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Annual Report 2011

TransAtlantic A

nnual Report 2

011

Rederi AB TransAtlantic (publ)

Visiting address:

Lindholmsallén 10

Box 8809,

SE-402 71 Gothenburg, Sweden

Tel: +46 (0)31–763 23 00

E-mail: [email protected]

www.rabt.se

Solberg. Print: Billes Tryckeri

TransAtlantic 2011 Affärsområden

Gothenburg

Copenhagen

TransAtlantic 2011

Contents2011 in brief 2

Comments by the CEO 4

40 years in Swedish shipping 6

Operations 8

Industrial Shipping business area 10

Viking Supply Ships business area 22

The share 32

Five-year summary 34

Corporate Governance Report 36

Board of Directors 42

Management 43

Board of Directors’ Report 44

Financial statements

Income statement 49

Balance sheet 50

Shareholders’ equity 52

Cash flow statement 53

Notes 54

Board signatures 80

Auditor’s Report 81

Definitions 82

Glossary 83

Annual General Meeting and

financial calendar 2012 84

Head office

Office

Business areas at sea

“We are seeing two strong business areas emerge.” Comments by the CEO,

Page 4

“A first key step toward profitability.”Comment from the Head

of Industrial Shipping,

Page 10

“Expertise generates competitive advantages.”Comment from the Head

of Viking Supply Ships,

2

1

Gothenburg

Copenhagen

TransAtlantic 2011

OperationsSince 2007, TransAtlantic’s operations have

been divided into two business areas, Industrial

Shipping and Viking Supply Ships (formerly

Offshore/Icebreaking). The fleet comprises

62 vessels, of which 48 belong to Industrial

Shipping and 14 to Viking Supply Ships.

More information is available on pages 8–9

Industrial ShippingWith the integration of the shipping and logistics

company Österströms and the development of

new services and expertise, an adaptation of the

operation was begun in 2011. The focus is now

on increasing profitability.


Viking Supply ShipsIn 2011, there was a high level of activity in the

business area, including a key strategic acquisition,

deliveries of newly built AHTS vessels and new Ice

Management assignments. Discussions about

larger partnerships are being conducted with sev-

eral of the oil companies that are to initiate pros-

pecting activities in arctic waterways in 2013–2014.


VIKING SUPPLY SHIPS - vertical logo

Division of the GroupThe process of dividing the Group is proceeding as planned. The goal is to spin off Viking Supply Ships A/S to the shareholders and list the company on the Oslo Stock Exchange. Following the division, Rederi AB TransAtlantic will comprise the Industrial Shipping business area and remain listed on the NASDAQ OMX Stockholm, Small Cap Segment. In 2011, Viking Supply Ships’ operations were relocated to Denmark and the headquarters was established in Copenhagen. The headquarters for TransAtlantic was relocated from Skärhamn to Gothenburg.

About TransAtlanticRederi AB TransAtlantic is a leading Swedish shipping company. The operations are divided into the Industrial Shipping business area with a focus on industrial shipping, with the Baltic Sea as the geographic base, and the Viking Supply Ships business area, with a focus on offshore work and icebreaking assignments in the North Sea and arctic waterways.

• The fleet comprises 62 vessels, of which 48 belong to Industrial Shipping and 14 to Viking Supply Ships.

• The company has about 850 employees and is headquartered in Gothenburg.

• In 2011, sales amounted to SEK 2,989 M.

• At year-end, there were 5,854 shareholders.

• The company is listed on the NASDAQ OMX Stockholm, Small Cap list.

2

TransAtlantic 2011

2011 in briefThe Group’s net sales increased to SEK 2,989 M (2,394). The rise was attributable to Viking Supply Ships being included at 100% as of the end of September 2010 (formerly 50%), Österströms being included in the financial statements as of June 2011 and the Viking Supply Ships business area’s acquisition of SBS Marine, with an accounting effect from October, and receiving delivery of two AHTS-vessels during the year, Njord Viking and Magne Viking. The Group’s net results after tax amounted to a loss of SEK 435 M (profit: 585), including restructuring items and acquisition effects of a negative SEK 194 M (pos: 528).

Summary of the yearWeak earnings trend, but a high level of activity and major strategic changes.

• Decision on the division of the Group into two independent listed companies.

• Acquisition of the shipping and logistics company Österströms.

• Delivery of two new AHTS vessels (Brage Viking was subsequently delivered in January 2012).

• New cargo agreements with StoraEnso and FNsteel, two of the Industrial Ship-ping business area’s largest customers.

• Relocation of the TransAtlantic Group’s headquarters, including Industrial Ship-ping, to Gothenburg. New headquarters for Viking Supply Ships in Copenhagen.

• New share issue of approximately SEK 555 M and acquisition of SBS Marine.

• New agreement with Cairn Energy, Shell and Sahkalin Energy* for icebreaking and offshore services.

• Offshore/Icebreaking business area renamed Viking Supply Ships.

Events after the close of the fiscal year

Heléne Mellquist assumed the position of CFO on January 2, 2012. In January 2012, Kim H. Sörensen was appointed Head of the Industrial Shipping business area effective March 1, 2012.

2,989MThe Group’s net sales increased during the year.

Quarter 1The acquisition of Österströms and the decision to investigate future division of the GroupAnother ice winter had an adverse impact

on freight activity in the Baltic Sea. Deliv-

ery of the AHTS vessel Njord Viking.

Agreement entered into on the acquisition

of the shipping and logistics company

Österströms. The Board resolves to

investigate a future division of the Group

into two independent listed companies,

but also to, as soon as possible, imple-

ment an organizational division, whereby

parts of Viking Supply Ships are relocated

to Denmark. Stefan Eliasson resigned as

CEO of TransAtlantic and Rolf Skaarberg

is appointed the new CEO.

Quarter 2New cargo agreement with StoraEnsoWhile the offshore spot market in the

North Sea remained weak, activity

increased in the container and RoRo

traffic in the Baltic Sea. A new three-year

cargo agreement signed with StoraEnso

to transport their paper from northern

Finland to Sweden, Germany and Belgium.

The agreement comprises six vessels.

The acquisition of Österströms was

completed. The former CEO of

Österströms, Percy Österström, was

appointed the Head of the Industrial

Shipping business area and Christian

W. Berg was appointed the Head of the

Viking Supply Ships business area.

Quarter 3Record-high contracts in offshoreWeak results impacted by restructuring

costs and low activity in the bulk seg-

ment. Delivery of the AHTS vessel

Magne Viking, the third in a series of

four new vessels. Increased activity and

higher rates generate record-high con-

tracts for Magne Viking in the offshore

spot market of NOK 1.5 M per day for an

eight-day charter. Njord Viking begins

a four-year charter for ENI Norge in the

Barents Sea. Vidar Viking commences

a two-month charter off the coast of

Greenland for the British company

Cairn Energy.

Quarter 4New share issue and the acquisition of SBS MarineNew three-year cargo agreement in bulk

signed with FNsteel and Nordkalk. Multi-

year agreement signed for the AHTS

vessel Vidar Viking with the Russian

company Sakhalin Energy for services

in such areas as icebreaking*. New

share issue of approximately SEK 555 M

to acquire SBS Marine and strengthen

the company’s financial position. Henning

E. Jensen replaces Rolf Skaarberg as

CEO of the Group. The headquarters for

Industrial Shipping are relocated from

Skärhamn to Gothenburg and the head-

quarters for Viking Supply Ships in

Copenhagen is completed.

* The agreement is subject to the approval of TransAtlantic’s Board and the banks concerned.

SEK

3

Key figures 1) Jan–Dec 2011

Jan–Dec 2010

Jan–Dec 2009

Net sales, SEK M 2,989 2,394 2,284

Operating profit before tax, SEK M –272 –121 –213

Profit before tax, SEK M –466 407 –276

Profit after current tax, SEK M –435 585 –221

Net earnings per share, SEK22) –6.60 16.60 – 8.00

Shareholders’ equity, SEK/share2) 22.50 43.20 42.40

Return on capital employed, % –6.9 12.8 – 9.0

Return on shareholders’ equity, % –17.8 32.8 –17.1

Equity/assets ratio on balance-sheet date, % 39.5 46.6 37.0

1) Comparability between the years is affected by the TransViking companies being 100-percent included as of 2010 (formerly 50 percent), the Österström Group being included in the financial statements as of June 2011 and the Viking Supply Ships business area receiving delivery of two vessels during the year and acquisition of SBS Marine with an accounting effect from October.

2) After new share issue in December 2011, when the number of shares doubled.

SEK M SEK M

Net sales

Operating profit (right scale)

07 08 09 10 11

3,000

2,000

1,000

0

–1,000

–2,000

450

300

150

0

–150

–300

Net sales and operating profit

%

Capital employed

Shareholders’ equity

07 08 09 10 11

30

20

10

0

–10

–20

–30

%

30

20

10

0

–10

–20

–30

Return on capital employed and shareholders’ equity

SEK M

Liquidity (SEK M)

Equity/assets ratio (%)

07 08 09 10 11

600

500

400

300

200

100

0

Liquidity and equity/assets ratio

%

60

50

40

30

20

10

0

4

TransAtlantic 2011 Comments by the CEO

While I assumed the position as President and CEO at year-end, I was fully engaged in the efforts to advance the operation in recent years in my capacity as CEO of TransAtlantic’s Parent Company Kistefos AS. There has been a high level of activity in which we balanced various growth initiatives with cost-reduction and efficiency-enhancement measures. This work was aimed at creating two independently strong businesses – with two separate organizations – which have solid potential to success fully compete in their respective markets. However, the condi-tions in the two markets are different.

A strong offshore market benefits Viking Supply ShipsThe pursuit of new oil and gas discoveries to supply a rapidly growing global demand for energy has resulted in ever increasing activity in offshore in recent years. The offshore market is in balance in terms of the supply of and demand for vessels, whereby global dynamics contribute to the vessels operating where they are needed the most. Viking Supply Ships features a strong offering to be able to benefit from an anticipated positive trend in demand in coming years. Vessels and systems, as well as highly skilled employees in offshore and icebreaking are already in place. The new contracts that were signed in arctic offshore in 2011 are proof of this. We must now grow with the market and compete for major new contracts in the arctic waterways in offshore activities and Ice Management.

Continued efficiency enhancements in Industrial ShippingIndustrial Shipping operates in a market with entirely different conditions. The reasons behind these conditions are a weak economic trend in Europe and the overloading of tonnage from overly optimistic shipping companies. These factors will keep cargo rates down for several years to come and entail that we must focus even more sharply on advancing the products and services being demanded by our customers, reduce costs and enhance efficiency. In 2011, we initiated and made some progress on a forceful restructuring of the operation. The focus is on improving net operating income, strengthening competitiveness by enhanc-ing the efficiency of the route network, reducing costs and modifying the contract structure. Much work remains to be done before we achieve success, but we have noted that the measures that we have taken were received positively by our customers. During the year, Industrial Shipping secured sev-eral new contracts with some of the largest compa-nies in the Nordic base industries. The business area’s expertise in integrated logistics solutions will mean a great deal in the coming years in increasing market shares and improving profitability.

Despite different market conditions, we are seeing two strong business areas, with a strong principal owner, emerge – which will be able to successfully evolve also as independent companies when the divi-sion of the Group has been completed. And within a few years, I expect to look back on 2011 as a highly important period in the creation of these companies.

Henning E. JensenPresident and CEO, TransAtlantic

Two operations with different preconditionsIn 2011, we focused on creating two distinct business areas that are ultimately to be able to successfully compete in their respective markets. Viking Supply Ships and Industrial Shipping will operate simultaneously in markets with entirely different preconditions in the coming years.

5

”We are seeing two strong business areas emerge – which will be able to successfully evolve also as independent c ompanies.”

2010TransAtlantic acquires the outstanding shares

and participations in the Trans Viking joint ven-

ture company, resulting in Norway’s Kistefos

becoming the new principal owner of Trans-

Atlantic. Ice Management assignments are

conducted off the coast of Greenland using the

Vidar, Balder and Tor Viking II vessels. A four-

year contract is signed with ENI Norge for Ice

Management services in the Barents Sea between

2011 and 2015. Delivery of Loke Viking.

6

TransAtlantic 2011

2011TransAtlantic acquires the shipping and

logistics company Österströms and SBS

Marine, launches the TransBothnia Line

and decides to relocate its headquarters

from Skärhamn to Gothenburg at year-

end 2011. A multiyear contract is signed

with the Sakhalin Energy oil consortium

concerning icebreaking of the coast of

Sakhalin, Russia*. Delivery of Njord and

Magne Viking. TransAtlantic decides to

divide the Group into two separate com-

panies and prepare for a listing on the

Oslo Stock Exchange of the Viking Supply

Ships A/S subsidiary. TransAtlantic will

remain listed on the NASDAQ OMX

Stockholm and comprise the operations

in the Industrial Shipping business area.

1990

Gorthon Lines is acquired from Bilspedition

(currently Schenker).

1991B&N is listed on the O List of the Stockholm

Stock Exchange.

1993Between 1990 and 1993, the operation grows

through various vessel purchases. In 1993,

Svenska Orient Linien is also acquired from

Bilspedition. B&N is moved to the A List of the

Stockholm Stock Exchange.

1994–1996The Dutch shipping company Moerman (including

a small fleet of bulk and RoRo tonnage) and the

Panamax operator Transbulk are acquired. Three

new RoRo vessels are delivered and leased by

Gorthon Lines to serve SCA under an extended

charter contract.

1997B&N is restructured. Gorthon Lines is spun off

to shareholders and listed on the O List of the

Stockholm Stock Exchange. 75% of Svenska

Orient Linien is divested through an initial public

offering (also on the O List). B&N is also moved

to the O List. The remaining business primarily

comprises bulk operations and a fleet of time-

charter leased RoRo vessels.

1998–2000B&N purchases 74% of Paltrans Shipping. The

new Offshore/Icebreaking business area is

established for whose operations three new

combination vessels are built. Trans Viking is

40 years in Swedish shipping

established as a joint venture, of which 50%

is owned by TransAtlantic and 50% by Kistefos

through the wholly owned subsidiary Viking

Supply Ships AS.

2001–2003B&N acquires 34% of Gorthon Lines. Offshore/

Icebreaking has all three vessels in operation.

In 2001–2002, a total of four new vessels are

launched into traffic across the Atlantic. A ton-

nage partnership is initiated with Gorthon Lines.

In 2002–2003, the bulk segment and RoRo oper-

ations report significant losses, which leads to

major restructuring and impairment costs.

2004In April, the 50/50 co-owned joint venture,

Gorthon-B&N TransAtlantic, is formed. The out-

standing share of Paltrans is acquired and thus

becomes wholly owned. In October, the proposal

concerning a full merger with Gorthon Lines is

announced.

2005The merger between B&N Nordsjöfrakt and

Gorthon Lines is finalized in March and B&N

Nordsjöfrakt is renamed Rederi AB TransAtlantic.

B&N Transbulk is sold during the first quarter.

During the year, TransAtlantic’s share is moved

to Stockholm’s Attract 40 List. TransAtlantic

launches the company TransLumi Line AB.

2006The Offshore/Icebreaking business area acquires

another AHTS vessel, Odin Viking. Another two

ice-going vessels are ordered for delivery in

2009–2011. During the second half of the year,

two of three new vessels under a long-term con-

tract for Stora Enso are delivered to the Industrial

Shipping business area. The contract has a term

of 15 years. StoraEnso will fill the vessels with its

loads to about 60%, after which, TransLumi Line

will market the remaining tonnage capacity to

third parties to effectively capitalize on the load

capacity. Older vessels in the Atlantic division will

be divested and leased for brief periods.

2007Another two ice-going AHTS vessels are ordered

for delivery in 2011. The third vessel, TransTimber,

also to be used under a long-term contract for

Stora Enso, is delivered.

2009In June, the previously announced sale of the

Atlantic division is cancelled.

2008A new integrated offshore service is

developed for operations in arctic water-

ways. The TransAtlantic Ice Academy and

TransAtlantic Ice Council systems are

launched. Assignments are conducted on

behalf of Shell outside Alaska.

1972–1989Nordsjöfrakt is formed and operated

from Skärhamn, Tjörn, and is gradually

expanded with minor bulk and RoRo

tonnage. In 1989, the operation

encompasses 15 vessels, including

three reefer vessels, which were

acquired together with the Bylock

Group. Bylock & Nordsjöfrakt (B&N)

was formed on December 31, 1989

by merger of Nordsjöfrakt’s operations

with the Bylock Group.

* The agreement is subject to the approval of TransAtlantic’s Board and the banks concerned.

2012Delivery of Brage Viking. Work on dividing the

Group into two independent listed companies

continues.

8

TransAtlantic 2011

The Industrial Shipping business area offers intelligent logistics solutions and efficient vessel transports. The business comprises five divisions that collaborate to achieve the maximum degree of utilization for the vessels and to provide cus-tomers with a high level of service. This is com-bined with a logistical infrastructure in Europe, independent terminals in strategic locations and networks for supplementary land transports.

Geographic areaPrimary focus on the Baltic Sea area, but also on the North Sea and Mediterranean.

CustomersFirst and foremost the forestry and steel industry in the Baltic Sea area, as well as basic industry in the rest of the Nordic region. The largest custom-ers are StoraEnso, FNsteel, SSAB, Rautaruukki, M-real, Sveaskog and Nordkalk.

ResourcesSome 48 vessels with dedicated crews and about 215 onshore employees in seven countries who work in terminals, offices and in ports.

OperationsTransAtlantic’s operations are divided into two business areas: Industrial Shipping and Viking Supply Ships. These business areas were also organizationally divided in 2011, with independent headquarters. In 2012, work continues on preparing the business areas for operating as two listed independent companies. It is planned to spin off Viking Supply Ships to the shareholders and list the company on the Oslo Stock Exchange. The Industrial Shipping business area will retain the name TransAtlantic and will remain listed on NASDAQ OMX Stockholm.

Industrial Shipping

48 vessels

SEK M SEK M

Net sales


07 08 09 10 11

3,000

2,000

1,000

0

–1,000

–2,000

–3,000

150

100

50

0

–50

–100

–150

Net revenue and operating profit Percentage of sales

pages 10–21

The weak market, with low demand and an oversupply of tonnage, put pressure on profit-ability in the business area. Restructuring costs and acquisition effects also had an adverse impact on earnings.

76%

9

Customized tonnage and crews with specialist expertise offer oil-prospecting customers in the North Sea and arctic waterways a secure and predictable operation through an integrated off-shore and Ice Management service. Icebreaking services are performed as required on behalf of the Swedish Maritime Administration in the Baltic Sea during the first quarter of the year.

Geographic areaThe North Sea and arctic areas such as the Barents Sea, Greenland and the Beaufort Sea.

CustomersThe major international oil companies, other oil-prospecting companies and the Swedish Maritime Administration. The largest customers are Cairn Energy, Eni Norge, Shell and Statoil.

ResourcesSome 14 vessels – of which three are combined icebreakers/AHTS vessels, four are new ice-reinforced AHTS vessels (including Brage Viking, which was delivered in January 2012) and five modern PSV vessels – with dedicated crew with extensive experience in icebreaking and offshore work in severe weather conditions. About 40 onshore employees at offices in Den-mark, Sweden, Norway, Scotland and Russia.

