Dsd annual report 2013

Annual Report

2013158th year of operation

TABLE OF CONTENTS

CORPORATE STRUCTURE

Corporate structure .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Milestones in DSD’s history .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Key figures – last five years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Areas of activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Annual report by the board of directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Income statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Equity and liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Cash flow statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Naming ceremony .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Fleet lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Addresses .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Side

DSD Shipping

2annual report 2013

3Det stavangerske Dampskibsselskab as

MILESTONES IN DSD’s HISTORY

2014 Norled adds two 100% LNG-powered car ferries to the Tau connection.

2013 Norled builds the world’s first CO2 emission-free battery-operated car ferry for the Lavik – Oppedal route in Sogn og Fjordane.

2012 Norled begins operating the Bergen – Sogn og Fjordane express boat route (1 May).

2011 Nor Lines contracts two environmentally-friendly LNG-powered freighters from China.

2011 DSD takes over 100% of the shares in Tide Sjø AS, and the company is renamed Norled AS (from 1 January 2012).

2011 Nor Lines becomes a wholly-owned subsidiary of DSD. 2009 The world’s three first LNG-powered passenger ferries

are deployed to the massive Nesoddtangen – Aker Brygge commuter route.

2007 Stavangerske AS is merged with Tide Sjø. 2007 Stavangerske AS builds three new carbon fibre

express boats for the routes in Ryfylke, cutting fuel consumption by 40% and subsequently winning an award for universal design.

2006 Nor Lines establishes a nationwide ground transport system.

2004 Nor-Cargo is sold to Posten Norge AS. Nor-Cargo Shipping becomes Nor Lines AS.

2003 MF “Stavanger” – the first Norwegian aluminium catamaran car ferry is deployed to the Tau route.

2001 North Sea traffic is transferred to the new company Sea-Cargo, with a current ownership of Nor Lines 40% and Sea-Trans 60%.

2000 Allianse Informasjonssystemer ASA is bought and, over the course of the next five years, further developed into Rogaland’s largest IT company with branch offices throughout Southern Norway.

1999 DSD buys 42.4% of the shares in HSD.1997 RT builds the first Norwegian ferries in Poland.1992 Boknafjorden Ferjeselskap (50% BNR and 50% RT)

wins the commuter ferry licence across the Boknafjord between Mortavika and Arsvågen.

1989 DSD enters international shipping through DSD Shipping AS.

1989 DSD reorganises and establishes subsidiaries Rogaland Trafikkselskap (RT) and Nor-Cargo Stavangerske.

1988 DSD becomes part of RoNoTro, which bought Bergenske.

1986 The Westamaran “Fjordsol”, added to the Sand-Sauda route, receives an award for its universal design.

1978 Joint sailing Stavangerske – Mørerutene. Nord-Pool is established as a merger of several coastal shipping companies.

1971 DSD starts a Westamaran route in Puerto Rico. 1964 More efficient freight ship operation through the

delivery of two ships equipped with side doors, cranes and heavy lifting beams: “Rogaland” and “Akershus”.

1960 Norway’s first hydrofoil boat “Vingtor” is deployed to Norway’s first express boat route between Stavanger – Haugesund – Bergen.

1959 The dawn of a new age - DSD receives a licence for the Stavanger – Tau route, signs a contract with the Norwegian Public Roads Administration and builds the first car ferry “Tau”, delivered in 1961.

1948 The birth of the motto “The white fleet”. The local ferries are painted white with yellow smokestacks.

1947 MS “Haugesund”, formerly “Kilbirnie”, is deployed to the Haugesund day service, which becomes the main connection across the Boknafjord.

1939 MS “Fjorddrott” is delivered as a result of experience with sea buses. The boat attracts considerable attention with its 140-foot length, lounges for 405 passengers, and room for 12–14 cars. “Fjorddrott” is deployed to the Haugesund and Sand – Sauda route in correspondence with the railway and bus link to Oslo.

1938 DSD takes good note of road network development, takes over the Sand – Ropeid ferry route and in the autumn of 1945, it procures a modern drive-through car ferry – “Ropeid”.

1938 The “Ekspress II” sister ship is deployed, inspiring the term “sea bus”.

1937 Technical Manager Ludvig Thorsen revolutionises the local liner design in Norway by building a light ship with a long, narrow hull powered by a diesel engine. This results in a ship with good sailing speed and solid operating economy. “Ekspress” is launched from the company’s own workshop in Klasaskjæret, and is added to the Sandeid route.

1934 DSD contributes share capital to Det Norske Luftfarts-selskap (DNL), and becomes a shipping agent for the seaplane routes with a dedicated floating dock at Klasaskjæret.

1930 DSD starts joint-sailing with Bergenske in Danzig and Gdynia, with sporadic calls at Königsberg.

1924 DSD begins collaborating with Bergen LIoyd and deploys “Tungenes” between Trondheim, the cities in Western Norway and Stettin-Lübeck.

1922 The shipping line starts an international route to Leith and Grangemouth with the cargo ship “Jæderen”.

1919 DSD takes an ownership stake in Hurtigruten and gives Stavanger a weekly link to the route between Bergen and Kirkenes. From 1919 to 1940, DSD is the only company to run a regular post, freight and passenger service along the entire Norwegian coast.

1912 The Sandnes/Stavanger – Kristiania coastal steamer is expanded with “Austri” and “Vestri”, purchased from Denmark and equipped with refrigeration units to ensure fast and hygienic transport of meat to the capital.

1909 The Bergen railway opens, and DSD expands the night route with the newly built “Bergen”.

1904 “Kong Olaf” is deployed to a new weekly express route between Sandnes/Stavanger and Kristiania – to secure rapid transport of agricultural products from Jæren.

1897 DSD enters into a joint-venture with Sandæs Dampskibs-Aktieselskab to operate the night route between Sandnes, Stavanger and Bergen. It is agreed that HSD would be responsible for the correspondence with the local ferries in Sunnhordland.

