HMK’s coaches operate 364 days a year. In peak of reductions in value. The testing was performed as at 31 used in public sector contexts. Moreover, the return on season, upwards of 1 000 German guests a day on 20 coaches will be December 2019. equity applied is equivalent to the Group's required rate on sightseeing tours around Oslo. Guests can buy tickets in reception on board the cruise ships or arrange sightseeing tours ahead of time The software is primarily related to the development of of return on equity. when they book their trip. the booking and Internet platform, which was implemented The Group is exposed to changes in the travel and tourism in 2011 and developed further in the following years. The industry, including competition from other operators in the investment is software classified in the accounts as an industry. There is nothing to indicate that the development intangible asset. of the Group should be anything but a stable continuation The software is essential to the entire Group and is of the present situation in the years ahead. Uncertainty accordingly attributed to the Group as a whole. The cost price attaches to estimates of future earnings. of the software is amortised systematically over its expected The testing of the value of goodwill for impairment does useful life, which has been set at 15 years from the point at not reveal any need to write down the goodwill or software which the system was implemented in operations in 2011. recorded in the balance sheet. Sensitivity analyses have The Group tests the book value of intangible assets, been performed in which the discount rate is adjusted by trademarks, goodwill and operating assets for the Cruise +/-1 per cent, equivalent to a +/-1 per cent adjustment in and Transport segment using the cash flow method. the growth of the terminal value and adjustment of the The testing is based on future cash flows after tax for estimated cash flows upwards/downwards by 25 per cent. the next five years, with a terminal value thereafter based None of these adjustments indicate a need to change the on a growth rate of 2.0 per cent, which is considered to be conclusion reached.

56 57 Notes Color Group Annual Report 2019 Color Group Annual Report 2019 Notes

NOTE 10 INTANGIBLE ASSETS (PARENT COMPANY) On Color Line ships the focus is on flavours throughout the voyage.

Goodwill and other intangible assets Amounts in NOK '000 2019 2018 Cost price 1 Jan. 444 677 444 677 Additions in the year 0 0 Disposals in the year 0 0 Cost price 31 Dec. 444 677 444 677

Acc. amortisation 1 Jan. 440 677 440 667 Ordinary amortisation in the year 0 0

Acc. amortisation 31 Dec. 440 677 440 677

Book value 31 Dec. 4 000 4 000 Amortisation rate 5 % 5 %

Goodwill is related to the acquisition of ferry business. Goodwill is amortised over estimated economic life. An amortisation period of 20 years is in line with the conditions that formed the basis for the valuation performed when the business was acquired. The book value of NOK 4 million relates to name rights which are not amortised.

NOTE 11 NON-CURRENT RECEIVABLES AND INVESTMENTS (GROUP)

Amounts in NOK '000 2019 2018 Ålesund Stadium 25 430 25 430 CIRR fixed-rate agreement 17 830 18 829 Other receivables 1 143 1 213 Total 44 403 45 472

NOTE 12 INVENTORIES (GROUP)

Inventories comprise the following types of goods: Amounts in NOK '000 2019 2018 Inventory held for resale 149 407 146 076 Consumables 604 1 407 Bunker fuel 13 374 11 890 Total 163 385 159 373

Writing down of inventories in 2019 is expensed under cost of sales in the amount of NOK 0.5 million (NOK 0 in 2018). The provision for inventory obsolescence totals NOK 4.5 million (NOK 4.0 million in 2018). Cost of sales relates to the consumption of purchased goods for resale, consumer goods, consumption of bunker fuel, ticket sale commissions and harbour dues.

58 59 Notes Color Group Annual Report 2019 Color Group Annual Report 2019 Notes

Color Magic and Color Fantasy NOTE 13 INTEREST-BEARING LIABILITIES, offer a full cruise experience MORTGAGES AND GUARANTEES between Oslo and Kiel.

Amounts in NOK '000 Parent Company Group 2019 2018 2019 2018 Carried non-current loans Mortgages 1 710 655 964 214 1 989 667 1 337 889 Bond loans (listed on Oslo Stock Exchange) 3 189 099 3 063 122 2 373 099 2 560 122 Total interest-bearing non-current liabilities 4 899 754 4 027 336 4 362 766 3 898 011

Carried current liabilities Current portion of mortgage debt 0 0 371 000 330 000 Redemption bond loans 0 0 816 000 503 000 Total interest-bearing current liabilities 0 0 1 187 000 833 000

Total interest-bearing liabilities 4 899 754 4 027 336 5 549 766 4 731 011

In its loan agreements, the Group has borrowing conditions related to liquidity, equity and debt-servicing degree. All borrowing conditions were fulfilled as at 31 December 2019. Mortgage loans are secured by means of mortgages on ships and other assets. Mortgages are also granted in leases on terminal areas, and negative pledges are granted on ships. Color Group AS has concluded a framework agreement for a guarantee on the Group's tax withholdings in the amount of NOK 51 million. In addition, the Group has pledged approx. NOK 125 million to travel guarantee funds, as well as other guaranties for subsidiary companies totalling approx. 37 million.

Amounts in NOK '000 2019 2018 Book value (Group) of assets pledged as security (ships, buildings, etc.) 6 078 674 4 912 250

Interest rate conditions on all loans and credits are fixed in accordance with NIBOR with the addition of an agreed margin. At yearend 2019, interest rates were on average: Mortgage debt: 2.75 per cent. Bond debt: 5.34 per cent Color Line Transport AS has a leasing agreement with Oslo Line AS. The agreement expires in 2025 and a guarantee has been furnished by Color Group AS.

NOTE 14 TRADE PAYABLES AND OTHER CURRENT LIABILITIES (GROUP)

Amounts in NOK '000 Trade payables and other current liabilities 2019 2018 Trade payables 320 945 337 173 Unpaid government charges and special taxes 98 092 83 376 Pre-paid income 198 719 193 497 Accrued interest 30 365 14 853 Accrued wage costs 83 165 82 812 Sundry current liabilities 178 037 199 127 Total 909 323 910 838

Other financial liabilities Market value, currency trades 13 434 7 644 Bunker fuel hedging 42 246 148 593 Total 55 680 156 237

