Gorthon Lines

Annual report 1998
12° 40'
Contents:
56°
00'
This is Gorthon Lines
2
Shares and shareholders
12
Cargo security
22
Comments from management
4
The fleet of the future
14
Formalities
24
Market overview
6
Sea Partner – operations and crew 16
The Board and management 38
Overview of the last few years
8
Environmental policy
18
Glossary
The Gorthon Lines fleet
20
Comment
10
40
Annual General Meeting
The Annual General Meeting of the
company will be held on Wednesday,
20 April 1999 at 5.00 p.m. in the
Öresund Room at the Hotel Marina
Plaza in Helsingborg, Sweden.
Notification of intent to participate
Shareholders wishing to participate
in the Annual General Meeting must
notify the company in one of the
following ways:
Right to participate
To participate and exercise the right
to vote, a shareholder must be:
• registered in the shareholders’
register
• made known to the company.
Registration in the shareholders’
register (VPC AB) must be effected
by Friday 9 April 1999 at the latest.
Shareholders whose shares are held
in the name of a nominee must
temporarily reregister their shares
in their own name by Friday 9 April
1999 at the latest. This means that
such shareholders must inform the
nominee of their intention to do so
in good time prior to this date.
• by telephone on (+46) 42 17 27 00
• by e-mail: [email protected]
• or by post to:
Gorthon Lines AB
Box 1063
SE 251 10 Helsingborg, Sweden
When notifying the company,
please state:
• your name
• personal/corporate identity number
• address and telephone number
• registered shareholding.
Dividends
Friday 23 April 1999 is proposed
as the record date for dividend
payments. It is anticipated that
dividends will be sent via VPC on
30 April 1999.
The Board of Directors and the
President of the Company propose
that a dividend of SEK 2.25 per share
be paid out for 1998.
Financial information
The following information will be
published for the financial year 1999:
Interim report, first quarter 20 April
1999:
• Half-yearly report 12 August 1999
• Interim report for the first three
quarters 21 October 1999
• Unaudited figures for 1999
February 2000
• Annual Report for 1999
March 2000
12° 40'
56°
00'
Gorthon Lines
– Working for our customers
Operational structure:
Gorthon Lines, whose head office is
located in Helsingborg, Sweden, owns
twelve vessels and is currently operating
a further four on long-term contracts.
Its subsidiary in Hamilton, Bermuda,
owns three of the company’s vessels,
which sail under the Bermudan flag.
Gorthon Lines has a subsidiary in
Sundsvall, Sweden which services
vessels in charter for SCA Transforest.
Gorthon Lines is a shipping company which specialises in refined
processed forest products. A base of
volume contracts and vessels with
the same type of load handling
provide high levels of efficiency.
The company commenced operations in 1915 as a traditional shipping line, sailing with cargoes of
coal, wood and timber across the
North Sea and the Baltic. Today,
the company’s main routes run
from the USA and Canada to
Europe, from Canada to the US
east coast and Central America, as
well as from Scandinavia to the
UK and the rest of the Continent.
Mission statement
• Gorthon Lines offers customised,
cost-effective seaborne transportation of refined forestry
products by providing a high
2•3
T H I S
I S
G O R T H O N
L I N E S
degree of expertise and tonnage
tailored to customer requirements.
Objectives:
• To guarantee a high return
to shareholders
• To create conditions for Gorthon
Lines to grow and develop
Aims:
• To retain our position as a firstclass carrier of forestry products
with good profitability
• To further increase market share
in existing markets
• To become a player in new
growth markets
Operational strategy
Gorthon Lines’ flexible high-tech
fleet of vessels has been specially
designed to meet all customer
transportation requirements.
The company provides effective,
safe and environmentally-friendly
marine transportation, and is also
at the forefront of technical development within the industry.
Gorthon Lines is minimising
wreckage, transportation damage
and other risks by implementing
an ambitious internal programme
for ship maintenance and technical
upgrading in addition to the regular
inspections carried out by classification societies and the authorities.
Employees throughout the company must have an excellent standard of training and attain high
levels of expertise. The company
provides set programmes and
many opportunities for further
training, guaranteeing a high level
of expertise both on deck as well
as at HQ.
Gorthon Lines has a subsidiary in
Montreal, Canada which deals with
loading and discharging.
The company employs external consultants in the UK, on the Continent
and on the US east coast to monitor
the discharging of vessels.
Sea Partner, Gorthon Lines’ associated
company in Göteborg, deals with ship
management, i.e. crewing and technical management.
Organizational structure:
Canada
- Cargo handling
- Cargo handling
- Workshop
- Marketing
- Chartering
- Project
- Insurance
- Finance/treasure
- Cargo handling
Associated company:
Sea Partner
- Crewing
- Technical management
12° 40'
56°
00'
Mats Nilsson, President:
Lars Petersson, Executive Vice President and Director of Marketing:
– New main shareholder presents
new opportunities
– Our strength lies with
the ability to expand even in the
midstof a turbulent market
Mats Nilsson, President.
1998 – Gorthon Lines’ first full year
as a listed company on the
Stockholm Stock Exchange has been
extremely successful. Profit before
tax rose to SEK 95.3 million (93.7).
This year, the company has a new
main shareholder, the Norwegian
shipping company Leif Höegh &
Co ASA.
This change in ownership means
that Leif Höegh & Co now holds 6.1
per cent of stock and 34.8 per cent
of votes as of 31 December 1998, a
move which we consider to be very
positive.
Leif Höegh & Co is one of Europe’s
larger shipping lines with a sound
reputation. Like Gorthon Lines, the
company’s operations are based on
long-term relations with customers,
as well as continuity and development.
Increased competitiveness
– new business opportunities
1998 was characterised by financial
unrest and competition will surely
4•5
C O M M E N T S
F R O M
become tougher in 1999. Falling
volumes within other marine transport companies have meant that
other tonnage, i.e. not the special
purpose RoRo or side port vessels
specially adapted for paper transportation, has appeared on the market
in which Gorthon Lines specialises.
However, Gorthon Lines’ strong
business foundations based on
long-term contracts will cushion
the negative effects of this increase
in competition.
Our customers have also experienced change with the merging of
large-scale forestry companies. In
many cases, this presents new
business opportunities – larger
customers mean greater volumes
– and at the same time offers us
increased exposure. The company
aims to off set this development by
further diversifying its operations.
This can be achieved within the
framework of current traffic, e.g.
by offering a transportation service
for rolling stock on return journeys
within the market area.
Healthy finances
– good conditions for growth
A low debt/equity ratio is a great
asset in today’s turbulent markets.
Gorthon Lines’ equity/asset ratio
stands at over 50 per cent, which
provides us with a wealth of opportunities to exploit a plethora of new
business opportunities which are
emerging from favourable econo-
M A N A G E M E N T
mic conditions. The overall picture
of the company’s finances is extremely positive. Our cash flow is
strong and our debt/equity ratio is
falling. In 1998, return on capital
was 17 per cent. In other words, the
time is right to invest in order to
increase our market potential even
further.
Conditions for investment in new
tonnage have improved considerably
as new tonnage prices, particularly
in Asia, have fallen by almost
30 per cent since autumn 1997.
New shipping policy
provides revised payroll costs
Gorthon Lines’ vessels have always
sailed under the national flag with
an all-Swedish crew, but this is no
longer viable if we are to remain
competitive. The decision was taken
in 1998 to register certain vessels
from our fleet under a different flag.
At the same time, however, the
shipping policy in Sweden has
changed. We welcome the new policy,
which, in the long run, offers us
opportunities to compete more
effectively with the rest of the world
under the Swedish flag.
It is against this background that I
look towards the future with confidence. A strong market position,
knowledgeable, committed employees, an expert Board and a new
heavyweight main shareholder
provide the best possible basis for
continued stable development.
Environmental awareness means
we have a competitive edge
It is essential that we adapt our vessels to the different requirements
for cargo handling which every
company demands in order to meet
our customers’ ever increasing
need for quality service.
Gorthon Lines has built up a
reputation as the leading technical
and environmental company in its
field. The vessels employed by SCA
Released capacity provides new
opportunities
In 1998, one customer opted to
establish its own shipping department, which means that two vessels
will not be running this contract in
1999. Several new markets are
experiencing strong growth, so this
released capacity will be used elsewhere to create a completely new
opening within our other business
areas.
Gorthon Lines is forging into the
21st century equipped with modern
vessels, specialist knowledge and a
deep awareness of environmental
Transforest, which have now been
operational for a number of years,
are among the most advanced on
the market today. As the leading
Swedish merchant vessels, these
will now also be fitted with catalytic
converters, further strengthening
Gorthon Lines’ position as a shipping company which does not just
follow technical developments but
leads the way.
issues. The depressed freight market
spells tougher competition for the
time being, but we have great faith
in our mission statement. We are in
a strong position both economically
and technically and realise that the
need for cost-effective transportation
is increasing. We also aim to have
new tonnage within two years to
ensure that we are able to compete
on the market in the future.
demands. In 1999, we aim to place
new orders with a view to replacing
our older vessels in the future.
Lars Petersson, Executive Vice President.
The marine transport sector has
experienced more turbulence in
1998 than in previous years. The
Asian financial crisis has affected
all areas of the market, increasing
competition from transportation
companies whom we traditionally
have not considered as players in
our specialist field. In spite of this,
we are optimistic about the future;
there are several reasons for this:
• The new Swedish shipping policy,
in conjunction with the re-registration of part of our fleet under
different flags, will put us in a
stronger financial position in the
long term.
• Our markets are experiencing
strong growth. Demand for newsprint in the USA alone is growing
by approximately 6-7 per cent. We
have witnessed an increase in transAtlantic traffic of almost 15 per cent,
and a great many new markets
are flourishing.
• We have a first-rate fleet which is
tailored specifically to market
12° 40'
56°
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Gorthon Lines’ market overview and operations:
A strong player with long-term goals
Tonnes carried per traffic zone
1200
1120
1100
1000
900
800
700
600
480
500
400
390
300
380
280
200
180
Long-term contracts offer stability
The past year has been characterised by market turbulence and
enormous pressure on pricing.
Cargo loads have been unusually
low. Shipping lines transporting
freight containers are now flooding
the market, thus increasing competition, especially when it comes
to transporting smaller loads.
Gorthon Lines’ fleet, however,
operates almost exclusively on a
6•7
M A R K E T
O V E R V I E W
Leading market position
World demand for paper is rising,
on average by 3 per cent a year,
and there is nothing to suggest that
this stable trend will lose momentum. Gorthon Lines carries the
basic volumes required despite
fluctuations in the global economy,
thus resulting in stable development. During 1998, the shipping
line’s vessels carried a total of
approximately 2.8 million tonnes
of paper. Gorthon Lines has a
market share of approximately 25
per cent and is therefore the clear
leader within the company’s traffic
zones. Although Gorthon Lines
has a relatively small client base,
its customers are large-scale forestry
groups which have grown stronger
in the past few years due to mergers. This trend generates greater
volumes and at the same time
increases exposure.
