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2013Annual Report

J. Lauritzen a/S · AnnuAl RepoRt 20132

DiScLaimerthis Annual Report contains forward-looking statements about Jl’s future financial position. Such statements are subject to risks and uncertainties as various factors, many of which are beyond the control of Jl, may cause actual developments and actual results to differ materially from expectations contained in the Annual Report. Accordingly, forward-looking statements should not be relied upon as a prediction of actual results.

pRinted by: KlS gRAfiSK huS A/S, denmARKS moSt gReen gRAphic houSe

J. Lauritzen a/S · AnnuAl RepoRt 2013 3

intRoduction by chAiRmAn & ceo 4Who We ARe 6gRoup Key figuReS 8highlightS 2013 10outlooK 2014 14lAuRitZen in peRSpectiVe 15lAuRitZen bulKeRS 18lAuRitZen KoSAn 26lAuRitZen offShoRe 34lAuRitZen tAnKeRS 38coRpoRAte goVeRnAnce 40finAnce And inVeStoR RelAtionS 44RiSK mAnAgement 48coRpoRAte ReSponSibility 52people And competenceS 54finAnciAl ReVieW 56boARd of diRectoRS 60mAnAgement 62AccountS 64mAnAgement StAtement 104independent AuditoRS’ RepoRt 105oVeRAll gRoup StRuctuRe 106liSt of gRoup compAnieS 107

tAble of contentS


2013 was yet a difficult year for J. lauritzen (Jl). our position in dry-cargo combined with another year, of which a major part presented us with re-cord low earnings, made its impact felt on the re-sult. on top of this, defaults on two long-term capesize bulk carrier charters forced sizeable im-pairments. the result for the year, a loss of uSd (284.6)m, had been anticipated since mid-2013 and as such, has been analyzed, understood and worked with over the past six months.

A number of initiAtives swept through JL during 2013,

chAnging our strAtegies, our cApitAL structure And the wAy we work. whiLe we concentrAted on this, the mArkets gentLy improved

towArds the end of the yeAr, fueLLed by A sentiment of

the gLobAL economy finALLy, ALbeit sLowLy, moving in the

right direction.

even if there is now a distinct and widespread feeling that 2013 was in many ways a turning point, the world is still faced with economic and political challenges, the ripples of which could im-pact a not yet robustly established global up-turn.

An industry specific concern must be the chronic oversupply of global yard capacity which until bal-anced will always hover just over the horizon, ready to release more berths and make its impact felt on any market spike in any sector of shipping.

2013 became the year when the much predicted arrival of private equity as a replacement for tradi-tional finance finally gained speed in the shipping industry. While the results of this have sometimes been spectacular, it has not been universally suc-cessful and it will be interesting to follow the lon-ger term actions of these new players in global shipping.

the year regrettably showed a continuation and even an increase in the introduction of protective trade legislation by national governments trying to gain a short-term benefit while gambling with the global economy’s ability to improve longer term as this unfortunate trend spread in a tit-for-tat game. the continued development of free trade is paramount for our industry and for the ac-cess to prosperity and well-being for millions of people globally.

geopolitical concerns and their consequences for our industry also remain to a large extent equal to what has been experienced in previous years. When some are mitigated, new appear; piracy in

intRoduction by cHairman & ceo


gulf of Aden is now at a very low level, even if the root causes remain unsolved. however in other parts of the world violence is on the rise. the solu-tion provided in gulf of Aden by joint, coordinated action from a range of governments will be diffi-cult to replicate in some of the new areas of trou-ble, but action from the international community is needed.

during 2013, JL progressed through A significAnt

trAnsition.

the decision to exit our product tanker activities with its dedicated staff and long tradition, which have served us well over the years, was taken to secure our long-term financial strength, to in-crease our strategic focus and prepare our bal-ance sheet for a new phase of expansion in the identified core businesses, transportation of dry-cargo and liquefied gases.

early in 2014, our fleet of three shuttle tankers was sold. this will lead to an exit from shuttle tankers concluding our strategic objectives of ad-justing our business portfolio while providing fur-ther funds for developing our core activities.

in 2013, Jl lost uSd (284.6)m. it is tempting to react to this by trying to forget the year as quickly as possible. however, that would be wrong. the result is certainly unsatisfactory by any measure, but the efforts made and changes implemented during the year are significant and will, when they take effect, mean that the future Jl will be a com-pany very different from the Jl of the past. for that reason, 2013 deserves deeper analysis which is provided in the pages of this Annual Report.

We hope you find it interesting.

Bent Østergaardchairman of the board

Jan Kastrup-nielsenpresident & ceo


Jl is a shipping company with world-wide opera-tions headquartered in copenhagen, denmark. We operate more than 150 vessels including short-term charters.

We are wholly-owned by the lauritzen founda-tion; a commercial foundation with the objective of supporting shipping, culture, social humanitar-ian work and education. our owner provides us with the ability to take long-term views in develop-ing our business and a close and continuous dia-logue between the board of directors and execu-tive management, enables rapid decision-making.

the overALL Aim of JL is to provide our owners with An AttrActive return on equity refLecting the risk profiLe As stipuLAted At Any time by

the boArd.

the pillars of our strategy are spreading risk through engaging in diverse business areas, building long-term and close relations with key stakeholders, creating insight through building critical mass in selected segments, embracing complexity to benefit from our amassed compe-tencies, selecting and investing in talent, while maintaining the highest degree of accountability.

our BuSineSSpart of our strategy is to spread risk across differ-ent business areas each with specific business models that enable us to deliver competitive and reliable transportation services to our clients. our business portfolio includes lauritzen bulkers (dry bulk cargoes), lauritzen Kosan (petrochemi-cal and liquefied petroleum gases) and part-own-ership of Axis offshore ltd.

lauritzen bulkers controls a fleet of more than 100 handysize, handymax and capesize bulk carriers with a low average age. the handysize operation is the largest business activity and comprises a significant fleet of homogeneous vessels, ensur-ing economies of scale and operational efficiency.

lauritzen Kosan controls a modern fleet of about 45 semi-refrigerated, pressurized and ethylene gas carriers. As a leading carrier of liquefied gas-es, including petrochemical gases, strict health, safety and environmental standards and stringent

Who We are


client requirements are achieved through close in-house collaboration between the technical, oper-ational and commercial departments.

Axis offshore ltd. is a provider of high specifica-tion accommodation units servicing the offshore oil and gas industry. our PeoPLe anD our VaLueSour value creation is anchored in the ability of our people to build and manage relations with our cli-ents and through these, understand and fulfill ef-ficiently many different types of transportation re-quirements. our aim is to be considered always approachable, always accountable and always looking to shared value creation.

We can only achieve this by attracting and devel-oping high-calibre talented people, who taking their starting point in our tradition for open and direct communication, combined with a flat or-ganisation and world-class tools, can be given the freedom to develop our businesses.

in Jl, we consider diversity as an important and natural prerequisite for innovation and develop-ment of the group. in Jl, all employees have equal opportunities to make a career, be this as a man-ager or specialist.

Accountability

Competence

Enthusiasm

Team spiritEntrepreneur-ship

Respect

We believe that part of a quality service is to con-duct business in a responsible manner creating benefits broadly while being open, fair and honest in all our activities.

We consider ourselves a value-driven organiza-tion with our core values representing the essence of whom and what we are.

our core VaLueS

“maintaining our inSiStence on accountaBiLity HaS aLWayS Been an imPortant Part of tHe JL VaLue Set”

Jan Kastrup-nielsen, president & CeO


USDm 2013 2012 2011 2010 2009

Income statementRevenue 502 574 604 719 483Time charter equivalent (TCE) 353 404 537 641 409Profit before depreciation (EBITDA) 9 34 146 252 135EBITDA accounted for as discontinued operations 48 55 N/A N/A N/AProfit/(loss) on sale of vessels (8) (95) (36) (12) 17Depreciations (63) (75) (91) (71) (44)Profit/(loss) from operations before write-down (62) (136) 19 169 107Write-down (133) (103) 0 18 (32)Operating income (EBIT) (195) (239) 19 187 76Share of profit/(loss) in joint ventures (11) (25) 5 11 17Financial items, net (31) (41) (69) (56) (17)Profit/(loss) from continuing operations before tax (237) (305) (46) 136 80Profit/(loss) from discontinuing operations (48) (43) N/A N/A N/AThe J. Lauritzen Group's share of profit/(loss) (285) (350) (46) 131 75

Balance sheetNon current assets 1,185 1,931 2,361 2,062 1,671Total assets 1,877 2,315 2,682 2,411 2,188JL's share of equity 740 852 1,199 1,239 1,126Non-current liabilities 754 1,297 1,311 967 886Current liabilities 382 166 170 200 172Invested capital, incl. discontinued operations 1,638 1,960 2,344 2,049 1,813Invested capital, excl. discontinued operations 1,209 1,468 N/A N/A N/ANet interest bearing debt (NIBD) incl. discontinued ope. 897 949 1,160 840 731Net interest bearing debt (NIBD) excl. discontinued ope. 631 685 N/A N/A N/ACash and securities 164 267 236 224 218

Cash flowsCash flow from operating activities (20) 34 86 164 (24)Cash flow from investment activities 28 (108) (330) (325) (455)- hereof investments in vessels, machinery and equipm. (109) (190) (438) (538) (541)Cash flow from financing activities (126) 107 323 142 508Changes for the year in cash and cash equivalents (118) 33 79 (19) 29

Key figures and financial ratios Average number of employees 1,354 1,379 1,300 1,148 940 Total number of ship days, incl. discontinued operations 63,875 64,970 55,115 54,385 51,100 Total number of ship days, excl. discontinued operations 57,305 58,765 N/A N/A N/ADKK exchange rate year end 541 566 575 561 519 Average DKK exchange rate 562 580 536 563 536

Profit margin (38.8)% (41.6)% 3.1% 25.9% 15.7%NIBD/EBITDA incl. discontinued operations 15.8 10.7 7.9 3.3 5.4NIBD/EBITDA excl. discontinued operations 70.9 20.1 N/A N/A N/ASolvency ratio 39% 37% 45% 52% 52%Return on equity (ROE) (35.8)% (34.1)% (3.8)% 11.1% 6.9%Return on invested capital (ROIC) (12.5)% (13.5)% 1.1% 10.2% 6.1%

In 2013, JL decided to discontinue its operations in Lauritzen Offshore - shuttle tankers and Lauritzen Tankers and thus these activities have beenaccounted for as discontinued operations. Income statement figures for 2012 have been re-presented accordingly.Comparison figures for 2009-2011 have not been re-presented.

gRoup Key figureS

The key figures have been calculated as follows:Profit margin:

Solvency ratio:

Return on equity:

Invested capital:

Net interest bearing debt (NIBD)

Return on invested capital:

Operating income x 100 / Revenue

Total equity, year-end x 100 / Total equity and liabilities, year-end

JL's share of profit/(loss) x 100 / JL's average share of equity

Total assets less cash, securities, non operational assets and non interest-bearing current liabilities

Interest-bearing liabilities, less subordinated loan, interest-bearing assets and cash

(Operating income + share of profit/(loss) in joint ventures) x 100 / Average invested capital


caPitaL Structure uSDm

reVenueS uSDm

SeLecteD Key figureS uSDm

caSH fLoW from oPerationS anD caSH uSDm

eBitDa 2012-2013 uSDm

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inVeSteD caPitaL at year-enD uSDm

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highlightS 2013

Jl’s result was uSd (284.6)m compared to uSd (349.7)m in 2012, cf. figure 1.

the result was significantly impacted by one-off items with a net effect of uSd (185.0)m (2012: uSd (254.4)m). Adjusted for these, Jl’s result was uSd (99.6)m compared to uSd (95.4)m in 2012. the effects of the depressed market conditions for bulk carriers, which continued into 2013, and the weakening of the market for gas carriers were partly offset by lower depreciation and reduced net financial costs.

2013 turned out to be the fifth consecutive yeAr with depressed shipping mArkets.

Again lauritzen bulkers was hit by a new sizeable counterparty default in the capesize bulk carrier segment. to secure our long-term financial strength, we decided that structural changes in our capital base and our business portfolio were needed. to achieve this, the following actions were taken during the year:

• the lauritzen foundation, our sole owner, de-cided in early 2013 to convert two subordi-nated loans into equity. At year-end 2012, the loans amounted to a total of dKK 903m (uSd 160m).

• our fleet of ten wholly-owned product tank-ers was sold en bloc in october 2013 to haf-nia tankers, copenhagen at a price of uSd 305m, releasing net cash at deliveries total-ling uSd 125m.

figure 1: reSuLt for tHe year uSDm

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Bulk Gas Offshore Tank Other/

Result for the year minorities JL result

2012 2013


SouRce: Jl buSineSS AnAlySiS bASed on dAtA extRActed fRom clARKSon ReSeARch SeRViceS

figure 2: cLarKSea inDex 2009-2013 uSD/Day

• After the balance date, three shuttle tankers were sold with expected delivery between 1 April 2014 and 15 may 2014 to Knutsen nyK offshore tankers, norway at a price of uSd 191m, releasing net cash of uSd 65m. the sale is still subject to certain approvals.

during the second half of the year, lauritzen bulk-ers took a total of eleven newbuildings on long-term time-charter for delivery 2014-17 with both extension and purchase options. these, together with orders for four supramax eco newbuildings with delivery 2016-17 concluded in early 2014, signify our belief in an improved market in the coming years.

in 2013, we continued to improve processes across the group in order to improve efficiency and reduce costs. our fuel-efficiency programme continued with the implementation of a range of initiatives with the aim of reducing fuel consump-tion as well as our carbon footprint.

At year-end 2013, Jl’s solvency amounted to 39.4% (2012: 36.8%) and cash and cash equiva-lents were uSd 154m (2012: uSd 267m). net debt amounted to uSd 631m equal to 62% of bro-ker values (2012: uSd 949m and 61% respective-ly).

the result was in line with our latest expectations but considerably below our expectations at the beginning of the year due to write-downs at 30 June 2013 resulting from a counterparty default and the expected long-term asset value effects of new eco designs. the result is regarded as very unsatisfactory.

tHe BuSineSS enVironmentApart from Q4, world shipping markets remained depressed for most of 2013 as illustrated by the clarksea index (earnings index for the bulk, gas, container and tanker markets), cf. figure 2. higher earnings were seen for most markets only in Q4, but particularly for large dry bulk and crude oil. product tankers enjoyed higher rates during the year, whereas the market for smaller gas carrier deteriorated slightly in the second half. on aver-age, the clarksea index increased by 6% in 2013 compared to 2012.

the strengthening of shipping markets in late 2013 was due to economic activity becoming more broadly based, both in terms of countries and in terms of goods transported and due to sup-ply growth in most shipping markets receding from previous years’ level.

political and economic developments were chal-lenging in 2013. unrest in the middle east and north Africa continued and kept oil prices at high levels. financial conditions as a whole deteriorat-ed slightly with increased risks in emerging mar-kets on exchange rates and liquidity which nega-tively affected their economic performance. these developments contributed to general uncertainty, leading to high volatility in many shipping mar-kets.

despite these occurrences, some optimism en-tered the tonnage market during 2013. newbuild-ing prices as well as second hand tonnage prices bottomed out early 2013 and towards the end of 2013, newbuilding prices were on average 5% higher than at year-end 2012, but still 20% below early 2009, cf. figure 3.

figure 3: aVerage neWBuiLDing PriceS 2009-2013


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New

bu

ildin

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an. 1

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= 1

00)

Newbuilding Price Index Yr/Yr Change Newbuilding Price Index - rhs


this relatively limited rise in newbuilding prices should be seen in the light of a large world surplus in ship building capacity, illustrated by the fact that 2013 deliveries only corresponded to about 70% of annual deliveries during the past two years and the sizeable improvement of Japanese ship-yards’ competitiveness due to the depreciation of the Jpy. the rise of nearly 150% in 2013 orders compared to 2012 taken together with the intro-duction of more fuel-efficient vessel designs have thus not been sufficient to initiate a strong in-crease in newbuilding prices.

the surplus global shipbuilding capacity implies sizeable supply elasticity. this means that the abil-ity of the shipbuilding industry to deliver new ships within a fairly short time span is high, en-abling shipyards to quickly meet demand and make business cycles fairly short-lived as a result.

Second hand prices recovered during the second half of the year, mainly for bulk carriers and prod-ucts tankers, whereas only a minor rise was regis-tered for smaller gas carriers.

JL grouPJan Kastrup-nielsen became president & ceo at the end of february 2013 when torben Janholt re-tired as planned. Jan Kastrup-nielsen has been with Jl since 2000 and been part of executive management since 2009.

the sale of our fleet of ten wholly-owned product

tankers to hafnia tankers was concluded in octo-ber 2013. the transaction will be completed and all vessels delivered to the new owner during Q1 2014.

Subsequent to the product tanker sale, Jl offered holders of our Senior unsecured bond issue 2010/2015 with iSin no 0010572381 to buy back these bonds at a price of noK 105. the offer was very well received with bonds valued at noK 259m being repurchased, equal to 37% of out-standing bonds.

together with our partner hitecVision, we man-dated Axis offshore to exercise an option to con-tract an additional accommodation unit for deliv-ery in late 2015, which will strengthen Axis offshore’s position for the expected growth in the offshore accommodation market. concurrently, we decided to reduce our shareholding in Axis offshore to 34% (voting rights remain unchanged at 50%). instead of having a 50% share of a “two unit” ASV company, we now own 34% of a “three unit” ASV company with high specification assets acquired at competitive prices.

We decided to maintain and develop our pres-ence in the handysize bulk carrier segment where we have built a very strong presence and have a large and important group of clients. We intend to expand our presence in the “neighbouring” su-pramax segment, where we find some of the same clients and business dynamics. during the


figure 4: aVerage no. of VeSSeLS

year, we decided to cease our activities in the pan-amax bulk carrier segment and to act strictly as shipowners under long-term charters for our re-maining capesize activities.

towards the end of the year, two 58,000 dwt bulk carriers were sold.

eleven handysize bulk carriers newbuildings for delivery in 2014-16 were taken on long-term char-ter with options for extensions as well as purchase options.

during 2013, Jl controlled a combined average fleet of 176 vessels compared to 178 vessels in 2012, cf. figure 4, of which 59 were owned ves-sels (59 in 2012). At year-end, the average age of

our bulk carriers was 3.3 years, gas carriers 9.3 years and shuttle tankers 5.7 years. aSSetS anD SoLVencytotal invested capital was uSd 1,638m at year-end 2013, down from uSd 1,960m at year-end 2012.

the total book value of vessels amounted to uSd 1,021m, down uSd 681m on 2012 primarily due to write-downs, asset disposals and ordinary de-preciation. brokers’ valuations of vessels totalled uSd 953m, up 9% on 2012. the value in use of the vessels, taking contract coverage into account was higher than the total carrying amount.

At year-end 2013, Jl’s unsecured bonds maturing in 2015 and 2017 respectively were trading on the oslo Stock exchange at noK 105 (noK 102 at year-end 2012) and at noK 102,75 (the bond was listed on 16 January 2013), cf. figure 5.

after year-enD eVentSAfter balance date, outstanding deliveries of five product tankers to hafnia tankers were complet-ed. four long-term time chartered product tank-ers were also transferred to hafnia tankers and as of mid-march 2014 our product tanker operations will cease.

An order for two 61,000 dwt eco design supra-max bulk carriers was placed at dalian coSco Kawasaki hi Ship engineering co., ltd., dalian, china (dAcKS) for delivery in Q3 2016. further, two 63,000 dwt eco design supramax bulk carri-ers were ordered from imabari, Japan for delivery h2 2017.

After the balance date our fleet of three shuttle tankers was sold to Knutsen nyK offshore tank-ers, norway with delivery between April 1 and may 15, 2014. the sale is still subject to certain approvals. the transaction marks the finalization of the process to regain financial strength.

figure 5: traDeD Price (noK) for J. Lauritzen noK 700m BonD 2011-2012

SouRce: oSlo StocK exchAnge

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Own Part ownedChartered Shared charterOther

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10% JL 5 May 2015 - JLA 01

FRN (NIBOR 3mhts + 8.25%) JL 24 Oct. 2017 - JLA 02


outlooK 2014World economic growth and trade are expected to be on a positive path in 2014. however, the roll back of the uS federal Reserve bank’s purchase of government bonds, the debt problems in Southern europe, the vulnerability of many emerging markets to commodity price develop-ments and currency markets, and the outcome of the current negotiations between the un Security council members and iran are examples of uncer-tainties with a potentially significant impact on shipping markets.

AcknowLedging such events, we AnticipAte thAt seAborne

trAnsportAtion wiLL increAse for ALL key

mArkets, incLuding dry buLk, smALLer gAs cArriers And

offshore units.

deliveries and demolitions are projected to de-cline in 2014 compared to the previous two years. this suggests that the world merchant fleet over-all is expected to grow less rapidly than the 4% growth recorded in 2013.

the dry bulk carrier fleet is expected to grow less than the 6% growth recorded in 2013, whereas smaller gas carrier supply is poised for a some-what stronger increase than the 4.5% growth in 2013. the outlook is for a stronger dry bulk market due to demand growth being expected to surpass supply growth. the market for smaller gas carriers is foreseen as increasing slightly, as demand growth is expected to be only somewhat higher than supply growth.

in november 2013, talks between iran and the group of permanent un Security council mem-bers and germany led to an agreement for a six to twelve month period for further negotiations with the aim of finding a solution to the iranian conflict. An agreement could have considerable impacts on energy and petrochemical markets with posi-tive implications for shipping markets, but these have not however been included in our earnings forecasts.

in 2014, we will expand our bulk carrier activities in handysize and supramax, consolidate our posi-tion in the market for smaller gas carriers and con-tinue to improve our business processes and or-ganisational competencies and skills. but more

than anything else, we will work on strengthening relations with clients, suppliers and other stake-holders.

the result for 2014 is expected to improve consid-erably compared to 2013, due to market improve-ments and redelivery of expensive time-charter tonnage, but also because no further losses from the sale of assets and impairments are envisaged.

ebitdA from continuing operations is expected to be within the range of uSd 55-75m, significantly up on 2013 of uSd 8.9m, due mainly to dry bulk market improvements and redelivery of expensive time-chartered vessels.

net result from continuing operation is expected to be uSd (20)m – (40)m, significantly up on the uSd (236.5)m in 2013. Results from discontinu-ing operations are estimated around uSd 15m in-cluding gains from announced sale of assets of uSd 10m.

overall, Jl is expected to see a 2014 result of uSd (5) – (25)m.

currency and interest rate fluctuations as well as effects from additional sale of assets may impact the result.

capital expenditure including installments on four newbuildings for delivery in 2016 and 2017 and dockings is limited.


figure 6: cLarKSea inDex: 2004-2013 uSD/Day

0

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figure 7 inVeSteD caPitaL uSDm

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Invested Capital

Continuing operations Axis Offshore Discontinued operations Reefer

part of our business strategy is to spread risks across different business areas with different growth drivers and cycles and specific busi-ness models.

As a result, Jl has throughout the years been engaged in many different shipping seg-ments. the decision to enter or exit a business area depends on our ability to continuously develop the business, the business perspec-tives and considerations relating to a “best owner” principle.

2013 was the fifth consecutive year with de-pressed shipping markets following the ex-ceptionally strong five-year period between 2004 and 2008 as illustrated by the clarkSea index, cf. figure 6.

in 2013, we decided that structural changes in our capital base and business portfolio were needed in order to secure our long-term financial strength.

in early 2014, after disposals of our product tanker and shuttle tanker fleets (referred to as “discontinued operations”), our invested capi-tal amounted to uSd 1.209m, a threefold in-crease since 2004 cf. figure 7.

lAuRitZen in PerSPectiVe



lAuRitZen BuLKerSin 2013, lauritzen bulkers’ result amounted to uSd (229.6)m compared to uSd (294.5)m in 2012, cf. table 1. the result was significantly im-pacted by one-off items with a net effect of uSd (136.1)m (2012: uSd (200.3)m) due to write-downs, revenue from claims and vessel disposals due to counterparty defaults. Adjusted for one-off items, the result was uSd (93.5)m, slightly better than the result of uSd (94.2)m in 2012, but still very unsatisfactory. it reflects the sustained, de-pressed market for bulk carriers and expensive time-charter commitments.

the one-offs items recorded in 2013 related to:

• counterparty default by Korean Stx pan ocean with untimely redelivery of two long-term time-chartered capesize bulk carriers to lauritzen bulkers, which led to write-downs of uSd (77)m at the end of Q2 (in 2012 an-other default led to loss from the sale of as-sets of uSd (97)m).

• Accelerated global ordering of fuel-efficient eco-design bulk carriers challenging the earnings potential for traditional bulk carriers, which led to additional write-downs of uSd (61)m included in the interim result for the first half-year of 2013 compared to uSd (120)m write-downs at year-end 2012.

gLoBaL marKet DeVeLoPmentSAfter a tough start to the year, the bulk market is thought to have bottomed out during the first half of 2013. towards the end of Q2, a slow market re-covery began due to a strong Southern hemi-sphere grain season, and the market continued to improve during the second half of the year as a result of high chinese imports of iron ore and large exports of grain from the northern hemi-sphere, cf. figure 8.

As a consequence of the above, the annual spot market average improved compared to 2012; handysize and supramax by 8% and 10% respec-tively, panamax by 24% and capesize by 93%.

DemanD for BuLK carrierSdemand for bulk carriers is estimated to have in-creased by around 9% (in dwt terms) in 2013 compared to 6.5% in 2012, cf. figure 9.

the greatest contributor to demand growth was iron ore. china, accounting for 67% of total world imports of iron ore, maintained a strong appetite for this commodity and is estimated to have im-ported around 795m tonnes in 2013m, up 10% on 2012. the significant spike in the capesize market during the autumn was caused by record high lev-els of chinese iron ore imports, primarily due to the easing of china’s economic policies and re-stocking. the Australian iron ore majors increased production during 2013 and after the summer, brazilian exporters did the same, leading to more long haul exports.

in 2013, large Southern and northern crops in-creased the availability of grains for export and hence shipments increased by 11% which paved the way for the slight rate increase for handysize and supramax during Q2 (the Southern grain sea-son) and the significant increase in Q4 (the north-ern grain season).

Strong chinese imports of coal, mainly steam coal, led demand for coal to increase by 8%. mi-nor bulks increased by 6%.

SuPPLy of BuLK carrierSAt the beginning of 2013, the world fleet of bulk carriers amounted to 680m dwt. deliveries and demolitions both decreased in 2013 compared to 2012, leading to net fleet growth of 6%, down from 10% in 2012 and at year-end 2013 the world bulk fleet totalled 717m dwt, cf. figure 10.

2013 2012

Revenue 321.1 361.1 EBITDA (10.5) 4.0 Depreciations and write-downs (169.8) (150.7) Profit/(loss) on sale of vessels etc. (10.7) (96.6) Operating income (191.0) (243.2) Share of profit in joint ventures (16.7) (28.6) Finance net (21.1) (25.0) Profit/(loss) before tax (228.8) (296.8) JL's share of profit/(loss) (229.6) (294.5) Invested capital (average) 901.6 1,108.3 Return on invested capital (23.0)% (24.5)%Average no. of employees 573 590

taBLe 1: Key figureS uSDm


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figure 8: SPot marKet rateS 2009-2013 uSD/Day

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figure 9: DemanD for Dry BuLK carrierS 2009-2013 DWtm

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figure 10: SuPPLy of Dry BuLK carrierS 2009-2013 (year-enD) DWtm

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fleet growth in the capesize and supramax seg-ments was 5% and 7% respectively whereas the handysize fleet decreased by 1%.

for the first time since 2010, growth in demand exceeded supply in 2013 leading to an improve-ment in the market balance. Volatility in the spot market was also higher during 2013, particularly during the autumn, supporting the view that the market balance has improved.

A combination of low newbuilding prices, positive market outlook and demand for more fuel-effi-cient vessels led to a significant increase in con-tracting of bulk carriers in 2013 with a total of 80m dwt corresponding to more than a trebling of con-tracting in 2012. As a consequence of the in-creased contracting activity, newbuilding prices increased by 7% during the year. the demand for tonnage also led secondhand prices to rise by 25-35%.

At year-end 2013, the order book for capesize stood at 20% of the existing fleet, 24% for supra-max and 18% for handysize. the average age of the bulk fleet was approximately nine years com-pared to 11 years at year-end 2012, cf. figure 11.

