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    A.P. Møller - Mærsk A/S Group Annual Report 2012

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    In order to make the annual report more transparent and user-friendly, After the approval at the Annual General Meeting, the full annual report A.P. Moller - Maersk Group has chosen to publish a consolidated annual may also be obtained from the Danish Business Authority. Appropria- report that does not comprise the financial statements of the parent tion of profit for the year and proposed dividends from the parent company A.P. Møller - Mærsk A/S. In accordance with Section 149 of company are disclosed in note 16 to the consolidated annual report. the Danish Financial Statements Act, this consolidated annual report The full annual report comprises the Statement of the Board of Direc- is therefore an extract of the Group’s full annual report. The full annual tors and Management and the independent auditors’ report disclosed report, including the parent company financial statements, can be on pages 140 and 141. downloaded from http://investor.maersk.com/financials.cfm?Year=2012 Forward-looking statements Governing text The Group´s annual report contains forward-looking statements. The Group annual report has been translated from Danish. The Danish Such statements are subject to risks and uncertainties as various text shall govern for all purposes and prevail in case of any discrepancy factors, many of which are beyond A.P. Møller - Mærsk A/S’ control, with the English version. may cause actual development and results to differ materially from expectations contained in the Group annual report.

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    Group Annual Report 2012 Contents Page Mærsk Mc-Kinney Møller (1913-2012) 4 It all began in 1904… 6 Continuity and Growth 8 DiRectoRsʼ RepoRt Highlights for the Group 10 Outlook for 2013 13 Financial highlights 14 Maersk line: The worldʼs largest liner company, Message from the Group CEO 17 with a global network. Company profile 20 Building on the strength of the Group 22 Business units The Groupʼs business units 32 Segment overview 34 Maersk Line 36 Maersk Oil 40 APM Terminals 44 Maersk Drilling 48 Maersk Supply Service 52 Maersk Tankers 53 Maersk oil: Using innovation to unlock poten- tial, turning discoveries into production. Damco 54 SvITzEr 55 Strategic and other reportable segments 56 Unallocated activities 60 Financial report 61 Shareholders 64 risk management 67 Corporate governance 71 consoliDAteD finAnciAl stAteMents 2012 Consolidated income statement 74 ApM terminals: running efficient ports, build- Consolidated statement of comprehensive income 75 ing tomorrowʼs port infrastructure today. Consolidated balance sheet at 31 December 76 Consolidated cash flow statement 78 Consolidated statement of changes in equity 79 Notes to the consolidated financial statements 82 statement of the Board of Directors and Management 140 independent auditorsʼ report 141 Management duties 142 company overview 146 Definitions 149 company announcements 150 Maersk Drilling: Breaking ground offshore, working safely in ultra-harsh environments.

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    Mærsk Mc-Kinney Møller 1913 – 2012

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    In memoriam A.P. Moller - Maersk – Group Annual Report 2012 5 Mærsk Mc-Kinney Møller In memoriam (1913–2012) Mærsk Mc-Kinney Møller left an indelible mark on the Mr. Møller understood the big picture as well as the A.P. Moller - Maersk Group, Denmark and the interna- numerous small details that make up the whole. He also tional business community. understood the need to keep focussing on new areas. He was able to look at an issue from all angles and to chal- Mærsk Mc-Kinney Møller dedicated his life to the busi- lenge experts before making the final decision. The deci- nesses that his father had founded and which they de- sion would then be carried out during busy hours every- veloped together until A.P. Møllerʼs death in 1965. where in offices, on ships, platforms, rigs, at shipyards, terminals and in aircrafts by teams of talented and Even as a boy, the young Mærsk was involved in the office, inspired individuals, followed by an attentive Mr. Møller. at the shipyard and on the vessels. He was therefore no stranger to the business when he first joined the Com- The strength that comes from stable ownership was very pany. important to Mr. Møller. The Foundations created by his father form a guarantee for long-term stability of Group He began his apprenticeship in 1930, and the experience operations and this weighed heavily on Mr. Møllerʼs mind. he gained from shipping and banking companies in Den- As chairman of the Foundations, Mærsk Mc-Kinney mark, Germany, the United Kingdom and France was Møller was responsible for the inward consolidation of significant in shaping the unique part that Mærsk Mc- values, as well as the many public donations, both large Kinney Møller was to play in international business. and small, that have benefited society at large. Mr. Møller – as he was called, just like his father – joined Mr. Møller followed the business to the very end of his the Company in 1938 and became a partner in the Firm life. He attended the Annual General Meeting and dinner A.P. Moller in 1940. He managed the Companyʼs interests just four days before his death on 16 April 2012. in the USA from 1940 to 1947. Mr. Møllerʼs parting words to the Groupʼs Board of Di- Mærsk Mc-Kinney Møller took over the helm in 1965, pay- rectors and management team after the dinner were ing profound respect to his fatherʼs work and the values “Good Night and Goodbye – and Thank You”. that he had created and instilled. However, his attention was also directed towards new opportunities of an in- creasingly globalised world. Mr. Møllerʼs approach to the business was focussed, show- ing constant care and a great sense of responsibility to- Ane Mærsk Mc-Kinney Uggla wards the Company. His rare energy and unlimited com- mitment, combined with the support of his staff, helped expand the Company into all parts of the world.

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    6 A.P. Moller - Maersk – Group Annual report 2012 1904–1965 It all began in 1904… Todayʼs A.P. Moller - Maersk Group builds on more staff. That was the foundation for todayʼs Governance than 100 years of experience in global trade. Commitments. Mr. A.P. Møller (1876–1965) initiated and developed A.P. Møller led the activities within shipping, energy the original shipping company into a diverse group of and industries to establish the Group as a leading businesses. company not only in Denmark, but also on the inter- national business scene. A.P. Møller was born into a shipping family and his father Peter Mærsk Møller strongly supported the To secure the future of his lifetimeʼs work, A.P. Møller start up of the company. Through his daily work, A.P. established Foundations to own and manage the Møller expressed the family principles and values in Group. management and eventually imbued them on his Before returning to Denmark in 1912 1904, A.P. Møller was employed To facilitate expansion, in trading houses and shipping A.P. Møller founded the Steamship companies in England, Germany Company of 1912 and established and Russia. his own business. Upon his return, A.P. Møller took up a position with a leading ship owner in Copenhagen, but with the provision that he could invest 1913 1921 1930 in his own ships. The Maersk fleet consisted of The motor ship LEISE MÆRSK Mærsk Mc-Kinney Møllerʼs nine ships. entered the Maersk Fleet; inci- career began in Denmark. Later, dentally LEISE MÆRSK became Mr. Møller worked in shipping, the first ship on a Maersk Lineʼs brokerage and banking in Ger- first voyage in 1928. many, England and France until 1938, where he returned to Co- penhagen to work in his fatherʼs company. 1928 That year turned out to be a pivotal year for Maersk. Global consumption of petroleum products increased and in 1928 A.P. Møller seized the opportunity to add five crude oil tankers to the fleet – the beginning of Maersk 1904 1918 Tankers. Agents were contracted to han- The Steamship Company A.P. Møller was able to realise dle Maersk Lineʼs business in Svendborg was founded by the ambition to combine shipping Maersk Lineʼs first voyage took Shanghai, Hong Kong and Tokyo, A.P. Møller, supported by his with shipbuilding. Odense Steel place in 1928, inaugurating the supported by the offices in New father Peter Mærsk Møller and Shipyard was founded and ships Panama Line between the USA York and Copenhagen. leading citizens of Svendborg. would be built at this yard until and the Far East. 1966. In the period from its inaugura- The steam ship SVENDBORG New markets were explored as tion in 1918 to 1939, Odense Steel was acquired in October 1904. Maersk ships called ports in Maersk ships traded in Asia and Shipyard delivered 79 ships; of Europe, Africa and the Americas. Australia for the first time. these 29 entered the Maersk Fleet. 1900 1910 1920 1930

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    1904–1965 A.P. Moller - Maersk – Group Annual Report 2012 7 1940 The Foundations Mærsk Mc-Kinney Møller A.P. Møllerʼs concern that his became a partner in his fatherʼs life’s work would be taken over firm and travelled to New York by investors who had a different to manage the fleet during the view on running a business was German occupation of Denmark. resolved by the establishment of three foundations; The Fam- ily Foundation, The A.P. Moller and Chastine Mc-Kinney Moller Maersk Line expanded its 1962 Foundation and The Relief Foun- network, initially in the Far East The A.P. Moller Group was dation. and later to the Arabian Gulf and awarded the concession for the Africa. exploration and extraction of hy- Albeit the purposes were differ- drocarbons in Denmark. ent, the common goal was to en- sure that the Groupʼs businesses would be managed according to A.P. Møllerʼs principles and values. 1964 A.P. Møllerʼs last major initiative before his death in 1965 was to support the expansion plans of the Danish merchant Herman Salling. The result was Dansk Supermarked Group, the retail arm of Maersk. 1940-1945 1955 150 sailors and 25 of the Maersk In response to the growing energy Quietly, privately and later through Fleetʼs 46 ships were lost to war demand in the world market, the Foundations, A.P. Møller causes. Maersk Tankers acquired larger donated funds to support a range and larger ships. One of those was of causes, mainly of national im- Towards the end of the period, REGINA MÆRSK, the first ship to portance. focus was to acquire replacement have its hull painted in the distinct tonnage and regain market shares. Maersk Blue. A.P. Møller chaired the Founda- Immediately after Liberation in May tions until 1965, when Mærsk 1945 seven new buildings entered Mc-Kinney Møller became Chair- the fleet from the Odense Steel man. The family commitment con- Shipyard and the surviving ships tinues as Ane Mærsk Mc-Kinney were recovered from the warring Uggla succeeded her father in 2012 countries. in The A.P. Moller and Chastine Mc- Kinney Moller Foundation, which owns the majority of voting shares in A.P. Møller - Mærsk A/S. 1946 1959 The shipping activities were Maersk Line resumed its service The Lindø shipyard was es- expanded with special vessels between the USA and the Far East. tablished to build ships up to transporting bulk cargoes, cars Soon afterwards the first round- 200,000 tons. In 1969 the yard and refined oil products as well the-world sailings took place, via was expanded to a capacity of as supply vessels for off-shore. the Suez and Panama canals. 650,000 tons. The Group invested in industrial companies producing refined oil products and the relatively new product called plastic. 1940 1950 1960

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    8 A.P. Moller - Maersk – Group Annual Report 2012 1965–2012 Continuity and Growth Mærsk Mc-Kinney Møller (1913-2012) was the Mr. Møller was tireless in continuing his fatherʼs CEO and Chairman of the A.P. Moller - Maersk work in building up the business and did so by lead- Group from his fatherʼs death in 1965 until 1993. ing the Group into new ventures and persistently developing existing businesses. Mr. Møller remained the Chairman of the Group un- til 2003, when he passed the torch to Michael Pram Mærsk Mc-Kinney Møllerʼs virtues were founded Rasmussen. in the family background. Mr. Møller ensured that the company values are a natural part of every The foundations created by A.P. Møller between employeeʼs daily work day: 1946-1960 became the majority owners in Mærsk Mc-Kinney Møllerʼs time as Chairman (1965-2012). “The basic principle is that people can trust us… your word should be your bond”. 1965 1983 1991 Mærsk Mc-Kinney Møller Amaliehaven, a public park at Maersk Container Industry was assumed the Chair of the Group the royal residence Amalienborg, founded; now dry and refrigerated upon the death of his father was donated to the Danish state containers are manufactured in A.P. Møller. and the City of Copenhagen by China and soon in Chile. The Moller Foundation. Maersk Line expanded its global presence from 40 countries in 1990 to more than 100 countries in 2000. 1966-1967 Maersk Line introduced con- Maersk Line containerised its Large acquisitions positioned Todayʼs Maersk Oil commenced tainer ships on the Panama Line Asia-Europe and Trans-Atlantic Maersk Line as the leading con- exploration activities in the Dan- between Asia and USA. Todayʼs services, and made its first acqui- tainer carrier in the world. ish part of the North Sea, together Damco was founded as Mercan- sition of competitors. with its partners in DUC (Dansk tile to offer supply chain manage- The worldʼs first double hulled Undergrunds Consortium). In sup- ment and consolidation of cargo. VLCC and largest container ships port of this effort, the first supply were built at the Odense Steel vessels entered the Maersk Fleet. Shipyard at Lindø. Maersk Line included Asia- 1972 Europe to its network. First oil was produced from the 1993 North Sea fields by DUC – Mærsk Mc-Kinney Møller with- Maersk Tankers took delivery of Maersk Oil and its partners. drew from daily management of its first product tankers and VLCC the Group. (Very Large Crude Carrier). Maersk Tankers received its first gas tanker and a series of ULCCʼs (Ultra Large Crude Carriers). New initiatives in the decade in- 1984 1994 cluded: Maersk Data and Maersk Maersk Oil produced the first Maersk Oil initiated oil produc- Drilling were founded, SVITZER natural gas from the North Sea tion in Qatar. was acquired. and started preparations for in- ternational expansion. Mercantile, later Maersk Logistics 1969 and now Damco, expanded to Maersk Air was founded. The pas- To optimise production, Maersk meet customer demand for supply senger activities were divested in Oil developed ground-breaking chain management. 2005; the short-haul freight car- horizontal drilling technologies. rier Star Air continues operation. 1960 1970 1980 1990

