DFDS MANAGEMENT REVIEW 2013

This document is an extract from DFDS A/S’ full Annual Report 2013. The page numbers are identical with the page numbers in the full Annual Report 2013. The full Annual Report 2013 is available on www.dfdsgroup.com Welcome to the DFDS Annual Report 2013

This interactive PDF allows you to access information easily, print pages or go directly to another page, section or website.

Home Print Previous Page Next Page (Table of contents)

Underlined words and numbers are dynamic links.

When you click them, they will take you to further information within the document or to a web page.

This PDF contains bookmarks, so you can access any section you need. Open your bookmarks palette in your PDF reader, to access the list. DFDS provides shipping and transport services in , generating Management review annual revenues of EUR 1.6BN. 4 Key Figures 5 Foreword To over 8,000 freight customers, we deliver high performance AND 6 Transport Network superior reliability through shipping & port terminal services, and 7 Vision, Strategy and Priorities transport & logistics solutions. 8 Financial Goals 9 Management Review For more than five million passengers, many travelling in their own 16 Shipping Division cars, we provide safe overnight and short sea services. 23 Logistics Division 28 Risk Factors Our 6,000 employees, located in offices across 20 countries, ARE 31 The DFDS Share COMMITTED TO YOUR SUCCESS. 33 CR Report DFDS was founded in 1866, is headquartered in , and listed 53 Financial Review on NASDAQ OMX Copenhagen. 113 Fleet List 115 Commercial Duties 118 Executive Management 119 Definitions & Glossary REVENUE PROFIT BEFORE TAX RETURN ON INVESTED CAPITAL (ROIC) (DKK bn) AND SPECIAL ITEMS BEFORE SPECIAL ITEMS (DKK M) (%)

14 700 10

9 12 600 8

10 500 7

6 8 400 5 6 300 4

4 200 3 2 2 100 1

0 0 0 1 2 3 1 2 3 20 1 20 1 20 1 2009 2010 20 1 20 1 20 1 2009 2010 2009 2010 2011 2012 2013 Key Figures DFDS Group

Key figures Key figures

2013 2013 DKK m EUR m 1 2013 2012 2011 2 2010 2 2009 2 DKK m EUR m 1 2013 2012 2011 2 2010 2 2009 2

Income statement Cash flows Revenue 1,622 12,097 11,700 11,625 9,867 6,555 Cash flows from operating activities, before • Shipping Division 1,143 8,530 8,015 7,798 6,921 4,805 financial items and after tax 201 1,501 905 1,419 929 836 • Logistics Division 561 4,183 4,259 4,330 3,353 1,970 Cash flows from investing activities -126 -943 239 219 -1,521 -1,265 • Non-allocated items and eliminations -82 -616 -574 -503 -407 -220 Acquistion of enterprises, activities and minorities -13 -99 -5 -8 -1,417 -39 Other investments, net -113 -844 244 227 -104 -1,226 Operating profit before depreciations (EBITDA) Free cash flow 75 558 1,144 1,638 -592 -429 and special items2 163 1,213 1,089 1,495 1,273 804 • Shipping Division 154 1,148 992 1,416 1,221 822 Key operating and return ratios • Logistics Division 20 149 141 171 74 42 Number of ships 48 49 49 57 51 • Non-allocated item -11 -84 -44 -92 -22 -60 Revenue growth, % 3.4 0.6 17.8 50.5 3 -20,0 EBITDA margin, % 10.0 9.3 12,9 12.9 12.3 Profit on disposal of non-current assets, net 1 6 6 26 5 18 Operating margin, % 4.2 3.6 7.2 5.9 3.7 Operating profit (EBIT) before special items 67 503 418 835 580 245 Turnover, investered capital average, (times) 1.40 1.27 1.20 1.09 0.84 Special items, net -2 -17 -124 91 102 -71 Return on invested capital (ROIC), % 5.7 3.4 9.0 7.2 2.1 Operating profit (EBIT) 65 486 295 925 682 174 Return on equity, % 4.9 2.1 11.0 10.2 2.4 Financial items, net -18 -136 -149 -183 -135 -154 Profit before tax 47 350 146 742 547 20 Key capital and per share ratios Profit for the year 44 327 143 735 522 89 Equity ratio, % 51.3 56.3 54.4 46.2 39.7 Profit for the year exclusive minorities 44 325 144 731 509 86 Interest-bearing net debt/EBITDA, times 1.80 1.77 1.71 3.05 5.06 Earnings per share (EPS), DKK 23 10 50 47 11 Capital Dividends per share, DKK 14.0 14.0 14.0 8.0 0.0 Total assets 1,650 12,311 12,313 12,795 13,849 9,298 Number of shares, end of period 4, ’000 14,856 14,856 14,856 14,856 8,000 DFDS A/S’ share of equity 840 6,263 6,882 6,906 6,339 3,641 Share price at the end of the period, DKK 437 255.5 355 418 358 Equity 847 6,318 6,936 6,964 6,396 3,688 Market value, DKK m 5,559 3,706 5,149 6,119 2,743 Net interest-bearing debt 293 2,189 1,929 2,555 3,887 4,067 Invested capital, end of period 1,147 8,555 8,896 9,564 10,341 7,997 1 Applied exchange rate for euro as of 31. December 2013: 7,4603 Invested capital, average 1,157 8,633 9,207 9,691 9,061 7,762 2 The key figures for 2009-2011 have not been restated in accordance with the amendments to IAS 19 ‘Emloyee benefits’. 3 37% relates to the acquisition of the -Group. 4 Average number of employees - 5,930 5,239 5,096 4,862 3,924 A change of the number of shares to 13,330,000 was registered by the Danish Business Authority on 16 January 2014 following a statutory notice period of one month from the extraordinary general meeting’s cancellation of 10.5% of the share capital on 16 December 2013

Key figures DFDS Group DFDS Annual report 2013 4 Heading in the right direction

The European economy started to head dialogue over 200 DFDS sales managers investment programme running until in the right direction in 2013, as did went through sales training in 2013, 2017, introduction of higher bunker DFDS in an operating environment with and we expanded our HR capabilities surcharges and, most likely, consolida- a continued high level of competitive to drive the DFDS Way of selling across tion of routes. pressure. the Group. Looking ahead, we see a balanced mix In DFDS, we are taking up the challenge, Improving performance of opportunities and challenges. With focusing on growing our top line results Our project-based strategy of opera- solid cash flows and strong relations and making operations more efficient. tional streamlining includes four major with our stakeholders, DFDS is well We made good progress in 2013, raising projects in 2014 covering working cap- positioned to make the most of opportu- BENT ØSTERGAARD NIELS SMEDEGAARD EBITDA by 11% to DKK 1,213m, deliver- ital, finance organisation, logistics and nities, including acquisition led growth, Chairman of the board President & CEO ing one of the best results in our sector. passenger system development, and and overcome the challenges. procurement. Project goals and 2014 Moving closer to our customers targets are reviewed on page 10. We Thank you to all our stakeholders for For the first time, we are reporting on have also initiated a group wide ROIC your support in 2013, not least for customer satisfaction in line with our drive to support our target of achieving the hard work of our employees and commitment to customer focus, see a 10% return on invested capital. the confidence shown in us by our page 10 for results. DFDS is perceived customers. as a quality service provider, but not Light at the end of the Channel yet world class. Reliability, frequency, The provisional findings of the UK com- fast communication, easy processes petition authorities will be announced and proactive optimisation of customer in mid-March 2014 and a final decision solutions are key to delivering world is due in early May 2014. Including pro- class customer service. Improving cus- cessing of appeal options, we estimate tomer satisfaction, in order to grow the that the exceptional competitive situa- top line, is a top priority. tion on the Channel will be resolved by the end 2014. Empowered people with a can-do attitude Preparing for new sulphur When we say we are moving closer to rules in 2015 our customers, it is the people of DFDS DFDS is preparing to meet the chal- stepping up the dialogue with custom- lenge of transitioning to 40-50% more ers to learn more about their expecta- expensive low-sulphur fuel in 2015. tions and requirements. To enhance the Our plan includes a DKK 750m scrubber

Foreword DFDS Annual report 2013 5 CONTAINERLOGISTICRAIL NETWORK SERVICEOFFICES 01.201312.2012

Reliable shipping services, flexible transport solutions…

BODØ

DFDS operates the largest network variety of consumer and industrial of shipping routes in , goods – supported by a European focused on servicing the requirements of network of road, rail and container TRONDHEIM both freight customers and passengers. carriers and, not least, DFDS’ network ÅLESUND of ferry routes. FLORØ The shipping services are complement- ed by European transport and logistics The main activity is the transport of KOTKA solutions. full and part loads, both ambient and HAUGESUND ST. PETERSBURG KAPELLSKÄR UST-LUGA temperature controlled. BREVIK MOSS VASTERAS PALDISKI ABERDEEN HALDEN KRISTIANSSAND STOCKHOLM Freight shipping services and solutions GRANGEMOUTH GREENOCK DFDS’ routes are ideally located for ser- In partnership with retailers and produc- BALLINA LARKHALL VENTSPILS vicing the freight volumes of forwarding tion companies, we develop and provide BELFAST NEWCASTLE RIGA LIEPĀJA companies and manufacturers of heavy performance enhancing and cost efficient AARHUS DUBLIN FREDERICIA COPENHAGEN KARLSHAMN industrial goods. logistics solutions, including warehous- MALMÖ KLAIPEDA IMMINGHAM TAULOV MOSCOW WATERFORD LIVERPOOL ing services. CORK ALMA-ATA  PETERBOROUGH KALININGRAD SASSNITZ Our routes operate to fixed schedules CUXHAVEN LÜBECK HAMBORG AVONMOUTH MINSK FELIXSTOWE with a high level of frequency, allow- Passenger ferry services (IJMUIDEN) DAVENTRY TILBURY ROTTERDAM (VLAARDINGEN) NEWLYN NEWHAVEN ing customers to precisely meet their DFDS’ route network offers both over- ZEEBRUGGE ANTWERP transport service needs. Visibility is night and short crossings. Passengers GHENT BRUGGE BOULOGNE SUR MER enhanced by access to online tracking can bring their own cars on all routes. of shipments. The onboard facilities are adapted to

each route’s particular mix of passen- We develop bespoke transport solutions gers and their requirements for an in partnership with manufacturers of enjoyable maritime experience. heavy goods such as automobiles, steel, paper and forest products, and Key facts ILYICHEVSK chemicals. • 80% of total revenues are generated BUSTO FAGNANO (VA) BILBAO VERONA by freight customers and 20% by NOVARA To enhance the efficiency of our custom- passengers er services, we operate our own port • DFDS transported 29 million lane MARSEILLE terminals in strategic locations, includ- ­metres of freight in 2013 ing warehousing services. • DFDS transported nearly 6 million passengers in 2013

Transport and logistics solutions • Our largest freight ships carry BARI We provide flexible, cost efficient 370 trailers per sailing ports of call and sales offices and on-time, door-to-door transport • Our largest passenger ships have logistics offices solutions to producers of a wide room for 2,000 passengers per sailing Rail transport

TUNIS

DFDS Annual rreporteport 2013 6 Our vision, strategy & priorities

Vision Delivering high performance and superior reliability We listen closely to our customers and, in most Raising customer satisfaction levels is a top respects, DFDS is perceived as a quality service strategic priority in DFDS. The tool is our group­- – whatever we carry. provider. We can, however, improve our customer wide Customer Focus Initiative. See the manage- services. The good thing is that our customers have ment report on p. 10 for reporting on progress. told us exactly what we should improve to fully Our people understand your needs and are live up to their expectations, and exceed them. The vision reflects our decision to become a truly committed to your success. customer focused and customer driven company.

Strategy principles

DFDS’ strategy is based on four drivers: The DFDS Way – our behaviours and operating We expect to continue to lead the consolidation of model – is our platform for driving continuous im- our sector in the coming years to gain additional 1. The DFDS Way: Customer focus and continuous improvement provement. Top priorities are customer focus and scale advantages. 2. network strength: Expand network to leverage operating model achievement of a higher return on invested capital. 3. integrated shipping and logistics operations: Optimise capacity utilisation DFDS’ route network integrates freight and pas­ DFDS operates in a mature market environment senger shipping services. To support the route 4. Financial strength and performance: Reliable, agile partner and our growth strategy is focused on both organic network’s capacity utilisation, our freight services and acquisition led growth. include door-to-door transport and logistics solu- tions deploying the routes as part of the solution. The Group revenue split between freight customers and passengers is 80/20.

Priorities 2014 Follow-up on 2013 priorities

1. Resolve situation on Channel Operational efficiency: Several large scale projects Acquisition led growth: Baltic logistics network 2. Prepare transition to new sulphur emissions rule in 2015 initiated: One Finance (finance organisation), expanded by acquisition of Swedish transport com- 3. improve financial performance Project 100 (procurement), Light Capital (working pany. Participation in sales process of ; 4. lead sector consolidation capital), Blue Sky (scrubber strategy develop- submitted bid not accepted by seller. Preparation ment), IT projects (passenger and logistics systems of opportunities of which several are expected to The priorities for 2014 reflect two events with significant financial impact for DFDS: The first is development). See detailed follow-up in the man- materialise in 2014. the outcome of the UK merger inquiry into the Eurotunnel/SeaFrance transaction which will impact agement report. DFDS’ activities on the Channel. The second is the introduction of more expensive low sulphur fuel in 2015. Preparation for the transition will be ongoing in 2014. Improved financial performance is Customer focus: Roll-out of the Customer Focus driven by efficiency and improvement projects and a group wide ROIC drive. Both underpin DFDS’ goal Initiative across 30 shipping and logistics locations. of continuous improvement, including the achievement of a 10% return on invested capital. Sector Over 200 sales managers completed sales training consolidation will continue in order to leverage DFDS’ operating model and position DFDS for the future. courses.

Vision, strategy & priorities DFDS Annual report 2013 7 Our financial goals

RETURN ON INVESTED CAPITAL (ROIC) DIVIDEND AND PAYOUT RATIO NET INTEREST-BEARING DEBT/EBITDA BEFORE SPECIAL ITEMS AND COST OF CAPITAL (DKK) (%) BEFORE SPECIAL ITEMS (%) (TIMES)

9 16 160 6.0

8 14 140 5.0 7 12 120 6 4.0 10 100 5 8 80 3.0 4 6 60 3 2.0 4 40 2 1.0 1 2 20

0 0 0 0.0 1 2 3 1 2 3 0 1 0 1 0 1 0 1 0 1 0 1 01 0 2 201 0 2 2 2 2 2 2 2009 2009 20 11 20 12 20 13 200 9 2010

WACC DIVIDEND PER SHARE ROIC PAYOUT RATIO, %

10% return on invested capital Distribution to shareholders Capital structure

In 2013, DFDS’ return on invested cap- DFDS’ distribution policy is to pay an The capital structure is defined by ital was 5.8%, excluding special items, annual dividend of DKK 14 per share. the ratio of net interest-bearing debt implying a gap of 4.2 ppt to the goal of In addition, excess capital, as defined (NIBD) to operating profit before depre- a 10% return. Around 2.5 ppt of the gap by the target capital structure, will be ciations (EBITDA). The target capital was due to the extraordinary situation distributed to shareholders as an extra structure is a NIBD/EBITDA multiple of on the Channel. Another 1.0 ppt of the dividend and/or buyback of shares. minimum 2.0 and maximum 3.0. This gap is driven by the shipping activities Distribution of dividend and excess implies that excess capital will be dis- on the southern part of the . capital can be suspended in connection tributed to shareholders if the multiple Together, the two areas account for with large investments, including ac- is below 2.0, and distribution will be more than 80% of the gap. A third, and quisitions, and other strategic events. reduced if the multiple exceeds 3.0. upcoming, challenge is the introduction of more expensive low sulphur fuel in In 2013, DFDS distributed DKK 831m 2015, which is expected to initially to shareholders, including ordinary increase DFDS’ cost level. See page 13 dividends of DKK 203m and buy-back for a review of how DFDS expects to of shares of DKK 628m. overcome these challenges in the com- ing years to achieve a 10% return.

