2008 ANNUAL REPORT. Port of Larvik

Transcription

1 2008 ANNUAL REPORT Port of Larvik

2 02 Contents KEY FIGURES 03 0 ABOUT THE PORT OF LARVIK 04 0 MAIN OPERATIONS 06 0 THE YEAR BOARD OF DIRECTORS REPORT 10 0 PROFIT AND LOSS ACCOUNT 12 0 BALANCE SHEET 13 0 CASH FLOW STATEMENT 14 0 NOTES TO THE ACCOUNTS 15 0 AUDITOR S REPORT 19 0 Management/administration: Jan Fredrik Jonas (Port Director), Knut Jørgen Heum (Financial Manager), Fred Arne Sørum (Technical Manager) and Olaf Klunderud (Head of Marinas) Anne Gokstad (Accountant Secretary) and Bjørg Woll (Office Secretary) Maritime department: Erling Kristensen (Port Captain), Kjell Holand and Bjørn Syrrist (foremen), John Kristiansen (Port Worker) Crane operators: Cato Johansen, Håkon Barland, Kai Petter Strand, Morten Bjørn, Ole-André Næss and Rune Aalvik Production: Knut Jørgen Heum, Larvik Havn KF, august Adobe InDesign CS4. Photos: Knut Jørgen Heum except: page 1, 5 and 20 (airphoto): Terje Löchen; page 2, 8 and 11: Gunnar Berven; page 4: Nor Lines; page 9 (Nor Lines terminal): Borgvar Christiansen.

3 Harbour dues 2008 (NOK 15.1 Million) 4 % 8 % 24 % 64 % Other revenues 2008 (NOK 29.3 Million) 2 % 1 % 4 % 10 % 34 % 49 % 03 Call dues (vessels) Cargo dues Quay dues (vessels) Passenger dues Operating revenues EBITDA Operating profit Ordinary profit Profit (loss) for the year Investments in property etc Number of employees EBITDA-margin % 45.6 % 41.2 % 38.4 % 50.0 % Profit margin % 28.2 % 24.6 % 22.5 % 30.7 % Return on total assets % 4.9 % 5.2 % 5.3 % 7.1 % Equity percentage % 25.3 % 39.6 % 42.3 % 38.7 % 1: EBITDA/operating revenues*100% 2: (Ordinary profit+financial costs)/total revenues*100% 3: (Ordinary profit+financial costs)/average total assets at 31 Dec*100% 4: Equity at 31 Dec/total assets at 31 Dec*100% Water supplies ISPS Marinas Rentals Crane operations Various Key figures Revenues and profits (NOK) Operating revenues EBITDA Operating profit Ordinary profit Profit for the year Cargo turnover (tons) Total Foreign Domestic Port calls Total Foreign (ferries) Foreign (others) Domestic - Financial situation (NOK) Investments Bank deposits Loan debt Cargo by type 2008 Ferry ro/ro 17 % Container 31 % Other general cargo 9 % Liquid bulk 3 % Dry bulk 40 %

