2008 ANNUAL REPORT. Port of Larvik

2008 ANNUAL REPORT Port of Larvik

02 Contents KEY FIGURES 03 0 ABOUT THE PORT OF LARVIK 04 0 MAIN OPERATIONS 06 0 THE YEAR 2008 08 0 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 2009. 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.

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 2006 2005 2004 Operating revenues 44 429 40 836 36 180 36 569 35 558 EBITDA 14 872 18 623 14 913 14 043 17 782 Operating profit 3 480 10 660 8 432 7 898 10 515 Ordinary profit -1 250 4 843 6 674 6 482 7 304 Profit (loss) for the year 37 378-458 6 674 6 482 7 304 Investments in property etc. 60 702 83 079 34 452 5 332 11 650 Number of employees 16 16 16 16 18 EBITDA-margin 1 33.5 % 45.6 % 41.2 % 38.4 % 50.0 % Profit margin 2 13.5 % 28.2 % 24.6 % 22.5 % 30.7 % Return on total assets 3 2.1 % 4.9 % 5.2 % 5.3 % 7.1 % Equity percentage 4 34.9 % 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 45 000 000 40 000 000 35 000 000 30 000 000 25 000 000 20 000 000 15 000 000 10 000 000 5 000 000 - -5 000 000 2 000 000 1 500 000 1 000 000 500 000-1 500 1 000 500 Revenues and profits (NOK) 2004 2005 2006 2007 2008 Operating revenues EBITDA Operating profit Ordinary profit Profit for the year 200 000 000 150 000 000 100 000 000 50 000 000 Cargo turnover (tons) 2004 2005 2006 2007 2008 Total Foreign Domestic Port calls - 2004 2005 2006 2007 2008 Total Foreign (ferries) Foreign (others) Domestic - Financial situation (NOK) 2004 2005 2006 2007 2008 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 %

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 14001 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 1.600 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 55.000 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.

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 250.000 and 300.000 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. 800.000 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 100.000 tons (2008). INVESTMENTS According to investment plans for 2009 2012, 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: 378.000 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: 381.000 TEUs. Source: Statistisk Sentralbyrå (Statistics Norway)

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 14.000 containers in 1998, the figures for 2008 show a volume of over 55.000 TEUs (Twentyfoot Equivalent units), an increase of 9 percent from 2007. This resulted in Larvik being Norway s second largest container harbour. A total of 645.000 tons of goods were transported in these containers, with stone blocks accounting for 218.000 tons (34 percent). Corresponding figures for 2007 were 573.000 tons and 192.000 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 1996. 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 (2004 2006). 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 345.000 tons, spread over 47.000 lorries and trailers. Passenger traffic via the port of Larvik was 591.000 passengers and 163.000 cars, an increase of 29 percent and 65 percent respectively. Calls to the ferry dock were 539 in 2008 compared to 369 in 2007. 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 2008. Of a total volume of 850.000 tons, stone blocks shipped from Kanalkaia accounted for 84.000 tons (10 percent), and armour rock/gravel for 766.000 tons (90 percent). Corresponding figures for 2007 show 97.000 tons and 517.000 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.

07 Main operations 2004 Containers (TEUs) 2004 Cargo by containers (tons) 2005 2005 2006 2006 2007 2008 2007 2008-10 000 20 000 30 000 40 000 50 000 60 000 Empty With goods - 200 000 400 000 600 000 800 000 Import Export 2004 2005 2006 2007 2008 Ferry passengers 2004 2005 2006 2007 2008 Vehicles by ferry 2004-200 000 400 000 600 000 800 000 Stone blocks (tons) 2004-50 000 100 000 150 000 200 000 Cars Lorries Coaches Armour rock and gravel (tons) 2005 2005 2006 2006 2007 2007 2008 2008-75 000 150 000 225 000 300 000 Kanalkaia Revet (container) - 200 000 400 000 600 000 800 000 Revet Svartebukt

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 2007. 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 55.000 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 5.205 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 3.865 (3.525 in 2007) in Stavern, 935 (757) in Helgeroa and 405 (370) in Nevlunghavn.

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 2008. Busy times: Many new traffic records were sett in the Port of Larvik in 2008. Having a short break, we see foreman Kjell Holand on the left, and crane driver Cato Johansen.

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 55.714 TEUs, giving an increase of 9 percent. The total weight lifted in the containers was 645.120 tons, an increase of 13 percent from 2007. Ferry cargo increased by 58 percent, but remaining cargo decreased by 28 percent. Passenger movement increased by 29 percent to 591.461 passengers. Stone and gravel had a very good year with 765.812 tons (48 percent increase compared to previous year). Export of stone blocks ended at 299.813 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 2008. 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 37.378.081 is suggested transferred to Equity capital.

