Color Group AS annual report 2011

Color Group AS Annual Report 2011

2 3

IFRSAccountIng StAndARd

DEVELOPMENT OF TRAFFIC

Passengers 4 085 938 4 129 119 4 212 974 4 093 761 4 294 691

Cars 954 930 958 671 984 695 890 407 879 458

Freight units (12m-equivalents) 172 311 171 796 172 245 168 272 176 634

PROFIT (in NOK mill.) 1) (in EUR mill.)

Operating revenues 4 586 4 509 4 600 4 568 3 802 590

Operating expenses -3 666 -3 540 -3 538 -3 550 -3 137 -472

Operating profit before depreciation, amortisation, charter and leasing costs 920 969 1 062 1 018 665 118

Ordinary depreciation and amortisation -343 -299 -302 -305 -310 -44

Other exceptional items -150 -19

Charter, leasing costs -118 -123 -133 -98 -65 -15

Earnings before interest and taxes (EBIT) 308 547 627 616 290 40

Net financial items -230 -81 256 -752 -88 -30

Pre-tax income 78 466 883 -136 203 10

Tax expenses -23 -129 -242 37 -59 -3

Profit/loss for the year before discontinued operations 55 337 642 -99 144 7

Discontinued operations -85 -22

Net profit/loss for the year 55 337 642 -184 121 7

BALANCE SHEET (in NOK mill.)

Current assets 1 674 1 943 893 1 208 1 743 215

Non-current assets 7 613 7 706 7 913 7 999 6 877 980

Total assets 9 287 9 649 8 806 9 207 8 620 1 195

Current liabilities 1 393 1 092 1 027 1 637 967 179

Non-current liabilities 4 884 5 230 4 767 5 287 4 863 629

Deferred tax liabilities 934 928 778 521 733 120

Equity 2 060 2 398 2 234 1 762 2 057 265

Total liabilities and equity 9 287 9 649 8 806 9 207 8 620 1 195

LIQUIDITY (in NOK mill.)/FINANCIAL STRENGTH (%)

Cash and cash equivalents as at 31 Dec. 2) 1 631 1 740 670 694 1 307 210

Cash flow from operations 638 871 772 640 980 82

Equity ratio % 22 25 25 19 24

Net interest-bearing debt 4 518 4 635 5 094 5 656 4 955 581

EMPLOYEES/SUNDRY EXPENSES

Number of man-years 3) 2 490 2 446 2 445 2 739 3 967

Cost of wages 1 286 1 231 1 213 1 141 1 409 166

Port dues 138 144 147 141 152 18

CONSOLIDATED 20072008200920102011 2011

Definitions:

1) Translated into EUR, exchange rate as at 31 Dec. 2011

2) Including non-utilized credit facilities

3) 2007 figure shows number of employees

Color Group AS is the parent company of Color Line AS. Color Line AS is

Norway’s largest – and one of Europe’s leading – short-sea cruise and

freight shipping companies.

The company’s fleet of six vessels operates four international services

between seven ports in Norway, Sweden, Denmark and Germany.

The company’s vision is to be Europe’s best cruise and freight shipping

company.

Color Line offers high quality cruises on the service between Oslo and

Kiel in Germany, while the efficient transportation of freight and passengers

is the main priority on the shorter routes between Kristiansand and

Hirtshals, Larvik and Hirtshals and on the Sandefjord-Strømstad service.

Most of Color Line’s fleet is modern and economically efficient and the

ships have been designed to operate efficiently and cost-effectively.

Product-standardisation has given the ships a distinct profile based on

well-functioning, attractive and highly-reputed concepts.

The company is headquartered in Oslo and at present Color Line is the

only shipowner operating international passenger traffic services using

ships registered in the Norwegian Ordinary Ship Register (NOR).

Of the company’s approximately 3 000 employees (some 2 500 man-

years), 2 300 are employed on board the vessels (equivalent of 1 800

man-years). Color Line operates one of Norway’s biggest maritime

training organisations and annually offers 60 apprenticeships on deck,

in the engine room and in the hotel operation.

In 2011, Color Line’s services carried close to 4.1 million passengers, in

addition to over 172 000 freight units (12m-equivalents). The company

recorded a turnover of almost NOK 4.6 billion and a pre-tax profit of

NOK 78 million. This figure includes an exceptional provision of approxi-

mately NOK 150 million relating to a decision handed down by the EFTA

Surveillance Authority (ESA) in December 2011. Color Group AS is the

parent company of Color Line AS. Color Group is wholly owned by the

limited company O. N. Sunde AS, which in turn is owned in its entirety by

Olav Nils Sunde and his family. n

This is Color Line

‘‘ To succeed in the process of industrial renewal on the scale

achieved by Color Line over the last few years requires the ability to

innovate and implement at every level of the organisation.

Trond Kleivdal Group President

Color Group AS

Principal figures and key figures


the 50th anniversary of the oslo – Kiel service

The 2nd of May 2011 was the 50th anniversary of the start of the Oslo -

Kiel service. In 1961, Jahre Line deployed the M/S Kronprins Harald on this

service and the ship carried a total of almost 50 000 passengers in the

first year of operations. Since the start, the service has carried almost

20 000 000 guests and several million tonnes of freight. The motto for

the grand celebrations in Kiel was: “With an eye to the future”. Represent-

atives of the Norwegian and German authorities, harbour management,

customers and other collaboration partners attended the celebrations.

Peer gynt in Hamburg

Color Line was the instigator and main sponsor of a unique performance

of Peer Gynt in Hamburg on the 5th of May 2011. The performance was a

Norwegian-German co-production based on artistic contributions from

Peer Gynt AS at Gålå. The event marked the start of a marketing cam-

paign to promote Norway in Germany. Key contributors included the Port

of Oslo, the Norwegian Seafood Export Council, the Norwegian-German

Chamber of Commerce, Innovation Norway and Norwegian commercial

and industrial interests in Germany. HKH Crown Prince Haakon Magnus

was the guest of honour.

25th anniversary of Sandefjord - Strømstad

The 17th of March 1986 marked the start of the maiden voyage of the

M/S Bohus on the Sandefjord – Strømstad service. During the first year of

the service the operator, Scandi Line, carried 67 000 passengers. In year

2000 Color Scandi Line AS was fully integrated as a line in Color Line AS.

On 8 May 2001 the company acquired the M/S Color Viking after a period

of charter hire.

Shore-based electrical power

The 10th of October 2011 saw the opening of Norway’s first shore-based

electrical power facility for large vessels at Color Line’s terminal at

Hjortnes in Oslo. With shore-based power the electricity is largely pro-

duced from clean, renewable energy. When the M/S Color Magic and the

M/S Color Fantasy have both switched to shore-based power, CO2 emis-

sions in Oslo will be reduced by approximately 3 000 tonnes a year and

NOx emissions by approximately 50 tonnes a year. This will also mean

lower emissions of SOx and airborne particulate matter. An additional

benefit is that when the ships receive power from shore, the noise gener-

ated by the auxiliary engines formerly used to produce electricity for the

vessels will also disappear.

trial scheme for environmentally efficient road trains

Effective from June 2011, the Norwegian Ministry of Transport decided

that several stretches of road leading to and from ports in which Color

Line operates will be included in a new pilot project for road trains.

Road trains can be up to 25.2 m in length and carry 50 per cent heavier

loads than traditional heavy goods vehicles. The expectation is that this

scheme will lead to more efficient and environmentally friendly goods

traffic.

M/S SuperSpeed1 undergoes refit

In January, the M/S SuperSpeed1, which operates on the Kristiansand -

Hirtshals service, resumed operations after a refit in which the vessel’s

restaurant section was extended to seat a further 450 guests. The refit

was a response to an increase in traffic, particularly during the high sea-

son and holiday periods. The extension will increase capacity by approxi-

mately 500 000 passengers a year.

germany’s best conference hotel 2011

M/S Color Fantasy and M/S Color Magic were voted «Conference Hotels of

the Year 2011» in Germany at the Business Diamond Awards and were also

ranked among the top five most popular cruise ships by the users of the

travel rating portal HolidayChecks. The Business Diamond Award is one

of Germany’s most prestigious business travel awards. M/S Color Magic

and M/S Color Fantasy are in good company: former prizewinners include

the Intercontinental Düsseldorf Radisson SAS Hotel Frankfurt and the

Arabella Sheraton Grand Hotel in Munich.

color Line voted denmark’s best passenger shipping company

Danish consumers voted Color Line Denmark’s best passenger shipping

company. The combination of the high efficiency and comfort of the ships

was what particularly appealed to the Danes. The Danish Travel Award

was presented in Copenhagen in October. The award is based on a survey

that looked at the travel and transport preferences of 400 consumers,

conducted between January and August.

decision on port agreement

In December, the EFTA Surveillance Authority (ESA) adopted a decision to

charge Color Line EUR 18.8 million, which is equivalent to approximately

NOK 145 million. The decision relates to allegations of breach of competi-

tion legislation relating to a previous port agreement in force between

1994 and 2005. Color Line does not agree with the decision, but has

chosen to bring this matter to a close by accepting the charge. n

4 5

Key events

The production of Peer Gynt in Hamburg was a great success.

Group President Trond Kleivdal and Owner Olav Nils Sunde at the celebration in Hamburg.

HKH Crown Prince Haakon Magnus was the guest of honour at the performance of Peer Gynt in Hamburg.

M/S SuperSpeed1 is currently undergoing a refit and when completed will feature a new pizzeria.

The reception on board the M/S Color Fantasy to celebrate the 50th anniversary of the start of the Oslo – Kiel service.


The Norwegian-controlled shipping fleet is amongst the largest and most

modern in the world and the Norwegian maritime cluster is unique, not

least because it is so varied and comprehensive. As Norway’s largest

cruise and transport operator, Color Line supplements the maritime

cluster along the Norwegian coast and acts as an instigator and agenda-

setter in the generation and transfer of knowledge, environmental

innovation, restructuring and growth.

Color Line’s sense of social responsibility is built on the company’s

direct creation of value through its industrial activities internationally,

nationally and locally. The company contributes actively to the develop-

ment of infrastructure in and around the ports from which it operates

and these ports serve as vital hubs in the transport corridors to and from

Norway. Color Line helps to nurture active local communities that play an

important part in the development of the Norwegian travel industry.

Color Line operates one of Norway’s largest private maritime

apprenticeship schemes. Between 2003 and 2009, the company created

539 apprentice places: 111 in the hotel operation and 428 on deck and in

the engine room. This programme makes the company by far the biggest

sponsor of apprentices in the Norwegian maritime sector.

A FoRcE to BE REcKonEd WItH In tHE tRAVEL

And touRISM InduStRY

As a carrier of tourists from Europe, Color Line is a force to be reckoned

with in the Norwegian travel and tourism industry. Each year, some

550 000 foreign tourists travel to Norway on Color Line ships: 60 per cent

from Germany and just over 32 per cent from Denmark.

Annually, tourists travelling on Color Line’s services account for approxi-

mately 3.5 million visitor days on shore. Foreign tourists travelling with

There has been broad political agreement for some time in Norway

and within the European Union that condition should be put in place to

encourage the transfer of goods from road to sea and rail. Norway lies

on a peninsula in Europe and Color Line’s ports and terminals serve as

important hubs on vital transport routes between national and interna-

tional transport corridors. Color Line’s services represent cost-effective

and environmentally efficient transport corridors for goods carried by

sea to and from Norway.

With effect from 1 June 2011, several sections of road leading to and

Color Line represent a total spend in Norway of almost NOK 3.6 billion.

This accounts for approximately 8 per cent of total tourist consumption

in mainland Norway.

gAMIng FundS FoR cHARItABLE cAuSES

New regulations permitting gambling on Color Line ships came into force

in January 2011. Twenty per cent of the profits (turnover less payouts of

winnings) go to organisations approved as recipients of lottery funding.

Annually, this provision totals approximately NOK 20 million.

SHoRE-BASEd ELEctRIcAL PoWER In oSLo

Color Line supports the Norwegian Shipowners’ Association’s vision of

zero-emission ships. On 10 October 2011, Norway’s first facility for shore-

based electrical power for large vessels opened at Color Line’s terminal

at Hjortnes in Oslo. The shore-based power project is the fruit of a partner-

ship between a range of interests, including Oslo Port Authority,

environmental foundation Bellona, and power grid operator Hafslund

Nett, and forms part of the environmental treaty that Oslo City Council

has concluded with various external collaborators.

Shorebased power means that the electricity is primarily produced

from clean, renewable energy. When the M/S Color Magic and the M/S Color

Fantasy have both switched to shore-based power, CO2 emissions in Oslo

will be reduced by approximately 3 000 tonnes a year and NOx emissions

by approximately 50 tonnes a year. This will also mean lower emissions

of SOx and airborne particulate matter. An additional benefit is that when

the ships receive power from shore, the noise generated by the auxiliary

engines formerly used to produce electricity for the vessels will also

disappear. n

from ports served by Color Line were incorporated in a new trial scheme

for road trains. Road trains are large heavy goods vehicles which help to

make freight traffic more efficient and environmentally friendly.

In addition to economical loading and unloading operations, efficient

terminals are essential if more goods traffic is to transfer to sea and rail.

The Norwegian National Transport Plan stresses that integrated inter-

modal terminals can have a beneficial impact on the profitability of

freight operations and will serve to strengthen the attractiveness of

transport by sea and rail. n

6 7

A sense of social responsibility– environmentally-efficient transport

From road to sea

Shore based electrical power was pronounced with an arrangement on board M/S Color Magic. (Photo: A. Mathismoen)


8 9

After many years of planning and investing in new tonnage, infrastruc-

ture and expertise, Color Line’s new booking and Internet platform was

commissioned on Monday, 16th January 2012. A new era had started for

the company. With the launch of this new platform all the key elements of

Color Line’s modernisation strategy are now in place.