Financial goals DFDS Annual report 2013 8 Management review

• Improved financial performance Q1 2012. Revenue from higher freight The ratio of net-interest-bearing debt Key figures for the DFDS Group driven by recovery in North volumes was partially offset by lower to operating profit (EBITDA) before DKK m 2013 2012 2011 2010 2009 Sea region revenue from bunker surcharges as the special items was 1.8 at year-end, • Cash flow boosted by more oil price declined in 2013. Adjusted for which was below the target of a Revenue 12,097 11,700 11,625 9,867 6,555 than DKK 300m through working bunker surcharges, revenue growth was minimum ratio of 2.0. Consequently, EBITDA* 1,213 1,089 1,495 1,273 804 Pre-tax profit* 367 276 651 445 91 capital reduction 5.6% which was in line with the expecta- a share buy-back programme will be Free cash flow 558 1,144 1,638 -592 -429 • Clear policy for distribution tion of an increase of around 5%. initiated in 2014 to increase lever- Invested capital, end of year 8,555 8,896 9,564 10,341 7,997 of excess capital to shareholders age. The equity ratio was 51.3% at Net interest-bearing debt/EBITDA*, times 1.8 1.8 1.7 3.1 5.1 adopted Group operating profit before depreci- the end of 2013 compared to 56.3% Return on invested capital*, % 5.8 4.5 8.1 6.1 3.0 Number of staff, average 5,930 5,239 5,096 4,862 3,924 ation (EBITDA) and special items was in 2012.

DKK 1,213m, an increase of 11.4% * Before special items Financial performance compared to 2012. The Shipping Di- In 2013, the average number of em- Profit before tax and special items vision’s EBITDA before special items ployees increased by 13.2% to 5,930, was DKK 367m, an increase of 35.9% increased by 15.8% to DKK 1,148m primarily due to the full-year effect compared to 2012. while the Logistics Division’s EBITDA of the opening of a new route on the Swedish customer agreement renewed ships between Dover and Calais under before special items increased by and the addition of In March 2013, NTEX AB and DFDS the name MyFerryLink. The increase was mainly driven by 5.7% to DKK 149m. The cost of LD Lines. renewed and expanded their customer higher earnings from the freight and non-allocated items rose by DKK agreement concerning the shipping The competition authorities’ decision passenger activities in the North Sea -40m to DKK -84m. Important events in 2013 of trailers on DFDS’ route Gothen- is of great importance to DFDS since region following the gradual recovery The most important events of the burg-Immingham/Tilbury. In January Eurotunnel’s entry into the Channel of demand in Europe during the year. The EBITDA before special items of year, shown in the table on page 11, 2012, NTEX switched the majority of ferry market created overcapacity, as DKK 1,213m was in line with the most are divided into three areas: business its volumes to the shipping company DFDS earlier in the year had replaced Freight and passenger volumes resumed recent expectations of an EBITDA before development and competition; opera- North Sea Ro-Ro. To accommodate SeaFrance’s capacity on the Channel. growth during the year in the regions special items of DKK 1,100-1,300m. The tions and finance; and people and the the increase of volumes from NTEX, around the North Sea, while growth profit expectation announced in the an- environment. the swap of tonnage between Gothen- On 6 June 2013, the UK Competition slowed down in regions nual report for 2012 was an EBITDA be- burg-Immingham and Gothenburg-Ghent Commission (CC) ruled on the Eurotun- linked to Russia. fore special items of DKK 1,050-1,250m was reversed in May 2013. nel/SeaFrance merger inquiry that Euro- as the expectation was upgraded by Business development and tunnel should cease ferry operations at Revenue for the year was DKK 12.1bn, DKK 50m in March 2012. competition UK competition ruling on Eurotunnel/ the . Following the ruling, an increase of 3.4% compared to 2012, SeaFrance merger Eurotunnel and SCOP, the cooperative mainly driven by the full-year effect of The Group’s free cash flow from op- Shipping overcapacity reduced Since 2012, the UK competition engaged in the operation of the , the addition of activities acquired from erations was positive by DKK 558m on North Sea authorities have conducted a merger appealed to the UK Competition Appeal the French shipping company Louis despite net investments of DKK 943m In March 2013, our competitor on the inquiry into Eurotunnel’s acquisition Tribunal (CAT). Dreyfus Armateurs (LDA) and increased as the Light Capital project boosted -UK freight trade, North Sea Ro- of SeaFrance following the company’s activity on Dover-Calais, which opened the cash flow by DKK 362m through Ro, closed its route which had opened bankruptcy in 2012. In the second half On 4 December 2013, the CAT decided with only one ship on the Channel during a reduction of working capital. in January 2012. of that year, Eurotunnel deployed three that the CC should review its juris-

Management review DFDS Annual report 2013 9 diction to consider the transaction, domestic transport and warehousing eas, volume growth was 5.5%, of which declined in other areas, particularly In 2013, DFDS’ bunker cost was DKK i.e. could Eurotunnel’s transaction be services. Karlshamn Express’ head around a third was driven by the addi- container volumes between Ireland 1.9bn, equal to 16% of revenue. The considered to be a transfer of assets or office and warehousing facilities are tional volumes between Sweden and and the Continent as margin improve- cost ratio was 11% net of bunker the transfer of an enterprise. All other located in Karlshamn. The company UK following the renewal and expansion ment was prioritised. Volumes were surcharges. All else being equal, a challenges to the CC’s ruling were dis- also has offices in Liepaja, Ventspils, of a Swedish customer agreement, as up by 6.0% in the UK & Ireland area, switch to MGO in 2015 entails a cost missed by the CAT. Klaipeda and Kaliningrad. mentioned above. driven by distribution activities in increase of around DKK 800m. and , while volumes The provisional findings of the UK com- Re-organisation of Channel activities Growth in the Baltic region was flat remained subdued in the Northern DFDS’ transition strategy to overcome petition authorities will be announced From 1 January 2014, the two western overall due to a slowdown in trade with Ireland market. the considerable financial challenge of in mid-March 2014 and a final decision Channel routes, Dieppe-Newhaven and Russia. Volumes grew in the Swe- the new rules has three elements: is due in early May 2014. Including pro- Le Havre-Portsmouth, will be trans- den-/Estonia corridors while As in the shipping market, pricing was cessing of appeal options, we estimate ferred from the Channel business area they declined in the trades relating to weak in most areas throughout the year. • Installation of scrubbers on 21 ships that the exceptional competitive situa- to & Mediterranean. The latter Russia. Organic growth was around by 2017, a total investment of DKK tion on the Channel will be resolved by business area has provided port ter- 5% in the North Sea region, although The number of passengers rose by 750m. See page 47 for more informa- the end 2014. minal and agency services to Channel, unevenly distributed with flat growth in 15.0%, primarily due to the full-year tion on scrubbers and to simplify the business structure the /-UK corridor and impact of the Dover-Calais route and the • Roadshows and meetings ongoing to Baltic and Russian logistics network these activities will be transferred back higher growth in the Sweden-Continent addition of two routes on the Western prepare freight customers and market expanded through acquisition to Channel. Reporting numbers will be and Benelux-UK corridors. Channel. Adjusted for this, the number for a cost increase DFDS completed the acquisition of restated accordingly. of passengers increased by 1.9%, with • Consolidation of routes. the Swedish transport and logistics Pricing was weak in all areas through- the highest growth achieved by the company Karlshamn Express Group out the year following the recessionary Amsterdam-Newcastle route. Efficiency and improvement projects in September 2013. The acquisition Operations and finance environment of 2012. The growing In 2013, there was a continued focus on expands and develops DFDS’ platform volumes in the North Sea region are ex- Transition strategy to new efficiency and improvement projects: for providing transport and logistics Market trends pected to contribute to a firmer pricing sulphur rules solutions between Sweden and the After a slow start in Q1, volume growth environment in 2014. From 1 January 2015, a new set of rules • C ustomer Focus Initiative: Aims to Baltics, Russia and the CIS countries. gradually picked up during the rest will limit the sulphur emissions to 0.1% strengthen DFDS’ customer relations Moreover, the acquisition supports of the year, apart from the Baltic area Volume growth in the Logistics Divi- from the current limit of 1.0% in SECAs through better understanding of the DFDS’ route network as the company where lower activity in the Russian sion was 3.2% overall. Volumes were (Sulphur Emission Control Areas). These context for purchasing decisions and is a major customer on DFDS’ route economy reduced volumes. up by 1.7% in the Nordic area, where areas include the Baltic Sea, the North customer satisfaction regarding DFDS’ between Karlshamn and Klaipeda. Swedish and Danish traffic recorded Sea and the Channel, which are DFDS’ performance and services. In 2013, Shipped lane metres of freight in- strong growth which was offset by primary market areas. roll-out continued to 30 locations. Karlshamn Express had total revenues creased by 20.9% in 2013, driven by lower volumes in Norwegian traffic. During the year, we received feedback of SEK 225m (DKK 197m) in 2012 the full-year impact of the Dover-Calais Volumes were up by 2.6% in the The price of MGO (Marine Gas Oil) from over 3,500 freight customers and 81 employees. The main activity route and addition of two routes on the Continent area with growth unevenly with a content of 0.1% sulphur is and 27,000 passengers. We heard that of the company is the transport of full Western Channel and one route in the distributed as some trades achieved currently 40-50% higher than 1.0% we are doing well overall, although and part loads between Sweden and Mediterranean. Adjusted for the Channel double digit growth while volumes bunker fuel and this price difference we can still improve our performance. Baltics/Russia. In addition, it provides and France & Mediterranean business ar- is expected to continue in the future.

Management review DFDS Annual report 2013 10 Business development and competition Operations and finance People and the environment

January • Contract with Norske Skog renewed • Channel freight sales organisation restructured • IT integration of port terminal in Gothenburg, acquired in 2012, completed

February • UK Competition Commission published provisional findings on • New country based organisation in DFDS Logistics, Norway the Eurotunnel/SeaFrance merger inquiry • Two newbuilding contracts for ro-ro freight ships signed

March • Renewal and expansion of customer agreement with Swedish • CALAIS SEAWAYS onboard facilities refurbished • Customer Focus Initiative: Launch of roll-out to 12 new locations transport company NTEX, a major customer on the • Container rail service introduced between Waterford and Ballina in Ireland • DFDS’ Henrik Holck appointed to Business Forum for Social Responsibility Gothenburg-Immingham route • Sale of corporate bond of NOK 700m completed • New MD of DFDS Seaways, France • North Sea Ro-Ro closes route between Sweden and UK

April • Cash pool project initiated • Tonnage reshuffle between Gothenburg-Immingham and Gothenburg-Ghent

May • Restructuring of routes between Germany and Russia • Sales training of more than 225 sales managers initiated • Upgrade of two passenger ships on Copenhagen-Oslo route announced • Country based marketing organisation for Channel finalised

June • UK Competition Commission’s final report on the Eurotunnel/SeaFrance • CORAGGIO, renamed ATHENA SEAWAYS, chartered for a five-year • Telematic tools deployed to reduce trucks’ fuel consumption merger inquiry rules that Eurotunnel must cease ferry operations from period from beginning of 2014 • DFDS participates in public debate organised by Business Forum Dover. Eurotunnel appeals decision to the UK Competition Appeal Tribunal • VILNIUS SEAWAYS chartered out to Ukrferry in the Black Sea for Social Responsibility on Bornholm • SIRENA SEAWAYS collided with the quay in Harwich and was out • MD for Group finance service centre in Poland recruited of service for two weeks • Customer Focus Initiative: Launch of roll-out to seven new locations

July • Following the charter of VILNIUS SEAWAYS to Ukrferry, the Black Sea ferry • New logistics contract finalised with Volvo Logistics and Volvo Car • Scrubber installations initiated at shipyard in Poland operator, DFDS agree to explore opportunities for future cooperation Corporation for logistics services to Gothenburg production plants • DFDS Logistics Ipswich office merged with office in Immingham

August • 200 new mega trailers delivered to DFDS Logistics

September • Acquisition of Swedish transport company Karlshamn Express with • Turnaround project launched for port terminal in Gothenburg, Älvsborg Ro-Ro • Loss prevention project launched in five port terminals activities in Baltic region completed • Project 100 (procurement) launched to improve EBIT by DKK 100m by 2015 • New MD DFDS Seaways, Belgium • Sassnitz-Klaipeda route closed • New social media website launched, DFDS Connect • DFDS purchases own shares from A.P. Møller – Mærsk equal to 12.0% • Customer Focus Initiative: Launch of roll-out to nine new locations of the share capital for DKK 628m

October • Second ship deployed on Paldiski-Kapellskär route • Initiation of road shows to inform customers about transition to new sulphur rules

November • QUEEN OF SCANDINAVIA sold to charterer • Three-year logistics contract of EUR 75m awarded by Tata Steel • CEO Niels Smedegaard elected as vice-chairman of ECSA (European • Project 100: Use of procurement e-auctions launched Community Shipowners Associations) • Clear policy on distribution of excess capital to shareholders adopted, including targets for capital structure

December • The UK Competition Appeal Tribunal dismisses all challenges to the UK • Extraordinary general meeting cancels 10.5% of the share capital following • Bi-annual Bearing employee survey completed Competition Commission’s (CC) ruling except for the challenge on jurisdic- DFDS’ purchase of own shares from A.P. Møller – Mærsk • Christmas lunch for homeless people, Copenhagen and Oslo tion, which requires a further review • ONE Finance: 65 positions migrated from Belfast to Poznan, Poland • Storms impact operations, including flooding of the port terminal in Immingham • ARK FUTURA employed by Danish military in Syria mission

Management review DFDS Annual report 2013 11 The most often highlighted areas for continued in 2013. The passenger In November 2013, the bi-annual Em- Return on invested capital (ROIC) 2013 improvement were communicating system, Seabook, was implement- ployee Engagement Survey, Bearing, Invested capital, Profit variance vs faster when issues occur and provid- ed on the Channel routes in Q3 was launched, ending with a response average, DKK m ROIC 1 2013, % target2, DKK m ing new solutions. Customer feedback 2012 and during 2013 a number of rate of 76%, a slight increase from is applied to develop action plans tar- performance issues were resolved. 2011. Overall, the survey shows satis- DFDS Group 8,633 5.8 -363 geted to improve our performance and In 2014, the roll-out will continue factory scores for job satisfaction and Shipping Division 8,077 6.5 -283 customer satisfaction. In 2014, cus- to the Baltic routes and in 2015 motivation. The survey also identifies tomer focus continues with an annual to the remaining passenger routes. areas for improvement. More informa- North Sea 4,270 6.7 -141 Baltic Sea 1,232 17.9 97 freight survey and bi-weekly meetings The logistics system, Velocity, was tion about HR in DFDS is available on Channel 1,296 -8.0 -233 at the activity level to discuss current successfully implemented in Brugge pages 43-44 of the CR report. Passenger 903 15.7 51 customer service issues and how our and Peterborough in 2013 and the France & Mediterranean -55 n.a. n.a. solutions can be improved. The results system is expected to be fully im- CFI – sales training Non-allocated 431 0.7 -40 of the past year have been encour- plemented in the Logistics Division In 2013, sales training for 225 sales Logistics Division 795 8.7 -10 aging, supporting our continuous by the end of 2015. The Shipping managers across the Group was com- customer focus initaitive. Division’s freight system, Phoenix, pleted as part of CFI (Customer Focus Nordic 271 6.7 -9 Continent 323 8.5 -5 was fully implemented at the end Initiative). Sales training programmes UK & Ireland 183 13.1 6 • L ight Capital: The project success- of 2012. The onboard maintenance will continue in 2014. Non-allocated 18 0.0 -2 fully released more than DKK 300m system, Sertica, was successfully of cash tied up in working capital in implemented in the port workshops New shipping emission target Non-allocated, Group -239 n.a. -65 2013 (inventory and trade receiva- in Immingham, and further rollout After achieving a 10% reduction of 1 ROIC excluding special items bles/payables). The result exceeded is planned in 2014. Sertica has also bunker consumption over a five year 2 DFDS’ target is a return of 10% the project’s initial goal of DKK 300m. been chosen as the general pro- period, the new target is a 5% reduc- The goal for 2014 is to release a curement platform, and integration tion to be achieved by 2017. Shipping further DKK 100m of cash. with accounting systems is ongoing. emissions amount to more than 90% Customer Satisfaction Customers’ online experience was of DFDS’ total emissions. For more in- DFDS services CSAT NPS3 Scale • O NE Finance: Establishment of a improved on a number of passenger formation on the environmental impact group-wide finance service centre ships following installation of new of DFDS’ activities, see pages 46–48 Freight shipping services 1 8.0 33 Very Good in Poland expected to comprise communication devices. in the CR report. Transport & logistics solutions 1 7.8 19 Good 2 150 positions. In December 2013, Passenger services 7.8 27 Good the migration of 65 positions from Significant events after 2013 1 Shipping and Logistics customer scores are the simple average of all units within each Division 2 the former finance service centre in People and the environment In January 2014, DFDS acquired Passenger customer scores are the simple average of all customer responses in BU Passenger 3 Net Promoter ® and NPS ® are registered trademarks of Bain & Company, Inc., Fred Reichheld and Belfast was completed. All migrations STEF’s logistics activities in Scotland Satmetrix Systems, Inc. are expected to be completed by Employees and STEF acquired the continental CSAT asks customers “How would you rate the overall performance, products and services of DFDS?” and is meas- October 2014. The total average number of employees distribution and handling activities of ured on a 10-point scale (1-Not satisfied at all; 10-Fully satisfied) rose by 13.2% in 2013 to 5,930, primar- DFDS Logistics located in Boulogne. NPS asks customers “How likely would you be to recommend the products/services of DFDS?” on a 10-point scale Group IT systems ily as a result of the full-year impact of (1-Not at all likely; 10-Extremely likely). The NPS is an aggregate score created by subtracting the percentage of de- The implementation of the IT strat- the opening of the Dover-Calais route tractors (those who gave scores from 1 to 6) from the percentage of promoters (those who gave scores of 9 and 10). egy for introducing Group systems and the acquisition of LD Lines.