BuSineSS moDeL anD riSK managementthe dry bulk markets are fragmented with no dominant players and are very liquid in terms of tonnage for charter for shorter or longer periods, providing ample possibilities to seek both short-term and long-term cover in addition to the for-ward freight agreement (ffA) market. the ffA market liquidity is, however, more prevalent in the supramax and panamax segments than in the handysize segment. the overall market liquidity is,

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figure 11: BuLK carrier age ProfiLe anD orDer BooK at year-enD 2013 (% of exiSting fLeet)


however, a unique feature of the dry cargo mar-kets and as such it is critical to have sufficient scale in any segment in which we operate in order to manage the risks associated with contracts of affreightment and volatility in geographical sub-markets.

lauritzen bulkers will continue to develop our presence in the handysize segment where we have historically had a very strong position and where we have a large and important group of cli-ents. further, we will expand our presence in the “neighbouring” supramax segment as this com-prises some of the same clients and because of its higher liquidity, it will allow us more opportunity to act as operators and conduct arbitrage busi-ness in the market.

in handysize and supramax, we believe that we can maintain and build sufficient scale, whereas we have ceased activities in the panamax seg-ment and with the expiry of time-charter commit-ments, we will act strictly as shipowners under long-term charters for our remaining capesize ac-tivities.

due to defaults, we have revised and strength-ened our risk management, which comes in three parts: 1) careful monitoring of our trading risk. in 2013 we focused on securing longer term ton-nage to rejuvenate our fleet in handysize and su-pramax, concentrating on eco designs from own-ers who offer us optionality in terms of trading, period and purchase options; 2) careful scrutiny of counterparties prior to concluding longer term business with them. this implies a dual focus on their rating/financial statements as well as on their recent trading, positioning and payment perfor-mance; 3) careful fleet portfolio management of owned as well as short, medium and long-term time-chartered tonnage and vessels committed by partners.

main eVentSAs of 1 february 2013, peter borup became presi-dent of lauritzen bulkers.

during the second half of the year, we initiated a fleet renewal process in our core segments.

eleven handysize bulk carriers newbuildings for delivery in 2014-16 were taken on long-term char-ter with extension and purchase options.

two second-hand handysize bulk carriers were taken on charter for one year each with delivery at the end of 2013/beginning 2014.

existing long-term time-charters for five handy-size and two supramax bulk carriers were extend-ed during the year.

A handysize bulk carrier newbuilding scheduled for delivery in Q3 2013 was sold and subsequently taken on long-term time-charter with extension and purchase options.

one supramax bulk carrier newbuilding for deliv-ery in 2016 was taken on long-term charter with extension and purchase options.

one 2011 built supramax bulk carrier for delivery in Q1 2014 was taken on long-term charter with extension and purchase options.

fLeet in 2013, the total number of ship-days reached 41.626 with 114 vessels on average, compared to 43,539 ship-days with 119 vessels on average in 2012, cf. figure 12. Spot vessels days amounted to 8,897 compared to 4,932 in 2012 due to in-creased focus on short-term arbitrage.

the operational fleet of handysize bulk carriers av-eraged 83, unchanged compared to 2012. At year-end 2013, the controlled handysize fleet comprised 88 vessels.

on average, the supramax fleet consisted of 23 vessels in 2013 compared to 24 vessels in 2012,


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with a further two panamax vessels (four in 2012) and seven capesize vessels (eight in 2012).

At year-end 2013, the fleet was made up of 45 long-term time-chartered vessels, with purchase options for 18 of these.

the owned fleet comprised 25 vessels at the end of 2013 (26 in 2012) with part ownership of a fur-ther 13 vessels (20 in 2012).

At the end of 2013, the AverAge Age of the owned

fLeet wAs 3.3 yeArs (2.3 yeArs At yeAr-end 2012).

fLeet managementtechnical management, including crewing for owned bulk carriers, is performed by new centu-ry overseas management inc., manila and Syner-gy maritime pte., Singapore.

our technical department works closely with ex-ternal providers on all aspects of achieving safe, cost-effective and reliable vessel operations.

two scheduled dry dockings were completed in 2013. unscheduled off-hire for lb’s owned fleet came to 0.57% of available vessel days in 2013 (0.29% in 2012).

HSSeQfleet safety performance and energy efficiency are closely monitored in order not only to comply with national and international rules and regula-tions but also due to increasing client require-ments and our internal risk guidelines.

With ship management outsourced to external service providers, our in-house technical depart-ment specifies requirements, aligns expectations and monitors performance on achieving safe and efficient operations.

to ensure a level of safety and performance in ac-cordance with above-mentioned regulations, re-quirements and guidelines, lauritzen bulkers con-stantly benchmarks external ship managers’ safety performance by way of Kpis, regular vessel visits and office audits. this close collaboration with ship managers is the key to providing safe, reliable and cost-effective shipping.

during 2013, our technical department conduct-ed vessel visits, office audits and attended crew seminars. these efforts enabled us to have a con-structive dialogue with our ship managers and crew. Vessel visits included close follow-up on the implementation of maritime labour convention (mlc 2006) related items, not only as these are mandatory but as crew welfare is of significant value for our operations. See p. 54-55 for addition-al information on mlc implementation.


We constantly assess and manage the risks asso-ciated with our operations. on the RightShip’s rat-ing programme (with 5.0 as best rating), the aver-age risk rating of our owned fleet was 4.9 at year-end 2013 and thus unchanged from 2012.

during 2013, we implemented and initiated a range of further initiatives to support our ongoing efforts to reduce fuel oil consumption and reduce emissions of Sox, nox and co2. the specific ini-tiatives are listed in our corporate Responsibility Report 2013 p. 20.

after year-enD eVentSAn order for two 61,000 dwt eco design supra-max bulk carriers was placed at dalian coSco Kawasaki hi Ship engineering co., ltd., dalian, china (dAcKS) for delivery in Q3 2016. further, two 63,000 dwt eco design supramax bulk carri-ers were ordered from imabari, Japan for delivery h2 2017.

outLooK for 2014the positive rate development experienced during the second half of 2013 is expected to continue into 2014, and it is generally believed that 2014 will be better than 2013 on average.

Supply growth is estimated at around 7%, with demand growth at around 9%, indicating further improvement of the market balance. demand growth is supported by increased distances for both laden and ballast legs.

the supply situation remains particularly favour-able in the handysize segment, which is lb’s main segment, with 18% of the world fleet aged more than 25 years and an order book amounting to 18% of the current fleet – the lowest ratio of all bulk segments.

together with the improving freight market, ves-sel prices for all segments are also projected to increase further in 2014.

during 2014, a number of expensive time-charter commitments will expire and further reduce aver-age fleet costs from 2015.


lAuRitZen KoSanthe result for 2013 was uSd 4.1m, down from uSd 8.9m in 2012 mainly due to weak market conditions for smaller gas carriers in Q4 2013, cf. table 2. the result included uSd 1.3m in gains from the sale of a fully pressurized 4,000 m3 gas carrier and was down on the uSd 1.8m gains re-ported in 2012. the result is regarded as less satis-factory.

gLoBaL marKet DeVeLoPmentStowards the end of the year spot market rates for 3-10,000 m3 gas carriers receded which meant that for the second year in a row, average spot market rates declined, albeit only marginally, cf. figure 13.

newbuiLding And second-hAnd tonnAge prices were stAbLe during the first six

months of the yeAr but sAw A sLight improvement during

the second hALf.

DemanD for SmaLLer gaS carrierSAfter somewhat meagre demand growth for gas carriers 3-23,000 m3 in 2012, partly due to the tightening of sanctions against iran, recovery de-pended on the availability of petrochemical gases in the middle east gulf and resumption of growth in europe. both turned out to be disappointing, and only the increased supply of lpg mainly from the uSA provided some support for the modest growth in demand seen in 2013, cf. figure 14.

All petrochemical gases save for Vcm (Vinyl chlo-ride monomer) and propylene saw reduced vol-umes shipped in 2013. the reduced availability of ethylene from the middle east gulf with reduced demand for butadiene from the uSA (squeezed by rising imports of tyres after a fall in tariffs in sec-ond half 2012) had a significant impact on 5-9,000 m3 gas carriers. propylene volumes increased benefitting mostly the 17-23,000 m3 gas carrier market. despite strong demand growth in trans-portation of Vcm, levels were still below those of 2009-2011.

SuPPLy of SmaLL gaS carrierSdeliveries of gas carriers in the 3-23,000 m3 seg-ment amounted to 250,000 m3, up 30,000 m3 compared to 2012, whereas demolitions amount-ed to approximately 50,000 m3, down from 80,000 m3 in 2012. net deliveries amounted to 200,000

m3, of which 35% were fully pressurized with the balance being semi-refrigerated. close to 70% of the semi-refrigerated newbuildings were con-structed for the carriage of ethylene. At year-end 2013, the global carrying capacity amounted to 4.9m m3 up 4.5% from year-end 2012 cf. figure 15.

one notable feature of net additions to the world fleet during the year was the large proportion to the 12-23,000 m3 segment.

ordering was on a rising trend during 2013. At year-end, the order book amounted to 21% of the existing fleet of which 10% is aged 25 years or more, cf. figure 16. practically all gas carriers on order are for delivery in 2014-2015 and approxi-mately half of these are for ethylene carriers.

BuSineSS moDeL anD riSKlauritzen Kosan (lK) controls a fleet of 43 semi-refrigerated/ethylene and fully pressurized gas carriers in the 3-10,000 m3 segment with an aver-age age of 8.7 years. the fleet comprises owned, part-owned, chartered vessels and vessels com-mitted by partners. Active fleet portfolio manage-ment via cargo and period cover and the sale and purchase of vessels constitute key elements in our business model.

2013 2012

Revenue 180.8 210.3 EBITDA 28.1 35.7 Depreciations and write-downs (26.5) (27.2) Profit/(loss) on sale of vessels etc. 1.3 1.8 Operating income 2.8 10.3 Share of profit in joint ventures 0.8 0.7 Finance net 0.7 (1.9) Profit/(loss) before tax 4.3 9.1 JL's share of profit/(loss) 4.1 8.9 Invested capital (average) 384.5 408.3 Return on invested capital 0.9% 2.7%Average no. of employees 486 505



figure 13: SPot marKet rateS 2009-2013 uSD ‘000/montH

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figure 14: DemanD for SmaLLer gaS carrierS 2009-2013 in miLL m3

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figure 15: SuPPLy of SmaLLer gaS carrierS 2009-2013 (year-enD) in miLL m3

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We comply with strict health, safety and environ-mental standards and stringent client require-ments through close in-house collaboration be-tween the technical and commercial departments. continuous improvements through education and training, innovation and careful implementa-tion of procedures enhance operational flexibility and higher fleet utilization.

As one of the LeAding tonnAge suppLiers to the

petrochemicAL And oiL mAJors, Lk continuousLy

enters into Affreightment contrActs, seeking to

optimize effective fLeet cover.

main eVentSduring 2013, we completed a restructuring pro-cess for our commercial, operational and techni-cal departments. this will improve organisational efficiency and provide us with the ability to under-stand and meet client expectations better.

the ReJuice initiative, started in 2012 with the aim of reducing fuel consumption and emissions, continued in 2013 with a focus on systems for op-timising trim and ballast, the installation of con-trollers to minimize power consumption, im-proved voyage planning and general fleet utilization. Read more about these initiatives in our corporate Responsibility Report 2013, p. 24.

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figure 16: SmaLLer gaS carrier age ProfiLe anD orDer BooK at year-enD 2013 (% of exiSting fLeet)


fLeettotal ship-days reached 15,841 for 43.3 vessels on average compared to 15,617 days for the aver-age of 42.8 vessels reported in 2012, cf. figure 17

At year-end 2013, lK’s fleet comprised 35 owned, part-owned and chartered vessels. the average age of the company’s owned fleet was 9.3 years compared to 8.6 years at year-end 2012. At year-end 2013, the average age of the ethylene fleet was 5.0 years (4.6 years at year-end 2012), with the Semi-Refrigerated fleet at 17.1 years (16.0 years in 2012) and the fully pressurised fleet at 6.5 years (6.3 years in 2012).

the operated fleet comprised 29 semi-refrigerat-ed/ethylene gas carriers on average (unchanged from 2012) and 14 fully pressurized gas carriers (unchanged from 2012) with a combined capacity of about 224,737 m3 (221,950 m3 in 2012).

fLeet managementlauritzen Kosan fleet management (lKfm) is re-sponsible for technical management of the major-ity of the owned fleet. during 2013, three fully pressurised vessels, previously managed by a third party, were taken into technical manage-ment and three more are expected to be enrolled during the first half of 2014, increasing the pool of technically managed vessels to 27 vessels by lKfm. Star management Associates, tokyo, in which lauritzen Kosan has a 30% holding, han-dles the technical management of the remaining fleet of fully pressurised vessels.

2013 was a busy year with 14 scheduled dry-dockings (six in 2012). unscheduled off-hire came to 1.9% of available vessel days in 2013 (2.8% in 2012).

the ever-changing regulatory agenda is setting an increasingly demanding scene for ship manage-ment both in terms of complexity and costs, and lKfm is continuously noting these and preparing and investing for the future. issues such as ballast water management systems and emissions re-


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duction efforts are being assessed in order to en-sure that the fleet is always fully compliant and geared to support our environmental efforts.

our aim is to have effective standards of mainte-nance emphasizing safety performance and pro-tection of the environment within defined guide-lines. So learning from operational incidents and near-misses is an ongoing aspect of the improve-ment process and for achieving compliance with international rules and regulations as well as cli-ent expectations.

in order to maintain the ability to obtain customer acceptability for any commercial nomination, a total of 138 vetting inspections were performed in 2013 (166 in 2012). on average, 4.4 observations were received, down from 5.3 in 2012. crew-relat-ed observations continued to decline, from 2.3 in 2012 to 1.8 in 2013.

our orgAnizAtion systemAticALLy identifies

cLients’ priority AreAs And tAkes the Actions necessAry to meet their requirements.

As a result, we have successfully reduced the commercial implications originating from the vet-ting regime to a minimum, as evidenced by only having one inspection from inspecting companies in 2013 compared to six in 2012.

during 2013, we upgraded our it infrastructure, linking ship and shore crew databases, which will allow users to access one system for Safety/Qual-ity, technical and procurement operations from 2014. consolidation into one system will provide an improved overview of fleet performance and enhance management’s ability to compare per-formance and identify early deviations.

HSSeQhealth and safety is about protecting people and the environment, and our focus on improving the safety culture for all employees is essential. dur-ing the past years, a broad range of safety initia-tives has been launched and we shall continue to focus on safety.

the ilo maritime labour convention, 2006 came into force on 20 August 2013. besides the legal requirements for seafarers’ employment condi-tions, the convention has a broad range of mini-mum requirements for vessels’ accommodation, recreational facilities, shipboard food/catering standards, health protection and medical care.

throughout 2013, the mlc certification process ran smoothly with zero deficiencies raised by the authorities relating to compliance.

Again in 2013 we conducted the annual heAt (human element Assessment tool) survey across the fleet as a ‘health check’ on our seafarers’ view and an assessment of the human element of the company’s performance. the result for 2013 showed a constantly very high rating for fleet management, with an average score of 4.2 points (out of a total 5.0) which can be translated into “good to best practice” performance.

piracy and armed robbery remain a threat al-though there was a significant general decrease in attacks and hijackings during 2012 and the pos-itive trend continued throughout 2013. Recogniz-ing the responsibility for our seafarers, lK contin-ues to use private armed security teams on board our vessels when operating in high-risk regions.

after year-enD eVentSearly in 2014, three 3,200 m3 bare-boat chartered semi-refrigerated gas carriers owned by gas & heat S.p.a., italy were extended for a longer peri-

pRoJectreJuicethroughout 2013, the ReJuice project fo-cused on reducing fuel consumption and the environmental impact of our gas carrier opera-tions. Several initiatives have been implement-ed, and more are being prepared, always pri-oritising the initiatives with the optimum payoff: updated systems for trim and ballast optimisation, the installation of controllers to minimize power consumption, improved voy-age planning and general fleet utilization. to-gether, these initiatives contribute to increased fuel efficiency and a reduction in our carbon footprint.


od and agreement was reached for a bare-boat charter for a fourth vessel of the same type deliv-ering from yard in february 2014.

outLooK for 2014We expect to see rising economic activity in eu-rope with higher consumption of petrochemical gases. the availability of propane and propylene for exports in the uS gulf is expected to continue its rise, and the outlook for increased supply of petrochemical gases in the middle east gulf for export is improving for the second half of 2014. A number of propylene production plants in china are coming on stream during second half 2014 and this is also regarded as a possible source of rising demand.

Scheduled deliveries in 2014 of small gas carriers are of the order of 450,000 m3, although slippage may take actual deliveries down to around 400,000 m3.

We expect demolition to remain at subdued lev-els, which suggests that supply growth will be somewhat stronger in 2014 than the 4.5% net growth recorded in 2013.

A slight improvement in trading conditions is ex-pected during the year with spot market rates slightly up in the second half of 2014, although with volatility still part of the picture.

We expect prices for newbuildings and second-hand tonnage to find support from the strength-ening of the market anticipated for the second half of 2014.

during 2014, Lk wiLL expAnd its technicAL orgAnizAtion in the fAr eAst with the Aim of

strengthening cLient reLAtions And fLeet

performAnce.


lAuRitZen offSHorein early January 2014, lauritzen offshore’s fleet of three shuttle tankers was sold to Knutsen nyK offshore tankers, norway (Knot) with expected delivery between 1 April 2014 and 15 may 2014. As a consequence of the sales transaction, the shuttle tanker activity has been defined as a “dis-continued operation” and its assets and liabilities reclassified as “held for sale” as of 31 december 2013. the sale is still subject to certain approvals.

lauritzen offshore comprises the operation of three shuttle tankers and the investment in the as-sociated company Axis offshore. the sale of the shuttle tankers causes closure of the operating segment lauritzen offshore as the shuttle tanker operation is presented as “discontinued opera-tion” and the investment in Axis offshore ac-counted for under “other/unallocated items” in note 2 “operating Segments” retrospectively from 2012.

in 2013, lauritzen offshore’s result amounted to uSd (25.1)m compared to uSd 6.1m in 2012, cf.

table 3. the result was unsatisfactory and signifi-cantly impacted by write-downs of uSd (28.2)m (2012: uSd nil) on the oldest of its three shuttle tankers and by the transfer of our accommodation and support vessel operation to Axis offshore in 2012. Adjusted for write-downs and the effect of assets transferred to Axis offshore, the result in 2013 was uSd 3.1m, compared to uSd 8.9m in 2012.

in the second half of 2013, Axis offshore exer-cised a call option to contract an additional ac-commodation unit at cosco Qidong offshore, china, for delivery in late 2015. by calling the op-tion, Axis offshore positioned itself for the expect-ed growth in the offshore accommodation mar-ket. As regards additional funding, Jl decided to support the fleet expansion by reducing our shareholding in Axis offshore from 50% to 34% and thus our net investment commitment remains unchanged.

gLoBaL marKet DeVeLoPmentSthe market for offshore vessels has grown quite strongly in recent years and this development is expected to continue in coming years. According to ieA (international energy Agency), investments in deepwater oil exploration, development and production is expected to increase from 16% of total investments for such purposes on/offshore in 2010 to 22% in 2020, implying strong demand for offshore units as total investments are forecast to rise strongly in this time span.

the shuttle tanker fleet saw the delivery of 14 units in 2013 compared to seven in 2012. one unit was contracted in 2013 compared to six units in 2012. After demolition of four units in 2013, the shuttle tanker fleet amounted to 85 units at year-end 2013, cf. figure 18. delays in existing projects in combination with strong orders in the past few years appear to have held back orders without employment contracts. At year-end 2013, the shuttle tanker order book amounted to eight units, equal to some 9% of the world fleet.

the north Sea and brazilian waters constitute the most interesting markets for flotels and shuttle tankers in the medium term, but potential energy policy changes in mexico may offer interesting new markets in the longer term.


BuSineSS moDeL anD riSK managementour three wholly-owned shuttle tankers are em-ployed on long-term contracts, of which one ex-pires in 2014 and two in late 2023/early 2024, and thus business risks relate to counterparty risk and the renewal/alternative employment options. We continuously monitor risks and new business op-portunities.

our offshore involvement also comprises a 34% shareholding in Axis offshore, a provider of high specification accommodation units servicing the offshore oil and gas industry.

fleet managementhigh quality fleet management is vital in the off-

2013 2012

Revenue 36.3 60.1 EBITDA 27.0 40.4 Depreciations and write-downs (38.8) (16.8) Profit/(loss) on sale of vessels etc. - (7.5) Operating income (11.8) 16.1 Share of profit in joint ventures - - Finance net (12.7) (10.8) Profit/(loss) before tax (24.5) 5.2 JL's share of profit/(loss) (25.1) 6.1 Invested capital (average) 194.1 334.2 Return on invested capital (6.1)% 4.8%Average no. of employees 29 58


figure 18: gLoBaL SHuttLe tanKer fLeet anD age ProfiLe (year-enD)

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shore industry and all issues relating to crewing, health, safety and the environment are managed by in-house experts, providing assurance of com-pliance with the requirements laid down in appli-cable national and international rules and regula-tions.

there were zero dry-dockings in 2013. unsched-uled off-hire for the shuttle tanker fleet was zero in 2013 (also zero in 2012).

during 2013, newly developed engine perfor-mance software was installed on the vessels. the software is a vital tool in our day-to-day endeav-ours to maintain and ensure a high level of techni-cal performance and reliability for the vessels. this also enables their environmental footprint in the form of fuel consumption and emissions to be monitored and controlled.

offshore is a highly competitive segment for crewing and hence considerable resources are used to constantly keep officers and ratings up-dated with specialised courses and training in or-der to meet our clients’ expectations.

HSSeQlauritzen offshore is committed to providing safe working conditions in a markedly diverse multi-cultural and multilingual working environment.

We have management systems certified to inter-national standards, ensuring the well-being of staff, third party contractors and others who may be affected by our activities, in an effort to mini-mize any impacts.

in the second half of 2013 and as a part of our self-assessment mindset, we initiated a comprehen-sive revision process of our safety management systems. Additional personnel have been allocat-ed to review every single procedure and checklist in close conjunction with the end-users onboard the vessels. We also took a further step towards a fully paperless system.

after year-enD eVentSin early January 2014, lauritzen offshore’s fleet of three shuttle tankers was sold to Knutsen nyK offshore tankers, norway (Knot) subject to cer-tain approvals, cf. above.


lAuRitZen tanKerS

2013 2012

Revenue 81.3 61.0 EBITDA 21.1 14.3 Depreciations and write-downs (29.3) (55.3) Profit/(loss) on sale of vessels etc. 1.4 - Operating income (6.8) (40.9) Share of profit in joint ventures - (1.1) Finance net (16.3) (7.6) Profit/(loss) before tax (23.1) (49.5) JL's share of profit/(loss) (23.1) (50.6) Invested capital (average) 266.1 274.8 Return on invested capital (2.6)% (15.3)%Average no. of employees 193 154


figure 19: PerioD rateS anD SeconD HanD VaLueS for

mr ProDuct tanKerS 2009-2013

As the fleet of wholly-owned products tankers was sold in october 2013 with scheduled delivery to the new owners prior to the end of february 2014, the product tanker business has been clas-sified as a “discontinued operation” and assets and liabilities reclassified as “held for sale” as of 31 december 2013.

in 2013, lauritzen tankers’ result amounted to uSd (23.1)m compared to uSd (50.6)m in 2012, cf. table 4. the result was significantly impacted by write-downs of uSd (22.1)m (2012: uSd (46.5)m) due to the strategic decision to exit the product tanker segment. Adjusted for one-offs, the result in 2013 was uSd (2.4)m compared to uSd (4.0)m in 2012.

gLoBaL marKet DeVeLoPmentSpositive developments characterized the product tanker market in 2013. Average spot market earn-ings for mR product tankers (40-60,000 dwt) in-creased by 26% and one year period rates were up 6% on average on 2012, cf. figure 19.

tonnage prices also increased, primarily during the second half of the year, with values of five year mR product tankers about 30% higher at year-end 2013 compared to year-end 2012, cf. figure 19.

According to mSi, demand for product tankers in-creased by 3.5% in 2013 compared to 3.7% in 2012 and was driven by rising oil consumption and new trading patterns. expanding oil produc-tion in the uS, combined with a 1.3% increase in global oil consumption, led to a rise in exports from the uS, that has been a net exporter of oil products since mid-2011.

further, refinery closures in for example the euro zone and oecd Asia/pacific-rim countries caused world imports of oil products to rise even though oil consumption in these regions was down. emerging markets also saw upward movements in trade with refined oil products.

during the year, approximately 80 newbuildings (55 in 2012) were added to the existing mR prod-uct tanker fleet which was in line with expecta-tions, whereas scrapping was lower than expect-ed, causing net fleet growth to be higher than expected at approximately 5.5%

the positive sentiment in the mR product tanker segment caused a massive increase in ordering, with contracts for 175 newbuildings being signed in 2013, exceeding the combined orders in 2011 and 2012. this caused the world order book to in-crease to 25% of the existing fleet at year-end 2013 compared to 19% at year-end 2012.

the average age of the mR product tanker fleet is eight years, and with a young fleet scrapping was limited.

BuSineSS moDeL anD riSK managementlauritzen tankers (lt) controlled fleet comprised owned, part-owned, and time-chartered vessels as well as vessels committed by partners.

SouRce: clARKSon ReSeARch SeRViceS And bAltic SAle And puRchASe ASSeSSment

20

22

24

26

28

30

32

34

12,000

13,000

14,000

15,000

16,000

17,000

18,000

19,000

20,000

2009-Q1 2010-Q1 2011-Q1 2012-Q1 2013-Q1

US

Dm

ill

US

D/d

ay

1 Year Time charter Rate 47-48,000 Modern Products Tanker

Products D/H 47K DWT 5 Year Old Second hand Prices - RHS


Vessels employed in the spot market or on coA were commercially and operationally managed by the mR pool of part-owned hafnia management, copenhagen. pooling the spot business reduced lt’s market risk, inasmuch as the coverage ob-tained by the pool in terms of meeting client re-quirements and being spread across many mar-kets provides better protection against adverse market movements. in 2013, lt remained the largest tonnage provider to this pool.

lt used its market access to charter in/out ton-nage from/to first class charterers, providing fixed income with limited risk.

technical management responsibilities continued to be outsourced to external service providers.

main eVentSthree 53,500 dwt mR product tanker newbuild-ings were delivered in 2013, two of which were placed in hafnia management’s mR pool and one was sold.

three 50,000 dwt product tanker newbuildings were taken on long-term time-charter, two of which were employed in hafnia management’s mR pool and one was re-let to a subcharterer.

in August 2013, JL Announced A strAtegic decision to trim

the bALAnce sheet by A grAduAL exit from the

product tAnker segment.

in october 2013, the fleet of ten wholly-owned mR product tankers was sold to hafnia tankers with the intention of delivering all the vessels to the new owner before the end of february 2014. At year-end 2013, three of the ten vessels had been delivered to the new owner.

fLeetin 2013, total ship-days reached 5,584 with 15.3 vessels on average compared to the 4,646 days with 12.7 vessels on average reported in 2012, cf. figure 20.

fLeet managementtechnical management of owned ships was pro-vided by Wallem Shipmanagement in hong Kong and bergen and mmS in Singapore. lt’s technical department worked closely with both suppliers on all aspects of achieving safe, cost-effective and responsible vessel operations.

there were no dry-dockings in 2013 (none in 2012). the unscheduled off-hire for lt’s owned fleet was 0.15% (0.8% in 2012).

HSSeQduring the year, we maintained our strict focus on health, safety, security and environmental protec-tion. Working closely with external technical man-agers and monitoring performance on safety pro-cedures, security and energy-efficient operations enabled us to meet client expectations for safe and efficient operations.

after year-enD eVentSduring January-february 2014, five of the remain-ing seven wholly-owned product tankers were de-livered to hafnia tankers as well as four of lt’s fleet of five long-term time-chartered vessels. transfer of vessels to hafnia tankers will be final-ised by mid-march 2014.