Total trade payables and other current liabilities 965 003 1 067 075

60 61 Notes Color Group Annual Report 2019 Color Group Annual Report 2019 Notes

Options to renew a contract of lease NOTE 15 LEASES (GROUP) The Group’s contracts of lease on buildings/terminals have terms that vary between 0.5 and 23 years. Some of the contracts contain a right to renew that may be exercised during the final period of the contract. When entering into a contract the Group assesses whether there is a reasonable degree of certainty that the right to renew will be exercised. There are only two contracts of lease with options that have not been Group as lessee recognised. One has an annual lease cost of NOK 1.7 million and it is not considered likely that it will be continued. The other is 23 years into Right-of-use assets the future and has accordingly not been recognised either. The Group’s leased assets include ships, other real property, machines and equipment, and vehicles. The Group’s right-of-use assets are categorised and presented in the table below: Option to purchase The Group leases machines and equipment and vehicles under leases with terms of between three and five years. Some of these contracts contain an option to purchase the assets at the end of term of the lease. Contracts of lease with a purchase option of this nature have a total Amounts in NOK '000 buyout value of NOK 2.1 million. Terminals Machines, Right-of-use assets Ships and parking equipment, Total areas vehicles Procurement cost 1 January 2019 581 050 334 726 41 485 957 261 NOTE 16 NET FINANCIAL EXPENSES AND FINANCIAL INCOME Additions, right-of-use assets 0 0 45 008 45 008 Amounts in NOK '000 Transfers, reclassifications, translation differences 20 878 -6 604 -5 554 8 720 Parent Company Group Procurement cost 31 December 2019 601 928 328 122 80 939 1 010 989 2019 2018 2019 2018 Interest expense, bank loans -32 360 -10 553 -55 097 -23 889 Accumulated amortisation and write-downs as at 1 Jan. 2019 0 0 0 0 Interest expense, bond loans -171 843 -163 701 -171 843 -163 701 Amortisation 85 990 27 700 19 781 133 471 Interest expense lease liability IFRS 16 0 0 -41 067 0 Accumulated amortisation and write-downs as at 31 Dec. 2019 85 990 27 700 19 781 133 471 Other interest expense -81 -66 -3 553 -1 098 Total interest expense -204 284 -174 320 -271 560 -188 688 Value of right-of-use assets in balance sheet at 31 Dec. 2019 515 938 300 422 61 158 877 518 Loss, financial instruments at fair value through profit or loss -999 0 -6 787 -4 353 Lower of remaining lease term or economic life 6 years 1–23 years 1–7 years Unrealised foreign exchange losses -5 153 -3 564 -5 153 -3 564 Amortisation method Linear Linear Linear Borrowing costs -38 552 -42 579 -23 361 -45 338 Foreign exchange losses -30 279 0 0 -3 019 Lease liabilities Other financial expenses 0 0 0 -1 418 Total financial expenses -279 267 -220 463 -306 861 -246 380 Undiscounted lease liabilities and maturity of payments Less than 1 year 166 386 Interest earned, liquid assets 2 729 4 405 0 0 1–2 years 144 348 Interest earned, accounts receivable 89 462 69 923 34 965 27 870 2–3 years 140 093 Total interest earned 92 191 74 328 34 965 27 870 3–4 years 135 529 Result, investment in associate and subsidiary 186 453 530 415 17 509 29 112 4–5 years 125 284 Change in value, financial derivative 0 21 983 0 21 983 More than 5 years 468 473 Gain on shares 11 195 6 651 11 266 6 651 Total undiscounted lease liabilities 31 December 2019 1 180 113 Foreign exchange gains 0 7 823 8 567 0 Total financial income 289 839 641 200 72 307 85 616 Reconciliation of operating lease liabilities under IAS 17 with recognised lease liabilities under IFRS 16 at 1 Jan. 2019 Operating lease liabilities at 31 December 2018 1 264 481 Total financial items 10 572 420 737 -234 554 -160 764 Discounting using marginal borrowing rate -307 220 Lease liabilities recognised on initial application 957 261 The Group buys and sells foreign currency based on anticipated income and expense in the respective currencies. The effect of these trades is recorded under operations together with the relevant income statement items in the accounts. See Note 7.

Weighted average incremental borrowing rate 4.3%

On a SuperSpeed crossing from Larvik or Kristiansand, Denmark Changes in lease liabilities is less than four hours away. Popular destinations Skagen, At initial application 1 January 2019 957 261 Aalborg and Aarhus are a short distance from Hirtshals. New/amended lease liabilities recognised in period 45 008 Payment of principal -168 721 Interest expense relating to lease liabilities 41 067 Translation differences 8 720 Total lease liabilities 31 December 2019 883 335 Current lease liabilities 165 491 Non-current lease liabilities 717 844

The contracts of lease do not contain restrictions on the Group’s dividend policy or financing options. The Group has no significant residual value guarantees relating to its leases. The Group has no variable contracts of lease.

Applied practical solutions The Group leases some equipment that at 01.01.2020 had a shorter lease term than 12 months. The Group has not recognised lease liabilities and right-of-use assets in the case of these contracts of lease. They expired during 2019. Instead, the lease payments were taken to expense in 2019. There are also some smaller leases that have not been recognised. These are viewed as insignificant.