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    1965–2012 A.P. Moller - Maersk – Group Annual Report 2012 9 2000 Names and Logos 1904 Her Majesty Queen Margrethe II in Maersk The Maersk Star was chosen as bestowed Mærsk Mc-Kinney Innovation is part of the Maersk the logo for the Steamship Com- Møller with the Order of the culture, as are traditions and we pany Svendborg. Elephant, the most distinguished strive to build our actions on our Danish Order. heritage. The symbols and the names in the Group are valuable for us, 1906 2001 2011 not least because of their back- APM Terminals was established Maersk Line announced the The Steamship Company ground with the founding family. Svendborg took delivery of its on the basis of Maersk Lineʼs ter- order for 20 containerships, nick- minal activities. named Triple E for Energy effi- second ship. It was named PETER ciency, Economy of scale and the The Mærsk name derives from MÆRSK and two traditions were Environment. First ship will enter Peter Mærsk Møllerʼs side of the established; using family related the Maersk Fleet in 2013. family. names in ship names and using the MÆRSK name in ship names. His middle name came from his 2003 2011 mother, Kiersten Pedersdatter Mærsk Mc-Kinney Møller Following the divestments of Mærsk, whose family originally stepped down from the chairman- several business units during was from West Slesvig. The first ship of the Company. Mr. Møller the 2000ʼs, A.P. Moller - Maersk known bearer of the name was remained chairman of the Foun- presented its focused strategy Anders Nielsen Mersch, who dations. within shipping and energy. lived in the area between 1617 and 1698. Mærsk (also spelled mersk or 2011 marsk) is Danish for marshland, 1928 Maersk Drilling continued its The first logo was implemented which is the typical landscape in expansion with the order for four as part of Maersk Lineʼs efforts to West Slesvig. In the international drill ships. market its new liner service from context, MAERSK is used. the USA to the Far East. The shipping activities traded un- 2004 der the A.P. Møller name until the By far its largest donation, first use of MAERSK in a brand The Moller Foundation built the 2012 name; MAERSK LINE from 1928. Opera in Copenhagen to the Mærsk Mc-Kinney Møller died Danish state. and his youngest daughter Ane Mærsk Mc-Kinney Uggla assumed the Chairmanship of A.P. Moller and Chastine Mc-Kinney Moller Foundation. 1886 1972 The white, seven-pointed The current Maersk logo and Maersk Star was introduced MAERSK letter fonts were devel- when A.P. Møllerʼs father, Captain oped for Maersk Line, but even- Peter Mærsk Møller, put it on the tually they were introduced in 2006 funnel of his first steam ship, most business units in the Odense Steel Shipyard at Lindø named LAURA. A.P. Moller - Maersk Group. delivered the worldʼs largest con- tainer ships to Maersk Line. In 2009 it was decided to discon- The star was placed on a blue tinue shipbuilding due to the band surrounding the black funnel competition from Asia. – as it is on todayʼs Maersk ships. 2000 2010

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    10 A.P. Moller - Maersk – Group Annual report 2012 Directorsʼ report Directorsʼ report (figures for 2011 in parenthesis) The Group delivered a profit of USD 4.0bn (USD 3.4bn), which was slightly higher than the latest announced outlook of around USD 3.7bn expressed on 9 November 2012. The return on invested capital (rOIC) was 8.8% (8.3%). Profit was positively affected by the settlement of an Cash flow from operating activities was USD 7.6bn (USD Algerian tax dispute in Q1 of USD 899m combined with 7.3bn) while cash flow used for capital expenditure was improved volumes, rates and unit costs for Maersk Line. USD 6.3bn (USD 9.8bn) after netting sales proceeds amount- Profit was negatively affected by a decline in Maersk Oilʼs ing to USD 3.4bn (USD 1.7bn). The Groupʼs free cash flow share of production and impairment losses of net USD was positive USD 1.3bn (negative USD 2.5bn). 405m of which USD 268m related to Maersk Tankers in Q3. Divestment gains were USD 636m (USD 890m) with Net interest-bearing debt increased by USD 339m to USD the divestment of two FPSOs, Maersk LNG and Maersk 15.7bn (USD 15.3bn). Total equity was USD 39.3bn (USD Equipment Service as the largest transactions. Revenue 36.2bn); positively affected by the profit of the year of USD decreased slightly to USD 59.0bn (USD 60.2bn). 4.0bn. Dividend paid was USD 945m (USD 924m). Highlights for the Group 2012 DKK million USD million 2012 2011 Change 2012 2011 Change revenue 342,058 322,520 6% 59,036 60,230 -2% Profit before depreciation, amortisation and impairment losses, etc. 72,897 78,506 -7% 12,581 14,661 -14% Depreciation, amortisation and impairment losses 30,973 28,889 7% 5,346 5,396 -1% Gain on sale of non-current assets, etc., net 3,683 4,764 -23% 636 890 -29% Profit before financial items 46,893 55,032 -15% 8,093 10,277 -21% Profit before tax 42,517 50,452 -16% 7,338 9,422 -22% Profit for the year 23,395 18,083 29% 4,038 3,377 20% Cash flow from operating activities 44,202 38,886 14% 7,629 7,262 5% Cash flow used for capital expenditure -36,619 -52,259 -30% -6,320 -9,759 -35% return on invested capital after tax (rOIC) 9.0% 7.8% 8.8% 8.3%

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    Directorsʼ report A.P. Moller - Maersk – Group Annual Report 2012 11 Board of Directors Left to right: John Axel Poulsen, Erik Rasmussen, Robert Routs, Lars Pallesen, vice chairman Niels Jacobsen, vice chairman Ane Mærsk Mc-Kinney Uggla, chairman Michael Pram Rasmussen, Leise Mærsk Mc-Kinney Møller, Jan Leschly, Jan Tøpholm, Arne Karlsson, Sir John Bond. With an equity ratio of 52.9% (51.4%) and a liquidity was USD 1.8bn (USD 899m) and cash flow used for capital buffer of USD 13.6bn (USD 11.3bn), the Group is well expenditure was USD 3.6bn (USD 3.2bn). prepared and determined to execute on its long-term growth aspirations and seize market opportunities Maersk Oil made a profit of USD 2.4bn (USD 2.1bn) and a within its core businesses despite continued con- ROIC of 36.6% (37.2%). The result was positively affected straints in the financial markets. by the one-off tax income of USD 899m from the settle- ment of an Algerian tax dispute and a USD 91m gain from Maersk Line made a profit of USD 461m (loss of USD a partial divestment of interests in Brazil. This was partly 553m) and a ROIC of 2.4% (negative 3.1%). The result offset by a 23% decline in the Groupʼs share of oil and gas was positively affected by improved volumes, rates and production to 257,000 boepd (333,000 boepd), primarily unit costs. The average freight rates were 1.9% higher at due to a lower share of production in Qatar and Denmark. 2,881 USD/FFE (2,828 USD/FFE) and volumes increased by 5% to 8.5m FFE (8.1m FFE). Bunker consumption per Development of the portfolio included maturation of the FFE was reduced by 11% and headquarters headcount significant projects Chissonga in Angola and Johan Sver- was reduced significantly. drup in Norway, and an agreement of further develop- ment of the Al Shaheen field in Qatar and start-up of Maersk Line announced and implemented significant Dunga Phase II production in Kazakhstan. Exploration ex- general rate increases on most trades backed by active penses were USD 1.1bn (USD 1.1bn). Cash flow from oper- capacity adjustments in the form of slow steaming, scrap- ating activities was USD 3.9bn (USD 4.3bn) and cash flow pings, idling and blanked sailings. The total fleet capacity used for capital expenditure was USD 2.0bn (USD 3.8bn). increased by 4% to 2.6m TEU (2.5m TEU). The capacity growth in owned fleet was partly offset by redelivery of APM Terminals made a profit of USD 723m (USD 648m) time charter vessels. Maersk Line maintained its market and ROIC was 13.6% (13.1%). The result was positively share for the full year. Cash flow from operating activities affected by pre-tax divestment gains of USD 123m (USD

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    12 A.P. Moller - Maersk – Group Annual Report 2012 Directorsʼ report 28m). Number of containers handled increased by 6% to Europe segment and entered into an agreement to divest 35.4m TEU (33.5m TEU), ahead of the market growth of the Handygas segment. The Handygas transaction will 4%, boosted by additions to the portfolio. take place in 2013. The divestments are equivalent to 14% of the fleet measured on invested capital. The main portfolio changes were the acquisition of a 37.5% co-controlling stake in Global Ports Investments Damco made a profit of USD 55m (USD 63m) and ROIC PLC, Russia, as well as the take-over of operations in was 13.5% (24.4%). Damco significantly increased its Gothenburg, Sweden. New terminal projects were se- service offerings within the airfreight market through cured in Lazaro Cardenas, Mexico, and in Ningbo, China. the acquisition in 2011 of NTS International Transport Cash flow from operating activities was USD 975m (USD Services in China. In October 2012, Damco acquired 912m) and cash flow used for capital expenditure was the freight forwarder Pacific Network Global Logistics, USD 1.4bn (USD 688m). strengthening its position in Oceania. Maersk Drilling made a profit of USD 359m (USD 488m) SVITZER made a profit of USD 9m (USD 102m) after and ROIC was 8.3% (12.5%). The result was negatively impairment of goodwill of USD 102m related to the impacted by delayed start-up and maintenance yard Adsteam activities acquired in 2007. ROIC was 0.6% stays of two units. (6.4%). During 2012, Maersk Drilling has entered into three new Dansk Supermarked Group made a profit of DKK 1.3bn major contracts and has now secured contracts for five (DKK 5.4bn including gain from sale of Netto, UK) and a out of seven newbuildings to be delivered in 2013-2015. ROIC of 8.2% (35.1%). The Group opened 71 new stores The revenue backlog increased to USD 7.0bn (USD 4.9bn), and closed 55 stores of which 37 were Tøj & Sko stores. and the one-year forward coverage by the end of 2012 was 98% (98% at the end of 2011). Operational uptime Maersk FPSOs and Maersk LNG made a profit of USD averaged 92.1% (95.6%). Cash flow from operating activi- 336m (USD 10m) and a ROIC of 33.9% (0.4%), positively ties was USD 651m (USD 825m) and cash flow used for affected by divestment gains of USD 245m. capital expenditure was USD 589m (USD 600m). SHARE PRICE AND DIVIDEND Maersk Supply Service made a profit of USD 132m During 2012, the Maersk B-share price increased by 12.3% (USD 243m) and a ROIC of 6.1% (11.2%), negatively af- to DKK 42,600. The dividend payout proposed by the Board fected by general oversupply in most segments of the of Directors is DKK 1,200 per share of DKK 1,000, represent- market, except in the emergency response and rescue ing a dividend yield of 2.8% based on the B-share closing segment. price as of 31 December 2012. Maersk Tankers made a loss of USD 312m (loss of USD QUARTERLY FIGURES 153m) and a negative ROIC of 8.3% (negative 4.3%). The Quarterly figures for the Group for 2010-2012 are avail- result was negatively affected by a USD 268m impair- able on http://investor.maersk.com/financials.cfm ment loss. Maersk Tankers divested the Small Northwest

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    Outlook for 2013 A.P. Moller - Maersk – Group Annual report 2012 13 Outlook for 2013 The Group expects a result for 2013 below the 2012 result (USD 4.0bn). The operational result is expected to be in line with 2012 (USD 2.9bn) excluding impairment losses, divestment gains and gain from the tax set- tlement in Algeria. Cash flow used for capital expenditure is expected to be Maersk Drilling has almost full contract coverage in somewhat higher than the USD 6.3bn in 2012, while cash 2013 and expects a result above the 2012 result (USD flow from operating activities is expected to be stable. 359m). Maersk Line expects a result above 2012 (USD 461m) The total result from all other activities is expected to based primarily on further unit cost reductions. Global be above the 2012 result excluding divestment gains and demand for seaborne containers is expected to increase impairment losses. by 4-5% in 2013, lower on the Asia–Europe trades but supported by higher growth for imports to emerging The outlook for 2013 is subject to considerable uncertainty, economies. not least due to developments in the global economy. The Groupʼs expected result depends on a number of factors. Maersk Oil expects a result significantly below the re- Based on the expected earnings level and all other things sult for 2012 (USD 2.4bn), which included a one-off tax being equal, the sensitivities for four key value drivers are income of USD 899m from the settlement of an Algerian listed in the table below. tax dispute. The operational result is expected to be be- low the operational result for 2012 (USD 1.5bn) exclud- ing one-off tax impacts, impairment losses and gains. Maersk Oil expects its share of production to be 240,000- 250,000 boepd, lower in the first half than the second half of 2013 at an average oil price of USD 105 per barrel. The lower production share is predominantly caused by a natural decline and reduced ownership share in Den- mark, countered by start-up in El Merk and Gryphon. Ex- factors change effect on ploration expenses are expected to be above USD 1.0bn. the Groupʼs profit APM Terminals expects a result above 2012 (USD 723m) Oil price for Maersk Oil +/- 10 USD/barrel +/- USD 0.2bn Bunker price +/- 100 USD/tonne +/- USD 0.1bn and to grow ahead of the market, supported by volumes Container freight rate +/- 100 USD/FFE +/- USD 0.9bn from new terminals, whilst improving productivity in Container freight volume +/- 100,000 FFE +/- USD 0.2bn existing facilities.