-2 4 6 8

10 12 14 16

2009 2010 2011 2012 2013




our corporate governance procedures are based on the danish companies Act, the fundamental principles and recommendations of the danish committee on corporate governance, the com-pany’s Articles of Association, the board of direc-tors’ Rules of procedure and its guidelines to the executive management. the procedures reflect the fact that Jl is a privately-owned company with one owner but with several investors as bond holders. during 2013, no major changes were made to the way we conduct our governance.

please visit our corporate website to see the group’s statutory report on corporate gover-nance for 2013 at http://static.j-l.com/imce/jl_an-swer_cguk_2013.pdf.

commitmentmore than anything else, Jl stands for account-ability and our owner (see fact box) enables us to focus on long-term value creation. in 2013, we continued our commitment and work with the universal principles of united nations global compact on responsible business conduct.

goVernanceownershipJl is a private (non-listed) company incorporated in denmark and is owned by the lauritzen foun-dation. According to its charter, the foundation is committed to developing the shipping industry (see sidebar). the foundation’s values and heri-tage also provide day-to-day inspiration and sup-port for Jl’s market profile, with our focus on long-term value creation combined with the ability to meet external demands and developments.

management StructureJl has a two-tier management structure consist-ing of two separate bodies; a non-executive board of directors and an executive management. the board of directors is the central, supreme govern-ing body. day-to-day management is conducted by the executive management in line with the rules and procedures laid down by the board of directors.

Board of Directorsthe core task of the board of directors’ is to en-sure that Jl’s overall business strategy is consis-tent and the group’s capital structure is appropri-ate. the focus is on risk management and internal control and the board of directors ensures that an

coRpoRAte goVernance


lAuRitZen founDationJ. lauritzen A/S was founded in 1884 and has been a provider of ocean transport for almost 130 years. the lauritzen foundation was estab-lished in 1945 and since then, it has been in full control of Jl. the lauritzen foundation is a com-mercial foundation and is as such a self-govern-ing institution under danish law and is regulated by the danish Act on commercial foundations. the foundation is also subject to supervision by the danish ministry of Justice and the danish ministry of business and growth.

the lauritzen foundation supports Jl’s goal to have a well-balanced financial structure, taking into consideration Jl’s continued existence and development. its policy is also to ensure flexible capital structures of the companies it owns. through its charter, the foundation is committed to promote and develop the danish shipping in-dustry in general and support humanitarian work.

in addition to its ownership of Jl and its control-ling interest in dfdS A/S (42.8% holding), the lauritzen foundation has holdings via wholly-owned lf investment ApS in oil analysis, mea-suring equipment, software, healthcare prod-ucts, biotechnology and real estate sectors.

annual strategic plan and budget are drawn up and approved and that monthly and quarterly re-ports are submitted.

in 2013, the board met six times, including an an-nual mid-year strategy meeting. between meet-ings, recommendations were submitted to the board for written resolution.

the boArd of directors is supported by two

permAnent committees: An Audit committee And A

nominAtion And remunerAtion committee.

the board of directors consists of eight members, five elected by the general meeting and three elected by the employees. members elected by the general meeting serve for one year and may stand for re-election. in 2013, all five members were re-elected at the general meeting.

pursuant to the danish companies Act and en-abling ministerial orders, three board members are elected by the employees for a period of four years. in march 2013 Søren berg and ulrik dan-strøm were re-elected, whereas Jan lystlund Sø-rensen was elected for the first time, all for a fur-ther 4-year term.

At the turn of 2013, the average length of board members’ service was eight years and their aver-age age was 56.

the board is broadly composed of members with diverse, extensive experience, knowledge and know-how relating to the global shipping industry, international leadership, finance and strategy de-velopment.

J. Lauritzen A/S100%

LF Investment ApS 100 %

The Lauritzen Foundation

Lauritzen Bulkers

Lauritzen Kosan

LauritzenTankers *

LauritzenOffshore **

DFDS A/S 42,8%

please visit our corporate website to see the com-petence profiles of our board members www.j-l.com/about/corporate-governance/board-direc-tors.

committee work in 2013Jl’s Audit committee held six meetings in 2013 and supported the board of directors in reviewing reports and reporting processes, accounting, risk management systems and procedures and the overall audit process.

the nomination and Remuneration committee supports the board of directors in maintaining ap-propriate succession plans for the board of direc-tors and executive management as well as ensur-ing that the group’s remuneration policy is in line with market sentiment. during the year, the com-

* diScontinued opeRAtion ** lAuRitZen ShuttletAnKeRS diScontinued opeRAtion


mittee implemented procedure to assess the board’s performance. the committee held two meetings in 2013.

executive managementthe executive management is appointed by the board of directors and consists of Jan Kastrup-nielsen, president & ceo and birgit Aagaard-Svendsen, eVp & cfo. extraordinary or major dis-positions may only be implemented by the executive management on the basis of specific authorization granted by the board.

the executive committee functions as the coordi-nating forum for the day-to-day management of the Jl group.

the executive committee consists of the execu-tive management together with peter borup (president, lauritzen bulkers), thomas Wøide-mann (president, lauritzen Kosan), erik donner (president, lauritzen tankers and lauritzen off-shore), erik bierre (Senior Vice president, corpo-rate control) and John m. Jørgensen (Senior Vice president, treasury).

increaSing DiVerSityAt Jl, we consider diversity as an important and natural prerequisite for innovation and the devel-opment of the group. We want to remain a work-place that can attract, recruit and retain the best qualified employees and continuously develop

them in order to make best use of their skills and potential. We aim to create a culture where all employees consistently experience diversity at all levels, in-cluding management. At Jl, all employees have equal opportunities to make a career, be this as a manager or specialist. one key focus is to create a framework which will in time allow for approxi-mate gender balance at all management levels to reflect the make-up of the group›s workforce. due to the group›s relatively small land-based organi-zation worldwide, even minor organizational changes impact significantly on the gender bal-ance at senior management level.

our recruitment poLicy focuses on competence And diversity, which in the Long-term is expected to increAse

diversity in reLAtion to gender And nAtionALity.

our ambition is for overall employee gender distri-bution of the employees to be matched at man-agement level. based on a review of the organisa-tion’s composition, including natural retirement, we will endeavour to increase the number of fe-male managers across the group from approxi-mately 27% at year-end 2013 to approximately 31% at year-end 2016.


the composition of the board of directors was un-changed in 2013 and thus the diversity profile of the board members elected by the annual general meeting remained at 20% female, with 40% com-ing from outside denmark. our objective is to in-crease the gender diversity of the board and for the board to have two female directors by 2017.

PrinciPLeS of remuneration Jl’s remuneration principles include the board of directors, executive management and Jl person-nel in general. Remuneration within the group re-flects personal performance and achievements as well as market conditions in comparable compa-nies.

members of the board of directors receive fixed compensation at a level which reflects the scope and character of their duties as directors and is on par with fees in comparable companies. mem-bers of the Audit committee and the nomination and Remuneration committee receive additional fees. no pension contributions are payable on di-rectors’ fees and neither are they covered by in-centive programmes. fees are disclosed on p. 60-61.

executive management receive fixed compensa-tion, with an incentive programme not exceeding 50% of the annual fixed compensation.

controLAn important part of our day-to-day work on gov-ernance relates to risk management, financial control and management and audit processes. the board of directors and executive manage-ment routinely define and review policies and control procedures to support the business, risk management, financial management and report-ing, and benchmarks these against generally ac-cepted international practice.

Activities relating to day-to-day business are dele-gated insofar as possible to individual business

units, subject to well-defined financial and risk limits and overseen by the executive manage-ment.

operational efficiency is supported by centralized, shared corporate services such as corporate con-trol, human resources, it, legal and insurance, procurement, cash management, corporate com-munication and cSR.

it infrastructure and application management, technical management in some business areas and services relating to control functions have been outsourced to third party providers, which are selected on the basis of thorough due dili-gence.

A whistleblower system was implemented in 2010. no incidents were reported in 2013.

financial management, reporting and inter-nal controlJl’s financial management comprises long-term financial projections and rolling two-year fore-casts followed up by quarterly and monthly re-porting. long-term projections are revised at least twice a year or as required.

effective, transparent reporting requires well-de-fined levels of authorisation, the segregation of duties and the adoption of common reporting structures. through shared data access, the group’s it-systems promote requisite knowledge-sharing, control and transparency.

Statutory reporting and internal management re-porting are based on common policies, shared databases and a standardised reporting system.

Jl’s corporate control is responsible for the group’s financial management, reporting and the internal financial control of business units and subsidiaries.

“as frOm the first quarter Of 2013, we have started tO disClOse quarterly finanCial repOrts in Order tO inCrease

transparenCy On Our finanCial perfOrmanCe” niels heering, BOard memBer, Chairman Of the audit COmmittee.


Jl aims to have access to a range of resources to finance our business activities through honest, transparent and regular communication.

financingJl’s business operations are capital intensive and this is reflected in our financial policy which has three main objectives, to:

• maintain financial independence through prudent financial risk management and a di-versified funding base.

• Secure refinancing of existing debt.• Secure the lowest possible cost of debt capi-

tal, taking market terms and conditions into consideration.

Jl’s board of directors has approved a financial strategy which includes a set of guidelines for group solvency ratio, liquidity target and policies for financing debt, containing:

• group solvency ratio of at least 35% and pref-erably not less than 40%.

• group liquidity (cash and cash equivalents) of at least uSd 50m plus a buffer to withstand a severe crisis.

• no single bank to contribute more than 25% of total debt.

• debt based on unsecured bonds not to ex-ceed 25% of total debt.

Jl’s owned fleet is financed with a mix of debt and

own funds. bank facilities account for the majority of the debt financing.

Jl completed its extensive newbuilding program in 2013 and Jl had no outstanding cApex com-mitments at year end-2013.

Debt financinglong-term debt is generally held by J. lauritzen A/S but in some instances subsidiaries J. laurit-zen Singapore pte. ltd. or lauritzen Shuttletank-ers Singapore pte. ltd. are borrowers of long-term debt.

At year-end 2013, bank facilities (amortizing term loans and revolving credit facilities) accounted for 85% of total debt net of our holdings in our own bond issues. bank facilities are secured by mort-gages in the vessels being financed. of the 85% bank facilities, 26 percentage points were ecA (export credit Agency) backed facilities at year-end 2013. however, the distribution of Jl’s long-term debt among the various sources of finance and also the repayment profile of the debt will change further due to the sale of the fleet of prod-uct tankers and shuttle tankers.

At year-end 2013, three of the ten product tankers were delivered to the new owner and the related debt was repaid. in connection with the delivery of the remaining seven vessels to the buyer, the related debt will be repaid. figure 21 illustrates the forecast outstanding debt after early repay-

finAnce And inVeStor reLationS


issuer J. Lauritzen A/s J. Lauritzen A/s

iSin no 001 0572381 no 0010 661846

type Senior unsecured bond Senior unsecured bond

coupon p.a. fixed 10.5% floating rate 8.25% + niboR 3mths

issue date 05 may 2010 24 october 2012

maturity date 05 may 2015 24 october 2017

Amount noK 700mnoK 441m (net of own holdings)

noK 500m

interest payment Annual Quarterly

listing oslo Stock exchange oslo Stock exchange

figure 21: forecaSt outStanDing DeBt year-enD uSDm (exiSting faciLitieS onLy)

taBLe 5: JL’S corPorate BonD iSSue

0

200

400

600

800

1000

2013 2014 2015 2016 2017 2018

Term loans Term loans ECA backedRevolving credits Bonds unsecured

ment of debt relating to all ten product tankers and all three shuttle tankers.

existing term loans (amortizing loans with a bal-loon payment at maturity) mature in 2016 and 2017. existing ecA-backed term loans (fully am-ortizing loans) mature in 2021 and 2022, respec-tively. Revolving facilities (partially amortizing credits with a balloon payment at maturity) ma-ture between 2015 and 2017.

Jl’s bank facilities include covenants on the mort-gaged vessels relevant to the ordinary conduct of business. bank facilities also include minimum

value requirements (e.g. minimum requirements relating to a ratio between the fair market value of the security and outstanding debt in the particular facility) between 100% and 130%. finally, facili-ties include financial covenants on Jl’s value-ad-justed consolidated solvency ratio (minimum 30%), Jl’s consolidated liquidity (minimum uSd 50m) and Jl’s consolidated working capital ratio (ratio between current assets and current liabili-ties to be 1:1 or better).

Jl has issued two corporate bonds. the first was issued in may 2010 and the second in october 2012. details for the bonds are given in table 5.

the corporate bonds issued by Jl include finan-cial covenants on Jl’s consolidated solvency ratio (minimum 30%) and consolidated liquidity (mini-mum uSd 50m).

At year-end 2013, corporate bonds accounted for 15% of total outstanding debt net of our own holdings in the corporate bond issues.

in 2013 the board of directors adopted a revised strategy on bond financing to reflect the projected future change of Jl’s asset base. the original strategy contemplated Jl having approximately uSd 300m (or the equivalent in other currencies) in outstanding debt on a rolling basis, based on corporate bond issuance. the revised strategy is to have a maximum of 25% of total debt sourced from corporate bonds.

Note: Actual data as per end-December 2013 but after repayment of debt relating to seven re-

maining product tankers and three shuttle tankers. Numbers may change subsequently, e.g. in

case of sale of a vessel, repayment & refinancing, reduction in use of revolving facilities, etc. Bond

debt at hedged value less JL’s holding of own bonds.


figure 22: rePayment ProfiLe of outStanDing DeBt. forecaSt amountS Per year in uSDm

Note: Based on actual data as per end-December 2013 but after early repayment of debt relat-

ing to seven product tankers and three shuttle tankers. Numbers may change subsequently,

e.g. in the case of further vessel sales, early repayment & refinancing, reduction in use of re-

volving facilities, etc. Bond debt at hedged value. Bullet payments on existing bank facilities are

normally refinanced on or before maturity by way of pledging the particular financed vessels in

a new facility and using proceeds to redeem the existing facility.

0

50

100

150

200

250

300

2014 2015 2016 2017 2018

Repayment Bullit bonds Bullit bank loans - to be refinanced

Jl did not issue new corporate bonds in 2013. however, in december 2013 Jl lodged a public offer to buy back a substantial amount of the out-standing Jl bond maturing in may 2015. Jl suc-ceeded in buying a total nominal amount of noK 259m at a price of noK 105. the purpose of the offer was to reduce Jl’s net interest cost through use of some of the proceeds from the sale of our fleet of product tankers.

We will maintain the ability and the expertise to issue new corporate bonds in future, both to refi-nance existing bond debt and potentially also to support future new business initiatives. however, we currently expect that, taking for example the current pricing on Jl corporate bonds into consid-eration, we will not refinance the 2015 maturity corporate bond by issuing a new corporate bond.

As noted above, our debt repayment profile will change further due to the sale of lauritzen tank-ers’ fleet of product tankers and lauritzen off-shore’s fleet of shuttle tankers. figure 22 illus-trates the forecast repayment profile after early repayment of debt relating to all ten product tank-ers and the three shuttle tankers.

no bank or bond debt requires refinancing until early 2015. We have already started discussions with existing lenders (banks) on refinancing debt maturing in 2015, 2016 and 2017 and expect to secure the refinancing of each facility no less than six months prior to the original maturity of the par-ticular facility.

Jl complied with all bank loan and bond debt cov-enants throughout 2013 and no additional securi-ty (in the form of cash or security) was provided to remedy breach of minimum value requirements at year-end 2013. due to the increase in vessel val-ues, all previously pledged cash has been re-leased.

equityJl is a private (non-listed) company owned by the lauritzen foundation. As a non-listed company Jl has no direct market access to equity.

however, Jl benefits from being owned by the lauritzen foundation with long-term vested inter-est in shipping and we have previously received

two subordinated loans from our owner. both subordinated loans were converted into equity in 2013.

Joint ventures and part-ownershipJl considers joint-ventures as an attractive way to provide access to new markets or to increase our fleet with a view to gaining economies of scale in particular markets or market segments.

Some of the handysize bulk carrier vessels oper-ated by lauritzen bulkers are part-owned vessels. Similarly, part of lauritzen Kosan’s fleet of ethyl-ene gas carriers is co-owned together with a joint venture partner and operated by lauritzen Kosan.

our activity in the offshore accommodation and support vessel segment was transferred to the Axis offshore joint venture in 2012. this was formed by lauritzen offshore with our norwegian partner, hitecVision. in September 2013, Jl re-duced its holding in Axis offshore to 34% (voting rights remain unchanged at 50%) to support the growth potential in Axis offshore without increas-ing our investment commitment. instead of hav-ing a 50% share of a “two unit” ASV company, we now own 34% of a “three unit” ASV company with high specification assets acquired at com-petitive prices.


StocK exchAnge announcementS 2013the following Stock exchange announcements were made in calendar 2012 via oslo Stock ex-change.

announcement no. 1:Approval of prospectus for introducing fRn J. lauritzen A/S Senior unsecured bond issue 2012/2017 to oslo børs

announcement no. 2:financial report for 2012

announcement no. 3:interim financial report - first quarter of 2013

announcement no. 4: counterparty in receivership

announcement no. 5 :bulk carrier transaction

announcement no. 6:interim financial report for the first half of 2013

announcement no. 7:Sale of ten product tankers

announcement no. 8:interim financial report - third quarter 2013

announcement no. 9:interim financial report - third quarter 2013 announcement no. 10:J. lauritzen A/S offers to repurchase bonds from the bondholders in the bond issue

announcement no. 10:information regarding result of buyback offer

inVeStor reLationSdue to the listing of corporate bonds on oslo Stock exchange, Jl has since 2010 kept an open dialogue with current and potential investors, an-alysts and other market professionals providing them with easy and equal access to information. maintaining close relations with the investor com-munity is essential.

Jl’s objective is for the market price of the securi-ties we issue to fairly reflect our financial perfor-mance, our actual and forecast ability to create value and our ability to repay our obligations as they fall due. in so doing, we strive to provide timely, precise and relevant information on our strategy, our business, results and expectations and other matters which affect the perception and assessment of the securities we issue.

during 2013, Jl held a number of investor meet-ings and conducted two investor conference calls. Related presentations are available on our website where all announcements and financial reports issued by Jl are available. in order to in-crease transparency and to match the frequency of Jl’s financial reporting with that of other issu-ers, Jl began disclosing quarterly interim finan-cial reports from Q1 2013.

investor relations activities in 2013 focused on keeping the investor community updated on de-velopments at Jl despite our not issuing new bonds during 2013.

future investor relations activities are expected to remain at the same level as in 2013.


RiSK management

As cyclical, global industries, shipping and off-shore are exposed to a large number of diverse risk factors with the potential to impact heavily on the way business is conducted.

the purpose of risk management is to ensure that risks affecting Jl’s operations are identified, moni-tored and dealt with according to the tolerance set for each type of risk.

Jl as a group has identified, monitors and man-ages four main types of risk: business Risks (e.g. freight rates, fuel oil prices, asset values and oper-ating costs), financial Risks (e.g. interest rates, currencies and liquidity), credit Risks (e.g. credit rating of counterparties) and operational Risks (e.g. fleet operations, safety, insurance, it and pi-racy). Risk management is an integral part of Jl’s corporate governance, see p. 40-43.

As a shipping company, we create value by taking calculated risks relating to our core businesses. for operational risks, our risk tolerance is in prin-ciple zero and risks relating to operations, safety, environment and it systems are reduced as much as possible. We have a low risk tolerance for fi-nancial risks and these are managed closely and minimized in order to support our strategy. policies on risk management and risk limitation are approved by the board of directors. Key risk factors both at group level and for individual busi-ness units are regularly assessed and prioritised

based on how likely they are to occur and their potential impact. the group and individual busi-ness units also have procedures in place to ensure consistent day-to-day risk management.

BuSineSS riSKSbusiness risks relate primarily to volatility in freight rates and asset values. global economic cycles and economic growth are key drivers for all shipping and offshore markets as world trade, seaborne trade and oil production and consump-tion all depend on economic growth. further, the demand for seaborne transport depends on the geographical location of production compared to where the goods are being used. Jl’s business units all have market-specific demand drivers and are responsible for identifying and monitoring the risks relating to their individual markets.

to reduce earnings volatility, Jl operates a diversi-fied business portfolio and different vessel seg-ments within the individual business units and se-cures a deliberate combination of open and covered vessel days (including forward freight Agreements - ffAs).

According to our strategy, two growth segments have been identified, i.e. smaller bulk carriers (handysize and supramax) which are character-ised by exposure to the spot market and smaller gas carriers characterized by annual contracts and a high level of repeat clients. the remaining segment (large bulk) is characterized by long-term


figure 23: coVerage 2014

period charters with solid counterparts. long-term period charters and very long cargo con-tracts are approved by the board of directors.

fluctuations in assets values affect our balance sheet, financial covenants and the minimum val-ue clauses in our loan agreements. Risks relating to fleet and asset values are managed by having a diversified fleet comprising owned, part-owned as well as pool vessels and time-chartered vessels with different durations, optional periods and pur-chase options.

2013 saw vessel values increasing whereby funds amounting to uSd 34m, earlier paid into pledged accounts to comply with minimum value clauses, were released. Should vessel values drop by 10% during 2014 compared to december 2013 valua-tions, uSd 2.4m would be required for pledged accounts.

business strategies, comprising policies for con-tract coverage by vessel segments and overall limits for off-balance sheet exposure (such as chartered tonnage), are approved by Jl’s board of directors and reporting on these is an integral part of our reporting routines. We constantly monitor market trends and adjust our coverage and off-balance sheet exposure to market expectations and defined financial ratios, cf. figure 23.

BunKer oiL Price riSKbunker oil is a significant cost element for Jl, al-though oil price risk in principle only relates to contracted cargo volumes not covered by bAf (bunker Adjustment factor). At present, most of the fleet is employed either in the spot market, re-let or on time-charter or employed under contract

of Affreightment (coA) with bAf and hence bun-ker oil price risk is limited.

rePutationaL riSKJl enjoys strong brand recognition and loyalty and for many years has been a quality shipowner with high standards in all aspects of safety and corporate governance.

however, any incident or accident could have an impact on the company to the detriment of our image and brand loyalty. guarding against this type of risk is difficult and can only be achieved by extensive preventive work and complete transpar-ency should an incident or accident nevertheless occur.

financiaL riSKSfinancial risks relate to capital management risks, see finance and investor relations on p. 44-47and to the financial markets in general (currency ex-change rates and interest rates).

currency riSKSJl’s operating and reporting currency is uSd and thus all amounts are recorded and reported in uSd. matching income and expenses and assets and liabilities minimises the net currency risk, leaving net positions to be focused on.

currency exposure relates to our operational, fi-nancial and investment cash flows.

the most important non-uSd operating cost cur-rency is dKK arising mainly from head office costs and danish crew expenses. currency risk from non-uSd interest bearing debt relates to Jpy (uSd 63.5m) and noK (uSd 151,9m). the Jpy debt is partially hedged and the noK debt is 100% hedged (see note 15)

our policy is to use derivative instruments to hedge currency risks relating to net non-uSd cash flows from operating activities, investments and financing. hedging policy is approved by the board of directors.

intereSt rate riSKSpart of Jl’s loan portfolio is subject to floating in-terest rates, meaning that we are exposed to fluc-tuations in these.

0%

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Capesize Supramax Handysize F/P LPG S/R LPG Ethylene LPG


our policy is to hedge risks associated with changes in interest rates to limit the financial ef-fects of adverse changes in interest rates by con-verting variable interest rates to fixed interest rates. net interest rate risk may be hedged via for-ward rate agreements, interest rate swaps and related instruments if felt advantageous. hedging policy is approved by the board of directors.

At year-end 2013, 58% of Jl’s debt was in fixed rate loans (59% at year-end 2012).

We have a total threshold of uSd 114.5m on lines relating to derivatives with financial counterpar-ties, and at year-end the remaining credit support amount was uSd 79.9m, so the risk of margin calls is relatively low.

creDit riSKcredit risk is the risk of incurring financial loss if clients or counterparties fail to fulfill their contrac-tual obligations.

Jl rates clients for creditworthiness based on his-torical trading and payment records, input from rating agencies as well as industry knowledge and client reputation. large counterparties are monitored and rated, with fixed exposure limits. further, clients and counterparties are only ac-cepted when fulfilling general requirements. in certain cases contracts are guaranteed by parent companies or the like.

large contracts and long-term commitments are reviewed and approved by the executive manage-ment and in certain cases by the board of direc-tors.

on a group basis, our ten largest clients account-ed for 19% of total revenues in 2013 (20.5% in 2012).

during the past years, Jl has experienced severe counterparty defaults especially on capesize and handymax contracts. policies related to credit as-sessment are routinely reassessed.

Risks relating to financial counterparties, financial instruments, bonds and cash funds are minimised by trading only with financial institutions with a long-term investment grade credit rating from moody’s and by defined limits on deposits for each financial partner.

please see note 15 of the financial statements for further details on financial and credit risks.

oPerationaL riSKSoperational risks refer to potential losses resulting from people/compliance, inadequate systems, accidents and piracy.

People and complianceWe need to attract and retain talented, competent and motivated employees with the right sets of skills and ethical mindsets to ensure quality oper-ations. conversely, lack of the right people could impact on our performance with increased risks and opportunities missed.

compliance risk is the current and prospective risk to earnings or capital arising from non-confor-mance with rules and regulations on for example antitrust, anti-corruption and fraud, prescribed practices, internal policies and ethical standards including human rights and principles of environ-mental protection. compliance risk also arises in situations where the governing laws or rules may be ambiguous and lack enforcement. this risk ex-poses Jl to fines, employees’ imprisonment, pay-ment of damages and the voiding of contracts in addition to diminished reputation and limited business opportunities. policies and procedures to limit such risks are regularly assessed by exec-utive management.

Safetycasualties from ship operations can have serious consequences and merchant shipping has widely implemented international safety standards. fur-ther, several clients have additional requirements relating to safety, environmental protection, etc. in Jl, we have safety standards in place, obvious-ly complying with general safety standards, but also over and above client demands.

Any accident could have serious consequences for our crews or personnel, the environment and our financial position due to personnel injury, loss of income, repair costs, claims and damages and consequential loss of client satisfaction.

Jl recognises the risks and potential hazards in-volved in owning, operating and managing a large, diversified fleet of ships worldwide. one major prerequisite for handling these risks is to ensure that all ships under our control comply


with comprehensive internal management sys-tems that are in line with or exceed the require-ments of the international Safety management (iSm) code. this relates both to vessels managed by ourselves and vessels under external technical management. management systems and report-ing practices are regularly revised so as to com-municate best practice across the fleet, thus avoiding or minimizing the risk of incidents, acci-dents and time loss.

ongoing training of crews is the key to reducing risks relating to ship and cargo handling opera-tions.

Piracy and violent crime the fight against piracy, violent crime and associ-ated risks continue to be at the top of the global shipping agenda, and so also for Jl.

the risk to our crews and clients’ cargo due to pi-racy or violent crime-related activity in certain parts of the world has our strictest attention. We adhere to recommendations and best manage-ment practices from relevant national and interna-tional bodies as set out in our corporate security guidelines.

Jl supports the use and dispatch of armed secu-rity teams aboard our vessels. the necessity for engaging armed security teams on vessels oper-ating in high risk regions is assessed on the basis of voyage-specific risk assessments. Armed secu-rity teams are carefully selected based on thor-ough vetting processes conducted by third party. this is supported by industry anti-piracy measures aboard (best management practices, bmp4) and close monitoring by technical management and by military forces providing intelligence relevant to our vessels and military escorts.

our efforts are strengthened by working closely with external anti-piracy professionals in assess-ing current risk trends.

Jl ensures that in the unfortunate case of a pira-cy-related incident, a team of professional crisis management psychologists will assist crews, families and relatives in order to provide the coun-seling required.

insuranceA policy for insurance has been adopted with the aim of reducing the financial implications of inci-dents and casualties.

Jl’s insurances cover our assets, our hired and operated fleet, our liabilities and non-marine risks. As a general rule, insurances are always taken out with first class international insurance companies and they are always taken out with a certain finan-cial safety margin to avoid any serious conse-quential impact of an incident or casualty on our financial status.

it systemsit is critical for the conduct of our business and thus it is imperative that our it systems are avail-able round-the-clock and are accessible world-wide.

it infrastructure and application management is outsourced to a third party provider. our internal it organization has the authority, the capabilities and capacity to manage the relationship in order to ensure the quality and availability of the it ser-vices delivered by the third party service provider.

Redundant systems and duplicate infrastructure are in place and systems are tested annually to ensure that they can be restored within pre-de-fined time limits.

the company’s it security policy defines the over-all system, platform and infrastructure require-ments and defines the framework for user behav-iour and access to systems.


coRpoRAte reSPonSiBiLityour corporate responsibility builds on our core values and internationally recognized principles, such as the un global compact’s ten principles for responsible business conduct and the un’s guiding principles on business and human Rights.

during 2013, we continued our corporate respon-sibility (cR) efforts both within the group and in different industry collaborations.

guiDing PrinciPLeSKey work streams for our corporate responsibility work in 2013 were on integrating Anti-corruption principles and guidance into our compliance pro-gramme and implementing our Responsible pro-curement programme that is based on the un global compact as well as the un’s guiding prin-ciples on business and human Rights.

