Annual Report • Feb 22, 2013
Annual Report
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A.P. Møller - Mærsk A/S
Maersk Line: The world's largest liner company, with a global network.
Maersk Oil: Using innovation to unlock potential, turning discoveries into production.
APM Terminals: Running efficient ports, building tomorrow's port infrastructure today.
Maersk Drilling: Breaking ground offshore, working safely in ultra-harsh environments.
| Mærsk Mc-Kinney Møller (1913-2012) | 4 |
|---|---|
| It all began in 1904… | 6 |
| Continuity and Growth | 8 |
| Highlights for the Group | 10 |
|---|---|
| Outlook for 2013 | 13 |
| Financial highlights | 14 |
| Message from the Group CEO | 17 |
| Company profile | 20 |
| Building on the strength of the Group | 22 |
| The Group's business units | 32 |
|---|---|
| Segment overview | 34 |
| Maersk Line | 36 |
| Maersk Oil | 40 |
| APM Terminals | 44 |
| Maersk Drilling | 48 |
| Maersk Supply Service | 52 |
| Maersk Tankers | 53 |
| Damco | 54 |
| Svitzer | 55 |
| Strategic and other reportable segments | 56 |
| Unallocated activities | 60 |
| Financial report | 61 |
|---|---|
| Shareholders | 64 |
| Risk management | 67 |
| Corporate governance | 71 |
| Consolidated income statement | 74 |
|---|---|
| Consolidated statement of comprehensive income | 75 |
| Consolidated balance sheet at 31 December | 76 |
| Consolidated cash flow statement | 78 |
| Consolidated statement of changes in equity | 79 |
| Notes to the consolidated financial statements | 82 |
| Statement of the Board of Directors and Management | |
|---|---|
| Independent auditors' report | 141 |
| Management duties | 142 |
| Company overview | 146 |
| Definitions | 149 |
| Company announcements | 150 |
Mærsk Mc-Kinney Møller left an indelible mark on the A.P. Moller - Maersk Group, Denmark and the international business community.
Mærsk Mc-Kinney Møller dedicated his life to the businesses that his father had founded and which they developed together until A.P. Møller's death in 1965.
Even as a boy, the young Mærsk was involved in the office, at the shipyard and on the vessels. He was therefore no stranger to the business when he first joined the Company.
He began his apprenticeship in 1930, and the experience he gained from shipping and banking companies in Denmark, Germany, the United Kingdom and France was significant in shaping the unique part that Mærsk Mc-Kinney Møller was to play in international business.
Mr. Møller – as he was called, just like his father – joined the Company in 1938 and became a partner in the Firm A.P. Moller in 1940. He managed the Company's interests in the USA from 1940 to 1947.
Mærsk Mc-Kinney Møller took over the helm in 1965, paying profound respect to his father's work and the values that he had created and instilled. However, his attention was also directed towards new opportunities of an increasingly globalised world.
Mr. Møller's approach to the business was focussed, showing constant care and a great sense of responsibility towards the Company. His rare energy and unlimited commitment, combined with the support of his staff, helped expand the Company into all parts of the world.
Mr. Møller understood the big picture as well as the numerous small details that make up the whole. He also understood the need to keep focussing on new areas. He was able to look at an issue from all angles and to challenge experts before making the final decision. The decision would then be carried out during busy hours everywhere in offices, on ships, platforms, rigs, at shipyards, terminals and in aircrafts by teams of talented and inspired individuals, followed by an attentive Mr. Møller.
The strength that comes from stable ownership was very important to Mr. Møller. The Foundations created by his father form a guarantee for long-term stability of Group operations and this weighed heavily on Mr. Møller's mind. As chairman of the Foundations, Mærsk Mc-Kinney Møller was responsible for the inward consolidation of values, as well as the many public donations, both large and small, that have benefited society at large.
Mr. Møller followed the business to the very end of his life. He attended the Annual General Meeting and dinner just four days before his death on 16 April 2012.
Mr. Møller's parting words to the Group's Board of Directors and management team after the dinner were "Good Night and Goodbye – and Thank You".
Ane Mærsk Mc-Kinney Uggla
Today's A.P. Moller - Maersk Group builds on more than 100 years of experience in global trade.
Mr. A.P. Møller (1876–1965) initiated and developed the original shipping company into a diverse group of businesses.
A.P. Møller was born into a shipping family and his father Peter Mærsk Møller strongly supported the start up of the company. Through his daily work, A.P. Møller expressed the family principles and values in management and eventually imbued them on his
staff. That was the foundation for today's Governance Commitments.
A.P. Møller led the activities within shipping, energy and industries to establish the Group as a leading company not only in Denmark, but also on the international business scene.
To secure the future of his lifetime's work, A.P. Møller established Foundations to own and manage the Group.
Before returning to Denmark in 1904, A.P. Møller was employed in trading houses and shipping companies in England, Germany and Russia.
Upon his return, A.P. Møller took up a position with a leading ship owner in Copenhagen, but with the provision that he could invest in his own ships.
The motor ship Leise Mærsk entered the Maersk Fleet; incidentally LEISE MÆRSK became the first ship on a Maersk Line's first voyage in 1928.
Mærsk Mc-Kinney Møller's career began in Denmark. Later, Mr. Møller worked in shipping, brokerage and banking in Germany, England and France until 1938, where he returned to Copenhagen to work in his father's company.
Agents were contracted to handle Maersk Line's business in Shanghai, Hong Kong and Tokyo, supported by the offices in New York and Copenhagen.
In the period from its inauguration in 1918 to 1939, Odense Steel Shipyard delivered 79 ships; of these 29 entered the Maersk Fleet.
The Steamship Company Svendborg was founded by A.P. Møller, supported by his father Peter Mærsk Møller and leading citizens of Svendborg.
The steam ship SVENDBORG was acquired in October 1904.
The Maersk fleet consisted of
1912
1913
nine ships.
To facilitate expansion, A.P. Møller founded the Steamship Company of 1912 and established
his own business.
A.P. Møller was able to realise the ambition to combine shipping with shipbuilding. Odense Steel Shipyard was founded and ships would be built at this yard until 1966.
Maersk ships called ports in Europe, Africa and the Americas. 1928
That year turned out to be a pivotal year for Maersk.
Global consumption of petroleum products increased and in 1928 A.P. Møller seized the opportunity to add five crude oil tankers to the fleet – the beginning of Maersk Tankers.
Maersk Line's first voyage took place in 1928, inaugurating the Panama Line between the USA and the Far East.
New markets were explored as Maersk ships traded in Asia and Australia for the first time.
Mærsk Mc-Kinney Møller became a partner in his father's
firm and travelled to New York to manage the fleet during the German occupation of Denmark.
Maersk Line expanded its network, initially in the Far East and later to the Arabian Gulf and Africa.
1964
arm of Maersk.
The A.P. Moller Group was awarded the concession for the exploration and extraction of hydrocarbons in Denmark.
A.P. Møller's last major initiative before his death in 1965 was to support the expansion plans of the Danish merchant Herman Salling. The result was Dansk Supermarked Group, the retail
A.P. Møller's concern that his life's work would be taken over by investors who had a different view on running a business was resolved by the establishment of three foundations; The Family Foundation, The A.P. Moller and Chastine Mc-Kinney Moller Foundation and The Relief Foundation.
Albeit the purposes were different, the common goal was to ensure that the Group's businesses would be managed according to A.P. Møller's principles and values.
Quietly, privately and later through the Foundations, A.P. Møller donated funds to support a range of causes, mainly of national importance.
A.P. Møller chaired the Foundations until 1965, when Mærsk Mc-Kinney Møller became Chairman. The family commitment continues as Ane Mærsk Mc-Kinney Uggla succeeded her father in 2012 in The A.P. Moller and Chastine Mc-Kinney Moller Foundation, which owns the majority of voting shares in A.P. Møller - Mærsk A/S.
150 sailors and 25 of the Maersk Fleet's 46 ships were lost to war causes.
Towards the end of the period, focus was to acquire replacement tonnage and regain market shares. Immediately after Liberation in May 1945 seven new buildings entered the fleet from the Odense Steel Shipyard and the surviving ships were recovered from the warring countries.
Maersk Line resumed its service between the USA and the Far East. Soon afterwards the first roundthe-world sailings took place, via the Suez and Panama canals.
1959
650,000 tons.
product called plastic.
In response to the growing energy demand in the world market, Maersk Tankers acquired larger and larger ships. One of those was REGINA MÆRSK, the first ship to have its hull painted in the distinct Maersk Blue.
The shipping activities were expanded with special vessels transporting bulk cargoes, cars and refined oil products as well as supply vessels for off-shore.
The Group invested in industrial companies producing refined oil products and the relatively new
The Lindø shipyard was established to build ships up to 200,000 tons. In 1969 the yard was expanded to a capacity of
Mærsk Mc-Kinney Møller (1913-2012) was the CEO and Chairman of the A.P. Moller - Maersk Group from his father's death in 1965 until 1993.
Mr. Møller remained the Chairman of the Group until 2003, when he passed the torch to Michael Pram Rasmussen.
The foundations created by A.P. Møller between 1946-1960 became the majority owners in Mærsk Mc-Kinney Møller's time as Chairman (1965-2012). Mr. Møller was tireless in continuing his father's work in building up the business and did so by leading the Group into new ventures and persistently developing existing businesses.
Mærsk Mc-Kinney Møller's virtues were founded in the family background. Mr. Møller ensured that the company values are a natural part of every employee's daily work day:
"The basic principle is that people can trust us… your word should be your bond".
Mærsk Mc-Kinney Møller assumed the Chair of the Group upon the death of his father A.P. Møller.
Today's Maersk Oil commenced exploration activities in the Danish part of the North Sea, together with its partners in DUC (Dansk Undergrunds Consortium). In support of this effort, the first supply vessels entered the Maersk Fleet.
Maersk Line included Asia-Europe to its network.
Maersk Tankers took delivery of its first product tankers and VLCC (Very Large Crude Carrier).
Maersk Air was founded. The passenger activities were divested in 2005; the short-haul freight carrier Star Air continues operation.
Maersk Line introduced container ships on the Panama Line between Asia and USA. Today's Damco was founded as Mercantile to offer supply chain management and consolidation of cargo.
First oil was produced from the North Sea fields by DUC – Maersk Oil and its partners.
Maersk Tankers received its first gas tanker and a series of ULCC's (Ultra Large Crude Carriers).
New initiatives in the decade included: Maersk Data and Maersk Drilling were founded, SVITZER was acquired.
Maersk Line containerised its Asia-Europe and Trans-Atlantic services, and made its first acquisition of competitors.
Maersk Oil produced the first natural gas from the North Sea and started preparations for international expansion.
To optimise production, Maersk Oil developed ground-breaking horizontal drilling technologies.
Maersk Container Industry was founded; now dry and refrigerated containers are manufactured in China and soon in Chile.
Maersk Line expanded its global presence from 40 countries in 1990 to more than 100 countries in 2000. Large acquisitions positioned Maersk Line as the leading container carrier in the world.
The world's first double hulled VLCC and largest container ships were built at the Odense Steel Shipyard at Lindø.
Mærsk Mc-Kinney Møller withdrew from daily management of the Group.
Maersk Oil initiated oil production in Qatar.
Mercantile, later Maersk Logistics and now Damco, expanded to meet customer demand for supply chain management.
Her Majesty Queen Margrethe II bestowed Mærsk Mc-Kinney Møller with the Order of the Elephant, the most distinguished Danish Order.
APM Terminals was established on the basis of Maersk Line's terminal activities.
Mærsk Mc-Kinney Møller
stepped down from the chairmanship of the Company. Mr. Møller remained chairman of the Foundations.
By far its largest donation, The Moller Foundation built the Opera in Copenhagen to the Danish state.
Odense Steel Shipyard at Lindø delivered the world's largest container ships to Maersk Line. In 2009 it was decided to discontinue shipbuilding due to the competition from Asia.
Maersk Line announced the order for 20 containerships, nicknamed Triple E for Energy efficiency, Economy of scale and the Environment. First ship will enter the Maersk Fleet in 2013.
Following the divestments of several business units during the 2000's, A.P. Moller - Maersk presented its focused strategy within shipping and energy.
Maersk Drilling continued its expansion with the order for four drill ships.
Mærsk Mc-Kinney Møller died and his youngest daughter Ane Mærsk Mc-Kinney Uggla assumed the Chairmanship of A.P. Moller and Chastine Mc-Kinney Moller Foundation.
Names and Logos
Innovation is part of the Maersk culture, as are traditions and we strive to build our actions on our
The symbols and the names in the Group are valuable for us, not least because of their background with the founding family.
The Mærsk name derives from Peter Mærsk Møller's side of the
His middle name came from his mother, Kiersten Pedersdatter Mærsk, whose family originally was from West Slesvig. The first known bearer of the name was Anders Nielsen Mersch, who lived in the area between 1617
Mærsk (also spelled mersk or marsk) is Danish for marshland, which is the typical landscape in West Slesvig. In the international context, MAERSK is used.
in Maersk
heritage.
family.
and 1698.
The white, seven-pointed Maersk Star was introduced when A.P. Møller's father, Captain Peter Mærsk Møller, put it on the funnel of his first steam ship, named LAURA.
The star was placed on a blue band surrounding the black funnel – as it is on today's Maersk ships.
The Maersk Star was chosen as the logo for the Steamship Company Svendborg.
Svendborg took delivery of its second ship. It was named PETER MÆRSK and two traditions were established; using family related names in ship names and using the MÆRSK name in ship names.
The first logo was implemented as part of Maersk Line's efforts to market its new liner service from the USA to the Far East.
The shipping activities traded under the A.P. Møller name until the first use of MAERSK in a brand name; MAERSK LINE from 1928.
The current Maersk logo and MAERSK letter fonts were developed for Maersk Line, but eventually they were introduced in most business units in the A.P. Moller - Maersk Group.
(figures for 2011 in parenthesis)
The Group delivered a profit of USD 4.0bn (USD 3.4bn), which was slightly higher than the latest announced outlook of around USD 3.7bn expressed on 9 November 2012. The return on invested capital (ROIC) was 8.8% (8.3%).
Profit was positively affected by the settlement of an Algerian tax dispute in Q1 of USD 899m combined with improved volumes, rates and unit costs for Maersk Line. Profit was negatively affected by a decline in Maersk Oil's share of production and impairment losses of net USD 405m of which USD 268m related to Maersk Tankers in Q3. Divestment gains were USD 636m (USD 890m) with the divestment of two FPSOs, Maersk LNG and Maersk Equipment Service as the largest transactions. Revenue decreased slightly to USD 59.0bn (USD 60.2bn).
Cash flow from operating activities was USD 7.6bn (USD 7.3bn) while cash flow used for capital expenditure was USD 6.3bn (USD 9.8bn) after netting sales proceeds amounting to USD 3.4bn (USD 1.7bn). The Group's free cash flow was positive USD 1.3bn (negative USD 2.5bn).
Net interest-bearing debt increased by USD 339m to USD 15.7bn (USD 15.3bn). Total equity was USD 39.3bn (USD 36.2bn); positively affected by the profit of the year of USD 4.0bn. Dividend paid was USD 945m (USD 924m).
| DKK million | USD million | ||||||
|---|---|---|---|---|---|---|---|
| 2012 | 2011 | Change | 2012 | 2011 | Change | ||
| Revenue | 342,058 | 322,520 | 6% | 59,036 | 60,230 | -2% | |
| Profit before depreciation, amortisation and impairment losses, etc. | 72,897 | 78,506 | -7% | 12,581 | 14,661 | -14% | |
| Depreciation, amortisation and impairment losses | 30,973 | 28,889 | 7% | 5,346 | 5,396 | -1% | |
| Gain on sale of non-current assets, etc., net | 3,683 | 4,764 | -23% | 636 | 890 | -29% | |
| Profit before financial items | 46,893 | 55,032 | -15% | 8,093 | 10,277 | -21% | |
| Profit before tax | 42,517 | 50,452 | -16% | 7,338 | 9,422 | -22% | |
| Profit for the year | 23,395 | 18,083 | 29% | 4,038 | 3,377 | 20% | |
| Cash flow from operating activities | 44,202 | 38,886 | 14% | 7,629 | 7,262 | 5% | |
| Cash flow used for capital expenditure | -36,619 | -52,259 | -30% | -6,320 | -9,759 | -35% | |
| Return on invested capital after tax (ROIC) | 9.0% | 7.8% | 8.8% | 8.3% |
Left to right: John Axel Poulsen, Erik Rasmussen, Robert Routs, Lars Pallesen, vice chairman Niels Jacobsen, vice chairman Ane Mærsk Mc-Kinney Uggla, chairman Michael Pram Rasmussen, Leise Mærsk Mc-Kinney Møller, Jan Leschly, Jan Tøpholm, Arne Karlsson, Sir John Bond.
With an equity ratio of 52.9% (51.4%) and a liquidity buffer of USD 13.6bn (USD 11.3bn), the Group is well prepared and determined to execute on its long-term growth aspirations and seize market opportunities within its core businesses despite continued constraints in the financial markets.
Maersk Line made a profit of USD 461m (loss of USD 553m) and a ROIC of 2.4% (negative 3.1%). The result was positively affected by improved volumes, rates and unit costs. The average freight rates were 1.9% higher at 2,881 USD/FFE (2,828 USD/FFE) and volumes increased by 5% to 8.5m FFE (8.1m FFE). Bunker consumption per FFE was reduced by 11% and headquarters headcount was reduced significantly.
Maersk Line announced and implemented significant general rate increases on most trades backed by active capacity adjustments in the form of slow steaming, scrappings, idling and blanked sailings. The total fleet capacity increased by 4% to 2.6m TEU (2.5m TEU). The capacity growth in owned fleet was partly offset by redelivery of time charter vessels. Maersk Line maintained its market share for the full year. Cash flow from operating activities was USD 1.8bn (USD 899m) and cash flow used for capital expenditure was USD 3.6bn (USD 3.2bn).
Maersk Oil made a profit of USD 2.4bn (USD 2.1bn) and a ROIC of 36.6% (37.2%). The result was positively affected by the one-off tax income of USD 899m from the settlement of an Algerian tax dispute and a USD 91m gain from a partial divestment of interests in Brazil. This was partly offset by a 23% decline in the Group's share of oil and gas production to 257,000 boepd (333,000 boepd), primarily due to a lower share of production in Qatar and Denmark.
Development of the portfolio included maturation of the significant projects Chissonga in Angola and Johan Sverdrup in Norway, and an agreement of further development of the Al Shaheen field in Qatar and start-up of Dunga Phase II production in Kazakhstan. Exploration expenses were USD 1.1bn (USD 1.1bn). Cash flow from operating activities was USD 3.9bn (USD 4.3bn) and cash flow used for capital expenditure was USD 2.0bn (USD 3.8bn).
APM Terminals made a profit of USD 723m (USD 648m) and ROIC was 13.6% (13.1%). The result was positively affected by pre-tax divestment gains of USD 123m (USD
28m). Number of containers handled increased by 6% to 35.4m TEU (33.5m TEU), ahead of the market growth of 4%, boosted by additions to the portfolio.
The main portfolio changes were the acquisition of a 37.5% co-controlling stake in Global Ports Investments PLC, Russia, as well as the take-over of operations in Gothenburg, Sweden. New terminal projects were secured in Lazaro Cardenas, Mexico, and in Ningbo, China. Cash flow from operating activities was USD 975m (USD 912m) and cash flow used for capital expenditure was USD 1.4bn (USD 688m).
Maersk Drilling made a profit of USD 359m (USD 488m) and ROIC was 8.3% (12.5%). The result was negatively impacted by delayed start-up and maintenance yard stays of two units.
During 2012, Maersk Drilling has entered into three new major contracts and has now secured contracts for five out of seven newbuildings to be delivered in 2013-2015. The revenue backlog increased to USD 7.0bn (USD 4.9bn), and the one-year forward coverage by the end of 2012 was 98% (98% at the end of 2011). Operational uptime averaged 92.1% (95.6%). Cash flow from operating activities was USD 651m (USD 825m) and cash flow used for capital expenditure was USD 589m (USD 600m).
Maersk Supply Service made a profit of USD 132m (USD 243m) and a ROIC of 6.1% (11.2%), negatively affected by general oversupply in most segments of the market, except in the emergency response and rescue segment.
Maersk Tankers made a loss of USD 312m (loss of USD 153m) and a negative ROIC of 8.3% (negative 4.3%). The result was negatively affected by a USD 268m impairment loss. Maersk Tankers divested the Small Northwest Europe segment and entered into an agreement to divest the Handygas segment. The Handygas transaction will take place in 2013. The divestments are equivalent to 14% of the fleet measured on invested capital.
Damco made a profit of USD 55m (USD 63m) and ROIC was 13.5% (24.4%). Damco significantly increased its service offerings within the airfreight market through the acquisition in 2011 of NTS International Transport Services in China. In October 2012, Damco acquired the freight forwarder Pacific Network Global Logistics, strengthening its position in Oceania.
SVITZER made a profit of USD 9m (USD 102m) after impairment of goodwill of USD 102m related to the Adsteam activities acquired in 2007. ROIC was 0.6% (6.4%).
Dansk Supermarked Group made a profit of DKK 1.3bn (DKK 5.4bn including gain from sale of Netto, UK) and a ROIC of 8.2% (35.1%). The Group opened 71 new stores and closed 55 stores of which 37 were Tøj & Sko stores.
Maersk FPSOs and Maersk LNG made a profit of USD 336m (USD 10m) and a ROIC of 33.9% (0.4%), positively affected by divestment gains of USD 245m.
During 2012, the Maersk B-share price increased by 12.3% to DKK 42,600. The dividend payout proposed by the Board of Directors is DKK 1,200 per share of DKK 1,000, representing a dividend yield of 2.8% based on the B-share closing price as of 31 December 2012.
Quarterly figures for the Group for 2010-2012 are available on http://investor.maersk.com/financials.cfm
The Group expects a result for 2013 below the 2012 result (USD 4.0bn). The operational result is expected to be in line with 2012 (USD 2.9bn) excluding impairment losses, divestment gains and gain from the tax settlement in Algeria.
Cash flow used for capital expenditure is expected to be somewhat higher than the USD 6.3bn in 2012, while cash flow from operating activities is expected to be stable.
Maersk Line expects a result above 2012 (USD 461m) based primarily on further unit cost reductions. Global demand for seaborne containers is expected to increase by 4-5% in 2013, lower on the Asia–Europe trades but supported by higher growth for imports to emerging economies.
Maersk Oil expects a result significantly below the result for 2012 (USD 2.4bn), which included a one-off tax income of USD 899m from the settlement of an Algerian tax dispute. The operational result is expected to be below the operational result for 2012 (USD 1.5bn) excluding one-off tax impacts, impairment losses and gains. Maersk Oil expects its share of production to be 240,000- 250,000 boepd, lower in the first half than the second half of 2013 at an average oil price of USD 105 per barrel. The lower production share is predominantly caused by a natural decline and reduced ownership share in Denmark, countered by start-up in El Merk and Gryphon. Exploration expenses are expected to be above USD 1.0bn.
APM Terminals expects a result above 2012 (USD 723m) and to grow ahead of the market, supported by volumes from new terminals, whilst improving productivity in existing facilities.
Maersk Drilling has almost full contract coverage in 2013 and expects a result above the 2012 result (USD 359m).
The total result from all other activities is expected to be above the 2012 result excluding divestment gains and impairment losses.
The outlook for 2013 is subject to considerable uncertainty, not least due to developments in the global economy. The Group's expected result depends on a number of factors. Based on the expected earnings level and all other things being equal, the sensitivities for four key value drivers are listed in the table below.
| Factors | Change | Effect on the Group's profit |
|---|---|---|
| Oil price for Maersk Oil | +/-10 USD/barrel | +/-USD 0.2bn |
| Bunker price | +/-100 USD/tonne | +/-USD 0.1bn |
| Container freight rate | +/-100 USD/FFE | +/-USD 0.9bn |
| Container freight volume | +/-100,000 FFE | +/-USD 0.2bn |
| 2012 | 2011 | 2010 | 2009 | 2008 | ||
|---|---|---|---|---|---|---|
| Revenue | 342,058 | 322,520 | 315,396 | 260,336 | 312,122 | |
| Profit before depreciation, amortisation and | ||||||
| impairment losses, etc. (EBITDA) | 72,897 | 78,506 | 89,218 | 49,262 | 83,945 | |
| Depreciation, amortisation and impairment losses | 30,973 | 28,889 | 33,822 | 30,317 | 26,092 | |
| Gain on sale of non-current assets, etc., net | 3,683 | 4,764 | 3,810 | 1,062 | 4,905 | |
| Share of profit/loss in associated companies | 1,286 | 651 | 461 | 360 | -1,882 | |
| Profit before financial items (EBIT) | 46,893 | 55,032 | 59,667 | 20,367 | 60,876 | |
| Financial items, net | -4,376 | -4,580 | -5,281 | -5,463 | -8,057 | |
| Profit before tax | 42,517 | 50,452 | 54,386 | 14,904 | 52,819 | |
| Tax | 19,138 | 32,447 | 26,174 | 20,393 | 35,287 | |
| Profit/loss for the year – continuing operations | 23,379 | 18,005 | 28,212 | -5,489 | 17,532 | |
| Profit/loss for the year – discontinued operations | 16 | 78 | 3 | - | 106 | |
| Profit/loss for the year | 23,395 | 18,083 | 28,215 | -5,489 | 17,638 | |
| A.P. Møller - Mærsk A/S' share | 21,673 | 15,189 | 26,455 | -7,027 | 16,960 | |
| Total assets | 420,691 | 404,743 | 374,723 | 345,199 | 343,110 | |
| Total equity | 222,544 | 207,935 | 192,962 | 158,868 | 158,394 | |
| Cash flow from operating activities | 44,202 | 38,886 | 56,972 | 25,098 | 43,422 | |
| Cash flow used for capital expenditure | -36,619 | -52,259 | -26,078 | -42,195 | -52,375 | |
| Investments in property, plant and equipment and intangible assets | 55,327 | 58,376 | 31,636 | 49,586 | 62,295 | |
| Return on invested capital after tax (ROIC) | 9.0% | 7.8% | 12.7% | -0.2% | 10.0% | |
| Return on equity after tax | 10.9% | 9.0% | 16.0% | -3.5% | 11.6% | |
| Equity ratio | 52.9% | 51.4% | 51.5% | 46.0% | 46.2% | |
| Earnings per share (EPS), DKK | 4,964 | 3,479 | 6,061 | -1,674 | 4,122 | |
| Diluted earnings per share, DKK | 4,962 | 3,478 | 6,058 | -1,674 | 4,122 | |
| Cash flow from operating activities per share, DKK | 10,124 | 8,907 | 13,052 | 5,980 | 10,553 | |
| Dividend per share, DKK | 1,200 | 1,000 | 1,000 | 325 | 650 | |
| Share price (B share), end of year, DKK | 42,600 | 37,920 | 50,510 | 36,600 | 28,100 | |
| Total market capitalisation, end of year | 180,388 | 160,982 | 217,464 | 156,901 | 116,281 |
| 2012 | 2011 | 2010 | 2009 | 2008 | |
|---|---|---|---|---|---|
| Revenue | 59,036 | 60,230 | 56,090 | 48,580 | 61,270 |
| Profit before depreciation, amortisation and | |||||
| impairment losses, etc. (EBITDA) | 12,581 | 14,661 | 15,867 | 9,193 | 16,478 |
| Depreciation, amortisation and impairment losses | 5,346 | 5,396 | 6,015 | 5,658 | 5,122 |
| Gain on sale of non-current assets, etc., net | 636 | 890 | 677 | 198 | 963 |
| Share of profit/loss in associated companies | 222 | 122 | 82 | 67 | -369 |
| Profit before financial items (EBIT) | 8,093 | 10,277 | 10,611 | 3,800 | 11,950 |
| Financial items, net | -755 | -855 | -939 | -1,019 | -1,582 |
| Profit before tax | 7,338 | 9,422 | 9,672 | 2,781 | 10,368 |
| Tax | 3,303 | 6,060 | 4,655 | 3,805 | 6,927 |
| Profit/loss for the year – continuing operations | 4,035 | 3,362 | 5,017 | -1,024 | 3,441 |
| Profit/loss for the year – discontinued operations | 3 | 15 | 1 | - | 21 |
| Profit/loss for the year | 4,038 | 3,377 | 5,018 | -1,024 | 3,462 |
| A.P. Møller - Mærsk A/S' share | 3,740 | 2,836 | 4,705 | -1,311 | 3,329 |
| Total assets | 74,339 | 70,444 | 66,756 | 66,511 | 64,925 |
| Total equity | 39,325 | 36,190 | 34,376 | 30,610 | 29,972 |
| Cash flow from operating activities | 7,629 | 7,262 | 10,132 | 4,679 | 8,524 |
| Cash flow used for capital expenditure | -6,320 | -9,759 | -4,638 | -7,874 | -10,281 |
| Investments in property, plant and equipment and intangible assets | 9,549 | 10,901 | 5,626 | 9,252 | 12,278 |
| Return on invested capital after tax (ROIC) | 8.8% | 8.3% | 12.2% | -0.2% | 10.2% |
| Return on equity after tax | 10.7% | 9.6% | 15.4% | -3.4% | 11.8% |
| Equity ratio | 52.9% | 51.4% | 51.5% | 46.0% | 46.2% |
| Earnings per share (EPS), USD | 857 | 650 | 1,078 | -312 | 809 |
| Diluted earnings per share, USD | 856 | 649 | 1,077 | -312 | 809 |
| Cash flow from operating activities per share, USD | 1,747 | 1,663 | 2,321 | 1,115 | 2,072 |
| 212 | 63 | 123 | |||
| Dividend per share, USD | 174 | 178 | |||
| Share price (B share), end of year, USD | 7,528 | 6,600 | 8,998 | 7,052 | 5,317 |
| Total market capitalisation, end of year | 31,876 | 28,018 | 38,741 | 30,231 | 22,002 |
| Average USD/DKK exchange rate | 5.79 | 5.35 | 5.62 | 5.36 | 5.09 |
| End of year USD/DKK exchange rate | 5.66 | 5.75 | 5.61 | 5.19 | 5.28 |
| Maersk Line | |||||
| Transported volumes (FFE in million) | 8.5 | 8.1 | 7.3 | 6.9 | 7.0 |
| Average rate (USD per FFE) | 2,881 | 2,828 | 3,064 | 2,370 | 3,284 |
| Average fuel price (USD per tonne) | 661 | 620 | 458 | 342 | 520 |
| Maersk Oil | |||||
| Average share of oil and gas production | |||||
| (thousand barrels of oil equivalent per day) | 257 | 333 | 377 | 428 | 424 |
| Average crude oil price (Brent) (USD per barrel) | 112 | 111 | 80 | 62 | 97 |
| APM Terminals | |||||
| Containers handled (million TEU weighted with ownership share) | 35.4 | 33.5 | 31.5 | 30.9 | 33.3 |
The Executive Board functions as the day-to-day management and consists of: From the top left: Jakob Thomasen, Trond Westlie, Nils S. Andersen (Group CEO), Claus V. Hemmingsen. From the top right: Søren Skou, Kim Fejfer.
The Group delivered a satisfactory result in 2012, continuing to execute on its strategy including a significant investment programme with focus on building and expanding four world class businesses over the next five years. The result and return on invested capital were above 2011 but below the target of 10% over the cycle, mainly due to continued poor shipping markets affecting container and tanker earnings.
The non-shipping activities continue to deliver good results. Our business units are competitive and achieve high marks from customers and partners for performance and reliability. Maersk Line managed to reduce costs and improve rates after a difficult start to the year in particular due to low container freight rates.
As global growth remains subdued with 2.5% in 2012 and a similar level expected for 2013, the weakness in the main shipping corridors is expected to continue in the short term. By focusing our transport and infrastructure investments on growing markets, the Group can help unleash economic potential in countries where supply chain bottlenecks are barriers to growth.
The container vessels received for Maersk Line's African and South American networks, the acquisition of Global Ports in Russia, and construction of a major container terminal in Mexico are examples of such investments and partnerships with governments. The Group will continue to leverage its global presence to pursue more opportunities in growth markets in order to achieve a healthy geographical mix long term.
Further, the Group is constantly developing its portfolio of businesses to ensure that positions are strengthened in the most promising segments of the industries in which its businesses operate.
The Group held its first capital markets day in October 2012. In a volatile world, strategies and objectives will periodically be revised, but by stating our ambitions we aim to lift our performance and motivate the entire organisation to work together to build an even stronger company to the benefit of our shareholders and partners across our businesses and across the world. Maersk Line, Maersk Oil, APM Terminals and Maersk Drilling have all made progress towards achieving their objectives of becoming
strong pillars in the Group each with profits above USD 1.0bn and world class operational performance.
The Group was successful in exiting activities no longer deemed core businesses such as Maersk LNG and the large FPSO Maersk Peregrino, freeing up capital totalling up to USD 3.4bn for investments in continuing businesses.
The Group also made progress on safety measures continuing last year's positive development. Still, the number of casualties remains too high. In 2012, 17 colleagues lost their lives at work. We consider one fatality to be one too many, and we are committed to eliminating fatalities through systematic safety improvements.
With the expectation of continued slow growth in 2013, focus on operation and performance in our business units become key for the Group to deliver a good result and live up to the expectation of our partners and customers.
Part of this will be to secure progress on a number of very significant projects across the Group's strategic core businesses:
For Maersk Oil, the most important target is to deliver progress as planned on key projects such as El Merk in Algeria, Chissonga in Angola, and Johan Sverdrup in the Norwegian sector of the North Sea.
In Maersk Drilling, three new drilling rigs are coming into the fleet at the end of 2013 and the beginning of 2014. The aim is to get them delivered and put into operation without delays or extra cost.
Maersk Line will keep managing its capacity effectively during the introduction of the first new Triple-E ships which will come into the fleet this year.
APM Terminals' top priority is to effectively execute on the Santos terminal project in Brazil (opening early 2013) and the Maasvlakte II project in The Netherlands.
Another priority is to optimise our balance sheets for further growth. It emerges from the Group's significant growth plans which in 2013 entail investments of around USD 9bn. On top of the commitments already made, the Group expects attractive opportunities to occur in the coming years. All business units will therefore engage in an effort to clean their balance sheets of underperforming assets and terminate marginal non-core activities to release capital for the most profitable investments. Other capital effectiveness initiatives will be introduced to enable the Group's ability to pursue attractive growth opportunities. The Group has maintained its financial flexibility and is well-prepared to execute on its investment plans. It has a strong liquidity buffer and no need for near-term refinancing.
On balance, 2012 was a good year for the A.P. Moller - Maersk Group and I want to thank our employees and leaders for their strong performance and dedication.
Nils S. Andersen
Maersk Line It can be a spectacular experience to watch how the morning mist creeps in as the sun rises at sea. This particular photo was among the most shared photos on Maersk Line's social media channels in 2012.
The A.P. Moller - Maersk Group is represented in 130 countries, employing around 121,000 people and is headquartered in Copenhagen, Denmark.
In addition to being one of the world's largest shipping companies, the Group is involved in a wide range of activities within energy, transportation, offshore and retail.
Maersk Line carries around 14% of all seaborne containers and, together with APM Terminals and Damco, provides infrastructure for global trade.
The Group is involved with production of oil and gas and other oil related activities including drilling, offshore services, FPSOs, and transportation of crude oil and products.
The Group's major businesses are displayed in the graphic. A more comprehensive list of companies is available on: http://investor.maersk.com/financials.cfm?Year=2012
Maersk Line is the Group's largest business unit in terms of revenue and the leading container shipping company in the world. Maersk Line is consistently recognised as the most reliable container shipping company in the industry.
DAMCO NETTO
Maersk Oil is an international oil and gas company with roots in the North Sea going 50 years back in time, now with operations in many parts of the world. Maersk Oil has specialised in turning marginal and challenging fields into commercial successes.
APM Terminals has its core expertise in the development, construction and operation of ports and inland services with a Global Terminal Network of 62 port facilities in 40 countries and Inland Services operations in over 160 locations in 47 countries.
Maersk Drilling is a leading global operator of high-technology drilling rigs. Maersk Drilling provides offshore drilling services in several key regions, supporting the world's oil and gas companies with one of the world's youngest and most advanced fleets.
Is present in more than 90 countries and manages more than 2.7 million TEU of ocean freight and supply chain management volumes as well as more than 210,000 tonnes of airfreight annually
Operates 18 Bilka supermarkets, 89 føtex supermarkets, 2 Salling department stores and 1,210 Netto discount supermarkets located in Denmark, Germany, Poland and Sweden
Maersk Tankers
A.P. Moller - Maersk owns a 20% stake in one of the biggest banks in the Nordics
MAERSK TANKERS
Maersk Supply Service
A fleet of more than 50 vessels that provides worldwide services to the offshore and associated industries
Maersk FPSOs
Owns and operates four offshore floating production storage and offloading units (FPSOs) servicing major oil companies
Owns and operates a fleet of 162 crude oil carriers, product tankers, and gas carriers. The Maersk Tankers fleet is one of the largest, most modern and most diversified independent fleets in the world
4. The company is a specialist in harsh and deep water environments operating 16 jack-up rigs and floaters
The Group's aspiration is to continue building a first class conglomerate. This will be achieved through a disciplined allocation of capital across Group businesses, active portfolio management, a clear funding strategy, operational excellence, technological innovation and development of human resources.