62 63 Notes Color Group Annual Report 2019 Color Group Annual Report 2019 Notes

and DKK. A change in the exchange rate between EUR and Bunker fuel risk its financial obligations as they come due. The Group NOTE 17 FINANCIAL RISK NOK of +/- 10 per cent in relation to the Group's currency The cost of bunker fuel accounted for some 12.9 per cent focuses on maintaining a level of liquidity contingency loans and derivatives would affect earnings (foreign of the Group's operating costs in 2019 and represents an that, as a minimum, will cover a peak load event. Liquidity AND USE OF FINANCIAL exchange gain/loss) by approx. +/- NOK 110 million before operational risk as a consequence of changes in the price contingency is managed at Group level and 12-month budgets tax. A change in the exchange rate between USD and NOK of oil. At 31 December 2019, the Group had bunker hedging are prepared and monitored on a weekly basis. Liquidity INSTRUMENTS of +/- 10 per cent would affect earnings by approx. +/- NOK 60 contracts in place for approximately 66 per cent of estimated available as at 31 December 2019 amounts to NOK 1 929 million before tax, account being taken of currency derivative consumption in 2020, approximately 63 per cent of estimated million (including undrawn credit lines). Surplus liquidity contracts in place. Profits would also be affected by a change consumption in 2021, and approximately 31 per cent of is placed primarily on the short-term money market. FINANCIAL RISK FACTORS in the value of hedging contracts. estimated consumption in 2022. The hedging contracts Reference is also made to the table under «Measuring the The main financial risks borne by the Group are related to In 2019, currency contracts were realised in EUR, USD are based on the actual physical product consumed by the fair value of financial assets and liabilities» for a maturity bunker fuel, foreign currency, interest rates and liquidity and DKK related to current income and costs within the Group. ships. The bunker hedging contracts in force at yearend had analysis showing future instalments and interest on risk/refinancing risk. The Group monitors the individual areas These contracts are largely related to day-to-day operations, no impact on earnings for 2019. The fair value of hedging interest-bearing debt. on an ongoing basis in order to ascertain any current and and foreign exchange gains/losses on settlement are contracts in force as at 31 December 2019 is NOK -42 million. future risk. It is the policy of the Group to refrain from active attributed to the respective items in the income statement. All hedging contracts for bunker fuel expire in 2020 and Credit risk speculation in financial risks, and instead to use financial At yearend, hedging contracts are in place covering parts of 2021 and will affect earnings in the coming year. Changes in The Group’s financial assets consist mainly of receivables derivatives as a buffer against risks connected with financial the total exposure in the coming year, primarily in the form the market value of the remaining bunker contracts will not from sales, other receivables, liquid resources and financial exposure in the operation and financing of the Group's of option and forward contracts with delivery in 2020. affect earnings, only equity. instruments. These receivables represent the Group's business. An overview is maintained of hedging instruments With a change in the price of bunker fuel of +/- 10 per maximum exposure and credit risk related to financial assets. in place from time to time. The Board and the company's Interest rate risk cent, the hedging contracts in place would impact earnings The figures for trade receivables recorded in the balance Audit Committee are furnished with regular overviews of The Group's primary exposure to interest rate risk is through by approximately +/-NOK 10 million before tax. The effect on sheet are net after provisions for potential losses, based hedging instruments and estimated future risk. its loan portfolio. The reason for managing interest rate risk earnings of hedging contracts is reported in the accounts on past experience and an evaluation of the present-day is that changes in the interest rate level over time can have in accordance with hedge accounting principles and will situation. Most of the company's trade receivables fall due Market risk a negative effect on profits. The Group enters into interest amount to a total of NOK -5 million for 2019. Hedging for payment within three months. The credit risk related to The Group's market risk is largely related to changes in rate swap agreements in order to achieve the desired ratio operations have functioned as intended in 2018 and 2019. financial derivatives is regarded as low, as the agreements foreign exchange rates, interest rates and changes in the between fixed and floating rates of interest. on these assets have been concluded with highly credit­ cost of bunker fuel. Total interest-bearing debt recorded in the balance sheet Liquidity risk worthy banks, thus reducing the risk that the counterparty is NOK 5 550 million. In connection with the delivery of Liquidity risk is the risk of the Group being unable to meet will be unable to fulfil its commitments. Currency risk M/S Color Hybrid, the company took out an option for CIRR Income in foreign currencies and the cost of goods and fixed interest-rate contracts (fixed rate for 12 years) for the services are not neutral in the individual currency. Wher­ever full amount of the financing: approximately NOK 691 million possible, this risk is mitigated. Currency risk arises when at a fixed rate of 2.14 per cent and EUR 31 million at a fixed there are differences between income received and expenses rate of 0.84 per cent from Export Credit Norway. Moreover, Liquid assets (available liquidity) paid in different currencies, particularly USD, EUR and DKK the company entered into total cross currency interest Amounts in NOK '000 2019 2018 and in relation to investments/purchase of non-current rate/currency swap agreements NOK to EUR equivalent to assets and repayment of loans in foreign currency. The approximately NOK 500 million maturing in October 2020. Bank deposits, cash 332 362 867 758 Group has active measures in place to reduce currency A change in the interest rate level of +/- 1 per cent would Market-traded shares 64 244 52 637 risk by using foreign currency netting and foreign currency affect earnings by approx. +/- NOK 30 million before tax. In Unused drawing rights 1 532 394 1 477 605 Liquid assets (available liquidity) 1 929 000 2 398 000 loans. In a normal situation it is the Group's policy to cover a addition, earnings would be impacted by changes in the value significant portion of its current currency risk 6 to 12 months of hedging contracts, and interest earned on cash holdings. ahead by means of forward contracts, options, swaps and The table below quantifies future interest rate risk, structured products. Taking into account concluded currency account being taken of cash in hand/bank deposits, the contracts and foreign currency holdings as at 31 December maturity structure of mortgages, bond loans and interest Exposure to credit risk: 2019, the Group is in a more or less currency neutral position rate swaps. The figures are based on liability recorded in with regard to operational revenues and expenses in EUR the balance sheet as at 31 December 2019: trade receivables/other current assets Amounts in NOK '000 2019 2018 Trade receivables 84 976 94 678 Interest rate sensitivity, Group Write-down for anticipated loss -3 455 -3 363 Amounts in NOK '000 Less than 1 year 1–2 years 3–4 years 5 years and over Net trade receivables 81 521 91 315 Mortgage loans 2 018 257 1 647 257 1 396 257 1 145 257 Inter-company receivables 663 038 647 351 Unsecured bond loans 2 400 000 2 400 000 1 700 000 800 000 Pre-paid costs 233 064 141 259 Total debt to credit institutions 4 418 257 4 047 257 3 096 257 1 945 257 Sundry current receivables 40 656 64 074 Cash in hand/bank deposits and market-traded shares 463 568 463 568 463 568 463 568 Trade receivables and other accounts receivable 1 018 279 943 999 Net interest rate swaps 993 965 911 135 828 305 745 475 Net interest-bearing debt after interest rate swaps 2 960 724 2 672 554 1 804 384 736 214 Bunker fuel derivatives 0 0 Interest rate sensitivity at +/- 1% change 29 607 26 726 18 044 7 362 Currency derivatives 0 0 Other financial receivables 0 0

