color group as annual report 2010
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Color Group AS Annual Report 2010
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Color Group AS
Principal fi gures and key fi gures
2 3
Color Group AS Annual Report 2010
IFRSACCOUNTING STANDARD
DEVELOPMENT OF TRAFFIC
Passengers 4 129 119 4 212 974 4 093 761 4 294 691 4 279 868
Cars 958 671 984 695 890 407 879 458 828 284
Freight units (12m-equivalents) 171 796 172 245 168 272 176 634 192 412
PROFIT/LOSS (in NOK mill.) 1) (in EUR mill.)
Operating revenues 4 509 4 600 4 568 3 802 4 585 577
Operating expenses -3 540 -3 538 -3 550 -3 137 -3 726 -453
Operating result before depreciation, charter and leasing costs 969 1 062 1 018 665 859 124
Ordinary depreciation -299 -302 -305 -310 -397 -38
Charter, leasing costs -123 -133 -98 -65 -66 -16
Operating income before write-downs/loss/gain EBIT 547 627 616 290 396 70
Net fi nancial items -81 256 -752 -88 -31 -10
Pre-tax income 466 883 -136 203 365 60
Taxes -129 -242 37 -59 -104 -17
Net income prior to discontinued business 337 642 -99 144 43
Discontinued business -85 -22
Net income 337 642 -184 121 261 43
BALANCE SHEET (in NOK mill.)
Current assets 1 943 893 1 208 1 743 1 534 249
Non-current assets 7 706 7 913 7 999 6 877 5 073 987
Total assets 9 649 8 806 9 207 8 620 6 608 1 235
Current liabilities 1 092 1 027 1 637 967 842 140
Long-term debt 5 230 4 767 5 287 4 863 2 928 670
Deferred taxes 928 778 521 733 599 119
Equity 2 398 2 234 1 762 2 057 2 074 307
Total liabilities and equity 9 649 8 806 9 207 8 620 6 608 1 235
LIQUIDITY (in NOK mill.)/FINANCIAL STRENGTH (%)
Cash and cash equivalents as at 31 Dec. 2) 1 740 670 694 1 307 1 463 223
Cash fl ow from operations 871 772 640 980 606 108
Equity ratio % 25 25 19 24 31
Net interest-bearing debt 4 635 5 094 5 656 4 955 2 950 593
EMPLOYEES/SUNDRY EXPENSES
Number of man-years 3) 2 446 2 445 2 739 3 967 3 821
Cost of wages 1 231 1 213 1 141 1 409 1 296 158
Port dues 144 147 141 152 143 18
CONSOLIDATED 20062007200820092010 2010
Defi nitions:
1) Translated into Euro, exchange rate as at 31 Dec. 10
2) Including non utilized credit facilities
3) 2006 and 2007 show the number of employees
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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 fi eld of
short-sea cruises and freight. The company’s fl eet of 6 ships has trans-
ported more than 4 million passengers, almost 990 000 private cars and
more than 170 000 trailers (12m equivalents) each year. The company
represents approx. 2 446 man-years in four countries. Annual turnover is
in the region of NOK 4.5 billion.
The company’s vessels operate four international services between
seven ports in Norway, Germany, Denmark and Sweden offering high
quality cruises on the service to Germany and effi cient transport on the
services between Norway, Denmark and Sweden.
Color Line represents more than one hundred years of continuous
service between Norway and the Continent. The company celebrated its
20th anniversary in 2010 and in 2011 will celebrate the 25th anniversary
of the Sandefjord-Strømstad service and the 50th anniversary of the
service between Oslo and Kiel.
INVESTING FOR THE FUTURE
From the year 2004, Color Line has invested more than 7.5 bil-
lion in new ships, concepts, port facilities and other infrastruc-
ture. These investments include the world’s two largest cruise ships
equipped with a car deck, M/S Color Fantasy and M/S Color Magic,
operating on the Oslo-Kiel service in addition to the new transport
concept in which M/S SuperSpeed1 and 2 operate on the Kristiansand-
Hirtshals Line and the Larvik-Hirtshals Line.
Color Line is part of the European ShortSea industry and is at present
the only transport and cruise operator with a fl eet sailing under the
Norwegian fl ag. Color Line’s ships are registered in the Norwegian
ordinary register of shipping (NOR) and the company is a Norwegian
registered limited company with its head offi ce in Oslo.
The company is subject to the Norwegian tax regime and Color Line is
not part of the Norwegian tax scheme for shipowners.
INVESTMENTS IN EMPLOYEES AND THE ORGANIZATION
Color Line’s vision is to be the best shipowning company in Europe in the
fi eld of cruise and transport goods.
Color Line has its main focus on securing dependable and good results
by strengthening the development of income and adjusting expenses
in the company on an ongoing basis. In 2010 the company increased its
engagement in the development of management and staff throughout
the entire organization. During the course of the year, 440 managers and
team leaders have attended management training courses. Color Line is
Norway’s largest private training enterprise at sea.
During the period 2003 to 2010 the company has taken in 561 appren-
tices, 117 in the fi eld of hotel operation and 444 deckhand, engine room
and electrician apprentices. The company is the largest contributor to the
Norwegian Maritime Competence Foundation. ■
4 5
Prepared for a new era
Color Group AS Annual Report 2010
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Color Line’s operations, fl ying the Norwegian fl ag with Norwegian seamen
and landbased operations in Norway must be based on stable framework
conditions. Color Line’s ambitions are subject to the company having the
same framework conditions as its competitors in the fi eld of cruise and
international passenger travel, operating under fl ags other than the Nor-
wegian.
The Government’s maritime strategy, also called “a Steady Course”
was launched in 2007 and has subsequently been followed up by status
reports. The strategy is based on three main pillars – development of
competence, a taxation scheme for shipowners and a refund scheme for
the employment of seamen. Color Line has been given special mention
in the Government maritime strategy “a Steady Course” dated 2 October
2007:
Color Line has developed into one of Europe’s leading cruise and
ferry companies. The company operates at the intersection between
transport of goods and tourism and plays an important part in attracting
foreign tourists to Norway.
The present day refund scheme for seamen continued more or less
unchanged in 2010, compared with the preceding year and the scheme
provides Color Line with almost equal competitive terms compared with
shipowning companies in the Nordic Countries and in Europe, despite the
fact that since its introduction the scheme has been weakened in relation
to the company’s international competitors.
Color Line faces competition from both Nordic shipowners operating
on international services and carrying both passengers and goods, and
from cruise companies operating under international fl ags with crews
engaged on local terms. For safety reasons, Color Line is under obliga-
tion to have crew members who speak one of the Scandinavian langua-
ges in all jobs involving emergency procedures. At the same time, Color
Line must continue to be registered in the Norwegian International Ship
Register (NIS) as the company operates its ships on a fi xed schedule to
and from Norwegian Ports.
GAMING AND CASINO ONBOARD
All sections of the regulations permitting gaming onboard Color Line
ships were adopted in 2010 and apply from 1 January 2011, including pro-
cedures for control and reporting. These regulations and the handling
of this issue goes far in securing equality for Color Line compared with
passenger ships sailing under other fl ags to and from Norwegian ports.
Licences for gaming onboard are granted on the express condition
that 20 percent of profi ts (the sales fi gure less payment of prizes) must
be paid to an organization that is approved as a lottery benefi ciary. This
allocation will amount to approx. NOK 20 million per year. Color Line is in
the process of preparing a list of proposed benefi ciaries, which must be
approved by the Norwegian Gaming and Foundation Authority.
PUTTING NORWAY ON THE TOURIST MAP
Traffi c between Sandefjord and Strømstad is stable and high throug-
hout the year. Interest in Norway among German tourists has increased
considerably after Color Line’s new cruise ships Color Fantasy and Color
Magic were put into operation between Oslo and Kiel, and SuperSpeed has
widened the overall market from Denmark to Norway. In order to absorb
further growth in traffi c, the capacity of the SuperSpeed ferry operating
between Kristiansand and Hirtshals was increased in 2010. This has in-
creased the capacity of the ferry by a further 450 passengers equivalent
to approx. 20 percent. This means that the new SuperSpeed ferry can
now carry half a million more passengers annually and will have a daily
capacity of 9 000 passengers between Kristiansand and Hirtshals in nor-
mal operation. In addition, SuperSpeed2 operating between Larvik and
Hirtshals represents a further 7 500 passengers daily.
NEW MARKET STRATEGY IN GERMANY
Germany is Norway’s most important and largest foreign market.
However, Norway’s market share of German foreign travel is less than
1 percent. This is the background for the increase in the marketing of
Norwegian tourism in Germany. In 2010, almost 1,1 million guests travelled
by Color Line’s cruise ships Color Magic and Color Fantasy, a historical
record on the service between Norway and Germany. Two of three new
guests are from Germany and the Netherlands.
This growth is due mainly to the effect of Color Line’s new market stra-
tegy in Germany together with increased initiative on the part of Innova-
tion Norway and VisitOslo in the form of Oslo packages comprising, crui-
se, hotel and cultural events. The development of a theme cruise for the
Norwegian market is expected to increase the potential even further. The
increase registered in Color Line for this segment was 65 percent from
2009 to 2010. On the Oslo-Kiel service the number of German guests in
2010 increased by almost 7 percent and German guests now represent 84
percent of all foreign guests onboard. ■
6 7
Stable framework conditions
‘‘
Color Group AS Annual Report 2010
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8 9
SAFETY
Color Line makes every effort to prevent situations arising that could
cause injury or a negative impact on health and the environment. Color
Line is engaged in adapting to new requirements in connection with MLC
2006 and STOW 2010. These are the new international standards for sa-
fety at sea and are a supplement to the ISM code. Adaption work takes
place through participation in a separate working group in the Norwegian
Shipowner’s Association. Color Line has also implemented training and
courses in safety work and understanding the ISM code. These training
activities apply to both seagoing personnel and shore-based personnel
throughout the year.
Color Line is represented in international EU fi nanced projects in
addition to national projects and organizations engaged in safety and
the environment.
There were no major accidents in 2010 involving serious injury or
environmental pollution.
THE ENVIRONMENT
In 2010, Color Line continued its engagement in environmental issues in
line with the company’s environmental strategy from 2009 by establishing
KPIs for discharge to air. The company’s objective is to reduce discharge
Environment and safety
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 fi eld
of European short-sea shipping, employing approx. 2 446 man-years in
four countries. The company now operates a fl eet of six vessels, operat-
ing on four international ferry services between seven ports in Norway,
Germany, Denmark and Sweden.
Norway is part of a peninsula in Europe where effi cient sea transport is
essential for Norwegian industry and Norwegian tourism. Color Line has
an assertive differentiation strategy – high quality cruises on the service
between Oslo and Kiel in Germany and effi cient transport of goods and
passengers on the shorter routes between Kristiansand and Larvik in
Norway and Hirtshals in Denmark in addition to the Sandefjord-Strømstad
service.
Color Line has a modern and cost-effi cient fl eet with a high degree
of product standardisation. Passengers in 2010 totalled 4 129 119 (2009:
4 212 974). This is a reduction in the number of passengers of approx.
2 percent from January to December in relation to 2009. The reduction
in the number of passengers is primarily the result of lower production
involving 45 more cancellations than in the preceding year due to the
ice conditions in the outer Oslo Fjord and 18 more days of planned dock-
ing for all ships. The competitive situation changed from 2009 to 2010
involving a new operator on the route between Kristiansand and Hirtshals
and new initiatives from international cruise companies offering short
sea cruises directly from Kiel and Oslo. The volume of freight (12m equiva-
lents) was 171 796 compared to 172 245 in 2009.