REnEWAL oF tHE FLEEt

The modernisation programme started with an extensive fleet renewal

process which saw the introduction on the Oslo – Kiel service of the M/S

Color Fantasy in December 2004 and the M/S Color Magic in September

2007. These ships mark the start of a new era in short-sea cruise experi-

ences in Europe. With the launch of the M/S SuperSpeed1 in March 2008

and the M/S SuperSpeed2 in June 2008, the company has revolutionised

a more than 150-year-old shipping tradition in the Skagerrak.

tHE FutuRE IS dIgItAL

The new booking- and Internet platform will play an important part in

fulfilling Color Line’s ambition of growing its business through ef-

ficient distribution systems using the Internet as the primary sales

channel. The system also plays an important role in optimising the

price picture for travel products by providing the right prices for all

products at the right time. The new web portal makes it easier to

purchase travel products from Color Line. New travel and tourism

experiences are no more than a mouse click away. n

ABout tHE gRouP

Color Group AS is the parent company of Color Line AS. Color Line AS is

Norway’s largest – and one of Europe’s leading – companies in the field of

European short-sea shipping, employing approximately 2 500 man-years

in four countries. At present, the company’s fleet numbers six vessel’s

operating on four international ferry services between seven ports in

Norway, Germany, Denmark and Sweden.

Norway forms part of a peninsula in Europe and efficient sea transport

is essential to, for example, Norwegian industry and Norwegian travel

and tourism. Color Line operates a clear strategy of differentiation: high-

quality cruises on the service between Oslo and Kiel in Germany and

the efficient shipment of freight and passengers on the shorter routes

between Kristiansand and Larvik in Norway and Hirtshals in Denmark and

on the Sandefjord-Strømstad service.

Color Line has a modern and cost-effective fleet with a high degree of

product standardisation. Passenger numbers in 2011 totalled 4 085 938

(2010: 4 129 119). This represents a reduction in the number of passen-

gers carried between January and December of approximately 1 per cent

from 2010. On the whole, the downturn in passenger numbers can be

attributed to lower production as a result of 145 more cancellations than

in the preceding year as a consequence of particularly unfavourable

weather conditions in the latter half of 2011. Freight volume carried

(12m-equivalents) in 2011 totalled 172 311, compared with 171 796 in 2010.

IncoME StAtEMEnt

Accounting principles

Color Group AS is a Norwegian limited company with its head office in

Oslo. The consolidated accounts are presented in accordance with IFRS

(International Financial Reporting Standards).

Results reported by the Group and the parent company

Operating revenues totalled NOK 4 586 million in 2011, as compared with

NOK 4 509 million in 2010. The operating profit before depreciation,

amortisation and charter hire was NOK 920 million, compared with NOK

969 million in 2010. Although underlying operations were satisfactory,

bad weather during 2011 resulted in the cancellation of a large number of

departures and, moreover, the cost of bunker fuel rose. Earnings before

interest and taxes in 2011 totalled NOK 308 million, compared to NOK 547

million in 2010.

This includes an exceptional provision in the amount of approximately

NOK 150 million related to a decision by the EFTA Surveillance Author-

ity (ESA) adopted in December of 2011. Group net financial expenses rose

from NOK -81 million in 2010 to NOK -230 million in 2011. Net financial items

in 2010 included approximately NOK 90 million in realised and unreal-

ised values on currency loans, fixed interest rate contracts, interest rate

derivatives, currency hedging and gains on shares, as compared with a

more or less neutral effect from these items in 2011.

The profit for the year after tax totals NOK 55 million, as compared

with NOK 337 in 2010. The parent company, Color Group AS, reported a

pre-tax profit of NOK 25 million, compared with NOK 182 million in 2010.

The profit after tax was NOK 18 million for 2011, as compared with NOK 134

million in 2010. The Board proposes that the profit be applied to other

equity. Distributable shareholders’ equity in the parent company stood at

NOK 63 million as at 31 December 2011.

Exceptional effect on profits

In December, the EFTA Surveillance Authority (ESA) announced a

decision to charge Color Line AS EUR 18.8 million for breaches of the

competition regulations. The decision relates to an historical port agree-

ment (Strømstad port) concluded in 1991 by the limited company Scandi

Line AS, which at that time was operating the service between Sande-

fjord and Strømstad. Larvik Scandi Line AS took over the line in 1994,

succeeded by Color Line in 2000. The ESA takes the view that a

competition restricting agreement was in force from 1994, when the

Competition Act came into force, in December 2005. The ESA’s decision

relates solely to historical conditions in the port of Strømstad and has no

implications for current operations on the Sandefjord to Strømstad route.

Color line does not share the conclusions of the ESA, but has chosen not

to appeal the decision.

FInAncIAL MAttERS

Balance sheet and funding

Color Group AS focuses on securing diversified, long-term and predictable

financing. The company issued one new bond loan in 2011, which is quoted

on the Oslo Stock Exchange ABN. The bond loan (COLG09) was issued in

November for a total amount of NOK 500 million, maturing in August

2016. In connection with the issuing of bond loan COLG09, the company

repurchased parts of existing outstanding bond loans with shorter

maturity: NOK 25.5 million of COLG04 (maturity October 2012), and NOK

206 million of COLG05 (maturity 2012).

As at 31 December 2011, the balance sheet total of the Group was NOK

9 287 million. As at the same date, equity capital stood at NOK 2 060

million, compared with NOK 2 398 million in 2010. The equity ratio was

approximately 22 per cent.

Long-term mortgages on ships/terminals/hotel have a repayment

profile of 12 to 15 years. Total outstanding mortgage and unsecured

debt as at 31 December 2011 was NOK 5 527 million. Net outstanding

debt less bank deposits and cash stood at NOK 4 518 million as at 31

December 2011, compared with NOK 4 635 million in 2010. Bond loans

listed on Oslo Stock Exchange mature in the period between 2012 and

Color Group AS– greater efficiency and increased profitability

Directors’ Report 2011Innovating for the future

colorline.nocolorline.no

Color Group AS Annual Report 2011 Director’s Report and Financial Statement Color Group Annual Report 2011

2016. Net outstanding bond loans as at 31 December 2011 total NOK

2 120 million. In connection with the delivery of the high speed ferry

M/S SuperSpeed2 in 2008, a 12-year operational leasing agreement was

concluded between Oslo Line AS and Color Line Transport AS, with a

guarantee furnished by Color Group AS. In its loan agreements the

company has commitments related to liquidity, equity and debt-servicing

ratio. All commitments had been fulfilled as at 31 December 2011.

Cash flow

In 2011, the Group’s cash flow from operational activities totalled NOK 638

million. Net cash flow from financing activities totalled NOK -528 million,

and net cash flow from investments amounted to NOK -197 million, of

which part is related to development costs in connection with the new

booking and Internet platform. The Group’s total liquidity reserve as at

31 December 2011, including granted drawing rights and liquid securities

stood at approximately NOK 1 631 million. Ordinary planned instalments

on the Group’s interest-bearing debt to credit institutions and bond loans

in 2012 will amount to approximately NOK 643 million.

Financial risk

The Group is exposed to foreign exchange risk related to fluctuations

in the value of the NOK against other currencies, particularly the USD,

EUR and DKK. The Group is also exposed to interest rate risk, and fluc-

tuations in the price of bunker fuel products. The Group makes use of

financial instruments to curb the risk of fluctuations in cash flow. As at

the balance sheet date, approximately 67 per cent of the Group’s interest-

bearing debt was hedged by means of fixed interest rate agreements and

approximately 40 per cent of the company’s estimated cost of bunker

fuel for 2012 was hedged by means of derivative contracts for bunker.

The company also had various currency derivative contracts in place for

operations budgeted for 2012. The Group has limited market risk expo-

sure as its business is directed at a market comprising a large number

of customers.

Continued operation as a going concern

On the basis of the above report on the Group’s results and financial

position, the Directors confirm that the annual financial statements have

been prepared on the assumption that operations will continue as a

going concern, and that the Report provides a correct picture of the

assets, liabilities, financial position and profits or losses of the parent

company and the Group.

WoRKIng EnVIRonMEnt And PERSonnEL

In 2011, Color Line recorded a total of approximately 2 490 man-years.

Average absence due to illness in the Group in 2011 was approximately 4.1

per cent for shore-based personnel (5.2 per cent in 2010), and approxi-

mately 8.3 per cent for seagoing personnel (9.8 per cent in 2010).

The Directors consider the working environment in the Group to be

good and will continue to maintain a sharp focus on the working environ-

ment issues and on absence due to illness amongst both shore-based and

seagoing personnel, reflecting the company’s policy and trends in society

as a whole.

EQuAL oPPoRtunItIES/dIScRIMInAtIon

It is Color Line’s objective that there shall be full equality in the workplace

between female and male employees. Moreover, the company makes

every effort to satisfy the requirements of the Anti-discrimination and

Accessibility Act, both in terms of its treatment of existing employees and

in the recruitment of new personnel.

Of the Group’s shipboard employees, 946 are women. 26 out of a

total of 228 management positions are held by women. The percentage

of women in shipboard management positions is relatively low since

technical/maritime jobs have traditionally been dominated by men and to

date fewer women hold the necessary certificates.

Of the 705 man-years worked on shore, 420 are worked by women.

There is one woman in the Group management. Of shore-based manage-

ment positions women hold equals approximately 40 per cent.

SAFEtY

Color Line works continuously to prevent situations which might have

negative consequences for human life and health and the environment. In

2011, the company continued to develop its electronic systems for safety

management, incident management and risk assessment. The company

also conducted extensive safety training and safety courses for ship-

board and shore personnel throughout the year.

The company is now beginning to see the results of this work in the

form of a reduction in the number of routine deviations.

Large parts of the company took part in the SkagEX11 exercise (in Sep-

tember 2011). Since this exercise the contingency planning procedures

have been audited. A project aimed at reducing the quantity and number

of products harmful to health was conducted during the course of the

year and has resulted in positive environmental and safety gains. There

were no major accidents in 2011 involving serious injury or environmental

pollution.

tHE EnVIRonMEnt

During 2011, Color Line maintained a particular focus on reducing

discharges to the sea and air and reducing energy consumption.

Discharges to the sea continue to be minimal. 2011 was the first full

year in which all use and exchanges of ballast water were regulated

under the company’s plan for processing ballast water (Ballast Water

Management Plan) in compliance with the Norwegian Ballast Water Man-

agement Regulation of 2010. The company’s ships use a minimum of ballast

water and this, in combination with our own stringent procedures, means

10 11

that the risk of the introduction of unwanted organisms into Norwegian

waters by means of ballast water exchanges is limited.

During 2011, the company conducted testing on dynamic trim optimisa-

tion, automated weather and current data for adjusting departure plans,

the testing of fuel additives, and the replacement of light sources and

automation on-board ship with new low energy solutions. The results

have been favourable.

In 2011, M/S Color Magic was the first large ship in Norway to be

fitted with a shore-based electricity system for use in the port of Oslo. In

June 2012, her sister ship the M/S Color Fantasy will introduce equivalent

equipment. Shore-based electrical power eliminates virtually all emis-

sions of CO2, NOx and SOx as well as PM (particulate matter) while the

vessels are docked in Oslo.

Color Line is involved as a partner in Oslo Municipality’s work on im-

proving the quality of the air in the capital through the “Business for

Climate” agreement, and the company is also involved in the WWF Baltic

Sea Initiative, as well as being a sponsor of BELLONA’s Partnership for the

Environment.

tHE BoARd oF dIREctoRS, coRPoRAtE goVERnAncE

And SHAREHoLdERS

O.N. Sunde AS indirectly owns 100 per cent of the company’s 71 800 000

shares. O.N. Sunde AS is wholly owned by Director and Group President

Olav Nils Sunde and his family.

The company’s corporate governance policy is based on the Norwe-

gian Code of Practice for Corporate Governance. Further information on

corporate governance can be found in the section headed “Corporate

Governance 2011”.

outLooK/EVEntS AFtER tHE BALAncE SHEEt dAtE

Equal market conditions

Color Line is now the only large shipowner under Norwegian ownership

and headquartered in Norway with a fleet flying the Norwegian flag that

operates regular scheduled freight and passenger services throughout

the year between Norway and the Continent. Stable and internationally

competitive framework conditions have been and continue to be a pre-

requisite for the Group’s substantial investments, seen from a Norwegian

perspective. The refund scheme for seafarers was introduced in 2002,

but has been amended repeatedly in ways that over time have served to

undermine the Norwegian scheme relative to the terms enjoyed by Color

Line’s international competitors. In 2006, the regulations were amended

to apply only to shipboard safety crew, and with effect from 2008 an

upper limit was introduced on the refunds payable per employee. Since

this maximum limit was introduced the scheme has not been adjusted

to reflect increases in prices and pay, which has made the scheme less

competitive over time. Color Line is working to secure conditions for

Norwegian seafarers that are comparable to those offered by the com-

pany’s competitors in the Nordic region and the European Union. This

work is being conducted in collaboration with Color Line’s shipboard

personnel and their trade unions, as well as with the Norwegian Ship-

owners’ Association and the Maritime Forum of Norway.

From road to sea and rail

Color Line’s services represent cost-effective and environmentally

efficient transport corridors for goods carried by sea to and from

Norway, with long term port agreements in Kiel, Hirtshals, Strømstad,

Kristiansand, Larvik, Sandefjord and Oslo. The authorities have stated

that their aim is to contribute to bringing about a transfer of freight and

goods traffic from roads to sea and rail services.