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    14 A.P. Moller - Maersk – Group Annual report 2012 Financial highlights Amounts in DKK million Financial highlights 2012 2011 2010 2009 2008 revenue 342,058 322,520 315,396 260,336 312,122 Profit before depreciation, amortisation and impairment losses, etc. (EBITDA) 72,897 78,506 89,218 49,262 83,945 Depreciation, amortisation and impairment losses 30,973 28,889 33,822 30,317 26,092 Gain on sale of non-current assets, etc., net 3,683 4,764 3,810 1,062 4,905 Share of profit/loss in associated companies 1,286 651 461 360 -1,882 Profit before financial items (EBIT) 46,893 55,032 59,667 20,367 60,876 Financial items, net -4,376 -4,580 -5,281 -5,463 -8,057 Profit before tax 42,517 50,452 54,386 14,904 52,819 Tax 19,138 32,447 26,174 20,393 35,287 Profit/loss for the year – continuing operations 23,379 18,005 28,212 -5,489 17,532 Profit/loss for the year – discontinued operations 16 78 3 - 106 Profit/loss for the year 23,395 18,083 28,215 -5,489 17,638 A.P. Møller - Mærsk A/Sʼ share 21,673 15,189 26,455 -7,027 16,960 Total assets 420,691 404,743 374,723 345,199 343,110 Total equity 222,544 207,935 192,962 158,868 158,394 Cash flow from operating activities 44,202 38,886 56,972 25,098 43,422 Cash flow used for capital expenditure -36,619 -52,259 -26,078 -42,195 -52,375 Investments in property, plant and equipment and intangible assets 55,327 58,376 31,636 49,586 62,295 return on invested capital after tax (rOIC) 9.0% 7.8% 12.7% -0.2% 10.0% return on equity after tax 10.9% 9.0% 16.0% -3.5% 11.6% Equity ratio 52.9% 51.4% 51.5% 46.0% 46.2% Earnings per share (EPS), DKK 4,964 3,479 6,061 -1,674 4,122 Diluted earnings per share, DKK 4,962 3,478 6,058 -1,674 4,122 Cash flow from operating activities per share, DKK 10,124 8,907 13,052 5,980 10,553 Dividend per share, DKK 1,200 1,000 1,000 325 650 Share price (B share), end of year, DKK 42,600 37,920 50,510 36,600 28,100 Total market capitalisation, end of year 180,388 160,982 217,464 156,901 116,281

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    Financial highlights A.P. Moller - Maersk – Group Annual report 2012 15 Amounts in USD million Financial highlights 2012 2011 2010 2009 2008 revenue 59,036 60,230 56,090 48,580 61,270 Profit before depreciation, amortisation and impairment losses, etc. (EBITDA) 12,581 14,661 15,867 9,193 16,478 Depreciation, amortisation and impairment losses 5,346 5,396 6,015 5,658 5,122 Gain on sale of non-current assets, etc., net 636 890 677 198 963 Share of profit/loss in associated companies 222 122 82 67 -369 Profit before financial items (EBIT) 8,093 10,277 10,611 3,800 11,950 Financial items, net -755 -855 -939 -1,019 -1,582 Profit before tax 7,338 9,422 9,672 2,781 10,368 Tax 3,303 6,060 4,655 3,805 6,927 Profit/loss for the year – continuing operations 4,035 3,362 5,017 -1,024 3,441 Profit/loss for the year – discontinued operations 3 15 1 - 21 Profit/loss for the year 4,038 3,377 5,018 -1,024 3,462 A.P. Møller - Mærsk A/Sʼ share 3,740 2,836 4,705 -1,311 3,329 Total assets 74,339 70,444 66,756 66,511 64,925 Total equity 39,325 36,190 34,376 30,610 29,972 Cash flow from operating activities 7,629 7,262 10,132 4,679 8,524 Cash flow used for capital expenditure -6,320 -9,759 -4,638 -7,874 -10,281 Investments in property, plant and equipment and intangible assets 9,549 10,901 5,626 9,252 12,278 return on invested capital after tax (rOIC) 8.8% 8.3% 12.2% -0.2% 10.2% return on equity after tax 10.7% 9.6% 15.4% -3.4% 11.8% Equity ratio 52.9% 51.4% 51.5% 46.0% 46.2% Earnings per share (EPS), USD 857 650 1,078 -312 809 Diluted earnings per share, USD 856 649 1,077 -312 809 Cash flow from operating activities per share, USD 1,747 1,663 2,321 1,115 2,072 Dividend per share, USD 212 174 178 63 123 Share price (B share), end of year, USD 7,528 6,600 8,998 7,052 5,317 Total market capitalisation, end of year 31,876 28,018 38,741 30,231 22,002 Average USD/DKK exchange rate 5.79 5.35 5.62 5.36 5.09 End of year USD/DKK exchange rate 5.66 5.75 5.61 5.19 5.28 Maersk Line Transported volumes (FFE in million) 8.5 8.1 7.3 6.9 7.0 Average rate (USD per FFE) 2,881 2,828 3,064 2,370 3,284 Average fuel price (USD per tonne) 661 620 458 342 520 Maersk Oil Average share of oil and gas production (thousand barrels of oil equivalent per day) 257 333 377 428 424 Average crude oil price (Brent) (USD per barrel) 112 111 80 62 97 APM Terminals Containers handled (million TEU weighted with ownership share) 35.4 33.5 31.5 30.9 33.3

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    The Executive Board functions as the day-to-day management and consists of: From the top left: Jakob Thomasen, Trond Westlie, Nils S. Andersen (Group CEO), Claus V. Hemmingsen. From the top right: Søren Skou, Kim Fejfer.

  • Page 17

    Message from the Group CEO A.P. Moller - Maersk – Group Annual report 2012 17 Message from the Group CEO The Group delivered a satisfactory result in 2012, continuing to execute on its strategy including a significant investment programme with focus on building and expanding four world class businesses over the next five years. The result and return on invested capital were above 2011 but below the target of 10% over the cycle, mainly due to continued poor shipping markets affecting container and tanker earnings. The non-shipping activities continue to deliver good re- strong pillars in the Group each with profits above USD sults. Our business units are competitive and achieve high 1.0bn and world class operational performance. marks from customers and partners for performance and reliability. Maersk Line managed to reduce costs and im- The Group was successful in exiting activities no longer prove rates after a difficult start to the year in particular deemed core businesses such as Maersk LNG and the due to low container freight rates. large FPSO Maersk Peregrino, freeing up capital total- ling up to USD 3.4bn for investments in continuing busi- PROMOTING GROWTH nesses. As global growth remains subdued with 2.5% in 2012 and a similar level expected for 2013, the weakness in the The Group also made progress on safety measures con- main shipping corridors is expected to continue in the tinuing last yearʼs positive development. Still, the num- short term. By focusing our transport and infrastructure ber of casualties remains too high. In 2012, 17 colleagues investments on growing markets, the Group can help un- lost their lives at work. We consider one fatality to be one leash economic potential in countries where supply chain too many, and we are committed to eliminating fatalities bottlenecks are barriers to growth. through systematic safety improvements. The container vessels received for Maersk Lineʼs African DELIVERING ON PRIORITIES and South American networks, the acquisition of Global With the expectation of continued slow growth in 2013, Ports in Russia, and construction of a major container ter- focus on operation and performance in our business units minal in Mexico are examples of such investments and become key for the Group to deliver a good result and live partnerships with governments. The Group will continue up to the expectation of our partners and customers. to leverage its global presence to pursue more opportuni- ties in growth markets in order to achieve a healthy geo- Part of this will be to secure progress on a number of very graphical mix long term. significant projects across the Groupʼs strategic core busi- nesses: Further, the Group is constantly developing its portfolio of businesses to ensure that positions are strengthened For Maersk Oil, the most important target is to deliver in the most promising segments of the industries in which progress as planned on key projects such as El Merk in its businesses operate. Algeria, Chissonga in Angola, and Johan Sverdrup in the Norwegian sector of the North Sea. STATING OUR AMBITIONS The Group held its first capital markets day in October In Maersk Drilling, three new drilling rigs are coming 2012. In a volatile world, strategies and objectives will pe- into the fleet at the end of 2013 and the beginning of riodically be revised, but by stating our ambitions we aim 2014. The aim is to get them delivered and put into to lift our performance and motivate the entire organisa- operation without delays or extra cost. tion to work together to build an even stronger company to the benefit of our shareholders and partners across our Maersk Line will keep managing its capacity effectively businesses and across the world. Maersk Line, Maersk Oil, during the introduction of the first new Triple-E ships APM Terminals and Maersk Drilling have all made pro- which will come into the fleet this year. gress towards achieving their objectives of becoming

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    18 A.P. Moller - Maersk – Group Annual Report 2012 Message from the Group CEO APM Terminalsʼ top priority is to effectively execute on tunities. The Group has maintained its financial flexibility the Santos terminal project in Brazil (opening early 2013) and is well-prepared to execute on its investment plans. and the Maasvlakte II project in The Netherlands. It has a strong liquidity buffer and no need for near-term refinancing. Another priority is to optimise our balance sheets for further growth. It emerges from the Groupʼs significant On balance, 2012 was a good year for the A.P. Moller - growth plans which in 2013 entail investments of around Maersk Group and I want to thank our employees and USD 9bn. On top of the commitments already made, the leaders for their strong performance and dedication. Group expects attractive opportunities to occur in the coming years. All business units will therefore engage in an effort to clean their balance sheets of underperform- ing assets and terminate marginal non-core activities to release capital for the most profitable investments. Other capital effectiveness initiatives will be introduced to ena- ble the Groupʼs ability to pursue attractive growth oppor- Nils S. Andersen

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    Maersk Line It can be a spectacular experience to watch how the morning mist creeps in as the sun rises at sea. This particular photo was among the most shared photos on Maersk Lineʼs social media channels in 2012.

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    20 A.P. Moller - Maersk – Group Annual report 2012 Company profile Company profile The A.P. Moller - Maersk Group is represented in 130 supporting the global demand For energy countries, employing around 121,000 people and is The Group is involved with production of oil and gas and headquartered in Copenhagen, Denmark. other oil related activities including drilling, offshore ser- vices, FPSOs, and transportation of crude oil and products. In addition to being one of the worldʼs largest shipping companies, the Group is involved in a wide range of ac- The Groupʼs major businesses are displayed in the graphic. tivities within energy, transportation, offshore and retail. A more comprehensive list of companies is available on: http://investor.maersk.com/financials.cfm?Year=2012 FaCilitating global Containerised trade Maersk Line carries around 14% of all seaborne contain- ers and, together with APM Terminals and Damco, pro- vides infrastructure for global trade. maersk Container industry Is a manufacturer of dry containers, 3. Operates a global terminal reefer containers and refrigeration MAERSK network in 68 countries systems CONTAINER INDUSTRY 1. A fleet of around 600 vessels and a number of containers corre- sponding to more than 4.0m TEU (a 20 foot long container) SVITZER sVitZer Is a global market leader within MAERSK LINE towage, salvage and emergency response, with a fleet close to 500 vessels MAERSK OIL 2. An average share of oil and gas production of 257,000 barrels of oil equivalent per day in 2012

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    Company profile A.P. Moller - Maersk – Group Annual Report 2012 21 maersk line is the maersk oil is an inter- apm terminals has its maersk drilling is a Groupʼs largest business unit national oil and gas company core expertise in the devel- leading global operator of in terms of revenue and the with roots in the North Sea go- opment, construction and high-technology drilling rigs. leading container shipping ing 50 years back in time, now operation of ports and inland Maersk Drilling provides company in the world. Maersk with operations in many parts services with a Global Termi- offshore drilling services in Line is consistently recognised of the world. Maersk Oil has nal Network of 62 port facili- several key regions, support- as the most reliable container specialised in turning mar- ties in 40 countries and Inland ing the worldʼs oil and gas shipping company in the ginal and challenging fields Services operations in over companies with one of the industry. into commercial successes. 160 locations in 47 countries. worldʼs youngest and most advanced fleets. damco dansk supermarked group is present in more than 90 countries Operates 18 bilka supermarkets, 89 føtex and manages more than 2.7 million TEU supermarkets, 2 salling department stores of ocean freight and supply chain man- and 1,210 netto discount supermarkets danske bank agement volumes as well as more than located in Denmark, Germany, Poland and 210,000 tonnes of airfreight annually Sweden A.P. Moller - Maersk owns a 20% stake in one of the biggest banks in the Nordics NETTO DAMCO MAERSK TANKERS MAERSK SUPPLY SERVICE maersk tankers maersk supply service Owns and operates a fleet of 162 crude oil carriers, product tankers, and gas carriers. The Maersk Tank- A fleet of more than 50 vessels ers fleet is one of the largest, most modern and that provides worldwide services most diversified independent fleets in the world to the offshore and associated industries 4. The company is a MAERSK FPSOs specialist in harsh and maersk Fpsos deep water environ- ments operating 16 owns and operates four off- MAERSK DRILLING jack-up rigs and shore floating production storage and offloading units (FPSOs) floaters servicing major oil companies