Viking Supply Ships

14

SEK M SEK M

Net revenue


07 08 09 10 11

750

600

450

300

150

0

–150

375

300

225

150

75

0

–75


pages 22–31

The offshore market was gradually strengthened during the year with a number of rig relocations and a general boost in activity. This entailed a higher degree of utilization for Viking Supply Ships’ AHTS vessels, which resulted in higher rates. Restructuring and future investments had a negative impact on earnings.VIKING SUPPLY SHIPS - vertical logo

Percentage of sales

19%

vessels

TransAtlantic 2011 Affärsområden

1010

TransAtlantic 2011 Industrial Shipping

Key step toward profitabilityIn 2011, a transition of the business was initiated. We reduced costs, adapted the fleet and developed new services that will move TransAtlantic from a traditional shipping company to a leading logistical player for major and demanding customers in the basic industry in northern Europe.

Comments from the head of the business area:

The extensive work initiated in 2011 to advance and improve the Industrial Shipping operation has generated results. We have an even clearer focus on effective transport solutions with the Baltic Sea as our geographic base and we have amassed expertise, systems and services that enable us to grow with our largest Nordic industrial customers throughout Europe – both at sea and on land.

More services will be addedAt the same time, the accomplishments that have been made can be seen as a key step toward profitability. We operate in a market exposed to intense competition with significant imbalances. Far too much tonnage is competing for the same customers, which has pressured cargo rates to low levels in recent years – which we probably have to live with for several years to come.

We have also noted that our customers are imposing increasingly stringent require-ments on their suppliers and demanding higher frequency, shorter lead times and lower unit costs. In addition to meeting these challenges by becoming an even more efficient company, we will continue to develop our knowledge in the interest of adding more services that make TransAtlantic more attractive than its competitors.

The ability to build new transport systems for both existing and new customers, and integrating other transport solutions, such as railways, trucks and barges, is the key to our continued success. Today, our customers include some of the largest companies in the Nordic forestry, steel and chemical industries. Meeting and exceeding these custom-ers’ expectations also facilitates a continued expansion in other customer segments. In 2012, we are sharply focused on increased profitability by both accelerating and applying the brakes. We will continue to improve and increase our product and service level and we will strengthen the sales organization. Combined with continued cost adaptations of the business, this will lead to the company bolstering its sales and the degree of utilization and taking the next step toward profitability.

Kim H. SörensenHead of Industrial Shipping

11

Operations in the Industrial Shipping busi-ness area comprise five different divisions – with a total of 48 bulk, container and RoRo vessels – working in unison to achieve the maximum degree of utilization for the vessels and a high level of service for TransAtlantic’s customers. This is combined with a logistical infrastructure in Europe, proprietary terminals in strategic locations and networks for supplementary land tran-sports. With the Baltic Sea as the geographic base, the business area covers various customer segments in the Nordic basic industry.

Acquisition of Österströms expands operationsAs part of its focus on advancing the busi-ness area, the shipping and logistics com-pany Österströms was acquired in 2011. Österströms supplements the business area through shipping transports with smaller bulk vessels and integrated logistics serv-ices. The acquisition contributes to increas-ing the selection of services and volumes and has led to the business area being divided into five divisions: Bulk, Container,

RoRo Baltic, Short Sea Bulk and Integrated Logistics. During the year, intense efforts were initiated to improve profitability in all divisions through cost rationalizations, reviewing structures and business plans and adapting the fleet.

Major customers in the Nordic basic industryTransAtlantic has partnerships with some of the largest players in the forestry and steel industry in Finland and Sweden. These are customers with high demands who operate in a global market in which time and quality are key factors. The com-panies are in significant need of such factors as short lead times and reduced costs to cope with competition. The major customers include StoraEnso, M-real, Rauta ruukki, FNsteel, Sveaskog, SMA Mineral, SSAB, and Nordkalk. In 2011, a new three-year agree-ment was signed with StoraEnso for its paper transports from Finland to Germany, Sweden and Belgium. Under the agreement, a new RoRo route was launched between northern Finland and Antwerp/Zeebrügge, and TransAtlantic assumed control of the

Effective logistics and transport solutions The Industrial Shipping business area’s business concept is to add value to European industrial customers by delivering environmentally efficient logistics solutions of the highest quality and with the greatest reliability. With the integration of Österströms and the development of new services and skills, a rapid transition of the operation was initiated in 2011. The focus is now on bolstering profitability.

Facts about the business area

• One of Sweden’s largest shipping companies

• Headquarters in Gothenburg and offices in Stockholm, Västerås, Södertälje, Hull, Helsinki, Riga, Tallinn, Szczecin, Antwerp, Oxelösund, Västervik and Raahe

• Focus on the Baltic Sea with leading positions in the Gulf of Bothnia

• Major customers in the Nordic basic industry

• Five coordinated divisions

• Integrated logistics solutions

• 48 vessels, of which 11 are proprietary

– 10 RoRo vessels– 8 container vessels– 30 bulk vessels

SEK M SEK M

Net sales


07 08 09 10 11

3,000

2,000

1,000

0

–1,000

–2,000

–3,000

150

100

50

0

–50

–100

–150

Net revenue and operating profit

Industrial Shipping management

Kim H. Sörensen Head of Industrial Shipping

Klas Eskilsson CCO

Heléne Mellquist CFO

Britta StoltHR Manager

Industrial Shipping business area

12


Activities in 2011• Acquisition of Österströms

• Relocation of the headquarter to Gothenburg

• New agreement with StoraEnso

• New agreements with FNsteel and Nordkalk

• New terminal in Hull, UK

• Discontinuation of Atlantic traffic and TransSuomi Line

• ISO certification of fleet and companies completed

Focus in 2012The synergies and advantages between the various divisions will be utilized to a greater degree. In addition to a continued focus on the Nordic basic industry, the customer base will be expanded to also include new customers in other sectors who can benefit from the business area’s comprehensive solutions, which entails complete system traffic, in terms of the route and types of vessels, linked to inte-grated land logistics.

commercial and operational responsibility for the TransLumi Line from StoraEnso, which was formerly in charge of the route. Key new agreements were also signed with FNsteel and Nordkalk for transports of both input goods for steel production and processed steel products.

Flexible vessel fleet An increasingly large share of the vessels are leased to allow the fleet to be rapidly adapted based on customers’ needs and to be renewed in pace with technological developments and new environmental requirements. This is combined with owned vessels to fulfill a long-term need for modern vessels with a high ice class and the right tonnage for customers, thus maintaining expertise in such areas as vessel mainte-nance, load economics and vessel develop-ment. As a result of the acquisition of Österströms, bulk vessels have become a significant share of the combined tonnage, although leased vessels have gradually been returned as a result of relentless efforts to optimize the degree of utilization of the vessel fleet.

All divisions are undergoing a long-term transition to larger and more effective but fewer vessels. In 2011, five vessels were sold and five vessels were returned after com-pletion of charter. At year-end, the business area had a total of 48 vessels, of which 11 were proprietary. The number of vessels increased compared with the same date in the preceding year as a result of the acquisi-tion of Österströms.

Structural problems in shipping continueThe shipping sector continues to be belea-guered by aftermath of the latest economic peak when shipping companies and other investors ordered a number of vessels that are now being released into the market. According to the magazine Svensk Sjöfarts-tidning, about 9,000 vessels were ordered with a combined deadweight tonnage of 560 million, corresponding to nearly half the global commercial fleet. However, not all ordered vessels will be delivered, some orders will be delayed and a number of shipyards are expected to enter bankruptcy. Despite this, there will be extensive new deliveries, which will contribute to keeping cargo rates down in the coming years.

Major selection of tonnage presses cargo rates down Baltic Dry Index is a global price indicator

for maritime transports of such dry goods as

coal, iron ore, copper and grain. The major

structural problems in shipping, meaning the

excessively rapid rise of the global vessel

fleet, contribute to maintaining cargo rates at

low levels.

SEK M

July07

12,100

10,100

8,100

6,100

4,100

2,100

500

Baltic Dry Index (Biffex) 1997–2011

Jan08

July08

Jan09

July09

Jan10

July10

Jan11

July11

Entire fleet environmentally and quality certifiedTransAtlantic is certified in accordance with

the ISO 9001 quality management system

and the ISO 14001 environmental manage-

ment system. The environmental certifica-

tions comprise 54 environmental manage-

ment points for the operations, at sea and

on land. TransAtlantic assigns high priority

to environmental issues and continually

measures its environmental impact in each

individual maritime transport.

13

Performance of divisions

Division RoRo Baltic

The division conducts Baltic-Sea based system traffic for such sectors as forestry, with dedi-cated RoRo and container vessels. TransAtlantic has long been one of the major operators in the RoRo segment in the Baltic Sea and has built extensive customer relationships and effective transport systems. The creation of a maritime transport system for StoraEnso enabled Trans-Atlantic to successively expand its customer base, also beyond the forestry industry. During the year, some changes were made in the traffic and agreement structure entailing an increased focus on the Gulf of Bothnia and having Trans-Atlantic take greater control of traffic. At year-end, three routes – TransLumi Line, TransBoth-

nia Line and TransFeeder North – with a total of six vessels, were operated between northern Finland and Sweden, Germany and Belgium. In addition to paper and paper pulp, the loads primarily comprise tank containers, rolling loads and standard containers. Growing and key com-ponents are project loads for such sectors as the rapidly growing mining industry in northern Finland and Sweden.

Performance in 2011Aside from a weak beginning due to the chal-lenging ice scenario in the Baltic Sea, the divi-sion experienced a stable trend during the year, with a favorable capacity of forestry products

from StoraEnso and third-party loads from existing and new customer segments.

Focus in 2012Management of current traffic with a focus on further increasing profitability in the system by expanding the degree of vessel utilization, while also examining new long-term projects for increased system traffic for the forestry industry in the Baltic Sea.

Reinforcement of the new TransBothnia con-cept by increasing the degree of utilization in the vessels and intensified concentration of sched-uled traffic in the Gulf of Bothnia based on a con-tract with StoraEnso.

Division Container

The division conducts container-based liner traffic to the UK through the TransPal Line and feeder traffic through TransFeeder South. The routes are served by modern container vessels with ice class, most of which have built-in dehu-midifiers for the transport of humidity-sensitive steel products. During the year, a vessel was added to the TransPal Line, and greater tonnage was added to TransFeeder South to enable con-tinued expansion. The division includes clearing, storage and forwarding operations in Sweden and the UK. In the UK, the import goods are dis-tributed to their end recipients, either by storage

facility or directly from the vessels, as an inte-grated element of the transports. The new termi-nal in Hull creates additional advantages for the customers’ total transport chain by offering a modern machinery fleet and large new storage spaces. At year-end, there were four vessels in the TransPal Line and two in TransFeeder South.

Performance in 2011The demand for steel products tapered off slightly, resulting in somewhat lower average loads in the TransPal Line. TransFeeder South reported continued strong volume growth.

Division Bulk

The operation comprises four midsized ice-classed bulk vessels for contract-based trans-ports in the Baltic Sea and the North Sea, prima-rily for the forestry, steel and agricultural industry. During the year, an intensive effort was conducted at identifying longer contracts and refining the fleet toward the mid-bulk segment. A three-year contract was signed for two of the vessels with the Finnish companies FNsteel and Nordkalk for the transport of input goods for steel production. In early 2012, vessels from the transatlantic portion of the division, the RoRo

vessels TransPine and TransWood, were trans-ferred to the RoRo Baltic division and the new TransBothnia line in the Baltic Sea. Accordingly, only one vessel remains in the division that operates with customers in North America. The vessel, TransFighter, transports newsprint along the east coast of North America under contract for the Canadian company Kruger.

Performance in 2011A high degree of exposure to a weak spot mar-ket, due to low access to loads and tonnage over

capacity generated weak profitability in the division. The Atlantic business was discontinued during the year.

Focus in 2012Managing existing contracts and generating new ones. Developing new business relations and growing profitably in the Baltic Sea, including through such measures as continued synergies with other divisions in the business area.

Division Short Sea Bulk

The division has more than 25 minor bulk ves-sels at its disposal, which are adapted to all types of products in the forestry and steel indus-try. The vessels call on most ports in the Baltic Sea area and several of the ports on the conti-nent. The division offers integrated logistics solutions for such sectors as the Finnish steel industry, including the distribution of steel prod-ucts from Poland to end-customers in Central and Eastern Europe. In 2011, extensive efforts

were made to adapt capacity to lower demand, and to create a flexible contract structure for the new charter agreements that are entered into.

Performance in 2011The harsh icy winter in early 2011 had a negative impact on activities and a successively weaker demand for forestry and steel products resulted in the division posting a loss in 2011. The market was characterized by excessive tonnage and

economically low contract volumes among major customers.

Focus in 2012Establishing a flexible structure for tonnage and enhancing efficiency in the fleet through more in-depth talks with customers and more third-party solutions in the aim of reducing the dependency on one type of product.

Focus in 2012In Hull, work is being done on efficiency enhancements and coordinating the flow of goods to achieve greater cost effectiveness and thus create even greater competitive advantages for the customers. Traffic efficiency will be fur-ther enhanced and work is under way on devel-oping larger catchment areas through focused market initiatives. The advancement of IT related to operations will also comprise a prioritized area in 2012.

14


Integrated logisticsEach product requires its own logistics solution:

from commodity transports to industry, on to

processing, storage and finally delivery to the

end customer. TransAtlantic offers integrated

logistics services, including maritime trans-

ports, terminal operations, storage, land distri-

bution and IT services. These operations jointly

offer a seamless transport chain and create an

increased information exchange with the cus-

tomers and with their customers. The aim is to

increase the number of services in all divisions

by selling more integrated services to existing

and new customers.

Maritime transportsThe 48 container, RoRo and bulk vessels form a

central component in the business area’s inte-

grated logistics. The commanders on the vessels

are experts in what type of requirements the

customers place on the cargo and how the con-

tinued process of the goods works. When the

goods being transported comprise such sensi-

tive products as pulp and various types of steel

products, it is even more important to offer

adapted storage rooms and careful loading and

unloading.

IT and information systemsInformation management pertaining to cargo

is becoming increasingly comprehensive and

necessary. No one wants to hold on to excessive

inventories or receive unnecessary spillage,

which is why each order becomes even more

precise and frequent. Several of the business

area’s divisions offer cohesive IT systems that

monitor each individual article that is in the

logistics chain and when it is expected to arrive

at the end customer. This is achieved by reading

and identifying barcodes that allow the customer

to follow the course of the goods through an

online platform. Similar systems have already

been used for land transports but are unusual in

conjunction with industrial shipping.

Terminal managementIt is important that the vessel spend the least

amount of time possible in the port. Vessels are

expensive to operate and it is thus of the utmost

importance to have high loading and unloading

efficiency in the ports. TransAtlantic operates

independent and efficient terminals in key geo-

graphic areas in Sweden, Poland and the UK.

The Group has extensive experience in this area

in terms of shipping, port and stevedoring work,

load management, logistics, forwarding/distri-

bution and agent operations. The ports in

Szczecin, Poland, and Hull in the UK comprise

central reloading hubs and are strategically

located in the most intensive market areas for

the Nordic basic industry.

StorageIntermediary storage services are important to

industrial customers. When a vessel is unloaded,

several hundred freight railcars and trucks are

needed for onward transport of the entire load.

The industry itself often lacks the capacity to

accept the entire transport at once and would

prefer to make suborders to adapt the deliveries

based on their own production rate. Intermediary

storage is included in TransAtlantic’s integrated

logistics service and port concept.

DistributionWorking in networks and in partnerships is an

important element of building a logistics flow.

TransAtlantic has a comprehensive network and

several partnerships that enable rapid and effi-

cient distribution services via truck, railway or

barge. For example, in Hull in the UK, the goods

are loaded onto a truck for further transporta-

tion or intermediary storage. In Szczecin,

Poland, a partnership exists for river-bound

transports on the River Oder, among others, which

is the entryway to the European river system.

Partnerships are also in progress with road-car-

rier partners in Western and Eastern Europe.

Barges and railways are the modes of transport

that clearly offer environmental advantages

when combined with maritime transport.

TransAtlantic adds valuesTransAtlantic manages the entire transport chain

and bears ultimate responsibility to its custom-

ers. This means that responsibility for delivery

precision and quality assurance are handed over

to TransAtlantic. The various logistics resources,

Integrated logistics solutions

Transport to ports

Loading vessels

Maritime transport

Unloading in ports

Intermediary storage

Distribution by railway/truck/ barge to the end-customer

Storage before salesProduction

Performance of divisions, cont.

such as vessels, ports, terminals and land trans-

port are part of a single unit. Customers only

receive one invoice, despite many different hubs

being involved in the transport process.

15

New skills emergingIn a market subject to intense competition, where

a large supply of tonnage limits an increase in

cargo rates, new services must be developed to

bolster profitability. In 2011, Industrial Shipping

was restructured into a more customer-oriented

organization that encompasses new areas of

expertise. This included the development of

knowledge to meet the needs of the initiative on

Number of employees, (total of 442 persons)

At Dec. 31, 2011

Onboard, 52%

Land, 48%

integrated logistics solutions, and to build spe-

cific skills in various sectors in the aim of develop-

ing Key Account Managers. During the year, a

process was also initiated in the aim of identifying

talent at TransAtlantic. In 2012, the focus is on

developing and coordinating leadership in con-

junction with making the business area an inde-

pendent company.

Gender distribution

At Dec. 31, 2011

Men, 82%

Women, 18%

30

20–29

25

20

15

10

5

0

%

Age structure

30–39 40–49 50–59 60–

Industrial Shipping business area

During the autumn of 2008, what is known

as a Ferrybox was installed on TransPaper.

This device provides the Swedish Meteoro-

logical and Hydrological Institute (SMHI)

with real-time measurements online about

water conditions in the Baltic Sea. The

project, which is scheduled to proceed for

ten years, is a partnership between SMHI,

the Finnish Institute of Marine Research and

TransAtlantic. TransPaper conducts routine

contract traffic on behalf of StoraEnso

between Kemi in Finland, Lübeck in Ger-

many, and Gothenburg, Sweden, and since

the contract has a term of many years, long-

term high-frequency marine environment

data can be collected on the same route.

Measurements are taken every 20 seconds

and are supplemented by water samples at

24 predetermined locations, which are

collected when the vessel reaches port. To

date, more than one million samples have

been taken, which will be highly significant

to the long-term environmental monitoring

of one of the world’s most sensitive seas.

Environmental monitoring with TransPaper

16


Continuous improvements

TransAtlantic’s environmen-tal objectives, 2009–2014• Reduce emissions to air, including

CO2, by 10%, measured in emissions

per ton/km.

• Reduce the number of chemicals

onboard by 15%.

• Reduce fuel consumption onboard

by 5%.

• Use chemicals that are less hazardous

for humans and the environment.

• Improve waste management onboard.

• Improve control and management of

emissions to water.

In 2011, TransAtlantic specifically focused

on energy efficiency enhancements

through flow gauges and frequency

controls for ventilation, on further

reducing hazardous chemicals and

on using biodegradable oils.

For TransAtlantic to successfully evolve, the shipping company must be the leader in environmental and safety measures, and be able to recruit the best employees. Trans-Atlantic’s entire organization and the vessels that TransAtlantic operates meet the require-ments of the ISM code and are certified under the ISO 9001:2008 quality manage-ment system and the ISO 14001:2004 envi-ronmental management system.

Secure deliveries Safety work aimed at minimizing incidents and accidents involving crew members is additionally important in operations in sen-sitive areas such as the Baltic Sea and Arctic waters. Safety issues are a prioritized area and TransAtlantic works actively with pre-ventive measures. TransAtlantic’s Safety Management System (SMS) aims to promote and contribute to the safety effort, which is continuously improved on land and at sea. Procedures and checklists onboard vessels are improved and developed continuously, jointly with personnel to minimize risks. All of TransAtlantic’s vessels are ice-classed and have crews with ice expertise, which contributes to increasing shipping safety.