1885 DSD enters the travel/tourism segment, providing significant funding to “Suldal” on the Suldalsvannet lake to promote tourism between Sand and Røldal.

1879 DSD looks to the international market, winning the tender for a 3-year contract to operate the summer mail route between Kristiansand and Fredrikshavn in Jutland, Denmark. “Stavanger” and later on, “Kong Olaf”, are deployed to the route.

1868 DSD receives its first modern screw steamer “Stavanger”, which is deployed to the route between Kristiania and Bergen starting in the spring of 1868. The coastal route becomes one of the country’s most important trunk routes.

1855 DSD is established on 12 February 1855 to build and operate the “Ryfylke” paddle steamer on the first commercial boat routes in Ryfylke.

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KEY FIGURES LAST FIVE YEARS

Operating revenuesEBITDAOperating resultProfit/loss before tax

Fixed assetsCurrent assets

Equity capitalInterest-bearing debtNet interest-bearing debtCashMarket-based securities

Total balanceEquity-to-assets ratio

Total return on capitalReturn on equity

Liquid assetsLiquidity ratio

3 775724308329

5 5961 239

2 1673 6182 947

671205

6 83631,7 %

8,4 %17,5 %

876176 %

3 932772319209

5 9541 224

2 3033 7423 066

676114

7 17932,1 %

5,8 %9,4 %

790148 %

4 965635-75

-274

6 1831 145

1 9114 2033 719

4840

7 32826,1 %

-0,7 %-13,0 %

484119 %

4 884531-176-280

4 593564

1 5532 8712 683

1880

5 15830,1 %

-0,9 %-16,2 %

18859 %

2 85627459-99

4 549805

1 6752 9392 469

4700

5 35431,3 %

2,6 %-6,1 %

47084 %

Figures in MNOK 2009 2010 2011 2012 2013*

annual report 2013

* Tide ASA is not consolidated in the 2013 figures.


AREAS OF ACTIVITY

FERRIES AND EXPRESS BOATS

Norled AS, the ferry and express boat company employs about 1000 people and has 73 vessels. The company operates 49 ferry and express boat routes in Troms, Nord-Trøndelag, Sør-Trøndelag, Møre og Romsdal, Sogn og Fjordane, Hordaland, Rogaland, Vest-Agder, and the Oslo fjord. Norled is devoted to environmentally-friendly car and passenger transport, and operates three gas-powered ferries in the Oslo fjord. Starting from late 2013/early 2014, the company will have two new gas-powered car ferries (accommodating 165 cars) that will serve the Stavanger – Tau route. In 2015, Norled will start an environmental tender operation of the Lavik – Oppedal route on E39 in Sogn og Fjordane. y. Norled is currently building a battery-operated ferry that runs exclusively on electric power, recharging every time it docks to allow cars and passengers to disembark and embark. This will be the world’s first 100% emission-free ferry. The ferry is currently being outfitted and commissioned at Fjellstrand AS at Oma.

Most of Norway’s ferry and express boat routes are now subject to competitive tender processes. Profitable opera-tions will therefore be Norled’s primary focus, with special emphasis on refining the existing contract portfolio, partici-pating in new tenders, and consolidating positions where contracts held by the company come up for new bids.

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AREAS OF ACTIVITY

BUS TRANSPORT

Tide ASA, with its main office in Bergen, is one of the larg-est bus companies in Norway and Denmark. Tide is listed on the Oslo Stock Exchange, and DSD is the largest owner with 49% of the shares. DSD’s parent company holds a fur-ther 28%, and the Group thus controls 77% of the shares. The company’s core activity is bus transport contracted by the public sector. In Norway, Tide operates routes in Hordaland, Rogaland and Sør-Trøndelag, as well as in Nordmøre starting 4 January 2014. Tide will start running regular bus routes in Vestfold country from 1 July 2014. The Danish activity consists of the FynBus routes on Funen and the Sydtrafikk routes in South Jutland. Tide also has extensive express and airport express bus operations, and considerable involvement in charter travel and tour activities. Tide’s primary task is to ensure safe transport of passengers to their destination at all times – every minute, every day – year-round. The enterprise is certified according to the ISO 9001 quality standard and the ISO 14001 environmental standard. From the spring of 2014, Tide also became certified according to the OHSAS 18001 working environment standard. Public transport is an important sector in our modern

society. Rising population in the major cities and greater demands for environmentally-friendly transportation will only add to the importance and growth of this industry. Tide intends to consolidate and further develop its position as an important player in this landscape. The company has secured contracts worth more than NOK 10.7 billion, including options. Tide currently employs over 2,800 people, and operates a fleet of approx. 1,450 buses.


AREAS OF ACTIVITY

INTERNATIONAL SHIPPING

DSD Shipping AS is a fully-integrated shipping organi-sation, established in 1989 and with offices in Stavanger and Singapore. The company has an office staff of 23, and crew members from Europe and Asia. DSD Shipping is responsible for technical and commercial operation of the Group’s international tankers. DSD Shipping is certified in accordance with the ISM code, the ISO 9001:2008 standard and meets the major international oil companies’ strict requirements for high-quality operation. At the end of the year, DSD Shipping was responsible for operation of nine crude oil and product tankers where DSD is the owner or has an ownership stake. The fleet cur-rently consists of four Aframax crude oil tankers and five product tankers of different sizes: one LR2, two MRs, and two 16,500-dwt intermediate ships.

The fleet is modern, with an average age of seven years. The ships are contracted to solid charterers such as AET, Vitol, Vela and Statoil – while the others operate in the RSA and Taurus pools.