  • Page 22

    22 A.P. Moller - Maersk – Group Annual Report 2012 Building on the strength of the Group Building on the strength of the Group The Groupʼs aspiration is to continue building a first class conglomerate. This will be achieved through a disciplined allocation of capital across Group businesses, active portfolio management, a clear funding strategy, operational excellence, technological innovation and development of human resources. Strategic direction The Group will continue to focus investments in the CAPITAL ALLOCATION four core growth businesses Maersk Line, Maersk Oil, Today 70% of the Groupʼs invested capital is within the APM Terminals and Maersk Drilling. Investments in the four core growth businesses. By allocating more than opportunistic core businesses Maersk Supply Service, 90% of the Groupʼs capital expenditures to the four core Maersk Tankers, Damco and SVITZER will be continued growth businesses, their share of invested capital will on the basis of continuous evaluation of opportunities. reach at least 75% of the Groupʼs invested capital by 2017. The strategic investments Dansk Supermarked Group The total amount of the invested capital in the Group is and Danske Bank will grow mainly through own cash expected to grow 30-40% during the same period as re- flow generation and own resources. Assets managed for sult of a high investment level. value will continue to be developed to optimise value. The Group will also continue to build winning businesses The Groupʼs target is to achieve a return on invested and strengthen the respective competitive positions of capital (ROIC) above 10% with at least USD 1.0bn profit its smaller core businesses. An opportunistic approach contribution from each of the four core growth busi- will be taken if their respective markets present oppor- nesses and to deliver gradually increasing value and tunities worth pursuing. thereby continue the historical trend of increasing divi- dends per share supported by earnings growth. The allocation of capital and the Groupʼs annual strategy review is a fully integrated process. Strategies including The overall emphasis on active portfolio management will detailed plans and opportunities for the coming years continue. The portfolio of businesses and assets is evalu- are developed with each business unit. The total capital ated in the annual review process. The existing strong requirements across businesses are prioritised with position in growth markets will remain a focus area going a view to optimising the portfolio of the Group in line forward as the Group is in a good position to assist devel- with financial policies. Evaluation parameters include in- oping countries and capitalise on their growth. dustry attractiveness, financial return forecasts, business Four world class businesses MAERSK OIL MAERSK DRILLING MAERSK LINE Maersk Line Maersk Oil APM Terminals Maersk Drilling Opportunistic core: Maersk Supply Service Maersk Tankers Damco SVITZER Strategic investments: Dansk Supermarked Group Danske Bank Assets managed for value: DFDS Höegh Autoliners Others

  • Page 23

    Building on the strength of the Group A.P. Moller - Maersk – Group Annual Report 2012 23 performance and overall strategic aspirations. The result- • 100% of the shares in Skandia Container Terminal ing plan provides the framework for each business unit. AB, Gothenburg, Sweden. Planned portfolio adjustments are integrated into the plan. The divestments for the year totalled USD 3.4bn in In line with the direction of investments towards more released cash flow, primarily: profitable and less volatile business areas, Maersk Lineʼs • Maersk LNG A/S (six fully owned and two partly share of the Groupʼs invested capital is likely to see a rel- owned vessels) ative decline from 38% today towards a 25-30% range, • FPSO Maersk Peregrino while Maersk Oilʼs, APM Terminalsʼ and Maersk Drillingʼs • Small product tankers in north-west Europe combined share of the invested capital will see a relative (13 vessels) increase from 32% towards a 45-50% range over the • Inland service activities: Maersk Equipment Service coming 4-5 years. Company, Inc. PORTFOLIO MANAGEMENT In addition, Maersk Tankers has entered into an agree- The overall emphasis on active portfolio management ment to divest its Handygas segment (11 vessels). The will continue. In order to secure the most optimal transaction is expected to be completed in 2013. business portfolio, the Group is assessing the composi- tion of its assets. In connection with this optimisation The portfolio optimisation will continue over the next the Group is participating in both strategic and oppor- years to enhance the strategic focus of the Group, but tunistic acquisitions and divestments of companies as also to take advantage of opportunities which may well as of individual assets. arise in the various industries in which the Group operates. Over the last five years, the Group has divested compa- nies and assets of more than USD 10.4bn with pre-tax FUNDING STRATEGY gains of USD 4.4bn. To support growth, secure liquidity and balance the risk to returns, the Group has developed a funding The Group has during 2012 announced and completed strategy to cater for this. The main elements are to: a series of investments and divestments across the dif- • Secure long-term commitment to support business ferent segments. The main acquisitions/investments strategy for the Group in 2012 were: • Continue to obtain funding from diversified sources • 37.5% stake in Global Ports Investments PLC, Russia ensuring access to funding in volatile times • A pro rata contribution of USD 250m in Danske Bankʼs • Support an adequate liquidity reserve to have finan- DKK 7.15bn (USD 1.2bn) capital increase in October cial flexibility at all times 2012 • Maintain a conservative capital structure and fund- Invested capital 2012, percent Cash flow and gains from divestments USD m Cash flow from divestments Divestment gains (pre-tax) 4,000 Maersk Line 3,500 30 Maersk Oil 3,000 38 APM Terminals 2,500 Maersk Drilling 2,000 Other 8 1,500 11 13 1,000 500 0 2008 2009 2010 2011 2012

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    24 A.P. Moller - Maersk – Group Annual Report 2012 Building on the strength of the Group ing profile, matching that of a strong investment- Existing loan facillities at 31 December 2012, percent grade company over the business cycle. The Group raised more than USD 5bn in new financing 11 Export credit agencies Shipfinancing in 2012 to support investments of net USD 6.3bn (USD 13 institutions 9.8bn), amortisation on the debt portfolio of USD 2.1bn 37 Bank financing (USD 3.6bn) and net repayment of revolving credit fa- Bonds 16 cilities of USD 2.0bn (net drawing of USD 1.9bn). With a Project financing in JV´s 7 Committed cash flow from operating activities of USD 7.6bn (USD 16 undrawn facilities 7.3bn) for the year and dividend payment of USD 945m (USD 924m), the Groupʼs liquidity reserve was USD 13.6bn (USD 11.3bn) at 31 December 2012. Diversification of the funding sources remains a strate- five years) and the Group has limited refinancing needs gic priority for the Group. The Group has continued to during the next 24 months. issue corporate bonds in 2012 under its Euro Medium Term Note programme, a framework providing flexi- The debt leverage in the Group (net interest-bearing debt/ bility in accessing the bond markets, of equivalent to EBITDA levels) remains within the historic range (0.5-2.0). USD 1.9bn from the NOK, EUR and SEK markets. At 31 December 2012, total outstanding bonds were USD Funding position 4.7bn (USD 2.5bn) corresponding to 24% (13%) of the At 31 December 2012, the liquidity reserve, defined as interest-bearing debt. cash and bank balances and securities of USD 2.6bn (USD 2.7bn) and committed undrawn facilities of USD 11.0bn The interest-bearing debt totalled USD 19.6bn (USD (USD 8.6bn), was USD 13.6bn (USD 11.3bn). Additionally, 19.1bn) at 31 December 2012. The Groupʼs net interest- the Group has financing commitments related to the bearing debt totalled USD 15.7bn (USD 15.3bn). The net newbuilding programme of USD 3.0bn and a number of interest-bearing debt increased slightly by USD 339m overdraft facilities relating to daily cash management during 2012 due to investments partly offset by a strong operations. development in the cash flow from operating activities and divestments of USD 3.4bn. The average cost of fund- The Group is committed to maintaining a conservative ing was 4.6% (5.0%). capital structure and funding profile matching that of a strong investment-grade company over the business cy- At 31 December 2012, the average maturity of loan facili- cle. As a consequence of the payment schedule of the in- ties in the Group was about five years (approximately vestments and potential fluctuations in the Groupʼs cash Net interest-bearing debt/EBITDA Re-payment schedule for loan facilities USD bn USD bn Drawn debt Bonds Committed undrawn facilities 2.5 12 10 2.0 8 1.5 6 1.0 4 2 0.5 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 >2019

  • Page 25

    Building on the strength of the Group A.P. Moller - Maersk – Group Annual report 2012 25 flow, some volatility in the financial profile is expected. Maersk Oil Based on the size of the committed loan facilities, includ- Maersk Oilʼs aspiration is to grow the business by almost ing investment specific financing, the maturity of the 50% to reach a share of production of 400,000 boepd by loan facilities and the capital commitments, the Groupʼs 2020, which implies significant capital expenditure in funding position is deemed satisfactory. the coming years. Maersk Oilʼs return on invested capital will decline from the 30% ROIC-level delivered in 2010- OPERATIONAL EXCELLENCE 2012; however, it is expected to stay double-digit during Operational excellence translates the strategy into tan- the business expansion phase. In the coming years, there gible actions. will be a continued emphasis on building a strong, trans- parent organisation. The Groupʼs operational performance is monitored through quarterly benchmarking of key financial and APM Terminals operational metrics, relative to key competitors. These Over the next five years, APM Terminals will continue benchmarks are used to set specific targets, build an in- to focus on their strong operational performance and to centive structure, and confirm individual KPIs through- generate at least 50% of revenue from 3rd party cust- out the Group. omers. Further to this, APM Terminals will continue to pursue investments in attractive terminals in growth The Groupʼs ambition is that all core businesses become markets, whilst improving operations in existing facili- top quartile performers within their industries and ac- ties. APM Terminalsʼ financial ambition is to deliver USD tions are defined to progress in this direction. 1.0bn to the Groupʼs profit by 2016. There are many levels and elements in performance Maersk Drilling management of which the majority are within each busi- Maersk Drillingʼs financial ambition is to deliver USD ness unit. 1.0bn to the Groupʼs profit by 2018. This is to be achieved by world class and safe operations while building a rig Maersk Line fleet of a size sufficient to be a preferred drilling partner Maersk Lineʼs ambition is to lift the financial performance of key customers. Maersk Drilling plans to extend the from an above average industry performer today to a fleet to 30 high-end rigs for operation mainly in harsh clear top quartile performer and to deliver returns above environments and deep water within the next five years. the cost of capital during the next five years. This is to be achieved through a combination of further building scal- To build value across the Group, the main priorities for able cost leadership, while continuing to maintain the the opportunistic core and the strategic investments are: leading brand position as the most reliable carrier in the • Maersk Supply Service – Build on leadership position industry. Maersk Line is to grow in line with the market, • Maersk Tankers – Protect value during cycle lows funded by own cash flow. • Damco – Profitable growth Strategic focus Maersk Line Maersk Oil APM Terminals Maersk Drilling • Top quartile performer • Share of production by 2020 • Best port operator in the • Top quartile performer • EBIT margin 5% above peers > 400,000 boepd world • 30 high-end rigs mainly for • Growing with the market and • Double digit returns • Strong brand; at least 50% harsh environment and funded by its own cash flow • Building reserves towards revenue from 3rd party deep water • Delivering stable returns 10 yearsʼ production customers • Annual profit (NOPAT) above cost of capital • Strong transparent • More attractive terminals in > USD 1.0bn by 2018 • Getting value premium from organisation growth markets customers • Annual profit (NOPAT) > USD 1.0bn by 2016

  • Page 26

    26 A.P. Moller - Maersk – Group Annual Report 2012 Building on the strength of the Group • SVITZER – Grow margins and invest in profitable extra oil production from enhanced oil recovery and contracts gas from fields judged non-commercial using existing • Dansk Supermarked Group – Return to growth in sales technologies. and increased profits. Terminals TECHNOLOGICAL INNOVATION Taking the next leap in automation: The Group invests to ensure cutting-edge technology Lift-Automated Guided Vehicles solutions across its businesses. Innovation is focused on: The new terminal at Rotterdam, Maasvlakte II will have: • Delivering better services • The biggest and most advanced quay cranes in the • Protecting employees world. They will be the first to be operated remotely • Minimising environmental impact from a central control room, allowing for more effi- • Creating new business opportunities cient operation and increased crane speeds • Ensuring cost-effectiveness. • The first Lift-Automated Guided Vehicles (L-AGV) that improve port efficiency. They will also use battery Technological innovation is carried out by technology technology to drive them, reducing vehicle emissions divisions within the Groupʼs business units, in close co- to zero operation with manufacturers, shipyards, suppliers, uni- • An automated bespoke software package will control versities and research institutes. Below are examples all the automated equipment at the terminal. This will from four of the Groupʼs core business units. optimise equipment use. Shipping Terminal automation will increase productivity by 25- Improving vessel efficiency: 30% compared to conventional terminal designs as well the ECO Retrofit Technology Programme as reduce the space needed to handle the same volume. An array of retrofit initiatives, tailored for individual vessel types. Examples include: Drilling • Fitting bulbous bows optimised for reduced fuel Training innovation: Highly advanced simulator complex consumption exceeds all known standards • Adding economisers to auxiliary engines In 2012, Maersk Drilling, together with Maersk Training • Reusing waste heat from auxiliary engines. Centre, built the most advanced drilling simulator com- plex in the drilling industry, which will enable: Projected net savings in 2013 are expected to be USD • More team training. Improving interactions between 20m. crew members on rigs helps prevent accidents • More realistic scenarios. It is possible to simulate the Oil extreme well control situations that crews may actu- Rocket science (TriGen) gives new life to mature oil fields ally need to deal with. With a rocket engine, low quality gas can be turned into clean energy, pure water and CO2. This CO2 can in turn be These new facilities at Maersk Training Centre in Svend- used to recover more oil from mature fields. The engine: borg, Denmark, will be used to train many of the 3,000 • Burns low quality gas, which might otherwise be new employees Maersk Drilling is planning to employ wasted over the coming years. • Transforms generated heat into electric power • Has pure water as a by-product; a valuable resource HUMAN RESOURCES in dry areas Human Resources work closely with the businesses to • Creates CO2 which can be pumped into mature oil ensure that the Group has an engaged, motivated work- fields to improve oil recovery. All CO2 used in this way force and a clear link between performance and rewards. is sequestered in oil reservoirs. The key HR challenges for the Group are to secure a suf- ficient number of highly qualified and well-trained em- As the demand for energy and oil increases, the poten- ployees to manage the planned growth. tial for TriGen Technology is huge - both for generating