INCOME STATEMENT
Accounting principles
Color Group AS is a Norwegian limited company with its head offi ce in
Oslo. The consolidated accounts are presented in accordance with IFRS
(International Financial Reporting Standards).
Result for the Group and the parent company
Operating income totalled NOK 4 509 million in 2010 compared with
NOK 4 600 million in 2009. The operating result before depreciation and
charter hire totalled NOK 969 million compared with NOK 1 062 million
in 2009. The underlying operations were satisfactory and in addition to
the elements mentioned above include a higher cost of bunkers than in
the preceding year. The operating result in 2010 totalled NOK 547 million
compared with NOK 627 million in 2009.
Group net fi nancial expenses show an increase from NOK 256 million
in 2009 to NOK -81 million in 2010. Net fi nancial items in 2010 include
approx. NOK 85 million in realised and unrealised values in respect of cur-
rency loans, fi xed interest contracts, interest derivates, currency hedging
and gains on shares, compared with approx. NOK 470 million in 2009. The
annual result after tax shows a profi t of NOK 337 million compared with
NOK 642 million in 2009. The parent company Color Group AS recorded a
pre-tax result of NOK 182 million compared with NOK 391 million in 2009.
After tax, the result is NOK 134 million for 2010 compared with NOK 290
million in 2009. The Board proposes that NOK 43 million be distributed
as Group contribution. The remaining profi t to be transferred to other
equity. Distributable shareholders’ equity in the parent company was NOK
384 million as at 31 December 2010.
FINANCIAL MATTERS
Balance Sheet and fi nancing
Color Group AS focuses on diversifi ed long term fi nancing and predict-
ability. The company issued two new bond loans in 2010 registered on
Oslo Stock Exchange ABN. The fi rst bond loan (COLG07) was issued in
April for a total amount of NOK 500 million maturing in August 2014. The
second bond loan (COLG08) was issued in November for a total of NOK
900 million, maturing in November 2015. In connection with the issuing
of the bond loan COLG08, the company bought back 205 million (with
shorter maturity) in COLG04 (maturity 2012), NOK 124 million in COLG05
(maturity 2012), and NOK 118 million in COLG06 (maturity 2011).
Color Group has also concluded an agreement on a new Reducing
Revolving Credit Facility of NOK 350 million in 2010, the principal matur-
ing in October 2014. This refi nanced existing facility of NOK 150 million
maturing in 2012.
As at 31 December 2010, the Group’s balance totalled NOK 9 649 mil-
lion, an increase of NOK 843 million compared with 2009, primarily due to
the issue of the bond loans COLG07 and COLG08 providing a cash effect
(approx. NOK 1 100 million in bank deposits/cash at yearend). Equity as at
31 December 2010 totalled NOK 2 398 million, compared with NOK 2 234
million in 2009. The equity ratio was approx. 25 percent, about the same
as in 2009.
Long-term mortgages in ships/terminals/hotel have a repayment pro-
fi le of 12 to 15 years. Total outstanding mortgages on ships/terminals/
hotel as at 31 December 2010 are NOK 5 678 million. Net outstanding debt
after deduction of bank deposits and cash was NOK 4 635 million as at
31 December 2010 compared with NOK 5 094 million in 2009. The bond
loans registered on Oslo Stock Exchange mature during the period 2011 to
2015. Outstanding net bond loans as at 31 December 2010 total NOK 1 948
million. In connection with the handover of the high speed ferry MS
SuperSpeed2 in 2008, a 12 year operational leasing agreement was
concluded between Oslo Line AS and Color Line Transport AS with a
guarantee from Color Group AS. In its loan agreements the company
has liabilities linked to liquidity, equity and debt servicing ratio. All
liabilities were fulfi lled as at 31 December 2010.
Color Group AS
Director’s Report 2010
Directors Report and Financial Statement Color Group Annual Report 2010Color Group AS Annual Report 2010
of greenhouse gasses by 10 percent by the year 2015 measured in the
relation to the company’s discharge in 2009.
In 2010 Color Line entered into partnership with Oslo Municipality in
connection with the municipality’s work in improving the quality of air in
the capital. This partnership has been defi ned in a pact entitled “Working
for a better climate”. The agreement was signed in Oslo City Hall on 29
November 2010 together with approx. 20 other companies and institu-
tions. Color Line has a long term cooperation agreement with the envi-
ronmental foundation Bellona concerning measures for reducing envi-
ronmentally harmful discharge to air and water. In a separate agreement
with the World Wildlife Fund in connection with the Baltic Sea initiative,
Color Line has voluntarily undertaken not to discharge water into the
Baltic Sea.
In 2010, Color Line has initiated several specifi c measures for reducing
the company’s impact on the environment. The most important measure
is the agreement on the establishment of shore based mains electricity
to ships berthed in Oslo on a daily basis. The shore based electricity pro-
ject in Oslo is the fi rst in Norway and will contribute towards preventing
discharge of the greenhouse gasses, SOx, NOx and PM while the ships are
berthed. ■
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Cash fl ow
In 2010, the Group’s cash fl ow from operational activities totalled NOK
871 million. Net cash fl ow from fi nancing activities totalled NOK 395 mil-
lion, and net cash fl ow from investments showed a defi ciency of NOK -229
million of which part is related to development costs in connection
with the new booking and Internet platform. The Group’s total liquidity
reserve, including granted drawing rights and liquid securities totalled
approx. NOK 1 740 million. Ordinary planned instalments on the Group’s
interest-bearing debt to credit institutions and bond loan is approx. NOK
466 million.
The fi nancial risk situation
The Group is exposed to foreign exchange risk due to fl uctuations in NOK
against other currencies, particularly USD, EUR and DKK. The Group is also
exposed to interest risk, and fl uctuations in the price of bunker products.
The Group makes use of fi nancial instruments in order to curb the risk of
fl uctuations in the Group’s cash fl ow. On balance sheet date, approx. 20
percent of the Group’s interest-bearing debt was secured through fi xed
interest agreements and approx. 45 percent of the company’s estimated
cost of bunkers for 2011 was secured through derivate contracts for bun-
kers. The company also had different currency derivate contracts related
to budgeted operations in 2011. The Group has a limited market risk as its
business relates to a large number of customers.
Continued operation
On the basis of the above report on the Group’s result and fi nancial
position, the Directors confi rm that the Annual Financial Statement
has been prepared under the assumption of continued operation as a
going concern, and that the Report provides a correct picture of the
parent company’s and the Group’s assets, liabilities, fi nancial position,
and result.
WORKING ENVIRONMENT AND PERSONNEL
At the end of 2010, the number of man-years in the Group totalled approx.
2 446. In 2010, the average absence due to illness in the Group was ap-
prox. 5.2 percent for shore-based employees (6.8 percent in 2009), and
approx. 9.8 percent for seagoing employees (10.5 percent in 2009).
The Directors consider that the working environment in the Group is
good and will continue to focus attention on the environment and on
absence due to illness in respect of both shore-based and seagoing per-
sonnel in line with the company’s policy and with trends in society.
EQUAL OPPORTUNITIES
It is Color Group AS’ objective that there shall be full equality between
female and male employees. The company makes every effort to satisfy
the demands of the Anti-discrimination Act and the Anti-discrimination
and Availability Act. This applies both to employees and in recruitment
of new crew members.
Of the Group employees onboard the ships, 953 are women. There are
224 leading positions and 24 of these are held by women. The percent-
age of women in leading positions onboard is relatively low as technical/
maritime jobs have traditionally been dominated by males and so far few
women hold the necessary certifi cates.
Of the 691 shore-based personnel, 410 are women. There is 1 woman in
the Color Line AS Group management. The percentage of women in shore-
based management positions is approx. 45 percent.
SAFETY
Color Line endeavours to prevent situations that can involve injury and
an impact on health and the environment. In 2010 the company contin-
ued to develop the company’s electronic safety management system.
Moreover in 2010 the company has issued new preparedness plans for
the company. The company has also been working on the adaption to
new requirements in connection with MLC 2006 and STOW 2010, the new
internationals standards for safety at sea that are a supplement to the
ISM code. Color Line participates in a working group in the Norwegian
Shipowner’s association.
The company has also been engaged in extensive training and courses
in safety work and in the ISM code for both sea and land-based personnel
throughout the year. The company is represented in international (EU fi -
nanced) projects in addition to national projects and organizations work-
ing on improvements in safety and the environment. There were no major
accidents in 2010 involving serious injury or environmental pollution.
THE ENVIRONMENT
In 2010, Color Line Marine AS continued the work on environmental issues
in line with the company’s environmental strategy from 2009 through
the establishment of KPI for discharge to air. The company’s aim is to
reduce the discharge of greenhouse gasses by 10 percent by the year
2015 measured in relation to the 2009 level. Color Line Marine has
engaged the company CO2focus AS to take care of the greenhouse
gas discharge accounts on behalf of the company. C02focus AS is an
authorized audit company in this area using the method recommended
by the UN (based on the Greenhouse Gas Protocol Initiative – the GHG
protocol) which is the usual accounting standard for the discharge of
greenhouse gases.
In 2010, Color Line also became engaged as a partner in Oslo Mu-
nicipality’s work in improving the quality of air in the capital by signing
the Greenhouse Gas Agreement “working for a better climate” in Oslo
City Hall on 29 November 2010 together with approx. 20 other compa-
10 11
nies and institutions. This agreement is a supplement to other goodwill
agreements that in 2010 also include an agreement with the environ-
mental foundation Bellona as well as WWF for their Baltic Sea initiative
whereby the company has undertaken not to discharge waste water into
the Baltic Sea.
In 2010, Color Line has also initiated several specifi c measures
for reducing environmental impact. The most important of these
is the start-up of work on shore based mains current for ships
berthed in Oslo on a daily basis in order to prevent the discharge of
greenhouse gasses to air (SOx, NOx and PM).
Other measures worthy of mention include the start-up of several trial
projects aimed at reducing discharge of greenhouse gasses (and reduc-
ing consumption of energy by several percent). The company has also
in 2010 reduced the consumption of electricity for lighting onboard by
replacing light units on several ships with new low energy units in addi-
tion to control systems and routines for lighting on board.
THE BOARD OF DIRECTORS AND SHAREHOLDERS
O. N. Sunde AS owns indirectly 100 percent 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.
PROSPECTS/EVENTS AFTER BALANCE SHEET DATE
Changed market conditions
The cruise and seaborne transport industry requires a high level of in-
vestment and places heavy demands on cost management and earning
potential. Several of the ferry services between Norway and Europe have
been discontinued in recent years, primarily due to costly operating con-
cepts, low utilisation of capacity, and competition from alternative forms
of transport. Strong focus on the environment by the authorities in the
EU and in Norway involving a defi ned objective for the transfer of goods
traffi c from road to seaborne and rail transport has contributed towards
stable and long-term framework conditions for shipowners. It is expected
that there will be further positive political measures in the fi eld of trans-
port and industry that will strengthen the competitiveness of seaborne
transport with particular emphasis on intermodality in the ports.
ESA
ESA, EFTA’s supervisory body, decided in December 2009 to instigate
competition law-based investigations of Color Line and the company’s
port agreements in connection with the Sandefjord-Strømstad service.
Competitors of Color Line fi led a complaint with the Norwegian Competi-
tion Authority in 2006. As the case also concerns Sweden, it was trans-
ferred to ESA. In the view of the company, Color Line has acted in accord-
ance with the ruling provisions of competition law at all times.