4 04 ABOUT THE Port of Larvik COMPANY IN BRIEF The Port of Larvik (PoL) was established September 17, 2003 and is owned by Larvik Municipality. It employs 16 people. The Board of Directors has 7 members, where 3 represent the proprietary municipality and 2 represent the public. In addition, one member represents Vestfold county and one represents the employees. The main activities of the PoL are the following: * Keep the waterways clear and in order, and ensure that there is suitable place for vessels docking at the Port of Larvik. * Ensure sufficient areas for loading/unloading of vessels, and for short-term cargo storage. * Provide services (crane services, water supplies, rental services, guest marinas etc.). Private companies carry out all terminal activities, with the exception of crane operation, which is carried out by PoL. The main activity of the company takes place at Revet where Pol is an important proprietor and organizor for the various logistics companies. Crane operation is given high priority. The PoL had revenue of NOK 44.4 million in 2008, this being an increase of NOK 3.6 million from the previous year. The company is ISO environmentally certified. BUSINESS CONCEPT The Port of Larvik (PoL) is Larvik Municipality`s professional Harbour Company, and shall exercise administrative duties in accordance with the Norwegian Harbour Act. The PoL operates in accordance with commercial and sustainable principles. The PoL shall ensure an economically sustainable and efficient port operation, supervise port area traffic in Larvik municipality, and manage the port s assets in a manner that promotes the attainment of established aims. The PoL may engage in port related activities that are advantageous to its own port operations. The PoL shall develop as an attractive port with a high degree of service, and shall strengthen its position as an easily accessible and cost efficient port. PORT FACILITIES The port facilities can be found in Kanalkaiene and Revet. The ferry traffic was moved from Indre Havn (Town Centre) in June 2008 to new, modern facilities at Revet. Svartebukt Havn in Brunlanes is a separate terminal used for stone export. In addition, Dampskipskaia in Stavern is in sporadic use as a traffic quay. The ferry dock in Helgeroa is in use all year round to serve the local need for transportation to Øyane/Langesund and for charter traffic in the summer season. There are no other private quays within the port district. There are 10 municipal leisure boat harbours with a total of approximately mooring places within the harbour area. Several of these provide mooring areas for visitors (guest marinas). The daily operation and administration of the marinas has been entrusted to local boat associations. There are 3 fishing harbours in the port district and approximately 15 registered professional fishermen. MARKET SITUATION The Port of Larvik is in an expansive phase and has an annual cargo turnover of 2 million tons. Traffic through the port can be divided into 4 main segments; container traffic, ferry traffic, stone export and other general cargo traffic. Container traffic Traffic figures for the container ports in Oslo Fjord show that Larvik has tripled its market share in the last decade. With over containers in 2008, Larvik has increased its market share from 13.9 percent (2007) to 15 percent in the Oslo Fjord market. The market potential is large there is a clear tendency that constantly diversified goods are being transported by container, and today s container transport is so cost efficient that even more goods will justify this type of transport via the network of overseas lines. Lo/lo based container traffic is likely to by far offer the largest growth potential within transportation at sea to and from Norway. This is due to the strong connection (overseas/feeder) and the importance which the Asian markets have achieved within world trade. It is therefor expected that the increase in container traffic at the Port of Larvik will continue. Ferry traffic The ferry traffic is one of the factors throughout the years which has been the basis for the port s economy. Since its start in 1937, as the first ferry connection between Norway and Denmark, this line has developed into one of the most important of the overseas ferry routes.

5 05 The ports of Oslo, Sandefjord, Larvik and Kristiansand dominate the ferry market within south east Norway. The main participants within this market are Color Line, DFDS Seaways and Stena Line. In June 2008, the new ferry facilities at Revet were opened. At the same time, Color Line s new ferry «SuperSpeed 2» was introduced to the Larvik Hirtshals line. A new ship means that cargo capacity can be doubled in comparison to the previous ship, and as Color Line are terminating their route from Oslo to Denmark, it is expected that Larvik will experience a substantial increase in traffic. Stone export Stone blocks, mainly Larvikitt, have for many years been a predominant export article through the port. Annual export volumes have in recent years varied between and tons. Stone blocks are shipped either to European ports or in containers for reshipping to overseas vessels that continue on to Asian markets. Armour rock, reinforcement stone or waste stone are three names describing the same product, which is a by-product from extracting stone blocks tons are exported on freighters/barges to England (among others) where it is used for securing the coastline against erosion. The market potential is considered sizable, but yearly volume swings back and forth due to duration and quantity of contracts. Other general cargo traffic This comprises of cargo traffic generated by NorLines route along the Norwegian coast, Scandinavia and the Baltic states, along with timber import and some iron and steel transportation. The total cargo turnover yields an annual tonnage of tons (2008). INVESTMENTS According to investment plans for , NOK 115 million will be invested. The plans include a new container/ multi purpose quay (starting in 2009), reclamation of sea area, upgrading of the container port and establishment of park areas at Revet. The projects will be an important part of the further complete development of Revet. VISION The Port of Larvik shall be developed to be the preferred environmental and commercial port on the western side of Oslo Fjord, and consecuently contribute to the growth of the region s trade and industry Drammen 0,4 Drammen 2,4 Larvik 13,9 Larvik 15,0 Container ports, Oslo Fjord Market shares 2007 (TEUs) Grenland 10,0 Oslo 51,7 Borg 9,1 Moss 15,0 Container lo/lo and container ro/ro. Total: TEUs. Container ports, Oslo Fjord Market shares 2008 (TEUs) Grenland 8,4 Oslo 49,6 Borg 10,2 Moss 14,3 Container lo/lo and container ro/ro. Total: TEUs. Source: Statistisk Sentralbyrå (Statistics Norway)