TransAtlantic’s bridge officers have been trained in Maritime Resource Management (MRM), which is a system that is based on the safety approach developed in the airline industry, where checklists and procedures minimize the risk of accidents. In addition to reducing the risk of navigational errors and accidents, such as grounding and colli-

Effective fleet operations focused on quality control are of decisive significance for TransAtlantic. New international regulatory frameworks will lead to higher costs and TransAtlantic’s customers largely comprise major, international corporations with exacting standards on their suppliers’ environmental and safety efforts.

sions, MRM also contributes to increasing understanding for strong leadership and teamwork, as well as the benefit of common terminology. MRM has been implemented on all vessels operated by TransAtlantic, and in 2012, the training process will pro-ceed according to plan.

Continuous environmental improvementsThe environment is becoming an increas-ingly competitive factor. Many transport purchasers are increasing the demand for efficient environmental work in their sup-pliers, which is often higher than the various legislations that apply in the industry. The trend is beneficial to TransAtlantic, since the effort with the fleet’s environmental performance is based on continuous improve-ments. Within the Group, a number of projects are being conducted to reduce the environmental load, which is continuously adapted to changes in the business world and customers’ requirements.

Integrated logistics for a better environmentThe entire transport chain is hallmarked by an ambition to create a system with a mini-mal environmental impact. TransAtlantic’s greatest contribution to this takes the shape of integrated logistics, where maritime, rail-way and truck transports are combined with environmental and cost effectiveness. TransAtlantic also conducts key environ-mental initiatives to ensure that the vessels are fully loaded and that the number of positioning trips are minimized.

Reduced emissions to air A reduction in the emissions of sulfur

and nitric oxide, and a reduction in the

consumption of fossil fuels, thus reduc-

ing the emissions of carbon dioxide are

among the highest prioritized matters

at TransAtlantic.

More stringent emissions regulations a challengeIn 2008, the International Maritime Organization

(IMO) adopted more stringent limits for sulfur in

maritime fuel. The regulations mean that the lim-

its for sulfur in the so-called Sulfur Emission Con-

trol Areas (SECA), the Baltic Sea, the North Sea

and the English Channel, will be reduced from

the current 1.0% to 0.1% as of 2015. The limit for

sulfur content will be reduced globally to 0.5 per-

cent by weight by 2020, or depending on supply,

not later than 2025. A consequence of the

requirements on reduced sulfur content is that

the vessel’s costs for bunker oil will increase

sharply, resulting in higher maritime transport

costs. This is difficult to transfer to customers

and could cause transports by sea to change to

land, which is negative from an environmental

perspective. Accordingly, the need for alternative

solutions is substantial for the approximately

70,000 vessels affected by the new regulations.

The problem is that it be difficult to develop a

proven and effective cleaning technology prior to

the rules coming into effect in 2015. Rapid

advancements are certainly being made of vari-

ous technologies and in the use of alternative

fuels, but no solution is adequately efficient from

a cleaning or cost perspective. TransAtlantic has

a positive view of the more stringent emissions

regulations, but within a reasonable period, and

is involved in a number of partnerships concern-

ing the development of various technologies

such as scrubber systems and alternative fuels.

Safety and the environment

17

List of vesselsIndustrial Shipping

Vessel Type DwtYear of construction/year of remodeling

Holding/ leasing form Flag

TransAgila Container 4,500 1994 Owned – 67% Antigua/Barbuda

TransFrej Container 4,500 1994 Owned – 70% Antigua/Barbuda

TransNjord Container 4,500 1995 Owned – 100% Gibraltar

TransOdin Container 4,500 1994 Owned – 65% Antigua/Barbuda

TransAlrek Container 4,500 1995/2006 Timecharter Antigua/Barbuda

TransAnund Container 9,800 2007 Timecharter Cyprus

TransJorund Container 9,800 2007 Timecharter Cyprus

Conger Container 5,207 1995 Timecharter Antigua/Barbuda

TransPaper RoRo 16,000 2006 Bareboat-charter Sweden

TransPulp1) RoRo 16,000 2006 Bareboat-charter Sweden

TransTimber RoRo 15,960 2007 Bareboat-charter Sweden

TransEagle LoLo 16,600 2002 Owned – 100% The Netherlands

TransOsprey1) LoLo 20,400 2003/2008 Timecharter Gibraltar

TransHawk LoLo 16,600 2005 Bareboat-charter Gibraltar

Toftön2) LoLo 14,900 1980 Timecharter Gibraltar

TransAndromeda Bulk 6,700 1999 Owned – 100% The Netherlands

TransCapricorn Bulk 6,700 2000 Owned – 100% The Netherlands

TransFalcon Bulk 5,700 1993 Owned – 100% Sweden

Andante Bulk 6,397 2005 Timecharter Gibraltar

Arina Bulk 4,402 1989 Timecharter Lithuania

Brilliante Bulk 5,557 1997 Bareboat-charter Gibraltar

Distinto Bulk 4,135 2000 Bareboat-charter Gibraltar

Ernst Hagedorn Bulk 4,401 1989 Timecharter Antigua/Barbuda

Festivo RoRo 4,600 1979 Bareboat-charter Gibraltar

Forte Bulk 6,397 2005 Owned – 100% Gibraltar

Forza Bulk 4,135 2000 Bareboat-charter The Netherlands

Furioso Bulk 5,580 2007 Timecharter Antigua/Barbuda

Lontano Bulk 4,135 2000 Bareboat-charter Gibraltar

Metallica Bulk 4,401 1989 Timecharter Antigua/Barbuda

Nemuna Bulk 4,135 1989 Timecharter Antigua/Barbuda

Risoluto Bulk 4,145 1997 Bareboat-charter Gibraltar

Sereno Bulk 4,455 1991 Timecharter The Netherlands

Soave Bulk 4,455 1991 Timecharter The Netherlands

Sonoro Bulk 4,135 2000 Bareboat-charter Gibraltar

Vigoroso Bulk 5,580 2007 Timecharter Gibraltar

Visurgis Bulk 4,145 1997 Timecharter Antigua/Barbuda

Volante Bulk 4,135 2000 Bareboat-charter Gibraltar

Solenne Bulk 4,600 2000 Timecharter The Dutch Antilles

Subito Bulk 4,600 2000 Timecharter The Netherlands

Suono Bulk 4,600 2000 Timecharter The Dutch Antilles

Salsa Bulk 4,600 2000 Timecharter The Dutch Antilles

Samba Bulk 4,600 2000 Timecharter The Netherlands

Vikingland2) RoRo 16,675 1979/1996 Timecharter Sweden

TransReel1) RoRo 11,400 1987 Owned – 100% Sweden

TransFighter RoRo/sideloader 18,855 2001 Owned – 100% Sweden

TransPine RoRo/sideloader 18,855 2002 Bareboat-charter Sweden

TransWood RoRo/sideloader 18,855 2002 Bareboat-charter Sweden

Ingrid Gorthon2) RoRo/sideloader 14,240 1977 Timecharter Cyprus

1) Vessel leased on timecharter basis.2) Redelivered January/February 2012.


18

Hull

Amsterdam

Bremerhaven

Västerås

Södertälje Oxelösund

Norrköping

Åhus

Gothenburg

LübeckHamburg

Kemi Tornio

Oulu

Västervik

Szczecin

Antwerp

HelsinkiDalsbruk

Port

TransLumi Line (RoRo)

TransBothnia Line (RoRo)

TransFeeder North (Cont)

TransPal Line (Cont)

TransFeeder South (Cont)

Ruukki Raahe/Antwerp (Bulk/MPP)

Short Sea Bulk

A northern European logistics companyBacked by 48 vessels with dedicated crews, and 213 land-based employees spread among 13 offices in seven countries, TransAtlantic’s Industrial Shipping business area offers its European customers cost-effective solutions by applying a high level of expertise, effective systems and adapted tonnage. The service offering encompasses everything from separate maritime transports to integrated logistics solutions, which can include maritime transports, terminal management, storage and distribution.

RoRoRolling load and unit goodsTransAtlantic’s ten RoRo vessel can take most rolling loads, such as cars, trucks, heavy machinery and mining equipment. The vessels also handle unit articles such as machinery parts, boats, contain-ers and tanks.

BulkFlexible load solutionsTransAtlantic’s 30 ice-classed bulk vessels transport a number of different dry prod-ucts for the forestry, mining, chemicals and steel industry. The customers are given the opportunity to utilize the vessel’s entire cargo space or parts of it.

ContainerBuilt-in dehumidifiersTransAtlantic’s eight modern container vessels are ice-classed, most with built- in dehumidifiers for the transport of humidity-sensitive steel products.

Integrated logistics solutionsOne-stop shopTransAtlantic’s logistics solutions can be compared with a one-stop shop, where the customer turns to a single contact person who is responsible for the customer’s entire logistics flow from raw material transports to the delivery of a finished product to the end customer.

Competition scenarioTransAtlantic’s largest competitors in industrial shipping are Spliethoff, Finnlines, DFDS Tor Line,

Transfennica and Wagenborg. The segment is marked by excess capacity and weak profitability.

Increasing profitability requires better capitalization of the vessel fleet through such actions as

partnerships with various shipping companies. This could also lead to more cost-effective cargo

transport and reduced environmental impact.

%

Shares of product categories that were freighted in 2011

Steel, 20

Forestry, 40

Chemicals, 25

Other, 15

Supply (year 2007=100)

Demand (year 2007=100)

07 08 09 10 12E

120

110

100

90

80

70

60

13E11E

Source: TransAtlantic’s own estimate based on sources from official statistics or market sources in shipping and production/GDP statistics.

Brief facts for 2011• 2,300 trips by vessels

No market balance in the Baltic SeaThe increase in the container and bulk fleet

in the Baltic Sea since 2007 does not match

the demand trend. These imbalances will

remain in place for several years to come

and hamper cargo rates.

2,300trips by vessels during 2011

2012 – focus on increased profitability

Following the completion of rationalization measures and adapting tonnage in 2011, the focus is now on increasing the service offering and volumes, as well as improving the degree of utilization of the vessel fleet and thus bolstering profitability.

Hull

Amsterdam

Bremerhaven

Västerås

Södertälje Oxelösund

Norrköping

Åhus

Gothenburg

LübeckHamburg

Kemi Tornio

Oulu

Västervik

Szczecin

Antwerp

HelsinkiDalsbruk

Port

TransLumi Line (RoRo)

TransBothnia Line (RoRo)

TransFeeder North (Cont)

TransPal Line (Cont)

TransFeeder South (Cont)

Ruukki Raahe/Antwerp (Bulk/MPP)

Short Sea Bulk

19

HullThe new terminal in the UK city of

Hull gives TransAtlantic overriding

access to the customers’ operations.

The terminal offers a modern machin-

ery fleet and new covered storage

space comprising about 16,000

square meters, and since it is not

dependent on tides, the vessels can

take larger and heavier loads.

Gulf of BothniaTransAtlantic has a strong position in maritime

transports in the Gulf of Bothnia, a key growth

area in the Nordic basic industry. TransAtlantic’s

bulk, container and RoRo vessels transport

products including forestry and steel for some

of the largest companies in the region, such as

StoraEnso and Rautaruukki.

Szczecin In the Polish port city of Szczecin, TransAtlantic has estab-

lished a key terminal for integrated logistics solutions for

the Finnish steel industry, among others. Through partner-

ships with companies in rail traffic, river-bound transports

and truck transports, products are distributed to end-

customers in Central and Eastern Europe.

HelsinkiFrom the proprietary revenue office in

the Finnish capital city, the largest compa-

nies in the country’s basic industry are

cultivated. Finnish customers accounted

for about 13% of the Industrial Shipping

business area’s revenue in 2011.

Short Sea BulkThe Short Sea Bulk division

offers integrated logistics solu-

tions for the Finnish steel

industry, which includes the

distribution of steel products

from steel mills in Finland to

end customers in Sweden,

Norway and on the continent.

mal environmental impact. TransAtlantic assumes

overall responsibility for FNsteel, which includes

delivery precision and quality assurance.

A growing operation

Effective logistics systems are being created for

several players in the Nordic basic industry. In

addition to the transport of steel and forestry

products to end customers on the continent and

in the Nordic region, through ports in the Baltic

Sea, TransAtlantic assumes responsibility for the

entire logistics chain for customers who transport

container and bulk goods from Sweden and

Finland to various end customers in the UK –

through TransAtlantic’s terminal in Hull. Regard-

less of the customer, IT and the environment are

always in focus as an important added value

throughout the transport chain.


20

That was the year in which the first bulk vessel

left the port in Dalsbruk in Finland – loaded with

steel rolls (wire-rod rolls) for distribution through

the ports in Västervik in Sweden and the Polish

city of Szczecin, to industrial customers through-

out Europe. Today, five years later, nearly 1.2 mil-

lion tons of steel rolls have left the Finnish port on

TransAtlantic’s vessels to be transported onward

by truck, railway and barges to customers in the

automotive and construction industry on the con-

tinent and in the Nordic region. Vast quantities of

input goods for FNsteel’s steel production, such

as coke fuel and taconite pellets, have also been

shipped into the steel mill in Finland.

Overall transport responsibility

The logistics work for FNsteel continues. About

two vessels per week throughout the year leave

the port in Dalsbruk freighting a valuable load of

steel rolls. The entire logistics flow is operated

from TransAtlantic’s offices in Stockholm and

Szczecin, from the loading in Finland to the

unloading with the end-customer somewhere in

Europe. FNsteel uses TransAtlantic as its only

contact for the entire logistics chain, and can

monitor the path of each individual steel roll via

TransAtlantic’s IT system. In addition to contribut-

ing to strengthening FNsteel’s competitiveness,

the entire transport chain is hallmarked by the

aim of creating a value-adding system with mini-

A fast and safe route for Finnish steel goodsThe comprehensive logistics system that TransAtlantic is creating will increase customers’ competitiveness. Based on each individual customer’s needs and conditions, a logistics proposal is prepared, which may be the beginning of a long and rewarding business partnership. Such a partnership was initiated with the Finnish steel company FNsteel in 2007.

50daily truck transports from Szczecin

REAl TIME INFORMATION All steel rolls that leave FNsteel’s production

facility in Dalsbruk have been ordered by custom-

ers. Each individual roll is identity labeled with

a barcode that, via TransAtlantic’s

information services, provide detailed

and regular information to all players

throughout the transport route.

By having TransAtlantic and FNsteel

integrate their information systems,

all players in the logistics chain

always have real time control over

where their products are.

“High quality, short lead times and an effective infor-mation system are decisive factors for our partnership with TransAtlantic.”Markus Malinen, Vice President Logistics & Business Development, FNsteel*

* The Finnish company FNsteel is a leading European company in the production and processing of specialist steel products in the form of wire rod and steel wire. The products are used in the European automotive and construction industries. Manufacturing is con-ducted in Finland, Sweden and the Netherlands, with a combined annual steel production capacity of about 600,000 tons.

3

Västervik

Szczecin

Dalsbruk

21

CAREFul AND EFFECTIVE lOADINGSpecialist steel is a sensitive product.

Accordingly, loading and unloading are

specifically adapted so as not to cause

any damage to the steel rolls. Since

vessels are expensive to operate, even

when they are at a standstill, high load-

ing and unloading efficiency is impor-

tant. It takes an average of two days to

load up to 3,000 tons of steel rolls

onboard one of TransAtlantic’s modern

bulk vessels in the port of Dalsbruk.

SAFE MARITIME TRANSPORTSSteel rolls also require a specifically adapted

secure form of loading to avoid damages. To

enhance the efficiency of the transport chain,

loading and unloading measures are also prepared

onboard prior to the vessel reaching port. Trans-

Atlantic’s modern and fuel efficient bulk vessels

have ice class and ply the Baltic Sea year-round.

QuAlITy ASSuRANCE WHEN uNlOADINGWhen unloading, TransAtlantic ensures

the quality of each individual roll of steel

and scans their barcodes prior to being

delivered to the customer or placed in

intermediary storage. Through wireless

communications in port, FNsteel and the

end-customers receive immediate infor-

mation on what has been unloaded, as

well as an update on the inventory.

COMPREHENSIVE DISTRIBuTION NETWORKSFrom its terminals in Szczecin, Västervik and Hull, Trans-

Atlantic has created a comprehensive network of road carriers

and other distribution partners. In Szczecin, up to 50 trucks a

day carrying steel rolls from FNsteel depart to industrial

customers in Poland, Germany, Austria, Italy and the Czech

Republic. When the end-customer makes a suborder under

the framework agreement, the products are scanned when

they are loaded onto the railcar, barge or truck. A message is

automatically send to the recipient and FNsteel, who are thus

informed that the goods have been loaded and are en route.

PROPRIETARy TERMINAlSTransAtlantic’s terminal in Szczecin is dimensioned to

receive and store FNsteel’s products. The storage space

is divided between various customers and qualities for

subsequent suborders for final deliveries. In Szczecin,

TransAtlantic has a proprietary office with seven employ-

ees, who plan the unloading of the vessel and the daily

distribution for TransAtlantic’s various customers. The

personnel in the port work in shifts on coordinating the

unloading of steel rolls from the vessels to the ware-

house, to subsequently load these onto trucks, railcars

or barges to the final destination.

1

2

4

5

22

TransAtlantic 2011 Viking Supply Ships

In addition to having a new organization in place, including the relocation of the headquarters to Copenhagen, 2011 was a year hallmarked by a high level of market activity. We secured several key contracts that strengthen our leading niche position in arctic areas, and expanded our offering through the acquisition of SBS Marine.

Our expertise forms the foundation for a continued successful trend. Viking Supply Ships possesses a unique expertise to conduct operations in areas with severe weather condi-tions and in areas with ice. This expertise naturally encompasses our system and methods but it primarily comprises the extensive and solid experience that our officers have gathered over time in icebreaking and offshore operations. We will further sharpen our focus on developing and marketing these competitive advantages moving forward. An element of this effort involves advancing the training initiative within the framework of the Viking ICE Academy and the arctic expertise in the Viking ICE Council. Most of the key positions in the new organization, which was formed in 2011, were filled by former TransAtlantic employees. We also place considerable focus on developing our own talents.

In January 2012, we received delivery of the final ATHS vessel from the Astilleros Zamakona shipyard in Spain. This means that we have 14 proprietary offshore vessels and icebreakers in our fleet and five icebreakers for which we bear operational responsibility on behalf of the Swedish Maritime Administration. Combined, this entails an expertise-based advantage in icebreaking, as well as a strong offering ahead of forthcoming negotia-tions for new assignments in various waterways.

Positive outlookIn 2011, following several years of pressure due to a vast supply of tonnage and low activity, we noted signs of change. The prospects ahead of 2012 are positive, with fewer available vessels, only a few new vessels and increased activity in all of our geographic areas. In the coming years, several key contracts will arise for assisting the oil companies when pros-pecting in arctic waterways. Our solid knowledge and experience, and zero tolerance in terms of accidents, emissions and material accidents will enable us to successfully compete for these contracts.

