Annual Report 2011 Report Annual Transatlantic

TransAtlantic Annual Report 2011 Report Annual TransAtlantic

Annual Report 2011

Rederi AB TransAtlantic (publ) Visiting address: Lindholmsallén 10 Box 8809, SE-402 71 Gothenburg, Sweden Tel: +46 (0)31–763 23 00 E-mail: [email protected] www.rabt.se

Solberg. Print: Billes Tryckeri TransAtlantic 2011 Affärsområden

Contents

2011 in brief 2 Comments by the CEO 4 40 years in Swedish shipping 6 Operations 8 Industrial Shipping business area 10 Viking Supply Ships business area 22 The share 32 Five-year summary 34 “We are seeing two “A first key step “Expertise generates Corporate Governance Report 36 strong business toward profitability.” competitive advantages.” Board of Directors 42 areas emerge.” Comment from the Head Comment from the Head of Industrial Shipping, of Viking Supply Ships, Management 43 Comments by the CEO, Page 4 Page 10 Page 22 Board of Directors’ Report 44

Financial statements Income statement 49 Balance sheet 50 Shareholders’ equity 52 Cash flow statement 53 Notes 54 Board signatures 80 Auditor’s Report 81

Definitions 82 Glossary 83 Head office Annual General Meeting and Office financial calendar 2012 84 Business areas at sea

Gothenburg Copenhagen About TransAtlantic Rederi AB TransAtlantic is a leading Swedish shipping company. The operations are divided into the Industrial Shipping business area with a focus on industrial shipping, with the Baltic Sea as the geographic base, and the Viking Supply Ships business area, with a focus on offshore work and icebreaking assignments in the North Sea and arctic waterways. • The fleet comprises 62 vessels, of which 48 belong to Industrial Shipping and 14 to Viking Supply Ships. • The company has about 850 employees and is headquartered in Gothenburg. • In 2011, sales amounted to SEK 2,989 M. • At year-end, there were 5,854 shareholders. • The company is listed on the NASDAQ OMX Stockholm, Small Cap list.

TransAtlantic 2011

Operations Industrial Shipping Viking Supply Ships Since 2007, TransAtlantic’s operations have With the integration of the shipping and logistics In 2011, there was a high level of activity in the been divided into two business areas, Industrial company Österströms and the development of business area, including a key strategic acquisition, Shipping and Viking Supply Ships (formerly new services and expertise, an adaptation of the deliveries of newly built AHTS vessels and new Ice Offshore/Icebreaking). The fleet comprises operation was begun in 2011. The focus is now Management assignments. Discussions about 62 vessels, of which 48 belong to Industrial on increasing profitability. larger partnerships are being conducted with sev- Shipping and 14 to Viking Supply Ships. More information is available on pages 10–21 eral of the oil companies that are to initiate pros- More information is available on pages 8–9 pecting activities in arctic waterways in 2013–2014. More information is available on pages 22–31

Division of the Group The process of dividing the Group is proceeding as planned. The goal is to spin off Viking Supply VIKING SUPPLY SHIPS - vertical logo Ships A/S to the shareholders and list the company on the Oslo Stock Exchange. Following the division, Rederi AB TransAtlantic will comprise the Industrial Shipping business area and remain listed on the NASDAQ OMX Stockholm, Small Cap Segment. In 2011, Viking Supply Ships’ operations were relocated to Denmark and the headquarters was established in Copenhagen. The headquarters for TransAtlantic was relocated from Skärhamn to Gothenburg.

Gothenburg Copenhagen

1 TransAtlantic 2011

2011 in brief The Group’s net sales increased to SEK 2,989 M (2,394). The rise was attributable to Viking Supply Ships being included at 100% as of the end of September 2010 (formerly 50%), Österströms being included in the financial statements as of June 2011 and the Viking Supply Ships business area’s acquisition of SBS Marine, with an accounting effect from October, and receiving delivery of two AHTS-vessels during the year, Njord Viking and Magne Viking. The Group’s net results after tax amounted to a loss of SEK 435 M (profit: 585), including restructuring items and acquisition effects of a negative SEK 194 M (pos: 528).

Summary of the year Quarter 1 Quarter 2 Weak earnings trend, but a high level of The acquisition of Österströms New cargo agreement with StoraEnso activity and major strategic changes. and the decision to investigate While the offshore spot market in the • Decision on the division of the Group into future division of the Group North Sea remained weak, activity two independent listed companies. Another ice winter had an adverse impact increased in the container and RoRo • Acquisition of the shipping and logistics on freight activity in the Baltic Sea. Deliv- traffic in the Baltic Sea. A new three-year company Österströms. ery of the AHTS vessel Njord Viking. cargo agreement signed with StoraEnso Agreement entered into on the acquisition to transport their paper from northern • Delivery of two new AHTS vessels (Brage of the shipping and logistics company Finland to Sweden, Germany and Belgium. Viking was subsequently delivered in Österströms. The Board resolves to The agreement comprises six vessels. January 2012). investigate a future division of the Group The acquisition of Österströms was • New cargo agreements with StoraEnso into two independent listed companies, completed. The former CEO of and FNsteel, two of the Industrial Ship- but also to, as soon as possible, imple- Österströms, Percy Österström, was ping business area’s largest customers. ment an organizational division, whereby appointed the Head of the Industrial • Relocation of the TransAtlantic Group’s parts of Viking Supply Ships are relocated Shipping business area and Christian headquarters, including Industrial Ship- to Denmark. Stefan Eliasson resigned as W. Berg was appointed the Head of the ping, to Gothenburg. New headquarters CEO of TransAtlantic and Rolf Skaarberg Viking Supply Ships business area. for Viking Supply Ships in Copenhagen. is appointed the new CEO. • New share issue of approximately SEK 555 M and acquisition of SBS Marine. • New agreement with Cairn Energy, Shell and Sahkalin Energy* for icebreaking and Quarter 3 Quarter 4 offshore services. Record-high contracts in offshore New share issue and the • Offshore/Icebreaking business area Weak results impacted by restructuring acquisition of SBS Marine renamed Viking Supply Ships. costs and low activity in the bulk seg- New three-year cargo agreement in bulk ment. Delivery of the AHTS vessel signed with FNsteel and Nordkalk. Multi Magne Viking, the third in a series of year agreement signed for the AHTS Events after the close four new vessels. Increased activity and vessel Vidar Viking with the Russian of the fiscal year higher rates generate record-high con- company Sakhalin Energy for services Heléne Mellquist assumed the position of tracts for Magne Viking in the offshore in such areas as icebreaking*. New CFO on January 2, 2012. In January 2012, spot market of NOK 1.5 M per day for an share issue of approximately SEK 555 M Kim H. Sörensen was appointed Head of eight-day charter. Njord Viking begins to acquire SBS Marine and strengthen the Industrial Shipping business area a four-year charter for ENI Norge in the the company’s financial position. Henning effective March 1, 2012. Barents Sea. Vidar Viking commences E. Jensen replaces Rolf Skaarberg as a two-month charter off the coast of CEO of the Group. The headquarters for Greenland for the British company Industrial Shipping are relocated from Cairn Energy. Skärhamn to Gothenburg and the headquarters for Viking Supply Ships in Copenhagen is completed. SEK2,989M The Group’s net sales * The agreement is subject to the approval of TransAtlantic’s Board and the banks concerned. increased during the year.

2 Net sales and operating proﬁt Return on capital employed and shareholders’ equity Liquidity and equity/assets ratio

SEK M SEK M % SEK M% %

3,000 450 30 600 30 60

2,000 300 20 500 20 50 10 400 10 40 1,000 150 0 300 0 30 0 0 –10 200–10 20 –1,000 –150 –20 100–20 10 –2,000 –300 –30 0 –30 0 07 08 09 10 11 07 08 09 10 11 07 08 09 10 11

Net sales Capital employed Liquidity (SEK M) Operating proﬁt (right scale) Shareholders’ equity Equity/assets ratio (%)

Key figures 1) Jan–Dec Jan–Dec Jan–Dec 2011 2010 2009

Net sales, SEK M 2,989 2,394 2,284 Operating profit before tax, SEK M –272 –121 –213 Profit before tax, SEK M –466 407 –276 Profit after current tax, SEK M –435 585 –221 Net earnings per share, SEK22) –6.60 16.60 – 8.00 Shareholders’ equity, SEK/share2) 22.50 43.20 42.40 Return on capital employed, % –6.9 12.8 – 9.0 Return on shareholders’ equity, % –17.8 32.8 –17.1 Equity/assets ratio on balance-sheet date, % 39.5 46.6 37.0

1) Comparability between the years is affected by the TransViking companies being 100-percent included as of 2010 (formerly 50 percent), the Österström Group being included in the financial statements as of June 2011 and the Viking Supply Ships business area receiving delivery of two vessels during the year and acquisition of SBS Marine with an accounting effect from October. 2) After new share issue in December 2011, when the number of shares doubled.

3 TransAtlantic 2011 Comments by the CEO

Two operations with different preconditions

In 2011, we focused on creating two distinct business areas that are ultimately to be able to successfully compete in their respective markets. Viking Supply Ships and Industrial Shipping will operate simultaneously in markets with entirely different preconditions in the coming years.

While I assumed the position as President and CEO Continued efficiency enhancements at year-end, I was fully engaged in the efforts to in Industrial Shipping advance the operation in recent years in my capacity Industrial Shipping operates in a market with as CEO of TransAtlantic’s Parent Company Kistefos entirely different conditions. The reasons behind AS. There has been a high level of activity in which these conditions are a weak economic trend in we balanced various growth initiatives with cost- Europe and the overloading of tonnage from overly reduction and efficiency-enhancement measures. optimistic shipping companies. These factors will This work was aimed at creating two independently keep cargo rates down for several years to come strong businesses – with two separate organizations and entail that we must focus even more sharply on – which have solid potential to successfully compete advancing the products and services being in their respective markets. However, the condi- demanded by our customers, reduce costs and tions in the two markets are different. enhance efficiency. In 2011, we initiated and made some progress on a forceful restructuring of the A strong offshore market benefits operation. The focus is on improving net operating Viking Supply Ships income, strengthening competitiveness by enhanc- The pursuit of new oil and gas discoveries to supply ing the efficiency of the route network, reducing a rapidly growing global demand for energy has costs and modifying the contract structure. Much resulted in ever increasing activity in offshore in work remains to be done before we achieve success, recent years. The offshore market is in balance in but we have noted that the measures that we have terms of the supply of and demand for vessels, taken were received positively by our customers. whereby global dynamics contribute to the vessels During the year, Industrial Shipping secured sev- operating where they are needed the most. Viking eral new contracts with some of the largest compa- Supply Ships features a strong offering to be able to nies in the Nordic base industries. The business benefit from an anticipated positive trend in demand area’s expertise in integrated logistics solutions will in coming years. Vessels and systems, as well as mean a great deal in the coming years in increasing highly skilled employees in offshore and icebreaking market shares and improving profitability. are already in place. The new contracts that were Despite different market conditions, we are seeing signed in arctic offshore in 2011 are proof of this. two strong business areas, with a strong principal We must now grow with the market and compete owner, emerge – which will be able to successfully for major new contracts in the arctic waterways in evolve also as independent companies when the divi- offshore activities and Ice Management. sion of the Group has been completed. And within a few years, I expect to look back on 2011 as a highly important period in the creation of these companies.

Henning E. Jensen President and CEO, TransAtlantic

4 ”We are seeing two strong business areas emerge – which will be able to successfully evolve also as independent companies.”

5 TransAtlantic 2011

40 years in Swedish shipping

established as a joint venture, of which 50% is owned by TransAtlantic and 50% by Kistefos 1972–1989 through the wholly owned subsidiary Viking 2008 Nordsjöfrakt is formed and operated Supply Ships AS. A new integrated offshore service is from Skärhamn, Tjörn, and is gradually developed for operations in arctic water- expanded with minor bulk and RoRo 2001–2003 ways. The TransAtlantic Ice Academy and tonnage. In 1989, the operation B&N acquires 34% of Gorthon Lines. Offshore/ TransAtlantic Ice Council systems are encompasses 15 vessels, including Icebreaking has all three vessels in operation. launched. Assignments are conducted on three reefer vessels, which were In 2001–2002, a total of four new vessels are behalf of Shell outside Alaska. acquired together with the Bylock launched into traffic across the Atlantic. A ton- Group. Bylock & Nordsjöfrakt (B&N) nage partnership is initiated with Gorthon Lines. was formed on December 31, 1989 In 2002–2003, the bulk segment and RoRo oper- by merger of Nordsjöfrakt’s operations ations report significant losses, which leads to with the Bylock Group. major restructuring and impairment costs. 2010 TransAtlantic acquires the outstanding shares 2004 and participations in the Trans Viking joint ven- In April, the 50/50 co-owned joint venture, ture company, resulting in Norway’s Kistefos Gorthon-B&N TransAtlantic, is formed. The out- becoming the new principal owner of Trans standing share of Paltrans is acquired and thus Atlantic. Ice Management assignments are 1990 becomes wholly owned. In October, the proposal conducted off the coast of Greenland using the Gorthon Lines is acquired from Bilspedition concerning a full merger with Gorthon Lines is Vidar, Balder and Tor Viking II vessels. A four- (currently Schenker). announced. year contract is signed with ENI Norge for Ice Management services in the Barents Sea between 1991 2005 2011 and 2015. Delivery of Loke Viking. B&N is listed on the O List of the Stockholm The merger between B&N Nordsjöfrakt and Stock Exchange. Gorthon Lines is finalized in March and B&N Nordsjöfrakt is renamed Rederi AB TransAtlantic. 1993 B&N Transbulk is sold during the first quarter. 2011 Between 1990 and 1993, the operation grows During the year, TransAtlantic’s share is moved TransAtlantic acquires the shipping and through various vessel purchases. In 1993, to Stockholm’s Attract 40 List. TransAtlantic logistics company Österströms and SBS Svenska Orient Linien is also acquired from launches the company TransLumi Line AB. Marine, launches the TransBothnia Line Bilspedition. B&N is moved to the A List of the and decides to relocate its headquarters Stockholm Stock Exchange. 2006 from Skärhamn to Gothenburg at year- The Offshore/Icebreaking business area acquires end 2011. A multiyear contract is signed 1994–1996 another AHTS vessel, Odin Viking. Another two with the Sakhalin Energy oil consortium The Dutch shipping company Moerman (including ice-going vessels are ordered for delivery in concerning icebreaking of the coast of a small fleet of bulk and RoRo tonnage) and the 2009–2011. During the second half of the year, Sakhalin, Russia*. Delivery of Njord and Panamax operator Transbulk are acquired. Three two of three new vessels under a long-term con- Magne Viking. TransAtlantic decides to new RoRo vessels are delivered and leased by tract for Stora Enso are delivered to the Industrial divide the Group into two separate com- Gorthon Lines to serve SCA under an extended Shipping business area. The contract has a term panies and prepare for a listing on the charter contract. of 15 years. StoraEnso will fill theves sels with its Oslo Stock Exchange of the Viking Supply loads to about 60%, after which, TransLumi Line Ships A/S subsidiary. TransAtlantic will 1997 will market the remaining tonnage capacity to remain listed on the NASDAQ OMX B&N is restructured. Gorthon Lines is spun off third parties to effectively capitalize on the load Stockholm and comprise the operations to shareholders and listed on the O List of the capacity. Older vessels in the Atlantic division will in the Industrial Shipping business area. Stockholm Stock Exchange. 75% of Svenska be divested and leased for brief periods. Orient Linien is divested through an initial public offering (also on the O List). B&N is also moved 2007 to the O List. The remaining business primarily Another two ice-going AHTS vessels are ordered comprises bulk operations and a fleet of time- for delivery in 2011. The third vessel, TransTimber, charter leased RoRo vessels. also to be used under a long-term contract for Stora Enso, is delivered. 2012 1998–2000 Delivery of Brage Viking. Work on dividing the B&N purchases 74% of Paltrans Shipping. The 2009 Group into two independent listed companies new Offshore/Icebreaking business area is In June, the previously announced sale of the continues. established for whose operations three new Atlantic division is cancelled. combination vessels are built. Trans Viking is

* The agreement is subject to the approval of TransAtlantic’s Board and the banks concerned.

6 7 TransAtlantic 2011

Operations

TransAtlantic’s operations are divided into two business areas: Industrial Shipping and Viking Supply Ships. These business areas were also organizationally divided in 2011, with independent headquarters. In 2012, work continues on preparing the business areas for operating as two listed independent companies. It is planned to spin off Viking Supply Ships to the shareholders and list the company on the Oslo Stock Exchange. The Industrial Shipping business area will retain the name TransAtlantic and will remain listed on NASDAQ OMX Stockholm.

Industrial Shipping

The Industrial Shipping business area offers Net revenue and operating proﬁt Percentage of sales

intelligent logistics solutions and efficient vessel SEK M SEK M

transports. The business comprises five divisions 3,000 150 that collaborate to achieve the maximum degree 76% 2,000 100 of utilization for the vessels and to provide cus- 1,000 50 tomers with a high level of service. This is com- 0 0 bined with a logistical infrastructure in Europe, –1,000 –50 independent terminals in strategic locations and networks for supplementary land transports. –2,000 –100 –3,000 –150 Geographic area 07 08 09 10 11 Primary focus on the Baltic Sea area, but also on Net sales Operating proﬁt (right scale) vessels the North Sea and Mediterranean. The weak market, with low demand and an Customers 48 oversupply of tonnage, put pressure on profit- First and foremost the forestry and steel industry ability in the business area. Restructuring in the Baltic Sea area, as well as basic industry in costs and acquisition effects also had an adverse impact on earnings. the rest of the Nordic region. The largest customers are StoraEnso, FNsteel, SSAB, Rautaruukki, M-real, Sveaskog and Nordkalk.

Resources Some 48 vessels with dedicated crews and about 215 onshore employees in seven countries who work in terminals, offices and in ports.

pages 10–21

8 Viking Supply Ships

Customized tonnage and crews with specialist Net sales and operating proﬁt Percentage of sales expertise offer oil-prospecting customers in the SEK M SEK M

North Sea and arctic waterways a secure and 750 375 predictable operation through an integrated off- 19% 600 300 shore and Ice Management service. Icebreaking 450 225 services are performed as required on behalf of 300 150 the Swedish Maritime Administration in the 150 75 Baltic Sea during the first quarter of the year. 0 0 Geographic area –150 –75 The North Sea and arctic areas such as the 07 08 09 10 11 Barents Sea, Greenland and the Beaufort Sea. Net revenue Operating proﬁt (right scale) vessels

Customers The offshore market was gradually The major international oil companies, other 14 strengthened during the year with a number oil-prospecting companies and the Swedish of rig relocations and a general boost in Maritime Administration. The largest customers activity. This entailed a higher degree of utilization for Viking Supply Ships’ AHTS are Cairn Energy, Eni Norge, Shell and Statoil. vessels, which resulted in higher rates. Restructuring and future investments had

Resources VIKING SUPPLY SHIPSa -negative vertical logo impact on earnings. Some 14 vessels – of which three are combined icebreakers/AHTS vessels, four are new ice- reinforced AHTS vessels (including Brage Viking, which was delivered in January 2012) and five modern PSV vessels – with dedicated crew with extensive experience in icebreaking and offshore work in severe weather conditions. About 40 onshore employees at offices in Den- mark, Sweden, Norway, Scotland and Russia. pages 22–31

9 TransAtlantic 2011 AffärsområdenIndustrial Shipping

Comments from the head of the business area: Key step toward profitability

In 2011, a transition of the business was initiated. We reduced costs, adapted the fleet and developed new services that will move TransAtlantic from a traditional shipping company to a leading logistical player for major and demanding customers in the basic industry in northern Europe.

The extensive work initiated in 2011 to advance and improve the Industrial Shipping operation has generated results. We have an even clearer focus on effective transport solutions with the Baltic Sea as our geographic base and we have amassed expertise, systems and services that enable us to grow with our largest Nordic industrial customers throughout Europe – both at sea and on land.

More services will be added At the same time, the accomplishments that have been made can be seen as a key step toward profitability. We operate in a market exposed to intense competition with significant imbalances. Far too much tonnage is competing for the same customers, which has pressured cargo rates to low levels in recent years – which we probably have to live with for several years to come. We have also noted that our customers are imposing increasingly stringent requirements on their suppliers and demanding higher frequency, shorter lead times and lower unit costs. In addition to meeting these challenges by becoming an even more efficient company, we will continue to develop our knowledge in the interest of adding more services that make TransAtlantic more attractive than its competitors. The ability to build new transport systems for both existing and new customers, and integrating other transport solutions, such as railways, trucks and barges, is the key to our continued success. Today, our customers include some of the largest companies in the Nordic forestry, steel and chemical industries. Meeting and exceeding these customers’ expectations also facilitates a continued expansion in other customer segments. In 2012, we are sharply focused on increased profitability by both accelerating and applying the brakes. We will continue to improve and increase our product and service level and we will strengthen the sales organization. Combined with continued cost adaptations of the business, this will lead to the company bolstering its sales and the degree of utilization and taking the next step toward profitability.

Kim H. Sörensen Head of Industrial Shipping

10 Industrial Shipping business area Effective logistics and transport solutions

The Industrial Shipping business area’s business concept is to add value to European industrial customers by delivering environmentally efficient logistics solutions of the highest quality and with the greatest reliability. With the integration of Österströms and the development of new services and skills, a rapid transition of the operation was initiated in 2011. The focus is now on bolstering profitability.

Operations in the Industrial Shipping busi- RoRo Baltic, Short Sea Bulk and Integrated Facts about the ness area comprise five different divisions – Logistics. During the year, intense efforts business area with a total of 48 bulk, container and RoRo were initiated to improve profitability in all • One of Sweden’s largest shipping vessels – working in unison to achieve the divisions through cost rationalizations, companies maximum degree of utilization for the reviewing structures and business plans • Headquarters in Gothenburg and offices vessels and a high level of service for and adapting the fleet. in Stockholm, Västerås, Södertälje, TransAtlantic’s customers. This is combined Hull, Helsinki, Riga, Tallinn, Szczecin, with a logistical infrastructure in Europe, Major customers in the Nordic Antwerp, Oxelösund, Västervik and proprietary terminals in strategic locations basic industry Raahe and networks for supplementary land tran TransAtlantic has partnerships with some • Focus on the Baltic Sea with leading sports. With the Baltic Sea as the geographic of the largest players in the forestry and positions in the Gulf of Bothnia base, the business area covers various steel industry in Finland and Sweden. • Major customers in the Nordic basic customer segments in the Nordic basic These are customers with high demands industry industry. who operate in a global market in which • Five coordinated divisions time and quality are key factors. The com- • Integrated logistics solutions Acquisition of Österströms panies are in significant need of such factors • 48 vessels, of which 11 are proprietary expands operations as short lead times and reduced costs to cope As part of its focus on advancing the busi- with competition. The major customers – 10 RoRo vessels – 8 container vessels ness area, the shipping and logistics com- include StoraEnso, M-real, Rautaruukki, – 30 bulk vessels pany Österströms was acquired in 2011. FNsteel, Sveaskog, SMA Mineral, SSAB, and Österströms supplements the business area Nordkalk. In 2011, a new three-year agree- Net revenue and operating proﬁt through shipping transports with smaller ment was signed with StoraEnso for its SEK M SEK M bulk vessels and integrated logistics serv- paper transports from Finland to Germany, ices. The acquisition contributes to increas- Sweden and Belgium. Under the agreement, 3,000 150 ing the selection of services and volumes a new RoRo route was launched between 2,000 100 and has led to the business area being northern Finland and Antwerp/Zeebrügge, 1,000 50 divided into five divisions: Bulk, Container, and TransAtlantic assumed control of the 0 0 –1,000 –50

–2,000 –100

–3,000 –150 Industrial Shipping management 07 08 09 10 11

Net sales Operating proﬁt (right scale)

Kim H. Sörensen Klas Eskilsson Heléne Mellquist Britta Stolt Head of Industrial Shipping CCO CFO HR Manager

11 TransAtlantic 2011 Industrial Shipping

commercial and operational responsibility All divisions are undergoing a long-term Activities in 2011 for the TransLumi Line from StoraEnso, transition to larger and more effective but • Acquisition of Österströms which was formerly in charge of the route. fewer vessels. In 2011, five vessels were sold • Relocation of the headquarter to Key new agreements were also signed with and five vessels were returned after com- Gothenburg FNsteel and Nordkalk for transports of pletion of charter. At year-end, the business • New agreement with StoraEnso both input goods for steel production and area had a total of 48 vessels, of which 11 processed steel products. were proprietary. The number of vessels • New agreements with FNsteel and Nordkalk increased compared with the same date in Flexible vessel fleet the preceding year as a result of the acquisi- • New terminal in Hull, UK An increasingly large share of the vessels tion of Österströms. • Discontinuation of Atlantic traffic and are leased to allow the fleet to be rapidly TransSuomi Line adapted based on customers’ needs and to Structural problems in shipping continue • ISO certification of fleet and companies be renewed in pace with technological The shipping sector continues to be belea- completed developments and new environmental guered by aftermath of the latest economic requirements. This is combined with owned peak when shipping companies and other Focus in 2012 vessels to fulfill a long-term need for modern investors ordered a number of vessels that The synergies and advantages between vessels with a high ice class and the right are now being released into the market. the various divisions will be utilized to a tonnage for customers, thus maintaining According to the magazine Svensk Sjöfarts greater degree. In addition to a continued expertise in such areas as vessel mainte- tidning, about 9,000 vessels were ordered focus on the Nordic basic industry, the nance, load economics and vessel develop- with a combined deadweight tonnage of customer base will be expanded to also ment. As a result of the acquisition of 560 million, corresponding to nearly half include new customers in other sectors Österströms, bulk vessels have become a the global commercial fleet. However, not who can benefit from the business area’s significant share of the combined tonnage, all ordered vessels will be delivered, some comprehensive solutions, which entails although leased vessels have gradually orders will be delayed and a number of complete system traffic, in terms of the route and types of vessels, linked to inte- been returned as a result of relentless shipyards are expected to enter bankruptcy. grated land logistics. efforts to optimize the degree of utilization Despite this, there will be extensive new of the vessel fleet. deliveries, which will contribute to keeping cargo rates down in the coming years.

Baltic Dry Index (Biffex) 1997–2011

SEK M

12,100

10,100

8,100

6,100

4,100

2,100

500 July Jan July Jan July Jan July Jan July 07 08 08 09 09 10 10 11 11 Entire fleet environmentally and quality certified Major selection of tonnage presses cargo rates down TransAtlantic is certified in accordance with Baltic Dry Index is a global price indicator the ISO 9001 quality management system for maritime transports of such dry goods as and the ISO 14001 environmental manage- coal, iron ore, copper and grain. The major ment system. The environmental certifica- structural problems in shipping, meaning the tions comprise 54 environmental manage- excessively rapid rise of the global vessel ment points for the operations, at sea and fleet, contribute to maintaining cargo rates at on land. TransAtlantic assigns high priority low levels. to environmental issues and continually measures its environmental impact in each individual maritime transport.

12 Performance of divisions

Division RoRo Baltic The division conducts Baltic-Sea based system nia Line and TransFeeder North – with a total of from StoraEnso and third-party loads from traffic for such sectors as forestry, with dedi- six vessels, were operated between northern existing and new customer segments. cated RoRo and container vessels. TransAtlantic Finland and Sweden, Germany and Belgium. has long been one of the major operators in the In addition to paper and paper pulp, the loads Focus in 2012 RoRo segment in the Baltic Sea and has built primarily comprise tank containers, rolling loads Management of current traffic with a focus on extensive customer relationships and effective and standard containers. Growing and key com- further increasing profitability in the system by transport systems. The creation of a maritime ponents are project loads for such sectors as expanding the degree of vessel utilization, while transport system for StoraEnso enabled Trans the rapidly growing mining industry in northern also examining new long-term projects for Atlantic to successively expand its customer Finland and Sweden. increased system traffic for the forestry industry base, also beyond the forestry industry. During in the Baltic Sea. the year, some changes were made in the traffic Performance in 2011 Reinforcement of the new TransBothnia con- and agreement structure entailing an increased Aside from a weak beginning due to the chal- cept by increasing the degree of utilization in the focus on the Gulf of Bothnia and having Trans lenging ice scenario in the Baltic Sea, the divi- vessels and intensified concentration of sched- Atlantic take greater control of traffic. At year- sion experienced a stable trend during the year, uled traffic in the Gulf of Bothnia based on a con- end, three routes – TransLumi Line, TransBoth- with a favorable capacity of forestry products tract with StoraEnso.

Division Container The division conducts container-based liner facility or directly from the vessels, as an inte- Focus in 2012 traffic to the UK through the TransPal Line and grated element of the transports. The new termi- In Hull, work is being done on efficiency feeder traffic through TransFeeder South. The nal in Hull creates additional advantages for the enhancements and coordinating the flow of routes are served by modern container vessels customers’ total transport chain by offering a goods to achieve greater cost effectiveness and with ice class, most of which have built-in dehu- modern machinery fleet and large new storage thus create even greater competitive advantages midifiers for the transport of humidity-sensitive spaces. At year-end, there were four vessels in for the customers. Traffic efficiency will be fur- steel products. During the year, a vessel was the TransPal Line and two in TransFeeder South. ther enhanced and work is under way on devel- added to the TransPal Line, and greater tonnage oping larger catchment areas through focused was added to TransFeeder South to enable con- Performance in 2011 market initiatives. The advancement of IT related tinued expansion. The division includes clearing, The demand for steel products tapered off to operations will also comprise a prioritized storage and forwarding operations in Sweden slightly, resulting in somewhat lower average area in 2012. and the UK. In the UK, the import goods are dis- loads in the TransPal Line. TransFeeder South tributed to their end recipients, either by storage reported continued strong volume growth.

Division Bulk The operation comprises four midsized ice- vessels TransPine and TransWood, were trans- capacity generated weak profitability in the classed bulk vessels for contract-based transferred to the RoRo Baltic division and the new division. The Atlantic business was discontinued ports in the Baltic Sea and the North Sea, prima- TransBothnia line in the Baltic Sea. Accordingly, during the year. rily for the forestry, steel and agricultural only one vessel remains in the division that industry. During the year, an intensive effort was operates with customers in North America. The Focus in 2012 conducted at identifying longer contracts and vessel, TransFighter, transports newsprint along Managing existing contracts and generating new refining the fleet toward the mid-bulk segment. A the east coast of North America under contract ones. Developing new business relations and three-year contract was signed for two of the for the Canadian company Kruger. growing profitably in the Baltic Sea, including vessels with the Finnish companies FNsteel and through such measures as continued synergies Nordkalk for the transport of input goods for Performance in 2011 with other divisions in the business area. steel production. In early 2012, vessels from the A high degree of exposure to a weak spot mar- transatlantic portion of the division, the RoRo ket, due to low access to loads and tonnage over

Division Short Sea Bulk The division has more than 25 minor bulk ves- were made to adapt capacity to lower demand, economically low contract volumes among major sels at its disposal, which are adapted to all and to create a flexible contract structure for the customers. types of products in the forestry and steel indus- new charter agreements that are entered into. try. The vessels call on most ports in the Baltic Focus in 2012 Sea area and several of the ports on the conti- Performance in 2011 Establishing a flexible structure for tonnage and nent. The division offers integrated logistics The harsh icy winter in early 2011 had a negative enhancing efficiency in the fleet through more solutions for such sectors as the Finnish steel impact on activities and a successively weaker in-depth talks with customers and more third- industry, including the distribution of steel prod- demand for forestry and steel products resulted party solutions in the aim of reducing the ucts from Poland to end-customers in Central in the division posting a loss in 2011. The market dependency on one type of product. and Eastern Europe. In 2011, extensive efforts was characterized by excessive tonnage and

13 TransAtlantic 2011 Industrial Shipping

Performance of divisions, cont.

Integrated logistics products, it is even more important to offer expensive to operate and it is thus of the utmost Each product requires its own logistics solution: adapted storage rooms and careful loading and importance to have high loading and unloading from commodity transports to industry, on to unloading. efficiency in the ports. TransAtlantic operates processing, storage and finally delivery to the independent and efficient terminals in key geo- end customer. TransAtlantic offers integrated IT and information systems graphic areas in Sweden, Poland and the UK. logistics services, including maritime trans- Information management pertaining to cargo The Group has extensive experience in this area ports, terminal operations, storage, land distri- is becoming increasingly comprehensive and in terms of shipping, port and stevedoring work, bution and IT services. These operations jointly necessary. No one wants to hold on to excessive load management, logistics, forwarding/distri- offer a seamless transport chain and create an inventories or receive unnecessary spillage, bution and agent operations. The ports in increased information exchange with the cus- which is why each order becomes even more Szczecin, Poland, and Hull in the UK comprise tomers and with their customers. The aim is to precise and frequent. Several of the business central reloading hubs and are strategically increase the number of services in all divisions area’s divisions offer cohesive IT systems that located in the most intensive market areas for by selling more integrated services to existing monitor each individual article that is in the the Nordic basic industry. and new customers. logistics chain and when it is expected to arrive at the end customer. This is achieved by reading Storage Maritime transports and identifying barcodes that allow the customer Intermediary storage services are important to The 48 container, RoRo and bulk vessels form a to follow the course of the goods through an industrial customers. When a vessel is unloaded, central component in the business area’s inte- online platform. Similar systems have already several hundred freight railcars and trucks are grated logistics. The commanders on the vessels been used for land transports but are unusual in needed for onward transport of the entire load. are experts in what type of requirements the conjunction with industrial shipping. The industry itself often lacks the capacity to customers place on the cargo and how the con- accept the entire transport at once and would tinued process of the goods works. When the Terminal management prefer to make suborders to adapt the deliveries goods being transported comprise such sensi- It is important that the vessel spend the least based on their own production rate. Intermediary tive products as pulp and various types of steel amount of time possible in the port. Vessels are storage is included in TransAtlantic’s integrated logistics service and port concept.