Due DiLigence actiVitieSduring the year, we increased our due diligence processes. in relation to our human rights’ im-pact, we initiated an internal due diligence pro-cess, which started by identifying our potential and actual impacts. in many areas we rely on ser-vices provided by third parties that are directly linked to the services we provide to our clients, and during 2013 we formalized our due diligence procedures in relation to our anti-corruption mea-sures.

With respect to procurement, due diligence pro-

cedures have been implemented in order to em-brace human rights including labour rights and environmental issues as well as anti-corruption principles.

focuS areaS in 2013the following main initiatives and actions were taken during the year:

• development of a human rights due diligence process based on the un guiding principles on business and human Rights.

• continued implementation of our group en-ergy efficiency project, which aims to en-hance fuel efficiency and cut emissions whilst achieving savings on costs.

• A legal review process and development of a set of gift and hospitality guidelines as a part of our compliance programme.

• ongoing participation in the maritime Anti-corruption network, part of specific work streams.

• implementation of our group responsible procurement programme and training of all our purchasing staff in the content of the pro-gramme.

• Active participation in the development and launch of impA Act, an industry standard for Responsible Supply chain management.

outLooK 2014We will continue our corporate responsibility ef-forts and to balance our priorities and seek indus-


try collaboration where deemed appropriate in or-der to increase the impact of our efforts.

Key group priorities for 2014 will be to:

• continue the implementation of our human rights programme with the key focus on out-line and identification of our internal human rights’ impacts.

• continue the group’s energy efficiency proj-ect, which aims to enhance fuel-efficiency and cut emissions whilst achieving savings on costs.

• ensure the implementation of our anti-cor-ruption compliance programme with the key focus on training senior management, shore and seagoing personnel and on increasing third party awareness.

• further support and implement the impA Act programme by sharing knowledge and experience with our suppliers about the pro-gramme and its impacts.

aDDitionaL informationRead more about our cR efforts in the group’s statutory corporate Responsibility report which has been drawn up in accordance with the danish financial Statements Act (§99a) and the un glob-al compact’s requirements for communication on progress http://static.j-l.com/imce/jlcr2013_lo-ReS.pdf.

netWoRKS &committee ParticiPationin 2014, we shall continue with our network par-ticipation efforts that contribute and add value to our corporate responsibility work. We are for example engaged in the following cR-related networks:

un global compact nordic networkthe danish Shipowners Association’s cR com-mittee, technical committee and legal commit-tee as well as related working groupspiracy focus groupthe green Ship for the futureimpA Act advisory boardthe maritime Anti-corruption network


people And comPetenceS Attracting, developing and retaining talented, competent and motivated employees at all organ-isational levels for our sea and shore-based or-ganisation is a key factor for Jl’s success and fu-ture growth.

LanD-BaSeD organizationJl is headquartered in copenhagen with overseas offices in china, philippines, Singapore, Spain and uSA.

traineeSduring the year, four new trainees with relevant academic qualifications embarked on Jl’s ship-ping programme. over the coming two years, we will ensure their development by way of on-the-job training and formal education at the danish Shipping Academy. A total of nine trainees are en-rolled in our trainee programme, corresponding to 4% of our land-based organisation.

Jl expects to expand the programme to more overseas offices and to work closer with relevant universities. So far, we have found great enthusi-asm and willingness to meet our needs.

recruitmentSthe group retention rate was 84% in 2013, up from 79% in 2012. during the year, Jl changed

the guard at a number of key positions. Some can-didates were found internally in Jl’s organisation, while other were sourced externally. consistent feedback has shown that Jl is considered an at-tractive place to work both in denmark and over-seas, making it a manageable task to recruit high-ly competent and motivated employees with the right skills.

comPetenceSAgain in 2013, we encouraged employees to up-skill and acquire new qualifications, with top pri-ority going to the “blue mbA” at copenhagen business School (cbS) and various diploma pro-grammes.

by the end of 2013, the organisational demogra-phy in terms of formal education was 14% being graduates (or above) and 49% undergraduates (or equivalent), cf. figure 24.

the coming years will set further focus on contin-uous competency development.

at Sea2013 was an important year for all seafarers and shipping companies as the maritime labor con-vention 2006 (mlc 2006) came into force.

the mlc has established minimum working and living standards including for example minimum age, contracts of employment, hours of work or rest, payment of wages, paid annual leave, repa-triation at the end of contract, onboard medical care, the use of licensed private recruitment and placement services, accommodation, food and catering, health and safety protection and acci-dent prevention and seafarers’ complaint han-dling.

mlc applies to all seafarers and the convention is an essential step toward ensuring fair competition and a level playing field for shipowners who are committed to providing decent working condi-tions for their seafarers.

All our business units have ensured that their ex-isting procedures, contracts etc. conform to re-quirements of mlc 2006.

in our dry bulk business, ship management is out-sourced to external service providers, leaving our in-house technical department to harmonise ex-


figure 24: DiStriBution of eDucationaL BacKgrounD year-enD 2013

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figure 25: totaL WorKforce at 2011-2013 year-enD

pectations and monitor performance on achiev-ing safe, efficient operations.

to ensure the highest level of safety and perfor-mance, lauritzen bulkers continuously uses Kpis, systematic vessel visits and office audits to benchmarks external ship managers’ safety per-formance. this close collaboration with ship man-agers is key to providing safe, reliable and cost-effective shipping.

during 2013, lauritzen bulkers’ technical depart-ment conducted vessel visits, office audits and at-tended crew seminars. these efforts enabled us to maintain constructive dialogue with our ship managers and crews.

A vital part of our gas carrier operations depends on crew performance. during 2013, about 600 seafarers from the philippines, Spain and cuba were employed onboard lK vessels.

14%

49 %

37%

Masters, MBA, PhD

Bachelors HD, Merkonom, maritime qualifications (engineers, officers)

Upper secondary school or equivalent

Respect and tolerance for individuals and being aware of national and cultural differences are some of the key issues which enable us to under-stand each other and work efficiently together. bi-annual crew seminars are used to communicate specific topics and provide dialogue and discus-sions between the shore and sea sides of our gas operations.

training and ongoing development of seafarers is a high priority, with our crews being trained and certificated well above the minimum require-ments set out in the international convention on Standards of training, certification and Watch-keeping for Seafarers (StcW).

in lauritzen offshore, our in-house crewing per-sonnel carefully selects all officers for our offshore vessels and as for ratings, we work closely with skilled, proven crew managers to ensure and maintain high retention rates. We focus on conti-nuity training for officers and ratings with special-ized courses and training in order to live up to our own and clients’ expectations. officers take a va-riety of e-learning courses to provide them with cultural understanding with the focus on brazil, cultural leadership and portuguese language.

employee developmentin 2013, Jl adopted a diversity policy, as we con-sider diversity as an important and natural prereq-uisite for innovation and development of the com-pany. for additional information on diversity, see p. 42.

the distribution of males and females in manage-rial positions of our land-based organisation was 62% and 38% respectively, thus implying that we need to focus on a more equal gender balance in positions which traditionally form the basis for a future managerial career.

At year-end 2013, Jl’s total headcount was 1.298 compared to 1,341 in 2012, with a total of 167 working at head office in copenhagen, 49 in the overseas offices, and 1,082 at sea, cf. figure 25.

the average age of shore-based personnel de-creased slightly to 40.6 (42.5 in 2012) while aver-age length of service with Jl increased slightly to 8.4 years compared to 8.0 years in 2012.


finAnciAl reVieWJl’s result was uSd (284.6)m compared to uSd (349.7)m in 2012. the result was significantly im-pacted by one-off items with a net effect of uSd (185.0)m (2012: uSd (254.4)m). Adjusted for these, Jl’s result was uSd (99.6)m compared to uSd (95.4)m in 2012 cf. table 6.

due to the sale of the product tanker fleet and the shuttle tanker fleet, both lauritzen tankers and lauritzen offshore Shuttletankers were defined as discontinued operations, with their assets and re-lated liabilities reclassified as “held for sale” at year-end 2013.

Revenues from continuing operations decreased from uSd 574.4m in 2012 to uSd 502.5m in 2013, cf. table 7, mainly due to decrease of the bulk carrier fleet and revenue from claim settle-ments received in 2012 not repeated in 2013, but also due to weakening of the market for gas carri-ers and changed employment mix for the gas car-rier fleet following tightening of the iran sanctions in 2012

Voyage-related costs including bunkers and port expenditures amounted to uSd 149.3m, down on uSd 170.0m in 2012 reflecting the changed em-ployment mix for the gas carriers and the smaller fleet of bulk carriers.

the time charter equivalent amounted to uSd 353.3m based on a total number of ship-days of 64,146 compared to uSd 404.4m in 2012 based 65,073 ship-days. the decrease was mainly due to the decrease of the bulk carrier fleet, less reve-nue from claim settlements and the weakening of the market for gas carriers.

hire of chartered vessels amounted to uSd 213.6m, down from uSd 238.4m in 2012 mainly due to redelivery of time-chartered bulk carriers.

operating costs for owned and bareboat char-tered vessels totalled uSd 96.4m, down from uSd 99.7m in 2012.

Administrative costs totalled uSd 45.3m, com-pared to uSd 44.5m in 2012.

taBLe 6: reSuLt excL. one-off itemS uSDm

http://sharenet.j-lauritzen.com/sites/Controller_Site/Accountssite/2013/FINANCIAL REVIEW tabel 14/02/2014

INCOME STATEMENT - CONDENSED Actual

Full year Note 2013 2012 2013 2012 2013 2012

Revenue 1) 502.5 574.4 1.6 16.6 500.9 557.8

Other operating income 11.0 12.3 - - 11.0 12.3

Costs (504.5) (552.7) - - (504.5) (552.7)

Profit before depreciation (EBITDA) 8.9 34.0 1.6 16.6 7.3 17.4

Profit/(loss) on sale of assets 2) (7.6) (94.8) - (96.6) (7.6) 1.8

Depreciations and write-downs 3) (196.4) (177.9) (133.0) (103.2) (63.4) (74.7)

Operating income (195.1) (238.7) (131.4) (183.1) (63.7) (55.6)

Share of profit in joint ventures 4) (10.7) (25.1) (4.7) (17.1) (6.0) (8.0)

Net financial items (30.7) (41.0) - - (30.7) (41.0)

Profit/(loss) before tax (236.6) (304.9) (136.1) (200.3) (100.5) (104.6)

Income tax 0.1 (0.4) - - 0.1 (0.4)

Profit/(loss) from continuing operations (236.5) (305.3) (136.1) (200.3) (100.4) (105.0)

Profit/(loss) from discontinuing operations 5) (47.8) (43.2) (48.9) (54.1) 1.0 10.9

Profit/(loss) for the year (284.3) (348.4) (185.0) (254.4) (99.3) (94.1)

Hereof non-controlling interest's share of profit/(loss) 0.3 1.3 - - 0.3 1.3

The J. Lauritzen Group's share of profit/(loss) (284.6) (349.7) (185.0) (254.4) (99.6) (95.4)

To illustrate the underlying development, management has identified a number of one-off items. One-off items include:1) Revenue from claims2) Sale of vessels as a consequence of counterparty defaults or strategic initiatives3) Impairment loss on vessels and vessels under construction4) Impairment loss on vessels owned by joint ventures5) Impairment loss and sale of vessels due to strategic initiatives

One-off items Excl. one-off items


ebitdA from continuing operations amounted to uSd 8.9m, down from uSd 34.0m in 2012, cf. figure 26. excluding one-off items, cf. table 6, ebitdA was uSd 7.3m compared to uSd 17.4m. the decrease was mainly related to lauritzen Ko-san.

in 2013, net losses from the sale of vessels and other assets totalled uSd (7.6)m. the net loss re-lated to the sale of one handysize bulk carrier part-ly off-set by profits from the sale of one gas carrier and the sale of a 16% shareholding in Axis off-shore to our joint venture partner. for 2012, net losses of uSd (94.8)m mainly related to the sale of two capesize bulk carriers due to a counterparty default partly off-set by gains from the sale of one gas carrier.

depreciation totalled uSd 63.4m compared to uSd 74.7m in 2012. depreciation was down by

uSd 11.3m due to vessel disposals and the im-pact of impairment losses on depreciations going forward. impairment losses on bulk carriers amounted to uSd 133.0m (2012: uSd 103.2m).

Jl’s share of profits in joint ventures totalled uSd (10.7)m, up from uSd (25.1)m in 2012. the in-crease was mainly related to impairment losses in 2012 on bulk carriers owned by joint ventures.

net financial costs of uSd 30.7m fell from uSd 41.0m in 2012 mainly due to conversion of two subordinated loans to equity and increased cur-rency exchange rate net gains.

income tax amounted to uSd 0.1m, up from uSd (0.4)m in 2012.

the result from continuing operations was uSd (236.5)m up from uSd (305.3)m in 2012. exclud-ing one-off items the result from continuing oper-ations was uSd (100.4)m compared to uSd (105.0)m in 2012 as the effect of the weakening of the market for gas carriers and a loss on sale of assets in 2013 compared to a small profit in 2012, were offset by lower depreciation and reduced net financial costs.

the result from discontinued operations, i.e. lau-ritzen tankers and lauritzen offshore Shuttletank-ers, totalled uSd (47.8)m, which included impair-ment losses of uSd (48.9)m, compared to uSd (43.2)m in 2012, which included impairment loss-es and losses from vessel disposals of uSd (54.1)m in total.

excluding these one-off items, the result from dis-continuing operations was uSd 1.0m compared to uSd 10.9m in 2012 mainly reflecting the effect of the transfer of the Accommodation and Sup-port Vessel operations to part-owned Axis off-shore ltd. in 2012 and the net financial costs re-lated to the sale of the product tanker fleet and the shuttle tanker fleet. this was partly off-set by earnings from the newbuildings delivered to lau-ritzen tankers in 2012 and 2013.

the result of uSd (284.3)m, up from uSd (348.4)m in 2012, was in line with expectations and re-garded as very unsatisfactory.

taBLe 7: reVenueS

figure 26: eBitDa uSDm

USD 000' 2013 2012

Lauritzen Bulkers 321.1 361.1

Lauritzen Kosan 180.8 210.3

Unallocated 0.6 2.9

Revenue from continuing operations 502.5 574.4

Lauritzen Tankers (discontinued operations) 81.3 61.0

Lauritzen Offshore (discontinued operations) 36.3 60.1

Revenue, total 620.0 695.6

Revenue

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Continued operations Accom. & Support Tank/shuttle tank (discont.)


Statement of financiaL PoSitionAt year-end 2013, total assets amounted to uSd 1.876.8m, down uSd 438.6m on 2012 due to the sale of vessels, depreciations and impairment losses.

the carrying amount of vessels, property and equipment totaled uSd 1,030.3m compared to uSd 1,752.4m. the carrying amount of vessels amounted to uSd 1,021.1m, down uSd 680.8m on 2012, whereas brokers’ valuations totalled uSd 953.0m, cf. figure 27. the calculated value in use of the vessels, taking contract coverage into account, was higher than the total carrying amount.

Vessels under construction amounted to uSd nil, down from uSd 39.1m in 2012 as Jl’s newbuild-ing program from 2008 and earlier was completed in 2013.

investments in joint ventures totalled uSd 101.1m, down from uSd 130.2m in 2012 due to impairment losses and the sale of interests.

our investments classified as shares available for sale amounted to uSd 43.4m compared to uSd

26.0m in 2012. the increase was mainly due to investments in hafnia tankers.

current receivables including fair value adjust-ments on ffAs and other financial derivatives amounted to a total of uSd 64.0m, compared to uSd 100.1m in 2012. the decrease was mainly related to the release of cash pledged as security for debt.

Assets held for sale comprising vessels sold but not yet delivered amounted to uSd 451.4m (2012: uSd nil).

total shareholders’ equity was down by uSd 111.8m at uSd 740.7m. Solvency was 39%, up from 37% at the end of 2012.

At year-end 2013, total liabilities amounted to uSd 1,136.1m, down uSd 326.8m on 2012. total interest bearing debt decreased to uSd 794.7m from uSd 1,375.1m in 2012, and other current payables including fair value adjustments on for-ward freight Agreements (ffAs) and other finan-cial derivatives, amounted to uSd 51.5m (2012: uSd 75.7m).

liabilities associated with assets held for sale amounted to uSd 266.7m (2012: uSd nil).

1

Note: Book values excl. dockings, etc. Above chart does not includeProduct tankers (“MR”): 7 vessels. Book value USD 219m. Market value USD 231m. Debt USD 142m. Average age 1.6 yearsShuttletankers (“SHT”): 3 vessels. Book value USD 179m. Market value USD 174m. Debt USD 125m. Average age 5.7 years

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USD m Years

figure 27: aVerage age (yearS) anD VeSSeL VaLueS year-enD 2013 uSDm - WHoLLy oWneD fLeet


caSH fLoW Statementcash flow from operating activities totalled uSd (19.9)m, down from uSd 34.1m in 2012 mainly reflecting the decrease of ebitdA for continuing and discontinuing operations. in 2013 cash flows from investment activities amounted to uSd 28.2m, up from uSd (107.9)m in 2012 due to the sale of vessels, reduced investments in joint ven-tures, less investments in newbuildings and the release of cash pledged as security for debt.

cash flows from financing activities amounted to uSd (126.1)m compared to uSd 107.2m in 2012. the decrease was related to at-delivery financing of vessels as delivery of vessels declined com-pared to 2012. furthermore, no bonds were is-sued in 2013.

cash and cash equivalents at year-end amounted to uSd 154.1m compared to uSd 267.0m at year-end 2012.

At year-end 2013, Jl had no outstanding deliver-ies of owned vessels and therefore no committed facilities available upon delivery of vessels. At year-end 2013, financial resources amounted to uSd 154.1m compared to uSd 331.0m at year-end 2012. in addition to the financial resources noted above, Jl has an unsecured overdraft facil-ity of dKK 100m for multi-currency short-term fi-nancing needs.


boARd of DirectorS

cHairmanBent ØStergaarDmember since 2003 // Remuneration: dKK 850,000chairman of the nomination and Remuneration committee

president,lf investment ApS & lauritzen fonden

chairman of the board of directors of:cantion A/SdfdS A/Sfrederikshavn maritime erhvervspark A/Snanonord A/S

board member of:comenxa A/Sdurisol uKmama mia holding A/Smeabco holding A/Smeabco A/SRoyal Arctic line A/SWith fonden

Vice cHairmaningar SKaugmember since 1998 // Remuneration: dKK 500,000member of the Audit committeemember of the nomination and Remuneration committee

chairman of the board of directors of:bery maritime A/SRagni invest A/Scenter for creative leadership

board member of:berg-hansen Reisebureau ASdfdS A/Smiros ASpetroleum geo-Services ASAperformance leadership AS

BoarD memBernieLS Heeringmember since 2001 // Remuneration: dKK 450,000chairman of the Audit committeemember of the nomination and Remuneration committee

chairman of the board, partnergorrissen federspiel

chairman of the board of directors of:Jeudan A/SntR holding A/S (+subsidiary company)civ. ing. n.t. Rasmussens fondellos A/Sthrane & thrane A/Shelgstrand dressage A/Snesdu A/SStæhr holding A/S (+ subsidiary company)Stæhr invest ii A/S

deputy chairman of the board:15. Juni fonden

board member of:Scandinavian private equity partners A/Sole mathiesen A/Slise og Valdemar Kählers familiefond

BoarD memBerPeter PouL Lauritzen Baymember since 2003 // Remuneration: dKK 264,560member of the Audit committee until 16 may 2013

management consultantAccenture


*elected by the employees

auDit committeeniels heering (chairman)ingar Skaug (member)marianne Wiinholt (member)

nomination &remuneration committeebent Østergaard (chairman)ingar Skaug (member)niels heering (member)

BoarD memBermarianne WiinHoLtmember since June 2011 // Remuneration: dKK 285,440member of the Audit committee from 16 may 2013

executive vice president/cfo, dong energy A/S

BoarD memBerSØren Berg*member since 2005 // Remuneration: dKK 250,000

project manager, lauritzen Kosan A/S

board member of:de forenede Sejlskibe

BoarD memBeruLriK DanStrØm*member since 2009 // Remuneration: dKK 250,000

senior chartering manager, lauritzen bulkers A/S

BoarD memBerJan LyStLunD*member since 2013 // Remuneration: dKK 250,000

captain, J. lauritzen A/S


mAnAgementexecutiVe management & executiVe committee

PreSiDent & ceoJan KaStruP-nieLSenJoined Jl in 2000 // ceo since february 2013

board member of:the danish Shipowners’ Association

executiVe Vice PreSiDent & cfoBirgit aagaarD-SVenDSenSince october 1998

chairman of the board of directors of:committee on corporate governance (Komitéen for god Selskabsledelse)danish Society for education and business (dSeb)

board member of:metroselskabet i/Sthe West of england Ship owners mutual insur-ance Association (luxembourg) otto mønsted A/S


PreSiDent - Lauritzen BuLKerS a/SPeter BoruPSince february 2013

PreSiDent - Lauritzen KoSan a/S tHomaS WØiDemannJoined Jl in January 2002 // in current position since march 2011

PreSiDent Lauritzen tanKerS & Lauritzen offSHore SerViceS a/SeriK DonnerJoined Jl in January 2002 // in current position since march 2011

Senior Vice PreSiDent, J. Lauritzen a/S grouP BuSineSS controLeriK BierreJoined Jl in may 2000 // in current position since may 2000

otHer memBerS of executiVe committee

Senior Vice PreSiDent, J. Lauritzen a/S grouP treaSuryJoHn JØrgenSenJoined Jl in may 2001 // in current position since June 2008


grouP accountS

income stAtement 66

stAtement of comprehensive income 66

stAtement of finAnciAL position 67

equity stAtement 68

cAshfLow stAtement 69

notes 70

note 1 Accounting eStimAteS & JudgementS 70

note 2 Segment infoRmAtion 72

note 3 StAff coStS, office & fleet 74

note 4 feeS to AuditoRS 74

note 5 depReciAtionS & WRite doWnS 74

note 6 finAnciAl income 74

note 7 finAnciAl expenSeS 74

note 8 tAx 75

note 9 VeSSelS, pRopeRty & eQuipment 76

note 10 inVeStmentS in Joint VentuReS 77

note 11 otheR RecieVAbleS 77

note 12 eQuity 77

note 13 pRoViSionS 77

note 14 long-teRm boRRoWingS 78

note 15 finAnciAl inStRumentS & finAnciAl RiSKS 79

note 16 AdJuStmentS to cASh floW 82

note 17 chAnge in WoRKing cApitAl 82

note 18 ASSetS held foR SAle And diScontinued opeRAtion 83

note 19 opeRAting leASeS of VeSSelS 86

note 20 moRtAgeS 87

note 21 contingent liAbilitieS 87

note 22 RelAted pARtieS 87

note 23 eVentS AfteR the bAlAnce Sheet dAte 87

note 24 Accounting policieS 87

mAnAgement stAtement 104

independent Auditors’ report 105

AccountS


Parent comPany accountS

income stAtement 92

stAtement of comprehensive income 92

stAtement of finAnciAL position 93

equity stAtement 94

cAshfLow stAtement 95

notes 96

note 1 StAff coStS 96

note 2 otheR SAleS & AdminiStRAtiVe coStS 96

note 3 finAnciAl income 96

note 4 finAnciAl expenSeS 96

note 5 tAx 96

note 6 mAchineRy, toolS & eQuipment 97

note 7 inVeStmentS in SubSidARieS 97

note 8 otheR RecieVAbleS 97

note 9 eQuity 97

note 10 long-teRm boRRoWingS 98

note 11 finAnciAl inStRumentS & finAnciAl RiSKS 99

note 12 moRtAgeS 102

note 13 contingent liAbilitieS 102

note 14 RelAted pARtieS 102

note 15 eVentS AfteR the bAlAnce Sheet dAte 102

note 16 Accounting policieS 102

note 17 Accounting eStimAteS And JudgementS 103

mAnAgement stAtement 104

independent Auditors’ report 105


income Statement

USD '000 2013 2012

Profit/(loss) for the year (284,317) (348,447)

Items that can be reclassified subsequently to profit or loss:

Other comprehensive income:

Exchange differences on translating foreign operations 1,892 144

Fair value adjustment of hedging instruments during the year 1,248 (9,284)

Deferred gains/(loss) on hedging instruments transferred to financial expenses 12,397 11,008

Fair value adjustment of shares available for sale 1,444 818

Other comprehensive income net of tax 16,981 2,685

Total comprehensive income for the year (267,336) (345,761)

Total comprehensive income attributable to:

The J. Lauritzen Group (267,632) (347,058)

Non-controlling interests 297 1,296

(267,336) (345,761)

StAtement of comPreHenSiVe income

grouP

USD '000 Note 2013 2012

Revenue 2 502,484 574,394

Voyage related costs (149,228) (170,039)

T/C equivalent income 353,256 404,355

Other operating income 10,961 12,325

Hire of chartered vessels (213,589) (238,449)

Operating costs of vessels 3 (96,439) (99,708)

Administrative costs 3.4 (45,293) (44,519)

Profit before depreciation (EBITDA) 8,896 34,004

Profit/(loss) on sale of vessels and other assets (7,622) (94,811)

Depreciations 5 (63,438) (74,698)

Write-downs 5 (132,965) (103,200)

Operating income (195,129) (238,706)

Share of profit in joint ventures 10 (10,740) (25,139)

Financial income 6 11,671 13,749

Financial expenses 7 (42,420) (54,796)

Profit/(loss) from continuing operations before tax (236,618) (304,891)

Income tax 8 137 (389)

Profit/(loss) from continuing operations (236,481) (305,280)

Profit/(loss) from discontinued operations 18 (47,835) (43,167)


Profit attributable to:

The J. Lauritzen Group (JL result) (284,613) (349,743)

Non-controlling interests 297 1,296

(284,317) (348,447)


StAtement of financiaL PoSition

grouP

USD '000 Note 2013 2012

ASSETS

Vessels, property and equipment 9 1,030,333 1,752,449

Investments in joint ventures 10 101,086 130,247

Deferred tax assets 8 297 655

Shares available for sale 15 43,427 26,010

Receivables from joint ventures 9,821 21,985

Non-current assets 1,184,964 1,931,346

Bunkers 12,264 16,755

Trade receivables 15 24,925 5,250

Other receivables 11 26,334 63,037

Prepayments 9,772 19,714

Current tax receivables 8 - 1,117

Derivative financial instruments 15 3,015 11,000

Securities 10,000 157

Cash at hand and in bank 154,145 267,000

240,455 384,030

Assets held for sale 18 451,368 -

Current assets 691,823 384,030

Total assets 1,876,787 2,315,376

LIABILITIES

Share capital 62,356 60,633

Retained earnings 675,881 806,670

Reserves 1,747 (15,235)

JL's share of equity 739,983 852,069

Non-controlling interests 668 371

Equity 12 740,651 852,440

Non-current derivative financial instruments 15 23,126 12,140

Long-term borrowings 14 731,291 1,284,709

Non-current liabilities 754,418 1,296,849

Current portion of long-term borrowings 14 63,447 90,387

Trade payables 15,994 14,740

Other payables 18,318 34,595

Provisions 13 - 18

Prepayments 191 359


Current tax payables 8 1,952 -

114,998 166,087

Liabilities associated with assets held for sale 18 266,719 -

Current liabilities 381,718 166,087

Total liabilities 1,136,135 1,462,936

Total equity and liabilities 1,876,787 2,315,376


USD '000

Equity 1/1 2012 60,633 (33,391) 21,245 (5,773) (17,920) 1,156,413 1,199,126 1,956 1,201,082

Profit/(loss) for the year - - - - - (349,743) (349,743) 1,296 (348,447)


Exchange differences on translating foreign -

operations - - - 144 144 - 144 - 144

Deferred (gain)/loss on hedging instruments

transferred to financial expenses - 11,008 - - 11,008 - 11,008 - 11,008 Fair value adjustment of hedging instruments during the period - (9,284) - - (9,284) - (9,284) - (9,284)

Fair value adjustment of shares available for sale - - 818 818 - 818 - 818 Total other comprehensive income - 1,724 818 144 2,685 - 2,685 - 2,685 Total comprehensive income - 1,724 818 144 2,685 (349,743) (347,058) 1,296 (345,762) Transactions with owners:

Paid dividend - - - - - - (2,881) (2,881) Total transactions with owners - - - - - - - (2,881) (2,881) Equity 31/12 2012 60,633 (31,668) 22,063 (5,630) (15,235) 806,670 852,068 371 852,440

Profit/(loss) for the year - - - - - (284,613) (284,613) 297 (284,317)


Exchange differences on translating foreign

operations - - - 1,892 1,892 - 1,892 - 1,892

Deferred (gain)/loss on hedging instruments

transferred to financial expenses - 12,397 - - 12,397 - 12,397 - 12,397

Fair value adjustment of hedging instruments during the period - 1,248 - 1,248 - 1,248 - 1,248 Fair value adjustment of shares available for sale - - 1,444 - 1,444 - 1,444 - 1,444 Other comprehensive income - 13,645 1,444 1,892 16,981 - 16,981 - 16,981 Total comprehensive income - 13,645 1,444 1,892 16,981 (284,613) (267,632) 297 (267,336) Transactions with owners:

Capital increase 1,722 - - - - 153,825 155,547 - 155,547 Paid dividend - - - - - - - - - Total transactions with owners 1,722 - - - - 153,825 155,547 - 155,547

Equity 31/12 2013 62,356 (18,022) 23,507 (3,738) 1,747 675,881 739,982 668 740,651

Hedging instrument

Shares available

for saleTranslation

gain/lossRetained earnings

Non-controlling

interestsHedging

instrumentShare

capital

Shares available

for saleTranslation

gain/lossRetained earnings Total Total

Non-controlling

interestsReserves

eQuity Statement

grouP


USD '000 - Inclusive discontinued operations. Note 2013 2012

(Refer to notes 2 and 18 for further disclosures per operating segment)


Depreciations and write-downs carried back 5 264,484 249,958

Adjustments 16 6,166 101,337

Change in working capital 17 (13,092) 3,906

Cash flow from operations before financial items 43,823 91,625

Ingoing financial payments 1,370 3,481

Outgoing financial payments (68,536) (63,565)

Cash flow from ordinary operations (23,343) 31,541

Paid corporate tax 8 3,410 2,517

Cash flow from operating activities (19,932) 34,059

Investments in vessels 9 (11,125) (8,540)

Payments on vessels under construction 9 (98,042) (181,090)

Payments on vessels under construction, classified as held for sale 18 (8,502) -

Investments in machinery and equipment 9 (17) (225)

Investments in joint ventures 10 (1,720) (65,055)

Sale of vessels 116,105 79,473

Sale of other non current assets - 12

Disposal of Joint ventures 10 22,530 175

Dividend received from Joint ventures 10 554 5,600

Purchase and sales of securities and shares available for sale (25,798) 257

Bank deposits pledged as security for debt 34,180 (22,321)

Sale of controlling interest in subsidiaries - 83,801

Cash flow from investment activities 28,165 (107,914)

Financial receivables 7,254 (1,514)

Instalment on long-term debt (182,256) (182,584)

Proceeds from loans 48,877 291,249

Cash flow from financing activities (126,125) 107,150

Changes for the year in cash and cash equivalents (117,892) 33,295

Cash and cash equivalents at beginning of year 267,000 234,132

Currency adjustments on cash and cash equivalents 5,037 (427)

Cash and cash equivalents at the end of the year 154,145 267,000

Undrawn committed credit facilities at end of year *) - 1,009

Financial resources at the end of the year 154,145 268,009

Committed facilities available upon delivery of vessels - 63,000

Financial resources incl. committed facilities available

upon delivery of vessels 154,145 331,009

*) In addition JL has an unsecured overdraft facility of DKK 100m for multi-currency short-term financing needs.

cASh floW Statement

grouP


noteS grouP

note 1 accounting eStimateS anD JuDgmentS

the preparation of the financial statements in conformity with ifRS as adopted by eu requires management to make estimates and judg-ments that affect the recognition and carrying amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported performance. manage-ment bases its estimates and judgments on historical data and other assumptions and sources that are considered reasonable. Actual re-sults could differ from those estimates and judgments.