Canada – USA/
South America
Canada – the UK/
the Continent
Sweden – the UK/
the Continent
Increased demand and
new markets
A large amount of Gorthon Lines’
traffic stems from North America,
both internally and externally, sailing from the Canadian paper mills
via the US east coast and down to
South America. The company is
dominant in this particular area.
Last year, the demand for paper rose
by 6-7 per cent in the USA alone,
a trend reflected in new markets,
most notably in South and Central
America. Increasing levels of traffic
with return routes from the USA
to Canada are relatively new.
These freighters have the capacity
to carry other loads on their return
journeys, thus giving the company
an extra string to its bow. Other
main routes run from Canada via
the Atlantic to the UK /the
Continent, from Scandinavia to
the UK/the Continent, and from
Scandinavia to the USA. Gorthon
Lines’ vessels travel approximately
1,402,000 nautical miles a year,
USA – Canada
long-term contract basis, which
offsets market fluctuations.
Scandinavia – USA
Forestry products is a broad category
covering everything from the pulp
transported in bulk carriers to
highly processed coated fine papers.
Gorthon Lines has elected to specialise in refined products, carrying
for the most part coated papers,
copy paper and newsprint.
Transportation of such materials
requires a high level of expertise and
special purpose vessels. An effective
flexible transport system has flourished thanks to close cooperation
with the company’s customers.
Finland – the UK/
the Continent
100
the equivalent of travelling around
the equator 60 times.
Loss of one traffic zone
Gorthon Lines traffic from Finland
to the USA will cease to operate in
1999 as one customer has opted to
start up its own traffic system for
these routes. This loss constitutes
approximately 10 per cent or
280,000 tonnes from a total of 2.8
million tonnes of freight.
In recent years Gorthon Lines has
contracted almost 98 per cent of
capasity, which has created a situation whereby it has been difficult to
adopt inquiries from new customers
and markets. The fact that vessels
have now been released for other
purpo-ses has provided new opportunities, which will result in new
contracts during 1999.
The future
– more vessels, new markets
Gorthon Lines aims to grow, both
within the established markets as
well as the new markets which are
currently emerging. The company
intends to execute a long-term plan
to renew the fleet, both by acquiring
more up-to-date vessels, as well as
building new vessels. However,
this expansion will not be implemented at the expense of a sound
financial position. New vessels on
existing shipping routes free up
capacity which can be exploited for
example on the readily-expanding
South American markets.
Competitors
Approximately twenty players operate on Gorthon Lines’ markets.
Only a few of them, however, operate
special purpose vessels such as those
used by Gorthon Lines, most of the
competitors’ vessels are the tradi-
tional RoRo models.
As a specialist shipping company
Gorthon Lines has a well-established
position in its own market. The
competitors’ profile below shows
that no single competitor operates
in all of Gorthon Lines’ traffic zones
– a fact which clearly demonstrates
the company’s strength.
Gorthon Lines’ key to success:
• Specialist shipping company
with close customer cooperation
• Special purpose fleet
• Careful journey planning
• Base volumes for freight,
which are not dependent
on economic conditions
• Capacity to carry other loads
on return journeys
• Lowest rate of damaged cargo on
the market
• Effective vessel management
• Strong financial position
Competitor profile
Companies
Gorthon Lines
Armada
Bror Husell
Charterfrakt
Dag Engström
Engship
Finncarriers
F-ships
Gearbulk
GustavEriksson
Kent Line
Sealink
Seatrans
Spliethoff
Star Shipping
Swan Shipping
United Shipping
Wagenburg
Canada/USA- Canada-USA/ Sweden-the
Finland-the Europe
Venezuela
UK/the Cont. UK/the Cont.
12° 40'
56°
00'
Five-year summary
KEY RATIOS
INCOME STATEMENTS
(All figures in millions of SEK)
1994
1995
1996
1997
1998
Operating income .................................................................
596
597
607
668
657
Operating expenses...............................................................
-465
-443
-460
-513
-501
Depreciation ..........................................................................
-38
-40
-43
-44
-45
Operating profit after depreciation
93
114
104
111
111
Financial income and expenses:
1995
1996
1997
1998
110
131
131
138
140
Equity/assets ratio, % ...........................................................
39
48
38
50
56
Portion of risk-bearing capital % ..........................................
49
54
48
59
68
Debt/equity ratio, % ..............................................................
106
78
65
36
17
Capital employed (in millions of SEK)..................................
617
669
581
715
667
Return on capital employed, %.............................................
15
19
18
18
17
Equity (in millions of SEK) ....................................................
286
363
322
423
454
Interest income......................................................................
7
8
7
4
5
Return on equity after actual tax, %......................................
26
28
26
25
22
Interest expenses and similar income statement items .....
-28
-31
-23
-21
-21
Return on equity after standard rate tax (28%), % ..............
18
20
19
18
16
72
91
88
94
95
Return on equity after full taxes, %.......................................
22
40
14
27
16
Gross margin, % ...................................................................
22
26
24
23
24
Profit after financial income and expenses
Transfers and appropriations:
Group contributions received ...............................................
-30
15
Profit before tax
42
Deferred taxes1) ......................................................................
-11
Profit for the year
31
1)
10
–
–
106
98
94
95
38
-39
7
-27
144
59
101
69
Actual tax has been extremely low during the 5-year period.
EXTRACTS FROM THE BALANCE SHEETS
(All figures in millions of SEK)
1994
1995
Vessels....................................................................................
618
674
Other fixed assets..................................................................
37
Other current assets..............................................................
53
Liquid assets ..........................................................................
1996
1997
Profit per share after actual tax, SEK ....................................
3,85
4,89
4,74
5,03
5,11
Profit per share after standard rate tax (28%), SEK.............
2,77
3,52
3,41
3,62
3,68
Profit per share after full taxes, SEK .....................................
3,26
6,93
2,62
5,41
3,68
Shareholder’s equity per share, SEK.....................................
15,32
19,47
17,26
22,67
24,36
Operational cash flow per share...........................................
5,90
7,03
7,03
7,40
7,53
Dividends per share * ...........................................................
–
–
–
2,00
–
22
20
20
601
46
17
6
16
32
62
29
22
49
139
136
Total assets
737
752
851
844
815
Equity......................................................................................
286
363
322
423
454
Deferred tax liability...............................................................
77
43
83
75
102
Long-term interest-bearing liabilities ...................................
287
260
211
213
161
Short-term interest-bearing liabilities...................................
44
46
48
79
52
43
40
187
54
46
737
752
851
844
815
Y E A R S
5,7
85
16
F E W
15
5,9
23
20
L A S T
14
5,4
23
105
T H E
15
4,4
54
36
O F
15
3,9
Net investments, (in millions of SEK)..................................
20
O V E R V I E W
12
Interest coverage ratio, times ...............................................
Number of employees...........................................................
657
Total liabilities and shareholders’ equity
Profit margin, % ....................................................................
1998
677
Short-term non-interest-bearing liabilities ...........................
8•9
1994
Cash flow from operations (in millions of SEK) ..................
All share related key ratios have been evaluated on 18,644,858 shares.
* Gorthon Lines was introduced onto the stock exchange in 1997, therefore no dividends were issued for previous years.
Key ratio definitions: see p. 40.
12° 40'
56°
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Comments on financial trends in 1998
Financial aims
The group’s financial aims are seemingly lower than the current key
ratios. Gorthon Lines has registered
its intention to renew and expand
its fleet, and this will affect the
equity/asset ratio as well as the level
of return over the next few years.
The group therefore aims to increase
profit per share in the long term.
Operating income
Gorthon Lines has recorded a net
turnover of SEK 656 million for
1998. This figure is on a par with the
previous year (665) despite the fact
that two vessels were sold in 1998.
The operating income has also been
adversely affected due to the fact
that more vessels than usual came
into dry dock during this period.
In addition to this, vessels have been
working to full capacity and autumn
was characterised by large transport
volumes.
Operating expenses
Expenses incurred vis-a-vis transportation, i.e. port, stowage and
bunker costs, amounted to SEK 138
million (185) in 1998. This change
can be attributed for the most part
to lower stowage costs resulting from
contractual changes as well as lower
bunker costs.
Operating costs (crewing, technical
work, insurance) at SEK 257 million
10•11
C O M M E N T
(256) also constitute operating
expenses, in addition to administration costs, vessel leasing and
depreciations.
The accounting principles for dry
docking costs were amended with
effect from 1997 so that costs are
capitalised and written off during the
period up to the next ordinary docking. The costs are SEK 5.2 million
higher in 1998 than they were in
1997.
Investments/divestments
The nature of industrial shipping,
where vessels are considered longterm assets, means that the level of
investment varies greatly from year
to year. During the 1990s, just over
SEK 600 million was invested into
the existing fleet to provide purpose
built vessels which are equipped
in the best possible way to meet
customer requirements for effective
transportation. SEK 5.7 million was
invested in 1998, of which SEK 2.2
million will be used to minimise the
risks presented by the transition to
the new millennium.
The vessels Munksund and Abitibi
John Cabot were sold during 1998,
with a small capital gain of SEK 1.5
million.
Cash flow
Cash flow from Gorthon Lines’
operations amounted to SEK 140
million (138) during 1998, which
means that the company, just as in
previous years, used liquid assets to
pay off loans taken out to purchase
vessels. Approximately SEK 90
million was paid off during the year,
which means that debts amounted
to SEK 235 million (318) by the end
of the year. No new loans were taken
out during the period, so the debt/
equity ratio continued to fall and is
currently at 17 per cent.
Loans on vessels will continue to
be paid off in large amounts during
1999 so that the company will be
well equipped to increase its loans
for commissioning new vessels or
for acquiring second-hand tonnage.
Profit and profitability
The company’s profit and profitability has improved drastically during
the 1990s, and 1998’s profit before
tax amounted to SEK 95 million (94).
Return on capital was 17 per cent (18).
Financial position
The equity/asset ratio over the last
few years has increased considerably,
from 15 per cent in 1990 to 58
per cent in 1998.
Financial targets
Key ratios
Equity/assets ratio
Return on capital employed
Gross margin
1998-12-31
56%
17%
24%
Liquidity and capital resources
The company’s liquid assets, which
include short-term placements in the
form of government securities,
amount to SEK 136 million at 31 Dec
1998. Company policy stipulates
that liquid assets should be placed
on the Swedish money market
with maturities of 1 to 6 months.
The shipping industry requires high
liquidity levels, which is why liquid
assets up to the value of SEK 30
million, or approximately 5 per cent
of turnover, are always accessible.
Dividends paid out to shareholders
have affected the year’s liquidity by
SEK 37 million.
Financial risks
Approximately 50 per cent of the
net turnover of SEK 656 million is
based on transactions in US dollars.
The company works with forward
Financial targets
30%
15%
15%
The financial targets are lower in the short term due to plans for fleet renewal.
contracts to minimise exposure to
currency risks. The policy is that
between 50 and 75 per cent of the
net currency flows in US dollars
for the next 12 months should be
hedged, falling to a portion of between 25 and 50 per cent for the
subsequent 12-month period. The
dollar has been extremely volatile
throughout the year, which has
meant that the forthcoming flows
should be able to be hedged at
satisfactory rates.