Equal competition
Color Line is today the only major shipping company in Norwegian owner-
ship, operating from a head offi ce in Norway, registered in the Norwegian
Register of Shipping, sailing under the Norwegian fl ag and operating on
a regular all year round schedule between Norway and the Continent
carrying freight and passengers. Stable and internationally competitive
framework conditions have been and are a condition for the appreciable
investments by Color Line in Norway. Color Line works actively to ensure
that there are equal conditions for Norwegian seamen in line with the
company’s competitors in the Nordic countries and in the EU. This is joint
effort with Color Line’s crew members and their organizations, the Nor-
wegian Shipowner’s Association, the Maritime Forum of Norway and the
Norwegian Authorities.
Rebuilding M/S SuperSpeed1
The rebuilding of M/S SuperSpeed1 was completed in January 2011. The re-
building work cost in the region of EUR 15 million and comprises a larger
pizza restaurant which has increased the passenger capacity of the ferry
by more than 400 passengers or approx. 20 percent. Rebuilding work took
place at the STX Yards in Finland and will be fi nanced via a guarantee
from Finnvera Plc in Finland.
Prospects for 2011
The Group’s main objective is to ensure profi tability and to maintain cost-
effi cient operation. The Group expects to achieve a satisfactory result for
2011. The Directors are of the opinion that the company is well equipped
to meet the challenges of 2011.
Oslo, 27 April 2011
Morten GarmanChairman of the Board
Bjørn PaulsenDirector
Alexander SundeDirector
Olav Nils SundeDirector/Group President
Directors Report and Financial Statement Color Group Annual Report 2010
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12 13
Color Group AS
Income statement
Amounts in TNOK GROUP (IFRS)PARENT COMPANY (NRS)
133 761 136 702 Sales revenues 3, 7 4 508 912 4 599 127
0 0 Other operating income 7 0 582
133 761 136 702 Total operating income 4 508 912 4 599 709
0 0 Cost of sales -1 539 917 -1 524 970
-7 717 -10 769 Cost of wages 4, 18, 19, 20 -1 230 750 -1 212 789
-4 952 -11 945 Other operating expenses 7, 15 -769 133 -799 913
-12 669 -22 714 Total operating expenses -3 539 800 -3 537 672
121 092 113 988 Operating income before depreciation, charter hire and leasing expenses 969 112 1 062 037
-22 034 -22 034 Write-downs and depreciation 4, 8, 9, 10 -299 337 -302 294
0 0 Charter and leasing expenses 15 -122 568 -132 621
99 058 91 954 Operating profi t 547 207 627 122
82 925 299 313 Net fi nancial expenses 16, 17 -81 279 256 173
181 983 391 267 Pre-tax profi t 465 928 883 295
-47 947 -101 158 Taxes 24 -128 724 -241 517
134 036 290 109 Profi t for the year before discontinued operations 337 204 641 778
Comprehensive income statement
Profi t for the year 337 204 641 778
Other income and expenses
Conversion differences, foreign exchange -1 359 -7 691
Net gain/loss bunkers hedging -992 13 334
Total other income and expenses net after taxes -2 351 5 643
Total profi t 334 853 647 421
Majority share of total profi t for the year 334 853 647 421
2010 Note2009 2010 2009
Directors Report and Financial Statement Color Group Annual Report 2010
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Color Group AS
Balance sheet
14 15
Color Group AS
Cash fl ow statement
Amounts in TNOK GROUP (IFRS)PARENT COMPANY (NRS)
181 983 391 267 Pre-tax result 465 928 883 295
22 034 22 034 Write-downs and depreciation 299 337 302 294
Loss/gain on sale of non-current assets 153
-22 891 Changes in value fi nancial assets -4 372 -18 519
2 996 15 482 Changes in value fi nancial long term liabilities 2 996 -13 280
-1 827 -228 183 Changes currency fi nancial liabilities -1 827 -228 183
Write-down fi nancial non-current assets 12 450
Pension costs exceeding premium paid 20 12 690 -4 354
-57 955 -182 488 Unrealized foreign exchange gain/loss, currency loans 16 -58 406 -182 488
Unrealized foreign exchange gain/loss, long term receivables 16 1 026 2 362
Translation differences non-current assets 8 13 679 39 621
Change in interest contracts CIRR 27 633 16 117
Translation differences foreign subsidiaries -1 359 -7 691
Changes in bunkers contracts, equity -992 13 334
Changes in working capital
Changes in inventories 5 272 22 039
3 644 17 131 Changes in accounts receivable and other receivables 10 252 218 493
59 982 -95 239 Changes in market based shares 59 982 -95 239
283 432 -43 886 Changes in accounts payable and other current liabilities 38 761 -188 096
347 058 -121 994 Total changes in working capital 114 267 -42 803
471 398 -103 882 Net cash fl ow from operational activities 870 753 772 155
Payments, investments in ships -34 166 -15 322
Pre-paid investments in ships -72 682
Payments, purchase of equipment -7 531 -5 736
Payment re. purchase of land, building and other real estate -9 490 -5 127
Payments, purchase of property under construction -104 658 -142 923
Proceeds from sale of equipment 2 698
-53 286 -192 587 Payments, other investments
-53 286 -192 587 Net cash fl ow from investment activities -228 527 -166 410
49 048 90 000 Proceeds from taking up of new debt to credit institutions 49 048 90 000
1 380 233 194 500 Proceeds from taking up of new bond loans 1 380 233 194 500
-351 331 -218 776 Repayment of debt to credit institutions -373 114 -258 513
-515 000 -543 500 Instalments on bond loans -515 000 -543 500
0 0 Payments, interest bearing receivables -115 685
290 825 949 993 Proceeds, long term receivables 8 385
-356 976 -359 843 Paid, received dividend/Group contribution -143 350 -165 900
128 798 -20 859 Change in outstanding account/owner -10 930 55 691
625 597 91 515 Net cash fl ow from fi nancing activities 395 272 -743 407
1 043 709 -204 954 Net change in liquid resources 1 037 498 -137 662
69 815 274 769 Closing balance liquid resources 1 Jan. 101 150 238 812
1 113 524 69 815 Closing balance liquid resources 31 Dec. 1 138 648 101 150
2010 FOR THE PERIOD 1 JANUARY TO 31 DECEMBER 2009 2010Note 2009
Amounts in TNOK GROUP (IFRS)PARENT COMPANY (NRS)
Non-current assets
Intangible assets
130 761 152 795 Goodwill and other intangible assets 4, 9, 10 671 301 671 301
130 761 152 795 Total intangible assets 671 301 671 301
Property, plant and equipment
0 0 Property under construction 2, 4, 8 378 112 273 454
0 0 Land, buildings and other real estate 4, 8 653 538 698 509
0 0 Equipment 4, 8, 10 49 363 59 125
0 0 Ships 2, 4, 8 5 526 463 5 733 712
0 0 Total property, plant and equipment 6 607 476 6 764 800
Non-current fi nancial assets
2 792 511 2 739 225 Investments in subsidiaries 5, 6 0 0
3 698 977 3 936 909 Long-term receivables and investments 6, 11, 17, 20 427 134 476 868
6 491 488 6 676 154 Total non-current fi nancial assets 427 134 476 868
6 622 249 6 828 929 Total non-current assets 7 705 911 7 912 969
Current assets
0 0 Inventories 12 150 121 155 393
276 753 409 195 Accounts receivable and other receivables 17 596 464 523 104
22 891 0 Other fi nancial assets 17 22 891 18 519
35 257 95 239 Short term share investments 35 257 95 239
1 113 524 69 815 Bank deposits and cash 17 1 138 648 101 150
1 448 425 574 249 Total current assets 1 943 381 893 405
8 070 674 7 403 178 TOTAL ASSETS 9 649 292 8 806 374
Contributed capital
143 600 143 600 Share capital (71 800 000 shares, nominal value NOK 2.- per share) 6, 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
515 025 652 008 Other equity 22 776 459 612 018
2 137 061 2 274 044 Total equity 2 398 495 2 234 054
LIABILITIES
Provisions
57 441 42 558 Deferred tax liabilities 23 928 492 777 663
57 441 42 558 Total provisions 928 492 777 663
Long-term liabilities
3 610 553 3 970 791 Debt to credit institutions 13, 17 3 360 544 3 757 516
1 927 733 1 062 500 Bond loans 13. 17 1 851 233 994 500
18 478 15 482 Other long term liabilities 17 18 478 15 482
5 556 764 5 048 773 Total long-term liabilities 5 230 255 4 767 498
Current liabilities
319 408 35 976 Trade creditors and other current liabilities 14, 17 626 050 582 332
0 0 Current share of long-term liabilities 13, 17 466 000 443 000
0 1 827 Other fi nancial liabilities 0 1 827
319 408 37 803 Total current liabilities 1 092 050 1 027 159
8 070 674 7 403 178 TOTAL EQUITY AND LIABILITIES 9 649 292 8 806 374
2010
2010
ASSETS
EQUITY AND LIABILITIES
2009
2009
2010
2010
Note
Note
2009
2009
Morten GarmanChairman of the Board
Bjørn PaulsenDirector
Alexander SundeDirector
Olav Nils SundeDirector/Group President The Cash fl ow statement has been changed for 2010. The fi gures for 2009 have been changed accordingly.
Directors Report and Financial Statement Color Group Annual Report 2010
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16 17
Color Group AS Color Group AS
Statement of changes in equity Notes to the accounts 2010
Amounts in TNOK
Equity 1 Jan. 2009 143 600 1 478 436 11 017 0 129 028 1 762 081
Result for the year 641 778 641 778
Other income and expenses -7 691 13 334 0 5 643
Total income and expenses for the period 0 0 -7 691 13 334 641 778 647 421
Group contribution/dividend to owner -175 448 -175 448
Equity 31 Dec. 2009 143 600 1 478 436 3 326 13 334 595 358 2 234 054
Equity 1 Jan. 2010 143 600 1 478 436 3 326 13 334 595 358 2 234 054
Result for the year 337 204 337 204
Other income and expenses -1 359 -992 -2 351
Total income and expenses for the period 0 0 -1 359 -992 334 853
Group contribution/dividend to owner -170 412 -170 412
Equity 31 Dec. 2010 143 600 1 478 436 1 967 12 342 762 150 2 398 495
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 with its head offi ce in Oslo. The Group con-
centrates mainly on two core areas, cruise and transport. These business
areas are described in Note 3, Information Segment.
Framework for preparing the Annual Financial Statements
Group
Color Group AS has taken up bond loans which are registered on Oslo Stock
Exchange. Stock Exchange regulations require that the Group must report
in accordance with International Financial Reporting Standards (IFRS) and
the interpretations issued by the International Financial Reporting Inter-
pretations Committee (IFRIC).
All new and amended standards and interpretations that are relevant
for Color Group and that were in force with effect from the commencement
of the accounting period on 1 January 2010 have been applied when prepar-
ing the Annual Financial Statements. At the time these fi nancial statements
were presented, some new or amended standards and changes in inter-
pretations had not yet come into force in cases where the Group had not
chosen early application. In the view of management, these standards and
interpretations will not have any signifi cant effect on the annual fi nancial
statements.
Preparing the accounts in accordance with IFRS requires the use of esti-
mates. Moreover, consolidated accounting principles require that manage-
ment shall make discretionary decisions. Areas that to a large extent are
based on discretionary evaluations that are very complex or areas in which
assumptions and estimates are signifi cant for the consolidated accounts
are duly described in the notes.
The consolidated accounts have been prepared on the historical cost
principle, adjusted in respect of fi nancial instruments and measured at real
value.