Jl has identified the following significant accounting estimates and judgments used in the preparation of its consolidated financial state-ments.

criticaL accounting eStimateS anD JuDgmentSEstimated useful life and residual value of vessels: the estimated useful life and residual value of vessels are assessed annually and adjusted if appropriate. the residual value is based on estimates on steel value less costs to scrap. estimated useful life of vessels is 25 years and the useful life of dry dockings range from 30 to 60 months.

there have been no signicant impact on profit/loss arising from chang-es in estimated useful life or residual value in 2012 or 2013.

Impairment test of non-current assets and charter commitments:the impairment test is carried out at the lowest level for which there are separately identifiable cash inflows (cash generat-ing units, cgu). As reported in the interim report for Q2 2013, the composition of cgus has changed compared to the cgus ap-plied for in the annual report 2012. furthermore, in second half of 2013 two operating segments, lauritzen tankers and laurit-zen offshore (shuttle tankers) were classified as discontinued op-erations. the changes compared to annual report 2012 comprise:

•LauritzenBulkers’twocapesizebulkcarrierspreviouslyoncon-tract to Stx pan ocean were separated from the large bulk cgu into its own cgu as sale of the vessels is expected. however, the criteria for classifying the vessels as “held for sale” is not fulfilled.

• TheCGU’s related to Lauritzen Tankers and LauritzenOffshorewere classified discontinued operations.

hence at year-end 2013 the cgu’s in Jl can be listed as follows:

Write-downs of non-current assets are only applicable if the aggre-gated carrying amount of all non-current assets in the cgu is higher than the highest of value in use and fair value less cost of disposal.

fair value less costs of disposal is estimated by use of independent

broker valuations and value in use is calculated as present value of future cash flows to be derived from the vessels and other non-current assets during their useful life.

the key assumptions used in the impairment test include estimated future earnings (including charter income, coAs and estimated spot rates for open ship days), operating costs, counterparty risk, the com-position of cgus and the rate used to discount future cash flows. Jl uses its risk adjusted weighted average cost of capital (real) of 6.5% (2012: 7%) as the discount rate.

impairment losses of assets within a cgu are allocated first to the carrying amount of any goodwill allocated to the cgu and then, to the carrying amount of the other assets in the cgu on a pro rata basis to the higher of fair value less cost to sell and value in use. if the total carrying amount of the assets in the cgu still exceeds the value in use of the cgu, provisions are made for onerous contracts. provisions are made to individual contracts, if net present value from an individual contract is negative.

imPairment teSt 2013 the income statement for 2013 includes write-downs of vessels and vessels under construction carried out in Q2 2013 of a total of uSd (138)m related to lauritzen bulkers, cf. description below.

Additional write-downs of uSd (50)m net, carried out in Q2 2013 and partly reversed in Q3 2013 is reported as discontinued operations re-lated to lauritzen tankers, uSd (22)m, net and lauritzen offshore, uSd (28)m, cf. description below.

At year-end the impairment test of Jl’s cgus did not indicate need for impairment or reversals.

Write-downs Q2 2013At the end of Q2 2013, the following factors indicated that impairment losses had incurred:

• A counterparty default by Korean Stx pan ocean led to untimely redelivery of two capesize bulk carriers to Jl. the vessels were re-employed but it is assumed that the vessels will be “marked for sale” after expiry of present charters during 2014.

• less than expected demand for shuttle tankers in brazil and sig-nificant reduction of broker valuations negatively impacted the value of Jl’s oldest and smallest shuttle tanker.

• the return of Japanese yards’ competitiveness due to deprecia-tion of Jpy leading to higher than anticipated ordering of fuel-efficient dry bulk tonnage is likely to challenge the earnings po-tential for traditional dry bulk carriers in a longer perspective.

• Strategic decision to trim Jls balance sheet by gradual exit of the product tanker segment.

Accordingly, an impairment test was carried out at the end of Q2 2013 for all Jl’s cgus.

As reported in the interim report for the second quarter of 2013 the key assumption of estimated earnings for bulk carriers had changed as the longer term earning potential for the fleet of non-eco design handysize and supramax bulk carriers was downward adjusted to re-flect the expected impact of eco-designed vessels. the average age

•Small bulk carriers•Large bulk carriers•Capes "marked for sale" (new)

Lauritzen Bulkers

•All gas carriersLauritzen Kosan

operation)


of Jl-owned handysize and supramax vessels affected by the revised estimate is approximately three years and the effect has been adapted as from vessel age of 10 years.

based on the factors above and the impairment test, Jl’s management concluded that the carrying amount exceeded the recoverable amount of certain gcu’s and therefore write-downs of vessels and vessels un-der construction were conducted of total uSd (207)m. Quarterly al-location per cgu is specified in the table below.

Reversal of write-downs in Q3 2013following the decision of discontinuing the product tanker division the fleet of product tankers was impaired at the end of Q2 2013 to its fair value defined as an average of independent broker values. At the end of Q3 2013 the market price for second-hand product tankers improved and write-downs of uSd 19m were reversed in accordance with a purchase offer for the wholly-owned product tanker fleet ac-cepted by Jl.

At the end of Q3 2013 there were no significant indications of impair-ment or reversal of impairments in the other cgus.

criticaL accounting JuDgmentS in aPPLying JL’S ac-counting PoLicieSleases: the group enters into different contracts regarding chartering vessels in and chartering vessels out. the majority of these contacts can easily be categorized as either operational or financial leases. however, some contracts may require judgment as to the substance of the agreement in order to recognise and measure them in accor-dance with Jl’s accounting policies.

Joint operations: classification of joint operations as subsidiaries, as-sociates or joint ventures is based on managerial judgment.

assets held for sale: non-current assets are classified as “Assets held for sale” when certain critera are met and it is highly probable that its carrying amount will be recovered principally through a sales transac-

tion rather than through continuing use. Whether or not a sale is highly probable within a year is based on managerial judgment.

metHoDS for Determination of fair VaLueA number of the group’s accounting policies and disclosures require the determination of fair value. fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. fair value has been determined for measurement and/or disclo-sure purposes based on the following methods:

vessels: fair value, used as basis in the annual impairment testing, has been determined by at least two independent brokers.

listed shares: for listed shares the fair value is determined as the stock exchange closing price at the balance sheet date.

Bonds: the fair value of investments in bonds is based on the closing price at the balance sheet date obtained directly from the market or from third parties. the fair value of bond related products where an ac-tive and liquid market does not exist, is obtained by using discounted cash flow techniques and observable market data prevailing at the balance sheet date.

shares available for sale: include unlisted shares for which valuation techniques are used to measure fair value. changes in fair value are recognised in equity.

derivatives: the fair values of derivative instruments are based on their listed market price, if available, or estimated using appropriate market rates prevailing at the balance sheet date.

non-derivative financial liabilities and non-current receivables: the fair value is calculated based on the present value of future principal and interest cash flows, discounted at the market interest rate at the balance sheet date.

Quarterly write-down and reversals per CGu, usdm:

2012 2013 2013 2013 2013 2013operating segment CGu Full year Q1 Q2 Q3 Q4 Full yearLauritzen Bulkers Small bulk carriers (120) - (61) - - (61) Lauritzen Bulkers Large bulk carriers - - - - - - Lauritzen Bulkers Capes “marked for sale" *) N/A N/A (77) - - (77) Lauritzen Kosan Gas carriers - - - - - - total continuing operations (120) - (138) - - (138) Lauritzen Tankers (47) - (41) 19 - (22) Lauritzen Offshore - - (28) - - (28) total discontinued operations (47) - (69) 19 - (50) Jl group total (167) - (207) 19 - (188) Write-downs per asset type:Vessels (124) - (189) 16 - (173) Vessels under construction (25) - (14) 3 - (10) Investment in joint ventures (18) - (5) - - (5) Jl group total (167) - (207) 19 - (188) *) The CGU were defined as separate CGU as from Q2 2013.


NOTE 2 SEGMENT INFORMATION

USDm

2013

Revenue 321.1 180.8 36.3 81.3 619.4 0.6 620.0 502.5

Voyage related costs (80.9) (68.2) (0.6) (2.3) (152.1) (0.1) (152.2) (149.2)

T/C equivalent income 240.2 112.5 35.6 79.0 467.3 0.5 467.9 353.3

Other operating income 7.1 2.6 0.6 0.7 11.0 1.2 12.3 11.0

Hire of chartered vessels (196.6) (17.0) 0.0 (36.2) (249.8) 0.0 (249.8) (213.6)

Operating costs of vessels (42.2) (53.6) (6.0) (20.1) (122.0) (0.6) (122.5) (96.4)

Contribution II 8.5 44.5 30.2 23.3 106.6 1.2 107.8 54.2

Administration costs (19.0) (16.4) (3.3) (2.3) (40.9) (9.9) (50.8) (45.3)

Profit before depreciation (EBITDA) (10.5) 28.1 27.0 21.1 65.6 (8.7) 56.9 8.9

Depreciations (36.9) (26.5) (10.6) (7.2) (81.2) (0.0) (81.2) (63.4)

Impairment losses (133.0) 0.0 (28.2) (41.1) (202.2) - (202.2) (133.0)

Reversal of impairment losses - - - 19.0 19.0 - 19.0 -

Profit/(loss) on sale of assets etc. (10.7) 1.3 0.0 1.4 (8.0) 1.8 (6.2) (7.6)

Operating income (191.0) 2.8 (11.8) (6.8) (206.8) (6.9) (213.7) (195.1)

Share of profit in joint ventures (16.7) 0.8 0.0 0.0 (15.9) 5.2 (10.7) (10.7)

Finance, net (21.1) 0.7 (12.7) (16.3) (49.4) (10.4) (59.8) (30.7)

Profit/(loss) before tax (228.8) 4.3 (24.5) (23.1) (272.1) (12.1) (284.2) (236.6)

Income tax for the year (0.8) (0.2) (0.5) 0.3 (1.2) 1.2 (0.1) 0.1

Profit/(loss) for the year (229.6) 4.1 (25.1) (22.8) (273.3) (11.0) (284.3) (236.5)

Hereof non-controlling interests - - - 0.3 0.3 0.3 -

Non current assets 727.8 366.1 0.0 16.7 1,110.6 74.4 1,185.0 1,168.3

Investments in joint ventures 37.0 18.2 0.0 0.0 55.2 45.9 101.1 101.1

Current assets 107.6 46.4 175.1 245.4 574.6 117.2 691.8 271.3

Total assets 835.4 412.5 175.1 262.1 1,685.1 191.6 1,876.8 1,439.6

Liabilities 345.3 97.2 130.9 144.5 718.0 418.2 1,136.1 860.7

Net assets 490.1 315.3 44.2 117.6 967.2 (226.5) 740.7 578.9

Onshore employees, average 70 66 7 5 147 73 220 208 Crew on vessels, average 504 420 22 188 1,134 0 1,134 924

Total employees, average 573 486 29 193 1,281 73 1,354 1,132

Profit margin (59.5)% 1.6% (32.5)% (8.4)% (33.4)% N/A (34.5)% (38.8)%

Return on invested capital (23.0)% 0.9% (6.1)% (2.6)% (12.8)% N/A (12.5)% (15.4)%

Investments in vessels etc. (CAPEX) 34.9 8.4 0.1 74.4 117.7 0.0 117.7 43.3

Invested capital - Year end 808.0 372.6 175.8 253.1 1,609.4 28.3 1,637.7 1,208.8

Invested capital - Average 901.6 384.5 194.1 266.1 1,746.3 52.5 1,798.8 1,338.5

*) Results related to associated company Axis Offshore of USD 5.2m (2012: USD 2.7m) are accounted for in "Other" ref note 18.

Discontinuing operations:

LauritzenBulkers

LauritzenKosan

LauritzenOffshore *)

LauritzenTankers

Total reportablesegments

Total Group

continuing Other/Un-allocated

TotalGroup


NOTE 2 SEGMENT INFORMATION (continued)

USDm

2012

Revenue 361.1 210.3 60.1 61.0 692.6 2.9 695.6 574.4

Voyage related costs (82.6) (87.5) (0.7) (0.8) (171.5) 0.0 (171.5) (170.0)

T/C equivalent income 278.5 122.9 59.4 60.3 521.1 2.9 524.0 404.4

Other operating income 8.3 2.7 1.0 0.5 12.5 1.3 13.8 12.3

Hire of chartered vessels (222.4) (16.0) - (27.6) (266.1) - (266.1) (238.4)

Operating costs of vessels (42.3) (57.3) (11.6) (16.8) (128.0) (0.1) (128.1) (99.7)

Contribution II 22.1 52.2 48.8 16.4 139.5 4.2 143.7 78.5

Administration costs (18.0) (16.5) (8.3) (2.0) (44.9) (10.0) (54.9) (44.5)

Profit before depreciation (EBITDA) 4.0 35.7 40.4 14.3 94.5 (5.7) 88.7 34.0

Depreciations (47.5) (27.2) (16.8) (9.8) (101.2) (0.0) (101.3) (74.7)

Impairment losses (103.2) 0.0 0.0 (45.5) (148.7) 0.0 (148.7) (103.2)

Profit/(loss) on sale of assets (96.6) 1.8 (7.5) 0.0 (102.3) 0.0 (102.3) (94.8)

Operating income (243.2) 10.3 16.1 (40.9) (257.8) (5.8) (263.6) (238.7)

Share of profit in joint ventures (28.6) 0.7 0.0 (1.1) (28.9) 2.7 (26.2) (25.1)

Profit/(loss) before tax (296.8) 9.1 5.2 (49.5) (332.0) (17.3) (349.2) (304.9)

Income tax for the year 2.3 (0.3) 0.9 0.3 3.2 (2.4) 0.8 (0.4)

Profit/(loss) for the year (294.5) 8.9 6.1 (49.3) (328.7) (19.7) (348.4) (305.3)

Hereof non-controlling interests - - - 1.3 1.3 - 1.3 0.0

Non current assets 967.5 386.6 217.9 270.6 1,842.6 88.7 1,931.3 1,442.8

Investments in joint ventures 52.1 16.4 0.0 0.5 69.0 61.3 130.2 129.8

Current assets 61.0 65.1 2.3 20.5 148.9 235.1 384.0 361.2

Total assets 1,028.6 451.7 220.2 291.1 1,991.6 323.8 2,315.4 1,804.1

Liabilities 409.4 109.6 150.6 131.2 800.8 662.2 1,462.9 1,181.1

Net assets 619.2 342.1 69.6 159.9 1,190.8 (338.4) 852.4 622.9

Onshore employees, average 64 65 19 4 152 72 224 201 Crew on vessels, average 526 440 39 150 1,155 - 1,155 966

Total employees, average 590 505 58 154 1,307 72 1,379 1,167

Profit margin (67.4)% 4.9% 26.7% (67.0)% (37.2)% N/A (37.9)% (41.6)%

Return on invested capital (24.5)% 2.7% 4.8% (15.3)% (13.5)% N/A (13.5)% (17.1)%

Investments in vessels etc. (CAPEX) 104.1 11.0 6.9 67.6 189.8 0.1 189.9 115.3

Invested capital - Year end 995.1 396.4 212.5 279.2 1,883.2 76.6 1,959.9 1,468.2

Invested capital - Average 1,108.3 408.3 334.2 274.8 2,125.6 26.5 2,152.1 1,543.1

The reportable segments in the J. Lauritzen Group consist of the business units Lauritzen Bulkers (bulk carriers), Lauritzen Kosan (gas

carriers), and the discontinued operations Lauritzen Offshore (shuttle tankers) and Lauritzen Tankers (product tankers). The four reportable

segments are identical with how JL has organized its business. Each business unit is operated independently as each business unit services

different customers and employs different types of vessels.

Due to the discontinued operation of Lauritzen Offshore (shuttle tankers), the investment in Axis Offshore classified under Investments in

joint ventures has been accounted for under Other/Unallocated retrospectively in the segment information.

The revenue reported represents revenue from external customers. There were no inter-segment sales in 2013 or 2012.

The accounting policies of the reportable segments are the same as described for the Group in note 24. Unallocated items inlude Group

administration costs, finance costs and corporate services not allocated to the business units as well as financial assets and financial liabilities

not allocated to business units. Other include strategic investment in Axis Offshore. None of JL's business are limited to specific geographical

area of the world and thus no geographical information is relevant or available.

As JL is not reliant on any single major customer, no customer information is given.

Discontinuing operations:

LauritzenBulkers

LauritzenKosan

Total reportablesegments

Other/Un-allocated

TotalGroup

LauritzenTankers

Total Group

continuing Lauritzen

Offshore*)


NOTE 3 STAFF COSTS, OFFICE & FLEET

USD '000 2013 2012

Staff costs onshore employees:(Included in "Administrative costs")Salaries 27,712 29,322 Pensions (defined contribution plan) 2,800 2,818 Social security 426 410 Contract labour 131 97

31,070 32,647 Hereof related to discontinued operations:Lauritzen Tankers 620 666 Lauritzen Offshore 1,109 2,900

Total continuing operations 29,341 29,081

Staff costs, crew on vessels:(Included in "Operating costs of vessels")Salaries 62,581 65,512 Pensions (defined contribution plan) 128 188 Social security 151 243

62,861 65,944 Hereof related to discontinued operations:Lauritzen Tankers 11,812 9,776 Lauritzen Offshore 3,021 6,684 Total continuing operations 48,028 49,485

Total staff costs: 93,931 98,591 Hereof related to discontinued operations:Lauritzen Tankers 12,432 10,442 Lauritzen Offshore 4,130 9,584 Total continuing operations 77,368 78,565

Average number of employees:Onshore employees 220 224 Crew on vessels 1,134 1,155 Average number of employees, total 1,354 1,379

Number of employees at year-end:Onshore employees 216 225 Crew on vessels 1,082 1,116 Number of employees at year-end, total 1,298 1,341

Remuneration to J. Lauritzen A/S'Exec. Mngt - salaries 2,469 3,373 CEO Jan Kastrup Nielsen 1,277 1,002

CFO Birgit Aagaard-Svendsen 941 912

Former CEO Torben Janholt 251 1,459

Exec. Mngt - Retention bonus 487 121 CEO Jan Kastrup Nielsen 224 -


Former CEO Torben Janholt - -

Board of Directors 556 548

3,512 4,042

Remuneration to Executive Management consists of a fixed andvariable compensation. No variable compensation has been paid in2012 and 2013. In addition hereto Executive Management has beenawarded a retention bonus subject to individual dates of resignation.

NOTE 5 DEPRECIATIONS & WRITE-DOWNS

USD '000 2013 2012

Vessels (251,713) (222,630) Vessels under construction (10,490) (24,681) Land and buildings (87) (126) Machinery and equipment (2,193) (2,521)

(264,484) (249,958)

Hereof related to discontinued operations:Lauritzen Tankers (29,315) (55,264) Lauritzen Offshore (38,767) (16,797) Total continuing operations (196,402) (177,898)

NOTE 4 FEES TO AUDITORS

USD '000 2013 2012

Total fees to elected auditors 565 588

Specified as follows:Statutory audit 495 529 Tax advisory services 35 36 Fee for other services 35 23

NOTE 6 FINANCIAL INCOME

USD '000 2013 2012

Interest income, bank deposits 511 1,781 Other interest income 201 1,153 Currency exchange gains and losses, net 10,301 10,269 Dividends received on shares available for sale 632 495 Interest on financial instr. at FV through P&L 26 52 Firm commitments under FV hedge accounting 3,988 2,147 Derivatives, FV hedge of firm commitments (3,988) (2,147)

Financial income 11,671 13,749

Hereof related to discontinued operations:Lauritzen Tankers - - Lauritzen Offshore - -

Total continuing operations 11,671 13,749

NOTE 7 FINANCIAL EXPENSES

USD '000 2013 2012

Interest expenses on loans (61,031) (65,845) Other financial expenses (7,411) (2,363) Financial instruments at FV through P&L, net (2,983) (4,992) Financial expenses (71,425) (73,201)

Hereof related to discontinued operations:Lauritzen Tankers (16,278) (7,561) Lauritzen Offshore (12,727) (10,844) Total continuing operations (42,420) (54,796)


NOTE 8 TAX

USD '000 2013 2012

Tax in the Income Statement consist of:Current tax 270 2,771 Deferred tax (357) (1,988)

Income tax (88) 783

Hereof related to discontinued operations:

Lauritzen Tankers 301 265 Lauritzen Offshore (525) 906

Total continuing operations 137 (389)

Tax on the profit is specified as follows:Calculated 25% of result before tax 71,057 87,308 Adjustment in foreign companies deviating from 25% tax 217 (532) Tax effect of:Tonnage tax (72,522) (83,491) Non-taxable items 3,148 4,080 Adjustments previous year 697 (30) Share of profit joint ventures (2,685) (6,551)

(88) 783

Effective tax percent 0% 0%

Deferred tax on the Balance Sheet:Deferred tax 1 January 655 2,707 Translation adj. in foreign operations - (65) Tax on profit (357) (1,988)

Deferred tax 31 December 297 655

Deferred tax concerns:Taxable losses carried forward 297 655

297 655

Corporate tax (receivable)/payable can be specified as follows:Balance 1 January (1,117) (833) Exchange rate adjustments (72) (31) Paid during the year 3,410 2,517 Provision for the year 427 (2,801) Adjustment to prior years (697) 30

1,952 (1,117)

Certain group companies are jointly taxed with subsidiaries of the Lauritzen Foundation, the sole owner of JL.

Provision for income tax for the year includes estimates ofnon-deductible finance expenses under the interest ceiling rules aswell as estimates on the effect of joint taxation contribution.

JL has ongoing discussions with the Danish tax authoritiesregarding the principles for calculating non-deductible financeexpenses under the interest ceiling rules and EBIT rules for 2009and onwards. The outcome ot the discussion is not expected to havematerial effect on recognised tax.

In 2005 the Danish based companies of the JL Group entered theDanish tonnage taxation system, the adoption of which is bindinguntil at least 2014. JL does not expect to exit the tonnage taxation andthus no deferred tax provision has been made on the assets orliabilities effected by the Danish tonnage taxation system. If, however,JL should leave the Danish tonnage taxation system there could be adeferred tax liability of up to a maximum of USD 7m. In excess ofdeferred tax assets recognised as specified above, the group hasdeductible unused tax losses of USD 65m at year-end 2013.

NOTE 8 TAX

USD '000 2013 2012

Tax in the Income Statement consist of:Current tax 270 2,771 Deferred tax (357) (1,988)

Income tax (88) 783

Hereof related to discontinued operations:

Lauritzen Tankers 301 265 Lauritzen Offshore (525) 906

Total continuing operations 137 (389)

Tax on the profit is specified as follows:Calculated 25% of result before tax 71,057 87,308 Adjustment in foreign companies deviating from 25% tax 217 (532) Tax effect of:Tonnage tax (72,522) (83,491) Non-taxable items 3,148 4,080 Adjustments previous year 697 (30) Share of profit joint ventures (2,685) (6,551)

(88) 783


Deferred tax on the Balance Sheet:Deferred tax 1 January 655 2,707 Translation adj. in foreign operations - (65) Tax on profit (357) (1,988)



297 655

Corporate tax (receivable)/payable can be specified as follows:Balance 1 January (1,117) (833) Exchange rate adjustments (72) (31) Paid during the year 3,410 2,517 Provision for the year 427 (2,801) Adjustment to prior years (697) 30

1,952 (1,117)

Certain group companies are jointly taxed with subsidiaries of the Lauritzen Foundation, the sole owner of JL.



In 2005 the Danish based companies of the JL Group entered theDanish tonnage taxation system, the adoption of which is bindinguntil at least 2014. JL does not expect to exit the tonnage taxation andthus no deferred tax provision has been made on the assets orliabilities effected by the Danish tonnage taxation system. If, however,JL should leave the Danish tonnage taxation system there could be adeferred tax liability of up to a maximum of USD 7m. In excess ofdeferred tax assets recognised as specified above, the group hasdeductible unused tax losses of USD 65m at year-end 2013.