Christian W. BergHead of Viking Supply Ships

Comments from the head of the business area

Expertise that generates competitive advantages

23

Sharp economic growth in such markets as the BRIC countries China and India are causing increased energy demands. Despite the rapid development of various energy efficient solutions, the International Energy Agency (IEA) estimates that global demand for energy will rise by at least 35% by 2035. Since the need for various types of energy will probably not change much, the demand for oil and gas will increase at the same rate. Since the production from existing fields is declining, new fields must be

Strong offering in arctic offshoreViking Supply Ships’ extensive expertise in conducting offshore assignments in icy condi-tions and in severe weather conditions will become increasingly important when prospecting for oil and gas gains momentum in the arctic waterways. In 2011, activity was high in the business area, hallmarked by a strategic acquisition and new Ice Management contracts.

Facts about the business area• Headquarters in Copenhagen and offices

in Aberdeen, Gothenburg, Kristiansand and Moscow

• 391 employees, of which 349 are on vessels

• Extensive experience in icebreaking and offshore activities

• One of few operators to possess actual arctic offshore experience

• Long-term contract with the Swedish Maritime Administration: – winter-season icebreaking with own tonnage – ship management for the five Swedish government icebreakers

• A fleet of 14 proprietary vessels: – three combined icebreakers/AHTS vessels – four ice-reinforced AHTS vessels – one AHTS vessel without ice class – six PSV vessels without ice class

• Leading arctic offshore training program – Viking ICE Academy

Management Viking Supply Ships

Christian W. Berg Head of Viking Supply Ships

Jan lybecker Steffensen, COO

Jesper Bejstrup CFO

Jeanette Wetterström HR Manager

lars Karlsson HSE Director

Not pictured:Tord ytterdahl, CCO

Viking Supply Ships business area

SEK M SEK M

Net revenue


07 08 09 10 11

750

600

450

300

150

0

–150

375

300

225

150

75

0

–75


tapped, and the IEA estimates that about 50% of the oil in 2035 will derive from new fields and production areas. The fastest per-centage production rise is estimated to derive from offshore fields, including arctic areas.

Arctic waterways becoming increasingly significantThe IEA estimates that about 25–30% of the world’s potential oil and gas reserves are found in the arctic areas. Prospecting for oil and gas in the arctic is a new challenge for the oil companies. In addition to the severe ice and weather conditions prevailing in the area, the logistics must be managed. Success not only requires new investments in rigs and vessels, but also in new operating methods. While relatively few arctic areas have been exploited, the countries that con-trol these areas have put an increasing number of exploitation licenses out to ten-der. The US, Canada, Greenland and Russia have already sold a number of licenses and will sell more in 2012. The oil companies that have purchased licenses have thus already made major investments and under-takings for arctic waterways. Since many of the licenses expire in 2016–2017, prospecting

24


must commence not later than 2013–2014 to enable the oil companies to thoroughly research each of their license areas.

Major demand for new offshore vesselsDue to the increased demand for energy and the positive trend for offshore fields, the prerequisites are beneficial for a succes-sively stronger market for offshore vessels. Compared with many other vessel types, order intakes for offshore vessels are currently at very low levels, which also strengthens the market prospects. Viking Supply Ships anticipates significant demand for arctic offshore vessels with a high ice class in the coming ten-year period. There will also be considerable demand for pow-erful icebreakers/offshore vessels (ice class PC3 or higher) in the immediate future, as new activities commence in the arctic areas.

Increased demand in the North SeaIn the North Sea, several major oil and gas finds have been made in recent years. In the market, this takes the shape of a sharp increase in the demand for offshore rigs. What are known as subsea companies fore-see major order intakes, indicating that the fleet of production vessels will grow in the coming years. This will lead to increased demand for offshore vessels, such as supply vessels (PSVs) and anchor handling vessels (AHTS). The forceful expansion that the Brazilian oil company Petrobras is conduct-ing off the coast of Brazil means that vessels will be relocated from the North Sea, which will also contribute to an improved market for offshore vessels in the North Sea and other markets.

High requirements during arctic operationsIce impacts personnel and equipment and knowledge about ice operations is currently limited. The brief operation period in the arctic waterways also entails requirements for extensive planning prior to the actual operation in order to coordinate all of the logistics. Drilling is conducted far from normal storage bases and there is often no or limited infrastructure in the area. There is also an extreme focus on safety and envi-ronment issues, and nothing may jeopardize the lifestyle of the local population. To par-ticipate in arctic operations, the shipping

companies that are to assist the oil compa-nies must possess solid experience of off-shore operations and vessel operations in ice. They must also fulfill stringent quality and environmental requirements and often have a local presence in the market in which the operation is to be performed.

High-level expertise and extensive experienceViking Supply Ships’ vast expertise in performing operations in ice and severe weather conditions will be of major signifi-cance when prospecting for oil and gas gains momentum in arctic waterways. The increase in activity in these areas will create the opportunities for multiyear contracts with the oil companies and thus balance the more volatile revenues from the offshore spot market in the North Sea. Customer adaptation and creativity combined with a leading position in safety and the environ-ment are pivotal factors for success. In addi-tion to a modern fleet adapted to operations in ice, Viking Supply Ships has the leading expertise in the area at its disposal. The commanding officers onboard the AHTS vessels hold an average of more than ten years’ experience of ice breaking and off-shore work. In addition, assignments have already been performed in the arctic water-ways since 2007 on behalf of Cairn Energy, ENI Norge, Exxon, Shell and Statoil.

New construction program completedAt the Spanish shipyard Astilleros Zama-kona, Viking Supply Ships has built four ice-reinforced AHTS vessels. The final ves-sel in the new construction program was delivered in January 2012. The vessels have a design that makes them suitable for opera-tions in areas with ice and in areas with severe weather conditions, such as the Barents Sea. During the year, extensive work was conducted on recruiting crews for the vessels. The new recruits are evenly distributed between Denmark, Norway and Sweden. One of the vessels, Njord Viking, underwent a major upgrade to meet the requirements for the four-year charter for ENI Norge in the Barents Sea, which the vessel commenced in late July. Other new constructions were active in the spot market in the North Sea.

Activities in 2011• New construction program completed

• Acquisition of the offshore shipping company SBS Marine

• Establishment of headquarters in Copenhagen

• Development of new training programs at Viking ICE Academy

• Contract with Sakhalin Energy in arctic offshore*

• Commenced four-year assignment in the Barents Sea for ENI Norge

• Ice Management assignment on behalf of Cairn Energy off Greenland

• Assignment on behalf of Statoil in the Barents Sea

• Intensive work on supply efforts and rig relocations in the North Sea

• Icebreaking in the Baltic Sea on behalf of the Swedish Maritime Administration

• Agreement on icebreaking in the Baltic Sea in 2012 on behalf of the Estonian Maritime Administration

• Development of new vessel design

Focus in 2012Marketing of arctic offshore operations will be intensified. Discussions on partner-ships will be held with several of the oil companies that are to being prospecting in the arctic waterways in 2013–2014. Work on signing long-term contracts applies to the entire fleet.

* The agreements are subject to the approval of the Board of TransAtlantic and the banks concerned.

25

Development of vessel designsIn addition to the recently concluded new construction program, Viking Supply Ships is developing new vessel designs for safe and efficient operations in the arctic water-ways in consultation with customers and shipyards and by performing various tests and simulations. Among the designs is a new series of vessels with a design opti-mized for managing future requirements in subarctic areas such as the Barents Sea. Work also commenced on a new series of AHTS/icebreakers, which is a new version of the Tor Viking icebreaker.

Icebreaking in the Baltic SeaUnder Viking Supply Ships’ long-term con-tract with the Swedish Maritime Adminis-tration, the two combination vessels – the Tor and Balder Viking vessels – will be at the disposal of the Administration during the first quarter of each year for icebreaking in the Baltic Sea. The structure of the agree-ment means that, during mild winters, the vessels may be used in offshore operations during the first quarter of the year. In such

cases, the operational area of the vessels would be dependent on the short transition time for icebreaking, which would nor-mally be limited to the southern parts of the North Sea sector.

Viking Supply Ships also partners with the Swedish Maritime Administration with the aim of using government ice breakers, for which Viking Supply Ships currently bears operational responsibility, for alterna-tive assignments when they are not needed for icebreaking in Swedish waterways. The partnership gives Viking Supply Ships a broader market offering. In 2011, an agree-ment was signed to terminate the current charter agreement with the Swedish Mari-time Administration for Vidar Viking, which will commence a multiyear contract off the coast of Sakhalin for the Sakhalin Energy oil consortium in 2012. The contract is subject to the approval of the Board of TransAtlantic and the banks involved. For the 2012 icebreaking season, Vidar Viking will provide icebreaking services for the Estonian Maritime Administration.

Four types of offshore vesselsAbout 6,700 offshore vessels currently

offer oil rigs worldwide assistance with

everything from construction work on

the ocean floor to transporting food

and other necessities to rig crews. The

vessels are generally classified in four

different types:

• AHTS (Anchor Handling Tug Supply

Vessels) – combined vessels that,

in addition to load capacity, are

equipped for the towing of oil rigs

and anchor handling.

• PSV (Platform Supply Vessels)

– vessels with large open deck sur-

faces and load tanks that conduct

transports to and from rigs.

• ERRV (Emergency Response and

Rescue Vessels) – safety vessels that

circle oil rigs with the capacity to

handle accidents.

• COV (Construction Offshore Vessels)

– vessels that perform construction

work on the ocean floor.

Read more about Viking Supply Ships’

vessels on page 29.

Acquisition of SBS Marine and Arctic Ice Management The reason for the acquisition of SBS Marine was to strengthen and advance the opera-tion in the business area by expanding the product offering. SBS Marine operates a fleet of five modern and one older PSV ves-sels, which manage transports to and from offshore platforms. In addition to offering additional services to existing customers, the acquisition will lead to economies of scale. In 2011, two SBS vessels were con-tracted for assignments in India, while two vessels were on long-term contract in the British sector and the remaining two on the spot market in the North Sea. In the coming years, Viking Supply Ships aims to use the vessels for operations in the North Sea and to supplement certain arctic operations. In early 2011, the Swedish company Arctic Ice Management AB was also acquired, which possesses Ice Management technology and knowledge, and contributes to further strengthening Viking Supply Ships’ offering.

26


Ice expertise in focusViking Supply Ships has a considerable need to

recruit for its arctic initiative, and in 2011, the four

new anchor handling vessels were manned with a

total of 112 individuals. In a longer-term perspec-

tive, when the exploitation and extraction of oil

and gas gains momentum in the arctic waterways,

there will be considerable need for employees

Number of employees (total of 391 persons)

At Dec 31, 2011

Onboard, 89%

Land, 11%

with specialist knowledge in icebreaking and ice-

navigating. The recruitment of and training in spe-

cialist functions will be conducted in partnership

with the Swedish Maritime Administration and the

Swedish Polar Research Secretariat. The recruit-

ment bases for icebreaking are in Sweden, Finland

and Russia, and the recruitment bases for offshore

are in Norway, Sweden, Denmark and the UK.

Gender distribution

At Dec 31, 2011

Men, 90%

Women, 10%

30

20–29

25

20

15

10

5

0

%

Age structure

30–39 40–49 50–59 60–

Viking ICE AcademyIn the aim of increasing the crews’ knowledge

of ice-navigation, Viking Supply Ships has devel-

oped specialist training courses in the area in

partnership with the Kalmar Maritime Academy.

In addition to the existing vessel crews, custom-

ers and business partners have the opportunity

to participate in training courses, which combine

theory and practice by using simulators and

onboard practice. The current training program

encompasses “Ice training,” “Arctic training,”

“Cold climate shipping” and “Dynamic position-

ing operations in Arctic waters.” The “Ice training”

program has received status as an official train-

ing program in ice-navigation by the Swedish

Maritime Administration. Read more at

www.iceacademy.org.

Viking ICE CouncilWith the aim of developing safe processes for

arctic offshore operations, Viking Supply Ships

initiated the formation of a global council of

independent experts in the area. In addition to

pursuing the establishment of various industry

standards and establishing a market for arctic

offshore, the Ice Council will provide advice on

how to best conduct arctic operations. The Coun-

cil’s members are from Sweden, Russia, the US,

Canada, Finland and Germany. In 2011, meet-

ings were held in Murmansk and Montreal focus-

ing on the Northern Sea Route and operations in

the Arctic. Read more at www.icecouncil.se.

Viking Supply Ships business area

28


The investment in arctic offshore means that the large oil companies are Trans Atlantic’s main customers. They have very stringent require ments on their suppliers’ safety work. For shipping companies that will be assisting the oil companies with exploration in the Arctic waters, the same strict demand specification that applies for tanker companies is now being introduced. The requirements, known as Offshore Vessels Management Self Assessment (OVMSA), include 12 items that must be met.

It essentially involves requirements for a systematic safety effort in accordance with established procedures, combining quality and environmental management systems. The shipping companies are assessed on a five-grade scale depending on how well the requirements are fulfilled. When assessing their suppliers, oil companies supplement the OVMSA with internal inspection con-trols of the vessels, as well as visiting the head offices to review procedures. The over-all impression subsequently determines whether the shipping company is approved as a supplier, which is a seal of quality.

In 2011, several major oil companies per-formed inspection controls of the business area’s operations, all of which were success-ful. Viking Supply Ships is certified in accordance with the FPAL quality assurance system that applies in the oil and gas indus-try. All of the offshore vessels are registered in OVID, the Offshore Vessel Inspection Database, where the oil companies can go in and check information online.

Leading approach to safety

Operating in arctic waterways means that the vessels are often active in previously untouched areas where a minimum of emissions are permitted and where extensive requirements are imposed on safety and specialist expertise among the crews. Major oil prospecting companies also impose increasingly high requirements on their suppliers’ environmental and safety efforts, which benefits Viking Supply Ships.

Continuous safety improvementsOne of the requirements included in the OVMSA is training of all bridge officers in a systematic safety approach, which is already implemented on Viking Supply Ships’ offshore vessels and icebreakers. Continuously identifying risks is the most important feature in the work to improve safety onboard.

Observations are compiled in reports that are distributed to all vessels and thus facilitate continuous improvements. The crews also complete safety training courses, which often exceed the market’s require-ments and the safety equipment is of high standard class on all vessels. The stringent safety and environmental approach at Viking Supply Ships will generate competi-tive advantages in the coming marketing effort.

Increased environmental requirements among oil companiesThe trend is progressing toward an increas-ingly extensive environmental approach in the sector, which is indicated by the rising demands imposed on environmental efforts in conjunction with the oil companies’ inspection controls in 2011.

Viking Supply Ships’ vessels operate on fuel with a 0.1% sulfur ratio and with cata-lytic converters that give the lowest emis-sions of nitric oxide. Viking Supply Ships’ entire organization and all vessels of Viking class are certified in accordance with the quality management system ISO 9001 and

Safety and the environment

the environmental management system ISO 14001. In 2012, the focus is on also implementing the ISO systems on SBS Marine’s vessels.

For Viking Supply Ships, as well as for the entire TransAtlantic Group, it is essential that the environmental impact is reduced to the extent possible and that statutory requirements are complied with.

Specially trained crewsIn offshore activities, experience in operat-ing in ice remains limited. As one of the leading shipping companies in the segment, Viking Supply Ships is focusing on estab-lishing a standard for requirements on how to conduct a safe and environmentally friendly operation. Viking Supply Ships imposes stricter requirements on its onboard crew on offshore vessels than the market requires, which is achieved through such measures as customized proprietary training courses at Viking ICE Academy at the Kalmar Marine Academy.

By continuously developing knowledge and amassing experience among crews, Viking Supply Ships is increasing its com-petitiveness to operate in arctic waterways.

29

List of vesselsViking Supply Ships

Vessel Type Dwt Year of construction Holding/leasing form Flag

Balder Viking AHTS/Icebreaker 3,000 2000 Owned – 100% Sweden

Tor Viking II AHTS/Icebreaker 3,000 2000 Owned – 100% Sweden

Vidar Viking AHTS/Icebreaker 3,000 2001 Owned – 100% Sweden

Odin Viking AHTS 2,869 2003 Owned – 100% Norway

Loke Viking AHTS 4,500 2010 Financial lease – Bareboat-charter Denmark

Njord Viking AHTS 4,500 2011 Financial lease – Bareboat-charter Denmark

Magne Viking AHTS 4,500 2011 Financial lease – Bareboat-charter Denmark

Brage Viking AHTS 4,500 2012 Financial lease – Bareboat-charter Denmark

SBS Torrent PSV 3,662 2007 Operational lease – Bareboat-charter UK

SBS Typhoon PSV 3,662 2006 Operational lease – Bareboat-charter UK

SBS Nimbus PSV 3,622 2003 Owned – 100% UK

SBS Stratus PSV 3,662 2003 Owned – 100% UK

SBS Tempest PSV 3,662 2006 Owned – 100% UK

SBS Cirrus PSV 3,250 1985 Owned – 100% UK

30

North Sea

Baltic Sea

Kalmar

Moscow

Barents Sea

Aberdeen

Greenland

Copenhagen (HQ)

Sakhalin


New finds are driving demandBased on the assumption that up to 25–30% of the world’s potential oil and gas reserves are found in the arctic areas, more and more oil companies have begun researching the possibility of extracting these reserves. Viking Supply Ships is already an established company in arctic offshore with vast expertise in performing operations in ice and severe weather conditions.

250icebergs moved in 2011

40rig relocations during the year

Competition scenarioExcept for Maersk, most of the shipping companies

that operate in the arctic offshore segment are

more niched, such as DOF, Farstad, Solstad, Havila,

Siem, Artica, Rieber Shipping, Fesco and Swire.

Brief facts for 2011 • 73% (AHTS) and 73% (PSV) degree of utilization

• 40 rig relocations

• 250 icebergs moved

USD per barrel of Brent Crude

Xxxxx

Feb07

Feb09

Feb 10

Feb12

150

100

50

0

Brent Crude

Feb08

Feb11

Continued high oil priceDespite a weaker world economy, the oil

price experienced a stable trend in 2011.

The reason is continued uncertainty

concerning future supply combined with

concerns over the geopolitical situation

in key oil-producing countries.

Unconventional oilNatural gas liquidsCrude oil; fields yet to be foundCrude oil; fields yet to be developedCrude oil; currently producing fields

Millions of barrels/day

1995 2005 2015 2025 2035

100

80

60

40

20

0

Oil reserves

New finds neededThe extraction of oil from existing fields

has already begun to decline. Some

25–30% of the world’s potential oil and

gas reserves are expected to be found in

the arctic areas.

North Sea

Baltic Sea

Kalmar

Moscow

Barents Sea

Aberdeen

Greenland

Copenhagen (HQ)

Sakhalin

31

2012 – more activity, higher ratesThe new finds that are being exploited in such regions as the North Sea, the Barents Sea and off the coast of Sakhalin are contributing to a stable rise in demand – and thus higher rates – for offshore vessels of the AHTS and PSV types. In 2012, Viking Supply Ships will focus on the North Sea and arctic areas with all of its 14 vessels.

Barents SeaActivity in the Barents Sea

increased in 2011, although the

severe weather conditions and

the complete darkness during the

winter entail specific requirements

on the vessels and crews operating

in the area. In 2011, the Njord

Viking vessel commenced a four-

year charter for ENI Norge and

Loke Viking participated in a short

charter for Statoil in the area.

North Sea Investments in new fields and expanded produc-

tion, combined with a limited supply of tonnage

contributed to a better market for offshore vessels

in the North Sea. In 2011, Viking Supply Ships had

between two and six AHTS vessels in the spot

market in the North Sea.

AberdeenSBS Marine, the offshore shipping

company acquired in 2011, is

based in the Scottish city of Aber-

deen. The fleet comprises six PSV

vessels, which generated revenue

of about SEK 240 million in 2011.