Management review DFDS Annual report 2013 12 On 16 January 2014, the cancellation INVESTED CAPITAL (NET ASSETS) Fleet overview and key figures 2013 of 10.5% of the share capital, 2013, DKK M (%) Average age equivalent to 1,556,081 shares, as Passenger Container and Ownership of owned 10,000 adopted by the extraordinary general Total ships Ro-ro ships Ro-pax ships ships sideport ships share, % ships, yrs 9000 meeting in December 2013, was 8000 DFDS Group 59 26 17 4 12 - - registered. 7000 1 41 22 15 4 - - - 6000 Shipping Division North Sea 18 17 1 - - 61 11 Financial goals 5000 Baltic Sea 9 3 6 - - 67 15 4000 DFDS’ target is a return of at least 10% Channel 8 - 8 - - 50 11 on new investments and on the total 3000 Passenger 5 - 1 4 - 100 21 invested capital. 2000 France & Mediterranean 2 2 - - - 0 - 1000 0 Logistics Division 2 11 - - - 11 - - 2 Return on invested capital (ROIC), -1000 Nordic 6 - - - 6 33 15 including special items, was 5.7% in Continent 2 5 - - - 5 0 - OTHER ASSETS 2013 compared to 3.4% in 2012. Before SHIPS Chartered out ships 5 2 2 1 100 17 special items, the return was 5.8% in CARGO CARRYING EQUIPMENT Newbuildings3 2 2 - - - 100 - 2013, compared with 4.5% in 2012. At TERMINALS, LAND AND BUILDINGS 1 One ro-pax ship, which is shared between North Sea and Passenger is eliminated in the sum the start of 2014, DFDS’ cost of capital OTHER IMMATERIAL ASSETS 2 Includes VSA (vessel sharing agreements) was calculated at 6.0%. GOODWILL 3 To be delivered in 2014 NET WORKING CAPITAL DFDS Logistics’ return of 8.7% in 2013 was above the cost of capital, but below the 10% target, while the Shipping Division’s return of 6.4% the UK must be improved through terminal services deploy a range of extent are non-asset based. The turno- Specialisation of ro-ro- and ro-pax- was just above the capital cost, but structural changes and market growth assets, mainly owned and chartered ver rate of invested capital in 2013 was based tonnage relates to capacity below target. to increase revenue per unit and ships, leased and owned port terminals, 1.1 times in the Shipping Division, and requirements for passengers and capacity utilisation of assets. including cargo carrying equipment. 5.3 times in the Logistics Division. freight; configuration of passenger In 2013, a ROIC Drive programme areas; loading capacity, especially for was launched across the Group to Business model, assets and capital Transport and logistics solutions are The Shipping Division’s ownership heavy freight; hanging decks for cars; improve awareness and transparency intensity provided using only owned and leased share of assets is determined by sailing speed; fuel efficiency; and of return levels in all profit units. To The business model encompasses both trailers as transport services mostly are how specialised ships must be to fit ramps, including requirements for achieve the return target, two primary asset and non-asset based activities. subcontracted to hauliers, and rail and route and customer requirements and the speed of turn­around in ports. challenges must be overcome: the container shipping operators. the long lifespan of such assets. The structural overcapacity on the Chan- DFDS’ business model combines ferry lifespan of ro-ro-based freight and The varying levels of asset deployment nel must be resolved and in the North shipping and port terminal services and The shipping part of DFDS’ activities is passenger tonnage is 25–35 years and across business areas translate into Sea business area, the return of the the provision of transport and logistics therefore asset-based while the trans- the duration of port-terminal leases is differences in required EBIT margins activities between the Continent and solutions. The ferry shipping and port port and logistics solutions to a large typically 25–30 years. to achieve the target of a return on

Management review DFDS Annual report 2013 13 invested capital of 10%. In the Shipping In 2014, total investments are expected • Materials from DFDS’ most recent DFDS’ CR report is included on pages similar accidents in the future. The Division, the requirement is an EBIT to amount to DKK 1,100m, including AGM, www.dfdsgroup.com/investors/ 33–52 of this annual report. The report precautions will be evaluated as soon margin mostly above 10%, while the the remaining investment in two freight annualgeneralmeeting/previousagm/ is also available as a separate docu- as the authorities have completed their requirement in the Logistics Division is newbuildings (ARK), installation of sev- ment on www.dfdsgroup.com/about/ report about the accident and the cause an EBIT margin of 2–3%. en scrubbers and an upgrade of two pas- • Remuneration policy, crreport/. The report outlines strategy, of it has been established. Psycholog- senger ships. Maintenance investments www.dfdsgroup.com/about/governance/ objectives and policies, and reports ical assistance was provided for the Composition of invested capital are expected to increase considerably in remunerationpolicy/ on the activities and results of six CR ship’s crew following the accident. DFDS In 2013, invested capital was reduced 2014 compared to an average year as focus areas. has provided the bereaved family with by 3.9%, mostly driven by a reduction a high number of ships will be docking • Diversity policy, www.dfdsgroup.com/ necessary assistance. of total net working capital of DKK and, in addition, several special projects About/Governance/DiversityPolicy/ Safety and security 445m. The Light Capital project contrib- are planned. Maintenance investments The safety of our passengers, crew and The report on pages 38–42 accounts for uted DKK 360m of the reduction related in port terminals, equipment and IT Directors are elected at the Annual freight, as well as the security of our DFDS’ safety and security work. to the change in the net working capital systems will, similarly, be higher than General Meeting for at term of one year ships and port facilities, are of para- of inventory and trade receivables/ in an average year. at a time, and new Directors are elected mount importance to DFDS. Outlook 2014 payables. according to the applicable rules of the Economic growth is expected to be Corporate governance Danish Companies Act. Staff representa- Our safety and security work is regulated moderately positive in 2014 following At the end of 2013, total invested DFDS A/S is subject to Danish law and tives are elected by the employees. by international and national conventions a pick-up in activity in the second half capital was DKK 8,555m, of which 85% listed on the NASDAQ OMX Copenhagen. and legislation and, moreover, by the of 2013. The sustainability and strength consisted of ships and 11% consisted of Corporate governance in DFDS is based Resolutions to amend the Articles of additional objectives and requirements of the upswing remains uncertain. In port terminals, land and buildings and on Danish legislation and regulations, Association require announcement to managed through DFDS’ Safety Man- addition, the overall level of capacity cargo carrying equipment. The Shipping including the Danish Companies Act, the the shareholders at least three weeks agement Systems. As per International utilisation in the transport sector is still Division’s invested capital was DKK rules for listed companies on NASDAQ before a General Meeting and an ordi- Safety Management (ISM) guidelines, all modest and competition continues to 8,002m, corresponding to 94% of the OMX Copenhagen, the Danish recommen- nary majority of votes cast if at least information regarding safety measures be intense. Group’s total invested capital. Logistics dations for good corporate governance two-thirds of the capital is represented, and conditions is regularly distributed to Division’s invested capital amounted and the company’s articles of associa- unless other adoption requirements are all ships. This includes a comprehensive DFDS’ profit forecast for 2014 is there­ to DKK 848m. The invested capital of tion, as well as other relevant rules. imposed by the Danish Companies Act. reporting scheme from the ships in order fore based on a cautiously positive non-allocated items was negative. to identify weak links and establish safe- growth scenario. Earnings in 2014 are Information on corporate governance at Corporate Responsibility (CR) guards to mitigate the risk of these. also expected to be burdened by a sig- Investments in 2013 and planned DFDS is available on www.dfdsgroup.com: DFDS’ CR activities create value for nificant loss on the Channel activities. future investments our stakeholders and contribute to Tragically, an accident on board PATRIA In 2013, total investments amounted • Statutory report on corporate DFDS being a preferred partner. The SEAWAYS in November 2013 cost the The Group’s EBITDA before special items to DKK 943m, including the ongoing governance, www.dfdsgroup.com/ framework and objectives for DFDS’ life of one of our crew members. The is expected to increase by DKK 1,250- construction of two freight ships (ARK), about/governance/ CR activities are managed by the CR accident occurred during repair works in 1,400m, driven by revenue growth of installation of three scrubbers, the Committee, which reports to the Exec- an elevator shaft, and DFDS immediate- around 6% and margin improvement. acquisition of a Swedish transport com- • DFDS’ statutes, www.dfdsgroup.com/ utive Management. ly informed all ships about the accident pany and maintenance investments. about/governance/articles/ and preliminary precautions to avoid

Management review DFDS Annual report 2013 14 The Shipping Division’s EBITDA before • EBITDA before special items: Expect- Outlook per division 2014 special items is expected to increase by ed to be DKK 1,250–1,400m (2013: Operating profit (EBITDA) DKK 1,175-1,275m, equally driven by DKK 1,213m). The expected perfor- Division Revenue growth before special items, DKKm revenue growth and margin improve- mance per division is shown in the ment. Revenue growth is restrained table to the right Shipping Division Approx. 3% 1,175–1,275 by a decrease of shipping capacity Logistics Division Approx. 10% 150-200 due to tonnage changes and extended • Depreciation and impairment are Non-allocated items n/a -75 dockings to install scrubbers. Margin expected to increase by around is set to improve, supported by higher 12% and the net cost of financing is DFDS Group total Approx. 6% Approx. 1,250–1,400 utilisation and lower tonnage costs. expected to be on a level with 2013

The Logistics Division’s EBITDA before • Special items: A cost of around DKK special items is expected to increase 35m is expected, mainly related to by DKK 150-120m, driven partly by the the One Finance project (2013: net full-year impact of the acquisition of cost of DKK 17m) Karlshamn Express made in September 2013, and partly by improved earnings • Investments: In 2014, total invest- of the recurring activities, particularly ments are expected to be around in the Nordic area. DKK 1,100m: – Dockings: DKK 250m, a higher than Increases in oil prices and changes in average year due to extended exchange rates can impact the profit dockings and a higher number forecast. See pages 28–30 for a review of dockings of the exposure to financial risks. – ARK ships: DKK 300m, remaining investment in two ships Against this background, the Group’s – Scrubbers: DKK 250m, installation key figures for 2014 are expected to of seven scrubbers develop as follows: – upgrade: DKK 100m, upgrade of passenger ships on Copenhagen- • Revenue: Expected to increase by Oslo route around 6%, of which 2% is driven by – other: DKK 200m, cargo carry- the full-year effect of acquisitions. ing equipment and IT system development.

Management review DFDS Annual report 2013 15 Shipping Division Shipping division overview

Shipping Division 2013 2012 DFDS Seaways operates the largest Head of division network of shipping routes in Northern Peder Gellert Pedersen DKK m Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Europe, servicing the requirements of Revenue 1,872 2,171 2,450 2,037 8,530 1,735 2,042 2,232 2,006 8,015 both freight customers and passengers. Share of DFDS Group Operating profit before depreciation revenue 2013 (EBITDA) and special items 89 289 502 268 1,148 93 253 472 174 992 Freight shipping services Share of profit of associates -2 -1 -5 1 -7 0 0 2 2 4 71% The routes are ideally located to Profit/loss on disposal of non-current assets 0 1 0 1 2 0 2 -1 0 1 Depreciation and impairment -153 -165 -151 -152 -621 -140 -146 -143 -152 -581 service the freight volumes of Business areas Operating profit (EBIT) before special items -66 124 346 118 522 -47 109 330 24 416 forwarding companies and manufactur- • North Sea Operating profit margin (EBIT), % -3.5 5.7 14.1 5.8 6.1 -2.7 5.3 14.8 1.2 5.2 ers of heavy industrial goods. Special items, net 0 0 -10 8 -2 0 -4 -2 -37 -43 • Baltic Sea Operating profit after special items (EBIT) -66 124 336 126 520 -47 105 328 -13 373 • Channel Invested capital, average 8,147 8,026 8,045 8,031 8,077 8,756 8,725 8,498 8,269 8,556 All routes operate to fixed schedules • Passenger Return on invested capital after special with a high level of frequency, al- • France & Mediterranean items (ROIC) p.a., % -3.2 6.2 16.7 6.3 6.4 -2.1 4.8 15.4 -0.7 4.4 lowing customers to precisely meet Lane metres, '000 6,902 7,335 7,485 7,645 29,367 5,912 5,945 6,196 6,571 24,624 their transport service needs. Fur- Passengers, '000 1,025 1,454 2,127 1,157 5,763 819 1,334 1,865 1,114 5,132 ther visibility is available by access to online tracking of shipments.

