Financial review

The Group presents its financial statements in accordance with the International Financial Reporting Standards (IFRS) as adopted by the EU and additional Danish disclosure requirements for annual reports of listed companies.

 

No changes have been made to the accounting policies applied last year.

 

For additional information, please see note 1 ”Accounting policies”.

 

The Company posted a profit for the year after tax of USD 703 million (USD 177 million) including profits from the sale of vessels totalling USD 163 million (USD 55 million) and a positive fair value adjustment of USD 20 million (negative adjustment of USD 27 million). Before tax, the profit was USD 725 million (USD 188 million).

 

This performance is in line with the profit forecast, which was USD 670-700 million including profits from the sale of vessels of USD 165 million and a fair value adjustment of certain hedging instruments of USD 13 million.

 

Equity amounted to USD 1,311 million (USD 714 million), equalling an 84% increase, which is specified in the right hand coloum:

 

Equity was written down by USD 0.2 million in 2007 through the cancellation of treasury shares of DKK 1.5 million nominal amount.

 

Vessels chartered by NORDEN in relation to which the risks and rewards of ownership, based on an overall assessment of the individual lease, has not been transferred to the Group, are accounted for as operating leases and recognised in the income statement on a straight-line basis over the term of the lease. As shown in note 35 to the financial statements, the Group at 31 December 2007 had operating lease liabilities in the amount of USD 3,661 million which will be recognised in the income statement over the period 2008-2022.

 

The lease liability does not represent the Group’s net exposure, as it is hedged on an ongoing basis through the Group’s risk management, see note 2 to the financial statements.

 

The Group’s vessels are recognised in the balance sheet at cost less accumulated depreciation and impairment.

 

The carrying amount of the vessels is continually compared with earnings opportunities and value indicators. If there are indications of impairment exceeding the annual depreciation, the vessels are written down to the lower recoverable amount.

 

Other accounting judgments and estimates are described in note 1, ”Accounting policies”.

 

Revenue in the form of freight income rose by USD 1,699 million to USD 2,933 million, a 138 % increase, which was the result of increased activity and higher freight rates, particularly in the Group’s dry cargo segment.

 

In dry cargo, the activity level in terms of ship days was 45% up in 2007. Freight income amounted to USD 2,743 million (USD 1,102 million), equalling a 149% increase.

 

The Dry Cargo Department’s operating profit (EBIT) was USD 548 million (USD 170 million), including profits from the sale of vessels of USD 59 million (USD 55 million).

 

Moreover, a profit of USD 4 million from the sale of vessels in 2007 was recognised in ”Share of results of joint ventures”.

 

The tanker activity in terms of ship days was up by 22% on the previous year. Freight income amounted to USD 191 million (USD 132 million), equalling a 44% increase.

 

The Tanker Department’s operating profit (EBIT) was USD 149 million (USD 41 million), including profits from the sale of vessels of USD 104 million (no vessels were sold in 2006).