NOTE 9 VESSELS, PROPERTY & EQUIPMENT

USD '000

2013

Cost as at 1 January 2,180,658 73,894 3,053 19,480 2,277,085

Exchange rate adjustments 274 - 20 (21) 273

Additions 11,125 98,042 - 17 109,185

Transferred from vessels under construction 87,757 (87,757) - - 0

Disposals (24,960) (45,356) - (1,078) (71,394)

Transferred to assets held for sale (note 18) (740,959) (38,823) - - (779,782)

Cost as at 31 December 1,513,895 - 3,074 18,398 1,535,366

Depreciation and write-down as at 1 January (478,745) (34,829) (491) (10,570) (524,636)

Exchange rate adjustments (96) - 9 19 (68)

Transferred from vessels under construction (20,796) 20,796 - - -

Depreciation (78,939) - (87) (2,193) (81,219)

Write down (188,668) (13,579) - - (202,246)

Reversal of write down 15,893 3,088 - - 18,981

Disposals 19,930 10,820 - 1,050 31,800 Transferred to assets held for sale (note 18) 238,651 13,704 - - 252,354

Depreciation and write-down as at 31 December (492,769) - (570) (11,695) (505,034)

Balance as at 31 December 1,021,126 - 2,504 6,703 1,030,333

2012

Cost as at 1 January 2,266,757 255,436 3,399 19,301 2,544,892

Exchange rate adjustments in foreign companies 283 - (4) (24) 255

Additions 8,540 181,090 - 225 189,855

Transferred from vessels under construction 362,632 (362,632) - - -

Disposals (200,049) - - (22) (200,071)

Disposals, loss of control of subsidiaries (257,505) - (341) - (257,846)

Cost as at 31 December 2,180,658 73,894 3,053 19,480 2,277,085

Depreciation and write-down as at 1 January (298,074) (23,490) (460) (8,027) (330,051)

Exchange rate adjustments in foreign companies (249) - 2 (22) (269)

Transferred from vessels under construction (13,342) 13,342 - - -

Depreciation (98,600) - (126) (2,521) (101,247)

Write down (124,030) (24,681) - - (148,711)

Disposals 25,775 - - - 25,775

Disposals, loss of control of subsidiaries 29,775 - 92 - 29,867

Depreciation and write-down as at 31 December (478,745) (34,829) (491) (10,570) (524,636)

Balance as at 31 December 1,701,913 39,065 2,562 8,909 1,752,449

Vessels

Vessels under

constructionLand &

buildings

Machinery,tools and

equipment Total


NOTE 10 INVESTMENTS IN JOINT VENTURES

USD '000 2013 2012

Cost as at 1 January 130,579 68,682 Additions during the year 1,720 65,055 Capital reduction - - Disposal during the year (28,093) (3,158)

Cost as at 31 December 104,206 130,579

Revaluation as at 1 January 20,911 49,224 Exchange rate adjustments (24) (16) Dividends received (554) (5,600) Revaluations during the year (10,740) (26,203) Disposal during the year 8,531 3,505

Revaluation as at 31 December 18,124 20,911

Write-down as at 1 January (21,243) (21,243)

Write-down as at 31 December (21,243) (21,243)

Balance as at 31 December 101,087 130,247

Key figures for joint ventures, in total: 2013 2012

Revenue 194,224 135,720 Net profit (29,289) (22,045) Assets 749,040 805,132 Liabilities 413,858 449,365

Group's share of net profit (10,234) (30,071) Internal profit/loss (506) 3,868 Net profit in joint ventures (10,740) (26,203)

Hereof related to discontinued operations:Lauritzen Tankers - (1,063) Lauritzen Offshore - - Total continuing operations (10,740) (25,139)

Group's share of equity 104,039 133,178 Internal profit/loss (2,952) (2,931)

101,087 130,247

NOTE 11 OTHER RECEIVABLES

USD '000 2013 2012

Specification of other receivablesBank deposits pledged as security for debt - 34,180 Other short-term receivables 26,334 28,857 Total other receivables 26,334 63,037

NOTE 13 PROVISIONS

USD '000 2013 2012

Provisions as at 1 January 18 1,037 Used during the year (18) (920) Reversal of provisions during the year - (99)

Provisions as at 31 December - 18

NOTE 12 EQUITY

The authorized and issued share capital of J. Lauritzen A/Samount to DKK 440m (2012: 430m) with 1 share (2012: 29shares) of DKK 50,000 or multiples of this.

In 2013, the Lauritzen Foundation decided to convert twosubordinated loans of DKK 903m (equivalent to USD 155.5m) intoequity.

Capital management

The general guidelines on capital approved by the Board of Directors include minimum solvency ratio of 35-40% for the Group.

JL pursues a prudent dividend policy that secures the necessary liquidity and supports JL’s ability to grow its business organically.

At the end of 2012 and 2013 no proposed dividends were included in retained earnings.


NOTE 14 LONG-TERM BORROWINGS

USD '000 <1 year 1 - 2 year 2 - 3 year 3 - 4 year 4 - 5 year > 5 year Total

Issued bonds, net *) - (71,739) - (80,193) - - (151,932)

Mortgage on vessels *) (62,455) (180,259) (237,094) (78,958) (15,733) (66,679) (641,178) Other debt (993) (636) - - - - (1,629)

Total long-term borrowings (63,447) (252,634) (237,094) (159,151) (15,733) (66,679) (794,739)

(266,719) - - - - - (266,719)

Total, incl. liabilities ass. with assets held for sale (330,167) (252,634) (237,094) (159,151) (15,733) (66,679) (1,061,458)

USD '000 <1 year 1 - 2 year 2 - 3 year 3 - 4 year 4 - 5 year > 5 year Total

Issued bonds *) - - (124,691) - (87,845) - (212,536)

Mortgage on vessels *) (89,678) (118,714) (199,282) (278,367) (107,191) (207,479) (1,000,712)

Subordinated loan **) - (109,361) (50,221) - - - (159,582)

Other debt (709) (949) (608) - - - (2,267)

Total long-term borrowings (90,387) (229,024) (374,802) (278,367) (195,036) (207,479) (1,375,096)

*) Please refer to pp 44-47 for description of financial covenants.

**) The subordinated loan of DKK (903)m (equivalent to USD (159.6)m at year-end 2012) was converted to equity as per 2 April 2013.

At the date of the conversion to equity on 2 April 2013 the DKK (903)m was equivalent to USD (155.5)m.

USD '000 CurrencyFixed/

VariableInterest rate

fixation

Average effective

interest rate, excl.

hedging

Average effective

interest rate incl. hedging Book value

2013Mortgage on vessels USD Variable 3-6 month 2.02% 3.56% (577,709)

Mortgage on vessels JPY Variable 6 month 2.31% 2.71% (63,469)

Issued bonds NOK Fix./Var. 2-4 years 10.20% 9.04% (151,932)

Other debt DKK Fixed 1-2 years 4.61% 4.61% (1,629)

Total 3.60% 4.55% (794,739)

2012

Mortgage on vessels USD Variable 3-6 month 2.30% 3.46% (914,633)


Subordinated loan DKK Variable 12 month 4.16% 4.16% (159,582)

Issued bonds NOK Fix./Var. 3-5 years 10.35% 9.24% (212,536)

Other debt DKK Fixed 2-3 years 4.73% 4.73% (2,267)

Total 3.20% 4.38% (1,375,096)

2013

2012

Mortgage on vessels classified as "Liabilities associated with assets held for sale", ref note 18.


NOTE 14 LONG-TERM BORROWINGS (continued)Currency exposure on non-USD long-term borrowings, net of hedging:

USD '000 Book value

Currency hedging

derivaties

Net currency

exposure on loan

JPY (63,469) 14,000 (49,469)

DKK (1,629) - (1,629)

NOK (151,932) 151,932 -

Total (217,030) 165,932 (51,098)

USD '000 Book value

Currency hedging

derivaties and deposits

Net currency

exposure on loan

JPY (86,078) 14,000 (72,078)

DKK*) (161,849) 148,614 (13,236)

NOK (212,536) 212,536 (0)

Total (460,463) 375,149 (85,314)

*) DKK deposits used to limit currency risk on DKK loan.

Interest exposure on long-term borrowings to floating interest rates:

USD '000 2013 2012

Total long-term borrowings (794,739) (1,375,096)

Hereof fixed to maturity (73,368) (126,958)

Floating interest borrowings (721,371) (1,248,139)

Interest rate swaps floating to fixed, nominal 390,483 679,235

Exposure to floating interest rates at year end (330,888) (568,904)

2013

2012

note 15 financiaL inStrumentS anD financiaL riSKS

Jl is through its operation, investment and financing exposed to cer-tain financial risks. the financial risks relate to and defined as such:

financial risks are regularly assessed and prioritized based on how likely they are to occur and their potential impact. As defined by Jl’s board of directors, overall policies and objectives for financial risks were generally unchanged from 2012.

liQuidity RiSKthe purpose of managing liquidity risk is to ensure sufficient capital for day-to-day operations and financial commitments also in distressed situ-ations. cash requirements are regularly assessed in various scenarios and stress tested.

liquidity is continuously monitored and assessed based on forecasts for the current year and years to come, outstanding capital expenditure, pro-ceeds from committed and expected credit facilities and future liabilities from existing and expected future credit facilities. this is done to ensure that liquidity is adequate at any times.

At year-end 2013 Jl’s cash and cash equivalents amounted to uSd 154m. in addition hereto Jl has an unsecured overdraft facility of dKK 100m for multi-currency short-term financing needs. Jl has no refinanc-ing needs until 2015.

Jl’s loan portfolio consists of traditional mortgage-backed ship finance (approximately 61% of total facilities), ecA (export credit Agency) backed agreements (approximately 20% of total facilities) as well as unsecured (non-mortgage) corporate bonds (approximately 19% of total facilities). According to Jl’s financial Strategy, no financial counterparty may ac-count for more than 25% of total loan facilities.

With some banks, Jl has agreed to make margin payments if some pre-defined financial limits in loan agreements are met. At year-end 2013, Jl had placed no margin payments. there were no breaches of credit facilities in 2013 and 2012.

the general guidelines on liquidity approved by the board of directors include minimum liquidity and requirement for external funding to be drawn on or post delivery of vessels.

•The risk that JL is not able to meet its future cash flow needsLiquidity risk

•The risk of losses in financial positions arising from movements in market prices to which JL is exposed

Market risk

•The risk of incurring a financial loss if a customer or counterparty fails to fulfill its contractual obligations

Credit risk


USD '000

2013

Interest-bearing debt *) (794,739) (884,693) (94,397) (277,762) (253,186) (168,676) (18,511) (72,162) Debt associated with assets held for sale (266,719) (266,719) (266,719) - - - - - Trade and other payables (34,312) (34,312) (34,312) - - - - - Derivatives, liabilities at fair value (38,223) (38,223) (15,097) (11,342) (7,223) (3,421) (786) (353) Total at 31 December 2013 (1,133,993) (1,223,947) (410,525) (289,104) (260,409) (172,097) (19,297) (72,515)

2012

Interest bearing debt *) (1,375,096) (1,575,328) (145,553) (279,486) (412,810) (301,645) (210,400) (225,434) Trade payable and other payables (49,335) (49,335) (49,335) - - - - -Derivative, liabilities at fair value (38,128) (38,128) (12,542) (9,991) (7,076) (4,274) (2,326) (1,919) Total at 31 December 2012 (1,462,560) (1,662,791) (207,431) (289,477) (419,886) (305,919) (212,726) (227,353)

Carrying amount

Contractual cash flows <1 year 4-5 years >5 years1-2 years 2-3 years 3-4 years

*) Contractual cash flows include undiscounted interest payments based on interest levels at year end

marKet riSKSmarket risks are risks of losses in financial positions arising from movements in market prices to which Jl is exposed through financial instruments. market risks are regularly assessed and prioritized based on how likely they are to occur and their potential impact. based on this assessment the following market risks are considered significant for Jl:

to a minor extent Jl is exposed to other marked risks that are con-sidered less significant. these include risks on financial instruments related to share prices, oil prices and freight rates (ffA). Jl use deriva-tives to hedge oil and freight rates in a small scope. the fair value of these instruments is disclosed in the table “derivative financial instru-ments”.

below is a description of how Jl manages the significant market risks and perform sensitivity analysis of the exposure.

Sensitivity information is calculated at balance sheet date and com-prises only sensitivity relating to financial instruments, so the amounts disclosed do not necessarily give a complete picture of Jl’s risks relat-ing to the different categories of risk.

currency riskJl’s operating and reporting currency is uSd and thus all amounts are recorded and reported in uSd. matching income and expenses and assets and liabilities minimises the net currency risk, leaving net posi-tions to be focused on.

Jl’s policy is to use derivative instruments to hedge the currency risks relating to net non-uSd cash flows from operating activities, invest-ments and financing. the general hedging policy is approved by the board of directors.

the hedging strategy for operating costs is based on estimated annual net non-uSd cash flows, i.e. 12 month rolling cash flow. Jl’s policy is to use forward currency contracts to provide cover for at least 25% or the equivalent of three months forward. Jl may hedge up to 100% net 12 month rolling non-uSd operational cash flow to secure minimum budget exchange rates. hedge accounting is not applied to forward contracts relating to future costs in non-uSd currencies.

According to the hedging strategy for non-uSd long-term borrow-ings, Jpy may be hedged up to 100% if the forward rate is viewed advantageous. Regarding the bond issues denominated in noK the full amount was swapped to uSd on the dates of issue. cash flow hedge accounting applies for the uSd/noK swap.

please refer to note 14 for further disclosure of Jl’s currency exposure of long-term borrowings and hedging hereof.

Currency risk - Operational cash flow

•Currency risk from operations is related non-USD costs where DKK expenses are the largest contributor.

Currency risk - Investments

•Relates to the risk of contractual commitments in non-USD. At year 2013 JL had no commitments on newbuildings.

Currency risk - Financing

•Relates to long-term borrowing in non-USD. JL had at year-end long-term borrowings denominated in NOK, DKK and JPY, ref note 14.

Interest rates risk - Long-term borrowings

•42% of JL's long-term borrowings are exposed to floating interest rate.

below is a maturity analysis of Jl’s financial liabilities at year-end 2013.A maturity analysis of operational lease obligations is included in note 19.


Sensitivity of currency riskto measure currency risk in accordance with ifRS 7, sensitivity is cal-culated as the change in fair value of future cash flows from financial instruments as a result of fluctuations in exchange rates on balance sheet date. Sensitivity to fluctuations in non-uSd currencies at bal-ance sheet date based (other things being equal and after tax) on a 10% decrease in currency translation rates against uSd (assuming 100% effectiveness) would result in a net profit/(loss) of uSd 2.1m (2012: 5.0m) and affect equity by uSd (0.5)m (2012: 2.5m). the effect of a 10% increase in the currency translation rates against uSd would have a corresponding inverse effect.

interest rate riskJl’s policy is to hedge risks associated with changes in interest rates to limit the negative financial effects of adverse changes in interest rates by converting variable interest rates to fixed interest rates. net interest rate risk may be hedged via forward rate agreements, interest rate swaps and related instruments if assessed as advantageous. the general hedging policy is approved by the board of directors.

Jl uses cash flow hedge accounting in respect of interest rate deriva-tives. these are recycled in the income statement over the term of the hedged loans. please refer to note 14 for disclosure of Jl’s exposure to floating interest rates at balance sheet date.

Sensitivity of interest rate riskSensitivity of interest fluctuations is calculated as the hypothetic effect on net profit and equity as a result of fluctuations in interest rates at balance sheet date.

the sensitivity analysis includes financial instruments recognized at fair value for which the calculated effect on equity represents an im-mediate fair value change from a thought change in interest rates and financial instruments with variable interest recognized at amortized costs for which the calculated effect represents a one year effect on net profit and equity based on balances at year end.

Assumptions for the sensitivity analysis:All hedging instruments assumed 100% effectivechanges in interest rates are global and thus the impact on the fair value of forward currency contracts and similar derivatives is not con-sideredShares available for sale and shares at fair value through profit or loss are not included in sensitivity calculations due to inability to reliably measure the sensitivity of share prices to interest rate changes.

on financial instruments at fair value the calculated effect after tax based on a 1% decrease in interest rates would affect profit/loss by uSd (8.1)m (2012: (6.8)m) and equity by uSd (10.5)m (2012: uSd (11.9)m). on financial instruments with variable interest recognized at amortized costs profit/loss and equity would be effect by uSd 5.7m (2012: 9.8m).

A 1% interest rate increase would have a corresponding inverse effect.

cRedit RiSKcredit risk is the risk of incurring a financial loss if a customer or coun-terparty fails to fulfill its contractual obligations.

Jl assesses customers for creditworthiness based on historical trading and payment records, input from rating agencies as well as industry knowledge and customer reputation. further, customers and counter-parties are accepted only when fulfilling general requirements. in cer-tain cases contracts are guaranteed by parent companies or similar.

Very large contracts and very long-term commitments are reviewed and approved by the executive management and in some cases by the board of directors.

the risks relating to financial counterparties, financial instruments, bonds and cash funds are minimized by trading only with financial institutions with a long-term investment grade credit rating from moody’s and by defined limits on deposits on each financial partner.

in 2013 no provision were made for losses on trade receivables (2012: uSd 0.2m). At year-end 2013, Jl did not have any further overdue trade receivables (2012: uSd 0m).

At year-end 2013, the majority of our financial counterparties had credit ratings of or above baa2.

Jl’s exposure to credit risks at balance sheet date can be illustrated as follows:

the maximum credit risk corresponds to the carrying value of the in-dividual assets.

USD ‘000 2013 2012

Other long-term receivables 9,821 21,985 Trade receivables 24,925 5,250 Financial derivatives 3,015 11,000 Other short-term receivables 26,334 28,857 Cash and bank deposits 154,145 267,000 Maximum credit risk 218,240 334,092


USD mCash flow /Fair value hedge

Nominal, USDm

Duration, month

Recognised on equity Fair value

Nominal, USDm

Duration, month


Hedge accouning applied:Currency: USD/JPY Fair value - - - - 32.1 0-12 - (0.3) Currency: USD/NOK Cash flow 206.0 17-46 (2.4) (12.1) 212.5 29-58 (0.6) 8.5 Interest rate swaps Cash flow 390.5 9-119 (16.1) (17.2) 542.0 21-131 (31.6) (31.6) Terminated interest rate swap Cash flow N/A N/A 0.4 N/A N/A N/A 0.6 N/ATotal (18.0) (29.2) (31.7) (23.4)

Hedge accouning not applied:Currency: USD/NOK N/A (47.6) 0-2 - (0.5) (2.1) 0-1 - (0.2) Currency: USD/EUR N/A - N/A - - 7.5 0-2 - 0.4 Currency: USD/DKK N/A 29.0 0-2 - 0.8 27.0 0-1 - 0.7 Currency: USD/JPY N/A 14.0 0-2 - (1.1) 2.8 0-1 - 0.2 Interest rate swaps N/A 124.5 52-75 - (1.8) - N/A - - FFA's and oil contracts N/A N/A N/A - 0.9 N/A N/A - 0.2 Interest indexswap N/A 34.5 27 - (4.4) 38.2 39 - (5.0) Total - (5.9) - (3.7)

Total derivative financial instruments (35.2) (27.1) Presented in the financial statement as:Derivative financial instruments, assets 3.0 11.0 Non-current derivative financial instruments, liabilities (23.1) (12.1) Derivative financial instruments, liabilities (15.1) (26.0)

2013 2012

USD ‘000 2013 2012

Fin. assets at FV through P/L *) 14,106 11,157

Loans and receivables**) 215,225 357,272

Fin. assets available for sale **) 43,427 26,010

Fin. liabilities - at FV through P/L *) (38,223) (38,128)

Fin. liabilities - at amortized cost**) (829,050) (1,424,432)

USD ‘000 2013 2012

Book value at 1 January 26,010 24,788 Purchase during the year 15,973 404 Fair value adjustment 1,444 818 Book value at 31 December 43,427 26,010

NOTE 16 ADJUSTMENTS TO CASH FLOW

USD '000 2013 2012

(Profit)/loss on sale of vessels and other assets 6,184 94,811 (Profit)/loss on sale of subsidiaries - 7,545 Changes in provisions (18) (1,019)

6,166 101,337

NOTE 17 CHANGE IN WORKING CAPITAL

USD '000 2013 2012

Change in bunkers 4,491 (5,543) Change in receivables (2,979) 991 Change in payables (14,604) 8,458

(13,092) 3,906

DeriVatiVe financiaL inStrumentSJl’s policy is to use derivative financial instruments to hedge financial risks. At year end Jl held the following derivatives:

categorieS of financiaL aSSetS anD LiaBiLitieSthe following categories of financial assets and liabilities are recog-nized in the balance sheet:

*) figure includes financial derivatives designated for hedge accounting

**) Amounts recognized for financial asset and liabilities at amortized cost do not differ materi-

ally from their fair value with the exception of issued bonds. fair value of issued bonds amount

to uSd 159.8m whereas the carrying amount totalled uSd 151.9m.

fair value hierarchy With the exception of listed bonds and shares of uSd 10.0m (2012: uSd 0.2m) (level 1) and shares available for sale of uSd 43.4m (2012: uSd 26.0m) (level 3), all financial instruments are stated at fair value on the basis of observable market prices (level 2), directly as prices or indirectly derived from prices.

in 2013 fair value adjustment of level 3 financial instruments amount-ed to uSd 1.4m recognised in other comprehensive income (2012: 0.8m). the fair value adjustment relate to unlisted shares for which a valuation technique has been used to determine fair value.

material inputs in the valuation comprise equity value and expected Roe compared to Jl’s return requirements. financial instruments cat-egorized at level 3 have developed as follows:


NOTE 18 ASSETS HELD FOR SALE AND DISCONTINUED OPERATION

Assets held for sale 2013 2012

Assets held for sale that do not qualify for discontinued operation: - Two bulk carriers 53,148

Assets held for sale that qualify for discontinued operation:Lauritzen Tankers 219,000 - Lauritzen Offshore Shuttle tankers 179,220 - Total assets held for sale 451,368 -

Labilities assoiciated with assets held for sale, qualifying for discontinued operations 2013 2012

Lauritzen Tankers 142,259 - Lauritzen Offshore Shuttle tankers 124,460 - Total liabilities assoiciated with assets held for sale 266,719 -

Profit/(loss) from discontinued operations 2013 2012

Lauritzen Tankers (22,776) (49,280) Lauritzen Offshore Shuttle tankers (25,059) 6,113 Total profit/(loss) from discontinued operations (47,835) (43,167)

Assets held for sale that do not qualify for discontinued operationsAt year-end 2013 the consolidated statement of financial position includes assets held for sale of USD 53m (2012: nil) that do notqualify for discontinued operation. The assets held for sale relate to two bulk carriers sold with delivery in 2014. The two vessels aremeasured at the lower of their previously carrying amount (USD 53m) and net sales price (USD 59m). Delivery of the vessels willtherefore affect profit/(loss) in 2014 by USD 5m.

Assets held for sale that qualify for discontinued operationsAt year-end 2013 the consolidated statement of financial position includes assets held for sale of USD 398m (2012: nil) that qualifyfor discontinued operation. The assets held for sale relate to Lauritzen Tankers (USD 219m) and Lauritzen Offshore shuttle tankers(USD 179m). Liabilities associated with the assets held for sale amounts to USD 267m of which USD 142m relates to Lauritzen Tankersand USD 124m relates to Lauritzen Offshore shuttle tankers.

I) Lauritzen TankersAs stated in announcement to Oslo Børs no. 6/2013 dated 15 August 2013, a strategic decision had been taken to trim our balance sheet bygradual exit of the product tanker segment. The conditions for classifying Lauritzen Tankers "as held for sale" and "discontinued operation"were fulfilled as from the end of 3Q 2013 as the wholly-owned fleet, cf. announcement to Olso Børs no. 7/2013 dated 22 October 2013 wasreported sold with delivery before the end of February 2014.

The results of Lauritzen Tankers are presented as discontinued operations in the Consolidated Income Statement for all periodspresented. The Income statement for the discontinued operations can be presented as follows:

USD '000 2013 2012

Revenue 81,046 61,047 Other operating income 274 548 Costs (60,242) (47,253) EBITDA 21,078 14,342 Depreciations (7,168) (9,714) Impairments (22,147) (45,550) Share of result in joint ventures - (1,063) Finance net (16,278) (7,561) Profit/(loss) on the remeasurement to fair value less costs to sell 1,438 - Pretax profit/(loss) from discontinued operations (23,077) (49,546) Income taxes 301 265 Profit/(loss) on discontinued operations, net of taxes (22,776) (49,280)

Attributable to:The J. Lauritzen Group (23,073) (50,577) Non-controlling interests 297 1,296

(22,776) (49,280)


NOTE 18 ASSETS HELD FOR SALE AND DISCONTINUED OPERATION (continued)

The assets and liabilities of Lauritzen Tankers were initially classified as held for sale in the Consolidated Statements of FinancialPosition as per 30 September 2013 and measured at the lower of their previous carrying amount of USD 295m and fair value less costs to sellcorresponding to the concluded sales agreement of USD 305m less JL's costs to finalize a vessel under construction, estimated toUSD 10m, net USD 295m. The assets held for sale at 30 September 2013 constisted of nine product tankers and one product tanker underconstruction. The carrying amounts of the major classes of assets and liabilities of Lauritzen Tankers and development from 30 September2013 to 31 December 2013 were as follows:

USD '000 2013

295,060 Capitalized during the fourth quarter on assets under construction 8,502 Adj. to profit/(loss) related to estimated owners expenses on vessel under construction 1,438 Three vessels delivered to new owners during fourth quarter (86,000) Vessels held for sale as at 31 December 2013 219,000

Assets held for sale 219,000

Mortgage debt transferred to assets held for sale at 30 September 2013 179,377 Reclassified to long-term borrowing 490 Repayment of mortgage during fourth quarter (32,343) Ordinary installments during fourth quarter (5,265) Mortgage debt associated with assets held for sale as at 31 December 2013 142,259

Liabilities associated with assets held for sale 142,259 The sales transaction does not include working capital items which are to be settled by JL and therefore not classified as held for sale.

During Q4 of 2013, a product tanker under construction was delivered from the yard and concurrenty delivered to the buyers. The costs tofinalise the the vessel amounted to USD 10.4m compared to estimated USD 10.0m resulting in an adjustment to profit/(loss) of USD (0.4m). Inaddition, two vessels were delivered to the buyers before year-end leaving seven vessels scheduled to be delivered before end ofFebruary 2014. The carrying amount of the remaining seven vessels amounts to USD 219m, corresponding to the agreed sales price, andthus 2014 results will not be affected by the delivery of the seven vessels.

Mortgage debt of a total of USD 37.1m related to the vessels were paid in ordinary installments and repayments during Q4 of 2013. Theremaining debt of 142.3m is expected to be repaid concurrently with the delivery of the remaining vessels.

II) Lauritzen Offshore Shuttle tankersTowards the end of 2013, JL received and an offer to sell its fleet of three shuttle tankers, and as per the reporting date acompleted sale, at a price above the carrying amount of the vessels, was considered highly probable. Thus the three vessels wereclassified as held for sale at 31 December 2013, measured at previous carrying amount of USD 179m. Subject to the agreement to sell waslifted on January 15 2014 and immediately reported to Oslo Bors cf. announcement no 1/2014. The deal is subject to buyers’ inspection ofthe three vessels and to current charterers’ approval of the transfer of ownership of the vessels

Lauritzen Offshore comprises the operation of the three shuttle tankers and investment in the associated company Axis Offshore. Thesale of the shuttle tankers causes a closing of the operating segment Lauritzen Offshore as the shuttle tanker operation ispresented as discontinued operation and the investment in Axis Offshore accounted for under Other/Unallocated items in note 2Operating Segments retrospectively from 2012.

Vessels and vessels under constr. classified as assets held for sale at 30 September 2013


NOTE 18 ASSETS HELD FOR SALE AND DISCONTINUED OPERATION (continued)

The results of Lauritzen Offshore shuttle tankers are presented as discontinued operations in the Consolidated Income Statement for allperiods presented. The Income statement for the discontinued operations can be presented as follows:

USD '000 2013 2012

Revenue 36,188 60,112 Other operating income 606 1,000 Costs (9,834) (20,685) EBITDA 26,960 40,427 Depreciations (10,614) (16,795) Impairments (28,153) - Profit/(loss) on sale of subsidiaries - (7,545) Finance, net (12,727) (10,844) Profit/(loss) on the measurement to fair value less costs to sell - - Pretax profit/(loss) from discontinued operations (24,533) 5,243 Income taxes (525) 870 Profit/(loss) on discontinued operations, net of taxes (25,059) 6,113

Attributable to:The J. Lauritzen Group (25,059) 6,113 Non-controlling interests - -

(25,059) 6,113

The assets and liabilities of Lauritzen Offshore Shuttle tankers are presented as held for sale in the Consolidated Statements ofFinancial Position as per 31 December 2013 and are measured at the lower of their previous carrying amount and fair value less costs to sell.The carrying amounts of the major classes of assets and liabilities of Lauritzen Offshore Shuttle tankers were as follows:

USD '000 2013 2012

Vessels 179,220 - Assets held for sale 179,220 -

Mortgage debt 124,460 - Liabilities associated with assets held for sale 124,460 -

The expected sales transaction does not include working capital items which are to be settled by JL and therefore not classified asheld for sale.

