Directors Report

    Corp. ID no. 556027-4077

    The Board of Directors and Chief Executive Officer of Copenhagen Malmö (CMP) hereby present their annual report for the financial year January – December 2011.

    Group structure, and nature and focus of activities

    CMP is owned by Udviklingsselskabet By & Havn I/S (corp. ID no. in Denmark 30 82 37 02), which holds 50 per cent of the shares, the City of Malmö (corp. ID no. 212000-1124) with 27 per cent of the shares and a group of investors, of which Norra Vallgatan Förvaltnings AB is the largest with 14 per cent of the shares of CMP.

    CMP’s activities in Denmark are conducted by CMP’s affiliate (corp. ID no. in Denmark SE 25 99 60 11).

    CMP leases permanent facilities in the form of quays, shipping lanes, buildings, etc. from the Municipality of Malmö and Udviklingsselskabet By & Havn I/S, for which CMP pays annual concession fees, based partly on the existing facilities and partly on investments in new facilities. The current concession agreements with the port owners expire in 2035. The agreements define the framework for the relocation of certain port terminals to new geographic territories during the term of the agreements.

    A new RoRo, combi and container terminal in Malmö’s Northern Harbour opened in 2011.

    In Copenhagen CMP will be relocating some of its current cruise ship quays to a new cruise ship terminal in Nordhavnen in 2013. The company will also be moving from its current container terminal to a new terminal in Nordhavnen in 2020. In 2012 CMP will be taking over a new land area with quays that is adjacent to the existing bulk terminal at Prøvestenen in Copenhagen.

    Business concept

    CMP’s business concept is to sell port, terminal and transport services.

    Net sales and results

    CMP posts a pre-tax profit of SEK 106 million for 2011 (SEK 116 million in 2010). The weaker result is a natural consequence of the general economic slowdown, both in the Öresund region and globally. The figure includes one-off items which had a positive impact on earnings of SEK 13.8 million.

    Total net sales in 2011 were SEK 727 million (SEK 675 million in 2010).
    Total operating costs in 2011 were SEK 625 million.

    Significant events during and after the financial year

    The economic slowdown had a limited impact on freight volumes, which were about 14 million tonnes in 2010, a decline of about 1 million tonnes on 2010. The contraction was due to a decline in transit oil volumes, which were adversely affected by the volatility in oil prices in 2011 caused by the troubles in the Middle East.
    To a certain extent the result was also negatively affected compared with 2010 by the effect of a stronger Swedish krona and a weaker Danish krone.

    The number of cruise ship arrivals was 370 and total passenger numbers were 820,000. CMP thus maintains its position as the largest cruise ship destination in the Baltic Sea region.

    In most unit load business segments volumes increased compared with 2010.

    Freight volumes in the dry bulk segment proved more buoyant, while liquid bulk volumes thus contracted significantly.

    Outlook

    CMP faces major challenges in the next few years. Extensive investments have been initiated in Malmö and Copenhagen, which from 2011 onwards will incur gradually higher costs in the form of concession fees for the investments. Determined efforts and careful planning will be required to ensure that resources are used optimally during what is expected to be a continued weak economic environment. However, the implemented cost cuts and restructuring measures put CMP in a strong position to exploit the opportunities that will arise over the next few years as the economy recovers.

    Environment

    CMP works continuously on environmental issues.

    The new ISO 14011 environmental standard has been used as the company’s environmental management system since a number of years. The current certification is valid until December 2012.

    Port activities in Sweden require environmental permits under applicable environmental laws. CMP received an environmental permit for its ports activities in November 2009.

    Some of the facilities and areas where CMP currently operates have suffered environmental damage from previous activities. However, environmental conditions resulting from the period before 2001, when CMP’s activities started, are the responsibility of the port owners.

    Investments

    Investments in buildings, machinery and equipment were SEK 69 million. The investments refer mainly to work machines, including the new container crane in Malmö.

    Employees

    The average number of employees in 2011 was 421, an increase of 4 per cent on 2010. Out of the total number, 11 per cent were women. Short-term sick leave was 2.3 per cent (2010, 2.4%) and long-term sick leave 1.85 per cent (2010, 1.7%).

    Proposed appropriation of retained earnings

    The Annual General Meeting is asked to decide on the appropriation of the
    following earnings:
    Retained earnings  178,781,000 
    Profit for the year  80,569,000 
    Total   259,350,000 

    The Board of Directors and Chief Executive Officer propose that
    A dividend of SEK 36 per share be
    paid to the shareholders 
    129,600,000
    To be carried forward  129,750,000 
    Total   259,350,000 

      
    No transfer to restricted equity is proposed.

    The Board and CEO believe the proposed dividend is justifiable in view of the equity requirements arising from the nature, scope and risks of the activities and the consolidation needs, liquidity and position of the company.

    For more information about the company’s results and financial position for 2011 and 2010, see the following income statement and balance sheet and additional disclosures 

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