Distribution Working in networks and in partnerships is an important element of building a logistics flow. TransAtlantic has a comprehensive network and several partnerships that enable rapid and efficient distribution services via truck, railway or barge. For example, in Hull in the UK, the goods are loaded onto a truck for further transportation or intermediary storage. In Szczecin, Poland, a partnership exists for river-bound transports on the River Oder, among others, which is the entryway to the European river system. Partnerships are also in progress with road-carrier partners in Western and Eastern Europe. Barges and railways are the modes of transport that clearly offer environmental advantages when combined with maritime transport.

Integrated logistics solutions

Transport Loading Maritime Unloading Intermediary Distribution by railway/truck/ Production Storage before sales to ports vessels transport in ports storage barge to the end-customer

TransAtlantic adds values TransAtlantic manages the entire transport chain such as vessels, ports, terminals and land trans- and bears ultimate responsibility to its custom- port are part of a single unit. Customers only ers. This means that responsibility for delivery receive one invoice, despite many different hubs precision and quality assurance are handed over being involved in the transport process. to TransAtlantic. The various logistics resources,

14 Industrial Shipping business area

Number of employees, (total of 442 persons)

At Dec. 31, 2011

Onboard, 52% Land, 48%

Gender distribution

At Dec. 31, 2011

Men, 82% Women, 18%

Age structure %

New skills emerging integrated logistics solutions, and to build spe- 20

In a market subject to intense competition, where cific skills in various sectors in the aim of develop- 15 a large supply of tonnage limits an increase in ing Key Account Managers. During the year, a 10 cargo rates, new services must be developed to process was also initiated in the aim of identifying bolster profitability. In 2011, Industrial Shipping talent at TransAtlantic. In 2012, the focus is on 5 was restructured into a more customer-oriented developing and coordinating leadership in con- 0 organization that encompasses new areas of junction with making the business area an inde- 20–29 30–39 40–49 50–59 60– expertise. This included the development of pendent company. knowledge to meet the needs of the initiative on

Environmental monitoring with TransPaper

During the autumn of 2008, what is known the Finnish Institute of Marine Research and Measurements are taken every 20 seconds as a Ferrybox was installed on TransPaper. TransAtlantic. TransPaper conducts routine and are supplemented by water samples at This device provides the Swedish Meteoro- contract traffic on behalf of StoraEnso 24 predetermined locations, which are logical and Hydrological Institute (SMHI) between Kemi in Finland, Lübeck in Ger- collected when the vessel reaches port. To with real-time measurements online about many, and Gothenburg, Sweden, and since date, more than one million samples have water conditions in the Baltic Sea. The the contract has a term of many years, long- been taken, which will be highly significant project, which is scheduled to proceed for term high-frequency marine environment to the long-term environmental monitoring ten years, is a partnership between SMHI, data can be collected on the same route. of one of the world’s most sensitive seas.

15 TransAtlantic 2011 Industrial Shipping

Safety and the environment Continuous improvements

Effective fleet operations focused on quality control are of decisive significance for TransAtlantic. New international regulatory frameworks will lead to higher costs and TransAtlantic’s customers largely comprise major, international corporations with exacting standards on their suppliers’ environmental and safety efforts.

For TransAtlantic to successfully evolve, sions, MRM also contributes to increasing the shipping company must be the leader understanding for strong leadership and TransAtlantic’s environmen- in environmental and safety measures, and teamwork, as well as the benefit of common tal objectives, 2009–2014 be able to recruit the best employees. Trans terminology. MRM has been implemented • Reduce emissions to air, including Atlantic’s entire organization and the vessels on all vessels operated by TransAtlantic, CO , by 10%, measured in emissions that TransAtlantic operates meet the require and in 2012, the training process will pro- 2 per ton/km. ments of the ISM code and are certified ceed according to plan. • Reduce the number of chemicals under the ISO 9001:2008 quality manage- onboard by 15%. ment system and the ISO 14001:2004 envi- Continuous environmental improvements ronmental management system. The environment is becoming an increas- • Reduce fuel consumption onboard by 5%. ingly competitive factor. Many transport Secure deliveries purchasers are increasing the demand for • Use chemicals that are less hazardous Safety work aimed at minimizing incidents efficient environmental work in their sup- for humans and the environment. and accidents involving crew members is pliers, which is often higher than the various • Improve waste management onboard. additionally important in operations in sen- legislations that apply in the industry. The • Improve control and management of sitive areas such as the Baltic Sea and Arctic trend is beneficial to TransAtlantic, since emissions to water. waters. Safety issues are a prioritized area the effort with the fleet’s environmental In 2011, TransAtlantic specifically focused and TransAtlantic works actively with pre- performance is based on continuous improve on energy efficiency enhancements ventive measures. TransAtlantic’s Safety ments. Within the Group, a number of through flow gauges and frequency Management System (SMS) aims to promote projects are being conducted to reduce the controls for ventilation, on further and contribute to the safety effort, which is environmental load, which is continuously reducing hazardous chemicals and continuously improved on land and at sea. adapted to changes in the business world on using biodegradable oils. Procedures and checklists onboard vessels and customers’ requirements. are improved and developed continuously, jointly with personnel to minimize risks. Integrated logistics for a better environment Reduced emissions to air All of TransAtlantic’s vessels are ice-classed The entire transport chain is hallmarked by A reduction in the emissions of sulfur and have crews with ice expertise, which an ambition to create a system with a mini- and nitric oxide, and a reduction in the contributes to increasing shipping safety. mal environmental impact. TransAtlantic’s consumption of fossil fuels, thus reduc- TransAtlantic’s bridge officers have been greatest contribution to this takes the shape ing the emissions of carbon dioxide are trained in Maritime Resource Management of integrated logistics, where maritime, rail- among the highest prioritized matters (MRM), which is a system that is based on way and truck transports are combined at TransAtlantic. the safety approach developed in the airline with environmental and cost effectiveness. industry, where checklists and procedures TransAtlantic also conducts key environ- minimize the risk of accidents. In addition mental initiatives to ensure that the vessels to reducing the risk of navigational errors are fully loaded and that the number of and accidents, such as grounding and colli- positioning trips are minimized.

More stringent emissions regulations a challenge requirements on reduced sulfur content is that the rules coming into effect in 2015. Rapid In 2008, the International Maritime Organization the vessel’s costs for bunker oil will increase advancements are certainly being made of vari- (IMO) adopted more stringent limits for sulfur in sharply, resulting in higher maritime transport ous technologies and in the use of alternative maritime fuel. The regulations mean that the lim- costs. This is difficult to transfer to customers fuels, but no solution is adequately efficient from its for sulfur in the so-called Sulfur Emission Con- and could cause transports by sea to change to a cleaning or cost perspective. TransAtlantic has trol Areas (SECA), the Baltic Sea, the North Sea land, which is negative from an environmental a positive view of the more stringent emissions and the English Channel, will be reduced from perspective. Accordingly, the need for alternative regulations, but within a reasonable period, and the current 1.0% to 0.1% as of 2015. The limit for solutions is substantial for the approximately is involved in a number of partnerships concern- sulfur content will be reduced globally to 0.5 per- 70,000 vessels affected by the new regulations. ing the development of various technologies cent by weight by 2020, or depending on supply, The problem is that it be difficult to develop a such as scrubber systems and alternative fuels. not later than 2025. A consequence of the proven and effective cleaning technology prior to

16 List of vessels

Industrial Shipping Year of construction/ Holding/ Vessel Type Dwt year of remodeling leasing form Flag

TransAgila Container 4,500 1994 Owned – 67% Antigua/Barbuda TransFrej Container 4,500 1994 Owned – 70% Antigua/Barbuda TransNjord Container 4,500 1995 Owned – 100% Gibraltar TransOdin Container 4,500 1994 Owned – 65% Antigua/Barbuda TransAlrek Container 4,500 1995/2006 Timecharter Antigua/Barbuda TransAnund Container 9,800 2007 Timecharter Cyprus TransJorund Container 9,800 2007 Timecharter Cyprus Conger Container 5,207 1995 Timecharter Antigua/Barbuda TransPaper RoRo 16,000 2006 Bareboat-charter Sweden TransPulp1) RoRo 16,000 2006 Bareboat-charter Sweden TransTimber RoRo 15,960 2007 Bareboat-charter Sweden TransEagle LoLo 16,600 2002 Owned – 100% The Netherlands TransOsprey1) LoLo 20,400 2003/2008 Timecharter Gibraltar TransHawk LoLo 16,600 2005 Bareboat-charter Gibraltar Toftön2) LoLo 14,900 1980 Timecharter Gibraltar TransAndromeda Bulk 6,700 1999 Owned – 100% The Netherlands TransCapricorn Bulk 6,700 2000 Owned – 100% The Netherlands TransFalcon Bulk 5,700 1993 Owned – 100% Sweden Andante Bulk 6,397 2005 Timecharter Gibraltar Arina Bulk 4,402 1989 Timecharter Lithuania Brilliante Bulk 5,557 1997 Bareboat-charter Gibraltar Distinto Bulk 4,135 2000 Bareboat-charter Gibraltar Ernst Hagedorn Bulk 4,401 1989 Timecharter Antigua/Barbuda Festivo RoRo 4,600 1979 Bareboat-charter Gibraltar Forte Bulk 6,397 2005 Owned – 100% Gibraltar Forza Bulk 4,135 2000 Bareboat-charter The Netherlands Furioso Bulk 5,580 2007 Timecharter Antigua/Barbuda Lontano Bulk 4,135 2000 Bareboat-charter Gibraltar Metallica Bulk 4,401 1989 Timecharter Antigua/Barbuda Nemuna Bulk 4,135 1989 Timecharter Antigua/Barbuda Risoluto Bulk 4,145 1997 Bareboat-charter Gibraltar Sereno Bulk 4,455 1991 Timecharter The Netherlands Soave Bulk 4,455 1991 Timecharter The Netherlands Sonoro Bulk 4,135 2000 Bareboat-charter Gibraltar Vigoroso Bulk 5,580 2007 Timecharter Gibraltar Visurgis Bulk 4,145 1997 Timecharter Antigua/Barbuda Volante Bulk 4,135 2000 Bareboat-charter Gibraltar Solenne Bulk 4,600 2000 Timecharter The Dutch Antilles Subito Bulk 4,600 2000 Timecharter The Netherlands Suono Bulk 4,600 2000 Timecharter The Dutch Antilles Salsa Bulk 4,600 2000 Timecharter The Dutch Antilles Samba Bulk 4,600 2000 Timecharter The Netherlands Vikingland2) RoRo 16,675 1979/1996 Timecharter Sweden TransReel1) RoRo 11,400 1987 Owned – 100% Sweden TransFighter RoRo/sideloader 18,855 2001 Owned – 100% Sweden TransPine RoRo/sideloader 18,855 2002 Bareboat-charter Sweden TransWood RoRo/sideloader 18,855 2002 Bareboat-charter Sweden Ingrid Gorthon2) RoRo/sideloader 14,240 1977 Timecharter Cyprus

1) Vessel leased on timecharter basis. 2) Redelivered January/February 2012.

17 TransAtlantic 2011 Industrial Shipping

A northern European logistics company

Backed by 48 vessels with dedicated crews, and 213 land-based employees spread among 13 offices in seven countries, TransAtlantic’s Industrial Shipping business area offers its

European customers cost-effective solutions by applying a high level of expertise, effective Tornio Kemi

systems and adapted tonnage. The service offering encompasses everything from separate Oulu maritime transports to integrated logistics solutions, which can include maritime transports, terminal management, storage and distribution.

Brief facts for 2011 RoRo Container • 2,300 trips by vessels Rolling load and unit goods Built-in dehumidifiers Dalsbruk TransAtlantic’s ten RoRo vessel can take TransAtlantic’s eight modern container Helsinki most rolling loads, such as cars, trucks, vessels are ice-classed, most with built- Shares of product categories Västerås heavy machinery and mining equipment. in dehumidifiers for the transport of that were freighted in 2011 The vessels also handle unit articles humidity-sensitive steel products. Södertälje % such as machinery parts, boats, contain- Oxelösund ers and tanks. Norrköping Steel, 20 Gothenburg Forestry, 40 Västervik Chemicals, 25 Bulk Integrated logistics solutions Other, 15 Flexible load solutions One-stop shop Åhus TransAtlantic’s 30 ice-classed bulk vessels TransAtlantic’s logistics solutions can be transport a number of different dry prod- compared with a one-stop shop, where the ucts for the forestry, mining, chemicals customer turns to a single contact person 2012 – focus on increased and steel industry. The customers are who is responsible for the customer’s entire profitability Hull Szczecin given the opportunity to utilize the logistics flow from raw material transports Following the completion of rationalization Lübeck vessel’s entire cargo space or parts of it. to the delivery of a finished product to the Hamburg measures and adapting tonnage in 2011, end customer. Bremerhaven the focus is now on increasing the service Amsterdam offering and volumes, as well as improving Antwerp the degree of utilization of the vessel Competition scenario fleet and thus bolstering profitability. TransAtlantic’s largest competitors in industrial shipping are Spliethoff, Finnlines, DFDS Tor Line, Transfennica and Wagenborg. The segment is marked by excess capacity and weak profitability. Increasing profitability requires better capitalization of the vessel fleet through such actions as partnerships with various shipping companies. This could also lead to more cost-effective cargo transport and reduced environmental impact.

No market balance in the Baltic Sea The increase in the container and bulk fleet in the Baltic Sea since 2007 does not match the demand trend. These imbalances will 2,300 remain in place for several years to come trips by vessels during 2011 and hamper cargo rates.

120

110

100

70 Port 60 07 08 09 1011E 12E 13E TransLumi Line (RoRo) TransBothnia Line (RoRo) Supply (year 2007=100) TransFeeder North (Cont) Demand (year 2007=100) TransPal Line (Cont) TransFeeder South (Cont) Source: TransAtlantic’s own estimate based on sources from ofﬁcial statistics or market sources Ruukki Raahe/Antwerp (Bulk/MPP) in shipping and production/GDP statistics. Short Sea Bulk

18 Gulf of Bothnia TransAtlantic has a strong position in maritime transports in the Gulf of Bothnia, a key growth area in the Nordic basic industry. TransAtlantic’s Helsinki bulk, container and RoRo vessels transport From the proprietary revenue office in products including forestry and steel for some the Finnish capital city, the largest compa- of the largest companies in the region, such as Tornio Kemi nies in the country’s basic industry are StoraEnso and Rautaruukki. cultivated. Finnish customers accounted Oulu for about 13% of the Industrial Shipping business area’s revenue in 2011.

Dalsbruk Helsinki

Västerås Södertälje Oxelösund

Norrköping Short Sea Bulk The Short Sea Bulk division Gothenburg offers integrated logistics solu- Västervik tions for the Finnish steel industry, which includes the distribution of steel products Åhus from steel mills in Finland to end customers in Sweden, Norway and on the continent.

Hull Lübeck Szczecin Hamburg Bremerhaven Amsterdam Antwerp

Szczecin In the Polish port city of Szczecin, TransAtlantic has established a key terminal for integrated logistics solutions for Hull the Finnish steel industry, among others. Through partner- The new terminal in the UK city of ships with companies in rail traffic, river-bound transports Hull gives TransAtlantic overriding and truck transports, products are distributed to end- access to the customers’ operations. customers in Central and Eastern Europe. The terminal offers a modern machinery fleet and new covered storage space comprising about 16,000 square meters, and since it is not dependent on tides, the vessels can take larger and heavier loads.

Port TransLumi Line (RoRo) TransBothnia Line (RoRo) TransFeeder North (Cont) TransPal Line (Cont) TransFeeder South (Cont) Ruukki Raahe/Antwerp (Bulk/MPP) Short Sea Bulk

19 TransAtlantic 2011 Industrial Shipping

A fast and safe route for Finnish steel goods

The comprehensive logistics system that TransAtlantic is creating will increase customers’ competitiveness. Based on each individual customer’s needs and conditions, a logistics proposal is prepared, which may be the beginning of a long and rewarding business partnership. Such a partnership was initiated with the Finnish steel company FNsteel in 2007.

That was the year in which the first bulk vessel mal environmental impact. TransAtlantic assumes left the port in Dalsbruk in Finland – loaded with overall responsibility for FNsteel, which includes steel rolls (wire-rod rolls) for distribution through delivery precision and quality assurance. the ports in Västervik in Sweden and the Polish city of Szczecin, to industrial customers through- A growing operation out Europe. Today, five years later, nearly 1.2 mil- Effective logistics systems are being created for lion tons of steel rolls have left the Finnish port on several players in the Nordic basic industry. In TransAtlantic’s vessels to be transported onward addition to the transport of steel and forestry by truck, railway and barges to customers in the products to end customers on the continent and 3 automotive and construction industry on the continent and in the Nordic region. Vast quantities of “High quality, short lead input goods for FNsteel’s steel production, such as coke fuel and taconite pellets, have also been times and an effective infor- shipped into the steel mill in Finland. * The Finnish company FNsteel is a leading European mation system are decisive company in the production and processing of specialist steel products in the form of wire rod and steel wire. Overall transport responsibility factors for our partnership The products are used in the European automotive and construction industries. Manufacturing is con- The logistics work for FNsteel continues. About with TransAtlantic.” ducted in Finland, Sweden and the Netherlands, with two vessels per week throughout the year leave a combined annual steel production capacity of the port in Dalsbruk freighting a valuable load of Markus Malinen, Vice President Logistics about 600,000 tons. & Business Development, FNsteel* steel rolls. The entire logistics flow is operated from TransAtlantic’s offices in Stockholm and Szczecin, from the loading in Finland to the in the Nordic region, through ports in the Baltic unloading with the end-customer somewhere in Sea, TransAtlantic assumes responsibility for the Europe. FNsteel uses TransAtlantic as its only entire logistics chain for customers who transport contact for the entire logistics chain, and can container and bulk goods from Sweden and 50 monitor the path of each individual steel roll via Finland to various end customers in the UK – daily truck transports TransAtlantic’s IT system. In addition to contribut- through TransAtlantic’s terminal in Hull. Regard- from Szczecin ing to strengthening FNsteel’s competitiveness, less of the customer, IT and the environment are the entire transport chain is hallmarked by the always in focus as an important added value aim of creating a value-adding system with mini- throughout the transport chain.

Rimeeal t information All steel rolls that leave FNsteel’s production facility in Dalsbruk have been ordered by customers. Each individual roll is identity labeled with a barcode that, via TransAtlantic’s information services, provide detailed and regular information to all players throughout the transport route. By having TransAtlantic and FNsteel integrate their information systems, all players in the logistics chain always have real time control over where their products are.

20 Cndareful a effective loading Specialist steel is a sensitive product. Accordingly, loading and unloading are specifically adapted so as not to cause any damage to the steel rolls. Since vessels are expensive to operate, even when they are at a standstill, high loading and unloading efficiency is important. It takes an average of two days to load up to 3,000 tons of steel rolls onboard one of TransAtlantic’s modern Quality assurance when unloading 1 bulk vessels in the port of Dalsbruk. When unloading, TransAtlantic ensures the quality of each individual roll of steel and scans their barcodes prior to being delivered to the customer or placed in Dalsbruk intermediary storage. Through wireless communications in port, FNsteel and the end-customers receive immediate information on what has been unloaded, as well as an update on the inventory.

Västervik

Saritimeafe m transports Steel rolls also require a specifically adapted secure form of loading to avoid damages. To enhance the efficiency of the transport chain, Szczecin loading and unloading measures are also prepared onboard prior to the vessel reaching port. Trans Atlantic’s modern and fuel efficient bulk vessels have ice class and ply the Baltic Sea year-round. 4

5 Proprietary terminals TransAtlantic’s terminal in Szczecin is dimensioned to Comprehensive distribution networks receive and store FNsteel’s products. The storage space From its terminals in Szczecin, Västervik and Hull, Trans is divided between various customers and qualities for Atlantic has created a comprehensive network of road carriers subsequent suborders for final deliveries. In Szczecin, and other distribution partners. In Szczecin, up to 50 trucks a TransAtlantic has a proprietary office with seven employ- day carrying steel rolls from FNsteel depart to industrial ees, who plan the unloading of the vessel and the daily customers in Poland, Germany, Austria, Italy and the Czech distribution for TransAtlantic’s various customers. The Republic. When the end-customer makes a suborder under personnel in the port work in shifts on coordinating the the framework agreement, the products are scanned when unloading of steel rolls from the vessels to the ware- they are loaded onto the railcar, barge or truck. A message is house, to subsequently load these onto trucks, railcars automatically send to the recipient and FNsteel, who are thus or barges to the final destination. informed that the goods have been loaded and are en route.

21 TransAtlantic 2011 Viking Supply Ships

Comments from the head of the business area Expertise that generates competitive advantages

In addition to having a new organization in place, including the relocation of the headquarters to Copenhagen, 2011 was a year hallmarked by a high level of market activity. We secured several key contracts that strengthen our leading niche position in arctic areas, and expanded our offering through the acquisition of SBS Marine.

Our expertise forms the foundation for a continued successful trend. Viking Supply Ships possesses a unique expertise to conduct operations in areas with severe weather conditions and in areas with ice. This expertise naturally encompasses our system and methods but it primarily comprises the extensive and solid experience that our officers have gathered over time in icebreaking and offshore operations. We will further sharpen our focus on developing and marketing these competitive advantages moving forward. An element of this effort involves advancing the training initiative within the framework of the Viking ICE Academy and the arctic expertise in the Viking ICE Council. Most of the key positions in the new organization, which was formed in 2011, were filled by former TransAtlantic employees. We also place considerable focus on developing our own talents. In January 2012, we received delivery of the final ATHS vessel from the Astilleros Zamakona shipyard in Spain. This means that we have 14 proprietary offshore vessels and icebreakers in our fleet and five icebreakers for which we bear operational responsibility on behalf of the Swedish Maritime Administration. Combined, this entails an expertise- based advantage in icebreaking, as well as a strong offering ahead of forthcoming negotia- tions for new assignments in various waterways.

Positive outlook In 2011, following several years of pressure due to a vast supply of tonnage and low activity, we noted signs of change. The prospects ahead of 2012 are positive, with fewer available vessels, only a few new vessels and increased activity in all of our geographic areas. In the coming years, several key contracts will arise for assisting the oil companies when prospecting in arctic waterways. Our solid knowledge and experience, and zero tolerance in terms of accidents, emissions and material accidents will enable us to successfully compete for these contracts.

Christian W. Berg Head of Viking Supply Ships

22 Viking Supply Ships business area Strong offering in arctic offshore

Viking Supply Ships’ extensive expertise in conducting offshore assignments in icy conditions and in severe weather conditions will become increasingly important when prospecting for oil and gas gains momentum in the arctic waterways. In 2011, activity was high in the business area, hallmarked by a strategic acquisition and new Ice Management contracts.

Sharp economic growth in such markets as tapped, and the IEA estimates that about Facts about the business area the BRIC countries China and India are 50% of the oil in 2035 will derive from new • Headquarters in Copenhagen and offices causing increased energy demands. Despite fields and production areas. The fastest per- in Aberdeen, Gothenburg, Kristiansand the rapid development of various energy centage production rise is estimated to derive and Moscow efficient solutions, the International Energy from offshore fields, including arctic areas. • 391 employees, of which 349 are on Agency (IEA) estimates that global demand vessels for energy will rise by at least 35% by 2035. Arctic waterways becoming • Extensive experience in icebreaking and Since the need for various types of energy increasingly significant offshore activities will probably not change much, the demand The IEA estimates that about 25–30% of the • One of few operators to possess actual for oil and gas will increase at the same world’s potential oil and gas reserves are arctic offshore experience rate. Since the production from existing found in the arctic areas. Prospecting for oil • Long-term contract with the Swedish fields is declining, new fields must be and gas in the arctic is a new challenge for Maritime Administration: the oil companies. In addition to the severe – winter-season icebreaking with own ice and weather conditions prevailing in the tonnage area, the logistics must be managed. Success – ship management for the five Swedish not only requires new investments in rigs government icebreakers Net sales and operating proﬁt and vessels, but also in new operating • A fleet of 14 proprietary vessels: SEK M SEK M methods. While relatively few arctic areas – three combined icebreakers/AHTS 750 375 have been exploited, the countries that con- vessels 600 300 trol these areas have put an increasing – four ice-reinforced AHTS vessels 450 225 number of exploitation licenses out to ten- – one AHTS vessel without ice class 300 150 der. The US, Canada, Greenland and Russia – six PSV vessels without ice class

150 75 have already sold a number of licenses and • Leading arctic offshore training program – Viking ICE Academy 0 0 will sell more in 2012. The oil companies that have purchased licenses have thus –150 –75 07 08 09 10 11 already made major investments and under

Net revenue takings for arctic waterways. Since many of Operating proﬁt (right scale) the licenses expire in 2016–2017, prospecting

Management Viking Supply Ships

Christian W. Berg Jan Lybecker Steffensen, Jesper Bejstrup Jeanette Wetterström Lars Karlsson Not pictured: Head of Viking Supply Ships COO CFO HR Manager HSE Director Tord Ytterdahl, CCO

23 TransAtlantic 2011 Viking Supply Ships

must commence not later than 2013–2014 to companies that are to assist the oil compa- Activities in 2011 enable the oil companies to thoroughly nies must possess solid experience of off- • New construction program completed research each of their license areas. shore operations and vessel operations in • Acquisition of the offshore shipping ice. They must also fulfill stringent quality company SBS Marine Major demand for new offshore vessels and environmental requirements and often • Establishment of headquarters in Due to the increased demand for energy have a local presence in the market in Copenhagen and the positive trend for offshore fields, which the operation is to be performed. • Development of new training programs the prerequisites are beneficial for a succes- at Viking ICE Academy sively stronger market for offshore vessels. High-level expertise and Compared with many other vessel types, extensive experience • Contract with Sakhalin Energy in arctic offshore* order intakes for offshore vessels are Viking Supply Ships’ vast expertise in currently at very low levels, which also performing operations in ice and severe • Commenced four-year assignment in strengthens the market prospects. Viking weather conditions will be of major signifi- the Barents Sea for ENI Norge Supply Ships anticipates significant demand cance when prospecting for oil and gas • Ice Management assignment on behalf for arctic offshore vessels with a high ice gains momentum in arctic waterways. The of Cairn Energy off Greenland class in the coming ten-year period. There increase in activity in these areas will create • Assignment on behalf of Statoil in the will also be considerable demand for pow- the opportunities for multiyear contracts Barents Sea erful icebreakers/offshore vessels (ice class with the oil companies and thus balance the • Intensive work on supply efforts and PC3 or higher) in the immediate future, as more volatile revenues from the offshore rig relocations in the North Sea new activities commence in the arctic areas. spot market in the North Sea. Customer • Icebreaking in the Baltic Sea on behalf adaptation and creativity combined with a of the Swedish Maritime Administration Increased demand in the North Sea leading position in safety and the environ- • Agreement on icebreaking in the Baltic In the North Sea, several major oil and gas ment are pivotal factors for success. In addi- Sea in 2012 on behalf of the Estonian finds have been made in recent years. In the tion to a modern fleet adapted to operations Maritime Administration market, this takes the shape of a sharp in ice, Viking Supply Ships has the leading • Development of new vessel design increase in the demand for offshore rigs. expertise in the area at its disposal. The What are known as subsea companies fore- commanding officers onboard the AHTS Focus in 2012 see major order intakes, indicating that the vessels hold an average of more than ten Marketing of arctic offshore operations fleet of production vessels will grow in the years’ experience of ice breaking and off- will be intensified. Discussions on partner coming years. This will lead to increased shore work. In addition, assignments have ships will be held with several of the oil demand for offshore vessels, such as supply already been performed in the arctic water- companies that are to being prospecting vessels (PSVs) and anchor handling vessels ways since 2007 on behalf of Cairn Energy, in the arctic waterways in 2013–2014. (AHTS). The forceful expansion that the ENI Norge, Exxon, Shell and Statoil. Work on signing long-term contracts Brazilian oil company Petrobras is conduct- applies to the entire fleet. ing off the coast of Brazil means that vessels New construction program completed will be relocated from the North Sea, which At the Spanish shipyard Astilleros Zama- * The agreements are subject to the approval will also contribute to an improved market kona, Viking Supply Ships has built four of the Board of TransAtlantic and the banks concerned. for offshore vessels in the North Sea and ice-reinforced AHTS vessels. The final ves- other markets. sel in the new construction program was delivered in January 2012. The vessels have High requirements during a design that makes them suitable for opera- arctic operations tions in areas with ice and in areas with Ice impacts personnel and equipment and severe weather conditions, such as the knowledge about ice operations is currently Barents Sea. During the year, extensive limited. The brief operation period in the work was conducted on recruiting crews arctic waterways also entails requirements for the vessels. The new recruits are evenly for extensive planning prior to the actual distributed between Denmark, Norway and operation in order to coordinate all of the Sweden. One of the vessels, Njord Viking, logistics. Drilling is conducted far from underwent a major upgrade to meet the normal storage bases and there is often no requirements for the four-year charter for or limited infrastructure in the area. There ENI Norge in the Barents Sea, which the is also an extreme focus on safety and envi- vessel commenced in late July. Other new ronment issues, and nothing may jeopardize constructions were active in the spot market the lifestyle of the local population. To par- in the North Sea. ticipate in arctic operations, the shipping

24 Four types of offshore vessels About 6,700 offshore vessels currently offer oil rigs worldwide assistance with everything from construction work on the ocean floor to transporting food and other necessities to rig crews. The vessels are generally classified in four different types: • AH TS (Anchor Handling Tug Supply Vessels) – combined vessels that, in addition to load capacity, are equipped for the towing of oil rigs and anchor handling. • PS V (Platform Supply Vessels) – vessels with large open deck sur- faces and load tanks that conduct transports to and from rigs. • ER RV (Emergency Response and Rescue Vessels) – safety vessels that circle oil rigs with the capacity to handle accidents. • CO V (Construction Offshore Vessels) – vessels that perform construction work on the ocean floor. Read more about Viking Supply Ships’ vessels on page 29.

Development of vessel designs cases, the operational area of the vessels Acquisition of SBS Marine In addition to the recently concluded new would be dependent on the short transition and Arctic Ice Management construction program, Viking Supply Ships time for icebreaking, which would nor- The reason for the acquisition of SBS Marine is developing new vessel designs for safe mally be limited to the southern parts of the was to strengthen and advance the opera- and efficient operations in the arctic water- North Sea sector. tion in the business area by expanding the ways in consultation with customers and Viking Supply Ships also partners with product offering. SBS Marine operates a shipyards and by performing various tests the Swedish Maritime Administration with fleet of five modern and one older PSV ves- and simulations. Among the designs is a the aim of using government ice breakers, sels, which manage transports to and from new series of vessels with a design opti- for which Viking Supply Ships currently offshore platforms. In addition to offering mized for managing future requirements in bears operational responsibility, for alterna- additional services to existing customers, subarctic areas such as the Barents Sea. tive assignments when they are not needed the acquisition will lead to economies of Work also commenced on a new series of for icebreaking in Swedish waterways. The scale. In 2011, two SBS vessels were con- AHTS/icebreakers, which is a new version partnership gives Viking Supply Ships a tracted for assignments in India, while two of the Tor Viking icebreaker. broader market offering. In 2011, an agree- vessels were on long-term contract in the ment was signed to terminate the current British sector and the remaining two on the Icebreaking in the Baltic Sea charter agreement with the Swedish Mari- spot market in the North Sea. In the coming Under Viking Supply Ships’ long-term con- time Administration for Vidar Viking, years, Viking Supply Ships aims to use the tract with the Swedish Maritime Adminis- which will commence a multiyear contract vessels for operations in the North Sea and tration, the two combination vessels – the off the coast of Sakhalin for the Sakhalin to supplement certain arctic operations. In Tor and Balder Viking vessels – will be at Energy oil consortium in 2012. The contract early 2011, the Swedish company Arctic Ice the disposal of the Administration during is subject to the approval of the Board of Management AB was also acquired, which the first quarter of each year for icebreaking TransAtlantic and the banks involved. For possesses Ice Management technology and in the Baltic Sea. The structure of the agree- the 2012 icebreaking season, Vidar Viking knowledge, and contributes to further ment means that, during mild winters, the will provide icebreaking services for the strengthening Viking Supply Ships’ offering. vessels may be used in offshore operations Estonian Maritime Administration. during the first quarter of the year. In such

25 TransAtlantic 2011 Viking Supply Ships

Viking Supply Ships business area

Number of employees (total of 391 persons)

At Dec 31, 2011

Onboard, 89% Land, 11%

Gender distribution

At Dec 31, 2011

Men, 90% Women, 10%

Age structure %

30 Ice expertise in focus with specialist knowledge in icebreaking and ice- 25 Viking Supply Ships has a considerable need to navigating. The recruitment of and training in spe- 20 recruit for its arctic initiative, and in 2011, the four cialist functions will be conducted in partnership 15 new anchor handling vessels were manned with a with the Swedish Maritime Administration and the total of 112 individuals. In a longer-term perspec- Swedish Polar Research Secretariat. The recruit- 10 tive, when the exploitation and extraction of oil ment bases for icebreaking are in Sweden, Finland 5

and gas gains momentum in the arctic waterways, and Russia, and the recruitment bases for offshore 0 there will be considerable need for employees are in Norway, Sweden, Denmark and the UK. 20–29 30–39 40–49 50–59 60–

Viking ICE Academy Viking ICE Council In the aim of increasing the crews’ knowledge With the aim of developing safe processes for of ice-navigation, Viking Supply Ships has devel- arctic offshore operations, Viking Supply Ships oped specialist training courses in the area in initiated the formation of a global council of partnership with the Kalmar Maritime Academy. independent experts in the area. In addition to In addition to the existing vessel crews, custom- pursuing the establishment of various industry ers and business partners have the opportunity standards and establishing a market for arctic to participate in training courses, which combine offshore, the Ice Council will provide advice on theory and practice by using simulators and how to best conduct arctic operations. The Coun- onboard practice. The current training program cil’s members are from Sweden, Russia, the US, encompasses “Ice training,” “Arctic training,” Canada, Finland and Germany. In 2011, meet- “Cold climate shipping” and “Dynamic position- ings were held in Murmansk and Montreal focusing operations in Arctic waters.” The “Ice training” ing on the Northern Sea Route and operations in program has received status as an official train- the Arctic. Read more at www.icecouncil.se. ing program in ice-navigation by the Swedish Maritime Administration. Read more at www.iceacademy.org.

