Photo: In 2020, DFDS moved extraordinary freight volumes as Brexit and Covid-19 congested ports DFDS A/S · Sundkrogsgade 11, DK-2100 Copenhagen Ø · T +45 3342 3342 · F +45 3342 3311 · dfds.com · CVR 14 19 47 11 Annual Report 2020 2 Our freight offering DFDS Annual Report 2020 Our freight DFDS’ key freight offering market offerings We keep Europe moving Ferry transport of freight Select industry solutions: through a wide range of units, accompanied and Automotive, Forest & Metal, freight services from unaccompanied Cold Chain and others ferry transport to complex logistics solutions Port rail services Port terminal services 70 27 ferries and other routes Contract logistics Industry solutions, vessels solutions asset-backed and 4PL 8 50 Door-door forwarding, port logistics full & part loads terminals locations and containers 3 Our passenger offering DFDS Annual Report 2020 Our passenger offering DFDS’ key passenger offerings We move people and their cars on ferry routes to enjoy a maritime experience and connect Short sea ferry Overnight ferry with others 17 9 Mini cruise Groups & events ferries ferry routes Packaged Conferences 23,000 breaks at sea sailings 4 Our Win23 strategy DFDS Annual Report 2020 Our Win23 strategy Develop and Grow solutions Digitise services Create more expand the ferry to select to accelerate value for A B C and logistics D industries growth passengers networks 5 Our purpose DFDS Annual Report 2020 Our purpose By moving freight and passengers reliably and efficiently, we provide vital services for trade and travel in and around Europe. We care – about the safety of our We seek to partner and innovate passengers and employees and about our with customers to grow their business environmental footprint. and the economy. 6 Our climate action plan DFDS Annual Report 2020 Our climate action plan Short-term plan 2030 target Long-term plan 2050 target Reduce CO² emissions from Reduction of relative CO² emis- Planning of zero emission Climate neutral existing fleet responsible for sions from fleet by 45% from newbuilds to start in 2025 +90% of our total emissions 2008 baseline Ensure green fuel availability through partnerships Getting our house in order Reduction of the 10% of emissions that are non-fleet: trucks, travel, company cars, buildings, and more 7 Content DFDS Annual Report 2020 Management review Consolidated financials Parent company financials 8 Key results 61 Income statement 118 Income statement 9 Letter from the Chair 62 Statement of comprehensive income 119 Statement of comprehensive income 10 CEO looks ahead 63 Balance sheet 120 Balance sheet 11 Key figures 64 Statement of changes in equity 121 Statement of changes in equity 12 Management review 65 Statement of cash flows 123 Statement of cash flows 27 Ferry Division 67 Notes 124 Notes 33 Logistics Division 38 Sustainability summary Reports Other information 44 Risk factors 114 Management statement 141 Fleet list 48 The DFDS share and shareholders 115 Independent Auditors report 143 Glossary 51 Financial review 144 Definitions 55 Corporate governance summary 145 DFDS’ history 58 Board of Directors and Executive Board 59 Executive Management Team 8 Management review DFDS Annual Report 2020 Key results 2020 Revenue down 16% to EBITDA¹ down 25% to Return on invested capital¹ The results for 2020 include DKK 14bn DKK 2.7bn after tax of 4% a significant negative impact from the Covid-19 ¹ ¹ Revenue per division EBITDA per division Return on invested capital (ROIC) pandemic on the Group’s DKK bn DKK bn % passenger activities that generated 16% of revenue 16 3.5 16 in 2019. Due to the imposed travel restrictions, the 14 3.0 14 EBITDA from passenger activities was reduced by 12 12 2.5 DKK 1bn compared to 2019. 10 2.0 10 Logistics Division 8 1.5 8 Ferry Division 6 1.0 6 Non-allocated items DFDS Group 4 0.5 4 2 0.0 2 1 Before special items 2 2018 restated to IFRS 16 on 0 -0.5 0 a proforma and unaudited basis 2018 2019 2020 2018² 2019 2020 2018² 2019 2020 9 Letter from the Chair DFDS Annual Report 2020 Rough seas in 2020 – may 2021 bring calmer waters and new opportunities I look back on 2020 with mixed emotions. On the one Financial position and dividend tainty, particularly about the effects of Brexit on UK trade hand, Covid-19 severely disrupted our lives and parts of In last year’s annual report, it was announced that dividend volumes as well as when and to what extent passengers our business. On the other hand, our ability to adapt to the payments would resume. Following the outbreak of Covid-19, will return in larger numbers to our ferry routes. changed circumstances proved the strength of the DFDS the proposed dividend was cancelled to safeguard our finan- In the meantime, I am confident and have faith in DFDS’ organisation and the resilience of our