The Group will continue to focus investments in the four core growth businesses Maersk Line, Maersk Oil, APM Terminals and Maersk Drilling. Investments in the opportunistic core businesses Maersk Supply Service, Maersk Tankers, Damco and SVITZER will be continued on the basis of continuous evaluation of opportunities. The strategic investments Dansk Supermarked Group and Danske Bank will grow mainly through own cash flow generation and own resources. Assets managed for value will continue to be developed to optimise value.
The Group's target is to achieve a return on invested capital (ROIC) above 10% with at least USD 1.0bn profit contribution from each of the four core growth businesses and to deliver gradually increasing value and thereby continue the historical trend of increasing dividends per share supported by earnings growth.
The overall emphasis on active portfolio management will continue. The portfolio of businesses and assets is evaluated in the annual review process. The existing strong position in growth markets will remain a focus area going forward as the Group is in a good position to assist developing countries and capitalise on their growth.
Today 70% of the Group's invested capital is within the four core growth businesses. By allocating more than 90% of the Group's capital expenditures to the four core growth businesses, their share of invested capital will reach at least 75% of the Group's invested capital by 2017. The total amount of the invested capital in the Group is expected to grow 30-40% during the same period as result of a high investment level.
The Group will also continue to build winning businesses and strengthen the respective competitive positions of its smaller core businesses. An opportunistic approach will be taken if their respective markets present opportunities worth pursuing.
The allocation of capital and the Group's annual strategy review is a fully integrated process. Strategies including detailed plans and opportunities for the coming years are developed with each business unit. The total capital requirements across businesses are prioritised with a view to optimising the portfolio of the Group in line with financial policies. Evaluation parameters include industry attractiveness, financial return forecasts, business
Four world class businesses
In line with the direction of investments towards more profitable and less volatile business areas, Maersk Line's share of the Group's invested capital is likely to see a relative decline from 38% today towards a 25-30% range, while Maersk Oil's, APM Terminals' and Maersk Drilling's combined share of the invested capital will see a relative increase from 32% towards a 45-50% range over the coming 4-5 years.
The overall emphasis on active portfolio management will continue. In order to secure the most optimal business portfolio, the Group is assessing the composition of its assets. In connection with this optimisation the Group is participating in both strategic and opportunistic acquisitions and divestments of companies as well as of individual assets.
Over the last five years, the Group has divested companies and assets of more than USD 10.4bn with pre-tax gains of USD 4.4bn.
The Group has during 2012 announced and completed a series of investments and divestments across the different segments. The main acquisitions/investments for the Group in 2012 were:
• 100% of the shares in Skandia Container Terminal AB, Gothenburg, Sweden.
The divestments for the year totalled USD 3.4bn in released cash flow, primarily:
In addition, Maersk Tankers has entered into an agreement to divest its Handygas segment (11 vessels). The transaction is expected to be completed in 2013.
The portfolio optimisation will continue over the next years to enhance the strategic focus of the Group, but also to take advantage of opportunities which may arise in the various industries in which the Group operates.
To support growth, secure liquidity and balance the risk to returns, the Group has developed a funding strategy to cater for this. The main elements are to:
ing profile, matching that of a strong investmentgrade company over the business cycle.
The Group raised more than USD 5bn in new financing in 2012 to support investments of net USD 6.3bn (USD 9.8bn), amortisation on the debt portfolio of USD 2.1bn (USD 3.6bn) and net repayment of revolving credit facilities of USD 2.0bn (net drawing of USD 1.9bn). With a cash flow from operating activities of USD 7.6bn (USD 7.3bn) for the year and dividend payment of USD 945m (USD 924m), the Group's liquidity reserve was USD 13.6bn (USD 11.3bn) at 31 December 2012.
Diversification of the funding sources remains a strategic priority for the Group. The Group has continued to issue corporate bonds in 2012 under its Euro Medium Term Note programme, a framework providing flexibility in accessing the bond markets, of equivalent to USD 1.9bn from the NOK, EUR and SEK markets. At 31 December 2012, total outstanding bonds were USD 4.7bn (USD 2.5bn) corresponding to 24% (13%) of the interest-bearing debt.
The interest-bearing debt totalled USD 19.6bn (USD 19.1bn) at 31 December 2012. The Group's net interestbearing debt totalled USD 15.7bn (USD 15.3bn). The net interest-bearing debt increased slightly by USD 339m during 2012 due to investments partly offset by a strong development in the cash flow from operating activities and divestments of USD 3.4bn. The average cost of funding was 4.6% (5.0%).
At 31 December 2012, the average maturity of loan facilities in the Group was about five years (approximately
Existing loan facillities at 31 December 2012, percent
five years) and the Group has limited refinancing needs during the next 24 months.
The debt leverage in the Group (net interest-bearing debt/ EBITDA levels) remains within the historic range (0.5-2.0).
At 31 December 2012, the liquidity reserve, defined as cash and bank balances and securities of USD 2.6bn (USD 2.7bn) and committed undrawn facilities of USD 11.0bn (USD 8.6bn), was USD 13.6bn (USD 11.3bn). Additionally, the Group has financing commitments related to the newbuilding programme of USD 3.0bn and a number of overdraft facilities relating to daily cash management operations.
The Group is committed to maintaining a conservative capital structure and funding profile matching that of a strong investment-grade company over the business cycle. As a consequence of the payment schedule of the investments and potential fluctuations in the Group's cash
flow, some volatility in the financial profile is expected. Based on the size of the committed loan facilities, including investment specific financing, the maturity of the loan facilities and the capital commitments, the Group's funding position is deemed satisfactory.
Operational excellence translates the strategy into tangible actions.
The Group's operational performance is monitored through quarterly benchmarking of key financial and operational metrics, relative to key competitors. These benchmarks are used to set specific targets, build an incentive structure, and confirm individual KPIs throughout the Group.
The Group's ambition is that all core businesses become top quartile performers within their industries and actions are defined to progress in this direction.
There are many levels and elements in performance management of which the majority are within each business unit.
Maersk Line's ambition is to lift the financial performance from an above average industry performer today to a clear top quartile performer and to deliver returns above the cost of capital during the next five years. This is to be achieved through a combination of further building scalable cost leadership, while continuing to maintain the leading brand position as the most reliable carrier in the industry. Maersk Line is to grow in line with the market, funded by own cash flow.
Maersk Oil's aspiration is to grow the business by almost 50% to reach a share of production of 400,000 boepd by 2020, which implies significant capital expenditure in the coming years. Maersk Oil's return on invested capital will decline from the 30% ROIC-level delivered in 2010- 2012; however, it is expected to stay double-digit during the business expansion phase. In the coming years, there will be a continued emphasis on building a strong, transparent organisation.
Over the next five years, APM Terminals will continue to focus on their strong operational performance and to generate at least 50% of revenue from 3rd party customers. Further to this, APM Terminals will continue to pursue investments in attractive terminals in growth markets, whilst improving operations in existing facilities. APM Terminals' financial ambition is to deliver USD 1.0bn to the Group's profit by 2016.
Maersk Drilling's financial ambition is to deliver USD 1.0bn to the Group's profit by 2018. This is to be achieved by world class and safe operations while building a rig fleet of a size sufficient to be a preferred drilling partner of key customers. Maersk Drilling plans to extend the fleet to 30 high-end rigs for operation mainly in harsh environments and deep water within the next five years.
To build value across the Group, the main priorities for the opportunistic core and the strategic investments are:
Annual profit (NOPAT) > USD 1.0bn by 2018
SVITZER Grow margins and invest in profitable contracts
The Group invests to ensure cutting-edge technology solutions across its businesses. Innovation is focused on:
Technological innovation is carried out by technology divisions within the Group's business units, in close cooperation with manufacturers, shipyards, suppliers, universities and research institutes. Below are examples from four of the Group's core business units.
Improving vessel efficiency:
the ECO Retrofit Technology Programme
An array of retrofit initiatives, tailored for individual vessel types. Examples include:
Projected net savings in 2013 are expected to be USD 20m.
Rocket science (TriGen) gives new life to mature oil fields With a rocket engine, low quality gas can be turned into clean energy, pure water and CO2. This CO2 can in turn be used to recover more oil from mature fields. The engine:
As the demand for energy and oil increases, the potential for TriGen Technology is huge - both for generating extra oil production from enhanced oil recovery and gas from fields judged non-commercial using existing technologies.
Taking the next leap in automation: Lift-Automated Guided Vehicles
Terminal automation will increase productivity by 25- 30% compared to conventional terminal designs as well as reduce the space needed to handle the same volume.
Training innovation: Highly advanced simulator complex exceeds all known standards
In 2012, Maersk Drilling, together with Maersk Training Centre, built the most advanced drilling simulator complex in the drilling industry, which will enable:
These new facilities at Maersk Training Centre in Svendborg, Denmark, will be used to train many of the 3,000 new employees Maersk Drilling is planning to employ over the coming years.
Human Resources work closely with the businesses to ensure that the Group has an engaged, motivated workforce and a clear link between performance and rewards. The key HR challenges for the Group are to secure a sufficient number of highly qualified and well-trained employees to manage the planned growth.
Employee engagement is an important priority for the Group as engaged employees deliver high performance and secure a good and positive work environment. The annual Employee Engagement Survey had a 91% response rate in 2012, the highest to date, indicating the level of importance, employees place in the survey.
The Group is investing in developing the future leaders of its businesses.
The management centre, Rolighed, north of Copenhagen, Denmark, opened late 2011. Rolighed has become a place where leaders and global talents from different locations and business units meet to develop and share their experiences and skills, and to interact with senior leaders. Rolighed hosts management team meetings, leadership development programmes, and expert speakers come to share their latest thinking. Such interactions are a platform for continuously developing leaders and businesses.
The Group continued its focus on diversity and inclusion during 2012, supporting leaders in managing diverse teams and implementing initiatives to accelerate career progression of women as well as talents in growth markets.
Globally, the Group's representation of women in senior management was 5% (4%) at vice president level, 10% (9%) in senior management and 20% (21%) in middle management (excluding Dansk Supermarked Group and most joint venture companies).
The Group's on-going ambition to expand in growth markets is also reflected in the efforts to strengthen recruitment and other HR activities to ensure a solid foundation for a long term presence in these locations.
In 2012, the Group achieved nominations for the Diversity in the Workplace Award by the Danish Institute for Human Rights and for European Diversity Awards in the category Company of the Year. The aspiration is to be a world-recognised inclusive employer, embracing and leveraging multiple forms of diversity, constantly committed to further improving in this area.
A new global Human Resources system was implemented during 2012, replacing around 90 different Human Resources IT solutions across the Group. The Human Resources system supports the human resources administration and offers comprehensive self-service functionalities for employees and managers.
The Group's Human Resources department works in close cooperation with the Human Resources departments in the business units. The four core growth businesses each have their key priorities and focus areas to support their respective strategies.
In supporting the strategy of cost leadership, the Human Resources focus will be on driving the strategy and related "Must Win Battles" through the organisation including the three cultural amplifiers identified as critical for success; simplicity, focus and teamwork.
The second priority area is to drive improvements in the performance management approach and culture to ensure that Maersk Line can deliver superior performance to the Group.
The HR team will support the focus areas by providing global data and develop plans for talent management, succession planning and diversity.
The demand for experienced and talented oil and gas professionals is increasing significantly. The industry is facing challenges given portfolios with complex and numerous projects to be executed.
Maersk Oil has to continue attracting and retaining talent to sustain a strong and well-balanced people pipeline.
Maersk Oil wants to ensure that junior staff recruited for one of the most attractive graduate programmes in the industry can benefit from the coaching and mentoring of the more experienced professionals. Accelerated development is a focus area of the younger generations and of the company, and Maersk Oil ensures that opportunities to learn are available.
Similarly, Maersk Oil focuses on attracting experienced professionals to complement the work force.
Lately, in an effort to monitor the pace of growth and demand for professionals, the Maersk Oil leadership team has refocused manpower efforts to ensure that the human resources are allocated to the projects with the highest value creation. The prioritisation is done by the global technical functions in close partnership with the country organisations.
Safety is APM Terminals' license to operate. In order to further emphasise and refocus the safety culture, an experienced senior executive with comprehensive insight in all aspects of the business has been appointed as an internal Safety Activist. This change has substantially increased the focus on safety from all employees during 2012.
APM Terminals is an industry leader with a strong and continuing record of growth, meaning that APM Terminals can attract good people but also that competitors wish to hire employees from APM Terminals.
The engagement survey results, which indirectly measure the quality of APM Terminals' leadership, the productivity of the workforce and the likelihood of retaining staff, continue to improve and in 2012 entered the upper quartile of a global range of benchmark companies.
To further support the emphasis on the importance of leadership, all levels of management and supervision are now covered by a leadership development suite of training programmes.
Recognising the importance of reward as a motivator for long term performance, an APM Terminals incentive plan for managing directors was introduced in 2012 intended to aid retention.
Recruiting and integrating 3,000 new employees The growth strategy entails hiring and integration of 3,000 new employees by 2018. The first 1,300 will be hired between 2013 and 2015. Recruitment represents a significant challenge due to shortage of skilled people for the general growth in the drilling industry.
To ensure a sustainable increase in the workforce, Maersk Drilling has launched several initiatives such as increased intake on talent programmes to develop more competencies, improved induction process to decrease time to competency and integrate new employees quickly, and a driller trainee programme to develop allround competencies.
Individual and team training is conducted through a structured training programme which includes the use of the most advanced offshore drilling simulator in the world. To ensure a safe and efficient operation of the new rigs in compliance with the processes, systems and values, the teams on the new units will be a combination of experienced employees and new hires enabling an effective integration of the new employees.
The Group is active in industries that are core to global economic growth and development: trade, energy and infrastructure. Combined with the Group's growth and prospects in emerging economies, sustainability challenges and opportunities are present throughout the Group's activities.
The Group's sustainability strategy focuses on integrating sustainable practices into the activities in each of the operating businesses. Supporting this strategy are targets for each of the sustainability issues that have been determined most material to the Group. A Sustainability Council oversees compliance with Group standards and the integration of sustainability across the businesses. The Council reports to the Executive Board which has overall responsibility for sustainability matters.
The safety of employees is a key priority, and the Group continuously monitors performance and pushes for improvements. The number of fatal accidents that occurred during operations grew in 2012. This is unacceptable and the Group fundamentally believes that all fatal accidents can be prevented. The rise in fatal accidents in 2012 confirms the decision to increase the focus on process safety and risk management.
The Group has achieved an 8% improvement in CO2 efficiency since 2010, mainly driven by large improvements in the container business. Both the relative and absolute CO2 emissions decreased in 2012. The improved efficiency in shipping affects the Group's CO2 performance substan-
tially, as more than 80% of the emissions are derived from Maersk Line. CO2 reductions were also achieved in the oil business where Maersk Oil has reduced CO2 emissions from flaring from operated producing facilities by 86% since 2007. In 2012, the Group raised its relative CO2 reduction target from 10% to 20% from 2010 to 2020.
Corruption negatively impacts communities where the Group does business as well as the global economic development. Due to the global nature of the Group's activities, the Group has an opportunity to support global improvements in this area. An internal anti-corruption training programme has been implemented across the Group. Since 2010, more than 25,000 employees have been trained in anti-corruption. The Group is also involved in industry efforts to eliminate facilitation payments in the shipping, freight forwarding, and the oil industry.
As with the overall sustainability strategy, the Group's long-term approach is to integrate human rights management into existing systems. The Group mapped in 2012 the human rights risks and gaps, carrying out 11 workshops. Overall, a majority of the Group's human rights issues are addressed through programmes on responsible procurement, global labour principles, anticorruption and safety.
The ability to manage risks in the supply chain has since the launch of the Responsible Procurement programme in 2011 taken a step forward. The Group has approached 1,985 external vendors (equivalent to 32% of the Group's total external spend) and assessed 178 (7%). Of the assessed external vendors, the Group has audited 23, and the prevailing issues identified during the audits were working hours, overtime compensation, and subcontractor transparency. Ten vendors have signed formalised improvement plans to rectify the identified issues, while the responsible procurement team is in dialogue with the others to implement more improvement plans where needed in the future.
The Group's separate Sustainability Report for 2012 provides detailed information on the Group's sustainability performance. It is also the Group's Communication on Progress as required by the UN Global Compact. The Sustainability Report complies with the requirements of the Danish Financial Statements Act on corporate social responsibility reporting. The report is available on: www.maersk.com/Sustainability/Documents/Maersk_ Sustainability_Report_2012.pdf
Maersk Line
Nautical charts are still in use from time to time, in spite of the many digital solutions available today. This photo is from Ebba Maersk, one of Maersk Line's eight E-Class vessels.
The Group's invested capital was USD 55bn at the end of 2012 and the annualised return on invested capital after tax (ROIC) was 8.8%. The Group's ambition is to achieve a ROIC > 10%.
| Maersk Supply Service | Revenue ratio 2% |
||
|---|---|---|---|
| Supply vessel activities with anchor handling and platform supply vessels, etc. |
Page 52 | ||
| Invested capital USD million | 2,206 | MAERSK SUPPLY SERVICE | |
| ROIC % 2012 |
6.1 | 4% | |
| ROIC % 2011 |
11.2 | Invested capital ratio | |
| Maersk Tankers | Revenue ratio 2% |
||
| Tanker shipping of crude oil, oil products and gas | Page 53 | ||
| Invested capital USD million | 3,729 | ||
| ROIC % 2012 |
-8.3 | MAERSK TANKERS | |
| ROIC % 2011 |
-4.3 | 7% | |
| Invested capital ratio | |||
| Damco | Revenue ratio 5% |
||
| Logistics and forwarding activities | Page 54 | ||
| Invested capital USD million | 499 | ||
| ROIC % 2012 |
13.5 | ||
| ROIC % 2011 |
24.4 | ||
| 1% Invested capital ratio |
|||
| Svitzer | Revenue ratio 1% |
||
| Towing and salvage activities, etc. | Page 55 | ||
| Invested capital USD million | 1,516 | ||
| ROIC % 2012 |
0.6 | SVITZER | |
| ROIC % 2011 |
6.4 | 3% | |
| Invested capital ratio | |||
| Dansk Supermarked Group | Revenue ratio 15% |
||
| Supermarkets (føtex and Bilka), department stores | |||
| (Salling) and discount stores (Netto), etc. | Page 56 | ||
| Invested capital USD million | 2,872 | ||
| ROIC % 2012 |
8.1 | 5% | |
| ROIC % 2011 |
37.2 | Invested capital ratio | |
| Maersk FPSO s and Maersk LNG |
Revenue ratio 1% |
||
| Floating oil and gas production units | Page 58 | ||
| Invested capital USD million | 120 | ||
| ROIC % 2012 |
33.9 | ||
| ROIC % 2011 |
0.4 | MAERSK FPSOs | |
| 0% Invested capital ratio |
|||
| Other businesses | Revenue ratio 3% |
||
| 20% ownership Danske Bank A/S (associated company), Maersk | |||
| Container Industry, Ro/Ro and related activities and other | Page 59 | ||
| Invested capital USD million | 5,965 | ||
| ROIC % 2012 |
5.4 | ||
| ROIC % 2011 |
4.5 | 10% Invested capital ratio |
|
| DKK million | USD million | ||||
|---|---|---|---|---|---|
| 2012 | 2011 | 2012 | 2011 | ||
| Revenue | |||||
| Maersk Line | 157,122 | 134,444 | 27,118 | 25,108 | |
| Maersk Oil | 58,833 | 67,554 | 10,154 | 12,616 | |
| APM Terminals | 27,697 | 25,073 | 4,780 | 4,682 | |
| Maersk Drilling | 10,947 | 10,056 | 1,889 | 1,878 | |
| Maersk Supply Service | 5,080 | 5,047 | 877 | 942 | |
| Maersk Tankers | 7,279 | 6,957 | 1,256 | 1,299 | |
| Damco | 18,957 | 14,737 | 3,272 | 2,752 | |
| SVITZER | 5,198 | 4,677 | 897 | 873 | |
| Dansk Supermarked Group | 55,610 | 55,227 | 9,598 | 10,314 | |
| Maersk FPSOs and Maersk LNG | 2,067 | 3,167 | 357 | 591 | |
| Total reportable segments | 348,790 | 326,939 | 60,198 | 61,055 | |
| Other businesses | 11,220 | 11,575 | 1,937 | 2,162 | |
| Unallocated activities | 4,717 | 4,188 | 814 | 782 | |
| Eliminations | -22,669 | -20,182 | -3,913 | -3,769 | |
| Total | 342,058 | 322,520 | 59,036 | 60,230 | |
| Profit/loss for the period | |||||
| Maersk Line | 2,671 | -2,961 | 461 | -553 | |
| Maersk Oil | 14,164 | 11,311 | 2,444 | 2,112 | |
| APM Terminals | 4,190 | 3,471 | 723 | 648 | |
| Maersk Drilling | 2,081 | 2,611 | 359 | 488 | |
| Maersk Supply Service | 765 | 1,301 | 132 | 243 | |
| Maersk Tankers | -1,811 | -817 | -312 | -153 | |
| Damco | 320 | 331 | 55 | 63 | |
| SVITZER | 54 | 547 | 9 | 102 | |
| Dansk Supermarked Group | 1,284 | 5,371 | 222 | 1,003 | |
| Maersk FPSOs and Maersk LNG | 1,944 | 52 | 336 | 10 | |
| Total reportable segments | 25,662 | 21,217 | 4,429 | 3,963 | |
| Other businesses | 1,773 | 1,186 | 306 | 221 | |
| Unallocated activities | -4,190 | -3,937 | -723 | -735 | |
| Eliminations | 134 | -461 | 23 | -87 | |
| Discontinued operations, after elimination | 16 | 78 | 3 | 15 | |
| Total | 23,395 | 18,083 | 4,038 | 3,377 |
SVITZER Sohar Oman
Providing harbour towage and escorting in Sohar, SVITZER plays an active role in one of the world's largest industrial port development projects. With five to six towing moves every day, SVITZER is busy assisting the export of steel and aluminium which since 2007 has seen the port's cargo throughput go from 4 million tonnes to 44 million tonnes in 2012.
Maersk Line improved its profit in 2012 by USD 1.0bn, delivering a profit of USD 461m, although the year started out with global freight rates at unsustainable levels and all time high bunker prices. From the second half of 2011 to the second half of 2012, the result improved USD 1.7bn. The improved profit was driven by a detailed profitability improvement programme with key focus on cost reductions, surcharges collection and rate increases, enabled through active capacity adjustments.
The global market for container demand grew an estimated 2% in 2012 compared to 2011. Demand growth deteriorated during the year from 5% in Q1 to only 0-1% in Q3 and Q4 compared to the corresponding quarters in 2011. Above all, European imports were weak with westbound Asia-Europe container demand dropping 7-9% in Q3 and Q4 year-over-year. This development reflected the weak European economy and in particular the debt crisis in the Mediterranean countries. Imports to the USA also softened and only saw a minor peak in demand during Q3. For the full year 2012, the total Asia-Europe trade declined nearly 2%, while volumes on the transpacific trade grew 2%.
Despite the low demand growth and a significant amount of deliveries of new container vessels, a stable supply/ demand balance was achieved. The nominal increase in capacity from deliveries of new vessels was 8.1% in 2012, but through slow steaming, scrappings, idling and blanked sailings, the industry managed to balance the effective capacity growth with the overall head haul demand growth.
On the back of the price war in the second half of 2011, global container freight rates started at very low levels in 2012. Especially, the Asia-Europe trade was hard hit with spot market rates at around USD 700-750 per TEU in January 2012. These rate levels were significantly below operating costs, and with bunker prices peaking at an all-time high above USD 700 per ton in March 2012, the industry experienced significant losses in Q1 2012. The industry was successful in getting general rate increases (GRI) through across most trade lanes. Especially, the USD 750 per TEU rate increase on the Asia-Europe trade effective from 1 March 2012 paved the way for GRIs in other key trades such as Africa and Latin America. Despite the significant focus on general rate increases, the market experienced a constant downward pressure on rates in the second half of 2012 due to the deteriorating demand growth in Q3 and Q4.
With freight rates at very low levels in Q1, Maersk Line started the year with losses amounting to around USD 8m per day and a Q1 2012 loss of USD 599m.
A profitability improvement programme was established to bring Maersk Line back to profitability and an overall review of the headquarters activities led to a significant reduction in headquarters staff implemented in June 2012. The profitability programme focused on executing on general rate increases, driving collection of demurrage and detention, right-sizing the vessel network to support the general rate increases and finally reducing overall costs.
Profit was USD 461m compared to a loss of USD 553m in 2011. The improvement was driven by increase in freight rates and operational cost savings mainly from vessel network efficiencies. The result improved the return on invested capital (ROIC), from negative 3.1% in 2011 to
positive 2.4% in 2012, however still below weighted average cost of capital.
Cash flow from operating activities of USD 1.8bn was signficantly higher than 2011 impacted by improved profitalility partly offset by an increase in working capital.
Revenue increased by 8% to USD 27.1bn, positively affected by volumes increasing 5% to 8.5m FFE and average freight rates increasing 1.9% to 2,881 USD/FFE. Maersk Line maintained its market share for the full year. The average freight rate excluding BAF increased by 4.6% to 2,274 USD/FFE compared to 2011, supported by active capacity adjustments throughout the year in the form of idling, slow steaming and blanked sailings.
On the main Asia-Europe trades, the head haul volumes decreased by 2%, while backhaul volumes increased by 16% to overall growth of 3%, compared to 2011. Average freight rates for Asia-Europe trades increased by 6%, with head haul and backhaul increasing 10% and 2%, respectively. Intra-Asia, Latin America and West & Central
| Maersk Line | USD million | |
|---|---|---|
| Highlights | 2012 | 2011 |
| Revenue | 27,118 25,108 | |
| Profit/loss before depreciation, amortisation | ||
| and impairment losses, etc. (EBITDA) | 2,179 | 1,009 |
| Depreciation, amortisation and impairment losses | 1,678 | 1,617 |
| Gain on sale of non-current assets, etc., net | 23 | 128 |
| Share of profit/loss in associated companies | 1 | -2 |
| Profit/loss before financial items (EBIT) | 525 | -482 |
| Tax | 64 | 71 |
| Net operating profit/loss after tax (NOP AT) |
461 | -553 |
| Cash flow from operating activities | 1,799 | 899 |
| Cash flow used for capital expenditure | -3,550 | -3,170 |
| Invested capital | 20,649 18,502 | |
| ROIC | 2.4% | -3.1% |
| Transported volumes (FFE in million) | 8.5 | 8.1 |
| Average rate (USD per FFE) | 2,881 | 2,828 |
| Average fuel price (USD per tonne) | 661 | 620 |
Asia were strong growth trades for volumes with respectively 19%, 10% and 7% growth. For the Africa trade, the focus on yield management reduced loss making cargo, but consequently also reduced overall volumes. Asia–Europe, Africa and Intra-Asia were the trades with strongest growth in rate levels.
Total cost per FFE decreased by 1.7% to 3,054 USD/FFE mainly driven by decreasing bunker consumption per FFE and operational cost savings. Maersk Line continued to utilise super slow steaming to reduce emissions and save bunker cost. The bunker price was 7% higher in 2012 but total bunker costs decreased by 1% to USD 6.7bn compared to 2011.
Reliability of the Daily Maersk service has on average been above 98% since the introduction in 2011. In terms of overall reliability, Maersk Line is still the most reliable carrier with a scheduled reliability for 2012 of 91%. Daily Maersk has been very well received by customers and overall customer satisfaction is high.
Maersk Line's fleet increased by 4% to 2.6m TEU total capacity. The fleet consisted of 270 owned vessels and 326 chartered vessels by the end of 2012.The owned fleet was increased by 6% as 17 newbuild vessels with 100,000 TEU capacity were delivered. The vessels are designed for Africa and Latin America trades – two key growth markets for the Group. Apart from the focus on reducing slot cost and emission of greenhouse gasses, the vessels are attractive due to their substantial reefer capacity. Other adjustments to the owned fleet were delivery of two multi purpose vessels totalling 36,000 DWT, while one vessel of 750 TEU was sold.
| Total | 2% | 5% | 100% | 100% |
|---|---|---|---|---|
| Intra-Europe | 1% | -2% | 3% | 4% |
| Intra-Asia | 6% | 19% | 7% | 6% |
| Oceania | -3% | 6% | 5% | 5% |
| West & Central Asia | 0% | 7% | 17% | 17% |
| Latin America | 1% | 10% | 14% | 13% |
| North America | 3% | 5% | 15% | 15% |
| Africa | 5% | -4% | 15% | 16% |
| Asia – Europe | 6% | 3% | 24% | 24% |
| routes 2012 | routes 2011 | |||
| 2011 | 2011 | across | across | |
| 2012/ | 2012/ | of volumes | of volumes | |
| Rates | Volumes | Distribution | Distribution |
11 vessels had increased capacity of 1,400 TEU per vessel primarily through bridge elevation. The chartered fleet declined by 1% to 1.1m TEU capacity. The chartered fleet was reduced by 65 vessels compared to 2011 as part of optimising the network countered by need for more tonnage to implement further slow steaming. In addition to this, the Group owned five and chartered six multi purpose vessels. 25 vessels totalling 395,100 TEU are on order for delivery during 2013-2015. The first five out of 20 Triple-E container vessels suited for the Asia-Europe trade will be delivered in 2013.
Global container demand growth is forecasted to remain modest at 4-5% range in 2013. Especially, the Asia-Europe trade outlook is bleak with westbound demand expected to stay flat. The challenging demand side is coupled with a significant amount of new tonnage being delivered corresponding to a capacity increase of 11% or 1.8m TEU. Thus, without significant capacity adjustments, the container shipping market is most likely expected to see a continued downward pressure on freight rates in 2013.
Maersk Line has defined five key focus areas for 2013. The reefer rate restructuring initiative will focus on restoring profitability in the refrigerated cargo business through a global rate restructuring. The rates and contracting initiative will focus on keeping rates at a sustainable level. The network cost initiative will focus on building a more cost-effective vessel network, while the total unit cost initiative will aim for the lowest achievable cost in the market. Finally, the volume and market share initiative will focus on maintaining the global position of Maersk Line.
The lost time injury frequency (LTIF) for 2012 was 0.76 per million exposure hours compared to 0.63 per million exposure hours in 2011.
*Terminal costs: costs related to terminal operation such as moving the containers (mainly load/discharge of containers), container storage at terminal, stuffing (loading) and stripping (unloading) of container content, power for reefer units, etc.
Inland transportation: costs related to transport of containers inland both by rail and truck.
Containers and other equipment: repair and maintenance, third party lease cost and depreciation of owned containers.
Vessel costs: port costs and canal fees (Suez and Panama), running costs and crewing of owned vessels, depreciation of owned vessels, time charter of leased vessels, cost of slot (capacity) purchases and vessel sharing agreements (VSA) with partners.
Bunkers: costs related to fuel consumption of the vessels. Lubricants are included as part of vessel cost.
Administration and other costs: own and third party agents in countries, liner operation centres, vessel owning companies, onshore crew and ship management, service centres and headquarters. Administration cost types such as staff, office, travel, training, consultancy, IT, legal and audit, etc. Other costs covering currency cash flow hedge, cargo and commercial claims and bad debt provision.
| TEU N | o. | |||
|---|---|---|---|---|
| Fleet | 2012 | 2011 | 2012 | 2011 |
| Own container vessels | ||||
| 0-2,999 TEU | 103,778 | 104,508 | 57 | 58 |
| 3,000-4,699 TEU | 403,493 | 351,586 | 98 | 87 |
| 4,700-7,999 TEU | 268,308 | 254,972 | 41 | 40 |
| > 8,000-TEU | 704,050 | 649,922 | 74 | 69 |
| Total | 1,479,629 | 1,360,988 | 270 | 254 |
| Chartered container vessels | ||||
| 0-2,999 TEU | 425,852 | 555,848 | 220 | 296 |
| 3,000-4,699 TEU | 120,525 | 144,771 | 29 | 35 |
| 4,700-7,999 TEU | 276,998 | 231,736 | 46 | 40 |
| > 8,000-TEU | 321,673 | 227,776 | 31 | 20 |
| Total | 1,145,048 | 1,160,131 | 326 | 391 |
| Own and chartered container vessels | 2,624,677 | 2,521,119 | 596 | 645 |
| Own and chartered multi purpose vessels | 11 | 15 | ||
| Newbuilding programme (own vessels) | ||||
| 0-2,999 TEU | - | - | - | - |
| 3,000-4,699 TEU | 9,000 | 58,500 | 2 | 13 |
| 4,700-7,999 TEU | 26,100 | 66,690 | 3 | 9 |
| > 8,000-TEU | 360,000 | 360,000 | 20 | 20 |
| Container vessels total | 395,100 | 485,190 | 25 | 42 |
| Multi purpose vessels | 0 | 2 |
Maersk Oil continues to progress the portfolio of development projects, including Dunga Phase II production start in Kazakhstan, and further maturation of Chissonga in Angola and Johan Sverdrup in Norway, both with planned production start in 2017-18. Also, the agreement to further development of the Al Shaheen field in Qatar constitutes a milestone.
Maersk Oil has exploration and production activities in 11 countries and has an entitlement production of some 257,000 barrels of oil equivalent per day (boepd) from six countries. Maersk Oil is maturing oil and gas resources through a large exploration programme and execution of a number of development projects.
At the A.P. Moller - Maersk Capital Markets Day on 9 October 2012, Maersk Oil disclosed information about its reserves and resources base and gave insights into the plans to increase production by almost 50% towards 2020 by reaching a daily entitlement production level of 400,000 barrels. More information from the Capital Markets Day can be found at:
http://investor.maersk.com/events.cfm?altevent =otherevents
At the end of 2011, Maersk Oil had entitlement reserves and resources of 1.38bn barrels of oil equivalent including proved reserves (1P) of 443m barrels of oil equivalent. The reserves and resources are estimated according to international standards (Society of Petroleum Engineers' Petroleum Resources Management System) and the reserves are audited by an independent third party. The reserves and resource figures will be updated annually and the figures for end of 2012 will be released together with the Q1 report in 2013.
The average daily share of oil and gas production in 2012 was 257,000 boepd in line with previously announced expectations of 258,000 boepd; 23% lower than in 2011 (333,000 boepd).
In Qatar, the production share was 103,000 boepd (157,000 boepd); 34% lower than in 2011 due to a contractual production sharing and cost recovery mechanism, while the gross production from the field continued unchanged at a level of 300,000 boepd.
Production share in Denmark was 91,000 boepd (113,000 boepd); 19% lower than in 2011 largely due to the entry of Nordsøfonden (the Danish state-owned North Sea Fund) as partner with 20% interest in DUC (Dansk Undergrunds Consortium) on 8 July 2012. The effect of the change on the Group's net profit is neutral as the Danish state participation replaces a 20% profit share collected since the agreement was made in 2003. Further the natural decline of the largely mature Danish fields affected the production negatively.
The share of production in the UK of 28,000 boepd was at the same level as in 2011 (27,000 boepd). The Gryphon
FPSO, which was damaged in a storm in early 2011, is expected to come back into production in Q1 2013.
In Algeria, the share of production of 27,000 boepd was slightly higher compared to 2011 (25,000 boepd), positively affected by improved contract terms with the Algerian national oil company from the settlement of the tax dispute in Q1 2012 but offset by the natural maturation of the fields.
The share of production in Kazakhstan and Brazil was in 2011 3,000 boepd (3,000 boepd) and 5,000 boepd (8,000 boepd) respectively.
Maersk Oil has a diverse project portfolio and project delivery plan in place to deliver on the production target of 400,000 boepd by 2020. Five major projects are sanctioned by the authorities and execution is progressing towards first production by 2014.
In Algeria, development of the El Merk field continues with first oil expected in Q1 2013.
In Angola, work continues on the development plan for the Chissonga discovery in Block 16 and drilling of the 4th appraisal well was completed late 2012. The development will likely comprise a stand-alone FPSO with first oil expected in 2017-18.
In the Kurdistan region of Iraq, a second appraisal well was successfully completed on the Swara Tika structure, and further pre-development activities are planned for 2013. Maersk Oil increased its shareholding in HKN Energy from 20% to 30% (corresponding to 22.5% equity in the Sarsang production sharing contract).
In Kazakhstan, the first Dunga Phase II well was brought on-stream in December 2012 as scheduled and over the next three years another 197 wells will be drilled and brought into production.