26 27 TransAtlantic 2011 Viking Supply Ships

Safety and the environment Leading approach to safety

Operating in arctic waterways means that the vessels are often active in previously untouched areas where a minimum of emissions are permitted and where extensive requirements are imposed on safety and specialist expertise among the crews. Major oil prospecting companies also impose increasingly high requirements on their suppliers’ environmental and safety efforts, which benefits Viking Supply Ships.

The investment in arctic offshore means that Continuous safety improvements the environmental management system the large oil companies are TransAtlantic’s One of the requirements included in the ISO 14001. In 2012, the focus is on also main customers. They have very stringent OVMSA is training of all bridge officers in implementing the ISO systems on SBS requirements on their suppliers’ safety a systematic safety approach, which is Marine’s vessels. work. For shipping companies that will be already implemented on Viking Supply For Viking Supply Ships, as well as for assisting the oil companies with exploration Ships’ offshore vessels and icebreakers. the entire TransAtlantic Group, it is essential in the Arctic waters, the same strict demand Continuously identifying risks is the most that the environmental impact is reduced specification that applies for tanker companies important feature in the work to improve to the extent possible and that statutory is now being introduced. The requirements, safety onboard. requirements are complied with. known as Offshore Vessels Management Observations are compiled in reports Self Assessment (OVMSA), include 12 items that are distributed to all vessels and thus Specially trained crews that must be met. facilitate continuous improvements. The In offshore activities, experience in operat- It essentially involves requirements for a crews also complete safety training courses, ing in ice remains limited. As one of the systematic safety effort in accordance with which often exceed the market’s require- leading shipping companies in the segment, established procedures, combining quality ments and the safety equipment is of high Viking Supply Ships is focusing on estab- and environmental management systems. standard class on all vessels. The stringent lishing a standard for requirements on how The shipping companies are assessed on a safety and environmental approach at to conduct a safe and environmentally five-grade scale depending on how well the Viking Supply Ships will generate competi- friendly operation. Viking Supply Ships requirements are fulfilled. When assessing tive advantages in the coming marketing imposes stricter requirements on its their suppliers, oil companies supplement effort. onboard crew on offshore vessels than the the OVMSA with internal inspection con- market requires, which is achieved through trols of the vessels, as well as visiting the Increased environmental requirements such measures as customized proprietary head offices to review procedures. The over- among oil companies training courses at Viking ICE Academy at all impression subsequently determines The trend is progressing toward an increas- the Kalmar Marine Academy. whether the shipping company is approved ingly extensive environmental approach in By continuously developing knowledge as a supplier, which is a seal of quality. the sector, which is indicated by the rising and amassing experience among crews, In 2011, several major oil companies per- demands imposed on environmental efforts Viking Supply Ships is increasing its com- formed inspection controls of the business in conjunction with the oil companies’ petitiveness to operate in arctic waterways. area’s operations, all of which were success- inspection controls in 2011. ful. Viking Supply Ships is certified in Viking Supply Ships’ vessels operate on accordance with the FPAL quality assurance fuel with a 0.1% sulfur ratio and with cata- system that applies in the oil and gas indus- lytic converters that give the lowest emis- try. All of the offshore vessels are registered sions of nitric oxide. Viking Supply Ships’ in OVID, the Offshore Vessel Inspection entire organization and all vessels of Viking Database, where the oil companies can go class are certified in accordance with the in and check information online. quality management system ISO 9001 and

28 List of vessels

Viking Supply Ships

Vessel Type Dwt Year of construction Holding/leasing form Flag

Balder Viking AHTS/Icebreaker 3,000 2000 Owned – 100% Sweden Tor Viking II AHTS/Icebreaker 3,000 2000 Owned – 100% Sweden Vidar Viking AHTS/Icebreaker 3,000 2001 Owned – 100% Sweden Odin Viking AHTS 2,869 2003 Owned – 100% Norway Loke Viking AHTS 4,500 2010 Financial lease – Bareboat-charter Denmark Njord Viking AHTS 4,500 2011 Financial lease – Bareboat-charter Denmark Magne Viking AHTS 4,500 2011 Financial lease – Bareboat-charter Denmark Brage Viking AHTS 4,500 2012 Financial lease – Bareboat-charter Denmark SBS Torrent PSV 3,662 2007 Operational lease – Bareboat-charter UK SBS Typhoon PSV 3,662 2006 Operational lease – Bareboat-charter UK SBS Nimbus PSV 3,622 2003 Owned – 100% UK SBS Stratus PSV 3,662 2003 Owned – 100% UK SBS Tempest PSV 3,662 2006 Owned – 100% UK SBS Cirrus PSV 3,250 1985 Owned – 100% UK

29 TransAtlantic 2011 Viking Supply Ships

Sakhalin

New finds are driving demand

Based on the assumption that up to 25–30% of the world’s potential oil and gas reserves are found in the arctic areas, more and more oil companies have begun researching the possibility of extracting these reserves. Viking Supply Ships is already an established company in arctic offshore with vast expertise in performing operations in ice and severe weather conditions.

Brief facts for 2011 • 73% (AHTS) and 73% (PSV) degree of utilization • 40 rig relocations • 250 icebergs moved

Competition scenario Except for Maersk, most of the shipping companies that operate in the arctic offshore segment are more niched, such as DOF, Farstad, Solstad, Havila, 40 Siem, Artica, Rieber Shipping, Fesco and Swire. rig relocations during the year

Continued high oil price Despite a weaker world economy, the oil price experienced a stable trend in 2011. The reason is continued uncertainty concerning future supply combined with concerns over the geopolitical situation Barents Sea inBrent key Crudeoil-producing countries. 250 Greenland icebergs moved in 2011 USD per barrel of Brent Crude

150

100

0 Moscow Feb Feb Feb Feb Feb Feb 07 08 09 10 11 12 Baltic Sea Xxxxx New finds needed The extraction of oil from existing fields Aberdeen Kalmar has already begun to decline. Some North Sea Copenhagen (HQ) 25–30% of the world’s potential oil and gas reserves are expected to be found in the arctic areas. Oil reserves

Millions of barrels/day

100

0 1995 2005 2015 2025 2035

Unconventional oil Natural gas liquids Crude oil; fields yet to be found Crude oil; fields yet to be developed Crude oil; currently producing fields

30 Sakhalin

2012 – more activity, higher rates The new finds that are being exploited in such regions as the North Sea, the Barents Sea and off the coast of Sakhalin are contributing to a stable rise in demand – and thus higher rates – for offshore vessels of the AHTS and PSV types. In 2012, Viking Supply Ships will focus on the North Sea and arctic areas with all of its 14 vessels.

Greenland Barents Sea Sakhalin The U.S. Geological Survey esti- Activity in the Barents Sea Off the coast of Russia’s largest island, mates that there are about 50 billion increased in 2011, although the Sakhalin, north of Japan, an intensive effort barrels of oil and gas off the west severe weather conditions and is under way to produce and search for oil and east coasts of Greenland. Sev- the complete darkness during the and gas. Beginning in the summer of 2012, eral companies have begun search- winter entail specific requirements Vidar Viking will assist the Sakhalin Energy ing for finds, including the British on the vessels and crews operating oil consortium with services concerning ice- oil company Cairn Energy. For the in the area. In 2011, the Njord breaking, anchor handling and other support*. second consecutive year, Viking Viking vessel commenced a four- Supply Ships was involved in pro- year charter for ENI Norge and tecting their drilling operations from Loke Viking participated in a short drifting icebergs, using the Vidar and charter for Statoil in the area. Balder Viking icebreakers in 2011.

Moscow Through its office in Moscow, Viking Supply Barents Sea Ships has created an extensive and close partnership with various players in the grow- Greenland ing Russian market. In 2011, this resulted in a multiyear contract with Sakhalin Energy*. Day-to-day work on the contract will be entirely managed by employees at the Moscow office.

Moscow Aberdeen SBS Marine, the offshore shipping Baltic Sea company acquired in 2011, is based in the Scottish city of Aber- Kalmar deen. The fleet comprises six PSV Aberdeen North Sea Copenhagen (HQ) vessels, which generated revenue of about SEK 240 million in 2011. SBS Marine strengthens and broadens Viking Supply Ships’ offshore offering in the North Sea and the ice-free arctic waterways. Kalmar To increase knowledge about ice navigation among our own crews and those of business partners, Viking Supply Ships has developed a unique special training program in the area in partnership North Sea with the Kalmar Maritime Academy. The training program has Investments in new fields and expanded produc- achieved status as an official training program in ice navigation tion, combined with a limited supply of tonnage from the Swedish Maritime Administration and is offered under contributed to a better market for offshore vessels the name of the Viking ICE Academy. in the North Sea. In 2011, Viking Supply Ships had between two and six AHTS vessels in the spot market in the North Sea.

* The agreement is subject to the approval of the Board of TransAtlantic and the banks concerned.

31 TransAtlantic 2011 The share

The TransAtlantic share New share issue ahead of division

TransAtlantic’s share price declined 65.3% in 2011. The trend was impacted by a continued weak earnings trend at the company and a general decline in global markets. The new share issue in conjunction with the acquisition of SBS Marine resulted in the Norwegian company Kistefos increasing its ownership from 50% to 62.9% of the share capital of TransAtlantic.

TransAtlantic’s Series B share is listed on the the company’s share capital. The reduction in company on the Oslo Stock Exchange. Follow- NASDAQ OMX Stockholm on the Small Cap share capital, which will result in a share capital ing the division, Rederi AB TransAtlantic will List and is included in the OMX Transport of about SEK 110.9 M, is expected to be registered comprise the Industrial Shipping business area index. At year-end, the share price was SEK with the Swedish Companies Registration and remain listed on the NASDAQ OMX 9.15, corresponding to a market capitalization Office on February 29, 2012. Stockholm. of SEK 1,015 M (1,686). On the same date, the total shareholders’ equity amounted to SEK Shareholders and changes in Dividend proposal and dividend policy 2,493 M (2,396), corresponding to SEK 22.50/ shareholder structure Based on earnings for the year and the existing share (43.20)*. The acquisition of Trans Viking in autumn investment requirement, the Board of Directors 2010 entailed that Norwegian Kistefos, through proposes that no dividend be paid for the 2011 Share capital and new share issue its subsidiary Viking Supply Ships, became fiscal year. TransAtlantic’s target is that the In late 2011, a new share issue was completed, TransAtlantic’s new principal shareholder, average amount of the dividend shall be not with preferential right given to existing share- with slightly more than 50% of both share capital less than 33% of the annual net profit. holders, valued at about SEK 555 M prior issu- and votes. This shareholding rose to 62.9% of ing costs, with the aim of financing the acqui the capital and 58.4% of the votes in conjunction Contacts with shareholders sition of SBS Marine and strengthening the partial exercise of the guarantees issued by TransAtlantic’s ambition is to maintain a posi- company’s financial position ahead of the Kistefos under the new share issue in 2011. tive dialog with the stock market and to pro- forthcoming division of the Group. The new Kistefos’ increased shareholding would have vide information on developments and events share issue increased TransAtlantic’s share caused a mandatory bidding process, but the concerning its operations. This is done via capital by about SEK 555 M to approximately company received an exemption from the presentations in conjunction with the quarterly SEK 1,109 M and the number of shares rose Swedish Securities Council for this under the reports and participation at conferences and by about 3.6 million Series A shares and 51.8 rules that apply to increased ownership in con- seminars. The Annual Report, year-end reports million Series B shares junction with a new share issue. At year-end, the and interim reports are available on the com- The total number of shares in TransAtlantic total number of shareholders was 5,854 (6,783), pany’s website www.rabt.se. The website also at the end of the year amounted to approxi- which was a decline compared with 2010. includes press releases, presentation material mately 110.9 million shares distributed among from information meetings and other informa- about 7.2 million Series A shares carrying ten Division of the company tion concerning the company. votes each and about 103.6 million Series B The process of dividing the Group continued shares carrying one vote each. An Extraordi- as planned. The objective is to spin off Viking nary General Meeting also resolved to reduce Supply Ships A/S to shareholders and list the

* Following the completion of the new share issue, the number of share rose by 55,451,350 to 110,902,700.

Press releases • 2012-02-28 Year-end Report 2011 • 2011-11-03 Interim Report January-September • 2011-05-26 TransAtlantic and StoraEnso • 20 12-01-27 New CEO of TransAtlantic Industrial 2011 extend cooperation Shipping appointed • 20 11-10-26 TransAtlantic’s Nomination Com- • 20 11-05-04 Annual General Meeting press • 20 12-01-13 New AHTS vessel delivered to mittee appointed release Rederi AB TransAtlantic TransAtlantic • 20 11-10-25 TransAtlantic signs three-year • 20 11-05-03 Interim Report Jan–Mar 2011 • 20 11-12-30 Changed number of shares and cargo contract • 20 11-04-29 New CEO appointed for votes in Rederi AB TransAtlantic (publ) • 20 11-10-24 New CFO for TransAtlantic Trans Viking Offshore A/S • 20 11-12-14 New Managing Director of appointed • 20 11-04-12 Rederi AB TransAtlantic publishes TransAtlantic • 20 11-10-05 Notification of Extraordinary Gen- its 2010 Annual Report on www.rabt.se • 20 11-12-08 Final outcome of TransAtlantic’s eral Meeting of Rederi AB TransAtlantic (publ) • 20 11-04-04 Notification of Annual General New share issue • 20 11-10-05 TransAtlantic acquires SBS Marine Meeting • 20 11-11-24 TransAtlantic strengthens position and undertakes new share issue of SEK 550 M • 20 11-03-31 Strategic changes in TransAtlantic in arctic offshore and signs long-term con- • 20 11-08-04 Interim Report Jan-June 2011 • 20 11-03-31 TransAtlantic divests RoRo vessels tracts with Sakhalin Energy • 20 11-07-29 TransAtlantic takes delivery of Ortviken, Östrand and Obbola • 20 11-11-09 Refinancing of existing loans for AHTS vessel Magne Viking • 20 11-03-31 TransAtlantic signs contract for Tor Viking II, Balder Viking and Vidar Viking • 20 11-06-17 TransAtlantic crew on board Tor AHTS vessel Balder Viking • 20 11-11-09 Publication of prospectus for Viking rewarded for its rescue efforts • 20 11-03-30 Amended Year-end Report 2010 TransAtlantic’s new share issue • 20 11-06-08 TransAtlantic continues process • 20 11-02-09 TransAtlantic takes delivery of • 20 11-11-08 Press release from Extraordinary to divide the Group AHTS vessel Njord Viking General Meeting of Rederi AB TransAtlantic • 20 11-05-31 Competition Authority gives • 20 11-01-21 TransAtlantic’s icebreaker Tor • 20 11-11-03 Terms and conditions established TransAtlantic its approval Viking called in for icebreaking in the Baltic Sea for TransAtlantic’s new share issue

32 Key figures* 2011 2010 2009 2008 2007 IR Contact Number of shares, Dec. 31, 000s 110,903 55,451 28,430 28,430 28,430 Carina Dietmann Market capitalization, Dec. 31, SEK M 1,015 1,686 645 904 1,225 Head of Corporate Communications Direct line: +46 (0) 31 763 23 34 Number of shareholders 5,854 6,783 7,402 6,184 6,324 E-mail: [email protected] Change in share price during the year, % –65.3 32 –29 –26 –15 Ordinary dividend, SEK — — — 2.50 2.0 Dividend as a percentage of earnings per share — — — 27 31 P/E ratio, Dec. 31 –1.39 1.8 n.a. 3.5 6.5 Shareholders’ equity/share, Dec. 31, SEK/share 22.5 43.2 42.4 50.9 43.6

* Following the completion of the new share issue, the number of shares rose by 55,451,350 to 110,902,700.

Shareholders in Rederi AB TransAtlantic at December 31, 2011 Series A shares Series B shares Number of shares Portion of capital, % Portion of votes, %

Kistefos (through wholly owned subsidiaries) 3,693,178 66,090,461 69,783,639 62.9 58.4 Enneff Rederi/Enneff Fastigheter 2,532,122 1,399,490 3,931,612 3.6 15.2 Lindéngruppen AB 913,016 5,313,000 6,226,016 5.6 8.2 Ernström Finans AB 0 3,010,000 3,010,000 2.7 1.7 Skagen Fonder 0 1,877,633 1,877,633 1.7 1.1 Morgan Stanley & Co Intl PLC 0 1,600,000 1,600,000 1.4 0.9 Credit Agricole Suisse SA 0 1,000,000 1,000,000 0.9 0.6 Försäkringsbolaget Avanza Pension 0 998,245 998,245 0.9 0.6 SEB S.A-NQI 0 956,329 956,329 0.9 0.5 Karlsson, Anders 58,606 124,698 183,304 0.2 0.4 Ribbskottet AB 0 600,000 600,000 0.5 0.3 Handelsbanken Fonder 0 515,930 515,930 0.5 0.3 Total 7,196,922 83,485,796 90,682,708 81.8 88.2 Other shareholders 74,920 20,145,062 20,219,992 18.2 11.8 Total number of shares 7,271,842 103,630,858 110,902,700 100% 100%

Share-price trend 2011 Number of shareholders in size categories at Dec. 31, 2011 Shares traded, 000s 30 1,800 Holdings Shareholder

25 1,500 1–500 2,740 501–1,000 1,146 20 1,200 1,001–5,000 1,415 15 900 5,001–10,000 273 10,001–15,000 75 10 600 15,001–20,000 49 5 300 20,001– 156 Total 5,854 0 0 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

Rederi AB TransAtlantic volume (000s) Rederi AB TransAtlantic share price (SEK) NASDAQ OMX Stockholm PI (rebased)

Share capital trend Change Number of shares Share capital Series A Series B Series A Series B Quotient Event shares shares Total shares shares Total Change Total value

2004 New share issue — 474,275 474,275 1,208,980 17,910,153 19,119,133 4,742,750 191,191,330 10 2005 New share issue 608,980 11,129,541 11,738,521 1,817,960 29,039,694 30,857,654 117,385,210 308,576,540 10 2007 Share withdrawal during the year — –2,427,180 –2,427,180 1,817,960 26,612,514 28,430,474 –24,271,800 284,304,740 10 2010 New share issue 1,817,961 25,907,715 27,725,676 3,635,921 52,520,229 56,156,150 277,256,760 561,561,500 10 2010 Withdrawal of treasury shares –704,800 –704,800 3,635,921 51,815,429 55,451,350 –7,048,000 554,513,500 10 2011 New share issue 3,635,921 51,815,429 55,451,350 7,271,842 103,630,858 110,902,700 554,513,500 1,109,027,000 10

* The reduction in share capital from 1,109,027,000 to 110,902,700 was registered by the Swedish Companies Registration Office on February 29, 2012.

33 TransAtlantic 2011 Five-year overview

Five-year overview

Refer to page 82 for definitions TransAtlantic SEK M 2011 2010 2009 2008 2007

Consolidated revenue and earnings

Net revenue Viking Supply Ships business area 568 298 125 402 359 Industrial Shipping business area 2,259 1,865 1,900 2,006 2,005 Ship Management/Group-wide1) 162 231 259 240 166 Consolidated net revenue 2,989 2,394 2,284 2,648 2,530

Operating profit/loss (before tax) Viking Supply Ships business area –72 45 –25 233 230 Industrial Shipping business area –113 –105 –140 81 81 –185 –60 –165 314 311

Ship Management/Group-wide –87 –61 –48 –31 –30 Consolidated operating profit/loss –272 –121 –213 283 281 Restructuring costs and other items affecting comparability –187 –247 –63 –24 –3 Acquisition effects –7 775 — — — Consolidated profit/loss before tax –466 407 –276 259 278 Tax 31 178 55 7 –92 Consolidated net profit/loss –435 585 –221 266 186

Consolidated cash flow Cash flow from current operations before changes in working capital –37 58 –50 455 415 Changes in working capital 151 33 2 38 –116 Cash flow from investing operations –477 164 –142 –58 –41 – of which, investments2) –824 152 –142 –86 –84 – of which, divestments 347 12 0 28 43 Cash flow from financing operations 273 86 –89 –240 –143 Total cash flow –90 341 –279 195 115 Exchange-rate difference in cash and cash equivalents 1 –31 32 –14 14 Closing cash and cash equivalents 548 637 327 574 393 Less blocked/pledged cash and cash equivalents — –14 –7 –7 –7 Overdraft facilities granted but not utilized 93 24 124 400 400 Unappropriated closing cash and cash equivalents3) 641 647 444 967 786

1) In addition to Group-wide expenses, this item includes the Group’s external ship management, for which a large portion of revenue comprise costs re-invoiced to customers. 2) The figure for 2011 includes cash and cash equivalents of SEK 38 M contributed to the Group in connection with the acquisition of Österströms and SBS Marine the 2010 figure includes cash and cash equivalents of SEK 298 M contributed to the Group in connection with the acquisition of Trans Viking. 3) Of the Groups cash and cash equivalents for 2011 of SEK 548 M (637), SEK 157 M pertains to a specific account to secure the Group’s cash commitments for the delivery of the Brage Viking. For 2010, a similar provision of SEK 315 M was made for the deliveries of Njord, Magne and Brage Viking.

34 Refer to page 82 for definitions TransAtlantic SEK M 2011 2010 2009 2008 2007

Consolidated balance sheet, Dec. 31 Vessels 4,839 3,815 2,195 2,171 2,047 Financial fixed assets 188 71 105 66 73 Other fixed assets 88 91 100 79 78 Current assets, excluding cash and cash equivalents 620 497 445 458 533 Cash and cash equivalents 548 637 327 574 393 Total assets 6,283 5,111 3,172 3,348 3,124

Shareholders’ equity1) 2,493 2,396 1,175 1,421 1,217 Interest-bearing liabilities 2,983 2,135 1,381 1,188 1,215 Noninterest-bearing liabilities 807 580 616 739 692 Total shareholders’ equity and liabilities 6,283 5,111 3,172 3,348 3,124

Consolidated shareholders’ equity1) Shareholders' equity, Jan. 1 2,396 1,175 1,421 1,217 1,085 New share issue net after transaction expenses 542 658 — — — Dividend — — –70 –70 –57 Profit for the year –435 585 –221 266 186 Exchange-rate differences/other –10 –22 51 8 37 Buy-back of own shares — — –6 — –34 Shareholders' equity, Dec. 31 2,493 2,396 1,175 1,421 1,217

Data per share (SEK)2) Earnings before capital costs (EBITDA) 1.0 21.6 –0.3 15.5 14.1 Earnings before interest expenses (EBIT) –5.2 11.1 –7.2 9.7 10.3 Operating profit (before tax) –4.1 –2.9 –6.6 8.7 8.5 Profit after current tax –7.3 9.9 –8.5 7.9 5.6 Profit after full tax –6.6 14.3 –6.9 8.2 5.6 Cash flow from current operations 1.7 22 –1.5 15.3 9.2 Total cash flow –1.4 8.3 –8.6 6.0 3.5 Shareholders' equity, Dec. 31 22.5 43.2 42.4 50.9 43.6 P/E ratio n.a 1.8 n.a 3.5 6.5 Dividend paid — — 2.50 2.50 2.00 Number of shares, Dec. 31 (000s)3) 110,903 55,451 27,726 27,926 27,926 Average number of shares 66,246 41,057 32,258 32,394 32,872

Key figures Earnings before capital costs (EBITDA), SEK M 67 884 –8 502 462 Earnings before interest expenses (EBIT), SEK M –348 455 –233 316 341 Shareholders’ equity, SEK M 2,493 2,396 1,175 1,421 1,217 Capital employed, SEK M 5,476 4,566 2,556 2,609 2,433 Net indebtedness, Dec. 31, SEK M 2,407 1,533 1,054 615 823 Operating cash flow, SEK M –51 841 –41 444 423 Total cash flow, SEK M –90 341 –279 195 115 Return on shareholders’ equity, % –18 32.8 –17.1 20.2 16.2 Return on capital employed, % –6.9 12.8 –9.0 12.5 14.8 Equity/assets ratio, % 40 47 37 42 39 Net indebtedness, Dec. 31, % 98 64 90 43 68 Profit margin, % –16 17.0 –12.1 9.8 11.0 Interest-coverage ratio, multiple 0.5 16.0 0.0 9.2 7.7 Number of employees, year-end 833 911 1,050 1,058 1,017

1) There are no warrants or other equity instruments in TransAtlantic. 2) In the new share issue with preferential rights for the old shareholders, in which the subscription price is lower than the fair value of the share, a so-called bonus issue element arises, which impacts the calculation of earnings per share for the current period and periods prior to the new share issue. The bonus issue element of the new share issue represents the value that the company’s shareholders waive by way of the reduced price of the share. 3) Calculated on number of shares outstanding, excluding bought-back shares held in treasury.

35 TransAtlantic 2011 Corporate Governance Report

Corporate Governance Report

Rederi AB TransAtlantic is a Swedish public limited company listed on NASDAQ OMX Stockholm, Small Cap segment. TransAtlantic is governed through the Annual General Meeting, the Board of Directors and the President, in accordance with the Swedish Com- panies Act and the Swedish Code for Corporate Governance.

Corporate governance in TransAtlantic document. The Articles of Association stipu- relation to Kistefos AS, which is the company’s This Corporate Governance Report has been lates where the Board has its registered head largest owner, as well as Lena Patriksson prepared in accordance with the provisions in office, operational focus, authorized signatory Keller, who is not independent in relation to a the Swedish Code of Corporate Governance as well as information on the number of shares Board member, a member of company manage- (“The Code”) and Ch. 6, sections 6–9 of the and share capital. The highest governing body ment or one of the principal owners, Enneff Swedish Annual Accounts Act and Ch. 9, sec- in TransAtlantic is the General Meeting of Rederi/Enneff Fastigheter. In addition, Jenny tion 31 of the Swedish Companies Act, and Shareholders, where the company’s sharehold- Lindén Urnes from Lindéngruppen, who is pertains to the 2011 financial year. The auditor ers exercise their influence. The Board of independent in relation to the company, the has expressed an opinion as to whether the Directors manages, on behalf of the sharehold- company management and principal owners, preparation of the Corporate Governance ers, the company’s interests and transactions. is included. However, the Board of Directors Report and disclosures in accordance with TransAtlantic’s Board of Directors is led by the believes that this is reasonable based on the Ch. 6, section 6, second paragraph 2–6 of the Chairman of the Board, Christen Sveaas. The company’s shareholder structure. Annual Accounts Act (for example, the most Board appoints the President. important features of the company’s system for Distribution of responsibility between the Shareholders internal control and risk management in con- Board of Directors and the President is regu- TransAtlantic’s Series B shares have been listed junction with financial reporting) correspond lated in the Board’s rules of procedure and the on NASDAQ OMX Stockholm since 1991, the with the other sections of the Annual Report. instructions for the President, both of which are Small Cap segment. The share capital amounts TransAtlantic’s Articles of Association and established annually. Administration by the to SEK 1,109,027,000, distributed among other additional information on corporate Board of Directors and the President, as well as 110,902,700 shares with a quotient value of governance at TransAtlantic are available at the company’s financial reporting is reviewed SEK 10. There are a total of 7,271,842 Series A www.rabt.se. by an external auditor, elected by the Annual shares and 103,630,858 Series B shares. Series A The company’s governance, management General Meeting. shares carry ten votes each and Series B shares and control are based on external laws and carry one vote each. The number of shareholders regulations, as well as internal regulations, Application of the Code at December 31 amounted to 5,854 (6,783). Both policies and instructions. TransAtlantic’s The Board of Directors and Management types of shares carry dividend entitlement. Board of Directors and management strive for believe that the company follows and applies Further information on the share and share- TransAtlantic to comply with the demands all regulations included in the Code, with the holders, refer to page 32. placed on the company by the stock market, exception of the composition of the Nomina- shareholders and other stakeholders. By being tion Committee. The Code states that the General Meeting of Shareholders transparent and accessible, TransAtlantic majority of the Nomination Committee mem- TransAtlantic’s highest decision-making body strives to provide shareholders and other bers must be independent in relation to the is the General Meeting of Shareholders, which stakeholders with insight into decision chan- company and company management. Trans must be held within six months of the end of nels, delegation of responsibility, authorities Atlantic’s Nomination Committee includes the financial year. Notification of the Annual and control systems. In addition to this, the Christen Sveaas (Chairman) and Henning General Meeting shall occur not earlier than Articles of Association is a central control E. Jensen, both of whom are dependent in six weeks and not later than four weeks prior

Corporate governance structure at TransAtlantic

Nomination Committee Shareholders through the Annual General Meeting Auditors

Board of Directors Audit Committee Remuneration Committee Investment Committee President

Management Group

36 to the Meeting. All shareholders included in to the President and Board of Directors. Reso- Shareholders in the Municipality of Härryda. the list of shareholders and who have regis- lutions at the Meeting are usually made with a In addition, the Meeting resolved to appoint tered for participation in time are entitled to simple majority, but certain motions require a Henning E. Jensen as a new Board member. participate and vote at the Meeting. Those higher proportion of the votes represented at Henning E. Jensen succeeds Åge Korsvold, shareholders who cannot attend in person may the Ge neral Meeting of Shareholders. It was who resigned from the Board. be represented by proxy. not possible to follow or participate in the For further information, visit The Annual General Meeting was held on Meeting from another location using commu- www.rabt.se/Investor Relations. May 3, 2011 at Tjörn municipality’s premises nication technology and no change has been in Skärhamn. At the Meeting, 55 shareholders planned in this regard for the 2012 Meeting. Nomination Committee were present, representing 65.9% of the votes. The Annual General Meeting resolved to At the Meeting, the entire Board of Directors, Extraordinary Meeting of Shareholders establish a Nomination Committee, which Group Management and the company’s audi- An Extraordinary Meeting of Shareholders shall consist of three members representing tors were present. The President informed the was held on November 7 to address the Board’s the three largest shareholders, in terms of shareholders about the development of the proposal to acquire SBS Marine (Holdings) voting rights, on September 30 each year. company during the past year and resolutions Ltd., a new share issue, amendments to the At the Annual General Meeting in May 2011, made at the Meeting included: Articles of Association, reduction of the com- the Nomination Committee’s Chairman, • no dividend will be paid for the 2010 fiscal year pany share capital and the statutory reserve. Christen Sveaas, reported on the work of the • fees for the Board of Directors shall remain The Meeting resolved to approve the proposals Nomination Committee. In its work, the Nomi- unchanged and total SEK 1,400,000, distri presented by the Board. The Meeting resolved nation Committee took into account the buted as SEK 400,000 to the Chairman and to acquire all of the shares in SBS Marine demands that can be placed on the Board of SEK 200,000 to each Board member (Holdings) Ltd. in exchange for a cash payment Directors resulting from the company opera- • guidelines for remuneration to senior executives and to implement a new share issue in the tions and development phase, as well as com- • procedures for the appointment and work of amount of about SEK 555 M with preferential petency, experience and background of the the Nomination Committee. rights for existing shareholders on 1:1 terms Board members. Independence issues were and SEK 10 for each share. The Meeting also also highlighted as well as issues pertaining At the Annual General Meeting Christen Sveaas, resolved to reduce the company’s share capital. to gender distribution. Folke Patriksson, Åge Korsvold, Håkan Larsson, The company’s share capital was to be reduced Pursuant to the resolution of the Annual Christer Olsson and Magnus Sonnorp were in 2012 by SEK 998,124,300 and subsequently General Meeting in May 2011, the Chairman reelected. In addition to these, Christer Lind- amount to SEK 110,902,700. A resolution was was given the task to appoint a Nomination gren will remain as the trade union represent- also made to reduce the company’s statutory Committee, based on the company’s three larg- ative and member of the Board. Christen Sveaas reserve by SEK 245,782,000. The amendments est shareholders at the end of September 2011, remained as Chairman of the Board and Folke to the Articles of Association also pertained to according to EuroClear Sweden AB. The Nomi- Patriksson as the Deputy Chairman. relocating the company’s registered office to nation Committee shall prepare proposals for During the Meeting, shareholders were the Municipality of Gothenburg and enabling Board members, the Chairman of the Board, provided the opportunity to submit questions the company to hold the General Meeting of as well as remuneration of Board members and

Composition of the Board of Directors, Independent Independent of the number of meetings and fees during the fiscal year of major company and company Elected Board meeting shareholders management

Christen Sveaas, Chairman1) 2010 18/20 No Yes Folke Patriksson, Deputy Chairman 1972 20/20 No Yes Henning E. Jensen2,3) 2011 4/5 No No Åge Korsvold2,4) 2010 13/15 No Yes Håkan Larsson 1993 19/20 Yes Yes Christer Lindgren 2001 18/20 Yes No Christer Olsson 1999 13/20 Yes Yes Magnus Sonnorp 2010 20/20 Yes Yes

1) Absent on two occasions due to a conflict of interests. 2) Absent on one occasion due to a conflict of interests. 3) Elected to the Board at the Extraordinary Meeting of Shareholders on November 7, 2011. 4) Resigned from the Board at the Extraordinary Meeting of Shareholders on November 7, 2011.