Color Line’s ports serve as important hubs on vital transport routes

between national and international transport corridors. In addition to

economical loading and unloading operations, efficient terminals are es-

sential if more goods traffic is to transfer to sea and rail. The Norwegian

National Transport Plan stresses that integrated intermodal terminals will

strengthen sea and rail transport services. With effect from 1 June 2011,

several sections of road leading to and from ports served by Color Line

operates were incorporated in a new trial scheme for road trains. Road

trains are large heavy goods vehicles which play a part in making goods

traffic more efficient and environmentally friendly.

Outlook for 2012

The Group’s main objective is to improve profitability and to continue

to maintain cost-effective operations. The Group is expecting to record

a satisfactory profit in 2012. The Directors are of the opinion that the

company is well equipped to meet the challenges that 2012 will bring.

Oslo, 26 April 2012

Morten GarmanChairman of the Board

Bjørn PaulsenDirector

Alexander SundeDirector

Olav Nils SundeDirector/Group President

Director’s Report and Financial Statement Color Group Annual Report 2011

12 13

Color Group AS

Income statement

Amounts in TNOK gRouP (IFRS)PAREnt coMPAnY (nAS)

135 457 133 761 Sales revenues 3, 7 4 585 546 4 508 912

135 457 133 761 Total operating revenues 4 585 546 4 508 912

0 0 Cost of sales -1 549 536 -1 539 917

-7 955 -7 717 Cost of wages 4, 18, 19, 20 -1 285 836 -1 230 750

-5 154 -4 952 Other operating expenses 7, 15, 19 -830 148 -769 133

-13 109 -12 669 Total operating expenses -3 665 520 -3 539 800

122 348 121 092 Operating profit before depreciation, amortisation, charter hire and leasing expenses 920 026 969 112

-22 034 -22 034 Depreciation, amortisation and write-downs 4, 8, 9, 10 -343 169 -299 337

0 0 Other exceptional items 2 -150 222 0

0 0 Charter and leasing expenses 15 -118 276 -122 568

100 314 99 058 Earnings before interest and taxes 308 359 547 207

-75 623 82 925 Net financial income/costs 16, 17 -229 925 -81 279

24 691 181 983 Pre-tax income 78 434 465 928

-7 075 -47 947 Tax expense 24 -23 066 -128 724

17 616 134 036 Profit for the year 55 368 337 204

comprehensive income statement

Profit for the year 55 368 337 204

Other income and expenses

Currency translation differences 403 -1 359

Net gain/loss bunker hedging -13 122 -992

Total other income and expenses net after tax -12 719 -2 351

Total profit for the year 42 649 334 853

Majority shareholders’ share of total profit for the year 42 649 334 853

2011 Note2010 2011 2010


Color Group AS

Balance sheet

14 15

Color Group AS

Cash flow statement


24 691 181 983 Pre-tax profit 78 434 465 928

22 034 22 034 Depreciation,amortisation and write-downs 8, 9 343 169 299 337

Loss/gain on disposals of non-current assets -963 153

9 921 -22 891 Changes in value financial assets -2 575 -4 372

-1 346 2 996 Changes in value non-current financial liabilities -1 346 2 996

0 -1 827 Changes currency financial liabilities 0 -1 827

0 0 Pension costs in excess of premium paid 20 14 868 12 690

-4 630 -57 955 Unrealised foreign exchange gain/loss, currency loans 16 -2 439 -58 406

0 0 Unrealised foreign exchange gain/loss, non-current receivables 16 399 1 026

0 0 Translation differences non-current assets 8 -178 13 679

0 0 Change in interest rate contracts CIRR 24 362 27 633

0 0 Translation differences foreign subsidiaries 403 -1 359

0 0 Changes in bunker contracts, equity -13 122 -992

Changes in working capital

0 0 Changes in inventories 2 782 5 272

34 343 132 442 Changes in accounts receivable and other receivables 34 897 10 252

-37 332 -128 798 Of which, change in outstanding account with owner 0 0

35 257 59 982 Changes in marketable shares 35 257 59 982

-274 017 283 432 Changes in accounts payable and other current liabilities 124 384 38 761

Total 197 320 114 267

-191 268 471 398 Net cash flow from operations 638 332 870 753

0 0 Payments, purchases of investments, ships 8 -152 034 -34 166

0 0 Pre-paid investments in ships 72 682 -72 682

0 0 Payments, purchase of equipment 8 -21 523 -7 531

0 0 Payments. purchase of land, buildings and other real estate 8 -11 071 -9 490

0 0 Payments, purchase of construction work in progress 8 -86 170 -104 658

0 0 Proceeds of sale of equipment 8 1 497 0

0 -53 286 Payments, purchases of other investments 0 0

0 -53 286 Net cash flow from investments -196 619 -228 527

49 047 49 048 Proceeds of raising new debt to credit institutions 49 047 49 048

477 578 1 380 233 Proceeds of raising new bond debt 477 578 1 380 233

-372 640 -351 331 Repayment of debt to credit institutions -388 803 -373 114

-303 352 -515 000 Instalments on bond loans -303 352 -515 000

580 655 290 825 Payments, interest-bearing receivables 7 821 8 385

-394 843 -356 976 Proceeds, non-current receivables -393 078 -143 350

37 332 128 798 Change in outstanding account/owner 22 815 -10 930

73 777 625 597 Net cash flow from financing -527 972 395 272

-117 491 1 043 709 Net change in cash and cash equivalents resources -86 259 1 037 498

1 113 524 69 815 Closing balance cash and cash equivalents resources 1 Jan. 1 138 648 101 150

996 033 1 113 524 Closing balance cash and cash equivalents resources 31 Dec. 1 052 389 1 138 648

2011 FOR THE PERIOD 1 JANUARY TO 31 DECEMBER2010 2011Note 2010


Non-current assets Intangible assets 0 0 Software and licences 2, 9 466 679 0 108 727 130 761 Goodwill and other intangible assets 4, 9, 10 671 301 671 301 108 727 130 761 Total intangible assets 1 137 980 671 301 Property, plant and equipment 0 0 Construction work in progress 2, 4, 8 0 378 112 0 0 Land, buildings and other real estate 4, 8, 13 623 265 653 538 0 0 Fixtures and equipment 4, 8, 13 59 002 49 363 0 0 Ships 2, 4, 8, 13 5 398 121 5 526 463 0 0 Total property, plant and equipment 6 080 388 6 607 476 Financial fixed assets 2 814 345 2 792 511 Investments in subsidiaries 5, 6 0 0 3 118 322 3 698 977 Non-current receivables and investments 6, 11, 17, 20 394 982 427 134 5 932 667 6 491 488 Total financial fixed assets 394 982 427 134 6 041 394 6 622 249 Total non-current assets 7 613 350 7 705 911 Current assets 0 0 Inventories 12 147 339 150 121 242 410 276 753 Accounts receivable and other receivables 17 460 967 596 464 12 970 22 891 Other financial assets 17 12 970 22 891 0 35 257 Marketable shares 0 35 257 996 033 1 113 524 Bank deposits and cash 17, 25 1 052 389 1 138 648 1 251 413 1 448 425 Total current assets 1 673 665 1 943 381 7 292 807 8 070 674 TOTAL ASSETS 9 287 015 9 649 292

Contributed capital

143 600 143 600 Share capital (71 800 000 shares, nominal value NOK 2.- per share) 6, 21, 22 143 600 143 600

1 478 436 1 478 436 Premium fund 22 1 478 436 1 478 436

1 622 036 1 622 036 Total contributed capital 1 622 036 1 622 036

172 188 515 025 Other equity 22 438 091 776 459

1 794 224 2 137 061 Total equity 2 060 127 2 398 495

LIABILITIES

0 0 Liabilities 20 15 298 0

51 771 57 441 Deferred tax 23 934 216 928 492

51 771 57 441 Total liabilities 949 514 928 492

Non-current liabilities

3 282 330 3 610 553 Debt to credit institutions 13, 17 2 765 215 3 360 544

2 101 959 1 927 733 Bond loans 13, 17 2 101 959 1 851 233

17 132 18 478 Other non-current liabilities 17 17 132 18 478

5 401 421 5 556 764 Total non-current liabilities 4 884 306 5 230 255

Current liabilities

45 391 319 408 Trade payables and other current liabilities 14, 17 750 434 626 050

0 0 Current share of non-current liabilities 13, 17 642 634 466 000

0 0 Other financial liabilities 0 0

45 391 319 408 Total current liabilities 1 393 068 1 092 050

7 292 807 8 070 674 TOTAL EQUITY AND LIABILITIES 9 287 015 9 649 292

2011

2011

ASSETS

EQUITY AND LIABILITIES

2010

2010

2011

2011

Note

Note

2010

2010

Morten GarmanChairman of the Board

Bjørn PaulsenDirector

Alexander SundeDirector

Olav Nils SundeDirector/Group President

Oslo, 26 April 2012


16 17

Color Group AS

Group IFRS figures

Color Group AS

Statement of changes in equity Notes to the accounts 2011

Amounts in TNOK

Equity 1 Jan. 2010 143 600 1 478 436 3 326 13 334 595 358 2 234 054


Other income and expenses -1 359 -992 -2 351

Total income and expenses for the period 0 0 -1 359 -992 337 204 334 853

Group contribution/dividend -170 412 -170 412

Equity 31 dec. 2010 143 600 1 478 436 1 967 12 342 762 150 2 398 495

Equity 1 Jan. 2011 143 600 1 478 436 1 967 12 342 762 150 2 398 495


Other income and expenses 403 -13 123 -12 720

Total income and expenses for the period 0 0 403 -13 123 55 368 42 648

Group contribution/dividend -381 016 -381 016

Equity 31 dec. 2011 143 600 1 478 436 2 370 -781 436 502 2 060 127

Undistributedsurplus

Translationdifferences

Hedgingreserve

PremiumFund

Share capital Total

notE 1 AccountIng PRIncIPLESGeneral information

Color Group comprises Color Group AS and its subsidiary companies. Color

Group AS is a limited company registered in Norway with its head office

in Oslo. The business of the Group is primarily concentrated on two core

areas: Cruise and Transport. These business areas are described in Note 3,

Segment Information.

Framework for preparing the Annual Financial Statements

Group

Color Group AS has issued bond loans, which are listed on Oslo Stock

Exchange. Stock Exchange regulations require the Group to report in

accordance with International Financial Reporting Standards (IFRS) and the

interpretations issued by the International Financial Reporting Interpreta-

tions Committee (IFRIC).

Preparing the accounts in accordance with IFRS necessitates the use

of estimates. Moreover, the Group’s accounting principles require that

management make judgements. Areas that to a large extent are based

on judgements, or are highly complex, or areas in which assumptions and

estimates are of significance to the consolidated accounts are duly

described in the notes.

The consolidated accounts have been prepared on the basis of the histori-

cal cost principle, adjusted for financial instruments measured at fair value.

The going concern assumption has been applied in the preparation of

the consolidated accounts.

The parent company

The financial statements of the parent company, Color Group AS have

been prepared in accordance with the provisions of the Accounting Act

of 1998 and generally accepted accounting practice in Norway (Norwegian

Accounting Standard, NAS).

Unless otherwise stated in the description of principles, it is the Group’s

accounting principles that are described. Descriptions of accounting

principles applicable only to the parent company’s accounts rendered in

accordance with NAS are specified separately.

Changes in accounting principles and information

All new and amended standards and interpretations of relevance to the Color

Group in force effective from the accounting period commencing on 1 January

2011 have been applied in the preparation of the annual financial statements.

As at the time of the rendering of these annual financial statements

some new and amended standards and amended interpretations had not

yet entered into force and the Group decided against early application. In

the assessment of the management these standards and interpretations

will have no significant impact on the annual financial statements.

translation of foreign currency

The accounts of the individual units in the Group are presented in the

currency normally used in the economic area in which the unit operates

(functional currency). The Group’s presentation currency is NOK and this

is also the parent company’s presentation and functional currency. Where

subsidiary companies use other functional currencies, amounts are trans-

lated into NOK. Balance sheet items are translated at the exchange rate

applicable at year-end, while income statement items are translated on the

basis of average rates of exchange. Translation differences are recognised

in the comprehensive income statement and are specified separately under

equity.

Transactions and balance sheet items

Monetary items (assets and liabilities) in foreign currencies are translated

at the exchange rates on the balance sheet date. Foreign exchange gain

and loss in connection with the translation of monetary items in foreign

currencies at year-end are recognised in the income statement. Income

statement items are translated at the exchange rate applicable at the

time of the transaction. Foreign exchange gains and losses arising upon

payment of such transactions are recognised in the income statement.

Segment reporting

Segment information is presented on busines areas. This structure is based

on the format used in reporting to Group management.

Principles of consolidation

Subsidiary companies comprise all units in which the Group has a

deciding influence on the unit’s financial and operational strategy,

normally as a result of an ownership stake of more than 50 per cent of

voting capital. When determining whether the Group has a deciding

influence, the effect of potential rights that could be exercised or converted

on the balance sheet date is taken into account.

Subsidiaries are consolidated from the time at which control is taken by

the Group and are excluded from consolidation when the deciding influence

ceases.

The purchase method of accounting is applied in connection with the

acquisition of subsidiary companies. Procurement cost is measured as the

fair value of assets used as payment, equity capital instruments issued,

commitments incurred in the transfer of control and direct expenses asso-

ciated with the acquisition itself. Identifiable purchased assets, debt taken

on and contingent commitments are recorded in the accounts at fair value

at the time of acquisition, irrespective of any non-controlling interests.

Expenses connected with the acquisition are allocated to identifiable

assets and liabilities based on their fair value at time of acquisition.

Procurement cost that exceeds the share of the fair value of identifiable net

assets of a subsidiary company is recorded in the balance sheet as good-

will. If procurement cost is lower than the fair value of the net assets of a

subsidiary company, the difference is recognised in the income statement

at the time of acquisition.