All ship loans are taken out in this
currency in order to further reduce
the risk of the company’s dollar
exposure.
The fixed interest rate period for
vessels at the end of the period was
5 months. The average maturity of
remaining ship loans is 3 years and
the average interest as at 31
December 1998 was 6.7 per cent.
Thanks to a strong cash flow the
company now has the opportunity
to be free from debt during 1999.
Bunker purchasing was hedged at
25–50 per cent of the total volume
for the subsequent 12 months. The
price level for bunkers fell by
approximately 20 per cent over the
year, which affects profits with a
certain time lapse depending on
the hedging policy.
Financial risks
Risk
Change
Profit after net financial items
Currency, USD
Interest
Bunker
+/- 10 öre
+/- 1%
+/- 5%
+/- 4 MSEK
+/- 1 MSEK
+/- 2 MSEK
The table indicates levels before risk limitation levels were taken.
12° 40'
56°
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Shares and shareholders
Gorthon Lines enjoyed its first full
year as an independent listed
company in 1998 after several years
as a subsidiary of Bilspedition (BTL)
and B&N. The company was first
quoted on the Stockholm Stock
Exchange OTC list in June 1997.
Shareholder structure
Gorthon Lines’ shareholder structure has changed over the course
of the year in several respects. In
March, the B&N shareholders
consortium sold all its shares in
Gorthon Lines to Lennart Bylock.
In September, Leif Höegh & Co
ASA acquired 34.8 per cent of
votes and 6.1 per cent of capital
from Lennart Bylock, his family and
company as well as others. Leif
Höegh & Co ASA is one of Europe’s
larger shipping lines, the headquarters of which are located in
Norway. The Group is involved
in several different shipping fields.
Several other foreign shareholders
joined the company in 1998, and
the number of shares held by
foreign investors has now increased
from 18.9 to 30.3 per cent.
is to issue dividends for 30–50
per cent of the Group’s net profit
after making deductions for standard rate tax to shareholders.
Dividends should provide a sound
balance between the shareholders’
demands for good direct yields and
the Group’s need to finance its own
activities. The Board proposes to
issue a cash dividend of SEK 2.25
per share, which is SEK 0.25 higher
than the previous year. This corresponds to a direct yield of 6.6
per cent taken from the share
price at 31 December 1998.
The share’s value reached its lowest
in October, plummeting to SEK
24.50. Towards the end of the year,
the share’s value increased again.
By 31 December shares stood at SEK
34, which corresponds to a stock
market value of SEK 634 million
and a P/E ratio of 9. The diagram
shows that throughout 1998 the
Gorthon share was valued higher
than the shipping index and showed
an upwards trend.
Dividends policy
Gorthon Lines’ long-term policy
Series B
Total shares
% of share
% of
shares
shares
held
capital
voting rights
1 016 031
124 770
1 140 801
6,12
34,83
Svolder ...................................................................................
2 140 000
2 140 000
11,48
7,25
S/A Odin Fondene, Oslo.......................................................
1 788 700
1 788 700
9,59
6,06
Leif Höegh & Co ASA, Oslo ..................................................
Enskilda Corporate, Oslo ......................................................
941 000
941 000
5,05
3,19
Swedish Empolyerís Confederation (SAF) ...........................
900 000
900 000
4,83
3,05
Chase Manhattan Bank, New York .......................................
866 200
866 200
4,65
2,93
SPP .........................................................................................
844 800
844 800
4,53
2,86
SEB Fonder ............................................................................
562 300
562 300
3,02
1,90
Bengtsson, Jan and company ...............................................
473 400
473 400
2,54
1,60
422 400
422 400
2,27
1,43
124 698
154 001
0,83
1,41
20 612
56 633
0,30
1,29
374 100
374 100
2,01
1,27
Bure ........................................................................................
Karlsson, Roger......................................................................
29 303
Andersson, Kenth ..................................................................
36 021
MGA Holding AB...................................................................
Gorthon Lines
Share
Affärsvärlden general index
70
Series A
Share traded
000s
(after notification)
Affärsvärlden shipping index
60
50
40
30
1000
20
Norman, Bengt with family...................................................
330 000
330 000
1,77
1,12
Praktikerfinans AB .................................................................
300 000
300 000
1,61
1,02
Swedish Trade Union Confederation (LO) and unions .......
266 000
266 000
1,43
0,90
Carlson Investment Mgt AB..................................................
250 000
250 000
1,34
0,85
Kristiansson, Jan-Erik ............................................................
20 055
20 000
40 055
0,21
0,75
Pettersson, Tore.....................................................................
19 650
19 138
38 788
0,21
0,73
Inberg, Carl-Göran.................................................................
14 919
25 623
40 542
0,22
0,59
Inberg, Lars-Arne ...................................................................
14 919
10 000
24 919
0,13
0,54
Swedish Union of Cerical and Technical Employees in Industry
150 000
150 000
0,80
0,51
Merita Bank Ltd .....................................................................
140 730
140 730
0,75
0,48
Johnson, Sten K company.....................................................
131 000
131 000
0,70
0,44
800
Bylock, Lennart with family ...................................................
128 000
128 000
0,69
0,43
600
DFA fonder (USA) .................................................................
111 100
111 100
0,60
0,38
1 150 898
11 464 571
12 615 469
67,66
77,81
58 082
5 971 307
6 029 389
32,34
22,19
1 208 980
17 435 878
18 644 858
100,00
100,00
400
Share trends and stock market value
Market turbulence was reflected
in Gorthon Lines’ share prices in
1998. The Gorthon share peaked
in April at SEK 53.
200
Total
10
J
J
1997
A
S
O
N
D
J
F
1998
M
A
M
J
J
A
S
O
N
D
(c) SIX Findata
Other Share holders
Total number of shares
12•13
S H A R E S
A N D
S H A R E H O L D E R S
12° 40'
56°
00'
Gorthon Lines to acquire new vessels
over the next few years
Gorthon Lines’ fleet is geared to
carrying paper products in the most
effective and efficient way possible.
The shipping line needs to acquire
or build more vessels in order to
grow within existing and new
markets. New vessel types and
new ways of solving transportation
and logistical problems are becoming increasingly important tools
with which to remain competitive
in the future. It is therefore extremely important that the company
incorporates an ongoing development programme into its day-to-day
operations.
Strong financial base for expansion
Paper consumption is on the
increase. Over the past few years,
the annual increase has remained
steady at 3 per cent and there are
no signs that demand will wane.
It is therefore quite clear that conditions are right for specialist
14•15
T H E
F L E E T
O F
T H E
F U T U R E
freight companies such as Gorthon
Lines to continue developing. The
company’s strong financial position
presents an excellent platform for
new investment and projects.
Great gains to be made with
new vessels
Gorthon Lines aims to develop its
vessels and transportation systems
in close consultation with its customers. Excellent examples of this
are the three cassette vessels
Obbola, Östrand and Ortviken,
which were specifically developed
for our customer SCA Transforest.
These vessels have been operating
on fixed routes on the North Sea
and the Baltic Sea since 1996.
The highly specialised nature of
the vessels and the unconventional
technical solutions implemented
ensures that all facets of the transport system are handled effectively.
Computer systems in the
company’s factories, ports and on
board the vessels link up to achieve
optimal management operations.
Cassette loading means that we can
work swiftly and independently in
port. Time alongside for loading
and discharging has been more
than halved compared with the
previous system used, which is just
one example of the many advantages of using new vessels.
Environmental project – first
Swedish vessels to have catalytic
converters!
It is still unusual for catalytic converters to be installed on vessels
within the shipping industry; it is
very expensive to install and maintain such technology.
There are very few ferry companies
in Sweden that have implemented
the technology. The catalytic converters reduce harmful nitrogen
oxide (NOx) elements in exhaust
emissions by 90 per cent.
Sweden’s leading merchant vessels
Obbola, Östrand and Ortviken,
which are operated by SCA, will be
fitted with catalytic converters.
Ortviken will be the first in line
when it docks during the summer
of 1999.
The vessels have been powered by
oil with a low sulphur content
(1 per cent), which has reduced
emissions of sulphur dioxide by
approximately 1,000 tonnes.
Stringent environmental controls
have been imposed on the Baltic Sea
due to the sensitive marine environment. The authorities have
introduced lower channel and port
dues for environmentally friendly
vessels. SCA vessels fall into the
lowest category in terms of port dues
thanks to catalytic converters and
oil with a low sulphur content.
New vessels for 1999
Gorthon Lines’ plans for expanding and renewing its fleet are in
full swing. Several new tonnage
projects were developed and evaluated in 1998, and the aim is to
place orders during 1999 for at
least two new vessels to operate
on the Atlantic. A new type of
vessel has already been designed
but the company has so far chosen
to delay the final commission, for
the most part due to the financial
unrest in Asia that has resulted
in fluctuating prices in the shipbuilding industry.
The millennium
is fast approaching
A number of measures were
taken in 1998 to protect Gorthon
Lines’ various computer systems
before the turn of the century. A
new administrative system was
installed at head office, which will
come into force as of January
1999, thus minimising the risk of
Y2K problems that might affect the
company’s financial information.
The company’s other operational
systems were all upgraded during
the year. A total of approximately
SEK 2.5 million has been invested.
Sea Partner is in the process of
implementing a comprehensive
Y2K project for its vessels, which
involves both databases and
embedded systems. An action plan
has been drawn up together with
suppliers in case of any problems.
This plan has been devised to
encompass measures that should
be implemented by 30 June 1999
at the latest. All vessels are judged
to be steered without the aid of
computer equipment, but nevertheless the shipping company will
ensure that no vessels sail on narrow
channels or on canals on the eve of
the millennium.
12° 40'
56°
00'
Sea Partner handles technology
and crewing
Sea Partner fact file:
The management company
Sea Partner is owned by the
three shipping companies
from the former B&N group.
Due to reorganisation, B&N
Nordsjöfrakt, the main shareholder, aims to sell its shares
to Gorthon Lines AB and
Svenska Orient Linien AB.
Gorthon Lines’ vessel operations
are handled by the management
company Sea Partner, a 30 per cent
stake of which is held by the shipping line. Sea Partner deals with crew,
vessel operations and technology,
quality and environmental issues,
and the recruitment of marine
personnel and training/skills
development. Sea Partner manages
a total of twenty-seven vessels from
several shipping lines and approximately 600 employees. The company also has an office in Norway
and operates recruitment offices
in Sweden, Poland and the
Philippines.
Responsibility delegated to vessels
Sea Partner considers the delegation
of responsibility to be an integral
part of its operations. The corporate
16•17
S E A
P A R T N E R - O P E R A T I O N S
culture is built on what is known
as Shipboard Management, whereby every vessel constitutes an
independent unit. The vessels are
able communicate directly with
shore due to advances in IT and
telecommunication solutions. The
crews deal with administration and
take full responsibility for running
operations, taking much of the
workload from those traditionally
responsible ashore. There is support
ashore for all operations, for
example opportunities to discharge
crews on board of particular tasks
temporarily at particular times or
in situations when extra work is
required for the vessel’s safety.