business model. cial position. We consolidated our financial position post the ability to adapt to market changes as well as a firm belief Adapting to such a severe event as Covid-19 did, however, outbreak and today our position is solid. Leverage remains, in our Win23 strategic roadmap and ambitions. The acqui- entail significant actions and costs, not least for the people however, well above our targeted range and the Board there- sition of HSF Logistics Group is a testament to this belief we had to let go due to the sudden drop in demand across fore proposes not to pay a dividend in 2021. and management’s commitment to deliver on the strategy. markets, especially in the passenger segment. In addition, the efficiency and improvement measures Claus V. Hemmingsen Management’s resolute adaptation of activities Breakthrough year for climate carried out in 2020 has positioned us well to both manage Chair of DFDS’ mitigated the impact on EBITDA, however, still with 2020 was a breakthrough year for the climate agenda in challenges and pursue opportunities in 2021. Board of Directors a 25% decrease to DKK 2.7bn. As the year evolved, the world of business. It’s now all about how and when we freight demand rose to levels above 2019 helped by become climate-neutral, not if. We launched our own climate Finally, thank you! stock building in the UK ahead of Brexit while passenger action plan that includes numerous projects to reduce our DFDS has emerged in good shape from 2020 due to volumes remained almost at a standstill. The decrease footprint over the next ten years as well as an ambition to an extraordinary and impressive effort from the entire in earnings was in the end caused by the drop in replace fossil fuel with sustainable fuels to achieve climate organisation. The cost has regrettably been significant passenger volumes. neutrality by 2050. For several years, a lot of effort has in both human and financial terms. I am grateful for the At the start of 2020, five of six members of the Execu- gone into developing our approach to sustainability and the great cooperation with our stakeholders, not least our tive Management Team were new in their roles or had just climate action plan is the preliminary culmination of this customers as well as our business and financial partners. joined. It was thus a new and untried team that faced the work. I am optimistic and encouraged by our green agenda. I extend my deepfelt gratitude to management and Covid-19 crisis. I am impressed with their ability to quickly staff for your support and efforts in overcoming the many rise to the challenge, how fast they got together and the Strategic roadmap in place challenges of 2020. Hopefully 2021 will bring calmer way they managed DFDS skilfully through a difficult period. Going into 2021, we face an elevated level of uncer- waters and new opportunities to all. 10 CEO letter DFDS Annual Report 2020 Managing through challenges and opportunities Our focus in 2020 was to serve our stakeholders as well relevant and ambitious roadmap. Our commitment Looking ahead and thank you! as possible through a period of great uncertainty. To keep to deliver on the Win23 growth ambitions was Our freight business proved to be strong and resilient our colleagues safe. To maintain service and reliability to underlined by the recent agreement to acquire HSF during 2020. In addition, Brexit is now behind us and customers. To collaborate with partners. To maintain a Logistics Group. we can focus on our long term growth opportunities strong financial position that keeps DFDS safe. Our financial ambitions are refocused on ROIC as in the UK. Uncertainty remains, however, elevated Looking back on 2020, Covid-19’s disruption of our the pandemic and other events have lowered the return going into 2021. How quickly will trade normalise passenger services stands out. A sad consequence of the to a level that is not satisfactory. Our ROIC minimum between the EU and the UK? When and to what extent Torben Carlsen pandemic was laying off around 700 competent and loyal target is 8% while the ambition of Win23 is to reach a will passengers return to our ferry routes? We cannot President & CEO employees as we adapted to the new market conditions. ROIC of 10% in 2023 compared to 4% in 2020. predict the outcomes of these key questions but Disruptions nevertheless also bring opportunities. We we are prepared to respond to any challenges and forged a commercially stronger and more focused freight Climate action plan launched opportunities that will arise during the year. More information on sales organisation in the adaptation process, and have A highlight of 2020 was the launch of our ambition I would like to send a warm, huge thank you to our approach to already achieved important customer wins.