SBS Marine strengthens and

broadens Viking Supply Ships’

offshore offering in the North Sea

and the ice-free arctic waterways.

GreenlandThe U.S. Geological Survey esti-

mates that there are about 50 billion

barrels of oil and gas off the west

and east coasts of Greenland. Sev-

eral companies have begun search-

ing for finds, including the British

oil company Cairn Energy. For the

second consecutive year, Viking

Supply Ships was involved in pro-

tecting their drilling operations from

drifting icebergs, using the Vidar and

Balder Viking icebreakers in 2011.

KalmarTo increase knowledge about ice navigation among our own crews

and those of business partners, Viking Supply Ships has devel-

oped a unique special training program in the area in partnership

with the Kalmar Maritime Academy. The training program has

achieved status as an official training program in ice navigation

from the Swedish Maritime Administration and is offered under

the name of the Viking ICE Academy.

MoscowThrough its office in Moscow, Viking Supply

Ships has created an extensive and close

partnership with various players in the grow-

ing Russian market. In 2011, this resulted

in a multiyear contract with Sakhalin Energy*.

Day-to-day work on the contract will be

entirely managed by employees at the

Moscow office.

Sakhalin Off the coast of Russia’s largest island,

Sakhalin, north of Japan, an intensive effort

is under way to produce and search for oil

and gas. Beginning in the summer of 2012,

Vidar Viking will assist the Sakhalin Energy

oil consortium with services concerning ice-

breaking, anchor handling and other support*.

* The agreement is subject to the approval of the Board of TransAtlantic and the banks concerned.

32

TransAtlantic 2011 The share

New share issue ahead of divisionTransAtlantic’s share price declined 65.3% in 2011. The trend was impacted by a continued weak earnings trend at the company and a general decline in global markets. The new share issue in conjunction with the acquisition of SBS Marine resulted in the Norwegian company Kistefos increasing its ownership from 50% to 62.9% of the share capital of TransAtlantic.

TransAtlantic’s Series B share is listed on the NASDAQ OMX Stockholm on the Small Cap List and is included in the OMX Transport index. At year-end, the share price was SEK 9.15, corresponding to a market capitalization of SEK 1,015 M (1,686). On the same date, the total shareholders’ equity amounted to SEK 2,493 M (2,396), corresponding to SEK 22.50/share (43.20)*.

Share capital and new share issueIn late 2011, a new share issue was completed, with preferential right given to existing share-holders, valued at about SEK 555 M prior issu-ing costs, with the aim of financing the acqui-sition of SBS Marine and strengthening the company’s financial position ahead of the forthcoming division of the Group. The new share issue increased TransAtlantic’s share capital by about SEK 555 M to approximately SEK 1,109 M and the number of shares rose by about 3.6 million Series A shares and 51.8 million Series B shares

The total number of shares in Trans Atlantic at the end of the year amounted to approxi-mately 110.9 million shares distributed among about 7.2 million Series A shares carrying ten votes each and about 103.6 million Series B shares carrying one vote each. An Extraordi-nary General Meeting also resolved to reduce

the company’s share capital. The reduction in share capital, which will result in a share capital of about SEK 110.9 M, is expected to be registered with the Swedish Companies Registration Office on February 29, 2012.

Shareholders and changes in shareholder structureThe acquisition of Trans Viking in autumn 2010 entailed that Norwegian Kistefos, through its subsidiary Viking Supply Ships, became TransAtlantic’s new principal shareholder, with slightly more than 50% of both share capital and votes. This shareholding rose to 62.9% of the capital and 58.4% of the votes in conjunction partial exercise of the guarantees issued by Kistefos under the new share issue in 2011. Kistefos’ increased shareholding would have caused a mandatory bidding process, but the company received an exemption from the Swedish Securities Council for this under the rules that apply to increased ownership in con-junction with a new share issue. At year-end, the total number of shareholders was 5,854 (6,783), which was a decline compared with 2010.

Division of the companyThe process of dividing the Group continued as planned. The objective is to spin off Viking Supply Ships A/S to shareholders and list the

company on the Oslo Stock Exchange. Follow-ing the division, Rederi AB TransAtlantic will comprise the Industrial Shipping business area and remain listed on the NASDAQ OMX Stockholm.

Dividend proposal and dividend policyBased on earnings for the year and the existing investment requirement, the Board of Directors proposes that no dividend be paid for the 2011 fiscal year. TransAtlantic’s target is that the average amount of the dividend shall be not less than 33% of the annual net profit.

Contacts with shareholdersTransAtlantic’s ambition is to maintain a posi-tive dialog with the stock market and to pro-vide information on developments and events concerning its operations. This is done via presentations in conjunction with the quarterly reports and participation at conferences and seminars. The Annual Report, year-end reports and interim reports are available on the com-pany’s website www.rabt.se. The website also includes press releases, presentation material from information meetings and other informa-tion concerning the company.

Press releases• 2012-02-28 Year-end Report 2011

• 2012-01-27 New CEO of TransAtlantic Industrial Shipping appointed

• 2012-01-13 New AHTS vessel delivered to TransAtlantic

• 2011-12-30 Changed number of shares and votes in Rederi AB TransAtlantic (publ)

• 2011-12-14 New Managing Director of TransAtlantic

• 2011-12-08 Final outcome of TransAtlantic’sNew share issue

• 2011-11-24 TransAtlantic strengthens position in arctic offshore and signs long-term con-tracts with Sakhalin Energy

• 2011-11-09 Refinancing of existing loans for Tor Viking II, Balder Viking and Vidar Viking

• 2011-11-09 Publication of prospectus for TransAtlantic’s new share issue

• 2011-11-08 Press release from Extraordinary General Meeting of Rederi AB TransAtlantic

• 2011-11-03 Terms and conditions established for TransAtlantic’s new share issue

• 2011-11-03 Interim Report January-September 2011

• 2011-10-26 TransAtlantic’s Nomination Com-mittee appointed

• 2011-10-25 TransAtlantic signs three-year cargo contract

• 2011-10-24 New CFO for TransAtlantic appointed

• 2011-10-05 Notification of Extraordinary Gen-eral Meeting of Rederi AB TransAtlantic (publ)

• 2011-10-05 TransAtlantic acquires SBS Marine and undertakes new share issue of SEK 550 M

• 2011-08-04 Interim Report Jan-June 2011

• 2011-07-29 TransAtlantic takes delivery of AHTS vessel Magne Viking

• 2011-06-17 TransAtlantic crew on board Tor Viking rewarded for its rescue efforts

• 2011-06-08 TransAtlantic continues process to divide the Group

• 2011-05-31 Competition Authority gives TransAtlantic its approval

• 2011-05-26 TransAtlantic and StoraEnso extend cooperation

• 2011-05-04 Annual General Meeting press release Rederi AB TransAtlantic

• 2011-05-03 Interim Report Jan–Mar 2011

• 2011-04-29 New CEO appointed for Trans Viking Offshore A/S

• 2011-04-12 Rederi AB TransAtlantic publishes its 2010 Annual Report on www.rabt.se

• 2011-04-04 Notification of Annual General Meeting

• 2011-03-31 Strategic changes in TransAtlantic

• 2011-03-31 TransAtlantic divests RoRo vessels Ortviken, Östrand and Obbola

• 2011-03-31 TransAtlantic signs contract for AHTS vessel Balder Viking

• 2011-03-30 Amended Year-end Report 2010

• 2011-02-09 TransAtlantic takes delivery of AHTS vessel Njord Viking

• 2011-01-21 TransAtlantic’s icebreaker Tor Viking called in for icebreaking in the Baltic Sea

The TransAtlantic share

* Following the completion of the new share issue, the number of share rose by 55,451,350 to 110,902,700.

33

Shares traded, 000s

JAN FEB MAR APR MAY JUN JUL SEPAUG OCT NOV DEC

Rederi AB TransAtlantic volume (000s)

Rederi AB TransAtlantic share price (SEK) NASDAQ OMX Stockholm PI (rebased)

1,800

1,500

1,200

900

600

300

0

30

25

20

15

10

5

0

Key figures*

2011 2010 2009 2008 2007

Number of shares, Dec. 31, 000s 110,903 55,451 28,430 28,430 28,430

Market capitalization, Dec. 31, SEK M 1,015 1,686 645 904 1,225

Number of shareholders 5,854 6,783 7,402 6,184 6,324

Change in share price during the year, % –65.3 32 –29 –26 –15

Ordinary dividend, SEK — — — 2.50 2.0

Dividend as a percentage of earnings per share — — — 27 31

P/E ratio, Dec. 31 –1.39 1.8 n.a. 3.5 6.5

Shareholders’ equity/share, Dec. 31, SEK/share 22.5 43.2 42.4 50.9 43.6

Number of shareholders in size categories at Dec. 31, 2011

Holdings Shareholder

1–500 2,740

501–1,000 1,146

1,001–5,000 1,415

5,001–10,000 273

10,001–15,000 75

15,001–20,000 49

20,001– 156

Total 5,854

Share capital trendChange Number of shares Share capital

Event Series A

shares Series B

shares TotalSeries A

shares Series B

shares Total Change TotalQuotient

value

2004 New share issue — 474,275 474,275 1,208,980 17,910,153 19,119,133 4,742,750 191,191,330 10

2005 New share issue 608,980 11,129,541 11,738,521 1,817,960 29,039,694 30,857,654 117,385,210 308,576,540 10

2007 Share withdrawal during the year — –2,427,180 –2,427,180 1,817,960 26,612,514 28,430,474 –24,271,800 284,304,740 10

2010 New share issue 1,817,961 25,907,715 27,725,676 3,635,921 52,520,229 56,156,150 277,256,760 561,561,500 10

2010 Withdrawal of treasury shares –704,800 –704,800 3,635,921 51,815,429 55,451,350 –7,048,000 554,513,500 10

2011 New share issue 3,635,921 51,815,429 55,451,350 7,271,842 103,630,858 110,902,700 554,513,500 1,109,027,000 10

Share-price trend 2011

Shareholders in Rederi AB TransAtlantic at December 31, 2011

Series A shares Series B shares Number of shares Portion of capital, % Portion of votes, %

Kistefos (through wholly owned subsidiaries) 3,693,178 66,090,461 69,783,639 62.9 58.4

Enneff Rederi/Enneff Fastigheter 2,532,122 1,399,490 3,931,612 3.6 15.2

Lindéngruppen AB 913,016 5,313,000 6,226,016 5.6 8.2

Ernström Finans AB 0 3,010,000 3,010,000 2.7 1.7

Skagen Fonder 0 1,877,633 1,877,633 1.7 1.1

Morgan Stanley & Co Intl PLC 0 1,600,000 1,600,000 1.4 0.9

Credit Agricole Suisse SA 0 1,000,000 1,000,000 0.9 0.6

Försäkringsbolaget Avanza Pension 0 998,245 998,245 0.9 0.6

SEB S.A-NQI 0 956,329 956,329 0.9 0.5

Karlsson, Anders 58,606 124,698 183,304 0.2 0.4

Ribbskottet AB 0 600,000 600,000 0.5 0.3

Handelsbanken Fonder 0 515,930 515,930 0.5 0.3

Total 7,196,922 83,485,796 90,682,708 81.8 88.2

Other shareholders 74,920 20,145,062 20,219,992 18.2 11.8

Total number of shares 7,271,842 103,630,858 110,902,700 100% 100%

IR ContactCarina Dietmann

Head of Corporate Communications

Direct line: +46 (0) 31 763 23 34


* The reduction in share capital from 1,109,027,000 to 110,902,700 was registered by the Swedish Companies Registration Office on February 29, 2012.

* Following the completion of the new share issue, the number of shares rose by 55,451,350 to 110,902,700.

34

TransAtlantic 2011 Five-year overview

Five-year overviewRefer to page 82 for definitions TransAtlantic

SEK M 2011 2010 2009 2008 2007

Consolidated revenue and earnings

Net revenue

Viking Supply Ships business area 568 298 125 402 359

Industrial Shipping business area 2,259 1,865 1,900 2,006 2,005

Ship Management/Group-wide1) 162 231 259 240 166

Consolidated net revenue 2,989 2,394 2,284 2,648 2,530

Operating profit/loss (before tax)

Viking Supply Ships business area –72 45 –25 233 230

Industrial Shipping business area –113 –105 –140 81 81

–185 –60 –165 314 311

Ship Management/Group-wide –87 –61 –48 –31 –30

Consolidated operating profit/loss –272 –121 –213 283 281

Restructuring costs and other items affecting comparability –187 –247 –63 –24 –3

Acquisition effects –7 775 — — —

Consolidated profit/loss before tax –466 407 –276 259 278

Tax 31 178 55 7 –92

Consolidated net profit/loss –435 585 –221 266 186

Consolidated cash flow

Cash flow from current operations before changes in working capital –37 58 –50 455 415

Changes in working capital 151 33 2 38 –116

Cash flow from investing operations –477 164 –142 –58 –41

– of which, investments2) –824 152 –142 –86 –84

– of which, divestments 347 12 0 28 43

Cash flow from financing operations 273 86 –89 –240 –143

Total cash flow –90 341 –279 195 115

Exchange-rate difference in cash and cash equivalents 1 –31 32 –14 14

Closing cash and cash equivalents 548 637 327 574 393

Less blocked/pledged cash and cash equivalents — –14 –7 –7 –7

Overdraft facilities granted but not utilized 93 24 124 400 400

unappropriated closing cash and cash equivalents3) 641 647 444 967 786

1) In addition to Group-wide expenses, this item includes the Group’s external ship management, for which a large portion of revenue comprise costs re-invoiced to customers.

2) The figure for 2011 includes cash and cash equivalents of SEK 38 M contributed to the Group in connection with the acquisition of Österströms and SBS Marine the 2010 figure includes cash and cash equivalents of SEK 298 M contributed to the Group in connection with the acquisition of Trans Viking.

3) Of the Groups cash and cash equivalents for 2011 of SEK 548 M (637), SEK 157 M pertains to a specific account to secure the Group’s cash commitments for the delivery of the Brage Viking. For 2010, a similar provision of SEK 315 M was made for the deliveries of Njord, Magne and Brage Viking.

35

Refer to page 82 for definitions TransAtlantic

SEK M 2011 2010 2009 2008 2007

Consolidated balance sheet, Dec. 31

Vessels 4,839 3,815 2,195 2,171 2,047

Financial fixed assets 188 71 105 66 73

Other fixed assets 88 91 100 79 78

Current assets, excluding cash and cash equivalents 620 497 445 458 533

Cash and cash equivalents 548 637 327 574 393

Total assets 6,283 5,111 3,172 3,348 3,124

Shareholders’ equity1) 2,493 2,396 1,175 1,421 1,217

Interest-bearing liabilities 2,983 2,135 1,381 1,188 1,215

Noninterest-bearing liabilities 807 580 616 739 692

Total shareholders’ equity and liabilities 6,283 5,111 3,172 3,348 3,124

Consolidated shareholders’ equity1)

Shareholders' equity, Jan. 1 2,396 1,175 1,421 1,217 1,085

New share issue net after transaction expenses 542 658 — — —

Dividend — — –70 –70 –57

Profit for the year –435 585 –221 266 186

Exchange-rate differences/other –10 –22 51 8 37

Buy-back of own shares — — –6 — –34

Shareholders' equity, Dec. 31 2,493 2,396 1,175 1,421 1,217

Data per share (SEK)2)

Earnings before capital costs (EBITDA) 1.0 21.6 –0.3 15.5 14.1

Earnings before interest expenses (EBIT) –5.2 11.1 –7.2 9.7 10.3

Operating profit (before tax) –4.1 –2.9 –6.6 8.7 8.5

Profit after current tax –7.3 9.9 –8.5 7.9 5.6

Profit after full tax –6.6 14.3 –6.9 8.2 5.6

Cash flow from current operations 1.7 22 –1.5 15.3 9.2

Total cash flow –1.4 8.3 –8.6 6.0 3.5

Shareholders' equity, Dec. 31 22.5 43.2 42.4 50.9 43.6

P/E ratio n.a 1.8 n.a 3.5 6.5

Dividend paid — — 2.50 2.50 2.00

Number of shares, Dec. 31 (000s)3) 110,903 55,451 27,726 27,926 27,926

Average number of shares 66,246 41,057 32,258 32,394 32,872

Key figures

Earnings before capital costs (EBITDA), SEK M 67 884 –8 502 462

Earnings before interest expenses (EBIT), SEK M –348 455 –233 316 341

Shareholders’ equity, SEK M 2,493 2,396 1,175 1,421 1,217

Capital employed, SEK M 5,476 4,566 2,556 2,609 2,433

Net indebtedness, Dec. 31, SEK M 2,407 1,533 1,054 615 823

Operating cash flow, SEK M –51 841 –41 444 423

Total cash flow, SEK M –90 341 –279 195 115

Return on shareholders’ equity, % –18 32.8 –17.1 20.2 16.2

Return on capital employed, % –6.9 12.8 –9.0 12.5 14.8

Equity/assets ratio, % 40 47 37 42 39

Net indebtedness, Dec. 31, % 98 64 90 43 68

Profit margin, % –16 17.0 –12.1 9.8 11.0

Interest-coverage ratio, multiple 0.5 16.0 0.0 9.2 7.7

Number of employees, year-end 833 911 1,050 1,058 1,017

1) There are no warrants or other equity instruments in TransAtlantic.2) In the new share issue with preferential rights for the old shareholders, in which the subscription price is lower

than the fair value of the share, a so-called bonus issue element arises, which impacts the calculation of earnings per share for the current period and periods prior to the new share issue. The bonus issue element of the new share issue represents the value that the company’s shareholders waive by way of the reduced price of the share.

3) Calculated on number of shares outstanding, excluding bought-back shares held in treasury.

36

TransAtlantic 2011 Corporate Governance Report

Corporate Governance Report

Corporate governance in TransAtlantic

This Corporate Governance Report has been prepared in accordance with the provisions in the Swedish Code of Corporate Governance (“The Code”) and Ch. 6, sections 6–9 of the Swedish Annual Accounts Act and Ch. 9, sec-tion 31 of the Swedish Companies Act, and pertains to the 2011 financial year. The auditor has expressed an opinion as to whether the preparation of the Corporate Governance Report and disclosures in accordance with Ch. 6, section 6, second paragraph 2–6 of the Annual Accounts Act (for example, the most important features of the company’s system for internal control and risk management in con-junction with financial reporting) correspond with the other sections of the Annual Report.

TransAtlantic’s Articles of Association and other additional information on corporate governance at TransAtlantic are available at www.rabt.se.

The company’s governance, management and control are based on external laws and regulations, as well as internal regulations, policies and instructions. TransAtlantic’s Board of Directors and management strive for TransAtlantic to comply with the demands placed on the company by the stock market, shareholders and other stakeholders. By being transparent and accessible, TransAtlantic strives to provide shareholders and other stakeholders with insight into decision chan-nels, delegation of responsibility, authorities and control systems. In addition to this, the Articles of Association is a central control

document. The Articles of Association stipu-lates where the Board has its registered head office, operational focus, authorized signatory as well as information on the number of shares and share capital. The highest governing body in TransAtlantic is the General Meeting of Shareholders, where the company’s sharehold-ers exercise their influence. The Board of Directors manages, on behalf of the sharehold-ers, the company’s interests and transactions. TransAtlantic’s Board of Directors is led by the Chairman of the Board, Christen Sveaas. The Board appoints the President.

Distribution of responsibility between the Board of Directors and the President is regu-lated in the Board’s rules of procedure and the instructions for the President, both of which are established annually. Administration by the Board of Directors and the President, as well as the company’s financial reporting is reviewed by an external auditor, elected by the Annual General Meeting.