6 06 Container Ferry Stone export After the purchase of a gantry crane and establishment of the container harbour, container traffic via the port of Larvik had a flying start at the end of the 1990 s. In subsequent years, considerable investments were made into these operations, including extention of quays, upgrading land areas and infrastructure, and the acquisition of a mobile harbour crane. Additionally, terminal operator Larvik Container Terminal AS has continually invested in land based handling equipment. From a tentative start of containers in 1998, the figures for 2008 show a volume of over TEUs (Twentyfoot Equivalent units), an increase of 9 percent from This resulted in Larvik being Norway s second largest container harbour. A total of tons of goods were transported in these containers, with stone blocks accounting for tons (34 percent). Corresponding figures for 2007 were tons and tons. Flow of container goods measured in tons was 23 percent import and 77 percent export in 2008 (2007: 24 percent and 76 percent). The large amount of granite on the export side gives a significant effect. The four shipping companies Unifeeder, MSC, Samskip and Tschudi Lines operate regular container lines via Larvik and other important container ports in Europe. The Larvik Frederikshavn Ferry Company was founded in the 1930 s, while the ferry connection itself was established in 1937 with «Peter Wessel» from Indre Havn (Town Centre). The company changed its name to Larvik Line in 1986 and was acquired by the Color Line Group in In 2006, the port of call in Denmark was changed from Frederikshavn to Hirtshals. From the turn of the century until 2006, the company operated two regular ferry services with the ships M/S Peter Wessel, M/S Skagen (-2003) og M/S Color Traveller ( ). From June 2008, the new ship Super- Speed 2 has been operating the Hirtshals line from the new ferry terminal at Revet. This ship represents a completely new transport solution related to cargo capacity, and speed and comfort for passengers, and has proved to be a considerable success for Color Line. There was an increase in goods traffic of an impressive 58 percent in 2008 to a total of tons, spread over lorries and trailers. Passenger traffic via the port of Larvik was passengers and cars, an increase of 29 percent and 65 percent respectively. Calls to the ferry dock were 539 in 2008 compared to 369 in Within the Larvik area, one can find a number of quarries where stone is extracted for use within interiors, exteriors, furniture, monuments etc. The stone is exported as unfinished goods, and is prepared and treated abroad. The by-product armour stone (also known as waste stone) is exported on freighters (barges) to Great Britain and Europe, where it is used in safeguarding coastal areas, and building piers and breakwaters. Stone exports showed an increase of 38 percent in Of a total volume of tons, stone blocks shipped from Kanalkaia accounted for tons (10 percent), and armour rock/gravel for tons (90 percent). Corresponding figures for 2007 show tons and tons. The total export volume of stone, including stone blocks in container, increased to almost 1.1 million tons in 2008, an increase of 32 percent from the previous year. Stema Shipping Norway has their own stone terminal situated in Svartebukt in the outskirts of Larvik for export of armour rock and gravel.

7 07 Main operations 2004 Containers (TEUs) 2004 Cargo by containers (tons) Empty With goods Import Export Ferry passengers Vehicles by ferry Stone blocks (tons) Cars Lorries Coaches Armour rock and gravel (tons) Kanalkaia Revet (container) Revet Svartebukt