The parent company
The fi nancial statements for the parent company, Color Group AS have been
prepared in accordance with the provisions of the Accounting Act of 1998
and generally accepted accounting principles in Norway (NRS).
Unless otherwise stated in the description of principles, it is the Group’s
accounting principles that are described. Description of accounting princi-
ples that apply only to the parent company’s accounts in accordance with
NRS are specifi ed separately.
Translation of foreign exchange
Accounts relating to the individual units in the Group are presented in
the currency normally used in the fi nancial area where the unit operates
(functional currency). The Group’s presentation currency is NOK and this is
also the parent company’s presentation and functional currency. Subsidi-
ary companies which have another functional currency are translated to
NOK. Balance sheet items are translated at the exchange rate ruling at year-
end, while items on the Income statement are translated on the basis of an
average exchange rate. Translation differences are entered against equity
and are specifi ed separately.
Transactions and Balance Sheet items
Money items (assets and liabilities) in foreign currency are translated at
the exchange rate on balance sheet date. Foreign exchange gain and loss
in connection with the translation of money items in foreign currency at
year-end are entered in the income statement. Items are translated at the
exchange rate ruling at the time of the transaction. Foreign currency gains
and losses arising upon payment of such transactions are entered in the
income statement.
Principles of consolidation
Subsidiary companies comprise all units in which the Group has a deciding
infl uence on the unit’s fi nancial and operational strategy, through a stake
of more than 50 percent providing voting control. When deciding whether
the Group has a deciding infl uence, the effect of potential rights that may
be exercised or converted on balance sheet date is included.
Subsidiaries are consolidated from the time control has been taken
over by the Group and are withdrawn from consolidation when deciding
infl uence ceases.
The purchase method of accounting is applied in connection with the
acquisition of subsidiary companies. Procurement cost is measured at the
actual value of assets used as payment, equity instruments issued, liabili-
ties that have been taken over through the transfer of control and direct
expenses connected with the actual acquisition. Identifi able purchased
assets, debts undertaken and conditional liabilities are entered in the ac-
counts at real value at time of acquisition, irrespective of any minority
interests. Expenses connected with the acquisition are allocated to identifi -
able assets and liabilities based on their actual value at time of acquisition.
Procurement costs that exceed the share of actual value of identifi able
net assets in a subsidiary company are entered in the balance sheet as
goodwill. If procurement cost is lower than actual value of net assets in a
subsidiary company, the difference is entered in the balance sheet at time
of acquisition.
Intercompany transactions, intercompany accounts and unrealised
earnings between companies in the Group are eliminated. Unrealised loss is
eliminated, but is evaluated as an indicator of the drop in value in relation
to the write-down of the transferred assets.
Accounting principles in subsidiary companies are amended whenever
necessary in order to conform to the Group’s accounting principles.
Principles of taking to income
Income from the sale of goods and services is entered in the accounts at
actual net value after deduction of VAT, discounts and reductions.
Income from the sale of goods and services is calculated from the
Directors Report and Financial Statement NotesColor Group Annual Report 2010 Color Group Annual Report 2010
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18 19
Intangible assets
Intangible assets procured separately are entered in the balance sheet
at actual value at time of procurement. Intangible assets are depreciated
according to the straight line method over the asset’s anticipated useful
live. If the useful live of the asset is not limited and economic use cannot be
estimated, the asset is not depreciated, but is tested annually with regard
to fall-off in value.
Goodwill
The difference between procurement cost at takeover and actual value of
net identifi able assets at the time of takeover is classifi ed as goodwill.
Goodwill is entered in the balance sheet at procurement cost with the
deduction of any accumulated write-downs. Goodwill is not depreciated but
is tested annually in respect of any impairment losses. The impairment test
in value is carried out by allocating goodwill to the Group’s cash generating
units that are expected to benefi t from the merger. Assets and liabilities
taken over in connection with mergers are entered at actual value in the
Group’s opening balance sheet.
Leasing, plant and equipment
Leases in which a large part of the risk and earnings linked to ownership
continue to be in the hands of the lessor are classifi ed as operational
leases. The company’s leases are mainly operational leases in which lease
payments are an operating expense distributed over the lease period.
Non-current assets retained for sale and winding-up of business
Non-current assets and groups of non-current assets and liabilities
are classifi ed as held for sale if the book value is to be regained
through a sales transaction, instead of continued use. This is only
considered to be fulfi lled when a sale is highly probable and the non-
current assets are available for immediate sale in their present form.
Management must have committed the company to a sale and it must be
expected that the sale will be implemented within one year from the date
of classifi cation.
Non-current assets and groups of non-current assets and liabilities re-
tained for sale are valued at earlier book value for real value less sales cost,
whichever is the lowest. Depreciation on assets classifi ed for sale ceases
from the date of classifi cation.
Operations which are to be discontinued are to be reported separately
in the income statement. Figures for the preceding year are to be adjusted
for comparison purposes.
Inventories
Inventories comprise trade goods, consumables and bunkers and are evalu-
ated at cost price or net sales value less sales costs, whichever is lowest.
The FIFO method is used in relation to procurement cost.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and bank deposits.
Equity
Ordinary shares are classifi ed as share capital. Expenses directly connected
with the issuing of new shares with the deduction of tax, are entered as a
reduction of remuneration received in equity.
Translation differences arise in connection with currency differences
when consolidating foreign enterprises.
Pension liabilities and pension costs
The companies in the Group have different pension schemes. In general,
pension schemes are fi nanced by payments of premium to life insurance
companies. During the course of 2008, the shore-based employees have for
the most part been transferred from a defi ned benefi t pension scheme to
a defi ned contribution pension scheme. In this scheme, expenses are equal
to contributed premium.
The pension scheme for the seagoing employees is a defi ned
benefi t scheme. Pension funds are evaluated at actual value. Net li-
abilities linked to the defi ned benefi t scheme are calculated separately in
each scheme by estimating the amount of future benefi ts earned by the
individual employee through work performed during the year under
review and in earlier periods. These future benefi ts are discounted in
order to calculate the present day value, and actual value of the pen-
sion funds is deducted in order to fi nd net liabilities. The discount rate
is equal to the balance day interest on Government bonds with
particularly high creditworthiness and with approximately the same
maturity as the Group’s liabilities. The schemes are based on a linear
earning model. When the benefi t in the schemes are changed, the share
of the increase in the benefi t that the employee has earned the right
to is entered in the income statement in accordance with the linear
method over the remaining earning period. Costs are entered in the income
statement if the employee has already received an unconditional right
to an increased benefi t. Estimated deviations that are not entered in the
balance sheet at the time of changeover to IFRS are zeroed and entered
directly against shareholders’ equity. Estimated deviations arising after
1 January 2006 are entered in the income statement and distributed
over the average remaining period to the extent that these exceed 10
percent of the present value of the defi ned benefi t pension liabilities and
actual value of the pension funds.
In previous years a liability was calculated in respect of a number of
employees who would probably retire under the early retirement scheme,
but this now applies to those employees who are included in the scheme.
This change was made in 2008.
Pension cost is calculated in respect of those who have retired under
the early retirement scheme.
Provisions
A provision is entered when the Group has a commitment (legal or
self-imposed) resulting from an earlier occurrence and it is probable that
a fi nancial settlement will take place as a result of this commitment and
the amount can be reliably measured. When a provision in the accounts is
measured by applying the cash fl ows necessary to pay for the commitment,
the amount entered in the balance sheet is the present value of these cash
fl ows.
Restructuring provisions are entered when the Group has approved a
detailed and formal restructuring plan and the restructuring has either
started or been publicised. Provisions for restructuring comprise only di-
rect costs resulting from and necessary for the restructuring, and are not
part of the normal operations of the unit.
time material risks and rights have passed over to the buyer, the Group no
longer has ownership or control of the goods, the income amounts can be
reliably measured, it is probable that the fi nancial gain linked to the sale is
passed to the Group and that costs incurred in connection with the sale can
be reliably measured.
Income is calculated as follows:
Sale of services (travel)
Sale of services is calculated at the start of a voyage, that is to say the time
of transfer of risk.
Sales of goods
Sales of goods in the Group are recorded when delivery of the goods is
made, this being the time of transfer of risk. Payment of retail sales is
usually in the form of cash payment or by credit card. Such sales are taken
to income, including credit card fees that are incurred at the time of the
transaction. Fees are entered as sales costs.
Interest earned
Interest earned is taken to income in accordance with the true rate of
interest method.
Income from dividends
Dividends from investments are recorded when the Group has an uncondi-
tional right to receive the dividend.
Public subsidies
Public subsidies are entered when it is reasonably certain that the company
will fulfi l the subsidy conditions and 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 to be covered by the subsidy.
Foreign currency
Foreign currency contracts in EURO, USD, DKK are to a great extent linked to
current income and expenses in the Group. Foreign exchange gain/foreign
exchange loss on reconciliation is from and including 2010 referred to the
relevant income items in the accounts. See Note 7. The value of current
contracts is included in fi nancial items in the accounts.
Cost of loans
Cost of loans that can be directly related to the acquisition of qualifi ed
assets are capitalised as part of the relevant asset’s expenses until the
non-current asset is ready for its intended use. Such loan expenses are
capitalised as part of the asset’s procurement cost when it is probable that
this will result in future fi nancial benefi ts for the Group and the expenses
can be measured in a reliable manner.
Loan expenses that can be referred to new loans are recorded under
liabilities in the balance sheet and amortized over the duration of the loan.
Other loan expenses are recorded in the income statement during the
period when they are incurred.
Taxes
Tax costs comprise tax payable and changes in deferred tax. Deferred
tax liabilities/tax assets is calculated on all differences between the value
of assets and liabilities in the accounts and tax value, with the exception of:
● Temporary differences connected with goodwill which is not tax
deductible.
● Temporary differences related to investments in subsidiary companies
when the Group controls when the temporary differences will be
reversed and this is not expected to take place in the foreseeable future.
Deferred tax assets is entered in the accounts when it is probable that the
company will have suffi cient taxable profi t in subsequent periods in order
to utilize the tax assets. Earlier deferred tax assets is entered in the ac-
counts by the company to the extent that it is probable that the company
can make use of the deferred tax assets. Likewise, the company will reduce
deferred tax assets to the extent the company no longer considers it prob-
able that it can utilize the deferred tax assets.
Deferred tax liabilities and deferred tax assets is measured on the basis
of anticipated future tax rates in the companies in the Group in which tem-
porary differences have arisen.
Deferred tax liabilities and deferred tax assets are entered at nominal
value in the balance sheet.
Tangible non-current assets
Assets that are classifi ed as long-term in nature or use are entered as
non-current assets. Tangible non-current assets are mainly comprised
of ships, port facilities, land, buildings and machines/equipment. Tangi-
ble non-current assets are entered at procurement cost including costs
linked to the procurement less deductions for depreciation and write-down
in respect of reduced value. Subsequent major embellishment costs are
added to the value of the non-current assets in the balance sheet or are
entered separately when it is probable that future fi nancial benefi ts linked
to the expense will be measured reliably. Other repairs, classifi cation and
maintenance costs, including costs for the docking of ships are entered in
the income statement in the period when the expense is incurred. Land
is not depreciated. Other property plant and equipment is depreciated in
accordance with the straight line method so that the procurement cost of
non-current assets is depreciated to residual value over anticipated useful
live, which is:
Ships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20-35 years
Buildings/port facilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20-30 years
Machines and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-10 years
The useful live of tangible non-current assets and the residual value is re-
assessed every balance day and amended if necessary. In respect of the
Group’s ships, these are broken down into components having high wear
and tear and components with low wear and tear. Components with high
wear and tear are depreciated without residual value. Scrap value is es-
timated every year-end, and any changes in estimates of scrap value are
entered in the accounts as a change in estimate.