64 65 Notes Color Group Annual Report 2019 Color Group Annual Report 2019 Notes

Shares Capital management Balance sheet value and fair value of non-current loans held by the Group The shares recorded in the balance sheet are readily- An important objective is to secure financial freedom of Amounts in NOK '000 negotiable listed shares. The value of the shares at balance action in both the short and the long term and to maintain Balance sheet value Fair value* sheet date is not considered to represent a critical risk. a good credit rating, enabling favourable loan conditions to 2019 2018 2019 2018 be achieved that are reasonable in relation to the business. Mortgages 1 989 667 1 337 889 2 018 257 1 337 889 The company manages its capital structure, and makes Bond loans 2 373 099 2 560 122 2 444 050 2 611 334 whatever adjustments prove necessary, on the basis of an Total 4 362 766 3 898 011 4 462 307 3 949 223 ongoing evaluation of the financial conditions under which the business operates. *The basis for the fair value of bond loans is the market price quoted at yearend and the fair value of mortgages is the company's valuation of any additional expenses for refinancing at yearend discounted at 6 per cent p.a. with due account being taken of average maturities. Debt-to-equity ratio Amounts in NOK '000 2019 2018 Balance sheet value of the Group's interest-bearing debt Interest-bearing debt 5 549 766 4 731 011 Net liquid assets 396 606 920 395 to credit institutions in sundry currencies is as follows: Net interest-bearing debt 5 153 160 3 810 616 Amounts in NOK '000 Equity 1 977 726 2 065 194 Parent Company Group 2019 2018 2019 2018 Debt-to-equity ratio 2.61 1.85 NOK 4 340 571 3 640 507 4 942 621 4 285 190 EUR 559 183 386 829 559 183 386 829 DKK 0 0 47 962 58 992 Sum 4 899 754 4 027 336 5 549 766 4 731 011 Net cash and liquid assets Amounts in NOK '000 2019 2018 Bank deposits and cash 399 324 938 118 Overview of the Group’s financial assets and debt classified Drawings on credit lines -66 962 -70 360 Market-traded shares 64 244 52 637 by measurement category: Net cash and liquid assets 396 606 920 395 Amounts in NOK '000 2019 2018 Financial assets Loans and receivables Bank deposits/cash 399 324 938 118 Measuring the fair value of financial assets and liabilities Trade receivables 81 521 91 315 Pre-paid costs 233 064 141 259 The fair value of forward contracts is determined by applying is equal to fair value. Similarly, the balance sheet value of Sundry current receivables 703 694 711 425 the forward exchange rates on the balance sheet date. The trade receivables and accounts payable to suppliers is Total loans and receivables 1 417 603 1 882 117 fair value of currency swap agreements is calculated by approximately equal to fair value, since these are concluded determining the present value of future cash flows. The on normal terms at short maturity. The bond loans are Financial assets at fair value through profit or loss fair value of interest rate swap contracts is calculated by stock-exchange listed and are subject to floating rates of Market-traded shares 64 244 52 637 discounting the contractual cash flows by the zero-coupon interest that fall due quarterly. The fair value of bond loans CIRR 17 830 18 829 rate from the yield curve for the relevant currency. The fair is the stock exchange price quoted at yearend. The fair value Total financial assets at fair value through profit or loss 82 074 71 466 values of the aforementioned instruments are calculated by of non-current bank loans is the company's valuation of any the company's external bankers and reviewed by the company. added costs for refinancing at yearend, discounted by 6 per Financial liabilities The balance sheet value of cash in hand and credit lines cent p.a. with due account taken of average maturities. Financial liabilities at amortised cost: Trade debtors and other current debt 909 323 910 838 Bank loans 2 360 667 1 667 889 The following table shows the total liquidity flows in the years ahead for coverage of instalments and interest on non-current Bond loans 3 189 099 3 063 122 financing contracts in the form of non-current bank loans and bond loans: Total financial liabilities 6 459 089 5 641 849

Amounts in NOK '000 Hedge accounting Parent Company Group Bunker swaps 42 246 148 593 2019 Mortgages Bond loans Mortgages Bond loans Total hedge accounting 42 246 148 593 Less than 1 year 322 000 816 000 371 000 816 000 1–2 years 322 000 0 371 000 0 Financial liabilities at fair value through profit or loss 2–3 years 202 000 700 000 251 000 700 000 Interest rate swaps 13 186 0 3–4 years 202 000 900 000 251 000 900 000 Currency derivative contracts 248 7 645 5 years and longer 686 295 800 000 1 145 257 800 000 Total financial liabilities at fair value through profit or loss 13 434 7 645 Total 1 734 295 3 216 000 2 389 257 3 216 000

66 67 Notes Color Group Annual Report 2019 Color Group Annual Report 2019 Notes

Balance sheet items valued at fair value (Group): NOTE 18 PAYROLL COSTS

The table below show financial assets and liabilities at fair value by valuation method. The various levels are defined as follows: Group Amounts in NOK '000 2019 2018 Level 1: values are taken from traded prices in a market with a corresponding level of activity Level 2: values supplied by third parties, but are not part of an active market with associated traded prices Payroll costs Level 3: values are calculated following a valuation of assets and liabilities that are not based on known market data. Wages 1 016 510 954 600 Employers' tax 202 326 186 028 Pension costs 58 599 77 351 Other benefits 148 757 141 519 Assets and liabilities measured at fair value at 31 Dec. 2019 Total 1 426 192 1 359 498 Amounts in NOK '000 Level 1 Level 2 Level 3 Total Man-years 2 460 2 376 Financial assets at fair value Market-traded shares 64 244 0 0 64 244 Refunds of income tax, national insurance contributions and Employers' tax for mariners totalled NOK 356 million in 2019 and is reported as a reduction Interest rate swaps 0 17 830 0 17 830 in crew costs (pay). Of this, the Group contributed NOK 10.2 million to Stiftelsen Norsk Maritim Kompetanse (Norwegian Maritime Competence Foundation). The corresponding figures for 2018 were NOK 323 million and NOK 9.9 million. Total 64 244 17 830 0 82 074

Financial liabilities at fair value Parent company Interest rate swaps 0 13 186 0 13 186 Amounts in NOK '000 Currency derivatives 0 248 0 248 2019 2018 Bunker fuel derivatives 0 42 246 0 42 246 Employee benefit expenses Total 0 55 680 0 55 680 Wages 2 586 6 818 Employers' tax 593 1 608 Pension costs 353 492 Other benefits 222 227 Total 3 754 9 145 Assets and liabilities measured at fair value at 31 December 2018 Amounts in NOK '000 Man-years 2 2 Level 1 Level 2 Level 3 Total Financial assets at fair value Market-traded shares 52 637 0 0 52 637 Interest rate swaps 0 18 829 0 18 829 NOTE 19 REMUNERATION PAID TO SENIOR EXECUTIVES Total 52 637 18 829 0 71 466 Amounts in NOK '000 Salary Bonus Pension cost Other remuneration Total Financial liabilities at fair value Olav Nils Sunde, Group President Color Group AS 0 0 0 0 0 Currency derivatives 0 7 645 0 7 645 Trond Kleivdal, Group President Color Line AS 4 108 2 454 133 338 7 033 Bunker fuel derivatives 0 148 593 0 148 593 Total 0 156 238 0 156 238 Directors' fees Total Directors' fees* 200 200

*Fee to the Chairman of the Board, Morten Garman. Only external directors receive directors’ fees. Other directors do not receive fees for their work on the Board of Directors. Reconciliation of financing activities Amounts in NOK '000 01.01.2019 Cash flows Other changes 31.12.2019 Auditor's fees – Deloitte Bond loans 3 063 122 125 977 0 3 189 099 Amounts in NOK '000 Debt to credit institutions 1 667 889 687 626 5 153 2 360 667 Parent Company Group Other receivables including Group -973 669 -63 298 31 174 -1 005 793 2019 2018 2019 2018 Total 3 757 342 750 304 36 327 4 543 973 Statutory auditing services 493 289 2 605 2 390 Other assurance engagements 91 40 320 413 Tax advice 0 0 210 52 Other services 168 722 201 838 Total fee to auditor 752 1 051 3 336 3 693

The fees are stated exclusive of VAT. No fees have been charged directly to equity in connection with equity capital transactions.