  • Page 27

    Building on the strength of the Group A.P. Moller - Maersk – Group Annual Report 2012 27 Performance management and engagement and business units meet to develop and share their ex- Employee engagement is an important priority for the periences and skills, and to interact with senior leaders. Group as engaged employees deliver high performance Rolighed hosts management team meetings, leadership and secure a good and positive work environment. The development programmes, and expert speakers come to annual Employee Engagement Survey had a 91% re- share their latest thinking. Such interactions are a plat- sponse rate in 2012, the highest to date, indicating the form for continuously developing leaders and businesses. level of importance, employees place in the survey. Diversity and inclusion Leadership development The Group continued its focus on diversity and inclusion The Group is investing in developing the future leaders of during 2012, supporting leaders in managing diverse teams its businesses. and implementing initiatives to accelerate career progres- sion of women as well as talents in growth markets. The management centre, Rolighed, north of Copenhagen, Denmark, opened late 2011. Rolighed has become a place Globally, the Groupʼs representation of women in where leaders and global talents from different locations senior management was 5% (4%) at vice president level,

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    28 A.P. Moller - Maersk – Group Annual Report 2012 Building on the strength of the Group 10% (9%) in senior management and 20% (21%) in middle Maersk Oil management (excluding Dansk Supermarked Group and Attracting and retaining talent most joint venture companies). The demand for experienced and talented oil and gas professionals is increasing significantly. The industry The Groupʼs on-going ambition to expand in growth mar- is facing challenges given portfolios with complex and kets is also reflected in the efforts to strengthen recruit- numerous projects to be executed. ment and other HR activities to ensure a solid foundation for a long term presence in these locations. Maersk Oil has to continue attracting and retaining talent to sustain a strong and well-balanced people pipeline. In 2012, the Group achieved nominations for the Diver- sity in the Workplace Award by the Danish Institute for Maersk Oil wants to ensure that junior staff recruited Human Rights and for European Diversity Awards in the for one of the most attractive graduate programmes in category Company of the Year. The aspiration is to be a the industry can benefit from the coaching and mentor- world-recognised inclusive employer, embracing and ing of the more experienced professionals. Accelerated leveraging multiple forms of diversity, constantly com- development is a focus area of the younger generations mitted to further improving in this area. and of the company, and Maersk Oil ensures that oppor- tunities to learn are available. Data-driven decision-making A new global Human Resources system was imple- Similarly, Maersk Oil focuses on attracting experienced mented during 2012, replacing around 90 different Hu- professionals to complement the work force. man Resources IT solutions across the Group. The Hu- man Resources system supports the human resources Lately, in an effort to monitor the pace of growth and administration and offers comprehensive self-service demand for professionals, the Maersk Oil leadership functionalities for employees and managers. team has refocused manpower efforts to ensure that the human resources are allocated to the projects with the Key priorities in the business units highest value creation. The prioritisation is done by the The Groupʼs Human Resources department works in close global technical functions in close partnership with the cooperation with the Human Resources departments in country organisations. the business units. The four core growth businesses each have their key priorities and focus areas to support their APM Terminals respective strategies. Safe operations Safety is APM Terminalsʼ license to operate. In order to Maersk Line further emphasise and refocus the safety culture, an ex- Simplicity, focus and teamwork perienced senior executive with comprehensive insight In supporting the strategy of cost leadership, the Human in all aspects of the business has been appointed as an Resources focus will be on driving the strategy and related internal Safety Activist. This change has substantially “Must Win Battles” through the organisation including the increased the focus on safety from all employees during three cultural amplifiers identified as critical for success; 2012. simplicity, focus and teamwork. APM Terminals is an industry leader with a strong and The second priority area is to drive improvements in the continuing record of growth, meaning that APM Termi- performance management approach and culture to en- nals can attract good people but also that competitors sure that Maersk Line can deliver superior performance wish to hire employees from APM Terminals. to the Group. The engagement survey results, which indirectly measure The HR team will support the focus areas by providing the quality of APM Terminalsʼ leadership, the productivity global data and develop plans for talent management, of the workforce and the likelihood of retaining staff, con- succession planning and diversity. tinue to improve and in 2012 entered the upper quartile of a global range of benchmark companies.

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    Building on the strength of the Group A.P. Moller - Maersk – Group Annual Report 2012 29 To further support the emphasis on the importance of SUSTAINABILITY leadership, all levels of management and supervision The Group is active in industries that are core to global are now covered by a leadership development suite of economic growth and development: trade, energy and training programmes. infrastructure. Combined with the Groupʼs growth and prospects in emerging economies, sustainability chal- Recognising the importance of reward as a motivator lenges and opportunities are present throughout the for long term performance, an APM Terminals incentive Groupʼs activities. plan for managing directors was introduced in 2012 in- tended to aid retention. The Groupʼs sustainability strategy focuses on integrat- ing sustainable practices into the activities in each of the Maersk Drilling operating businesses. Supporting this strategy are tar- Recruiting and integrating 3,000 new employees gets for each of the sustainability issues that have been The growth strategy entails hiring and integration of determined most material to the Group. A Sustainability 3,000 new employees by 2018. The first 1,300 will be Council oversees compliance with Group standards and hired between 2013 and 2015. Recruitment represents a the integration of sustainability across the businesses. significant challenge due to shortage of skilled people for The Council reports to the Executive Board which has the general growth in the drilling industry. overall responsibility for sustainability matters. To ensure a sustainable increase in the workforce, Safety Maersk Drilling has launched several initiatives such The safety of employees is a key priority, and the Group as increased intake on talent programmes to develop continuously monitors performance and pushes for im- more competencies, improved induction process to de- provements. The number of fatal accidents that occurred crease time to competency and integrate new employees during operations grew in 2012. This is unacceptable and quickly, and a driller trainee programme to develop all- the Group fundamentally believes that all fatal accidents round competencies. can be prevented. The rise in fatal accidents in 2012 con- firms the decision to increase the focus on process safety Individual and team training is conducted through a and risk management. structured training programme which includes the use of the most advanced offshore drilling simulator in the CO2 emissions world. To ensure a safe and efficient operation of the new The Group has achieved an 8% improvement in CO2 effi- rigs in compliance with the processes, systems and ciency since 2010, mainly driven by large improvements values, the teams on the new units will be a combination in the container business. Both the relative and absolute of experienced employees and new hires enabling an ef- CO2 emissions decreased in 2012. The improved efficiency fective integration of the new employees. in shipping affects the Groupʼs CO2 performance substan- Fatalities CO2 emissions CO2 improvement Number of fatal accidents 1,000 tonnes CO2 eq. Relative CO2 reduction (2010 baseline) (operational scoped) 17 40,969 37,673 38,631 3.8 6.6 13 7.3 Maersk Line 12 Share of Maersk Oil total CO2 eq. Maersk Tankers emissions (percent) Other 82.3 2010 2011 2012 2010 2011 2012

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    30 A.P. Moller - Maersk – Group Annual Report 2012 Building on the strength of the Group tially, as more than 80% of the emissions are derived from Responsible procurement Maersk Line. CO2 reductions were also achieved in the oil The ability to manage risks in the supply chain has since business where Maersk Oil has reduced CO2 emissions the launch of the Responsible Procurement programme from flaring from operated producing facilities by 86% in 2011 taken a step forward. The Group has approached since 2007. In 2012, the Group raised its relative CO2 re- 1,985 external vendors (equivalent to 32% of the Groupʼs duction target from 10% to 20% from 2010 to 2020. total external spend) and assessed 178 (7%). Of the as- sessed external vendors, the Group has audited 23, and Corruption the prevailing issues identified during the audits were Corruption negatively impacts communities where the working hours, overtime compensation, and subcontrac- Group does business as well as the global economic tor transparency. Ten vendors have signed formalised development. Due to the global nature of the Groupʼs ac- improvement plans to rectify the identified issues, while tivities, the Group has an opportunity to support global the responsible procurement team is in dialogue with the improvements in this area. An internal anti-corruption others to implement more improvement plans where training programme has been implemented across the needed in the future. Group. Since 2010, more than 25,000 employees have been trained in anti-corruption. The Group is also in- Increasing transparency and building trust volved in industry efforts to eliminate facilitation pay- The Groupʼs separate Sustainability Report for 2012 ments in the shipping, freight forwarding, and the oil provides detailed information on the Groupʼs sustain- industry. ability performance. It is also the Groupʼs Communication on Progress as required by the UN Global Compact. The Human rights management Sustainability Report complies with the requirements of As with the overall sustainability strategy, the Groupʼs the Danish Financial Statements Act on corporate social long-term approach is to integrate human rights man- responsibility reporting. The report is available on: agement into existing systems. The Group mapped in www.maersk.com/Sustainability/Documents/Maersk_ 2012 the human rights risks and gaps, carrying out 11 Sustainability_Report_2012.pdf workshops. Overall, a majority of the Groupʼs human rights issues are addressed through programmes on responsible procurement, global labour principles, anti- corruption and safety.

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    Maersk Line Nautical charts are still in use from time to time, in spite of the many digital solutions available today. This photo is from EBBA MAERSK, one of Maersk Lineʼs eight E-Class vessels.

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    32 A.P. Moller - Maersk – Group Annual report 2012 the groupʼs business units The Groupʼs business units The Groupʼs invested capital was USD 55bn at the end of 2012 and the annualised return on invested capital after tax (rOIC) was 8.8%. The Groupʼs ambition is to achieve a rOIC > 10%. A.P. Moller - Maersk Group Invested capital USD million 54,982 ROIC % 2012 8.8 ROIC % 2011 8.3 Revenue ratio 44% Maersk Line Global container services Page 36 MAERSK LIN E Invested capital USD million 20,649 ROIC % 2012 2.4 38% ROIC % 2011 -3.1 Invested capital ratio Revenue ratio Maersk Oil 16% Oil and gas production and exploration activities Page 40 MAERSK OIL Invested capital USD million 6,920 ROIC % 2012 36.6 13% ROIC % 2011 37.2 Invested capital ratio Revenue ratio 8% APM Terminals Container terminal activities, inland transportation, container depots and repair of containers, etc. Page 44 Invested capital USD million 6,284 ROIC % 2012 13.6 11% Invested capital ratio ROIC % 2011 13.1 Revenue ratio 3% Maersk Drilling Offshore drilling activities and operation of land rigs MAERSK through 50% ownership of Egyptian Drilling Company Page 48 DRILLING Invested capital USD million 4,604 ROIC % 2012 8.3 8% Invested capital ratio ROIC % 2011 12.5

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    the groupʼs business units A.P. Moller - Maersk – Group Annual Report 2012 33 Maersk Supply Service Revenue ratio 2% Supply vessel activities with anchor handling and platform supply vessels, etc. Page 52 Invested capital USD million 2,206 MAERSK SUPPLY SERVICE ROIC % 2012 6.1 4% ROIC % 2011 11.2 Invested capital ratio Revenue ratio Maersk Tankers 2% Tanker shipping of crude oil, oil products and gas Page 53 Invested capital USD million 3,729 MAERSK TANKE RS ROIC % 2012 -8.3 ROIC % 2011 -4.3 7% Invested capital ratio Revenue ratio Damco 5% Logistics and forwarding activities Page 54 Invested capital USD million 499 ROIC % 2012 13.5 ROIC % 2011 24.4 1% Invested capital ratio Revenue ratio SVITZER 1% Towing and salvage activities, etc. Page 55 Invested capital USD million 1,516 ROIC % 2012 0.6 SVITZER ROIC % 2011 6.4 3% Invested capital ratio Revenue ratio Dansk Supermarked Group 15% Supermarkets (føtex and Bilka), department stores (Salling) and discount stores (Netto), etc. Page 56 Invested capital USD million 2,872 ROIC % 2012 8.1 5% ROIC % 2011 37.2 Invested capital ratio Revenue ratio Maersk FPSOs and Maersk LNG 1% Floating oil and gas production units Page 58 Invested capital USD million 120 ROIC % 2012 33.9 MAERSK FPSOs ROIC % 2011 0.4 0% Invested capital ratio Revenue ratio Other businesses 3% 20% ownership Danske Bank A/S (associated company), Maersk Container Industry, Ro/Ro and related activities and other Page 59 Invested capital USD million 5,965 ROIC % 2012 5.4 10% ROIC % 2011 4.5 Invested capital ratio

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    34 A.P. Moller - Maersk – Group Annual report 2012 Segment overview Segment overview DKK million USD million 2012 2011 2012 2011 Revenue Maersk Line 157,122 134,444 27,118 25,108 Maersk Oil 58,833 67,554 10,154 12,616 APM Terminals 27,697 25,073 4,780 4,682 Maersk Drilling 10,947 10,056 1,889 1,878 Maersk Supply Service 5,080 5,047 877 942 Maersk Tankers 7,279 6,957 1,256 1,299 Damco 18,957 14,737 3,272 2,752 SVITZER 5,198 4,677 897 873 Dansk Supermarked Group 55,610 55,227 9,598 10,314 Maersk FPSOs and Maersk LNG 2,067 3,167 357 591 total reportable segments 348,790 326,939 60,198 61,055 Other businesses 11,220 11,575 1,937 2,162 Unallocated activities 4,717 4,188 814 782 Eliminations -22,669 -20,182 -3,913 -3,769 total 342,058 322,520 59,036 60,230 profit/loss for the period Maersk Line 2,671 -2,961 461 -553 Maersk Oil 14,164 11,311 2,444 2,112 APM Terminals 4,190 3,471 723 648 Maersk Drilling 2,081 2,611 359 488 Maersk Supply Service 765 1,301 132 243 Maersk Tankers -1,811 -817 -312 -153 Damco 320 331 55 63 SVITZER 54 547 9 102 Dansk Supermarked Group 1,284 5,371 222 1,003 Maersk FPSOs and Maersk LNG 1,944 52 336 10 total reportable segments 25,662 21,217 4,429 3,963 Other businesses 1,773 1,186 306 221 Unallocated activities -4,190 -3,937 -723 -735 Eliminations 134 -461 23 -87 Discontinued operations, after elimination 16 78 3 15 total 23,395 18,083 4,038 3,377

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    SVITZER Providing harbour towage and escorting in Sohar, SVITZER plays an active role in one of the worldʼs largest indus- Sohar trial port development projects. With five to six towing moves every day, SVITZER is busy assisting the export of Oman steel and aluminium which since 2007 has seen the portʼs cargo throughput go from 4 million tonnes to 44 million tonnes in 2012.

