52 Financial review <strong>DFDS</strong> 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 <strong>DFDS</strong> 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 <strong>DFDS</strong> 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 <strong>DFDS</strong> 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 <strong>DFDS</strong>’ 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 <strong>DFDS</strong>’ 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, <strong>DFDS</strong> 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.
<strong>DFDS</strong> annual report 2009 Financial review 53
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