68 69 Notes Color Group Annual Report 2019 Color Group Annual Report 2019 Notes

Year’s pension costs for the defined benefit scheme (yield) for the year are as follows: Amounts in NOK '000 2019 2018 Financial assumptions Discount rate 2.30 % 2.60 % Expected annual wage adjustment 2.25 % 2.75 % Expected annual adjustment of active pensions 0.50 % 0.80 % Expected annual G-adjustment 2.00 % 2.50 % Estimated yield 2.30 % 2.60 %

Pension costs for the year Pension earnings for the year 14 810 13 871 Interest expense on pension liabilities 1 052 6 345 Anticipated yield, pension funds 0 -5 864 Administration costs 817 805 Employers' tax -535 2 138 Net plan amendment, curtailment, settlement of scheme -20 471 0 Cost of pensions -4 327 17 295

Reconciliation of pension liabilities and pension funds against balance sheet values The ships offer a wide range restaurants, bars and cafes. Present value of accrued pension liabilities 0 287 829 Value of pension funds 0 -254 435 Employers' tax 0 4 709 Guidelines for remuneration guidelines and a statement is submitted to the General Pension liabilities in balance sheet 0 38 103 Meeting for discussion pursuant to the provisions of Section to senior managers in 2019 5-6 of the Public Limited Companies Act (Norway). Net amounts recorded in the balance sheet incl. Employer’s tax Net pension liability / (funds) at start of period 38 103 16 843 Remuneration to senior personnel in the Group is to be Report on the policy for the remuneration of Net pension costs during period -4 327 17 295 based on the following main principles: executives followed in 2019 Payments to/carried back from premiumfund/transfer to deposit fund -18 580 -20 516 As in previous years, the guidelines governing executive Estimate variance loss / (-gain) -15 196 24 481 The principle governing basic salary salaries as described above were followed during this past Net pensions commitment / (funds) at end of period 0 38 103 Persons in executive positions shall receive a competitive basic financial year. Remuneration paid to senior executives is salary based on the position, responsibilities, competence charged to the company as an expense and has no other Percentage breakdown of pension fund assets and performance of the individual executive. direct consequence for the company's shareholders. Shares 0 % 12.1 % Short-term bonds 0 % 12.5 % The principle governing variable benefits, Money market 0 % 11.0 % incentive schemes etc. Long-term bonds 0 % 29.4 % Executives may receive a variable salary. This will serve NOTE 20 PENSIONS Loans and receivables 0 % 25.2 % as an incentive, to stimulate profit orientation. A variable Property 0 % 9.1 % salary is based on the achievement of targets by the Group, Shore-based employees have a defined contribution pension Other 0 % 0.7 % division or company in which the executive is employed. scheme and seagoing personnel have a defined benefit pension scheme. A premium of NOK 16.3 million with the addition of employers' tax was paid in 2019. The scheme is managed by an insurance company and the composition The principle governing non-cash benefits. of the funds is based on the statutory management to which this company is subject. In addition, the calculation uses IR 02 for disability and table K2013BE Executives may be offered various benefits, such as compa- The defined contribution scheme for mortality. ny car schemes, insurance, pensions and the like. Benefits in Under this scheme the company pays an annual premium to A change in the actuarial assumptions of +/-1 per cent would not have a significant effect on the pension liability recorded in the balance sheet. kind shall primarily take the form of communications equip- a life assurance company, which manages the contributions The parent company, Color Group AS has a defined contribution pension scheme. NOK 0.4 million was paid into this scheme in 2019, as compared with ment to allow the executive to be available to the company. on behalf of the employees. The annual premium is charged NOK 0.5 million in 2018. The pension schemes fulfil the statutory requirements contained in the Act concerning Mandatory Occupational Pension Schemes. as an expense by the company. This year’s contribution to the Post-termination salary scheme defined contribution scheme was expensed in the amount of The Group President of Color Line, Trond Kleivdal will, in NOK 30.8 million, while the figure for 2018 was NOK 30.6. the event of termination not covered by the provisions of the Working Environment Act, receive three years' salary, The defined benefit pension scheme equivalent to approx. NOK 12 million. The defined benefit pension scheme was wound up with effect from 1 January 2020. As at 31 December, the pension liability Information on the preparation and was NOK 0 and the winding up was reported in the income decision-making process statement. In addition, the Group pays the ship owner's share Salary terms for the Chief Executive Officer are reviewed by of the pension insurance for seamen, which in 2019 totalled the Board on an annual basis. The Board prepares annual NOK 32.2 million and in 2018 totalled NOK 29.5 million.

70 71 Notes Color Group Annual Report 2019 Color Group Annual Report 2019 Notes

NOTE 21 SHARE CAPITAL NOTE 23 DEFERRED TAX

The share capital comprises 71 800 000 shares of NOK 2.00 each, total NOK 143.6 million. All shares carry equal rights. Specification of the taxation effect of temporary differences and carry-forward loss. ONS Invest II AS owns all the shares of Color Group AS. All the shares of ONS Invest II AS are owned indirectly by Director and Group President Olav Nils Sunde and his family. Group: Amounts in NOK '000 NOTE 22 EQUITY, PARENT COMPANY Liability (benefit) 2019 2018 Operating assets 3 533 728 2 568 718 Amounts in NOK '000 Intangible assets 14 861 -27 898 Share Premium Other Financial assets -42 246 -186 696 Total capital fund equity Profit and loss account 137 699 158 217 Equity 1 Jan. 2018 143 600 1 478 436 270 314 1 892 350 Current assets 11 952 13 556 Profit for the year 0 0 428 447 428 447 Liabilities -909 257 -20 259 Group contribution paid (received) 0 0 -379 642 -379 642 Group contribution 115 093 495 772 Other changes 0 0 0 0 Carry-forward loss -3 -6 Equity 31 Dec. 2018 143 600 1 478 436 319 119 1 941 155 Total 2 861 827 3 001 403

Equity 1 Jan. 2019 143 600 1 478 436 319 119 1 941 155 Deferred tax liability at 31 Dec. 629 600 665 918 Profit for the year 0 0 100 304 100 304 Deferred tax liability in balance sheet at 31 Dec. 629 600 665 918 Group contribution received (paid) 0 0 -245 673 -245 673 Tax rate for calculating deferred tax 22 % 22 % Equity 31 Dec. 2019 143 600 1 478 436 173 750 1 795 786 Tax rate for calculating deferred tax for subsidiary in Denmark 22 % 22 %

Amounts in NOK '000 Liability, deferred tax (tax asset) recorded via other income and expenses are as follows: 2019 2018 M/S Color Hybrid has received awards for innovation and ground-breaking environmental technology. Translation differences -329 -430 Fair value reserves in equity related to bunker fuel hedging -9 294 -32 691 Estimate variance pensions 0 -8 383 Total -9 623 -41 503

The above table includes effects as a consequence changes in temporary differences.

Parent company Amounts in NOK '000 Liability (benefit) 2019 2018 Operating assets -1 232 -1 540 Profit and loss account 1 847 2 309 Current assets 17 830 18 829 Liabilities 24 779 24 213 Total 43 224 43 811

Deferred tax liability (-tax asset) as at 31 Dec. 9 509 9 638 Tax rate for calculating deferred tax 22 % 22 %

The Group records deferred tax assets and liabilities net only where the Group has a legal right to offset these and only in the case of deferred tax liabilities and assets within the same tax regime.