Inter-company transactions, balances and unrealised earnings between

Notes Color Group Annual Report 2011Director’s Report and Financial Statement Color Group Annual Report 2011

18 19

expense will accrue to the Group and the expense can be measured reli-

ably. Other repair, classification and maintenance costs, including costs for

the docking of ships, are recorded in the income statement in the period

in which the expense is incurred. Land is not depreciated. Other operat-

ing equipment is depreciated in accordance with the straight line method

so that the procurement cost of the equipment is depreciated to residual

value over the estimated useful life of the asset, which is:

l Ships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20-35 years

l Buildings/port facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20-30 years

l Machines and equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-10 years

The useful life of property, plant and equipment and the residual value are

re-assessed at every balance sheet date and amended as necessary. In the

case of the Group’s ships, these are classified into components subject to

high wear and tear and components subject to low wear and tear. Compo-

nents subject to high wear and tear are depreciated without residual value.

Scrap value is estimated every year-end, and any changes in estimates

of scrap value are recorded in the accounts as a change in estimate. In the

case of replacements, the residual value of the replaced part is estimated.

Residual value is expensed at the time of replacement.

Gains and losses on disposals are recognised in the income statement

and make up the difference between the sales price and value recorded in

the balance sheet.

Construction work in progress is classified as a non-current asset

and reported at cost price until production or development is completed.

Construction work in progress is not depreciated until the non-current

asset is taken into use.

Intangible assets

Intangible assets procured separately are entered in the balance sheet at

fair value at the time of procurement. Intangible assets are amortised using

the straight-line method over the assets estimated lifetime. If the lifetime

of the asset is not limited and economic life cannot be estimated, the asset

is not amortised, but is tested annually for impairment.

Goodwill

The difference between the procurement cost of acquisitions and the fair

value of net identifiable assets at the time of acquisition is classified as

goodwill.

Goodwill is recorded in the balance sheet at procurement cost less any

accumulated impairment. Goodwill is not amortised but is tested annually

for impairment of value. Impairment testing is conducted by allocating

goodwill to the Group’s cash generating units expected to derive benefit

from the amalgamation. Value recorded in the balance sheet is compared

with the recoverable amount, which is the higher of value in use and fair

value less costs to sell. Any impairment is taken to expense and is not

reversed in subsequent periods.

Software

Costs associated with maintaining computer software programs are

recognised as an expense as incurred. Development costs that are directly

attributable to the design and testing of identifiable and unique software

products controlled by the Group are recognised in the balance sheet as

intangible assets when the criteria for doing so are met.

Development expenditures that do not meet these criteria are

recognised as an expense as incurred. Development costs previously

recognised as an expense cannot be recognised as an asset in a subse-

quent period.

Computer software recognised as an asset in the balance sheet is

amortised over its estimated useful life, which is 15 years.

Leasing, plant and equipment

Leases in which a large part of the risk and earnings linked to ownership

remain in the hands of the lessor are classified as operational leases. The

company’s leases are mainly operational leases in which lease payments

are an operating expense distributed over the term of the lease.

non-current assets held for sale and discontinued operations

Non-current assets and groups of non-current assets and liabilities are

classified as held for sale if the book value is to be recovered through

a sales transaction, rather than continuing use. This condition will be

considered to have been fulfilled only if a sale is highly probable and the

non-current asset is available for immediate sale in its present form.

Management must have committed the company to a sale and the sale

must be expected to be implemented within one year from the date of

classification.

Non-current assets and groups of non-current assets and liabilities held

for sale are valued at the lower of previous carrying amount or fair value

less costs to sell. Depreciation of assets classified for sale ceases from the

date of classification.

Operations that are to be discontinued are reported separately in the

income statement. Figures for the preceding year are restated to permit

comparison.

Inventories

Inventories comprise goods for resale, consumables and bunker fuel and

are valued at cost or net realisable value less costs of sales, whichever is

the lower. The FIFO method is used in determining procurement cost.

cash and cash equivalents

Cash and cash equivalents comprise cash in hand and bank deposits.

Equity

Ordinary shares are classified as share capital. Expenses related directly to

the issuing of new shares less tax, are recorded as a reduction of remunera-

tion received in equity.

companies in the Group are eliminated. Unrealised loss is eliminated, but is

evaluated as an indicator of impairment in relation to the writing-down of

the transferred asset.

Accounting principles applied by subsidiary companies are amended

whenever necessary in order to conform to the Group’s accounting

principles.

Principles governing revenue recognition

Income from the sale of goods and services is recognised in the accounts

at fair value, net of VAT, discounts and reductions. Income from the sale of

goods and services is recognised at the point at which material risks and

rights have passed over to the buyer, the Group no longer has ownership

of or control over the goods, the income can be measured reliably, it is

probable that the financial benefit associated with the sale has accrued to

the Group and costs incurred in connection with the sale can be measured

reliably.

Income is recognised as follows:

Sales of services (travel)

Sales of services are calculated at the start of a voyage, which is when risk

is transferred.

Sales of goods

Sales of goods by the Group are recognised when delivery of the goods

takes place, this being the time of transfer of risk. Payment for retail pur-

chases is usually in the form of cash/debit card payment or by credit card.

Sales of this nature are taken to income, including credit card fees incurred

on the transaction. Fees are recognised as sales costs.

Interest earned

Interest earned is recognised using the effective interest method.

Income from dividends

Dividends on investments are recognised when the Group has an uncondi-

tional right to receive the dividend.

Public subsidies

Public subsidies are recognised when it is reasonably certain that the

company will fulfil the subsidy conditions and that the subsidies will in

fact be received. Public subsidies that compensate the business for

disbursements are taken to income as and when the costs are incurred.

Subsidies are deducted from the expense that the subsidy is intended to

cover.

Foreign exchange

Foreign exchange contracts in EUR, USD, DKK are generally linked to the

current income and expenses of the Group. Foreign exchange gain/foreign

exchange loss on settlement is attributed to the relevant income statement

items in the accounts. See Note 7. The value of current contracts is recorded

in the accounts as a financial item.

Borrowing costs

Borrowing costs directly attributable to the acquisition of qualifying

assets are capitalised as part of the cost of the relevant asset until the

non-current asset is ready for its intended use. Borrowing costs of this

nature are capitalised as part of the assets procurement cost when it is

probable that this will result in future financial benefits for the Group and

the costs can be measured in a reliable manner.

Borrowing costs attributable to the raising of new loans are charged to

liabilities in the balance sheet and amortised over the term of the loan.

Other borrowing costs are recognised in the income statement in the

period in which they are incurred.

taxes

Tax costs comprise tax payable and changes in deferred tax. Deferred tax/

tax asset is calculated on all differences between the value of assets and

liabilities in the accounts and the tax value of such assets and liabilities,

with the exception of:

l Temporary differences related to non-deductible goodwill.

l Temporary differences related to investments in subsidiary companies

when the Group controls the time at which the temporary differences

will be reversed and this is not expected to be in the foreseeable future.

Deferred tax assets are recorded in the accounts when it is probable that

the company will have sufficient taxable profits in subsequent periods in

order to utilize the tax asset. Earlier deferred tax asset is entered in the

accounts by the company to the extent that it is probable that the company

can make use of the deferred tax asset. Likewise, the company will reduce

deferred tax assets insofar as the company no longer considers it probable

that it will be able to utilize the deferred tax asset.

Deferred tax and deferred tax assets are measured on the basis of

anticipated future tax rates payable by the Group companies in which

temporary differences have arisen.

Deferred tax and deferred tax assets are recorded at nominal value in

the balance sheet.

Property, plant and equipment

Assets intended for long-term use or ownership are recorded as operating

equipment. Property, plant and equipment mainly comprise ships, port

facilities, plots of land, buildings and machines/equipment. Property, plant

and equipment are recorded at procurement cost including costs associ-

ated with procurement, less deductions for depreciation and write-downs

for impairment. Subsequent major expenditures are added to the value

of property, plant and equipment in the balance sheet or are entered

separately when it is probable that future financial benefits linked to the

Notes Color Group Annual Report 2011

20 21

ognised in the balance sheet at fair value on the day on which the contract

is concluded and thereafter measured at fair value on each balance sheet

date. Any transaction expenses are recognised in the income statement

immediately.

Interest-bearing loans are first recognised in the balance sheet at fair

value less transaction costs. Subsequent recording is at amortised cost,

with any difference between cost and redemption amount being recognised

over the term as part of the effective interest.

Accounts payable and other current obligations are first measured at

fair value and thereafter at amortised cost. Current obligations due within

three months or obligations considered as insignificant are not normally

discounted. Income paid in advance on the balance sheet date is recorded

as a liability.

Bunker hedging

The Group makes use of financial derivatives earmarked as hedging instru-

ments in connection with highly probable cash flows in connection with the

procurement of bunker fuel for the ships. This hedging has been document-

ed as being very effective, both at the time of conclusion of the agreements

and in subsequent measurements, as it counteracts price changes in the

cash flows. Hedge accounting is applied. Any ineffective portion of a gain or

loss will be recognised in the income statement immediately.

Concluded hedging contracts are recorded at fair value on the balance

sheet date and changes in fair value are charged to other income and

expenses for the period. When hedging contracts are exercised, all earlier

gains and losses are transferred from equity and included in the cost of

bunker.

Principles applicable only to the parent company

Royalty

Operating revenues in the parent company refer for the most part to

royalty income, which is recognised in the income statement as it is earned.

In connection with the reorganisation of Color Group, the ferry business

of Color Group ASA was transferred to Color Line AS with effect from 1998.

The rights to use the names and trademarks and the use of pre-developed

shipping lines, quay rights etc. were not subject to transfer. Royalty agree-

ments have been concluded between the companies regulating Color Line’s

use of rights connected with the ferry business and remuneration for such

use.

Shares in subsidiary companies

Investments in subsidiary companies are valued using the cost method.

Group contributions after tax paid by the parent company to subsidiary

companies are recorded in the accounts as an increase in the investment

in the subsidiary company. Dividends and Group contributions received

from a subsidiary company are recorded in the income statement as in-

come on the investments in the subsidiary company. Dividend received

and paid out and Group contributions and other contributions are taken

to income in the same year as the provision is made by the subsidiary

company.

the general rule for valuing and classifying assets

and liabilities in the parent company

Assets for intended for permanent ownership or use are classified as

non-current assets. Other assets are classified as current assets. Receiv-

ables for repayment within one year are classified as current assets.

Equivalent criteria are applied in the classification of current and non-

current liabilities. Non-current assets are valued at procurement cost and

written down to fair value when the drop in value is not considered to be of

a short-term nature. Non-current assets having a limited economic life are

subject to a depreciation plan. Long-term loans are recorded in the balance

sheet at the nominal amount received at time of establishment. Current

assets are valued at cost or fair value, whichever is the lower. Shares in a

trading portfolio are valued at fair value on the balance sheet date. Changes

in value are recognised in the income statement. Current liabilities are

recorded in the balance sheet at the nominal amount received at time of

the transaction.

operating expenses

The expenses of the parent company are expensed in the same period as

the appurtenant income. Goodwill acquired by the parent company is amor-

tised using the straight-line method over the expected life of the goodwill.

notE 2 MAJoR IndIVIduAL tRAnSActIonSthe purchase and sale of assets, investment liabilities

Refitting of the M/S SuperSpeed1

During 2011, the refitting of the M/S SuperSpeed1 to increase her passenger

capacity was completed. The refit was capitalised in the amount of NOK 112

million under property, plant and equipment in 2011.

A new booking and Internet platform

The development and delivery of a new booking system and a new

Internet platform were completed in 2011 and the system was commis-

sioned in September of that year. The investment was transferred from

construction work in progress and is recorded under intangible assets in

the 2011 financial statements.

Other exceptional items

In December, the EFTA Surveillance Authority (ESA) announced a decision

charging Color Line AS EUR 18.8 million for breaches of the competition

regulations. The decision relates to an historical port agreement (Strøm-

stad port) concluded in 1991 by the limited company Scandi Line AS, which

at that time was operating the service between Sandefjord and Strømstad.

Larvik Scandi Line AS took over the line in 1994, succeeded by Color Line

in 2000. The ESA takes the view that a competition-restricting agreement

was in force from 1994, when the Competition Act came into force, and

Translation differences occur in connection with currency differences

when consolidating foreign enterprises.

Pension liabilities and pension costs

The companies in the Group have varying pension schemes. In general,

pension schemes are financed by payments of premium to life insurance

companies. The shore-based employees have a defined contribution

pension scheme. The cost of this scheme is equal to the premium con-

tributed. The Group has no obligation, legal or otherwise, to pay further

contributions in the event that the life insurance company has insufficient

funds to pay all personnel the benefits related to earnings in the current

or prior periods.

The pension scheme for the seagoing employees is a defined benefit

scheme. A defined benefit plan is a pension scheme in which the pension

benefit payable to the employee is defined in advance. The pension pay-

able will normally depend on a number of factors, including age, number

of years of service with the company and pay. Pension funds are valued

at fair value. Net liabilities relating to the defined benefit scheme are cal-

culated separately for each scheme by estimating the amount of future

benefits earned by the individual employee through work performed in

the year under review and in earlier periods. These future benefits are

discounted in order to calculate their present day value, and the fair value

of the pension funds is deducted in order to ascertain net liabilities. The

discount rate applied is the rate of interest on the balance sheet date

on high-quality government bonds with approximately the same term to

maturity as the Group’s liabilities. The schemes are based on a projected

unit credit method. When the benefit payable under a scheme is changed,

the share of the increase in the benefit that the employee has earned

the right to is recognised in the income statement in accordance with the

linear method over the remaining earning period. Costs are recognised in

the income statement immediately if the employee at the time of awarding

has already received an unconditional right to an increased benefit.