8 08 The year 2008 IMPORTANT EVENTS IN 2008 At the end of February, the first Super- Speed skip arrives in Kristiansand from Aker Yards in Finland, delayed due to substantial construction work in Europe. At the same time, Color Line announce that SuperSpeed 2, which will go in traffic from Larvik, will be delivered from the shipbuilder at the beginning of June. M/S Peter Wessel is sold to MSC (Mediterranean Shipping Company) and will be put in service in the Mediterranean. M/S Christian IV traffics the Larvik Hirtshals route for a couple of months as a temporary measure, until the new SuperSpeed comes to Larvik. In the first quarter, the Port of Larvik (PoL) can report a freight increase of 14 percent compared to Important areas such as containers, ferry and stone all show a positive growth compared to the previous year. SuperSpeed sails into Larvik fjord for the first time on Sunday, the 8th of June. With hundreds of spectators on land and the fjord full of small boats, this was a great demonstration of the ship s initial trip to Larvik. After a welcoming round in Indre Havn, SuperSpeed turns to dock at the new ferry terminal at Revet, which will be her base in Larvik. A couple of weeks later, Thursday the 19th June, there is the official inauguration for Color Line s new, ultra modern terminal which covers an area of 60 acres at Revet. There is a formal and smart celebration for over 400 guests from both home and abroad. The day starts with an inspiration workshop, where the Norwegian Minister of Trade and Commerce, Dag Terje Andersen, from our neighbouring municipality Lardal, has the honour of officially opening the occasion. The Group Managing Director In Color Line, Trond Kleivdal, presents the shipping company s large renewal programme, which includes investing NOK 7 million in new ships and harbour installations. The ship s christening takes place in the afternoon, with Mille Marie Treschow as godmother. Already the next day, the new terminal and the new super ship are ready to transport passengers and cargo between Larvik and Hirtshals. In August, the Port of Larvik can report on growth within all segments in the first half-year the total cargo volume through the port shows an increase of 51 percent compared to the previous year. At the same time, new development plans for the container harbour are presented, starting with the building of a new breakwater, the removal of the ro/ro ramp at West Revkai, and finally a new quay at Revet. Thursday the 28th August, the new cargo terminal in the Port of Larvik is officially opened. The terminal, costing almost NOK 45 million, has been built by the Port for long-term rental to Nor Lines sea freight business. The total construction comprises of a terminal building covering 1500 square metres, a new 90 metre long quay, a 20 metre broad ro/ro ramp as well as outdoor storage space. The terminal is tailor-made for the shipping line s fleet of different vessels which traffic Norway, Scandinavia and the Baltic. In autumn 2008, the Port can still show an increase in traffic through the port and proves to be the second largest container harbour after Oslo. Looking back on the year, it is evident that several new records have been set in 2008: for the first time, the total cargo volume has exceeded 2 million tons, and the total amount of containers has exceeded TEUs. GUEST HARBOURS The long coastline with islands and sandy beaches, combined with the pleasantly warm summertime, makes the Larvik district an attractive resort for yachting. The Port of Larvik has three guest harbours, Stavern, Helgeroa and Nevlunghavn, all of which are very popular in the summer season. Total guest days in the Port s harbours increased with 12 percent in 2008 to a total of overnight stops. It is reasonable to assume that this is a result of the continuing efforts over several years to improve the facilities in these guest harbours. Stavern provided a new service for the emptying of septic tanks this season. The total amount of guest days were (3.525 in 2007) in Stavern, 935 (757) in Helgeroa and 405 (370) in Nevlunghavn.

9 09 8th June: SuperSpeed 2 arrives in the Port of Larvik for the first time. After a welcoming round in Indre Havn, the ship proceeds to the new ferry terminal at Revet. 19th June: The new ferry terminal at Revet is opened by the Minister of Trade and Commerce, Dag Terje Andersen. 28th August: The new freight terminal is officially opened. From left; Jan Fredrik Jonas (Port Director), Jørn Simonsen (general manager Nor Lines Larvik), Toralf Ekrheim (managing director Nor Lines AS) and the mayor Øyvind Riise Jenssen. Modern premises: The new freight terminal has a price ticket of NOK 45 million, and is adapted to fill the needs of NorLines fleet trafficing the Port of Larvik, the norwegian coast, Scandinavia and the Baltic. Summer in Stavern: The guest harbour in Stavern is the most popular in the district, and had an increase of 10 percent in overnight visitors in Busy times: Many new traffic records were sett in the Port of Larvik in Having a short break, we see foreman Kjell Holand on the left, and crane driver Cato Johansen.