72 73 Notes Color Group Annual Report 2019 Color Group Annual Report 2019 Notes

NOTE 24 COST OF TAXES NOTE 26 EARNINGS PER SHARE

Earnings per share is calculated using the profit for the year and the average number of shares outstanding during the year. Group Amounts in NOK '000 Amounts in NOK '000 Tax cost 2019 2018 2019 2018 Tax costs for the year Profit for the year after tax 219 842 439 426 Tax, Group contribution 113 400 124 662 Weighted average number of shares 71 800 000 71 800 000 Tax payable 3 757 1 347 Earnings per share NOK 3.06 6.12 Change in deferred tax -36 316 -98 410 Tax effect of other income and costs -26 740 57 727 Other changes, directly recorded tax 52 0 Cost of taxes, ordinary profit 54 153 85 326 NOTE 27 INVESTMENTS IN ASSOCIATE COMPANY Reconciliation from nominal to actual tax rate Ordinary profit 273 995 524 752 Color Groups AS' wholly-owned subsidiary, Color Line AS, has the following investments in an associate. Estimated income tax at nominal tax rate 60 279 120 693

Tax effect of following items Balance Share of Translation Balance Amort. Dividend Fair Non-deductible items -6 017 -5 235 Entity Country Stake sheet value profits diff. added sheet value result 2019 value Translation differences -109 -688 31.12.2018 2019 value 2019 31.12.2019 Tax effect of change in deferred tax rate from 23% in 2017 to 22% in 2018. No change in tax rate from 2018 to 2019 0 -29 444 ONS Ship Finance AS Norway 38.6 % 280 843 17 509 0 0 0 298 352 298 352 Cost of taxes, ordinary profit 54 153 85 326 Effective rate of taxation 19.8 % 16.3 % ONS Ship Finance AS is an unlisted company and no quoted prices are available. Fair value is based on a valuation conducted in connection with reorganisations in December 2012 as well share of profits during the ownership period. Color Line AS acquired 38.6% of ONS Ship Finance AS in 2012 for NOK 390 million. ONS Ship Finance AS owns Oslo Line AS, owner of M/S SuperSpeed 2.

Parent Company Amounts in NOK '000 Accounts for ONS Ship Finance AS Tax cost 2019 2018 Amounts in NOK '000 Tax costs for the year 2019 2018 Tax, Group contribution 25 320 113 400 Operating income 121 385 170 234 Change in deferred tax -129 12 047 EBITDA 117 295 121 988 Cost of taxes, ordinary profit 25 191 125 447 Operating profit (EBIT) 74 174 101 200 Pre-tax profit (EBT) 58 411 273 269 Reconciliation from nominal to actual tax rate Pre-tax profit 125 495 553 894 Total assets 1 332 615 1 349 384 Ordinary profit 125 495 553 894 Equity 589 130 543 766 Estimated income tax at nominal tax rate 27 609 127 396 Net interest-bearing debt 446 539 609 972

Taxation effect of following items Non-deductible items -2 418 -1 511 Tax effect of change in deferred tax rate from 23% in 2017 to 22% in 2018. No change in tax rate from 2018 to 2019 0 -438 NOTE 28 EVENTS AFTER THE REPORTING DATE Cost of taxes, ordinary profit 25 191 125 447 Effective rate of taxation 20.1 % 22.6 % The effects of the coronavirus (COVID-19) outbreak Color Line is at present experiencing increasingly adverse effects of the coronavirus (COVID-19) outbreak. The management has put in place extensive cost-cutting measures both onboard ship and ashore (such as temporarily laying off personnel and NOTE 25 BANK cutting pay) to cover the expected loss of income. Effective as at today’s date, all passenger vessels have been withdrawn from service for an indefinite period, including the Oslo–Kiel, Larvik–Hirtshals, Kristiansand–Hirtshals, and Sandefjord–Strömstad Color Group AS is a group account holder. The Group companies’ bank accounts that are included therefore represent services. The cargo business will continue to operate some of its services, namely M/S Color Carrier on the Norway to an intercompany receivable/payable. All represented companies stand surety for intercompany balances in respect Germany route and M/S SuperSpeed 2 (with a minimum crew) on the Norway to Denmark route. The financial consequences of the legal Group account. for Color Group AS are not yet clear because of the uncertainty attaching to the course that the virus outbreak will take. The company is following the guidelines issued by national and international authorities at all times. With reference to Note 13 (maturity/instalments on debt in 2020 of approximately NOK 1 187 million), and Note 17 (available liquidity of approximately NOK 1 929 million) the Directors are of the view that the company can meet the situation that has arisen.

74 75 Color Group AS Color Group Annual Report 2019 Color Group AS Color Group Annual Report 2019