Application of the Code

The Board of Directors and Management believe that the company follows and applies all regulations included in the Code, with the exception of the composition of the Nomina-tion Committee. The Code states that the majority of the Nomination Committee mem-bers must be independent in relation to the company and company management. Trans-Atlantic’s Nomination Committee includes Christen Sveaas (Chairman) and Henning E. Jensen, both of whom are dependent in

Rederi AB TransAtlantic is a Swedish public limited company listed on NASDAQ OMX Stockholm, Small Cap segment. TransAtlantic is governed through the Annual General Meeting, the Board of Directors and the President, in accordance with the Swedish Com-panies Act and the Swedish Code for Corporate Governance.

relation to Kistefos AS, which is the company’s largest owner, as well as Lena Patriksson Keller, who is not independent in relation to a Board member, a member of company manage-ment or one of the principal owners, Enneff Rederi/Enneff Fastigheter. In addition, Jenny Lindén Urnes from Lindéngruppen, who is independent in relation to the company, the company management and principal owners, is included. However, the Board of Directors believes that this is reasonable based on the company’s shareholder structure.

Shareholders

TransAtlantic’s Series B shares have been listed on NASDAQ OMX Stockholm since 1991, the Small Cap segment. The share capital amounts to SEK 1,109,027,000, distributed among 110,902,700 shares with a quotient value of SEK 10. There are a total of 7,271,842 Series A shares and 103,630,858 Series B shares. Series A shares carry ten votes each and Series B shares carry one vote each. The number of shareholders at December 31 amounted to 5,854 (6,783). Both types of shares carry dividend entitlement.

Further information on the share and share-holders, refer to page 32.

General Meeting of Shareholders

TransAtlantic’s highest decision-making body is the General Meeting of Shareholders, which must be held within six months of the end of the financial year. Notification of the Annual General Meeting shall occur not earlier than six weeks and not later than four weeks prior

Nomination Committee

Auditors

Shareholders through the Annual General Meeting

Board of Directors

President

Management Group

Audit CommitteeRemuneration Committee

Investment Committee

Corporate governance structure at TransAtlantic

37

to the Meeting. All shareholders included in the list of shareholders and who have regis-tered for participation in time are entitled to participate and vote at the Meeting. Those shareholders who cannot attend in person may be represented by proxy.

The Annual General Meeting was held on May 3, 2011 at Tjörn municipality’s premises in Skärhamn. At the Meeting, 55 shareholders were present, representing 65.9% of the votes. At the Meeting, the entire Board of Directors, Group Management and the company’s audi-tors were present. The President informed the shareholders about the development of the company during the past year and resolutions made at the Meeting included:• no dividend will be paid for the 2010 fiscal year• fees for the Board of Directors shall remain

unchanged and total SEK 1,400,000, distri-buted as SEK 400,000 to the Chairman and SEK 200,000 to each Board member

• guidelines for remuneration to senior executives• procedures for the appointment and work of

the Nomination Committee.

At the Annual General Meeting Christen Sveaas, Folke Patriksson, Åge Korsvold, Håkan Larsson, Christer Olsson and Magnus Sonnorp were reelected. In addition to these, Christer Lind-gren will remain as the trade union represent-ative and member of the Board. Christen Sveaas remained as Chairman of the Board and Folke Patriksson as the Deputy Chairman.

During the Meeting, shareholders were provided the opportunity to submit questions

to the President and Board of Directors. Reso-lutions at the Meeting are usually made with a simple majority, but certain motions require a higher proportion of the votes represented at the General Meeting of Shareholders. It was not possible to follow or participate in the Meeting from another location using commu-nication technology and no change has been planned in this regard for the 2012 Meeting.

Extraordinary Meeting of Shareholders

An Extraordinary Meeting of Shareholders was held on November 7 to address the Board’s proposal to acquire SBS Marine (Holdings) Ltd., a new share issue, amendments to the Articles of Association, reduction of the com-pany share capital and the statutory reserve. The Meeting resolved to approve the proposals presented by the Board. The Meeting resolved to acquire all of the shares in SBS Marine (Holdings) Ltd. in exchange for a cash payment and to implement a new share issue in the amount of about SEK 555 M with preferential rights for existing shareholders on 1:1 terms and SEK 10 for each share. The Meeting also resolved to reduce the company’s share capital. The company’s share capital was to be reduced in 2012 by SEK 998,124,300 and subsequently amount to SEK 110,902,700. A resolution was also made to reduce the company’s statutory reserve by SEK 245,782,000. The amendments to the Articles of Association also pertained to relocating the company’s registered office to the Municipality of Gothenburg and enabling the company to hold the General Meeting of

Shareholders in the Municipality of Härryda. In addition, the Meeting resolved to appoint Henning E. Jensen as a new Board member. Henning E. Jensen succeeds Åge Korsvold, who resigned from the Board.

For further information, visit www.rabt.se/Investor Relations.

Nomination Committee

The Annual General Meeting resolved to establish a Nomination Committee, which shall consist of three members representing the three largest shareholders, in terms of voting rights, on September 30 each year. At the Annual General Meeting in May 2011, the Nomination Committee’s Chairman, Christen Sveaas, reported on the work of the Nomination Committee. In its work, the Nomi-nation Committee took into account the demands that can be placed on the Board of Directors resulting from the company opera-tions and development phase, as well as com-petency, experience and background of the Board members. Independence issues were also highlighted as well as issues pertaining to gender distribution.

Pursuant to the resolution of the Annual General Meeting in May 2011, the Chairman was given the task to appoint a Nomination Committee, based on the company’s three larg-est shareholders at the end of September 2011, according to EuroClear Sweden AB. The Nomi-nation Committee shall prepare proposals for Board members, the Chairman of the Board, as well as remuneration of Board members and

Composition of the Board of Directors, number of meetings and fees during the fiscal year

Elected Board meeting

Independent of major

shareholders

Independent of the company and company

management

Christen Sveaas, Chairman1) 2010 18/20 No Yes

Folke Patriksson, Deputy Chairman 1972 20/20 No Yes

Henning E. Jensen2,3) 2011 4/5 No No

Åge Korsvold2,4) 2010 13/15 No Yes

Håkan Larsson 1993 19/20 Yes Yes

Christer Lindgren 2001 18/20 Yes No

Christer Olsson 1999 13/20 Yes Yes

Magnus Sonnorp 2010 20/20 Yes Yes

1) Absent on two occasions due to a conflict of interests. 2) Absent on one occasion due to a conflict of interests.3) Elected to the Board at the Extraordinary Meeting of Shareholders on November 7, 2011.4) Resigned from the Board at the Extraordinary Meeting of Shareholders on November 7, 2011.

38


proposals for regulations for the Nomination Committee for the 2012 Annual General Meet-ing. The composition of the Nomination Com-mittee was announced on TransAtlantic’s web-site and through the press release on October 26, 2011. The Nomination Committee com-prises Christen Sveaas, Chairman of the Board, Henning E. Jensen representing Kistefos AS/Viking Supply Ships, Lena Patriksson Keller representing Enneff Rederi AB/Enneff Fastigheter i Skärhamn AB, and Jenny Lindén Urnes representing Lindéngruppen AB.

The members of the Nomination Committee represent 81.8% of the voting rights (at December 31, 2011) of all shares in the company. In con-junction with the acquisition of Trans Viking in 2010, Folke Patriksson, through Enneff Rederi AB/Enneff Fastigheter i Skärhamn AB, signed a shareholder agreement with Kistefos AS regarding certain issues related to Trans-Atlantic. The shareholder agreement defines, for example, the appointment of the Board of TransAtlantic, which, according to the agree-ment, shall comprise six members elected by the General Meeting of shareholders. Kistefos AS is entitled to nominate three Board mem-bers, including the Chairman, and Enneff is entitled to nominate three members, including the Vice Chairman of the Board. One of each of the parties’ nominated Board members shall be independent in relation to the company’s major shareholders. The agreement also con-tains provisions for preferential purchase should one of the parties to the agreement wish to sell its shares.

The composition of the Nomination Com-mittee does not comply with the requirements of the Code relating to independent members, but the Board of Directors believes that the composition of the Nomination Committee is reasonable based on the company’s ownership structure.

The Nomination Committee’s proposal, its motivated statement about the proposed Board, as well as supplementary information on the proposed Board members, is announced in conjunction with the Notice convening the Annual General Meeting and is presented jointly with a report on the Nomination Com-mittee’s work at the 2012 Annual General Meeting.

Board of Directors

The Board of Directors shall consist of not less than five and not more than ten members, and not more than five deputies according to the Articles of Association. The Board members are elected annually at the Annual General Meeting, with a mandate period from the Annual General Meeting until the next Annual General Meeting. The Annual General Meeting decides the exact number of Board members.

At the Annual General Meeting on May 3, 2011, Christen Sveaas, Folke Patriksson, Åge Korsvold, Håkan Larsson, Christer Olsson, and Magnus Sonnorp were elected to the Board. Christen Sveaas was elected Chairman of the Board. Folke Patriksson remains Deputy Chairman. In addition to the Board members elected by the Meeting, Christer Lindgren will remain as the trade union representative. The number of Board members elected by the Meet-ing who are considered independent in rela-tion to the company, according to requirements of the Code, is estimated to be three. At the Extraordinary General Meeting on November 7, 2011, Henning E. Jensen was elected as a new Board member and Åge Korsvold resigned from the Board.

No other remuneration was made apart from that resolved on by the Annual General Meeting. Remuneration to the Board of Direc-tors is approved by the Annual General Meet-ing following a proposal from the Nomination Committee. For information on remuneration, see Note 7.

Board of Directors’ work

The Board of Directors are elected at the Annual General Meeting. The Board of Direc-tors’ responsibilities and tasks are determined by a formal work plan, in addition to laws and regulations. The work plan is reviewed by the Board on an annual basis, and established through a resolution by the Board. The Board’s tasks include determining the company’s goals, strategies, business plans, budgets, as well as approving major investments and loans raised by TransAtlantic. Furthermore, it is the Board’s task to evaluate the operating manage-ment, as well as ensure systems to monitor and control the established goals. It is also the Board’s task to appoint the President, and where applicable, the Deputy President. The Finance Policy, Attestation Policy and the

Communication Policy, which are established annually, represent important control instru-ments. The Board also ensures the quality of the financial reporting through detailed review-ing of interim reports, annual reports and year-end reports at Board meetings. The Board addresses different issues in their entirety and, considering the Group’s size and complexity, has expressly made the decision not to have sub-committees to prepare auditing and remu-neration matters. This means that the Board as a whole constitutes the Audit Committee and Remuneration Committee. In December 2011, the Board resolved to appoint an Investment Committee to decide on the management of the Group’s surplus liquidity.

The Board usually meets on six occasions per year and additional meetings are held as necessary. The Board’s work during the year was extensive due to the company working on and implementing a vast number of major activities such as the acquisition of Österströms, the division of the Group into two independ-ent units, the acquisition of SBS Marine (Hold-

ings) Ltd. and the new share issue. Scheduled meetings are held in connection with quar-terly reports and additional meetings are held to deal with strategic issues and decide on budgets for future financial years. Based on this, the Board held six scheduled meet-ings, and one statutory meeting, as well as 13 extraordinary meetings. The CFO is Secretary at the Board meetings. The Board of Directors also receives monthly reports pertaining to the company’s financial posi-tion. At scheduled Board meetings, reports were also submitted pertaining to the cur-rent work in each business area with detailed analyses and proposals for measures.

Chairman’s responsibility

The Chairman of the Board is elected by the Annual General Meeting. The Chairman of the Board is responsible for organizing and leading the Board’s work in accordance with applicable rules for listed companies, the Swedish Code for Corporate Governance and the Articles of Association. Furthermore, the Chairman shall support the President. The Chairman and the President prepare proposals for the agenda for Board meetings. The Chairman conducts a dialog with the President and is responsible for ensuring that other Board members receive the

39

information and documentation needed to make decisions. The Chairman of the Board is also responsible for ensuring the annual review of the Board’s work.

The Chairman of the Board is Christen Sveaas and Folke Patriksson is the Deputy Chairman.

In addition to his Chairmanship of Trans -Atlantic, Christen Sveaas is the Chairman of Kistefos Holding AS and a number of other companies.

President

Rolf Skaarberg was appointed the new Presi-dent and CEO on March 31, 2011. Henning E. Jensen was appointed the new President on December 31, 2011, when Rolf Skaarberg retired. The President is responsible for the continuous management of the operations based on the terms of references issued by the Board of Directors. The President’s responsi-bilities include decisions regarding current investments and divestments, HR, financial and accounting issues, current contacts with the company’s stakeholders, as well as ensur-ing that the Board receives the information required to make well-substantiated decisions. The President reports to the Board of Directors. Rolf Skaarberg was not a member of the Board, unlike Henning E. Jensen who is a Board mem-ber. The President attends all Board meetings, except at Board meetings where the President is being evaluated.

The President leads the Group management work and makes decisions in consultation with other management members.

Rolf Skaarberg and Henning E. Jensen are not employed by TransAtlantic but work as consultants through Kistefos AS.

Group Management

The President appointed a management team that comprised the following five positions during most of 2011: the President, the CFO, the HR Manager, and the heads of the business areas Viking Supply Ships and Industrial Ship-ping. Group management is responsible for planning, controlling and following up daily operations. The management team held regular meetings to monitor the business operations, follow-up on financial development and other operational, development and strategy issues. Group Management ensures that the right com-

petency exists in the organization in relation to the company’s strategies. Authorities and responsibilities for the President and the man-agement team are defined in the policies, job descriptions and attestation instructions.

As of January 1, 2012, Group Management comprises Henning E. Jensen, President, Heléne Mellquist, CFO, Britta Stolt, HR Manager, Christian W. Berg, Head of Viking Supply Ships and Kim H. Sörensen, Head of Industrial Shipping. Kim H. Sörensen assumed the position as the new Head of Industrial Shipping on March 1, 2012. For more detailed information about the President and Group Management, see page 43 of the Annual Report.

Auditors

The auditors are elected by the Annual Gen-eral Meeting and at the Meeting held in April 2008, the auditing firm of PriceWaterhouse-Coopers AB was elected for a period of four years. Authorized Public Accountant Helén Olsson Svärdström was elected Auditor in Charge and signs the auditors’ report together with Olof Enerbäck. The auditor’s task is to review the Board’s and President’s manage-ment of the company and the quality of the company’s financial reports, as well as review the Annual Report. The company’s auditors reported once to the Board, providing a report on the year’s accounting and their view of the company’s internal control system. Informa-tion on remuneration of auditors is found in Note 8 of the Annual Report.

Principles governing remuneration

of senior executives

The 2011 Annual General Meeting adopted the guidelines governing remuneration of senior executives, which cover the President and his management group, comprising five individu-als in 2011, and are based on the following gen-eral principles:

The principles for remuneration to senior executives from a short- and long-term per-spective shall attract, motivate and create favorable conditions for retaining competent employees. To achieve this, it is important to maintain fair and internally balanced con-ditions that are also competitive in market terms regarding structure, scope and level. The employment terms and conditions for

senior executives shall contain a well-balanced combination of fixed salary, pension benefits and other benefits, as well as special terms for remuneration in the event of termination of employment. The possibility shall exist to pay variable remuneration.

The total annual cash remuneration to sen-ior executives shall be determined on the basis of competitiveness. The total level of remuner-ation shall be reviewed annually to ensure that it is in line with comparable positions in the relevant market. Remuneration shall be based on performance and position.

The company’s remuneration system shall contain various forms of remuneration aimed at creating well-balanced compensation that verifies and supports the achievement of short- and long-term goals.

Fixed salary shall be set individually and be based on the individual’s responsibility and role, as well as the individual’s competence and experience in the relevant position. The President and other senior executives may receive a variable remuneration if the Board resolves to this effect. Any variable remunera-tion must be based on extraordinary perform-ance in relation to defined and measurable goals, as well as be maximized in relation to the basic salary and always justified, particu-larly in a joint Board discussion. The President’s remuneration is determined by the Board of Directors.

When new pension agreements are signed, senior executives entitled to pension – exclud-ing the President – shall receive the customary pension benefits within the framework of the general pension plan. The retirement age for senior executives is 65 years. Pension provi-sions must be based only on basic salary. For the President, pension premium payments could be made corresponding to 25% of basic salary until the time of retirement.

Other benefits, such as company car, com-pensation for preventive healthcare and sick-ness insurance, shall comprise a small portion of the total compensation, correspond to mar-ket levels and contribute to the executive’s pos-sibilities of fulfilling his or her work assignment.

Apart from fixed and current remuneration, there is no remuneration approved earlier for senior executives that has not been paid.

The period of notice for senior executives shall be six months when initiated by the

40


executive and, in the event of notice from the company, six to twelve months. For the Presi-dent, a period of notice of up to six months shall apply if notice is served by the company. If notice is served by the company, the Presi-dent is entitled to severance pay corresponding to 18 months’ salary. For more detailed infor-mation on remuneration of the President and senior executives, see Note 7 of the Annual Report.

Audit Committee and

Remuneration Committee

The Board has decided that it shall handle auditing matters in its entirety and held one meeting with the Group’s auditors during the year. Planned and completed audits were discussed at these meetings. The audit encom-passes such issues as risk assessment, risk management, financial control, accounting issues, Group policies and administrative issues. Considerable emphasis is placed on follow-ups and implementing measures. The auditors also keep the Board informed of current developments in relevant areas.

The Board has also decided to address remuneration issues within the framework of Board duties. Remuneration of the President was addressed, as were the principles for remuneration to senior executives. Remunera-tion related to the Board of Directors’ work is approved by the Annual General Meeting.

Investment Committee

In December 2011, the Board resolved to appoint an Investment Committee charged with deciding on investments for the Group’s surplus liquidity.

The Board’s description of internal control and

risk management in financial reporting

This description of internal control and risk management is submitted by the Board of TransAtlantic and is prepared in accordance with the Swedish Code of Corporate Govern-ance. The Board of Directors of TransAtlantic has overall responsibility for the internal control pertaining to the financial reporting. Good internal control is based on efficient Board work. The Board’s formal work plan and instructions for the President are aimed at establishing a clear role and distribution of responsibilities to efficiently manage opera-

tional risks. The management group reports regularly to the Board of Directors, based on established procedures and also the auditor’s review of the internal control. Company man-agement is responsible for the system of inter-nal controls that is required to handle signifi-cant risks in operating activities. This is aimed at ensuring that the operation is conducted appropriately and efficiently, as well as the financial reporting is reliable and that rules, regulations and ordinances are followed.

The company has prepared procedures for the assessment of risks in the financial report-ing, as well as to attain a high reliability in the external reporting and that the reporting is prepared in accordance with laws and other requirements on listed companies.

Risk assessment and control activity

TransAtlantic’s assessment pertaining to the financial reporting aims to identify and evalu-ate the significant risks that influence the inter-nal control with respect to the financial report-ing in the Group’s companies, business areas and business processes. Considerable empha-sis was placed in formulating the controls to prevent and recognize risks in these areas. The key control instrument for the financial reporting comprises primarily the company’s finance policy. See also page 47 Risks and uncertainties.

Control environment

The Board of Directors has overall responsi-bility for the internal control pertaining to the financial reporting. The Board has established a formal work plan to clarify the Board’s responsibilities and to regulate the distribu-tion of work among Board members. Respon-sibility for maintaining an efficient control environment is based on an organization with distinct decision routes and clear instructions and with common values, where each employee has insight into his/her role in maintaining good internal control.