10 10 Board of Directors report ASSIGNMENT The Port of Larvik is Larvik Municipality s professional harbour board, and shall attend to the administrative management tasks according to the Norwegian Harbour Act. The Port manages considerable areas at Revet and at Svartebukt; in addition to areas connected to fishing, guest and small boat harbours. OPERATIONS Total cargo through the port increased by 24 percent compared to the previous year and ended up at 2 million tons. Container movement via Revet, measuered in amount of container units, ended at TEUs, giving an increase of 9 percent. The total weight lifted in the containers was tons, an increase of 13 percent from Ferry cargo increased by 58 percent, but remaining cargo decreased by 28 percent. Passenger movement increased by 29 percent to passengers. Stone and gravel had a very good year with tons (48 percent increase compared to previous year). Export of stone blocks ended at tons, an increase of 4 percent. INVESTMENTS Investments have been mainly connected to the new freight terminal (completion) costing NOK 23.9 millions; the rehabilitation of Kanalkaia costing NOK 16.4 millions; new multi-purpose quay costing NOK 6.7 millions; and the breakwater costing NOK 5.9 millions. PERSONNEL AND ENVIRONMENT Total number of employees at year-end was 16, of whom 2 were women. Two of the 7 Board members are women. There is neither initiated nor planned measures to encourage equality or prevent discrimination in conflict with the law of sexual equality. The working environment at the Port of Larvik is good, and there are no new measures implemented that would influence this environment. Absence due to illness was 2.8 percent in The Port of Larvik s operation has not contributed to any substantial impact on the external environment. There has been no significant discharge or other environmental influence from the Port s operations or from ships calling at the Port. THE FUTURE After prolonged growth in all segments except ferry, volumes sank when the economic crisis was a reality at the end of the year. The development programme which is started, i.e. New ferry terminal and cargo terminal, land reclamation at Revet, construction of breakwater and quay, along with existing facilities, will enable us to tackle the expected growth that will come when the global economy improves. With the arrival of Color Line s new ferry, SuperSpeed, the Port of Larvik has strengthened its position. PROFITS The Port of Larvik had a turnover of NOK 44.4 millions in 2008 (40.8 in 2007). After operating costs of 40.9 millions (30.2), the operating profit is 3.5 millions (10.6). Ordinary result after net financial costs shows a deficit of -1.2 millions (+ 4.8). Net extraordinary revenue of 38.6 millions gives a profit for the year of 37.4 millions. Extraordinary revenue is composed of 45.2 millions profit from settlement in Indre Havn, and expenditure of 6.6 millions on municipal road at Revet. The financial statements have been prepared assuming further operations at the Port of Larvik. It is the Board s opinion that the Port of Larvik is in a financially sound position. FINANCIAL RESULTS AND CAPITAL APPROPRIATION Net profit of NOK is suggested transferred to Equity capital.

11 11 BOARD OF DIRECTORS REPRESENTING THE OWNERS: Knut Anvik - Chairman (Fremskrittspartiet) Johan Olaf Melø - Deputy Chairman (Høyre) John Thorsen (Arbeiderpartiet) REPRESENTING THE PORT USERS: Reidar Bergene Holm (NHO Vestfold) Ingvild Nybø Holth (NHO Vestfold) COUNTY REPRESENTATIVE: Anne Holmsen (Høyre) EMPLOYEES REPRESENTATIVE: Rune Aalvik (Larvik Havn KF)

12 12 Profit and loss account Note Sales Other operational income Total operating revenues Production costs Salary costs Depreciation Other operating costs Total operating costs Operating profit Interest income Other financial income Interest costs Other financial costs Net financial costs Ordinary profit Extraordinary income Extraordinary costs Net extraordinary costs Profit (loss) for the year Used for: Reserved for Equity capital Total appropriations

13 Balance sheet at 31 December 13 ASSETS Note Fixed assets Property and equipment Land, buildings and other properties Machines and installations Operational inventory, equipment, office machines etc Total property and equipment Financial assets Investments in shares Long-term receivables Total financial assets Total fixed assets Current assets Receivables Accounts receivables Other receivables Total receivables Bank deposit and cash Total current assets TOTAL ASSETS LIABILITIES AND EQUITY Equity Equity capital Profit (loss) for the year Total equity Liabilities Reserved for contractual obligations Pension commitments Total reserved for contractual obligations Other long-term liabilities Payable to financial institutions Total long-term liabilities Current liabilities Payable to financial institutions Accounts payable Payable public taxes Other current liabilities Total current liabilities Total liabilities TOTAL LIABILITIES AND EQUITY