Maersk Oil's pipeline of major field developments
| production | share | lateau production |
|---|---|---|
| 2013 | ~11% | 15,000 boepd |
| 2012 | 60% | 15,000 boepd |
| 2013 | 100% | N/A1 |
| 2014 | 32% | 20,000 boepd |
| 2014 | 25%2 | 8,000 boepd |
| First E quity P |
1 FDP aims at optimising recovery and maintaining a stable production plateau around 300,000 boepd 2Phase 1 Maersk Oil estimate
In Norway, three appraisal wells were completed on the Avaldsnes part of the major Johan Sverdrup discovery. A preliminary agreement between the involved licences is in place and continued appraisal activities should lead to a concept selection by the end of 2013 and first production in 2018. The Zidane-2 well encountered a high pressure gas reservoir and evaluation of the commerciality of the combined Zidane 1 and 2 discoveries is ongoing. To support a development of Zidane and other future discoveries in Mid Norway, an interest in a planned gas pipeline has been secured.
In Qatar, a new field development plan for 2012 including further investments of USD 1.5bn, covering among others 51 new wells, has been agreed with Qatar Petroleum with the aim of increasing recovery and extending a stable production plateau at 300,000 boepd from the Al Shaheen field.
In the UK, the Golden Eagle development project is progressing towards a production start in 2014. Maersk Oil acquired the remaining 30% interest in the Maersk Oil operated Dumbarton and Lochranza fields as well as the Global Producer III FPSO. With the acquisition Maersk Oil now has 100% interest in both fields as well as in the FPSO.
In the USA, the Jack deepwater development project in the US Gulf of Mexico is progressing as planned towards production start in 2014. Further appraisal drilling of the Buckskin discovery is planned for 2013.
Successful exploration is crucial to Maersk Oil's aspiration to increase the daily entitlement production by 50% to 400,000 boepd by 2020. The current production profile reflects that Maersk Oil is in a catch-up phase with respect to replacing reserves. Exploration activities have been scaled up and a number of high impact discoveries have been made over the last couple of years. New prospects are continually being matured through the global portfolio and by focusing on prolific basins with familiar geology and risks. Maersk Oil has been able to add resources at competitive finding costs.
Maersk Oil completed 23 exploration/appraisal wells compared to 14 in 2011.
In Angola, the Caporolo discovery was made in Block 16 and further drilling is planned to decide on the commercial potential of the structure, which is adjacent to the Chissonga discovery. Exploration and appraisal drilling in Block 16 will continue in early 2013. Further exploration and appraisal drilling has also been planned for Blocks 8 and 23, but timing is dependent on rig availability, which increasingly has become a challenge due to the overheated drilling market in the West Africa region.
In Brazil, Maersk Oil participated in drilling of four exploration/appraisal wells and several wells are planned for 2013. In Blocks BM-C-37 and BM-C-38, Maersk Oil realised value by providing the business partner with 20% additional interest and operatorship in exchange for cash and full carry in up to six wells.
In Greenland, acquisition of 3D seismic data was successfully completed in the Baffin Bay, and Maersk Oil participated in a shallow core sampling programme.
In the Kurdistan region of Iraq, the high exploration level continues in the Sarsang block and by year-end drilling of two exploration prospects was in progress.
In Kazakhstan, three exploration wells were completed with encouraging results and allowed progression of the Dunga Phase III, which could bring the gross production to a level above 30,000 barrels per day.
In Norway, Maersk Oil submitted applications in two exploration licence rounds with expected awards mid-2013. The T-Rex exploration well did not discover hydrocarbons in commercial quantities and was therefore abandoned. Drilling of the Albert exploration well commenced in December.
In the UK, seven exploration/appraisal wells were completed including appraisal wells on Culzean, Ockley and Jackdaw. Maersk Oil was awarded nine new licences in the UK's 27th licensing round and potential award in 2013 of three additional licences awaits the outcome of ongoing environmental assessments.
In the USA, Maersk Oil continues to build its prospect portfolio and was awarded seven new blocks in the US Central Gulf of Mexico bid round. Drilling of the Oceanographer prospect is planned for 2013.
Maersk Oil's profit for 2012 was USD 2.4bn (USD 2.1bn) and ROIC was 36.6% (37.2%). The result was positively affected by the one-off tax income of USD 899m from the settlement of an Algerian tax dispute, a USD 91m gain from a partial divestment of interests in Brazil and a strong average oil price of USD 112 per barrel (USD 111 per barrel). This was partly offset by the expected decline of the entitlement share of oil and gas production to 257,000 boepd (333,000 boepd) due to a lower production share in Qatar and lower production in Denmark.
The Gryphon FPSO has been out of production from early 2011. However, the loss of production and property damage in 2012 are partly recoverable under the existing insurance policies, and for 2012 a compensation of USD 407m has been received. It should be noted that negotiations are still in progress to determine the final insurance proceeds from the insurance companies.
| Maersk Oil | USD million | ||
|---|---|---|---|
| Highlights | 2012 | 2011 | |
| Revenue | 10,154 | 12,616 | |
| Profit/loss before depreciation, amortisation | |||
| and impairment losses, etc. (EBITDA) | 7,156 | 10,015 | |
| Depreciation, amortisation and impairment losses | 1,895 | 2,171 | |
| Gain on sale of non-current assets, etc., net | 109 | 2 | |
| Share of profit/loss in associated companies | -42 | -4 | |
| Profit/loss before financial items (EBIT) | 5,328 | 7,842 | |
| Tax | 2,884 | 5,730 | |
| Net operating profit/loss after tax (NOP AT) |
2,444 | 2,112 | |
| Cash flow from operating activities | 3,857 | 4,319 | |
| Cash flow used for capital expenditure | -1,959 | -3,788 | |
| Invested capital | 6,920 | 6,427 | |
| ROIC | 36.6% | 37.2% | |
| Exploration expenses, net | 1,088 | 1,056 | |
| Average share of oil and gas production | |||
| (thousand barrels of oil equivalent per day) | 257 | 333 | |
| Average crude oil price (Brent) (USD per barrel) | 112 | 111 |
Cash flow from operating activities was USD 3.9bn (USD 4.3bn) and cash flow used for capital expenditure was USD 2.0bn (USD 3.8bn affected by the USD 2.4bn acquisition of SK Energy in Brazil). Exploration activity remained high with completion of 23 (14) exploration/ appraisal wells, leading to exploration expenses of USD 1.1bn (USD 1.1bn).
With the current development plans and a sustained high level of exploration, Maersk Oil is entering a period with planned annual development capital expenditure in the range of USD 3-5bn compared to USD 1-3bn in recent years, in order to replenish the portfolio. Exploration expenses are expected to be above USD 1.0bn per year.
The lost time injury frequency (LTIF) for 2012 was 0.75 per million working hours compared to 0.91 per million exposure hours in 2011.
Maersk Oil continues its efforts to completely eliminate accidents and the improved lost time injury frequency is a result of this effort.
APM Terminals delivered an increase in profit and a ROIC of 13.6% (13.1%). The expansion into high growth markets continued, notably with the acquisition of a 37.5% co-controlling stake in Global Ports Investments PLC, a portfolio of very attractive port assets in Russia and neighbouring countries. The increased presence in high growth areas presents an opportunity but increases also geopolitical exposure.
The global container terminal market measured in TEU increased by 4% during 2012. The growth rate was stronger during the first half of 2012 than during the second half. The trade lane from Asia to Europe in particular softened during the second half, which affected port volumes in both Asia and in Europe.
APM Terminals experienced renewed interest from shipping lines wishing to secure access to modern container terminals with crane specifications and operational capabilities to match future market requirements.
The larger vessels being deployed and an increased appreciation by the customers of the value of having the fastest possible turnaround time in port prompted APM Terminals to launch a Global Transformation Project to lift the operational performance. The project aims at improving productivity by 15%. The crane lift per hour improved by 8% across the terminal portfolio during 2012.
APM Terminals continued to work on developing attractive propositions to unlock value in long term partnerships. Volumes from 3rd party customers reached 48% of the total in 2012 (46%).
In the first half of 2012, operations in some terminals in North Africa, Europe and the Middle East were negatively affected by local political unrest or labour issues. Operations were fairly smooth during the second half of 2012 with only a relatively minor issue affecting operations in Los Angeles in December.
In late October, Hurricane Sandy landed on the US east coast, closing the ports of New York and New Jersey including APM Terminals' Port Elizabeth facility. Operations
| Portfolio | |
|---|---|
| ----------- | -- |
| APM Terminals |
Number of terminals |
Number of new terminal projects |
Average remaining |
Equity weighted crane lifts in million TEU | |||
|---|---|---|---|---|---|---|---|
| concession length in years |
2012 | 2011 | Change | ||||
| Americas | 13 | 3 | 16 | 7.2 | 6.9 | 4% | |
| Europe | 19 | 2 | 27 | 12.9 | 12.2 | 5% | |
| Asia | 17 | 1 | 26 | 10.7 | 10.6 | 1% | |
| Africa and Middle East | 13 | 0 | 18 | 4.5 | 3.8 | 20% | |
| Total | 62 | 6 | 22 | 35.4 | 33.5 | 6% |
were impacted for more than a week in the entire port, but APM Terminals was successful in being the first terminal in the area to recommence operations after the hurricane.
APM Terminals announced during 2012 the following developments with portfolio implications:
tion and maintenance of a new specialised container terminal at the port. APM Terminals will invest over USD 900m in the new deepwater 4.1m TEU capacity project.
APM Terminals acquired a 50% stake in an inland container depot in Mombasa, Kenya. APM Terminals will take charge of the operational management of the depot.
APM Terminals disposed half of the 50% stake in the Xiamen terminal in China with an after tax gain of USD 20m.
APM Terminals delivered a profit of USD 723m (USD 648m) and a ROIC of 13.6% (13.1%). Excluding the impact of portfolio changes, underlying ROIC was 12.5% (12.4%).
APM Terminals is actively pursuing an investment strategy with focus on growth markets. 38 out of 62 container terminals operate in growth markets and 78% of EBITDA was generated in these markets.
| USD million | |
|---|---|
| 2012 | 2011 |
| 4,780 | 4,682 |
| 1,093 | 1,059 |
| 360 | 368 |
| 123 | 28 |
| 59 | 50 |
| 915 | 769 |
| 192 | 121 |
| 723 | 648 |
| 975 | 912 |
| -1,350 | -688 |
| 6,284 | 5,124 |
| 13.6% | 13.1% |
| 35.4 | 33.5 |
The number of containers handled by APM Terminals (measured in crane lifts weighted with APM Terminals' ownership interest) increased by 6% compared to 2011. This was ahead of the market growth of 4%, boosted by additions to the portfolio.
During the second half of 2012, APM Terminals' volumes were adversely affected by the global economic slowdown and notably the decline in volume carried on the Asia-Europe trade lane. Positive developments in Africa and Latin America were to a large extent able to compensate for this.
Revenue grew by 2% compared to 2011. This was lower than the volume growth rate, mainly due to the divestment of Maersk Equipment Service Company in Q1, which impacted revenue without having a corresponding volume impact. The 44% tariff reduction imposed by the Tariff Authorities for Major Ports in India (TAMP) on Gateway Terminals India in Mumbai affected revenue negatively by USD 46m.
The EBITDA margin increased to 22.9% (22.6%).
Pre-tax gains of USD 123m were primarily achieved through the divestment of half of the 50% stake in Xiamen, China, and Maersk Equipment Service Company.
The expected market growth rate for 2013 is 4-5%. APM Terminals expects volume growth above market growth, supported by new additions to the portfolio and various performance improvement drives.
APM Terminals aims to become the leading port and inland operator in the world by 2016. APM Terminals will secure this position by serving the global shipping lines and cargo owners in long term partnerships through safe and excellent operations and by actively managing the portfolio and developing port infrastructure and inland services in high growth markets.
| 2011 | 2012 | 2016F | |
|---|---|---|---|
| ROIC | 13.1% | 13.6% | 13.0% |
| Number of terminals | 55 | 62 | 65-70 |
| Revenue (USD bn) | 4.7 | 4.8 | 6.0 |
| EBITDA (USD bn) | 1.1 | 1.1 | 1.6 |
| NOPAT (USD bn) | 0.6 | 0.7 | 1.0 |
APM Terminals' mid-term (2016) financial targets are to reach a portfolio of 65-70 terminals, revenue of USD 6.0bn, a ROIC of 13% and a profit of USD 1.0bn.
The lost time injury frequency (LTIF) for 2012 was 2.41 per million exposure hours compared to 3.86 per million exposure hours in 2011.
APM Terminals has continued focus on eliminating accidents and advancing the safety management culture through the Safety Activist campaign and elimination of high risk situations through separation of man and machine and various safety enhancements to the facilities.
With high forward contract coverage and an order book of seven large rigs with delivery in 2013-2015, Maersk Drilling is on track towards its strategic aspiration of delivering a profit of USD 1.0bn by 2018. The full year result for 2012 was negatively impacted by start-up issues on two drilling rigs.
The oil price has during 2012 remained supportive for continued increases in oil companies' exploration and development spending.
The market for Norwegian jack-up rigs remained strong with full utilisation throughout the year. The market is expected to remain tight in the years ahead and there are currently no jack-up rigs available until Q2 2014 and thus oil and gas companies are already now showing interest in securing rig capacity well beyond 2014.
The market for international premium jack-up rigs (outside Norway) enjoys significantly higher utilisation and day rates compared to older jack-up rigs, due to the safety and efficiency gains offered to the operators.
The market for ultra deepwater floaters (7,500ft+) was characterised by full utilisation in 2012 and day rate levels returned to pre-crisis levels at around USD 600,000 with some variations across regions and countries reflecting differences in operating cost levels and taxes.
Despite the newbuilding order book, the ultra deepwater market is expected to remain tight and the number of rigs with 2013 availability is limited and operators are already securing ultra deepwater rig capacity for commencement in 2014.
Oil supply from deepwater fields is needed to balance demand for oil, and to deliver the required deepwater oil production. Considerable exploration and development drilling will need to take place over the years to come.
The increasing demand is primarily seen from the main growth regions in West Africa and the US Gulf of Mexico while uncertainty has arisen concerning the demand in Brazil. Recent discoveries in other emerging deepwater regions such as East Africa will also contribute to growth in the future.
Throughout 2012, with the exception of one jack-up rig, all of Maersk Drilling's 16 jack-up rigs and floaters, the ten drilling barges in Venezuela and the managed semisubmersible rig have been on contract.
Maersk Drilling's operational uptime averaged 92.1% in 2012 (95.6%). For the floating rigs the operational uptime averaged 85.1% (92.4%), while the operational uptime for the jack-up rigs averaged 95.3% (97.0%). The operational uptime was negatively affected by start-up issues for one jack-up rig and one floating rig.
Six yard stays for planned surveys and upgrades were completed in 2012. The yard stays were completed on time and on budget.
Maersk Drilling's contract coverage per segment
| Segment | 2013 | 2014 |
|---|---|---|
| Ultra harsh environment jack-up rigs (Norway) 100% | 86% | |
| Premium jack-up rigs | 96% | 61% |
| Ultra deepwater and midwater rigs | 100% | 90% |
| Total | 98% | 76% |
Maersk Training Centre Svendborg Denmark
The high end rigs in Maersk Drilling's fleet can be recreated virtually in the simulator to include all rig specific equipment and control systems. This will enable the crews to train in realistic surroundings as if on board the rig.
work in the US Gulf of Mexico was also declared. The duration of the option is two years with commencement on 4 November 2013 when the firm contract expires, USD 370m.
By the end of 2012, Maersk Drilling's forward contract coverage was 98% for 2013, 76% for 2014, 51% for 2015 and 41% for 2016. The total revenue backlog for Maersk Drilling by the end of 2012 amounted to USD 7.0bn (USD 4.9bn).
Maersk Drilling currently owns and operates six ultra harsh jack-up rigs operating in Norway, three ultra
| Maersk Drilling | USD million | |
|---|---|---|
| Highlights | 2012 | 2011 |
| Revenue | 1,889 | 1,878 |
| Profit/loss before depreciation, amortisation | ||
| and impairment losses, etc. (EBITDA) | 682 | 862 |
| Depreciation, amortisation and impairment losses | 232 | 244 |
| Gain on sale of non-current assets, etc., net | 8 | - |
| Profit/loss before financial items (EBIT) | 458 | 618 |
| Tax | 99 | 130 |
| Net operating profit/loss after tax (NOP AT) |
359 | 488 |
| Cash flow from operating activities | 651 | 825 |
| Cash flow used for capital expenditure | -589 | -600 |
| Invested capital | 4,604 | 4,102 |
| ROIC | 8.3% | 12.5% |
deepwater semi-submersible rigs operating in the US Gulf of Mexico, Angola and Egypt, and six international premium jack-up rigs operating in Southeast Asia, West Africa and the North Sea. Furthermore, Maersk Drilling owns and operates a mid-water semi-submersible rig in the Caspian Sea, and manages a mid-water semi-submersible rig on behalf of its Chinese owners.
Maersk Drilling owns and operates ten drilling barges in Venezuela, which in 2012 generated revenue of USD 194m (USD 178m).
Maersk Drilling participates in the 50/50% joint venture Egyptian Drilling Company, which owns and operates 64 land and four jack-up rigs. In 2012, the joint venture generated total revenue of USD 424m (USD 447m).
Maersk Drilling has currently seven rigs under construction or on order. The order book includes three ultra harsh jack-up rigs, of which the first two will be delivered in 2014, while the third rig will be delivered in 2015. Additionally, the order book contains four ultra deepwater drillships – one to be delivered late in 2013 and the rest in 2014. The newbuilding programme is progressing according to plan.
Of the seven newbuild rigs, contracts have already been secured for five totalling a contract backlog of 17 rig years and estimated revenue backlog of around USD 2.9bn.
The profit for 2012 was USD 359m (USD 488m) negatively impacted by more than USD 125m due to delayed startup on new contracts for two rigs due to start-up issues and positively impacted by reversal of impairment losses of USD 24m.
| 2012 | 2011 |
|---|---|
| 12 | 12 |
| 4 | 4 |
| 10 | 10 |
| 26 | 26 |
| 3 | 2 |
| 4 | 4 |
| 7 | 6 |
Cash flow from operating activities was USD 651m (USD 825m) after a slight increase in working capital of USD 25m (USD 52m).
After investment cash flow of USD 589m (USD 600m), the total free cash flow was USD 62m (USD 225m).
The focus areas for growth are Norway, leveraging the market leading position in the ultra harsh jack-up market, and the deepwater regions in the US Gulf of Mexico and West Africa where Maersk Drilling aims to build strong positions.
With full contract coverage for 2013, Maersk Drilling has a high degree of earnings visibility. The main risks relate to operational performance, cost inflation and delivery of newbuildings and yard stays for existing rigs on time and budget. Longer term Maersk Drilling will be exposed in the event of a lower oil price which will negatively impact oil companies' exploration and development spending.
As a consequence of the significant growth and taking many new rigs into operation in 2013-2015, Maersk Drilling expects additional costs associated with training and start-up of operations, which will negatively impact the result in 2013, 2014 and 2015. After delivery from the yard, the rigs will carry operational costs without earning full revenue until contract commencement. Depending on the location of operation this may be for periods of 2-3 months per rig.
The lost time injury frequency (LTIF) for 2012 was 0.53 per million exposure hours compared to 0.21 per million exposure hours in 2011.
The increase in the LTIF is disappointing and whereas the safety performance is still relatively strong, a number of initiatives have been implemented in order to improve the safety performance.
The profit was negatively affected by general oversupply in most segments of the market, except in the emergency response and rescue segment. Cash flow used for capital expenditure increased due to investment in Canadian newbuildings and modification of a number of existing vessels.
Maersk Supply Service had a reasonable contract coverage going into 2012 with continued focus on employing spot fleet in key strategic markets such as West and East Africa, Brazil, Australia and Canada where a number of new contracts and extensions were made.
For the anchor handling tug supply vessels, the newbuilding activity in the market slowed down with very few new orders being placed, whereas the significant order book for platform supply vessels continued to grow. A number of subsea support vessels were ordered on speculation during the year.
| Maersk Supply Service | USD million | |
|---|---|---|
| Highlights | 2012 | 2011 |
| Revenue | 877 | 942 |
| Profit/loss before depreciation, amortisation | ||
| and impairment losses, etc. (EBITDA) | 319 | 416 |
| Depreciation, amortisation and impairment losses | 173 | 167 |
| Gain on sale of non-current assets, etc., net | -4 | 3 |
| Profit/loss before financial items (EBIT) | 142 | 252 |
| Tax | 10 | 9 |
| Net operating profit/loss after tax (NOP AT) |
132 | 243 |
| Cash flow from operating activities | 305 | 375 |
| Cash flow used for capital expenditure | -214 | -120 |
| Invested capital | 2,206 | 2,146 |
| ROIC | 6.1% | 11.2% |
ESVAGT became part of Maersk Supply Service's reporting segment effective 1 January 2012 and within the emergency response and rescue segment, ESVAGT achieved high utilisation in 2012 and all time high turnover and profit.
ESVAGT took delivery of three vessels during 2012. All went directly on long term contracts (duration five and ten years), two in Norway and one in Denmark. The newbuildings are ESVAGT's most advanced vessels todate and bring the fleet to 35 vessels
Two anchor handling tug supply vessels are on order with options for up to four additional vessels. The vessels are built for the Canadian market and optimised for the local operating profile with reduced emissions and fuel consumption. One vessel was sold, bringing the Maersk Supply Service fleet to 65 vessels.
Contract coverage for 2013 is 57% and for 2014 29% excluding options.
The lost time injury frequency (LTIF) for 2012 was 0.74 per million exposure hours compared to 0.75 per million exposure hours in 2011.
| Fleet | 2012 | 2011 |
|---|---|---|
| Anchor handling vessels | 49 | 50 |
| Supply vessels | 13 | 13 |
| Emergency, Response and Rescue vessels | 35 | 32 |
| Other vessels | 3 | 3 |
| Total | 100 | 98 |
| Newbuilding programme | ||
| Anchor handling vessels | 2 | 2 |
| Emergency, Response and Rescue vessels | 4 | 4 |
| Total | 6 | 6 |
Vessel oversupply and slower demand growth continue to drive the unfavourable market balances in most segments. During the year, the market conditions led Maersk Tankers to adjust the medium term outlook, resulting in USD 268m impairment loss on Very Large Crude Carriers (VLCCs), product handy-tankers and the small product tanker segment. Significant uncertainty regarding valuation of vessels remains.
Significant VLCC tonnage will be added to the market in 2013 with demand growth expected to be unchanged. General overcapacity and weak demand growth affected the product tanker segments negatively in 2012. Expectations for 2013 remain unchanged with a relatively flat demand/supply development.
| Maersk Tankers | USD million | ||
|---|---|---|---|
| Highlights | 2012 | 2011 | |
| Revenue Profit/loss before depreciation, amortisation |
1,256 | 1,299 | |
| and impairment losses, etc. (EBITDA) | 223 | 108 | |
| Depreciation, amortisation and impairment losses | 542 | 278 | |
| Gain on sale of non-current assets, etc., net | 8 | 6 | |
| Profit/loss before financial items (EBIT) | -311 | -164 | |
| Tax | 1 | +11 | |
| Net operating profit/loss after tax (NOP AT) |
-312 | -153 | |
| Cash flow from operating activities Cash flow used for capital expenditure |
142 -461 |
95 -668 |
|
| Invested capital | 3,729 | 3,774 | |
| ROIC | -8.3% | -4.3% | |
In the gas segment, earnings are expected to come under pressure from increasing vessel supply in 2013.
Maersk Tankers has started several initiatives to improve profitability. A project was launched, consisting of commercial improvement and cost reduction initiatives. Significant savings have been achieved in 2012 with bunker initiatives being the largest contributor with reductions of 7% corresponding to USD 48m.
Maersk Tankers divested the Small Northwest Europe segment as part of the strategy to optimise, to focus on fewer segments and to release capital for new investments. Such investments include the potential retrofitting of VLCCs, which would result in efficiency gains and a positive environmental impact due to reductions in fuel consumption. Maersk Tankers has also significantly reduced the time charter fleet.
Maersk Tankers entered into an agreement to divest the Handygas segment. The transaction will take place in 2013.
In addition to the above initiatives Maersk Tankers has decided to cold lay-up two VLCC vessels.
Maersk Tankers has taken delivery of seven vessels (five VLCCs and two product tankers) during 2012, sold ten product tankers and has no further newbuildings on order.
The lost time injury frequency (LTIF) for 2012 was 0.89 per million exposure hours compared to 1.12 per million exposure hours in 2011.
| 2012 | 2011 | |||
|---|---|---|---|---|
| Fleet | Own | Chartered | Own | Chartered |
| Crude oil | 16 | 5 | 11 | 5 |
| Product | 84 | 34 | 92 | 55 |
| Gas | 16 | 7 | 16 | 11 |
| Total | 116 | 46 | 119 | 71 |
| Newbuilding programme | ||||
| Crude oil | 0 | 1 | 5 | 1 |
| Product | 0 | 0 | 1 | 0 |
| Gas | 0 | 0 | 0 | 0 |
| Total | 0 | 1 | 6 | 1 |
Damco recorded significant growth in 2012, partly due to impact from acquisitions. Further, products grew volume well ahead of the market and net revenue in 2012 was up to USD 3.3bn, an increase of 18.9%.
Damco shipped 6% more ocean volumes compared to 2011. Airfreight tonnage almost doubled, recording a growth over last year of 91%. The growth in airfreight was partly due to the full year effect of the NTS acquisition in August 2011 (a China based freight forwarder), but also due to strong growth in selected focus industries. Supply Chain Management volumes returned to growth and ended 5% higher than prior year level.
The worsening market conditions as well as implementation costs related to new business caused downward pressure on Damco's unit margin profitability, which had a negative impact on Damco's performance in 2012.
| Damco | USD million | ||
|---|---|---|---|
| Highlights | 2012 | 2011 | |
| Revenue | 3,272 | 2,752 | |
| Profit/loss before depreciation, amortisation | |||
| and impairment losses, etc. (EBITDA) | 101 | 120 | |
| Depreciation, amortisation and impairment losses | 27 | 23 | |
| Gain on sale of non-current assets, etc., net | 19 | 1 | |
| Profit/loss before financial items (EBIT) | 93 | 98 | |
| Tax | 38 | 35 | |
| Net operating profit/loss after tax (NOP AT) |
55 | 63 | |
| Cash flow from operating activities | -97 | 93 | |
| Cash flow used for capital expenditure | -22 | -119 | |
| Invested capital | 499 | 317 | |
| ROIC | 13.5% | 24.4% |
Cash flow from operating activities was negative by USD 97m (positive USD 93m) driven by increased working capital employed.
Damco announced early in 2012 a restructuring of its European operations, which were split in East and West. In October, Damco acquired the freight forwarder Pacific Network Global Logistics, which significantly strengthened its position in Oceania. In September, Damco announced that the global headquarter will relocate from Copenhagen, Denmark, to The Hague, The Netherlands. The move is scheduled to be completed in Q1 2013.
The lost time injury frequency (LTIF) for 2012 was 0.51 per million exposure hours compared to 0.81 per million exposure hours in 2011.
Within harbour towage, activity was largely unchanged compared to the year before. Strong activity growth in Australia (7%) was offset by declining activity in Europe (-3%). Terminal towage developed as expected. SVITZER managed to charter recently delivered vessels to new terminal towage contracts and extended a number of existing contracts. Within salvage, activity was weak during large parts of the year with some increase during Q4.
Total revenue increased by 2.7% and EBITDA-margin increased to 29% (27%) driven by several initiatives to improve top line performance and strengthen cost control.
The UK towage market has been bleak over a longer period of time, and with a continued poor outlook, an impairment of goodwill was recognised in Q4 of USD 102m, related to the Adsteam activities acquired in 2007. Profit
| Svitzer | USD million | ||
|---|---|---|---|
| Highlights | 2012 | 2011 | |
| Revenue | 897 | 873 | |
| Profit/loss before depreciation, amortisation | |||
| and impairment losses, etc. (EBITDA) | 260 | 237 | |
| Depreciation, amortisation and impairment losses | 212 | 109 | |
| Gain on sale of non-current assets, etc., net | 5 | 4 | |
| Profit/loss before financial items (EBIT) | 53 | 132 | |
| Tax | 44 | 30 | |
| Net operating profit/loss after tax (NOP AT) |
9 | 102 | |
| Cash flow from operating activities | 257 | 131 | |
| Cash flow used for capital expenditure | -102 | -187 | |
| Invested capital | 1,516 | 1,589 | |
| ROIC | 0.6% | 6.4% | |
was in addition negatively impacted by provision for bad debts (USD 5m), a tax claim from the 2007 divestment of crew boat activities (USD 5m) and impairment of the Ocean Towage division (USD 7m).
Cash flow from operating activities was USD 257m (USD 131m) following the improved operational results and significant collections of salvage receivables.
In September 2012, SVITZER launched a new strategy, coupled with a new organisational structure, to improve returns in its harbour towage activities, increase its share of long term towage contracts and raise safety standards.
The lost time injury frequency (LTIF) for 2012 was 1.46 per million exposure hours compared to 0.78 per million exposure hours in 2011.
| 2012 | 2011 | |||
|---|---|---|---|---|
| Fleet | Own | Chartered | Own | Chartered |
| Tugboats | 351 | 17 | 340 | 23 |
| Other vessels | 126 | 11 | 143 | 13 |
| Total | 477 | 28 | 483 | 36 |
| Newbuilding programme | ||
|---|---|---|
| Tugboats | 4 | 15 |
| Other vessels | 2 | 1 |
| Total | 6 | 16 |
The Danish retail market for fast moving consumer goods grew by 2.3% in 2012. The market experienced a continued shift in volume from supermarkets towards discounters due to the continued slowdown in the economic environment, more store openings in the discount segment relative to supermarkets and a new law allowing extended opening hours including Sundays.
Short term, the discount segment is expected to continue its growth especially helped by the extended opening hours. Long term, discounters are expected to grow ahead of supermarkets but not at the same pace as historically.
| Dansk Supermarked Group | DKK million | |
|---|---|---|
| Highlights | 2012 | 2011 |
| Revenue | 55,610 | 55,227 |
| Profit/loss before depreciation, amortisation | ||
| and impairment losses, etc. (EBITDA) | 2,507 | 2,885 |
| Depreciation, amortisation and impairment losses | 846 | 564 |
| Gain on sale of non-current assets, etc., net | 68 | 3,703 |
| Profit/loss before financial items (EBIT) | 1,729 | 6,024 |
| Tax | 445 | 653 |
| Net operating profit/loss after tax (NOP AT) |
1,284 | 5,371 |
| Cash flow from operating activities | 2,316 | 2,271 |
| Cash flow used for capital expenditure | -2,055 | 3,392 |
| Invested capital | 16,252 15,091 | |
| ROIC | 8.2% | 35.1% |
Dansk Supermarked increased its market share in Denmark to 34.0% (33.6%). The increase mainly took place in the second half of 2012. Dansk Supermarked's market share also increased in Poland and remained stable in Germany and Sweden.
The non-food business continued to be under pressure primarily due to the economic environment together with the growing importance of online shopping, which was also reflected in the online shops, www.bilka.dk and www.salling.dk, which both experienced a continued strong growth in 2012. However, there was an overall decline in the non-food business.
A major transformation of Dansk Supermarked was initiated in 2012 to make a step change in the coming years to secure the position as the preferred choice of customers in all its retail formats. Every week, Dansk Supermarked delivers around 9m shopping trips and the ambition is to continuously improve the shopping experience to create value for the customers.
The transformation was initiated with a number of cost reducing projects to fund the transformation. Specifically, better prices have been negotiated with suppliers and a number of functions have been reorganised or reduced to get a lean and more agile set-up.
Strategic priorities in the coming years include improve customer insight, develop and refresh the formats,
| Number of stores | 2012 | 2011 |
|---|---|---|
| Netto Denmark | 441 | 431 |
| Netto Germany | 345 | 341 |
| Netto Poland | 276 | 242 |
| Netto Sweden | 148 | 146 |
| Netto total | 1,210 | 1,160 |
| Bilka | 18 | 16 |
| føtex | 89 | 86 |
| Salling | 2 | 3 |
| Other stores | 0 | 38 |
| Total | 1,319 | 1,303 |
continue expansion of Netto International, category management, price competitiveness, continued operational efficiency and the people agenda.
As part of Dansk Supermarked's international growth strategy the remaining 25% of the shares in Netto, Germany (OHG Netto Supermarkt GmbH & Co.) was acquired effective from the end of December 2012 and Dansk Supermarked is now the sole owner of the company.
Revenue for 2012 was DKK 55.6bn, an increase of DKK 2.1bn compared to 2011 adjusted for the sale of Netto Foodstores Limited, UK. In total, 71 new stores were opened of which 48 outside Denmark. A total of 55 stores across all countries were closed.
Profit was negatively impacted by impairment losses of DKK 221m (DKK 67m) mainly related to closed stores including two føtex stores and 37 Tøj & Sko stores. Additionally, a sharp decline in the performance of Netto, Sweden, partly due to implementation of a new ERP system and refurbishment of Salling, Aalborg, impacted the result negatively.
Cash flow used for capital expenditure was DKK 2.1bn (positive by DKK 3.4bn). Excluding the cash received from the sale of Netto, UK the comparable capital expenditure in 2011 was DKK 2.9bn. The decrease of DKK 818m was mainly related to investments in fewer stores, relocation and refurbishment of existing stores.
The expectation for 2013 is a total growth of 4-6% in revenue together with improvements in the profitability.
The lost time injury frequency (LTIF) for 2012 was 13.46 per million exposure hours compared to 13.95 per million exposure hours in 2011.
During the last three years, the FPSO market has seen an increase in divestments amongst contractors. The financial return on most FPSO contracts does not match the associated risks and costs, which have forced smaller contractors to exit the market creating fewer, but larger players to bid for projects today. Maersk FPSOs has taken part in divestments when the right opportunities with the right buyers have arisen.
At the end of 2012, Maersk FPSOs' fleet consisted of four units operating in the North Sea and Congo on long-term contracts running for up to nine years. Two of the units, FPSO North Sea Producer and FGSO NKossa II, are joint
| Maersk FPSOs and Maersk LNG | USD million | |
|---|---|---|
| Highlights | 2012 | 2011 |
| Revenue | 357 | 591 |
| Profit/loss before depreciation, amortisation | ||
| and impairment losses, etc. (EBITDA) | 118 | 243 |
| Depreciation, amortisation and impairment losses | 51 | 280 |
| Gain on sale of non-current assets, etc., net | 245 | 8 |
| Share of profit/loss in associated companies | - | 3 |
| Profit/loss before financial items (EBIT) | 312 | -26 |
| Tax | +24 | +36 |
| Net operating profit/loss after tax (NOP AT) |
336 | 10 |
| Cash flow from operating activities | 104 | 226 |
| Cash flow used for capital expenditure | 2,619 | 28 |
| Invested capital | 120 | 2,539 |
| ROIC | 33.9% | 0.4% |
ventures where Maersk FPSOs has 50% and 51% ownership, respectively.
Following the divestment of FPSO Maersk Ngujima-Yin in December 2011, an agreement was signed on 31 July 2012 to divest FPSO Maersk Peregrino at a price of USD 1.2bn. The divestment activities generated a total accounting gain of USD 245m in 2012 and a cash flow of USD 2.6bn. In the Group's consolidated figures an additional profit of USD 53m was recognised on the FPSO Maersk Peregrino transaction.
In Q3 2012, Maersk FPSOs signed a new contract for FPSO North Sea Producer, with a positive financial effect dating from 1 January 2012.
Drilling preparations on the Volve field in the Norwegian sector of the North Sea have recommenced during 2012 and it has been decided to transfer the Volve production module and the operating company from Maersk FPSOs to Maersk Drilling as of 1 January 2013. Furthermore, it was agreed to start a process which, if successful, will lead to a transfer of ownership of the FPSO Maersk Curlew to third party.
The result for Maersk FPSOs and Maersk LNG was USD 336m (USD 10m), positively affected by divestment gains from the sale of Maersk LNG and FPSO Maersk Peregrino. The continued shutdown of FPSO Maersk Curlew had a negative impact on the result.
The lost time injury frequency (LTIF) for 2012 was 0.00 per million exposure hours compared to 0.53 per million exposure hours in 2011.
| Operated fleet | 2012 | 2011 |
|---|---|---|
| Floating production units (FPSO/FGSO) | 4 | 6 |
| LNG carriers | 0 | 8 |
| Total | 4 | 14 |
| Newbuilding programme | ||
| Floating production units (FPSO/FGSO) | 0 | 0 |
| Total | 0 | 0 |
Maersk Container Industry (MCI) experienced a high demand for reefer containers and reefer machines in the first part of 2012 as a result of sound fundamentals in the market. In the latter part of 2012, demand weakened influenced by an attempt from shipping lines to drive freight rates higher by reducing capacity. However, the fundamentals in the market seem intact driven by the underlying growth in reefer transported commodities and cargo conversion from conventional reefer bulk vessels to reefer containers.