37 TransAtlantic 2011 Corporate Governance Report

proposals for regulations for the Nomination Board of Directors Communication Policy, which are established Committee for the 2012 Annual General Meet- The Board of Directors shall consist of not less annually, represent important control instru- ing. The composition of the Nomination Com- than five and not more than ten members, and ments. The Board also ensures the quality of mittee was announced on TransAtlantic’s web- not more than five deputies according to the the financial reporting through detailed review- site and through the press release on October Articles of Association. The Board members ing of interim reports, annual reports and year- 26, 2011. The Nomination Committee com- are elected annually at the Annual General end reports at Board meetings. The Board prises Christen Sveaas, Chairman of the Board, Meeting, with a mandate period from the addresses different issues in their entirety and, Henning E. Jensen representing Kistefos AS/ Annual General Meeting until the next Annual considering the Group’s size and complexity, Viking Supply Ships, Lena Patriksson Keller General Meeting. The Annual General Meeting has expressly made the decision not to have representing Enneff Rederi AB/Enneff decides the exact number of Board members. sub-committees to prepare auditing and remu- Fastigheter i Skärhamn AB, and Jenny Lindén At the Annual General Meeting on May 3, neration matters. This means that the Board as Urnes representing Lindéngruppen AB. 2011, Christen Sveaas, Folke Patriksson, Åge a whole constitutes the Audit Committee and The members of the Nomination Committee Korsvold, Håkan Larsson, Christer Olsson, Remuneration Committee. In December 2011, represent 81.8% of the voting rights (at December and Magnus Sonnorp were elected to the the Board resolved to appoint an Investment 31, 2011) of all shares in the company. In con- Board. Christen Sveaas was elected Chairman Committee to decide on the management of junction with the acquisition of Trans Viking of the Board. Folke Patriksson remains Deputy the Group’s surplus liquidity. in 2010, Folke Patriksson, through Enneff Chairman. In addition to the Board members The Board usually meets on six occasions Rederi AB/Enneff Fastigheter i Skärhamn AB, elected by the Meeting, Christer Lindgren will per year and additional meetings are held as signed a shareholder agreement with Kistefos remain as the trade union representative. The necessary. The Board’s work during the year AS regarding certain issues related to Trans number of Board members elected by the Meet- was extensive due to the company working Atlantic. The shareholder agreement defines, ing who are considered independent in rela- on and implementing a vast number of major for example, the appointment of the Board of tion to the company, according to requirements activities such as the acquisition of Österströms, TransAtlantic, which, according to the agree- of the Code, is estimated to be three. At the the division of the Group into two independ- ment, shall comprise six members elected by Extraordinary General Meeting on November ent units, the acquisition of SBS Marine (Hold- the General Meeting of shareholders. Kistefos 7, 2011, Henning E. Jensen was elected as a new ings) Ltd. and the new share issue. Scheduled AS is entitled to nominate three Board mem- Board member and Åge Korsvold resigned meetings are held in connection with quar- bers, including the Chairman, and Enneff is from the Board. terly reports and additional meetings are entitled to nominate three members, including No other remuneration was made apart held to deal with strategic issues and decide the Vice Chairman of the Board. One of each of from that resolved on by the Annual General on budgets for future financial years. Based the parties’ nominated Board members shall Meeting. Remuneration to the Board of Direc- on this, the Board held six scheduled meet- be independent in relation to the company’s tors is approved by the Annual General Meet- ings, and one statutory meeting, as well as major shareholders. The agreement also con- ing following a proposal from the Nomination 13 extraordinary meetings. The CFO is tains provisions for preferential purchase Committee. For information on remuneration, Secretary at the Board meetings. The Board should one of the parties to the agreement see Note 7. of Directors also receives monthly reports wish to sell its shares. pertaining to the company’s financial posi- The composition of the Nomination Com- Board of Directors’ work tion. At scheduled Board meetings, reports mittee does not comply with the requirements The Board of Directors are elected at the were also submitted pertaining to the cur- of the Code relating to independent members, Annual General Meeting. The Board of Direc- but the Board of Directors believes that the tors’ responsibilities and tasks are determined rent work in each business area with composition of the Nomination Committee is by a formal work plan, in addition to laws and detailed analyses and proposals for measures. reasonable based on the company’s ownership regulations. The work plan is reviewed by the Chairman’s responsibility structure. Board on an annual basis, and established The Nomination Committee’s proposal, through a resolution by the Board. The Board’s The Chairman of the Board is elected by the its motivated statement about the proposed tasks include determining the company’s Annual General Meeting. The Chairman of the Board, as well as supplementary information goals, strategies, business plans, budgets, as Board is responsible for organizing and leading on the proposed Board members, is announced well as approving major investments and loans the Board’s work in accordance with applicable in conjunction with the Notice convening the raised by TransAtlantic. Furthermore, it is the rules for listed companies, the Swedish Code Annual General Meeting and is presented Board’s task to evaluate the operating manage- for Corporate Governance and the Articles of jointly with a report on the Nomination Com- ment, as well as ensure systems to monitor and Association. Furthermore, the Chairman shall mittee’s work at the 2012 Annual General control the established goals. It is also the support the President. The Chairman and the Meeting. Board’s task to appoint the President, and President prepare proposals for the agenda for where applicable, the Deputy President. The Board meetings. The Chairman conducts a Finance Policy, Attestation Policy and the dialog with the President and is responsible for ensuring that other Board members receive the

38 information and documentation needed to petency exists in the organization in relation to senior executives shall contain a well-balanced make decisions. The Chairman of the Board the company’s strategies. Authorities and combination of fixed salary, pension benefits is also responsible for ensuring the annual responsibilities for the President and the man- and other benefits, as well as special terms for review of the Board’s work. agement team are defined in the policies, job remuneration in the event of termination of The Chairman of the Board is Christen descriptions and attestation instructions. employment. The possibility shall exist to pay Sveaas and Folke Patriksson is the Deputy As of January 1, 2012, Group Management variable remuneration. Chairman. comprises Henning E. Jensen, President, The total annual cash remuneration to sen- In addition to his Chairmanship of Trans Heléne Mellquist, CFO, Britta Stolt, HR ior executives shall be determined on the basis Atlantic, Christen Sveaas is the Chairman of Manager, Christian W. Berg, Head of Viking of competitiveness. The total level of remuner- Kistefos Holding AS and a number of other Supply Ships and Kim H. Sörensen, Head of ation shall be reviewed annually to ensure that companies. Industrial Shipping. Kim H. Sörensen assumed it is in line with comparable positions in the the position as the new Head of Industrial relevant market. Remuneration shall be based President Shipping on March 1, 2012. For more detailed on performance and position. Rolf Skaarberg was appointed the new Presi- information about the President and Group The company’s remuneration system shall dent and CEO on March 31, 2011. Henning E. Management, see page 43 of the Annual contain various forms of remuneration aimed Jensen was appointed the new President on Report. at creating well-balanced compensation that December 31, 2011, when Rolf Skaarberg verifies and supports the achievement of short- retired. The President is responsible for the Auditors and long-term goals. continuous management of the operations The auditors are elected by the Annual Gen- Fixed salary shall be set individually and be based on the terms of references issued by the eral Meeting and at the Meeting held in April based on the individual’s responsibility and Board of Directors. The President’s responsi- 2008, the auditing firm of PriceWaterhouse- role, as well as the individual’s competence bilities include decisions regarding current Coopers AB was elected for a period of four and experience in the relevant position. The investments and divestments, HR, financial years. Authorized Public Accountant Helén President and other senior executives may and accounting issues, current contacts with Olsson Svärdström was elected Auditor in receive a variable remuneration if the Board the company’s stakeholders, as well as ensur- Charge and signs the auditors’ report together resolves to this effect. Any variable remunera- ing that the Board receives the information with Olof Enerbäck. The auditor’s task is to tion must be based on extraordinary perform- required to make well-substantiated decisions. review the Board’s and President’s manage- ance in relation to defined and measurable The President reports to the Board of Directors. ment of the company and the quality of the goals, as well as be maximized in relation to Rolf Skaarberg was not a member of the Board, company’s financial reports, as well as review the basic salary and always justified, particu- unlike Henning E. Jensen who is a Board mem- the Annual Report. The company’s auditors larly in a joint Board discussion. The President’s ber. The President attends all Board meetings, reported once to the Board, providing a report remuneration is determined by the Board of except at Board meetings where the President on the year’s accounting and their view of the Directors. is being evaluated. company’s internal control system. Informa- When new pension agreements are signed, The President leads the Group management tion on remuneration of auditors is found in senior executives entitled to pension – exclud- work and makes decisions in consultation with Note 8 of the Annual Report. ing the President – shall receive the customary other management members. pension benefits within the framework of the Rolf Skaarberg and Henning E. Jensen are Principles governing remuneration general pension plan. The retirement age for not employed by TransAtlantic but work as of senior executives senior executives is 65 years. Pension provi- consultants through Kistefos AS. The 2011 Annual General Meeting adopted the sions must be based only on basic salary. For guidelines governing remuneration of senior the President, pension premium payments Group Management executives, which cover the President and his could be made corresponding to 25% of basic The President appointed a management team management group, comprising five individu- salary until the time of retirement. that comprised the following five positions als in 2011, and are based on the following gen- Other benefits, such as company car, com- during most of 2011: the President, the CFO, eral principles: pensation for preventive healthcare and sick- the HR Manager, and the heads of the business The principles for remuneration to senior ness insurance, shall comprise a small portion areas Viking Supply Ships and Industrial Ship- executives from a short- and long-term per- of the total compensation, correspond to mar- ping. Group management is responsible for spective shall attract, motivate and create ket levels and contribute to the executive’s pos- planning, controlling and following up daily favorable conditions for retaining competent sibilities of fulfilling his or her work assignment. operations. The management team held regular employees. To achieve this, it is important Apart from fixed and current remuneration, meetings to monitor the business operations, to maintain fair and internally balanced con there is no remuneration approved earlier for follow-up on financial development and other ditions that are also competitive in market senior executives that has not been paid. operational, development and strategy issues. terms regarding structure, scope and level. The period of notice for senior executives Group Ma nagement ensures that the right com- The employment terms and conditions for shall be six months when initiated by the

39 TransAtlantic 2011 Corporate Governance Report

executive and, in the event of notice from the tional risks. The management group reports instructions governing how financial informa- company, six to twelve months. For the Presi- regularly to the Board of Directors, based on tion shall be communicated between manage- dent, a period of notice of up to six months established procedures and also the auditor’s ment and other employees. TransAtlantic’s shall apply if notice is served by the company. review of the internal control. Company man- shareholders and stakeholders can monitor If notice is served by the company, the Presi- agement is responsible for the system of inter- the company’s operations and its development dent is entitled to severance pay corresponding nal controls that is required to handle signifi- on the website, where current information is to 18 months’ salary. For more detailed infor- cant risks in operating activities. This is aimed published on a continuous basis. Events mation on remuneration of the President and at ensuring that the operation is conducted deemed as having a potential impact on the senior executives, see Note 7 of the Annual appropriately and efficiently, as well as the share price are published through press Report. financial reporting is reliable and that rules, releases. Financial information is provided regulations and ordinances are followed. through quarterly reports and year-end Audit Committee and The company has prepared procedures for reports, as well as through the company’s Remuneration Committee the assessment of risks in the financial report- annual report. To achieve efficient internal The Board has decided that it shall handle ing, as well as to attain a high reliability in the information, the employees are gathered once auditing matters in its entirety and held one external reporting and that the reporting is a month for information and a question and meeting with the Group’s auditors during the prepared in accordance with laws and other answer session. year. Planned and completed audits were requirements on listed companies. discussed at these meetings. The audit encom- Follow-up passes such issues as risk assessment, risk Risk assessment and control activity The Board continuously evaluates the informa- management, financial control, accounting TransAtlantic’s assessment pertaining to the tion submitted by company management and issues, Group policies and administrative financial reporting aims to identify and evalu- the auditors. The work includes ensuring that issues. Considerable emphasis is placed on ate the significant risks that influence the inter- measures are implemented that address inade- follow-ups and implementing measures. nal control with respect to the financial report- quacies and preparing proposals for measures The auditors also keep the Board informed ing in the Group’s companies, business areas that arise in the external audit. of current developments in relevant areas. and business processes. Considerable empha- The Board has also decided to address sis was placed in formulating the controls to Internal audit remuneration issues within the framework of prevent and recognize risks in these areas. The Board has not found reason to establish an Board duties. Remuneration of the President The key control instrument for the financial internal audit function considering the size of was addressed, as were the principles for reporting comprises primarily the company’s the Group and the centralization of the finance remuneration to senior executives. Remunera- finance policy. See also page 47 Risks and administration. tion related to the Board of Directors’ work is uncertainties. Significant guidelines that are important to approved by the Annual General Meeting. financial reporting are continuously updated Control environment and communicated to employees concerned. Investment Committee The Board of Directors has overall responsi In December 2011, the Board resolved to bility for the internal control pertaining to the Fees and remuneration appoint an Investment Committee charged financial reporting. The Board has established Fees and remuneration to the President and with deciding on investments for the Group’s a formal work plan to clarify the Board’s Group Management are described in more surplus liquidity. responsibilities and to regulate the distribu- detail in Note 7 of the Annual Report. tion of work among Board members. Respon The Board’s description of internal control and sibility for maintaining an efficient control Key policies risk management in financial reporting environment is based on an organization with In addition to those listed above, the Board’s This description of internal control and risk distinct decision routes and clear instructions responsibilities include ensuring that the management is submitted by the Board of and with common values, where each employee Group’s policies are kept updated and are TransAtlantic and is prepared in accordance has insight into his/her role in maintaining observed. The Group has policies on such with the Swedish Code of Corporate Govern- good internal control. issues as investments, financing and foreign ance. The Board of Directors of TransAtlantic currency matters, approval and authorization has overall responsibility for the internal Information and communication of and attestation instructions for financial control pertaining to the financial reporting. TransAtlantic’s Board of Directors has estab- commitments, communications/Investor Good internal control is based on efficient lished a Communication Policy, which states Relations and a Code of Conduct/Ethics. As Board work. The Board’s formal work plan what shall be communicated, by whom and the part of the Group’s responsibility, there are also and instructions for the President are aimed manner in which the information shall be health, safety and environmental policies (HSE at establishing a clear role and distribution of issued to ensure that the external information policy) for the company’s sea and land operations. responsibilities to efficiently manage opera- is correct and complete. In addition, there are

40 Gothenburg, February 28, 2012

Christen Sveaas Folke Patriksson Henning E. Jensen Håkan Larsson Chairman Deputy Chairman Board member Board member

Christer Olsson Magnus Sonnorp Christer Lindgren Board member Board member Board member/Employee representative

Auditor’s report on the Corporate Governance Report

To the annual meeting of the shareholders of Rederi AB TransAtlantic (publ) corp. reg. no. 556161-0113

It is the Board of Directors who is responsible for the Corporate Governance Report for the year 2011 on pages 36–41 and that it has been prepared in accordance with the Annual Accounts Act. We have read the Corporate Governance Report and based on that reading and our knowledge of the company and the group we believe that we have a sufficient basis for our opinions. This means that our statutory examination of the Corporate Governance Report is different and substantially less in scope than an audit conducted in accordance with Interna- tional Standards on Auditing and generally accepted auditing standards in Sweden. In our opinion, the Corporate Governance Report has been prepared and its statutory content is consistent with the annual accounts and the consolidated accounts.

PricewaterhouseCoopers AB

Gothenburg, March 23, 2012

Helén Olsson Svärdström Olof Enerbäck Authorized Public Accountant Authorized Public Accountant Auditor in Charge

41 TransAtlantic 2011

Board of Directors

1 2 3 4

5 6 7

1. Christen Sveaas 3. Henning E. Jensen 5. Christer Olsson Born 1956, Oslo. Chairman of the Board. Born 1960, Oslo. Board member since 2011. Born 1945, Stockholm. Board member since Board member since 2010. Christen Sveaas has President and CEO of TransAtlantic. Henning E. 1999. Christer Olsson is Deputy Chairman of several Board assignments, including Chairman Jensen is also CEO of Kistefos. Henning E. Jensen’s Walleniusrederierna AB, Chairman of Stolt- of Kistefos Skog AS, Kistefos Holding AS and previous assignments included Senior Vice Pres- Nielsen Ltd and Board member of Wallenius- Anders Sveaas’ Allmennyttige Fond, a Norwegian ident Chairman of the Supervisory Board, Con- Wilhelmsen A/S, Atlantic Contair Line AB, Eukor charitable foundation. He is also a member of troller, Managing Director, Director and Vice Car Carriers and Singapore Shipping Corporation Dean’s Council Executive Committee, Harvard President of TE Connectivity and CEO and Chair- Ltd. He received his Master of Laws degree from Kennedy School, Boston, USA. Christen Sveaas man of RHI AG. Mr. Jensen has experience from Stockholm University and has 25 years’ experience has a Lic. oec. HSG degree from St Gallen, executive positions from various industries from the shipping industry. Switzerland. including RHI AG, TE Connectivity and General Shareholding: – Shareholding: 3,693,178 Series A shares and Motors. Henning E. Jensen was also a Professor Board fee: SEK 200,000/year. 66,090,461 Series B shares through companies. of Finance at the University of San Francisco, Board fee: SEK 400,000/year. where he also received his degree. 6. Magnus Sonnorp Shareholding: – Born 1967, Stockholm. Board member since 2. Folke Patriksson Board fee: SEK 200,000/year. 2010. Magnus Sonnorp is a Board member of Born 1940, Skärhamn. Deputy Chairman. Linver AB and Sulgrave Rd AB, Brunkeberg Indus- Board member since 1972. Folke Patriksson is 4. Håkan Larsson triutveckling AB and Planglasteknik Stockholm the Deputy Chairman of the Board and has been Born 1947, Gothenburg. Board member since AB, as well as Board member of Secure Glass a Board member since 1972. Mr. Patriksson was 1993. Håkan Larsson was the CEO of Rederi AB Holding AB and was previously the Chairman previously the Chairman of the Board of the TransAtlantic from 2003 to 2007 and was previ- of ClearSense AB and EDSA Holdings. Magnus Swedish Sea Rescue Society and is now Board ously CEO of Bilspedition/BTL and Schenker AG. Sonnorp holds a M.Sc Economics from Stockholm member of Swede Ship Marine AB. Mr. Patriksson Håkan Larsson is Chairman of the Board of BTL School of Economics and an MBA from Insead. holds a mate’s examination (degree in Nautical Aktiebolag, Schenker AB, Schenker North, Inpen- Shareholding: 50,000 Series B shares. Science) and has 40 years’ experience of the sion Asset Management AB and Valea Holding Board fee: SEK 200,000/year. shipping industry. He is one of the founders of AB. He is Board member of Walleniusrederierna 7. Christer Lindgren TransAtlantic and was formerly CEO of the AB, Bure Equity AB, Handelsbanken Region West Born 1965, Stockholm. Board member since company for 32 years. and Semcon AB. Håkan Larsson is Graduate in 2001. Employee representative. Shareholding: 2,532,122 Series A shares Business Administration from Gothenburg Uni- Christer Lindgren is a chef and sailor. and 1,399,490 Series B shares and through versity. Board member of SEKO seafarers. companies. Shareholding: 2,400 Series A shares and Shareholding: – Board fee: SEK 200,000/year. 100,000 Series B shares. Board fee: – Board fee: SEK 200,000/year.

42 Management

1 2 3

4 5

1. Henning E. Jensen 4. Heléne Mellquist President and CEO CFO Born 1960, Oslo. CEO since 2012. Born 1964, Gothenburg. Employed since 2012. Education: Bachelor of Arts, University of Education: University of Gothenburg, B.Sc. San Francisco, MBA, University of San Francisco Economics, IFL at the Stockholm School of and Cand. Dr., Hochschule St. Gallen, Switzerland. Economics, Executive Program. Shareholding: – Shareholding: –

2. Kim H. Sörensen 5. Britta Stolt Head of Industrial Shipping HR Manager Born 1966, Gothenburg. Employed since 2012. Born 1965, Gothenburg. Employed since 1993. Education: Aalborg universitet, BSc & MSc Education: Developer program and Advanced Macroeconomics, MSc Development Economics, strategic HR program. London Business School Executive Management Shareholding: – Program, IMD: Program for Executive Develop- ment, MBA. Shareholding: –

3. Christian W. Berg Head of Viking Supply Ships Born 1968, Copenhagen. Employed since 2011. Education: Maritime law studies at Vestfold University College in Horten, Norway and Norwegian Navy Academy at Befalskolen for Marinen in Horten, Norway. Shareholding: –

43 TransAtlantic 2011 Board of Directors’ Report

Board of Directors’ Report 2011 Rederi AB TransAtlantic (publ) – Corporate Registration Number 556161-0113

TransAtlantic’s 2011 financial year was again an eventful year, characterized by several structural changes and continued challenging business climate, culminating in an earnings deficit.

In June 2011, all shares were acquired in 528) in the form of positive capital gains the commercial value currently being Österströms International AB, which is the from the divestment of vessels totaling SEK deemed uncertain. Impairment totaling Parent Company of the Stockholm-based 6.6 M, outcome from a dispute from an ear- SEK 48 M is included in the amount per- shipping and logistics group that conducts lier vessel divestment totaling a negative taining to the establishment in Denmark. operations primarily in the Baltic Sea area. SEK 4.1 M, costs and impairments related to In November 2011, with accounting effect the establishment of the Danish offshore Industrial Shipping business area from October, the UK offshore shipping structure and preparation for the introduc- The year was characterized by comprehen- company SBS Marine (Holdings) Ltd. was tion of Viking Supply Ships on the Oslo sive restructuring. Two lines were discon- acquired. Stock Exchange totaling SEK 48 M, the tinued at the end of the year, the RoRo lines The Extraordinary General Meeting in restructuring of the Group, Industrial Ship- from southern Finland to Lübeck and November 2011 approved a new share issue ping and the integration of Österströms Gothenburg, and the Atlantic traffic. A new totaling approximately SEK 555 M, with totaling SEK 46 M and costs for the former RoRo line started between northern Finland preferential rights to existing shareholders. CEO totaling SEK 5 M. In addition, impair- and Antwerpen/Zeebrugge, TransBothnia The new issue resulted in Kistefos increas- ment of vessels occurred totaling SEK 32 M, Line. The business area offers integrated ing its ownership which as of December 31, as well as goodwill totaling SEK 58 M. logistics solutions in vessel transport. The 2011, amounted to 62.9% of the capital and Costs attributable to the acquisition of operation is conducted primarily through 58.4% of the votes. Österströms International AB and Arctic Ice system traffic in northern Europe using On March 31, 2011, Rolf Skaarberg Management AB amounted to SEK 7 M. For RoRo and container vessels, as well as bulk assumed the position of President and CEO, 2010, earnings were positively impacted by and small-bulk traffic. The business area succeeding Stefan Eliasson, who left the nonrecurring effects of SEK 775 M through has five divisions: Group. Rolf Skaarberg retired on December the acquisition of all shares outstanding in • RoRo Baltic Division: The operation has 30, 2011 and was succeeded by Henning E. the joint venture companies within Trans its base in system traffic with forest, steel Jensen. Viking. and automotive products in the Baltic Sea. In today’s market situation, vessel values • Container Division: The division operates Sales, earnings and business are more difficult to assess than normal. a container line between Västerås and development The above described vessel impairments Hull in the UK. The division also has During the year, operations within Indus- totaling SEK 32 M consisting of the Trans- feeder traffic between Västerås/Södertälje trial Shipping continued to be characterized Falcon with SEK 8 M, the TransFrej with and Hamburg/Bremerhaven. by weak volumes and tonnage surplus. The SEK 18 M and the TransNjord with SEK 6 • Bulk Division: The division’s operation acquisition of Österströms and comprehen- M, all in Industrial Shipping, are justified comprises transport using ice-classified sive restructuring costs had a negative by the assessed market capitalization since medium-size bulk vessels and transport impact on earnings. For Viking Supply work has commenced to divest the vessels. using RoRo vessels between Europe and Ships, the market strengthened succes- Following the impairments, the recognized North America, as well as transport along sively. In addition, the operation was influ- vessel values are deemed to be on par with the east coast of North America. enced during the year by vessel deliveries current market capitalization. • Short Sea Bulk Division: The division’s and the establishment of a head office in Impairment of goodwill totaling SEK 58 operation comprises transport using Copenhagen. M from the acquisition of Österströms smaller bulk tonnage preferably in the Bal- The Group’s net sales for 2011 amounted occurred following testing of the prerequi- tic Sea, but also to ports on the continent. to SEK 2,989 M (2,394). Loss before tax sites for profitability in the markets in • Integrated Logistics Division: The divi- amounted to SEK 466 M (profit: 407) and which the Österströms companies operate. sion’s operation comprises developing loss after tax amounted to SEK 435 M Impairment of capitalized development integrated transport solutions where (profit: 585). Earnings were negatively costs occurred for software in Arctic Ice TransAtlantic is responsible for a large impacted in 2011 by restructuring costs and Management AB totaling SEK 6 M when portion of the total transport chain. acquisition effects totaling SEK 194 M (pos: development work was suspended due to

44 The five divisions cooperate to achieve the bal offshore sector. The vessels are within Trans Viking in autumn 2010, the best possible degree of utilization and cus- equipped and have the capacity to operate newbuilds delivered, Loke Viking in June tomer service. in areas with cold and severe weather con- 2010 and Njord and Magne Viking in 2011, Revenue for the year amounted to SEK ditions, such as arctic waters. Three of the as well as the acquisition of SBS Marine. 2,259 M (1,865) and the operating loss before AHTS vessels have icebreaking capacity. During the year, the business area estab- tax was SEK 113 M (loss: 105). In addition, The newbuild program progressed on lished its head office in Copenhagen, and as vessel impairments were recognized total- schedule, with the delivery of Njord Viking of January 1, 2012, changed name to Viking ing SEK 32 M (loss: 156). in February 2011 and Magne Viking in July Supply Ships. The RoRo Baltic Division conducted liner 2011. The final vessel in the series of four, traffic during the year between Finland and the Brage Viking, was delivered in January Group-wide Sweden/Germany/Belgium with four lines. 2012. The vessels are specially designed and Group-wide comprises company manage- In June, a new RoRo line commenced, the equipped to meet demands for efficient, ment, central administration, financial TransBothnia Line, between northern Fin- safe and environment-friendly offshore management and external ship manage- land and Antwerpen/Zeebrugge using two handling in areas with severe ice condi- ment. The external ship management unit chartered vessels. During the year, the tions. In November 2011, with accounting includes assignments for external vessel RoRo lines from southern Finland to effect from October, the UK-based offshore owners, such as crews for the five govern- Lübeck and Gothenburg were discontinued shipping company, SBS Marine (Holdings) ment-owned icebreakers. The primary due to poor profitability. Ltd. was acquired. SBS Marine’s fleet com- objectives for the external assignments are The Container Division conducts con- prises five modern and one older Platform to achieve economies of scale for staffing tainer-based liner traffic in the UK (Trans- Supply Vessels, which are mainly used to vessels, as well as procurement to the Pal Line) and feeder traffic to Germany transport supplies to offshore platforms. Group’s vessel fleet. (TransFeeder South). Declining volumes Viking Supply Ships concluded the con- Revenue amounted to SEK 162 M (231) for from the steel industry were offset by vol- tract with the Swedish Maritime Adminis- the year. The operating loss before tax ume expansion in the TransPal Line. tration for Vidar Viking during the year and totaled SEK 87 M (loss: 61) and the change In October, the Bulk Division signed a subsequently signed an agreement with the in earnings was primarily attributable to three-year contract with FNsteel pertaining Estonian Maritime Administration to sup- increased loan costs mainly due to higher to transport between Luleå and Koverhar in ply icebreaking for the 2012 season using indebtedness, as well as costs for external Finland, as well as with Nordkalk pertain- Vidar Viking. Furthermore, a contract was consultants for several structural projects in ing to transporting limestone between signed with Sakhalin Energy for a period of progress. Storugns and Luleå/Kokkola. The Atlantic two and a half years with the option to As from 2012, Group-wide has been traffic was discontinued during the year. extend for 4x3 months for Vidar Viking. The divided and is included in each business The Short Sea Bulk Division, which con- vessel will provide services pertaining to area. sists of the previous Österströms operation, icebreaking, anchor handling and other reported continued weak profitability. The support in northern Russia, starting in sum- Investments market was characterized by tonnage sur- mer 2012. The total gross contract value The Group’s gross investments totaled SEK plus and cyclically low contract volumes amounted to USD 70 M for the fixed period. 1,239 M (268) and pertained primarily to from major customers. The agreement is conditional upon cash payments for the delivery of Njord During the year, the Integrated Logistics approval from TransAtlantic’s Board of Viking in February 2011, cash payments for Division continued to develop integrated Directors and banks concerned. the delivery of Magne Viking in July 2011 transport solutions, where TransAtlantic is The above resulted in higher revenue in and the acquisition of all shares in Arctic responsible for most of the total transport 2011 and totaled SEK 568 M (298), with an Ice Management AB, Österströms Interna- chain based on customer requirements. operating loss before tax of SEK 72 M tional AB and SBS Marine (Holdings) Ltd. (profit: 45). Revenue has been impacted by Viking Supply Ships business area costs for the establishment of the operation Divestments The business area’s fleet comprises a total of in Denmark, delivery of two newbuild During the year, the vessels Obbola, 14 offshore vessels, of which eight AHTS AHTS vessels, and an initially weak but Östrand, Ortviken, Map and TransVing vessels, including the Brage Viking, which strengthened market at the end of the year. were divested, resulting in positive net cash was delivered in January 2012, and six Plat- The operations were conducted using 13 and cash equivalent contributions of SEK 62 form Supply Vessels. The vessels operate in vessels during the year. Comparability M. In total, the vessel divestments generated the Arctic offshore market, in the offshore between the years was influenced by the a positive result effect of SEK 6.6 M. spot market in the North Sea and in the glo- acquisition of the joint venture companies

45 TransAtlantic 2011 Board of Directors’ Report

Acquisition of Arctic Ice Management, Cash flow and financial position Parent Company Österströms and SBS Marine The Group’s opening cash balance was SEK Revenue in the Parent Company amounted In February 2011, all shares in Arctic Ice 637 M (327). Cash flow from operating activ- to SEK 1,333 M (1,258). Net profit for the Management AB were acquired. In June ities amounted to SEK 114 M (91). year amounted to SEK 1,216 M (loss: 217). 2011, all shares were acquired in Öster- Investing activities generated a net loss of The full-year amount includes anticipated ströms International AB, which conducts SEK 477 M (profit: 164) and pertained to dividends from subsidiaries of SEK 1,377 M, business mainly in the Baltic Sea area. The tangible and financial fixed assets. Group contributions of SEK 215 M, capital acquisition is a step in TransAtlantic’s strat- The financing activities, which include gains from intra-Group divestment of sub- egy to offer customers better and more effi- new share issues, borrowing and loan sidiaries totaling SEK 26 M, impairment of cient services through the possibility of amortization reported a net effect of SEK shareholdings in subsidiaries of SEK 433 M, door to door transport by combining Bulk, 273 M (86). capital gains from the divestment of the RoRo and Container transports. In Novem- Cash flow for the year was a negative owner-companies to the vessels Obbola, ber 2011, all shares in SBS Marine (Hold- SEK 90 M (pos: 341). At the end of the year, Östrand and Ortviken of SEK 244 M. The ings) Ltd. were acquired. SBS Marine is a the Group’s available cash and cash equiva- amount for the 2010 full-year includes UK offshore shipping company based in lents amounted to SEK 548 M (637), of impairment of shareholdings in subsidiar- Aberdeen, which operates a fleet of six Plat- which SEK 157 M was reserved in a separate ies of SEK 59 M, as well as Group contribu- form Supply Vessels. The acquisition will account to guarantee the Group’s cash com- tions of SEK –49 M. The Parent Company’s strengthen Viking Supply Ships’ product mitments in the delivery of the Brage shareholders’ equity amounted to SEK 2,883 offering to existing customers and attract Viking, which was delivered in January M (1,125) and total shareholders’ equity and new customers. 2012. In addition, the Group had unutilized liabilities profit brought forward at year- credit facilities totaling SEK 93 M (24). In a end amounted to SEK 4,526 M (2,153). Cash Extraordinary General Meeting loan agreement, the Group has pledged to and cash equivalents at the end of the year The Extraordinary General Meeting on ensure, at any time, that cash and cash was SEK 202 M (31). November 7, 2011 approved the new issue of equivalents do not fall below the highest shares totaling approximately SEK 555 M in amount of either 5% of the Group’s interest- Significant events after the end of the year cash payment, with preferential rights to bearing liabilities or corresponding NOK Heléne Mellquist was recruited as the existing shareholders on 1:1 terms and at 125 M, less 50% of unutilized credit facili- Financial Director from January 1, 2012. SEK 10 per new share. In addition, the ties in the Group. On January 1, 2012, TransAtlantic’s Off- Meeting approved a reduction of SEK At the end of the year, the Group’s total shore/Icebreaking business area changed 998,124,300 in the share capital and a trans- assets amounted to SEK 6,283 M (5,111) and name to Viking Supply Ships. fer of SEK 245,782,000 from the statutory shareholders’ equity to SEK 2,493 M (2,396). TransAtlantic’s Viking Supply Ships busi- reserve to the non-restricted reserve. The At year-end, the equity/assets ratio was ness area received delivery in January 2012 reduction of the share capital and transfer 40% (47) and the debt/equity ratio was of the AHTS vessel Brage Viking, from the to the non-restricted reserve is expected to 97.7% (64.0). shipyard Astilleros Zamakona in Bilbao, be approved by the Swedish Companies Vessels are recognized at cost less depreci- Spain. The vessel was registered in the Dan- Registration Office on February 29, 2012. ation and impairment according to plan. In ish ship’s register, DIS. The decision resulted in the decrease of today’s market situation, assessing the value Kim H. Sörensen was appointed the new the company’s share capital to SEK of vessels is more difficult than normal. Head of the Industrial Shipping business 110,902,700 and the increase in the number Valuation of the Group’s vessels was con- area. Kim H. Sörensen was previously Head of shares in the company by 3,635,921 Series ducted using external appraisals and inter- of Europe Region, Damco, a subsidiary of A shares and 51,815,429 Series B shares. nally calculated yield values. Net income AP Möller Maersk. Kim H. Sörensen will As of December 31, 2011, the total number was charged with an impairment of SEK assume the position on March 1, 2012 and of shares in the company amounted to 32 M (–241). will thus replace Percy Österström, who 110,902,700 shares distributed among At the end of the year, the Group’s share- will be leaving the daily operation to focus 7,271,842 Series A shares and 103,630,858 holders’ equity totaled SEK 22.5 per share completely on developing the business Series B shares. The share capital amounted (43.2). The number of shares doubled as a result area’s expanding market and strengthening to SEK 1,109,027,000. of the new share issue in December 2011. customer relations in his role as Senior Vice President. Percy Österström will also become a member of the Board of Industrial Shipping.