14 14 Cash flow statement Ordinary profit Depreciation Change in accounts receivables Change in accounts payable Change in other accrual posts Difference pension costs/paid out premiums Net cash flow from operating activities Sale of property and equipment Purchase of/investments in property and equipment Collection of short-term and long-term receivables Extraordinary costs Purchase of financial investments Net cash flow from investment activities Proceeds from taking up long-term loans Proceeds from taking up short-term loans Repayments of long-term loans Repayments of short-term loans Net cash flow from financial activities Net cash flow for the year Bank deposit and cash Bank deposit and cash

15 Notes to the accounts 15 NOTE 1 - ACCOUNTING PRINICIPLES The annual financial statements consist of the profit and loss account, balance sheet, statement of cash flow and notes, and has been prepared in accordance with the Norwegian Accounting Act and generally accepted accounting principles for small companies in Norway. Direct maintance of operational business assets is consecutively booked as operating expenses. Additions and improvements are added to the business assets value and depreciated in accordance with these. Fixed assets are estimated at purchase cost. Accounts receivables are booked in the balance sheet without allocation to exptected loss. Any actual loss is booked directly. The company has a collective (secured) pension scheme. The collective commitment has been re-valued compared to the collective pension funds in the pension scheme. The estimation of pension funds and pension commitments has an estimated value in the closing of the books (actuary calculation). Payroll tax is booked based on actual paid pension premium. NOTE 2 - PROPERTY AND EQUIPMENT Text Buildings, quays, land Machines Boats Cars Equipment/ inventory Total Book value at of which acc. purchase cost of which acc. depreciation Additions during the year Disposals during the year Depreciation for the year Book value at Economical life Up to 50 yrs. Up to 20 yrs. Up to 10 yrs. 5 yrs yrs. Depreciation plan Straight line Straight line Straight line Straight line Straight line Annual leasing costs and leasing period - equipment not booked as assets in the Balance Sheet: Period (MM/YY) Machines (cranes) /04 to 09/09 Cars & 11/08 to 04&10/11 The company leases mobile harbour crane. NOK 3.3 million is paid out as payment of rent in advance. Booked leasing costs regarding the payment of rent in advance amount to NOK of the total leasing costs for NOTE 3 - RECEIVABLES Receivables falling due after more than 1 year: Loans, marinas Pension deposits Other long-term receivables Total long-term receivables

16 Other receivables: 16 Expenses paid out in advance for other companies* Accounts receivables Prepaid expenses Total short-term receivables *) Regarding the prosject New Ferry Terminal. NOTE 4 - BANK DEPOSITS AND CASH Frozen bank deposits (taxes) Other bank deposits Cash Total bank deposits and cash NOTE 5 - EQUITY Equity capital at Profit (loss) for the year Equity capital at NOTE 6 - PENSION COMMITMENTS At year-end, the company s commitments involve 16 active and 7 retired employees. The following financial assumptions have been used by the actuary: Discount rate 5.3 % 6.0 % Expected return on pension funds 5.5 % 6.3 % Expected salary raises 4.5 % 4.5 % Expected increase of the National Insurance base amount 4.3 % 4.3 % The pension costs for the year are as follows: Present value of pension earnings for this period Interest costs on pension commitments Return on pension fund Administration costs Booked estimate deviation This year s pension costs (see note 10) Calculated pension commitments vs. booked pension commitments in the Balance Sheet: Gross pension commitments Pension fund at market value Net pension commitments to market value Unrecognised change in estimate (corridor) Pension commitments in Balance Sheet at

17 Reconciliation: Net pension commitments at Net pension costs Administration costs Overdue premium (administration included) Net pension commitments at NOTE 7 - LOAN DEBT Loans falling due in more than 5 years Loans falling due the first 5 years Total long-term liabilities All bank loans are signed up with municipal risk. For the financing of prosject New Ferry Terminal, short-term loans covered the expenses during the construction period. At year-end 2008, these loans are transformed to ordinary long-term liabilities. Short-term loans in the Balance Sheet at For transforming to long-term liabilities Securing of interest rates represent NOK of total loan debt NOK at Securing expires as follows: NOK (2036), NOK (2011), NOK (2010) and NOK (2010). NOTE 8 - SALES INCOME Vessel dues Cargo dues Passasenger dues Rentals (buildings and areas) Crane operations, water supplies and other services Marinas Other sales income Total sales income NOTE 9 - SALARY COSTS Wages National Insurance contribution Pension costs (see note 6) Other benefits Total salary costs Employees: The average number of employees in 2008 was 16 (16.0 man-labour years). Auditor s fee: Audit-related services have been charged for NOK and additional consulting services for NOK in 2008.