The Cash flow from Lauritzen Tankers and Lauritzen Offshore Shuttle tankers is included in the Cash Flow Statement for all periodspresented.USD '000 2013 2012

Cash flow from operating activities (19,932) 34,059 Hereof cash flow from operating activities - discontinued operations:Lauritzen Tankers (857) 6,400 Lauritzen Offshore Shuttle tankers 21,744 36,818 Cash flow from operating activities, continuing operations (40,819) (9,159)

Cash flow from investment activities 28,165 (107,914) Hereof cash flow from investment activities - discontinued operations:Lauritzen Tankers 11,601 (67,888) Lauritzen Offshore Shuttle tankers 121 19,436 Cash flow from investing activities, continuing operations 16,443 (59,462)

Cash flow from financing activities (126,125) 107,150 Hereof cash flow from financing activities - discontinued operations:Lauritzen Tankers 20,439 32,617 Lauritzen Offshore Shuttle tankers (13,040) 40,040 Cash flow from financing activities, continuing operations (133,524) 34,493


NOTE 19 OPERATING LEASES OF VESSELS

At the balance sheet date JL has the following contractually committed charter income from time charter and bareboat contracts:

2013

USDm committed

income

No. of vessels, full

year equivalents

USDm committed

income


year equivalents

USDm committed

income


year equivalents

USDm committed

income


year equivalents

USDm committed

income


year equivalents

< 1 Year 41.1 4.6 29.8 7.8 29.6 2.6 6.6 1.2 107.0 16.2 1 - 2 Year 34.0 3.0 3.4 1.0 20.1 2.0 5.8 1.0 63.3 7.0 2 - 3 Year 32.2 3.0 3.3 1.0 20.2 2.0 5.8 1.0 61.5 7.0 3 - 4 Year 31.2 3.0 3.3 1.0 20.1 2.0 0.3 0.1 55.0 6.1 4 - 5 Year 28.0 2.4 0.1 0.0 20.1 2.0 - - 48.3 4.5 > 5 Year 172.9 14.6 - - 95.7 9.5 - - 268.6 24.1 Total 339.4 - 39.9 - 205.9 - 18.4 - 603.7 -

2012< 1 Year 65.3 6.8 38.2 10.8 35.2 3.0 20.0 3.8 158.7 24.4 1 - 2 Year 57.5 5.0 4.9 1.5 29.6 2.6 8.1 1.4 100.0 10.5 2 - 3 Year 57.5 5.0 3.3 1.0 20.1 2.0 5.8 1.0 86.7 9.0 3 - 4 Year 55.7 5.0 3.3 1.0 20.2 2.0 5.8 1.0 85.0 9.0 4 - 5 Year 54.7 5.0 3.3 1.0 20.1 2.0 0.3 0.1 78.5 8.1 > 5 Year 298.4 26.8 0.1 0.0 115.8 11.5 - - 414.3 38.4 Total 589.0 - 53.2 - 241.1 - 39.9 - 923.3 -

At the balance sheet date JL has the following operational lease obligations from time charter and bareboat contracts:

2013

USDm committed obligation


year equivalents



year equivalents



year equivalents



year equivalents



year equivalents

< 1 Year 147.8 30.4 14.3 7.6 - - 7.9 1.4 170.0 39.5 1 - 2 Year 104.2 22.4 9.6 5.0 - - 5.8 1.0 119.6 28.4 2 - 3 Year 96.8 21.8 7.1 4.1 - - 5.8 1.0 109.7 26.8 3 - 4 Year 73.2 17.5 4.0 2.3 - - 0.3 0.1 77.5 19.8 4 - 5 Year 66.6 16.0 - - - - - - 66.6 16.0 > 5 Year 186.4 49.3 - - - - - - 186.4 49.3 Total 675.0 - 35.0 - - - 19.7 - 729.8 -

2012< 1 Year 187.2 33.6 14.5 7.1 - - 28.7 5.7 230.4 46.4 1 - 2 Year 116.6 20.4 7.1 3.5 - - 23.4 4.6 147.1 28.4 2 - 3 Year 67.9 11.8 2.7 1.0 - - 20.7 4.0 91.2 16.8 3 - 4 Year 44.6 7.7 0.2 0.1 - - 9.2 1.7 54.1 9.5 4 - 5 Year 26.9 5.1 - - - - 0.3 0.1 27.2 5.1 > 5 Year 116.1 22.1 - - - - - - 116.1 22.1

Total 559.4 - 24.4 - - 82.4 - 666.2 -

At year end 2013 JL had purchase option on 18 bulk carriers (2012: 8 bulk carriers).

Total

Total

Bulkers Kosan Offshore (discontinued

operation) Tankers (discontinued

operation)

Bulkers Kosan Offshore (discontinued

operation) Tankers (discontinued

operation)


NOTE 20 MORTGAGES

USD '000 2013 2012

Debt for a total of 641,178 1,000,712 is secured by mortgage in assetsat the following book values:Vessels 1,011,943 1,690,497 Cash and cash equivalents - 34,180

1,011,943 1,724,677

Debt classified as liabilities associated withassets held for sale for a total of 266,719 - is secured by mortgage in assets at the following book values:Vessels classified as held for sale 451,368 -

there have been no events after the balance sheet date that could materially affect the accounts as presented.

note 23 eVentS after tHe BaLance SHeet Date

note 24 accounting PoLicieS

J. lauritzen A/S is a private limited company with domicile in den-mark. the consolidated financial statements for the period 1 January – 31 december 2013 comprise J. lauritzen A/S and its subsidiaries (the group).

the consolidated financial statements have been prepared in accor-dance with international financial Reporting Standards (ifRS) as ad-opted by the eu and additional danish disclosure requirements for annual reports of reporting class d. in addition, the consolidated fi-nancial statements have been prepared in compliance with the inter-national financial Reporting Standards issued by the iASb.

cHange in accounting PoLicieS anD neW financiaL rePorting StanDarDSWith effective date 1 January 2013, Jl has adopted:

Amendment to iAS 1 presentation of items of other comprehensive incomeifRS 13 fair value measurementiAS 19 employee benefits (amended 2011)Amendments to ifRS 1 governments loansAmendments to ifRS 7 offsetting financial assets and financial liabili-tiesifRic 20 Stripping costs in the production phase of a surface mine.

none of these new ifRS’s and ifRic’s has affected recognition or measurement in 2013.

BaSiS of PreParation the financial statements are presented in uS dollars, rounded to the nearest thousand.

the financial statements are prepared under the historical cost con-vention, except that the following assets and liabilities are stated at their fair value: derivative financial instruments, financial instruments held for trading and financial instruments available for sale.

non-current assets and disposal groups classified as held for sale are measured at the lower of its carrying amount prior reclassification and fair value less costs to sell.

the accounting policies set out below have been applied consistently by all Jl entities and to all periods presented in these consolidated financial statements.

BaSiS of conSoLiDation the Annual Report comprises the parent company, J. lauritzen A/S, and subsidiaries in which the parent company has directly or indi-rectly the power to govern the financial and operating policies. this is normally accomplished by holding more than 50% of the voting rights. the existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether Jl has control or significant influence over another entity.

enterprises in which Jl has a significant influence, but not control are classified as associates.

NOTE 21 CONTINGENT LIABILITIES

USDm 2013 2012

Guarantees undertaken for debt in joint ventures 137 158 Max. obligation to pay in capital into joint ventures 96 80 Other guarantees 20 -

Certain claims have been raised against JL. The judgment of themanagement is that the outcome of these claims will not have anymaterial impact on JL's financial position.

JL has issued certain guarantees in connection with sale of assets, whichdoes not expect to have a material impact on JL's financial position.

NOTE 22 RELATED PARTIES

As owners of J. Lauritzen A/S, the Lauritzen Foundation and itsaffilliated companies, are related parties.

Other related parties with a significant influence of the activities of J.Lauritzen A/S is the company's Board of Directors and the ExecutiveManagement (key management personnel).

Finally, additional related parties comprise joint ventures (cf. note 10)in which J. Lauritzen has a significant influence. Subsidiaries andjoint ventures together with J. Lauritzen's shareholding are shown inthe overall group structure on page 106-107.

Transactions with related parties are conducted at arms lengthand have comprised the following income/(expenses):

USD '000 2013 2012

LF InvestmentManagement fee 205 173 Rental of office facilities (1,696) (1,649) Interest expenses on subordinated loan - (6,888)

Joint ventures and associated companiesManagement fee 2,953 2,846

There have been no other material transactions with related partiesother than those stated above.

Consideration to key management personnel is disclosed in note 3.


Jointly controlled entities and associates are recognised using the eq-uity method.

the consolidated financial Statements are prepared on the basis of the financial statements of the parent company and its subsidiaries, by combining items of a uniform nature and eliminating inter-compa-ny transactions and balances, and are based on financial statements prepared in compliance with Jl’s accounting policies.

Acquisitions, disposals and entities formed during the year are includ-ed in the financial statements during the period of Jl’s control or signif-icant influence. comparative figures are not adjusted for acquisitions. disposals or liquidations are presented as discontinued operations.

BuSineSS comBinationSon acquisition of businesses, the purchase method is applied, accord-ing to which the identifiable assets, liabilities and contingent liabilities acquired are measured at their fair values on the date of acquisition. the excess of the cost of acquisition over the fair value of Jl’s share of the identifiable assets, liabilities and contingent liabilities acquired are recorded as goodwill. if the cost of acquisition is less than the fair value of the net assets of the business acquired (negative goodwill), the difference is recognised directly in the income statement.

gains or losses from the disposal or liquidation of subsidiaries or as-sociates are stated as the difference between the proceeds from dis-posal or liquidation and the book value of the net assets at the date of disposal or liquidation. this includes any goodwill as well as any anticipated disposal or liquidation costs.

tranSLation of foreign currencieS items included in the financial statements of each of Jl’s entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). the consolidated financial statements of Jl are stated in uSd which is both Jl’s func-tional and presentation currency.

foreign currency transactions are translated into the functional cur-rency at the exchange rate of the date when initially recognised. gains and losses arising between the exchange rate of the transaction date and that of the settlement date are recognised in the income state-ment under financial items.

Receivables, payables and other monetary items in foreign currencies that have not been settled at the balance sheet date are translated at the exchange rates then prevailing. Any differences between the ex-change rates at the balance sheet date and the transaction date rates are recognised in the income statement under financial items.

the results and financial position of any Jl entity that has a functional currency different from Jl’s presentation currency are translated into the presentation currency as follows:

Assets and liabilities, including goodwill and fair value adjustments arising on consolidation are translated at the closing rates at the date of the balance sheet.

income and expenses for each income statement are translated at ex-

change rates approximating the exchange rate of the date of transac-tion date, and all resulting exchange differences are recognised as a separate component of equity.

exchange differences arising from the translation of the net investment in foreign subsidiaries, associates, joint ventures and of borrowings or other currency instruments relating to hedging such investments are recognised in other comprehensive income in the translation reserve of equity. exchange differences are released to the income statement upon disposal of the net investment.

DeriVatiVe financiaL inStrumentS anD HeDging ac-tiVitieS derivatives are recognised at fair value. positive and negative fair val-ues of derivatives are recognized in the statement of financial position as other Receivable and other payables respectively, and offsetting is made only when Jl has the right and intention to settle several deriva-tives net.

fair value hedgechanges in the fair value of derivatives designated as and qualifying for recognition as a hedge of the fair value of a recognised asset or li-ability are recognised in the income statement together with changes in the fair value of the hedged asset or liability. hedging of future cash flows relating to firm commitments are treated as fair value hedges.

Cash flow hedgeWhere a derivative financial instrument is designated as a hedge of a highly probable forecasted transaction, the effective part of any gain or loss on it is recognised in other comprehensive income in the hedging reserve of equity. When the forecasted transaction subsequently is re-alised, the associated cumulative gain or loss is reclassified from other comprehensive income in the hedging reserve of equity to the income statement in the same period or periods during which the hedged fore-casted transaction affects profit or loss. the ineffective part of any gain or loss is recognised in the income statement immediately.

When a hedging instrument expires or is sold, terminated or exercised, or the entity revokes designation of the hedge relationship but the hedged forecast transaction still is expected to occur, the cumulative gain or loss at that point remains in other comprehensive income in the hedging reserve of equity and is recognised in accordance with the above policy when the transaction occurs. if the hedged transaction is no longer expected to take place, the cumulative unrealised gain or loss recognised in equity is recognised in the income statement immediately.

Net investment hedgederivatives used to hedge net investments in foreign subsidiaries, associates or joint ventures are accounted for similarly to cash flow hedges. Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognised in equity; the gain and loss relating to the ineffective portion is recognised immediately rec-ognised in the income statement.

Derivatives that do not qualify for hedge accounting for derivatives that do not qualify for hedge accounting, changes in


fair value are recognised in the income statement as they occur.

Segment information Segment information on key business areas is disclosed in line with Jl’s internal financial management, risks and accounting policies.

Assets in a segment comprise those that are directly attributable to the segment’s operations, including intangible assets, vessels, property, equipment, investments in associated companies and joint ventures, inventories, trade and other receivables, prepayments and cash.

liabilities in a segment comprise those that are directly employed in the segment’s operation, including trade payables, accruals and other liabilities.

income StatementRevenues Revenues include charter income, freight and demurrage revenues from the vessels. Revenues are recognised in the income statement as services are delivered. uncompleted voyages are recognised with the share related to the financial year. earnings from vessels which are engaged in pools are recognised in revenue on a net distribution basis.

in addition revenue comprises changes in fair value on forward freight agreements (ffA) used as hedging of Jl’s freight income. hedge ac-counting is not applied on ffA’s.

Other operating incomeother operating income includes commercial and technical manage-ment fee.

Voyage related costsVoyage related costs include bunker oil, port costs, agent’s commis-sions and other voyage related costs. furthermore other operating costs include fair value changes on financial bunkers contracts which are entered into for the purpose of hedging Jl’s bunkers costs as hedge accounting is not applied for these transactions.

Operating cost of vessels operating cost of vessels includes maintenance and repairs, crew staff costs, insurance of hulls and machinery, consumption of lubricants and supplies etc.

Share of profit in associated companies and joint ventures the proportionate share of the net profit after tax in associated com-panies and joint ventures, after the elimination of proportional share of internal profit/loss is recognised in the income statement.

Financial items financial items include interest income and expense, realised and unrealised exchange gains and losses, financial expenses in respect of finance leases, adjustments to the value of securities and certain financial instruments and other financial income and expenses.

borrowing costs directly attributable to the acquisition or construction of assets are capitalised as part of the cost of the asset.

Income taxincome tax consists of tax calculated according to the regulations of the danish tonnage tax Act for shipping activities and according to general tax regulations for other activities, as well as adjustments related to deferred tax. income tax is recognised in the income state-ment except to the extent that it relates to items recognised directly to equity, in which case it is recognised in equity.

Statement of financiaL PoSitionGoodwill goodwill is stated at cost less any accumulated impairment losses. All business combinations are accounted for by applying the purchase method. goodwill represents the excess of acquisition price over the net fair value of acquired identifiable assets and liabilities arising on acquisition of subsidiaries, associates and joint ventures. in respect of associates and joint ventures, the carrying amount of goodwill is included in the carrying amount of the investment in the associate or joint venture.

Vessels, property and equipment Vessels Vessels are measured at cost less accumulated depreciation and ac-cumulated impairment losses. Vessels are depreciated on a straight line basis to an estimated scrap value. expected useful life of vessel is 25 years.

cost of vessels acquired by way of finance leases are stated at the lower of fair value, and the present value of the minimum lease pay-ments at the inception of the lease.

Rebuilding of vessels is capitalised if the rebuilding is intended to ex-tend the service life and/or improve the earning potential. Rebuilding is depreciated over the expected service life of the investment.

costs relating to dry dockings are capitalised and depreciated on a straight line basis. the expected useful life of dry dockings range from 30 to 60 months.

Vessels under construction are measured at cost incurred until the time the vessel is taken into service.

Vessels classified as held for sale are measured at the lower of the car-rying amount and fair value less costs to sell.

Landland is measured at cost.

Buildings buildings are measured at cost less accumulated depreciation and ac-cumulated impairment losses. buildings are depreciated on a straight line basis. expected useful life of buildings is 50 years.

Machinery, tools and equipment machinery, tools and equipment are measured at cost less accumu-lated depreciation and accumulated impairment losses. machinery, tools and equipment are depreciated on a straight line basis. expected useful life of machinery, tools and equipment is 5-10 years.


gains and losses on the disposal of tangible assets are calculated as the difference between the sales price less cost of sales and the net book value at the time of sale.

Investments in associates and joint ventures investments in associates and joint ventures are recognised according to the equity method of accounting.

Any goodwill resulting from the acquisition is included in the carrying value of the investment. it is tested for impairment as described below.

Associates and joint ventures with negative equity are measured at uSd 0 (nil), unless Jl has a legal or constructive obligation to cover the negative balance of the associate.

Impairment the carrying amount of vessels, vessels under construction, part owned vessels through investments in joint ventures and associates and goodwill are tested annually for impairment.

the carrying amounts of other non-current assets, other than deferred tax assets, are reviewed at each balance sheet date to determine whether there is any indication of impairment. An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. impairment losses are recognised in the income statement.

please refer to note 1 for further disclosure on impairment test.

Inventories bunker oil is measured at cost according to the fifo principle. major spare parts purchased and stored ashore for subsequent use are mea-sured at cost less individually assessed write-down. other inventories are recognised at the lower of cost or net realisable value.

Financial assetsJl classifies its investments in the following categories:

financial assets at fair value through profit or loss (financial deriva-tives)loans and receivables andAvailable-for-sale financial assets.

the classification depends on the purpose for which the investments were acquired. management determines the classification of its in-vestments on initial recognition and re-evaluates this designation at every reporting date to the extent that such a designation is permitted and required. financial assets classified at fair value through profit or loss are investments that are measured and reported at fair value in the internal management reporting.

Financial assets at fair value through profit or loss comprise financial derivatives on which hedge accounting is not ap-plied and securities which is classified as such on initial recognition.

Loans and receivablesloans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.

loans and receivables are included in trade receivables and other receivables in the statement of financial position. trade receivables and other receivables are stated at amortised cost less allowances for doubtful trade receivables. the allowances are based on an individual assessment of each receivable.

Available-for-sale financial assetsAvailable-for-sale financial assets are non-derivatives that are not clas-sified held for trading. they are included in non-current assets unless management intends to dispose of the investment within 12 months of the balance sheet date.

Recognition and measurement of financial assetspurchases and sales of investments are recognised on the settlement date. investments are initially recognised at fair value plus transaction costs for all financial assets not classified as fair value through profit or loss.

Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. loans and receivables are carried at amortised cost using the effective interest method.

unrealised gains and losses arising from changes in the fair value of financial assets classified as available-for-sale are recognised in eq-uity. When financial assets classified as available-for-sale are sold or impaired, the accumulated fair value adjustments are included in the income statement as gains and losses from available-for-sale financial assets.

Prepayments prepayments recognised under assets include payments relating to costs in subsequent periods after the balance sheet date.

equity proposed dividend is recognised as a separate item under equity until approved at the Annual general meeting, where after it is recognised as a liability.liabilities mortgage debt and other interest bearing debt to credit institutions are initially recognised as the proceeds received less any transaction costs incurred. Subsequently, financial liabilities are measured at amortised cost using the effective interest rate method, such that the difference between the proceeds and the redemption value is recognised in the income statement over the lifetime of the loan.

financial liabilities also include lease obligations on finance leases.

trade payables and other amounts payable are measured at amortised cost.

provisions A provision is recognised in the statement of financial position when Jl has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of economic benefits will be re-quired to settle the obligation and it is possible to make a reliable es-timate of amount of the provision. if the effect is material, provisions are determined by discounting the expected future cash flows at a pre-


tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

Accruals Accruals include prepayments received relating to income in periods after the balance sheet date.

Corporate and deferred taxcorporate tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the bal-ance sheet date, and any adjustment to tax payable in respect of pre-vious years.

deferred tax is provided using the balance sheet liability method, pro-viding for temporary differences between the carrying amounts of as-sets and liabilities for financial reporting purposes and the amounts used for taxation purposes. the following temporary differences are not provided for: goodwill not deductible for tax purposes, the initial recognition of assets or liabilities that affect neither accounting nor taxable profit, nor differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. the amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

caSH fLoW Statement the cash flow statement has been prepared according to the indirect method and shows the cash flows from operating, investing and fi-nancing activities for the year.

cash flows from operating activities are calculated as the results for the year as adjusted for non-cash operational items, changes in work-ing capital and corporate tax payments.

cash flows from investment activities cover receipts or payments re-lated to acquisition and divestment of companies and/or activities, transactions relating to non-current assets and purchase or sale of securities.

cash flows from financing activities comprise changes in the size or mix of the share capital including related costs, raising and re-payment of interest bearing debt, as well as payment of dividend to shareholders.

cash and cash equivalents include bank deposits and short-term de-posits that without restriction can be exchanged into cash funds and where there is insignificant risk of value fluctuations, with the deduc-tion of short-term bank loans.

aSSetS HeLD for SaLeAssets held for sale comprise non-current asset or disposal groups if its carrying amount will be recovered principally through a sale

transaction rather than through continuing use. A disposal group is a group of assets to be disposed of, by sale or otherwise, together as a group in a single transaction, and liabilities directly associated with those assets that will be transferred in the transaction.

non-current asset (or disposal group) classified as held for sale are measured at the lower of its carrying amount and fair value less costs to sell. depreciation and amortisation ceases when the assets are classified as held for sale.

impairments arising from the first classification to assets held for sale and subsequent gains or losses on re-measurement to the lower of its carrying amount and fair value less costs to sell are recognised in the income statement and specified in the notes.

in the statement of financial position non-current assets or assets and liabilities in a disposal group are presented separately from other as-sets and liabilities in the statement of financial position. prior period comparative information is not re-presented. in the notes to the finan-cial statements the major classes of assets and liabilities classified as held for sale are separately disclosed.

PreSentation of DiScontinueD oPerationS A component of the entity comprises operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the entity. discontinued operation is a com-ponent of the entity that either has been disposed of, or classified as held for sale, and the sale is expected to be executed within one year.

in income Statement discontinued operation is presented in a single amount as the total of a) the pre-tax profit or loss of discontinued op-erations and b) pre-tax gain or loss recognised on the measurement to fair value less costs to sell or on the disposal of the assets or dis-posal group(s) constituting the discontinued operation. prior period comparative information is re-presented to reflect the discontinued operations. in the notes to the financial position is an analysis of rev-enue, expenses, revaluations to fair value and pre-tax profit or loss of discontinued operations as well as related income tax. the net cash flows attributable to the operating, investing and financ-ing activities of discontinued operations are disclosed in the notes to the financial statements.

neW accounting reguLationS for future imPLemen-tationthe iASb has issued a number of new or revised accounting stan-dards (iAS and ifRS) and interpretations (ifRics), that are not com-pulsory for Jl in the preparation of the financial statements for 2013. none of these are expected to have significant influence on the finan-cial reporting for Jl.

Jl expects to implement the standards and interpretations on effec-tive date as issued by the iASb subject to their endorsement by the eu. none of the new standards and interpretations is expected to have material effect going forward.


USD '000 Note 2013 2012

Revenue 12,072 11,935

Staff costs 1 (10,037) (10,318)

Other sales and administrative costs 2 (8,736) (8,326)

Profit before depreciation (EBITDA) (6,702) (6,710)

Depreciations and write-downs 6 - 0


Financial income 3 41,011 46,091

Financial expenses 4 (193,201) (106,062)

Profit/(loss) before tax (158,892) (66,682)

Income tax 5 1,328 794


Proposed allocation of the profit:

Proposed dividend - -

Transferred to other reserves (157,564) (65,888)

(157,564) (65,888)

Statement of comprehensive income

USD '000 2013 2012





Hedging instruments transferred to financial expenses (8,888) 9,520



Total comprehensive income (147,241) (60,335)

StAtement of comPreHenSiVe incomeUSD '000 2013 2012





Hedging instruments transferred to financial expenses (8,888) 9,520



Total comprehensive income (147,241) (60,335)

income Statement

Parent comPany


StAtement of financiaL PoSition

USD '000 Note 2013 2012

ASSETS

Machinery, tools and equipment 6 1,399 1,399

Investments in subsidiaries 7 458,280 433,453

Deferred tax assets 5 298 655

Shares available for sale 43,416 25,331

Non-current assets 503,393 460,837

Other receivables 8 5,168 34,332

Receivables from affiliated companies 843,463 1,012,675

Corporate tax receivables 5 2,229 1,713

Prepayments 171 2,186


Securities 10,000 157

Cash and bank deposits 127,979 230,366

Current assets 992,113 1,292,692

Total assets 1,495,506 1,753,529

LIABILITIES

Equity

Share capital 62,356 60,633

Retained earnings 345,370 349,109

Reserves 5,484 (4,839)

Equity 9 413,209 404,903

Non-current derivative financial instruments 11 23,126 9,418

Long-term borrowings 10 521,865 1,079,522

Non-current liabilities 544,991 1,088,940

Current portion of long-term borrowings 10 334,102 64,602

Trade payables 5,768 4,127

Other payables 11,893 20,669


Debt to affiliated companies 171,356 146,207

Current liabilities 537,306 259,686

Total liabilities 1,082,297 1,348,626

Total equity and liabilities 1,495,506 1,753,529

Parent comPany


eQuity Statement

USD '000

Equity 1/1 2012 60,633 (31,636) 21,245 (10,391) 414,997 - 465,238

Profit/(loss) for the year - - - - (65,888) - (65,888)


Deferred (gain)/loss on hedging instruments transferred to financial expenses - 9,520 - 9,520 - - 9,520 Fair value adjustment of shares available for sale - - 818 818 - - 818 Fair value adjustment of hedging instruments during the period - (4,786) - (4,786) - - (4,786) Total other comprehensive income - 4,734 818 5,552 - - 5,552

Total comprehensive income - 4,734 818 5,552 (65,888) - (60,335)

Transactions with owners:

Paid dividend - - - - - -

Total transactions with owners - - - - - -

Equity 31/12 2012 60,633 (26,902) 22,063 (4,839) 349,109 - 404,903

Profit/(loss) for the year - - - - (157,564) - (157,564)


Deferred (gain)/loss on hedging instruments transferred to financial expenses - (8,888) - (8,888) - - (8,888) Fair value adjustment of shares available for sale - - 1,443 1,443 - - 1,443 Fair value adjustment of hedging instruments during the period - 17,767 - 17,767 - - 17,767 Total other comprehensive income - 8,880 1,443 10,323 - - 10,323

Total comprehensive income - 8,880 1,443 10,323 (157,564) - (147,241)

Transactions with owners:

Capital increase 1,722 153,825 155,547

Paid dividend - - - - - - -

Total transactions with owners 1,722 - - - 153,825 - 155,547

Equity 31/12 2013 62,356 (18,022) 23,506 5,484 345,370 - 413,209

Hedging instrument

Sharecapital

Retained earnings Total

Proposed dividend

Shares available

for sale Reserves

Parent comPany


cASh floW Statement

USD '000 Note 2013 2012


Depreciations and write-downs carried back 6 - (0)

Adjustments 624 14,276

Change in working capital 182,489 7,462

Cash flow from operations before financial items 176,412 15,028

Ingoing financial payments 28,345 35,790

Outgoing financial payments (52,659) (53,616)

Cash flow from ordinary operations 152,097 (2,797)

Paid corporate tax 5 1,216 3,549

Cash flow from operating activities 153,314 751

Sale of shares in subsidiaries - 649

Increase of share capital in subsidiaries 7 (176,663) (1,165)

Purchase and sales of securities (12,031) 835

Cash and cash equivalents pledged as security for debt 34,180 (22,321)

Cash flow from investment activities (154,513) (22,003)

Instalment on long-term debt (152,610) (150,872)

Proceeds from loans 45,010 210,029

Cash flow from financing activities (107,600) 59,158

Changes for the year in cash and cash equivalents (108,800) 37,906

Cash and cash equivalents at beginning of year 230,366 190,061

Currency adjustments on cash and cash equivalents 6,413 2,399

Cash and cash equivalents at the end of the year 127,979 230,366

Parent comPany


noteSNOTE 1 STAFF COSTS

USD '000 2013 2012

Staff costs include:Wages and salaries 9,103 9,419 Pensions (defined contribution plan) 776 765 Social security 28 37 Contract labour 131 97

10,037 10,318

Remuneration to J. Lauritzen A/S'Exec. Mngt - salaries 2,469 3,373 CEO Jan Kastrup Nielsen 1,277 1,002


Former CEO Torben Janholt 251 1,459

Exec. Mngt - long term employment bonus 487 121 CEO Jan Kastrup Nielsen 224 -


Former CEO Torben Janholt - -

Board of Directors 556 548

3,512 4,042

Average number of employees 63 63

Number of employees at year-end 58 60

Remuneration to Executive Management consists of a fixed andvariable compensation. No variable compensation has been paid in2012 and 2013. In addition hereto Executive Management has beenawarded a retention bonus subject to individual dates of resignation.