Technology and operations
Sea Partner is responsible for the
technical operations of Gorthon
A N D
C R E W
Lines’ vessels, which should be
given the best possible service on
the market. The basis for effective
vessel operation is comprehensive
ongoing maintenance. Each vessel
has its own individual service manual, in which all technical procedures, possible upgrades and time at
the shipyard are logged in advance.
The vessels can therefore be maintained to the best standard possible
with the fewest interruptions to
their operations programme.
Safety accreditation
Work towards safety accreditation
progressed extremely well in 1998.
All Gorthon Lines’ vessels will be
accredited with the International
Safety Management Code (ISM)
certificate, the standard that has
been stipulated by the International
Maritime Organisation (IMO).
Work towards the ISM involves,
for example, thorough scrutiny of
security and environmental protection procedures. The ISM, like
other types of certification, is a
continual process with regular
audits. Manuals and other documentation are examined annually,
with a larger scale audit every five
years. The ISM guarantees high
quality across the board and provides an excellent starting point for
continual improvements. It also
constitutes part of the basis for
Sea Partners’ environmental work.
The IMO has stipulated that every
merchant fleet around the world
must be ISM certified by the year
2000. Gorthon Lines is therefore
extremely well placed in international terms. In a tandem project,
Gorthon Lines’ offices and its
vessels have been accredited with
ISO 9001. The vessels therefore
hold two certificates.
Recruitment
If the Swedish shipping industry
is to hold its own in the future, it
will need many new recruits.
Nowadays, there is a serious lack
of marine officers, in particular
Swedish officers. Gorthon Lines and
Sea Partner are working together
with Swedish marine officer
academies and are also supporting
alternative training projects in
Sweden. Sea Partner offers a considerable number of internships
at sea and has a well established
trainee scheme. In addition to
these projects, Gorthon Lines has
its own recruitment offices in
Norway, Poland and the
Philippines. Swedish officers man
all Gorthon Lines’ vessels. The
crews are a mixture of Swedish
and Polish nationals.
Developing expertise
The company sets great store by
developing expertise. The officers
at sea take part in conferences on
a regular basis, held both by
Gorthon Lines and Sea Partner
approximately three times a year.
Sea Partner also arranges special
technical training specific to the
industry, e.g. radio communications and handling of hazardous
goods.
Crews at other levels also meet
regularly for training.
12° 40'
56°
00'
New steps toward a sustainable cycle
Specific environmental threats and the effect on marine transportation
Note Emissions into air
Substance
Main environmental impact
1
Exhaust fumes from diesel motors
– Nitrogen dioxide, sulphur dioxide
– Carbon dioxide
– Carbon monoxide, hydrocarbons
Coolants and firefighting equipment
– Freons, halogens
2
3
4
5
6
NOx , SO2
CO2
CO, HC
Acidification of land and water
Greenhouse effect
Ozone close to ground/photo-chemical oxidantsr
CFC, HFCF, HFC
Ozone destruction
Discharge into water
Substance
Base coats
Oils
Sea water ballast
Waste, sewage, chemicals
Tin, copper
Heavy metals
Main environmental impact
Nitrogen, phosphor
Reproduction ability of living organisms
Toxic to organisms living in water
Foreign micro-organisms in new environments
Over fertilisation of land, lack of oxygen and death of organisms and plants on sea bed
Marine transport is extremely
environmentally friendly. Vessels
use energy effectively in relation
to the volume of goods transported,
and they pose only modest
demands on investment in infrastructure.
However, the very nature of transport means that the environment
will be affected to some degree,
whatever the method. The table
overleaf shows the great environmental challenges facing modern
shipping companies today.
Environmental measures
– an important factor
in remaining competitive
Environmental clauses are written
into most freight contracts between
Gorthon Lines and its customers,
demonstrating just how important
environmental policy is in order to
remain competitive.
Gorthon Lines’ management
group draws up the guidelines for
environmental policy in collaboration with Sea Partner. Once agreed,
this policy forms the basis for
environmental measures to be
18•19
E N V I R O N M E N T A L
P O L I C Y
taken, and the company considers
continued input to environmental
audits extremely important.
Gorthon Lines’ environmental policy
Aim:
• to provide and develop transportation whilst limiting environmental impact as much as possible.
This involves:
• heightening all employees’
awareness of and commitment
to environmental issues
• ensuring that suppliers and
other business partners meet our
environmental requirements
• working with environmental
processes and making constant
improvements
• implementing all national
legislation and keeping abreast
of international conventions in
the field
• supporting and contributing to
research in and the development
of fuel, technology and logistics
• considering effects on the
environment when developing
new services or vessels.
First Swedish merchant vessels
with catalytic converters!
Obbola, Östrand and Ortviken will
be the first merchant vessels to be
fitted with SCR catalytic converters.
Ortviken will dock to be fitted with
the converter during 1999. The
catalytic converter drastically
reduces airborne nitrogen oxide
(NOx) emissions. Although it is
more expensive to operate a vessel
with a catalytic converter, channel
and port dues for environmentally
friendly vessels have fallen as
from 1998. This is one way the
authorities can encourage more
vessels to use a more environmentally friendly system.
Round trips
Gorthon Lines’ customers need to
transport more and more recycled
paper: between 1997 and 1998,
volumes increased by 25 per cent,
and this increase is expected to
grow steadily. Recycled paper is
carried on the return leg of a trip,
a system which is both financially
rewarding as well as being environmentally friendly. Gorthon
Lines has invested in special purpose cargo handling equipment to
support this development.
Note 1. Emissions from diesel
motors. NOx, SO2. Installation of
catalytic converters in Obbola,
Östrand and Ortviken reduces
nitrogen oxide emissions (NOx) by
over 90 per cent. These vessels, like
Viola Gorthon, run on bunker oil
with a low sulphur content (approx.
1 per cent). Standard bunker oil
has a sulphur content of approx. 3
per cent. Sulphur dioxide (SO2)
emissions are therefore reduced by
approximately 1,000 tonnes per year
per vessel.
CO, HC. Combustion is very good
in a well-maintained diesel motor,
which is why only a very small
amount of these pollutants build
up in Gorthon Lines’ vessels.
CO2. Carbon dioxide emissions
constitute a global problem.
Gorthon Lines is in the process of
renewing its fleet, which means
that energy will be used more efficiently, and carbon dioxide emissions
will be reduced accordingly.
Efficient use of energy and
thoughtful route planning results
in lower emissions per tonne carried.
Note 2. Coolants and firefighting
equipment. Environmentally
harmful freons in Gorthon Lines’
vessels have been systematically
replaced with new approved coolants.
It is estimated that this work will
be completed in 1999. None of the
firefighting equipment on board
the vessels contains halons.
Note 3. Base coats. All Gorthon
Lines’ vessels are painted with base
coats approved by chemical inspectors.
Note 4. Oil. Oil leakages are usually
caused through accidents. Leaks are
also known to occur in the vessels
of less rigorous shipping companies.
Approximately 500 cases of oil leaks
were registered in the Swedish
economic zone in 1998. The ISM
accreditation indicates that safe
procedures on board ship can reduce
the risk of accidents and careless
leaks. Other oil stores are kept on
board so that they can be pumped
out to reception stations ashore.
Gorthon Lines’ vessels deposited
approximately 6,000 m3 of residual
oil products in 1998, at a cost of
approximately SEK 2 million.
Note 5. Sea water ballast. This is a
problem that has only recently been
highlighted. The sea water ballast
which is loaded in vessels can affect
the environment by spreading
foreign bodies in new environments. These organisms may, for
example, contain bacteria, leading
to disease in native species, which
may even be destroyed. Gorthon
Lines is following the IMO’s voluntary guidelines for handling sea
water ballast. These guidelines
include ensuring that the water is
exchanged at sea, if the process can
be carried out safely, before the
vessels enter national waters.
Note 6. Waste, sewage, chemicals.
A Waste Management Plan is
implemented on every Gorthon
Lines vessel, detailing how waste
and chemicals should be handled
and processed. All waste is processed on board and deposited ashore
at particular reception stations. The
Shipping Owners’ Association
environmental handbook is a permanent fixture on every vessel and
acts as an additional aid for crews
to ensure that they avoid environmentally harmful products and
procedures whilst at sea.
12° 40'
56°
00'
The Gorthon Lines fleet and contracts
Viola Gorthon. Ro-Ro vessel built 1987.
Length 166 metres, 11,400 dwt.
Ivan Gorthon. Ro-Ro/side port vessel built/rebuilt 1974/82.
Length 118 metres, 3,400 dwt.
The Gorthon Lines fleet comprises
16 vessels, all of which are upgraded
and function effectively in their
traffic zones. Most of the vessels
are equipped with stabiliser systems
to reduce roll in heavy seas, which
is extremely important to retaining
a low cargo damage rate. All vessels
are built to ice class 1A or above,
enabling them to safely navigate
ice-bound areas in the Baltic and
the Gulf of Bothnia, as well as the
St. Lawrence River in Canada.
Ownership of vessels
The vessels Obbola, Östrand and
Ortviken are operated on behalf of
SCA Transforest and are leased on
a bareboat charter basis with an
option to purchase. Viola Gorthon,
which carries paper and pulp for
MoDo, is also leased on a bareboat
charter, with a share in the residual
value. A bareboat charter means
that the vessels are owned externally
but crewed and operated by the
shipping company. Gorthon Lines
wholly owns the other twelve
20•21
T H E
G O R T H O N
L I N E S
F L E E T
vessels. Three of these have been
operating under the Bermudan flag
since 1998 and are owned by
a subsidiary in Bermuda.
Types of vessel
The four leased vessels are Ro-Ro
models and are specially adapted
for a certain type of transportation.
Obbola, Östrand and Ortviken are
modern cassette vessels. Their loads
are towed in advance and attached
to cargo carriers which are simply
positioned in the cargo hold. This
means that the cargo can be handled quickly and effectively in port
with only a minimum of assistance
from ashore. The other twelve
vessels are equipped to load and
discharge at the Canadian paper
mills, where side ports are essential
as there are no ramps for Ro-Ro
loading. Seven of the vessels are
extremely flexible, equipped with
both side ports as well as stern
ramps and capable of carrying rolling cargo or part cargo loading at
other ports. Three of these are also
equipped with cargo hatches in the
weather deck.
S T IG G O R T H O N
HELSINGBORG
STIG GORTHON
Contracts
The shipping line primarily works
with long-term freight contracts,
which generally run between one
and three years, although contracts
of up to 15 years are not unheard of.
The contract renewal rate is high.
The following types of contract are
used:
• Time charter. This means that a
vessel is leased to a charterer for
a fixed period of time. The ship
owner assumes all operating costs
excluding bunker charges and
port fees.
• Requirement contract. Frame
agreement with fixed prices.
Volumes may vary, but the ship
owner has preferential rights for
the volumes to be shipped.