Gain and loss upon disposal are entered in the income statement and
make up the difference between sales price and value in the balance sheet.
Property under construction is classifi ed as a non-current asset and
entered at cost price until production or development is completed. Prop-
erty under construction is not depreciated until the non-current assets are
taken into use.
Notes Color Group Annual Report 2010
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20 21
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
presumptions obtained from external sources such as the Norwegian Ac-
counting Foundation and the capital market. Estimates are also based on
the company’s long term forecast submitted in connection with the annual
budget process in addition to historical experience in the company. Chang-
es in accounting estimates are entered in the income statement during the
period in which the estimates are changed. Actual values can be shown to
deviate from these estimates. Both estimates and presumptions are based
on continued operation as a going concern.
Leasing expenses are presented on a separate line in the income state-
ment and are evaluated as operational in accordance with the IAS guide-
lines. Management has evaluated the lease situation in relation to the
SuperSpeed2 ferry and has determined that the relevant criteria linked to
operational leases are fulfi lled.
Key fi gures from the business divisionsAmounts in TNOK
Group2009
Group2010
Cruise2009
Cruise2010
Transport2009
Transport2010
Operating income 2 064 850 2 444 062 4 508 912 1 967 684 2 632 025 4 599 709
Operating expenses -1 629 496 -1 910 304 -3 539 800 -1 571 219 -1 966 453 -3 537 672
Sale of non-current assets/restructuring 0 0
Ordinary depreciation -212 438 -86 899 -299 337 -197 941 -104 353 -302 294
Charter hire, leasing expenses -7 016 -115 552 -122 568 -8 584 -124 037 -132 621
Operating profi t/segment profi t 215 900 331 307 547 207 189 940 437 182 627 122
Net fi nancial expenses -81 279 256 173
Pre-tax result 465 928 883 295
Tax costs -128 724 -241 517
Profi t for the year 337 204 641 778
Segment assets 4 757 418 1 975 653 6 733 071 4 901 776 1 908 738 6 810 514
Non-allocated assets 2 916 221 1 995 860
Total consolidated assets 9 649 292 8 806 374
Segment liabilities 3 219 995 1 152 535 4 372 530 3 567 501 1 036 989 4 604 490
Non-allocated liabilities 2 878 267 1 967 830
Total consolidated liabilities 7 250 797 6 572 320
Investments during the period (gross) 15 269 27 991 43 260 3 670 20 809 24 479
Non-allocated investments 112 432 144 629
Total consolidated investments 155 692 169 108
Conditional liabilities and assets
Conditional liabilities are not entered in the fi nancial statements. Informa-
tion is provided on material conditional liabilities, but conditional liabilities
where the probability of the liabilities arising is low are excepted. A
conditional asset is not entered in the annual accounts, but information
is provided if there is a probability that a benefi t will be ascribed to the
Group.
Occurrences after the closing of the balance sheet
New information after closing of the balance sheet concerning the com-
pany’s fi nancial position on balance day is taken into account in the annual
fi nancial statement. Occurrences taking place after balance sheet day that
do not affect the company’s fi nancial position on balance sheet day but will
effect the company’s fi nancial position in the future are reported if they are
of material importance.
Financial instruments
Financial assets and fi nancial liabilities are entered in the Group
Balance Sheet when the Group becomes a party to the contractual
conditions in the instruments. The Group’s fi nancial instruments are
classifi ed in the following three categories: At fair value through profi t or
loss, loans and receivables, and other fi nancial liabilities at amortised cost.
Financial instruments that are of a long term nature are included in
fi nancial non-current assets and long term liabilities.
Financial assets
Financial assets at fair value in the income statement are fi rst entered
on the balance sheet at fair value on the day the contract is concluded
and thereafter measured at actual value on each balance sheet day.
Any transaction expenses are entered in the income statement
immediately. Trade receivables and other short term receivables are fi rst
registered in the accounts at actual value and thereafter at amortised
cost corrected in respect of any written-down amount. Current receivables
having a maturity of less than 3 months or receivables evaluated as
insignifi cant are not normally discounted. Earned services that have
not been invoiced are taken to income on balance day and entered as
receivables.
Financial liabilities
Financial liabilities at actual value in the income statement are entered on
the balance sheet for the fi rst time at the actual value on the date the
contract is concluded and measured thereafter at actual value on each bal-
ance day. Any transaction expenses are entered on the income statement
immediately.
Interest bearing loans are fi rst entered on the balance sheet at actual
value with the deduction of transaction expenses. Subsequent accounting
is at amortised cost, any difference between cost and redemption amount
is calculated over the period of maturity as part of the effective interest
rate.
Accounts payable and other current liabilities are fi rst measured at
actual value and thereafter at amortized cost. Current liabilities that fall
due within three months or liabilities considered as insignifi cant are not
normally discounted. Income paid in advance on balance sheet day is
entered as a liability.
Bunkers hedging
The Group makes use of fi nancial derivates earmarked as hedging instru-
ments in connection with cash fl ows that are extremely probable connected
with the procurement of bunkers for the ships. This hedging is documented
as being highly effective when entering into agreements and in subsequent
measurements as it sets off price changes in cash fl ows. Hedging account-
ing is applied. Any ineffi cient part of a gain or loss will be immediately reg-
istered in the income statement.
Concluded hedging contracts are entered at actual value on balance
date and changes in actual value are entered against 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 price
of bunkers.
Principles applicable to the parent company only
Royalty
Operating revenues in the parent company refer for the most part to roy-
alty income.
In connection with the reorganisation of Color Group, the ferry business
in Color Group ASA was transferred to Color Line AS with effect from 1998.
The rights to the use of the name and trademarks and use of the developed
shipping lines, quay rights etc. were not subject to takeover. 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 evaluated according to the cost
method. Group contributions from the parent company to subsidiary com-
panies after tax are entered in the accounts as income on the investment
in the subsidiary company. Dividend received and Group contribution from
the subsidiary company is entered in the accounts as increase in the invest-
ments in the subsidiary company. Dividend received and paid out and Group
contributions and other contributions are taken to income in the same year
as they are allocated in the subsidiary company.
The main rule for evaluation and classifi cation of assets
and liabilities in the parent company
Assets for permanent ownership or use are classifi ed as non-current as-
sets. Other assets are classifi ed as current assets. Receivables for repay-
ment within one year are classifi ed as current assets. Equivalent criteria
are applied in the classifi cation of current and non-current liabilities. Non-
current assets are evaluated at procurement cost and written down to ac-
tual value when the drop in value is not considered to be of a short-term
nature. Non-current assets having a limited fi nancial lifetime are subject to
a depreciation plan. Long-term loans are entered in the balance sheet at
the nominal amount received at time of establishment. Current assets are
valued at procurement cost or actual value, whichever is the lowest. Shares
in a trade portfolio are appraised at actual value on balance day. Changes
in value are entered in the income statement. Current liabilities are entered
in the balance sheet at the nominal amount received at time of transaction.
Operating expenses
Expenses in the parent company are expensed in the same period as the
Notes Color Group Annual Report 2010
appurtenant income. Goodwill in the parent company is depreciated ac-
cording to the linear method over the expected lifetime of goodwill.
NOTE 2 MAJOR INDIVIDUAL TRANSACTIONSThe purchase and sale of assets, investment liabilities
Rebuilding of SuperSpeed1
In 2010, a contract was concluded for the rebuilding of SuperSpeed1 in order
to increase passenger capacity. The work will take place at a shipyard in
Finland in January 2011. An advance of approx. NOK 72 million has been paid.
This amount has been entered in the accounts as a short-term receivable.
A new booking and Internet platform
In 2007, an agreement was concluded on the development/delivery of a new
booking system and a new Internet platform. Commissioning has been de-
layed. The system is due to become operative in 2011.
NOTE 3 SEGMENT REPORTINGSegment information is presented for each business area. This structure
is based on a format for information to Group Management. Purchase and
sales of services within the Group are based on the arm length principle.
The Group’s operations take place outside Norway. No internal result and
balance based on geographical division is issued.
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/organizations between Norway and Germany. Freight
operations are also included. The business area transport is legally organ-
ized in Color Line Transport AS which markets and sells cost effi cient trans-
port services between Norway, Sweden and Denmark for individuals, groups
and organizations. Freight business is also included in addition to the sale
of travel and hotel packages.
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22 23
The Group buys and sells foreign currency based on anticipated income and expenses in the respective currency. From and including 2010, the result of this trading is recognised in the relevant income statement in the accounts as shown above. The effect linked to cost of sales in the amount of +NOK 2 million is additional. Unrealized changes in value are presented under fi nancial items. Previously both realized and unrealized effects were presented as fi nancial items. In 2010 realized effects entered under operations amount to NOK +53 million while unrealized effects entered under fi nancial items amount to +NOK 6 million, total NOK 59 million.
Parts of the bunker’s consumption onboard the ships are hedged. The contracts are hedged in the accounts in that unrealized effects are temporarily entered against other income and expenses are entered in the income statement in the same period as the hedged volume is included in cost of sales. In 2010, hedging had an effect of + NOK 17 million. This effect is entered as a reduction in bunker’s expenses. – NOK 1 million was entered against other income and expenses in 2010. The equivalent fi gure in 2009 was + NOK 13 million.
Cost of technical operation 241 221
Other operating expenses on board 191 193
Other operating expenses ashore etc. 362 386
Effect on foreign currency trading -25
Total 769 800
Total other operating expenses comprising the following items: Amounts in MNOK
2010 2009
Owned by Color Group AS (parent company)Color Line AS Oslo 173 091 3 206 325 100 2 792 411
Color Hotels AS Oslo 22 1 446 100 100
Total direct ownership 2 792 511
Companies owned indirectly Share capital Owned by Color Line AS
Color 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 Line 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
Owned by Color Line Cruises AS
Color Line GmbH Kiel 26 (EUR) 100
Terminalbygget AS Oslo 100 100
I/S Jahre Line Oslo 100
Owned by Color Line Transport AS
Color 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
O.N. Sunde AS 36 845 20 566
Companies controlled by O.N. Sunde AS 108 536 115 454 631 1 311 23 531 22 243
Total 108 536 115 454 37 476 21 877 23 531 22 243
O.N. Sunde AS 319 343 249 044 265 000 265 000
Companies controlled by O.N. Sunde AS 59 369 262 153 262 153
Total 319 343 308 413 265 262 265 153 262 153
Color Hotels AS -1 403 -978
Color Line AS 3 342 422 3 799 453
Color Line Danmark AS 40 040
Color Hotel Skagen AS 26 086 26 627
Total 3 408 548 3 826 080 0 0
Amounts in TNOK
Amounts in TNOK
Amounts in TNOK
Amounts in TNOK
Equity
2009
Liabilities 2009
Stake31.12.2010
Book value inbalance sheet
Profi t2010
2010LiabilitiesLong term receivableCurrent receivable
Liabilities 2010
Registeredoffi ce
2009 2009 20092010 2010 2010
20092009
Receivables 2009
Cost of leasing ships Interest earned Cost of salesProfi t
20102010
Receivables 2010
Balance sheet
NOTE 6 RELATED PARTIESColor Group AS is owned by ONS Invest II, a company owned by Olav Nils
Sunde and his family. All the companies included in the O.N. Sunde Group
and its owners are related parties. Related parties also include Directors, the
Group President and the CEO in the different business areas. Transactions
between related parties are entered on specifi c accounts. The external fi -
nancing 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 inter-
company accounts is calculated at the equivalent rate Color Group AS pays
for external loans.