During the year, MCI produced reefer container number 300,000 and reefer machine number 125,000. The production of the Star Cool reefer machine started in 2005
and for the first time MCI sold more reefer machines than reefer containers in a year.
Revenue was USD 1.1bn (USD 1.2bn) and the profit was USD 60m (USD 69m). ROIC was 27.7% (33.1%).
The building of the new reefer factory in Chile is progressing according to plan and is expected to be operational by the end of 2013.
The lost time injury frequency (LTIF) for 2012 was 1.47 per million exposure hours compared to 1.45 per million exposure hours in 2011.
The Group owns 20% of the shares in Danske Bank, the largest Danish bank, which has operations in a number of countries, including Denmark, Sweden, Finland, Norway, Ireland and Northern Ireland. The bank's profit was DKK 4.7bn (DKK 1.7bn), of which 20%, corresponding to DKK 952m (DKK 343m), is included in the Group's profit.
Ro/Ro and related activities
Ro/Ro and related activities comprise the Group's ownership interests in DFDS and Höegh Autoliners, etc. The profit was USD 55m (USD 34m) and ROIC was 7.7% (5.3%). The Group participated pro rata in Danske Bank's DKK 7.15bn (USD 1.2bn) capital increase in October 2012.
| USD million | |||
|---|---|---|---|
| Highlights | 2012 | 2011 | |
| Revenue | 814 | 782 | |
| Costs including depreciation and amortisation, etc. | 884 | 825 | |
| Value adjustment of oil price hedges | -3 | -14 | |
| EBIT | -73 | -57 | |
| Financial items, net | - 755 | -855 | |
| Loss before tax | -828 | -912 | |
| Tax | +105 | +177 | |
| Loss for the year | -723 | -735 | |
| Cash flow from operating activities | -742 | -1,123 |
Unallocated activities comprise revenue and costs, etc. as well as financial items which are not attributed to reportable segments, including in particular interest and exchange rate adjustments on borrowings. Furthermore, the purchase of bunker and lubricating oil on behalf of companies in the Group, as well as oil hedging activities that are not allocated to segments, are included on a net basis in unallocated activities.
The bunker purchase activity increased slightly compared to last year. The financial items were negative by USD 755m (negative by USD 855m). The two main contributors to this positive development were reduced net interest expenses (including hedging and fair value adjustments) primarily from short-term placements, as well as currency adjustments.
DKK 5.3bn to DKK 23.4bn (DKK 18.1bn) and the equity totalled DKK 222.5bn (DKK 207.9bn).
Revenue increased by 6% to DKK 342.1bn (DKK 322.5bn). Measured in USD, revenue decreased by 2% to 59.0bn (USD 60.2bn), positively impacted by higher oil prices and container volumes and negatively offset by lower container freight rates and lower share of oil production.
Operating costs increased by DKK 26.3bn to DKK 271.9bn (DKK 245.6bn), primarily due to increasing container volumes and increasing bunker prices.
Depreciation, amortisation and impairment losses increased by DKK 2.1bn to DKK 31.0bn (DKK 28.9bn). The Group recognised impairment losses of net DKK 2.3bn (DKK 1.7bn), mainly related to Maersk Tankers and Svitzer.
Gain on sale of non-current assets, net, decreased to DKK 3.7bn (DKK 4.8bn). In 2012, the gains primarily related to the sale of the FPSO Maersk Peregrino, the LNG activities, and a partial divestment of an oil activity in Brazil, whereas 2011 primarily was attributable to divestment of Netto Foodstores Limited, UK.
Share of the result in associated companies increased by DKK 0.6bn to DKK 1.3bn (DKK 0.7bn) due to higher profit in Danske Bank and Höegh Autoliners.
Net financial expenses were reduced to DKK 4.4bn (DKK 4.6bn). The two main contributors to this positive development was lower net interest expenses including hedging and positive fair value adjustments primarily from short-term placements, as well as currency adjustments.
Companies in the Group are taxed under different tax regimes, depending on location and activity. Special tax rules apply to some of the Group's activities.
As a general rule, shipping activities are subject to a tonnage-based or similar tax system, under which the computation of taxable income includes an amount calculated on the basis of the fleet's tonnage. Moreover, in certain countries freight taxes are paid, mainly based on calculated net income in those countries.
In most countries, oil and gas activities are subject to a special form of taxation, which is often considerably higher than the normal corporate tax rate. Furthermore, for the period 1 January to 8 July the Danish government received 20% of the profit before tax from the Danish sector of the North Sea, calculated according to tax rules. This profit share is treated as tax in the financial statements. In other countries, the government receives a share of the oil production in addition to the tax payment. Such government shares are excluded from revenue and hence not included as tax.
In 2012, the total tax charge for the Group was DKK 19.1bn (DKK 32.4bn). The decrease was primarily caused by the settlement of an Algerian tax dispute resulting in a oneoff income of DKK 5.2bn. Of the total tax charge, taxes payable to Denmark were DKK 9.3bn in 2012 (DKK 11.0bn), of which DKK 6.1bn related to the special hydrocarbon tax and profit share to the Danish state (DKK 7.7bn), and DKK 3.2bn represented corporate tax on oil activities (DKK 3.3bn). The shipping activities' tax payment was DKK 57m (DKK 56m).
Comprehensive income for the year was DKK 21.7bn (DKK 19.9bn) and includes the profit for the year of DKK 23.4bn (DKK 18.1bn) and other comprehensive income which was negative by DKK 1.7bn (positive DKK 1.8bn). Other comprehensive income mainly includes exchange rate adjustment on translation from functional currency to presentation currency, fair value adjustment of certain securities, value adjustment of cash flow hedges and actuarial gains and losses.
At 31 December 2012, total assets amounted to DKK 420.7bn (DKK 404.7bn).
Intangible assets increased to DKK 34.2bn (DKK 28.8bn) mainly due to acquired terminal concession rights.
Property, plant and equipment of DKK 261.4bn (DKK 254.8bn) increased by DKK 6.6bn, with investments in the year of DKK 47.0bn (DKK 43.2bn). Depreciation for the year was DKK 26.7bn (DKK 25.7bn), and net impairment losses of DKK 1.7bn (DKK 1.4bn) were recognised. Sale of tangible assets accounted for DKK 8.8bn (DKK 10.0bn), primarily related to oil facilities in Denmark due to the entry of Nordsøfonden (the Danish stateowned North Sea Fund) as partner in DUC (Dansk Undergrunds Consortium) and FPSO Maersk Peregrino. Currency adjustments were a decrease of DKK 3.2bn (increase of DKK 5.0bn) due to the development in USD versus DKK.
Shares in associated companies amounted to DKK 35.5bn (DKK 32.5bn), hereof Danske Bank DKK 27.7bn (DKK 25.2bn).
Derivatives were as of 31 December 2012 a net liability of DKK 135m (DKK 3.3bn). The reduced liability is primarily related to the appreciation of NOK and DKK.
Total cash and cash equivalents, consisting of securities held for trading as well as cash and bank balances, totalled DKK 15.2bn (DKK 15.2bn) at 31 December 2012. Assets held for sale of net DKK 3.0bn (DKK 8.7bn) comprised assets expected to be sold during 2013 including 11 handygas vessels.
Equity totalled DKK 222.5bn (DKK 207.9bn). The increase includes comprehensive income for the year of DKK
21.7bn (DKK 19.9bn), and dividend was deducted by DKK 5.5bn (DKK 4.9bn).
Deferred tax liabilities totalled DKK 7.9bn (DKK 6.0bn) at 31 December 2012, and recognised deferred tax assets totalled DKK 3.8bn (DKK 4.9bn). Furthermore, deferred tax assets of DKK 4.0bn (DKK 4.0bn) have not been recognised, cf. note 13 to consolidated financial statements.
The Group is involved in a number of legal disputes. Moreover, the Group is party to a number of tax disputes, some of which involve substantial amounts and are subject to considerable uncertainty.
The actuarial net liability in relation to defined benefit plans recognised in the financial statements totalled DKK 2.5bn (DKK 2.5bn) at 31 December 2012. Developments in the actuarial assumptions as well as changes to the minimum funding requirements resulted in actuarial losses of DKK 253m (loss of DKK 844m), which are included in other comprehensive income. In 2012, the Group paid DKK 584m (DKK 558m) to defined benefit plans.
Cash flow from operating activities DKK 44.2bn (DKK 38.9bn) was positively affected by less taxes paid, which was partly offset by lower earnings before depreciation and amortisation. Cash flow used for capital expenditure was DKK 36.6bn (DKK 52.3bn). The decrease was mainly due to sale of the FPSO Maersk Peregrino, the LNG activities, and a partial divestment of an oil activity in Brazil partly being offset by the investments in vessels, oil rights as well as the capital increase in Danske Bank.
The present value of the operating lease commitments totalled DKK 63.4bn (DKK 66.8bn) at 31 December 2012 using a discount rate of 6% (6%). The amount is divided into the following main items:
About half of the time charter payments in Maersk Line and one third of the time charter payments in Maersk
Tankers are estimated to relate to operational costs for the assets. The use of chartered vessels reduces the risk related to fluctuations in demand. The average term to maturity of commitments related to the charters was 2.4 years (2.7 years) for Maersk Line and 4.3 years (4.2 years) for Maersk Tankers.
In APM Terminals, the majority of the commitments relating to future concession fees for port facilities have long maturities with most of the concession agreements being longer than 20 years.
Capital commitments related to the purchase of property, plant and equipment totalled DKK 78.1bn (DKK
84.9bn) at 31 December 2012 and are primarily related to Maersk Line DKK 19.2.bn (DKK 30.0bn), Maersk Drilling DKK 19.2bn (DKK 17.4bn), Maersk Oil DKK 19.3bn (DKK 16.5bn) and APM Terminals DKK 18.3bn (DKK 16.3bn).
A total of 25 container vessels, 7 drilling units and 12 other vessels are in the order book at year-end.
The capital commitments will be financed by a combination of the Group's future cash flow from operating activities, investment specific loans and existing committed corporate facilities.
than 300 analysts and investors attending, this was the highest attendance for a Capital Markets Day in Denmark.
The total market value of A.P. Møller - Mærsk A/S' shares at the end of 2012 was DKK 180.4bn. On 20 February 2012, the B share closed at its highest price in 2012 of DKK 48,040 (for one DKK 1,000 share) and on 4 June 2012, at its lowest price of DKK 35,220. At the end of 2012, the price was DKK 42,600, corresponding to an increase by 12.3% compared to the end of 2011. The total shareholder return for the B share was 15.5% in 2012.
A.P. Møller - Mærsk A/S was listed on the stock exchange in 1982. The shares are listed on NASDAQ OMX Copenhagen and are divided into two classes: A shares with voting rights and B shares without voting rights. Each DKK 1,000 A share entitles the holder to two votes.
At 31 December 2012, the total share capital of DKK 4,395.6m consisted of 4,395,600 shares, equally split between A and B shares. No restrictions are imposed on the negotiability of the shares.
A.P. Møller - Mærsk A/S had above 75,000 private and institutional shareholders at the end of 2012. 41.22% of the share capital, corresponding to 50.6% of the votes, is held by the foundation A.P. Møller og Hustru Chastine Mc-Kinney Møllers Fond til almene Formaal. In addition to this, the founding family controls another 25.9% of the votes through various foundations and private ownership. The free float is 42% of the share capital.
In addition to the Foundations´ large ownership, A.P. Møller - Mærsk A/S has a base of international shareholders. According to an analysis of the shareholder structure carried out in December 2012, the distribution of the free floating shares is as follows:
| According to § 104 in the Danish Financial Statements Act (Årsregnskabsloven) |
Share capital | Votes |
|---|---|---|
| A.P. Møller og Hustru Chastine Mc-Kinney | ||
| Møllers Fond til almene Formaal, | ||
| Copenhagen, Denmark | 41.22% | 50.60% |
| A.P. Møller og Hustru Chastine Mc-Kinney | ||
| Møllers Familiefond, Copenhagen, Denmark | 9.65% | 13.53% |
| Estate of Mærsk Mc-Kinney Møller, | ||
| Copenhagen, Denmark | 3.73% | 6.50% |
| Den A.P. Møllerske Støttefond, | ||
| Copenhagen, Denmark | 2.94% | 5.86% |
Source: Factset
The Group's holding of own shares comprises 0.7% of the share capital and is, among other purposes, held to cover the revolving option programme, cf. note 17 to consolidated financial statements. According to the authorisation of the Annual General Meeting, the Board of Directors may in the period up to 3 April 2016 allow the Company to acquire own shares up to a total nominal value of 10% of the Company's share capital, cf. section 198 of the Danish Companies Act (Selskabsloven). The purchase price may not deviate by more than 10% from the price quoted on NASDAQ OMX Copenhagen at the time of purchase.
The Board of Directors proposes a dividend to the shareholders of DKK 1,200 per share of DKK 1,000 – a total of DKK 5,275m (DKK 1,000 per share of DKK 1,000 – a total of DKK 4,396m). The proposed dividend payment represents a dividend yield of 2.8% (2.6%), based on the Maersk B share's closing price as of 31 December 2012. Payment is expected to take place on 17 April 2013. The Group intends to continue the historical trend of increasing dividends nominally per share supported by underlying earnings strength.
| 11 April: | Annual General Meeting |
|---|---|
| 17 May: | Interim Report 1st Quarter |
| 16 August: | Interim Report 2nd Quarter |
| 13 November: Interim Report 3rd Quarter |
The Annual General Meeting will be held on 11 April 2013 in Svendborg, Denmark.
A.P. Møller - Mærsk A/S continues to develop the Company's level of information and ensure a consistent, regular and relevant flow of information on the Group's activities, business objectives, strategies and results. The Group's first Capital Markets Day was held in October 2012.
To ensure a regular and open dialogue with investors and analysts, the management hosts teleconferences in connection with the presentation of the annual and interim reports and visits investors in Europe and the USA. Investors and analysts are welcome to contact the Investor Relations office.
A.P. Møller - Mærsk A/S is covered by around 31 analysts, including international investment banks, who regularly publish research reports. A list of the analysts, including consensus target price and recommendation, is available on http://investor.maersk.com. The website also provides information on the Company's activities, including financial reports, financial calendar, investor presentations, share information, corporate governance, bond programme and contact information.
| The Maersk share: Key figures 2012 2011 2010 2009 Year-end share price (DKK, B share) 42,600 37,920 50,510 36,600 Share price range (DKK, B share) 12,820 21,670 14,920 17,100 Market capitalisation at year-end (DKK billion, A and B share) 180 161 217 157 Earnings per share (DKK) 4,964 3,479 6,061 -1,674 Dividend per share (DKK, A and B share) 1,200 1,000 1,000 325 Dividend yield (%, B share) 2.8% 2.6% 2.0% 0.9% Total dividend paid (DKK million, A and B share) 5,275 4,396 4,396 1,429 Total shareholder return (%, B share) 15.5% -22.9% 40.7% 31.4% |
|||
|---|---|---|---|
| 2008 | |||
| 28,100 | |||
| 34,100 | |||
| 116 | |||
| 4,122 | |||
| 650 | |||
| 2.3% | |||
| 2,857 | |||
| -47.2% |
Maersk Line Lashing at the stern. Crew members on board one of the container vessels make sure that the containers will not fall off during the journey.
The Group is exposed to a range of different risks due to its global presence and variety of businesses. This requires a portfolio approach to risks where the downside risks are carefully evaluated and balanced against the upside potential and where risks are assessed from a portfolio perspective.
Management of the Group's risks is anchored in an Enterprise Risk Management framework, where the most significant risks and mitigation plans are consolidated bi-annually in a Group key risk overview. The Group key risk overview is discussed with the Group's Executive Board and Board of Directors.
Supply and demand imbalance in Maersk Line The Group is exposed to substantial fluctuations in freight rates, particularly in Maersk Line, due to significant structural imbalances between supply and demand. To mitigate this risk, Maersk Line differentiates its services to build customer loyalty and furthermore enters into customer contracts to secure rates and volumes. Furthermore, scrapping of vessels, slow steaming and cancellations are used to reduce capacity and cost in periods of excess tonnage.
The Group's projected oil production depends on continuity of existing production, progression of pending field development projects and extension of existing licenses and contracts. In order to efficiently progress discoveries to productions, a defined project maturation process has been adopted in the Group. The Group additionally focuses on recruitment, stakeholder management and termination of non-commercial projects.
The Group's global presence exposes both assets and earnings to geopolitical events. Political actions such as trade barriers, new taxes, currency restrictions, expropriation etc. could impact the Group's result and cash flows. Key mitigations to manage these risks include engagement with political bodies and authorities, local partnerships, monitoring of regulatory initiatives, corporate social responsibility and spread of geographical risks.
The Group must have sufficient funds available to fund its operations and investment programme and service its debt. The Group has a financial policy and closely monitors cash flow forecasts, financial ratios and the liquidity reserve. Further, the Group aims to secure funding before committing investments and seeks to diversify financing sources through corporate bonds and private placements.
The Group has substantial exposure to financial and commercial counterparties but has no particular concentration of customers or suppliers. To minimise the credit risk, financial vetting is undertaken for all major customers and financial institutions, adequate security is required for commercial counterparties and credit limits are set for financial institutions and key commercial counterparties.
The Group's income from shipping and oil related activities is mainly USD denominated while the related expenses are in both USD and a wide range of other currencies. The Group's exposure to currency fluctuations is mitigated by various hedge programs.
The Group has substantial income from oil and gas activities and substantial costs to bunker fuel. Both items are highly sensitive to fluctuations in the oil price (crude oil price and bunker oil price respectively). The Group seeks to recover bunker fuel costs from customers through the Bunker Adjustment Factor (BAF). The net oil price position is being monitored closely and managed at Group level.
Controlling the risk of major safety incidents is inherent in the Group's businesses, particularly in the oil and offshore businesses. To mitigate these risks, safety training, safety risk management systems, certification and classification of equipment and procedures, quality assurance and processes for knowledge sharing across the Group are in place. When activities are performed in partnerships or in joint ventures where the Group is not in full control of the activities, the Group seeks to protect sustainable interests and values through cooperation and shareholder agreements, etc.
Controlling the risk of major environmental incidents is inherent in the Group's businesses, particularly in the oil, offshore and tanker business. The risk is mitigated through training, environmental management systems, oil spill procedures, membership of cross industry response organisations, double hull policy and by taking limited equity shares in operations in high risk areas. Where activities are performed in cooperation or joint ventures and the Group is not in full control of the activities, the Group constantly seeks to protect sustainable interests and values through cooperation and shareholder agreements, etc.
Due to its global operational presence the Group faces a threat of war, terrorism and piracy attacks in various areas. Main mitigations are disaster and contingency planning, security measures at offices, vessels and installations, armed guards on vessels, voyage planning and monitoring and intelligence.
The Group's global presence, size and complexity dictate a need for having the right information available at the right time, maintaining the integrity of protected information and preventing disclosure of confidential information.
This is secured through an information security policy, IT governance, technical controls, information security user training and awareness campaigns and business continuity plans.
Continued strengthening of the business areas' competitiveness, including customer focus and cost control, has a material impact on the Group's results and development.
Part of the activities in APM Terminals and Maersk Oil are performed in cooperation and joint ventures where the Group is not in full control of the activities. Through cooperation and shareholder agreements, etc., with stateowned partners among others, the Group constantly seeks to protect sustainable interests and values as well as to ensure implementation of initiatives to improve the Group's competitiveness and results.
It is a priority for the Group to be compliant with the global human rights standards associated with the new expectations and standards set by OECD for multinational enterprises. The Group has implemented a Responsible Procurement Programme, health and safety management programmes and global labour principles in place to mitigate the risk of non-compliance.
The Group is exposed to a large number of different tax regimes in 130 countries and there is a risk of unexpected tax expenses due to uncertainty in the interpretation of local tax regulations or failure in compliance. To mitigate this risk, specific tax compliance policies are in place, a tax risk database is maintained and the Group's tax function receives regular reporting from Business Unit and Country tax departments. In significant locations, specialised tax managers monitor changes in tax regulations and rules to ensure full compliance. In other locations the Group relies upon external tax advisors for guidance.
Anti-corruption, competition and export control Failure to comply with applicable legislation relating to anti-corruption, competition and export control may have a substantial negative impact on the Group's financial performance and reputation. To mitigate this risk, mandatory compliance training, specific compliance policies and procedures, a whistleblower system, a "hospitality book" to report gifts and compliance audits and drills are in place.
The Group has decided to further investigate and assess the potential impact of the following emerging risks:
The Group's insurance programmes cover assets and liabilities across the Group's business portfolio in accordance with legal requirements and industry practice. Limits and sums insured are based on maximum foreseeable losses considering also availability and price of capacity.
Since January 2012, the Group operates its own captive insurance company, Maersk Insurance A/S, which allows the Group to self-insure risks within parameters specified by the Group's Board of Directors and thus to optimise the Group's total cost of insurable risks.
Maersk Insurance A/S insures risks across the Group's business portfolio ranging from vessels, oil and gas installations, drilling rigs to ports and terminals.
Capital Markets Day Copenhagen Denmark
The Group held its first Capital Markets Day in October 2012 explaining its strategy of building four world class businesses over the next five years.
Corporate governance is a topic that A.P. Møller - Mærsk A/S' Board of Directors continuously considers on the basis of the Company's activities, external environment, history and needs, etc.
Recommendations for corporate governance
As a Danish listed company, A.P. Møller - Mærsk A/S must observe the "Recommendations for corporate governance" (Anbefalinger for god selskabsledelse) implemented by NASDAQ OMX Copenhagen in the Rules for issuers of shares (Regler for udstedere af aktier) and Section 107b of the Danish Financial Statements Act (Årsregnskabsloven).
The Board of Directors of A.P. Møller - Mærsk A/S has prepared a statement on corporate governance for the 2012 financial year. The statement can be reviewed and downloaded via http://investor.maersk.com/governancestate ment.cfm
The statement includes a description of the Company's approach to each of the "Recommendations for corporate governance" issued and a description of the Company's management structure and the main elements of the Group's internal control and risk management systems in connection with the Group's financial reporting process.
A.P. Møller - Mærsk A/S has a two-tier management structure consisting of the Board of Directors and the Executive Board, as illustrated. The Board of Directors lays down the general business and management principles for the Group and ensures the proper organisation of the Group. Furthermore, the Board of Directors decides the strategy and the risk policies and supervises the performance of the Company and its management. The Executive Board functions as the day-to-day management.
In August 2012, the Board of Directors decided that Firmaet A.P. Møller should step down as registered management as of 1 January 2013, from which date, the current members of the Executive Board, Nils S. Andersen, Kim Fejfer, Claus V. Hemmingsen, Søren Skou, Jakob Thomasen and Trond Westlie became registered as management of A.P. Møller - Mærsk A/S. Until 1 January 2013 the registered management of A.P. Møller - Mærsk A/S consisted of Firmaet A.P. Møller, a Danish partnership. Further information is available in the above-mentioned statement.
| Note | 2012 | 2011 | ||
|---|---|---|---|---|
| 3 | Revenue | 342,058 | 322,520 | |
| 4 | Operating costs | 271,872 | 245,565 | |
| Other income | 2,724 | 1,652 | ||
| Other costs | 13 | 101 | ||
| Profit before depreciation, amortisation and impairment losses, etc. | 72,897 | 78,506 | ||
| 9,10 Depreciation, amortisation and impairment losses | 30,973 | 28,889 | ||
| 5 | Gain on sale of non-current assets, etc., net | 3,683 | 4,764 | |
| 11 | Share of profit/loss in associated companies | 1,286 | 651 | |
| Profit before financial items | 46,893 | 55,032 | ||
| 6 | Financial income | 4,390 | 4,204 | |
| 6 | Financial expenses | 8,766 | 8,784 | |
| Profit before tax | 42,517 | 50,452 | ||
| 7 | Tax | 19,138 | 32,447 | |
| Profit for the year – continuing operations | 23,379 | 18,005 | ||
| 8 | Profit for the year – discontinued operations | 16 | 78 | |
| Profit for the year | 23,395 | 18,083 | ||
| Of which: | ||||
| Non-controlling interests | 1,722 | 2,894 | ||
| A.P. Møller - Mærsk A/S' share | 21,673 | 15,189 | ||
| 16 | Earnings per share of continuing operations, DKK | 4,960 | 3,461 | |
| 16 | Diluted earnings per share of continuing operations, DKK | 4,958 | 3,460 | |
| 16 | Earnings per share, DKK | 4,964 | 3,479 | |
| 16 | Diluted earnings per share, DKK | 4,962 | 3,478 |
| Note | 2012 | 2011 | |
|---|---|---|---|
| Profit for the year | 23,395 | 18,083 | |
| Translation from functional currency to presentation currency: | |||
| Translation impact arising during the year | - 2,347 | 2,547 | |
| Reclassified to income statement, gain/loss on sale of non-current assets, etc., net | - 279 | 547 | |
| Other equity investments: | |||
| Fair value adjustment for the year | 27 | -9 | |
| Reclassified to income statement, gain on sale of non-current assets, etc., net | - 3 | -50 | |
| 15 | Cash flow hedges: | ||
| Value adjustment of hedges for the year | - 88 | 3 | |
| Reclassified to income statement: | |||
| – revenue | - 17 | -47 | |
| – operating costs | 331 | -416 | |
| – gain on sale of non-current assets, etc., net | - | -279 | |
| – financial expenses | 767 | 763 | |
| Reclassified to cost of property, plant and equipment | 97 | 34 | |
| Share of other comprehensive income of associated companies, net of tax | 134 | -180 | |
| 19 | Actuarial gains/losses on defined benefit plans, etc. | -253 | -844 |
| 7 | Tax on other comprehensive income | - 98 | -252 |
| Other comprehensive income for the year | -1,729 | 1,817 | |
| Total comprehensive income for the year | 21,666 | 19,900 | |
| Of which: | |||
| Non-controlling interests | 1,686 | 2,977 | |
| A.P. Møller - Mærsk A/S' share | 19,980 | 16,923 |
| Note | 2012 | 2011 | ||
|---|---|---|---|---|
| 9 | Intangible assets | 34,183 | 28,839 | |
| Ships, rigs, containers, etc. | 172,323 | 169,184 | ||
| Production facilities and equipment, etc. | 35,635 | 35,812 | ||
| Land and buildings | 21,806 | 24,223 | ||
| Construction work in progress and payment on account | 31,605 | 25,609 | ||
| 10 | Property, plant and equipment | 261,369 | 254,828 | |
| 11 | Investments in associated companies | 35,541 | 32,465 | |
| Other equity investments | 425 | 485 | ||
| 15 | Derivatives | 1,249 | 815 | |
| 19 | Pensions, net assets | 193 | 87 | |
| 12 | Other receivables | 5,022 | 3,851 | |
| Financial non-current assets | 42,430 | 37,703 | ||
| 13 | Deferred tax | 3,773 | 4,935 | |
| Total non-current assets | 341,755 | 326,305 | ||
| 14 | Inventories | 13,042 | 12,868 | |
| Trade receivables | 30,767 | 25,319 | ||
| Tax receivables | 2,304 | 1,370 | ||
| 15 | Derivatives | 622 | 469 | |
| 12 | Other receivables | 11,376 | 10,438 | |
| Prepayments | 2,598 | 2,375 | ||
| Receivables, etc. | 47,667 | 39,971 | ||
| Securities | 2,160 | 2,152 | ||
| Cash and bank balances | 13,011 | 13,095 | ||
| 8 | Assets held for sale | 3,056 | 10,352 | |
| Total current assets | 78,936 | 78,438 | ||
| Total assets | 420,691 | 404,743 |
| Note | 2012 | 2011 | |
|---|---|---|---|
| 16 | Share capital | 4,396 | 4,396 |
| Reserves | 199,129 | 185,365 | |
| Proposed dividend for distribution | 5,275 | 4,396 | |
| Equity attributable to A.P. Møller - Mærsk A/S | 208,800 | 194,157 | |
| Non-controlling interests | 13,744 | 13,778 | |
| Total equity | 222,544 | 207,935 | |
| 18 | Borrowings, non-current | 98,112 | 96,884 |
| 19 | Pensions and similar obligations | 2,531 | 2,547 |
| 20 | Provisions | 19,351 | 18,432 |
| 15 | Derivatives | 1,441 | 2,444 |
| 13 | Deferred tax | 7,874 | 6,008 |
| 21 | Other payables | 371 | 457 |
| Other non-current liabilities | 31,568 | 29,888 | |
| Total non-current liabilities | 129,680 | 126,772 | |
| 18 | Borrowings, current | 12,952 | 12,914 |
| 20 | Provisions | 3,474 | 2,869 |
| Trade payables | 35,594 | 37,232 | |
| Tax payables | 2,806 | 3,497 | |
| 15 | Derivatives | 565 | 2,182 |
| 21 | Other payables | 8,992 | 9,022 |
| Deferred income | 3,993 | 663 | |
| Other current liabilities | 55,424 | 55,465 | |
| 8 | Liabilities associated with assets held for sale | 91 | 1,657 |
| Total current liabilities | 68,467 | 70,036 | |
| Total liabilities | 198,147 | 196,808 | |
| Total equity and liabilities | 420,691 | 404,743 | |
Amounts in DKK million (in parenthesis the corresponding figures for 2011)
| Note | 2012 | 2011 | |
|---|---|---|---|
| Profit before financial items | 46,893 | 55,032 | |
| 9,10 Depreciation, amortisation and impairment losses | 30,973 | 28,889 | |
| 5 | Gain on sale of non-current assets, etc., net | -3,651 | -4,748 |
| Share of profit/loss in associated companies | -1,286 | -651 | |
| 24 | Change in working capital | -4,015 | -502 |
| Change in provisions and pension obligations, etc. | 517 | -1,764 | |
| 24 | Other non-cash items | 541 | -256 |
| Cash flow from operating activities before financial items and tax | 69,972 | 76,000 | |
| 24 | Financial income received | 1,307 | 835 |
| Financial expenses paid | -5,634 | -5,879 | |
| Taxes paid | -21,443 | -32,070 | |
| Cash flow from operating activities | 44,202 | 38,886 | |
| 24 | Purchase of intangible assets and property, plant and equipment | -47,108 | -42,058 |
| Sale of intangible assets and property, plant and equipment | 10,121 | 2,255 | |
| 25 | Acquisition of subsidiaries and activities | -6,217 | -13,070 |
| 25 | Sale of subsidiaries and activities | 9,398 | 6,602 |
| 24 | Other financial investments | -2,813 | -5,988 |
| Cash flow used for capital expenditure | -36,619 | -52,259 | |
| Purchase/sale of securities, trading portfolio | -23 | -133 | |
| Cash flow used for investing activities | -36,642 | -52,392 | |
| Repayment of borrowings | -23,829 | -19,484 | |
| Proceeds from borrowings | 23,001 | 26,528 | |
| Dividends distributed | -4,366 | -4,365 | |
| Dividends distributed to non-controlling interests | -1,109 | -582 | |
| Acquisition of non-controlling interests | -1,653 | -35 | |
| Other equity transactions | 139 | 96 | |
| Cash flow from financing activities | -7,817 | 2,158 | |
| Net cash flow from continuing operations | -257 | -11,348 | |
| 8 | Net cash flow from discontinued operations | -3 | 129 |
| Net cash flow for the year | -260 | -11,219 | |
| Cash and bank balances 1 January | 13,129 | 23,921 | |
| Currency translation effect on cash and bank balances | 142 | 427 | |
| Cash and bank balances 31 December | 13,011 | 13,129 | |
| Of which classified as assets held for sale | - | -34 | |
| Cash and bank balances 31 December | 13,011 | 13,095 |
Cash and bank balances include DKK 7.0bn (DKK 5.0bn) that relates to cash and bank balances in countries with exchange control or other restrictions. These funds are not readily available for general use by the parent company or other subsidiaries. Cash and bank balances in jointly controlled entities are stated in note 30.
| A.P. Møller - Mærsk A/S | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Note | Share capital |
Trans- lation reserve |
Reserve for other equity invest- ments |
hedges | Reserve Retained Proposed for earnings |
dividend for distri- bution |
Total | Non- control- ling inter ests |
Total equity |
| Equity 1 January 2012 | 4,396 | -3,007 | 65 | -1,713 | 190,020 | 4,396 | 194,157 | 13,778 | 207,935 |
| Translation from functional currency | |||||||||
| to presentation currency | - | -2,627 | -2 | 3 | - | - | -2,626 | - | -2,626 |
| Other equity investments | - | - | 21 | - | - | - | 21 | 3 | 24 |
| Cash flow hedges | - | - | - | 1,112 | - | - | 1,112 | -22 | 1,090 |
| Share of other comprehensive | |||||||||
| income of associated companies, | |||||||||
| net of tax | - | - | - | - | 134 | - | 134 | - | 134 |
| Actuarial gains/losses on defined | |||||||||
| benefit plans, etc. | - | - | - | - | -231 | - | -231 | -22 | -253 |
| 7 Tax on other comprehensive income |
- | - | - | -58 | -45 | - | -103 | 5 | -98 |
| Other comprehensive income, net of tax - | -2,627 | 19 | 1,057 | -142 | - | -1,693 | -36 | -1,729 | |
| Profit for the year | - | - | - | - | 16,398 | 5,275 | 21,673 | 1,722 | 23,395 |
| Total comprehensive income | |||||||||
| for the year | - | -2,627 | 19 | 1,057 | 16,256 | 5,275 | 19,980 | 1,686 | 21,666 |
| Dividends to shareholders | - | - | - | - | 30 | -4,396 | -4,366 | -1,109 | -5,475 |
| 17 Value of granted and sold share |
|||||||||
| options | - | - | - | - | 43 | - | 43 | - | 43 |
| 26 Acquisition of non-controlling |
|||||||||
| interests | - | - | - | - | -1,032 | - | -1,032 | -640 | - 1,672 |
| Sale of own shares | - | - | - | - | 18 | - | 18 | - | 18 |
| Capital increases and decreases | - | - | - | - | - | - | - | 85 | 85 |
| Tax on transactions | - | - | - | - | - | - | - | -30 | -30 |
| Other equity movements | - | - | - | - | - | - | - | -26 | - 26 |
| Total transactions with shareholders | - | - | - | - | -941 | -4,396 | -5,337 | -1,720 | - 7,057 |
| 2011 | A.P. Møller - Mærsk A/S | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Note | Share capital |
Trans- lation reserve |
Reserve for other equity invest- ments |
hedges | Reserve Retained Proposed for earnings |
dividend for distri- bution |
Total | Non- control- ling inter ests |
Total equity |
||
| Equity 1 January 2011 | 4,396 | -5,592 | 125 | -1,764 | 179,995 | 4,396 | 181,556 | 11,406 | 192,962 | ||
| Translation from functional currency to presentation currency |
- | 2,585 | -1 | 381 | - | - | 2,965 | 129 | 3,094 | ||
| Other equity investments | - | - | -58 | - | - | - | -58 | -1 | -59 | ||
| Cash flow hedges Share of other comprehensive income of associated companies, |
- | - | - | 90 | - | - | 90 | -32 | 58 | ||
| net of tax Actuarial gains/losses on defined |
- | - | - | - | -180 | - | -180 | - | -180 | ||
| 7 | benefit plans, etc. Tax on other comprehensive |
- | - | - | - | -826 | - | -826 | -18 | -844 | |
| income | - | - | -1 | -420 | 164 | - | -257 | 5 | -252 | ||
| Other comprehensive income, | |||||||||||
| net of tax | - | 2,585 | -60 | 51 | -842 | - | 1,734 | 83 | 1,817 | ||
| Profit for the year | - | - | - | - | 10,793 | 4,396 | 15,189 | 2,894 | 18,083 | ||
| Total comprehensive income | |||||||||||
| for the year | - | 2,585 | -60 | 51 | 9,951 | 4,396 | 16,923 | 2,977 | 19,900 | ||
| Dividends to shareholders | - | - | - | - | 31 | -4,396 | -4,365 | -582 | -4,947 | ||
| 17 | Value of granted and sold share | ||||||||||
| options | - | - | - | - | 41 | - | 41 | - | 41 | ||
| 26 | Acquisition of non-controlling | ||||||||||
| interests | - | - | - | - | -28 | - | -28 | -7 | -35 | ||
| Acquisition of own shares | - | - | - | - | -24 | - | -24 | - | -24 | ||
| Sale of own shares | - | - | - | - | 38 | - | 38 | - | 38 | ||
| Capital increases and decreases | - | - | - | - | - | - | - | 76 | 76 | ||
| Tax on transactions | - | - | - | - | -48 | - | -48 | - | -48 | ||
| Other equity movements | - | - | - | - | 64 | - | 64 | -92 | -28 | ||
| Total transactions with shareholders | - | - | - | - | 74 | -4,396 | -4,322 | -605 | -4,927 | ||
| Equity 31 December 2011 | 4,396 | -3,007 | 65 | -1,713 | 190,020 | 4,396 | 194,157 | 13,778 | 207,935 |
Maersk Container Industry Qingdao China
In November 2012, the reefer factory in Qingdao produced reefer container no. 300,000. In the same month Star Cool reefer machine no. 125,000 came off the production line. The factory in Qingdao has an annual production capacity of 45,000 reefer containers and 45,000 Star Cool reefer machines.
| Contents | Page | ||
|---|---|---|---|
| 1 | Accounting policies | 83 | |
| 2 | Significant accounting estimates and judgements | 89 | |
| 3 | Segment information | 92 | |
| 4 | Operating costs | 98 | |
| 5 | Gain on sale of non-current assets, etc., net | 99 | |
| 6 | Financial income and expenses | 100 | |
| 7 | Tax | 101 | |
| 8 | Discontinued operations and assets held for sale | 102 | |
| 9 | Intangible assets | 103 | |
| 10 | Property, plant and equipment | 105 | |
| 11 | Investments in associated companies | 107 | |
| 12 | Other receivables | 108 | |
| 13 | Deferred tax | 109 | |
| 14 | Inventories | 110 | |
| 15 | Derivatives | 111 | |
| 16 | Share capital and earnings per share | 112 | |
| 17 | Share-based payment | 114 | |
| 18 | Borrowings | 115 | |
| 19 | Pensions and similar obligations | 116 | |
| 20 | Provisions | 119 | |
| 21 | Other payables | 119 | |
| 22 | Financial instruments by category | 120 | |
| 23 | Financial risks | 123 | |
| 24 | Cash flow specifications | 128 | |
| 25 | Acquisition/sale of subsidiaries and activities | 129 | |
| 26 | Effect of changes in ownership where the Group retains control | 132 | |
| 27 | Commitments | 133 | |
| 28 | Contingent liabilities | 135 | |
| 29 | Related parties | 136 | |
| 30 | Jointly controlled entities | 138 | |
| 31 | New financial reporting requirements | 139 |
The consolidated financial statements for 2012 for the A.P. Moller – Maersk Group have been prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the EU and Danish disclosure requirements for listed companies. In addition, the consolidated financial statements have been prepared in accordance with IFRS issued by the International Accounting Standards Board (IASB).