Actuarial gains and losses are recognised in the income statement

and distributed over the average remaining earnings period in so far as

they exceed 10 per cent of the higher of the present value of the defined

benefit pension liability and the fair value of the pension funds.

Actuarial gains and losses attributable to new information or changes in

actuarial assumptions are charged or credited to equity in other compre-

hensive income in the period in which they arise.

Liability is calculated for personnel who have retired and are part of the

AFP early retirement scheme.

Provisions

A provision is recorded when the Group has a legal or self-imposed obli-

gation resulting from an earlier occurrence, it is probable that a financial

settlement will take place as a consequence of this obligation and the size

of the amount can be measured reliably. When a provision in the accounts

is measured by applying the cash flows necessary to settle the obligation,

the amount recorded in the balance sheet is the present value of these

cash flows.

Restructuring provisions are recognised when the Group has approved

a detailed and formal restructuring plan and the restructuring has either

started or been publicised. The provision for restructuring comprise only

direct costs resulting from the restructuring, being amounts that are both

necessary to the restructuring and not part of the normal operations of the

unit.

contingent liabilities and assets

Contingent liabilities are not recorded in the annual financial statements.

Information is provided on material contingent liabilities, except in the case

of contingent liabilities where the probability of the liability arising is low.

A contingent asset will not be recorded in the annual financial statements,

but information will be provided if there is a probability that a benefit will

accrue to the Group.

Events after the reporting period

New information after the balance sheet date concerning the company’s

financial position on the balance sheet date is taken into account in the

annual financial statements. Events after the balance sheet date that do

not impact on the company’s financial position on the balance sheet date

but will affect the company’s financial position in the future are reported if

they are of material importance.

Financial instruments

Financial assets and financial liabilities are recognised in the Group

balance sheet when the Group becomes a party to the contractual condi-

tions applicable to the instrument. The Group’s financial instruments are

classified in the following three categories: fair value through the income

statement, lendings and receivables, and financial obligations at amortised

cost. Financial instruments that are long term in nature are recorded as

financial fixed assets and long-term liabilities.

Financial assets

Financial assets at fair value through the income statement are first

recognised in the balance sheet at fair value on the day on which the con-

tract is concluded and thereafter measured at fair value on each balance

sheet date. Any transaction expenses are recognised in the income state-

ment immediately. Trade receivables and other short term receivables are

first recognised at fair value and thereafter at amortised cost corrected for

any amounts written down. Current receivables due in less than 3 months

or receivables assessed as insignificant are not normally discounted.

Earned services that have not been invoiced are taken to income on the

balance sheet date and recorded as receivables.

Financial liabilities

Financial liabilities at fair value through the income statement are first rec-


22 23

owned by color group AS (parent company)Color Line AS Oslo -1 962 3 226 189 100 2 814 245Color Hotels AS Oslo 36 1 446 100 100Total direct ownership 2 814 345

companies owned indirectly Share capitalowned by color Line ASColor Line Cruises AS Oslo 430 520 100 Color Line Transport AS Oslo 414 142 100 Color Line Crew AS Oslo 3 033 100 Color Line Marine AS Sandefjord 2 250 100 Color Marine Verksted AS Sandefjord 4 000 100 Bergen Line AS Oslo 100 100 Norway Line AS Oslo 100 100 Color Scandi Line AS Oslo 100 100 Scandi Line AS Oslo 100 100

owned by color Line cruises ASColor Line GmbH Kiel 26 (EUR) 100 Terminalbygget AS Oslo 100 100 I/S Jahre Line Oslo 100

owned by color Line transport ASColor Hotel Skagen AS Skagen 5 700 (DKK) 100 Color Line Danmark AS Hirtshals 5 000 (DKK) 100 Hirtshals Skipsproviantering AS Hirtshals 500 (DKK) 100 Larvikterminalen AS Oslo 100 100

Amounts in TNOK

Equity Stake31.12.2011

Book value in balance sheetResult 2011Registered

office

notE 6 RELAtEd PARtIESColor Group AS is owned by ONS Invest II, a company owned 100 per cent by

Olav Nils Sunde and his family through the limited company O.N. Sunde AS.

All the companies in the O.N. Sunde Group and its owners are related parties.

Related parties also include directors, the Group President and the CEOs of

the various business areas.

Transactions between related parties are recorded in specific accounts in

the financial statements.

notE 5 SuBSIdIARY coMPAnIESThe Group comprises the parent company, Color Group AS and the following directly and indirectly owned subsidiaries


December 2005. The ESA’s decision relates solely to historical conditions

in the port of Strømstad and has no implications for current operations on

the Sandefjord to Strømstad route. A provision has been expensed in the

amount of NOK 150.2 million and is recorded under Other exceptional items.

notE 3 SEgMEnt REPoRtIngPurchases and sales of services within the Group are conducted on the

arm’s length principle. The Group’s also conducts operations outside

Norway. Internal income statements and balance sheets based on

geographical division are not compiled.

The Group’s main business areas

The business area Cruise is legally organised in Color Line Cruises AS, which

markets and sells cruises, conference travel and hotel packages for indi-

viduals and groups/organisations between Norway and Germany. Freight

operations are also conducted. The business area Transport is legally or-

ganised in Color Line Transport AS, which markets and sells cost-effective

transport services between Norway, Sweden and Denmark for individuals,

groups and organisations. In addition to the sale of travel and hotel pack-

ages, freight business is also conducted.

notE 4 uncERtAIn EStIMAtESThe estimates that form the basis for items in the income statement and

balance sheet have been subject to appraisal. The estimates are based

on assumptions obtained from external sources such as the Norwegian

Accounting Standards Board and the capital market. Estimates are also

based on the company’s long term-forecast submitted in connection with

the annual budgeting process, in addition to the past experience of the

company. Changes in accounting estimates are entered in the income state-

ment during the period in which the estimates are changed. Fair values

may deviate from these estimates. Estimates and assumptions are based

on continued operation as a going concern.

Leasing costs

Leasing costs presented on a separate line in the income statement are

Pension liabilities

The calculation of pension liabilities is based on a number of financial

conditions, as will be seen in the note showing the calculation. The cal-

culations have been carried out by an external actuary and are based on

actuarial assumptions, which in turn are based on guidelines issued by the

Norwegian Accounting Standards Board containing calculation assump-

tions for defined benefit pension schemes in accordance with IAS 19. Other

assumptions are in part based on market conditions. These asumptions are

appraised by management and in their best estimate are considered to be

reasonable. Any change in these assumptions will have an effect on future

profits/losses.

Goodwill

Goodwill is based on the assumption that discounted future cash flows are

sufficient to cover the present day value of goodwill. Uncertainty attaches

to these cash flows. A change in conditions and estimated future cash

flows will alter the present day value of the cash flows. Such changes could

evaluated as operational in accordance with the IAS guidelines. The

management has evaluated the lease situation in relation to the M/S

SuperSpeed2 vessel and in their best estimate have determined that the

relevant criteria applicable to operational leases have been fulfilled.

Depreciation

Depreciation of operating equipment is based upon the anticipated life

of the asset. The ships represent the highest-value operating equipment.

Ships are classified into their component parts and these depreciated at

different rates, as the lifetime of the individual components of a ship will

vary. Changes in investment decisions, market conditions and technologi-

cal development may impact on the depreciation period. This appraisal is

performed at the end of each year. In the opinion of management, grounds

do not exist for changing the depreciation periods.

necessitate the writing-down of goodwill. The annual cash flows on which

the calculation is based are built on the long-term forecasts for the compa-

ny presented in connection with the annual budgeting process. Estimated

interest levels in the calculation are based on those available in the market.

See also Note 9.

Vendor’s credit

The Group has outstanding vendor’s credit from the sale of vessel in 2008.

The remaining amounts are assessed annually in relation to possible losses.

Evaluations have not revealed any requirement for write-downs in 2010.

Other exceptional items

In accordance the ESA decision as per December 2011, the Company has

charged to expenses EUR 18.8 million. With reference to further information

in Note 2. It is the managements decision that the charged amount is tax

deductable.

Key figures from the business divisionsAmounts in TNOK

Group2010

Group2011

Cruise2010

Cruise2011

Transport2010

Transport2011

Operating revenues 2 141 632 2 443 914 4 585 546 2 064 851 2 444 062 4 508 912

Operating expenses -1 635 284 -2 030 236 -3 665 520 -1 629 497 -1 910 304 -3 539 800

Sales of non-current assets/restructuring 0 0

Ordinary depreciation and amortisation -230 280 -112 889 -343 169 -212 438 -86 900 -299 337

Other exceptional items -150 222 -150 222

Charter hire, leasing expenses -5 547 -112 729 -118 276 -7 016 -115 552 -122 568

taxes/segment profit 270 521 37 838 308 359 215 901 331 307 547 207

Net financial expenses -229 925 -81 279

Pre-tax income 78 434 465 928

Tax expenses -23 066 -128 724


Segment assets 4 507 778 1 798 221 6 305 999 4 757 418 1 975 653 6 733 071

Non-allocated assets 2 981 016 2 916 221

Total consolidated assets 9 287 015 9 649 292

Segment liabilities 2 912 646 505 754 3 418 400 3 219 995 1 152 535 4 372 530

Non-allocated liabilities 3 808 488 2 878 267

Total consolidated liabilities 7 226 888 7 250 797

Investments during the period (gross) 16 566 152 008 168 574 15 269 27 991 43 260

Non-allocated investments 464 419 112 432

Total consolidated investments 632 993 155 692

24 25

notE 8 PRoPERtY, PLAnt And EQuIPMEnt, ASSEtS HELd FoR SALE

Borrowing costs are capitalised with the associated asset and written off over the estimated lifetime of the equipment.

Construction work in progress in 2010 relates mainly to the new booking and Internet platform. This system was commissioned in 2011 and the investment has been transferred from construction work in progress to internally developed software development costs as an intangible asset, see Note 9.

Property on leased land is depreciated over the term of the lease.

Amounts in TNOK

TotalEquipmentInvestments in leased ships

Land, buildings and other real estate

Construction work in progressShips

Procurement cost

Procurement cost as at 1 Jan. 2010 6 825 255 6 176 328 094 1 105 597 273 454 8 538 576

Additions 25 782 8 384 7 531 9 490 104 658 155 845

Disposals -153 0 -6 408 -432 0 -6 993

Translation difference 0 0 -3 179 -18 256 0 -21 435

Procurement cost as at 31 Dec. 2010 6 850 884 14 560 326 038 1 096 399 378 112 8 665 993

Procurement cost as at 1 Jan. 2011 6 850 884 14 560 326 038 1 096 399 378 112 8 665 993

Additions 148 242 3 792 21 523 11 071 98 394 283 022

Disposals 0 0 -4 765 -541 -476 506 -481 812

Translation costs 0 0 -68 -3 0 -71

Procurement cost as at 31 Dec. 2011 6 999 126 18 352 342 728 1 106 926 0 8 467 132

Accumulated depreciation and write-downs

Depreciation and write-downs as at 1 Jan. 2010 1 097 456 263 268 969 407 088 0 1 773 776

Depreciation for the year 239 423 1 839 15 794 42 281 0 299 337

Disposals 0 0 -6 408 -432 0 -6 840

Translation difference 0 0 -1 680 -6 076 0 -7 756

Depreciation and write-downs as at 31 Dec. 2010 1 336 879 2 102 276 675 442 861 0 2 058 517

Depreciation and write-downs as at 1 Jan. 2011 1 336 879 2 102 276 675 442 861 0 2 058 517

Depreciation for the year 278 267 2 109 11 661 41 305 0 333 342

Disposals 0 0 -4 551 -541 0 -5 092

Translation difference 0 0 -59 36 0 -23

Depreciation and write-downs as at 31 Dec. 2011 1 615 146 4 211 283 726 483 661 0 2 386 744

Balance sheet values

As at December 2009 5 727 799 5 913 59 125 698 509 273 454 6 764 800

As at December 2010 5 514 005 12 458 49 363 653 538 378 112 6 607 476

As at December 2011 5 383 980 14 141 59 002 623 265 0 6 080 388

Depreciation method All capital acquisitions are depreciated according to the straight-line method over the estimated life.

Depreciation rates 2,85-20% 10-20% 10-20% 5-20%

The Group buys and sells foreign currency based on anticipated income and expenses in the respective currencies. From and including 2010, the result of this trading is attributed to the relevant income statement item. Unrealised changes in value are presented under financial items.

Some of the bunker fuel consumption of the ships is hedged. The contracts are hedged in the accounts in that unrealised effects are temporarily charged to other income and expenses are charged to the income statement in the same period as the hedged volume is included in cost of sales. The effect is recorded as a reduction in bunker costs.

Cost of technical operation 246 241

Other operating expenses on board 206 191

Other operating expenses ashore etc. 378 337

Total 830 769

Total other operating expenses comprises the following items:Amounts in MNOK

2011 2010


Receivables from related parties relate largely to loans on which interest is calculated. The receivables are not hedged.

No loans have been granted to any member of the Group management. There are no balances outstanding with any member of the Group management.

Outstanding balances between the parent company and companies in the Group relate largely to loan funding granted by the parent to subsidiary companies. Interest is calculated on this debt.

The subsidiary company Color Line AS pays royalties to the parent company. This is recognised as income by the parent company in the amount of NOK 135.5 million (NOK 133.8 million in 2010).

No provision was made for losses on loans to related parties in 2011 or 2010.