LOGISTICS SYSTEM AND FREIGHT

DSD Shipping

With a staff of more than 350, Nor Lines operates an extensive logistics system with freight liner service along the Norwegian coast, in the North Sea and the Baltic Sea. The company also operates central warehouse terminals with 3PL and Crossdocking, and also handles associated dis-tribution activities from its terminals. An extensive ground transport system, along with forwarding, customs clearing and overseas transport operations, are supported by the company’s 13 terminals in Norway. Nor Lines is represent-ed by partners in 30 Norwegian ports and 10 Northern European ports, in addition to a network of distribution and forwarding partners. All freight capacity on the Hurtigruten boats is also managed by Nor Lines. At year-end, Nor Lines’ liner operation consisted of 10 freighters; seven of which are wholly-owned and managed by the Group. The company also functions as a commercial broker for 2–3 freezer ships in the North Sea and Baltic Sea. The company’s fleet is due for renewal. Two LNG- powered freighters were contracted in the autumn of 2011 from Tsuji Heavy Industries in China, and will be added to the company’s routes in early 2015. Nor Lines is the market leader in sea transport of gen-eral cargo in Norway, and has a significant market share of

regular routes to/from Norway in the North Sea and Baltic Sea. Over the past few years, Nor Lines has built a compre-hensive transport system on land, including the railway as an important component on many routes. The goal is to offer competitive and environmentally-sound transport solutions. Nor Lines owns 39% of Sea-Cargo, which operates five general cargo and ro-ro vessels on regular routes between Western Norway and England, Scotland, the Netherlands and Denmark, along with three ships on industrial con-tracts, and one ship on a contract route primarily serving windmill projects.

8annual report 2013

2013 ANNUAL REPORT BY THE BOARD OF DIRECTORS

THE NATURE OF THE BUSINESS AND ITS MAIN OFFICEThe DSD Group, with its parent company Det Stavangerske Dampskibsselskab AS (DSD), is a company domiciled in Norway, with its main office in Stavanger. Transport opera-tions have been the company’s primary activity since its est-ablishment in 1855. Today the enterprise is concentrated on four business areas: International Shipping (DSD Ship-ping AS), Freight (Nor Lines AS), Ferry and Express Boat Operation (Norled AS), and Bus Transport (Tide ASA). The maritime enterprise is mainly wholly-owned by DSD, while the bus enterprise is a listed company with DSD as the largest owner (49%). DSD’s parent company Folke Her-mansen AS owns another 28% and the Group thus controls 76% of Tide ASA.

DEVELOPMENT AND DIRECTION 2013The DSD Group had a turnover of NOK 2,846 million in 2013 (compared with NOK 4,884 million in 2012). The turnover is divided among the Group’s three business areas, with ferry and express boat operations (Norled AS) accounting for 58%, freight (Nor Lines AS) 33%, and

international shipping 9%. Bus transport (TIDE ASA) is not consolidated in the 2013 accounts, but had a turnover for the year of NOK 1,994 million. 2013 was largely affected by the development in interna-tional shipping, where we saw the tank market bottom out in terms of both rates and ship values during the course of the year. This has led to a reversal of previous years’ write-downs of the value of the Group’s international shipping fleet of net NOK 44 million, compared with an overall write-down of NOK 559 million for the two previous years. Nev-ertheless, the weak tank market was a drag on the Group both in terms of profits and liquidity, which led to the Group deciding to reduce its exposure somewhat, while also boost-ing the company’s liquidity through an equity issue.

Important events in 2013 which have had an impact on the Group’s financial position:• Sale of two 100%-owned and one 50%-owned tankers• NOK 200 million capital inflow from parent company• Delivery of two new gas-powered ferries• Partial reversal of write-down on our tankers as a conse-

quence of increased fleet value


BUSINESS AREAS

FERRY AND ExPRESS BOAT OPERATION: NORLED AS Norled is one of Norway’s largest companies in sea trans-port of passengers and vehicles. The company operates 73 vessels in a number of ferry and express boat routes along Norway’s coast from the Oslo fjord to Nord-Troms. In 2013, the company transported 7.5 million passenger car units and 15 million passengers under various contracts with the state and county municipalities. These contracts make up a contract backlog worth NOK 15 billion. Norled’s head-quarters are in Stavanger, with regional offices in Bergen, Ålesund and Oslo. The company employs around 1,000 people. The Group also has 51 apprentices in the fleet, equivalent to about 5.6% of all maritime employees. Norled’s profit before taxes was NOK 12 million in 2013, compared with NOK 18 million in 2012. If we adjust for one-time effects related to gains and write-downs, the com-pany achieved improved profits and an improved EBITDA. The company’s results are still affected by some older weak tender contracts that are gradually being phased out. 2013 was an active year where Norled participated in many tenders and secured greater market shares by win-ning several of these. The company won five contracts with a total value of NOK 2 billion. New building activities has been vigorous throughout the year as a result of higher activity. The order book showed seven vessels at year-end, of which four have now been delivered. In 2014, the com-pany has contracted two additional vessels, which means

that the building program now constitutes five vessels, all of which will be deployed to contracts with various county municipalities as the principals.

FREIGHT: NOR LINES ASNor Lines is a transport and logistics company that ope-rates coastal routes along the entire coast, in the North Sea and the Baltic Sea. The company has an extensive land transport system, forwarding activities, as well as terminal operation with associated distribution activities. The com-pany has 14 branch offices along the coast and, at year-end, operated a fleet of nine pallet, refrigerator and side port ships in its regular routes, as well as two refrigerator ships in the spot market. Nor Lines also leases and ope rates all of the freight capacity on the Hurtigruten’s 11 ships.