Information and communication

TransAtlantic’s Board of Directors has estab-lished a Communication Policy, which states what shall be communicated, by whom and the manner in which the information shall be issued to ensure that the external information is correct and complete. In addition, there are

instructions governing how financial informa-tion shall be communicated between manage-ment and other employees. TransAtlantic’s shareholders and stakeholders can monitor the company’s operations and its development on the website, where current information is published on a continuous basis. Events deemed as having a potential impact on the share price are published through press releases. Financial information is provided through quarterly reports and year-end reports, as well as through the company’s annual report. To achieve efficient internal information, the employees are gathered once a month for information and a question and answer session.

Follow-up

The Board continuously evaluates the informa-tion submitted by company management and the auditors. The work includes ensuring that measures are implemented that address inade-quacies and preparing proposals for measures that arise in the external audit.

Internal audit

The Board has not found reason to establish an internal audit function considering the size of the Group and the centralization of the finance administration.

Significant guidelines that are important to financial reporting are continuously updated and communicated to employees concerned.

Fees and remuneration

Fees and remuneration to the President and Group Management are described in more detail in Note 7 of the Annual Report.

Key policies

In addition to those listed above, the Board’s responsibilities include ensuring that the Group’s policies are kept updated and are observed. The Group has policies on such issues as investments, financing and foreign currency matters, approval and authorization of and attestation instructions for financial commitments, communications/Investor Relations and a Code of Conduct/Ethics. As part of the Group’s responsibility, there are also health, safety and environmental policies (HSE policy) for the company’s sea and land operations.

41

Auditor’s report on the Corporate Governance Report

To the annual meeting of the shareholders of Rederi AB TransAtlantic (publ) corp. reg. no. 556161-0113

It is the Board of Directors who is responsible for the Corporate Governance Report for the year 2011 on pages 36–41 and that it has been prepared in accordance with the Annual Accounts Act.

We have read the Corporate Governance Report and based on that reading and our knowledge of the company and the group we believe that we have a sufficient basis for our opinions. This means that our statutory examination of the Corporate Governance Report is different and substantially less in scope than an audit conducted in accordance with Interna-tional Standards on Auditing and generally accepted auditing standards in Sweden.

In our opinion, the Corporate Governance Report has been prepared and its statutory con-tent is consistent with the annual accounts and the consolidated accounts.

Gothenburg, February 28, 2012

Christen SveaasChairman

Folke PatrikssonDeputy Chairman

Henning E. JensenBoard member

Håkan LarssonBoard member

Christer OlssonBoard member

Magnus SonnorpBoard member

Christer LindgrenBoard member/Employee representative

PricewaterhouseCoopers AB

Gothenburg, March 23, 2012

Helén Olsson Svärdström Olof Enerbäck Authorized Public Accountant Authorized Public Accountant Auditor in Charge

42

TransAtlantic 2011

Board of Directors

1

5

2

6

3

7

4

1. Christen Sveaas Born 1956, Oslo. Chairman of the Board.

Board member since 2010. Christen Sveaas has

several Board assignments, including Chairman

of Kistefos Skog AS, Kistefos Holding AS and

Anders Sveaas’ Allmennyttige Fond, a Norwegian

charitable foundation. He is also a member of

Dean’s Council Executive Committee, Harvard

Kennedy School, Boston, USA. Christen Sveaas

has a Lic. oec. HSG degree from St Gallen,

Switzerland.

Shareholding: 3,693,178 Series A shares and

66,090,461 Series B shares through companies.

Board fee: SEK 400,000/year.

2. Folke Patriksson Born 1940, Skärhamn. Deputy Chairman.

Board member since 1972. Folke Patriksson is

the Deputy Chairman of the Board and has been

a Board member since 1972. Mr. Patriksson was

previously the Chairman of the Board of the

Swedish Sea Rescue Society and is now Board

member of Swede Ship Marine AB. Mr. Patriksson

holds a mate’s examination (degree in Nautical

Science) and has 40 years’ experience of the

shipping industry. He is one of the founders of

TransAtlantic and was formerly CEO of the

company for 32 years.

Shareholding: 2,532,122 Series A shares

and 1,399,490 Series B shares and through

companies.


3. Henning E. Jensen Born 1960, Oslo. Board member since 2011.

President and CEO of TransAtlantic. Henning E.

Jensen is also CEO of Kistefos. Henning E. Jensen’s

previous assignments included Senior Vice Pres-

ident Chairman of the Supervisory Board, Con-

troller, Managing Director, Director and Vice

President of TE Connectivity and CEO and Chair-

man of RHI AG. Mr. Jensen has experience from

executive positions from various industries

including RHI AG, TE Connectivity and General

Motors. Henning E. Jensen was also a Professor

of Finance at the University of San Francisco,

where he also received his degree.

Shareholding: –


4. Håkan larssonBorn 1947, Gothenburg. Board member since

1993. Håkan Larsson was the CEO of Rederi AB

TransAtlantic from 2003 to 2007 and was previ-

ously CEO of Bilspedition/BTL and Schenker AG.

Håkan Larsson is Chairman of the Board of BTL

Aktiebolag, Schenker AB, Schenker North, Inpen-

sion Asset Management AB and Valea Holding

AB. He is Board member of Walleniusrederierna

AB, Bure Equity AB, Handelsbanken Region West

and Semcon AB. Håkan Larsson is Graduate in

Business Administration from Gothenburg Uni-

versity.

Shareholding: 2,400 Series A shares and

100,000 Series B shares.


5. Christer OlssonBorn 1945, Stockholm. Board member since

1999. Christer Olsson is Deputy Chairman of

Walleniusrederierna AB, Chairman of Stolt-

Nielsen Ltd and Board member of Wallenius-

Wilhelmsen A/S, Atlantic Contair Line AB, Eukor

Car Carriers and Singapore Shipping Corporation

Ltd. He received his Master of Laws degree from

Stockholm University and has 25 years’ experience

from the shipping industry.

Shareholding: –


6. Magnus Sonnorp Born 1967, Stockholm. Board member since

2010. Magnus Sonnorp is a Board member of

Linver AB and Sulgrave Rd AB, Brunkeberg Indus-

triutveckling AB and Planglasteknik Stockholm

AB, as well as Board member of Secure Glass

Holding AB and was previously the Chairman

of ClearSense AB and EDSA Holdings. Magnus

Sonnorp holds a M.Sc Economics from Stockholm

School of Economics and an MBA from Insead.

Shareholding: 50,000 Series B shares.


7. Christer lindgren Born 1965, Stockholm. Board member since

2001. Employee representative.

Christer Lindgren is a chef and sailor.

Board member of SEKO seafarers.

Shareholding: –

Board fee: –

43

Management

1. Henning E. Jensen President and CEO

Born 1960, Oslo. CEO since 2012.

Education: Bachelor of Arts, University of

San Francisco, MBA, University of San Francisco

and Cand. Dr., Hochschule St. Gallen, Switzerland.

Shareholding: –

2. Kim H. SörensenHead of Industrial Shipping

Born 1966, Gothenburg. Employed since 2012.

Education: Aalborg universitet, BSc & MSc

Macroeconomics, MSc Development Economics,

London Business School Executive Management

Program, IMD: Program for Executive Develop-

ment, MBA.

Shareholding: –

3. Christian W. Berg Head of Viking Supply Ships

Born 1968, Copenhagen. Employed since 2011.

Education: Maritime law studies at Vestfold

University College in Horten, Norway and

Norwegian Navy Academy at Befalskolen for

Marinen in Horten, Norway.

Shareholding: –

4. Heléne MellquistCFO


Education: University of Gothenburg, B.Sc.

Economics, IFL at the Stockholm School of

Economics, Executive Program.

Shareholding: –

5. Britta Stolt HR Manager


Education: Developer program and Advanced

strategic HR program.

Shareholding: –

1

4

2

5

3

44

TransAtlantic 2011 Board of Directors’ Report

In June 2011, all shares were acquired in Österströms International AB, which is the Parent Company of the Stockholm-based shipping and logistics group that conducts operations primarily in the Baltic Sea area. In November 2011, with accounting effect from October, the UK offshore shipping company SBS Marine (Holdings) Ltd. was acquired.

The Extraordinary General Meeting in November 2011 approved a new share issue totaling approximately SEK 555 M, with preferential rights to existing shareholders. The new issue resulted in Kistefos increas-ing its ownership which as of December 31, 2011, amounted to 62.9% of the capital and 58.4% of the votes.

On March 31, 2011, Rolf Skaarberg assumed the position of President and CEO, succeeding Stefan Eliasson, who left the Group. Rolf Skaarberg retired on December 30, 2011 and was succeeded by Henning E. Jensen.

Sales, earnings and business developmentDuring the year, operations within Indus-trial Shipping continued to be characterized by weak volumes and tonnage surplus. The acquisition of Österströms and comprehen-sive restructuring costs had a negative impact on earnings. For Viking Supply Ships, the market strengthened succes-sively. In addition, the operation was influ-enced during the year by vessel deliveries and the establishment of a head office in Copenhagen.

The Group’s net sales for 2011 amounted to SEK 2,989 M (2,394). Loss before tax amounted to SEK 466 M (profit: 407) and loss after tax amounted to SEK 435 M (profit: 585). Earnings were negatively impacted in 2011 by restructuring costs and acquisition effects totaling SEK 194 M (pos:

528) in the form of positive capital gains from the divestment of vessels totaling SEK 6.6 M, outcome from a dispute from an ear-lier vessel divestment totaling a negative SEK 4.1 M, costs and impairments related to the establishment of the Danish offshore structure and preparation for the introduc-tion of Viking Supply Ships on the Oslo Stock Exchange totaling SEK 48 M, the restructuring of the Group, Industrial Ship-ping and the integration of Österströms totaling SEK 46 M and costs for the former CEO totaling SEK 5 M. In addition, impair-ment of vessels occurred totaling SEK 32 M, as well as goodwill totaling SEK 58 M. Costs attributable to the acquisition of Österströms International AB and Arctic Ice Management AB amounted to SEK 7 M. For 2010, earnings were positively impacted by nonrecurring effects of SEK 775 M through the acquisition of all shares outstanding in the joint venture companies within Trans Viking.

In today’s market situation, vessel values are more difficult to assess than normal. The above described vessel impairments totaling SEK 32 M consisting of the Trans-Falcon with SEK 8 M, the TransFrej with SEK 18 M and the TransNjord with SEK 6 M, all in Industrial Shipping, are justified by the assessed market capitalization since work has commenced to divest the vessels. Following the impairments, the recognized vessel values are deemed to be on par with current market capitalization.

Impairment of goodwill totaling SEK 58 M from the acquisition of Österströms occurred following testing of the prerequi-sites for profitability in the markets in which the Österströms companies operate.

Impairment of capitalized development costs occurred for software in Arctic Ice Management AB totaling SEK 6 M when development work was suspended due to

Board of Directors’ Report 2011Rederi AB TransAtlantic (publ) – Corporate Registration Number 556161-0113

TransAtlantic’s 2011 financial year was again an eventful year, characterized by several structural changes and continued challenging business climate, culminating in an earnings deficit.

the commercial value currently being deemed uncertain. Impairment totaling SEK 48 M is included in the amount per-taining to the establishment in Denmark.

Industrial Shipping business areaThe year was characterized by comprehen-sive restructuring. Two lines were discon-tinued at the end of the year, the RoRo lines from southern Finland to Lübeck and Gothenburg, and the Atlantic traffic. A new RoRo line started between northern Finland and Antwerpen/Zeebrugge, TransBothnia Line. The business area offers integrated logistics solutions in vessel transport. The operation is conducted primarily through system traffic in northern Europe using RoRo and container vessels, as well as bulk and small-bulk traffic. The business area has five divisions:

• RoRo Baltic Division: The operation has its base in system traffic with forest, steel and automotive products in the Baltic Sea.

• Container Division: The division operates a container line between Västerås and Hull in the UK. The division also has feeder traffic between Västerås/Södertälje and Hamburg/Bremerhaven.

• Bulk Division: The division’s operation comprises transport using ice-classified medium-size bulk vessels and transport using RoRo vessels between Europe and North America, as well as transport along the east coast of North America.

• Short Sea Bulk Division: The division’s operation comprises transport using smaller bulk tonnage preferably in the Bal-tic Sea, but also to ports on the continent.

• Integrated Logistics Division: The divi-sion’s operation comprises developing integrated transport solutions where TransAtlantic is responsible for a large portion of the total transport chain.

45

The five divisions cooperate to achieve the best possible degree of utilization and cus-tomer service.

Revenue for the year amounted to SEK 2,259 M (1,865) and the operating loss before tax was SEK 113 M (loss: 105). In addition, vessel impairments were recognized total-ing SEK 32 M (loss: 156).

The RoRo Baltic Division conducted liner traffic during the year between Finland and Sweden/Germany/Belgium with four lines. In June, a new RoRo line commenced, the TransBothnia Line, between northern Fin-land and Antwerpen/Zeebrugge using two chartered vessels. During the year, the RoRo lines from southern Finland to Lübeck and Gothenburg were discontinued due to poor profitability.

The Container Division conducts con-tainer-based liner traffic in the UK (Trans-Pal Line) and feeder traffic to Germany (TransFeeder South). Declining volumes from the steel industry were offset by vol-ume expansion in the TransPal Line.

In October, the Bulk Division signed a three-year contract with FNsteel pertaining to transport between Luleå and Koverhar in Finland, as well as with Nordkalk pertain-ing to transporting limestone between Storugns and Luleå/Kokkola. The Atlantic traffic was discontinued during the year.

The Short Sea Bulk Division, which con-sists of the previous Österströms operation, reported continued weak profitability. The market was characterized by tonnage sur-plus and cyclically low contract volumes from major customers.

During the year, the Integrated Logistics Division continued to develop integrated transport solutions, where TransAtlantic is responsible for most of the total transport chain based on customer requirements.

Viking Supply Ships business areaThe business area’s fleet comprises a total of 14 offshore vessels, of which eight AHTS vessels, including the Brage Viking, which was delivered in January 2012, and six Plat-form Supply Vessels. The vessels operate in the Arctic offshore market, in the offshore spot market in the North Sea and in the glo-

bal offshore sector. The vessels are equipped and have the capacity to operate in areas with cold and severe weather con-ditions, such as arctic waters. Three of the AHTS vessels have icebreaking capacity.

The newbuild program progressed on schedule, with the delivery of Njord Viking in February 2011 and Magne Viking in July 2011. The final vessel in the series of four, the Brage Viking, was delivered in January 2012. The vessels are specially designed and equipped to meet demands for efficient, safe and environment-friendly offshore handling in areas with severe ice condi-tions. In November 2011, with accounting effect from October, the UK-based offshore shipping company, SBS Marine (Holdings) Ltd. was acquired. SBS Marine’s fleet com-prises five modern and one older Platform Supply Vessels, which are mainly used to transport supplies to offshore platforms.

Viking Supply Ships concluded the con-tract with the Swedish Maritime Adminis-tration for Vidar Viking during the year and subsequently signed an agreement with the Estonian Maritime Administration to sup-ply icebreaking for the 2012 season using Vidar Viking. Furthermore, a contract was signed with Sakhalin Energy for a period of two and a half years with the option to extend for 4x3 months for Vidar Viking. The vessel will provide services pertaining to icebreaking, anchor handling and other support in northern Russia, starting in sum-mer 2012. The total gross contract value amounted to USD 70 M for the fixed period. The agreement is conditional upon approval from TransAtlantic’s Board of Directors and banks concerned.

The above resulted in higher revenue in 2011 and totaled SEK 568 M (298), with an operating loss before tax of SEK 72 M (profit: 45). Revenue has been impacted by costs for the establishment of the operation in Denmark, delivery of two newbuild AHTS vessels, and an initially weak but strengthened market at the end of the year. The operations were conducted using 13 vessels during the year. Comparability between the years was influenced by the acquisition of the joint venture companies

within Trans Viking in autumn 2010, the newbuilds delivered, Loke Viking in June 2010 and Njord and Magne Viking in 2011, as well as the acquisition of SBS Marine. During the year, the business area estab-lished its head office in Copenhagen, and as of January 1, 2012, changed name to Viking Supply Ships.

Group-wideGroup-wide comprises company manage-ment, central administration, financial management and external ship manage-ment. The external ship management unit includes assignments for external vessel owners, such as crews for the five govern-ment-owned icebreakers. The primary objectives for the external assignments are to achieve economies of scale for staffing vessels, as well as procurement to the Group’s vessel fleet.

Revenue amounted to SEK 162 M (231) for the year. The operating loss before tax totaled SEK 87 M (loss: 61) and the change in earnings was primarily attributable to increased loan costs mainly due to higher indebtedness, as well as costs for external consultants for several structural projects in progress.

As from 2012, Group-wide has been divided and is included in each business area.

InvestmentsThe Group’s gross investments totaled SEK 1,239 M (268) and pertained primarily to cash payments for the delivery of Njord Viking in February 2011, cash payments for the delivery of Magne Viking in July 2011 and the acquisition of all shares in Arctic Ice Management AB, Österströms Interna-tional AB and SBS Marine (Holdings) Ltd.

DivestmentsDuring the year, the vessels Obbola, Östrand, Ortviken, Map and TransVing were divested, resulting in positive net cash and cash equivalent contributions of SEK 62 M. In total, the vessel divestments generated a positive result effect of SEK 6.6 M.

46

TransAtlantic 2011 Board of Directors’ Report

Acquisition of Arctic Ice Management, Österströms and SBS MarineIn February 2011, all shares in Arctic Ice Management AB were acquired. In June 2011, all shares were acquired in Öster-ströms International AB, which conducts business mainly in the Baltic Sea area. The acquisition is a step in TransAtlantic’s strat-egy to offer customers better and more effi-cient services through the possibility of door to door transport by combining Bulk, RoRo and Container transports. In Novem-ber 2011, all shares in SBS Marine (Hold-ings) Ltd. were acquired. SBS Marine is a UK offshore shipping company based in Aberdeen, which operates a fleet of six Plat-form Supply Vessels. The acquisition will strengthen Viking Supply Ships’ product offering to existing customers and attract new customers.

Extraordinary General MeetingThe Extraordinary General Meeting on November 7, 2011 approved the new issue of shares totaling approximately SEK 555 M in cash payment, with preferential rights to existing shareholders on 1:1 terms and at SEK 10 per new share. In addition, the Meeting approved a reduction of SEK 998,124,300 in the share capital and a trans-fer of SEK 245,782,000 from the statutory reserve to the non-restricted reserve. The reduction of the share capital and transfer to the non-restricted reserve is expected to be approved by the Swedish Companies Registration Office on February 29, 2012.

The decision resulted in the decrease of the company’s share capital to SEK 110,902,700 and the increase in the number of shares in the company by 3,635,921 Series A shares and 51,815,429 Series B shares.

As of December 31, 2011, the total number of shares in the company amounted to 110,902,700 shares distributed among 7,271,842 Series A shares and 103,630,858 Series B shares. The share capital amounted to SEK 1,109,027,000.

Cash flow and financial positionThe Group’s opening cash balance was SEK 637 M (327). Cash flow from operating activ-ities amounted to SEK 114 M (91).

Investing activities generated a net loss of SEK 477 M (profit: 164) and pertained to tangible and financial fixed assets.

The financing activities, which include new share issues, borrowing and loan amortization reported a net effect of SEK 273 M (86).