NOTE 2 OTHER SALES AND ADMINISTRATIVE COSTS

USD '000 2013 2012

Total fees to elected auditors 201 237

Specified as follows:Statutory audit 135 181Tax advisory services 31 33Fee for other services 35 23

NOTE 3 FINANCIAL INCOME

USD '000 2013 2012

Interest income on cash and deposits 1,009 2,253 Interest on receivables from subsidiaries 27,310 33,487 Income on financial assets at amortised costs 28,319 35,740 Currency exchange gains and losses, net 12,035 9,806 Dividends on shares available for sale 632 495 Interest on securities at fair value through P&L 26 51 Dividend received from subsidiaries - -

Financial income 41,011 46,091

NOTE 5 TAX

USD '000 2013 2012

Tax in the Income Statement consist of:Current tax 1,685 2,782 Deferred tax (357) (1,988)

Income tax 1,328 794

Tax on profit is specified as follows: Calculated 25% of profit before tax 39,723 16,670 Tax effect of: Tonnage tax (4,298) (2,482) Non-taxable items (33,716) (14,589) Adjustments previous year (382) 1,195

1,328 794


Deferred tax on the Balance Sheet:Deferred tax 1 January 655 2,642 Tax on profit (357) (1,988)



298 655

Corporate tax payable can be specified as follows:Balance 1 January (1,713) (2,497) Exchange rate adjustments (47) 17 Paid during the year 1,216 3,549 Adjustment to prior years 382 (1,195) Provision for the year (2,067) (1,587)

(2,229) (1,713)



In excess of deferred tax assets recognised as specified above, thecompany has deductible unused tax losses of USD 44m asper 31 December 2013.

NOTE 4 FINANCIAL EXPENSES

USD '000 2013 2012

Interest expenses on loans (53,599) (56,599) Interest on debt to subsidiaries (2,295) (363) Total expenses on fin. liab. at amortised costs (55,894) (56,962) Securities at fair value through P&L (2,188) (1,111) Loss on sale of shares in subsidiaries (119) (602) Impairment write-down of subsidiaries (135,000) (47,388)

Financial expenses (193,201) (106,062)

Parent comPany


NOTE 6 MACHINERY, TOOLS & EQUIPMENT

USD '000 2013 2012

Cost as at 1 January 1,604 1,631 Additions during the year - - Disposals during the year - (27)


Depreciation and write-down as at 1 Jan. (206) (206) Depreciation during the year - 0

Depreciation and write-down as at 31 Dec. (206) (206)

Balance as at 31 December 1,399 1,399

NOTE 7 INVESTMENTS IN SUBSIDARIES

USD '000 2013 2012

Lauritzen Bulkers A/S, Denmark 100.0% 100.0%Lauritzen Kosan A/S, Denmark 100.0% 100.0%Lauritzen Reefers A/S, Denmark 100.0% 100.0%Lauritzen Tankers A/S, Denmark 100.0% 100.0%Lauritzen Ship Owner A/S, Denmark 100.0% 100.0%J. Lauritzen Inversiones (Chile) Ltda., Chile 100.0% 100.0%J Lauritzen (Japan) K.K., Japan - 100.0%J. Lauritzen Singapore Pte., Singapore 100.0% 100.0%KRK 4 ApS, Denmark 100.0% 100.0%Segetrans Argentina S.A., Argentina 100.0% 100.0%LB Shipowner II A/S, Denmark 100.0% 100.0%J. Lauritzen Shanghai Co. Ltd., China 100.0% 100.0%

2013 2012

Cost as at 1 January 813,728 813,814 Additions during the year 176,663 1,165 Disposal during the year (16,835) (1,251)


Accumulated impairment losses at 1 Jan. (380,276) (332,888) Impairment during the year (135,000) (47,388)

Accumulated impairment losses at 31 Dec. (515,276) (380,276)

Carrying amount at 31 Dec. 458,280 433,453

Ownership

NOTE 8 OTHER RECEIVABLES

USD '000 2013 2012

Liquidity pledged as security for debt - 34,180 Other short-term receivables 5,168 152 Total other receivables 5,168 34,332

NOTE 9 EQUITY

Composition of share capital and dividends are disclosed in note 12in the consolidated statements.


NOTE 10 LONG-TERM BORROWINGS

USD '000 <1 year 1 - 5 year > 5 year Total <1 year 1 - 5 year > 5 year Total

Mortgage on vessels (333,110) (302,618) (66,679) (702,407) (63,893) (570,211) (135,635) (769,739)

Subordinated loan *) - (0) - (0) - (159,582) - (159,582)

Issued bonds - (151,932) - (151,932) - (212,536) - (212,536)

Other debt (993) (636) - (1,629) (709) (1,558) - (2,267)

Total long-term borrowings (334,102) (455,186) (66,679) (855,968) (64,602) (943,887) (135,635) (1,144,124) *) The subordinated loan of DKK (903)m (equivalent to USD (159.6)m at year-end 2012) was converted to equity as per 2 April 2013.

At the date of the conversion to equity on 2 April 2013 the DKK (903)m was equivalent to USD (155.5)m.

USD '000 CurrencyFixed/

VariableInterest rate

fixation

Average effective

interest rate, excl.

hedging

Average effective

interest rate incl. hedging Book value

2013Mortgage on vessels USD Variable 3-6 month 2.03% 3.82% (638,937)


Issued bonds NOK Fix./Var. 2-4 years 10.20% 9.04% (151,932) Other debt DKK Fixed 1-2 year 4.61% 4.61% (1,629) Total 3.78% 4.84% (855,968)

2012

Mortgage on vessels USD Variable 3-6 month 2.23% 3.54% (683,661)


Subordinated loan DKK Variable 12 month 4.16% 4.16% (159,582)

Issued bonds NOK Fix./Var. 3-5 years 10.35% 9.24% (212,536) Other debt DKK Fixed 2-3 year 4.73% 4.73% (2,267)

Total 3.98% 4.65% (1,144,124)

Currency exposure on non-USD long-term borrowings, net of hedging:

USD '000 Book value

Currency hedging

derivaties

Net currency exposure on

loan Book value

Currency hedging

derivaties Bank

deposits

Net currency

exposure on loan

JPY (63,469) 14,000 (49,469) (86,078) 14,000 - (72,078)

DKK (1,629) - (1,629) (161,849) - 148,614 (13,236)

NOK (151,932) 151,932 - (212,536) 212,536 - -

Total (217,030) 165,932 (51,098) (460,463) 226,536 148,614 (85,314)

Interest exposure to floating interest rates:

2013 2012

Total long-term borrowings (855,968) (1,144,124)

Herof fixed to maturity (74,996) (128,027)

Floating interest borrowings (780,971) (1,016,097)

Interest rate swaps floating to fixed at year end, nominal 390,483 541,957

Exposure to floating interest rates at year end (390,488) (474,140)

2013 2012

2013 2012


note 11 financiaL inStrumentS anD financiaL riSKS

financial risks for J. lauritzen A/S relate to:

financial risks are regularly assessed and prioritized based on how likely they are to occur and their potential impact. As defined by Jl’s board of directors, overall policies and objectives for financial risks were generally unchanged from 2012. Reference is also made to note 15 to the consolidated financial statements.

liQuidity RiSKliquidity risk relates to the risk that Jl will not be able to fulfill its finan-cial obligations as they fall due.

below is a maturity analysis of financial liabilities at year-end 2013:

USD '000

2013

Mortgage on vessels, bank debt and other interest-bearing debt *) (855,968) (945,413) (223,423) (649,751) (72,239) Trade and other payables (17,661) (17,661) (17,661) - -Debt to affiliates (171,356) (171,356) (171,356) Derivatives, liabilities at fair value (37,312) (37,312) (14,186) (22,774) (352) Total at 31 December 2013 (1,082,297) (1,171,742) (426,626) (672,525) (72,590)

2012

Mortgage on vessels, bank debt and other interest bearing debt *) (1,144,124) (1,315,795) (112,313) (1,051,715) (151,767) Trade payable and other payables (24,793) (24,793) (24,793) - -Debt to affiliates (146,207) (146,207) (146,207) - - Derivative, liabilities at fair value (33,500) (33,500) (24,082) (7,776) (1,642) Total at 31 December 2012 (1,348,624) (1,520,294) (307,394) (1,059,490) (153,409)

Carrying amount

Contractual cash flows <1 year 1-5 years >5 years

*) Contractual cash flows include undiscounted interest payments based on interest levels at year-end

•The risk that JL is not able to meet its future cash flow needsLiquidity risk

•The risk of losses in financial positions arising from movements in market prices to which JL is exposed

Market risk

•The risk of incurring a financial loss if a counterparty fails to fulfill its contractual obligations

Credit risk


marKet riSKSmarket risks are risks of losses in financial positions arising from move-ments in market prices to which J. lauritzen A/S is exposed through financial instruments. market risks are regularly assessed and priori-tized based on how likely they are to occur and their potential impact. based on this assessment the following market risks are considered significant for J. lauritzen A/S:

below is sensitivity analysis of J. lauritzen A/S’s exposure to the mar-ket risks. please refer to note 15 to the consolidated financial state-ments for description of managing the risks.

Sensitivity information is calculated at balance sheet date and com-prises only sensitivity relating to financial instruments, so the amounts disclosed do not necessarily give a complete picture of Jl’s risks relat-ing to the different categories of risk.

Currency riskto measure currency risk in accordance with ifRS 7, sensitivity is cal-culated as the change in fair value of future cash flows from financial instruments as a result of fluctuations in exchange rates on balance sheet date. Sensitivity to fluctuations in non-uSd currencies at bal-ance sheet date based (other things being equal and after tax) on a 10% decrease in currency translation rates against uSd (assuming 100% effectiveness) would result in a net profit/loss of uSd 2.1m (2012: 5.0m) and affect equity by uSd (0.5)m (2012: 2.5m). the effect of a 10% increase in the currency translation rates against uSd would have a corresponding inverse effect.

Interest rate riskSensitivity of interest fluctuations is calculated as the hypothetic effect on net profit and equity as a result of fluctuations in interest rates at balance sheet date.

the sensitivity analysis includes financial instruments recognized at fair value for which the calculated effect on equity represents an im-mediate fair value change from a thought change in interest rates and financial instruments with variable interest recognized at amortized costs for which the calculated effect represents a one year effect on net profit and equity based on balances at year-end.

Assumptions for the sensitivity analysis:All hedging instruments assumed 100% effective.changes in interest rates are global and thus the impact on the fair value of forward currency contracts and similar derivatives is not con-sidered.

USD ‘000 2013 2012

Financial derivatives 3,102 11,261 Other short-term receivables 5,168 152 Cash and bank deposits 127,979 230,366 Maximum credit risk 136,250 241,779

Shares available for sale and shares at fair value through profit or loss are not included in sensitivity calculations due to inability to reliably measure the sensitivity of share prices to interest rate changes.

on financial instruments at fair value, the calculated effect after tax based on a 1% interest rate decrease would affect profit/loss by uSd (3.9)m (2012: (5.4)m) and equity by uSd (6.3)m (2012: uSd (8.6)m). on financial instruments with variable interest recognized at amortized costs, profit/loss and equity would be effect by uSd (0.0)m (2012: (0.1)m).

A 1% interest rate increase would have a corresponding inverse effect.

creDit riSKthe risks relating to financial counterparties, financial instruments, bonds and cash funds are minimized by trading only with financial institutions with a long-term investment grade credit rating from moody’s and by defined limits on deposits on each financial partner.

At year-end 2013, the majority of our financial counterparties had credit ratings of or above baa2.

J. lauritzen A/S’s exposure to credit risks at balance sheet date can be illustrated as follows:categorieS of financiaL aSSetS anD LiaBiLitieS

Currency risk - Operational cash flow

•Currency risk from operations is related non-USD costs where DKK expenses are the largest contributor.

Currency risk - Financing

•Relates to long-term borrowing in non-USD. JL had at year-end long-term borrowings denominated in NOK, DKK and JPY, ref. note 10.

Interest rates risk - Long-term borrowings

•46% of JL's long-term borrowings are exposed to floating interest rate.

the maximum credit risk corresponds to the carrying value of the in-dividual assets.


the following categories of financial assets and liabilities are recog-nized in the balance sheet:*) figure includes financial derivatives designated for hedge accounting

**) Amounts recognized for financial asset and liabilities at amortized cost do not differ materi-

ally from their fair value with the exception of issued bonds. fair value of issued bonds amount

to uSd 159.8m whereas the carrying amount totalled uSd 151.9m.

fair value hierarchy With the exception of listed bonds and shares of uSd 10.0m (2012: uSd 0.2m) (level 1) and shares available for sale of uSd 43.4m (2012: uSd 25.3m)(level 3), all financial instruments are stated at fair value on the basis of observable market prices (level 2), directly as prices or indirectly derived from prices.

in 2013 fair value adjustment of level 3 financial instruments amount-ed to uSd 1.4m recognised in other comprehensive income (2012: 0.8m). the fair value adjustment relate to unlisted shares for which a valuation technique has been used to determine fair value. material inputs in the valuation comprise equity value and expected Roe com-

USD mCash flow /Fair value hedge

Nominal, USDm

Duration, month


Nominal, USDm

Duration, month


Hedge accouning applied:Currency: USD/JPY Fair value - - - - 32.1 0-12 - (0.3) Currency: USD/NOK Cash flow 206.0 17-46 (2.4) (12.1) 212.5 29-58 (0.6) 8.5 Interest rate swaps Cash flow 390.5 9-119 (16.1) (17.3) 630.1 21-131 (26.9) (26.9) Terminated interest rate swap Cash flow N/A N/A 0.4 N/A N/A N/A 0.6 N/ATotal (18.0) (29.3) (26.9) (18.7)

Hedge accouning not applied:Currency: USD/NOK N/A (47.6) 0-2 - (0.5) (2.1) 0-1 - (0.2) Currency: USD/EUR N/A - N/A - - 7.5 0-2 - 0.4 Currency: USD/DKK N/A 29.0 0-2 - 0.8 27.0 0-1 - 0.7 Currency: USD/JPY N/A 14.0 0-2 - (1.1) 2.8 0-1 - 0.4 Interest rate swaps N/A - 75 - 0.4 - - - - FFA's and oil contracts N/A N/A N/A - (0.1) N/A N/A - 0.0 Interest indexswap N/A 34.5 27 - (4.4) 38.2 39 - (5.0) Total 34.5 - (4.9) 38.2 - (3.6)

Total derivative financial instruments (34.2) (22.2) Presented in the financial statement as:Derivative financial instruments, assets 3.1 11.3 Non-current derivative financial instruments, liabilities (23.1) (9.4) Derivative financial instruments, liabilities (14.2) (24.1)

2013 2012

USD ‘000 2013 2012

Fin. assets at FV through P/L *) 13,102 11,418

Loans and receivables**) 848,632 1,047,008

Fin. assets available for sale **) 43,416 25,331

Fin. liabilities - at FV through P/L *) (37,312) (33,501)

Fin. liabilities - at amortized cost**) (1,044,985) (1,315,123)

pared to Jl’s return requirements. financial instruments categorized at level 3 have developed as follows:

USD ‘000 2013 2012

Book value at 1 January 25,331 24,513 Purchase during the year 16,641 - Fair value adjustment 1,444 818 Book value at 31 December 43,416 25,331

DeriVatiVe financiaL inStrumentSJl’s policy is to use derivative financial instruments to hedge financial risks. At year end J. lauritzen A/S held the following derivatives:


NOTE 12 MORTGAGES

USD '000 2013 2012

Debt for a total of 702,407 769,739 has been secured by mortgage in assets at the following book values:

Vessels owned by subsidiaries 1,095,820 1,433,630 Cash and cash equivalents - 34,180

1,095,820 1,467,810

NOTE 13 CONTINGENT LIABILITIES

USDm 2013 2012

Guarantees undertaken for debt in subsidiaries 175 193 Guarantees undertaken for debt in joint ventures 136 151 Max. obligation to pay in capital into Joint ventures 96 47 Guarantees regarding newbuildings in subsidiaries - -

Certain claims have been raised against JL. The judgment of themanagement is that the outcome of these claims will not have anymaterial impact on JL's financial position.

NOTE 14 RELATED PARTIES

As owners of J Lauritzen A/S, the Lauritzen Foundation and itssubsidiaries are related parties.

Other related parties with a significant influence of the activities ofJ. Lauritzen A/S is the company's Board of Directors and theExecutive Management (key management personnel).

Finally, additional related parties comprise subsidiaries and jointventures in which J Lauritzen A/S has a controlling or significantinfluence. Subsidaries and joint ventures together with J. Lauritzen'sShareholding is shown in the group structure on page 106-107.

Transactions with related parties are conducted at arms lengthand have comprised the following Income/(expenses):

USD '000 2013 2012

Management fee, income/(expenses) fromgroup companies 9,920 10,787 Management fee, income/(expenses) fromLF Investments Aps 205 173 Currency hedging income/(expenses) fromgroup companies (2,135) 2,676 Guarantee commission income/(expenses)from group companies 633 760 Received dividend from group companies - - Rental and lease income/(expenses) fromgroup companies 691 764 Rental and lease income/(expenses) fromLF Investments Aps (1,696) (1,649) Interest expenses on subordinated loanfrom LF Investment - (6,888)

Receivables, debt and interest to and from related parties areshown in the balance sheet and notes 3 and 4. There have been noother transactions with related parties other than those statedabove.Consideration to key management personnel is disclosed in note 1.

note 16 accounting PoLicieS

the separate financial statements for the parent company are included in the Annual Report as required by the danish financial Statement Act.

the accounting policies for the financial statements of the parent com-pany are unchanged compared to last financial year and are the same as for the consolidated financial statements except for supplementary accounting policies mentioned below. for a description of the account-ing policies of the group, please refer to note 24 to the consolidated financial statements, cf. p. 87-91.

SuPPLementary accounting PoLicieS for tHe Parent comPanyFinancial assetsinvestments in subsidiaries are recognized in the financial statement of the parent company at cost less accumulated impairment losses. cost includes fair value of consideration paid plus directly attributable acquisition costs.

if there are indications of impairment, impairment test is performed as described in accounting policies to the consolidated financial state-ments.

in the income statement dividends received during the year from sub-sidiaries are shown under financial income. if the distribution from subsidiaries exceeds retained earnings, the distribution reduces the cost of the investment in subsidiaries when the distribution is charac-terized as repayment of the parent company’s investment.

taxJ. lauritzen A/S is subject to the danish tax regulations included in the compulsory joint taxation with its parent company, the lauritzen foun-dation and all danish subsidiaries under the lauritzen foundation.

J. lauritzen A/S is the managing company in the joint taxation and consequently settles all payment of company tax with the authorities. tax receivables and tax payables are recognized as current assets and current liabilities respectively. outstanding tax contributions from oth-er companies included in the joint taxation are recognized as receiv-able/debt from affiliated companies.

neW accounting reguLationS for future imPLemen-tation

Reference is made to note 24 of the consolidated financial statements for disclosure of new accounting regulation. none of the new stan-dards and interpretations are expected to have material effect on the financial statement of the parent company.

note 15 eVentS after tHe BaLance SHeet Date

there have been no events after the balance sheet date that could materially affect the accounts as presented.


note 17 accounting eStimateS anD JuDgmentS

the preparation of the financial statements in conformity with ifRS re-quires management to make estimates and judgments that affect the reported carrying amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported performance. management bases its estimates on historical experience and various other assumptions and sources that are believed to be reasonable. Actual results could differ from those estimates.

material accounting estimates in preparing the separate financial statement for the parent company comprise estimates included in im-pairment testing of investment in subsidiaries.

critical accounting estimates and judgments for the group are dis-closed in note 1 of the consolidated financial statement.


Jan Kastrup-nielsenpresident & ceo

the board of directors and executive manage-ment have today discussed and approved the an-nual report of J. lauritzen A/S for the financial year 2013.

the annual report has been prepared in accord-ance with international financial Reporting Stand-ards as adopted by the eu and additional dis-closure requirements in the danish financial Statements Act. it is our opinion that the consoli-dated financial statements and parent company fi-nancial statements give a true and fair view of the group’s and the parent company’s financial posi-tion at 31 december 2013 and of the results of the

mAnAgement Statement

birgit Aagaard-Svendsenexecutive Vice president & cfo

* elected by the employees

bent Østergaard, chairman

niels heering

marianne Wiinholt

ulrik danstrøm*

BoarD of DirectorS

executiVe management

ingar Skaug, Vice chairman

peter poul lauritzen bay

Søren berg*

Jan lystlund Sørensen *

group’s and the parent company’s operations and cash flows for the financial year 1 January – 31 de-cember 2013.

further, in our opinion, the management’s re-view gives a fair review of the development in the group’s and the parent company’s operations and financial matters, the results of the group’s and the parent company’s operations and financial po-sition and describes the material risks and uncer-tainties affecting the group and the parent com-pany.

We recommend that the annual report be ap-proved at the Annual general meeting

Copenhagen, 25 February 2014


to tHe SHareHoLDer of J. Lauritzen a/S

inDePenDent auDitorS’ rePort on tHe conSoLiDateD financiaL StatementS anD tHe Parent comPany financiaL StatementS

We have audited the consolidated financial statements and the parent company financial statements of J. lauritzen A/S for the financial year 1 January – 31 december 2013. the consolidated financial statements and the parent company financial statements comprise income statement, statement of comprehensive income, statement of financial position, equity statement, cash flow statement and notes, including a summary of significant accounting policies for the group as well as for the parent company. the consolidated financial statements and the parent company financial statements are prepared in accordance with international financial Reporting Standards as adopted by the eu and danish disclosure requirements for listed companies.

management’s responsibility for the consolidated fi-nancial statements and the parent company financial statementsmanagement is responsible for the preparation of consolidated financial statements and parent company financial statements that give a true and fair view in accordance with international financial Reporting Standards as adopted by the eu and danish disclosure requirements for listed companies and for such internal control that management determines is necessary to enable the preparation of consolidated financial statements and parent company financial statements that are free from material misstatement, whether due to fraud or error.

auditors’ responsibilityour responsibility is to express an opinion on the consolidated financial statements and the parent company financial statements based on our audit. We conducted our audit in accordance with international Standards on Auditing and additional requirements under danish audit regulation. this requires that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance as to whether the consolidated financial statements and the parent company financial statements are free from material misstatement.An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements and the parent company financial statements. the procedures selected depend on the auditors’ judgement, including the assessment of the risks of material misstatement

of the consolidated financial statements and the parent company financial statements, whether due to fraud or error. in making those risk assessments, the auditors consider internal control relevant to the company’s preparation of consolidated financial statements and parent company financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements and the parent company financial statements.We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.our audit has not resulted in any qualification.

Opinionin our opinion, the consolidated financial state-ments and the parent company financial state-ments give a true and fair view of the group’s and the parent company’s financial position at 31 de-cember 2013 and of the results of the group’s and the parent company’s operations and cash flows for the financial year 1 January – 31 de-cember 2013 in accordance with international financial Reporting Standards as adopted by the eu and danish disclosure requirements for listed companies.

Statement on BoarD & executiVe manage-ment’S Statementpursuant to the danish financial Statements Act, we have read the board & executive management’s statement. We have not performed any further procedures in addition to the audit of the consolidated financial statements and the parent company financial statements. on this basis, it is our opinion that the information provided in the board & executive management’s statement is consistent with the consolidated financial statements and the parent company financial statements.

Copenhagen, 25 February 2014

KPmgStatsautoriseret Revisionspartnerselskab

independent auDitorS’ rePort

Henrik Kronborg iversen State Authorised public Accountant

carsten KjærState Authorised public Accountant


oVeRAll gRoup Structure

http://sharenet.j-lauritzen.com/sites/Controller_Site/Accountssite/2013/JL Group Structure 2013 i årsrapport form_updateret 2013.11.20 Side 1

J. LauritzenSingapore Pte. Ltd.

100%

Axis Offshore Pte. Ltd

100%

100%

J. LauritzenShanghai Co. Ltd.

100%100%

Handyventure Lauritzen KosanSingapore Pte. Ltd. Singapore Pte. Ltd.

50% 100%

50%

Lauritzen Bulkers A/S Lauritzen Tankers A/SDenmark Denmark

Gasnaval S.A.

100% 100%

J. Lauritzen (USA) Inc.

J. lauritzen a/sdenmark

Lauritzen Kosan A/S

Lauritzen Offshore

Denmark100%

Lauritzen Offshore Pte. Ltd.

LKT Gas Carriers Pte. Ltd.Singapore

100%

Star Management Ass.

100%

Japan30%

34%

Spain Services A/S

Singapore Pte. Ltd.Lauritzen Shuttletankers


liSt of gRoup comPanieS

Company name Country Ownership %

J. Lauritzen A/S Denmark -Segetrans Argentina S.A. Argentina 100 Greden Limited Bahamas 100 Labas (Bahamas) Ltd. Bahamas 100 Shoreoff Invest Bermuda Ltd. Bermuda 100 J. Lauritzen Shanghai Co. Ltd China 100 Owneast Shipping Limited China 100 De Forenede Sejlskibe I/S * Denmark 43 KRK 4 ApS Denmark 100 K/S Bulkinvest 30 * Denmark 18 K/S Danred I * Denmark 44 K/S Danred II * Denmark 40 K/S Danred III * Denmark 35 K/S Danred V * Denmark 50 K/S Danskib 30 * Denmark 10 K/S Danskib 34 * Denmark 20 K/S Danskib 63 * Denmark 14 K/S Handybulk * Denmark 24 Lauritzen Bulkers A/S Denmark 100 Lauritzen Kosan A/S Denmark 100 Lauritzen Offshore Services A/S Denmark 100 Lauritzen Reefers A/S Denmark 100 Lauritzen Ship Owner A/S Denmark 100 Lauritzen Tankers A/S Denmark 100 LB Ship Owner II A/S Denmark 100 Quantum Tankers A/S *** Denmark 50 Star Management Associates ** Japan 30 Lauritzen Shuttletankers Netherlands B.V. The Netherlands 100 Axis Offshore Pte. Ltd. * Singapore 34 Handyventure Singapore Pte. Ltd. * Singapore 50 J. Lauritzen Singapore Pte. Ltd. Singapore 100 Lauritzen Kosan Singapore Pte. Ltd. Singapore 100 Lauritzen Offshore Pte. Ltd. Singapore 100 Lauritzen Shuttletankers Singapore Pte. Ltd. Singapore 100 LKT Gas Carriers Pte. Ltd. * Singapore 50 Milau Pte. Ltd. * Singapore 50 Gasnaval S.A. Spain 100 J. Lauritzen (USA) Inc. USA 100

* Joint venture** Associated company*** Accounted for as subsidiary as JL has more than 50% of the voting rights

cHinaJ. Lauritzen shanghai co. Ltd.unit 2306, chong hing finance centerno. 288 nanjing road westhuangpu district, shanghaichina 200003phone: +86 21 6358 0066fax: +86 21 6358 0077

PHiLiPPineSLauritzen kosan manila rohq unit-b 6th floor glass tower buildingno. 115 don carlos palanca Jr. streetLegaspi village, makati city 1229 phiLippines tlf: +63 2 856 7929

SingaPoreJ. Lauritzen singapore pte. Ltd.1 harbourfront Avenue#13-01/02 keppel bay towersingapore 098632phone: +65 6275 8000fax: +65 6275 7208

SPaingasnaval s.A.pAe ibarrabarriedificio A-1c/iturriondo 18e-48940 Leioa, vizcayaspainphone: +34 94 479 5600fax: +34 94 416 7316

uSaJ. Lauritzen (usA) inc.4 Landmark square, suite 150stamford, ct 06901usAphone: +1 203 961 8661fax: +1 203 964 0350

HeaD officeJ. Lauritzen A/s28, sankt Annae pladsdk-1291 copenhagen kphone: +45 3396 8000fax: +45 3396 8001website: www.j-lauritzen.comCVR: 55 70 01 17

oWnerLauritzen fonden28, sankt Annae pladsdk- 1291 copenhagen kphone: +45 3396 8425fax: +45 3396 8434email: [email protected]: www.lauritzenfonden.com

FinanCial yeaR: 1 January – 31 December

auditoRsKPMGOsvald Helmuths Vej 4PO Box 250DK-2000 Frederiksberg

annual report - j. lauritzen a/sstatic.j-l.com/imce/annual_report_2013_lores.pdfj. lauritzen a/s ·...

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