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Nor Lines has 208 employees along the coast from Fredrik-stad to Hammerfest and 200 seamen employed on board the company’s ships. Nor Lines owns 39% in Sea-Cargo, a shipping line headquartered in Bergen which operates nine ships, primarily engaged in the North Sea Basin. Nor Lines had a pre-tax loss of NOK 4 million, com-pared with a pre-tax profit of NOK 18 million in 2012. The share of the profit from the ownership in Sea-Cargo was NOK 31 million, compared with NOK 20 million in 2012. This means a considerably weaker result for the company, if we adjust for this fact. In 2013, this weak result is mainly linked to challenges associated with the aging fleet. Shut-downs due to technical challenges with our ships create delays, but also cause expenses for the company related to alternative delivery of goods. We are looking forward to delivery of the company’s new ships in the second half of 2014. This will entail a substantial improvement in the Nor Lines product, while the new LNG-powered ships represent a renewal of the coastal fleet which, in turn, will yield more efficient and environmentally-friendly transport.

INTERNATIONAL SHIPPING: DSD SHIPPING AS

DSD Shipping is a fully integrated shipping company or-ganisation with 23 employees who run DSD’s internatio-nal shipping fleet from the headquarters in Stavanger and branch office in Singapore. At the beginning of the year, the fleet comprised seven crude oil tankers and five product tankers of various sizes. During the year, the Group opted to reduce its exposure in the volatile tanker market by selling two wholly-owned and one 50%-owned aframax tankers. The shipping segment suffered a pre-tax loss of NOK 13 million in 2013, compared with a loss of NOK 187 mil-lion in 2012. A reversal of previous write-downs underlies this improved result. If we adjust for reversals/write-downs, gain/loss and agio effects, the 2013 result is a loss of NOK 29 million, compared with NOK 0 million in 2012. The reason for the weaker result was more ships exposed to a weaker tanker market in 2013, compared with 2012 when all of our ships operated under lucrative contracts during the first half of the year. There was a rise in both earnings and ship values in the segment toward the end of the year, which has continued into 2014.

BUS: TIDE ASA

Tide AS is not consolidated in the accounts, but is recorded as an affiliated company according to the equity method.

Tide ASA, headquartered in Bergen, is one of Norway’s and Denmark’s largest bus companies. Tide is listed on the Oslo Stock Exchange. DSD owns 49% of the shares and DSD’s parent company, Folke Hermansen AS, owns another 28% of the shares. The Group thus controls 77% of the shares. The company’s core activity is bus transport with the public sector as principal. In Norway, Tide ope-rates bus lines in Hordaland, Rogaland and Sør-Trønde-lang counties. The company also opened routes in Møre og Romsdal county in January 2014, and won a tender in Vestfold with start-up in July 2014. The Danish activity is on Fyn and in Syd-Jylland. Tide also has extensive express and airport bus operations, as well as considerable involvement in charter travel and tour activities. Tide employs more than 2,700 people and operates a fleet of 1,450 buses. Tide ASA had a pre-tax loss of NOK 61 million in 2013, compared with a loss of NOK 63 million in 2012. Write-downs related to tender contracts were carried out in 2013. There were no comparable write-downs in the previous year. Furthermore, the company achieved greater gains on the sale of property and operating assets in 2013 as compared with 2012. Adjusted for these effects, the company’s profit improved by NOK 14 million from 2012 to 2013. During the year, Tide won new contracts in both Den-mark and Norway, bringing its order reserve, including option years, to NOK 11.1 billion, an increase from NOK 10.4 billion in the previous year. The Danish bus company Haderslev was purchased in the 2nd quarter, which in-creased the company’s presence in Denmark to a total of around 450 buses and 900 employees.

CONTINUED OPERATIONIn accordance with Section 3-3a of the Accounting Act, the going concern assumption is present.


REVIEW OF THE FINANCIAL STATEMENTS

INCOME STATEMENT2013 marked the DSD Group’s 158th year of operation. Turnover for the Group was NOK 2,856 million compared with NOK 4,884 million in 2012. TIDE ASA was part of the DSD Group in 2012, turnover for TIDE ASA amounted to NOK 1,922 million. Adjusted for TIDE ASA, the Group’s turnover is reduced by 106 million, which reflects reduced earnings in international shipping, as well as a marginal reduction of the top line in Norled and Nor Lines. EBITDA amounted to NOK 274 million, a weakening from NOK 531 million in 2012. The 2012 figures include TIDE ASA with NOK 148 million. Adjusted for TIDE ASA, the EBITDA drop of NOK 109 million is mainly due to weaker earnings in shipping (NOK 51 million), lower gain effects (NOK 28 million), as well as a weaker contribution from Nor Lines of NOK 36 million. Net write-downs and reversals amounted to NOK -35 million, compared with write-downs of NOK 265 million in 2012. This yields an operating result of NOK 59 million, compared with an operating loss of NOK 176 million in 2012. The result after taxes was a loss of NOK 87 million, com-pared with a loss of NOK 236 million in 2012.

CASH FLOW, LIQUIDITY AND DEBTThe company had positive cash flow for the year, NOK 283 million, compared with a negative cash flow in 2012 of NOK 297 million. Cash flow from operations was NOK 275 million com-pared with NOK 566 million in 2012. The 2012 figures include TIDE with NOK 230 million. Cash flow from investment activity was negative with NOK 173 million. Payments related to the Group’s ships building program are NOK 545 million, largely related to Norled’s new-build program. Cash flow from the sale of tangible fixed assets amounted to NOK 306 million, largely related to the sale of tankers. Interest-bearing debt showed marginal growth of NOK 16 million. International shipping debt was reduced by NOK 441 million, while debt in Norled grew by NOK 455 million.

EQUITYTotal capital was NOK 5,354 million at year-end, com-pared with NOK 5,158 million the previous year. Equity at 31 December was NOK 1,675, which represents an equity-to-assets ratio of 31%, compared with 30% for the previous year. DSD conducted an equity issue in June 2013, which brought the company NOK 200 million in new equity capacity from the parent company, Folke Her-mansen AS.

FINANCIAL RISK

Goals and strategyThe Group is exposed to financial risk relating to the busi-ness areas. This is mainly linked to currency, interest rates and oil prices, as well as credit risk. The goal is to mode-rate the financial risk as much as possible. Risk is contin-uously monitored, and financial derivatives are used to reduce such exposure.