46 Environmental issues Further description of the Group’s opera- Proposed treatment of appropriated In TransAtlantic, active work is in progress tional and financial risk management is earnings to reduce the environmental impact and found in Notes 1 and 32. The following funds in the Parent Company during the year new measures were imple- are available to the Annual General Meeting: mented and quality control improved with Outlook the aim of further strengthening the Group’s In Industrial Shipping, work continues to SEK 000s leading position in the environmental area. integrate Österströms and to adapt the ves- Other contribution from owners 388,159 Based on Sweden’s national environmental sel fleet to prevailing demand. Lower costs Loss brought forward –76,413 targets affecting shipping, TransAtlantic’s and higher effect will be achieved as the Profit for the year 1,216,091 efforts are based on six detailed environ- operation and organization are coordi- Total 1,527,837 mental goals for its operations. For further nated. We believe that demand for tonnage information, refer to page 16. will successively increase but the tonnage The Board of Directors proposes that no surplus in the market will remain for some dividend be paid for the 2011 financial year. Risks and uncertainties time. The reason for the proposal is that the The TransAtlantic Group is characterized Significant expansion occurred during financial funds and shareholders’ equity in by a high degree of international operations the year in Viking Supply Ships through the the Group at year-end will be needed to and is thus exposed to a number of opera- delivery of two newly built AHTS vessels conduct operations and develop the com- tional and financial risks. TransAtlantic and the acquisition of SBS Marine, which pany in a satisfactory manner works actively to identify, assess and man- has not yet had full impact on sales and age these risks. Risk management is profits. In addition, the Brage Viking was SEK 000s included in the continuous monitoring of delivered in January 2012. In general, this To be carried forward 1,527,837 operations. resulted in a significant increase in the ves- Total 1,527,837 In January 2012, the newbuild program sel fleet. Activities relating to offshore oil concluded entailing payment of cash and and gas exploitation in the North Sea, the Annual General Meeting cash equivalents in connection with vessel Barents Sea and the Arctic waters are The Annual General Meeting will be held deliveries. To guarantee these commit- increasing and will provide the company in Gothenburg’s Art Museum on Friday, ments, the Group reserved funds totaling with excellent prerequisites to occupy the April 27, 2012 at 4:00 p.m. More details will SEK 157 M in a special account, in accord- vessel fleet in the future. be provided in a special Notification in ance with the loan agreement. These are Dagens Industri, Göteborgs Posten and in recognized together with other cash and Described in separate sections Post & Inrikes Tidning, as well as on the cash equivalents. The following is described in separate sec- website, www.rabt.se. TransAtlantic continues to evaluate an tions of the Annual Report: agreement proposal with a bank due to the Earnings, cash flow and balance sheet Group’s failure to fulfill certain financial • The TransAtlantic share and ownership The Group’s and Parent Company’s earn- covenants requirements in 2010, and for the structure, see page 32. ings, liquidity and financial position are set third and fourth quarters in 2011. In addition, • Corporate Governance, including descrip- forth in the following income statements, dialog is being conducted with two addition of the work of the Board and manage- cash-flow statements and balance sheets, tional banks about TransAtlantic not fully ment, and guidelines for remuneration to and in the notes relating to them. meeting the requirement levels of the loan senior executives, see page 36. agreement pertaining to financial covenants ratio for Q4. As a result of the above, loans Personnel totaling SEK 636 M have been reclassified The number of employees in the Group at from long-term to current liabilities. For these the end of the year totaled 833 (911). Further loans, TransAtlantic has received refinancing information is found in Note 7. tenders, which are under consideration.

47 TransAtlantic 2011 Financial statements

Financial statements

Income statement 49 Balance sheet 50 Shareholders’ equity 52 Cash-flow statement 53 Notes 54 Board of Directors’ signatures 80 Auditors’ Report 81

Note descriptions

Note 1 Accounting and valuation policies, 54 Note 18 Other long-term receivables 70 significant assessments and financial risk Note 19 Inventories 70 management Note 20 Accounts receivables 70 Note 2 Distribution of net sales 59 Note 21 Prepaid expenses and accrued income 70 Note 3 Segment reporting 59 Note 22 Cash-flow statement 70 Note 4 Purchases and sales among 60 Note 23 Share capital 71 Group companies Note 24 Dividend per share 71 Note 5 Other operating income 60 Note 25 Pension provisions 71 Note 6 Other operating expenses 61 Note 26 Liabilities 73 Note 7 Average number of employees, sickness 61 absence, salaries, other remuneration and Note 27 Accrued expenses and deferred income 74 social security costs, etc. Note 28 Pledged assets 74 Note 8 Audit assignments 62 Note 29 Contingent liabilities 74 Note 9 Other profits 62 Note 30 Commitments 75 Note 10 Tangible and intangible fixed assets 63 Note 31 Related-party transactions 76 Note 11 Profit share in associated companies 66 Note 32 Financial risk management and derivative 76 Note 12 Profit share in Group companies 66 instruments Note 13 Financial revenue 66 Note 33 Acquisitions 78 Note 14 Financial expenses 66 Note 34 Events after the closing date 79 Note 15 Taxes 66 Note 16 Earnings per share 67 Note 17 Participations in Group companies, 68 associated companies and joint ventures

48 Income statement

Note Group Parent Company SEK 000s 1, 3, 33 2011 2010 2011 2010

Net revenue 2, 3, 4 2,989,468 2,394,096 1,332,815 1,258,420 Other operating income 5 10,031 784,328 112 366 Direct travel expenses 1 –1,573,977 –1,163,241 –436,194 –395,493 Personnel expenses 7 –701,323 –704,179 –306,635 –283,184 Other external operating expenses 4, 8 –643,523 –389,527 –736,833 –706,691 Other operating expenses 6 –14,206 –37,926 –4,027 –28,383 Other net profit/loss 9 608 — — — Depreciation and impairment of tangible and intangible fixed assets 10 –414,942 –428,618 –22,850 –14,873 Profit share in associated companies 11 –451 0 –14,915 1,270 Operating profit/loss –348,315 454,933 –188,527 –168,568

Profit/loss share in Group companies 12 — — 1,428,184 –105,925 Financial income 13 20,674 7,859 54,527 17,248 Financial expense 14 –138,705 –55,865 –69,639 –26,812 Profit/loss before tax –466,346 406,927 1,224,545 –284,057

Income tax 15 31,798 178,354 –8,454 66,948 Profit/loss for the year –434,548 585,281 1,216,091 –217,109

Attributable to: Parent Company’s shareholders –429,936 583,832 1,216,091 –217,109 Non-controlling interests –4,612 1,449 — — –434,548 585,281 1,216,091 –217,109 Earnings per share attributable to Parent Company’s shareholders, per share, SEK (before and after dilution) 16 –6.49 14.22 — —

Statement of comprehensive income

Group Parent Company SEK 000s 2011 2010 2011 2010

Profit/loss for the year –434,548 585,281 1,216,091 –217,109

Other comprehensive income/expense, net after tax: Change in hedging provision –24,760 19,251 — — Change in translation provision 13,797 –41,166 — — Other comprehensive income/expense, net after tax –10,963 –21,915 — —

Comprehensive income/expense for the year –445,511 563,366 1,216,091 –217,109

Attributable to: Parent Company’s shareholders –441,424 566,485 — — Non-controlling interests –4,087 –3,119 — — –445,511 563,366 1,216,091 –217,109

49 TransAtlantic 2011 Financial statements

Balance sheet

Balance sheet at December 31 Note Group Parent Company SEK 000s 1 2011 2010 2011 2010

Assets Fixed assets Vessels 10 4,558,882 3,170,303 — — Buildings and land 10 21,576 38,591 20,786 37,779 Equipment 10 52,861 40,622 4,800 10,003 Construction in progress and advance payments on tangible fixed assets 10 280,177 644,288 — 8,393 Goodwill 10 2,459 2,348 — — Brands 10 7,015 7,015 — — Other intangible fixed assets 10 4,463 3,063 9 1,800 Participations in Group companies 17 — — 3,582,202 613,080 Receivables from Group companies — — 112,637 941,364 Participations in associated companies 17 153 153 153 153 Deferred tax assets 15 105,577 40,376 130,487 138,942 Financial assets available for sale 105 105 105 105 Derivative instruments 32 15,314 20,799 — — Other long-term receivables 18, 25 65,885 29,907 35,688 24,886 Total fixed assets 5,114,467 3,997,570 3,886,867 1,776,505

Current assets Inventories 19 69,397 40,873 20,856 21,318 Accounts receivable 20 335,728 231,984 77,526 113,931 Receivables from Group companies — — 196,915 60,990 Derivative instruments 32 1,059 7,583 — — Other receivables 66,464 111,786 81,181 93,500 Prepaid expenses and accrued income 21 134,013 84,284 47,039 53,991 Financial assets valued at fair value in income statement 32 13,610 — 13,610 — Cash and cash equivalents 22 547,848 636,893 201,584 33,150 Total current assets 1,168,119 1,113,403 638,711 376,880

Total assets 6,282,586 5,110,973 4,525,578 2,153,385

50 Note Group Parent Company SEK 000s 2011 2010 2011 2010

Shareholders’ equity and liabilities

Shareholders’ equity and reserves attributable to Parent Company’s shareholders 16, 23, 24 Share capital 1,109,027 554,514 1,109,027 554,514 Other contributions from shareholders 555,285 555,285 388,159 388,159 Provisions 68,248 79,736 245,782 245,782 Profit brought forward 745,887 1,188,437 –76,413 153,310 Profit for the year — — 1,216,091 –217,109 Total shareholders’ equity and reserves attributable to Parent Company’s shareholders 2,478,447 2,377,972 2,882,646 1,124,656 Non-controlling interests 14,418 18,505 — — Total shareholders’ equity 2,492,865 2,396,477 2,882,646 1,124,656

Provisions Provisions for pensions 25 — — 10,463 11,688 Total provisions — — 10,463 11,688

Long-term liabilities 26 Vessel loans 2,003,143 1,842,072 — — Other liabilities to credit institutions 75,026 90,645 — 77,150 Liabilities to Group companies — — 1,172,638 398,354 Pension commitments 25 6,807 8,551 — — Deferred tax liabilities 15 9,739 28,422 — — Derivative instruments 32 20,630 8,327 — — Other liabilities 66,179 77,628 31,467 22,875 Total long-term liabilities 2,181,524 2,055,645 1,204,105 498,379

Current liabilities 26 Vessel loans 865,741 185,235 — — Other liabilities to credit institutions 57,571 25,601 59,150 18,600 Overdraft facilities 10,189 75,624 — 75,624 Accounts payable 178,503 100,848 64,130 45,612 Current tax liability 33,355 14,974 — — Liabilities to Group companies — — 146,212 252,202 Derivative instruments 32 7,320 586 — — Other liabilities 74,863 49,520 28,689 20,133 Accrued expenses and deferred income 27 380,655 206,463 130,183 106,491 Total current liabilities 1,608,197 658,851 428,364 518,662

Total shareholders’ equity and liabilities 6,282,586 5,110,973 4,525,578 2,153,385 Pledged assets 28 3,314,556 63,975 Contingent liabilities 29 2,146,550 1,029,772

51 TransAtlantic 2011 Financial statements

Shareholders’ equity

Attributable to the Parent Company’s shareholders Provisions Non-con- Total share- Consolidated changes in shareholders’ equity Share Other contributions Translation Hedging Profit/loss trolling holders’ SEK 000s capital from shareholders reserve reserve brought forward interests equity

Shareholders’ equity, Jan. 1, 2010 284,305 167,126 102,682 –5,599 604,380 21,624 1,174,518 Profit for the year — — — — 583,832 1,449 585,281 Exchange-rate difference on translation of foreign operations — — –36,598 — — –4,568 –41,166 Reassessment of derivative instruments, cash-flow hedging – Note 32 — — — 19,251 — — 19,251 Total comprehensive income/expense — — –36,598 19,251 583,832 –3,119 563,366 New share issue 277,257 388,159 — — –6,8231) — 658,593 Share reduction, refer to Note 23 –7,048 — — — 7,048 — — Total transactions with company’s owners 270,209 388,159 — — 225 — 658,593

Shareholders’ equity, Dec. 31, 2010 554,514 555,285 66,084 13,652 1,188,437 18,505 2,396,477

Shareholders’ equity, Jan. 1, 2011 554,514 555,285 66,084 13,652 1,188,437 18,505 2,396,477 Loss for the year — — — — –429,936 –4,612 –434,548 Exchange-rate difference on translation of foreign operations — — 13,272 — — 525 13,797 Reassessment of derivative instruments, cash-flow hedging – Note 32 — — — –24,760 — — –24,760 Total comprehensive income/expense — — 13,272 –24,760 –429,936 –4,087 –445,511 New share issue 554,513 — — — –12,6141) 541,899 Total transactions with company’s owners 554,513 0 0 0 –12,614 0 541,899

Shareholders’ equity, Dec. 31, 2011 1,109,027 555,285 79,356 –11,108 745,887 14,418 2,492,865

1) Transaction costs in connection with the new share issue.

Other contri- Profit/loss Total butions from Statutory brought shareholders’ Parent Company’s changes in shareholders’ equity Share capital shareholders reserve forward equity

Shareholders’ equity, Dec. 31, 2009 284,305 — 245,782 153,085 683,172 Loss for the year — — — –217,109 –217,109 Total comprehensive expense — — — –217,109 –217,109 New share issue 277,257 388,159 — –6,8231) 658,593 Share reduction, refer to Note 23 –7,048 — — 7,048 — Total transactions with company’s owners 270,209 388,159 — 225 658,593 Shareholders’ equity, Dec. 31, 2010 554,514 388,159 245,782 –63,799 1,124,656

Shareholders’ equity, Jan. 1, 2011 554,514 388,159 245,782 –63,799 1,124,656 Profit for the year — — — 1,216,091 1,216,091 Total comprehensive income — — — 1,216,091 1,216,091 New share issue 554,513 — — –12,6141) 541,899 Total transactions with company’s owners 554,513 — — –12,614 541,899 Shareholders’ equity, Dec. 31, 2011 1,109,027 388,159 245,782 1,139,678 2,882,646

1) Transaction costs in connection with the new share issue.

52 Cash-flow statement

Note Group Parent Company SEK 000s 22 2011 2010 2011 2010

Cash flow from current operations Loss/profit before tax –466,346 406,927 1,224,545 –284,057 Adjustments for non-cash items – Depreciation and impairment 10 414,942 428,618 22,850 14,873 – Capital gain/loss –2,504 5,450 –112 — – Results from participations in Group companies not affecting cash flow — — –1,428,184 105,925 – Interest not affecting cash flow1) 14,793 –639 18,338 5,412 – Effects from the acquisition of Trans Viking not affecting cash flow — –784,608 — — – Other2) 17,668 –7,485 –1,068 911 Income tax paid/received –15,114 9,827 — — Cash flow from current operations before changes in working capital –36,561 58,090 –163,631 –156,936

Changes in working capital Changes in inventories –4,299 20,079 462 3,033 Changes in accounts receivable and other current operating receivables 107,440 –2,526 46,068 –40,606 Changes in accounts payable and other current operating liabilities 48,270 15,619 50,742 1,214 Cash flow from current operations 114,850 91,262 –66,359 –193,295

Investing operations Acquisition of subsidiaries 33 –351,533 –100 –47,925 –9,782 Sale of subsidiaries — — 308,404 — Acquisition of vessels –478,722 –137,359 — — Sales of vessels 346,210 12,442 — — Cash and cash equivalents from acquired operations 33 38,283 298,493 — — Acquisitions of other intangible fixed assets — –1,425 — –1,426 Acquisitions of other tangible fixed assets –2,035 –2,137 –693 –4,068 Sale of other tangible fixed assets 748 — 748 — Changes in long-term receivables –30,600 –6,408 –13,610 –1,946 Cash flow from investing operations –477,649 163,506 246,924 –17,222

Financing operations Changes in loans from Group companies — — –441,653 120,231 Loans raised 984,987 270,114 40,000 69,998 Amortization of loans –1,253,930 –184,136 –152,220 –18,600 New share issue less issue expenses 541,899 — 541,899 — Cash flow from financing operations 272,956 85,978 –11,974 171,629

Change in cash and cash equivalents –89,843 340,746 168,591 –38,888

Cash and cash equivalents at the beginning of the year 636,893 327,400 33,150 73,082 Exchange-rate difference in cash and cash equivalents 798 –31,253 –157 –1,044 Cash and cash equivalents, Dec. 31 547,848 636,893 201,584 33,150

1) Interest received amounts to: 7,857 7,220 499 1,129 Interest paid amounts to: –123,912 –55,865 –10,629 –5,281 Total –116,055 –48,645 –10,130 –4,152

2) The amount for the Group includes the reversal of liability in an amount of TSEK 12,424 (9,240).

53 TransAtlantic 2011 Notes

Notes

NotE 1 Accounting and valuation policies, significant assessments and financial risk management

General information IFRS 10 “Consolidated financial statements” introduces no new The TransAtlantic Group conducts international contract-based policies but provides additional guidance for assisting in the estab- shipping. The Group is organized in two business areas – Viking lishment of control when it is difficult to assess. The Group intends to Supply Ships and Industrial Shipping. apply IFRS 10 for the financial year beginning January 1, 2013 and has The Parent Company is a limited liability company registered in not yet evaluated the full impact on the financial statements. The Sweden, with its domicile in Gothenburg, and corporate registration standard has not yet been adopted by the EU. number 556161-0113. The postal address for the head office is Box IFRS 12 “Disclosures of interests in other entities” includes disclo- 8809, SE-402 71 Gothenburg, Sweden and the street address is Lind- sure requirements for subsidiaries, joint arrangements, associated holmsallén 10. The Parent Company is listed on the Small Cap list of companies and non-consolidated structured entities. The Group the NASDAQ OMX Nordic Exchange in Stockholm. intends to apply IFRS 12 for the financial year beginning January 1, The Board of Directors approved these consolidated accounts for 2013 and has not yet evaluated the full impact on the financial state- publication on February 28, 2012. ments. The standard has not yet been adopted by the EU. IFRS 13 “Fair value measurement” provides an exact definition and Basis for the preparation of the financial reports a shared source for fair value measurements and associated informa- The most significant accounting policies applied, and noted below, tion, and application guidance since other IFRS already requires or have been consistently applied for the years presented, unless other- allows fair value measurement. The Group has not yet valued the full wise stated. effect of IFRS 13 in the financial statements. The Group intends to The consolidated accounts were prepared in accordance with IFRS, apply the new standard in the financial year beginning on January 1, rules adopted by the EU and in accordance with RFR 1 Supplementary 2013. The standard has not yet been adopted by the EU. Accounting Rules for Groups and the Swedish Annual Accounts Act. None of the IFRS or IFRIC interpretations not yet in effect are Preparing reports in agreement with IFRS requires that several expected to have any significant impact on the Group. crucial accounting estimations be applied and that management makes certain assumptions in the application of the company’s Consolidated accounts accounting policies. The main estimations and assumptions made are The consolidated accounts include the Parent Company, as well as stated at the end of this note. subsidiaries, associated companies and joint ventures.

New and amended standards applied by the Group Subsidiaries None of the IFRS or IFRIC interpretations that are mandatory for Subsidiaries are classified as companies in which the Group has a the first time for the financial year beginning January 1, 2011 have controlling influence through holding more than 50% of the voting had any significant impact on the Group. rights, or in which the Group can exercise controlling influence through contracts or other agreements (including SPE companies – New standards, amendments and interpretations of existing special companies formed with a limited and well-defined purpose). standards not yet in effect and not applied in advance by the Group The consolidated accounts were prepared in accordance with the IAS 19 “Employee benefits” was amended in June 2011. The amend- purchase method. Accordingly, consolidated shareholders’ equity – ment entails that the Group will no longer apply the “corridor excluding the Parent Company’s shareholders’ equity – only includes approach” and will instead recognize all actuarial gains and losses the changes in subsidiaries’ shareholders’ equity that occurred fol- in other comprehensive income as they arise. Costs for service for lowing acquisition of the subsidiaries. Costs for acquisition of a sub- prior years will be recognized immediately. Interest expenses and sidiary have been divided in the company’s various assets and liabili- anticipated return on plan assets will be replaced by a net interest ties with reference to the measurement executed in connection with rate, which will be calculated using the discount rate, based on the the acquisition, regardless of the extent of a possible non-controlling net surplus or net deficit in the defined-benefit plan. The Group interest. intends to apply the amended standard for the financial year begin- For acquisitions that occur in stages, goodwill is established on the ning January 1, 2013 and the anticipated positive impact on share- date controlling influence arises. If the company already owns a por- holders’ equity is expected to be approximately SEK 2 M, net after tion of the acquired company, this is revalued at fair value and the tax. The standard has not yet been adopted by the EU. value change recognized in profit and loss for the year. Correspond- IFRS 9 “Financial Instruments” handles classification, valuation ingly, in a divestment where controlling influence is lost, the remain- and recognition of financial liabilities and assets and replaces por- ing holding is revalued at fair value and the change in value is recog- tions of IAS 39. IFRS 9 states that financial assets shall be classified in nized in profit and loss for the year. two different categories and established at the first recognition occa- The portion of the purchase price that exceeds the acquisition’s net sion. For financial liabilities, there are minor changes, which pertain assets, valued at fair value, is recognized as goodwill and is subject to to liabilities that are identified at fair value. The Group intends to annual impairment testing. If the purchase price is lower than the net apply the new standard not later than the financial year beginning on assets, the difference is recognized directly in profit and loss. January 1, 2015 and has not yet evaluated the effects. The standard Transaction expenses, with the exception of transaction fees attrib- has not yet been adopted by the EU. utable to the issuance of equity instruments or liability instruments, are recognized directly in profit and loss for the year.

54 Non-controlling interests in the subsidiary’s shareholders’ equity, The reporting currency of the Group and the Parent Company is including net assets at fair value recognized for the subsidiary, are SEK. The Parent Company’s functional currency is SEK. recognized in the consolidated shareholders’ equity on a separate For Group companies that have a functional currency that is differ- line. Holdings with non-controlling influence in the net earnings for ent to the Group’s reporting currency, the balance sheets are trans- the year are recognized on a separate line in profit and loss. lated at the closing date rate and income statements are translated at Group-internal transactions and balance-sheet items and unreal- the average exchange rate for the year, whereby the translation differ- ized gains on transactions between Group companies are eliminated. ence is included under shareholders’ equity. In the case of divestment Unrealized losses are also eliminated, unless the transaction repre- or liquidation of such companies, the accumulated translation differ- sents evidence for the need to recognize impairment. ence is recognized under capital gains/losses. Income-statement items are translated at the transaction-date rate Associated companies and any exchange-rate differences are entered in the profit/loss for Associated companies are companies in which the Group has at the year. The exception is if the transaction represents hedging and least 20% but not more than 50% of the voting power, giving the meets the criteria for hedge accounting of cash flows or net invest- Group a significant influence. Participations in associated compa- ments, since gains and losses are recognized directly against Other nies are recognized in the consolidated accounts in accordance with comprehensive income. Receivables and liabilities are translated in the equity method. The equity method means that shares in a com- accordance with the principles stated under “Financial instruments” pany are recognized at cost, including goodwill, at the time of the below. acquisition and are subsequently adjusted by the Group’s share of the change in the associated company’s net assets. The Group’s par- Revenues ticipation in the associated company’s earnings is recognized under Revenues and expenses pertaining to cargo assignments under- “Profit share in associated companies.” The consolidated value of taken are recognized successively in relation to the cargo assign- the holding is reported as “Participations in associated companies.” ment’s degree of completion on the balance-sheet date. The cargo Unrealized Intra-Group profit is eliminated by the share of the assignment’s degree of completion is calculated on the basis of the profit attributable to the Group. Unrealized losses are also elimi- number of travel days on the balance-sheet date in relation to the nated, unless the transaction represents evidence for the need to total number of travel days for the assignment. Other revenues, such recognize impairment. Associated companies are recognized in the as those for external Ship Management assignments, are recognized Parent Company accounts at their cost. Only dividends received only after agreement is reached with the customer and the service after the acquisition are recognized as revenues. has been delivered. Direct overhead costs that are invoiced to the customer are recognized as gross amounts in profit and loss. Costs Transactions with shareholders with non-controlling influence for personnel employed in the Group are recognized as gross The Group manages transactions with shareholders with non-con- amounts even crews of external vessels. Interest revenues are recog- trolling influence as transactions with the Group’s shareholders. In nized in profit and loss distributed across the period of maturity, acquisitions from shareholders with no controlling influence, the applying the effective interest method. Dividend revenues are rec- difference between the purchase consideration paid and the actual ognized when the right to receive payment has been established. acquired participation of the carrying amount of the subsidiary’s net assets is recognized in shareholders’ equity. Gains and losses in Direct travel expenses divestments to shareholders with non-controlling influence are also Expenses directly attributable to cargo assignments, such as bun- recognized in shareholders’ equity. kers, harbor expenses, etc., are recognized in profit and loss under When the Group no longer has controlling influence, each remain- the heading Direct travel expenses. ing holding is revalued at fair value and the change in the carrying amount is recognized in profit and loss. The fair value is used as the Government subsidies first carrying amount and represents the basis for continued recogni- The Swedish State subsidy to ship owners is recognized as a net tion of the remaining holding as associated company, joint venture or amount against the payroll expenses on which it is based. Settle- financial asset. All amounts pertaining to the divested unit, previ- ment is made monthly. ously recognized in other comprehensive income, are recognized as if the Group had directly divested the attributable assets or liabilities. Income taxes This may result in the reclassification of the amount previously recog- Taxes included in the consolidated accounts pertain to current and nized in other comprehensive income as earnings. deferred tax. The Group recognizes deferred tax on temporary dif- If ownership in an associated company decreases but a significant ferences between the carrying amount and tax value of assets and controlling influence is retained, wherever relevant, only a propor- liabilities. Deferred tax assets are only recognized if it is probable tional share of the amounts previously recognized in Other compre- that the temporary differences can be utilized against future taxable hensive income will be reclassified as earnings. surpluses. The current nominal tax rate in each country is used in calculating deferred tax. Deferred tax liabilities for temporary dif- Translation of foreign currencies ferences pertaining to investments in subsidiaries and associated All transactions included in the financial reports for each Group companies are not recognized in the consolidated accounts as long company are valued and recognized in the currency that provides as no decision on profit taking has been made. In all cases, the Par- the most accurate picture of the company’s operations, its “func- ent Company can steer the timing for the reversal of the temporary tional currency.” Goodwill and adjustments in fair value arising differences, and it is not considered probable that a reversal will from the acquisition of foreign operations are treated as assets and occur in the foreseeable future. The tax effect of items recognized liabilities in these operations and are translated at closing-date rates. in profit and loss is recognized in profit and loss. The tax effect of items recognized directly against other comprehensive income is recognized against other comprehensive income.

55 TransAtlantic 2011 Notes

Note 1 cont.

Segment reporting The Group has goodwill and brands as intangible assets for The segments contain services with differing risks and returns com- which amortization is not applied. Goodwill is tested annually to pared with those of other areas of operations. Internal reporting identify possible needs for impairment recognition and is recog- and follow-up is organized based on these segments. The Group has nized at cost less accumulated impairment. Goodwill is distributed two segments, Viking Supply Ships and Industrial Shipping. among cash-generating units for impairment testing, whereby cash- Reporting is made to the company’s Group management, appointed generating units are the traffic areas within the segments. Branding by the President. pertains to TransAtlantic, for which the recoverable value of the asset is considerably higher than its carrying amount. Tangible fixed assets Tangible fixed assets as described below are recognized at cost or Impairment after deductions for accumulated depreciation according to plan Assets with an indeterminate useful life are tested annually for the and possible impairment. need to recognize impairment. For assets subject to amortization Expenses that raise the value or return of the asset through, for according to plan, an assessment is made regarding whether the example, capacity enhancements or cost rationalization, increase the value of the asset should be impaired whenever there are indica- carrying amount of the asset. Expenses incurred by the re-flagging of tions that its carrying amount is higher than its recoverable value. vessels are capitalized in accordance with this principle. The recoverable value corresponds to the higher of fair value less Expenses for major recurring inspection measures are capitalized selling costs and value in use. Impairment is recognized in an as fixed assets, since they are considered to increase the vessel’s fair amount equivalent to the difference between the recoverable value value and are depreciated on a straight-line basis over the vessel’s and carrying amount. useful life. Other outlay for repairs and maintenance is classed as expenses. Dry-dock expenses within the Group are also capitalized Financial assets in accordance with this principle and are depreciated over a period of Financial assets are classified according to the following categories: 30 months, which is the normal time between dry-dockings. Loans and accounts receivable and Financial assets available for Expenses, including interest, pertaining to vessels under construction sale. The classification is determined for the purpose of the investment are capitalized as fixed assets. Depreciation of vessels according to at the time of acquisition. The classification is reviewed annually. plan is based on an individual assessment of each vessel’s useful life Financial assets for sale are valued at fair value with transaction and subsequent remaining residual value. Impairment is recognized expenses. if the asset’s estimated recoverable amount is lower than its carrying amount. The residual value and useful life of assets are tested on each Loan and accounts receivable balance-sheet date and adjusted if necessary. The type of fixed asset Loans and accounts receivable are initially recognized at fair value with the greatest residual value comprises vessels for which the resid- and subsequently at amortized cost using the effective interest ual value comprises the estimated scrap value at the end of the ves- method less any provision for reduction in value. A provision for sel’s useful life. value reduction of accounts receivable is made when it is clear that the Group will not receive the full amount. The Group’s loan and Straight-line amortization according to plan is based on the following accounts receivable comprise accounts and other receivables and useful lives: cash and cash equivalents. – Vessels 20–32 years – Docking and major overhaul measures 2.5–5 years Borrowing – Computers 3–5 years Borrowing is initially recognized at fair value, net after transaction – Other equipment 5–10 years costs. Borrowing is subsequently recognized at amortized cost. Any – Buildings 20–50 years difference between the amount received and the repayment amount – Land improvements 25 years is recognized in profit and loss, distributed over the loan period using the effective interest method. Intangible assets Intangible assets are recognized at cost or at impaired value after Leasing agreements deductions for accumulated amortization according to plan. A use- The Group acts both as lessor and lessee and has entered both finan- ful life is determined for each asset and this is used for straight-line cial and operational leasing agreements. depreciation according to plan. In financial leasing agreements, in which the Group enjoys the financial benefits and assumes responsibility for the risks, the item Straight-line amortization according to plan is based on the following leased is recognized in the balance sheet as a fixed asset. At the useful lives: beginning of the lease period, the asset is recognized at the lower of – Computer programs 4 years the fair value of the leased item or the current value of the mini- – Line networks 10 years mum lease fees. Each leased item is assigned a useful life in accordance with the principles stated under tangible fixed assets. Future Amortization shall not be applied for intangible assets considered to leasing fees less financial expenses are recognized as a liability. have the capacity to provide a financial return for an indefinite Each lease payment is divided between the amortization of the lia- period. Instead, recoverable values shall be determined for assets bility and the financial expense. on an annual basis or more frequently if there are indicators that an Operational leasing agreements are recognized straight-line over asset’s value has changed. the lease period in profit and loss as net sales where the Group is the lessor and as Other external expenses where the Group is the lessee.