Color Hotels AS 0 0 -1 417 -1 403

Color Line AS 3 069 886 3 342 422 0 0

Color Line Danmark AS 269 657 40 040 0 0

Color Hotel Skagen AS 27 260 26 086 0 0

Total 3 366 803 3 408 548 -1 417 -1 403

Amounts in TNOK

Liabilities 2010Liabilities 2011Receivables 2010Receivables 2011

Passenger revenues 3 911 3 909

Freight revenues 433 414

Other 241 186

Total 4 585 4 509

notE 7 IncoME And EXPEnSESTotal operating income comprises the following items:

Intercompany accounts between the parent company and companies in the Group:

Amounts in MNOK

2011 2010

O.N. Sunde AS 253 450 319 343 265 000 265 000 0 0

ONS Invest II AS 0 0 0 0 0 0

Companies controlled by O.N. Sunde AS 0 0 0 262 0 262

Total 253 450 319 343 265 000 265 262 0 262

Amounts in TNOK

20102011LiabilitiesLong term receivableCurrent receivable

20102010 20112011Balance sheet

Related-party transactions with the Group:

The company purchases clothing for retail sales from Voice Norge AS at market prices. This company is part of the O.N. Sunde Group.

M/S SuperSpeed2 is owned by Oslo Line AS, which in turn is owned by O.N. Sunde AS. The company charters the ship from Oslo Line AS at an annual rate based on commercial principles equivalent to the level that could be achieved on an equivalent market.

The external financing of all companies in the Group is mainly handled by Color Group AS. The company then lends to other companies in the Group. Interest on intercompany accounts is calculated at a rate equivalent to the rate that Color Group AS pays for external loans.

O.N. Sunde AS 0 0 0 0 36 124 36 845

ONS Invest II AS 0 0 0 0 0 0

Companies controlled by O.N. Sunde AS 21 463 23 531 107 182 108 536 0 631

Total 21 463 23 531 107 182 108 536 36 124 37 476

Amounts in TNOK

20102011Interest earnedCost of leasing shipsPurchases of goods

20102010Profit 20112011

Related-party transactions with the Group:

26 27

non-current loans

Mortgages 3 281 921 3 610 553 3 004 306 3 360 544

Bond loans (listed on the Oslo Stock Exchange) 2 119 500 1 927 733 1 880 000 1 851 233

Total interest bearing long term liabilities 5 401 421 5 538 286 4 884 306 5 211 777

current liabilities

Current portion of mortgage debt 0 0 403 134 389 500

Redeemed bond loan 0 0 239 500 76 500

Total interest-bearing current liabilities 0 0 642 634 466 000

Total interest-bearing liabilities 5 401 421 5 538 286 5 526 940 5 677 777

notE 13 non-cuRREnt IntERESt-BEARIng LIABILItIES, MoRtgAgES And guARAntEES Amounts in TNOK

20102011 20112010GroupParent Company

In its loan agreements the Group has liabilities linked to liquidity, equity and debt servicing degree. All liabilities have been fulfilled as at 31 December 2011.

Cost price 1 Jan. 444 677

Additions in the year 0

Disposals in the year 0

Cost price 31 Dec. 444 677

Acc. depreciation 1 Jan. 313 916

Ordinary depreciation in the year 22 034

Disposals in the year 0

Acc. depreciation 31 Dec. 335 950

Book value 31 Dec. 108 727

Depreciation rate 5 %

notE 10 PRoPERtY, PLAnt And EQuIPMEnt, coLoR gRouP AS Amounts in TNOK

Goodwill/Intangible assets

Goodwill is related to the acquisition of ferry business. Goodwill is amortised over the estimated economic life. An amortisation period of 20 years is in line with the conditions that formed the basis for the valuation performed when the business was aquired.

Vendor’s credit, sale of vessel 77 424 86 926

Accounts receivable from Group companies 265 000 265 000

CIRR fixed interest contract 26 680 51 042

Pension funds 0 -1 713

Ålesund Stadium 25 430 25 430

Other receivables 448 449

Total 394 982 427 134

Inventory held for resale 123 544 120 228

Consumables 10 136 17 656

Bunker fuel 13 659 12 237

Total 147 339 150 121

notE 11 non-cuRREnt REcEIVABLES And InVEStMEntS

notE 12 InVEntoRIESInventories comprise the following types of goods:

Amounts in TNOK

Amounts in TNOK

2011

2011

2010

2010

industry, including competition from other players in the industry. There

is nothing to indicate that developments should be anything but stable in

the years ahead, although there is uncertainty with regard to estimated

future earnings.

The testing of the value of the software does not reveal any need to

write down the software recorded in the balance sheet. Sensitivity calcula-

tions show that reasonable fluctuations in the conditions on which testing

is based, do not provide grounds for altering the conclusion.


Procurement cost Procurement cost as at 1 Jan. 2010 671 301 0 671 301Additions 0 0 0Disposals 0 0 0Translation difference 0 0 0Procurement cost as at 31 Dec. 2010 671 301 0 671 301 Procurement cost as at 1 Jan. 2011 671 301 0 671 301Additions 0 476 506 476 506Disposals 0 0 0Translation costs 0 0 0Procurement cost as at 31 Dec. 2011 671 301 476 506 1 147 807 Accumulated amortisation and write-downs Amortisation and write-downs as at 1 Jan. 2010 0 0 0Amortisation for the year 0 0 0Disposals 0 0 0Translation difference 0 0 0Amortisation and write-downs as at 31 Dec. 2010 0 0 0 Amortisation and write-downs as at 1 Jan. 2011 0 0 0Amortisation for the year 0 9 827 9 827Disposals 0 0 0Translation difference 0 0 0Amortisation and write-downs as at 31 Dec. 2011 0 9 827 9 827 Balance sheet values As at December 2009 671 301 0 0As at December 2010 671 301 0 671 301As at December 2011 671 301 466 679 1 137 980

notE 9 IntAngIBLE ASSEtS Amounts in TNOK

Software and licences

Goodwill and other intangible assets Total

Goodwill

All goodwill is acquired through purchases and has been of strategic

importance in retaining and strengthening the market positions of the

Group. Goodwill is attributed to the Transport segment which encompasses

the Sandefjord – Strømstad service, the Larvik – Hirtshals service and the

Kristiansand – Hirtshals service.

Goodwill is tested for impairment below book value. Testing is based

on future cash flows after tax for the next 5 years, with a terminal value

thereafter based on a growth rate of 2 per cent, which is considered to be

reasonable relative to anticipated future growth levels in the travel and

tourism industry. Future cash flows are based on the Group’s long-term

forecast as presented in connection with the annual budgeting process.

These are based on moderate growth in sales and contribution margin over

the coming years.

The present value of future earnings is based on a discount rate after

tax of 6.74 per cent. This discount rate is based on 10 year government

bonds and the official market premium. Return on equity is equivalent to

the Group’s required rate of return.

The Group is exposed to changes in the travel and tourism industry,

including competition from other players in the industry. There is noth-

ing to indicate that developments should be anything but stable in the

years ahead, although there is uncertainty with regard to estimated future

earnings.

The testing of the value of goodwill does not reveal any need to write

down goodwill. Sensitivity calculations show that reasonable fluctuations

in the conditions on which testing is based, do not provide grounds for

altering the conclusion.

Software

The software relates to the development of the booking and Internet

platform, which was commissioned in 2011. In 2011, the investment was

transferred from construction work in progress as an operating asset to

software as an intangible asset.

The software is essential to the entire Group and is accordingly

attributed to the Group as a whole.

The value of the software recorded in the balance sheet is tested for

impairment below book value. Testing is based on future cash flows

after tax for the next 5 years, with a terminal value thereafter based on a

growth rate of 2 per cent, which is considered to be reasonable relative to

anticipated future growth levels in the travel and tourism industry. Future

cash flows are based on the Group’s long-term forecast as presented in

connection with the annual budgeting process. These are based on

moderate growth in sales and contribution margin over the coming years.

The present value of future earnings is based on a discount rate after

tax of 6.74 per cent. This discount rate is based on 10 year government

bonds and the official market premium. Return on equity is equivalent to

the Group’s required rate of return.

The Group is exposed to changes in the travel and tourism

28 29

notE 17 FInAncIAL RISK And uSE oF FInAncIAL InStRuMEntS

the group’s risk management policy

The main financial risks in the Group concern bunker fuel, foreign currency,

interest rate, and liquidity risk/refinancing risk. The Group monitors

the individual areas on an ongoing basis in order to bring to light any

current and future risk. It is the Group’s policy to refrain from active

speculation in financial risks, but to use financial derivatives as a buffer

against risks connected with financial exposure in the operation and

financing of the Group’s business. On an ongoing basis an overview is

prepared of hedging instruments in place. The Board and the company’s

audit committee are also furnished with regular overviews of hedging

instruments and estimated future risks.

Market risk

The Group’s market risk is mainly connected with changes in foreign

exchange rates, interest rates and the cost of bunker.

Currency risk

Income in foreign currencies and the cost of goods and services are not

neutral in the individual currency. Wherever possible, this risk is reduced.

Currency risk arises when there are differences between income received

and expenses paid in different currencies, particularly USD, EUR and DKK

and in relation to investments/purchase of non-current assets and repay-

ment of loans in foreign currency. The Group has active measures in place to

reduce currency risk by using foreign currency netting and multi-currency

loans. In a normal situation it is the Group’s policy to cover a significant

portion of its current currency risk 6 to 12 months ahead by means of

forward contracts, options, swaps and structured products.

Taking into account concluded currency contracts and foreign currency

holdings as at 31 December 2011, the Group is in a more or less currency

neutral position with regard to operating revenues and expenses in EUR

and DKK. A change in the exchange rate between EUR and NOK of +/- 10 per

cent in relation to the Group’s currency loans would affect profits (foreign

exchange gain/loss) by approx. +/- NOK 83 million before tax. A change in

the exchange rate between USD and NOK of +/- 10 per cent, would affect

profits by approx. +/- NOK 48 million before tax, before effects of currency

derivative contracts. Profits would also be affected by the change in value

of hedging contracts.

In 2011, currency contracts were realised in EUR, USD and DKK related

to current income and costs within the Group. These contracts are largely

related to day-to-day operations, and foreign exchange gains/losses on

settlement are attributed to the respective items in the income statement.

As at year-end, hedging contracts in place cover parts of total exposure

for the coming year, and mainly consist of option and forward contracts

with delivery in 2012.

Interest rate risk

The Group’s primary exposure to interest rate risk is through its loan port-

folio. The purpose of managing interest rate risk is that changes in the in-

terest rate level over time can have a negative effect on profits. The Group

has concluded interest rate swap agreements in order to achieve the de-

sired ratio between fixed and floating rates of interest. At year-end 2011,

The Group buys and sells foreign currency based on anticipated income and expenses in the respective currencies. The realised effect of this trading is entered under operations together with the relevant income statement items in the accounts while the non-realised effects are presented as a financial item. See Note 7.

Interest costs, bank loans -106 060 -108 707 -110 866 -113 755

Interest costs, bond loans -132 711 -74 959 -132 711 -74 959

Other interest costs -371 0 -19 938 0

Total interest costs -239 142 -183 666 -263 515 -188 714

Change in value, financial derivatives -24 362 -28 942 0 0

Loss financial instruments at fair value in income statement -19 209 -2 996 0 -2 996

Unrealised foreign exchange loss 0 -1 026 0 0

Losses on shares 0 0 0 0

Borrowing costs -21 161 -13 183 -19 718 -13 183

Writing down, loans 0 0 0 0

Foreign exchange loss -4 573 0 0 0

Total financial expenses -308 076 -229 813 -283 233 -204 893

Interest earned, liquidity 0 4 960 0 528

Interest earned, accounts receivable 44 661 44 648 197 523 202 083

Total interest earned 44 661 49 608 197 523 202 611

Gain financial instruments at fair value through income statement 27 775 7 578 1 346 1 828

Unrealised foreign exchange gain 4 630 57 622 4 630 57 171

Gains on shares 1 456 19 950 1 456 19 950

Foreign exchange gain 0 13 776 2 654 6 258

Total financial income 78 522 148 534 207 609 287 818

Total financial items -229 925 -81 279 -75 624 82 925

notE 16 nEt FInAncIAL EXPEnSES Amounts in TNOK

20102010 20112011Parent CompanyGroup


Future minimum hire liabilities

Ships NOK 81 694 316 002 386 386 784 082

Ships EUR 2 885 10 978 14 680 28 543

ICT equipment NOK 8 317 15 674 - 23 991

Other 2 203 4 686 - 6 889

Amounts in TNOK

over 5 years1 yearCurrency Total2-5 years

Mortgage loans are secured by means of mortgages on ships and other assets. Mortgages are also granted in leases on terminal areas, and negative

pledges are granted on ships. Color Group AS has concluded a framework agreement for guarantee of the Group’s tax withholdings in the amount of NOK

60 million. In addition, the Group has pledged approx. NOK 80 million to travel guarantee funds, in addition to other guaranties for subsidiary companies

totalling approx. 52 million.

Interest rate terms on all loans and credits are fixed in accordance with NIBOR with the addition of an agreed margin. At year-end 2011, interest rates were on average:Mortgage loans: 3.17 per cent. Bond debt: 7.58 per cent

A 12 year operational leasing contract has been concluded between Oslo Line AS and Color Line Transport AS, guaranteed by Color Group AS.

