Management Report

Corp. ID no. 556027-4077

The Board and CEO of Copenhagen Malmö Port AB (CMP) hereby submit the annual accounts for the financial year January – December 2009.

Group structure and the nature and focus of activities

CMP is jointly owned by Malmö Hamn AB (corp. ID no. 556014-7596) and Udviklingsselskabet By & Havn I/S (corp. ID no. in Denmark 30 82 37 02).

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

CMP hires permanent facilities in the form of quays, shipping lanes, buildings, etc. from the Municipality of Malmö (via Malmö Hamn AB) and Udviklingsselskabet By & Havn I/S, for which CMP pays annual concession fees which are based on both existing facilities and investments made in new facilities. The current concession agreements with the port owners have been formally terminated during the year, but run until 2023.

Negotiations on an extension of the concession agreements after 2023 are ongoing with both port owners.

Business concept

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

Net sales and results

CMP’s profit for 2009 after financial items amounted to SEK 128.2 million (2008, SEK 181.4 million). The deterioration in profit is a natural consequence of the general downturn in the economy, both in the Öresund Region and internationally. In addition, write-downs of a one-off nature for a ferry ramp have had a negative effect on the result of around SEK 11 million.

The total net sales for 2009 amounted to SEK 732.9 million, compared to SEK 784.3 million in 2008.
Total operating costs for 2009 amounted to SEK 611.0 million.

Significant events during the financial year and after its end

In January agreement was reached with the Municipality of Malmö for investment worth SEK 900 million in new port facilities for ro-ro, containers and rail in Norra Hamnen (Northern Harbour) in Malmö. These facilities should be operational in April 2011.

The financial downturn naturally had an impact on freight turnover, which during 2009 was around 15 million tons. This is a fall of around 17 % compared to the volume in 2008.

However, the downturn has not hit all areas equally, and some segments have made progress despite the recession.

The number of cruise ships calling during 2009 hit record levels, with 335 arrivals and almost 677,000 passengers. CMP can therefore confirm its position as the largest cruise destination in the Baltic Region.

In addition to the cruise segment, freight volumes within the bulk area have also demonstrated satisfactory development. The volumes of dry and liquid bulk cargo have only fallen by around 8 %, which may be regarded as satisfactory during the current market conditions.

Within most areas with unit cargo, there have been relatively large falls compared to 2008. It is worst within the cars segment, where the number of units handled virtually halved compared to 2008. The reduction has been greatest for transit traffic, while the cars for local areas have not been hit as hard.

Ferry cargo to Germany and Norway has fallen by around 28 % compared to 2008.

The weak market conditions with falling freight volumes meant that it was necessary to reduce the workforce during the year. The permanent workforce has therefore been reduced by over 60 persons, with a proportion leaving voluntarily by agreement or through natural wastage.

Future development

CMP will face tremendous challenges over the next few years. Huge investments have been initiated in both Malmö and Copenhagen, which in the longer term will involve higher costs in the form of capital costs for investments. It will, of course, require a huge effort to be able to exploit the investments during a recession. However, the savings made and the completed streamlining mean that CMP is well equipped to exploit the opportunities that will arise during the next few years as the economy recovers.

Environmental conditions

CMP works continuously on environmental issues.

The international ISO 14001 standard was introduced as the company’s environmental management system several years ago. The current certification is valid until December 2012.

Port activities in Sweden require environmental permits in accordance with environmental legislation, and in December CMP was granted permission to continue port activities in Malmö. With regards to other terms and permits from the environmental authorities for CMP’s current activities in the areas in question, these have been fulfilled.

Some of the facilities and ground areas in which CMP carries out its current activities have been environmentally impacted from earlier activities. Environmental conditions resulting from activities in the period before 2001, which is when CMP’s activities started, are, however, the port owner’s responsibilities.

Investments

Investments for the year in buildings, machinery and equipment amounted to SEK 30.3 million. Investments consist mainly of working machines.

Personnel

The number of permanent employees during 2009 totalled 412, a reduction of 14 % compared to 2008. Of the total number of employees, 14 % were women. Short-term absence due to illness amounted to 2.3 % (2008, 2.2 %), while long-term absence due to illness amounted to 1.4 % (2008, 2.3 %).

Proposed distribution of profits

No transfer to restricted equity is proposed.

The Board and CEO deem the proposed dividend to be justified in light of the demands placed on the size of working capital by the nature, scale and risks of CMP’s activities, as well as the company’s consolidation requirements, liquidity and position in general.

For information regarding the company’s profit and position for 2009 and 2008, please refer to the income statement and balance sheets, as well as the additional information, below.