The Shipping Division’s revenue increased by 6.4% to The Shipping Division’s EBIT before special items increased We develop bespoke shipping logistics DKK 8.5bn in 2013 by 25.6% to DKK 522m in 2013 solutions in partnership with manufacturers of heavy goods such as automobiles, metals, paper and SHIPPING DIVISION: REVENUE PER SHIPPING DIVISION: REVENUE PER EBIT BEFORE SPECIAL ITEMS ROIC PER BUSINESS AREA, 2013 BUSINESS AREA 2013 ACTIVITY 2013 PER BUSINESS AREA (%) forest products, and chemicals. (DKKm)

300 20 To enhance the efficiency of customer services, we operate own port termi- 250 15 nals in strategic locations, including 200 10 warehousing services. 150 5 100 Passenger ferry services 50 0 The route network offers both over-

0 -5 night and short crossings on which NORTH SEA (37%) PASSENGER (29 %) -50 passengers can bring their own cars. BALTIC SEA (16%) TRAILER SHIPPING (57 %) -10 The onboard facilities are adapted -100 CHANNEL (21%) SHIPPING LOGISTICS (8 %) to each route’s particular mix of -150 -15 PASSENGER (20%) CHARTERING OF SHIPS (2 %) passengers and their requirements FRANCE & MED (3%) PORT TERMINALS (4%) for an enjoyable maritime experience. NON-ALLOCATED (3%) CHANNEL CHANNEL BALTIC SEA BALTIC NORTH SEA NORTH PASSENGER BALTIC SEA BALTIC NORTH SEA NORTH PASSENGER FRANCE & MED FRANCE & MED 2012 2012 SHIPPING DIVISION 2013 2013 ITEMS NON-ALLOCATED NON-ALLOCATED ITEMS NON-ALLOCATED Shipping Division DFDS Annual report 2013 17 North Sea

OSLO North sea 2013 2012

BREVIK DKK m Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY

ROSYTH

GOTHENBURG Revenue 807 841 815 832 3,295 843 828 797 807 3,275 EBIT before special items 47 67 67 103 284 58 41 37 50 186 NEWCASTLE Invested capital 4,449 4,217 4,178 3,979 4,270 4,645 4,425 4,561 4,538 4,382

ESBJERG COPENHAGEN ROIC before special items p.a., % 4.2 6.4 6.4 10.4 6.7 5.0 3.7 3.2 4.4 4.2

IMMINGHAM Lane metres freight, '000 2,517 2,682 2,648 2,666 10,513 2,482 2,411 2,428 2,474 9,795

CUXHAVEN

FELIXSTOWE HARWICH AMSTERDAM (IJMUIDEN)

TILBURY ROTTERDAM (VLAARDINGEN) ZEEBRUGGE • Sweden-UK volumes boosted in March, where a competing route was earnings at Immingham and Gothen-

GHENT by major customer agreement closed. This growth was balanced by burg were below return requirements. • Overcapacity on Sweden-UK lower volumes on Gothenburg-Tilbury In September 2013, a turnaround reduced by closure of competitor as one of two ships was removed from project in Gothenburg was initiated Head of business area Kell Robdrup (South) route in March the route due to lower paper volumes. which is expected to improve earnings Morgan Olausson (North) • Capacity reduced on Gothen­- High volume growth was achieved on considerably in 2014. Share of Shipping Division 37% revenue 2013 burg-Tilbury Gothenburg-Ghent from both new and Routes • Gothenburg-Brevik/Immingham • Turnaround of port terminal existing customers, primarily in the Outlook • Gothenburg-Tilbury in Gothenburg launched automotive sector. Overall volume growth is expected • Gothenburg-Brevik/Ghent • Total EBIT up by 53% to DKK 284m to be flat in 2014 as capacity is • Esbjerg-Immingham Volumes between Denmark and UK de- reduced on three routes following • Esbjerg-Harwich • Cuxhaven-Immingham clined slightly following outsourcing of rotation of ships and deployment of • Vlaardingen-Felixstrowe Market and activity trends production to other regions and increas- the new ARK ships, plus the impact • Vlaardingen-Immingham Freight volumes increased by 7.3% in ing competition from road transport and of extended dockings for three scrub- • Rosyth-Zeebrugge 2013, mainly driven by higher volumes low ferry rates on the Channel. ber installations. The pricing envi- Ships • 17 ro-ro ships • 1 ro-pax ship in three corridors: Holland-UK, Swe- ronment is forecast to remain weak Port terminals • Gothenburg den-UK and Sweden-Belgium. As the UK The pricing environment was weak on as the overall capacity utilisation of • Esbjerg economy resumed growth during 2013, all routes as the overall capacity utilisa- carriers in the region is expected to • Vlaardingen and a route was closed by a competi- tion of freight carriers in the North Sea remain subdued in 2014 and price • Immingham • Ghent tor in late 2012, volumes rebounded region was relatively subdued during competition is, therefore, expected Customer segments • Forwarding companies & hauliers on Vlaardingen-Felixstowe. On Goth- the year. to continue to be strong. • Manufacturers of heavy industrial goods (automotive, enburg-Immingham, volumes were forest and paper products, metals, chemicals) boosted by the return of all volumes Port terminal operations benefited Primary market areas • Sweden from a major Swedish freight forwarder from the increase in volumes, although • Great Britain • Denmark • Germany • Benelux • Norway Main competitors • • Cobelfret • P&O Ferries • Road and rail transport Shipping Division DFDS Annual report 2013 18 Baltic Sea

Baltic Sea 2013 2012

ST. PETERSBURG DKK m Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY KAPELLSKÄR UST-LUGA

PALDISKI Revenue 318 357 368 326 1,369 321 373 395 333 1,422 EBIT before special items 33 54 83 50 220 31 56 93 48 228 Invested capital 1,260 1,184 1,150 1,291 1,232 1,322 1,323 1,314 1,312 1,236 ROIC before special items p.a., % 10.5 18.2 28.9 15.5 17.9 9.4 16.9 28.3 14.6 18.4 RIGA Lane metres freight, '000 822 876 869 879 3,446 808 884 897 845 3,434

COPENHAGEN KARLSHAMN Passengers, '000 64 85 108 70 327 66 87 104 69 326 KLAIPEDA MOSCOW

KIEL SASSNITZ

• Continued growth on routes Volumes out of Sweden continued to reduced volumes between Denmark out of Sweden grow in 2013 and a second ship was and Lithuania. • Russian slowdown reduced introduced in Q4 on Paldiski-Kapellskär Head of business area Anders Refsgaard volumes on other routes which added one weekly roundtrip Passenger volumes grew by 2.0% as • Capacity increased on Kapellskär- and improved the schedule. The ship growth on Paldiski-Kapellskär more Share of Shipping Division 16% revenue 2013 Paldiski in Q4 was transferred from Sassnitz-Klaipe- than offset the closure of Sassnitz-Klai- • Sassnitz-Klaipeda closed at da which was closed at the end of Q3 peda. The passenger organisation was Routes • Fredericia/Copenhagen-Klaipeda the end of Q3 due to reduced rail volumes. Most of restructured in 2013 to improve cus- • Karlshamn-Klaipeda • Kiel-Klaipeda • Total EBIT down by 4% to the route’s volumes moved to Klai- tomer service levels and sales. • Kiel-St. Petersburg/Ust Luga DKK 220m peda-Kiel. The German corridor faced • Kapellskär-Paldiski increasing competition from other ferry Outlook • Sassnitz-Klaipeda (discontinued 30/9-2013) operators and some shift of volumes to Financial performance in 2014 is Ships • 3 ro-ro ships Market and activity trends Polish highways. expected to be on a level with 2013. • 6 ro-pax ships Overall freight volume growth was flat To support continued growth on

Customer segments • Forwarding companies & hauliers in 2013 as eastbound volumes were The two routes to Russia were merged Karlshamn-Klaipeda, capacity was • Manufacturers of heavy industrial goods impacted by a slowdown in the Russian during the year to one route following increased by replacement of one ship (automotive, forest products, metals) economy, increasing competition from the continued slowdown in the Russian with a larger chartered ship in January • Passengers, mainly travelling in their own cars road transport and other ferry operators. economy. In Q4, volumes improved as 2014. Demand is expected to continue Primary market areas • Germany Pricing was under pressure on all routes a competitor lowered capacity on the to be subdued on the German, Russian • Sweden following continued yield pressure in Russian corridor. Lower Danish exports and Danish corridors in 2014. • Denmark the door-to-door transport market. • Benelux • Russia • Baltic States

Main competitors • Stena Line • • Transrussia Express • Transfennica • Road and rail transport

Shipping Division DFDS Annual report 2013 19 Channel

Channel 2013 2012

DKK m Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY

Revenue 374 456 600 428 1,858 237 321 442 386 1,386

NEWHAVEN DOVER EBIT before special items -61 -46 42 -39 -104 -39 -45 49 -97 -132 PORTSMOUTH DUNKIRK Invested capital 1,278 1,302 1,339 1,280 1,296 1,146 1,123 1,288 1,257 1,292 CALAIS ROIC before special items p.a., % -19.1 -14.1 12.5 -12.2 -8.0 -13.6 -16.0 15.2 -30.9 -10.2 DIEPPE Lane metres freight, '000 3,366 3,543 3,764 3,876 14,549 2,480 2,500 2,716 3,039 10,735 LE HAVRE Passengers, '000 697 1,003 1,575 778 4,053 501 879 1,334 735 3,449

PARIS

• Significant loss due to continued The total freight market rose by 4.7% The pricing environment for both overcapacity in ferry market in 2013. freight and passengers was weakened • Full-year impact from Dover-Calais by overcapacity, particularly on the Head of business area Carsten Jensen start-up and acquisition of LD Lines Passenger volumes increased by 18.4% Dover-Calais corridor. The business • Total EBIT improved by DKK 28m and 8.3% adjusted for the full-year im- area’s operating loss was primarily Share of Shipping Division 21% revenue 2013 to DKK -104m pact of the addition of the two Western driven by the overcapacity on the Channel routes. The adjusted volume Dover-Calais corridor. See page 9 for Routes • Dover-Dunkirk growth was likewise entirely driven a review of the extraordinary compe- • Dover-Calais • Portsmouth-Le Havre Market and activity trends by Dover-Calais as volumes on Dover- tition circumstances impacting ferry • Dieppe-Newhaven Freight volumes increased by 35.5%, Dunkirk were 8.2% lower in 2013. operations on the Channel. and 25.6% adjusted for the full-year im- Volumes on Dover-Calais increased by Ships • 3 short sea ferries • 5 ro-pax ships pact of the addition of Le Havre-Ports- 57.0% in 2013, driven by the full-year Outlook mouth and Dieppe-Newhaven in Q4 impact of the ramp up of capacity and The operating loss will continue as Port terminals • Dunkirk 2012. The adjusted volume growth achievement of a market share of 6% in long as the overcapacity on the Dover Customer segments • Forwarding companies & hauliers was entirely driven by Dover-Calais as 2013. DFDS’ total passenger car market Strait persists. The financial outlook • Car passengers volumes on Dover-Dunkirk were 4.4% share on the Dover Strait was reduced for 2014 is, therefore, contingent on • Coach operators lower in 2013, partly due to 3.4% few- to 19% at the end of 2013 from 20% in when the UK Competition Commis- Primary market areas • Great Britain er sailings. Volumes on Dover-Calais 2012 due to the loss of market share on sion’s Eurotunnel/SeaFrance merger • Continental Europe increased by 159.5% in 2013, driven Dover-Dunkirk. The total passenger car inquiry is finalised and the outcome by the full-year impact of the ramp up market rose by 2.8% in 2013. of the inquiry. Provisional findings are Main competitors • Eurotunnel • P&O Ferries of capacity since the start of operations planned to be published in mid-March • MyFerryLink in February 2012 and achievement of The operation of the concession route 2014 and a final decision is planned • a market share of just above 10% in Dieppe-Newhaven was in line with for early May 2014. Allowing time for 2013. DFDS’ total freight market share expectations in 2013, while perfor- appeal options, DFDS expects a final on the Dover Strait was 24% at the mance on Le Havre-Portsmouth was decision to be implemented by the end of 2013, up from 19% in 2012. not satisfactory. end of 2014.

Shipping Division DFDS Annual report 2013 20 France & Mediterranean

France & Mediterranean 2013 2012 MARSEILLE DKK m Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY

Revenue 50 69 56 56 231 n.a. n.a. 1 30 31 EBIT before special items -5 -3 -8 -8 -24 n.a. n.a. -1 -2 -3 Invested capital -13 -12 -61 -48 -55 n.a. n.a. 5 -16 -39 ROIC before special items p.a., % n.a n.a n.a n.a n.a n.a. n.a. n.a. n.a. n.a. Lane metres freight, '000 58 60 44 57 219 n.a. n.a. 3 50 53

TUNIS • Capacity increased on Marseille-Tunis Outlook • Total EBIT down by DKK 21m to The business model of Marseille-Tunis is DKK -24m planned to be expanded with shipping logistics solutions for customers in the Head of business area Peder Gellert Pedersen automotive sector in 2014. Market and activity trends Share of Shipping Division 3% revenue 2013 The operation and results of the route In 2014, the two western routes on were satisfactory, taking the contin- the Channel, Le Havre-Portsmouth and Routes • Marseille-Tunis ued weakness of the Mediterranean Dieppe-Newhaven, will be transferred Ships • 2 ro-ro ships economies into consideration. The route to this business area. Internal port ter- is operated in a VSA (vessel sharing minal and agency services provided to Customer segments • Forwarding companies & hauliers agreement) with CMA-CGM, with each Channel will be transferred back to this Primary market areas • Tunisia part providing one ship. business area in order to simplify the • France business structure.

Main competitors • Cotunav The operating loss of the business area • SNCM reflects the full-year impact of the ac- The concession period of Dieppe-New­ quisition of LD Lines in September 2012 haven ends in 2014. The final outcome and insufficient coverage, including of the renewal process of the conces- higher costs than expected, of the inter- sion has yet to be announced. nal port terminal and agency services provided to the activities of the Channel business area.

Shipping Division DFDS Annual report 2013 21 Passenger

Passenger 2013 2012 OSLO DKK m Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY

Revenue 304 472 606 376 1,758 296 474 595 396 1,761 EBIT before special items -84 53 160 13 142 -106 57 147 14 112 Invested capital 903 834 848 851 903 1,041 1,073 1,024 1,082 950 NEWCASTLE ROIC before special items p.a., % -37.2 25.4 75.5 6.1 15.7 -40.7 21.2 57.4 5.2 11.7 ESBJERG COPENHAGEN Lane metres freight, '000 139 174 160 168 641 142 150 152 163 607 Passengers, '000 264 366 444 309 1,383 252 368 427 310 1,357

HARWICH AMSTERDAM (IJMUIDEN) • Record passenger volumes on a two-week docking of DANA SIRENA and March 2014 is expected to Amsterdam-Newcastle on Esbjerg-Harwich in June following support increased sales in the Family • Growth in overseas passengers a quay collison in Harwich. and Business Conference segments in Head of business area Brian Thorsted Hansen on Copenhagen-Oslo 2014. On Amsterdam-Newcastle, the • Unplanned docking on Esbjerg- Yields on Amsterdam-Newcastle were positive trend of 2013 is expected to Share of Shipping Division 20% revenue 2013 Harwich in high season supported by solid growth in the high- continue underpinned by further focus • Savings of 15% on bunker cost yield car market which offset a negative on the car market, including new mar- Routes • Copenhagen-Oslo • Total EBIT up by 27% to DKK 142m impact from a decline in the pound kets in Belgium and France. Likewise • Amsterdam-Newcastle • Esbjerg-Harwich sterling. On Copenhagen-Oslo, yields on Esbjerg-Harwich, where the focus were reduced by a continued high level will increasingly be on the car market Ships • 1 ro-pax ship Market and activity trends of competition, a higher share of low- as competition in other segments • 4 passenger ships Overall passenger volumes grew by er-yielding segments in the passenger continues to strengthen. Port terminals • Copenhagen 1.9%, although with an uneven distri- mix and a large decline in the Norwe- bution across markets and routes. The gian krone. Income from onboard sales Customer segments • Mini Cruise • Passengers with cars Dutch and German markets experienced increased driven by the higher volume, • Business conferences solid growth leading to 4.6% volume targeted price increases and a higher • Forwarding companies/hauliers growth on Amsterdam-Newcastle. sales margin following cost reductions. Primary market areas • Denmark The growth in the number of passen- • Sweden gers from overseas markets was also Earnings on all routes were supported • Norway solid and was the main driver of 1.2% by a 15% lower bunker cost. • Great Britain • Benelux volume growth on Copenhagen-Oslo. • Germany Volumes in the UK, Danish and Norwe- Outlook • Overseas markets gian markets were on a level with 2012. The upgrade of the two passenger

Main competitors • Color Line Passenger volumes were reduced by ships on Copenhagen-Oslo in January • P&O Ferries • Stena Line • Airlines and road transport

Shipping Division DFDS Annual report 2013 22 Logistics Division Logistics Division Overview

Logistics Division 2013 2012 DFDS Logistics provides flexible, cost Head of division efficient and on-time, door-to-door Eddie Green DKK m Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY transport solutions to producers of a Revenue 992 1,046 1,028 1,117 4,183 1,083 1,066 1,082 1,028 4,259 wide variety of consumer and indus- Share of DFDS Group Operating profit before depreciation trial goods. The main activity is the revenue 2013 (EBITDA) and special items 33 37 33 46 149 36 43 32 30 141 transport of full and part loads, both Share of profit of associates 0 0 0 1 1 0 0 0 0 0 35% Profit/loss on disposal of non-current assets 2 0 3 -1 4 1 3 1 1 6 ambient and temperature controlled. Depreciation and impairment -15 -13 -15 -18 -61 -16 -18 -16 -18 -68 Business areas Operating profit (EBIT) before special items 20 24 21 28 93 21 28 17 13 79 In partnership with retailers and • Nordic Operating profit margin (EBIT), % 2.0 2.3 2.0 2.5 2.2 1.9 2.6 1.6 1.3 1.9 production companies, performance Special items, net 0 0 0 0 0 0 -79 -1 0 -80 • Continent enhancing and cost efficient logistics Operating profit after special items (EBIT) 20 24 21 28 93 21 -51 16 13 -1 • UK & Ireland Invested capital, average 757 765 806 847 795 885 853 806 774 826 solutions are developed and provided, Return on invested capital after special including warehousing services. items (ROIC) p.a., % 8.0 9.5 7.5 9.9 8.7 7.3 -18.0 6.0 4.8 -0.1 Units, '000 87.7 93.5 94.0 101.5 376.7 90.8 91.2 90.7 90.4 363.1 Tons, '000 108.2 104.7 103.1 106.8 422.8 240.8 182.5 175.8 184.6 783.7 All solutions are supported by a European network of road, rail and container carriers and, not least, DFDS’ network of ferry routes. If required, the Revenue decreased by 1.8% to DKK 4.2bn in 2013 EBIT before special items increased by 17.1% to carrier network is supplemented with DKK 93m in 2013 our own drivers and trucks.