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 Profit and loss account Note Sales 8 44 418 764 40 725 186 Other operational income 10 000 110 887 Total operating revenues 44 428 764 40 836 073 Production costs 200 000 380 000 Salary costs 9 12 415 954 10 587 874 Depreciation 2 11 392 116 7 962 910 Other operating costs 10 16 940 521 11 245 395 Total operating costs 40 948 591 30 176 179 Operating profit 3 480 173 10 659 894 Interest income 2 724 234 1 067 197 Other financial income 161 597 106 334 Interest costs 7 612 207 6 988 650 Other financial costs 3 673 2 188 Net financial costs -4 730 049-5 817 308 Ordinary profit -1 249 876 4 842 586 Extraordinary income 11 45 230 795 0 Extraordinary costs 11 6 602 838 5 300 591 Net extraordinary costs 38 627 957-5 300 591 Profit (loss) for the year 37 378 081-458 005 Used for: Reserved for Equity capital 37 378 081-458 005 Total appropriations 37 378 081-458 005

Balance sheet at 31 December 13 ASSETS Note Fixed assets Property and equipment Land, buildings and other properties 2 253 353 500 226 281 276 Machines and installations 2 5 225 398 5 931 271 Operational inventory, equipment, office machines etc. 2 218 267 243 741 Total property and equipment 260 797 165 232 456 288 Financial assets Investments in shares 23 473 23 473 Long-term receivables 3 4 466 569 4 075 655 Total financial assets 4 490 042 4 099 128 Total fixed assets 265 287 207 236 555 416 Current assets Receivables Accounts receivables 3 4 930 654 3 641 684 Other receivables 3 2 221 297 9 328 899 Total receivables 7 151 951 12 970 583 Bank deposit and cash 4 45 734 278 42 389 910 Total current assets 52 886 229 55 360 493 TOTAL ASSETS 318 173 436 291 915 909 LIABILITIES AND EQUITY Equity Equity capital 5 73 711 495 74 169 500 Profit (loss) for the year 37 378 081-458 005 Total equity 111 089 576 73 711 495 Liabilities Reserved for contractual obligations Pension commitments 6 1 777 274 1 597 284 Total reserved for contractual obligations 1 777 274 1 597 284 Other long-term liabilities Payable to financial institutions 7 183 523 977 66 599 850 Total long-term liabilities 183 523 977 66 599 850 Current liabilities Payable to financial institutions 7 0 97 314 082 Accounts payable 11 547 406 1 401 493 Payable public taxes -2 553 820-1 758 837 Other current liabilities 12 789 023 53 050 542 Total current liabilities 21 782 609 150 007 281 Total liabilities 207 083 860 218 204 415 TOTAL LIABILITIES AND EQUITY 318 173 436 291 915 909

14 Cash flow statement Ordinary profit -1 249 876 4 842 586 Depreciation 11 392 116 7 962 910 Change in accounts receivables -1 288 970-1 098 576 Change in accounts payable 10 145 912-1 589 973 Change in other accrual posts -581 144 3 290 035 Difference pension costs/paid out premiums 179 990 26 355 Net cash flow from operating activities 18 598 028 13 433 336 Sale of property and equipment 26 200 000 0 Purchase of/investments in property and equipment -60 702 197-83 078 781 Collection of short-term and long-term receivables 8 318 009 4 976 453 Extraordinary costs -6 602 838-5 300 591 Purchase of financial investments -2 275 798-9 196 194 Net cash flow from investment activities -35 062 824-92 599 113 Proceeds from taking up long-term loans 27 285 918 0 Proceeds from taking up short-term loans 391 125 110 396 749 Repayments of long-term loans -7 675 873-6 166 716 Repayments of short-term loans -192 006-217 774 Net cash flow from financial activities 19 809 164 104 012 259 Net cash flow for the year 3 344 368 24 846 482 Bank deposit and cash 01.01 42 389 910 17 543 428 Bank deposit and cash 31.12 45 734 278 42 389 910

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 01.01.08 226 281 276 5 931 271 28 343 49 497 165 901 232 456 288 of which acc. purchase cost 293 192 302 23 688 998 438 170 791 253 870 395 318 981 118 of which acc. depreciation -66 911 026-17 757 727-409 827-741 756-704 494-86 524 830 Additions during the year 60 000 410 601 903 0 0 99 884 60 702 197 Disposals during the year 20 969 204 0 0 0 0 20 969 204 Depreciation for the year 9 958 982 1 307 776 10 542 49 497 65 319 11 392 116 Book value at 31.12.08 255 353 500 5 225 398 17 801 0 200 466 260 797 165 Economical life Up to 50 yrs. Up to 20 yrs. Up to 10 yrs. 5 yrs. 3-15 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) 2 824 403 2 705 696 09/04 to 09/09 Cars 124 214 0 05 & 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 660.000 of the total leasing costs for 2008. NOTE 3 - RECEIVABLES Receivables falling due after more than 1 year: Loans, marinas 4 231 294 3 873 887 Pension deposits 230 275 196 768 Other long-term receivables 5 000 5 000 Total long-term receivables 4 466 569 4 075 655