18 Payments to Managing Director and the Board of Directors: 18 Managing Director Board of Directors Wages Pension commitments Other benefits Total expenses NOTE 10 - OTHER OPERATING COSTS Energiy, fuel and water regarding production Costs premises Rental machines, inventory etc Purchase of equipment, inventory and operational materials Repairs and maintance External services (consulting etc.) Office costs, printed matters etc Telephone, postage etc Costs for transport vehicles (cars, boats) Costs for travelling Advertising, sales- and representation costs Membership and gifts Insurance premium Other costs Losses etc Total other operating costs NOTE 11 - EXTRAORDINARY COSTS Background: In 2003, the Larvik City Council decided to shut down the future port activities in Indre Havn (Town Centre) and the Port of Larviks areas to be transfered to the city for town development and city purposes. In 2007, the City Council decided financial compensation and other matters regarding the sales of areas. A transaction of NOK 66.2 millions was conducted between the Larvik Municipality and the Port of Larvik during In 2007 and 2008, expenses regarding establishing of new road infrastructure for the new ferry terminal at Revet have been paid out. Profit on disposals, sale of port areas in Indre Havn Total extraordinary income Costs for new roads at Revet Total extraordinary costs Basis for extraordinary classification: - These matters are regarding the closing down of port activities taken place since 1937 and facilitate for new ferry installations on a long-term basis respectively. - These matters are irregular. - This matters are related to a type of activity which account for up to 30 percent of the company s total turnover.

19 19 Translation from the original Norwegian version To Larvik County Council AUDITOR S REPORT FOR 2008 We have audited the annual financial statements of the Port of Larvik for 2008, showing a profit of NOK We have also audited the information in the Board of Directors report concerning the financial statements, the going concern assumption, and the proposal of the appropriation of the profit. The annual financial statements comprise the profit and loss account, the balance sheet, the statement of cash flow and notes. These financial statements are the responsibility of the Company s Board of Directors and Managing Director. Our responsibility is to express an opinion on these financial statements and on other information according to the requirements of the Norwegian Act on Auditing and Auditors. We conducted our audit in accordance with the law, regulations and good auditing practice in Norway. These auditing standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. To the extent required by law and good auditing practice an audit also comprises a review of the management of the Company s financial affairs and its accounting and internal control systems. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements are prepared in accordance with the law and regulations and give a true and fair view of the financial position of the Company as of December 31, 2008, and the results of its operations and its cash flows for the year then ended, in accordance with good accounting practice in Norway the company s management has fulfilled its duty to produce a proper and clearly set out registration and documentation of accounting information in accordance with the law and good bookkeeping practice in Norway the information in the Board of Directors report concerning the financial statements, the going concern assumption, and the proposal for the covering of the deficit are consistent with the financial statements and comply with the law and regulations. Larvik, March 31, 2009 Trond O. Gundersen Executive Auditor

20 THE PORT OF LARVIK - AN ATTRACTIVE, CENTRAL, MODERN AND A PORT OF IMPORTANCE IN THE OSLO FJORD Two calls by ferry per day, SuperSpeed 2 (Larvik-Hirtshals) Operator: Color Line Weekly container services on Antwerp, Bremerhaven, Hamburg, Immingham and Rotterdam Operators: Unifeeder, MSC, Samskip and Tschudi Lines Weekly general cargo service between Larvik and other ports in Scandinavia and Baltikum. Operator: Nor Lines One of Europes most modern ferry terminals Second largest container port of Norway (2008) Gantry crane (50 tons) and mobile harbour crane (100 tons) Easy port access; fast, efficient and environmentally friendly operations New additional 140 meters container quay in 2010 Agents and local shipping lines COMPANY ADDRESS PHONE +47 WEB BUGGE & OLSEN AS (agent) Revet COLOR LINE CARGO Revet NOR LINES AS Kanalgt STEMA SHIPPING N AS Svartebukt havn THS. ARBO HØEG & CO AS (agent) Kanalgt Larvik Havn KF (The Port of Larvik) Havnegata 5, P.O. Box 246 Sentrum, NO-3251 Larvik Tel.: , fax , post@larvik.havn.no