• Contract of affreightment. This is
a volume contract with a fixed
price where a minimum quantity
of business is guaranteed.
L O V IS A G O R T H O N
HELSINGBORG
LOVISA GORTHON
RAGNA GORTHON
HELSINGBORG
RAGNA GORTHON
Alida, Ingrid, Margit Gorthon. Side port vessels
built/rebuilt 1977/91. Length 141 metres, 14,240 dwt.
Ragna, Lovisa, Stig Gorthon. Ro-Ro vessels with side ports and cargo
hatches. Built/rebuilt 1979/94. Length 135 metres, 7,600 dwt.
CORNER BROOK
HUMBER ARM
JOH GORTHON
JOH GORTHON
HELSINGBORG
Joh. Gorthon. Ro-Ro/side port vessel built/rebuilt 1977/82/87.
Length 156 metres, 8,350 dwt.
Humber Arm, Corner Brook. Side port vessels built/rebuilt 1976/97.
Length 136 metres, 7,650 dwt.
SCA TRANSFOREST
HELSINGBORG
MARIA GORTHON
HELSINGBORG
SCA TRANSFOREST
ADA GORTHON
ADA GORTHON
MARIA GORTHON
OOBBOLA
SCA TRANSFOREST
HELSINGBORG
Maria, Ada Gorthon. Ro-Ro/side port vessels built 1984.
Length 156 metres, 11,490 dwt.
Obbola, Östrand, Ortviken. Ro-Ro vessels with cassette loading.
Built 1996. Length 156 metres, 9,600 dwt.
12° 40'
56°
00'
The lowest cargo damage rate on the market
– the result of proactive preventative measures
Paper is an expensive and sensitive
commodity, which means that it
must be handled with great care.
Gorthon Lines loads about 14,000
rolls of paper, up to a value of SEK
40 million, on a single journey.
The company works hard to ensure
its loads are handled carefully,
which means that damage to cargo
is nowadays extremely rare; the
total damage costs for 1998
amounted to less than a twentieth
of one per cent of the cargo value.
Gorthon Lines’ vessels operate in
zones where the weather conditions
can be severe, and the fleet must
be equipped for travel both on the
open sea and through ice.
Stabilisers reduce roll on open seas.
All the vessels are built to ice class
series 1A or above, some are built
to ice class series 1A Super, which
means lower dues are paid in
22•23
C A R G O
S E C U R I T Y
some ports and that they are better
equipped to deal with severe ice
conditions.
Swift and safe deliveries
Gorthon Lines introduced a programme to minimise cargo damage
through technical cooperation and
staff coordination as early as 1994.
This programme involved
working with customers and cargo
inspectors who were affiliated to
the company in a consultancy
capacity. The programme has
ensured one of the market’s lowest
cargo damage rates for paper
products. Nowadays, an effective
online system monitors loading
and discharging, and is directly
linked to headquarters. The system
records, for example, cargo handling
equipment, damage, technical stops
and production (turnover of goods
per hour). This online system,
together with separate cargo
damage monitoring systems in
important ports and digital photography of possible damage, ensures
the best possible basis for adapting
or amending procedures if necessary. The online reports also function as the basis for new journey
estimates, as well as for analyses
and statistics, and provide the
vessels with important feedback.
Gorthon Lines employs a special
cargo inspector in Canada, who
helps with cargo problem solving
and assists customers.
Increasingly effective cargo handling
Long periods alongside are expensive, which is why Gorthon Lines
is always seeking new solutions to
render loading and discharging
more effective. The shipping line
currently operates vessels which
carry cargo in many different ways,
for example stern ramps for rolling
cargo, side ports and hatches in the
weather deck. Computer-controlled
lifts with conveyor belts ensure that
cargo is handled effectively and
efficiently. The vessels’ own trucks
handle sensitive paper rolls using
vacuum aggregates, which is the
best way to handle sensitive products. The company also employs
trucks with clamp aggregates,
which may be necessary under
certain circumstances. The cargo
is stowed in the box-shaped cargo
hold without sharp edges, and any
‘holes’ between the cargo are filled
with air cushions to ensure that
the cargo does not move.
Climate control protects paper
The differences in temperature
between northern and southern
ports must also be taken into consideration. When a vessel begins
its journey in a chilly northern port,
the cargo hold is often filled with
condensation, which must be ventilated out. A climate control facility
is fitted in the vessels, maintaining
a constant humidity in the cargo
hold of between 50 and 55 per cent.
Cargoes of recycled paper are
becoming increasingly popular and
in order to support this development, Gorthon Lines has invested
in special purpose cargo handling
equipment.
All in all, the company’s measures
ensure that the customer receives
a swift, high-quality transportation
service, incurring as little damage
and as few disturbances as possible.
In the UK and on the Continent, as in the USA,
Gorthon Lines employs its own inspectors to supervise discharging and assist crews with handling.
The picture shows Richard Brogård (right) who
works in Europe.
12° 40'
56°
00'
Director’s Report
ANNUAL REPORT
The Board of Directors and President of Gorthon Lines AB (publ) have pleasure
in presenting the company’s Annual Report for 1998.
DIRECTORS’ REPORT
Gorthon Lines has been a public limited company since 6 June 1997 and is
quoted on the Stockholm Stock Exchange.
Operations
Parent Company
Most of the operations are carried out in the parent company which owns
9 of the Group’s 12 vessels. In 1998, three vessels were sold to the whollyowned subsidiary Gorthon International Shipping Limited in Bermuda. In
addition to its wholly-owned vessels, Gorthon Lines operates a further four
on bareboat charters for periods of between 3 and 12 years. The Group has
customer contracts for these vessels, which run for the corresponding
lengths of time.
Contracts for the company’s wholly-owned vessels run between 1 and 5 years.
All contracts were renewed in 1998 with the exception of the Finland to
USA contract. Contracts were taken up for Bowater, both for Caribbean and
European traffic, which will come into force as from January 1999.
Capacity utilisation levels for the company’s vessels sailing the Atlantic and
serving the east coast of North America were good throughout 1998. The
seven vessels sailing between Scandinavia, the UK and the Continent operate
on time charter contracts, whereby the income for Gorthon Lines is not
affected by the quantities shipped.
Turnover for the company amounted to SEK 642.6 million (630.1) and the
profit before tax and appropriations was SEK 70.1 million (92.0). No new loans
were raised in 1998.
SEK 88 million (56) was amortised on loans already raised.
Since a considerable portion of the company’s operations is dollar-based,
the company has benefited from the increasing strength of this currency
over the year. This has not, however, affected the profit for the year to the
same degree because of the company’s policy of using futures and forward
contracts to hedge 50-75 per cent of its income for the coming 12-month
period and 25-50 per cent for the following 12 months. European Monetary
Union (EMU) will not affect the company to a great extent, since income in
euros is extremely limited.
Group
Gorthon Lines carried 2.8 million tonnes of paper in 1998 (2.9), valued at
approximately SEK 12 billion.
Turnover was SEK 656.4 million (664.5), yielding a profit before tax of SEK 95.3
million (93.7). By the end of the year, the equity/assets ratio was 55.7 per cent
(50.1), calculated on the balance sheet total. Return on capital employed
was 17 per cent (18).
The cash flow from operations remains strong, amounting to SEK 140 million
(138). Group liquid assets, including short-term placements, were SEK 136
million (139).
Investments during the year amounted to SEK 5.7 million (27.0), of which
SEK 2.2 million was related to risk limitation for operational disturbances
in connection with the transition to the new millennium. The risk of any
effect on the financial information is therefore thought to have been eliminated.
With regard to vessels, an action plan has been drawn up containing measures
which are to be implemented by 30 June 1999 at the latest. All vessels are
however judged to be steered without the use of computer equipment.
Long-term loans were amortised by SEK 88 million. No new loans were raised.
Important events
During the first half of the year, the vessels ABITIBI JOHN CABOT and
MUNKSUND were sold, resulting in a capital gain of SEK 1.5 million.
Vessels IVAN, GORTHON, HUMBER ARM and CORNER BROOK were
reregistered in June/July and handed over to the subsidiary in Hamilton,
Bermuda. The decision was taken in 1998 to register further vessels in
Bermuda or, alternatively, to continue using the Swedish flag with temporary
shipping personnel in order to reduce salary costs for personnel at sea.
24•25
F O R M A L I T I E S
On 16 February, the President announced that he is resigning from his post as
president in the company at the Annual General Meeting on 20 April 1999.
He will, however, remain in the company as a consultant during 1999 and
will also put himself forward for re-election as Board Member if the Annual
General Meeting so wishes.
Projected future sales
Gorthon Lines is involved in industrial shipping activities and is an important
link in the logistical system serving the industry as a whole. The demands
on swift, safe, reliable transport are increasing all the time. Mergers between
companies in the forestry industry have already taken place and the trend
is continuing both in Europe and North America. Gorthon Lines sees improved
opportunities in all this and is continually seeking to work in close cooperation
with industry, and is actively involved in pioneering technological advances.
Cargo handling systems, ship design and the efficiency of engines will be
crucial factors for the success of the new generation of ships. The current
fleet has been regularly rebuilt, refitted and adapted to the changing requirements of the market and all the vessels have now been specially converted
for the transportation of forestry products.
1999 will see increasing competition from conventional vessels (i.e. they
are not specially adapted to carrying paper products). The impact of this on
Gorthon Lines has been reduced due to long fixed contracts for transporting
basic volumes, but despite this, 1999’s revenues will be adversely negatively
due to pressurised cargo rates when new contracts are signed. At the same
time there will be a certain reduction in costs due to the change of flag on
three vessels in 1998.
The company’s firm financial footing provides a good foundation for new
investment and projects. Gorthon Lines’ future aim is to expand through
both organic growth and new corporate acquisitions.
The Board’s activities
The Board, including the President, met on five occasions during the financial
year to present the end of year figures, for the Annual General Meeting, and
to discuss the quarterly report and the budget for 1999. Other company
executives also take part in the work of the Board. In 1998, for example, the
Board discussed the result for the previous three month period, the prognosis
for the remaining months of the financial year, investment issues, the market
situation, contractual issues, the current shipping climate and the transition
to the new millennium.
Proposed appropriation of profits
Group
The Group’s non-restricted equity amounts to SEK 44.978 millions of which
SEK 68.598 millions is the profit for the year. The Board proposes that the sum
of SEK 2.834 millions be transferred to restricted reserves in the Group.
Parent Company
The Board and President propose that the profits of:
SEK
Profit brought forward
Profit for the year
Total
51,393,222
37,632,351
89,025,573
Be allocated as follows:
Transfers to statutory reserve
To shareholders, a dividend of SEK 2.25 per share
To be carried forward
Total
2,833,863
41,950,930
44,240,780
89,025,573
For other details concerning the operations and financial statements of the
Group and the parent company, please refer to the Income Statements,
Balance Sheets, Financial Analyses, Notes and Comments that follow.
12° 40'
56°
00'
Consolidated Income Statement
Consolidated Balance Sheet
1998
1997
(All figures in thousands of SEK)
31 Dec 1998 31 Dec 1997
(All figures in thousands of SEK)
ASSETS
Net revenues................................................................................