Market riskThe Group is exposed to fluctuations in exchange rates, es-pecially USD, as part of the company’s revenues are in for-eign currency. The Group seeks to neutralise currency risk in that activities with earnings and associated debt servic-ing in a foreign currency also borrow in the same currency. A large share of the interest rate exposure is hedged through compensation clauses in public transport contracts. The Group also uses derivatives from time to time to reduce interest rate risk in the various business areas. The Group is exposed to the developments in oil prices and bunker consumption. The high price of oil has been a significant burden on the Group’s results during the past few years. Contract regulation has improved significantly in recent years in ferry and express boat operation, and the risk will therefore decline. The credit risk is considered to be moderate. The coun-terparty risk for International Shipping has increased after several years of poor earnings. For Ferries and Express Boats, the counterparty is the State and county administra-tions, with a low counterparty risk.

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The Group’s liquidity risk is considered acceptable. The soft market in international shipping has weakened the Group’s financial position. As a consequence of this, a NOK 200 million increase in capital was carried out in 2013, and the Group’s exposure in the volatile tanker mar-ket was reduced by three ships. Our international shipping activity was refinanced toward the end of 2013, and the segment now has sufficient earnings to service both operat-ing costs and debt. The Group’s new building program is fully-financed, with the exception of two vessels in Norled that are contracted in the first quarter of 2014. The Group’s loan agreements include financial require-ments. The Group met these marks throughout the year, and forecasts indicate that it will continue to do so in 2014, even though the margin is relatively small in relation to a specific requirement. The stable cash flow from the ferry and express boat operation offers a predictability that leads the board to consider the Group’s liquidity risk to be acceptable.

WORKING ENVIRONMENT AND EMPLOYEES

At year-end, the DSD Group had 1,279 employees. The DSD Group wants to be an attractive workplace with a good working environment. It therefore places great emp-hasis on health, safety and the environment. There is good collaboration between employees, the employee repre-sentatives and management. In 2013, the Group contin-ued the work of reducing sick leave, with particular focus on long-term sick leave. Group sick leave amounted to 5.2% in 2013, while the comparable figure for 2012 was 5.1% (excluding TIDE ASA). TIDE has focused on work to reduce sick leave over quite some time. The activity in Norway has a sick leave of 8.7% in 2013. This is still too high, but represents a reduction from 9.6% in 2012 and 11% in 2011. Cor-respondingly, TIDE Bus Danmark AS had a sick leave of 4.6%, which is the same level as in 2012.

GENDER EQUALITYThe Group’s goal is to be a workplace with full equality between women and men. The Group has drawn up guide-lines to ensure that there is no gender-based discrimination in matters such as pay, promotion and recruiting. Transportation and maritime activities are tradition-ally male-dominated industries. The Group employs 239 women; i.e. 17.8% of its workforce. Female representation on the corporate management team was 33%, while it was 20 % on the board of the parent company.

DISCRIMINATIONThe various subsidiaries have established procedures for whistleblowing regarding censurable practices or condi-tions, for conflict resolution and for reporting bullying and harassment. The guidelines have been adopted in the working environment committees in the respective compa-nies and have been announced in the organisation. The guidelines are also available in the companies’ employee handbooks. All Group employees have equal wages and working conditions, regardless of gender, nationality and ethnicity.

ENVIRONMENTAL REPORTSThe nature of the Group’s activities entails an impact on the external environment. The company emphasises early implementation of requirements stipulated by the authorities to reduce pollution. Installation of environmentally-friendly technology is emphasised in new builds to reduce emissions to the extent possible. The Group works actively to reduce the use of diesel within ferry and express boat operation, bus transport and freight, and an increasing percentage of the Group’s vessels now use natural gas. There was comprehensive innovation work in all of the business areas over the past year, with focus on energy efficiency and the environment. Gradual reductions were achieved in fuel consumption through improvements that fo-cus on attitude-building work and good route planning. The Group is an active partner in developing new vessel con-cepts, energy-efficient engines and propellers, and use of alternative fuels like biofuel, natural gas and electric power. The DSD Group wants to lead developments, and is a driver and innovator in environmentally-friendly transport. Norled currently operates five LNG-powered passenger ferries. Two of these were delivered in 2013 and are the world’s first ferries which exclusively use LNG as energy source. These ferries reduce NOX emissions by 80% and CO2 emissions by 20%. In 2012, the company contracted the world’s first battery-operated car ferry. Norled won the 2013 Research and Innovation Prize awarded by Rogaland Research Council, NHO Rogaland and Rogaland County Authority. Norled was also nominated as one of four finalists for the prestigious 2014 Thor Heyerdahl award by the Nor-wegian Shipowners’ Association. Nor Lines has two gas-

annual report 2013

13

Stavanger, 6 May 2014The Board of Det Stavangerske Dampskibsselskab AS:

powered freighters under construction which will represent a renewal of the coastal fleet and will yield environmental benefits by replacing older tonnage. The new-builds will in-corporate the Environship concept developed by Rolls Royce Marine, which won the Thor Heyerdahl prize in 2014. TIDE has more gas buses than any other company in Norway. In 2013, the company started the first tender in Denmark with gas-powered buses. The Group’s ships have international and domestic cer-tification pursuant to the International Management Code for Safe Operation of Ships and Pollution Prevention (the ISM code). Passenger ships and ferries larger than 400 grt. have valid IAPP certificates and IOPP certificates in ac-cordance with requirements laid down by the Norwegian Maritime Authority. Within international shipping, both ships and company have NS ISO9001:2008 certification. All of TIDE’s branches are certified in accordance with the environmental standard NS ISO 14001.