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    36 A.P. Moller - Maersk – Group Annual Report 2012 Building four world class businesses Maersk Line Maersk Line improved its profit in 2012 by USD 1.0bn, delivering a profit of USD 461m, although the year started out with global freight rates at unsustainable levels and all time high bunker prices. From the second half of 2011 to the second half of 2012, the result improved USD 1.7bn. The improved profit was driven by a detailed profitability improvement programme with key focus on cost reductions, surcharges collection and rate increases, enabled through active capacity adjustments. • Profit of USD 461m (loss of USD 553m) On the back of the price war in the second half of 2011, • ROIC was 2.4% (negative 3.1%) global container freight rates started at very low levels • Cash flow from operating activities was USD 1.8bn in 2012. Especially, the Asia-Europe trade was hard hit (USD 899m) with spot market rates at around USD 700-750 per TEU • Cash flow from capital expenditure (investments) was in January 2012. These rate levels were significantly be- USD 3.6bn (USD 3.2bn) low operating costs, and with bunker prices peaking at • Average rate increased by 1.9% to 2,881 USD/FFE an all-time high above USD 700 per ton in March 2012, (2,828 USD/FFE) the industry experienced significant losses in Q1 2012. • Active capacity adjustments through idling, slow The industry was successful in getting general rate steaming and blanked sailings increases (GRI) through across most trade lanes. Espe- • Unit cost decreased by 1.7% to 3,054 USD/FFE (3,108 cially, the USD 750 per TEU rate increase on the Asia-Eu- USD/FFE) rope trade effective from 1 March 2012 paved the way • Significant headquarters staff reduction implemented for GRIs in other key trades such as Africa and Latin in June 2012 America. Despite the significant focus on general rate in- • Volumes grew 5% to 8.5m FFE (8.1m FFE). creases, the market experienced a constant downward pressure on rates in the second half of 2012 due to the MARKET DEVELOPMENT deteriorating demand growth in Q3 and Q4. The global market for container demand grew an esti- mated 2% in 2012 compared to 2011. Demand growth INITIATIVES IN 2012 deteriorated during the year from 5% in Q1 to only 0-1% With freight rates at very low levels in Q1, Maersk Line in Q3 and Q4 compared to the corresponding quarters in started the year with losses amounting to around USD 2011. Above all, European imports were weak with west- 8m per day and a Q1 2012 loss of USD 599m. bound Asia-Europe container demand dropping 7-9% in Q3 and Q4 year-over-year. This development reflected A profitability improvement programme was established the weak European economy and in particular the debt to bring Maersk Line back to profitability and an overall crisis in the Mediterranean countries. Imports to the USA review of the headquarters activities led to a significant also softened and only saw a minor peak in demand dur- reduction in headquarters staff implemented in June ing Q3. For the full year 2012, the total Asia-Europe trade 2012. The profitability programme focused on executing declined nearly 2%, while volumes on the transpacific on general rate increases, driving collection of demurrage trade grew 2%. and detention, right-sizing the vessel network to support the general rate increases and finally reducing overall Despite the low demand growth and a significant amount costs. of deliveries of new container vessels, a stable supply/ demand balance was achieved. The nominal increase FINANCIAL PERFORMANCE in capacity from deliveries of new vessels was 8.1% in Profit was USD 461m compared to a loss of USD 553m in 2012, but through slow steaming, scrappings, idling and 2011. The improvement was driven by increase in freight blanked sailings, the industry managed to balance the rates and operational cost savings mainly from vessel effective capacity growth with the overall head haul de- network efficiencies. The result improved the return on mand growth. invested capital (ROIC), from negative 3.1% in 2011 to

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    Building four world class businesses A.P. Moller - Maersk – Group Annual Report 2012 37 positive 2.4% in 2012, however still below weighted Asia were strong growth trades for volumes with respec- average cost of capital. tively 19%, 10% and 7% growth. For the Africa trade, the focus on yield management reduced loss making cargo, Cash flow from operating activities of USD 1.8bn was but consequently also reduced overall volumes. Asia–Eu- signficantly higher than 2011 impacted by improved rope, Africa and Intra-Asia were the trades with strong- profitalility partly offset by an increase in working capital. est growth in rate levels. Revenue increased by 8% to USD 27.1bn, positively af- Total cost per FFE decreased by 1.7% to 3,054 USD/FFE fected by volumes increasing 5% to 8.5m FFE and aver- mainly driven by decreasing bunker consumption per age freight rates increasing 1.9% to 2,881 USD/FFE. FFE and operational cost savings. Maersk Line contin- Maersk Line maintained its market share for the full year. ued to utilise super slow steaming to reduce emissions The average freight rate excluding BAF increased by 4.6% and save bunker cost. The bunker price was 7% higher to 2,274 USD/FFE compared to 2011, supported by active in 2012 but total bunker costs decreased by 1% to USD capacity adjustments throughout the year in the form of 6.7bn compared to 2011. idling, slow steaming and blanked sailings. Reliability of the Daily Maersk service has on average On the main Asia-Europe trades, the head haul volumes been above 98% since the introduction in 2011. In terms decreased by 2%, while backhaul volumes increased by of overall reliability, Maersk Line is still the most reliable 16% to overall growth of 3%, compared to 2011. Average carrier with a scheduled reliability for 2012 of 91%. Daily freight rates for Asia-Europe trades increased by 6%, Maersk has been very well received by customers and with head haul and backhaul increasing 10% and 2%, re- overall customer satisfaction is high. spectively. Intra-Asia, Latin America and West & Central Maersk Lineʼs fleet increased by 4% to 2.6m TEU total capacity. The fleet consisted of 270 owned vessels and 326 chartered vessels by the end of 2012.The owned fleet was increased by 6% as 17 newbuild vessels with Maersk Line UsD million 100,000 TEU capacity were delivered. The vessels are Highlights 2012 2011 designed for Africa and Latin America trades – two key growth markets for the Group. Apart from the focus on revenue 27,118 25,108 reducing slot cost and emission of greenhouse gasses, profit/loss before depreciation, amortisation the vessels are attractive due to their substantial reefer and impairment losses, etc. (eBitDA) 2,179 1,009 capacity. Other adjustments to the owned fleet were de- Depreciation, amortisation and impairment losses 1,678 1,617 livery of two multi purpose vessels totalling 36,000 DWT, Gain on sale of non-current assets, etc., net 23 128 while one vessel of 750 TEU was sold. Share of profit/loss in associated companies 1 -2 profit/loss before financial items (eBit) 525 -482 Tax 64 71 net operating profit/loss after tax (nopAt) 461 -553 Rates volumes Distribution Distribution 2012/ 2012/ of volumes of volumes Cash flow from operating activities 1,799 899 2011 2011 across across Cash flow used for capital expenditure -3,550 -3,170 routes 2012 routes 2011 Asia – Europe 6% 3% 24% 24% Invested capital 20,649 18,502 Africa 5% -4% 15% 16% North America 3% 5% 15% 15% rOIC 2.4% -3.1% Latin America 1% 10% 14% 13% West & Central Asia 0% 7% 17% 17% Transported volumes (FFE in million) 8.5 8.1 Oceania -3% 6% 5% 5% Average rate (USD per FFE) 2,881 2,828 Intra-Asia 6% 19% 7% 6% Average fuel price (USD per tonne) 661 620 Intra-Europe 1% -2% 3% 4% total 2% 5% 100% 100%

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    38 A.P. Moller - Maersk – Group Annual Report 2012 Building four world class businesses 11 vessels had increased capacity of 1,400 TEU per vessel tainer shipping market is most likely expected to see a primarily through bridge elevation. The chartered fleet continued downward pressure on freight rates in 2013. declined by 1% to 1.1m TEU capacity. The chartered fleet was reduced by 65 vessels compared to 2011 as part of Maersk Line has defined five key focus areas for 2013. optimising the network countered by need for more ton- The reefer rate restructuring initiative will focus on nage to implement further slow steaming. In addition restoring profitability in the refrigerated cargo business to this, the Group owned five and chartered six multi through a global rate restructuring. The rates and con- purpose vessels. 25 vessels totalling 395,100 TEU are on tracting initiative will focus on keeping rates at a sus- order for delivery during 2013-2015. The first five out of tainable level. The network cost initiative will focus on 20 Triple-E container vessels suited for the Asia-Europe building a more cost-effective vessel network, while the trade will be delivered in 2013. total unit cost initiative will aim for the lowest achiev- able cost in the market. Finally, the volume and market STRATEGIC FOCUS share initiative will focus on maintaining the global po- Global container demand growth is forecasted to remain sition of Maersk Line. modest at 4-5% range in 2013. Especially, the Asia-Europe trade outlook is bleak with westbound demand expected SAFETY PERFORMANCE to stay flat. The challenging demand side is coupled with The lost time injury frequency (LTIF) for 2012 was 0.76 a significant amount of new tonnage being delivered cor- per million exposure hours compared to 0.63 per million responding to a capacity increase of 11% or 1.8m TEU. exposure hours in 2011. Thus, without significant capacity adjustments, the con-

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    Building four world class businesses A.P. Moller - Maersk – Group Annual Report 2012 39 Distribution of container shipping unit costs*, percent 2012 2011 9 Terminal costs 8 Terminal costs 24 Inland transportation 24 Inland transportation Containers and other equipment Containers and other equipment 25 26 Percent Vessel costs Percent Vessel costs 12 Bunkers 12 Bunkers 4 Administration and other costs 4 Administration and other costs 26 26 *Terminal costs: costs related to terminal operation such as moving the containers (mainly load/discharge of containers), container storage at terminal, stuffing (loading) and stripping (unloading) of container content, power for reefer units, etc. Inland transportation: costs related to transport of containers inland both by rail and truck. Containers and other equipment: repair and maintenance, third party lease cost and depreciation of owned containers. Vessel costs: port costs and canal fees (Suez and Panama), running costs and crewing of owned vessels, depreciation of owned vessels, time charter of leased vessels, cost of slot (capacity) purchases and vessel sharing agreements (vSA) with partners. Bunkers: costs related to fuel consumption of the vessels. Lubricants are included as part of vessel cost. Administration and other costs: own and third party agents in countries, liner operation centres, vessel owning companies, onshore crew and ship management, service centres and headquarters. Administration cost types such as staff, office, travel, training, consultancy, IT, legal and audit, etc. Other costs covering currency cash flow hedge, cargo and commercial claims and bad debt provision. TEU No. Fleet 2012 2011 2012 2011 Own container vessels 0-2,999 TEU 103,778 104,508 57 58 3,000-4,699 TEU 403,493 351,586 98 87 4,700-7,999 TEU 268,308 254,972 41 40 > 8,000-TEU 704,050 649,922 74 69 Total 1,479,629 1,360,988 270 254 Chartered container vessels 0-2,999 TEU 425,852 555,848 220 296 3,000-4,699 TEU 120,525 144,771 29 35 4,700-7,999 TEU 276,998 231,736 46 40 > 8,000-TEU 321,673 227,776 31 20 Total 1,145,048 1,160,131 326 391 Own and chartered container vessels 2,624,677 2,521,119 596 645 Own and chartered multi purpose vessels 11 15 Newbuilding programme (own vessels) 0-2,999 TEU - - - - 3,000-4,699 TEU 9,000 58,500 2 13 4,700-7,999 TEU 26,100 66,690 3 9 > 8,000-TEU 360,000 360,000 20 20 Container vessels total 395,100 485,190 25 42 Multi purpose vessels 0 2