The business model ensures flexible LOGISTICS DIVISION: REVENUE PER DFDS LOGISTICS: CUSTOMER SPLIT EBIT BEFORE SPECIAL ITEMS ROIC PER BUSINESS AREA BUSINESS AREA 2013 PER INDUSTRY PER BUSINESS AREA (%) solutions that fit customer require- (DKKm) ments and allows for fast reactions 40 14 to changes in market conditions.

35 12

30 10 25 8 20 6 15 4 NORDIC (31 %) FOOD PRODUCTS (19%) 10 CONTINENT (46 %) FREIGHT FORWARDERS (25%) 2 INDUSTRY (22%) 5 UK & IRELAND (23 %) FOREST AND PAPER PRODUCTS (12%) 0 0 CONSUMER GOODS (7%) RETAILERS (12%) NORDIC OTHER (3%) NORDIC CONTINENT CONTINENT UK & IRELAND 2012 2012 UK & IRELAND

2013 2013 DIVISION LOGISTICS Logistics Division DFDS Annual report 2013 24 Nordic

Head of business area Eddie Green Nordic 2013 2012

Share of Logistics Division’s 31% DKK m Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY revenue, 2013 Revenue 305 320 314 383 1,322 368 348 345 351 1,411 Main Activities Door-to-door full & part load transport solutions: EBIT before special items 7 6 3 9 25 11 10 5 2 27 • Sweden/Denmark/Norway-UK Invested capital 257 246 261 329 271 309 240 232 261 276 • Sweden-Baltic/Russia ROIC before special items p.a., % 8.1 7.3 2.9 7.8 6.7 10.6 11.9 6.0 2.2 7.4 Units, ‘000 19.3 21.0 20.8 28.1 89.2 22.9 22.0 21.6 21.3 87.8 Paper shipping logistics, incl. containers: Tons, '000 108.2 104.7 103.1 106.7 422.7 240.8 182.5 175.8 184.6 783.7 • Norway--Immingham-Norway • Norway-Zeebrügge-Immingham-Norway

Door-to-door container transport solutions: • Norway-UK • Norway-Continent • Strong volume growth in Swedish Norwegian paper volumes and delays and Danish traffic caused by landslides and storms. The Door-to-door rail transport solutions: • Market coverage expanded to CIS Norway-UK container traffic continued • UK/Nordic-Italy and Baltic countries to perform well in 2013. Equipment • 3 sideport ships • Full-year negative impact of sideport • VSAs on four container ships operated by other route restructuring The acquisition of the Karlshamn shipping companies • Joint Nordic/Continent equipment pool: • Total EBIT down by 7% to DKK 25m Express Group, completed in September – 2,350 trailers 2013, has extended the geographical – 90 tractor units coverage to the CIS and Baltic coun- – 3,750 containers – 850 swap bodies Market and activity trends tries. In Gothenburg, a new contract Adjusted for the acquisition of the was entered into in July 2013 covering Warehouses • Gothenburg • Karlshamn Karlshamn Express Group, volumes just-in-time logistics between Volvo • Moss decreased by 5.7% in 2013 due to the production plants in Gothenburg. full-year impact of the restructuring Sales offices • Oslo • Gothenburg of the sideport route network and the Outlook • Hamina loss of some key Norwegian custom- Financial performance in 2014 will be • Copenhagen ers in 2012. Volumes out of Sweden positively impacted by a full-year effect • Moss • Brevik and Denmark increased by 11.3% of the acquisition of the Karlshamn • Fredericia driven by new customer contracts Express Group, continued expansion in • Helsingborg and market growth. the CIS and Baltic countries, as well as Customer segments • Industrial producers (automotive, paper) the Volvo contract. Similarly, the per- • Producers of consumer goods Rail volumes between Scandinavia formance of rail transport solutions and • Producers of temperature controlled goods • Retailers and Italy declined in 2013 driven by the Norwegian activities is expected to • 3rd party containers a slowdown of Italian exports, loss of improve in 2014.

Primary competitors • NTEX • DSV • Schenker • Blue Water • Lo-Lo, container & sideport carriers • Tschudi Line

Logistics Division DFDS Annual report 2013 25 Continent

Head of business area Jens Antonsen Continent 2013 2012

Share of Logistics Division’s 46% DKK m Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY revenue, 2013 Revenue 482 500 490 494 1,966 496 493 494 481 1,964 Main Activities Door-to-door full & part load transport solutions: EBIT before special items 8 10 12 7 37 0 6 5 7 19 • Holland-UK/Ireland Invested capital 325 335 293 324 323 330 344 307 339 336 • Germany-UK/Italy ROIC before special items p.a., % 7.7 9.0 11.8 6.0 8.5 0.1 5.4 5.1 6.3 4.2 • Belgium-UK/Scandinavia Units, ‘000 47.0 50.4 48.2 48.2 193.8 47.6 48.1 47.7 45.6 188.9 • France-Scandinavia

Door-to-door container transport solutions: • Ireland-Continent • Strong turnaround of profitability to operate as a NVOCC (non-vessel op- Outlook Door-to-door rail transport solutions: • Italy-UK/Germany/Benelux • Full-year impact of non-vessel, erating container carrier) at the end of Following the successful restructur- • Warehousing UK & Italy door-to-door container solutions 2012. Although this reduced volumes, ing in 2013 of the Ireland-Continent • 4PL contracts on Ireland-Continent the greater focus on customer solutions container trade, financial performance Equipment Joint Nordic/Continent equipment pool: • High growth of UK-Continent increased profitability. in 2014 is expected to be on a level • 2,350 trailers full loads with 2013. Focus will be on further de- • 75 tractor units • Rail solutions impacted by Volume growth was flat for the full velopment of customer solutions and • 3,750 containers • 850 swap bodies inconsistent service delivery load activity between Belgium and continuous improvement of operations, • VSAs on two container of carriers UK and balance issues and fierce particularly the rail activities and the ships operated by other shipping companies • Total EBIT up by 95% to DKK 37m competition lowered margins. For the Belgium-UK traffic. Warehouses • Vlaardingen Belgium-Scandinavia trade, market • Immingham conditions were more stable and a • Milano • Rotterdam Market and activity trends higher result was achieved. Volumes increased by 2.6% in 2013 Sales offices • Hamburg driven by high growth of the full load The rail activities between UK and • Vlaardingen • Ghent activities between Holland/Northern Italy were reorganised during the year, • Brugge Germany/Italy and UK. Margins for these including the closure and relocation • Immingham activities were also improved in 2013 of the Ipswich office to Immingham, to • Rotterdam • Milano as cost control measures became more improve future transport planning. The • Dublin efficient. The margin for the container combination of a weak Italian economy

Customer segments • Industrial producers (automotive, paper) activity between Holland and Ireland and inconsistent service delivery of the • Producers of high value goods likewise improved following the move rail carriers reduced the result. • Producers of temperature controlled goods • Retailers • 3rd party containers

Primary competitors • Cobelfret • P&O Ferrymasters • LKW Walter • European trailer operators • Samskip • Lo-Lo carriers

Logistics Division DFDS Annual report 2013 26 UK and Ireland

Head of business area Steve Macaulay UK And ireland 2013 2012

Share of Logistics Division’s 23% DKK m Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY revenue, 2013 Revenue 233 252 264 270 1,019 234 247 255 271 1,007 Main Activities Door-to-door full & part load transport solutions: EBIT before special items 5 8 6 13 32 10 12 7 4 33 • Northern Ireland-UK Invested capital 184 190 189 199 183 205 185 211 156 189 ROIC before special items p.a., % 8.2 12.9 9.7 19.3 13.1 15.2 19.3 10.9 6.5 13.2 Logistics solutions: Units, ‘000 21.4 22.1 25.0 25.0 93.5 20.7 21.2 21.6 23.5 87.0 • UK/Ireland domestic • UK-Continent • Northern Ireland retail distribution • Seafood distribution • Warehousing • Logistics solutions delivered competitive market conditions. of DFDS’ and STEF’s operations in • 4PL Contracts continued strong profitability Profitability deteriorated through the Scotland, including a turnaround of Door-to-door container transport solutions: • Weak markets and balance issues year as changes in the trade balance the acquired activities. STEF’s logis- • Ireland/UK-Spain impacted Northern Ireland-UK resulted in more empty shipments. In tics activities in Scotland include Equipment • 750 trailers full loads Q4, rate increases were successfully an owned temperature-controlled • 55 tractor units • Temperature-controlled logistics implemented. The managed contracts storage facility in Bellshill and rent- • 1 chartered container ship and VSAs on two container ships out of Scotland expanded in 2014 controlled in Ireland were in line with ed facilities in Aberdeen and Newlyn operated by other shipping companies by acquisition expectations in 2013. with total revenue of around DKK Warehouses • Peterborough • Total EBIT down by 3% to DKK 32m 90m and 32 employees. • Larkhall • Belfast The container trade between UK/Ireland and Spain was operated by one own Outlook Sales offices • Aberdeen Market and activity trends chartered ship and a VSA (vessel shar- Focus in 2014 will be on integrat- • Peterborough • Larkhall Volumes increased by 7.5% in 2013, ing agreement) comprising two ships. ing the acquired activities from • Belfast mainly driven by an expansion of logis- Volumes and margins were in line with STEF and extracting the planned • Boulogne Sur Mer tics solutions for producers of fresh fruit expectations. synergies. In Northern Ireland, focus • Dublin and increasing distribution activities will be on improving the full load Customer segments • Temperature controlled and ambient cargo for retailers/ for retailers in England. Key customers’ In January 2014, DFDS acquired activity’s profitability. The service manufacturers seafood volumes distributed out of STEF’s logistics activities in Scotland excellence of the logistics solutions • Aquaculture producers • Contract management Scotland were lower than expected in and STEF acquired the continental in Scotland and England will be the first half of the year, but recovered distribution and handling activities further developed and profitability Primary competitors • McBurney Transport • Montgomery Transport during the latter months of 2013. of DFDS Logistics located in Bou- is expected to be stable in 2014. • STEF-TFE Tradimar logne. The transaction is expected • MacAndrews The full load activity between Ireland to result in substantial operational and UK continues to operate in fiercely synergies through the integration

Logistics Division DFDS Annual report 2013 27 Risk factors

Risk management is an integral part of the management of DFDS. Risks and opportunities are reviewed regularly and reported to the Board of Directors to enable appropriate responses and actions.

General and specific fleet on contracts of less than a year forms of transport such as road, rail and Risks associated with business deve­ Operational, security and operational risks with options for extensions, which air – the latter of which mainly impacts lopment ventures are managed by environmental risks facilitates opportunities for redelivery the passenger sector. In addition, markets thorough planning and decision- The main operational risks are asso- Macro-economic and market risks of ships at a few months’ notice. All are impacted by changes in local and making processes governed by inter- ciated with ships and port terminals. Risks of major fluctuations in earn- passenger ships in the fleet are owned regional competition, such as the opening nal policies and guidelines for invest- Technical problems and accidents ings caused by changes in market and by DFDS, which limits the options for of competing routes and capacity increas- ment decisions, including a required may lead to unplanned periods in economic conditions are highest for the adapting passenger capacity in the es on existing routes. rate of return. dock, interruption of schedules, and Group’s shipping activities and lowest short term. DFDS’ container activities loss of revenue. Replacement tonnage for the transport and logistics activities. deploy chartered ships through vessel On a few routes, a significant proportion The shipping charter market can usually be deployed at short The difference in risk profile is due to a sharing agreements with other shipping of freight volumes are derived from a DFDS mainly charters freight ships for notice through chartering. In order high proportion of fixed costs in ship- companies, which provides flexibility. few industrial customers. The risk inher- varying periods. Such charters are sub- to minimise operational risks, DFDS ping as opposed to a low share of fixed DFDS’ logistics activities to a large ex- ent in such relationships is mitigated by ject to price risks (charter rates) and has a systematic and comprehensive costs in transport and logistics. tent lease equipment and subcontract entering into contracts with a duration risks concerning availability of ships maintenance programme in place for haulage. This results in a high propor- of several years. that fit operational requirements. all ships, including periods in dock at The market for shipping of freight and tion of variable costs and, therefore, Similar risks, including counterparty regular intervals. In addition, extreme passengers is impacted by changes less cyclical risk. Risks associated with business risks, are relevant when chartering out weather conditions can cause delays in customer demand, which in turn is development and investment excess tonnage. In addition, there is a and cancellations, and strikes in ports governed by the general state of the DFDS’ geographic diversification across DFDS’ growth strategy embodies price risk related to acquiring or order- can also disrupt services. economy. Decreasing demand can lead Northern Europe, including activities business development and investment ing ships at cycle peaks. In connection to overcapacity, which can only be focussed on Russia and the surround- risks related to organic growth driven with the ordering of ships, there is a DFDS uses freight and passenger remedied by deployment of a ship(s) ing countries, reduces dependence on by acquisition of tonnage and growth default risk related to the shipyard, ships, port terminals, warehouses and with less capacity or by removal of a trends in the different regions. In addi- driven by acquisition of companies which can lead to additional costs, cargo-carrying equipment, all of which ship from a route or, ultimately, by route tion, a large number of routes and other and activities. The most important including delayed delivery. are subject to the usual safety risks closure. Overcapacity tends to increase activities balances commercial risks, risk associated with organic growth is associated with equipment of this downward pressure on prices and, including opportunities for reallocation related to expansion of capacity on a Due to the ongoing process of replacing type. These risks are controlled and hence, a risk of lower profitability. of ships between routes. route by deployment of a larger ship, and renewing the DFDS fleet, the sale of minimised partly through compliance or ships. The acquisition of companies tonnage or the cancellation of contracts with safety requirements and routines, Partly in order to counteract cyclical The freight- and passenger-shipping mar- and activities involves significant risks, may result in gains, losses and costs as well as preventative work, and part- demand risk, part of the freight fleet kets are also impacted by industry-specif- which are proportionate to the size of that are not included in annual profit ly through insurance against risk. See consists of chartered vessels. DFDS ic market conditions, including changes the investment and the complexity of a forecasts. pages 38-42 for reporting on health aims to charter a certain share of the in market conditions faced by competing subsequent integration process. and safety.