The accounting policies are consistent with those applied to the consolidated financial statements for 2011. An overview of the new and updated standards and interpretations is given in note 31.
A number of operational segments have an increasing significance to the Group, and consequently the presentation of segment information has been changed as of 1 January 2012. The business area Tankers, offshore and other shipping activities has been divided into Maersk Drilling, Maersk Supply Service, Maersk Tankers, SVITZER and Maersk FPSOs and Maersk LNG. Maersk Supply Service includes the ESVAGT business, which was transferred from SVITZER. The Ro/Ro and related activities have been moved to Other businesses, while Damco has been separated from Container activities. Furthermore, for simplification purposes, segment profit or loss no longer includes financial items. Comparative figures have been restated.
The Board of Directors and the Management Board have on 22 February 2013 considered and adopted the annual report for 2012, which will be presented for adoption by the shareholders at the Company's Annual General Meeting on 11 April 2013.
The consolidated financial statements comprise the parent company A.P. Møller - Mærsk A/S, subsidiaries and proportionate shares in jointly controlled entities.
Subsidiaries are entities in which A.P. Møller - Mærsk A/S controls the financial and operational policies for the purpose of achieving a return or other benefits from the activities. Control is achieved by directly or indirectly owning or controlling more than 50% of the voting rights, by means of agreements on management control or some other way of controlling the entity concerned. Entities in which the Group exercises a significant but non-controlling influence are considered to be associated companies (associates). A significant influence is usually achieved by directly or indirectly owning or controlling 20-50% of the voting rights. Agreements and other circumstances are considered when assessing the degree of influence.
Jointly controlled entities are entities in which the Group according to contractual agreements makes strategic decisions about the financing and operation of the entity jointly with one or more other parties.
Consolidation is performed by summarising the financial statements of the parent company, subsidiaries and the proportionate share of jointly controlled entities which have been prepared in accordance with the Group's accounting policies, after the elimination of intra-group income and expenses, shareholdings, intra-group balances and dividends, and gains on intra-group transactions. Financial statement items related to part-owned vessels are included proportionately.
Unrealised gains on transactions with associated companies and jointly controlled entities are eliminated in proportion with the Group's ownership share. Unrealised losses are eliminated in the same way, unless they indicate impairment.
Non-controlling interests' share of profit for the year and of equity in subsidiaries which are not wholly owned is included as part of the Group's profit and equity respectively, but shown as separate items.
On acquisition of new entities, the acquired assets, liabilities and contingent liabilities are measured at fair value at the date control was achieved using the acquisition method. Identifiable intangible assets are recognised if they arise from a contractual right or can otherwise be separately identified. The difference between the fair value of the acquisition cost and the fair value of acquired identifiable net assets is recognised as goodwill under intangible assets. Any subsequent changes to contingent acquisition costs are recognised as other income or other costs in the income statement. Transaction costs are recognised as operating costs as they are incurred.
In stepwise acquisitions, value adjustments of previously recognised investments are recognised in the income statement. When surrendering control, the value of any retained investment is adjusted at fair value and the value adjustment is recognised in the income statement as gain on sale of non-current assets, etc., net. The effect of the purchase and sale of non-controlling interests without changes in control is included directly in equity.
The Group uses DKK as its presentation currency. In the translation to the presentation currency for entities with a functional currency different from DKK, the statement of comprehensive income is translated into DKK at average exchange rates and the balance sheet is translated at the exchange rates at the balance sheet date. Exchange differences arising from such translation are recognised directly in other comprehensive income.
The functional currency varies from business area to business area. For the Group's principal shipping activities and oil and gas activities, the functional currency is USD. This means that, among other things, the carrying amounts of property, plant and equipment and intangible assets and, hence, depreciation and amortisation are maintained in USD from the date of acquisition. For other activities, including container terminal activities and land-based container activities, the functional currency is generally the local currency in the country in which such activities are performed.
Transactions in other currencies than the functional currency are translated at the exchange rate prevailing at the date of the transaction. Monetary items in foreign currencies not settled at the balance sheet date are translated at the exchange rate at the balance sheet date. Foreign exchange gains and losses are included in the income statement as financial income or expenses.
Derivative financial instruments are recognised on the trading date and measured at fair value using generally acknowledged valuation techniques based on relevant observable swap curves and exchange rates.
The effective portion of changes in the value of derivative financial instruments designated to hedge future transactions is recognised directly in other comprehensive income until the hedged transactions are realised. At that time, the cumulated gains/losses are transferred to the items under which the hedged transactions are recognised.
The effective portion of changes in the value of derivative financial instruments used to hedge the value of recognised financial assets and liabilities is recognised in the income statement together with changes in the fair value of the hedged assets or liabilities which can be attributed to the hedging relationship.
The ineffective portion of hedge transactions, including time value for oil price hedges, and changes in the fair values of derivative financial instruments which do not qualify for hedge accounting, are recognised in the income statement as financial income or expenses for financial instruments, and as other income/costs for oil price hedges and forward freight agreements.
The allocation of business activities into segments reflects the Group's character as a conglomerate and is in line with the internal management reporting. Some activities are related, but are managed as independent units. The segments are as follows:
| Maersk Line | Global container services |
|---|---|
| Maersk Oil | Oil and gas production and exploration activities |
| APM Terminals | Container terminal activities, inland transportation, container depots and repair of containers, etc. |
| Maersk Drilling | Offshore drilling activities as well as land-rig operations through 50% ownership of Egyptian Drilling Company |
| Maersk Supply Service | Offshore support supply vessel activities with anchor handling, platform and subsea support vessels |
| Maersk Tankers | Tanker shipping of crude oil, oil products and gas |
| Damco | Logistic and forwarding activities |
| SVITZER | Towing and salvage activities, etc. |
| Dansk Supermarked Group | Supermarkets (føtex and Bilka), department stores (Salling) and discount supermarkets (Netto), etc. |
| Maersk FPSOs and Maersk LNG | Floating oil and gas production units |
Revenue from Other businesses consists of income from container sales, shipbuilding, air freight, and services sold to the energy industry. Other businesses also include investments in the associated companies Danske Bank, Höegh Autoliners and DFDS.
Revenue between segments is limited except for Terminal activities and Damco, which deliver a large part of their services to the Group's container shipping activities. Sales of products and services between segments are based on market terms.
Segment profit or loss, assets and liabilities comprise items directly related to or which can be allocated to segments. Financial assets and liabilities and financial income and expenses are not attributed to business segments.
Reportable segments do not comprise costs in group functions. Furthermore, oil hedging activities in Maersk Oil Trading and the results of Maersk Oil Trading's trading activity in the form of purchasing bunker and lubricating oil on behalf of entities in the Group are not allocated to business segments.
Revenue from sale of goods is recognised upon the transfer of risk to the buyer.
Revenue from shipping activities is recognised as the service is rendered, by which incomplete voyages are recognised at the share related to the financial year. The earnings of vessels that are part of pool arrangements are recognised in revenue based on time charter equivalents.
Oil and gas sales are recognised as revenue upon discharge from the production site. Revenue from agreements in which the state's share of production is settled in oil is recognised gross with the state share recognised as tax expense. Royalties settled in oil are deducted from revenue.
Revenue from terminal operations, logistics, forwarding activities and towing activities is recognised upon completion of the service. In container terminals operated under certain restrictive terms of pricing and service, etc., the value of tangible assets constructed on behalf of the concession grantor is also included. For drilling activities, which are typically carried out under long-term agreements with fixed day rates, revenue is recognised for the production time related to the financial year. Revenue from retail activities is recognised by cash sales.
Lease income from operational leases is recognised over the lease term.
Exploration costs in the oil and gas activities are recognised as operating costs as they are incurred.
Share in profits of associated companies is recognised net of tax and corrected for share of unrealised intra-group gains and losses. The item also comprises any impairment losses for investments in associated companies, including goodwill, and their reversal.
Tax comprises the amount estimated to be paid for the year, as well as adjustments to previous years and deferred tax. The tax amount includes the special taxes relating to extraction and production of hydrocarbons, including the profit share to the Danish State and tax on income subject to Danish and foreign tonnage taxation, etc.
Government grants are deducted from the cost of the assets or costs to which the grant relates.
Other comprehensive income consists of income and costs not included in the income statement, including exchange rate adjustments arising from the translation of consolidated and associated companies' financial statements into presentation currency, adjustment of other equity investments and hedging instruments to fair value and actuarial gains or losses on defined benefit plans, etc. The Group's share of other comprehensive income in associated companies is also included.
In the event of disposal or discontinuation of an entity, the Group's share of the accumulated exchange rate adjustment relating to the relevant entity is reclassified to the income statement. Accumulated value adjustments of securities are transferred to the income statement in the event of sale or when an impairment loss is deemed to be unrecoverable.
Actual and deferred tax relating to other comprehensive income are included.
Intangible assets are measured at cost less accumulated amortisation and impairment losses. Amortisation is calculated on a straight-line basis over the estimated useful lives of the assets.
Intangible assets in connection with acquired oil resources (concession rights, etc.) are amortised from the commencement of production until the fields' expected production periods ends – a period of up to 15 years. Acquired exploration rights are amortised from the date of acquisition for a period of up to five years.
IT software is amortised over a useful life of 3-5 years.
For container terminals operated under certain restrictive price and service conditions, etc., concessional rights to collect usage charges are included under intangible assets. Cost includes the present value of minimum payments under concession agreements and the cost of property, plant and equipment constructed on behalf of a grantor of a concession. The rights are amortised from the commencement of operations over the concession period.
Goodwill and other intangible assets with indefinite useful lives are not amortised, but impairment tests are prepared at least annually, starting in the year of acquisition. Goodwill is attributed to cash-generating units.
Property, plant and equipment are valued at cost less accumulated depreciation and impairment losses. Depreciation is charged to the income statement on a straight-line basis over the useful lives at an estimated residual value. The useful lives of new assets are typically as follows:
| Ships, rigs, etc. | 20-25 years |
|---|---|
| Containers, etc. | 12 years |
| Buildings | 10-50 years |
| Terminal infrastructure | over lease or |
| concession period | |
| Plant and machinery, cranes and other terminal equipment | 5-20 years |
| Other operating equipment, fixtures, etc. | 3-7 years |
| Oil and gas production facilities, etc. – based on the expected production periods of the fields | up to 15 years |
For oil production facilities, including facilities under construction, where oil is received as payment for the investment (cost oil), depreciation takes place concurrently with the receipt of cost oil.
The cost of an asset is divided into separate components which are depreciated separately if the useful lives of the individual components differ.
Estimated useful lives and residual values are reassessed on a regular basis. Impairment losses are recognised when the carrying amount of an asset or a cash-generating unit exceeds the higher of the estimated value in use and fair value less costs to sell.
The cost of assets constructed by the Group includes direct and indirect expenses. For assets with a long construction period, borrowing costs during the construction period from specific as well as general borrowings are attributed to cost.
Cost includes the net present value of estimated costs of abandonment, removal and restoration.
Dry-docking costs are recognised in the carrying amount of ships, rigs, etc. when incurred and depreciated over the period until the next drydocking.
Assets held under finance leases are treated as property, plant and equipment.
Impairment losses are recognised when the carrying amount of an asset or a cash-generating unit exceeds the higher of the estimated value in use and fair value less costs to sell. Goodwill is fully impaired before other assets in a cash-generating unit.
Investments in associated companies are recognised as the Group's share of the equity value measured according to the Group's accounting policies inclusive of goodwill less any impairment losses. Goodwill is an integral part of the value of associated companies and is therefore subject to an impairment test together with the investment as a whole. Impairment losses are reversed to the extent the original value is regained.
Securities, including shares, bonds and similar securities, are recognised on the trading date at fair value and subsequently measured at the quoted market price for listed securities and at estimated fair value for other securities. Securities that form part of the liquidity resources (Held for trading) are classified as current assets and value adjustments are recognised in the income statement under financial items. Other equity investments are classified as non-current assets (the category Available-for-sale) where unrealised value adjustments are recognised in other comprehensive income.
Inventories are measured at cost, primarily according to the FIFO method. Write-down is made to net realisable value if lower. The cost of finished goods and work in progress includes direct and indirect production costs.
Receivables are generally recognised at nominal value, which in all material respects corresponds to amortised cost. Non-current receivables are recognised at discounted value, including finance lease receivables. Write-down is made for anticipated losses based on specific individual or group assessments.
Equity includes total comprehensive income for the year comprising the profit or loss for the year and other comprehensive income. Proposed dividend for distribution is included as a separate component of equity until the declaration date. Proceeds on the purchase and sale of own shares and dividend from such shares are recognised in equity, including proceeds on the disposal of own shares in connection with the exercise of share options.
The translation reserve comprises the Group's share of accumulated differences arising on the foreign currency translation of Group entities' and associated companies' financial statements into presentation currency. The securities reserve comprises accumulated changes in the fair value of other equity investments (Available-for-sale). The reserve for hedges includes the accumulated net change in the fair value of hedging transactions qualifying for cash flow hedge accounting.
Share options allocated to the executives of the Group as part of the Group's long-term incentive programme are recognised as staff costs over the vesting period at the grant date estimated fair value. The counter item is equity. The fair value is calculated on the basis of the Black & Scholes formula for valuation of options.
Provisions are recognised when the Group has a current legal or constructive obligation and include provisions for abandonment of oil fields, restructuring costs, legal disputes, onerous contracts, etc. Provisions are recognised on the basis of best estimates and considering discounting when the time element is significant.
Pension obligations, etc. which are defined benefit plans are recognised based on actuarial calculations of the obligations and the fair value of the assets in the plans. The pension cost charged to the income statement consists of current service costs less employee payments, computed interest cost, expected return on plan assets and settlement, gains or losses, etc. Actuarial gains and losses are recognised in other comprehensive income. Costs regarding defined contribution pension and insurance plans are recognised as incurred.
Pension plans where the Group as part of collective bargaining agreements participates together with other enterprises – so called multiemployer plans – are treated as other pension plans in the financial statements. For defined benefit multi-employer plans where sufficient information is not available to use defined benefit accounting, the plans are treated as defined contribution plans.
Deferred tax is calculated on differences between the carrying amount and tax base of assets and liabilities. Deferred tax is not provided on goodwill which is not deductible or depreciable for tax purposes, or temporary differences which have no effect on the accounting results or
taxable income at the time of the transaction. In addition, deferred tax is not calculated for differences relating to investments in subsidiaries and associated companies to the extent that taxable dividends are unlikely in the foreseeable future. Deferred tax assets are recognised to the extent that it is probable that they can be utilised within a foreseeable future.
Financial liabilities are initially recognised at fair value less transaction costs. Transaction costs and any premium or discount are amortised over the term of the liabilities using the amortised cost method. Fixed interest loans which under hedge accounting are swapped to variable interest are measured at amortised cost adding or deducting the fair value of the hedged interest component. Liabilities in respect of finance leases are recognised in the balance sheet.
Cash flow for the year is divided into cash flow from operating activities, cash flow used for investing activities and cash flow from financing activities. Cash and cash equivalents comprise cash and bank balances. Changes in marketable securities are included in cash flow used for investing activities.
Discontinued operations represent a separate major line of business disposed of or in preparation for sale. The results of discontinued operations are presented separately in the income statement and comparative figures are restated. Similarly, assets and related liabilities from discontinued operations are presented as separate items in the balance sheet, and the cash flows from discontinued operations are presented separately in the cash flow statement.
Individual assets or groups of assets that are to be disposed of collectively are classified as assets held for sale, when the activities to carry out such a sale have been initiated and the activities are expected to be disposed of within 12 months. Liabilities that are directly related to assets held for sale are presented correspondingly.
Assets and liabilities from discontinued operations and assets held for sale except financial assets, etc. are measured at the lower of carrying amount and fair value less costs to sell. Assets held for sale are not depreciated.
Return on equity is calculated as the profit or loss for the year divided by the average equity.
Return on invested capital after tax (ROIC) is the profit or loss for the year before interest but after calculated tax, divided by the average invested capital (equity plus net interest-bearing debt).
Equity ratio is calculated as the equity divided by total assets.
The segments' return on invested capital after tax (ROIC) is profit or loss divided by the average invested capital, net (assets less liabilities).
Earnings per share and cash flow from operating activities per share comprise A.P. Møller - Mærsk A/S' share of the profit or loss for the year respectively the cash flow from operating activities divided by the number of shares (of DKK 1,000 each), excluding the Group's holding of own shares.
Diluted earnings per share are adjusted for the dilution effect of issued share options.
Dividend per share is the proposed dividend for the year per share of DKK 1,200.
Total market capitalisation is the total number of shares – excluding the Group's holding of own shares – multiplied by the end-of-year price quoted by NASDAQ OMX Copenhagen.
When preparing the consolidated financial statements for the Group, the management undertakes a number of accounting estimates and judgements to recognise, measure and classify the Group's assets and liabilities.
The most significant areas subject to estimates and judgements are mentioned below.
Intangible assets and property, plant and equipment are tested for impairment, if there is an indication of impairment. However, annual impairment tests are always carried out for goodwill and other intangible assets with indefinite useful lives as well as intangible assets that are not yet in use. Impairment losses are recognised when the carrying amount exceeds the higher of fair value less costs to sell and estimated value in use.
Fair value is sought to be obtained for active markets for corresponding assets or determined on the basis of other observable input. As far as possible, the estimated fair value of ships, rigs and properties is obtained using acknowledged brokers. However, it is not possible to determine reliable fair value for certain types of ships in the current market with continued low trading activity.
The estimated value in use is computed on the basis of the expected free cash flow from the relevant cash-generating unit based on updated business plans for the next five years or the remaining useful lives for assets operating under contracts. The calculated value in use is based on a number of assumptions and is by nature subject to uncertainty. For oil concession rights the value will primarily depend on conclusions regarding the commercial prospects. The values in use for the tanker activities are based on future expectations, which have been adjusted downwards and consequently impairment losses are recognised. Assumptions are described in notes 9 and 10.
The determination and delimitation of cash-generating units differ for the various business areas. For integrated network businesses such as Maersk Line and Safmarine, the container shipping activities are considered to be a single cash-generating unit. For the oil and gas activities, connected oil and gas fields are considered to be cash-generating units, and for offshore and other shipping activities, the cash-generating unit is often the individual asset. Maersk Tankers and Maersk Supply Service group vessels according to type, size, etc. in accordance with the structure governing the management's ongoing follow-up.
The total depreciation and amortisation is a considerable cost to the Group. Intangible assets and property, plant and equipment are depreciated and amortised over the expected useful lives for ships and rigs, etc., typically over a useful life of 20-25 years to a residual value of 10% of the original cost for ships and up to 30% for drilling rigs. For producing oil fields and production platforms, the useful lives are based on the expected production profile of the field.
Estimates of useful lives and residual values are reassessed regularly based on available information. In this connection, the long term view is prioritised, in order to disregard to the extent possible temporary market fluctuations, which may be significant. Changes to estimates of useful lives and residual values may affect the annual depreciation and amortisation and thereby the results for the year significantly.
The allocation of the acquisition cost to the fair value of the acquired assets, liabilities and contingent liabilities and thus to goodwill, including the allocation to cash-generating units, may have a significant impact on future profits. Fair values are based on estimates using information available at the time control was achieved. When part of the acquisition cost for entities acquired is dependent on the development in future profits, estimates are made of the most probable value of the contingent acquisition cost based on current forecasts.
Lease contracts are classified as operating or finance leases at the inception of the lease. Once determined, the classification is not subsequently changed unless there are changes to the contract documents.
Contracts which transfer all significant risks and benefits associated with the underlying asset to the lessee are classified as finance leases. This usually applies to long-term lease contracts or where ownership is transferred to the lessee at the expiry of the lease term. All conditions in a contract are assessed and the classification depends to a certain extent on judgement based on the actual circumstances of the agreement.
The value of assets held under finance leases recognised in the balance sheet is based on the discounted value of the contractual lease payments. No contingent lease payments are included and the value can therefore be determined reliably. Uncertainty relating to the useful lives and residual values of assets and the impairment test principles is the same for assets held under finance leases as for own assets.
Deferred tax assets are recognised and measured to the extent they are expected to be realisable within the foreseeable future. Tax assets which can only be utilised in the longer term are deemed to be uncertain and are not recognised.
Provisions for bad debt and write-downs of receivables are carried out on the basis of an assessment of their recoverability at the balance sheet date. Trade receivables are grouped on the basis of maturity analyses for the purpose of providing for bad debt. In special circumstances trade receivables are impaired individually. Other receivables, including loans, are written-down on the basis of an assessment of the individual debtor's credit rating. An analysis of overdue trade receivables and movement in the provisions for bad debt can be found in note 23. The write-downs of non-current receivables performed in the period can be found in note 6.
The gross liability for defined benefit plans, etc. is based on a number of actuarial assumptions such as discount rates, future inflation, the future rate of salary and pension increases, and mortality rates. External actuaries are used for measuring the gross liabilities. Even modest changes to the actuarial assumptions may result in significant changes in the pension liability.
Plan assets that are used only to meet the obligations are set off against the gross liability. Assets are measured at fair value by fund administrators and comprise cash, securities, properties, etc. Where there is not an active market for the assets, the fair value is estimated. The less liquid the assets, the greater the uncertainty related to the measurement. The composition of the assets can be found in note 19.
When establishing oil and gas production facilities, provisions are made for the cost of the disposal of the facilities and re-establishment of the sea bed according to the rules which apply to the individual concession areas. The assumptions for the provisions are reassessed annually. A significant part of the liability is not realised until after 20-30 years and consequently the calculation of the liability, including the assumptions applied, is associated with significant uncertainty.
The most significant assumptions are:
The management's estimate of the provisions in connection with legal disputes, including disputes on taxes and duties, is based on the knowledge available on the actual substance of the cases and a legal assessment of these. Due to the nature of legal disputes, the outcome of these is subject to considerable uncertainty.
The amount comprises inter alia estimated provisions for onerous contracts, guarantee obligations and provisions for incurred, but not yet reported, incidents under certain insurance programmes, primarily in the USA.
To a certain extent, the classification of entities partly owned by other enterprises, and thereby how the entities are accounted for in the consolidated financial statements, is based on a judgement of the formal and actual conditions and clauses in shareholders' agreements, etc.
Maersk Oil Al Shaheen Qatar
In November 2012, Qatar Petroleum (representing the State of Qatar) and Maersk Oil agreed on a new field development plan which included a further investment in the field of around USD 1.5bn and drilling of 51 new wells and some facility debottlenecking activities. Al Shaheen is Qatar's largest offshore oil field and currently produces around 300,000 barrels of oil per day.
| Maersk Line |
Maersk Oil |
APM Terminals |
||
|---|---|---|---|---|
| 2012 | ||||
| External revenue | 153,448 | 58,833 | 16,590 | |
| Inter-segment revenue | 3,674 | - | 11,107 | |
| Total revenue | 157,122 | 58,833 | 27,697 | |
| Profit before depreciation, amortisation and impairment losses, etc. | 12,628 | 41,463 | 6,332 | |
| Depreciation and amortisation | 9,836 | 10,812 | 2,088 | |
| Impairment losses | 467 | 169 | - | |
| Reversal of impairment losses | 579 | - | - | |
| Gain on sale of non-current assets, etc., net | 133 | 632 | 715 | |
| Share of profit/loss in associated companies | 6 | -243 | 344 | |
| Profit/loss before financial items (EBIT) | 3,043 | 30,871 | 5,303 | |
| Tax | 372 | 16,707 | 1,113 | |
| Net operating profit/loss after tax (NOPAT) | 2,671 | 14,164 | 4,190 | |
| Cash flow from operating activities | 10,422 | 22,347 | 5,653 | |
| Cash flow used for capital expenditure | -20,566 | -11,352 | -7,823 | |
| Free cash flow | -10,144 | 10,995 | -2,170 | |
| Investments in non-current assets 1 | 19,577 | 11,484 | 12,562 | |
| Investments in associated companies | 17 | 1,114 | 2,706 | |
| Other non-current assets | 122,479 | 53,343 | 36,646 | |
| Assets held for sale | - | - | 321 | |
| Other current assets | 21,440 | 11,645 | 4,147 | |
| Non-interest bearing liabilities | 27,079 | 26,943 | 8,260 | |
| Invested capital, net | 116,857 | 39,159 | 35,560 |
1 Comprise additions of intangible assets and property, plant and equipment, including additions from business combinations.
Maersk Oil's profit for the period includes a tax income of DKK 5.2bn from the settlement of a dispute regarding tax collected by the Algerian national oil company, Sonatrach S.P.A. The settlement is related to Algerian tax imposed from August 2006.
| Maersk Drilling |
Maersk Supply Service |
Maersk Tankers |
Damco | SVITZER | Dansk Supermarked |
Maersk FPSOs and Maersk LNG |
Total reportable segments |
|---|---|---|---|---|---|---|---|
| 332,108 | |||||||
| 16,682 | |||||||
| 10,947 | 5,080 | 7,279 | 18,957 | 5,198 | 55,610 | 2,067 | 348,790 |
| 3,953 | 1,848 | 1,291 | 584 | 1,508 | 2,507 | 682 | 72,796 |
| 1,507 | 964 | 1,585 | 143 | 599 | 625 | 296 | 28,455 |
| 12 | 39 | 1,554 | 14 | 630 | 221 | - | 3,106 |
| 174 | - | - | - | - | - | - | 753 |
| 48 | -21 | 46 | 109 | 26 | 68 | 1,419 | 3,175 |
| - | - | 2 | - | - | - | 1 | 110 |
| 2,656 | 824 | -1,800 | 536 | 305 | 1,729 | 1,806 | 45,273 |
| 575 | 59 | 11 | 216 | 251 | 445 | +138 | 19,611 |
| 2,081 | 765 | -1,811 | 320 | 54 | 1,284 | 1,944 | 25,662 |
| 3,776 | 1,767 | 824 | -562 | 1,489 | 2,316 | 600 | 48,632 |
| -3,414 | -1,242 | -2,672 | -126 | -590 | -2,055 | 15,176 | -34,664 |
| 362 | 525 | -1,848 | -688 | 899 | 261 | 15,776 | 13,968 |
| 55,379 | |||||||
| 1 | - | 34 | 1 | - | - | - | 3,873 |
| 26,569 | 12,399 | 17,786 | 2,015 | 9,222 | 18,814 | 878 | 300,151 |
| - | 21 | 2,644 | 20 | 31 | - | - | 3,037 |
| 3,378 | 1,389 | 2,486 | 4,615 | 1,055 | 4,498 | 662 | 55,315 |
| 3,892 | 1,322 | 1,847 | 3,824 | 1,728 | 7,060 | 863 | 82,818 |
| 26,056 | 12,487 | 21,103 | 2,827 | 8,580 | 16,252 | 677 | 279,558 |
| 10,839 108 3,899 |
4,941 139 1,329 |
7,154 125 2,901 |
17,545 1,412 580 |
5,087 111 802 |
55,610 - 2,237 |
2,061 6 8 |
| Maersk | Maersk | APM | ||
|---|---|---|---|---|
| Line | Oil | Terminals | ||
| 2011 | ||||
| External revenue | 131,601 | 67,554 | 14,556 | |
| Inter-segment revenue | 2,843 | - | 10,517 | |
| Total revenue | 134,444 | 67,554 | 25,073 | |
| Profit before depreciation, amortisation and impairment losses, etc. | 5,401 | 53,626 | 5,670 | |
| Depreciation and amortisation | 8,340 | 11,485 | 1,978 | |
| Impairment losses | 313 | 135 | - | |
| Reversal of impairment losses | - | - | 5 | |
| Gain on sale of non-current assets, etc., net | 684 | 13 | 150 | |
| Share of profit/loss in associated companies | -11 | -24 | 270 | |
| Profit/loss before financial items (EBIT) | -2,579 | 41,995 | 4,117 | |
| Tax | 382 | 30,684 | 646 | |
| Net operating profit/loss after tax (NOPAT) | -2,961 | 11,311 | 3,471 | |
| Cash flow from operating activities | 4,813 | 23,130 | 4,885 | |
| Cash flow used for capital expenditure | -16,978 | -20,286 | -3,681 | |
| Free cash flow | -12,165 | 2,844 | 1,204 | |
| Investments in non-current assets1 | 19,887 | 21,143 | 4,372 | |
| Investments in associated companies | 22 | 711 | 2,631 | |
| Other non-current assets | 113,064 | 54,206 | 27,340 | |
| Assets held for sale | 1,621 | - | 1,792 | |
| Other current assets | 18,082 | 8,007 | 4,285 | |
| Non-interest bearing liabilities | 26,481 | 25,998 | 6,608 | |
| Invested capital, net | 106,308 | 36,926 | 29,440 |
1 Comprise additions of intangible assets and property, plant and equipment, including additions from business combinations.
| Maersk Drilling |
Maersk Supply Service |
Maersk Tankers |
Damco | SVITZER | Dansk Supermarked |
Maersk FPSOs and Maersk LNG |
Total reportable segments |
|---|---|---|---|---|---|---|---|
| 9,825 | 4,906 | 6,938 | 13,954 | 4,585 | 55,227 | 3,158 | 312,304 |
| 231 | 141 | 19 | 783 | 92 | - | 9 | 14,635 |
| 10,056 | 5,047 | 6,957 | 14,737 | 4,677 | 55,227 | 3,167 | 326,939 |
| 4,616 | 2,227 | 576 | 642 | 1,267 | 2,885 | 1,304 | 78,214 |
| 1,294 | 896 | 1,224 | 133 | 582 | 496 | 646 | 27,074 |
| 107 | - | 268 | - | - | 68 | 1,339 | 2,230 |
| 95 | - | - | 8 | - | - | 485 | 593 |
| - | 18 | 33 | 5 | 21 | 3,703 | 42 | 4,669 |
| - | - | 2 | - | - | - | 16 | 253 |
| 3,310 | 1,349 | -881 | 522 | 706 | 6,024 | -138 | 54,425 |
| 699 | 48 | +64 | 191 | 159 | 653 | +190 | 33,208 |
| 2,611 | 1,301 | -817 | 331 | 547 | 5,371 | 52 | 21,217 |
| 4,420 | 2,011 | 509 | 498 | 700 | 2,271 | 1,208 | 44,445 |
| -3,213 | -643 | -3,576 | -636 | -1,001 | 3,392 | 152 | -46,470 |
| 1,207 | 1,368 | -3,067 | -138 | -301 | 5,663 | 1,360 | -2,025 |
| 3,243 | 707 | 3,752 | 729 | 1,100 | 2,895 | 36 | 57,864 |
| 1 | 7 | 34 | 1 | - | - | - | 3,407 |
| 24,439 | 12,248 | 21,578 | 1,604 | 9,793 | 17,526 | 7,352 | 289,150 |
| 29 | - | - | 217 | - | - | 6,634 | 10,293 |
| 3,047 | 1,347 | 2,137 | 3,622 | 891 | 4,629 | 2,047 | 48,094 |
| 3,946 | 1,270 | 2,064 | 3,624 | 1,554 | 7,064 | 1,443 | 80,052 |
| 23,570 | 12,332 | 21,685 | 1,820 | 9,130 | 15,091 | 14,590 | 270,892 |
| 2012 | 2011 | ||
|---|---|---|---|
| Revenue | |||
| Reportable segments | 348,790 | 326,939 | |
| Other businesses | 11,220 | 11,575 | |
| Unallocated activities (Maersk Oil Trading) | 4,717 | 4,188 | |
| Eliminations | -22,669 | -20,182 | |
| Total | 342,058 | 322,520 | |
| Of which: | |||
| Sale of goods including sale of oil and gas | 121,242 | 131,349 | |
| Rendering of services, etc. | 220,816 | 191,171 | |
| Profit for the year | |||
| Reportable segments | 25,662 | 21,217 | |
| Other businesses | 1,773 | 1,186 | |
| Financial items, net | -4,376 | -4,580 | |
| Unallocated tax | +611 | +946 | |
| Other unallocated items | 425 | 303 | |
| Eliminations | 134 | -461 | |
| Total continuing operations | 23,379 | 18,005 | |
| Discontinued operations, after elimination | 16 | 78 | |
| Total | 23,395 | 18,083 | |
| Assets | |||
| Reportable segments | 362,376 | 350,944 | |
| Other businesses | 36,555 | 33,892 | |
| Unallocated activities | 29,412 | 27,783 | |
| Eliminations | -7,663 | -7,883 | |
| Total continuing operations | 420,680 | 404,736 | |
| Discontinued operations, after elimination | 11 | 7 | |
| Total | 420,691 | 404,743 | |
| Liabilities | |||
| Reportable segments | 82,818 | 80,052 | |
| Other businesses | 2,801 | 2,946 | |
| Unallocated activities | 119,486 | 120,829 | |
| Eliminations | -6,974 | -7,050 | |
| Total continuing operations | 198,131 | 196,777 | |
| Discontinued operations, after elimination | 16 | 31 | |
| Total | 198,147 | 196,808 | |
Amounts in DKK million
Revenue for the shipping activities is based on the destination for ships operated by the Group and on customer location for ships on time charter. The majority of the Group's ships, drilling rigs and containers are registered in Denmark, Singapore, United Kingdom and the USA. These types of assets are allocated to countries based on legal ownership.
| External revenue | Non-current assets 1 | ||||
|---|---|---|---|---|---|
| Geographical split | 2012 | 2011 | 2012 | 2011 | |
| Denmark | 64,634 | 63,185 | 104,089 | 98,290 | |
| Brazil | 8,040 | 6,889 | 18,884 | 18,759 | |
| China and Hong Kong | 12,204 | 9,760 | 21,546 | 13,180 | |
| Qatar | 24,914 | 33,440 | 5,258 | 10,385 | |
| Singapore | 1,901 | 1,551 | 51,436 | 53,204 | |
| United Kingdom | 17,099 | 18,762 | 26,766 | 27,705 | |
| USA | 32,340 | 26,766 | 11,267 | 11,200 | |
| Other | 180,926 | 162,167 | 56,306 | 50,944 | |
| Total | 342,058 | 322,520 | 295,552 | 283,667 |
1 Comprise intangible assets and property, plant and equipment.
| Exploration activities (Maersk Oil) | 2012 | 2011 |
|---|---|---|
| Income | 735 | - |
| Expenses | 7,037 | 5,650 |
| Intangible assets | 16,168 | 14,137 |
| Total assets | 30,642 | 20,593 |
| Total liabilities | 2,254 | 725 |
| Cash flow from operating activities | -5,074 | -4,623 |
| Cash flow used for capital expenditure | -2,768 | -13,834 |
| Free cash flow | -7,842 | -18,457 |
The exploration activities include Maersk Oil's income, expenses, assets, liabilities and cash flows related to exploration for and evaluation of oil and gas resources. Activities in the subsequent development phases are not included. The income relates primarily to farm-out agreements. Expenses comprise exploration costs, equipment costs, amortization and impairment losses related to exploration rights, etc. The assets, liabilities and cash flows comprise Maersk Oil entities primarily engaged in exploration activities.