OWNERSHIP, ETC.DSD is a wholly-owned subsidiary of Folke Hermansen AS. Yuhong Jin Hermansen took over as chairman of the Board in August 2013, after Erik Eik chose to resign upon reach-ing the age of 70. Hermansen has been a member of DSD’s board since 2005. Furthermore, Bjørn Anders Dahle was

elected as a new Board member. In March 2014, Steinar Madsen resigned as CEO and Yuhong Jin Hermansen took up the post of working board chair.

FUTURE DEVELOPMENTSThe company’s objective is profitable operations to ensure satisfactory, long-term return on invested capital. The Group has not succeeded to achieve satisfactory profitability in any of its segments in recent years. Several of the Group’s subsidiaries have strong techni-cal and market positions in their segments. Stronger focus on cost control and risk management in the time ahead will improve Group profitability. Development of expertise will ensure that the Group achieves long-term profitable develop-ment. Overall, the board expects satisfactory profits and posi-tive results in 2014.

RESULT FOR THE YEAR AND ALLOCATIONSThe board proposes the following allocation to cover the loss in Det Stavangerske Dampskibsselskab AS:

Reserve for valuation variances 54 333 Other equity 31 962 Total allocation 86 295

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Steinar OlsenDeputy chairman

Jon BøthunBoard member

Yuhong Jin HermansenChairman of the Board /

Managing Director

Ole MelbergBoard member

Bjørn Anders DahleBoard member

Det stavangerske Dampskibsselskab as


INCOME STATEMENT

Parent 01.01–31.12 Group

2013 2012 (Amounts in NOK 1.000) Note 2013 2012

311 650 Operating revenues 16,18 2 855 524 4 884 362

10 053 11 562 Salery cost 3,11 1 008 271 2 102 660

6 006 6 591 Other operating costs 3,21 1 573 234 2 251 034

-15 748 -17 503 EBITDA 274 019 530 668

333 320 Depreciation on tangible fixed assets 12 250 076 441 314

0 0 Write-Downs 12 -35 000 265 000

-16 081 -17 823 Operating profit/loss 58 943 -175 646

-40 234 -194 069 Profit from investments in subsidiaries 2 0 0

-16 511 -13 225 Profit/loss associated companies 2 -10 441 -19 670

0 0 Profit from short-term investments 8 0 0

-56 745 -207 294 Profit from investments -10 441 -19 670

2 190 8 267 Financial income 9 103 956 68 208

-20 345 -30 022 Financial expenses 9 -237 473 -224 527

0 0 Unrealised agio/disagio 9 -13 803 71 337

-18 155 -21 755 Net financial items -147 320 -84 982

-90 981 -246 872 Ordinary profit before tax -98 818 -280 298

4 686 12 123 Tax on ordinary profit 14 12 353 31 879

-86 295 -234 749 Annual profit before minority interests -86 465 -248 419

0 0 Minority interests 15 597 -12 036

-86 295 -234 749 Profit after minority interest -87 062 -236 383

Allocation on the result

-54 333 -319 110 Valuation difference fund

-31 962 84 361 Other equity

-86 295 -234 749 Total allocated


ASSETS



ASSETS

Intangible assets

0 0 Other intangible assets 12 4 000 4 000

8 922 6 629 Deferred tax asset 14 0 0

8 922 6 629 Total intangible assets 4 000 4 000

Tangible fixed assets

4 634 4 908 Land and buildings 12 5 997 6 121

182 123

Means of transport and other 12 10 795 8 539 operating equipment

0 0 Ships 12 3 185 359 3 623 758

0 0 Periodic maintenance 12 31 630 40 259

0 0 New building contract ships 12 978 229 509 873

4 816 5 031 Total tangible fixed assets 4 212 010 4 188 550

Long-term investments

1 813 738 1 703 498 Investments in subsidiaries 2 0 0

210 978 220 579 Investments in associated companies 2 312 740 378 981

2 805 6 732 Loans to Group companies 4,7 0 0

156 151 Other receivables 4,7,11 12 770 13 587

5 682 5 932

Investments in shares and 8 7 761 7 960

ownership interests

2 033 361 1 936 892 Total long-term investments 333 271 400 528

2 047 099 1 948 552 Totale non-current assets 4 549 282 4 593 079

CuRRENT ASSETS

0 0 Inventories 13 15 364 45 884

Receivables

6 0 Trade receivables 182 292 216 574

33 728 79 335 Receivables on Group companies 7 0 3 000

380 540 Other receivables 136 831 111 653

34 114 79 875 Total receivables 319 123 331 227

Investments

43 43 Marketable Securities 8 43 43

43 43 Total investments 43 43

110 249 21 479 Cash and cash equivalents 5,6 470 026 187 501

144 406 101 397 Total current assets 804 556 564 655

2 191 505 2 049 949 TOTAL ASSETS 5 353 838 5 157 734


Stavanger, 6 May 2014

EQUITY AND LIABILITIES



EquITY

Called-up and fully paid equity

573 736 445 288 Share capital 15 573 736 445 288

305 406 233 854 Share premium reserve 15 305 406 233 854

879 142 679 142 Total called-up and fully paid equity 879 142 679 142

Retained earning

335 166 389 499 Valuation difference fund

443 504 467 130 Other equity

Group funds 793 125 872 068

Minority interests 2 702 2 112

778 670 856 629 Total retained earnings 15 795 827 874 180

1 657 812 1 535 771 Total equity 1 674 969 1 553 322

DEBT

Provision for liabilities

7 130 6 223 Pension liabilities 11 51 214 46 470

0 0 Deferred tax 14 103 526 118 795

7 130 6 223 Total provisions 154 740 165 265

Other long-term liabilities

187 000 215 000 Liabilities to financial institutions 6, 10 2 887 889 2 871 240

169 164 162 968 Liabilities to group companies 7 0 0

0 0 Other long-term debt 6 441 1 166

356 164 377 968 Total other long-term debt 2 888 330 2 872 406