Other receivables: 16 Expenses paid out in advance for other companies* 1 642 291 8 075 416 Accounts receivables 4 930 654 3 641 684 Prepaid expenses 579 006 1 253 483 Total short-term receivables 7 151 951 12 970 583 *) Regarding the prosject New Ferry Terminal. NOTE 4 - BANK DEPOSITS AND CASH Frozen bank deposits (taxes) 515 950 517 441 Other bank deposits 45 208 584 41 857 807 Cash 9 744 14 662 Total bank deposits and cash 45 734 278 42 389 910 NOTE 5 - EQUITY Equity capital at 01.01 73 711 495 74 169 500 Profit (loss) for the year 37 378 081-458 005 Equity capital at 31.12 111 089 576 73 711 495 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 981 470 806 143 Interest costs on pension commitments 916 061 886 663 Return on pension fund -642 083-683 551 Administration costs 59 164 53 786 Booked estimate deviation 132 210 42 875 This year s pension costs (see note 10) 1 446 822 1 105 916 Calculated pension commitments vs. booked pension commitments in the Balance Sheet: Gross pension commitments 17 984 209 15 431 941 Pension fund at market value -12 704 119-11 814 011 Net pension commitments to market value 5 280 090 3 617 930 Unrecognised change in estimate (corridor) -3 502 816-2 020 646 Pension commitments in Balance Sheet at 31.12 1 777 274 1 597 284

Reconciliation: Net pension commitments at 01.01 1 597 284 1 570 929 Net pension costs 1 387 658 1 052 130 Administration costs 59 164 53 786 Overdue premium (administration included) -1 266 832-1 079 561 Net pension commitments at 31.12 1 777 274 1 597 284 17 NOTE 7 - LOAN DEBT Loans falling due in more than 5 years 181 267 344 61 291 546 Loans falling due the first 5 years 2 256 633 5 308 304 Total long-term liabilities 183 523 977 66 599 850 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 31.12 - For transforming to long-term liabilities 0 97 314 082 Securing of interest rates represent NOK 178.213.797 of total loan debt NOK 183.523.977 at 31.12.08. Securing expires as follows: NOK 95.586.207 (2036), NOK 40.000.000 (2011), NOK 40.000.000 (2010) and NOK 2.627.590 (2010). NOTE 8 - SALES INCOME Vessel dues 4 801 488 5 439 049 Cargo dues 9 727 332 11 293 678 Passasenger dues 552 673 1 330 713 Rentals (buildings and areas) 14 277 203 8 092 384 Crane operations, water supplies and other services 11 908 986 11 917 149 Marinas 3 051 082 2 552 213 Other sales income 100 000 100 000 Total sales income 44 418 764 40 725 186 NOTE 9 - SALARY COSTS Wages 9 088 889 7 932 110 National Insurance contribution 1 471 552 1 284 203 Pension costs (see note 6) 1 446 822 1 105 916 Other benefits 408 691 265 644 Total salary costs 12 415 954 10 587 874 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 34.500 and additional consulting services for NOK 17.500 in 2008.

Payments to Managing Director and the Board of Directors: 18 Managing Director Board of Directors Wages 578 329 559 307 95 546 221 230 Pension commitments 81 081 56 100 0 0 Other benefits 5 198 8 628 0 2 850 Total expenses 664 608 624 035 95 546 224 080 NOTE 10 - OTHER OPERATING COSTS Energiy, fuel and water regarding production 1 155 723 584 295 Costs premises 303 303 352 550 Rental machines, inventory etc. 3 006 643 2 742 562 Purchase of equipment, inventory and operational materials 312 813 254 240 Repairs and maintance 6 580 179 3 355 245 External services (consulting etc.) 3 145 360 1 614 032 Office costs, printed matters etc. 278 582 174 487 Telephone, postage etc. 180 016 205 840 Costs for transport vehicles (cars, boats) 224 866 173 629 Costs for travelling 213 022 212 805 Advertising, sales- and representation costs 490 198 295 688 Membership and gifts 167 208 353 116 Insurance premium 542 046 652 280 Other costs 340 562 267 189 Losses etc. 0 7 439 Total other operating costs 16 940 521 11 245 395 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 2008. 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 45 230 795 0 Total extraordinary income 45 230 795 0 Costs for new roads at Revet 6 602 838 5 300 591 Total extraordinary costs 6 602 838 5 300 591 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 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 37.378.081. 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

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 2 33 13 93 00 www.buggeolsen.no COLOR LINE CARGO Revet 8 33 12 29 50 www.colorline.no NOR LINES AS Kanalgt. 7 33 13 67 60 www.norlines.no STEMA SHIPPING N AS Svartebukt havn 33 15 64 32 www.stema-shipping.no THS. ARBO HØEG & CO AS (agent) Kanalgt. 1 33 13 94 00 www.arbohoeg.no Larvik Havn KF (The Port of Larvik) Havnegata 5, P.O. Box 246 Sentrum, NO-3251 Larvik Tel.: +47 33 16 57 50, fax +47 33 16 57 59, post@larvik.havn.no www.larvik.havn.no