Risk factors DFDS Annual report 2013 28 Environmental and safety measures Risks Policies Hedging 2013 are based on DFDS’ environmental and safety policies, as well as rules and Bunker • Increase in oil price • Hedging of fluctuations in oil prices of 55–90% of anticipated • A change in oil prices of 1% compared to the price level at regulations and customer require- • Expected bunker consumption in 2014: consumption for the next four quarters the end of December 2013 would have an estimated impact 490,000 tons • The oil price risk is hedged by bunker surcharges to freight on financial performance of approximately DKK 7.3m ments. Changes in these factors can • Total bunker costs in 2013: DKK 1,869m customers and passengers and financial instruments • Total hedging of oil consumption: 55%: increase costs. The Group is insured • DFDS Bunker Committee monitors hedging levels – The commercial hedging level is around 45% against environmental risks as far as on a monthly basis – Financial hedging constitutes 10% possible, and participates in prepara- Interest • Increase in interest rate levels • Duration 9–36 months • Duration at the end of 2013: 13 months tory legislative procedures through rates • When calculating the fixed-interest proportion, • Fixed-interest proportion 40–70% • Fixed-interest proportion: 60% (proportion of fixed-interest loans, industry organisations. long-term charter contracts are included as fixed- • Implicitly includes fixed-interest for long-term charter contracts including interest-rate swaps and charter contracts, compared to interest loans • The target for risk is calculated as a net position net-interest-bearing debt) (net of cash and deposits) • An increase in interest rates of 1% compared to the level at the The CR report on pages 33-52 gives end of December 2013 would have an estimated negative impact details of these safety and environmen- on financial performance of approximately DKK 13m tal risks, as well as DFDS’ control and Currency • Translation risks are related to changes in exchange • Positions are hedged by matching the currencies for • Primary net currency balance positions at the end of 2013 were: prevention measures. rates that affect the income statement due to assets and liabilities – SEK: DKK 298m changes in the value of monetary assets and • Net positions in excess of SEK 200m, NOK 100m, – gbP: DKK -7m Political and legal risks liabilities in foreign currencies USD 25m and GBP 20m are hedged using price adjustment – noK: DKK 20m agreements – uSD: DKK 2m DFDS’ activities are impacted by changes • SEK exposure has subsequently reduced to below SEK 200m in rules and regulations governing the shipping and transport sector, as well • Transaction risks relate to changes in exchange rates, • At Group level, subsidiaries’ exposures are • Approximately 85% of DFDS’ revenue is invoiced in foreign which have an impact on earnings when revenues aggregated to facilitate mutual hedging currency as changes in the overall conditions and expenses are not incurred in the same currency • Risk is also reduced by adjusting prices and cost • Primary net currency cash flow positions in 2014 were: concerning Europe’s infrastructure. In ad- structures in local currencies – SEK (income): DKK 27m dition to political bodies, DFDS is subject • Financial hedging is applied as required – gbP (cost): DKK -10m to International Maritime Organization – noK (income): DKK 127m – uSD (cost): DKK -38m (IMO) conventions. The IMO is the UN • Transaction risks have not been hedged, apart from bunker costs body responsible for maritime issues, in USD primarily safety and environment. Liquidity • Liquidity risks relating to payments • Sufficient liquidity is guaranteed by maintaining a minimum • Liquidity risks are not quantifiable level of cash reserves and drawing rights of DKK 400m • The total liquidity contingency amounted to DKK 1,484m at Changes in the above rules and regula- the end of 2013 consisting of cash funds and liquid net holdings tions can have negative consequences, of DKK 1,004m and drawing rights of DKK 480m including higher costs and changes in • Counterparty risks with financial institutions • The limits for placing liquidity in banks are determined by • Counterparty risk is hedged by complying with fixed limits the flow of passengers and freight, e.g. the credit ratings of the banks concerned between sea and land. Currently, the Solvency • Risks associated with high • Capital structure target is a net interest-bearing debt (NIBD)/ • If the NIBD/EBITDA ratio were to exceed 3.0x, distribution of most important change with a poten- financial leverage EBITDA before special items ratio of minimum 2.0x and dividends would be reduced and leverage reduced to within tially significant impact is the introduc- maximum 3.0x, which is considered an appropriate leverage policy range range given current performance and financial projections

Risk factors DFDS Annual report 2013 29 tion of a new set of rules in 2015 that Executive Board regularly receives maintained through a solid capital hedging level of 40–70%. When cal- reduces the sulphur content in bunkers reports on financial positions and structure. A target capital structure has culating interest rate risks, long-term from 1.0% to 0.1% in the Baltic Sea, the discusses financial risks. The Board of been adopted of a net interest-bearing charter contracts are included under North Sea and the Channel. Bunker with Directors also receives reporting on debt/EBITDA before special items ratio fixed-interest loans. It is estimated a sulphur content of 0.1% is presently the management of financial risks. between a minimum of 2.0x and a that an increase in interest rates of around 40-50% more expensive than maximum of 3.0x. DFDS owns several 1%, compared to the level at the end bunker with a 1.0% sulphur content. Following the first issue of corporate unpledged ships and, given the oppor- of December 2013, would have a neg- bonds in 2012, DFDS continued to diver- tunity of issuing additional corporate ative impact on financial performance There are considerable risks related to sify the loan portfolio through an issue bonds, refinancing risks are considered of approximately DKK 13m. the transition to the use of 0.1% MGO of five-year unsecured NOK-denominat- to be limited. (Marine Gas Oil) and these are detailed ed bonds in 2013 (2012: NOK 500m • C urrency: Transaction risks have not in the CR report on pages 33-52. with four-year maturity). The bonds The table on page 29 accounts in great- been hedged. They primarily concern are listed on the Oslo Stock Exchange er detail for DFDS’ financial risk expo- SEK, NOK, GBP and USD. Due to some Other significant political risks concern and were sold at a value of NOK 700m sure. Please also refer to notes 26 and instability in the Eurozone, EUR risks changes to taxation arrangements for to a number of institutional investors 27 for more detail regarding financial are monitored continuously, but not staff at sea, abolition of duty-free sales in Norway, Sweden and Denmark. The risks. For the individual areas of risk, hedged. USD risk is hedged in connec- in Norway if the country were to join issue was an additional supplement the following can be highlighted: tion with hedging of bunker. the EU, cancellation of VAT exemption to, and partial replacement of, existing on tickets and on-board sales, and bank debt and ship loans. To support the • Bunker: The freight industry is very • L iquidity: DFDS systematically and changes of tonnage tax schemes. ongoing diversification of the loan port- dependent on the oil price and it is regularly conducts internal credit folio, DFDS expects to issue corporate therefore characterized by a high assessments of all financial counter- DFDS actively monitors these issues, bonds on a regular basis, and the market level of oil price hedging. The hedging parts. The internal credit assessment including by participating in industry for corporate bonds is therefore closely level is affected by capacity utili- is based on ratings from international organisations. monitored. In connection with DFDS’ sation, such that higher utilisation credit rating agencies. The Board of focus on streamlining the cash manage- implies a higher level of hedging. It is Directors approve general limits on Financial risks ment set-up, new drawing rights were estimated that a price change of 1% deposits, etc. with DFDS’ counterparts DFDS is exposed to a range of finan- negotiated to maintain sufficient liquidi- compared to the price level at the end on this basis. At present, the risks are cial risks. The primary risks relate ty and maintain cash pool facilities. of 2013 (approximately USD 608 per estimated to be limited. to changes in oil prices, exchange ton) would entail a negative impact rates and interest rates. DFDS is also DFDS’ shipping activities are asset- on financial performance of approxi- exposed to liquidity risks in terms based and involve a relatively high mately DKK 7.3m. of payments and counterparty risk. level of capital intensity. At the same Managing financial risk is based on time, the demand for transport services • Interest: At the end of December Group policies and guidelines for the is to some extent cyclical. This entails 2013, the proportion of net fixed-in- respective risk areas. Risk is managed a risk of significant fluctuations in terest loans was 60%, which is centrally, as per Group policy. The earnings, and financial flexibility is consistent with the objective of a

Risk factors DFDS Annual report 2013 30 The DFDS share and shareholders

The total retuRn in 2013 was 74%

Share capital Share price performance and maximum 3.0. Excess capital will SHARE RELATED KEY FIGURES DFDS has one class of shares. At the DFDS’ share price rose by 71% to DKK thus be distributed to shareholders if 2013 2012 2011 2010 2009 end of 2013, the share capital* was 437 in 2013, equal to an increase in the multiple is below 2.0, and distri- DKK 1,330m distributed on 13,300,000 DFDS’ market value of DKK 1,853m to bution will be reduced if the multiple Earnings per share, DKK 23 10 50 47 11 shares, each with a nominal value of a total market value of DKK 5,559m, exceeds 3.0. Dividend per share, DKK 14 14 14 8 0 Dividend payout ratio, % 60 140 28 17 0 DKK 100. excluding treasury shares. By compari- Dividend yield, % 3.2 5.5 3.9 1.9 0.0 son, the Danish stock market’s all share For 2013, the Board of Directors propos- P/E ratio, times 19 26 7 9 33 On 16 December 2013, 10.5% of the index rose by 27% in 2013, while DFDS’ es to the 2014 annual general meeting Equity per share, DKK 492 475 476 433 475 share capital was cancelled, equivalent peer group index rose by 10%. (AGM) payment of a dividend of DKK 14 Price/book value, times 0.89 0.52 0.73 0.95 0.72 to 1,556,081 shares, by an extraordi- per share. Share price, DKK: nary general meeting. The cancelled DFDS’ peer group index includes DSV (DK), Price at year-end 437.0 255.5 355.0 418.0 358.0 shares were treasury shares acquired as Finnlines (FIN), Irish Continental Group Buy-back of shares Price high 455.5 386.0 480.0 423.0 416.0 Price low 262.0 258.0 353.0 309.0 250.0 part of DFDS’ purchase of 12.0% of the (IE), Tallink (ES) and Line (FIN). At the AGM in March 2012, the Board Market value, DKK m 5,559 3,706 5,149 6,119 2,743 share capital from A.P. Møller – Mærsk of Directors received a mandate to No. of shares* at year-end, m 13.3 14.9 14.9 14.9 8.0 in September 2013. The total return on the DFDS share was purchase treasury shares totalling a 74% in 2013, including dividends. maximum of 20% of the share capital. Analysts covering the DFDS share Ownership structure, % of share Stock exchange trade end of 2013 capital The DFDS share is listed on NASDAQ OMX Distribution policy and dividend In 2013, DFDS distributed DKK 628m CARNEGIE BANK Stig Frederiksen Lauritzen Foundation 1 42.8 Copenhagen. On this exchange, 3.5m DFDS DFDS’ distribution policy is to pay an to shareholders by buying 1,782,730 Phone: +45 3288 0258 Institutional and financial investors 36.4 shares were traded in 2013, excluding annual dividend of DKK 14 per share. treasury shares, equivalent to 12.0% E-mail: [email protected] Other registered shareholders 8.9 A.P. Møller – Mærsk’s sale of 4.7m DFDS In addition, excess capital, as defined of the share capital. For 2014, DFDS Own shares 4.4 MARKETS Non-registered shareholders 7.5 shares or 31.3% of the share capital, in by the target capital structure, will be has announced a share buy-back Erik Bergöö September 2013. The annual turnover was distributed to shareholders as an extra programme of DKK 200m. Phone: +45 4512 8036 Total 100.0 E-mail: [email protected] DKK 1.3bn, also excluding A.P. Møller – dividend and/or a buy-back of shares. 1 based in Copenhagen Mærsk’s sale of DFDS shares. Distribution of dividend and excess Shareholders HANDELSBANKEN CAPITAL MARKETS capital can be suspended in connection At the end of 2013, DFDS had 15,869 Dan Togo Jensen Phone: +45 4679 1246 SHAREholder Distribution A.P. Møller – Mærsk’s sale of its holding with large investments, including acqui- registered shareholders that owned E-mail: [email protected] No. of No. of share % of share in DFDS increased trading in the DFDS sitions, and other strategic events. 92.6% of the share capital. Most of the shares holders capital share. For the full year 2013, the aver- share capital was owned by Danish NORDEA MARKETS Finn Bjarke Petersen 1-10 4,966 0.3 % age number of trades per day was 163 The capital structure is defined by the shareholders, 79.4%, while 13.2% was Phone: +45 3333 5723 11-100 8,011 2.3 % with an average daily turnover of DKK ratio of net interest-bearing debt (NIBD) owned by international shareholders. At E-mail: [email protected] 101-1,000 2,589 4.9 % 5.3m. In Q4 2013, the average number to operating profit before depreciation the end of 2013, the Lauritzen Founda- SEB ENSKILDA 1,001-10,000 226 5.1 % of trades per day increased to 274 with (EBITDA). The target capital structure is tion was the largest shareholder with a Mikkel Nielsen 10,001- 77 80.0 % an average daily turnover of DKK 9.1m. a NIBD/EBITDA multiple of minimum 2.0 holding of 42.8%. Phone: +45 3328 3307 E-mail: [email protected] Total 1 15,869 92.6 %

1 Total of registered shareholders

* The share capital of DKK 1.33bn was registered by the Danish Business Authority on 16 January 2014 following a statutory notice period of one month from the extraordinary general meeting’s cancellation of 10.5% of the share capital on 16 December 2013. In this shareholder section, all figures are based on a share capital of DKK 1.33bn. DFDS Share & Shareholders DFDS Annual report 2013 31 Investor relations INDEXED PRICE DEVELOPMENT FOR DFDS AND INDEX, 2013 Company announcements 2013/2014 Søren Brøndholt Nielsen, Director, (INDEX) Updated Heading IR & Corporate Planning Phone: +45 3342 3359 180 25-02-2014 Postponement of UK Competition Commission’s timeline E-mail: soeren.broendholt@.com 170 18-02-2014 Award of share options 160 31-01-2014 DFDS Logistics expansion through acquisition in Scotland 09-01-2014 Timeline for UK Competition Commission remittal announced Shareholder Secretariat 150 07-01-2014 Tribunal’s judgment not appealed Helle Hvidtfeldt Jensen, Secretary 140 17-12-2013 Financial calender 2014 Phone: +45 3342 3271 130 16-12-2013 Summary of extraordinary general meeting E-mail: [email protected] 120 04-12-2013 Tribunal requires further review of UK Competition Commission's ruling 110 02-12-2013 Ruling concerning the channel to be announced on 4 December Financial calendar 100 20-11-2013 Notice of extraordinary general meeting Annual General Meeting 90 20-11-2013 Progress continued in Q3 26 March 2014 at 14:00 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC 2013 2013 20-11-2013 DFDS to distribute excess capital to shareholders 09-09-2013 Reporting of transactions in DFDS’ shares and associated securities by senior Radisson SAS Falconer Hotel DFDS INDEX PEER GROUP employees and their related parties and Conference Centre ALL SHARE INDEX OMX COPENHAGEN (OMXCPI) 06-09-2013 Purchase of own shares from A.P. Møller – completed Falkoner Allé 9 05-09-2013 DFDS commits to buy own shares from A.P. Møller – Maersk DK-2000 Frederiksberg, Denmark 22-08-2013 DFDS made progress in Q2 11-07-2013 Baltic & Russian logistics network expanded through acquisition DFDS SHARE: PRICE DEVELOPMENT AND TRADING, 2013 Reporting 2014 (SHARE PRICE, DKK) (NO. OF SHARES, 1,000) 24-06-2013 DFDS no longer part of Scandlines sales process 06-06-2013 Ruling by UK Competition Commission Q1, 23 May 23-05-2013 Upgrade of Copenhagen-Oslo route in 2014 H1, 21 August 500 3.0 22-05-2013 Result as expected in stagnating market Q3, 21 November 2.5 450 17-05-2013 Logistics Division: new comparison figures 2012 03-05-2013 Information concerning a possible transaction 2.0 400 22-03-2013 DFDS a/s – summary of annual general meeting, 22 March 2013 1.5 15-03-2013 DFDS a/s – election of employee representatives to the Board of Directors 350 12-03-2013 New corporate bond issue of NOK 700m completed 1.0 11-03-2013 DFDS contemplates bond issue 300 07-03-2013 Renewal & expansion of Swedish customer agreement 0.5 28-02-2013 Notice to convene the annual general meeting of DFDS a/s 250 0 28-02-2013 DFDS maintains strong position despite headwind JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC 15-02-2013 Two newbuilding contracts finalized 2013 2013 05-02-2013 Award of share options DFDS TRADING VOLUME, NO. OF SHARES 03-01-2013 Negotiations on newbuilding contracts ongoing