Book value (Group) of assets pledged as security (ships, buildings, etc.) 6 080 388 6 607 476

Amounts in TNOK

2011 2010

Trade payables 213 142 191 804

Unpaid government charges and special taxes 71 498 75 937

Pre-paid income 120 019 120 992

Accrued interest 33 854 31 984

Accrued wage costs 62 336 62 804

Sundry current liabilities 248 500 142 529

Total 749 349 626 050

Other financial liabilities

Bunker hedging 1 085

Total 1 085 0

notE 14 tRAdE PAYABLES And otHER cuRREnt LIABILItIESAmounts in TNOK

2011 2010

Charter hire 107 182 108 536

Hire of ICT equipment 8 592 11 634

Other 2 502 2 398

Total charter hire, leasing liabilities 118 276 122 568

Lease of terminals and queuing areas 16 484 17 397

Total lease liabilities 134 760 139 965

notE 15 LEASES Amounts in TNOK

2011 2010

The company has concluded a lease for the hire of the M/S SuperSpeed2 for a period of 12 years commencing in 2008. The annual lease amount totals NOK 82.3 million plus EUR 3.2 million. The lease amount is reduced every 6 months by 3.92 per cent of NOK 25 million and of EUR 1.3 million. After 6 years the lease amount is increased by NOK 11.6 million and by EUR 0.6 million p.a. Thereafter the lease payment is to be reduced every 6 months by 4.17 per cent. Other leases are mainly for ICT equipment and other equipment for terms of 3 to 5 years.

The Group has current contracts of lease with the local port authorities in regular ports of call. These contracts comprise leases on land, buildings, spaces and berths for the ships. The provisions of the leases are in part fixed, in part variable, based on the number of calls, passengers and vehicles. The company owns the terminal buildings in Oslo, Larvik, Hirtshals and Strømstad.

Operational framework agreements have been concluded for the lease of IT equipment, vehicles and other equipment.

30 31

GroupParent Company

Debt 5 526 940 5 677 777

Net liquid assets 1 009 317 1 042 777

Net debt 4 517 623 4 635 000

Equity 2 060 127 2 398 495

Debt-to-equity ratio 2,19 1,93

debt-to-equity ratio Amounts in TNOK

2011 2010

Measuring the fair value of financial assets and liabilities

The fair value of forward contracts is determined by applying the forward

exchange rates on the balance sheet date. The fair value of currency swap

agreements is calculated by determining the present value of future

cash flows. The fair value of interest rate swap contracts is calculated by

discounting the cash flows in the contracts by the zero-coupon rates from

the yield curve for the relevant currency. The fair values of the aforemen-

tioned instruments are calculated by the company’s external banks.

The balance sheet value of cash in hand and credit lines is equal to

Shares

Shares recorded in the balance sheet are readily negotiable listed shares.

The value of the shares on the balance sheet date is not considered to

represent a critical risk.

Capital management

An important objective is to secure financial freedom of action in both

the fair value. Similarly, the balance sheet value of trade receivables and

accounts payable is more or less equal to fair value, since these are con-

cluded on normal terms at short maturity.The bond loans are listed on the

stock exchange and are subject to a floating rate of interest that falls due

quarterly. The fair value of bond loans is the stock exchange price quoted

at year-end. The fair value of non-current bank loans is the company’s valu-

ation of any added costs for refinancing at year-end, discounted at 5 per

cent p.a. and taking due account of average maturities.

the short and the long term and to maintain a good credit rating enabling

favourable loan conditions to be achieved that are reasonable in relation to

our business. The company manages its capital structure, making whatever

changes are required on the basis of ongoing evaluation of the financial

conditions under which the business operates. The company’s capital

structure is monitored by calculating the debt-to-equity ratio.

Less than 1 year 495 116 399 556 511 092 399 556

1 - 2 years 476 722 142 573 492 319 142 573

2 - 3 years 442 520 642 573 457 736 642 573

3 - 4 years 431 015 1 004 655 445 851 1 004 655

5 years and longer 1 876 039 548 253 1 960 310 516 402

Total 3 721 412 2 737 610 3 867 308 2 705 759

Amounts in TNOK

MortgagesMortgages Bond loansBond loans

The following table shows the total liquidity flows in the years ahead for coverage of instalments and interest

on non-current financing contracts in the form of non-current bank loans and bond loans.


the company had nine swap agreements with a total nominal value of NOK

3 702 million with an average remaining term of approx. 2.7 years at an

average interest rate of approx. 3.3 per cent. Furthermore a CIRR fixed-rate

agreement was concluded with Finnish Export Credit in connection with

the delivery of M/S Color Magic in 2007 in the amount of NOK 1 404 million

(adjusted in accordance with contractual instalments) of which 50 per cent

is fixed at 4.2 per cent + margin and 50 per cent is swapped to a float-

ing rate of interest, six month NIBOR less 1.315 per cent p.a. for 11 years. A

further CIRR fixed- rate contract was also concluded with Finnish Export

Credit in connection with the delivery of M/S SuperSpeed1 in 2008, for NOK

460 million at 3.91 per cent and EUR 26 million at 3.55 per cent. These have

been swapped in their entirety to a floating rate of interest, 6 month NIBOR

less 1.115 per cent and EURIBOR less 0.49 per cent p.a. for 12 years. Total

interest-bearing debt is NOK 5 527 million. Fixed-interest-rate derivatives

have been concluded for a total net amount of NOK 3 702 million repre-

senting approx. 67 per cent of total interest-bearing debt as at 31 Dec. 2011.

A change in the interest rate level of +/- 1 per cent would affect profits

by approx. +/- NOK 18 million before tax, account being taken of interest

rate hedging contracts in place. In addition, profits would be affected by

changes in the value of hedging contracts, and interest earned on cash

holdings.

Interest rate sensitivity

The table below quantifies future interest rate risk, taking into account cash in hand/bank deposits, structure of maturity of mortgages, bond loans and

interest rate swaps. The figures are based on commitments recorded in the balance sheet as at 31 December 2011.

Mortgage loans 3 004 306 2 607 173 2 232 040 1 856 907Unsecured bond loans 1 880 000 1 880 000 1 380 000 480 000Total debt to credit institutions 4 884 306 4 487 173 3 612 040 2 336 907 Cash in hand/bank deposits 1 009 255 1 009 255 1 009 255 1 009 255Net interest rate swaps 2 114 185 776 370 688 555 262 925 Net interest-bearing debt after interest rate swaps 1 760 866 2 701 548 1 914 230 1 064 727

Interest rate sensitivity at +/- 1% change 17 609 27 015 19 142 10 647

Amounts in TNOK

3-4 yearsLess than 1 year 5 years and over1-2 years

Bunker risk

The cost of bunker fuel accounted for some 13 per cent of the Group’s

operating expenses in 2011, and represents an operational risk as a

consquence of fluctuations in the price of oil. As at 31 December 2011, the

Group had bunker hedging contracts in place for approx. 35 per cent of

estimated consumption in 2012, more for the first quarter than for the

remainder of the year. The hedging contracts are based on the actual

physical product consumed by the ships and reflect an oil price (Brent per

barrel) of approx. USD 100-105. The bunker hedging contracts in force at

year-end had no impact on profits. The fair value of hedging contracts in

force as at 31 December 2011 is NOK -1.1 million. All hedging contracts for

bunker fuel expire in 2012, and will impact on profits in the coming year.

Changes in the market value of the remaining bunker contracts will not

impact on profits, but will impact on equity.

With a change in the price of bunker fuel of +/- 10 per cent, the hedging

contracts concluded would reduce profits by +/-NOK 25 million before tax.

The effect on profits associated with hedging contracts is recorded in the

accounts in accordance with hedge accounting principles and will amount

to a total of NOK 59.5 million for 2011. Hedging has not given rise to shown

inefficiencies in 2010 or 2011.

Liquidity risk

Liquidity risk is the risk of the Group being unable to fulfil its financial

liabilities as and when they fall due. The Group focuses on main-

taining a level of liquidity contingency that, as a minimum, will cover a peak

load event. Liquidity contingency is managed at Group level and 12-month

budgets are prepared and monitored on a weekly basis. Liquidity avail-

able as at 31 December 2011 is NOK 1 631 million (including undrawn credit

lines). Surplus liquidity is placed primarily on the short-term money market.

Reference is also made to the table under “Measuring the fair value of

financial assets and commitments” for a maturity analysis showing future

instalments and interest on interest-bearing debt.

Credit risk

The Group’s financial assets mainly consist of receivables from sales, other

receivables, liquid resources and financial instruments. These receivables

represent the Group’s maximum exposure and credit risk related to finan-

cial assets.

The figure for trade receivables recorded in the balance sheet is net

after provisions for potential losses, based on past experience and an

evaluation of the present-day situation. Most of the company’s trade

receivables fall due for payment within 3 months. The credit risk related to

financial derivatives is regarded as low, as the agreements on these assets

have been concluded with highly creditworthy banks, thus reducing the risk

that the counterparty will be unable to fulfil its liabilities.

Trade receivables 113 472 104 187Write-down for anticipated loss -4 573 -4 631Net trade receivables 108 899 99 556 Pre-paid property, plant and equipment 0 72 862Inter-company receivables 253 450 319 343Misc. current receivables 98 618 104 703 Trade receivables and other accounts receivable 460 967 596 464 Bunker contracts 0 17 141Currency derivatives 12 970 5 750 Other financial receivables 12 970 22 891

Exposure to credit risk: trade receivables/other current assets Amounts in TNOK

2011 2010

32 33

Employee benefit expenses

Wages 905 854 866 746

Employers’ tax 167 221 159 996

Pension costs 66 777 66 152

Other benefits 145 984 137 856

Total 1 285 836 1 230 750

Man-years 2 490 2 446

notE 18 coSt oF WAgESgroup Amounts in TNOK

2011 2010

Refunds of income tax, national insurance contributions and Employers’ tax for mariners totalled NOK 211 million in 2011 and is reported as a reduction in crew costs (pay). Of this, the Group contributed NOK 9.3 million to Stiftelsen Norsk Maritim Kompetanse (Norwegian Maritime Competence Foundation). The corresponding figures for 2010 were NOK 204 million and NOK 9 million.

Employee benefit expenses

Wages 6 309 6 060


Pension costs 0 69

Other benefits -68 -58

Total 7 955 7 717

Man-years 3 3

Parent company (color group)

Assets and liabilities measured at fair value as at 31 december 2010

Amounts in TNOK

2011 2010

Financial assets at fair value

Market-based shares 35 257 35 257

Currency swaps 5 750 5 750

Bunker derivatives 17 141 17 141

Total 52 398 5 750 0 58 148

Financial liabilities at fair value

Interest rate swaps 18 478 18 478

Total 0 18 478 0 18 478

Amounts in TNOK

Level 3Level 1 TotalLevel 2


Financial assets

Loans and accounts receivable

Bank deposits/cash 1 052 493 1 138 648

Trade receivables 108 899 99 556

Other current receivables 352 068 496 908

Total loans and receivables 1 513 460 1 735 112

Hedge accounting

Bunker swaps 0 17 141

Total hedge accounting 0 17 141

Financial assets at fair value through income statement

Short-term share investments 0 35 257

Interest rate swaps 0 51 042

Currency derivatives 12 970 5 750

Total financial assets at fair value through income statement 12 970 92 049

Financial liabilities

Financial liabilities at amortised cost

Trade payables and other current liabilities 749 349 626 050

Bank loans 3 407 440 3 750 044

Bond loans 2 119 500 1 927 733

Total financial liabilities at amortised cost 6 276 289 6 303 827

Financial liabilities at fair value through income statement


Contracts, currency derivatives - -

Bunker derivatives 1 085 -

Total financial liabilities at fair value through income statement 18 217 18 478

overview of financial assets and liabilities classified by measurement categoriesAmounts in TNOK

20102011

Assets and liabilities measured at fair value as at 31 december 2011

Balance sheet items valued at fair valueThe table below show financial assets and liabilities at fair value by valuation method. The various levels are defined as follows:

Level 1 values are taken from traded prices in a market a corresponding level of activity.Level 2 values are taken from others, but not from an active market with appurtenant traded prices.Level 3 values are calculated following a valuation of assets and commitments that are not based on known market data.

Financial assets at fair value

Market-based shares 0 0

Currency swaps 12 970 12 970

Bunker derivatives 0 0

Total 0 12 970 0 12 970

Financial liabilities at fair value


Bunker derivatives 1 085 1 085

Total 1 085 17 132 0 18 217

Amounts in TNOK

Level 3Level 1 TotalLevel 2

Balance sheet value and fair value of non-current loans

Mortgages 3 004 306 3 360 544 2 863 653 3 194 162

Bond loans 1 880 000 1 851 233 1 878 126 1 848 233

Total 4 884 306 5 211 777 4 741 779 5 042 395

* The basis for the fair value of bond loans is the market price quoted at yearend and the fair value of mortgages is the company’s valuation of any additional expenses for re-financing at year-end discounted at 5 per cent p.a. and taking due account of average maturities.

Amounts in TNOK

20102010 20112011Fair value*Balance sheet value

Balance sheet value of the group’s interest-bearing debt to credit institutions in various currencies

NOK 4 569 590 4 627 053 4 590 493 4 652 610

EUR 831 831 911 233 831 831 911 232

DKK - 104 616 113 936

Total 5 401 421 5 538 286 5 526 940 5 677 777

Amounts in TNOK


34 35

notE 22 EQuItY, PAREnt coMPAnY

Equity 1 Jan. 2010 143 600 1 478 436 652 008 2 274 044


Group contribution -271 019 -271 019

Equity 31 Dec. 2010 143 600 1 478 436 515 025 2 137 061

Equity 1 Jan. 2010 143 600 1 478 436 515 025 2 137 061


Group contribution -360 452 -360 452

Equity 31 Dec. 2011 143 600 1 478 436 172 188 1 794 224

Amounts in TNOK

Other equity Share capital TotalPremium fund

The parent company, Color Group AS has a defined contribution pension

scheme. TNOK 38 was paid into this scheme in 2011 (TNOK 69 in 2010). The

pension schemes fulfil the statutory requirements applicable to service

pension schemes.

notE 21 SHARE cAPItALThe share capital comprises 71 800 000 shares of NOK 2.00 each, total TNOK

143 600. All shares carry equal rights. ONS Invest II AS owns all the shares

of Color Group AS. All the shares of ONS Invest II AS are owned indirectly by

Director and Group President Olav Nils Sunde and his family.


guidelines for remuneration to senior executives 2011Remuneration to senior executives in the Group is to be based on the following main principles:

The principle governing basic salaryPersons in executive positions shall receive a competitive basic salary based on the position, responsibilities, competence and performance of the individual executive.

