Directors Report

    Corp. ID no. 556027-4077

    The Board of Directors and Chief Executive Officer of Copenhagen Malmö (CMP) hereby submit their annual report for the financial year January – December 2010.

    Group relationship and the nature and focus of activities

    CMP is owned in equal parts by Malmö Hamn AB i likvidation (corp. ID no. 556014-7596) and Udviklingsselskabet By & Havn I/S (corp. ID no. in Denmark 30 82 37 02). In 2011 Malmö Hamn AB’s shares in CMP will be distributed to Malmö Hamn’s current owners, of which the largest, holding about 55 per cent of the shares, is the Municipality of Malmö. There are also a number of private stakeholders, of which the largest, holding 29 per cent of the shares in Malmö Hamn AB, is Norra Vallgatan Förvaltnings AB. CMP will thus have a broader ownership base in 2011.

    CMP’s activities in Denmark are conducted by CMP’s affiliate (corp. ID no. in Denmark SE 25 99 60 11).

    CMP leases permanent facilities in the form of quays, shipping lanes, buildings, etc. from the Municipality of Malmö (via Malmö Hamn AB) and Udviklingsselskabet By & Havn I/S, for which CMP pays annual concession fees, based partly on the existing facilities and partly on investments in new facilities. In 2010 the company concluded negotiations with the port owners on an extension of the old agreements, which ran until 2023. The new, currently applicable concession agreements with the port owners expires in 2035.

    The new agreements also defines the framework for the transfer of certain port terminals to new geographic areas. A new RoRo, combi and container terminal in the Northern Harbour will open in Malmö in 2011. In Copenhagen CMP has an agreement under which CMP will move from a part of the existing terminal areas used for cruise traffic to a new cruise terminal in 2013 and from the existing container terminal to a new terminal in 2020. In 2011 CMP will also be taking over a new area adjacent to the existing bulk terminal at Prøvestenen in Copenhagen.

    Business concept

    CMP’s business concept is to sell port, terminal and transport services.

    Net sales and results

    CMP posts a pre-tax profit of SEK 116 million for 2010 (2009, SEK 128 million). The weaker result is a natural consequence of the general economic slowdown, both in the Öresund region and globally. The result includes one-off charges of SEK 7.3 million.

    Total net sales in 2010 were SEK 675 million, against SEK 733 million in 2009.
    Total operating costs in 2010 were SEK 562 million.

    Significant events during and after the financial year

    The economic slowdown had no impact on freight volumes, which was about 15 million tonnes in 2010, the same as in 2009. The reduced turnover is mainly due to lower rental income and currency effects, as CMP’s Danish sales were affected by changes in the value of the Danish krone against the Swedish krona from 2009 to 2010.

    The number of cruise ship arrivals was 308, representing a total of 662,000 passengers. CMP thus retained its position as the largest cruise ship destination in the Baltic Sea region.

    While volumes in most unit load areas have remained flat there has been a marked resurgence in car transports, with the number of handled cars soaring by over 60 per cent compared with 2009. The increase has been greatest in transit traffic but transports of cars to neighbouring regions have also increased sharply.

    Ferry cargo to Germany and Norway declined by 1 and 5 per cent, respectively, compared with 2009. The ferry service from Copenhagen to Poland was discontinued in November.

    Freight volumes in dry bulk declined slightly while liquid bulk volumes increased somewhat, which must be deemed satisfactory in view of the prevailing economic climate.

    The weak economy made it necessary to reduce staff levels. The number of permanent employees was cut by 18, half of whom left the company through voluntary redundancy agreements in connection with retirement.

    Outlook

    CMP faces major challenges in the next few years. Extensive investments have been initiated in Malmö and Copenhagen, which in the longer term will incur sharply higher expenses in the form of concession fees for the investments. A determined effort will of course be required to ensure that we are able to benefit from the investments during a period of economic weakness. However, the implemented cost cuts and restructuring measures put CMP in a strong position to exploit the opportunities that will arise over the next few years as the economy recovers.

    Environment

    CMP works continuously on environmental issues.

    The new ISO 14011 environmental standard has been used as the company’s environmental management system since a number of years. The current certification is valid until December 2012.

    Port activities in Sweden require environmental permits under applicable environmental laws. CMP received an environmental permit for its ports activities in November 2009.
    Some of the facilities and areas where CMP currently operates have suffered environmental damage from previous activities. However, environmental conditions resulting from the period before 2001, when CMP’s activities started, are the responsibility of the port owners.

    Investments

    Investments in buildings, machinery and equipment in 2010 were SEK 13 million. The investments refer mainly to work machines.

    Employees

    The number of permanent employees in 2010 was 404, which is 2 per cent less than in 2009. Out of the total number of employees, 14 per cent were women. Short-term sick leave was 2.4 per cent (2009, 2.3%) and long-term sick leave 1.7 per cent (2009, 1.4%).

    Proposed distribution of profits

    The Annual General Meeting is asked to decide on the appropriation of the
    following earnings:
    Retained earnings
    138,867,000
    Profit for the year 99,914,000
    Total
    238,781,000


    The Board of Directors and Chief Executive Officer propose that
    A dividend of SEK 300 per share be
    paid to the shareholders
    60,000,000
    To be carried forward
    178,781,000
    Total
    238,781,000

    No transfer to restricted equity is proposed.

    The Board and CEO believe the proposed dividend is justifiable in view of the equity requirements arising from the nature, scope and risks of the activities and the consolidation needs, liquidity and position of the company.

    For more information about the company’s results and financial position for 2010 and 2009, see the following income statement and balance sheet and additional disclosures.