SuperSpeed2 is owned by Oslo Line AS, which 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 company purchases clothing for retail sales from Voice Norge AS at
market prices. This company is part of the O.N. Sunde Group.
Passenger revenues 3 883 3 996
Freight revenues 414 400
Other 186 203
Effect of foreign currency trading 26
Total 4 509 4 599
NOTE 7 INCOME AND EXPENSESTotal operating income comprises the following items:
NOTE 5 SUBSIDIARY COMPANIESThe Group comprises the parent company, Color Group AS. The following subsidiaries are owned directly and indirectly
The situation with regard to related parties:
Intercompany accounts between the current company and companies in the Group
Amounts in MNOK
2010 2009
Notes Color Group Annual Report 2010
Depreciation of property, plant and equipment is based upon the
anticipated lifetime of the acquisition. The ships represent the highest
value of capital acquisitions. Ships are divided into component parts and
depreciated at different rates as the useful live of the individual compo-
nents in the ships will vary. Changes in investment decisions, the market
situation and technological development may affect the depreciation
period. This appraisal is made at the end of each year. In the opinion of
management, there is no basis for changing depreciation periods.
The calculation of pension liabilities is based on several fi nancial condi-
tions as shown in the note concerning calculation. The calculations have
been carried out by an external actuary based on conditions applying in
the market, including future growth in wages. These presumptions are ap-
praised by management and in their best estimate are considered to be
reasonable. Any change in these estimates will have an effect on future
results.
Goodwill is based on the assumption that discounted future cash fl ows
are suffi cient to cover the present day value of goodwill. There is uncer-
tainty related to these cash fl ows. A change of presumptions and estimated
future cash fl ows will change the present day value of the cash fl ows. Such
changes could bring about a requirement for the writing-down of goodwill.
The annual cash fl ows on which calculations are based are also founded on
the company’s long term forecast presented in connection with the annual
budget process. Estimated interest levels in the calculation are based on
those available on the market. See also Note 9.
The Group has outstanding vendor’s credit from the sale of ships in
2008. The remaining amounts are assessed annually in relation to possi-
ble loss. Evaluations have not revealed any requirement for write-downs in
2010.
ESA, EFTA’s supervisory body decided in December 2009 to commence
competition-related investigations into Color Line and the company’s port
agreements in connection with the Sandefjord – Strømstad service. Com-
petitors of Color Line brought the case before the Norwegian Competition
Authorities in 2006. As the case also relates to Sweden it was transferred
to ESA. The company considers that Color Line has at all times acted in line
with competition law and regulations.
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24 25
Long term loans
Mortgages 3 610 553 3 970 791 3 360 544 3 757 516
Bond loans (registered on Oslo Stock Exchange) 1 927 733 1 062 500 1 851 233 994 500
Total interest bearing long term liabilities 5 538 286 5 033 291 5 211 777 4 752 016
Current liabilities
Short-term part of mortgage 0 0 389 500 375 000
Redeemed bond loans 0 0 76 500 68 000
Total interest bearing current liabilities 0 0 466 000 443 000
Total interest bearing liabilities 5 538 286 5 033 291 5 677 777 5 195 016
Cost price 1 Jan. 444 677
Additions in the year
Disposals in the year
Cost price 31 Dec. 444 677
Acc. depreciation 1 Jan. 291 882
Ordinary depreciation in the year 22 034
Disposals in the year
Acc. depreciation 31 Dec. 313 916
Book value 31 Dec. 130 761
Depreciation rate 5 %
NOTE 13 LONG TERM INTEREST BEARING DEBTS, MORTGAGES AND GUARANTEES
NOTE 10 TANGIBLE NON-CURRENT ASSETS, COLOR GROUP AS
Amounts in TNOK
Amounts in TNOK
20092010
Goodwill/ Intangible assets
20102009GroupParent Company
Goodwill is related to the acquisition of ferry business. Goodwill is depreciated over the estimated fi nancial lifetime. A depreciation period of 20 years is in line with the conditions that formed the basis for evaluation upon acquisition of the business.
In its loan agreements the Group has liabilities linked to liquidity, equity and degree of debt servicing. All liabilities are fulfi lled as at 31 December 2010.
Vendor’s credit, sale of ships 86 926 96 475
Accounts receivable from Group companies 265 000 265 000
CIRR fi xed interest contract 51 042 78 675
Pension funds -1 713 10 844
Ålesund stadium 25 430 25 430
Other accounts receivable 449 444
Total 427 134 476 868
Inventories for onward sale 120 228 124 864
Consumables 17 656 20 814
Bunkers 12 237 9 715
Total 150 121 155 393
NOTE 11 ACCOUNTS RECEIVABLE AND INVESTMENTS
NOTE 12 INVENTORIESInventories comprise the following types of goods:
Amounts in TNOK
Amounts in TNOK
2010
2010
2009
2009
NOTE 9 GOODWILL/INTANGIBLE ASSETSThe book value of goodwill as at 31 December 2010 is TNOK 671 301. The
equivalent value as at 31 December 2009 was also TNOK 671 301.
All goodwill is acquired by takeovers and has been of strategic impor-
tance in retaining and strengthening the market positions of the Group.
Goodwill is recorded in the transport segment which includes the Sande-
fjord – Strømstad service, the Larvik – Hirtshals service and the Kristian-
sand – Hirtshals service.
Goodwill has been tested for any possible drop in value below book va-
lue. The test is based on future cash fl ows after tax for the next 5 years, with
a terminal value based on a growth of 2% which is considered to be rea-
sonable in relation to the anticipated future growth in the tourist industry.
Future cash fl ows are based on the Group’s long term forecast presented in
connection with the annual budget process. These are based on moderate
growth in sales and contribution margin.
The net present value of future earnings is based on a discounting rate
after tax of 7.35%. This discounting rate is based on 10 year government
bonds and the offi cial market premium. Return on equity is equivalent to
the Group’s required rate of return.
The Group is exposed to changes in the tourist industry, including com-
petition from other players in the market. 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.
A test of the value of goodwill does not show any requirement for wri-
ting down goodwill. Sensitivity calculations show that reasonable fl uctua-
tions in the conditions on which the test is based, do not provide any basis
for changing the conclusion.
Notes Color Group Annual Report 2010
NOTE 8 TANGIBLE NON-CURRENT ASSETS, ASSETS HELD FOR SALE
Borrowing expenses are capitalized against the appurtenant item and depreciated over the estimated lifetime of the equipment.Property under construction is mainly related to the new booking and Internet platform.Property on leased land is depreciated over the lease period.Certain minor adjustments have been made in cost price and accumulated depreciation as at 1 Jan. 2009.These adjustments have no effect on book values.Amendments to cost price and accumulated depreciation as at 1 Jan. 2009 are in line with original values and do not effect book values.
Amounts in TNOK
TotalEquipmentInvestments in leased ships
Land, buildings and other real- estate
Property under construction
Ships
Procurement cost
Procurement cost as at 1 Jan. 2009 6 815 909 200 484 640 1 152 617 130 531 8 583 897
Additions 12 854 5 976 5 736 5 127 142 923 172 616
Disposals -3 508 -153 178 -156 686
Translation difference -9 104 -52 147 -61 251
Procurement cost as at 31 Dec. 2009 6 825 255 6 176 328 094 1 105 597 273 454 8 538 576
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 -6 408 -432 -6 993
Translation costs -3 179 -18 256 -21 435
Procurement cost as at 31 Dec. 2010 6 850 884 14 560 326 038 1 096 399 378 112 8 665 993
Accumulated depreciation and write-downs
Depreciations and write-downs as at 1 Jan 2009 855 128 0 405 028 383 436 0 1 643 592
Depreciations for the year 242 328 263 18 377 41 326 302 294
Disposals -150 480 -150 480
Translation difference -3 956 -17 674 -21 630
Depreciation and write-downs as at 31 Dec. 2009 1 097 456 263 268 969 407 088 0 1 773 776
Depreciations and write-downs as at 1 Jan. 2010 1 097 456 263 268 969 407 088 0 1 773 776
Depreciations for the year 239 423 1 839 15 794 42 281 299 337
Disposals -6 408 -432 -6 840
Translation difference -1 680 -6 076 -7 756
Depreciation and write-downs as at 31 Dec. 2010 1 336 879 2 102 276 675 442 861 0 2 058 517
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
Depreciation method All capital acquisitions are depreciated according to the linear method over the estimated lifetime.
Depreciation rates 2,85-20% 10-20% 10-20% 5-20%
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26 27
The Group has current leases with the local port authorities in regular
ports of call. These contracts comprise lease of land, buildings, areas and
berths for the ships. Terms of the leases are partially fi xed or are variable,
based on number of calls, passengers and vehicles. The company owns the
NOTE 17 FINANCIAL RISK AND USE OF FINANCIAL INSTRUMENTSThe Group’s risk management policy
The main fi nancial risks in the Group concern bunkers, foreign currency,
and liquidity/refi nancing risk. The Group’s fi nance division follows up the
individual areas on an ongoing basis in order to uncover any impending
risks. The division also has a supporting role for the operating organiza-
tion in order to prevent any risks arising. It is the Group’s policy to refrain
from active speculation in fi nancial risks, but to use fi nancial derivates as
a buffer against risks connected with fi nancial exposure in the operation
and fi nancing of the Group’s business. Each month a return is prepared
providing an overview of hedging instruments in force. The Board is also
updated currently with overviews of hedging instruments and estimated
future risks.
Market risk
The Group’s market risk is mainly connected with changes in foreign ex-
change rates, Income in foreign exchange and cost of sales and services is
not always neutral in the individual currency. This risk is reduced as far as
possible. See currency risk.
Currency risk
Currency risk arises when there are differences between income and
expenses in each type of currency, particularly USD, EUR and DKK and in
relation to investments/purchase of non-current assets and repayment of
loans in foreign currency. The Group has an active policy for reducing cur-
rency risk through the hedging of currencies and the use of multi-currency
terminal buildings in Oslo, Larvik, Hirtshals and Strømstad. Operational
framework agreements have been concluded for the lease of IC equipment,
vehicles and other equipment.
loans. In a normal situation it is the Group’s policy to cover a large part
of the current currency risk 6 to 12 months ahead by means of hedging
contracts, options, swaps and structured products. Taking into account
concluded hedging contracts and currency on hand as at 31 December 2010,
the Group is in a fairly neutral position with regard to operating income and
expenses in EUR and DKK, but a change in the exchange rate between EUR
and NOK of +/- 10 % in relation to the Group’s currency loan will affect the
result (foreign exchange gain/loss) by approx. +/- NOK 90 million before tax.
A change in the exchange rate between USD and NOK of +/- 10 %, taking
into account concluded currency derivate contracts will affect the result by
approx. +/- NOK 40 million before tax. The result will also be affected by the
change in value of hedging contracts.
In 2010 hedging contracts have been realized in EUR, USD and DKK linked
to current income and costs in the Group. These contracts are to a great
extent connected with daily operations and foreign exchange gain/loss is
entered in the respective items on the income statement.
At yearend the concluded hedging contracts cover parts of total expo-
sure for the coming year, and are primarily option and hedging contracts
maturing in 2011.
Interest risk
The Group is primarily exposed to interest risk through its loan portfolio.