Capital gain from sale of fixed assets .........................................
Sailing and operational costs...........................................(Note 1)
Other external costs ....................................................................
Personnel costs ................................................................(Note 2)
Depreciation .....................................................................(Note 4)
Costs for stock exchange introduction .......................................
Operating profit
656,429
1,022
-480,075
-8,797
-12,099
-45,117
–
664,543
3,781
-488,983
-5,970
-11,038
-44,400
-6,501
111,363
111,432
Tangible assets:
(Note 4)
Buildings ......................................................................................
Land..............................................................................................
Vessels..........................................................................................
Investment in long-term leased tonnage ..................................
Machinery and other technical equipment ................................
Equipment, tools, fixtures and fittings .......................................
–
–
597,139
4,127
265
2,200
2,557
993
653,102
3,922
2,607
872
Total tangible assets
603,731
664,053
Shares and participations in associated companies ...............(Note 6)
Other long-term assets ...............................................................
1,260
12,243
1,800
6,681
Total financial assets
13,503
8,481
TOTAL FIXED ASSETS
617,234
672,534
Current assets
Inventories ...................................................................................
Accounts receivable - trade .........................................................
Receivables from associated companies ...................................
Prepaid taxes................................................................................
Other receivables.........................................................................
Prepaid expenses and accrued income...........................(Note 9)
Other current investments..........................................................
Cash and bank balances..............................................................
2,929
15,541
2,259
502
5,237
35,358
65,000
70,720
5,671
3,347
–
487
4,252
18,591
55,000
84,272
TOTAL CURRENT ASSETS
197,546
171,620
TOTAL ASSETS
814,780
844,154
Profit from financing activities
Results from participation in associated companies ................
Interest income............................................................................
Interest expenses and similar income statement items............
Profit before tax
Tax on the profit for the year ............................................(Note 3)
NET PROFIT FOR THE YEAR
26•27
F O R M A L I T I E S
-540
4,907
-20,473
–
3,698
-21,397
95,257
93,733
-26,659
7,176
68,598
100,909
Financial assets
12° 40'
56°
00'
Consolidated Balance Sheet
Group Financial Analysis
31 Dec 1998 31 Dec 1997
(All figures in thousands of SEK)
1998
1997
(All figures in thousands of SEK)
EQUITY AND LIABILITIES
FUNDS SUPPLIED FROM OPERATIONS
Equity
(Note 7)
Restricted equity:
Share capital ...........................................................................
Restricted reserves..................................................................
37,290
371,903
37,290
342,028
Non-restricted equity:
Profit brought forward ............................................................
Profit for the year.....................................................................
-23,620
68,598
-57,594
100,909
TOTAL EQUITY
454,171
422,633
Net revenues................................................................................
Operating costs ...........................................................................
Financial income and expenses..................................................
656,429
-501,582
-15,566
664,543
-512,492
-17,699
Total funds generated internally
139,281
134,352
Change in current receivables.....................................................
Change in current liabilities
excluding short-term portion of ship loans................................
Change in long-term receivables ................................................
-29,478
21,797
-6,765
-5,562
-30,489
-409
97,476
125,251
21,985
540
-5,719
13,797
-1,720
-27,291
114,282
110,037
–
-76,382
-4,162
-37,290
-50,000
4,446
25,797
–
-3,552
90,280
Cash and bank brought forward .................................................
Cash and bank rate differencies..................................................
139,060
212
45,738
3,254
CASH AND BANK CARRIED FORWARD
135,720
139,272
Provisions
Provisions for taxation......................................................(Note 3)
102,123
75,464
INVESTING ACTIVITIES
TOTAL PROVISIONS
102,123
75,464
Sales of fixed assets.....................................................................
Purchase of shares ......................................................................
Purchase of vessels and equipment ...........................................
Ship loans .........................................................................(Note 8)
Other liabilities to credit institutions..........................................
138,750
22,358
186,593
26,520
TOTAL LONG-TERM LIABILITIES
161,108
213,113
Re-payment of intra-group financing..........................................
Re-payment of ship loans............................................................
Re-payment of long-term liabilities.............................................
Dividend.......................................................................................
Short-term portion of ship loans .....................................(Note 8)
Accounts payable - trade .............................................................
Liabilities to associated companies............................................
Other liabilities ............................................................................
Accrued expenses and deferred income........................(Note 10)
49,942
4,957
–
7,754
34,725
78,481
7,111
9 857
5,134
32,361
CHANGE IN LIQUID ASSETS
TOTAL CURRENT LIABILITIES
97,378
132,944
814,780
844,154
550,050
–
None
542,054
550
None
Long-term liabilities:
Current liabilities:
TOTAL EQUITY AND LIABILITIES
Pledged assets and contingent liabilities
Ship mortgages with regard to ship loans .................................
Property mortgages with regard to liability to credit institutions
Contingent liabilities....................................................................
28•29
F O R M A L I T I E S
FINANCING
12° 40'
56°
00'
Parent Company’s Income Statement
Parent Company’s Balance Sheet
1998
1997
(All figures in thousands of SEK)
31 Dec 1998 31 Dec 1997
(All figures in thousands of SEK)
ASSETS
Net revenues................................................................................
Capital gain from sale of fixed assets .........................................
Sailing and operational costs...........................................(Note 1)
Other external costs ....................................................................
Personnel costs ................................................................(Note 2)
Depreciation .....................................................................(Note 4)
Costs for stock exchange introduction .......................................
Operating profit
642,574
-466
-489,943
-8,218
-11,435
-46,234
–
630,081
7,537
-456,344
-5,750
-10,590
-48,708
-6,501
86,278
109,725
Tangible assets:
(Note 4)
Buildings ......................................................................................
Land..............................................................................................
Vessels..........................................................................................
Investment in long-term leased tonnage ..................................
Machinery and other technical equipment ................................
Equipment, tools, fixtures and fittings .......................................
–
–
595,943
4,127
265
2,174
2,557
993
699,805
3,922
2,607
807
Total tangible assets
602,509
710,691
Profit from financing activities
Financial assets
Profit from winding up operations .............................................
Result from participation in associated companies ..................
Interest income ...........................................................................
Interest expenses and similar income statement items............
Profit after financial items
–
-540
4,907
-20,524
58
–
3,632
-21,397
Shares in subsidiaries.......................................................(Note 5)
Other shares .....................................................................(Note 6)
Other long-term receivables .......................................................
587
1,260
12,243
260
1,800
6,681
70,121
92,018
Total financial assets
14,090
8,741
616,599
719,432
Inventories ...................................................................................
Accounts receivable - trade .........................................................
Receivables from group companies ...........................................
Receivables from associated companies ...................................
Prepaid taxes................................................................................
Other receivables.........................................................................
Prepaid expenses and accrued income...........................(Note 9)
Other current investments..........................................................
Cash and bank balances..............................................................
2,929
15,542
45,652
1,847
502
5,211
35,358
65,000
70,326
4,506
2,813
25,849
–
487
4,252
17,506
55,000
82,913
TOTAL CURRENT ASSETS
242,367
193,326
TOTAL ASSETS
858,966
912,758
TOTAL FIXED ASSETS
Transfers and appropriations
CURRENT ASSETS
Accelerated depreciation..................................................(Note 4)
Profit before tax
Tax on the profit for the year ............................................(Note 3)
Net profit for the year
30•31
F O R M A L I T I E S
-32,489
-45,777
37,632
46,241
–
–
37,632
46,241
12° 40'
56°
00'
Parent Company’s Balance Sheet
Parent Company’s Finacial Analysis
31 Dec 1998 31 Dec 1997
(All figures in thousands of SEK)
EQUITY AND LIABILITIES
Equity:
1998
1997
(All figures in thousands of SEK)
FUNDS SUPPLIED FROM OPERATIONS
Restricted equity:
Share capital ...........................................................................
Statutory reserve......................................................................
37,290
4,624
37,290
–
Non-restricted equity:
Profit brought forward.............................................................
Profit for the year ....................................................................
51,393
37,632
47,066
46,241
130,939
130,597
TOTAL EQUITY
642,574
-509,596
-16,157
630,081
-479,185
-17,707
TOTAL FUNDS GENERATED INTERNALLY
116,821
133,189
Change in current receivables.....................................................
Change in current liabilities
excluding short-term portion of ship loans................................
Change in long-term receivables ................................................
-31,824
22,729
-6,129
-5,562
-31,528
-409
73,306
123,981
–
3,054
44,343
213
-5,719
210
37,587
-24,000
-1,720
-27,082
115,197
108,976
–
-76,382
-4,112
-37,290
-50,064
4,446
25,797
–
-2,587
89,155
Net revenues................................................................................
Operating costs ...........................................................................
Financial income and expenses..................................................
(Note 7)
Untaxed reserves:
INVESTING ACTIVITIES
Accumulated excess depreciation ...................................(Note 4)
469,466
436,977
Long-term liabilities:
Ship loans .........................................................................(Note 8)
Other liabilities to credit institutions ..............................(Note 8)
Liabilities to group companies ...................................................
138,750
22,358
100
186,593
26,520
50
TOTAL LONG-TERM LIABILITIES
161,208
213,163
Result from liquidation of subsidiary .........................................
Sale of fixed assets ......................................................................
Receivables from group companies...............................(Note 12)
Purchase of shares ......................................................................
Purchase of vessels and equipment ...........................................
FINANCING
Current liabilities:
Short-term portion of ship loans .....................................(Note 8)
Accounts payable - trade .............................................................
Liabilities to associated companies............................................
Other liabilities ............................................................................
Accrued expenses and deferred income........................(Note 10)
TOTAL CURRENT LIABILITIES
TOTAL EQUITY AND LIABILITIES
49,942
4,957
–
7,749
34,705
78,481
6,224
9 857
5,138
32,321
97,353
132,021
Cash and bank brought forward .................................................
Cash and bank rate differencies..................................................
137,702
211
45,501
3,257
858,966
912,758
CASH AND BANK CARRIED FORWARD
135,326
137,913
550,050
–
None
542,054
550
None
Pledged assets and contingent liabilities
Ship mortgages with regard to ship loans .................................
Property mortgages with regard to liability to credit institutions
Contingent liabilities....................................................................
32•33
F O R M A L I T I E S
Re-payment of intra-group financing..........................................
Re-payment of ship loans............................................................
Re-payment of long-term liabilities.............................................
Dividend.......................................................................................
CHANGE IN LIQUID ASSETS
Notes to the financial statements
Accounting principles
The annual and Group accounts have been prepared in accordance with
Årsredovisningslagen [Annual Accounts Act] (1995:1554).
Group accounts
Group consolidated accounts include the financial statements for all Group
companies. All intra-Group transactions and profits have been eliminated.
Accounts for associated companies have been included in the consolidated
accounts in accordance with the equity method.