Eierstyring og selskapsledelse Corporate Governance The Audit Committee comprises two members elected by and from amongst the ranks of the Board of Directors. The members of the Audit Committee are independent of the company's day-to-day management and key business associates. Color Group AS has bonds listed on a regulated market and reports its policies and practice on corporate governance in Color Group AS rapporterer i henhold til Regnskapsloven § 3-3 b tredje ledd for prinsipper og praksis Risk management and internal control procedures accordance with Section 3-3b third paragraph of the Accounting Act (Norway). vedrørende foretaksstyring. The Board ensures that the company has satisfactory internal control procedures in place in accordance with the provisions Reporting on corporate governance applicable to the business. The Board conducts an annual review of the company's internal control procedures and monitors The company'sRedegjø generalrelse for principles eierstyring on corporate og selskapsledelse governance shall ensure an appropriate distribution of roles between the the main areas of risk on an ongoing basis. Together with the management of the company, the Board has focused on company'sSelskapets owners, overordnedeBoard of Directors prinsipper and the for management eierstyring ofog the selskapsledelse Group. This distribution skal sikre ofen roleshensiktsmessig shall ensure rolledelingthat goals developing the internal control procedures applicable to the company's financial reporting, including: and strategiesmellom are selskapets set, that the eiere, adopted styret strategies og konsernets are implemented daglige ledelse. in practice En slikand thatrolledeling the profits skal achieved sørge for are at detmeasured fastsettes and followedmål og up. strategie The principlesr, at de shallvedtatte also strategier contribute implementeres towards ensuring i praksis that the og business at de oppnådde of the company resultatene is the subjecter gjenstand of satis - - the control environment factory forcontrolLedelseserklæring måling procedures. og oppfølging. An appropriate Prinsippene distribution skal også of roles bidra and til satisfactoryat selskapets control virksomhet procedures er gjenstand shall contribute for betryggende - risk Ledelseserklæringassessment to ensuringkontroll. the highest En hensiktsmessig possible creation rolledeling of value overog betryggende time, for the kontrollbenefit ofskal the bidraowners til andstørst other mulig stakeholders. verdiskapning over - control activities - information and communication tid, til beste for eierne og øvrige interessegrupper. The business - follow-up The objects of the company are to conduct ferry operations, transport operations and other corresponding business as well Selskapskapital, likebehandling av aksjeeiere samt styrefullmakter as to participateVi erklærer in other etter companies beste overbevisning with similar at objects. konsernregnskapet for 2013 er utarbeidet i samsvar med IFRS som The BoardVi erklærer receives etterperiodic beste reports overbevisning on the financial at konsernregnskapet performance of forthe 2013company er utarbeidet and a description i samsvar of meddevelopments IFRS som in and Colorfastsatt Group av EU, AS med har kraven aksjeklasse, til tilleggsopplysninger og samtlige aksjersom følger har like av regnskapsloven,rettigheter i selskapet. samt at V årsregnskapetedtektene inneholder for the statusfastsatt of the av company's EU, med most krav importanttil tilleggsopplysninger individual projects. som følger av regnskapsloven, samt at årsregnskapet for Subscribedingen capital stemmerettsbegrensninge and dividends r. Enhver aksjeoverdragelse er betinget av samtykke fra selskapets styre. morselskapet for 2013 er avlagt i samsvar med regnskapsloven og god regnskapsskikk i Norge, og at morselskapet for 2013 er avlagt i samsvar med regnskapsloven og god regnskapsskikk i Norge, og at The equityGeneralforsamlingen capital of the Group har at 31ikke December gitt fullmakter 2019 stood som at gir NOK styret 2.0 adgangbillion. Atil group å beslutte contribution kapitalendringer of NOK 5.58 eller per kjøp share av Remuneration of the Board of Directors was paidegneregnskapsopplysningene for theaksje 2018r. financial year. gir etOver rettvisende time, the shareholdersbilde av foretakets of the companyog konsernets are to eiendelerreceive a competitive return on their The remunerationregnskapsopplysningene of the Board of gir Directors et rettvisende is described bilde in av further foretakets detail og in konsernets Note 19. eiendeler investment through a combination of dividends and increases in the value of the share. The Board has proposed that a group og resultat som helhet, samt at årsberetningen gir en rettvisende oversikt over utviklingen, resultatet og stillingen Remunerationog resultat of executivesom helhet, personnel samt at årsberetningen gir en rettvisende oversikt over utviklingen, resultatet og stillingen contributionStyresammensetning of NOK 3.48 per share og uavhengighet should be paid for the 2019 financial year. til foretaket og konsernet, sammen med en beskrivelse av de mest sentrale risiko- og usikkerhetsfaktorer The guidelinestil foretaket for the og remunerationkonsernet, sammen of the executive med en beskrivelse personnel are av describedde mest sentrale in further risiko- detail og in usikkerhetsfaktorerNote 19. Bestemmelser om sammensetningen av styret er inntatt i selskapets vedtekter. Styret skal bestå av fra 3 til 8 Equal treatmentforetakene of står shareholders overfor. and transactions with related parties foretakene står overfor. Color Groupmedlemme AS hasr. aStyret single består class ofav shares 4 medlemme and all sharesr. carry equal rights in the company. The Articles of Association Information and communications contain no restrictions on voting rights. The company has issued bonds which are quoted on Oslo Børs, the Oslo Stock Exchange. Communication with the financial In theSty eventrets ofarbeid not immaterial transactions between the company and shareholders, a shareholder’s parent company, markets is based on the principles of openness and equal treatment of investors. In order to ensure that the same information memberStyret of the har Board det ofoverordnede Directors, executive ansvaret personnelfor forvaltningen or close associatesav selskapet. of any Styret such overvåkerparties, the og Board påser will at arrangeselskapets for interne is available to all stakeholders at the same time, the primary channel of communication of the company is Oslo Børs. Oslo, den 28. april 2014 Oslo, den 28. april 2014 a valuationkontroll to be er obtained betryggende. from an independent third party. Further information on transactions between related parties is Although the company arranges regular meetings for analysts, investors and employees, all significant new information is provided in Note 6. first published on the stock exchange and on our website. The company will present information in a consistent way irrespec- tive of whether the news is positive or negative. Selskapets revisjonsutvalg har ansvaret for gjennomføringen av dette og rapporterer til styret. Fokusområder Freely negotiable shares for revisjonsutvalget er: The shares of the company are not quoted on any stock exchange. Any transfer of shares is contingent upon the consent The company’s website (www.colorline.no) contains an up-to-date financial calendar, financial reports and other information – økonomisk rapportering of the Board of Directors of the company. for investors. – internkontroll The General– risikostyring Meeting and the Nomination Committee Sale of the company The company Mortenhas a single Garman shareholder and theOlav sections Nils Sunde concerning recommendationsAlexander Sundefor the General MeetingBjørn and Paulsen the The company Morten has a single Garman shareholder and Olavit has Nilsnot been Sunde considered necessaryAlexander to draft Sunde specific guidelinesBjørn on possiblePaulsen NominationRevisjonsutvalget CommitteeStyreformann are består for this av reason to medlemmerStyremedlem not considered / valgtKonsernsjef to av be og relevant blant styretsto theStyremedlem company. medlemme r. RevisjonsutvalgetsStyremedlem medlemmer takeover bids. Styreformann Styremedlem / Konsernsjef Styremedlem Styremedlem er uavhengige av selskapets daglige ledelse og vesentlige forretningsforbindelser. Auditor The Corporate Assembly and Board of Directors, composition and independence The elected auditor of the company is Deloitte AS. The company’s auditor submits the main features of the plan for the audit Provisions on the composition of the Board of Directors are included in the Articles of Association of the company. The Board Risikostyring og intern kontroll of the company to the Audit Committee and reports ongoing and final status of the audit to the Committee. The auditor shall shall have between 3 and 8 directors. The Board comprises 4 directors. Styret påser at selskapet har god internkontroll i forhold til de bestemmelser som gjelder for virksomheten. report all material matters on which there has been disagreement between the auditor and the executive management of the Styret foretar årlig en gjennomgang av selskapets internkontroll og har løpende oppfølging på de viktigste The work of the Board of Directors Group. The Boardrisikoområde has the overarchingr. Sammen responsibility med selskapets for managing administrasjon the company. har styret The fokusert Board monitors på å utvikle and ensures den interne that the kontrollen company's internalknyttet control til procedures finansiell are rapportering, satisfactory. herunder Once a year the auditor presents any weaknesses identified in the internal control procedures and proposals for improvements – kontrollmiljøet to the Audit Committee and the Board of Directors. At least once a year the auditor holds meetings with the Audit Committee The company's– risikovurdering Audit Committee is responsible for implementing these measures and reports to the Board. The areas of focus and the Board of Directors at which neither the Group President nor any other member of the executive management team is of the Audit– kontrollaktiviteter Committee are: present. – informasjon og kommunikasjon - financial– oppfølging. reporting - internal control procedures - risk management Styret mottar periodisk rapport om selskapets finansielle resultater samt en beskrivelse av utvikling og status for selskapets viktigste enkeltprosjekter.