The object of interest risk management is that changes in the interest level
over a period of time can have a negative effect on the result. The Group
has concluded interest swap agreements in order to achieve the desired
ratio between fi xed and fl oating rates of interest. At yearend 2010, the Com-
pany had three swap agreements at a nominal value of NOK 1 290 million
Future minimum hire liabilities
Ships NOK 78 233 301 543 470 624 850 400
Ships EUR 2 940 11 189 17 976 32 105
Internal Communications Equipment NOK 6 315 4 094 0 10 409
Other NOK 1 827 1 039 0 2 866
Amounts in TNOK
over 5 years1 yearCurrency Total2-5 years
The Group buys and sells foreign currency based on anticipated income and expenses in the respective currencies. From and including 2010 the realized effect of this trading is entered under operations together with the relevant income statement items in the accounts while the non-realized effects are presented as a fi nancial item. All changes in value connected with these derivates were previously presented as fi nancial items. See Note 7.
Interest costs, bank loans -108 707 -151 383 -113 755 -148 335
Interest costs, bond loans -74 959 -60 101 -74 959 -60 101
Other interest costs -28 942 -17 839
Total interest costs -212 608 -229 323 -188 714 -208 436
Loss fi nancial instruments at actual value in income statement -2 996 -72 326 -2 996 -72 326
Unrealized foreign exchange loss -1 026 -2 362 0 0
Loss on shares -14 830 -4 016 -14 830 -4 016
Loan expenses -13 183 -6 666 -13 183 -4 041
Depreciation, loans -12 450
Foreign exchange loss -99 348 -131 088 -47 577 -70 424
Total fi nancial expenses -343 991 -458 231 -267 300 -359 243
Interest earned, liquidity 4 960 3 169 528 9 595
Interest earned, accounts receivable 44 648 30 483 202 083 141 440
Total interest earned 49 608 33 652 202 611 151 035
Gain fi nancial instruments at actual value in income statement 7 578 259 368 1 828 230 606
Unrealized foreign exchange gain 57 622 182 488 57 171 182 488
Gain on shares 34 780 63 790 34 780 63 790
Foreign exchange gain 113 124 175 106 53 835 30 637
Total fi nancial income 262 712 714 404 350 225 658 556
Total fi nancial items -81 279 256 173 82 925 299 313
NOTE 16 NET FINANCIAL EXPENSES Amounts in TNOK
20092009 20102010Parent CompanyGroup
Notes Color Group Annual Report 2010
Mortgage loans are secured by mortgages in ships and other assets. Leases for terminal areas are also mortgaged as well as negative mortgage in ships.
Color Group AS has concluded a framework agreement for guarantee of the Group’s tax withholdings of NOK 60 million. In addition the Group has pledged
approx. NOK 80 million to the travel guarantee fund in addition to other pledges for subsidiary companies totalling approx. 52 million.
Interest conditions on all loans and credits are fi xed in accordance with NIBOR with the addition of an agreed margin. At yearend 2010, interest rates were on average:Mortgage loans: 2.84 percent. Bond debt: 6.39 percent.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.) 6 607 476 6 764 800
Amounts in TNOK
2010 2009
Trade creditors 191 804 182 980
Unpaid government charges and special taxes 75 937 74 334
Pre-paid income 120 992 120 490
Accrued interest 31 984 22 273
Accrued wage costs 62 804 59 468
Sundry current liabilities 142 529 122 787
Total 626 050 582 332
Other fi nancial liabilities
Market value currency contracts 1 827
Bunkers’ hedging
Total 1 827
NOTE 14 TRADE CREDITORS AND OTHER CURRENT LIABILITIESAmounts in TNOK
2010 2009
Charter hire 108 536 115 454
Hire of internal communications equipment 11 634 14 662
Other 2 398 2 505
Total charter hire, leasing liabilities 122 568 132 621
Lease of terminals and queuing areas 17 397 18 842
Total lease liabilities 139 965 151 463
NOTE 15 LEASESAmounts in TNOK
2010 2009
The company has concluded a lease for the hire of MS 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 percent 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. while the reduction of the lease amount every 6 months is increased to 4.17 percent. Other leases mainly comprise internal communications equipment and other equipment on lease periods of 3 to 5 years.
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GroupParent Company
28 29
Trade debtors 104 187 100 699
Write-downs for anticipated loss -4 631 -5 821
Net trade debtors 99 556 94 878
Pre-paid tangible non-current assets 72 862 0
Inter-company receivables 319 343 308 414
Other current receivables 104 703 119 812
Trade debtors and other accounts receivable 596 464 523 104
Bunkers contracts 17 141 18 519
Currency derivates 5 750 0
Other fi nancial receivables 22 891 18 519
Debt 5 677 777 5 195 016
Liquid assets 1 138 648 101 150
Net debt 4 539 129 5 093 866
Equity 2 398 495 2 234 054
Debt equity ratio 1,89 2,28
Exposure to credit risk: trade receivables/other current assets
Debt equity ratio
Amounts in TNOK
Amounts in TNOK
2010
2010
2009
2009
Determining actual value of fi nancial assets and liabilities
The actual value of hedging contracts is determined by applying the futures
rate on balance sheet date. Actual value of currency swap agreements is
calculated by determining the present day value of future cash fl ows. Ac-
tual value of interest swap contracts is calculated by discounting the cash
fl ows in the contracts at nil coupon rates in the yield curve in the relevant
currency. Actual value of the above mentioned instruments is calculated by
the company’s external bankers. The balance sheet value of cash in hand
Credit risk
The Group’s fi nancial assets are mainly comprised of receivables from
sales, other receivables, liquid resources and fi nancial instruments. These
receivables represent the Group’s maximum exposure and credit risk
related to fi nancial assets.
The fi gure for trade debtors in the balance sheet is net after alloca-
and credit lines is equal to the actual value. Similarly, balance sheet value
of trade receivables and accounts payable is practically equal to the actual
value as these are concluded on normal terms at short maturity. Bond loans
are registered on the stock exchange and are subject to a fl oating rate
of interest falling due quarterly. Actual value of bond loans is the stock
exchange list price at yearend. Actual value of long term bank loans is the
company’s evaluation of any added costs for refi nancing at yearend, dis-
counted at 5% p.a. and taking due regard to average maturity.
tions for potential loss, based on previous experience and evaluation of the
present day situation. The largest part of the company’s trade debtors fall
due for payment within 3 months. The credit risk for fi nancial derivates is
considered to be low as agreements on these assets have been concluded
with banks of high creditworthiness, thereby reducing the risk that the
other party will be unable to fulfi l its liabilities.
Balance sheet value and actual value of long term loans
Mortgages 3 360 544 3 757 516 3 194 162 3 562 396
Bond loans 1 851 233 994 500 1 848 233 931 218
Total 5 211 577 4 752 016 5 042 395 4 493 614
Less than 1 year 482 510 200 213 496 011 200 213
1 - 2 years 441 788 590 507 454 948 590 507
2 - 3 years 462 552 89 423 475 372 89 423
3 - 4 years 429 243 589 423 441 791 589 423
5 years and longer 2 306 487 957 486 2 406 269 957 486
Total 4 122 580 2 427 052 4 274 391 2 427 052
Amounts in TNOK
MortgagesMortgages Bond loansBond loans
* The basis for actual value of bond loans is the market price at yearend and actual value for mortgages is the company’s evaluation of any additional expenses for re-fi nancing at yearend discounted at 5% p.a. with due regard to average maturity.
Amounts in TNOK
20092009 20102010Actual value*Balance sheet value
The following table shows the total liquidity fl ows in the years ahead for coverage of instalments and interest on current
long term fi nancing contracts in the form of long term bank loans and bond loans.
Notes Color Group Annual Report 2010
with a remaining term of approx. 4.1 years at an average interest rate of
4.4 %. Furthermore a CIRR-fi xed interest agreement has been concluded
with Finnish Export Credit in connection with the delivery of M/S Color
Magic in 2007 in the amount of NOK 1 580 million (adjusted in accordance
with contractual instalments) of which 50 % is fi xed at 4.2 % + margin
and 50 % is swapped to a fl oating rate of interest, six months NIBOR less
1.315 % p.a. for 11 years. A further CIRR-fi xed interest contract has also been
concluded with Finnish Export Credit in connection with the delivery of
M/S SuperSpeed1 in 2008, of NOK 460 million at 3.91 % and EUR 26 million
at 3.55 %. These have been swapped in their entirety to a fl oating rate of
interest, 6 months NIBOR less 1.115 % and EURIBOR less 0.49 % p.a. for
12 years. Total interest bearing debt is NOK 5 696 million. Fixed inter-
est derivates are concluded for a total net amount of NOK 1 290 million
representing approx. 20 % of total interest bearing debt as at 31 Dec. 2010.
A change in the interest level of +/- 1 % taking into account concluded
hedging contracts will affect the result by approx. +/- NOK 30 million before
tax. In addition the result will be affected by the change in value of hedging
contracts, and interest earned on retained cash.
The table below quantifi es the future interest risk taking into account
cash in hand/bank deposits, structure of maturity for mortgages, bond
loans and interest swaps. The fi gures are based on existing balance sheet
liabilities as at 31 December 2010.
Interest sensitivity, Group
Mortgage loans 3 360 527 3 001 027 2 610 893 2 243 259
Unsecured bond loans 1 871 000 1 400 000 1 400 000 900 000
Total debt to credit institutions 5 231 527 4 401 027 4 010 893 3 143 259
Cash in hand/bank deposits 1 063 000 1 063 000 1 063 000 1 063 000
Net interest swaps 1 202 370 864 555 526 740 351 110
Net interest bearing debt after interest swaps 2 966 157 2 473 472 2 421 153 1 729 149
Interest sensitivity at +/- 1% 29 662 24 735 24 212 17 291
Amounts in TNOK
3-4 yearsLess than 1 year 5 years and over1-2 years
Bunkers risk
Bunkers represented approx 12 % of the Group’s operating expenses in 2010,
and represent an operational risk resulting from fl uctuations in the prices
of oil. As at 31 December 2010, the Group had bunkers hedging contracts for
approx. 45 % of estimated consumption in 2011, more or less equally distri-
buted throughout the year. The contracts are based on the actual physical
product consumed by the ships refl ecting an oil price (Brent per barrel)
of approx. USD 70-75. The bunkers hedging contracts in force have had no
impact on the results at yearend. Actual value of hedging contracts as at
31 December 2010 is TNOK 17 141. All hedging contracts for bunkers expire
in 2011, and will affect the result in the coming year. Changes in the market
value of the remaining bunkers contracts will have an affect on equity, but
not on profi t.
A change in the price of bunkers of +/- 10 % the hedging contracts
concluded will reduce profi t by +/- NOK 20 million before tax. The effect
connected with future hedging contracts will be entered in the accounts
in accordance with hedging principles and will amount to a total of TNOK
16 995 for 2010. Hedging activities have not shown ineffi ciency in 2009 and
2010.
Liquidity risk
Liquidity risk is linked to the risk of the Group being unable to fulfi l its
fi nancial liabilities as and when they fall due. The Group focuses on maintai-
ning a level of liquidity preparedness which, as a minimum will cover a peak
charge period. Liquidity preparedness is managed at Group level and 12
month budgets are prepared and monitored on a weekly basis. Liquidity
available as at 31 December 2010 is NOK 1 743 million (including undrawn
credit lines). Surplus liquidity is placed primarily on the short term money
market. Reference is also made to the table under “Fixing of actual value
of fi nancial assets and liabilities” in respect of maturity analysis showing
instalments and interest in respect of interest bearing debt in the future.
Shares
Shares entered in the balance sheet are listed shares that are readily tra-
ded, acquired in order to earn on short-term variations in price. The value
of shares on balance sheet day is not considered to represent a critical risk.
Capital management
An important objective is to secure fi nancial freedom of action both in the
short and long terms and to maintain a good credit rating thereby achieving
favourable loan terms that bear a reasonable relationship to our business.