56 Inventories while the statement of comprehensive income, the statement on Inventories have been valued at the lower of cost and net realizable changes in shareholders’ equity and cash-flow statements are based value. Inventories mainly comprise bunker and lubricating oils. Val- on IAS 1 Presentation of financial reports and IAS 7 Statement of uation has been made in accordance with the FIFO principle. cash flows. The differences in the Group’s reports that apply in the Parent Company’s income statements and balance sheets pertain Pensions and similar commitments primarily to shareholders’ equity, as well as the presence of provi- The Group has defined-benefit and defined-contribution pension sions as a separate heading. plans. Defined-benefit pension plans provide employees with pension benefits corresponding to a predetermined amount and the Associated companies and subsidiaries Group is responsible for financing these plans so that these amounts Participations in associated companies and subsidiaries are recog- can be paid in the future. For defined-contribution pension plans, nized in the Parent Company using the cost method. Carrying the Group pays in an established fee to an independent legal entity. amounts are tested on each balance-sheet date to determine any Fees are recognized as personnel expenses when they mature for need for impairment. Only dividends received are recognized as payment. Subsequently, the Group has no further pension commit- revenue, on the condition that these are derived from profits earned ments towards employees. after the acquisition. Dividends that exceed these profits are consid- Provisions are made for all defined-benefit plans on the basis of ered a repayment of the investment and reduce the participation’s actuarial calculations in accordance with the project unit credit carrying amount. method, with the purpose of establishing the current value of future Transaction expenses are included in the carrying amount for commitments to current and previous employees. Actuarial calcu- holdings in subsidiaries and associated companies. However, trans- lations are conducted annually and are based on actuarial assump- action expenses for subsidiaries are recognized directly in profit/ tions applicable on the closing date. The size of the provision is loss in the Group. determined by the current value of future pension commitments less deductions for the fair value of plan assets, unrecognized actu- Group contributions and shareholders’ contributions arial gains/losses and unrecognized liabilities for earlier periods of Shareholders’ contributions are recognized directly against share- service. Discount of pension commitments occurs based on the holder’s equity for the recipient and are capitalized in shares and interest rates of government bonds. Actuarial gains/losses exceed- participations by the contributor to the extent that impairment is not ing a “corridor” of 10% shall be recognized in profit and loss during required. The Swedish Financial Reporting Board has withdrawn employees’ average remaining period of service. UFR 2 Group contributions and shareholders contributions. Rederi AB TransAtlantic has thus amended its recognition of Group contri- Borrowing costs bution for 2011 in accordance with RFR 2 Accounting for legal enti- Borrowing costs for new building projects are capitalized as fixed ties. The amendment is applied retroactively which is why the com- assets during the project period. Other borrowing costs are parative year 2010 has been recalculated. The changed accounting expensed as they are incurred. has had a positive impact on other financial income and expenses of SEK 215 M for 2011 and a negative impact of SEK 49 M for 2010. The Cash-flow statements tax effect of Group contributions is recognized after Changes in the The cash-flow statements are prepared in accordance with the indi- income statement and not in Other comprehensive income. The rect method. The recognized cash flow comprises only transactions amended accounting had a negative effect of SEK 57 M on tax entailing payments received or paid out. expense for 2011, and a positive effect of SEK 13 M for 2010. Earnings for comparative year 2010 fell SEK 36 M, while other comprehensive Cash and cash equivalents income rose by an equal amount. The changed accounting had no Cash and cash equivalents include cash and bank balances, matur- impact on total shareholders’ equity. ing within three months. Restricted cash and cash equivalents are recognized among Other long-term receivables. Untaxed reserves The amounts included in untaxed reserves comprise taxable tempo- Parent Company’s accounting policies rary differences. As a result of the link between accounting and tax- The financial statements of the Parent Company are prepared in ation, in a legal entity, the deferred tax liability attributable to accordance with the Swedish Annual Accounts Act (1995:1554) and untaxed reserves is not recognized separately, but in its gross the Swedish Financial Accounting Standards Council’s recommen- amount in the balance sheet. dation RFR 2, Accounting for legal entities. The Parent Company, in its financial statements, shall apply all of the EU-approved IFRS and Financial income statements insofar as these do not conflict with the Annual Net financial income in the Parent Company includes dividends on Accounts Act and the relationship between accounting and taxation. shares in subsidiaries and these are only recognized when the right The recommendation states which exceptions are to be made and to receive payment has been established. can be made based on IFRS. This means that the Parent Company applies the same accounting Financial instruments policies as the Group with the exception of the instances stated The Parent Company applies the same policies pertaining to finan- below: cial instrument as the Group, except for measurement regulations in IAS 39. In the Parent Company, financial fixed assets are valued at Classification and presentation cost less any impairment losses, and financial current assets are val- The Parent Company’s income statement and balance sheets are set ued at the lower of cost or market value. forth in accordance with the outline in the Annual Accounts Act,

57 TransAtlantic 2011 Notes

Note 1 cont.

Acquisition of own shares restricted by matching the exposure to revenues in various curren- When own shares are acquired, unrestricted shareholders’ equity is cies with costs in the corresponding currency. In the same manner, reduced by the expense for the acquisition. When own shares are assets in a certain currency are matched with liabilities in the same transferred, unrestricted shareholders’ equity is increased by the currency. The remaining exposure is hedged using various hedging income derived from the transfer. instruments in accordance with Group policy, see Note 32.

Risk management Interest-rate risks The Group’s operations entail a number of operational and financial Shipping is a capital-intensive business, in which long-term loans risks that may affect earnings. The most significant risks are: opera- are the principal form of financing. Accordingly, interest-rate fluctu- tional risks, market risks, liquidity risks and credit risks. ations have a major impact on the Group’s earnings and cash flow. The Group’s overriding goal is to minimize the impact of finan- To reduce this risk, interest levels are hedged to a large extent for cial and operational risks on the consolidated income statements varying periods of time and using various types of hedging instru- and balance sheets. ments, see Note 32. The Board of Directors has identified these risks and developed a plan to avoid or minimize the impact on the consolidated income Liquidity risk statement and balance sheets through various measures. Through To avoid disruptions in payments flows, the Group ensures the clear policies and reporting paths, it is stated how these risks shall availability of sufficiently large liquidity reserves in the form of be managed and how presentation is to be made. bank deposits and loan pledges to cope with unforeseen fluctua- The Group’s policy is thus to work with various types of insur- tions in cash flow, refer to Notes 22 and 26. ance or financial instruments to minimize various types of risks. Credit risks Operational risks The Group only provides short working credit. These credits are The general economic trend in the countries where the Group is mainly provided to major customers, with whom the Group has a active is a crucial factor for financial development, since the eco- long-term relationship. New customers are subject to a credit check nomic trend has a major effect on the flows of goods, volumes, and prior to credit being provided. When longer-term credit is provided, the resultant demand for maritime transports. The trend in markets this is conducted against collateral. other than those where the Group is active can also affect demand for the Group’s services, since the maritime transport market is Bunker risks highly international. The Group endeavors to maintain close contact Cost changes for bunker oil can have a significant impact on earn- with its customers and signs long-term cargo agreements with them ings. Cargo contracts often include clauses that imply that the cus- to restrict the impact of economic fluctuations. tomer carries the risk of price changes. For the portion of consump- Earnings can be impacted by the loss of a vessel. These costs can tion for which the Group does not have such clauses, the Group uses be minimized through active service and damage-prevention work, forward contracts for bunker oil, see Note 32. resulting in lower risk of major individual cost increases. An offhire insurance that provides financial compensation in the event of pro- Derivative instruments/hedge accounting longed operational disruption has been taken for part of the fleet of The Group has derivative instruments that hedge highly probable vessels, primarily those vessels involved in scheduled services. forecast transactions (cash-flow hedging). The Group utilizes derivative instruments to cover the risks of Capital risk exchange-rate fluctuations and exposure in interest-rate risks. The The Group’s capital structure shall secure the operation of current Group’s policy is to only hold instruments that qualify for hedge business and enable desired future investments and development. accounting. Hedge accounting requires that the explicit purpose of Capital is assessed on the basis of the debt/equity ratio, meaning the hedging measure is classed as hedging, that it has an unequivo- interest-bearing net loan liabilities in relation to shareholders’ cal connection with the hedge item and that the hedging measure equity. The net loan liability comprises long and short-term interest- effectively protects the hedged position. bearing borrowing less cash and cash equivalents. When a hedge is established, the relationship between the hedg- Total borrowing amounted to SEK 2,983 M (2,170). Cash and cash ing instrument and the hedged item is documented, as are the equivalents, negative in the amount of SEK 548 M (neg: 637), are objective of the hedging and the strategy for implementing hedging deducted. The net debt amounted to SEK 2,435 M (1,533) and share- measures. The Group also documents its assessment, both at the holders’ equity to SEK 2,493 M (2,396). The debt/equity ratio was onset of the hedge and on an ongoing basis during its period of 98% (64). application, regarding the effectiveness of the hedge in evening out The increase in borrowing in 2011 was a result of deliveries of the changes in cash flow for the hedged items. AHTS vessels Njord and Magne Viking, the ongoing newbuild of Derivative instruments are recognized at fair value at the time of Brage Viking, and the acquisition of SBS Marine (Holdings) Ltd., acquisition and continuously revalued at fair value. Unrealized and Österströms International AB. These events are also com- value changes for effective hedging pertaining to cash flow are rec- mented in the Board of Directors’ Report. ognized in other comprehensive income. Changes in the fair value of a derivative formally identified to hedge the fair value, and fulfill Market risks the conditions for hedge accounting, are recognized in the profit Currency risks and loss with changes in the fair value, attributable to the hedged Shipping is a highly international business, which means that only a risk of the hedged asset or liability. For derivatives that do not qual- portion of the Group’s cash flow is generated in SEK and this means ify for hedge accounting, the unrealized value changes, including that currency fluctuations have a major impact on the Groups earn- the effective portion of the hedge, shall be recognized directly in ings and cash flows. The foreign-exchange risk is primarily profit and loss.

58 The fair value of financial instruments is established through The estimations with the greatest impact are: assessment in an active market (market appraisal) or through estab- – The useful life of tangible fixed assets and their residual value. lished valuation methods if no active market exists. – Income taxes where the Group maintains operations in different countries with different tax systems (such as tonnage taxation). Measurement of fair value – The pension liability and pension cost. Fair value of financial instruments traded on an active market is based on listed market prices and belongs to measurement level 1 Useful-life periods and residual value are assessed in connection according to IFRS 7. In the event that there are no listed market with annual impairment testing, which, in 2011, resulted in changes prices, fair value is measured through discounted cash flows. When to the carrying amount, see Note 10. Pension calculations are con- measurements of discounted cash flows have been conducted, all ducted by an actuary based on assumptions established by the variables, such as discount rates of interest and exchange rates for company. measurements, have been retrieved from market listings wherever possible. These measurements belong to measurement level 2. Important assessments in the application of the Group’s Other measurements, for which a variable is based on own assess- accounting policies ments, belong to measurement level 3. The assessments made by the Group on the basis of its established The nominal value less any credits was used as fair value for accounting policies mainly consist of the classification of leasing accounts receivable and accounts payable. agreements and assumptions concerning future cash flows for vessels. The assessment of future cash flows for vessels is based on Significant estimations and assessments forecasts prepared in connection with the Group’s budget process, Estimations and assessments are conducted continuously and are which, taking into account the impact of economic fluctuations and based on historical experience and reasonable assumptions of other known changes, is calculated at its current value with a dis- future development. count factor of 8–10%. Important estimations and assumptions for accounting purposes: For the Group, it has been determined that the assumptions con- The Group makes estimations about the future that affect its income cerning future cash flows for vessels correspond to the assessment statements and balance sheets. and estimation that have the greatest impact on the Group’s income statement and balance sheet.

NOTE 2 Distribution of net sales

Group Parent Company SEK 000s 2011 2010 2011 2010

Cargo revenues 2,069,600 1,534,304 691,557 685,338 Time charter revenues 760,813 622,842 308,610 353,240 Expenses invoiced on to external customers 155,030 235,779 33,840 1,520 Expenses invoiced on to internal customers — — 295,529 217,108 Other 4,025 1,171 3,279 1,214 Total 2,989,468 2,394,096 1,332,815 1,258,420

NOTE 3 Segment reporting

During 2011, the operation successively switched to governance sion conducts scheduled traffic using specially adapted RoRo and through the two business areas Industrial Shipping and Viking container vessels, which form a full-coverage maritime transport Supply Ships. However, the Group’s financial control continued to system in the Baltic Sea. The Bulk Division comprises ice-classified also monitor the Ship Management/Group-wide support function. vessels in the medium-size bulk segment, which operates primarily As of 2012, the remaining external ship management operation will in Europe, and also conducts RoRo traffic between Canada and the be allocated to each business area and the shared costs will be southern portion of the US east coast. The Container Division con- distributed among the respective business areas. ducts container-based scheduled services between Sweden and the The Viking Supply Ships business area comprises ice-classified UK, and feeder traffic between Sweden and Germany. and also icebreaking anchor-handling vessels that are partly used The Short Sea Bulk Division conducts transport with smaller bulk for icebreaking (primarily for the Swedish Maritime Administra- tonnage preferably in the Baltic Sea. The Integrated Logistics Divi- tion), and partly for assignments for the offshore industry, with the sion develops integrated transport solutions where TransAtlantic repositioning of rigs and anchors for these. The acquisition of SBS provides a larger portion of the total transport chain. Marine adds a new operation and vessel type, Platform Supply Ves- Ship Management/Group-wide comprises company manage- sels, which mainly transports supplies to rigs for customers in the ment, central administration, financial management and ship man- offshore industry. agement for both own ships and external clients. As of 2012, the Industrial Shipping focuses mainly on contract-based shipping operation has been divided and allocated to the individual business for Nordic base industry. The business area comprises several dif- areas. ferent areas of operation, which are integrated with each other and Transactions between the business areas and support functions cooperate on tonnage and customer contracts. The RoRo Baltic Divi- have been conducted on market terms.

59 TransAtlantic 2011 Notes

Note 3 cont.

Ship Management/ Viking Supply Ships Industrial Shipping Group-wide Total SEK 000s 2011 2010 2011 2010 2011 2010 2011 2010

Sales 568,490 298,396 2,258,923 1,865,191 1,387,875 1,150,694 4,215,288 3,314,281 Internal sales — — — — –1,225,820 –920,185 –1,225,820 –920,185 Net revenue 568,490 298,396 2,258,923 1,865,191 162,055 230,509 2,989,468 2,394,096

Depreciation/amortization/impairments –212,601 –77,137 –183,934 –262,797 –18,407 –88,684 –414,942 –428,618 Profit share in associated companies –451 — — — — — –451 — Operating profit/loss –48,649 65,531 –219,330 –323,359 –80,336 712,761 –348,315 454,933

Financial income Financial income 1,999 1,379 9,845 2,156 8,830 4,324 20,674 7,859 Financial expense –79,420 –21,444 –38,126 –30,427 –21,159 –3,994 –138,705 –55,865 Profit/loss before tax1) –126,070 45,466 –247,611 –351,630 –92,665 713,091 –466,346 406,927 Income tax 31,798 178,354 Profit/loss for the year –434,548 585,281

Assets 4,664,468 3,158,639 822,130 1,080,472 779,615 864,126 6,266,213 5,103,237 Capital participations in associated companies 153 153 153 153 Undistributed assets2) 16,373 7,583 Total assets 4,664,468 3,158,639 822,130 1,080,472 779,768 864,279 6,282,739 5,110,973

Liabilities 2,844,351 1,659,607 705,885 772,927 211,535 281,376 3,761,771 2,713,910 Undistributed liabilities2) 27,950 586 Total liabilities 2,844,351 1,659,607 705,885 772,927 211,535 281,376 3,789,721 2,714,496 Gross investments3) 1,155,097 235,879 55,710 27,720 27,863 4,061 1,238,670 267,660

1) The loss before tax for the Viking Supply Ships business area includes restructuring and acquisition effects totaling SEK 52 M comprising costs and impairments in connection with the establishment of the Danish offshore structure, as well as preparation for the introduction of Viking Supply Ships on the Oslo Stock Exchange totaling SEK 48 M, and costs of SEK 4 M in connection with the acquisition of SBS Marine (Holdings) Ltd. The loss before tax for the Industrial Shipping business area includes restructuring and acquisition expenses totaling SEK 142 M for 2011. Costs comprise restructuring the business area in connection with the acquisition and integration of Österströms totaling SEK 45 M, costs for the former President totaling SEK 5 M, as well as costs in connection with the acquisition of Österströms International AB totaling SEK 3 M. In addition, vessel impairments in the business area totaled SEK 32 M, and goodwill impairment was SEK 58 M. Profit before tax for 2010 in Ship Management/Group-wide includes effects of SEK 775 M attributable to the acquisition of TransViking, restructuring items in the Industrial Shipping business area comprising vessel impairments totaling SEK 241 M, and capital loss from vessel divestment totaling SEK 6 M. 2) Undistributed assets and liabilities comprise financial instruments. 3) Investments for the year in Viking Supply Ships comprised mainly of three new-builds in progress, the acquisition of SBS Marine (Holdings) Ltd., and capitalized docking fees. Investments in the previous year comprised mainly of new-builds in progress, as well as capitalized docking fees. In the Industrial Shipping business area, investments for the year comprised the acquisition of Österströms International AB, as well as capitalized docking fees. Investments in the preceding year comprised primarily capitalized docking fees. In Ship Management/ Group-wide, investments for the year comprised cash and cash equivalents reserved in blocked accounts, acquisition of capital investment shares and equipment. Investments in the previous year in the business area comprised investment in new office building, and investments in computer software and equipment.

Secondary segment NOTE 4 Purchases and sales among Group companies Distribution by geographic area: Group Parent Company SEK 000s 2011 2010 The Parent Company’s net sales include sales to other Group compa- Net sales nies in the amount of TSEK 304,664 (233,830). Nordic countries 1,568,165 1,327,485 The Parent Company’s other external operating expenses include Rest of Europe 1,114,975 781,786 purchases from other Group companies of TSEK 87,545 (60,572). North America 275,368 283,446 Rest of the world 30,960 1,379 Total 2,989,468 2,394,096 NOTE 5 Other operating income Assets Group Parent Company Nordic countries 5,965,141 4,414,924 SEK 000s 2011 2010 2011 2010 Rest of Europe 317,598 696,049 Acquisition effects North America —— TransViking — 774,915 — — Rest of the world —— Capitalized own work 2,233 7,215 — — Total 6,282,739 5,110,973 Capital gain/loss 7,798 — 112 — Investments Other — 2,198 — 366 Nordic countries 924,743 251,778 Total 10,031 784,328 112 366 Rest of Europe 313,927 15,882 North America —— Rest of the world —— Total 1,238,670 267,660

60 NOTE 6 Other operating expenses Salaries and other remuneration by country 2011 2010 Operating profit/loss includes exchange-rate differences pertaining Board1) and Other Board and Other to operating receivables and operating liabilities in accordance with SEK 000s President employees President employees the following: Parent Company Group Parent Company Sweden 11,484 248,677 4,468 226,420 SEK 000s 2011 2010 2011 2010 Total, Parent Exchange-rate difference –8,806 –32,578 –4,027 –28,383 Company 11,484 248,677 4,468 226,420 Capital losses –5,400 –5,348 — — Subsidiaries in Sweden 2,492 121,896 67 202,600 Total –14,206 –37,926 –4,027 –28,383 Foreign subsidiaries: Refer also to Note 1. Netherlands 90 949 — — Denmark — 10,120 — — NOTE 7 Average number of employees, sickness absence, UK — 15,301 634 4,074 salaries, other remuneration and social security Finland — 4,036 — 2,728 costs, etc. Estonia 126 695 — — Latvia 244 226 — — 2011 2010 Poland 406 470 — — Average number of No. of Of whom, No. of Of whom, Russia 632 3,700 603 2,260 employees employees women % employees women % Total, foreign Parent Company subsidiaries 1,498 35,497 1,237 9,062 Sweden Group total 15,474 406,070 5,772 438,082 – land based 87 46% 113 40% 1) The amount for the Parent Company includes consulting fees totaling TSEK 3,132, – shipboard 317 2% 344 2% and non-recurring remuneration to the departing President totaling TSEK 3,937. The Parent Company received a government shipping subsidy of TSEK 122,448 (102,153) Total, Parent and the total shipping subsidy received by the Group amounted to TSEK 130,651 Company 404 12% 457 11% (153,684). The figures in the Note above pertain to amounts before reductions for the government shipping subsidy received. Subsidiaries Sweden Salaries and other remuneration paid to the Board of Directors and senior – land based 75 41% 47 41% executives – shipboard 177 8% 360 8% Board fee Denmark Remuneration paid to the Board of Directors – land based 13 31% — — Jan 1 – Dec 31 (SEK 000s) 2011 2010 – shipboard 36 8% — — Christen Sveaas, Chairman 400 100 UK – land based 11 27% 38 22% Folke Patriksson, Deputy Chairman 200 350 1) – shipboard 133 2% — — Åge Korsvold 167 50 Finland Christer Olsson 200 200 – land based 8 38% 4 25% Håkan Larsson 200 200 Russia Magnus Sonnorp3) 200 133 – land based 6 33% 5 20% Henning E. Jensen2) 33 — Poland Helena Levander4) — 150 – land based 6 0% — — Jenny Lindén Urnes5) — 67 Estonia Lena Patriksson Keller4) — 150 – land based 8 0% — — Björn Rosengren4) — 150 Latvia – land based 4 25% — — Christer Lindgren, employee representative —— Netherlands 3 33% — — 1,400 1,550 Norway 4 50% — — 1) Resigned at the Extraordinary General Meeting in November 2011. Total, subsidiaries 484 14% 453 13% 2) Elected at the Extraordinary General Meeting in November 2011. 3) Elected at the Annual General Meeting in April 2010. Group total 888 13% 911 12% 4) Resigned at the Extraordinary General Meeting in September 2010. 5) Resigned at the Annual General Meeting in April 2010. Salaries, other remuneration and social security costs During the ten-year period 2004–2013, the Deputy Chairman of the 2011 2010 Board is entitled to a pension corresponding to 70% of his final annual Social security Social security Salaries costs (of Salaries costs (of salary. Subsequently, a lifelong defined-benefit pension is paid corre- and remu- which, pen- and remu- which, pen- sponding to the ITP plan. To cover the company’s pension commit- SEK 000s neration sion costs) neration sion costs) ment, which amounted to TSEK 10,248 as at December 31, 2011, Parent Company 260,161 136,121 230,888 140,078 pension-insurance plans have been signed with a market capitalization (39,225) (48,412) of TSEK 9,987 as at December 31, 2011. During 2011, the company had Subsidiaries in no expenses for this commitment. There are no other pension commit- Sweden 124,388 84,032 202,667 109,273 ments for the Parent Company’s Board members. (21,271) (38,865) Foreign subsidiaries 36,995 6,298 10,299 1,185 (2,913) (957) Group total 421,544 226,451 443,854 250,536 (63,409) (88,234)

61 TransAtlantic 2011 Notes

Note 7 cont.

Remuneration paid to senior executives Salary Other benefits Pension premium Consulting fees Total SEK 000s 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010

CEO Rolf Skaarberg1) — — — — — — 3,132 — 3,132 — CEO Stefan Eliasson2) 6,404 2,400 46 49 502 469 — — 6,952 2,918 Other senior executives, four persons (4)3) 5,624 4,594 374 252 1,182 1,555 3,423 — 10,603 6,401 Total 12,028 6,994 420 301 1,684 2,024 6,555 — 20,687 9,319

1) Rolf Skaarberg was President of the Parent Company during the period April 1 – December 30, 2011. During the year, remuneration of TNOK 300 per month was paid to Rolf Skaarberg in accordance with a consultancy agreement signed with Kistefos AS. Henning E. Jensen assumed the position of President on December 31, 2011 and he also receives remuneration in accordance with a consultancy agreement with Kistefos AS. Remuneration of TNOK 200 per month was paid. 2) The amount includes six months’ termination notice salary and 12 months’ severance pay to Stefan Eliasson, who resigned as President on March 31, 2011. 3) The Group’s former CFO and former Head of Viking Supply Ships were paid fees via consultancy agreements for eight and five months, respectively, during the year.

Termination notice on the part of the company for other senior execu- included one woman in 2011. The Group paid no separate fees to mem- tives is six to 12 months. This group follows the ITP plan and is entitled bers of the Boards of subsidiaries and Group companies. The separate to company cars. These individuals are entitled to a lifelong pension Corporate Governance section in the Annual Report addresses matters from the age of 65, corresponding to the ITP plan. As in 2010, the group regarding decisions on remuneration.

NOTE 8 Audit assignments

Expensed fees and reimbursements during the year amounted to: Group Parent Company SEK 000s 2011 2010 2011 2010

Fees pertaining to audit assignments – PwC 3,427 2,204 2,380 1,920 – BDO 209 390 177 354 – KPMG 816 — — — – Other audit companies 984 653 — —

Fees pertaining to auditing operations in addition to the audit assignment – PwC 1,923 1,361 1,618 1,187 – Other audit companies 48 1 — —

Fees pertaining to tax advice – PwC 4,341 1,187 4,012 1,168 – Other audit companies 48 78 11 —

Other services – PwC 991 — 16 — Total 12,787 5,874 8,214 4,629

NOTE 9 Other profits Group Parent Company SEK 000s 2011 2010 2011 2010

Interest-hedge derivative – Fair value gains 608 — — — Total 608 0 0 0

1) Refer also to Note 32 Financial risk management and derivative instruments, section “Fair values derivative instruments.”

62 NOTE 10 Tangible and intangible fixed assets

Vessels1) Group Parent Company SEK 000s 2011 2010 2011 2010

Costs Costs, Jan 1 4,499,976 2,605,777 — — Purchases during the year (incl. improvement costs) 49,181 28,382 — — Acquisitions through corporate acquisitions 772,226 1,992,385 — — Reclassifications 1,174,756 245,822 — — Sales/scrapping3) –679,348 –93,438 — — Translation difference for the year 39,817 –278,952 — — Accumulated costs, Dec. 31 5,856,608 4,499,976 — —

Accumulated depreciation according to plan Depreciation, Jan 1 –1,048,559 –735,135 — — Acquisitions through corporate acquisitions — –274,911 — — Sales/scrapping 228,766 47,097 — — Translation difference for the year –423 87,246 — — Depreciation according to plan for the year –274,578 –172,856 — — Accumulated depreciation according to plan, Dec. 31 –1,094,794 –1,048,559 — —

Impairment Impairment, Jan 1 –281,114 –81,435 — — Sales/scrapping 112,015 28,312 — — Translation difference for the year –1,793 13,207 — — Impairment for the year –32,040 –241,198 — — Accumulated impairment, Dec. 31 –202,932 –281,114 — —

Residual value according to plan, Dec. 312) 4,558,882 3,170,303 — —

The average remaining service life of vessels is 13 (13) years.

1) The item “vessels” includes leasing items held by the Group according to financial leasing agreements involving the following amounts: Group Parent Company SEK 000s 2011 2010 2011 2010

Costs Costs, Jan 1 — 597,832 — — Acquisitions for the year of chartered vessels2) — –597,832 — — Accumulated costs, Dec. 31 — 0 — —

Accumulated depreciation according to plan Depreciation, Jan 1 — –142,247 — — Acquisitions for the year of chartered vessels2) — 157,082 — — Depreciation according to plan for the year — –14,835 — — Accumulated depreciation according to plan, Dec. 31 — — — —

Residual value according to plan, Dec. 313) — — — —

2) Vessel values in today’s market situation are more difficult to assess than normal. The valuation of the Group’s vessels occurred using external measurements and internal impairment tests. During 2011, impairments occurred on TransFalcon totaling SEK 8 M, TransFrej with SEK 18 M and TransNjord with SEK 6 M, all within the Industrial Shipping business area. The impairments were based on assessed current market capitalization since work has commenced to divest these vessels. Following these impairments, the recognized vessel values were estimated to be on par with the assessed market capitalization. During 2010, impairments were made within Industrial Shipping on TransFighter at SEK 128 M, the SCA vessels (Obbola, Östrand and Ortviken) at SEK 85 M, TransNjord at SEK 25 M and Map at SEK 3 M. 3) In connection with TransAtlantic acquiring the three owner companies for the SCA vessels Cove, Kirmar and Sanaga Shipping Ltd in 2010, an agreement was signed giving SCA the rights to acquire the companies. This option to acquire the vessels was utilized by SCA in June 2011, entailing that the vessels were thus divested at a capital gain of SEK 6 M.

Group Parent Company Buildings and land, SEK 000s 2011 2010 2011 2010

Costs Costs, Jan 1 48,003 47,778 46,745 46,091 Acquisitions for the year (incl. improvement expenses) — 313 –1 654 Translation difference for the year 16 –88 — — Accumulated costs, Dec. 31 48,019 48,003 46,744 46,745

63 TransAtlantic 2011 Notes

Note 10 cont. Group Parent Company Buildings and land, SEK 000s 2011 2010 2011 2010

Accumulated depreciation according to plan Depreciation, Jan 1 –9,412 –8,463 –8,966 –7,980 Translation difference for the year –8 75 — — Depreciation according to plan for the year –1,023 –1,024 –992 –986 Accumulated depreciation according to plan, Dec. 31 –10,443 –9,412 –9,958 –8,966

Impairment Impairment, Jan 1 — — — — Impairment for the year1) –16,000 — –16,000 — Accumulated impairment, Dec. 31 –16,000 — –16,000 —

Residual value according to plan, Dec. 31 21,576 38,591 20,786 37,779 – of which, land value 5,855 5,855 5,855 5,855

Carrying amount Taxation values for properties in Sweden – buildings 10,725 10,725 10,725 10,725 – land 2,054 2,054 2,054 2,054 Total 12,779 12,779 12,779 12,779 Carrying amount for properties in Sweden 20,786 37,779 20,786 37,779

1) A decision was taken in 2011 to divest the Group’s office property in Skärhamn. In connection with this decision, a market valuation was conducted, resulting in an impairment of SEK 16 M. Group Parent Company Equipment, SEK 000s 2011 2010 2011 2010

Costs Costs, Jan 1 118,287 116,049 30,339 30,102 Purchases during the year (incl. improvement costs) 11,996 4,861 895 1,067 Acquisitions through corporate acquisitions 22,299 — — — Sales/scrapping –12,485 –1,400 –2,372 –830 Translation difference for the year 759 –1,223 — — Accumulated costs, Dec. 31 140,856 118,287 28,862 30,339

Accumulated depreciation according to plan Depreciation, Jan 1 –77,665 –67,968 –20,336 –14,994 Acquisitions through corporate acquisitions –7,251 — — — Sales/scrapping 20,221 1,400 1,300 372 Translation difference for the year –670 1,043 — — Depreciation according to plan for the year –22,630 –12,140 –5,026 –5,714 Accumulated depreciation according to plan, Dec. 31 –87,995 –77,665 –24,062 –20,336

Residual value according to plan, Dec. 313) 52,861 40,622 4,800 10,003

3) The item “Equipment” includes leasing objects held by the Group in accordance with financial leasing contracts in the following amounts: Group Parent Company Equipment, financial leasing, SEK 000s 2011 2010 2011 2010

Costs Costs, Jan 1 68,008 64,920 — — Acquisitions during the year (incl. improvement costs) — 3,088 — — Acquisitions during the year through corporate acquisitions 8,420 — — — Concluded leasing agreements –12,921 — — — Accumulated costs, Dec. 31 63,507 68,008 — —

Accumulated depreciation according to plan Depreciation, Jan 1 –42,470 –37,477 — — Acquisitions during the year through corporate acquisitions –5,502 — — — Concluded leasing agreements 12,374 — — — Depreciation according to plan for the year –5,189 –4,993 — — Accumulated depreciation according to plan, Dec. 31 –40,787 –42,470 — —

Residual value according to plan, Dec. 31 22,720 25,538 — —

Refer also to Note 30 Commitments

64 Group Parent Company Construction in progress and advances for tangible fixed assets, SEK 000s 2011 2010 2011 2010

Costs Costs, Jan 1 644,288 405,822 8,393 5,588 Acquisitions during the year (incl. improvement costs)4) 804,457 148,393 1,176 6,849 Acquisitions through corporate acquisitions 6,283 337,140 — — Reclassifications –1,174,756 –245,822 — — Divestments –2,122 –4,044 –9,569 –4,044 Translation difference for the year 2,028 2,798 — — Accumulated costs, Dec. 31 280,177 644,288 — 8,393

Residual value according to plan, Dec. 31 280,177 644,288 — 8,393

4) The amount includes capitalized financial expense totaling SEK 62 M (26). The interest rate on newbuild credit was 4.95% during the year. Group Parent Company Goodwill, SEK 000s 2011 2010 2011 2010

Costs Costs, Jan 1 2,348 2,348 8,278 8,278 Acquisitions during the year1) 58,137 — — — Translation difference for the year 111 — — — Accumulated costs, Dec. 31 60,596 2,348 8,278 8,278

Accumulated impairment Impairment, Jan 1 — — –8,278 –8,278 Impairment for the year –58,137 — — — Accumulated impairment, Dec. 31 –58,137 — –8,278 –8,278

Carrying amount, Dec. 31 2,459 2,348 — — 1) Acquisitions for the year pertain to the acquisition of Österströms International AB on June 8, 2011. The entire value was impaired during the year. The acquisition calculation is still preliminary and will be finally established not later than June 30, 2012. Impairment was justified by a testing of the conditions for profitability in the markets in which the Österströms companies operate. In connection with the merger with Gorthon Lines in 2005, there was impairment in the Parent Company of the goodwill item that arose in the minority acquisition of shares in Gor- thon Lines AB in 2001. This goodwill value was included up to the merger in the item “Participations in associated companies.” The goodwill item represented surplus values in the vessel fleet that is currently owned by a subsidiary. Group Parent Company Brands, SEK 000s 2011 2010 2011 2010

Costs Costs, Jan 1 7,015 7,015 — — Residual value according to plan, Dec. 31 7,015 7,015 — —

Group Parent Company Other intangible assets, SEK 000s 2011 2010 2011 2010

Costs Costs, Jan 1 10,543 9,114 6,938 101,628 Acquisitions during the year 8,555 1,429 154 1,426 Acquisitions through corporate acquisitions 8,838 — — — Sales/scrapping –3,605 — –1,579 –96,116 Translation difference for the year 225 — — — Accumulated costs, Dec. 31 24,556 10,543 5,513 6,938

Accumulated depreciation according to plan Depreciation, Jan 1 –7,480 –6,080 –5,138 –71,722 Acquisitions through corporate acquisitions –2,574 — — — Sales/scrapping 466 — 466 74,757 Translation difference for the year 29 — — — Depreciation according to plan for the year –4,909 –1,400 –832 –8,173 Accumulated depreciation according to plan, Dec. 31 –14,468 –7,480 –5,504 –5,138

Impairment1) Impairment, Jan 1 — — — — Impairment for the year –5,625 — — — Accumulated impairment, Dec. 31 –5,625 — — —

Residual value according to plan, Dec. 31 4,463 3,063 9 1,800

1) During the year, impairment occurred of capitalized development costs for software in Arctic Ice Management AB. The impairment was based on the suspension of development work since the commercial value was currently deemed as uncertain. Group: In addition to capitalized computer software, value comprises traffic systems developed within the Industrial Shipping business area held by the subsidiary TransAtlantic European Services AB and was added to the Group through the acquisition of the remaining 26% of shares in 2004. Parent Company: The amount comprises capitalized computer software. 65 TransAtlantic 2011 Notes

NOTE 11 Profit from participations in associated companies NOTE 13 Financial revenue

Group Parent Company Group Parent Company SEK 000s 2011 2010 2011 2010 SEK 000s 2011 2010 2011 2010

Share of profits from Interest revenue 7,857 7,859 499 1,129 other associated Interest revenue from companies1) –451 — –14,915 1,270 Group companies — — 39,426 16,119 Total –451 — –14,915 1,270 Exchange-rate 1) Share of profits in the Parent Company for 2010 and 2011 pertains to equity income differences 12,817 — 14,602 — from Partrederiet för Odin Viking DA. Share of profits in the Group for 2011 pertains to Total 20,674 7,859 54,527 17,248 earnings from Östersjöfrakt AB. This company, which is 20%-owned, was included in the acquisition of the Österströms Group (refer also to Note 33).