Amounts in DKK million (in parenthesis the corresponding figures for 2011)
| 2012 | 2011 | ||
|---|---|---|---|
| Costs of goods sold | 45,583 | 48,003 | |
| Bunker costs | 40,005 | 37,580 | |
| Exploration costs | 6,302 | 5,303 | |
| Rent and lease costs | 21,315 | 19,490 | |
| Staff costs | 39,366 | 35,763 | |
| Integration and restructuring costs | 497 | 344 | |
| Other | 118,804 | 99,082 | |
| Total operating costs | 271,872 | 245,565 | |
| Remuneration of employees | |||
| Wages and salaries | 35,017 | 31,720 | |
| Severance payments | 520 | 529 | |
| Pension costs, defined benefit plans | 240 | 242 | |
| Pension costs, defined contribution plans | 2,619 | 2,203 | |
| Other social security costs | 2,319 | 2,141 | |
| Total remuneration | 40,715 | 36,835 | |
| Of which: | |||
| Recognised in the cost of assets | 321 | 266 | |
| Included in exploration costs | 590 | 447 | |
| Included in integration and restructuring costs | 438 | 359 | |
| Expensed as staff costs | 39,366 | 35,763 | |
| Average number of employees excluding discontinued operations | 121,105 | 117,080 |
Rent and lease costs include contingent rent totalling DKK 881m (DKK 644m), which entirely relates to operating leases.
Customary agreements have been entered into with employees regarding compensation in connection with resignation with consideration for local legislation and collective agreements.
For information about share-based payment reference is made to note 17.
The Board of Directors has received fees of DKK 19m (DKK 17m).
Remuneration of the Managing Director, Firmaet A.P. Møller, is expensed with DKK 96m (DKK 81m).
Contract of employment for the Managing Director contains terms customary in Danish listed companies, including termination notice and competition clauses. In connection with a possible takeover offer, neither management nor the Board of Directors will receive special remuneration.
Amounts in DKK million (in parenthesis the corresponding figures for 2011)
| Fees to the statutory auditors | KPMG Statsautoriseret | KPMG including | |||
|---|---|---|---|---|---|
| Revisionspartnerselskab | network firms | ||||
| 2012 | 2011 | 2012 | 2011 | ||
| Statutory audit | 27 | 29 | 96 | 101 | |
| Other assurance services | 2 | 2 | 5 | 3 | |
| Tax and VAT advisory services | 17 | 15 | 28 | 26 | |
| Other services | 11 | 6 | 23 | 17 | |
| Total fees | 57 | 52 | 152 | 147 | |
| PricewaterhouseCoopers | PwC including network firms |
||||
| Statsautoriseret | |||||
| Revisionspartnerselskab | |||||
| 2012 | 2011 | 2012 | 2011 | ||
| Statutory audit | 8 | 8 | 16 | 10 | |
| Other assurance services | 1 | 1 | 1 | 1 | |
| Tax and VAT advisory services | 2 | 2 | 3 | 3 | |
| Other services | 11 | 10 | 42 | 13 | |
| Total fees | 22 | 21 | 62 | 27 |
| 2012 | 2011 | |
|---|---|---|
| Gains1 | 3,812 | 4,930 |
| Losses | 129 | 166 |
| Gain on sale of non-current assets, etc., net | 3,683 | 4,764 |
1 Gains include dividends received from other equity investments of DKK 32m (DKK 16m).
Gains relate primarily to the sale of the FPSO Maersk Peregrino, which was completed 31 July 2012 with a gain of DKK 1,252m, Maersk LNG A/S, DKK 465m, oil concession rights in Brazil, DKK 637m, and Maersk Equipment Service Company, Inc., DKK 458m. Gains on sale of subsidiaries and activities during the year include reclassification adjustments related to accumulated net foreign exchange rate gains of DKK 279m, which previously were recognised in other comprehensive income.
In 2011, gains related primarily to the sale of Netto Foodstores Limited, UK. The sale was completed on 13 April 2011 with a gain of DKK 3.8bn including an accumulated exchange rate loss of DKK 0.5bn previously recognised in equity.
Amounts in DKK million (in parenthesis the corresponding figures for 2011)
| 2012 | 2011 | ||
|---|---|---|---|
| Interest expenses on liabilities | 4,650 | 4,173 | |
| Of which borrowing costs capitalised on assets 1 | 392 | 229 | |
| Interest income on loans and receivables | 1,008 | 697 | |
| Interest income on securities | 21 | 71 | |
| Fair value adjustment transferred from equity hedge reserve (loss) | 770 | 673 | |
| Fair value adjustment of issued bonds attributable to interest rate risk (loss) 2 | 349 | 211 | |
| Unwind of discount on provisions | 376 | 376 | |
| Net interest expenses | 4,724 | 4,436 | |
| Exchange rate gains on bank deposits, loans and working capital | 1,225 | 2,947 | |
| Exchange rate losses on bank deposits, loans and working capital | 2,818 | 1,500 | |
| Net foreign exchange gains/losses | -1,593 | 1,447 | |
| Fair value gains from derivatives 2 | 2,106 | 464 | |
| Fair value losses from derivatives | 173 | 2,029 | |
| Fair value gains from securities | 22 | 20 | |
| Fair value losses from securities | 11 | 24 | |
| Net fair value gains/losses | 1,944 | -1,569 | |
| Dividends received from securities | 8 | 5 | |
| Impairment losses on financial non-current receivables | 11 | 27 | |
| Financial expenses, net | 4,376 | 4,580 | |
| Of which: | |||
| Financial income | 4,390 | 4,204 | |
| Financial expenses | 8,766 | 8,784 | |
| 1 The capitalisation rate used to determine the amount of borrowing costs eligible for capitalisation | |||
| is 4.8% (5.2%). | |||
| 2 Derivatives in fair value hedging amounting to DKK 394m (DKK 211m) have been recognised in fair value gains from derivatives. |
|||
| For an analysis of gains and losses from derivatives reference is made to note 15. | |||
Amounts in DKK million
7 Tax
| 2012 | 2011 | |
|---|---|---|
| Tax recognised in the income statement | 19,138 | 32,447 |
| Of which regarding Danish and foreign tonnage tax, freight tax, etc. | -432 | -610 |
| Total | 18,706 | 31,837 |
| Of which: | ||
| Current tax | 17,231 | 30,458 |
| Current and deferred tax arise as follows: | ||
| Profit before tax | 42,517 | 50,452 |
| Income subject to Danish and foreign tonnage taxation, etc. | -399 | 3,186 |
| Share of profit/loss in associated companies | -1,286 | -651 |
| Profit before tax, adjusted | 40,832 | 52,987 |
| Calculated 25% tax | 10,208 | 13,247 |
| Tax rate deviations in foreign entities, net | -681 | -209 |
| Additional tax in the oil segment in excess of 25% | 12,961 | 18,985 |
| Gains related to shares, dividends, etc. | -196 | -879 |
| Adjustment to previous years' taxes 1 | -5,340 | -9 |
| Deferred tax assets, not previously recognised | -412 | -462 |
| Tax losses for which no deferred tax asset was recognised | 768 | 1,142 |
| Other permanent differences, net | 1,398 | 22 |
| Total | 18,706 | 31,837 |
| Tax recognised in equity | ||
| Fair value adjustment of other equity investments | - | 1 |
| Cash flow hedges | 82 | 420 |
| Actuarial gains/losses on defined benefit plans, etc. | 16 | +169 |
| Tax recognised in other comprehensive income, net | 98 | 252 |
| Tax recognised directly in equity | 30 | 48 |
| Total | 128 | 300 |
| Of which: | ||
| Current tax | 64 | 56 |
| Deferred tax | 64 | 244 |
| 1 Includes a tax income of DKK 5.2bn from the settlement of a dispute regarding tax collected | ||
| by the Algerian national oil company, Sonatrach S.P.A. The settlement is related to Algerian tax imposed from August 2006. |
||
Amounts in DKK million (in parenthesis the corresponding figures for 2011)
Assets held for sale are primarily related to Maersk Tankers' 11 vessels in the handygas segment.
Seven container vessels in Maersk Line, of which four are owned and three under finance lease, have due to unsuccessful sales efforts ceased to be classified as held for sale and in consequence impairment losses of DKK 550m have been reversed.
Impairment losses of DKK 148m have been recognised in relation to the reclassification to assets held for sale.
In 2011, assets held for sale primarily related to Maersk LNG A/S, Maersk Equipment Service Company, Inc. and seven container vessels, of which four were owned and three under finance lease. Impairment losses of DKK 112m were recognised relating to the seven container vessels.
On 12 October 2011, the Group entered into an agreement with Teekay LNG Operating LLC and Marubeni Corporation on the sale of Maersk LNG A/S for a total consideration of USD 1.4bn on a cash and debt free basis. The transaction was completed on 28 February 2012.
The sale of Netto Foodstores Limited, UK was completed on 13 April 2011 with a gain of DKK 3.8bn including an accumulated exchange rate loss of DKK 0.5bn previously recognised in equity. Furthermore, the three aircrafts that remained in Maersk Aviation (discontinued operations) and one handysize product tanker were sold in 2011.
| 2012 | 2011 | ||
|---|---|---|---|
| Profit for the year – discontinued operations | |||
| Revenue | 3 | 6 | |
| Costs, etc. (including provisions made and reversed) | 14 | 42 | |
| Profit before tax, etc. | 17 | 48 | |
| Tax | 1 | 10 | |
| Profit | 16 | 38 | |
| Gain on sale of non-current assets, etc., net | - | 56 | |
| Tax hereof | - | 16 | |
| Profit for the year – discontinued operations | 16 | 78 | |
| A.P. Møller - Mærsk A/S' share hereof | 16 | 78 | |
| Earnings and diluted earnings per share, DKK | 4 | 18 | |
| Cash flows from discontinued operations for the year | |||
| Cash flow from operating activities | -10 | -14 | |
| Cash flow used for investing activities | 6 | 141 | |
| Cash flow from financing activities | 1 | 2 | |
| Net cash flow from discontinued operations | -3 | 129 | |
| Balance sheet items comprise: | |||
| Non-current assets | 2,921 | 10,148 | |
| Current assets | 135 | 204 | |
| Assets held for sale | 3,056 | 10,352 | |
| Provisions | 15 | 73 | |
| Other liabilities | 76 | 1,584 | |
| Liabilities associated with assets held for sale | 91 | 1,657 | |
Amounts in DKK million (in parenthesis the corresponding figures for 2011)
| Goodwill | Terminal and service concession rights |
Oil con- cession rights |
Other rights |
Total | |
|---|---|---|---|---|---|
| Cost | |||||
| 1 January 2011 | 3,931 | 6,299 | 26,017 | 3,131 | 39,378 |
| Addition | - | 485 | 887 | 593 | 1,965 |
| Acquired in business combinations | 399 | 284 | 12,345 | 139 | 13,167 |
| Disposal | 2 | 6 | 123 | 176 | 307 |
| Transfer, assets held for sale | - | -122 | - | -90 | -212 |
| Exchange rate adjustment | 109 | -84 | 1,570 | 84 | 1,679 |
| 31 December 2011 | 4,437 | 6,856 | 40,696 | 3,681 | 55,670 |
| Addition | - | 630 | 1,141 | 635 | 2,406 |
| Acquired in business combinations | 235 | 5,537 | - | 184 | 5,956 |
| Disposal | 11 | 1 | - | 180 | 192 |
| Exchange rate adjustment | 4 | -222 | -639 | -46 | -903 |
| 31 December 2012 | 4,665 | 12,800 | 41,198 | 4,274 | 62,937 |
| Amortisation and impairment losses | |||||
| 1 January 2011 | 553 | 1,134 | 21,026 | 2,036 | 24,749 |
| Amortisation | - | 197 | 1,031 | 319 | 1,547 |
| Impairment losses | - | - | 135 | 12 | 147 |
| Disposal | 2 | - | 67 | 139 | 208 |
| Transfer, assets held for sale | - | -26 | - | -10 | -36 |
| Exchange rate adjustment 31 December 2011 |
12 563 |
-7 1,298 |
575 | 52 | 632 |
| Amortisation | - | 301 | 22,700 1,290 |
2,270 356 |
26,831 1,947 |
| Impairment losses | 623 | - | - | - | 623 |
| Disposal | 11 | - | - | 176 | 187 |
| Exchange rate adjustment | -16 | -41 | -371 | -32 | -460 |
| 31 December 2012 | 1,159 | 1,558 | 23,619 | 2,418 | 28,754 |
| Carrying amount: | |||||
| 31 December 2011 | 3,874 | 5,558 1 |
17,996 2 |
1,411 3 |
28,839 |
| 31 December 2012 | 3,506 | 11,242 1 |
17,579 2 |
1,856 3 |
34,183 |
1Of which DKK 936m (DKK 637m) is under development. DKK 1,528m (DKK 284m) is related to terminal rights with indefinite useful life in Poti Sea Port Corp. and Global Ports. The impairment tests are based on the estimated value in use according to business plans. An average discount rate of 11.0% (13.5%) p.a. after tax has been applied in the calculations. Furthermore, the development in volumes and rates are significant parameters.
2 Of which DKK 15,383m (DKK 14,967m) is related to oil concession rights where amortisation will begin when production commences.
3 Of which DKK 839m (DKK 798m) is related to ongoing development of software.
Amounts in DKK million
The carrying amount of goodwill has been allocated to the following operating segments and cash generating units based on the management structure:
| Carrying amount | ||||
|---|---|---|---|---|
| Operating segment | Cash generating unit | 2012 | 2011 | |
| SVITZER SVITZER Damco |
Adsteam Marine Limited (Australia) Adsteam Marine Limited (United Kingdom) Airfreight service |
2,325 - 421 |
2,564 320 442 |
|
| Dansk Supermarked Group | OHG Netto Supermarkt GmbH & Co. | 413 | 415 | |
| Other | 347 | 133 | ||
| Total | 3,506 | 3,874 |
The impairment tests are based on the estimated value in use from five year business plans and a calculated terminal value with growth equal to the expected local economic growth.
Impairment losses for 2012 of DKK 623m primarily relate to Adsteam Marine Limited goodwill in the United Kingdom, which was fully impaired due to weak market conditions. Regarding goodwill in Australia, an increase in the discount rate of 1%-point is estimated to result in an additional impairment of DKK 570m. Likewise a decline of 1%-point in terminal value growth rate is estimated to result in an impairment of DKK 445m.
Impairment losses for 2011 of DKK 147m primarily related to oil concession rights on the Janice field in the United Kingdom and were based on estimated value in use. A discount rate of 8.5% p.a. after tax and the forward curve for oil prices at 31 December 2011 were used in the calculation.
| Key assumptions | Terminal value growth rate |
Estimated average Applied discount rate earnings growth p.a. p.a. after tax in the forecast period |
|||||
|---|---|---|---|---|---|---|---|
| Cash generating unit | 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | |
| Adsteam Marine Limited (Australia) Adsteam Marine Limited (United Kingdom) Airfreight service OHG Netto Supermarkt GmbH & Co. |
1.7% 1.0% 2.0% 0.0% |
2.0% 1.5% 2.0% 0.0% |
4.3% 5.6% 7.2% 2.3% |
12.5% 5.9% 8.6% 11.3% |
7.0% 8.0% 9.1% 7.0% |
7.5% 7.5% 9.6% 7.0% |
Amounts in DKK million
| Ships, rigs, containers, etc. |
Production facilities and equipment, etc. |
Land and buildings |
Construc- tion work in progress and payment on account |
Total | |
|---|---|---|---|---|---|
| Cost | |||||
| 1 January 2011 | 242,519 | 127,047 | 33,586 | 22,835 | 425,987 |
| Addition | 11,919 | 2,422 | 755 | 26,693 | 41,789 |
| Acquired in business combinations | 120 | 620 | 675 | 40 | 1,455 |
| Disposal | 8,916 | 3,015 | 273 | 170 | 12,374 |
| Disposal on sale of businesses | 32 | 65 | - | - | 97 |
| Transfer | 17,422 | 4,494 | 2,021 | -23,937 | - |
| Transfer, assets held for sale | -8,824 | -166 | -389 | -1 | -9,380 |
| Exchange rate adjustment | 6,462 | 2,761 | -176 | 655 | 9,702 |
| 31 December 2011 | 260,670 | 134,098 | 36,199 | 26,115 | 457,082 |
| Addition | 12,436 | 1,358 | 383 | 30,181 | 44,358 |
| Acquired in business combinations | 2 | 1,439 | 948 | 218 | 2,607 |
| Disposal | 2,521 | 8,136 | 248 | 163 | 11,068 |
| Disposal on sale of businesses | 39 | 38 | 15 | - | 92 |
| Transfer | 17,236 | 11,160 | -4,290 | -24,106 | - |
| Transfer, assets held for sale | -7,752 | -79 | -160 | - | -7,991 |
| Exchange rate adjustment | -4,120 | -1,887 | 306 | -505 | -6,206 |
| 31 December 2012 | 275,912 | 137,915 | 33,123 | 31,740 | 478,690 |
| Depreciation and impairment losses | |||||
| 1 January 2011 | 83,846 | 86,240 | 11,420 | 815 | 182,321 |
| Depreciation | 12,675 | 11,703 | 750 | 543 | 25,671 |
| Impairment losses Reversal of impairment losses |
1,792 | 35 | 68 | 110 | 2,005 |
| Disposal | 581 6,943 |
5 2,718 |
8 141 |
- 128 |
594 9,930 |
| Disposal on sale of businesses | 12 | 47 | - | - | 59 |
| Transfer | 203 | 721 | -94 | -830 | - |
| Transfer, assets held for sale | -1,809 | -66 | -5 | - | -1,880 |
| Exchange rate adjustment | 2,315 | 2,423 | -14 | -4 | 4,720 |
| 31 December 2011 | 91,486 | 98,286 | 11,976 | 506 | 202,254 |
| Depreciation | 14,525 | 11,588 | 568 | - | 26,681 |
| Impairment losses | 2,076 | 220 | 173 | - | 2,469 |
| Reversal of impairment losses | 739 | 25 | - | - | 764 |
| Disposal | 2,048 | 7,634 | 116 | 1 | 9,799 |
| Disposal on sale of businesses | 23 | 31 | 8 | - | 62 |
| Transfer | 277 | 1,378 | -1,282 | -373 | - |
| Transfer, assets held for sale | -371 | -72 | -36 | - | -479 |
| Exchange rate adjustment | -1,594 | -1,430 | 42 | 3 | -2,979 |
| 31 December 2012 | 103,589 | 102,280 | 11,317 | 135 | 217,321 |
| Carrying amount: | |||||
| 31 December 2011 | 169,184 | 35,812 | 24,223 | 25,609 | 254,828 |
| 31 December 2012 | 172,323 | 35,635 | 21,806 | 31,605 | 261,369 |
| Of which carrying amount of finance leased assets: | |||||
| 31 December 2011 | 13,601 | - | 40 | - | 13,641 |
| 31 December 2012 | 13,477 | 107 | 6 | - | 13,590 |
Amounts in DKK million (in parenthesis the corresponding figures for 2011)
Impairment tests of property, plant and equipment have been carried out within the following cash generating units :
| Applied discount Impairment rate p.a. after tax losses |
Reversal of impairment losses |
||||||||
|---|---|---|---|---|---|---|---|---|---|
| Operating segment |
Cash generating unit |
Methodology | 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | |
| Maersk Tankers | Intermediate product tankers |
Value in use | - | 10.0% | - | 268 | - | - | |
| Crude tankers | Value in use | 10.0% | - | 1,043 | - | - | - | ||
| Product Handy | Value in use | 10.0% | - | 406 | - | - | - | ||
| Maersk Line | Maersk Line1 | Fair value | - | - | 220 | - | 566 | - | |
| Multi purpose vessel |
Value in use | 10.0% | - | 214 | - | - | - | ||
| Maersk Oil | Janice area | Value in use | 8.5% | - | 169 | - | - | - | |
| Maersk FPSOs | FPSOs | Value in use | - | 9.0% | - | 1,339 | - | - | |
| Maersk LNG | LNG carriers | Fair value | - | - | - | - | - | 485 | |
| Maersk Drilling | EDC rigs | Fair value | - | - | - | - | 174 | - | |
| Other | 417 | 398 | 24 | 109 | |||||
| Total | 2,469 | 2,005 | 764 | 594 |
1 Container vessels previously held for sale, partly redeployed and partly laid-up.
The negative transfer from land and buildings is primarily related to pavement and other terminal infrastructure being reclassified to production facilities and equipment, etc. Transfer to assets held for sale primarily comprise the FPSO Maersk Perigrino.
As part of the Group's activities, customary leasing agreements are entered into, especially with regard to the chartering of vessels and leasing of containers and other equipment. In some cases, the leasing agreements comprise purchase options for the Group and options for extension of the lease term.
In the financial statements, assets held under finance leases are recognised in the same way as owned assets.
Property, plant and equipment include assets, mainly drillships, jack-up rigs and vessels, which are leased out as part of the Group's activities. The future lease income is DKK 53.3bn (DKK 29.5bn) of which DKK 13.5bn (DKK 3.6bn) is payable within one year, DKK 35.4bn (DKK 9.6bn) between one and five years and DKK 4.4bn (DKK 16.3bn) in more than five years.
Ownership of production facilities, etc. relating to oil production in Qatar and Algeria with a carrying amount of DKK 8.3bn (DKK 13.1bn) is transferred to state-owned oil companies on an ongoing basis according to agreements. The right of use is maintained during the concession period.
Ships, buildings, etc. with a carrying amount of DKK 61.4bn (DKK 54.8bn) have been pledged as security for loans of DKK 41.4bn (DKK 41.4bn).
Amounts in DKK million (in parenthesis the corresponding figures for 2011)
In aggregate, the Group's associated companies have the following revenue, profit for the year, total assets and total liabilities (100%):
| Banking activities | Other activities | |||
|---|---|---|---|---|
| 2012 | 2011 | 2012 | 2011 | |
| Revenue Profit for the year |
127,200 4,749 |
118,523 1,723 |
29,002 874 |
20,414 793 |
| Total assets Total liabilities |
3,485,181 3,346,947 |
3,424,403 3,298,548 |
53,988 29,913 |
54,122 30,361 |
The fair value of listed shares in associated companies totalled DKK 22.0bn (DKK 16.7bn). The carrying amount of these is DKK 30.6bn (DKK 28.0bn) and is primarily related to the Group's ownership interest in Danske Bank.
Revenue from banking activities includes interest income, fee income and net premiums.
Contingent liabilities in associated companies totalled DKK 48.6bn (DKK 50.9bn) proportionally and are mainly related to Danske Bank's guarantees and other contingent liabilities.
Profit in Danske Bank was DKK 4.7bn (DKK 1.7bn). The Group's share was DKK 1.0bn (DKK 0.3bn).
In October 2012, the Group participated pro rata in Danske Bank's capital increase of DKK 7.2bn with an investment of DKK 1.4bn.
Overall, the Group's ownership interest in DFDS and Höegh Autoliners, etc. contributed a profit of DKK 224m (DKK 50m). The Group's share of DFDS' profit is based on the latest consensus estimates as the 2012 annual financial statements for DFDS have not yet been published.
| 2012 | 2011 | ||
|---|---|---|---|
| Loans | 5,554 | 4,937 | |
| Finance lease receivables | 868 | 648 | |
| Other interest-bearing receivables and deposits | 883 | 1,020 | |
| Receivables from sale of non-current assets, etc. | 39 | 1,162 | |
| VAT and similar receivables | 914 | 904 | |
| Receivables from settled claims | 2,495 | 547 | |
| Other | 5,645 | 5,071 | |
| Total | 16,398 | 14,289 | |
| Of which: | |||
| Classified as non-current | 5,022 | 3,851 | |
| Classified as current | 11,376 | 10,438 |
Receivables from settled claims are primarily related to a tax dispute in Algeria. The finance lease receivables are primarily related to the Portsmouth terminal in Virginia, USA, and the Poti terminal in Georgia.
| Finance lease receivables | Gross recei- vables |
Interest | Carrying amount |
Gross recei- vables |
Interest | Carrying amount |
|---|---|---|---|---|---|---|
| 2012 | 2012 | 2012 | 2011 | 2011 | 2011 | |
| Within one year | 83 | 47 | 36 | 36 | 9 | 27 |
| Between one and five years | 352 | 196 | 156 | 149 | 45 | 104 |
| After five years | 1,298 | 622 | 676 | 674 | 157 | 517 |
| Total | 1,733 | 865 | 868 | 859 | 211 | 648 |
Amounts in DKK million
Recognised deferred tax assets and liabilities are attributable to the following:
| Assets | Liabilities | Net | ||||
|---|---|---|---|---|---|---|
| liabilities | ||||||
| 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | |
| Intangible assets | 185 | 172 | 2,272 | 1,386 | 2,087 | 1,214 |
| Property, plant and equipment | 1,932 | 1,874 | 10,843 | 8,443 | 8,911 | 6,569 |
| Receivables, etc. | 140 | 145 | 438 | 341 | 298 | 196 |
| Provisions, etc. | 3,696 | 4,073 | 367 | 218 | -3,329 | -3,855 |
| Oil lifting balances in joint operations | 528 | 373 | - | - | -528 | -373 |
| Tax loss carry forwards | 2,978 | 2,216 | - | - | -2,978 | -2,216 |
| Other | 430 | 521 | 70 | 59 | -360 | -462 |
| Total | 9,889 | 9,374 | 13,990 | 10,447 | 4,101 | 1,073 |
| Offsets | -6,116 | -4,439 | -6,116 | -4,439 | - | - |
| Total | 3,773 | 4,935 | 7,874 | 6,008 | 4,101 | 1,073 |
| Change in deferred tax, net during the year | 2012 | 2011 |
|---|---|---|
| 1 January | 1,073 | -734 |
| Intangible assets | -344 | -123 |
| Property, plant and equipment | 2,129 | 1,727 |
| Receivables, etc. | 96 | -12 |
| Provisions, etc. | 501 | -143 |
| Oil lifting balances in joint operations | -164 | -221 |
| Tax loss carry forwards | -859 | 214 |
| Other | 116 | -63 |
| Recognised in the income statement | 1,475 | 1,379 |
| Intangible assets | 1,237 | 75 |
| Property, plant and equipment | 315 | 74 |
| Other | 44 | -144 |
| Change from acquisition/sale of businesses | 1,596 | 5 |
| Recognised in equity | 64 | 244 |
| Transfer, assets held for sale | -3 | 5 |
| Exchange rate adjustments | -104 | 174 |
| 31 December | 4,101 | 1,073 |
The tax losses carried forward have no significant time limitations. No tax value is recognised as it is not considered likely that the deferred tax assets can be realised in the foreseeable future.
| Total | 4,031 | 4,004 | |
|---|---|---|---|
| Tax loss carry forwards | 2,909 | 2,610 | |
| Deductible temporary differences | 1,122 | 1,394 | |
| 2012 | 2011 | ||
There are no significant unrecognised tax liabilities on investments in subsidiaries, associated companies and jointly controlled entities.
| 2012 | 2011 | ||
|---|---|---|---|
| Raw materials and consumables | 2,240 | 2,046 | |
| Work in progress | 127 | 125 | |
| Finished goods and goods for resale | 4,952 | 4,852 | |
| 7,319 | 7,023 | ||
| Bunker | 5,723 | 5,845 | |
| Total | 13,042 | 12,868 |
No significant write-downs or reversals have been recognised on inventories.
Amounts in DKK million (in parenthesis the corresponding figures for 2011)
Foreign exchange forwards and option contracts are used to hedge the currency risk related to recognised and unrecognised transactions. Interest rate swaps are used to hedge interest rate exposure on borrowings. Derivatives are entered into to hedge crude oil prices and bunker prices.
| Liabilities, net | 135 | 3,342 |
|---|---|---|
| Current liabilities | 565 | 2,182 |
| Non-current liabilities | 1,441 | 2,444 |
| Current receivables | 622 | 469 |
| Non-current receivables | 1,249 | 815 |
| 2012 | 2011 | |
The fair value of derivatives held at the balance sheet date can be allocated by type as follows:
| Fair value | Recognised in income statement |
Recognised in equity |
Fair value | Recognised in income statement |
Recognised in equity |
|
|---|---|---|---|---|---|---|
| 2012 | 2012 | 2012 | 2011 | 2011 | 2011 | |
| Currency derivatives1 | 161 | -53 | 214 | -2,382 | -1,743 | -639 |
| Interest rate derivatives1 | -262 | 555 | -817 | -929 | 108 | -1,037 |
| Price hedge derivatives 2 | -34 | -34 | - | -31 | -31 | - |
| Total | -135 | 468 | -603 | -3,342 | -1,666 | -1,676 |
1 Of which DKK 857m (DKK 32m) is related to fair value hedges.
2 Price hedge derivatives comprise oil price and raw material hedges.
The fair value recognised in equity relates to derivatives designated as effective hedging of future cash flows. The gains/losses are mainly expected to affect the income statement in the same periods as the cash flows are expected to occur. The expected timing of the effect on the income statement is as follows :
| Currency derivatives |
Interest rate derivatives |
Total | Currency derivatives |
Interest rate derivatives |
Total | |
|---|---|---|---|---|---|---|
| 2012 | 2012 | 2012 | 2011 | 2011 | 2011 | |
| Within one year | 222 | -305 | -83 | -622 | -575 | -1,197 |
| Between one and five years After five years |
5 -13 |
-369 -143 |
-364 -156 |
-2 -15 |
-387 -75 |
-389 -90 |
| Total | 214 | -817 | -603 | -639 | -1,037 | -1,676 |
The gains/losses, including realised transactions, are recognised as follows:
| 2012 | 2011 | ||
|---|---|---|---|
| Hedging foreign exchange risk on revenue | 17 | 47 | |
| Hedging foreign exchange risk on operating costs | -331 | 416 | |
| Hedging foreign exchange risk on gain on sale of non-current assets, etc. | - | 279 | |
| Hedging interest rate risk | -770 | -673 | |
| Hedging foreign exchange risk on the cost of property, plant and equipment | -97 | -34 | |
| Total effective hedging | -1,181 | 35 | |
| Ineffectiveness recognised in financial expenses | 3 | -90 | |
| Total reclassified from equity reserve for hedges | -1,178 | -55 | |
| Derivatives accounted for as held for trading: | |||
| Currency derivatives recognised directly in financial income/expenses | 1,372 | -1,762 | |
| Interest rate derivatives recognised directly in financial income/expenses | 558 | 287 | |
| Hedging of oil prices and freight rates recognised directly in other income/costs | -11 | -88 | |
| Net gains/losses recognised directly in the income statement | 1,919 | -1,563 | |
| Total | 741 | -1,618 |
Currency derivatives hedge future revenue, operating costs and investments and are recognised on an ongoing basis in the income statement and the cost of property, plant and equipment respectively.
Interest rate derivatives swap floating to fixed rates on borrowings and are recognised in the income statement concurrently with the hedged interest expenses. Interest rate derivatives are also used to swap fixed rates to floating rates.
Furthermore, the Group enters into derivatives to hedge economic risks that are not accounted for as hedging. These derivatives are accounted for as held for trading.
For information about currencies, maturities, etc. reference is made to note 23.
The share capital on 31 December 2012 comprises:
A shares DKK 2,197.8m divided into 2,197,607 shares of DKK 1,000 and 386 shares of DKK 500 B shares DKK 2,197.8m divided into 2,197,678 shares of DKK 1,000 and 244 shares of DKK 500 All shares are fully issued and paid up.
One A share of DKK 1,000 holds two votes. B shares have no voting rights.
For adoption of resolutions regarding changes in the Company's articles and increase or decrease to the share capital, the presence of two-thirds of the class A voting rights at the Annual General Meeting is required and further the resolution shall be passed by two-thirds of the votes cast.
Apart from a resolution for the dissolution of the Company, other resolutions at the Annual General Meetings are passed by simple majority, unless legislation requires particular voting majority. Reference is made to the Company's articles of association.
Amounts in DKK million (in parenthesis the corresponding figures for 2011)
In the event of an increase of the Company's share capital, the shareholders in the given share class shall have a pre-emptive right to subscribe for a proportionate share of the capital increase.
According to the authorisation of the Annual General Meeting, the Board of Directors may in the period up to and including 3 April 2016 allow the Company to acquire own shares up to a holding of 10% of the Company's share capital. The purchase price may not deviate by more than 10% from the price quoted on NASDAQ OMX Copenhagen A/S at the time of purchase.
| No. of shares of DKK 1,000 |
Nominal value |
% of share capital |
||||
|---|---|---|---|---|---|---|
| Own shares (B shares) | 2012 | 2011 | 2012 | 2011 | 2012 | 2011 |
| 1 January | 29,729 | 30,619 | 30 | 31 | 0.68% | 0.70% |
| Addition | - | 465 | - | - | 0.00% | 0.01% |
| Disposal | 659 | 1,355 | 1 | 1 | 0.02% | 0.03% |
| 31 December | 29,070 | 29,729 | 29 | 30 | 0.66% | 0.68% |
Additions and disposals of own shares are primarily related to the share option programme.
Based on the parent company's profit of DKK 8,435m (DKK 10,477m), the Board of Directors proposes a dividend to the shareholders of DKK 1,200 per share of DKK 1,000 – a total of DKK 5,275m (DKK 1,000 per share of DKK 1,000 – a total of DKK 4,396m). Payment is expected to take place on 17 April 2013.
Payment of dividends to shareholders does not trigger taxes for the Group.
Basis for calculating earnings per share is as follows:
| A.P. Møller - Mærsk A/S' share of: | 2012 | 2011 |
|---|---|---|
| Profit for the year of continuing operations | 21,657 | 15,111 |
| Profit for the year of discontinued operations | 16 | 78 |
| Profit for the year | 21,673 | 15,189 |
| Average number of shares | 4,366,270 | 4,365,585 |
|---|---|---|
| Average number of own shares | 29,330 | 30,015 |
| Issued shares 1 January | 4,395,600 | 4,395,600 |
| 2012 | 2011 | |
At 31 December 2012, there is a dilution effect on earnings per share of 4,658 (5,317) issued share options while there is no dilution effect on 15,931 (11,255) issued share options. This corresponds to 0.11% (0.12%) and 0.36% (0.26%) of the share capital, respectively.
Amounts in DKK million (in parenthesis the corresponding figures for 2011)
The Group has established a share option programme for partners in Firmaet A.P. Møller and other employees. Each share option granted is a call option to buy an existing B share of nominal DKK 1,000 in A.P. Møller - Mærsk A/S.
The fair value of share options granted to 123 (126) employees was DKK 39m (DKK 36m) at the time of such grant. Total value of granted share options recognised in the income statement is DKK 36m (DKK 32m). In addition to this, three (four) partners in Firmaet A.P. Møller bought share options corresponding to a fair value of DKK 7m (DKK 9m).
The share options are granted at an exercise price corresponding to 110% of the average of the market price on the first five trading days following the release of A.P. Møller - Mærsk A/S' annual report. Exercise of the share options is contingent on the option holder still being permanently employed at the time of exercise. The share options can be exercised when at least two years and no more than five years have passed from the time of grant and can only be exercised within the trading periods as stated in the internal rules for trading of A.P. Møller - Mærsk A/S' securities in force at any time. Special conditions apply regarding illness, death and resignation as well as changes in the Company's capital structure, etc.
The share options can only be settled in shares. A portion of the Group's holding of own shares is reserved for settlement of granted options.
| Outstanding share options | Partners in Firmaet A.P. Møller1 |
Employees1 | Total | Average exercise price |
Total fair value1 |
|---|---|---|---|---|---|
| No. | No. | No. | DKK | DKK million | |
| 1 January 2011 | 3,824 | 10,466 | 14,290 | 39,363 | |
| Granted | - | 3,161 | 3,161 | 57,959 | 36 |
| Sold | 775 | - | 775 | 57,959 | 9 |
| Exercised | 140 | 1,215 | 1,355 | 27,237 | |
| Forfeited | - | 299 | 299 | 42,438 | |
| Outstanding 31 December 2011 | 4,459 | 12,113 | 16,572 | 44,716 | |
| Exercisable 31 December 2011 | 2,919 | 6,121 | 9,040 | 38,053 | |
| Granted | - | 4,356 | 4,356 | 49,843 | 39 |
| Sold | 792 | - | 792 | 49,843 | 7 |
| Exercised | - | 659 | 659 | 27,237 | |
| Forfeited | - | 472 | 472 | 52,351 | |
| Outstanding 31 December 2012 | 5,251 | 15,338 | 20,589 | 46,382 | |
| Exercisable 31 December 2012 | 3,684 | 8,076 | 11,760 | 41,183 |
1 At the time of grant.
The weighted average share price at the dates of exercise of share was DKK 43,124 (DKK 48,778).