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    40 A.P. Moller - Maersk – Group Annual report 2012 Building four world class businesses Maersk Oil Maersk Oil continues to progress the portfolio of development projects, including Dunga Phase II produc- tion start in Kazakhstan, and further maturation of Chissonga in Angola and Johan Sverdrup in Norway, both with planned production start in 2017-18. Also, the agreement to further development of the Al Shaheen field in Qatar constitutes a milestone. • Profit of USD 2.4bn (USD 2.1bn), positively impacted by PRODUCTION one-off tax income of USD 899m in Algeria and a USD The average daily share of oil and gas production in 2012 91m gain from a partial divestment of interests in Brazil was 257,000 boepd in line with previously announced • ROIC was 36.6% (37.2%) expectations of 258,000 boepd; 23% lower than in 2011 • Cash flow from operating activities was USD 3.9bn (333,000 boepd). (USD 4.3bn) • Entitlement share of production declined by 23% to In Qatar, the production share was 103,000 boepd 257,000 boepd (333,000 boepd) (157,000 boepd); 34% lower than in 2011 due to a con- • Average oil price was 1% higher at USD 112 per barrel tractual production sharing and cost recovery mecha- (USD 111 per barrel) nism, while the gross production from the field contin- • Exploration expenses were USD 1.1bn (USD 1.1bn). ued unchanged at a level of 300,000 boepd. INITIATIVES IN 2012 Production share in Denmark was 91,000 boepd (113,000 Maersk Oil has exploration and production activities in boepd); 19% lower than in 2011 largely due to the entry 11 countries and has an entitlement production of some of Nordsøfonden (the Danish state-owned North Sea 257,000 barrels of oil equivalent per day (boepd) from six Fund) as partner with 20% interest in DUC (Dansk Un- countries. Maersk Oil is maturing oil and gas resources dergrunds Consortium) on 8 July 2012. The effect of the through a large exploration programme and execution change on the Groupʼs net profit is neutral as the Danish of a number of development projects. state participation replaces a 20% profit share collected since the agreement was made in 2003. Further the nat- At the A.P. Moller - Maersk Capital Markets Day on 9 ural decline of the largely mature Danish fields affected October 2012, Maersk Oil disclosed information about the production negatively. its reserves and resources base and gave insights into the plans to increase production by almost 50% towards The share of production in the UK of 28,000 boepd was 2020 by reaching a daily entitlement production level of at the same level as in 2011 (27,000 boepd). The Gryphon 400,000 barrels. More information from the Capital Mar- kets Day can be found at: http://investor.maersk.com/events.cfm?altevent Maersk Oilʼs entitlement share of production =otherevents Thousand barrels of oil equivalents per day (boepd) 2012 2011 At the end of 2011, Maersk Oil had entitlement reserves 200 and resources of 1.38bn barrels of oil equivalent includ- ing proved reserves (1P) of 443m barrels of oil equivalent. 150 The reserves and resources are estimated according to international standards (Society of Petroleum Engineersʼ 100 Petroleum Resources Management System) and the re- serves are audited by an independent third party. The re- 50 serves and resource figures will be updated annually and the figures for end of 2012 will be released together with 0 Qatar Denmark UK Algeria Kazakhstan Brazil the Q1 report in 2013.

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    Building four world class businesses A.P. Moller - Maersk – Group Annual report 2012 41 Greenland Norway UK Denmark Kazakhstan Algeria Iraq USA Qatar Angola Maersk Oil, production Brazil and exploration 2012 Production and exploration Exploration FPSO, which was damaged in a storm in early 2011, is DEVELOPMENT expected to come back into production in Q1 2013. Maersk Oil has a diverse project portfolio and project delivery plan in place to deliver on the production target In Algeria, the share of production of 27,000 boepd was of 400,000 boepd by 2020. Five major projects are sanc- slightly higher compared to 2011 (25,000 boepd), posi- tioned by the authorities and execution is progressing tively affected by improved contract terms with the Alge- towards first production by 2014. rian national oil company from the settlement of the tax dispute in Q1 2012 but offset by the natural maturation In Algeria, development of the El Merk field continues of the fields. with first oil expected in Q1 2013. The share of production in Kazakhstan and Brazil was in In Angola, work continues on the development plan for 2011 3,000 boepd (3,000 boepd) and 5,000 boepd (8,000 the Chissonga discovery in Block 16 and drilling of the boepd) respectively. 4th appraisal well was completed late 2012. The devel- opment will likely comprise a stand-alone FPSO with first oil expected in 2017-18. In the Kurdistan region of Iraq, a second appraisal well was successfully completed on the Swara Tika structure, Maersk Oilʼs pipeline of major field developments and further pre-development activities are planned for 2013. Maersk Oil increased its shareholding in HKN En- Field First Equity Plateau ergy from 20% to 30% (corresponding to 22.5% equity in country production share production the Sarsang production sharing contract). EL Merk (Algeria) 2013 ~11% 15,000 boepd Dunga (Kazakhstan) 2012 60% 15,000 boepd 1 In Kazakhstan, the first Dunga Phase II well was brought FDP2012 (Qatar) 2013 100% N/A on-stream in December 2012 as scheduled and over the Golden Eagle (UK) 2014 32% 20,000 boepd 2 next three years another 197 wells will be drilled and Jack (USA) 2014 25% 8,000 boepd 1 FDP aims at optimising recovery and maintaining a stable production plateau around 300,000 boepd brought into production. 2 Phase 1 Maersk Oil estimate

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    42 A.P. Moller - Maersk – Group Annual Report 2012 Building four world class businesses In Norway, three appraisal wells were completed on the cial potential of the structure, which is adjacent to the Avaldsnes part of the major Johan Sverdrup discovery. Chissonga discovery. Exploration and appraisal drilling A preliminary agreement between the involved licences in Block 16 will continue in early 2013. Further explo- is in place and continued appraisal activities should lead ration and appraisal drilling has also been planned for to a concept selection by the end of 2013 and first pro- Blocks 8 and 23, but timing is dependent on rig availabil- duction in 2018. The Zidane-2 well encountered a high ity, which increasingly has become a challenge due to pressure gas reservoir and evaluation of the commerci- the overheated drilling market in the West Africa region. ality of the combined Zidane 1 and 2 discoveries is on- going. To support a development of Zidane and other fu- In Brazil, Maersk Oil participated in drilling of four explo- ture discoveries in Mid Norway, an interest in a planned ration/appraisal wells and several wells are planned for gas pipeline has been secured. 2013. In Blocks BM-C-37 and BM-C-38, Maersk Oil real- ised value by providing the business partner with 20% In Qatar, a new field development plan for 2012 includ- additional interest and operatorship in exchange for cash ing further investments of USD 1.5bn, covering among and full carry in up to six wells. others 51 new wells, has been agreed with Qatar Petro- leum with the aim of increasing recovery and extending In Greenland, acquisition of 3D seismic data was success- a stable production plateau at 300,000 boepd from the fully completed in the Baffin Bay, and Maersk Oil partici- Al Shaheen field. pated in a shallow core sampling programme. In the UK, the Golden Eagle development project is pro- In the Kurdistan region of Iraq, the high exploration level gressing towards a production start in 2014. Maersk Oil continues in the Sarsang block and by year-end drilling acquired the remaining 30% interest in the Maersk Oil of two exploration prospects was in progress. operated Dumbarton and Lochranza fields as well as the Global Producer III FPSO. With the acquisition Maersk Oil In Kazakhstan, three exploration wells were completed now has 100% interest in both fields as well as in the FPSO. with encouraging results and allowed progression of the Dunga Phase III, which could bring the gross production In the USA, the Jack deepwater development project in to a level above 30,000 barrels per day. the US Gulf of Mexico is progressing as planned towards production start in 2014. Further appraisal drilling of the In Norway, Maersk Oil submitted applications in two Buckskin discovery is planned for 2013. exploration licence rounds with expected awards mid- 2013. The T-Rex exploration well did not discover hy- EXPLORATION drocarbons in commercial quantities and was therefore Successful exploration is crucial to Maersk Oilʼs aspira- abandoned. Drilling of the Albert exploration well com- tion to increase the daily entitlement production by 50% menced in December. to 400,000 boepd by 2020. The current production pro- file reflects that Maersk Oil is in a catch-up phase with In the UK, seven exploration/appraisal wells were com- respect to replacing reserves. Exploration activities have pleted including appraisal wells on Culzean, Ockley and been scaled up and a number of high impact discoveries Jackdaw. Maersk Oil was awarded nine new licences have been made over the last couple of years. New pros- in the UKʼs 27th licensing round and potential award in pects are continually being matured through the global 2013 of three additional licences awaits the outcome of portfolio and by focusing on prolific basins with familiar ongoing environmental assessments. geology and risks. Maersk Oil has been able to add re- sources at competitive finding costs. In the USA, Maersk Oil continues to build its prospect portfolio and was awarded seven new blocks in the US Maersk Oil completed 23 exploration/appraisal wells Central Gulf of Mexico bid round. Drilling of the Oceano- compared to 14 in 2011. grapher prospect is planned for 2013. In Angola, the Caporolo discovery was made in Block 16 and further drilling is planned to decide on the commer-

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    Building four world class businesses A.P. Moller - Maersk – Group Annual Report 2012 43 finAnciAl peRfoRMAnce Cash flow from operating activities was USD 3.9bn Maersk Oilʼs profit for 2012 was USD 2.4bn (USD 2.1bn) (USD 4.3bn) and cash flow used for capital expenditure and ROIC was 36.6% (37.2%). The result was positively was USD 2.0bn (USD 3.8bn affected by the USD 2.4bn affected by the one-off tax income of USD 899m from the acquisition of SK Energy in Brazil). Exploration activity settlement of an Algerian tax dispute, a USD 91m gain remained high with completion of 23 (14) exploration/ from a partial divestment of interests in Brazil and a strong appraisal wells, leading to exploration expenses of USD average oil price of USD 112 per barrel (USD 111 per bar- 1.1bn (USD 1.1bn). rel). This was partly offset by the expected decline of the entitlement share of oil and gas production to 257,000 stRAteGic focUs boepd (333,000 boepd) due to a lower production share With the current development plans and a sustained in Qatar and lower production in Denmark. high level of exploration, Maersk Oil is entering a period with planned annual development capital expenditure in The Gryphon FPSO has been out of production from early the range of USD 3-5bn compared to USD 1-3bn in recent 2011. However, the loss of production and property dam- years, in order to replenish the portfolio. Exploration ex- age in 2012 are partly recoverable under the existing in- penses are expected to be above USD 1.0bn per year. surance policies, and for 2012 a compensation of USD 407m has been received. It should be noted that negotia- sAfety peRfoRMAnce tions are still in progress to determine the final insurance The lost time injury frequency (LTIF) for 2012 was 0.75 proceeds from the insurance companies. per million working hours compared to 0.91 per million exposure hours in 2011. Maersk Oil continues its efforts to completely eliminate accidents and the improved lost time injury frequency is a result of this effort. Maersk Oil UsD million Highlights 2012 2011 revenue 10,154 12,616 profit/loss before depreciation, amortisation and impairment losses, etc. (eBitDA) 7,156 10,015 Depreciation, amortisation and impairment losses 1,895 2,171 Gain on sale of non-current assets, etc., net 109 2 Share of profit/loss in associated companies -42 -4 profit/loss before financial items (eBit) 5,328 7,842 Tax 2,884 5,730 net operating profit/loss after tax (nopAt) 2,444 2,112 Cash flow from operating activities 3,857 4,319 Cash flow used for capital expenditure -1,959 -3,788 Invested capital 6,920 6,427 rOIC 36.6% 37.2% Exploration expenses, net 1,088 1,056 Average share of oil and gas production (thousand barrels of oil equivalent per day) 257 333 Average crude oil price (Brent) (USD per barrel) 112 111

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    44 A.P. Moller - Maersk – Group Annual Report 2012 Building four world class businesses APM Terminals APM Terminals delivered an increase in profit and a ROIC of 13.6% (13.1%). The expansion into high growth markets continued, notably with the acquisition of a 37.5% co-controlling stake in Global Ports Invest- ments PLC, a portfolio of very attractive port assets in Russia and neighbouring countries. The increased pres- ence in high growth areas presents an opportunity but increases also geopolitical exposure. • Profit of USD 723m (USD 648m), impacted by pre-tax terminals with crane specifications and operational ca- divestment gains of USD 123m (USD 28m) pabilities to match future market requirements. • ROIC was 13.6% (13.1%). Excluding the impact of port- folio changes and one offs, underlying ROIC was 12.5% INITIATIVES IN 2012 (12.4%) The larger vessels being deployed and an increased ap- • Cash flow from operating activities was USD 975m preciation by the customers of the value of having the (USD 912m) fastest possible turnaround time in port prompted APM • Number of containers handled increased by 6% to 35.4m Terminals to launch a Global Transformation Project to TEU (33.5m TEU), ahead of the market growth of 4%, lift the operational performance. The project aims at im- boosted by additions to the portfolio proving productivity by 15%. The crane lift per hour im- • New terminal projects were secured in Lazaro Car- proved by 8% across the terminal portfolio during 2012. denas, Mexico, and Ningbo, China, and a new inland project secured in Mombasa, Kenya APM Terminals continued to work on developing attrac- • APM Terminals took control of the operations in Goth- tive propositions to unlock value in long term partner- enburg, Sweden, and the terminal in Wilhelmshaven, ships. Volumes from 3rd party customers reached 48% Germany, opened. of the total in 2012 (46%). MARKET DEVELOPMENT In the first half of 2012, operations in some terminals in The global container terminal market measured in TEU North Africa, Europe and the Middle East were negatively increased by 4% during 2012. The growth rate was affected by local political unrest or labour issues. Opera- stronger during the first half of 2012 than during the sec- tions were fairly smooth during the second half of 2012 ond half. The trade lane from Asia to Europe in particular with only a relatively minor issue affecting operations in softened during the second half, which affected port vol- Los Angeles in December. umes in both Asia and in Europe. In late October, Hurricane Sandy landed on the US east APM Terminals experienced renewed interest from ship- coast, closing the ports of New York and New Jersey in- ping lines wishing to secure access to modern container cluding APM Terminalsʼ Port Elizabeth facility. Operations Portfolio APM Number of Number of Average Terminals terminals new terminal remaining Equity weighted crane lifts in million TEU projects concession length in years 2012 2011 Change Americas 13 3 16 7.2 6.9 4% Europe 19 2 27 12.9 12.2 5% Asia 17 1 26 10.7 10.6 1% Africa and Middle East 13 0 18 4.5 3.8 20% Total 62 6 22 35.4 33.5 6%