DFDS Share & Shareholders DFDS Annual report 2013 32 Financial review

Cash flow from operations of DKK 1,520m boosted by reduction of working capital

Introduction income from bunker surcharges reduced mainly due to the addition of activities Revenue DFDS’ activities are organised in two revenue in North Sea and Baltic Sea from LD Lines. Passenger’s profit was DKK m 2013 2012 ∆ % ∆ divisions: the Shipping Division, oper- offsetting higher revenue from volume improved by a lower bunker cost and ating within five business areas, and growth in North Sea, while revenue in higher passenger volumes between UK Shipping Division 8,530 8,015 6.4 515 the Logistics Division, operating within Baltic Sea was further reduced by route and the Continent. Baltic Sea’s result Logistics Division 4,183 4,259 -1.8 -76 Eliminations etc. -616 -574 n.a. -42 three business areas. Non-allocated changes. was reduced in 2013, primarily due to items consists of corporate costs not a slowdown of activity in the Russian DFDS Group 12,097 11,700 3.4 397 allocated to either division. The Logistics Division’s revenue economy during the year. decreased by 1.8% to DKK 4,183m in In order to make data comparable, large 2013, driven by the full-year impact of The Logistics Division’s EBITDA non-recurring items are recognised as the restructuring of the sideport route increased by 5.7% to DKK 149m, Operating profit before depreciations (EBITDA) and special items special items in the income statement. network in the Nordic business area. mainly as a result of higher earn- DKK m 2013 2012 ∆ % ∆ Revenue of the Continent and UK & ings in the Continent business area Shipping division 1,148 992 15.7 156 Revenue Ireland business areas was on a level which offset lower profits in Nordic. Logistics division 149 141 5.7 8 Revenue increased by 3.4% to DKK with 2012 as overall modest volume Continent’s performance was driven Non-allocated items -84 -44 n.a. -40 12,097m in 2013, driven by higher growth was offset by lower revenue per by high volume growth for the full revenue in the Shipping Division, while unit and a lower pound sterling. load activities between Holland/ DFDS Group 1,213 1,089 11.4 124 revenue decreased in the Logistics Northern Germany/Italy and UK and EBITDA-margin, % 10.0 9.3 n.a. 0.7 Division. EBITDA before special items improved margins as cost control Operating profit before depreciation measures became more efficient. The Shipping Division’s revenue in- (EBITDA) and special items increased by The margin of the container activity creased by 6.4% to DKK 8,530m, driven 11.4% to DKK 1,213m, mainly driven by between Holland and Ireland similarly Special items by an increase of DKK 471m in Channel higher earnings in the Shipping Division. improved following the move to oper- DKK m 2013 and DKK 200m in France & Mediterrane- ate as a NVOCC (non-vessel operating an. Channel’s revenue increase compris- The Shipping Division’s EBITDA in- container carrier) at the end of 2012. Customer Focus Initiative -2 Reversal of provision for earn-out agreement related to the purchase of Kapellskär-Paldiski 16 es the full-year impact of the acquisition creased by 15.7% to DKK 1,148m as Nordic’s performance was adversely Project ONE Finance costs -24 of LD Lines in September 2012, the full- earnings improved in the North Sea, affected by the full-year impact of the Reimbursement of credit insurance premium related to ARK newbuildings 22 year impact of the ramp up of capacity Channel and Passenger business areas. restructuring of the sideport route Write down on property for sale in Scheveningen -12 on Dover-Calais, after the route opened North Sea’s profit improvement was network and the loss of some key Impairment of goodwill related to LD Lines activities -18 in February 2012, and market share mainly due to volume growth as the Norwegian customers in 2012. Rail Total -17 growth in 2013. The revenue increase of UK economy came out of recession volumes between Scandinavia and France & Mediterranean solely reflects during 2013 and the return of volume Italy also declined in 2013 as Italian the full-year impact of the acquisition from a major Swedish freight forwarder. exports slowed down. UK & Ireland’s of LD Lines in September 2012. Lower Channel’s loss was reduced in 2013, result was on a par with 2012.

Financial review DFDS Annual report 2013 53 Non-allocated items amounted to a Operating profit (EBIT) after special DFDS Group 2013 2012 cost of DKK 84m compared to a cost items was DKK 486m, an increase of of DKK 44m in 2012. The higher cost 64.8% as special items in 2012 was a DKK m Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY level is attributable to an income in net cost of DKK -124m. Revenue 2,713 3,051 3,339 2,994 12,097 2,674 2,971 3,169 2,886 11,700 2012 from a reversal of a provision for Operating profit before depreciation jubilee liabilities and higher costs in Financing (EBITDA) and special items 100 307 529 277 1,213 109 293 503 184 1,089 2013 for bonus schemes, several large The net cost of financing was reduced by Share of profit of associates -2 -1 -5 2 -6 -2 0 3 2 3 Profit/loss on disposal acquisition projects and other projects 8.5% to DKK 136m, primarily due to a of non-current assets 2 2 2 0 6 2 3 1 0 6 undertaken during the year. reduction in the net interest cost of DKK Depreciation and impairment -173 -185 -175 -177 -710 -163 -171 -167 -178 -679 9m as the average net interest-bearing Operating profit (EBIT) before Associates and profit on sale of assets debt decreased by 12.9%. A financial special items -73 123 351 102 503 -54 125 340 8 418 Operating profit margin (EBIT), % -2.7 4.0 10.5 3.4 4.2 -2.0 4.2 10.7 0.3 3.6 The share of loss in associates was receivable related to the sale of a pas- Special items, net -1 -1 -16 1 -17 0 -67 -30 -27 -124 DKK -6m as operations of the Älvs- senger ship, was written down by DKK Operating profit (EBIT) -74 122 335 103 486 -54 58 310 -19 295 borg port terminal in Gothenburg were 7m but more than offset by a positive Profit before tax -118 93 307 68 350 -98 22 272 -50 146 lossmaking in 2013. Profit on the sale variance on other financial items. Invested capital, average 8,687 8,549 8,619 8,587 8,633 9,452 9,356 9,118 8,898 9,207 Return on invested capital (ROIC) p.a., % -3.4 5.6 15.5 5.0 5.7 -2.3 3.0 13.7 -0.8 3.4 of non-current assets amounted to DKK 6m, mainly from the sale of cargo-carry- ing equipment.

Depreciation, impairment and EBIT REVENUE AND INVESTED CAPITAL DFDS GROUP – EBITDA BEFORE SPECIAL ITEMS FREE CASH FLOW CAPITAL STRUCTURE (DKKm) (TIMES) PER QUARTER (DKK M) (%-SHARE OF CAPITAL) Total depreciation and write-downs (DKK M) increased by 4.6% to DKK 710m, driven by DKK 37m higher ship depreciations 14 1.4 600 2,000 100 in the Shipping Division. 12 1.2 500 1,500 75 Operating profit (EBIT) before special 10 1.0 1,000 items was DKK 503m, an increase of 400 20.3%. 8 0.8 300 500 50 6 0.6 Special items 200 0 Special items in 2013 were a net cost 4 0.4 25 of DKK -17m. The individual items are 100 -500 shown on page 53. See also note 7. 2 0.2

0 0 0 -1,000 0 3 2 2 3 1 Q1 Q2 Q3 Q4 2013 20 1 20 1 20 12 20 1 2010 2009 20 1 20 1 2009 2011 2010 200 9 2010 20 1

REVENUE 2011 2012 2013 NET INTEREST-BEARING DEBT AVERAGE INVESTED CAPITAL EQUITY AND DEFERRED TURNOVER RATE, TAX INVESTED CAPITAL

Financial review DFDS Annual report 2013 54 Tax and the annual result Acquisitions amounted to investments 3,233m at the end of 2012. The loan 137m, buy-back of shares of DKK 628m The decrease was mainly due to the Profit before tax was DKK 350m. The of DKK 99m, primarily related to the portfolio was further diversified during and a dividend payment of DKK 203m. purchase of DKK 628m of own shares shipping activities of the DFDS Group acquisition of Karlshamn Express Group. 2013 as a second corporate bond of The cash flow from financing activities in September 2013. The transfer of are covered by tonnage tax schemes See note 31 for further details. NOK 700m was issued increasing the was negative by DKK 462m in 2013. the profit for the year of DKK 327m in Denmark, Norway, the , share of bond loans in the portfolio to was balanced by currency and other Lithuania, England and France. Tax on Assets, invested capital and return 31.2% from 15.7%. The other major Impairment test adjustments and a dividend payment of the annual profit amounted to DKK Total assets were on a level with 2012 component of the portfolio is mortgaged Based on the impairment tests com- DKK 203m. Including minority interests 23m, of which DKK 18m consisted at the end of the year as investments in ship loans. pleted in 2013 for the cash-generating of DKK 55m, equity amounted to DKK of tax for the year, while DKK 4m newbuildings, scrubbers and a company units, no write-downs or reversals of 6,318m at the end of 2013. consisted of deferred tax. Adjustment acquisition were balanced by deprecia- Compared to the year-end of 2012, prior years’ write-downs are deemed for previous years’ taxes amounted to tion of assets and lower other non-cur- net interest-bearing debt increased by necessary. The equity ratio at the end of the year an income of DKK 13m and changes rent assets and cash funds. 13.5% to DKK 2,189m while the aver- was 51.3%, a decrease of 5.0 ppt com- to the rate of corporation tax gener- age net interest-bearing debt decreased VILNIUS SEAWAYS and the former Nor- pared to 2012. ated a cost of DKK 5m. Deferred tax Net working capital, defined as in- by 12.9% in 2013. folkline domicile in Scheveningen are assets were written down by DKK 2m ventory and trade receivables minus classified as held for sale and therefore Parent company key figures in 2013. trade payables, was reduced by DKK At the end of 2013, the ratio of net measured individually at the lower of Parent company, DFDS A/S, revenues 362m from DKK 606m in 2012 to interest-bearing debt to operating profit the carrying amount and the fair value were DKK 6,335m in 2013 and the The net annual result was DKK 327m DKK 244m as a result of project Light (EBITDA) before special items was 1.8. less selling costs. Based on independ- profit for the year was DKK 313m. Total compared to DKK 143m in 2012. Capital started in 2012. The project’s ent ship broker valuations, VILNIUS assets at the end of the year amounted goal of a reduction of DKK 300m was Cash flow SEAWAYS has been written down by to DKK 11,268m and the equity was Investments thus exceeded. The primary driver of Gross cash flow from operations in- DKK 3.0m. Based on a real estate broker DKK 4,648m. Net investments in 2013 amounted to the reduction was an increase of trade creased by 64.1% to DKK 1,520m due valuation, the property in Scheveningen DKK 943m. payables. to a higher operating profit (EBITDA) has been written down by DKK 11.8m. and a release of cash of DKK 381m from The write-down of the ship is recognised Gross investments in tangible assets At the end of 2013, invested capital was changes in total working capital. The in the income statement as ‘Impairment amounted to DKK 822m, of which DKK 8,555m, a reduction of 3.8% com- latter includes a contribution of DKK losses of ships and other non-current DKK 731m was related to ships. pared to the end of 2012. Calculated as 362m generated by the Light Capital assets’, whereas the write-down of Main investments were DKK 398m in an average, invested capital was DKK project. Cash flow from investment the property is recognised as ‘Special the construction of ARK ships, DKK 8,633m in 2013, a decrease of 6.2% activities amounted to DKK -943m. The items’. 120m in scrubber installations and compared to 2012. The average return free cash flow was DKK 559m. DKK 201m in docking and upgrade of on invested capital was 5.7% in 2013 The impairment tests conducted are ships. Other gross investments in tan- and 5.8% adjusted for special items. The positive free cash flow and pro- described in greater detail in note 37. gible assets of DKK 91m were mainly ceeds of DKK 927m from ship mortgage cargo-carrying equipment. Invest- Financing and capital structure loans and corporate bonds were applied Equity ments in intangible assets amounted At year-end 2013, interest-bearing debt to fund repayment of debt of DKK DFDS’ equity decreased by DKK 619m to DKK 38m, mainly IT systems. was DKK 3,398m compared to DKK 693m, a net cost of financing of DKK to DKK 6,263m at the end of 2013.

Financial review DFDS Annual report 2013 55 FLEET LIST (per 31.12.2013)

freight ships (ro-ro) Freight ships (ro-ro) for delivery in 2014

Year built Gross tons Lanemeter TEU 4 Deployment Year built Gross tons Lanemeter TEU 4

Ficaria Seaways 2006/09 37,939 4,650 Gothenburg-Brevik-Immingham Stralsund NB 500 (Ark Germania) 2014 33,300 3,000 342 Freesia Seaways 2005/09 37,722 4,650 Gothenburg-Brevik-Gent Stralsund NB 501 (Ark Dania) 2014 33,300 3,000 342 Begonia Seaways 2004/09 37,722 4,650 Gothenburg-Brevik-Immingham Magnolia Seaways 2003 32,523 3,831 Gothenburg-Brevik-Gent Petunia Seaways 2004 32,523 3,831 Gothenburg-Brevik-Immingham Primula Seaways 2004 32,289 3,831 Gothenburg-Brevik-Gent Ro-pax ships 3 Selandia Seaways 1998 24,803 2,772 Vlaardingen-Immingham Suecia Seaways 1999/11 24,196 2,772 180 Vlaardingen-Felixstowe Year built Gross tons Lanemeter Passengers Deployment 2000/11 24,196 2,772 180 Esbjerg-Immingham Ark Futura 1996/00 18,725 2,308 246 On charter Victoria Seaways 2009 25,518 2,496 515 Kiel-Klaipeda Flandria Seaways 2000 13,073 1,692 Vlaardingen-Felixstowe Regina Seaways 1 2010/11 25,518 2,496 515 Kiel-Klaipeda Anglia Seaways 2000 13,073 1,692 On charter Athena Seaways 1 2007 25,993 2,593 550 Karlshamn-Klaipeda Botnia Seaways 2000 11,530 1,899 Kiel-Karlshamn-St. Petersburg Optima Seaways 1999 25,206 2,300 328 Karlshamn-Klaipeda Finlandia Seaways 2000 11,530 1,899 Kiel-Karlshamn-St. Petersburg Sirena Seaways 2002/03 22,382 2,056 610 Esbjerg-Harwich 2 2008 25,609 3,322 Fredericia-Copenhagen-Klaipeda Liverpool Seaways 1997 21,856 2,200 335 On charter Hafnia Seaways 2 2008 25,609 3,322 Vlaardingen-Felixstowe Patria Seaways 1991 18,332 1,710 250 Paldiski-Kapellskär Fionia Seaways 2 2009 25,609 3,322 Vlaardingen-Immingham Kaunas Seaways 1989/94 25,606 1,539 250 Paldiski-Kapellskär Jutlandia Seaways 2 2010 25,609 3,322 Esbjerg-Immingham Vilnius Seaways 1987/93 22,341 1,700 132 On charter Clementine 2 1997 23,986 2,307 Cuxhaven-Immingham Dunkerque Seaways 5 2005 35,923 2,000 944 Dover-Dunkirk Longstone 2 2003 23,235 2,606 Zeebrügge-Rosyth Delft Seaways 5 2006 35,923 2,000 944 Dover-Dunkirk Beachy Head 2 2003 23,235 2,606 Marseilles-Tunis Dover Seaways 5 2006 35,923 2,000 944 Dover-Dunkirk Mont Ventoux 6 1996 18,469 2,025 Marseilles-Tunis Calais Seaways 1991/92/99 28,833 1,850 1,222 Dover-Calais Transpulp 2 2006 23,128 2,774 Gothenburg-Tilbury Dieppe Seaways 5 2002 30,551 1,891 1,200 Dover-Calais Clipper Point 2 2008 14,759 1,830 Cuxhaven-Immingham Norman Voyager 5 2008 26,904 2,250 762 Portsmouth-Le Havre Côte d'Albâtre 1 2006 18,425 1,270 600 Newhaven-Dieppe Seven Sisters 1 2006 18,425 1,270 600 Newhaven-Dieppe