NOTE 12 Profit from participations in Group companies NOTE 14 Financial expenses

Group Parent Company Group Parent Company SEK 000s 2011 2010 2011 2010 SEK 000s 2011 2010 2011 2010

Dividend — — 1,376,857 1,772 Interest expenses 138,705 55,733 10,629 4,869 Group contribution1) — — 214,636 –48,646 Interest expenses Impairment of paid to Group shareholding — — –433,280 –59,100 companies — — 57,764 7,150 Impairment of Group Exchange-rate receivables —— –30 differences — 132 — 14,381 Net capital gain/loss Other financial from sales of sub expenses — — 1,246 412 sidiaries — — 269,971 79 Total 138,705 55,865 69,639 26,812 Total — — 1,428,184 –105,925

1) Recognized directly against shareholders’ equity in prior years.

NOTE 15 Taxes

Group Parent Company SEK 000s 2011 2010 2011 2010

Tax in profit and loss – Current tax –17,919 –1,593 — — – Deferred tax 49,717 179,947 –8,454 66,948 Total 31,798 178,354 –8,454 66,948

Group Parent Company 2011 2010 2011 2010 SEK 000s % SEK 000s % SEK 000s % SEK 000s %

Difference between recognized tax expense and tax expense based on the current tax rate Recognized profit/loss before tax –466,346 406,927 1,224,545 –284,057 Tax at current Swedish tax rate, 26.3% 122,649 26 –107,022 –26 –322,055 –26 74,707 26 – Difference in tax rate in countries in which operations are conducted –1,080 –0 –22,819 –6 — — — — – Effect of non-taxable acquisition TransViking — —204,557 51 — — — — – Effect of adjusted tonnage tax regulations in Norway2) — —40,460 10 — — — — – Tonnage-tax based operations –32,917 –7 9,753 2 — — — — – Effect of recognizing in functional currency 2,956 1–8,844 –2 — — — — – Effect of non-taxable revenue 1,496 0 3,113 1 432,969 35 2,439 1 – Effect of non-deductible expenses –224 –0 –334 — –118,246 –10 –15,351 –5 – Effect of non-deductible impairment of goodwill –15,290 –3 — — — — — — – Effect of taxable income3) –44,120 –9 — — — — — — – Change in value of pension commitments –1,270 –0 –728 — –1,027 –0 –488 –0 – Dissolved tax liability connected to purchase option4) — — 77,788 19 — — 5,617 2 – Deficit for tax receivable not recognized –2,104 –0 –25,124 –6 — — — — – Adjustment of preceding year’s tax –521 –0 1,540 0 –253 — 21 0 – Other 2,223 1 6,013 1 158 0 3 0 Tax expense 31,798 7% 178,354 44% –8,454 –1% 66,948 24%

66 Group 2011 2010 Before tax Tax After tax Before tax Tax After tax

Tax attributable to other comprehensive income Change in hedging provision –29,055 4,295 –24,760 25,284 –6,033 19,251 Change in translation provision 13,272 — 13,272 –36,598 — –36,598 –15,783 4,295 –11,488 –11,314 –6,033 –17,347

Group Parent Company SEK 000s 2011 2010 2011 2010

Deferred tax assets – Pension commitments considering time of deductibility 12,536 13,806 12,090 13,117 – Financial instruments, valuation at market value 34 — — — – Loss carryforwards 149,124 101,831 130,952 133,769 161,694 115,637 143,042 146,886 Offsetting of tax receivables and tax liabilities in the same country of operation –56,117 –75,261 –12,555 –7,944 Deferred long-term tax receivables in the balance sheet 105,577 40,376 130,487 138,942

Deferred tax liabilities – Tangible fixed assets, temporary differences1) –56,117 –71,227 –12,555 –7,944 – Financial instruments, valuation at market value — –4,035 — — – Other liabilities considering time of deductibility2) –9,739 –28,421 — — –65,856 –103,683 –12,555 –7,944 Offsetting of tax receivables and tax liabilities in the same country of operation 56,117 75,261 12,555 7,944 Deferred long-term tax liability in the balance sheet –9,739 –28,422 — — Net deferred tax receivable/(tax liability)5) 95,838 11,954 130,487 138,942

1) Temporary differences resulting from tax treatment of amortization/depreciation. 2) In January 2010, the Norwegian Supreme Court annulled the non-recurring tax that was expensed in 2007 in connection with the introduction of the new Norwegian tonnage tax regulations. The consequence of this ruling was that the Group was able to restore provisions corresponding to approximately SEK 63 M during the year. A new law was passed by the Norwegian Parliament on June 18, 2010, which entailed that shipping companies, in return for a reduced non-recurring tax, once again had the opportunity to be subject to the new tonnage tax regulations. The tax consequences of this entry for TransAtlantic entail a non-recurring charge of SEK 23 M. The amendment in the Norwegian tonnage tax during the year had a net positive impact of SEK 40 M on the Group’s tax expense. 3) During 2011, vessels in the Viking Supply Ships business area were transferred internally in the Group, thereby redeeming taxable capital gains. The capital gains effects were eliminated in the consolidated profit. 4) The option to acquire Cove, Kimar and Sanaga Shipping LTD (owner companies to Obbola, Östrand and Ortviken) was exercised during the year when the tax liability connected to the option value was redeemed. 5) The deferred tax receivable/tax liability is recognized net in each country of operation since offsetting rights are deemed to exist. The loss carryforwards in the Group for Swedish units amount to SEK 457 M (197) net after deduction for untaxed reserves, of which SEK 354 M (101) was capitalized. Loss carryforwards in the Parent Company amounted to SEK 498 M (509), for which deferred tax assets were recognized in their entirety.

Temporary differences regarding investments in subsidiaries were not recognized, since capital gains/losses are not taxable in accordance with the applicable tax legislation. Deferred tax assets are recognized only to the extent that it is probable that the amounts could be utilized against future taxable surpluses.

NOTE 16 Earnings per share1)

Group SEK 2011 2010

Weighted average number of shares excluding shares in custody 57,798,159 35,321,750 Bonus-issue element 8,447,758 5,735,353 Total 66,245,917 41,057,103

Group Earnings attributable to the Parent Company’s shareholders (SEK): 2011 2010 Total –429,936,000 583,832,000

Group SEK 2011 2010 Earnings per share attributable to the Parent Company’s shareholders –7.44 16.53 Bonus-issue element 0.95 –2.31 Total –6.49 14.22

1) In a new share issue with preferential rights for old shareholders, where the issue price is lower than the share’s fair value, a so-called bonus-issue element arises, which impacts the calculation of earnings per share for the current period, and periods prior to the new issue. The bonus-issue element in the new share issue represents the value that the company’s shareholders are deprived of through a discount price on the share.

In the Group, there are no equity instruments that can result in dilution effects.

67 TransAtlantic 2011 Notes

NOTE 17 Participations in Group companies, associated companies and joint ventures

Holding Holding value Amount of Carrying amount Carrying amount Share in equity Share in equity Registered shares/par- % of share Dec. 31, 2011, Dec. 31, 2010, Dec. 31, 2011, Dec. 31, 2010, Corp. Reg. No. office ticipations capital SEK 000s SEK 000s SEK 000s SEK 000s Subsidiaries owned by Parent Company1) Transatlantic Specialtonnage AB2) 556074-5431 Skärhamn 20,000 100 1,360,910 — Transatlantic Shipping AB3) 556208-0373 Skärhamn 2,118,115 100 214,263 444,263 Transatlantic European Services AB 556520-6504 Västerås 1,000 100 18,021 18,021 Transatlantic Crewing AB2) 556426-8646 Skärhamn 1,000 100 — 120 Transatlantic Services AB4) 556161-7928 Helsingborg 1,000 100 — 100 Transatlantic Administration AB3) 556662-6866 Skärhamn 1,000 100 1,400 7,400 Transatlantic Administration (2) AB5) 556550-2159 Skärhamn 1,000 100 257 257 Transatlantic Icebreaker Management Sweden AB2) 556679-1454 Skärhamn 1,000 100 — 5,106 SOIC Shipmanagement AB 556803-0372 Skärhamn 510 51 51 51 Österströms International AB6) 556777-2180 Stockholm 166,667 100 10,883 — Viking Supply Ships A/S8) 33369794 Copenhagen 5,000 100 1,901,295 — Trans Viking Management AS2) 981240030 Sarpsborg 50 100 — 361 Partrederiet Odin Viking DA 989,573,152 Kristiansand 50 11,326 26,242 Transatlantic Nederland BV3) Rotterdam 10 100 32,402 47,401 TRS Transatlantic Shipping GmbH3) HRB110034 Hamburg 100 27,042 42,042 Transatlantic Shipping LTD Gibraltar 100 27 27 Transatlantic Shipping (2) LTD Gibraltar 100 32 32 Transatlantic Ship Management LTD Gibraltar 100 26 26 Transhawk LTD Gibraltar 100 4,072 72 Gorthon International Shipping LTD Bermuda 12,000 100 84 84 Cove Shipping LTD9) Isle of Man 100 — 7,121 Kirmar Shipping LTD9) Isle of Man 100 — 7,121 Sanaga Shipping LTD9) Isle of Man 100 — 7,121 Gorthon Shipping Inc. Canada 100 100 1 1 OY Transatlantic Services AB Helsinki 100 76 76 Hays Mews Properties Ltd10) 2531990 London 100 100 — 1 Transatlantic LLC 1107746094060 Moscow 100 34 34 Total 3,582,202 613,080

The Parent Company’s accumulated cost for shares in subsidiaries amounted to TSEK 2,247,697 (854,791).

Other Group companies Percy Tham i Oxelösund AB 556022-4908 Oxelösund 1,000 100 TRVI Offshore & Icebreaking AB 556710-9003 Skärhamn 1,551,000 100 TRVI Offshore & Icebreaking 3 AB 556733-1102 Skärhamn 100,000 100 TRVI Offshore & Icebreaking 4 AB 556733-1094 Skärhamn 100,000 100 Trans Viking Offshore AB11) 556858-2463 Gothenburg 1,000 100 Transatlantic Crewing AB2) 556426-8646 Gothenburg 1,000 100 Transatlantic Icebreaker Management AB2) 556679-1454 Gothenburg 1,000 100 Arctic Ice Management AB12) 556807-0972 Gothenburg 99 100 Österströms Rederi AB7) 556073-3767 Norrköping 15,000 100 Österströms Logistics AB7) 556320-7215 Valdemarsvik 1,000 100 Österströms Nordic AB7) 556284-6740 Norrköping 5,000 100 Multidocker Cargo Handling AB7) 556149-1860 Norrköping 1,000 100 Västerviks Logistik och Industri AB7) 556598-0454 Västervik 10,000 100 Rederi AB Nordship7) 556309-9141 Norrköping 500 100 Trans Viking Icebreaking & Offshore AS 979,437,943 Kristiansand 1,100 100 Trans Viking Management AS 981240030 Sarpsborg 50 100 Partrederiet Odin Viking DA 989,573,152 Kristiansand — 50 Transatlantic Specialtonnage AS 987069295 Oslo 100 100 Viking Supply Ships Crewing ApS11) 33775199 Copenhagen 800 100 Viking Supply Ships 3 ApS11) 33775172 Copenhagen 800 100 Viking Supply Ships 4 ApS11) 33859082 Copenhagen 800 100

68 Holding Holding value Amount of Carrying amount Carrying amount Share in equity Share in equity Registered shares/par- % of share Dec. 31, 2011, Dec. 31, 2010, Dec. 31, 2011, Dec. 31, 2010, Corp. Reg. No. office ticipations capital SEK 000s SEK 000s SEK 000s SEK 000s

SBS Marine (Holdings) Ltd13) SC303430 Aberdeen, UK 7,900,001 100 SBS Aberdeen Ltd14) SC250818 Aberdeen, UK 30,001 100 Stoneywood Crewing Services Ltd14) SC351608 Aberdeen, UK 1 100 Bankhead Management Ltd14) 43805 Guernsey, UK 2 100 SBSL (Holdings) Ltd14) SC180512 Aberdeen, UK 76,924 100 SBS Marine Ltd14) SC202464 Aberdeen, UK 1,000 100 Transatlantic UK Ltd 3384716 Goole, UK 10,000 100 Österström UK Ltd7) Hull, UK 100 100 Paltrans Cargo Services Ltd 2547016 Goole, UK 100 100 Nordon Shipping Company B.V. Rotterdam 35 100 Andromeda Shipping Company B.V. Rotterdam 35 100 Capricorn Shipping Company B.V. Rotterdam 35 100 Swing Shipping Company B.V. Rotterdam 35 100 Holding Zeena Maritiem B.V.7) 34119948 Zuiddorpe 200 100 Zeena Maritiem Management B.V.7) 20088567 Zuiddorpe 400 100 Österströms Netherlands B.V.7) 34088147 Zuiddorpe 400 100 Zeeron Maritiem B.V.7) 24179737 Zuiddorpe 525 100 Zeefi Maritiem B.V.7) 34119950 Zuiddorpe 200 100 Zeefor Maritiem B.V.7) 34119948 Zuiddorpe 180 100 Zeehorn Maritiem B.V.7) 24234773 Zuiddorpe 1,919 100 Zeedor Maritiem B.V.7) 34088151 Zuiddorpe 4,000 100 Zeedal Maritiem B.V.7) 34088150 Zuiddorpe 48 100 Zeehelm Maritiem B.V.7) 12061348 Zuiddorpe 18,000 100 Zeegra Maritiem B.V.7) 24145899 Zuiddorpe 35 100 Zeenim Maritiem B.V.7) 34119949 Zuiddorpe 200 100 Zeeranc Maritiem B.V.7) 20070758 Zuiddorpe 400 100 Zeelis Maritiem B.V.7) 34149137 Zuiddorpe 40 100 Zeeros Maritiem B.V.7) 24138471 Zuiddorpe 300 100 Nachricht B.V.7) 33259663 Zuiddorpe 400 100 Sea Message B.V.7) 23079359 Zuiddorpe 40 100 Multidocker Netherlands B.V.7) 33290480 Zuiddorpe 590 100 MS Frej Claus-Markus Speck KG HRA1211 Hörsten 72 MS Odin Claus-Markus Speck KG HRA1215 Hörsten 66 Agila GmbH & Co. KG Seeschiffahrt HRA5055 Hörsten 67 Österströms OY7) 1931010-50 Finland 100 100 Daugava Shipping Services SIA7) Latvia 10,000 100 Österströmi Laevanduse7) Estonia 196 98 Österströms Spolka Z.o.o7) Poland 100 100 Euroforest Shipping Ltd Malta 60 60

Consolidated value of associated companies Östersjöfrakt AB7) 556393-0709 Norrköping 200 20 MS Agila Verwaltungs GmbH HRB7664 Hörsten 49 153 153 153 153 Total 153 153 153 153

1) The Parent Company in the Group is Rederi AB Transatlantic, 556161-0113, with its 8) The company was formed in 2011 and is the Parent Company in the Viking Supply Ships registered office in Gothenburg. Group. 2) The company was acquired/transferred Group-internal in 2011 in conjunction with 9) The companies, which owned the vessels Obbola, Östrand and Ortbviken, were the formation of the Viking Supply Ships Group. divested in 2011. 3) Impairment occurred during the year. 10) The company was discontinued in 2011. 4) In 2011, the company merged with Transatlantic Administration AB. 11) The company was established in 2011. 5) In 2011, the company changed name from ACL Ship Management AB to Transatlantic 12) The company was acquired in 2011; refer also to Note 33 on Corporate Acquisitions. Administration 2 AB. 13) SBS Marine (Holdings) Ltd., which was acquired from Viking Supply Ships A/S in 2011, 6) The company is the Parent Company in the Österströms Group, which was acquired is the Parent Company of the Aberdeen-based company group that conducts opera- in 2011. Refer also to Note 33 on Corporate Acquisitions. tions using Platform Supply Vessels. Refer also to Note 33 Corporate Acquisitions. 7) The company was included in the Österströms Group, which was acquired in 2011. 14) The company was included as a subsidiary of SBS (Holdings) Ltd., which was acquired in 2011.

69 TransAtlantic 2011 Notes

NOTE 18 Other long-term receivables NOTE 21 Prepaid expenses and accrued income

Group Parent Company Group Parent Company SEK 000s 2011 2010 2011 2010 SEK 000s 2011 2010 2011 2010

Value, Jan 1 29,907 65,939 24,886 63,830 Prepaid personnel Acquisitions expenses 13,838 23,238 12,768 20,567 during the year 41,520 5,491 13,840 2,456 Accrued travel Divestments revenue 52,087 38,915 17,852 11,948 during the year –5,542 –41,523 –3,038 –41,400 Accrued interest Value, Dec 31 65,885 29,907 35,688 24,886 revenue 10 880 — 862 Prepaid docking fees for chartered tonnage 412 — — 10,015 Largest individual items consist of: Other prepaid Group Parent Company expenses and SEK 000s 2011 2010 2011 2010 accrued income 67,666 21,251 16,419 10,599 Endowment Total 134,013 84,284 47,039 53,991 insurances 22,414 24,416 21,467 22,875 Blocked bank funds 41,520 — 13,840 — Other 1,951 5,491 361 2,011 NOTE 22 Cash-flow statement Total 65,885 29,907 35,668 24,886

Refer also to Note 32 Financial risk management and derivative instruments. In cases in which loan financing of investment projects is paid directly to the shipyard/supplier and does not pass through the company/Group’s cash balance, the investment amount is recog- NOTE 19 Inventories nized in the cash-flow statement as a net amount after deductions for financing. The recognized investment fee therefore comprises Inventories comprise bunkers, lubricating oil and load-handling the company’s cash payment. equipment. The acquisition/divestment of shares in subsidiaries is recognized in the consolidated financial statements as paid/received purchase consideration less the acquired/divested subsidiary’s cash NOTE 20 Accounts receivable and cash equivalents on the date of acquisition/divestment.

Group Parent Company The carrying amount for accounts receivable is classified as follows: SEK 000s 2011 2010 2011 2010 Group Parent Company Cash and cash SEK 000s 2011 2010 2011 2010 equivalents Cash and bank Invoiced receivables 336,491 232,025 77,547 113,931 balances, Jan 1 636,893 327,400 33,150 73,082 Provision for doubtful Changes in cash receivables –763 –41 –21 — and bank balances Total 335,728 231,984 77,526 113,931 for the year –47,525 309,493 168,434 –39,932 The carrying amount for accounts receivable corresponds to the fair value since the Cash and cash discount effect is negligible. equivalents, Dec 31 589,368 636,893 201,584 33,150 The provision for doubtful receivables changed as follows: Less blocked/ pledged cash and Group Parent Company cash equivalents –41,520 — — — SEK 000s 2011 2010 2011 2010 Unappropriated cash and cash equiva- Value, Jan 1 41 3,158 — — lents1), Dec 31 547,848 636,893 201,584 33,150 Provision for doubtful receivables 763 — 763 — 1) Of the Group’s available cash and cash equivalents of SEK 548 M, SEK 157 M pertains to a specific account to secure the Group’s cash commitments for the delivery of the Reversed provisions –41 –3,117 –742 — AHTS vessel Brage Viking, which was delivered on January 12, 2012. This reserved Value, Dec 31 763 41 21 — cash and cash equivalents may be utilized at a specific fee. The Group’s cash and cash equivalents include advance from external clients totaling SEK 28 M to be utilized in Confirmed losses on accounts receivable amounted to TSEK 2,274 (3,117). In addition external ship management operations. In a loan agreement, the Group has committed to the recognized provisions, only minor credit risks are deemed to occur in the remaining to, at any time, ensure that cash and cash equivalents do not fall below the highest accounts receivable. The maximum exposure for credit risks on the closing date is the amount of either 5% of the Group’s interest-bearing liabilities or corresponding carrying amount for each category of receivables mentioned above. NOK 125 M, less 50% of the Group’s unutilized credit facilities.

Age analysis: Group Parent Company SEK 000s 2011 2010 2011 2010

Not due 252,625 128,490 63,799 54,703 Due date exceeded by up to 30 days 68,208 74,166 11,090 42,535 Due date exceeded by 31–60 days 4,858 5,873 464 2,400 Due date exceeded by 61 days or more 10,037 23,455 2,173 14,293 Total 335,728 231,984 77,526 113,931

70 NOTE 23 Share capital

Share capital 2011 2010 SEK Series A shares Series B shares Total Series A shares Series B shares Total

Share capital, Jan 1 36,359,210 518,154,290 554,513,500 18,179,600 266,125,140 284,304,740 New share issue1,2) 36,359,210 518,154,290 554,513,500 18,179,610 259,077,150 277,256,760 Cancellation of treasury shares — — — — –7,048,000 –7,048,000 Share capital, Dec 31 72,718,420 1,036,308,580 1,109,027,000 36,359,210 518,154,290 554,513,500

Number of shares 2011 2010 Series A shares Series B shares Total Series A shares Series B shares Total

Number of shares, Jan 1 3,635,921 51,815,429 55,451,350 1,817,960 26,612,514 28,430,474 New share issue1,2) 3,635,921 51,815,429 55,451,350 1,817,961 25,907,715 27,725,676 Cancellation of treasury shares — — — — –704,800 –704,800 Number of shares, Dec 31 7,271,842 103,630,858 110,902,700 3,635,921 51,815,429 55,451,350

Number of treasury shares, Jan 1 — — — — –704,800 –704,800 Cancellation of treasury shares — — — — 704,800 704,800 Number of treasury shares, Dec 31 — — — — — — Total number of shares outstanding 7,271,842 103,630,858 110,902,700 3,635,921 51,815,429 55,451,350

Number of votes 2011 2010 Series A shares Series B shares Total Series A shares Series B shares Total

Number of votes 72,718,420 103,630,858 176,349,278 36,359,210 51,815,429 88,174,639 Treasury shares with no voting rights 72,718,420 103,630,858 176,349,278 36,359,210 51,815,429 88,174,639

The quotient value is SEK 10 per share. The Group has no option programs.

1) The acquisition of the shares outstanding in Trans Viking implemented in September 2010 was paid for using newly issued shares in TransAtlantic. At the same time, there was a cancellation of all earlier bought-back treasury shares. Refer also to Note 33 Corporate Acquisitions. 2) In December 2011, a new share issue was completed with preferential rights to existing shareholders at 1:1 relationship. Subscription price was the same as the quotient value, i.e. SEK 10 per share.

NOTE 24 Dividend per share

No dividends were paid during 2011 and 2010. At the Annual Gen- eral Meeting on April 27, 2012, it will be proposed that no dividend be paid for the 2011 financial year.

NOTE 25 Pension provisions

Remuneration to employees following the completion of their of the collective consolidation level was 113% (146). The collective employment mainly takes the form of ongoing payments to inde- consolidation level comprises the market value of Alecta’s assets as pendent authorities or insurance companies, which subsequently a percentage of the insurance commitment calculated in accordance assume responsibility for the commitments to employees. These with Alecta’s actuarial calculation assumption, which does not coin- types of arrangements are called defined-contribution plans. cide with IAS 19. The commitment for old-age pensions and survivor pensions for Defined-benefit plans are characterized by the fact that the Group employees in Sweden is covered through insurance with Alecta. retains its commitment until the pension has been paid. The costs According to a statement from the Emerging Issues Task Force of and provisions for defined-benefit plans are assessed through actu- the Swedish Financial Reporting Board, URF 3, this is a defined- arial calculations with the purpose of determining the current value benefit multiemployer scheme. For the 2011 financial year, the of the commitment. Defined-benefit plans exist only in Sweden. Group did not have access to such information that makes it possi- Commitments are secured through pension insurances with ble to report this plan as a defined-benefit scheme. The pension investments primarily in interest funds and equity funds. scheme in accordance with ITP, which is safeguarded through The tables below provide data on the Group’s defined-benefit insurance with Alecta, is therefore reported as a defined-contribu- plans, the assumptions used in the calculations, the expenses recog- tion scheme. Alecta’s surplus can be distributed to the insurers nized and the values of the commitments and insurance plan assets. and/or the insured. At the end of 2011, Alecta’s surplus in the form

71 TransAtlantic 2011 Notes

Note 25 cont.

Group SEK M 2011 2010 2009 2008 2007

Multiyear overview At December 31 Current value of defined-benefit obligations 27,033 30,243 35,079 36,945 39,488 Fair value of pension capital –31,149 –35,124 –38,241 –42,626 –45,053 Unrecognized actuarial (losses)/gains 1,617 3,183 1,881 4,979 4,913 Payroll tax liability 9,306 10,249 10,790 10,268 12,634 Net liability 6,807 8,551 9,509 9,566 11,982

Group Parent Company SEK 000s 2011 2010 2011 2010

Assumptions applied in actuarial calculations Sweden Average discount rate, % 3.40% 3.75% 3.40% 3.75% Forecast return on pension capital, % 5.10% 6.00% 5.10% 6.00% Estimated long-term pay increase, % 3.00% 3.00% 3.00% 3.00% Estimated long-term inflation, % 2.00% 2.00% 2.00% 2.00% Assumptions regarding mortality are the same as those specified by the Swedish Financial Supervisory Authority (FFFS 2007:31).

Pension expenses for the year Cost of benefits earned during the year 1,309 1,749 10 10 Interest expense 1,158 1,348 697 816 Depreciation of actuarial gains/losses –161 –50 –161 –50 Adjustment costs 40 –129 — — Forecast return on pension capital –1,865 –1,876 –991 –1,026 Expenses for the year pertaining to defined-benefit pension plans 481 1,042 –445 –250

Expenses for the year pertaining to defined-contribution pension plans 50,914 70,882 31,638 39,535 Payroll tax expense for the year 15,283 19,171 9,897 10,433 Pension expense for the year included in personnel expenses 66,678 91,095 41,090 49,718

Actual return on pension capital 2.0% 4.4% 1.7% 5.1%

All items are recognized as personnel expenses. Of the costs for defined-contribution plans, TSEK 36,175 (55,977) comprises premiums to Alecta.

Changes in fair value of pension capital Pension capital, Jan. 1 35,124 38,241 19,738 22,156 Expected return 1,865 1,876 991 1,026 Adjusted liability/cost for plan adjusted during the year –2,488 –2,290 — — Withdrawal –3,413 –3,858 –3,023 –3,472 Premiums/deposits 1,282 1,460 18 18 Actuarial gains/(losses) –1,221 –305 –680 10 Pension capital, Dec. 31 31,149 35,124 17,044 19,738

These assets consist primarily of funds investing in shares, bonds and money market instruments.

Changes in defined-benefit pension obligation Obligation, Jan. 1 30,243 35,079 18,587 21,761 Cost of benefits earned during the year 1,309 1,749 10 10 Adjusted liability/cost for plan adjusted during the year –2,429 –2,601 — — Interest expense 1,158 1,348 697 816 Pension payments –3,413 –3,858 –3,023 –3,472 Actuarial (gains)/losses 165 –1,474 –32 –528 Obligation, Dec. 31 27,033 30,243 16,239 18,587

72 Group Parent Company SEK 000s 2011 2010 2011 2010

Changes in actuarial losses/gains Unrecognized actuarial (losses)/gains, Jan 1 3,183 1,881 3,102 2,614 10% of the largest Obligation/Pension capital amount 3,512 3,824 1,974 2,216 Unrecognized actuarial (losses)/gains outside the corridor — — 1,129 399 Depreciation of actuarial losses/(gains) –161 –50 –161 –50 Adjustment of actuarial losses/(gains) –19 183 — — Actuarial gains/(losses) on obligation –165 1,474 32 528 Actuarial gains/(losses) on pension capital –1,221 –305 –680 10 Unrecognized actuarial (losses)/gains, Dec. 31 1,617 3,183 2,293 3,102

Change in payroll tax liability Liability in balance sheet, Jan. 1 10,249 10,790 9,737 10,100 Change in payroll-tax liability for the year –943 –541 –762 –363 Payroll tax liability, Dec. 31 9,306 10,249 8,975 9,737

Liability in balance sheet Pension obligation 27,033 30,243 16,239 18,587 Unrecognized actuarial (losses)/gains 1,617 3,183 2,293 3,102 Payroll tax liability 9,306 10,249 8,975 9,737 Liability in balance sheet, Dec. 31 37,956 43,675 27,507 31,426

Net liability in balance sheet Pension capital –31,149 –35,124 –17,044 –19,738 Pension obligation 27,033 30,243 16,239 18,587 Unrecognized actuarial (losses)/gains 1,617 3,183 2,293 3,102 Payroll tax liability 9,306 10,249 8,975 9,737 Net liability, Dec. 31 6,807 8,551 10,463 11,688

Reconciliation of changes in net liability Liability in balance sheet, Jan. 1 8,551 9,509 11,688 12,319 Pension expenses for the year 481 1,042 –445 –250 Payment to capital under management –1,282 –1,460 –18 –18 Withdrawal from capital under management 3,413 3,858 3,023 3,472 Pension payments –3,413 –3,858 –3,023 –3,472 Change in payroll-tax liability for the year –943 –541 –762 –363 Net liability, Dec. 31 6,807 8,551 10,463 11,688

NOTE 26 Liabilities

Group The TransAtlantic Group’s total interest-bearing liabilities Total interest-bearing liabilities, distributed by currency amounted to SEK 2,983 M (2,135) at the closing-date rate. In Group addition, there were non-interest-bearing liabilities totaling SEK 000s Dec 31, 2011 Dec 31, 2010 SEK 807 M (580). Parts of the interest-bearing liabilities are USD 462,291 138,465 associated with so-called covenants, according to which the EUR 864,921 821,989 1) Group must fulfill certain key data. NOK 1,584,512 592,040 Other foreign currencies — 176,714 Parent Company SEK 71,034 406,147 The Parent Company’s total interest-bearing liabilities amounted Total 2,982,758 2,135,355 to SEK 1,232 M (569). In addition, there were non-interest-bearing liabilities and provisions totaling SEK 411 M (479).

1) TransAtlantic continues to evaluate a proposal for agreement with a bank due to the Group not fulfilling certain financial covenants in 2010, and for the third and fourth quarters of 2011. Furthermore, discussions are being held with two more banks about TransAtlantic’s inability to fully fulfill the loan agreement’s financial covenants requirements for Q4, 2011. For these loans, TransAtlantic received refinancing offers, which are under consideration.