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    Building four world class businesses A.P. Moller - Maersk – Group Annual report 2012 45 APM Terminals’ global port APM Terminalsʼ global activities 2012 port activities 2012 Existing terminals Existing terminals Expansion of existing Expansion terminals of existing terminalsprojects New terminal New terminal projects were impacted for more than a week in the entire port, but tion and maintenance of a new specialised container APM Terminals was successful in being the first terminal terminal at the port. APM Terminals will invest over in the area to recommence operations after the hurricane. USD 900m in the new deepwater 4.1m TEU capacity project. poRtfolio • The Container Terminal Wilhelmshaven (CTW) APM Terminals announced during 2012 the following opened on 21 September 2012. APM Terminals holds developments with portfolio implications: a 30% share in Germanyʼs only deep-water terminal. • On 28 November, a 37.5% co-controlling stake in the CTW has a 2.7m TEU capacity. publicly listed company, Global Ports, was acquired. • Brasil Terminal Portuario (BTP) in Santos, Brazil, Global Ports is the leading operator of container ter- received ship-to-shore cranes and other crucial equip- minals in Russia and the Baltics. The enterprise value ment in its finalisation phase. This joint venture will of the share acquisition was around USD 900m. As a result in a 2.2m TEU facility with a 15 meter draft to result, APM Terminals added three container termi- accommodate the larger vessels coming into the Latin nals in Russia, two container terminals in Finland and American trade lanes. The start of operations has been a major oil and oil products terminal in Estonia to its slightly delayed and is now expected during first half global network. of 2013. APM Terminals holds a 50% share of BTP. • APM Terminals took control of the operations in the • The Group signed a cooperation agreement to enlarge Skandia Container Terminal in Gothenburg, Sweden, the Meishan box facility at Ningbo, China, intending effective 4 January 2012. The facility is Scandinaviaʼs to take a 25% stake in the development of three new largest container terminal and handles about 0.8m berths at the terminal. TEU per year. • APM Terminals acquired a 50% stake in an inland • A 32 year concession contract was signed with the Port container depot in Mombasa, Kenya. APM Terminals Authority of the port of Lazaro Cardenas (APILAC), will take charge of the operational management of the Mexico, for the design, financing, construction, opera- depot.

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    46 A.P. Moller - Maersk – Group Annual Report 2012 Building four world class businesses • APM Terminals disposed half of the 50% stake in the The number of containers handled by APM Terminals Xiamen terminal in China with an after tax gain of (measured in crane lifts weighted with APM Terminalsʼ USD 20m. ownership interest) increased by 6% compared to 2011. • Maersk Equipment Service Company Inc., USA, was di- This was ahead of the market growth of 4%, boosted by vested in March 2012 with an after tax gain of USD 46m. additions to the portfolio. • APM Terminalsʼ proposal to operate all Port of Virginia facilities in Hampton Roads, USA, under a long-term During the second half of 2012, APM Terminalsʼ volumes concession agreement with the Virginia Port Authority were adversely affected by the global economic slowdown (VPA) was met with competing proposals submitted and notably the decline in volume carried on the Asia-Eu- by the existing operator Virginia International Termi- rope trade lane. Positive developments in Africa and Latin nals (VIT) as well as infrastructure investment units of America were to a large extent able to compensate for this. two financial services and investment firms. The VPA is currently considering all proposals. Revenue grew by 2% compared to 2011. This was lower than the volume growth rate, mainly due to the divest- finAnciAl peRfoRMAnce ment of Maersk Equipment Service Company in Q1, APM Terminals delivered a profit of USD 723m (USD which impacted revenue without having a correspond- 648m) and a ROIC of 13.6% (13.1%). Excluding the impact ing volume impact. The 44% tariff reduction imposed by of portfolio changes, underlying ROIC was 12.5% (12.4%). the Tariff Authorities for Major Ports in India (TAMP) on Gateway Terminals India in Mumbai affected revenue APM Terminals is actively pursuing an investment strat- negatively by USD 46m. egy with focus on growth markets. 38 out of 62 container terminals operate in growth markets and 78% of EBITDA The EBITDA margin increased to 22.9% (22.6%). was generated in these markets. Pre-tax gains of USD 123m were primarily achieved through the divestment of half of the 50% stake in Xia- men, China, and Maersk Equipment Service Company. APM Terminals UsD million stRAteGic focUs Highlights 2012 2011 The expected market growth rate for 2013 is 4-5%. APM Terminals expects volume growth above market growth, revenue 4,780 4,682 supported by new additions to the portfolio and various profit/loss before depreciation, amortisation performance improvement drives. and impairment losses, etc. (eBitDA) 1,093 1,059 Depreciation, amortisation and impairment losses 360 368 APM Terminals aims to become the leading port and in- Gain on sale of non-current assets, etc., net 123 28 land operator in the world by 2016. APM Terminals will Share of profit/loss in associated companies 59 50 secure this position by serving the global shipping lines profit/loss before financial items (eBit) 915 769 and cargo owners in long term partnerships through Tax 192 121 safe and excellent operations and by actively managing net operating profit/loss after tax (nopAt) 723 648 the portfolio and developing port infrastructure and in- Cash flow from operating activities 975 912 land services in high growth markets. Cash flow used for capital expenditure -1,350 -688 Invested capital 6,284 5,124 2011 2012 2016F rOIC 13.6% 13.1% Roic 13.1% 13.6% 13.0% Number of terminals 55 62 65-70 Containers handled (measured in million TEU revenue (USD bn) 4.7 4.8 6.0 EBITDA (USD bn) 1.1 1.1 1.6 and weighted with ownership share) 35.4 33.5 NOPAT (USD bn) 0.6 0.7 1.0

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    Building four world class businesses A.P. Moller - Maersk – Group Annual Report 2012 47 APM Terminalsʼ mid-term (2016) financial targets are APM Terminals has continued focus on eliminating ac- to reach a portfolio of 65-70 terminals, revenue of USD cidents and advancing the safety management culture 6.0bn, a ROIC of 13% and a profit of USD 1.0bn. through the Safety Activist campaign and elimination of high risk situations through separation of man and ma- SAFETY PERFORMANCE chine and various safety enhancements to the facilities. The lost time injury frequency (LTIF) for 2012 was 2.41 per million exposure hours compared to 3.86 per million exposure hours in 2011.

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    48 A.P. Moller - Maersk – Group Annual report 2012 Building four world class businesses Maersk Drilling With high forward contract coverage and an order book of seven large rigs with delivery in 2013-2015, Maersk Drilling is on track towards its strategic aspiration of delivering a profit of USD 1.0bn by 2018. The full year result for 2012 was negatively impacted by start-up issues on two drilling rigs. • Profit of USD 359m (USD 488m) The increasing demand is primarily seen from the main • ROIC was 8.3% (12.5%) growth regions in West Africa and the US Gulf of Mexico • Cash flow from operating activities was USD 651m while uncertainty has arisen concerning the demand in (USD 825m) Brazil. Recent discoveries in other emerging deepwater • Forward contract coverage of 98% for 2013 and 76% regions such as East Africa will also contribute to growth for 2014 in the future. • Operational uptime averaged 92.1% (95.6%). initiAtives in 2012 MARKet DevelopMent Throughout 2012, with the exception of one jack-up rig, The oil price has during 2012 remained supportive for all of Maersk Drillingʼs 16 jack-up rigs and floaters, the continued increases in oil companiesʼ exploration and ten drilling barges in Venezuela and the managed semi- development spending. submersible rig have been on contract. The market for Norwegian jack-up rigs remained strong Maersk Drillingʼs operational uptime averaged 92.1% in with full utilisation throughout the year. The market is 2012 (95.6%). For the floating rigs the operational uptime expected to remain tight in the years ahead and there are averaged 85.1% (92.4%), while the operational uptime for currently no jack-up rigs available until Q2 2014 and thus the jack-up rigs averaged 95.3% (97.0%). The operational oil and gas companies are already now showing interest in uptime was negatively affected by start-up issues for one securing rig capacity well beyond 2014. jack-up rig and one floating rig. The market for international premium jack-up rigs Six yard stays for planned surveys and upgrades were (outside Norway) enjoys significantly higher utilisation completed in 2012. The yard stays were completed on and day rates compared to older jack-up rigs, due to the time and on budget. safety and efficiency gains offered to the operators. contRActs siGneD in 2012 The market for ultra deepwater floaters (7,500ft+) was • A newbuild ultra harsh, high specification jack-up rig characterised by full utilisation in 2012 and day rate lev- for operation in Norway, USD 620m. The contract du- els returned to pre-crisis levels at around USD 600,000 ration is four years and the contract commences mid- with some variations across regions and countries reflect- 2015 after delivery from the shipyard and mobilisation ing differences in operating cost levels and taxes. to Norway. • An option which was included in a four-year firm con- Despite the newbuilding order book, the ultra deepwater tract for an ultra deepwater semi-submersible rig for market is expected to remain tight and the number of rigs with 2013 availability is limited and operators are already securing ultra deepwater rig capacity for com- Maersk Drillingʼs contract coverage per segment mencement in 2014. segment 2013 2014 Oil supply from deepwater fields is needed to balance Ultra harsh environment jack-up rigs (Norway) 100% 86% demand for oil, and to deliver the required deepwater oil Premium jack-up rigs 96% 61% production. Considerable exploration and development Ultra deepwater and midwater rigs 100% 90% drilling will need to take place over the years to come. total 98% 76%

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    Maersk Training Centre The high end rigs in Maersk Drillingʼs fleet can be recreated virtually in the simulator to include Svendborg all rig specific equipment and control systems. This will enable the crews to train in realistic Denmark surroundings as if on board the rig.

  • Page 50

    50 A.P. Moller - Maersk – Group Annual Report 2012 Building four world class businesses work in the US Gulf of Mexico was also declared. The deepwater semi-submersible rigs operating in the US duration of the option is two years with commence- Gulf of Mexico, Angola and Egypt, and six international ment on 4 November 2013 when the firm contract premium jack-up rigs operating in Southeast Asia, West expires, USD 370m. Africa and the North Sea. Furthermore, Maersk Drilling • A two-year contract for an ultra harsh jack-up rig, USD owns and operates a mid-water semi-submersible rig 280m. The contract is expected to commence in April in the Caspian Sea, and manages a mid-water semi-sub- 2014 in direct continuation of its current contract. mersible rig on behalf of its Chinese owners. • The first in a series of four identical ultra deepwater drillships currently under construction, USD 610m. The Maersk Drilling owns and operates ten drilling barges contract duration is three years and commencement is in Venezuela, which in 2012 generated revenue of USD expected by end 2013 upon delivery and mobilisation 194m (USD 178m). to the US Gulf of Mexico. The estimated contract value includes mobilisation, but excludes cost escalation and Maersk Drilling participates in the 50/50% joint venture performance bonus. Egyptian Drilling Company, which owns and operates 64 • A second drillship in the series, USD 694m. The contract land and four jack-up rigs. In 2012, the joint venture gen- duration is three years plus a two-year option and com- erated total revenue of USD 424m (USD 447m). mencement is expected in Q2 2014 upon mobilisation to the US Gulf of Mexico. Maersk Drilling has currently seven rigs under construc- tion or on order. The order book includes three ultra harsh By the end of 2012, Maersk Drillingʼs forward contract cov- jack-up rigs, of which the first two will be delivered in 2014, erage was 98% for 2013, 76% for 2014, 51% for 2015 and while the third rig will be delivered in 2015. Additionally, 41% for 2016. The total revenue backlog for Maersk Drill- the order book contains four ultra deepwater drillships ing by the end of 2012 amounted to USD 7.0bn (USD 4.9bn). – one to be delivered late in 2013 and the rest in 2014. The newbuilding programme is progressing according to Fleet and newbuilding programme plan. Maersk Drilling currently owns and operates six ultra harsh jack-up rigs operating in Norway, three ultra Of the seven newbuild rigs, contracts have already been secured for five totalling a contract backlog of 17 rig years and estimated revenue backlog of around USD 2.9bn. Maersk Drilling UsD million finAnciAl peRfoRMAnce The profit for 2012 was USD 359m (USD 488m) negatively Highlights 2012 2011 impacted by more than USD 125m due to delayed start- up on new contracts for two rigs due to start-up issues revenue 1,889 1,878 and positively impacted by reversal of impairment profit/loss before depreciation, amortisation losses of USD 24m. and impairment losses, etc. (eBitDA) 682 862 Depreciation, amortisation and impairment losses 232 244 Gain on sale of non-current assets, etc., net 8 - profit/loss before financial items (eBit) 458 618 fleet 2012 2011 Tax 99 130 Jack-up rigs 12 12 net operating profit/loss after tax (nopAt) 359 488 Semi-submersible rigs 4 4 Drilling barges 10 10 Cash flow from operating activities 651 825 total 26 26 Cash flow used for capital expenditure -589 -600 Invested capital 4,604 4,102 newbuilding programme Jack-up rigs 3 2 rOIC 8.3% 12.5% Drillships 4 4 total 7 6

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