1 chartered tonnage (bareboat charter) 2 chartered tonnage (time charter) 3 Ro-pax: Combined ro-ro and passenger ship 4 TEU: 20 foot container unit 5 Short-sea ferries 6 VSA: Ship operated in a vessel sharing agreement with owner/charterer

Fleet list DFDS Annual report 2013 113 Passenger ships OWNERSHIP SHARES OF FLEET, END 2013 OWNED SHIPS, AVERAGE AGE END 2013 FLEET IN GROSS TONS, OWNED, (%) (YEARS) CHARTER & VSA SHIPS, END 2013 Year built Gross tons Lanemeter Passengers Deployment (GROSS TONS)

Pearl Seaways 1989/01/05 40,039 1,482 1,870 Copenhagen-Oslo 100 25 Crown Seaways 1994/05 35,498 1,370 1,790 Copenhagen-Oslo 90 King Seaways 1987/93/06 31,788 1,410 1,325 Amsterdam-Newcastle 80 Princess Seaways 1986/93/06 31,356 1,410 1,250 Amsterdam-Newcastle 20 70

60 15

50 Sideport ships 40 10 Year built Gross tons TEU 4 Deployment RO-RO (46 %) 30 RO-PAX (35 %) Lysvik Seaways 1998/04 7,409 160 Oslo Fjord-Continent/UK 20 5 Lysbris 1999/04 7,409 160 Oslo Fjord-Continent/UK PASSENGER (11 %) Lysblink Seaways 2000/03 7,409 160 On charter 10 SIDEPORT (2 %) 0 0 0 CONTAINER (6 %)

Container ships RO-RO SHIPS 4 RO-RO SHIPS RO-PAX SHIPS Year built Gross tons TEU Deployment RO-PAX SHIPS SIDEPORT SHIPS SIDEPORT CONTAINER SHIPS CONTAINER PASSENGER SHIPS PASSENGER Endeavor 2 2005 7,642 750 UK-Ireland-Spain SHIPS PASSENGER Encounter 6 2004 7,642 750 UK-Ireland-Spain Philipp 6 2008 8,971 917 UK-Ireland-Spain Spica J 6 2007 8,246 962 Oslo Fjord-Rotterdam Kristin Schepers 6 2008 7,852 812 Oslo Fjord-Rotterdam Hanse Vision 6 2005 7,713 809 Oslo Fjord-Rotterdam Hanse Spirit 6 2005 7,713 809 Oslo Fjord-Rotterdam Samskip Endeavour 6 2011 7,852 812 Rotterdam-Ireland/Northern Ireland Samskip Express 6 2006 7,852 803 Rotterdam-Ireland/Northern Ireland

1 chartered tonnage (bareboat charter) 2 chartered tonnage (time charter) 3 Ro-pax: Combined ro-ro and passenger ship 4 TEU: 20 foot container unit 5 Short-sea ferries 6 VSA: Ship operated in a vessel sharing agreement with owner/charterer

Fleet list DFDS Annual report 2013 114 COMMERCIAL DUTIES

Commercial duties of the Board of Directors and Executive Board as of 28 February 2014

Board of Directors Vagn Sørensen, Deputy Chairman • Chairman: Denmark Hong Kong Trade The Board is of the opinion that Ingar Lene Skole, member of the • Date of birth: 12 December 1959 Association Skaug possesses the following special Board of Directors Bent Østergaard, Chairman • Joined the Board: 20 April 2006 • Deputy chairman: The Danish Ship- competences: international manage- • Date of birth: 28 April 1959 • Date of birth: 5 October 1944 • Re-elected: 2007–2013 owners’ Association ment experience, board experience from • Joined the Board: 20 April 2006 • Joined the Board: 1 April 2009 • Period of office ends: 26 March 2014 • Board member: Egyptian Drilling international and listed companies, and • Re-elected: 2007–2013 • Re-elected: 2010–2013 • Member of the Nomination Commit- Company, International Association of expertise in shipping, logistics, aviation • Period of office ends: 26 March 2014 • Period of office ends: 26 March 2014 tee, the Audit Committee and the Drilling Contractors, IADC, (Executive and service companies. Ingar Skaug has • Chairman of the Audit Committee • Chairman of the Nomination Commit- Remuneration Committee Committee member), Danish Chinese been a Board member for more than 12 • Position: EVP & CFO, Coloplast A/S tee and the Remuneration Committee • Position: Director, GFKJUS 611 ApS Business Forum, EU Hong Kong Busi- years. According to the recommenda- • Board member: Coloplast Danmark • Position: President, Lauritzen Fonden • Chairman: E-Force A/S, FLSmidth A/S, ness Co-operation Committee tions on corporate governance, he there- A/S, Coloplast Ejendomme A/S, & LF Investment ApS FLSmidth & Co. A/S, Scandic Hotels • Shareholding: 142 fore cannot be considered independent. Tryg A/S • Chairman: J. Lauritzen A/S, Frederiks­ AB, Select Service Partner Ltd., • Shareholding: 470 havn Maritime Erhvervspark A/S, TDC A/S, Automic Software GmbH The Board is of the opinion that Claus Jill Lauritzen Melby, member NanoNord A/S, Cantion A/S • Board member: Air Canada Inc., Hemmingsen possesses the following of the Board of Directors The Board is of the opinion that Lene • Board member: Mama Mia Holding Braganza A/S, CP Dyvig & Co A/S, special competences: international • Date of birth: 6 December 1958 Skole possesses the following special A/S, Meabco Holding A/S, Meabco A/S, Lufthansa Cargo AG, Royal Caribbean management experience and expertise • Joined the Board: 18 April 2001 competences: international manage- Royal Arctic Line A/S, With Fonden, Cruises Ltd, Nordic Aviation Capital A/S in offshore activities and shipping. • Re-elected: 2002–2013 ment experience, including from a listed Durisol UK, Desmi A/S, Comenxa A/S • Shareholding: 1,333 • Period of office ends: 26 March 2014 company, and expertise in finance and • Shareholding: 2,833 Ingar Skaug, member of the • Member of the Audit Committee accounting. The Board is of the opinion that Vagn Board of Directors • Position: Team Leader Finance, The Board is of the opinion that Bent Sørensen possesses the following • Date of birth: 28 September 1946 BASF A/S Annette Bjerre Bjerregaard, Østergaard possesses the following special competences: international man- • Joined the Board: 16 April 1998 • Shareholding: 266 staff representative special competences: international man- agement experience, board experience • Re-elected: 1999–2013 • Date of birth: 16 August 1974 agement experience, board experience from international and listed companies, • Period of office ends: 26 March 2014 The Board of Directors is of the opinion • Joined the Board: 13 April 2011 from international and listed companies, and expertise in aviation and service • Chairman: Center for Creative Leader- that Jill Lauritzen Melby possesses • Re-elected: 2013 and expertise in shipping and finance. companies. ship, Ragni Invest AS, Environor AS, the following special competences: • Period of office ends: 26 March 2014 Performance Leadership AS, Vectura expertise in financial control. • Position: Shipping agent As a result of his executive functions Claus Hemmingsen, Deputy Chairman AS, Deputy chairman of board: • Shareholding: 10 for the company’s principal share- • Date of birth: 15 September 1962 J. Lauritzen A/S Due to family relations to the compa- holder, the Lauritzen Foundation, Bent • Joined the Board: 29 March 2012 • Board member: PGS, Berg-Hansen AS, ny’s principal shareholder, the Lauritzen Annette Bjerre Bjerregaard has no Østergaard cannot be considered inde- • Re-elected: 2013 Miros AS, Bery Maritime AS, AGM/ Foundation (Vesterhavet Holding managerial or executive positions pendent as per the recommendations • Period of office ends: 26 March 2014 ANB (Adjaristqali Georgia LLC/Ad- A/S), Jill Lauritzen Melby cannot be in other companies. on corporate governance. • Position: CEO of Maersk Drilling and jaristqali Netherlands BV) considered independent according to member of the Executive Board, A.P. • Shareholding: 0 the recommendations on corporate Møller - Mærsk A/S governance.

Commercial duties DFDS Annual report 2013 115 Jens Otto Knudsen, staff representative Executive Board • Date of birth: 8 August 1958 • Joined the Board: 13 April 2011 Niels Smedegaard, President & CEO • Re-elected: 2013 • Date of birth: 22 June 1962 • Period of office ends: 26 March 2014 • Appointed: 1 January 2007 • Position: Captain • Chairman: Interferry • Shareholding: 0 • Deputy chairman: ECSA (European Community Shipowners’ Association) Jens Knudsen has no managerial or • Board member: The Denmark-America executive positions in other companies. Foundation, the Danish Trade Council, the Danish Shipowners’ Association, Kent Vildbæk, staff representative Den Danske Banks Advisory Board, • Date of birth: 15 February 1964 Bikuben Fonden • Joined the Board: 13 April 2011 • Shareholding: 1,506 • Re-elected: 2013 • Period of office ends: 26 March 2014 Torben Carlsen, EVP & CFO • Position: Commercial Head • Date of birth: 5 March 1965 • Shareholding: 0 • Appointed: 1 June 2009 • Chairman: Crendo Fastighetsförvalt- Kent Vildbæk has no managerial or ning AB, SEM Invest A/S, SEM Stålin- executive positions in other companies. dustri A/S • Shareholding: 2,166 Lars Skjold-Hansen, staff representative • Date of birth: 23 August 1965 • Joined the Board: 22 March 2013 • Re-elected: n.a. • Period of office ends: 26 March 2014 • Position: Captain • Shareholding: 0

Lars Skjold-Hansen has no managerial or executive positions in other compa- nies.

Commercial duties DFDS Annual report 2013 116 Board of directors

Bent østergaard ANNETTE BJERRE BJERReGAARD

Vagn Sørensen Claus Hemmingsen Ingar Skaug Kent Vildbæk

Jill Lauritzen Melby Lene skole Lars skjold-hansen Jens otto knudsen Executive Management

Niels Smedegaard (1962) Eddie Green (1957) Henrik Holck (1961) Peder Gellert Pedersen (1958) Torben Carlsen (1965) • President & CEO • Executive Vice President, • Executive Vice President, • Executive Vice President, • Executive Vice President & CFO • Msc. Finance Logistics Division People & Ships Shipping Division • Msc. Finance • Employed by DFDS since 2007 • BA (Hons) Economics • Msc. Psych • Ship broker, HD (O) • Employed by DFDS since 2009 • Employed by DFDS since 2010 • Employed by DFDS • Employed by DFDS since 1994 since 2007

DFDS Annual report 2013 118 Definitions & Glossary

Bareboat charter: Lease of a ship without Production partnership (Vessel Sharing Operating profit before depreciation (EBITDA) Profit before depreciation and impairment on non-current assets crew, for an agreed period. Agreement): Agreement between two or more parties on the distribution and use of Operating profit (EBIT) Profit after depreciation and impairment on non-current assets Bunker: Oil-based fuel used in shipping. a ship’s freight-carrying capacity. Operating profit margin Operating profit (EBIT) before special items x 100 Revenue Chartering: Lease of a ship. Ro-pax: Combined ro-ro freight and passenger ship. Net operating profit after taxes (NOPAT) Operating profit (EBIT) minus payable tax for the period, adjusted for the tax effect of net Chartering-out: Leasing out of a ship. interest costs Ro-ro: Roll on-roll off: Type of ship for which Door-to-door transport: Transportation of freight is driven on and off. Invested capital Non-current intangible and tangible assets plus net current assets (non-interest bearing current assets goods from origin to final destination by a minus non-interest bearing liabilities) minus pension and jubilee liabilities and other provisions single freight forwarder. The freight forwarder Short sea: Shipping between destinations typically uses third-party suppliers, such as in a defined geographic area. The converse Return on invested capital (ROIC) Net operating profit after taxes (NOPAT) x 100 a haulage contractor, for the actual transpor- is deep-sea shipping, i.e. sailing between Average invested capital tation. continents.

Weighted average cost of capital (WACC) Average capital cost for liabilities and equity, weighted Intermodal: Transport using several different Sideport ships: Type of ship in which loading/ according to the capital structure types of transport (road, rail and sea), typical- unloading takes place via ports in the ship’s ly for containers. side. Free cash flow Cash flow from operating activities, net, excluding interest received and paid minus cash flow from investing activities Lane metre: An area of ship deck one lane Space charter: Third-party lease of space on a wide and one metre long. Used to measure ship deck. Return on equity p.a. Profit for the year excluding non-controlling interests x 100 freight volumes. Average equity excluding non-controlling interests Stevedoring: Loading and unloading of ships. Equity ratio Equity x 100 Logistics: Sea and land-based transport, stor- Total assets age and distribution of freight, and associated Time charter: Lease of a ship with crew, for information processing. an agreed period. Net interest-bearing debt Interest-bearing non-current and current liabilities minus interest-bearing non-current and current assets Lo-lo: Lift on-lift off: Type of ship for which Tonnage tax: Taxation levied on ships accord- cargo is lifted on and off. ing to ship displacement. Earnings per share (EPS) Profit for the year excluding non-controlling interests Weighted average number of shares Non-allocated items: Central costs which are Trailer: An unpowered vehicle pulled by a not distributed to divisions. powered vehicle for the transport of goods. P/E ratio Share price at year-end Earnings per share (EPS) Northern Europe: The Nordic countries, Benelux, the , Ireland, Germa- Dividend per share Dividend for the year ny, Poland, the Baltic countries, Russia and Number of shares at year-end other CIS countries. Dividend payout ratio Dividend for the year Profit for the year excluding non-controlling interests

Dividend yield Dividend per share Share price at year-end

Book value per share Equity excluding non-controlling interests at year-end Number of shares at year-end

Market-to-book value (M/B) Share price at year-end Book value per share at year-end

Definitions & Glossary DFDS Annual report 2013 119 The history of DFDS

DFDS was founded in 1866, the Group was restructured, includ- Editing result of an initiative by C.F. ing divestment of activities in DFDS A/S

Tietgen to merge the three larg- the Mediterranean and routes Design & Layout est Danish steamship companies to the USA and South America. Kontrapunkt A/S of the day. Photo Haulage and logistics activities Søren Nielsen In the beginning, DFDS was were developed organically and involved in domestic as well as by acquisitions. Following the international shipping, carrying acquisition of Dan Transport in both freight and passengers. 1998, the business area became The international services one of the largest overland covered the North Sea and the transport companies in North- Baltic, later expanding to the ern Europe. To focus the Group’s Mediterranean. Towards the end resources, a new strategy was of the 19th century, routes were adopted with emphasis on also established to the USA and shipping and the transport and South America. The passenger logistics activities, DFDS Dan routes to the USA were closed Transport, were consequently in 1935. divested in 2000.

As land-based transport vol- DFDS’ route network for passen- umes increased, haulage and gers and freight has been contin- logistics became integral parts uously developed via organic of DFDS’ strategy. From the capacity growth and acquisi- mid-60s, considerable land tions. Following a number of activities were developed, smaller acquisitions, a transfor- extending the route network. mational acquisition was made in 2010 as DFDS acquired In 1982, a passenger route was Norfolkline, making DFDS the opened between New York and largest combined shipping and Miami. However, the route failed logistics company in Northern to live up to expectations and Europe. was discontinued at great cost in 1983. Subsequently, the DFDS

History DFDS Annual report 2013 120