The average remaining contractual life of outstanding share options as per 31 December 2012 is 2.3 years (2.7 years) and the exercise price is in the range of DKK 27,237 to DKK 57,959 (DKK 27,237 to DKK 57,959).
The fair value per option granted in 2012 is calculated at DKK 8,839 (DKK 11,275) at the time of grant based on Black & Scholes' options pricing model.
Amounts in DKK million
The following principal assumptions are used in the valuation:
| 2012 | 2011 | |
|---|---|---|
| Share price, five days average, DKK | 45,312 | 52,690 |
| Exercise price, DKK | 49,843 | 57,959 |
| Expected volatility (based on historical volatility) | 31.3% | 31.1% |
| Expected term | 4.0 years | 4.0 years |
| Expected dividend per share, DKK | 1,000 | 1,000 |
| Risk free interest rate (based on the five years swap interest curve) | 1.6% | 3.2% |
| 2012 | 2011 | |
|---|---|---|
| Bank and other credit institutions | 72,002 | 81,553 |
| Finance lease liabilities | 12,605 | 13,738 |
| Issued bonds | 26,457 | 14,507 |
| Total | 111,064 | 109,798 |
| Of which: | ||
| Classified as non-current | 98,112 | 96,884 |
| Classified as current | 12,952 | 12,914 |
| Finance lease liabilities | Minimum lease pay- ments |
Interest | Carrying amount |
Minimum lease pay ments |
Interest | Carrying amount |
|---|---|---|---|---|---|---|
| 2012 | 2012 | 2012 | 2011 | 2011 | 2011 | |
| Within one year | 1,625 | 587 | 1,038 | 2,907 | 667 | 2,240 |
| Between one and five years | 6,413 | 1,906 | 4,507 | 6,040 | 2,163 | 3,877 |
| After five years | 8,977 | 1,917 | 7,060 | 10,005 | 2,384 | 7,621 |
| Total | 17,015 | 4,410 | 12,605 | 18,952 | 5,214 | 13,738 |
The finance lease agreements are described in note 10.
Amounts in DKK million
As employer, the Group participates in pension plans according to normal practice in the countries in which the Group operates. As a main rule, the pension plans within the Group are defined contribution plans, where contributions are recognised in the income statement on an accrual basis. A number of entities have defined benefit plans, in which retirement benefits are based on length of service and salary level. To a limited extent, these defined benefit plans also include payment of medical expenses, etc.
Pension and medical plans which, as part of collective bargaining agreements, have been entered into with other enterprises (known as multi-employer plans) are treated as other pension plans. Such defined benefit plans are treated as defined contribution plans when sufficient information for calculating the individual enterprises' share of the obligation is not available.
| 2012 | 2011 | |
|---|---|---|
| Recognised net liability | ||
| Present value of funded plans | 14,044 | 12,927 |
| Fair value of plan assets | -12,596 | -11,619 |
| Net liability of funded plans | 1,448 | 1,308 |
| Present value of unfunded plans | 857 | 752 |
| Net liability | 2,305 | 2,060 |
| Assets not recognised due to limit of the asset ceiling | 32 | 50 |
| Adjustment for minimum funding requirement | 1 | 350 |
| Funded plans with surplus, transfer to assets | 193 | 87 |
| Net liability 31 December | 2,531 | 2,547 |
| Change in gross liability | ||
| Gross liability 1 January | 13,679 | 12,282 |
| Current service costs, etc. | 158 | 153 |
| Computed interest costs | 629 | 632 |
| Actuarial gains/losses | 832 | 1,001 |
| Change from acquisition/sale of businesses | 9 | -2 |
| New plans, etc. | 6 | - |
| Curtailments and settlements | - | -61 |
| Benefits paid | -662 | -655 |
| Contribution from employees | 16 | 19 |
| Exchange rate adjustment | 234 | 310 |
| Gross liability 31 December | 14,901 | 13,679 |
| Change in plan assets | ||
| Fair value 1 January | 11,619 | 10,410 |
| Expected return | 547 | 558 |
| Actuarial gains/losses | 202 | 445 |
| Settlements | - | -76 |
| Benefits paid | -597 | -579 |
| Contributions from the Group, etc. | 584 | 558 |
| Contributions from employees | 16 | 19 |
| Exchange rate adjustment | 225 | 284 |
| Fair value 31 December | 12,596 | 11,619 |
In 2013, the Group expects to pay contributions totalling DKK 445m to funded defined benefit plans (DKK 425m in 2012).
Amounts in DKK million
| 2012 | 2011 | |
|---|---|---|
| Specification of plan assets | ||
| Shares | 4,535 | 4,023 |
| Government Bonds | 4,297 | 3,758 |
| Corporate Bonds | 2,504 | 1,909 |
| Real estate | 130 | 187 |
| Other assets | 1,130 | 1,742 |
| Fair value 31 December | 12,596 | 11,619 |
| The plan assets do not include assets used by the Group or own shares. | ||
| Cost recognised in the income statement | ||
| Current service costs, etc. | 158 | 153 |
| Computed interest costs | 629 | 632 |
| Expected return on plan assets | -547 | -558 |
| Gains/losses on curtailments and settlements | - | 15 |
| Cost, net | 240 | 242 |
| Return on plan assets | ||
| Expected return | 547 | 558 |
| Actuarial gains/losses | 202 | 445 |
| Actual return | 749 | 1,003 |
| Gains/losses (-) recognised in other comprehensive income | ||
| Actuarial gains/losses on gross liability | -832 | -1,001 |
| Actuarial gains/losses on plan assets | 202 | 445 |
| Effect of the asset ceiling | 18 | 49 |
| Adjustment for minimum funding requirement | 359 | -337 |
| Total | -253 | -844 |
| Accumulated actuarial gains/losses (-) | ||
| Accumulated losses 1 January | -808 | -266 |
| Actuarial gains/losses for the year | -630 | -556 |
| Disposal | - | 32 |
| Exchange rate adjustment | 7 | -18 |
Amounts in DKK million (in parenthesis the corresponding figures for 2011)
| 2012 | 2011 | ||
|---|---|---|---|
| Actuarial assumptions | |||
| Actuarial assumptions 31 December expressed as weighted averages: | |||
| Discount rate | 4.2% | 4.6% | |
| Inflation rate | 2.9% | 2.9% | |
| Expected return on plan assets | N/A | 4.6% | |
| Future salary increase | 3.9% | 3.9% | |
| Future pension increase | 2.8% | 2.8% | |
| Medical cost trend rate | 4.5% | 4.5% |
Expected return on plan assets has not been determined in 2012, since the pension cost from 2013 is calculated on the basis of the discount rate in accordance with the revised IAS 19.
| Historical overview | 2012 | 2011 | 2010 | 2009 | 2008 | |
|---|---|---|---|---|---|---|
| Gross liability | 14,901 | 13,679 | 12,282 | 11,423 | 10,140 | |
| Plan assets | -12,596 | -11,619 | -10,410 | -9,505 | -7,764 | |
| Net liability | 2,305 | 2,060 | 1,872 | 1,918 | 2,376 | |
| Experience adjustments to liabilities | -119 | -173 | 104 | 107 | -188 | |
| Experience adjustments to plan assets | 202 | 445 | 216 | 926 | -2,275 |
Due to collective agreements, some entities in the Group participate together with other enterprises in defined benefit pension and health insurance schemes for current and retired employees (multi-employer plans). In 2012, the Group's contribution is estimated at DKK 707m (DKK 572m). The contributions to be paid in 2013 are expected to be DKK 760m.
No reliable basis exists for allocation of the schemes' obligations and plan assets to individual employer participants. The Group's share might be significant. Deficit in some of the schemes may necessitate increased contributions in the future. Based on the most recent available financial data from the plans' trustees, the plan assets totalled DKK 38.8bn (DKK 41.5bn) and the actuarial value of obligations approximately DKK 52.8bn (DKK 53.7bn). Net obligations in the plans with deficits totalled DKK 15.5bn (DKK 13.8bn). In general, the contributions to the schemes are based on man hours worked or cargo tonnage handled, or a combination hereof.
Amounts in DKK million
| Abandon- ment |
Restruc- turing |
Legal dis- putes, etc. |
Other | Total |
|---|---|---|---|---|
| 21,301 | ||||
| 5,542 | ||||
| 89 | 432 | 241 | 928 | 1,690 |
| 229 | 112 | 1,067 | 948 | 2,356 |
| - | - | 1 | 4 | 5 |
| 375 | - | 0 | 1 | 376 |
| -150 | -1 | -95 | -107 | -353 |
| 9,622 | 373 | 7,768 | 5,062 | 22,825 |
| 19,351 | ||||
| - | 316 | 1,685 | 1,473 | 3,474 |
| 8,716 | - | 1,065 | 815 | 10,596 |
| 9,426 289 9,622 |
550 368 57 |
6,431 2,739 6,083 |
4,894 2,146 3,589 |
Provisions for abandonment comprise estimated expenses for abandonment of oil and gas fields at discounted value. Restructuring includes provisions for decided and publicly announced restructurings. Legal disputes, etc. include tax and duty disputes among other things. Other includes provisions for guarantees, onerous contracts, and risk under certain self-insurance programmes. The provisions are subject to considerable uncertainty, cf. note 2.
Reversals of provisions primarily relate to legal disputes and contractual disagreements, which are recognised in the income statement under operating costs and tax.
| 2012 | 2011 | |
|---|---|---|
| Interest payable | 996 | 940 |
| VAT and duties payable | 2,867 | 3,369 |
| Accrued staff costs | 3,217 | 2,851 |
| Contingent consideration | 281 | 350 |
| Other | 2,002 | 1,969 |
| Total | 9,363 | 9,479 |
| Of which: | ||
| Classified as non-current | 371 | 457 |
| Classified as current | 8,992 | 9,022 |
The contingent consideration, primarily related to the acquisitions of Poti Sea Port Corp. and NTS International Transport Services Co. Ltd., are dependent on the future financial and operational performance of the companies.
Amounts in DKK million (in parenthesis the corresponding figures for 2011)
| Financial assets measured at amortised cost | Carrying amount | |||
|---|---|---|---|---|
| 2012 | 2011 | |||
| Loans | 5,554 | 4,937 | ||
| Finance lease receivables | 868 | 648 | ||
| Other interest-bearing receivables and deposits | 883 | 1,020 | ||
| Total interest-bearing receivables | 7,305 | 6,605 | ||
| Trade receivables | 30,767 | 25,319 | ||
| Other receivables (non-interest-bearing) | 9,093 | 7,684 | ||
| Cash and bank balances | 13,011 | 13,095 | ||
| Total loans and receivables | 60,176 | 52,703 |
Trade receivables include work in progress for third parties of DKK 0m (DKK 164m) net of prepayments of DKK 0m (DKK 1,179m).
Fair value of the non-current receivables is not materially different from the carrying amount.
| Financial liabilities measured at amortised cost | Carrying amount |
Fair value |
Carrying amount |
Fair value |
|
|---|---|---|---|---|---|
| 2012 | 2012 | 2011 | 2011 | ||
| Bank and other credit institutions | 72,002 | 75,546 | 81,553 | 86,383 | |
| Finance lease liabilities | 12,605 | 14,752 | 13,738 | 16,577 | |
| Issued bonds | 26,457 | 27,619 | 14,507 | 14,855 | |
| Borrowings | 111,064 | 117,917 | 109,798 | 117,815 | |
| Trade payables | 35,594 | 37,232 | |||
| Other financial liabilities | 9,082 | 9,129 | |||
| Total financial liabilities | 155,740 | 156,159 |
Fair value of issued bonds is based on observable market prices. Fair value of other liabilities is calculated on the basis of discounted interest and instalments.
Amounts in DKK million (in parenthesis the corresponding figures for 2011)
Financial instruments measured at fair value can be divided into three levels:
| Level | ||||
|---|---|---|---|---|
| Carrying amount |
Quoted prices |
Other observable inputs |
Other measurement methods |
|
| 2012 | ||||
| Listed shares | 37 | 37 | - | - |
| Non-listed shares | 388 | - | - | 388 |
| Total other equity investments (available-for-sale) | 425 | 37 | - | 388 |
| Bonds | 2,019 | 2,019 | - | - |
| Listed shares | 1 | 1 | - | - |
| Non-listed shares | 9 | - | - | 9 |
| Other securities | 131 | 1 | 120 | 10 |
| Total securities (held for trading) | 2,160 | 2,021 | 120 | 19 |
| Derivatives | 1,871 | 11 | 1,860 | - |
| Total financial assets | 4,456 | 2,069 | 1,980 | 407 |
| Derivatives | 2,006 | 46 | 1,960 | - |
| Other payables | 281 | - | - | 281 |
| Total financial liabilities | 2,287 | 46 | 1,960 | 281 |
| 2011 | ||||
| Listed shares | 21 | 21 | - | - |
| Non-listed shares | 464 | - | - | 464 |
| Total other equity investments (available-for-sale) | 485 | 21 | - | 464 |
| Bonds | 1,910 | 1,910 | - | - |
| Listed shares | 1 | 1 | - | - |
| Non-listed shares | 57 | - | - | 57 |
| Other securities | 184 | 3 | 91 | 90 |
| Total securities (held for trading) | 2,152 | 1,914 | 91 | 147 |
| Derivatives | 1,284 | 92 | 1,192 | - |
| Total financial assets | 3,921 | 2,027 | 1,283 | 611 |
| Derivatives | 4,626 | 97 | 4,529 | - |
| Other payables | 350 | - | - | 350 |
| Total financial liabilities | 4,976 | 97 | 4,529 | 350 |
Derivatives designated as cash flow hedges (hedging instruments) are equal to a net liability of DKK 603m (DKK 1.7bn).
Amounts in DKK million (in parenthesis the corresponding figures for 2011)
| Movement during the year in level 3 | Non-listed shares | Other securities |
Total financial assets |
Other payables |
Total financial liabilities |
||||
|---|---|---|---|---|---|---|---|---|---|
| Available- for-sale |
Held for trading |
||||||||
| Carrying amount 1 January 2011 | 578 | 75 | 85 | 738 | 67 | 67 | |||
| Addition | 1 | 29 | 6 | 36 | 316 | 316 | |||
| Disposal | 7 | 52 | 6 | 65 | 42 | 42 | |||
| Gains/losses recognised in the income statement | - | 4 | 4 | 8 | -11 | -11 | |||
| Gains/losses recognised in other comprehensive income | -4 | - | - | -4 | - | - | |||
| Transfer, assets held for sale | -110 | - | 3 | -107 | - | - | |||
| Exchange rate adjustment | 6 | 1 | -2 | 5 | 20 | 20 | |||
| Carrying amount 31 December 2011 | 464 | 57 | 90 | 611 | 350 | 350 | |||
| Addition | - | - | - | - | 61 | 61 | |||
| Disposal | 10 | 41 | 20 | 71 | - | - | |||
| Gains/losses recognised in the income statement | - | - | - | - | -126 | -126 | |||
| Gains/losses recognised in other comprehensive income | -10 | - | - | -10 | - | - | |||
| Transfer, assets held for sale | -51 | - | - | -51 | - | - | |||
| Transfer between fair value levels | - | - | -67 | -67 | - | - | |||
| Transfer, other | - | -7 | 7 | - | - | - | |||
| Exchange rate adjustment | -5 | - | - | -5 | -4 | -4 | |||
| Carrying amount 31 December 2012 | 388 | 9 | 10 | 407 | 281 | 281 |
Fair value of level 3 assets and liabilities are primarily based on the present value of expected future cash flows. A reasonably possible change in the discount rate is not estimated to affect the Group's profit or equity significantly.
Gains/losses recognised in the income statement are included under financial income/expenses for financial assets and under other income/ costs for other payables. DKK 115m (DKK 6m) is related to other payables held at the balance sheet date.
Amounts in DKK million (in parenthesis the corresponding figures for 2011)
The Group's activities expose it to a variety of financial risks: market risks, i.e. currency risk and interest rate risk, credit risk and liquidity risk. The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise the potential adverse effects on the Group's financial performance. The Group uses derivative financial instruments to hedge certain risk exposures.
Risk management is carried out by a central finance department under policies approved by the Board of Directors. The finance department identifies, evaluates and hedges financial risks in close co-operation with the Group's Business Units.
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect the Group's profit or the value of its holdings of financial instruments. Below sensitivity analyses relate to the position of financial instruments at 31 December 2012.
The sensitivity analyses for currency risk and interest rate risk have been prepared on the basis that the amount of net debt, the ratio of fixed to floating interest rates of the debt and the proportion of financial instruments in foreign currencies remain unchanged from hedge designations in place at 31 December 2012. Furthermore, it is assumed that the exchange rate and interest rate sensitivities have a symmetric impact, i.e. an increase in rates results in the same absolute movement as a decrease in rates.
The sensitivity analyses show the effect on profit or loss and equity of a reasonably possible change in exchange rates and interest rates.
The Group's currency risk arises due to income from shipping and oil-related activities are denominated mainly in USD, while the related expenses are incurred in both USD and a wide range of other currencies such as DKK, EUR, CNY and GBP. As the net income is in USD, this is also the primary financing currency. Income and expenses from other activities, including APM Terminals and Dansk Supermarked, are mainly denominated in local currencies, thus reducing the Group's exposure to these currencies.
The main purpose of hedging the Group's currency risk is to hedge the USD value of the Group's net cash flow and reduce fluctuations in the Group's profit. The Group uses various financial derivatives, including forwards, option contracts and cross-currency swaps, to hedge these risks. The key aspects of the currency hedging policy are as follows:
An increase in the USD exchange rate of 10% against all other significant currencies to which the Group is exposed, is estimated to have a negative impact on the Group's profit before tax by DKK 0.8bn (positive DKK 0.1bn) and the Group's equity, excluding tax, negatively by DKK 1.8bn (DKK 0.9bn). The sensitivities are based only on the impact of financial instruments that are outstanding at the balance sheet date, cf. notes 15 and 22, and are thus not an expression of the Group's total currency risk.
Amounts in DKK million (in parenthesis the corresponding figures for 2011)
| Currency position of net interest-bearing debt |
Cash and bank balances |
Other interest- bearing assets1 |
Borrow- ings |
Net interest- bearing debt |
Cash and bank balances |
Other interest- bearing assets1 |
Borrow- ings |
Net interest bearing debt |
|
|---|---|---|---|---|---|---|---|---|---|
| 2012 | 2012 | 2012 | 2012 | 2011 | 2011 | 2011 | 2011 | ||
| USD | 4,324 | 3,669 | 71,354 | 63,361 | 3,958 | 2,985 | 78,440 | 71,497 | |
| EUR | 619 | 575 | 17,282 | 16,088 | 1,220 | 70 | 10,971 | 9,681 | |
| DKK | 825 | 4,153 | 1,907 | -3,071 | 1,448 | 4,973 | 4,685 | -1,736 | |
| Other currencies | 7,243 | 1,058 | 20,521 | 12,220 | 6,469 | 671 | 15,702 | 8,562 | |
| Total | 13,011 | 9,455 | 111,064 | 88,598 | 13,095 | 8,699 | 109,798 | 88,004 |
1 Other interest-bearing assets consist of bonds, other securities and interest-bearing receivables (cf. note 22).
Interest rate swaps entered into for the purpose of hedging interest rate risks on loans are mainly in USD. Fair values can be found in note 15.
| Foreign exchange forwards and option contracts for hedging currency risks |
Fair value | ||
|---|---|---|---|
| 2012 | 2011 | ||
| USD | 46 | 26 | |
| EUR | -553 | -1,283 | |
| DKK | 182 | -809 | |
| GBP | 278 | 225 | |
| NOK | 188 | -274 | |
| SEK | 15 | -152 | |
| Other | 5 | -115 | |
| Total | 161 | -2,382 |
The Group has most of its debt denominated in USD, but part of the debt (e.g. issued bonds) is in other currencies such as DKK, EUR and NOK. Some loans are at fixed interest rates, while others are at floating interest rates.
The Group strives to maintain a combination of fixed and floating interest rates on its net debt, reflecting expectations and risks. The hedging of the interest rate risk is governed by a duration range and is primarily obtained through the use of interest rate swaps. The duration of the Group's debt portfolio is 1.8 years (2.0 years). A general increase in interest rates by one percentage point is estimated, all other things being equal, to affect profit before tax negatively by DKK 0.4bn (DKK 0.4bn). The effect on equity, excluding tax effect, of an increase in interest rates as mentioned above is estimated to be positive by DKK 0.1bn (negative by DKK 0.2bn).
This analysis assumes that all other variables, in particular foreign currency rates, remain constant.
| Borrowings by interest rate levels inclusive of interest rate swaps |
Carrying amount |
Next interest rate fixing | ||
|---|---|---|---|---|
| 0-1 year | 1-5 years | 5- years | ||
| 2012 | ||||
| 0-3% | 49,754 | 40,565 | 6,312 | 2,877 |
| 3-6% | 51,251 | 25,551 | 11,005 | 14,695 |
| 6%- | 10,059 | 1,423 | 1,999 | 6,637 |
| Total | 111,064 | 67,539 | 19,316 | 24,209 |
| Of which: | ||||
| Bearing fixed interest | 55,757 | |||
| Bearing floating interest | 55,307 | |||
| 2011 | ||||
| 0-3% | 46,542 | 44,306 | 756 | 1,480 |
| 3-6% | 49,502 | 13,282 | 23,155 | 13,065 |
| 6%- | 13,754 | 1,263 | 5,255 | 7,236 |
| Total | 109,798 | 58,851 | 29,166 | 21,781 |
| Of which: | ||||
| Bearing fixed interest | 60,243 | |||
| Bearing floating interest | 49,555 | |||
The Group has substantial exposure to financial and commercial counterparties but has no particular concentration of customers or suppliers. To minimise the credit risk, financial vetting is undertaken for all major customers and financial institutions, adequate security is required for commercial counterparties and credit limits are set for financial institutions and key commercial counterparties.
Amounts in DKK million (in parenthesis the corresponding figures for 2011)
| Maturity analysis of trade receivables | 2012 | 2011 | |
|---|---|---|---|
| Receivables not due | 23,853 | 19,502 | |
| Less than 90 days overdue | 6,111 | 5,578 | |
| More than 90 days overdue | 2,672 | 1,755 | |
| Receivables, gross | 32,636 | 26,835 | |
| Provision for bad debt | 1,869 | 1,516 | |
| Carrying amount | 30,767 | 25,319 |
| Change in provision for bad debt | 2012 | 2011 | |
|---|---|---|---|
| 1 January | 1,516 | 2,546 | |
| Disposal on sale of businesses | - | 4 | |
| Provision made | 946 | 662 | |
| Amount used | 252 | 518 | |
| Amount reversed | 307 | 1,145 | |
| Exchange rate adjustment | -34 | -25 | |
| 31 December | 1,869 | 1,516 |
The equity share of total assets was 52.9% at the end of 2012 (51.4%). The Group's long term objective is to maintain a conservative financial solvency profile. Capital is managed for the Group as a whole.
| 2012 | 2011 | ||
|---|---|---|---|
| Borrowings Net interest-bearing debt |
111,064 88,598 |
109,798 88,004 |
|
| Liquidity reserve 1 | 77,215 | 64,897 |
1 Liquidity reserve is defined as undrawn committed revolving facilities, securities, cash and bank balances, including balances in countries with exchange control or other restrictions, cf. page 78.
Based on the liquidity reserve, the size of the committed loan facilities, including loans for the financing of specific assets, the maturity of outstanding loans, and the current investment profile, the Group's financial resources are deemed satisfactory. The Group's long term objective is to maintain a conservative funding profile, matching that of a strong investment grade company over the business cycle, with a strong liquidity position in order to withstand fluctuations in the economy, and have the strength to exploit new and attractive investment opportunities.
The average term to maturity of loan facilities in the Group was about five years (about five years).
Amounts in DKK million
It is of great importance for the Group to maintain a financial reserve to cover the Group's obligations and investment opportunities and to provide the capital necessary to offset changes in the Group's liquidity due to changes in the cash flow from operating activities.
The flexibility of the financial reserve is subject to ongoing prioritisation and optimisation, among other things, by focusing on release of capital and following up on the development in working capital.
| Maturities of liabilities and commitments Carrying amount |
Cash flows including interest | |||
|---|---|---|---|---|
| 0-1 year 1-5 years |
5- years | Total | ||
| 2012 | ||||
| Bank and other credit institutions 72,002 13,908 40,629 |
27,060 | 81,597 | ||
| Finance lease liabilities 12,605 1,625 6,413 |
8,977 | 17,015 | ||
| Issued bonds 26,457 1,007 20,560 |
9,549 | 31,116 | ||
| Trade payables 35,594 35,594 |
- - |
35,594 | ||
| Other payables 9,363 8,992 |
252 119 |
9,363 | ||
| Derivatives 2,006 565 1,250 |
191 | 2,006 | ||
| Total recognised in balance sheet 158,027 61,691 69,104 |
45,896 | 176,691 | ||
| Operating lease commitments 14,917 33,666 |
44,200 | 92,783 | ||
| Capital commitments 31,935 41,114 |
5,058 | 78,107 | ||
| Total 108,543 143,884 |
95,154 | 347,581 | ||
| 2011 | ||||
| Bank and other credit institutions 81,553 12,650 51,628 |
27,725 | 92,003 | ||
| Finance lease liabilities 13,738 2,907 6,040 |
10,005 | 18,952 | ||
| Issued bonds 14,507 684 12,404 |
4,331 | 17,419 | ||
| Trade payables 37,232 37,232 |
- - |
37,232 | ||
| Other payables 9,479 9,022 |
394 63 |
9,479 | ||
| Derivatives 4,626 2,182 1,777 |
667 | 4,626 | ||
| Total recognised in balance sheet 161,135 64,677 72,243 |
42,791 | 179,711 | ||
| Operating lease commitments 15,977 36,618 |
41,097 | 93,692 | ||
| Capital commitments 35,907 45,862 |
3,130 | 84,899 | ||
| Total 116,561 154,723 |
87,018 | 358,302 |
| 2012 | 2011 | ||
|---|---|---|---|
| Change in working capital | |||
| Inventories | -287 | -2,000 | |
| Trade receivables | -2,744 | -1,087 | |
| Other receivables and prepayments | -134 | 1,104 | |
| Trade payables and other payables, etc. | -715 | 1,744 | |
| Exchange rate adjustment of working capital | -135 | -263 | |
| Total | -4,015 | -502 | |
| Financial income received | |||
| Dividends received | 364 | 230 | |
| Interest and other financial income received | 943 | 605 | |
| Total | 1,307 | 835 | |
| Purchase of intangible assets and property, plant and equipment | |||
| Addition | -46,764 | -43,754 | |
| Addition, assets held for sale | -39 | -20 | |
| Of which finance leases, etc. | 71 | 739 | |
| Of which borrowing costs capitalised on assets | 392 | 229 | |
| Change in payables to suppliers regarding purchase of assets | -828 | 192 | |
| Change in provision for abandonment | 60 | 556 | |
| Total | -47,108 | -42,058 | |
| Other financial investments | |||
| Capital increases and acquisition of shares in associated companies | -2,378 | -5,192 | |
| Sale of shares in associated companies | -1 | - | |
| Purchase of non-current assets available-for-sale | -1 | -38 | |
| Sale of non-current assets available-for-sale | 134 | 111 | |
| Loan repayments received | 516 | 771 | |
| Loans granted | -1,083 | -1,640 | |
| Total | -2,813 | -5,988 |
Other non-cash items related primarily to adjustment of provision for bad debt regarding trade receivables.
Amounts in DKK million
| Cash flow used for acquisitions in 2012 | Skandia Container Terminal |
Global Ports |
Other | Total |
|---|---|---|---|---|
| Fair value at time of acquisition | ||||
| Intangible assets | 1,627 | 3,918 | 176 | 5,721 |
| Property, plant and equipment | 182 | 2,421 | 4 | 2,607 |
| Financial assets | - | 23 | 5 | 28 |
| Current assets | 111 | 379 | 253 | 743 |
| Provisions | - | - | -5 | -5 |
| Liabilities | -557 | -1,989 | -284 | -2,830 |
| Net assets acquired | 1,363 | 4,752 | 149 | 6,264 |
| Goodwill | - | - | 235 | 235 |
| Purchase price | 1,363 | 4,752 | 384 | 6,499 |
| Contingent consideration assumed | - | - | -61 | -61 |
| Cash and bank balances assumed | - | -203 | -18 | -221 |
| Cash flow used for acquisition of subsidiares and activities | 1,363 | 4,549 | 305 | 6,217 |
If the acquisitions during the year had occurred 1 January 2012, the Group's revenue and profit would not have been materially different.
Fair value adjustments on contingent considerations in relation to prior year acquisitions of Poti Sea Port Corp. and NTS International Transport Services Co. Ltd. have during 2012 resulted in gains of DKK 87m and DKK 47m, respectively. The gains are recognised as other income.
On 4 January 2012, the Group acquired 100% of the shares in Skandia Container Terminal AB, which operates the port of Gothenburg, Sweden. The acquisition will strengthen APM Terminals' position in Scandinavia.
The total purchase price was DKK 1,363m. The net assets acquired consist of terminal rights of DKK 1,627m, property, plant and equipment of DKK 182m and liabilities of DKK 557m.
From the acquisition date to 31 December 2012, Skandia Container Terminal AB contributed with a revenue of DKK 540m and a profit of DKK 63m.
On 28 November 2012, the Group acquired 37.5% of the shares in Global Ports (30% voting rights), which is a leading operator of container terminals in Russia and the Baltics. The Group has through a shareholder agreement joint control over the entity. The acquisition enables APM Terminals to expand its network in Russia and neighbouring countries and create further opportunities to accommodate growth.
The total purchase price was DKK 4,752m. The net assets acquired consist of terminal rights of DKK 3,918m, property, plant and equipment of DKK 2,421m and liabilities of DKK 1,989m.
As the acquisition date is close to the year end, the revenue and the profit contributed to the Group is insignificant.
The accounting for the business combination is considered provisional at 31 December 2012 as some analyses are still ongoing.
| Cash flow used for acquisitions in 2011 | Poti Sea Port |
SK do Brasil |
NTS Inter- national Transport Services |
Other | Total | |
|---|---|---|---|---|---|---|
| Fair value at time of acquisition | ||||||
| Intangible assets | 284 | 12,345 | 134 | 5 | 12,768 | |
| Property, plant and equipment | 911 | 482 | 8 | 54 | 1,455 | |
| Financial assets | 101 | - | 1 | - | 102 | |
| Deferred tax assets | - | 142 | - | - | 142 | |
| Current assets | 78 | 864 | 452 | 21 | 1,415 | |
| Provisions | - | -205 | - | - | -205 | |
| Liabilities | -301 | -446 | -268 | -22 | -1,037 | |
| Net assets acquired | 1,073 | 13,182 | 327 | 58 | 14,640 | |
| Goodwill | - | - | 399 | - | 399 | |
| Purchase price | 1,073 | 13,182 | 726 | 58 | 15,039 | |
| Change in payable purchase price, etc. | - | - | -87 | 2 | -85 | |
| Contingent consideration recognised | -151 | - | -157 | - | -308 | |
| Contingent consideration paid | - | - | - | 42 | 42 | |
| Paid in prior years | - | -1,071 | - | -27 | -1,098 | |
| Cash and bank balances assumed | -14 | -479 | -25 | -2 | -520 | |
| Cash flow used for acquisition of subsidiaries | ||||||
| and activities | 908 | 11,632 | 457 | 73 | 13,070 |
If acquisitions during the year had occurred on 1 January 2011, the Group's revenue and profit would not have been materially different.
Amounts in DKK million
On 14 May 2011, the Group acquired 100% of the shares in Poti Sea Port Corp., which owns and operates the Black Sea port of Poti, Georgia.
The total acquisition cost was DKK 1,073m including a contingent consideration of DKK 151m. The contingent consideration is dependent on the future financial and operational performance of the company and is estimated to range between DKK 27m and DKK 310m (undiscounted).
From the acquisition date to 31 December 2011, Poti Sea Port Corp. contributed revenue of DKK 149m and a profit of DKK 21m.
On 21 July 2011, the Group acquired 100% of the shares in SK do Brasil Ltda., which owns shares in three offshore oil licenses in Brazil.
From the acquisition date to 31 December 2011, SK do Brasil Ltda. contributed revenue of DKK 550m and a profit of DKK 41m.
On 18 August 2011, the Group acquired 100% of the shares in the China based airfreight forwarder NTS International Transport Services Co. Ltd.
The total acquisition cost was DKK 726m including a contingent consideration of DKK 157m. The contingent consideration is dependent on the future financial and operational performance of the company and is estimated to range between DKK 90m and DKK 280m (undiscounted).
Current assets include trade receivables with a fair value of DKK 292m. The gross amount due under the contracts is not materially different from the fair value.
The goodwill of DKK 399m is attributable to synergies between Damco's customer base and NTS International Transport Services Co. Ltd.'s airfreight services and is not deductible for tax purposes.
From the acquisition date to 31 December 2011, NTS International Transport Services Co. Ltd. contributed revenue of DKK 636m and a profit of DKK 4m.
| Cash flow from sale | 2012 | 2011 | |
|---|---|---|---|
| Carrying amount | |||
| Intangible assets | 196 | - | |
| Property, plant and equipment | 8,532 | 2,525 | |
| Financial assets | 15 | 1 | |
| Deferred tax assets | 5 | - | |
| Current assets | 571 | 515 | |
| Provisions | -5 | -2 | |
| Liabilities | -717 | -564 | |
| Net assets sold | 8,597 | 2,475 | |
| Non-controlling interests | -27 | - | |
| A.P. Møller - Mærsk A/S' share | 8,570 | 2,475 | |
| Gain/loss on sale | 1,062 | 4,355 | |
| Proceeds from sale | 9,632 | 6,830 | |
| Change in receivable proceeds, etc. | - | 237 | |
| Non-cash items | - | -368 | |
| Cash and bank balances sold | -234 | -97 | |
| Cash flow from sale of subsidiaries and activities | 9,398 | 6,602 |
Sales during 2012 primarily comprised Maersk LNG A/S and Maersk Equipment Service Company, Inc.
Non-current assets sold include assets that were previously classified as assets available for sale.
Sales during 2011 primarily comprised of Netto Foodstores Limited, UK. The sale was completed on 13 April 2011 with a gain of DKK 3.8bn including an accumulated exchange rate loss of DKK 0.5bn previously recognised in equity.
| Effect on equity attributable to A.P. Møller - Mærsk A/S | 2012 | 2011 |
|---|---|---|
| Increase in ownership | ||
| Purchase of 44% in West Africa Container Terminal BVI Ltd. | -129 | - |
| Purchase of 27% in West Africa Container Terminal Nigeria Ltd. | - 86 | - |
| Purchase of 40% in APM Terminals Apapa Ltd. | - 494 | - |
| Purchase of 25% in OHG Netto Supermarkt GmbH & Co. | - 304 | - |
| Other | -19 | -28 |
| Total increase in ownership | -1,032 | -28 |
Amounts in DKK million (in parenthesis the corresponding figures for 2011)
As part of the Group's activities, customary agreements are entered into regarding charter and operating leases of ships, containers, port facilities, etc. The future charter and operating lease payments for continuing operations are:
| Maersk Line1 |
Maersk Oil |
APM Terminals |
Maersk Drilling |
Maersk Tankers1 |
Other | Total | |
|---|---|---|---|---|---|---|---|
| 2012 | |||||||
| Within one year | 8,937 | 1,094 | 1,892 | 14 | 1,695 | 1,285 | 14,917 |
| Between one and two years | 6,189 | 919 | 1,736 | 9 | 1,416 | 893 | 11,162 |
| Between two and three years | 4,307 | 833 | 1,946 | - | 1,205 | 644 | 8,935 |
| Between three and four years | 3,333 | 779 | 1,999 | - | 1,021 | 312 | 7,444 |
| Between four and five years | 2,412 | 499 | 2,040 | - | 973 | 201 | 6,125 |
| After five years | 3,571 | 59 | 36,543 | - | 3,418 | 609 | 44,200 |
| Total | 28,749 | 4,183 | 46,156 | 23 | 9,728 | 3,944 | 92,783 |
| Net present value 2 | 24,403 | 3,577 | 24,611 | 21 | 7,494 | 3,300 | 63,406 |
| 2011 | |||||||
| Within one year | 10,043 | 920 | 1,810 | 12 | 2,020 | 1,172 | 15,977 |
| Between one and two years | 7,415 | 728 | 1,656 | 2 | 1,666 | 870 | 12,337 |
| Between two and three years | 5,155 | 469 | 1,701 | 3 | 1,451 | 720 | 9,499 |
| Between three and four years | 3,998 | 432 | 1,780 | 3 | 1,241 | 555 | 8,009 |
| Between four and five years | 3,262 | 404 | 1,834 | 1 | 1,057 | 215 | 6,773 |
| After five years | 6,101 | 259 | 29,668 | - | 4,541 | 528 | 41,097 |
| Total | 35,974 | 3,212 | 38,449 | 21 | 11,976 | 4,060 | 93,692 |
| Net present value 2 | 30,051 | 2,734 | 21,511 | 19 | 9,131 | 3,392 | 66,838 |
1 About half of the time charter payments in Maersk Line and one-third of the time charter payments in Maersk Tankers, included above, are estimated to relate to operational costs for the assets.
