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52 Financial review
DFDS annual report 2009
Depreciation, write-downs and EBIT
Total depreciation and write-downs amounted to DKK 631 million,
of which DKK 61 million consisted of write-downs. The latter consists
primarily of a write-down of DKK 53 million on the passenger ship
Queen of Scandinavia, and a write-down of DKK 6 million on a ro-ro
ship that was sold for scrapping early in 2010.
Depreciation of ships and other long-term assets amounted to
DKK 572 million, which was on a par with 2008. The value adjustment
of negative goodwill resulted in an income of DKK 1 million in 2009
compared to an income of DKK 20 million in 2008.
Operating profit (EBIT) was then DKK 174 million, down 63 %
or DKK 293 million compared to 2008.
Financing
Net financing amounted to a cost of DKK 154 million, a reduction of
DKK 92 million compared to 2008. Net-interest costs, excluding financial
leasing, were reduced by 12 % or DKK 22 million to DKK 159 million.
This was due to a decrease in the average net borrowing rate, which
more than offset an increase in average net interest-bearing debt of 7 %.
In 2009, net exchange-rate adjustments, excluding financial leasing,
constituted an income of DKK 15 million, in contrast to a loss of DKK
19 million in 2008, and thus a profit improvement of DKK 34 million
compared to 2008. The adjustments were primarily related to SEK,
NOK and USD.
In addition, the cost of finance in 2009 was reduced by a lower
cost of DKK 17 million for financial leasing from price adjustments and
lower interest plus the return of three ships at the end of the year.
Moreover, there was a positive deviation of DKK 22 million from a
write-down in 2008 on a receivable from DFDS Suardiaz Line. Costs
were incurred from changes in loan conditions.
Tax and annual profit
Pre-tax profit in 2009 was DKK 20 million, a decrease of DKK 201
million compared to 2008.
The shipping activities of the DFDS Group are covered by tonnage
tax schemes in Denmark, Norway, the Netherlands and Lithuania. Tax
on the result for the year constituted an income of DKK 69 million of
which DKK 70 million concerns an income from a reversal of the Norwegian
transition rules adopted for a new tonnage tax scheme in 2007.
A new set of transition rules have yet to be decided upon. Deferred
taxes was an income of DKK 30 million primarily from capitalised and
deficits carried forward. Tax on the result for the year was a cost of
DKK 21 million.
Net profit was then DKK 89 million compared to DKK 253 million
in 2008.
Investments
Investments in 2009 amounted to DKK 1,304 million, of which DKK
1,191 million consists of investment in ships. The most significant investments
were DKK 373 million related to two newer ro-ro ships; DKK
463 million related to a newly-built ro-pax ship; and DKK 272 million
for the extension of three ro-ro ships. The remaining DKK 83 million
relates to docking of ships.
Of the remaining investments of DKK 113 million, cargo carrying
equipment accounted for DKK 52 million, while investments in IT
systems and development amounted to DKK 22 million. Acquisition of
the remaining 20 % stake in the Halléns NV represented an investment
of DKK 38 million.
Assets and invested capital
Total assets increased by 8 % to DKK 9.3 billion., a rise of DKK 688
million, derived mainly from the abovementioned investments in ships
and the reduction of DKK 147 million in cash funds to DKK 155 million.
Despite investments of DKK 1.3 billion in 2009, average invested
capital rose by only 1.2 % to DKK 7,762 million in 2009, as a result of
the gradual phasing in of investments over the year. Invested capital rose
year-on-year by 11 % to DKK 7,979 million. The return on invested capital
was 2.1 %, a decrease of 3.8 percentage points compared to 2008.
Financing and capital structure
Interest-bearing debt rose by 16 % to DKK 4,200 million at the end of
2009, corresponding to a rise of DKK 564 million. Net interest-bearing
debt increased by 19 % to DKK 4,067 million at the end of 2009.
Calculated as an average, the increase was 7 % in 2009. At the end
of 2009, the ratio of net interest-bearing debt to EBITDA was 5.2.
Cash flow
Gross cash flow from operations declined by 15 % to DKK 861 million.
Cash flow was positively affected by a change in working capital of DKK
87 million, including adjustments. Free cash flow from operations, calculated
before interest and after investments, was negative DKK 468 million in
2009. The negative free cash flow and payment of interest was, amongst
other things, financed by loans of DKK 528 million and a DKK 147 million
reduction in cash funds. Short-term debt amounted to DKK 333 million
of the loan financing, and helped to reduce the average borrowing rate
as a result of declining short-term interest rate throughout the year.
Valuation of ships
An annual impairment test is conducted on the Group’s ships, based on
expected net cash flow and external brokers’ evaluations. The tests for
2009 did not lead to any write-downs apart from the passenger ship
Queen of Scandinavia and the ro-ro ship Tor Anglia. The impairment test
is described in greater detail in note 39.
Queen of Scandinavia, which was laid up for most of the year, was written
down by DKK 53 million in 2009 on the basis of a separate evaluation. Tor
Anglia was written down by DKK 6 million in 2009 on a basis of a seperate
evaluation, because of the ship being transferred to ‘asset held for sale’.
Overall, the demand for ro-ro and ro-pax ships fell in 2009,
although charter rates for newer and bigger ships remained relatively
stable. The market value of the DFDS fleet at the end of 2009, based
partly on brokers’ evaluations, was slightly higher than the accounting
value, which was DKK 6.9 billion.
Equity
DFDS’ share of the equity increased by 7 % or DKK 227 million to
DKK 3,641 million at the end of 2009. As well as carrying forward
DFDS’ share of the annual net profit of DKK 86 million, equity was
positively affected by currency adjustments and value adjustments
on hedging transactions. Minority interests were reduced to DKK 47
million from DKK 71 million in 2008, primarily as a result of the
acquisition of the remaining shares in Halléns NV. Total equity
therefore amounted to DKK 3,688 million at the end of 2009.
The equity ratio at the end of the year was 40 %, the same share
as in 2008.
The parent company’s financial performance
The annual profit for the parent company, DFDS A/S, was DKK 32
million. Total assets at the end of the year amounted to DKK 8,029
million and the equity was DKK 3,465 million.