The consolidated accounts have been prepared in accordance with the purchase method and are adapted to Recommendation 1:96 of the Swedish
Financial Accounting Standards Council pertaining to the treatment of untaxed
reserves. Accordingly, the group income statement and balance sheet are
stated without appropriations and untaxed reserves. Instead, deferred tax
is accounted for in these reports. Untaxed reserves in the individual companies within the Group have been divided so that the deferred tax is reported
under provisions and the equity capital portion is included among restricted
reserves. The deferred tax is, after considering unutilised tax loss, carried
forward, calculated as 28 per cent of untaxed reserves. Deferred tax attributable to allocations for the year as a whole in the individual companies has
been charged against consolidated income reported for the year.
The accounts of foreign subsidiaries have been translated in accordance with
the current method, which means that balance sheets have been translated
at year-end rates, and income statements have been translated at the average
rates for the year. In cases where intra-group transactions represent permanent
investments, the exchange differences reported in the companies are transferred to equity, considering the tax effects.
Consolidated unrestricted equity includes unrestricted equity in subsidiaries
translated at the year-end exchange rate. As a consequence, the translation
difference is divided between restricted and unrestricted equity.
Accounting for foreign currencies
Receivables and liabilities in foreign currency have been shown at the year-end
exchange rate, with unrealised exchange gains reported in accordance with
Recommendation R7 of the Swedish Financial Accounting Standards Board.
In line with this recommendation, the book value of liabilities in foreign
currencies that have been hedged by assets in the same currency has not been
affected by changes in the exchange rate. In compliance with Recommendation
R7, premiums and deductions relating to futures and forward contracts are
accrued over the duration of the contract.
The Group uses the accounting principle to offset rate differentials for hedged
loans, so that the differentials that arise when paying off a loan and replacing
currency loans are resolved at the same time as the assets are written off.
Inventories
Inventories have been valued at the lower end of the acquisition cost and
market value. Inventories consist of bunkers, the value of which has been
calculated based on the FIFO method. Appropriate deductions have been made
for obsolescence.
Other comments
As of 1997, the accounting principles for dry-docking have changed: the costs
are now activated and written off in the period leading up to the next scheduled dry-docking, usually a period of three years. Shipping revenues are
recognised when incurred.
Accounts receivable are valued at their recognisable value.
Depreciation according to plan
Vessels: annual depreciation is based on individual estimates of each ship’s
remaining economic life and an estimated scrap value at the end of the depreciation period. The average remaining economic life of the Group’s vessels is
just under 11 years. The economic life used as a basis for straight-line depreciation is 29–32 years. Machinery and equipment: Annual depreciation is
made at the rate of 20 per cent of the acquisition value. Movables: Annual
depreciation is made at the rate of 20 per cent of the acquisition value.
Computer equipment: Annual depreciation is made at the rate of 33 per cent
of the acquisition value. Buildings: Annual depreciation is made at the rate
of 2 per cent of the acquisition value.
NOTES TO ANNUAL REPORT
state issued a subsidy in 1998 of SEK 37.938 millions (39.424). The subsidy
was paid to Sea Partner AB, the company responsible for technical management and crewing. Sailing and administration costs include bareboat charters
for 4 vessels, chartered for periods of between 3 and 12 years. The Group has
cargo agreements for these vessels running for the corresponding periods.
Note 4
Fixed assets
Vessels and investments in
long-term leased tonnage
1998
1997
GROUP
Note 2 Personnel – average number of employees, wages
and other remuneration and social security costs, etc.
Group
Average no. of employees in Sweden
Men
Women
Total, Sweden
Average no. of employees in Canada
Men
Women
Total, Canada
GRAND TOTAL EMPLOYEES
1998
11
8
19
1997
11
8
19
1
–
1
1
–
1
20
20
Personnel costs
1998
1997
(in SEK 000s)
Sweden
Wages and remuneration
8,098
7,855
Payroll overheads
3,337
2,735
(of which 940 for pension costs (1,497)
(of which 322 (452) are pension costs for the President and Executive Vice
President)
Canada
Wages and remuneration
664
448
Total personnel costs
12,099 11,038
Of which
Board, President and Executive Vice President
Wages and remuneration
2,643 2,369
Of which bonus payments 498 (552)
President
Wages and remuneration
1,203
1,053
Of which bonus payments 249 (276)
The President and Executive Vice President each receive bonus payments
of 0.25 per cent of the profit for the year after financial income and expenses
and 0.75 per cent of the increase in profits over the year. The period of notice
to be served by the President and Executive Vice President is 12 months. If
Gorthon Lines terminates their employment, they may be entitled to severance
payment equivalent to two year’s salary. In the case of significant structural
changes in the company, such as the company having new owners, the
President and Executive Vice President are entitled to resign from their
positions with severance pay in accordance with the same regulations which
are applicable for termination of employment by the company. Pension
contributions on behalf of the President and Executive Vice President are paid
on an ongoing basis by the Pension Foundation. Above and beyond this there
are no guarantees for their future pensions.
Emoluments to the Board amounted to SEK 240,000. No fees are paid to
the Chairman of the Board or to the President. The Chairman of the Board
is employed on a part-time basis and Gorthon Lines pay B&N, Nordsjöfrakt
AB part of the costs for offices etc. Profit for the year has been affected by
SEK 840,000 for these items.
Other senior executives’ pension contributions are made in accordance
with the ITP plan. No terms for severance pay exist.
PARENT COMPANY
All staff in Sweden are employed by the parent company.
Note 3 Tax on profit for the year
The winding up of a foreign subsidiary has reduced the tax cost for the Group
by SEK 36 million in 1997. By reducing the deferred tax liability and the actual
tax, this has already been included in the Group’s financial statements as of
31 December 1997. However, as a result of excess depreciation a tax loss carry
forward of SEK 60 million still exists in the parent company at 31 December 1998.
Acquisition value
Acquisition value brought forward
Purchases
Sales
ccumulated acquisition value carried forward
Machinery
and other technical equipment
1998
1997
(all figures in thousands of SEK)
1,336,685
3,554
-20,730
1,319,509
1,320,124
27,081
-10,520
1,336,685
20,032
–
–
20,032
19,898
134
–
20,032
4,064
2,165
-191
6,038
3,993
76
-5
4,064
Accumulated depreciation according to plan
Depreciation brought forward
-679,661
Sales
3,357
Depreciation for the year according to plan
-41,939
Accumulated depreciation acc. to plan carried fwd. -718,243
-638,810
509
- 41,360
-679,661
-17,425
–
-2,342
-19,767
-14,924
–
-2,501
-17,425
-3,192
190
-836
-3 838
-2,712
–
-480
-3,192
Value according to plan carried forward
657,024
265
2,607
2,200
872
601,266
Vessels and investments in
long-term leased tonnage
1998
1997
PARENT COMPANY
Acquisition value
Acquisition value brought forward
Purchases
Sales
Accumulated acquisition value carried forward
Machinery
and other technical equipment
1998
1997
(all figures in thousands of SEK)
34•35
F O R M A L I T I E S
Equipment, tools,
fixtures and fittings
1998
1997
852,898
3,554
-97,905
758,547
857,777
27,082
-31,961
852,898
20,032
–
–
20,032
19,898
134
–
20,032
3,948
2,165
-191
5,922
3,877
76
-5
3,948
Accumulated depreciation according to plan
Depreciation brought forward
-149,171
Sales
33,759
Depreciation for the year according to plan
-43,065
Accumulated depreciation acc. to plan carried fwd. -158,477
-105,208
1,705
-45,668
-149,171
-17,425
–
-2,342
-19,767
-14,924
–
-2,501
-17,425
-3,141
190
-797
-3,748
-2,662
–
-479
-3,141
Value according to plan carried forward
600,070
703,727
265
2,607
2,174
807
Accumulated excess depreciation
-469,466
-436,977
–
–
–
–
130,604
266,750
265
2,607
2,174
807
Residual written-down value carried forward
Accelerated depreciation has been eliminated in the group. Please refer to Accounting Principles.
Vessels owned by the group are insured for a total of SEK 1,240 million.
Buildings
Land
1998
1997
1998
(all figures in thousands of SEK)
Acquisition value
Acquisition value brought forward
Sales
Accumulated acquisition value carried forward
1997
2,973
-2,973
0
2,973
–
2,973
993
-993
0
993
–
993
-416
446
-30
0
-357
–
–
-59
-416
–
0
–
0
Value according to plan carried forward
0
2 557
0
993
Value for taxation purposes
–
889
–
539
Accumulated depreciation according to plan
Depreciation brought forward
Sales
Depreciation for the year according to plan
Accumulated depreciation acc. to plan carried fwd.
Note 1 Shipping and administration costs
For vessels registered in Sweden employing labour for whom an employer’s
contribution to national social security fees in Sweden are paid, the Swedish
Equipment, tools,
fixtures and fittings
1998
1997
12° 40'
56°
00'
Note 5 Shares in subsidiaries
Par
Book
of shares
capital
value
value
199712-31
Rederi AB Gylfe,
Helsingborg, 500
556161-7928
Sweden
Gorthon Shipping Inc. Montreal,
100
Canada
Gorthon Lines AS,
Sarpsborg,
200
977027330
Norway
Gorthon International Hamilton, 12,000
Shipping Ltd
Bermuda
100
100
100
50
100
1
1
1
200
209
209
USD 1
277
–
587
260
Number % of share
Company
Reg. office
Auditors’ report
Note 8 Ship loans and liabilities to credit institutions
100
NOK
As of 31 Dec 1998 Gorthon Lines’ long-term loans (including the current
portion) amounted to SEK 235 millions at the closing day rate. All ship loans
are denominated in US dollars.
Amortisations in accordance with current amortisation
plans have been translated at the closing day rate.
SEK millions
100
Total (in SEK 000s)
1999
2000
2001
After
2002
61
32
20
123
Total
235
Note 9 Prepaid expenses and accrued income
Group
Note 6 Shares in associated companies
Company
Reg. office
of shares
capital
value
1997value 12-31
Sea Partner AB,
556275-8846
Göteborg,
Sweden
60,000
30
1,500
1,260 1,800
Number % of share
Par
Book
Results from participation in associated companies was SEK -540.000 in 1998 (0).
Note 7 Equity
Accrual of sailing revenues
Pre-paid time charters
Pre-paid dry dock charges
Other items
Parent company
Accrual of sailing revenues
Pre-paid time charters
Pre-paid dry dock charges
Other items
Group
(in SEK 000s)
Share-
Restr’d
Non-res.
Non-res.
capital
reserves
reserves
equity
Balance brought forward
37,290 342,028 43,315 422,633
Appropriations
4,624 -4,624
0
Dividends
-37,290 -37,290
Equity part of unrestricted reserves
35,074 -35,074
0
Transfers from restricted to non-restricted reserves -9,823
9,823
0
Translation differenses
230
230
Profit for the year
68,598 68,598
Balance carried forward
37,290 371,903
1998
1997
6,103
4,320
22,045
2,890
5,755
1,884
7,581
3,371
35,358
18,591
6,103
4,320
22,045
2,890
5,755
1,884
7,581
2,286
35,358
17,506
1998
1997
2,088
8,957
6,102
17,578
2,388
9,189
4,775
16,009
34,725
32,361
Note 10 Accrued expenses and prepaid income
Group
Accrued liabilities to employees
Accrued bareboat charters
Interest expenses
Other items
44,978 454,171
(in SEK 000s)
Share-
Restr’d
Non-res.