73 TransAtlantic 2011 Notes

Note 26 cont. NOTE 28 Pledged assets

Total contractual commitments Group Parent Company Group SEK 000s 2011 2010 2011 2010 SEK 000s 2012 2013–2016 After 2016 Current and long-term Loans (excluding ship loans and share in liabilities pertaining current and long-term to financial leasing)2) 1,027,625 1,403,333 1,053,972 liabilities of shipping Liabilities pertaining to consortiums financial leasing 9,553 6,483 — – Vessel mortgages 3,196,024 2,545,992 — — Derivative instruments 7,320 20,630 — – New building Accounts payable 178,503 — — contracts 280,177 636,590 — — Other liabilities 488,873 75,918 6,807 Current and long-term 1,711,874 1,506,364 1,060,779 other liabilities to credit institutions Parent Company – Fixed assets held SEK 000s 2012 2013–2016 Efter 2016 through financial Liabilities to credit leasing agreements 587,436 25,538 — — institutions3) 60,762 — — – chattel mortgages 86,030 24,085 — — Liabilities to Group – shares in companies 204,844 234,528 1,172,638 subsidiaries 2,833,350 124,011 3,262,205 21,362 Accounts payable 64,130 — — – collateral in Other liabilities 158,852 10,000 31,950 receivables 32,580 20,011 — — 488,588 244,528 1,204,588 – bank balances 198,417 328,995 13,840 —

2) Of the Group’s long-term liabilities, SEK 636 M has been reclassified to current Provisions for liabilities since certain financial covenants in the loan agreements were not fulfilled. pensions 3) Of the Parent Company’s long-term liabilities, SEK 41 M has been reclassified to current liabilities since certain financial covenants in the loan agreement was not – endowment insur- fulfilled. ance and pension assets 53,564 59,539 38,511 42,613 Group Total 7,267,578 3,764,761 3,314,556 63,975 The Parent Company has credit facilities in the form of unutilized overdraft facilities totaling SEK 93 M (24). Utilized overdraft facilities at the balance-sheet date totaled SEK 10 M (76). NOTE 29 Contingent liabilities

Parent Company Group Parent Company The Parent Company has credit facilities in the form of unutilized SEK 000s 2011 2010 2011 2010 overdraft facilities totaling SEK 70 M (24). Utilized overdraft Sureties — — 2,146,550 1,029,772 facilities at the balance date totaled SEK 0 M (76). – of which, for subsidiaries — — 2,146,550 1,029,772 NOTE 27 Accrued expenses and deferred income The Parent Company has provided a guarantee regarding a subsidi- Group Parent Company ary’s completion of time-charter agreements, which also comprise SEK 000s 2011 2010 2011 2010 parts of the undertaking of the divested subsidiary Transbulk. For the latter, there is also a reciprocal guarantee from an external party Accrued personnel costs 77,601 71,709 46,047 42,883 for an equivalent amount. Transbulk was divested in 2005. In addition, Accrued interest the Parent Company has also provided guarantee for commitments in expenses 38,624 5,242 13,602 300 a leasing agreement pertaining to a minimum residual value. Accrued travel expenses 100,400 85,736 20,303 33,226 Accrued other expenses 164,030 43,776 50,231 30,082 Total 380,655 206,463 130,183 106,491

74 NOTE 30 Commitments

Investment commitments Financial leasing Contracted remaining investment commitments in the Group that are At the end of 2011, financial leasing comprised only the leasing of con- not recognized in the balance sheet are attributable to the new-build tainers and equipment used in the Industrial Shipping business area. Brage Viking, which was delivered in January 2012, in the Viking Supply Ships business area. In the preceding year, there were also commit- Operational leasing revenues ments for sister vessels Njord and Magne Viking, which were delivered Operational leasing revenues comprise vessels leased on time- and in 2011. The remaining commitment on the closing date amounted to: bareboat charter contracts. At December 31, 2011, the number of vessels leased by the Group SEK M 2011 2010 was 34 (15 at Dec 31, 2010) and the number of vessels leased to others was 15 (14). Vessels 278 919

Leasing commitments 2013 After SEK M 2011 2012 –2016 2016 The Group leases vessels, buildings and equipment through leasing agreements. Leasing expenses Operational leasing 472 315 838 820 Operational leasing Of which: – Bareboat charter 169 198 717 820 Operational leasing mainly entails the leasing of vessels on a bare- – T/C 302 116 121 — boat or T/C basis, for which contract periods and leasing terms are – Other 1 1 — — different for each vessel. The largest contract pertains to the leasing Financial leasing 6 9 6 — of three vessels, the TransWood, TransPine and TransHawk, formerly – Containers and machines 6 9 6 — owned by the TransAtlantic Group, on a bareboat basis, with a remain- Leasing revenues ing contract period of four years, and leasing of paper-transport Operational leasing 888 417 1,151 873 vessels TransPaper, TransPulp and TransTimber, which operate on – T/C 888 417 1,151 873 time charter for StoraEnso, for which there is a remaining contract The above future leasing fees are the Group’s nominal minimum period of about ten years. The Group is thereafter entitled to fees. redeem the above-mentioned vessels at their market value. The above-mentioned leasing contract is variable with respect to the In the consolidated balance sheets, the following items are recog- interest-rate element. The Group has hedged this exposure with nized as financial leasing on the closing date. interest derivatives. The acquisition of Österströms International AB included a con- SEK M 2011 2010 tract, which is under negotiation, pertaining to the long-term lease Fixed assets of eight bulk vessels with a remaining contract period of approxi- Equipment mately 14 years. Discussions are in progress with vessel owners – Cost 68 65 about certain amendments to the contract, including a reduction by – Purchases during the year 2 3 one vessel, which has been deducted in the minimum lease charges – Accumulated depreciation –47 –42 stated below. In addition to these long-term leased vessels, there Total 23 26 was an additional long-term leased vessel, in the Österströms Group on closing date, with a remaining contract period of approximately Liabilities pertaining to financial leasing three years, and 11 short-term leased vessels with an average remain- – Long-term portion 6 12 ing contract period of about six months. Refer also to Note 33. – Current portion 8 6 In the acquisition of SBS Marine (Holdings) Ltd., contracts were Total 14 18 included pertaining to the lease of two Platform Supply Vessels. Provisions, tax liabilities 2 2 These contracts extend until April and August 2014, respectively. See also Note 10. The contracts entail the possibility to acquire these vessels during the 2012–2014 period.

75 TransAtlantic 2011 Notes

NOTE 31 Related-party transactions

In June 2011, TransAtlantic secured a loan of NOK 150 M from German shipping consortium, in which TransAtlantic’s Deputy Kistefos AS, at a variable interest rate of 8.5%, which was repaid Chairman Folke Patriksson has a non-controlling interest via his in November 2011. The decision to acquire SBS Marine (Holdings) company Enneff Rederi AB. The agreement is based on market Ltd., a company fully owned by Kistefos AS, was taken at the terms and conditions and extends to 2014 with an option for Trans- Extraordinary General Meeting in November 2011. Furthermore, Atlantic to extend the contract for two additional years. The daily Kistefos AS has made management available through a consultancy rate amounts to EUR 3,850 through June 2012 and will then increase agreement for which remuneration totaling SEK 10 M, of which SEK to EUR 4,000 through June 2014. 4 M pertaining to costs for the former CEO Rolf Skaarberg for the TransAtlantic leases a small piece of land to Enneff Fastigheter April – December period was paid. During the year, SEK 6 M in i Skärhamn AB, a company owned by the Deputy Chairman Folke guarantee fees was paid to one of Kistefos AS’ companies pertaining Patriksson, at market prices. The rent amounts to SEK 25,000 annu- to loans to two of the AHTS vessels. ally. The agreement was signed in 2007. In addition, TransAtlantic sub-leases sections of office premises Vessel operations for four of the Group’s Dutch-owned vessels are owned by one of Kistefos’ companies in Kristiansand. The annual handled by an external company partly owned by Felix Feleus, who rent was set at market-based prices and amounted to TNOK 512 in is also the Managing Director of Transatlantic Netherlands BV. Fees 2011. In addition, services were provided pertaining to engineering for vessel operations are on commercial terms and in 2011 amounted and accounting for Odin Viking totaling TNOK 713. to TEUR 171 annually for four vessels. During the year, TransAtlantic extended the lease contract per- Pertaining to remuneration paid to the Board of Directors and taining to a container vessel, TransAlrek, which is owned by a senior executives, refer to Note 7.

NOTE 32 Financial risk management and derivative instruments

In its operations, the TransAtlantic Group is exposed to various The Financial Department continuously prepares liquidity fore- types of financial risks, such as changes in exchange rates and inter- casts for the Group that are aimed at foreseeing the Group’s liquid- est rates, as well as liquidity and credit risks. The Group’s goal is to ity requirement for operating activities, taking into account future minimize such negative effects in the consolidated income state- investment requirements and amortization. Based on this work, a ment and balance sheet. liquidity reserve is ensured by maintaining bank balances/invest- Risk management is handled by the Group’s central finance depart- ments and obtained lines of credit. For information regarding the ment on the basis of the finance policy established by the Board of maturity structure of liabilities, see also Note 26. Directors. The policy contains clear instructions on how various finan- Surplus liquidity is invested in accordance with the established cial risks are to be handled, where different types of derivative instru- finance policy and instructions to the investment committee. ments are key elements in minimizing financial risks. The policy also includes instructions for managing credit- and liquidity risks through Currency risks financing and loan commitments. Currency exposure for assets shall primarily be financed through The Group applies hedge accounting pertaining to currency risks in financing being made in the same currency as the asset. Most of the the cash flow in accordance with the regulations included in IAS 39, vessels have such a hedge for 2011. The Parent Company has a the content of which is described in Note 1, Derivative instruments. number of foreign subsidiaries, whose net assets are exposed to currency-translation risks. These currency positions have not been Credit risks hedged. The Group has a policy for providing credits to customers and other In accordance with the finance policy, currency risks affecting business partners. Credits provided are primarily short-term credits cash flow must primarily be managed by balancing currency flows in the form of receivables from customers. Credit risk in cash and so that inward and outward flows offset one another. For antici- cash equivalents is managed by investing the liquidity with major pated imbalances, these positions shall be hedged at least 70% for Swedish banks. the immediate six-month period, at 60% for the following six months, at 45% for Year 2 and 20% for Year 3. The Group is mainly exposed Liquidity risks to USD, EUR and NOK. During 2011, in accordance with the policy, Liquidity risk is attributable to the event that the Group has an inad- a number of hedge contracts were taken out in these currencies on a equate liquidity reserve. This can lead to difficulties in honoring continuous basis to reduce cash-flow risks during 2012. No hedging current payment liabilities in operating activities, planned invest- took place for other currencies since no significant imbalance exist, ments and amortization. or there is uncertainty regarding time of payment.

76 As of the reporting date, March 31, 2011, the Group had the following Interest-rate terms open currency-derivative contracts: The Group uses various kinds of interest-hedging instruments. The Forward rates Group has decided to currently have a somewhat shorter interest Agreement value, SEK M (weighted averages) rate fixing period than stated in the financial policy. At the closing SEK 000s 2011 2010 2011 2010 date, the Group held the following interest-rate terms: Currency forward agreements USD/EUR 125 — 1.29 — Hedged underlying loan values for which the Group bears the interest-rate Currency forward risk (including interest-rate exposed lease commitment): agreements SEK/USD — 114 — 7.13 One year Currency forward SEK M or less 1–3 years 3–5 years Total agreements SEK/EUR — 52 — 9.22 Total interest-hedged Currency forward loan values 2,063 724 678 3,465 agreements SEK/NOK — 9 — 1.13 % of total interest-bearing loan values 59% 21% 20% 100% Currency derivatives mature at one to 12 months from the closing date. If hedging had not been implemented, future earnings would Weighted average interest rate for interest-bearing loans have been SEK 0 M higher if the closing-date exchange rate applied amounted to: at the time at which the forward agreements were redeemed. Group Parent Company

Interest-rate risks % 2011 2010 2011 2010 The finance policy states that interest-rate risk must be hedged 4.53 3.26 5.30 2.97 through financial instruments that limit exposure to raised interest rates. The Group’s policy is that 25–50% of interest-bearing loans, With a change in interest rates of 1 percentage point, the Group’s taking into account implemented hedging transactions, should have interest expense would change by SEK 3 M. an interest rate fixing below one year, 25–50% should have an interest rate fixing between one and three years and 25–50% should have Goods risks an interest rate fixing of longer than three years. To minimize cost fluctuations for bunkers, the Group has principally signed customer contracts that entail compensation for the Group in the event of changes in bunkers prices. Only a small proportion of the Group’s future bunkers consumption will be exposed to price changes. At the closing date, the Group had no bunkers derivatives.

Financial instruments by category Accounts receivable Assets measured and cash and cash Derivatives used for at fair value in profit Financial assets equivalents hedging purposes and loss available for sale Total Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010

Assets in the balance sheet Financial assets available for sale3) — — — — — — 105 105 105 105 Derivative instruments2) — — 16,373 28,382 — — — — 16,373 28,382 Accounts receivable and other receivables, excl. interim receivables4) 402,192 343,770 — — — — — — 402,192 343,770 Shares listed on the Oslo Stock Exchange1) — — — —13,610 — — —13,610 0 Cash and cash equivalents4) 547,848 636,893 — — — — — 547,848 636,893 950,040 980,663 16,373 28,382 13,610 — 105 105 980,128 1,009,150

Liability in balance sheet Borrowing excl. liabilities pertaining to financial leasing4) — — — — — —2,992,7592,201,6542,992,7592,201,654 Liabilities pertaining to financial leasing4) — — — — — — 18,911 17,523 18,911 17,523 Derivative instruments2) — — — — 27,950 8,913 — — 27,950 8,913 Accounts payable and other liabilities, excl. interim liabilities4) — — — — — — 369,446 279,943 369,446 279,943 — — — — 27,950 8,913 3,381,116 2,499,120 3,409,066 2,508,033

1) Fair value based on listed market values, where financial instruments are traded on an active market (Level 1). 2) Fair values for which there are no listed market values, but instead are based on measurements of discounted cash flows. Variables in the measurement model, such as exchange rates and interest rates, are derived from market listings when possible (Level 2). 3) Other measurements in which one variable is based on own assessments (Level 3). 4) Recognized at amortized cost.

77 TransAtlantic 2011 Notes

Note 32 cont.

Fair values derivative instruments The Parent Company holds financial instruments corresponding to Fair values for derivative instruments on the closing date were as a fair value of SEK 0 M (16). This value has not been recognized in follows: the Parent Company. Group 2011 2010

SEK 000s Assets Liabilities Assets Liabilities

Currency options — — 956 — Currency forward agreements 495 390 6,627 — Interest-rate swap1) 15,878 27,560 20,799 8,913 Total 16,373 27,950 28,382 8,913

1) Hedge accounting is not applied for the Group’s interest-hedging instruments. Value changes on these instruments are recognized in consolidated profit and loss, refer also to Note 9.

NOTE 33 Acquisitions

Acquisitions for the year consist of shares in:

Company Acquisition date Acquired share No. of employees Country Business area

Arctic Ice Management AB 2011-02-28 100 2 Sweden Viking Supply Ships Österströms International AB 2011-06-08 100 100 Sweden Industrial Shipping SBS Marine (Holdings) Ltd. 2011-10-01 100 141 UK Viking Supply Ships

An agreement was signed at the end of February 2011 to acquire all been treated as operational leasing. A reclassification of the lease shares in Arctic Ice Management AB, a company with Ice Manage- agreement to financial leasing would result in the vessels being ment technology. The purchase consideration for the shares in Arc- included in the consolidated balance sheet. The preparation of the tic Ice Management was calculated at SEK 8 M with a possible sup- final acquisition analysis is not complete, but will be established plementary purchase consideration of a maximum of SEK 6 M. On during the first half of 2012. The results pertaining to the acquired December 31, 2011, purchase consideration totaling SEK 6 M had participations were included in the consolidated profit and loss been paid. The Group only had minor transaction costs in connec- from the acquisition date. Net sales and earnings, excluding acquisition with this acquisition. Net sales and earnings from the acquisition costs from the acquisition date, amounted to SEK 533 M and tion date amounted to SEK 0 M and SEK –8 M, respectively. If the SEK –48 M, respectively. If the acquired operation had been wholly acquired operation had been wholly owned from the beginning of owned from the beginning of the year, the Group’s net sales would the year, the Group’s net sales would have been SEK 0 M higher, and have been SEK 422 M higher, and the consolidated profit would the consolidated profit would have been SEK –1 M lower for the Jan- have been SEK –23 M lower for the period January 1–June 7. uary 1–February 27 period. On November 7, 2011, TransAtlantic concluded the acquisition In June 2011, the acquisition of all shares in Österströms Interna- of all shares in SBS Marine (Holdings) Ltd. from Kistefos. SBS tional AB from Skärgårdshavet AB was concluded. Österströms Marine (Holdings) Ltd. is a UK offshore shipping company based in International AB is the Parent Company of the Stockholm-based Aberdeen. The company operates a fleet of six PSV vessels (Platform shipping and logistics group, which conducts operations primarily Supply Vessel), of which four are owned and two are leased on a in the Baltic Sea area. The acquisition is a step in strengthening bareboat basis with a purchase option. The acquisition is a step in Industrial Shipping’s presence in the Baltic Sea area by offering cus- the investments in Viking Supply Ships to strengthen the business tomers better and more efficient service by the possibility of door to area’s product offering. The purchase consideration for the shares door transportation through combined Bulk, RoRo and Container amounted to SEK 307 M. Transaction costs in connection with the transports. The purchase consideration comprises a fixed portion acquisition amounted to SEK 4 M and were charged against con totaling SEK 40 M and a variable portion amounting to SEK 0–40 M. solidated earnings for 2011. The results pertaining to the acquired The variable portion is based on achieving profitability targets for participations were included in the consolidated profit and loss the years 2012–2013 in Industrial Shipping. The total purchase con- from October 1, 2011 when controlling influence was transferred. sideration on the date of acquisition was calculated at SEK 50 M, of Net sales and earnings, excluding acquisition costs, contributed to which SEK 40 M was paid on possession date. Any variable portion the TransAtlantic Group in 2011 amounted to SEK 55 and 4 M, will be paid in 2014. Transaction costs totaling SEK 3 M in connec- respectively. If the acquired operation had been wholly owned from tion with the acquisition was charged against consolidated earnings the beginning of the year, the Group’s net sales would have been for 2011. The acquisition of Österströms contributed eight long-term SEK 171 M higher, and the consolidated profit would have been leased vessels. This agreement, which is being renegotiated, has SEK 8 M higher for the January 1–September 30, 2011 period.

78 Impact on the consolidated balance sheet Arctic Ice Österströms SBS Marine SEK M Management AB International AB (Holdings) Ltd. Total

Vessels — 51 732 783 Other tangible fixed assets — 9 — 9 Intangible fixed assets 8 3 — 11 Financial fixed assets — 18 24 42 Total fixed assets 8 81 756 845 Current assets1) — 196 115 311 Total assets 8 277 871 1,156

Long-term liabilities — –88 –353 –441 Current liabilities — –197 –211 –408 Total liabilities 0 –285 –564 –849 Fair value of net assets 8 –8 307 307

Purchase consideration –8 –50 –307 –365 Acquisition goodwill — 58 — 58

Impairment — –58 — –58 Goodwill Dec 31, 2011 — — — —

Impact on the consolidated cash and cash equivalents in 2011:

Purchase consideration in cash paid –4 –40 –307 –351 Acquired cash balance 0 31 7 38 Total –4 –9 –300 –313

1) In connection with the acquisitions, an analysis was conducted of the companies’ receivables, and the assessment is that they are expected to be included as a carrying amount.

NOTE 34 Events after the closing date

Heléne Mellquist was recruited as CFO from January 1, 2012. On January 1, 2012, TransAtlantic’s Offshore/Icebreaking business area changed name to Viking Supply Ships. In January 2012, TransAtlantic’s Viking Supply Ship business area received delivery of the AHTS vessel Brage Viking from the shipyard Astilleros Zamakona in Balbao, Spain. The vessel has been registered in the Danish ships register, DIS. Kim H. Sörensen was appointed the new Head of Industrial Shipping. Kim H. Sörensen was previously CEO of Europe Region, Damco, a subsidiary of AP Möller Maersk. Kim H. Sörensen will assume the position on March 1, 2012 and will thus replace Percy Österström, who will be leaving the daily operation to focus completely on developing the business area’s expanding market and strengthen customer relations in his role as Senior Vice President.

79 TransAtlantic 2011 Signatures of the Board

The Board of Directors and the President assure that the consolidated financial position and results. The Administration Report for the accounts were prepared in accordance with the international account- Group and the Parent Company provides a fair view of the trend ing standards (IFRS) as adopted by the EU and that they provide a for the Group’s and the Parent Company’s operations, position and fair view of the Group’s financial position and results. The annual earnings and describes significant risks and uncertainties facing the report was compiled in accordance with generally accepted account- Parent Company and the companies that are included in the Group. ing standards and provides a fair view of the Parent Company’s

Gothenburg, February 28, 2012

The income statement and balance sheets will be presented to the Annual General Meeting on April 27, 2012 for approval.

Christen Sveaas Folke Patriksson Håkan Larsson Chairman Deputy Chairman Board member

Christer Olsson Magnus Sonnorp Christer Lindgren Board member Board member Board member/ Employee representative

Henning E. Jensen President and Board member

PricewaterhouseCoopers AB

Our Auditors’ Report was submitted on March 23, 2012

Helén Olsson Svärdström Olof Enerbäck Authorized Public Accountant Authorized Public Accountant Auditor in Charge

80 Auditor’s report

To the annual meeting of the shareholders of Rederi AB TransAtlantic, accounts have been prepared in accordance with the Annual Accounts corporate identity number 556161-0113 Act and present fairly, in all material respects, the financial position of the group as of 31 December 2011 and of their financial performance Report on the annual accounts and consolidated financial and cash flows in accordance with International Financial Reporting statements Standards, as adopted by the EU, and the Annual Accounts Act. The We have audited the annual accounts and consolidated accounts of statutory administration report is consistent with the other parts of the Rederi AB TransAtlantic for the year 2011. The annual accounts and annual accounts and consolidated accounts. consolidated accounts of the company are included in the printed version We therefore recommend that the annual meeting of shareholders of this document on pages 44–80. adopt the income statement and balance sheet for the parent company Responsibilities of the Board of Directors and the President for the and the group. annual accounts and consolidated accounts. The Board of Directors and the President are responsible for the prepa- Report on other legal and regulatory requirements ration and fair presentation of these annual accounts and consolidated In addition to our audit of the annual accounts and consolidated accounts in accordance with International Financial Reporting Stand- accounts, we have examined the proposed appropriations of the com- ards, as adopted by the EU, and the Annual Accounts Act, and for such pany’s profit or loss and the administration of the Board of Directors internal control as the Board of Directors and the President determine and the President of Rederi AB TransAtlantic for the year 2011. is necessary to enable the preparation of annual accounts and consolidated financial statements that are free from material misstatement, Responsibilities of the Board of Directors and the President whether due to fraud or error. The Board of Directors is responsible for the proposal for appropriations of the company’s profit or loss, and the Board of Directors and Auditor’s responsibility the President are responsible for administration under the Companies Our responsibility is to express an opinion on these annual accounts Act. and consolidated accounts based on our audit. We conducted our audit in accordance with International Standards on Auditing and generally Auditor’s responsibility accepted auditing standards in Sweden. Those standards require that Our responsibility is to express an opinion with reasonable assurance we comply with ethical requirements and plan and perform the audit on the proposed appropriations of the company’s profit or loss and on to obtain reasonable assurance about whether the annual accounts and the administration based on our audit. We conducted the audit in consolidated accounts are free from material misstatement. accordance with generally accepted auditing standards in Sweden. An audit involves performing procedures to obtain audit evi- As a basis for our opinion on the Board of Directors’ proposed dence about the amounts and disclosures in the annual accounts appropriations of the company’s profit or loss, we examined the Board and consolidated accounts. The procedures selected depend on the of Directors’ reasoned statement and a selection of supporting evidence auditor’s judgement, including the assessment of the risks of material in order to be able to assess whether the proposal is in accordance with misstatement of the annual accounts and consolidated accounts, the Companies Act. whether due to fraud or error. In making those risk assessments, the As a basis for our opinion concerning discharge from liability, in auditor considers internal control relevant to the company’s prepara- addition to our audit of the annual accounts and consolidated tion and fair presentation of the annual accounts and consolidated accounts, we examined significant decisions, actions taken and cir- accounts in order to design audit procedures that are appropriate in cumstances of the company in order to determine whether any mem- the circumstances, but not for the purpose of expressing an opinion on ber of the Board of Directors or the President is liable to the company. the effectiveness of the company’s internal control. An audit also We also examined whether any member of the Board of Directors or includes evaluating the appropriateness of accounting policies used the President is liable to the company. We also examined whether any and the reasonableness of accounting estimates made by the Board of member of the Board of Directors or the President has, in any other Directors and the President, as well as evaluating the overall presenta- way, acted in contravention of the Companies Act, the Annual Accounts tion of the annual accounts and consolidated accounts. Act or the Articles of Association. We believe that the audit evidence we have obtained is sufficient We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. and appropriate to provide a basis for our opinion.

Opinions Opinions In our opinion, the annual accounts have been prepared in accordance We recommend to the annual meeting of shareholders that the loss be with the Annual Accounts Act and present fairly, in all material respects, dealt with in accordance with the proposal in the statutory administra- the financial position of the parent company as of 31 December 2011 and tion report and that the members of the Board of Directors and the of its financial performance and its cash flows for the year then ended President be discharged from liability for the financial year. in accordance with the Annual Accounts Act, and the consolidated

Gothenburg, March 23, 2012 PricewaterhouseCoopers AB

Helén Olsson Svärdström Olof Enerbäck Authorized Public Accountant Authorized Public Accountant Auditor in Charge

81 TransAtlantic 2011 Definitions and Glossary

Definitions

CAP: Hedge: P/E ratio: A financial interest-rate instrument used to A general term for financial measures taken to Closing share price at the end of the period ensure that interest expense does not exceed avoid undesirable effects on earnings due to divided by profit after financial items less full a certain set level. variations in interest rates, exchange rates, etc. tax per share.

Capital employed: IFRS: Percentage of risk-bearing capital: Interest-bearing liabilities and shareholders’ International Financial Reporting Standards, an Shareholders’ equity and deferred tax liabili- equity. international accounting standard that all listed ties (including non-controlling interests) companies must adopt. Certain older standards divided by total assets. Debt/equity ratio: included in the IFRS collective name are referred Interest-bearing liabilities minus cash and to as IAS (International Accounting Standards). Profit margin: cash equivalents divided by shareholders’ Profit after financial items divided by net sales. equity. Interest-coverage ratio: Operating profit/loss before depreciation plus Restructuring costs: Desinvestment: interest income divided by interest expense. Includes revenues and expenses of nonrecur- Divestment of fixed assets. ring nature, such as capital gains/losses from Net indebtedness: the sale of vessels, impairment of vessels and Dividend yield: Interest-bearing liabilities less cash and cash costs related to personnel cutbacks. Dividend per share divided by closing share equivalents. price at year-end. Return on capital employed: Operating cash flow: EBIT divided by average capital employed. Earnings per share: Profit/loss after financial income/expenses Profit after financial items less tax on profit for adjusted for capital gains/losses, depreciation/ Return on equity: the year (current and deferred tax) according to amortization and impairment. Profit after financial items less tax on profit for the consolidated income statement. the year, divided by average shareholders’ Operating profit/loss: equity. EBIT: Profit/loss before financial items and tax, Earnings Before Interest and Taxes, corre- and before restructuring costs. Total cash flow: sponding to operating profit/loss. Cash flow from operating activities, investing Operating profit/loss (before tax): activities and financing activities. EBITDA: Profit/loss before tax and before restructuring Earnings Before Interest, Taxes, Depreciation, costs. and Amortization, corresponding to profit/loss before capital expenses and tax. Operating profit/loss per business area: Profit/loss after financial items and before Equity/assets ratio: Group-wide expenses and central/Group-wide Shareholders’ equity divided by total assets. net financial income/expenses.

Equity per share: Profit per business area: Equity divided by the number of shares out- Profit/loss for each business area, recognized standing. before Group-wide expenses.

82 Glossary

AHTS – Anchor Handling, Tug & Supply Ships: ISM code (International Safety Management): RoLo vessel: (Roll on/off Lift on/off): Combination vessels operating in the offshore Quality and safety regulations stipulated by Vessel with both cargo hatches and ramps and market, intended for use in anchor-handling, IMO for international merchant shipping. Certi- can therefore combine loading/unloading with tug operations and transportation of supplies. fication in accordance with the ISM Code is trucks and/or cranes. administered by the national maritime author- Bareboat charter: ity, which in Sweden is the Swedish Maritime RoRo vessel (Roll on Roll off): The leasing of a vessel without a crew to a Administration. Vessel on which cargo is driven on board via charter party for a fixed period. In principle, one or more ramps located on the vessel. the charterer pays all operating costs. ISO: International Standards Organization. SECU: Breakbulk: Stora Enso Cargo Unit. General cargo or bulk cargo that is “breakbulk” Joint Venture: loaded, meaning with no pallets or other type Business operations performed by two or more Side-port vessel/side loader: of carrier. companies jointly, with shared risk-taking. Vessel that is loaded using trucks and/or rolling platforms through side ports, often in com- Bunker: LoLo vessel (Lift on Lift off): bination with lifts between various decks. Name of the vessel’s fuel, i.e. the oil used for Vessel that is loaded/unloaded using its powering the vessel’s engines. onboard or fixed dockside cranes. Ship Management: All the services required to operate a vessel, Bulk carrier: Marpol: including the crew. Vessel for the transportation of loose goods in International Convention for Prevention large quantities, such as coal, ore and grain. of Maritime Pollution from Ship. IMO environ- Spot market: mental convention. The sector of the chartering market in which a Charterer: vessel is chartered for individual voyages as A cargo owner or party that charters a vessel. MRM: opposed to long-term charters. Maritime Resource Management. Deadweight tons (DWT): Solas: The total weight of cargo, bunkers and unat- NETSS: International Convention for Safety of Life at tached equipment that a vessel can carry. Stora Enso’s logistics system for Northern Sea. IMO safety convention. Europe. “North Europe Transport & Supply ERRV: System.” SSPA: Emergency Response and Rescue Vessels. Svensk Skeppsprovningsanstalt. (Swedish Offshore: shipbuilding testing institute). Feeder traffic: General term for industrial activities in connec- Feeder services with smaller vessels to ports tion with the exploitation of oil resources at Supply vessel: where reloading to larger vessels is under- sea. Vessel that transports supplies to oilrigs and taken. platforms in the North Sea. Paper carrier: FEU: A forest-products carrier specially adapted for TAP agreement: Container size. Forty Equivalent Units, i.e. a paper cargo. Agreement covering temporarily employed per- 40-foot container. sonnel on Swedish-registered vessel, which is PSV: not based on a Swedish labor agreement. HSE policy: Platform Supply Vessel. Health, safety and environmental policy. Timecharter (T/C): Rates: Leasing a vessel to a charter party for a fixed IMO: Freight or transport charges/prices. period of time. The ship-owner pays all the International Maritime Organization, UN inter- operating costs except bunkers and port dues. national maritime body.

83 TransAtlantic 2011 Annual General Meeting and Calendar 2012

Annual General Meeting

The shareholders of Rederi AB TransAtlantic (publ) address, telephone number (daytime), informa- are hereby notified of the Annual General Meeting tion on any assistants (maximum of two), and to be held on Friday, April 27, 2012 at 4:00 p.m. at when applicable, information on proxies or repre- the Gothenburg Art Gallery Museum, Gothenburg. sentatives. In the event the shareholder intends to be represented by proxy, a power of attorney and Registration other authorization documents must be enclosed Shareholders who intend to participate in the with the registration. General Meeting must: Shareholders whose shares are registered with • be listed in the shareholder register maintained a trustee must temporarily register the shares in by EuroClear Sweden AB not later than Saturday, their own name with EuroClear Sweden AB to be April 21, 2012 entitled to participate in the General Meeting. • notify the company of their intention to partici- Such reregistration process must be completed not pate not later than 4:00 p.m. on Monday, April later than Friday, April 20, 2012. The trustee (bank 23, 2012, to the address: Rederi AB TransAtlan- or fund broker) must be instructed in adequate tic, c/o Computershare AB, Box 610, SE-182 16 time prior to that date. Danderyd, or by telephone: +46 (0)771-24 64 00 Notification of the Annual General Meeting or on Rederi AB TransAtlantic’s website, will be published on Wednesday, March 28, 2012, www.rabt.se. in Dagens Industri, Göteborgs-Posten and Post och Inrikes tidning. Registration must include the shareholder’s Further information regarding the notification name, personal identity number or corporate reg- and agenda can be found on the company website, istration number, registered shareholding, www.rabt.se.

Calendar 2012

April 27 Annual General Meeting

May 15 Interim Report January–March

August 8 Interim Report January–June

November 2 Interim Report January–September

TransAtlantic Annual Report 2011 Report Annual TransAtlantic

Annual Report 2011

Rederi AB TransAtlantic (publ) Visiting address: Lindholmsallén 10 Box 8809, SE-402 71 Gothenburg, Sweden Tel: +46 (0)31–763 23 00 E-mail: [email protected] www.rabt.se

Solberg. Print: Billes Tryckeri