Short-term debt

0 0 Liabilities to financial institutions 5,6 51 389 0

782 451 Account payable 188 859 220 807

0 0 Taxes payable 14 2 916 11 664

525 358 Indirect taxed payable 63 800 69 508

163 871 125 287 Debt to group companies 7 80 000 17 955

5 221 3 891 Other short-term debt 248 835 246 807

170 399 129 987 Total short-term debt 635 799 566 741

533 693 514 178 Total debt 3 678 869 3 604 412

2 191 505 2 049 949 TOTAL EquITY AND LIABILITIES 5 353 838 5 157 734

Steinar OlsenDeputy chairman

Jon BøthunBoard member

Yuhong Jin HermansenChairman of the Board /

Managing Director

Ole MelbergBoard member

Bjørn Anders DahleBoard member


CASH FLOW STATEMENT

Parent 01.01–31.12 Group 2013 2012 (Amounts in NOK 1.000) Note 2013 2012 Cash flow from operating activities -90 981 -246 872 Profit before tax -98 818 -280 298 333 320 Depreciation and amortisation 12 238 603 429 303 0 0 Depreciation of main/intermediate class 12 11 473 12 013 0 0 Write-downs tangible assets 12 -35 000 265 000 0 0 Loss/(gain)from sale of fixed assets 12,21 -1 127 -16 626 40 234 194 069 Profit from investments in subsidaries 0 0 16 511 13 225 Profit/loss from investments in associated companies 2 10 441 19 670 18 155 21 755 Net financial items 147 320 84 982 0 0 Changes in inventory 13 30 520 -18 495 3 190 0 Changes in accounts receivable 34 282 5 091 331 302 Changes in accounts payable -31 948 -116 907 1 971 Changes in pension liabilities 11 4 354 -10 697 0 0 Taxes 14 -11 664 -16 888 1 187 341 Changes in other accrual items -23 344 92 567 -10 133 -14 889 Net cash flow from operations 275 092 565 506 Cash flow from investments 0 0 Payments received from sale of tangible fixed assets 12 305 601 174 950 0 0 Payment received from financial assets 0 0 -118 -36 Disbursements from puchase of tangiable fixed assets 12 -544 637 -447 032 0 0 Net cash effect consolidation 2 0 51 219 0 0 Payments received from sale of shares -50 0 -150 000 -79 973 Increase equity subsidaries 0 0 0 130 646 Payments received from sale of shares 11 554 20 958 0 17 250 Dividend received 54 400 15 399 76 139 2 745 Received group contribution 0 0 0 0 Called-up capital other investments 0 -1 510 27 332 Payments received from other investments 27 332 -73 952 70 964 Net cash flow from investments -173 105 -185 684 Cash flow from financing -20 114 -29 368 Interest paid 9 -140 067 -171 732 2 150 2 046 Interest received 9 9 180 10 678 33 59 Realised agio/disagio 9 3 842 -773 0 0 Payments received from new long-term borrowing 6,10 1 441 636 1 430 664 -28 000 -184 462 Payments from repayment of long-term debt 6,10 -1 446 762 -1 934 220 0 -17 955 Payment other long term debt -725 -19 216 -994 -2 640 Disbursements from lending to group companies 0 0 6 196 6 735 Payments received from long-term borrowing from Group companies 0 0 13 584 142 545 Net change receivables Group companies 7 62 045 14 955 0 0 Disbursements from reduction of bank overdraft 51 389 0 200 000 0 Disbursements from repayment of short-term debt 200 000 0 0 0 Disbursement/payment received to/from minority 2,10 0 -1 521 0 0 Disbursement from dividend 0 -5 310 172 855 -83 040 Net cash flow from financing 180 538 -676 475 88 770 -26 965 Net change in cash through the year 282 525 -296 653 21 479 48 444 Cash 01.01. Cash and cash equivalents 187 501 484 154 110 249 21 479 Cash and cash equivalents 01.01.–31.12. 470 026 187 501 325 325 Tied-up assets (source tax deduction) 1 179 1 056

Cash consists of cash in hand and in the bank.

annual report 2013

Tau Marching Band defied the weather and provided a musical backdrop for the ferry christening.

Ryfylke chef Frode Selvaag serves christening cake to Yuhong Hermansen and Tore Lærdal.

Proud sponsor of MF “Ryfylke”, Janne Johnsen, with Executive Captain Torleiv Landsnes and flower boy Mortenius Stølen.

MF “Ryfylke” was christened at the quay outside the Stavanger Concert Hall on 18 December 2013. After the christening, Norled organised a concert featuring the local group ‘VAMP’ to raise money for the Folke Hermansen cancer research fund.

The world’s two first 100% natural gas-powered car ferries named and deployed into the Stavanger-Tau ferry service

Storting representative and deputy chair of the Storting’s Standing Committee on Transport and Communications Eirin Sund and mayor of Strand Helge Steinsvåg at the cake party on board, together with Yuhong Hermansen and Ivan Fossan.

Pupils from Class 7A and marching band musicians from Hafrsfjord school enjoyed the cake party.

MF “Hardanger’s” proud sponsor Anne Grethe Are Madsen, Execu-tive Captain Geir Kristoffersen and flower girl Mira Malde Pedersen.

On 14 February 2014, MF “Hardanger” was christened at Fiskepirterminalen in Stavanger. Class 7A and the marching band from Hafrsfjord school were among the satisfied guests transported by Tide Reiser.

The world’s two first 100% natural gas-powered car ferries named and deployed into the Stavanger-Tau ferry service


FLEET LIST AS OF 31 MARCH 2014

Coastal liners – Nor LinesMS «Baltic Betina» (30 %) 1983 3229 dwt.MS «Cometa» 1981 4450 dwt.MS «Link Star» (TC) 1989 4453 dwt.MS «Nordvåg» (50 %) 1979 2540 dwt.MS «Nordjarl» 1985 2400 dwt.MS «Nordvær» 1986 2067 dwt.MS «Sunnmøre» 1985 2067 dwt.MS «Tananger» 1979 4450 dwt.MS «Nordkinn» (BB + call option) 2006 2500 dwt.