Non-res.
capital
reserves
reserves
equity
Balance brought forward
Bonus issue
Dividends
Profit for the year
37,290
Balance carried forward
37,290
4,624
93,307 130,597
-4,624
0
-37,290 -37,290
37,632 37,632
4,624
89,025 130,939
The number of shares amounted to 18,644,858, with a nominal value of SEK 2 per share.
The share capital is divided up into 1,208,980 series A shares, each holding 10 votes,
and 17,435,878 series B shares, each holding one vote.
Accrued liabilities to employees
Accrued bareboat charters
Interest expenses
Other items
2,088
8,957
6,102
17,558
2,388
9,189
4,775
15,969
34,705
32,321
Sten K Johnson
No transactions took place within the Group in 1998 apart from leasing
vessels.
F O R M A L I T I E S
We conducted our audit in accordance with generally accepted auditing standards in
Sweden. Those standards require that we plan and reform the audit to obtain reasonable assurance that the annual report and the consolidated financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts an disclosures in the financial statements. An audit also includes
assessing the accounting principles used and their application by the board of directors and the managing director, as well as evaluating the overall presentation of information in the annual report and the consolidated financial statements. We examined
significant decisions, actions taken and circumstances of the Company in order to be
able to determine the liability, if any, to the Company of any board member or the
managing director or whether they have in any way acted in contravention of the
Companies Act, the Annual Accounts Act or the Articles of Association. We believe
that our audit provides a reasonable basis for our opinion set out below.
that
the income statements and the balance sheets of the parent company and the
Group be adopted and
that
the unappropriated earnings of the parent company be dealt
with in accordance with the proposal in the administration report.
Note 12
In our opinion, the members of the board of directors and the managing director have
not committed any act or been guilty of any omission, which could give rise to any liability to the Company.
Vessels were sold to a subsidiary in 1998, which yielded a total of SEK 65.680
millions.
We recommend
Lennart Nilsson
Christer Zetterberg
Chairman of the board
36•37
We have audited the annual report, the consolidated financial statements, the accounting records and the administration by the board of directors and the managing director of Gorthon Lines AB for the year 1998. These accounts and the administration of
the Company are the responsibility of the board of directors and the managing director. Our responsibility is to express an opinion on the annual report, the consolidated
financial statements and the administration based on our audit.
Note 11 Purchasing and sales between group companies
that
Helsingborg, February 16, 1999
Gorthon Lines AB (publ)
Lennart Bylock
To the general meeting of the shareholders of Gorthon Lines AB (publ) Reg no 556112-6953.
In our opinion the annual report and the consolidated financial statements have been
prepared in accordance with the Annual Accounts Act, consequently, we recommend
Parent company
Parent company
(Translation from the Swedish original)
Mats Nilsson
President
Carl-Eric Bohlin
Magnus Willfors
Auditor
Auditor
the members of the board of directors and the managing director be discharged
from liability for the financial year.
Malmö , February 19, 1999
Carl-Eric Bohlin
Authorised Public Accountant
Magnus Willfors
Authorised Public Accountant
12° 40'
56°
00'
The Board, Auditors and Senior Executives
THE BOARD
SENIOR EXECUTIVES
Lennart Bylock
Born 1940.
Chairman.
Board member since 1990. Board member
since 1990. Chairman of CellMark AB,
Svenska Orient Linien AB, Varta AB,
Varta Bosch Holding AB. Board member
of Cloetta AB, L-E Lundbergföretagen
AB, Midway Holding AB, Swede Ship
Marine AB and Stiftelsen Natur och Kultur.
Shares held: 128,000, series B
Pension fund shares: 36,850, series B
Sten K Johnson
Born 1945.
Board member since 1997. Chairman
and CEO of Midway Holding AB,
Chairman of Gandalf AB, Liljeholmens
Stearinfabriks AB, Nordifagruppen AB
and Skåne-möllan AB. Board member
of AB Custos, Sydkraft AB and others.
Shares held: via companies 131,000,
series B
Lennart Nilsson
Born 1941.
Board member since 1997. Chairman
of Sveriges Verkstadsindustrier, Lund
University and Celsius AB, Vice
Chairman of Cardo AB and Trelleborg
AB. Board member of AB
Industrivärden, Henry and Gerda
Dunkers Donationsfond nr 2,
Industriförbundets and SAFs arbetsutskott, Stig and Ragna Gorthons Stiftelse
and Crafoordska Stiftelsen and others.
Shares held: 8,400, series B
Mats Nilsson
Born 1956.
President. Employed since 1989.
Shares held: 0.
Lars Petersson
Born 1951.
Executive Vice President - Marketing.
Employed since 1982.
Shares held: 0.
Bo Johnsson
Born 1953.
Manager – Cargo handling.
Employed since 1993.
Shares held: 0.
AUDITORS
Kenny Pettersson
Born 1951.
Manager - Chartering.
Employed since 1980.
Shares held: 0.
Anette Henriksson
Born 1962.
Financial Manager.
Employed since 1986.
Shares held: 0.
Deputy Auditors
Mats Nilsson
Born 1956.
President, Gorthon Lines.
Board member since 1995.
President of Provinsbanken Skåne
Helsingborg and Sea Partner AB. Board
member of Morgan Wedlin & Son AB,
Sveriges Redareförening – (European
section) and Sveriges Ångfartygs
Assurans Förening.
Shares held: 0
38•39
T H E
B O A R D
A N D
Christer Zetterberg
Born 1941.
Board member since 1997.
Chairman of IDI AB, Ekman & Co,
AB Segerström och Svensson, TurnIT AB
och Micronic Laser Systems. Board
member of L-E Lundbergföretagen AB
and MoDo AB. Member of IVA
Ingenjörsvetenskapsakademien.
Shares held: 4,500, series B
M A N A G E M E N T
Michael Bengtsson
Born 1959.
PricewaterhouseCoopers KB.
Deputy auditor in the company since:
1992.
Carl-Eric Bohlin, auditor
Born 1946.
Authorised Public Accountant,
PricewaterhouseCoopers KB.
Auditor in the company since: 1990.
Magnus Willfors, auditor
Born 1963.
Authorised Public Accountant,
PricewaterhouseCoopers KB.
Auditor in the company since: 1994.
Olov Karlsson
Born 1949.
PricewaterhouseCoopers KB.
Deputy auditor in the company since:
1992.
Definitions and Glossary
of nautical terms
DEFINITIONS
Capital employed
Interest bearing liabilities and shareholders’ equity.
Cash flow from operations
Income after financial items plus depreciation according to plan.
Debt/equity ratio
Interest-bearing liabilities less liquid
funds divided by equity.
Return on equity
a) Income after financial items, less
actual tax, divided by the average
amount of shareholders’ equity.
b) Income after financial items, less
standard rate 28% tax divided by average
shareholders’ equity.
Share of risk-bearing capital
Shareholders’ equity plus deferred tax
divided by the balance sheet total.
GLOSSARY OF NAUTICAL TERMS
Equity/assets ratio
Shareholders’ equity divided by balance
sheet total.
Equity per share
Shareholders’ equity divided by the
number of shares outstanding.
Gross margin
Income before depreciation divided by
operating income.
Interest coverage ratio
Income after financial items plus interest expense divided by interest expense.
Price-earnings ratio (P/E ratio)
Market price per share divided by earnings per share after taxes.
Profit margin
Income after financial items divided by
operating income.
Profit per share
a) Income after financial items less
actual tax divided by the number of shares outstanding.
b) Income after financial items less
standard rate 28% tax divided by the
number of shares outstanding.
c) Income after financial items less full
tax (actual tax plus deferred tax) divided
by the number of share outstanding.
Return on capital employed
Income after financial items plus interest expenses divided by the average capital employed.
40•41
G L O S S A R Y
Bare-boat charter
Leasing of a vessel, without a crew, to a
charterer for a specific period, normally
of extended duration.
Bunkers
Fuel used to power a vessel.
Cassette vessel
A Ro-Ro vessel adapted to transport
ready-stowed goods.
Charterer
A cargo owner or the party that charters
a ship.
Contract of affreightment
A ‘volume’ contract guaranteeing a
minimum quantity at a fixed price.
Deadweight (dwt)
The total weight in tonnes of cargo, bunkers and loose equipment which a vessel
can carry.
IMO
International Maritime Organisation, a
United Nations agency which acts in the
capacity of an international supervisory
authority for shipping.
ISM
International Safety Management. A
code of regulations governing quality
and safety in the world merchant fleet
that is stipulated by the IMO. Certification in accordance with the ISM code
is administered by national shipping
authorities, such as the National
Maritime Administration in Sweden.
ISO 9000
An international standard governing
quality management in companies. ISO
9001 certification is granted by classification societies or other accredited
agencies.
Requirement contract
A contract offering a fixed price and preferential rights for volumes shipped, but
providing no guarantees as to those
volumes.
Ro-Ro vessel
(Roll on-Roll off) A vessel that is loaded
and unloaded by driving trucks or flatbeds up one or more ramps.
Ship management
All services, including the provision of a
crew, that are required to operate a vessel. The cost for these services is sometimes referred to as the daily cost.
Side-loader
A vessel loaded by driving trucks or flatbeds through sideports in the hull, generally combined with elevators between
decks.
Time charter (T/C)
Leasing a vessel to a charterer for a specified period of time. The shipping company assumes all operating costs except
those for bunkers and port charges.
Gorthon Lines AB
Gamla Tullhuset, Hamntorget, Box 1063, 251 10 Helsingborg, Sweden
Tel: +46-42-17 27 00 • Fax: +46-42-14 63 43
E-mail: [email protected]
Gorthon Shipping Inc
465 Rue St Jean, Suite 505, Montreal, Quebec H2Y 2R6, Canada
Tel: +1-514-697 5660 • Fax: +1-514-697 7997
Gorthon Lines AS
Strandg 9, Postboks 147, N-1705 Sarpsborg, Norway
Tel: +47-69 15 40 22 • Fax: +47-69-15 46 91
Gorthon International Shipping Limited
P.O. Box HM 2452, Hamilton HM JX, Bermuda
Tel: +91-441-295 0850 • Fax: +91-441-292 3704
Gorthon Lines AB
Box 761, 851 22 Sundsvall, Sweden
Tel: +46-60-19 35 71 • Fax: +46-60-19 39 61
Sea Partner AB
Exportg 47, 422 46 Hisings Backa, Sweden
Tel: +46-31- 742 46 00 • Fax: +46-31-742 46 04
E-mail: [email protected]
Annual report 1998
Gorthon Lines
• Table of Contents
• Overview
• Summary 1998
• Key figures
• Report of the Board of Directors
Annual report 1998
• Income Statement
• Balance Sheet
• Cash Flow Analysis
• Notes
• Shareholders Policy
Main menu
HUGIN 1999. All rights reserved