The principle governing variable benefits, incentive schemes etcExecutives may receive a variable salary. This shall serve as an incentive, aimed at profit orientation. A variable salary is based on the achievement of targets by the Group, division or company in which the executive is employed.

The principle governing non-cash benefitsExecutives may be offered various benefits, such as company car schemes, insurance, pensions and similar. Benefits in kind shall primarily be in the form of home telephone, mobile telephone and newspaper – items that can improve the availability of the executive to the company.

Post-termination salary schemeThe Group President of Color Line, Trond Kleivdal will, in the event of ter-mination that is not covered by the provisions of the Working Environment Act, receive three years’ salary, equivalent to NOK 9.4 million.

Information on the preparation and decision-making processSalary terms for the Chief Executive Officer are reviewed by the Board on an annual basis. The Board prepares annual guidelines and a statement is submitted to the General Meeting for discussion pursuant to the provisions of Section 5-6 of the Public Limited Companies Act (Norway).

Report concerning the policy for the remuneration of executives in 2011The guidelines governing executive salaries as described above were followed during this past financial year. Remuneration paid to senior

executives is charged to the company as an expense and has no other direct consequence for the company’s shareholders.

notE 20 PEnSIonSShore-based employees have a defined contribution pension scheme and seagoing personnel have a defined benefit pension scheme.

The defined contribution schemeUnder this scheme the company pays an annual premium to a life insurance company, which manages the contributions on behalf of the employees. The annual premium is charged as an expense.The company contribution to the defined contribution scheme was expensed in the amount of 12.7 million in 2011 (2010: NOK 12.7 million).

The defined benefit pension schemeA number of shore based employees are covered by the early retirement scheme (AFP). In addition, there are some employees entitled to a pension directly from the company. These employees are included in the annual calculation of pension costs and liabilities. As at 31 December the group pension liabilities for seagoing employees covered 1 363 members. In addition, the Group pays the shipowners’ share of the pension insurance for seamen, which 2011 totalled NOK 26.9 million and in 2010 totalled NOK 25.7 million. Liabilities with regard to the early retirement scheme (AFP) and un-funded liabilities comprise 32 members and are included in net pension liabilities in the amount of NOK 1.5 million. Estimated values are applied in the evaluation of pension funds and liabilities incurred. These estimates are adjusted annually in accordance with a statement of the transfer value of the pension funds and an actuarial calculation of the size of the liability.

In 2011, the pension liability is reported on a separate line in the balance sheet. In 2010, the liability was recorded on the line for long-term receivables and investments. A premium of TNOK 8 982 with the addition of employers’ tax was paid in 2011. Next year’s premium is expected to total TNOK 9 342.The scheme is managed by an insurance company and the composition of the funds is based on the statutory management to which this company is subject. The calculation uses disability table IR 02 and mortality table K05.

Financial assumptions

Discount rate 3,30 % 4,40 %

Expected annual wage adjustment 4,00 % 4,00 %

Expected annual adjustment of pensions 0,70 % 1,30 %

Expected annual G-adjustment 3,75 % 3,75 %

Estimated yield 4,80 % 5,40 %

Pension costs for the year are as follows

Pension yield for the year 17 632 16 141

Interest cost on pension liabilities 7 810 7 371

Anticipated yield, pension funds - 7 230 - 7 224

Administration 865 856


Changes in estimates and estimate variances in income statement 6 523 4 124

Cost of pensions 28 290 23 686

Reconciling of pension liabilities and pension funds against balance sheet

Present value of pension liabilities 202 765 195 590

Value of pension funds - 146 267 - 132 447


Unrecognized estimate variances - 49 166 - 70 331

Pension liabilities in balance sheet 15 298 1 713

Pension costs for the defined benefit scheme (yield) for the year are as follows:Amounts in TNOK

2011 2010

* Fee to Chairman of the Board, Morten Garman

The fees are stated exclusive of VAT. No fees have been charged directly to equity in connection with equity capital transactions.

TotalOther

remunerationPension costsBonusSalary

notE 19 REMunERAtIon PAId to SEnIoR EXEcutIVESAmounts in TNOK

Olav Nils Sunde, Group President Color Group AS 0 0 0 11 11

Trond Kleivdal, Group President Color Line AS 3 270 1 244 58 308 4 880

Total senior executives 3 270 1 244 58 319 4 909

directors’ fees

Total Directors’ fees* 200 200

Auditors’ fees – deloitte

Statutory auditing services 265 260 1 486 1 460

Other assurance engagements 6 0 48 0

Tax advice etc. 21 42 464 334

Other services 317 145 791 598

Total fee to auditor 609 447 2 789 2 392

Amounts in TNOK


tax costs for the year

Tax, Group contribution 4 066 67 714

Tax payable 14 4 406

Change in deferred tax 18 986 56 604

Cost of taxes, ordinary profit 23 066 128 724

Reconciliation from nominal to actual tax rate

Pre-tax profit including extraordinary profit

Ordinary profit 78 434 465 928

Estimated income tax at nominal tax rate 21 962 130 460

tax effect of following items

Non-deductable expenses 205 -2 585

Translation differences 658 399

Corrections, previous years 242 450


Effective tax rate 29,4 % 27,6 %

notE 24 coSt oF tAXES

groupAmounts in TNOK

2011Benefit/liability 2010

tax costs for the year

Tax, Group contribution 12 555 32 784

Changes previous years 190 280

Change in deferred tax -5 670 14 883


Reconciliation from nominal to actual tax rate

Pre-tax profit including extraordinary profit

Ordinary profit 24 691 181 984

Estimated income tax at nominal tax rate 6 913 50 956

taxation effect of following items

Non-deductable expenses -27 -3 459

Corrections, previous years 189 450


Effective tax rate 28,7 % 26,3 %

notE 25 BAnKColor Group AS is a group account holder. The Group companies’ bank

accounts that are included therefore represent an intercompany receivable/

payable. This represents a net receivable of NOK 539 million for the parent

company. All represented companies stand surety for intercompany

balances in respect of the legal Group account.

Parent company (color group) Amounts in TNOK

2011Benefit/Liabilities 2010

Profit for the year after tax 55 368 337 204

Weighted average, number of shares 71 800 000 71 800 000

Earnings per share NOK 0,77 4,70

notE 26 EARnIngS PER SHAREEarnings per share is calculated using the profit for the year and the average number of shares outstanding during the year.

Amounts in TNOK

2011 2010

Operating assets 2 677 028 2 480 142

Intangible assets 187 429 187 429

Financial assets 845 12 258

Profit and loss account 401 044 500 450

Current assets -44 816 -42 009

Liabilities 130 615 196 660

Carry-forward loss -15 990 -18 886

Total 3 336 155 3 316 044

Deferred tax liability as at 31 Dec. 934 123 928 492

Of this: non balanced deferred tax liabilities 93 0

Deferred tax liability in the balance as at 31 Dec. 934 216 928 492

Operating assets 97 340 117 527

Financial assets 1 742 -55

Profit and loss account 11 011 13 764

Current assets 0 0

Liabilities 74 804 73 911

Carry-forward loss 0 0

Total 184 897 205 147

Deferred tax liability as at 31 Dec. 51 771 57 441

notE 23 dEFERREd tAXSpecification of the taxation effect of temporary differences and carry-forward loss.

group

Parent company (color group)

Amounts in TNOK

Amounts in TNOK

2011

2011

Benefit/Liability

Benefit/Liability

2010

2010

36 37


38 39


Corporate Governance

Color Group AS has bonds listed on a regulated market and reports its policies and practice with regard to corporate governance in accordance with Section 3-3b third paragraph of the Accounting Act.

Reporting on corporate governanceThe company’s general principles on corporate governance shall ensure an appropriate distribution of roles between the company’s owners, directors and the management of the Group. This distribution of roles shall ensure that goals and strategies are set, that the adopted strategies are implemented in practice and that the profits achieved are measured and followed up. The principles shall also contribute towards ensuring that the business of the company is the subject of satisfactory control procedures. An appropriate distribution of roles and satisfactory control procedures shall contribute to ensuring the highest possible creation of value over time, to the benefit of the owners and other stakeholders.

Equity, equal treatment of shareholders and the powers of the board of directorsColor Group AS has one class of shares and all shares carry equal rights in the company. The articles of association contain no restrictions on voting rights. All transfers of shares are conditional upon the consent of the Board of Directors of the company. The General Meeting has not granted powers giving the Board of Directors the authority to adopt capital changes or to purchase treasury shares.

The composition of the Board of Directors and its independence Provisions on the composition of the Board of Directors are included in the articles of association of the company, according to which the Board shall comprise between three and eight directors. The Board comprises four directors.

The work of the Board of DirectorsThe Board has the overall responsibility for managing the company. The Board monitors and ensures that the company’s internal control procedures are satisfactory.

The company’s Audit Committee is responsible for implementing this and reports to the Board. The areas of focus of the Audit Committee are:– financial reporting– internal control procedures– risk management.

The Audit Committee comprises two members elected by and from amongst the ranks of the directors. The members of the Audit Committee are independent of the company’s day-to-day management and key business associates.

Risk management and internal control proceduresThe Board ensures that the company has satisfactory internal control procedures in place in accordance with the pro-visions applicable to the business. The Board conducts an annual review of the company’s internal control procedures and monitors the main areas of risk on an ongoing basis. Together with the management of the company, the Board has focused on developing the internal control procedures applicable to the company’s financial reporting, including:– the control environment– risk assessment– control activities– information and communication– follow-up.

The Board receives periodic reports on the financial performance of the company and a description of developments in and the status of the company’s most important individual projects.

Color Group ASBryggegata 3, N-0250 Oslo

Tlf.: +47 23 11 86 00 • Fax: +47 23 11 86 06 • Foretaksnr. 958815018

Declaration by Management

We hereby declare that to the best of our knowledge, the consolidated accounts for 2011 have been prepared

in accordance with IFRS, as stipulated by the EU and include the submission of additional information

pursuant to the provisions of the Accounting Act (Norway), and that the Annual Financial Statements for the

parent company for 2011 have been prepared in accordance with the Accounting Act and generally accepted

accounting practice in Norway, and that the information in the accounts provides a true and fair view of the

assets and liabilities of the Enterprise and the Group, the financial position of the group and the results of its

operations, and that the Annual Financial Statements provide a correct review of developments, result and

position of the Enterprise and the Group, together with a description of the main risks and uncertainty factors

facing the Company.

Oslo, 26 April 2012

Morten Garman Olav Nils Sunde Alexander Sunde Bjørn Paulsen Chairman of the Board Director / Group President Director Director

Color Group ASBryggegata 3, N-0250 Oslo

Tlf.: +47 23 11 86 00 • Fax: +47 23 11 86 06 • Foretaksnr. 958815018

40 41

Color Group Annual Report 2011

42

Color Group Annual Report 2011

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KRISTIANSAND – HIRTSHALS LARVIK – HIRTSHALS SANDEFJORD – STRØMSTAD OSLO – KIEL

Color Group AS Bryggegata 3 • 0250 Oslo • Tel.: (+47) 23 11 86 00 • Telefax: (+47) 23 11 86 01Color Line AS Hjortnes • 0250 Oslo • Tel.: (+47) 23 11 80 00 • Telefax: (+47) 23 11 80 01

Booking: (+47) 810 00 811 • www.colorline.no • [email protected]

M/S SuperSpeed 1Built: Aker Yards, Rauma, FinlandHome port: KristiansandTonnage: 36 822 GRTLength: 211.3 metresBeam: 26 metresDraft: 6.5 metresClass: Det Norske VeritasMax. capacity: 2 315 personsPassenger cars: 764Trailers: lane metres: 2 036

M/S SuperSpeed 2Built: Aker Yards, Rauma, FinlandHome port: KristiansandTonnage: 33 500 BRTLength: 211.3 metresBeam: 26 metresDraft: 6.5 metresClass: Det Norske VeritasMax. capacity: 1 929 personsPassenger cars: 764Trailers: lane metres: 2 036

M/S color VikingYear built 1985, Nakskov, DenmarkHome port: SandefjordTonnage: 19 763 GRTLength: 137 metresBeam: 24 metresDraft: 5.64 metresClass: Det Norske VeritasMax. capacity: 1 720 personsPassenger cars: 350Trailers: lane metres: 490

M/S color FantasyYear built: 2004, Aker Yards, Turku FinlandHome port: OsloTonnage: 75 027 GRTLength: 224 metresBeam: 35 metresDraft: 6.8 metresClass: Det Norske VeritasMax. capacity: 2 700 personsPassenger cars: 750Trailers: lane metres: 1 270

M/S BohusYear built 1971, Aalborg, DenmarkHome port: SandefjordTonnage: 9 149 GRTLength: 123.4 metresBeam: 19.2 metresDraft: 5.4 metresClass: Det Norske VeritasMax. capacity: 1 165 personsPassenger cars: 230Trailers: lane metres: 462

M/S color MagicYear built: 2007, Aker Yards, Turku FinlandHome port: OsloTonnage: 75 100 GRTLength: 224 metresBeam: 35 metresDraft: 6.8 metresClass: Det Norske VeritasMax. capacity: 2 700 personsPassenger cars: 550Trailers: lane metres: 1 270

Color Group AS annual report 2011

Economy & Finance

present color line

parent company of color

key figures color group

color group asannual

color lines services

color lines fleet

jahre line

oslo kiel service line