Built SizeTankers – DSD ShippingMT «Stavanger Prince» 2002 110.000 dwt.MT «Stavanger Blossom» 2007 105.000 dwt.MT «Stavanger Bliss» 2008 105.000 dwt.MT «Eagle Stavanger» 2009 105.000 dwt.MT «Eagle Sydney» 2009 105.000 dwt.MT «Stavanger Breeze» 2004 47.000 dwt.MT «Stavanger Eagle» 2004 45.000 dwt.MT «Stavfjord» (30 %) 2009 16.000 dwt.MT «Star Viking» (30 %) 2009 16.000 dwt.


Ferries – Norled Built Grt.-Cars-PassengersMF Austevoll 1979 769-35-200MF Bjørnefjord 1990 2 871-105-390MF Bømlo 1972 1 206-73-260MS Dronningen 2009 600MS Dyrøy 1964 415-22-94MF Etne 1979 1 660-94-390MF Fedjefjord 2001 2 232-42-130MF Finnøy 1999 1 935-101-350MF Fitjar 1973 740-35-195MF Fjordveien 2001 3 368-79-300MF Foldøy 1999 1 656-48-200MF Folgefonn 1998 1 182-76-299MF Frafjord 1979 739-34-165MF Folkestad 2005 1 910-90-295MF Hardanger 2013 3 999-165-550MF Hardingen 1993 2 631-86-399MF Hidraferja 2001 595-36-128MF Hidrasund 1972 113-10-98MF Hidrasund ll 1969 307-23-128MF Hjelmeland 1992 1 183-76-400MF Hordaland 1979 1 184-64-298MS Huldra 1974 438MF Høgsfjord 1992 1 183-76-400MF Ibestad 2014 1 599-74-225MF Jondal 1974 748-35-195

Built Grt.-Cars-PassengersMS Kongen 2009 600MF Kvam 1977 839-35-147MF Kvinnherad 1978 839-42-248MF Lauvstad 2007 884-50-145MF Melderskin 1985 1 974-112-400MF Os 1978 838-35-147MS Prinsen 2009 600MF Ropeid 1969 551-33-141MF Ryfylke 2013 2 999-165-550MF Sand 2007 879-50-255MF Sjernarøy 1999 1 656-48-200MF Stavanger 2003 2 434-114-393MF Stord 1987 2 871-107-390MF Strand 1982 1 479-64-422MF Strandebarm 1971 743-21-195MF Sveio 1975 662-26-200MF Tidefjord 2008 2 980-120-350MF Tidesund 2008 2 980-120-350MF Ullensvang 1986 2 871-106-399MF Utstein 1975 821-36/47-240MF Vikingen 1992 2 631-86-399MF Ytterøyningen 2006 632-38-160MF Ølen 1977 904-51-255MF Ørland 2006 875-50-190




Express boats – Norled Built Grt.-Passengers

MS Baronen 2009 330-250

MS Baronessen 2008 228-180

MS Fjordbris 2014 410-240

MS Fjordbuen 2005 22-50

MS Fjorddrott 2007 226-180

MS Fjordfart 2007 226-180

MS Fjordkatt 2007 226-180

MS Fjordsol 2005 98-97

MS Frøya 2012 190

MS Fjord Molde 2005 97-97

MS Lyse Ekspress 1988 47-60

MS Lysefjord (66 %) 2006 230-85-12 pbe

MS Njord 2012 290

MS Tedno 2007 54-85

Built Grt.-Passengers

MS Teisten 2006 278-180

MS Tideadmiral 2010 398-280

MS Tidebris 2001 224-180

MS Tideekspress 2008 416-296

MS Tidecruise 2008 179-147

MS Tidelyn 2009 192-125

MS Tidevind 2008 190-147

MS Tiderose 2009 192-147

MS Tjelden 2013 135-47-2 pbe

MS Tranen 2006 278-120

MS Tyrving 2002 224-180

MS Vingtor 2012 290

MS Vøringen 1995 103-79

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Det Stavangerske Dampskibsselskab ASnedre holmegt. 30P.O. Box 404001 stavangerTel.: +47 51 84 56 11fax: +47 51 84 56 03www.dsd.noe-mail: [email protected]

DSD Shipping ASnedre holmegt. 30P.O. Box 8484004 stavangerTel.: +47 51 84 56 00fax: +47 51 84 56 01www.dsd-shipping.noe-mail: [email protected]

Norled ASBørehaugen 1P.O. Box 839 sentrum4004 stavangerTel.: +47 51 86 87 00fax: +47 51 89 54 25www.norled.noe-mail: [email protected]

Nor Lines ASnedre holmegate 30P.O. Box 655 sentrum4003 stavangerTel.: +47 51 84 56 50fax: +47 51 84 56 51www.norlines.noe-mail: [email protected]

Tide ASAMøllendalsveien 1AP.O. Box 63005893 BergenTel.: +47 05505fax: +47 55 23 87 01www.tide.noe-mail: [email protected]

Cover Illustration:Nine new ships under construction with delivery to the DSD group in 2013-2014.

From Top Left:Build no. 2709/1 MF «Stavanger» for Norled. Build no. 2709/2 MF «Hardanger» for Norled. Build no. 0033 MS «Kvitnos» for Nor Lines.Build no. 0032 MS «Kvitbjørn» for Nor Lines. Build no. 1696 Battery-powered ferry for Norled. Build no. 22 MF «Kvernsund» for Norled.Build no. 270 MF «Tjelden» for Norled. Build no. 21 MF «Ibestad» for Norled. Build no. 272 MF «Fjordbris» for Norled.

Photos: Tor Arne Aasen, Samferdselsfoto

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Dsd annual report 2013

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