The company manages its capital structure, making whatever changes are
required on the basis of ongoing evaluation of the fi nancial conditions for
the business. The company’s capital structure is followed up by calculating
debt equity ratio.
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30 31
Cost of wages
Wages 866 746 839 436
Employers’ tax 159 996 159 357
Pension costs 66 152 70 433
Other benefi ts 137 856 143 563
Total 1 230 750 1 212 789
Man-years 2 446 2 445
NOTE 18 COST OF WAGESGroup Amounts in TNOK
2010 2009
*Fee to Chairman of the Board, Morten Garman
The princibles of defi ning man-year has been slightly changed for 2010. The fi gures for 2009 has been changed accordingly.
In 2010 refund of income tax, national insurance contribution and employer’s tax for seamen was taken to income in the amount of NOK 204 million (NOK 203 million in 2009).
The amount was entered as a reduction in wages in the consolidated accounts. From this amount the Group has contributed NOK 9 million to the Foundation Norwegian Maritime
Competence (NOK 9 million in 2009).
Statutory auditing services 260 1 460
Fees for tax advice etc. 42 334
Fees for other services unrelated to the audit 145 598
Total audit and advisory fees 447 2 392
Auditors’ fees – DeloitteAmounts in TNOK
Parent Company
TotalOther
remunerationPensioncostsBonusSalary
Group
NOTE 19 REMUNERATION TO SENIOR EXECUTIVESAmounts in TNOK
Olav Nils Sunde, President Color Group AS 0 0 0 0 0
Trond Kleivdal, Group President Color Line AS 3 155 1 742 76 301 5 274
Total senior executives 3 155 1 742 76 301 5 274
Director’s fees
Total Directors fees* 200 200
Cost of wages
Wages 6 060 8 647
Employers’ tax 1 646 1 340
Pension costs 69 190
Other benefi ts -58 592
Total 7 717 10 769
Man-years 6 6
Parent company (Color Group) Amounts in TNOK
2010 2009
Guidelines for remuneration to senior executives 2010
Remuneration to senior executives in the Group is to be based on the fol-
lowing main principles:
The principle of basic salary
Persons in executive positions shall receive a competitive basic salary
based on position, responsibility, competence and the performance of the
individual executive.
The principle of variable benefi ts, incentive schemes etc
Executives may receive a variable salary. This shall be an incentive, aimed
at profi t orientation. A variable salary is based on achievement of targets
for the Group, division or company in which the executive is employed.
The principle of non-cash benefi ts
Executives may be offered different schemes, such as company car
schemes, insurance, pensions and similar. Benefi ts in kind shall primarily
be in the form of home telephone, mobile phone and newspaper – items
that can improve the availability of the executive for the company.
Post termination salary scheme
The Group president of Color Line, Trond Kleivdal will, in the case of a pos-
sible termination that is not covered by the provisions of the Working Envi-
ronment Act, receive three years salary equivalent to NOK 9.4 million.
Information on the preparation and decision-making process
Salary terms for the Chief Executive Offi cer are dealt with by the Board on
Balance sheet items evaluated at actual valueLevel 1 values taken from the fi gures in the market with similar activityLevel 2 values from others that are not included in an active market with appurtenant ratesLevel 3 values calculated following evaluation of assets and liabilities that are not based on known market data.
Financial assets at actual value
Short-term share investments 35 257 35 257
Currency swaps 5 750 5 750
Bunkers derivates 17 141 17 141
Total 52 398 5 750 0 58 148
Financial liabilities at actual value
Interest swaps 18 478 18 478
Total 0 18 478 0 18 478
Amounts in TNOK
Level 3Level 1 TotalLevel 2
Notes Color Group Annual Report 2010
Balance sheet value of the Group’s interest bearing debt to credit institutions in different currencies
NOK 4 627 053 4 011 104 4 652 610 4 042 181
EUR 911 233 1 022 369 911 232 1 022 369
DKK 113 935 130 466
Total 5 538 286 5 033 473 5 677 777 5 195 016
Amounts in TNOK
20092009 20102010GroupParent Company
Financial assets
Loans and accounts receivable
Bank deposits/cash 1 138 648 101 150
Trade debtors 99 556 94 878
Other current receivables 496 908 428 226
Total loans and receivables 1 735 112 624 254
Hedge accounting
Bunkers swaps 17 141 18 519
Total hedge accounting 17 141 18 519
Financial assets at actual value in income statement
Short-term share investments 35 257 95 239
Interest swaps 51 042 78 675
Currency derivates 5 750
Total fi nancial assets at actual value in income statement 92 049 173 914
Financial liabilities
Trade creditors and other current liabilities 626 050 582 332
Bank loans 3 750 044 4 132 516
Bond loans 1 927 733 1 062 500
Total fi nancial liabilities 6 303 827 5 777 348
Financial liabilities at actual value in income statement
Interest swaps 18 478 15 482
Contracts, currency derivates 1 827
Total fi nancial liabilities at actual value in income statement 18 478 17 309
Overview of fi nancial assets and liabilities classifi ed according to measurement categoriesAmounts in TNOK
20092010
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32 33
NOTE 22 EQUITY, PARENT COMPANY
Equity 1 Jan. 2009 143 600 1 478 436 482 158 2 104 194
Profi t for the year 290 109 290 109
Group contribution -120 259 -120 259
Equity 31 Dec. 2009 143 600 1 478 436 652 008 2 274 044
Equity 1 Jan. 2010 143 600 1 478 436 652 008 2 274 044
Result for the year 134 036 134 036
Group contribution:
– 2010 -240 000 -240 000
– Ordinary -31 019 -31 019
Equity 31 Dec. 2010 143 600 1 478 436 515 025 2 137 061
Amounts in TNOK
Other equity
Share capital Total
Premium fund
Operating equipment 2 480 142 2 225 893
Intangible assets 187 429 159 030
Financial assets 12 258 21 221
Income statement 500 450 625 563
Current assets -42 009 -37 259
Liabilities 196 660 24 682
Carry-forward loss -18 886 -241 765
Total 3 316 044 2 777 365
Deferred tax liabilities as at 31 Dec. 928 492 777 663
Operating equipment 117 527 138 068
Financial assets -55
Income statement 13 764 17 205
Current assets -3 281
Liabilities 73 911
Total 205 147 151 992
Deferred tax liabilities as at 31 Dec. 57 441 42 558
NOTE 23 DEFERRED TAX LIABILITIESSpecifi cation of the taxation effect of temporary differences and carry-forward loss
Group
Parent company (Color Group)
Amounts in TNOK
Amounts in TNOK
2010
2010
Benefi t/Liabilities
Benefi t/Liabilities
2009
2009
The parent company, Color Group AS has a defi ned contribution pension
scheme. TNOK 69 has been paid in to this scheme in 2010. The pension
schemes fulfi l the statutory requirements with regard 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
in Color Group AS. All shares in ONS Invest II AS are owned indirectly by
Director and Group President Olav Nils Sunde and his family.
Notes Color Group Annual Report 2010
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 Company’s Act (Norway).
Report concerning the policy for remuneration to executives in 2010
Guidelines for executive salaries were in accordance with the above policy
during the previous fi nancial year. Remuneration to senior executives is
charged to the company as an expense and has otherwise no direct conse-
quence for the company’s shareholders.
NOTE 20 PENSIONSAs at 1 July 2008 the Group pension scheme was changed from a defi ned
benefi t scheme to a defi ned contribution scheme for all shore-based em-
ployees.
The defi ned contribution scheme
In this scheme the company pays an annual premium to a life insurance
company which invests the contributions on behalf of the employees. The
annual premium is charged to expenses. Company contribution to the de-
fi ned contribution scheme is expensed in the amount of TNOK 12 745 in 2010
and TNOK 15 073 in 2009.
The defi ned benefi t pension scheme
A 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 encompassed by the an-
nual calculation of pension costs and liabilities.
As at 31 December the Group Pension liabilities for seagoing employees
covered 1 484 members. In addition the Group pays the shipowners’ share
of the pension scheme for seamen which in 2010 totalled NOK 25.7 million
and in 2009 NOK 25.45 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 TNOK 2 486. 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 liabilities.
A premium of TNOK 7 450 with the addition of employers’ tax was paid in 2010. Next year’s premium is expected to total TNOK 7 748.The scheme is managed by an insurance company and the composition of funds is based on the statutory management performed by this company. In the calculation disability table IR 02 and mortality table K05 are applied.
Financial assumptions
Discount rate 4,00 % 4,40 %
Expected annual wage adjustment 4,00 % 4,25 %
Expected annual adjustment of pensions 1,30 % 1,30 %
Expected annual G-adjustment 3,75 % 4,00 %
Estimated yield 5,40 % 5,60 %
Pension costs for the year are as follows
Pension yield for the year 16 141 23 849
Interest cost on pension liabilities 7 371 7 078
Anticipated yield pension funds - 7 224 - 7 421
Administration 856 812
Employers’ tax 2 418 3 428
Changes in estimates and estimate deviation in income statement 4 124 5 455
Cost of pensions 23 686 33 201
Reconciling of pension liabilities and pension funds against balance sheet
Present value of pension liabilities 195 590 170 333
Value of pension funds - 132 447 -127 614
Employers’ tax 8 901 6 023
Unrecognized deviation in estimate - 70 331 -59 719
Pension liabilities in balance sheet 1 713 -10 977
Pension costs for the defi ned benefi t scheme (yield) for the year are as followsAmounts in TNOK
2010 2009
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Color Group Annual Report 2010
34 35
Tax costs for the year
Tax, Group contribution 67 714 69 044
Tax payable 4 406
Changes in deferred tax 56 604 172 473
Cost of taxes, ordinary result 128 724 241 517
Reconciling from nominal to actual tax rate
Pre-tax result including extraordinary result
Ordinary result 465 928 883 295
Estimated income tax at nominal tax rate 130 460 247 323
Tax effect of following items
Non-deductable expenses -2 585 -7 063
Translation differences 399 -165
Corrections previous years 450 1 422
Cost of taxes, ordinary result 128 724 241 517
Effective tax rate 27,6 % 27,3 %
NOTE 24 COST OF TAXES
GroupAmounts in TNOK
2010Benefi t/Liabilities 2009
Tax costs for the year
Tax, Group contribution 32 784 47 834
Changes previous years 281
Changes in deferred tax 14 882 53 324
Cost of taxes, ordinary result 47 947 101 158
Reconciling from nominal to actual tax rate
Pre-tax result including extraordinary result
Ordinary result 181 984 391 268
Estimated income tax at nominal tax rate 50 956 109 555
Taxation effect of following items
Non-deductable expenses -3 459 -8 397
Corrections, previous years 450
Cost of taxes, ordinary result 47 947 101 158
Effective tax rate 26,3 % 25,9 %
NOTE 25 BANKColor Group AS is a group account holder. The Group companies’ bank
accounts that are included therefore represent intercompany accounts.
This represents a net receivable of NOK 277 million in the parent company.
All represented companies stand surety for intercompany balances in re-
spect of the legal Group account.
Parent Company (Color Group) Amounts in TNOK
2010Benefi t/Liabilities 2009
Result for the year after tax 337 204 641 778
Weighted average, number of shares 71 800 000 71 800 000
Result per share NOK 4,70 8,94
NOTE 26 RESULT PER SHAREThe result per share is calculated as an annual result providing an average of the number of outstanding shares throughout
Amounts in TNOK
2010 2009
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36 37
Color Group Annual Report 2010
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Color Group Annual Report 2010
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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