2 The net present value has been calculated using a discount rate of 6% (6%).
Total operating lease costs incurred and contingent payments related to volume, etc., are stated in note 4.
| Capital commitments | Maersk Line |
Maersk Oil |
APM Terminals |
Maersk Drilling |
Maersk Tankers |
Other | Total | |
|---|---|---|---|---|---|---|---|---|
| 2012 Capital commitments relating to |
||||||||
| acquisition of non-current assets | 19,211 | 9,757 | 4,441 | 19,194 | - | 2,084 | 54,687 | |
| Commitments towards | ||||||||
| concession grantors | - | 9,561 | 13,859 | - | - | - | 23,420 | |
| Total capital commitments | 19,211 | 19,318 | 18,300 | 19,194 | - | 2,084 | 78,107 | |
| 2011 | ||||||||
| Capital commitments relating to | ||||||||
| acquisition of non-current assets | 30,032 | 8,313 | 3,338 | 17,354 | 2,337 | 2,395 | 63,769 | |
| Commitments towards | ||||||||
| concession grantors | - | 8,194 | 12,936 | - | - | - | 21,130 | |
| Total capital commitments | 30,032 | 16,507 | 16,274 | 17,354 | 2,337 | 2,395 | 84,899 |
The decrease in capital commitments is primarily related to contractual payments during 2012. The decrease is partly offset by investments in Qatar as well as contracts for a jack-up rig.
| No. | |||||
|---|---|---|---|---|---|
| Newbuilding programme | 2013 | 2014 | 2015 | Total | |
| Container vessels | 10 | 8 | 7 | 25 | |
| Rigs and drillships | 2 | 4 | 1 | 7 | |
| Anchor handling vessels, tugboats and standby vessels, etc. | 3 | 8 | 1 | 12 | |
| Total | 15 | 20 | 9 | 44 |
| DKK million |
|||||
|---|---|---|---|---|---|
| Capital commitments relating to the newbuilding programme | 2013 | 2014 | 2015 | Total | |
| Container vessels, etc. Rigs and drillships Anchor handling vessels, tugboats and standby vessels, etc. |
7,629 9,307 701 |
6,662 6,614 342 |
4,674 1,574 103 |
18,965 17,495 1,146 |
|
| Total | 17,637 | 13,618 | 6,351 | 37,606 |
DKK 37.6bn (USD 6.6bn) of the total capital commitments is related to the newbuilding programme for ships, rigs, etc. at a total contract price of DKK 48.1bn (USD 8.5bn) including owner-furnished equipment. The remaining capital commitments of DKK 40.5bn (USD 7.2bn) relate to investments mainly within Terminal activities and Oil and gas activities.
The capital commitments will be financed by cash flow from operating activities as well as existing and new loan facilities.
Amounts in DKK million (in parenthesis the corresponding figures for 2011)
Except for customary agreements within the Group's activities, no material agreements have been entered into that will take effect, change or expire upon changes of the control over the Company.
The necessary facility of DKK 2,150m (DKK 2,183m) corresponding to USD 380m (USD 380m) has been established in order to meet the requirements for trading in the USA under the American Oil Pollution Act of 1990 (Certificate of Financial Responsibility).
Maersk Line and APM Terminals have entered into certain agreements with terminals and port authorities, etc. containing volume commitments including an extra payment in case minimum volumes are not met.
When exploring or producing oil in foreign countries, each subsidiary is generally liable for contractual obligations jointly with the other consortium parties.
The Group is involved in a number of legal disputes. The Group is also involved in tax disputes in certain countries. Some of these involve significant amounts and are subject to considerable uncertainty.
Tax may crystallise if the companies leave the tonnage tax regimes and on repatriation of dividends.
Amounts in DKK million (in parenthesis the corresponding figures for 2011)
| Associated companies |
Jointly controlled entities |
Management 1 | ||||||
|---|---|---|---|---|---|---|---|---|
| 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | |||
| Revenue | 62 | 82 | 120 | 108 | - | - | ||
| Operating costs | 1,141 | 1,342 | 2,210 | 1,969 | 89 2 |
110 2 |
||
| Remuneration to management | - | - | - | - | 184 | 146 | ||
| Other income | - | - | - | - | 11 | 11 | ||
| Financial income | 434 | 165 | 8 | 8 | - | - | ||
| Financial expenses | 5 | 355 | 2 | 2 | 0 | - | ||
| Derivatives, non-current | 87 | 185 | - | - | - | - | ||
| Other receivables, non-current | 859 | 163 | 334 | 334 | - | - | ||
| Trade receivables | 274 | 130 | 179 | 116 | - | - | ||
| Derivatives, current | 83 | 101 | - | - | - | - | ||
| Other receivables, current | 59 | 147 | 96 | 174 | - | - | ||
| Securities | 83 | 55 | - | - | - | - | ||
| Cash and bank balances | 1,652 | 1,185 | - | - | - | - | ||
| Derivatives, non-current | 541 | 895 | - | - | - | - | ||
| Bank and other credit institutions, etc. current | 6 | 575 | 68 | 87 | 22 | 23 | ||
| Trade payables | 134 | 62 | 271 | 200 | 13 | 14 | ||
| Derivatives, current | 3 | 399 | - | - | - | - | ||
| Other payables, current | 40 | 42 | - | - | - | - | ||
| Purchase of property, plant and equipment, etc. | - | - | - | - | 18 | - | ||
| Capital increases | 1,659 | 4,505 | - | - | - | - | ||
| Dividends | 361 | 225 | - | - | - | - |
1 The Board of Directors and the Executive Board in A.P. Møller - Mærsk A/S, A.P. Møller og Hustru Chastine Mc-Kinney Møllers Fond til almene Formaal and their close relatives (including undertakings under their significant influence).
2 Includes commission to Maersk Broker K/S from chartering, purchase and sale of ships with DKK 89m (DKK 103m) as well as time charter hire to part owners.
Amounts in DKK million (in parenthesis the corresponding figures for 2011)
The A.P. Møller og Hustru Chastine Mc-Kinney Møllers Fond til almene Formaal, Copenhagen, Denmark has control over the Group. Related parties also include the companies in which the Group exercises significant influence or joint control. In addition, related parties comprise the Executive Board, Firmaet A.P. Møller, members of the Board of Directors, as well as their close family members and companies significantly influenced by them.
One (four) partner in Firmaet A.P. Møller participates in one (three) shipping partnership with one vessel that is operated as part of the A.P. Moller - Maersk fleet. A.P. Møller - Mærsk A/S owns more than 50% (50%) of the vessel and holds the ultimate control. The vessel is operated directly in the market. All transactions between related parties and the Group are subject to arm's length conditions.
During the year DKK 1m (DKK 1m) has been expensed regarding office rent to the A.P. Møller og Hustru Chastine Mc-Kinney Møllers Fond til almene Formaal.
In relation to Danske Bank's arrangement of payment transactions, sale and purchase of securities, etc. only the related costs are included in the above.
For jointly controlled entities, only the non-eliminated part is included.
Three (four) members of the Managing Director bought 792 (775) share options in total corresponding to a fair value of DKK 7m (DKK 9m). Further information is provided in note 17.
Amounts in DKK million
The jointly controlled entities listed on page 148 are included proportionally in the consolidated financial statements with the following amounts before elimination of internal transactions:
| 2012 | 2011 | ||
|---|---|---|---|
| Revenue | 5,882 | 5,398 | |
| Expenses, depreciation, amortisation, interest, etc. | 5,152 | 4,735 | |
| Profit for the period | 730 | 663 | |
| Non-current assets | 20,448 | 13,318 | |
| Current assets | 2,822 | 3,252 | |
| Non-current liabilities | 9,174 | 6,908 | |
| Current liabilities | 2,907 | 2,861 | |
| Net assets | 11,189 | 6,801 | |
| Cash and bank balances | 1,341 | 1,083 | |
| Capital commitments | 1,407 | 1,083 |
The Group has not assumed any separate capital commitments or contingent liabilities regarding jointly controlled entities.
The Group's share of jointly controlled entities' capital commitments and contingent liabilities is included proportionally in notes 27 and 28.
The International Accounting Standards Board (IASB) has issued a number of changes to financial reporting standards and interpretations which come into effect for the 2012 financial year. None of these are of significance to the accounting policies applied by the Group.
The Group expects to implement the following new standards when they become mandatory in 2015 (IFRS 9) and 2013 (others):
IFRS 9 Financial Instruments will be issued in phases to gradually replace IAS 39. So far, the changes cover the recognition, classification and measurement of financial assets and liabilities.
The Group's current practice of classifying and recognising gains and losses in the income statement and other comprehensive income can be retained under IFRS 9.
IFRS 10 Consolidated Financial Statements is based on the principle in IAS 27 that control is a precondition for the consolidation of an entity. The concept of control is expanded upon including guidelines on how to determine control in cases where an assessment is required.
The Group expects IFRS 10 to have limited impact.
IFRS 11 Joint Arrangements replaces IAS 31 and removes the choice of method for preparing the financial statements of jointly controlled entities. Going forward it must be assessed whether the contracting parties have rights to assets and liabilities in the jointly controlled entity (joint operations) or if they have rights to the net assets in the arrangement (joint ventures). Joint operations will continue to be recognised proportionately, whereas joint ventures will be recognised according to the equity method, equivalent to associates.
On the basis of an analysis of the existing contractual relationships, it can be concluded that the change will not have a significant impact on the Group.
IFRS 12 Disclosure of Interests in Other Entities contains new requirements for information about interests in subsidiaries, jointly controlled entities and associates.
IFRS 13 Fair Value Measurement contains a definition of fair value and comprehensive guidelines on its application; these replace the guidelines found in the individual financial reporting standards. The standard means new disclosure requirements but does not change the Group's accounting policies.
IAS 19 Employee Benefits has been revised in terms of the accounting of and disclosure on defined benefit pension plans. The revised rules change the calculation of the period's interest cost for the net obligation with no material impact on the Group's profit.
IAS 1 Presentation of Financial Statements means a change in the presentation of items in other comprehensive income.
Some of the above changes have not yet been endorsed by the EU. The standards endorsed by the EU with a later effective date than the corresponding effective date from the IASB are pre-implemented and thus comply with the IASB's effective date
The Board of Directors and the Management have today discussed and approved the annual report of A.P. Møller - Mærsk A/S for 2012.
The annual report for 2012 of A.P. Møller - Mærsk A/S has been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and Danish disclosure requirements for annual reports of listed companies and in our opinion gives a true and fair view of the Group's and the Company's assets and liabilities, financial position at 31 December 2012 and of the results of the Group's and the Company's operations and cash flows for the financial year 2012.
In our opinion, the Directors´ report includes a fair review of the development in the Group´s and the Company´s operations and financial conditions, the results for the year, cash flows and financial position as well as a description of the most significant risks and uncertainty factors that the Group and the Company face.
We recommend that the annual report be approved at the Annual General Meeting.
| Management: | ||
|---|---|---|
| Nils S. Andersen | ||
| Group CEO | ||
| Kim Fejfer | Claus V. Hemmingsen | Søren Skou |
| Jakob Thomasen | Trond Westlie | |
| Board of Directors: | ||
| Michael Pram Rasmussen Chairman |
||
| Ane Mærsk Mc-Kinney Uggla | Niels Jacobsen | |
| Vice chairman | Vice chairman | |
| Sir John Bond | Arne Karlsson | Jan Leschly |
| Leise Mærsk Mc-Kinney Møller | Lars Pallesen | John Axel Poulsen |
| Erik Rasmussen | Robert Routs | Jan Tøpholm |
We have audited the consolidated financial statements and the parent company financial statements of A.P. Møller - Mærsk A/S for the financial year 1 January to 31 December 2012, which comprise income statement, statement of comprehensive income, balance sheet, cash flow statement, statement of changes in equity and notes, including a summary of significant accounting policies, for the Group as well as for the parent company. The consolidated financial statements and the parent company financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and Danish disclosure requirements for listed companies.
The Board of Directors and the Management are responsible for the preparation of consolidated financial statements and parent company financial statements that give a true and fair view in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and Danish disclosure requirements for listed companies and for such internal control that the Board of Directors and the Management determine is necessary to enable the preparation of consolidated financial statements and parent company financial statements that are free from material misstatement, whether due to fraud or error.
Our responsibility is to express an opinion on the consolidated financial statements and the parent company financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing and additional requirements under Danish audit regulation. This requires that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the consolidated financial statements and the parent company financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial
KPMG PricewaterhouseCoopers
Jesper Ridder Olsen Gert Fisker Tomczyk State Authorised Public Accountant State Authorised Public Accountant
statements and the parent company financial statements. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the consolidated financial statements and the parent company financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation of consolidated financial statements and parent company financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors and the Management, as well as evaluating the overall presentation of the consolidated financial statements and the parent company financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
The audit has not resulted in any qualification.
In our opinion, the consolidated financial statements and the parent company financial statements give a true and fair view of the Group's and the parent company's financial position at 31 December 2012 and of the results of the Group's and the parent company's operations and cash flows for the financial year 1 January to 31 December 2012 in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and Danish disclosure requirements for listed companies.
Pursuant to the Danish Financial Statements Act, we have read the Directors' report. We have not performed any further procedures in addition to the audit of the consolidated financial statements and the parent company financial statements. On this basis, it is our opinion that the information provided in the Directors' report is consistent with the consolidated financial statements and the parent company financial statements.
Statsautoriseret Revisionspartnerselskab Statsautoriseret Revisionspartnerselskab
| Michael Pram Rasmussen | ||||
|---|---|---|---|---|
| Chairman (born 1955) | ||||
| Joined the board in 1999. Latest re-election in 2011. | ||||
| Term of office will end in 2013. |
Former CEO, Topdanmark A/S.
and one subsidiary; Semler Holding A/S (chairman) and one subsidiary; JPMorgan Chase International Council; Museumsfonden af 7. december 1966; Louisiana – Fonden.
Not considered independent.
Vice chairman (born 1957) Joined the board in 2007. Latest re-election in 2011. Term of office will end in 2013.
CEO of William Demant Holding A/S.
LEGO A/S (chairman); KIRKBI A/S (vice chairman); Thomas B. Thriges Fond (chairman).
Considered independent.
Joined the board in 1991. Latest re-election in 2012. Term of office will end in 2014.
A.P. Møller og Hustru Chastine Mc-Kinney Møllers Fond til almene Formaal (chairman); Maersk Broker A/S (chairman); Maersk Broker K/S (chairman); Estemco A/S (chairman).
Not considered independent.
Joined the board in 2008. Latest re-election in 2012. Term of office will end in 2014.
Former chairman of HSBC Holdings Plc.
Xstrata plc (chairman); Shui On Land Limited; International Advisory Board of Mitsubishi Corporation; China Development Forum; International Business Leaders' Advisory Council to the Mayor of Shanghai; Kohlberg Kravis Roberts & Co. Asia Limited (chairman); Endowment Board of Qatar Foundation; Advisory Director, Northern Trust Corporation; International Advisory Council Tsinghua University School of Economics & Management; International Advisory Council Chinese Banking Regulatory Commission; International Advisory Council Central Bank of the U.A.E.
Considered independent.
Joined the board in 2010. Latest re-election in 2012. Term of office will end in 2014.
Bonnier Holding (chairman) and one subsidiary; Ratos (chairman); SNS (Center for Business and Policy Studies) (chairman); Einar Mattsson; Ecolean; Swedish Securities Council.
Former CEO, Ratos AB.
Joined the board in 2000. Latest re-election in 2012. Term of office will end in 2014.
Chairman and managing partner of Care Capital LLC. Former CEO, SmithKline Pharmaceuticals.
American Express Company; Vaxart Pharmaceuticals; Adjunct professor at Copenhagen Business School.
Not considered independent.
Joined the board in 1993. Latest re-election in 2011. Term of office will end in 2013.
A.P. Møller og Hustru Chastine Mc-Kinney Møllers Fond til almene Formaal; Bramsløkke Landbrug A/S (chairman); L. Møller Shipping ApS.
Not considered independent.
| Lars Pallesen (born 1947) Joined the board in 2008. Latest re-election in 2012. Term of office will end in 2014. Former president, Technical University of Denmark (DTU). |
Other management duties, etc.: Mogens Balslevs Fond (chairman); Metricorr ApS (chair man); Frederiksberg Gymnasium (chairman); Technische Universität Münchens Institute for Advanced Study; Korean Advanced Institute of Science and Technology President's Advisory Council. Considered independent. |
|---|---|
| John Axel Poulsen (born 1946) Joined the board in 2008. Latest re-election in 2012. Term of office will end in 2014. Captain (employee). |
No other management duties Not considered independent. |
| Erik Rasmussen (born 1955) Joined the board in 2010. Latest re-election in 2012. Term of office will end in 2014. Lead mechanical engineer (employee). |
No other management duties Not considered independent. |
| Robert Routs (born 1946) Joined the board in 2010. Latest re-election in 2012. Term of office will end in 2014. Former Executive Director, Royal Dutch Shell plc. |
Other management duties, etc.: Aegon NV (chairman); KPN NV; DSM NV (chairman); ATCO Group; AECOM. Considered independent. |
| Jan Tøpholm (born 1946) Joined the board in 2001. Latest re-election in 2011. Term of office will end in 2013. CEO, Widex A/S. |
Other management duties, etc.: Seven subsidiaries to Widex A/S; T & W Holding A/S and one subsidiary (chairman); Widex Holding A/S (chairman); AM Denmark A/S (chairman); GSA Invest ApS (chairman) and two subsidiaries. Considered independent. |
(born 1958) Member of Executive Board since 2007.
F. Salling Holding A/S (chairman); F. Salling Invest A/S (chairman); Dansk Supermarked A/S (chairman); Industria De Diseño Textil S.A. (Inditex); Danske Banks Rådgivende Repræsentantskab; DI's Erhvervspolitiske Udvalg; European Round Table of Industrialists; EU-Russia Industrialists' Round Table.
Kim Fejfer (born 1965) Member of Executive Board since 2011. Other management duties, etc.: Global Ports Investments PLC (vice chairman).
Claus V. Hemmingsen (born 1962) Member of Executive Board since 2007.
DFDS A/S (vice chairman); Egyptian Drilling Company; International Association of Drilling Contractors (IADC); Danmarks Rederiforening (vice chairman); Denmark Hong Kong Trade Association (chairman); Danish Chinese Business Forum; EU-Hong Kong Business Co-operation Committee.
Søren Skou (born 1964) Member of Executive Board since 2007. Other management duties, etc.: S. Skou Invest ApS.
Jakob Thomasen (born 1962) Member of Executive Board since 2009. Other management duties, etc.: Member of the Board of Dansk Arbejdsgiverforening.
Trond Westlie (born 1961) Member of Executive Board since 2010.
Dansk Supermarked A/S (vice chairman); F. Salling Holding A/S; Danske Bank A/S; Danmarks Skibskredit A/S; Subsea 7 Ltd.; Pepita AS; Shama A/S; Tønsberg Delikatesse AS.
The A.P. Moller - Maersk Group comprises approximately 1,000 companies. Major companies of the A.P. Moller - Maersk Group are listed below. A more comprehensive list of companies is available on http://investor.maersk.com/financials.cfm
| Company | Country of incorporation |
Owned share |
Company | Country of incorporation |
Owned share |
|---|---|---|---|---|---|
| A.P. Moller Finance S.A. | Switzerland | 100% | Broström Tankers Singapore Pte. Ltd. | Singapore | 100% |
| A.P. Moller Singapore Pte. Ltd. | Singapore | 100% | Coman S.A. | Benin | 100% |
| Addicks & Kreye | Container Operators S.A. | Chile | 100% | ||
| Container Service GmbH & Co. KG | Germany | 51% | Damco (UAE) FZE | United Arab | |
| Anchor Storage Ltd. | Bermuda | 51% | Emirates | 100% | |
| APM Terminals - Cargo Service A/S | Denmark | 60% | Damco A/S | Denmark | 100% |
| APM Terminals Algeciras S.A. | Spain | 100% | Damco Australia Pty. Ltd. | Australia | 100% |
| APM Terminals Apapa Ltd. | Nigeria | 94% | Damco Belgium N.V. | Belgium | 100% |
| APM Terminals B.V. | The Netherlands 100% | Damco China Ltd. | China | 100% | |
| APM Terminals Bahrain B.S.C. | Bahrain | 80% | Damco Distribution Services Inc. | USA | 100% |
| APM Terminals Callao S.A. | Peru | 80% | Damco France S.A.S. | France | 100% |
| APM Terminals China Co. Ltd. | Hong Kong | 100% | Damco India Pvt. Ltd. | India | 100% |
| APM Terminals Gothenburg AB | Sweden | 100% | Damco International A/S | Denmark | 100% |
| APM Terminals India Private Limited | India | 100% | Damco Italy S.R.L. | Italy | 100% |
| APM Terminals Inland Services S.A. | Peru | 100% | Damco Logistics Uganda Ltd. | Uganda | 100% |
| APM Terminals Liberia Ltd. | Liberia | 100% | Damco Sweden AB | Sweden | 100% |
| APM Terminals Management B.V. | The Netherlands 100% | Damco UK Ltd. | Great Britain | 100% | |
| APM Terminals Mobile LLC | USA | 100% | Damco USA Inc. | USA | 100% |
| APM Terminals North America B.V. | The Netherlands 100% | Danbor Service A/S | Denmark | 100% | |
| APM Terminals Pacific Ltd. | USA | 100% | Dansk Supermarked A/S | Denmark | 68% |
| APM Terminals Rotterdam B.V. | The Netherlands 100% | ERS Railways B.V. | The Netherlands100% | ||
| APM Terminals Tangier S.A. | Morocco | 90% | ESVAGT A/S | Denmark | 75% |
| APM Terminals Virginia, Inc. | USA | 100% | F. Salling A/S | Denmark | 38% |
| APM Terminals Yangshan Co. Ltd. | Hong Kong | 100% | Farrell Lines Inc. | USA | 100% |
| Aqaba Container Terminal Company Ltd. | Jordan | 50% | Gateway Terminals India Pvt. Ltd. | India | 74% |
| Bermutine Transport Corporation Ltd. | Bermuda | 100% | Lilypond Container Depot Nigeria Ltd. | Nigeria | 70% |
| Bridge Terminal Transport Inc. | USA | 100% | Lindø Industripark A/S | Denmark | 100% |
| Brigantine International Holdings Ltd. | Hong Kong | 100% | Live Oak Company Ltd. | Bermuda | 100% |
| Brigantine Services Ltd. | Hong Kong | 100% | Maersk A/S | Denmark | 100% |
| Company | Country of incorporation |
Owned share |
|---|---|---|
| Maersk Agency U.S.A. Inc. | USA | 100% |
| Maersk Aviation Holding A/S | Denmark | 100% |
| Maersk B.V. | The Netherlands 100% | |
| Maersk Bangladesh Ltd. | Bangladesh | 100% |
| Maersk (China) Shipping Company Ltd. | China | 100% |
| Maersk Container Industry A/S | Denmark | 100% |
| Maersk Container Industry Dongguan Ltd. | China | 100% |
| Maersk Container Industry Qingdao Ltd. | China | 100% |
| Maersk Contractors Venezuela S.A. | Venezuela | 100% |
| Maersk Denizcilik A.S. | Turkey | 100% |
| Maersk Drilling Deepwater A/S | Denmark | 100% |
| Maersk Drilling Holdings Singapore Pte. Ltd. | Singapore | 100% |
| Maersk Drilling International A/S | Denmark | 100% |
| Maersk Drilling Norge AS | Norway | 100% |
| Maersk Drilling USA Inc. | USA | 100% |
| Maersk Egypt For Maritime Transport SAE | Egypt | 100% |
| Maersk Energia Ltda. | Brazil | 100% |
| Maersk Energy Marketing A/S | Denmark | 100% |
| Maersk Energy UK Ltd. | Great Britain | 100% |
| Maersk FPSOs A/S | Denmark | 100% |
| Maersk FPSOs Australia A/S | Denmark | 100% |
| Maersk Gabon S.A. | Gabon | 100% |
| Maersk Global Service Centres | ||
| (Chengdu) Ltd. | China | 100% |
| Maersk Global Service Centres | ||
| (India) Pvt. Ltd. | India | 100% |
| Maersk Handy Gas Pte. Ltd. | Singapore | 100% |
| Maersk Holding B.V. | The Netherlands 100% | |
| Maersk Hong Kong Ltd. | Hong Kong | 100% |
| Maersk Inc. | USA | 100% |
| Maersk Inter Holding B.V. | The Netherlands 100% | |
| Maersk Jupiter Drilling Corporation S.A. | Panama | 100% |
| Maersk K.K. | Japan | 100% |
| Maersk Line Agency Holding A/S | Denmark | 100% |
| Maersk Line Ltd. (State of Delaware) | USA | 100% |
| Maersk Line UK Ltd. | Great Britain | 100% |
| Maersk Logistics Warehousing | ||
| China Company Ltd. | Hong Kong | 100% |
| Maersk Mauritanie S.A. | Mauritania | 60% |
| Maersk Oil America Inc. | USA | 100% |
| Maersk Oil Brasil Ltda. | Brazil | 100% |
| Maersk Oil GB Ltd. | Great Britain | 100% |
| Maersk Oil Gulf of Mexico Four LLC | USA | 100% |
| Maersk Oil North Sea UK Ltd. | Great Britain | 100% |
| Maersk Oil Norway AS | Norway | 100% |
| Company | Country of incorporation |
Owned share |
|---|---|---|
| Maersk Oil Qatar A/S | Denmark | 100% |
| Maersk Oil Three PL B.V. | The Netherlands100% | |
| Maersk Oil UK Ltd. | Great Britain | 100% |
| Maersk Peregrino Pte. Ltd. | Singapore | 100% |
| Maersk Petróleo Brasil Ltda. | Brazil | 100% |
| Maersk Reacher Norge A/S | Denmark | 100% |
| Maersk Shipping Hong Kong Ltd. | Hong Kong | 100% |
| Maersk Spain S.L.U. | Spain | 100% |
| Maersk Supply Service A/S | Denmark | 100% |
| Maersk Supply Service Canada Ltd. | Canada | 100% |
| Maersk Supply Service Holdings UK Ltd. | Great Britain | 100% |
| Maersk Supply Service International A/S | Denmark | 100% |
| Maersk Supply Service UK Ltd. | Great Britain | 100% |
| Maersk Tankers A/S | Denmark | 100% |
| Maersk Tankers Singapore Pte. Ltd. | Singapore | 100% |
| Maersk Treasury Center (Asia) Pte. Ltd. | Singapore | 100% |
| Maersk Tunisie S.A. | Tunisia | 100% |
| Maersk Vietnam Ltd. | Vietnam | 100% |
| MCC Transport Singapore Pte. Ltd. | Singapore | 100% |
| Mercosul Line Navegacao E Logistica Ltda. | Brazil | 100% |
| Mærsk Gallant Norge A/S | Denmark | 100% |
| Mærsk Guardian Norge A/S | Denmark | 100% |
| Mærsk Innovator Norge A/S | Denmark | 100% |
| Mærsk Olie Algeriet A/S | Denmark | 100% |
| Mærsk Olie og Gas A/S | Denmark | 100% |
| Nedlloyd Container Line Ltd. | Great Britain | 100% |
| New Times International Transport | ||
| Service Co. Ltd. | China | 100% |
| NTS International Transport Services Co. Ltd. Hong Kong | 100% | |
| Odense Staalskibsværft A/S | Denmark | 100% |
| Poti Sea Port Corporation | Georgia | 80% |
| PT Damco Indonesia | Indonesia | 100% |
| Rederiaktieselskabet Kuling | Denmark | 100% |
| Rederiet A.P. Møller A/S | Denmark | 100% |
| Safmarine (Pty) | South Africa | 100% |
| Safmarine Container Lines N.V. | Belgium | 100% |
| SATI Container Services Pty. Ltd. | South Africa | 75% |
| Seago Line A/S | Denmark | 100% |
| Sogester - Sociedade | ||
| Gestora De Terminais S.A. | Angola | 51% |
| Suez Canal Container Terminal SAE | Egypt | 55% |
| Svitzer A/S |
Denmark | 100% |
| Terminal 4 S.A. | Argentina | 100% |
| Universal Maritime Service Corporation | USA | 100% |
| West Africa Container Terminal Nigeria Ltd. | Nigeria | 100% |
| Company | Country of incorporation |
Owned share |
|---|---|---|
| Arctic Base Supply A/S | Denmark | 50% |
| Congo Terminal Holding S.A.S | France | 30% |
| Congo Terminal S.A. | DR Congo | 23% |
| Cosco Ports (Nansha) Ltd. | British Virgin | |
| Islands | 34% | |
| Danske Bank A/S | Denmark | 20% |
| DFDS A/S | Denmark | 31% |
| Eurogate Container Terminal Wilhelmshaven | ||
| Beteiligungsgesellschaft mbH | Germany 30% |
|
| Guangzhou South China Oceangate | ||
| Container Terminal Co. Ltd. | China | 20% |
| Company | Country of incorporation |
Owned share |
|---|---|---|
| Gujarat Pipavav Port Ltd. | India | 43% |
| Höegh Autoliners Holdings AS | Norway | 39% |
| Inttra Inc. | USA | 23% |
| Medcenter Container Terminal SpA | Italy | 33% |
| Meridian Port Services Ltd. | Ghana | 35% |
| Salalah Port Services Company S.A.O.G. | Oman | 30% |
| Societe d'Exploration du Terminal de Vridi | Ivory Coast | 40% |
| South Asia Gateway Pvt. Ltd. | Sri Lanka | 33% |
| Tianjin Port Alliance International | ||
| Container Terminal Co. Ltd. | China | 20% |
| Company | Country of incorporation |
Owned share |
|---|---|---|
| Aither Maritime Ltd. | Great Britain | 50% |
| APM Terminals Yangshan Co. Ltd. | Hong Kong | 49% |
| Aurai Maritime Ltd. | Great Britain | 50% |
| Brasil Terminal Portuario S.A. | Brazil | 50% |
| Cai Mep International Terminal Co. Ltd. | Vietnam | 49% |
| Dalian Port Container Terminal Co. Ltd. | China | 20% |
| Douala International Terminal S.A. | Cameroon | 40% |
| Egyptian Drilling Company SAE | Egypt | 50% |
| Europe Terminal Brasil Participacoes S.A. | Brazil | 50% |
| Getma Gabon S.A. | Gabon | 34% |
| Global Ports Investments PLC | Cyprus | 38% |
| Laem Chabang Container Terminal 1 Ltd. | Thailand | 35% |
| LR2 Management K/S | Denmark | 50% |
| Maersk Djibouti Sarl | Djibouti | 60% |
| North Sea Production Company Ltd. | Great Britain | 50% |
| Company | Country of incorporation |
Owned share |
|---|---|---|
| North Sea Terminal Bremerhaven | ||
| Verwaltungsgesellschaft mbH | Germany | 50% |
| Pelabuhan Tanjung Pelepas Sdn. Bhd. | Malaysia | 30% |
| Professional Terminal Service Holdings Ltd. | Mauritius | 41% |
| Qingdao New Qianwan Container | ||
| Terminal Co. Ltd. | China | 16% |
| Qingdao Qianwan | ||
| Container Terminal Co. Ltd. | China | 20% |
| Shanghai East Container Terminal Co. Ltd. | China | 49% |
| Shanghai Tie Yang | ||
| Multimodal Transportation Co. Ltd. | China | 49% |
| Smart International Logistics Company Ltd. China | 49% | |
| South Florida Container Terminal LLC | USA | 49% |
| Terminal Porte Océane S.A. | France | 50% |
| Xiamen Songyu Container Terminal Co. Ltd. | China | 25% |
| Appraisal well – Additional wells drilled after a discovery, to confirm | LNG – Liquefied Natural Gas |
|---|---|
| the size of a hydrocarbon deposit | LPG – Liquefied Petroleum Gas |
| Backhaul – The return leg of the vessel trip | LTIF – Lost Time Injury Frequency - Number of lost time injuries |
| BAF – Bunker Adjustment Factor – Fuel surcharge to customers | including fatalities, but excluding fatalities categorised as a criminal |
| to compensate for fluctuations in bunker prices | act, per million exposure hours |
| Bid round – An occasion when a governmental body offers | Mature field – Oil producing field that has passed its peak production |
| exploration acreage to oil companies | Multi purpose – A vessel designed to carry both containerized |
| Blanked sailings – Cancelled sailings | and dry bulk cargoes |
| boepd – Barrels of oil equivalent per day | Net interest-bearing debt – Equals interest-bearing debt – cash |
| Brent – Sweet light crude oil produced in the North Sea | and bank balances – other interest-bearing assets |
| Bulk vessel – A ship specially designed to transport unpackaged | Product tanker – Vessel transporting refined oil products |
| bulk cargo, such as grains, coal, ore and cement | Proved reserves (1P) – Quantity of energy sources estimated with |
| Bunker fuel – Type of fuel oil used in ship engines | reasonable certainty, from the analysis of geologic and engineering |
| Cold lay-up – Vessel taken out of service for a longer period of time | data, to be recoverable from well established or known reservoirs with |
| with no running motor | the existing equipment and under the existing operating conditions |
| Contract coverage – Percentage indicating the part of ship/rig | Reefer – A refrigerated container |
| days that are contracted for a specific period | Ro/Ro – Roll On/Roll Off – A vessel that transports vehicles |
| Daily Maersk – Maersk Line product offering daily departures and | ROIC –Return on invested capital |
| guaranteed delivery times between main ports in Asia and Europe | Semi-submersible – A floating platform moored on location |
| Drillship – A vessel that has been fitted with drilling equipment, | by anchors to the seabed |
| mainly used for deepwater drilling | Slow steaming – Reduction of vessel speed from 22-24 knots |
| DUC – Dansk Undergrunds Consortium – Operator of oil and gas | to 18 knots |
| fields in the Danish part of the North Sea | Spot rate – Price quoted for immediate service |
| DWT – Dead Weight Tonnes | Super slow steaming – Reduction of vessel speed below 18 knots |
| FFE – Forty Foot Equivalent – Forty foot container unit | TEU – Twenty Foot Equivalent Unit – Twenty foot container |
| FGSO – Floating Gas Storage and Offloading vessel | Time Charter – Hire of a vessel for a specified period |
| Floater – A mobile offshore drilling unit that floats and is not | Triple-E – Triple-E stands for Economy of scale, Energy efficiency |
| secured to the seabed (except for anchors) | and Environmentally improved |
| FPSO – Floating Production Storage and Offloading vessel | Uptime – A period of time when a unit is functioning and available |
| Free float – Share of share capital that is readily available for trading | for use |
| Handy-tanker – Smaller product tanker | VLCC – Very Large Crude Carrier |
| Head haul – The main leg of the vessel trip | VLGC – Very Large Gas Carrier |
| Hospitality book – Database containing register of gifts | Whistleblower system – A whistleblower scheme for confidential |
| received by employees | notification of possible or suspected offences |
| Jack-up rig – A mobile platform resting on a number of | |
| supporting legs | |
| JV – A joint venture company - a jointly owned company | |
| Lay-up – Vessel taken out of service, typically due to excess |
capacity in the market
| Date | Title |
|---|---|
| 1 January | A.P. Møller - Mærsk A/S - CEO Nils S. Andersen absent for one month owing to illness |
| 27 February | Group Annual Report 2011 for A. P. Møller - Mærsk A/S |
| 28 February | Completion of the sale of Maersk LNG A/S |
| 7 March | Notice convening the Annual General Meeting of A.P. Møller - Mærsk A/S |
| 9 March | Settlement of Algerian tax claims |
| 15 March | A.P. Møller - Mærsk A/S places Norwegian kroner bonds |
| 2 April | Approval of Settlement of Algerian tax claims |
| 12 April | Development of the Annual General Meeting on 12 April 2012 |
| 12 April | Articles of Association for A.P. Møller - Mærsk A/S |
| 16 April | Mærsk Mc-Kinney Møller has died |
| 16 May | A.P. Møller - Mærsk A/S Interim Report 1st Quarter 2012 |
| 13 August | A.P. Møller - Mærsk A/S – Change of management |
| 14 August | Interim Report 2012 |
| 21 August | A.P. Møller - Mærsk A/S places Eurobonds |
| 9 October | A.P. Møller - Mærsk A/S – Reserves and Resources numbers for Maersk Oil |
| 18 October | A.P. Møller - Mærsk A/S places Swedish kronor bonds |
| 9 November | Interim Report 3rd Quarter 2012 |
| 9 November | A.P. Møller - Mærsk A/S – Financial Calendar 2013 |
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