ColorColorColor G G Grouprroupoup AS ASAS ColorColor Group Group AS AS Bryggegata 3, 0250 Oslo, Norway Bryggegata 3, 0250 Oslo, Norway BBrryyggggeeggataata 3, 3, N-0250 N-0250 Oslo Oslo Bryggegata 3, N-0250 Oslo Tel.: +47 23 11 86 00 Organisation number: 958815018 Tel.: +47 23 11 86 00 Organisation number: 958815018 T l f .: +47 Tlf.: 23 +47 11 23 86 11 00 86 • F00ax: •+47 Foretaksn 23 11 r86. 958815018 06 • Foretaksnr. 958 Tlf.: +47 23 11 86 00 • Foretaksnr. 958815018

76 77 Color Group AS Color Group Annual Report 2019 Color Group AS Color Group Annual Report 2019

DeclarationLedelseserklæring by the Management

We hereby declare that to the best of our knowledge, the consolidated accounts for 2019 have been prepared in Vi erklærer etter beste overbevisning at konsernregnskapet for 2013 er utarbeidet i samsvar med IFRS som accordance with IFRS, as adopted by the European Union, and include the submission of additional information fastsatt av EU, med krav til tilleggsopplysninger som følger av regnskapsloven, samt at årsregnskapet for pursuant to the provisions of the Accounting Act (Norway), and that the Annual Financial Statements for the morselskapet for 2013 er avlagt i samsvar med regnskapsloven og god regnskapsskikk i Norge, og at parent company for 2019 have been prepared in accordance with the Accounting Act and generally accepted ac- regnskapsopplysningene gir et rettvisende bilde av foretakets og konsernets eiendeler counting practice in Norway, and that the information in the accounts provides a true and fair view of the assets og resultat som helhet, samt at årsberetningen gir en rettvisende oversikt over utviklingen, resultatet og stillingen and liabilities, financial position and result of operations of the Enterprise and the Group as a whole, and that the til foretaket og konsernet, sammen med en beskrivelse av de mest sentrale risiko- og usikkerhetsfaktorer Annual Report provides a correct review of developments, result and position of the Enterprise and the Group, foretakene står overfor. together with a description of the main risks and uncertainty factors facing the enterprises.

Oslo, 5.den mars 28. 2018april 2014

Oslo, 16 March 2020

Morten Garman Olav Nils Sunde Alexander Sunde Bjørn Paulsen Styreformann Styremedlem / Konsernsjef Styremedlem Styremedlem

Morten Garman Olav Nils Sunde Alexander Sunde Bjørn Paulsen Chairman of the Board Director/Group President Director Director

ColorColor G rGroupoup AS AS Bryggegata 3, 0250 Oslo, Norway Bryggegata 3, N-0250 Oslo Tel.: +47 23 11 86 00 Organisation number: 958815018 Tlf.: +47 23 11 86 00 • Foretaksnr. 958815018

78 79 Color Group AS Color Group Annual Report 2019 Color Group AS Color Group Annual Report 2019

80 81 Color Group AS Color Group Annual Report 2019 Color Group AS Color Group Annual Report 2019

Once a month, a full-scale safety drill takes place in which all emergency equipment is tested, including the launching of life-boats/life rafts.

Oslo, 16 March 2020

82 83 Color Group AS Color Group Annual Report 2019 Color Group AS Color Group Annual Report 2019

Sources:

Horwath HTL. Green Shipping Programme. Maritime Forecast to 2050. Menon Economics AS. The Norwegian Institute for Water Research (NIVA). The Norwegian Government’s updated ocean strategy Blue Opportunities, 2019. Statistics Norway. Norwegian Tourism Partners.

84 85 Color Line’s services and destinations CG-CG20–01 Annual Report 2019.

KRISTIANSAND–HIRTSHALS SANDEFJORD–STRÖMSTAD SANDEFJORD–STRÖMSTAD OSLO–KIEL OSLO–KIEL M/S SuperSpeed 1 M/S Color Viking M/S Color Hybrid M/S Color Fantasy M/S Color Magic

Year built: 2008, (2011) Year built: 1985, Year built: 2019, Year built: 2004, Year built: 2007, Aker Yards, Rauma, Finland Nakskov, Denmark Ulstein Verft Aker Yards, Turku, Finland Aker Yards, Turku, Finland Home port: Kristiansand Home port: Sandefjord Home port: Sandefjord Home port: Oslo Home port: Oslo Tonnage: 36 822 BRT Tonnage: 19 763 BRT Tonnage: 27 000 BRT Tonnage: 74 500 BRT Tonnage: 75 100 BRT Length: 211,3 meters Length: 137 meters Length: 160 meters Length: 224 meter Length: 224 meters Beam: 26 meters Beam: 24 meters Beam: 27,10 meters Beam: 35 meters Beam: 35 meters Draft: 6,5 meters Draft: 5,64 meters Draft: 6,0 meters Draft: 6,8 meters Draft: 6,8 meters Class: Det Norske Veritas Class: Det Norske Veritas Class: Det Norske Veritas Class: Det Norske Veritas Class: Det Norske Veritas Max. capacity: 2 400 Max. capacity: 1 773 Max. capacity: 2 000 Max. capacity: 2 605 Max. capacity: 2 812 Passenger cars: 750 Passenger cars: 370 Passenger cars: 500 Passenger cars: 750 Passenger cars: 550 Trailers: 1 990 Trailers: 490 Trailers: 760 Trailers: 1 270 Trailers: 1 270

LARVIK–HIRTSHALS OSLO–KIEL M/S SuperSpeed 2 M/S Color Carrier

Year built: 2008, Year built: 1998, Aker Yards, Rauma, Finland Fosen Yard Home port: Larvik Home port: Oslo Tonnage: 33 500 BRT Tonnage: 12 433 BRT Length: 211,3 meters NRT: 3 730 tons Beam: 26 meters Norway DWT: 8 936 tons Draft: 6,5 meters Length: 154,5 meters Class: Det Norske Veritas Beam: 22,7 meters Max. capacity: 2 000 Draft: 7,15 meters Passenger cars: 764 Trailers: 1 775

Trailers: 2 036

OSLO

SANDEFJORD Sweden LARVIK

KRISTIANSAND STRÖMSTAD

HIRTSHALS

Denmark

KIEL

Germany

Color Group AS Bryggegata 3 • 0250 Oslo • +47 23 11 86 00 Color Line AS Hjortnes • 0250 Oslo • +47 22 94 42 00