Cash flow for the year was a negative SEK 90 M (pos: 341). At the end of the year, the Group’s available cash and cash equiva-lents amounted to SEK 548 M (637), of which SEK 157 M was reserved in a separate account to guarantee the Group’s cash com-mitments in the delivery of the Brage Viking, which was delivered in January 2012. In addition, the Group had unutilized credit facilities totaling SEK 93 M (24). In a loan agreement, the Group has pledged to ensure, at any time, that cash and cash equivalents do not fall below the highest amount of either 5% of the Group’s interest-bearing liabilities or corresponding NOK 125 M, less 50% of unutilized credit facili-ties in the Group.

At the end of the year, the Group’s total assets amounted to SEK 6,283 M (5,111) and shareholders’ equity to SEK 2,493 M (2,396). At year-end, the equity/assets ratio was 40% (47) and the debt/equity ratio was 97.7% (64.0).

Vessels are recognized at cost less depreci-ation and impairment according to plan. In today’s market situation, assessing the value of vessels is more difficult than normal. Valuation of the Group’s vessels was con-ducted using external appraisals and inter-nally calculated yield values. Net income was charged with an impairment of SEK 32 M (–241).

At the end of the year, the Group’s share-holders’ equity totaled SEK 22.5 per share (43.2). The number of shares doubled as a result of the new share issue in December 2011.

Parent CompanyRevenue in the Parent Company amounted to SEK 1,333 M (1,258). Net profit for the year amounted to SEK 1,216 M (loss: 217). The full-year amount includes anticipated dividends from subsidiaries of SEK 1,377 M, Group contributions of SEK 215 M, capital gains from intra-Group divestment of sub-sidiaries totaling SEK 26 M, impairment of shareholdings in subsidiaries of SEK 433 M, capital gains from the divestment of the owner-companies to the vessels Obbola, Östrand and Ortviken of SEK 244 M. The amount for the 2010 full-year includes impairment of shareholdings in subsidiar-ies of SEK 59 M, as well as Group contribu-tions of SEK –49 M. The Parent Company’s shareholders’ equity amounted to SEK 2,883 M (1,125) and total shareholders’ equity and liabilities profit brought forward at year-end amounted to SEK 4,526 M (2,153). Cash and cash equivalents at the end of the year was SEK 202 M (31).

Significant events after the end of the yearHeléne Mellquist was recruited as the Financial Director from January 1, 2012.

On January 1, 2012, TransAtlantic’s Off-shore/Icebreaking business area changed name to Viking Supply Ships.

TransAtlantic’s Viking Supply Ships busi-ness area received delivery in January 2012 of the AHTS vessel Brage Viking, from the shipyard Astilleros Zamakona in Bilbao, Spain. The vessel was registered in the Dan-ish ship’s register, DIS.

Kim H. Sörensen was appointed the new Head of the Industrial Shipping business area. Kim H. Sörensen was previously Head of Europe Region, Damco, a subsidiary of AP Möller Maersk. Kim H. Sörensen will assume the position on March 1, 2012 and will thus replace Percy Österström, who will be leaving the daily operation to focus completely on developing the business area’s expanding market and strengthening customer relations in his role as Senior Vice President. Percy Österström will also become a member of the Board of Industrial Shipping.

47

Environmental issuesIn TransAtlantic, active work is in progress to reduce the environmental impact and during the year new measures were imple-mented and quality control improved with the aim of further strengthening the Group’s leading position in the environmental area. Based on Sweden’s national environmental targets affecting shipping, TransAtlantic’s efforts are based on six detailed environ-mental goals for its operations. For further information, refer to page 16.

Risks and uncertaintiesThe TransAtlantic Group is characterized by a high degree of international operations and is thus exposed to a number of opera-tional and financial risks. TransAtlantic works actively to identify, assess and man-age these risks. Risk management is included in the continuous monitoring of operations.

In January 2012, the newbuild program concluded entailing payment of cash and cash equivalents in connection with vessel deliveries. To guarantee these commit-ments, the Group reserved funds totaling SEK 157 M in a special account, in accord-ance with the loan agreement. These are recognized together with other cash and cash equivalents.

TransAtlantic continues to evaluate an agreement proposal with a bank due to the Group’s failure to fulfill certain financial covenants requirements in 2010, and for the third and fourth quarters in 2011. In addition, dialog is being conducted with two addi-tional banks about TransAtlantic not fully meeting the requirement levels of the loan agreement pertaining to financial covenants ratio for Q4. As a result of the above, loans totaling SEK 636 M have been reclassified from long-term to current liabilities. For these loans, TransAtlantic has received refinancing tenders, which are under consideration.

Further description of the Group’s opera-tional and financial risk management is found in Notes 1 and 32.

OutlookIn Industrial Shipping, work continues to integrate Österströms and to adapt the ves-sel fleet to prevailing demand. Lower costs and higher effect will be achieved as the operation and organization are coordi-nated. We believe that demand for tonnage will successively increase but the tonnage surplus in the market will remain for some time.

Significant expansion occurred during the year in Viking Supply Ships through the delivery of two newly built AHTS vessels and the acquisition of SBS Marine, which has not yet had full impact on sales and profits. In addition, the Brage Viking was delivered in January 2012. In general, this resulted in a significant increase in the ves-sel fleet. Activities relating to offshore oil and gas exploitation in the North Sea, the Barents Sea and the Arctic waters are increasing and will provide the company with excellent prerequisites to occupy the vessel fleet in the future.

Described in separate sectionsThe following is described in separate sec-tions of the Annual Report:

• The TransAtlantic share and ownership structure, see page 32.

• Corporate Governance, including descrip-tion of the work of the Board and manage-ment, and guidelines for remuneration to senior executives, see page 36.

PersonnelThe number of employees in the Group at the end of the year totaled 833 (911). Further information is found in Note 7.

Proposed treatment of appropriated earningsThe following funds in the Parent Company are available to the Annual General Meeting:

SEK 000s

Other contribution from owners 388,159

Loss brought forward –76,413

Profit for the year 1,216,091

Total 1,527,837

The Board of Directors proposes that no dividend be paid for the 2011 financial year.

The reason for the proposal is that the financial funds and shareholders’ equity in the Group at year-end will be needed to conduct operations and develop the com-pany in a satisfactory manner

SEK 000s

To be carried forward 1,527,837

Total 1,527,837

Annual General MeetingThe Annual General Meeting will be held in Gothenburg’s Art Museum on Friday, April 27, 2012 at 4:00 p.m. More details will be provided in a special Notification in Dagens Industri, Göteborgs Posten and in Post & Inrikes Tidning, as well as on the website, www.rabt.se.

Earnings, cash flow and balance sheetThe Group’s and Parent Company’s earn-ings, liquidity and financial position are set forth in the following income statements, cash-flow statements and balance sheets, and in the notes relating to them.

TransAtlantic 2011 Financial statements

Financial statementsIncome statement 49

Balance sheet 50

Shareholders’ equity 52

Cash-flow statement 53

Notes 54

Board of Directors’ signatures 80

Auditors’ Report 81

Note 1 Accounting and valuation policies,

significant assessments and financial risk

management

54

Note 2 Distribution of net sales 59

Note 3 Segment reporting 59

Note 4 Purchases and sales among

Group companies

60

Note 5 Other operating income 60

Note 6 Other operating expenses 61

Note 7 Average number of employees, sickness

absence, salaries, other remuneration and

social security costs, etc.

61

Note 8 Audit assignments 62

Note 9 Other profits 62

Note 10 Tangible and intangible fixed assets 63

Note 11 Profit share in associated companies 66

Note 12 Profit share in Group companies 66

Note 13 Financial revenue 66

Note 14 Financial expenses 66

Note 15 Taxes 66

Note 16 Earnings per share 67

Note 17 Participations in Group companies,

associated companies and joint ventures

68

Note 18 Other long-term receivables 70

Note 19 Inventories 70

Note 20 Accounts receivables 70

Note 21 Prepaid expenses and accrued income 70

Note 22 Cash-flow statement 70

Note 23 Share capital 71

Note 24 Dividend per share 71

Note 25 Pension provisions 71

Note 26 Liabilities 73

Note 27 Accrued expenses and deferred income 74

Note 28 Pledged assets 74

Note 29 Contingent liabilities 74

Note 30 Commitments 75

Note 31 Related-party transactions 76

Note 32 Financial risk management and derivative

instruments

76

Note 33 Acquisitions 78

Note 34 Events after the closing date 79

Note descriptions

48

Income statement

Statement of comprehensive income

Note Group Parent Company

SEK 000s 1, 3, 33 2011 2010 2011 2010

Net revenue 2, 3, 4 2,989,468 2,394,096 1,332,815 1,258,420

Other operating income 5 10,031 784,328 112 366

Direct travel expenses 1 –1,573,977 –1,163,241 –436,194 –395,493

Personnel expenses 7 –701,323 –704,179 –306,635 –283,184

Other external operating expenses 4, 8 –643,523 –389,527 –736,833 –706,691

Other operating expenses 6 –14,206 –37,926 –4,027 –28,383

Other net profit/loss 9 608 — — —

Depreciation and impairment of tangible and intangible fixed assets 10 –414,942 –428,618 –22,850 –14,873

Profit share in associated companies 11 –451 0 –14,915 1,270

Operating profit/loss –348,315 454,933 –188,527 –168,568

Profit/loss share in Group companies 12 — — 1,428,184 –105,925

Financial income 13 20,674 7,859 54,527 17,248

Financial expense 14 –138,705 –55,865 –69,639 –26,812

Profit/loss before tax –466,346 406,927 1,224,545 –284,057

Income tax 15 31,798 178,354 –8,454 66,948

Profit/loss for the year –434,548 585,281 1,216,091 –217,109

Attributable to:

Parent Company’s shareholders –429,936 583,832 1,216,091 –217,109

Non-controlling interests –4,612 1,449 — —

–434,548 585,281 1,216,091 –217,109

Earnings per share attributable to Parent Company’s shareholders, per share, SEK (before and after dilution) 16 –6.49 14.22 — —

Group Parent Company

SEK 000s 2011 2010 2011 2010

Profit/loss for the year –434,548 585,281 1,216,091 –217,109

Other comprehensive income/expense, net after tax:

Change in hedging provision –24,760 19,251 — —

Change in translation provision 13,797 –41,166 — —

Other comprehensive income/expense, net after tax –10,963 –21,915 — —

Comprehensive income/expense for the year –445,511 563,366 1,216,091 –217,109

Attributable to:

Parent Company’s shareholders –441,424 566,485 — —

Non-controlling interests –4,087 –3,119 — —

–445,511 563,366 1,216,091 –217,109

49


Balance sheet

Balance sheet at December 31 Note Group Parent Company

SEK 000s 1 2011 2010 2011 2010

Assets

Fixed assets

Vessels 10 4,558,882 3,170,303 — —

Buildings and land 10 21,576 38,591 20,786 37,779

Equipment 10 52,861 40,622 4,800 10,003

Construction in progress and advance payments on tangible fixed assets 10 280,177 644,288 — 8,393

Goodwill 10 2,459 2,348 — —

Brands 10 7,015 7,015 — —

Other intangible fixed assets 10 4,463 3,063 9 1,800

Participations in Group companies 17 — — 3,582,202 613,080

Receivables from Group companies — — 112,637 941,364

Participations in associated companies 17 153 153 153 153

Deferred tax assets 15 105,577 40,376 130,487 138,942

Financial assets available for sale 105 105 105 105

Derivative instruments 32 15,314 20,799 — —

Other long-term receivables 18, 25 65,885 29,907 35,688 24,886

Total fixed assets 5,114,467 3,997,570 3,886,867 1,776,505

Current assets

Inventories 19 69,397 40,873 20,856 21,318

Accounts receivable 20 335,728 231,984 77,526 113,931

Receivables from Group companies — — 196,915 60,990


Other receivables 66,464 111,786 81,181 93,500

Prepaid expenses and accrued income 21 134,013 84,284 47,039 53,991

Financial assets valued at fair value in income statement 32 13,610 — 13,610 —

Cash and cash equivalents 22 547,848 636,893 201,584 33,150

Total current assets 1,168,119 1,113,403 638,711 376,880

TOTAl ASSETS 6,282,586 5,110,973 4,525,578 2,153,385

50


SEK 000s 2011 2010 2011 2010

Shareholders’ equity and liabilities

Shareholders’ equity and reserves attributable to Parent Company’s shareholders 16, 23, 24

Share capital 1,109,027 554,514 1,109,027 554,514

Other contributions from shareholders 555,285 555,285 388,159 388,159

Provisions 68,248 79,736 245,782 245,782

Profit brought forward 745,887 1,188,437 –76,413 153,310

Profit for the year — — 1,216,091 –217,109

Total shareholders’ equity and reserves attributable to Parent Company’s shareholders 2,478,447 2,377,972 2,882,646 1,124,656

Non-controlling interests 14,418 18,505 — —

Total shareholders’ equity 2,492,865 2,396,477 2,882,646 1,124,656

Provisions

Provisions for pensions 25 — — 10,463 11,688

Total provisions — — 10,463 11,688

Long-term liabilities 26

Vessel loans 2,003,143 1,842,072 — —

Other liabilities to credit institutions 75,026 90,645 — 77,150

Liabilities to Group companies — — 1,172,638 398,354

Pension commitments 25 6,807 8,551 — —

Deferred tax liabilities 15 9,739 28,422 — —


Other liabilities 66,179 77,628 31,467 22,875

Total long-term liabilities 2,181,524 2,055,645 1,204,105 498,379

Current liabilities 26

Vessel loans 865,741 185,235 — —

Other liabilities to credit institutions 57,571 25,601 59,150 18,600

Overdraft facilities 10,189 75,624 — 75,624

Accounts payable 178,503 100,848 64,130 45,612

Current tax liability 33,355 14,974 — —

Liabilities to Group companies — — 146,212 252,202

Derivative instruments 32 7,320 586 — —

Other liabilities 74,863 49,520 28,689 20,133

Accrued expenses and deferred income 27 380,655 206,463 130,183 106,491

Total current liabilities 1,608,197 658,851 428,364 518,662

Total shareholders’ equity and liabilities 6,282,586 5,110,973 4,525,578 2,153,385

Pledged assets 28 3,314,556 63,975

Contingent liabilities 29 2,146,550 1,029,772

51


Shareholders’ equity

Attributable to the Parent Company’s shareholders

Non-con-trolling

interests

Total share-holders’

equity

Provisions

Consolidated changes in shareholders’ equitySEK 000s

Share capital

Other contributions from shareholders

Translation reserve

Hedging reserve

Profit/loss brought forward

Shareholders’ equity, Jan. 1, 2010 284,305 167,126 102,682 –5,599 604,380 21,624 1,174,518

Profit for the year — — — — 583,832 1,449 585,281

Exchange-rate difference on translation of foreign operations — — –36,598 — — –4,568 –41,166

Reassessment of derivative instruments, cash-flow hedging – Note 32 — — — 19,251 — — 19,251

Total comprehensive income/expense — — –36,598 19,251 583,832 –3,119 563,366

New share issue 277,257 388,159 — — –6,8231) — 658,593

Share reduction, refer to Note 23 –7,048 — — — 7,048 — —

Total transactions with company’s owners 270,209 388,159 — — 225 — 658,593

Shareholders’ equity, Dec. 31, 2010 554,514 555,285 66,084 13,652 1,188,437 18,505 2,396,477

Shareholders’ equity, Jan. 1, 2011 554,514 555,285 66,084 13,652 1,188,437 18,505 2,396,477

Loss for the year — — — — –429,936 –4,612 –434,548

Exchange-rate difference on translation of foreign operations — — 13,272 — — 525 13,797

Reassessment of derivative instruments, cash-flow hedging – Note 32 — — — –24,760 — — –24,760

Total comprehensive income/expense — — 13,272 –24,760 –429,936 –4,087 –445,511

New share issue 554,513 — — — –12,6141) 541,899

Total transactions with company’s owners 554,513 0 0 0 –12,614 0 541,899

Shareholders’ equity, Dec. 31, 2011 1,109,027 555,285 79,356 –11,108 745,887 14,418 2,492,865

1) Transaction costs in connection with the new share issue.

Parent Company’s changes in shareholders’ equity Share capital

Other contri-butions from shareholders

Statutory reserve

Profit/loss brought forward

Total shareholders’

equity

Shareholders’ equity, Dec. 31, 2009 284,305 — 245,782 153,085 683,172

Loss for the year — — — –217,109 –217,109

Total comprehensive expense — — — –217,109 –217,109

New share issue 277,257 388,159 — –6,8231) 658,593

Share reduction, refer to Note 23 –7,048 — — 7,048 —

Total transactions with company’s owners 270,209 388,159 — 225 658,593

Shareholders’ equity, Dec. 31, 2010 554,514 388,159 245,782 –63,799 1,124,656

Shareholders’ equity, Jan. 1, 2011 554,514 388,159 245,782 –63,799 1,124,656

Profit for the year — — — 1,216,091 1,216,091

Total comprehensive income — — — 1,216,091 1,216,091

New share issue 554,513 — — –12,6141) 541,899

Total transactions with company’s owners 554,513 — — –12,614 541,899

Shareholders’ equity, Dec. 31, 2011 1,109,027 388,159 245,782 1,139,678 2,882,646

1) Transaction costs in connection with the new share issue.

52

Cash-flow statement


SEK 000s 22 2011 2010 2011 2010

Cash flow from current operations

Loss/profit before tax –466,346 406,927 1,224,545 –284,057

Adjustments for non-cash items

– Depreciation and impairment 10 414,942 428,618 22,850 14,873

– Capital gain/loss –2,504 5,450 –112 —

– Results from participations in Group companies not affecting cash flow — — –1,428,184 105,925

– Interest not affecting cash flow1) 14,793 –639 18,338 5,412

– Effects from the acquisition of Trans Viking not affecting cash flow — –784,608 — —

– Other2) 17,668 –7,485 –1,068 911

Income tax paid/received –15,114 9,827 — —

Cash flow from current operations before changes in working capital –36,561 58,090 –163,631 –156,936

Changes in working capital

Changes in inventories –4,299 20,079 462 3,033

Changes in accounts receivable and other current operating receivables 107,440 –2,526 46,068 –40,606

Changes in accounts payable and other current operating liabilities 48,270 15,619 50,742 1,214

Cash flow from current operations 114,850 91,262 –66,359 –193,295

Investing operations

Acquisition of subsidiaries 33 –351,533 –100 –47,925 –9,782

Sale of subsidiaries — — 308,404 —

Acquisition of vessels –478,722 –137,359 — —

Sales of vessels 346,210 12,442 — —

Cash and cash equivalents from acquired operations 33 38,283 298,493 — —

Acquisitions of other intangible fixed assets — –1,425 — –1,426

Acquisitions of other tangible fixed assets –2,035 –2,137 –693 –4,068

Sale of other tangible fixed assets 748 — 748 —

Changes in long-term receivables –30,600 –6,408 –13,610 –1,946

Cash flow from investing operations –477,649 163,506 246,924 –17,222

Financing operations

Changes in loans from Group companies — — –441,653 120,231

Loans raised 984,987 270,114 40,000 69,998

Amortization of loans –1,253,930 –184,136 –152,220 –18,600

New share issue less issue expenses 541,899 — 541,899 —

Cash flow from financing operations 272,956 85,978 –11,974 171,629

Change in cash and cash equivalents –89,843 340,746 168,591 –38,888

Cash and cash equivalents at the beginning of the year 636,893 327,400 33,150 73,082

Exchange-rate difference in cash and cash equivalents 798 –31,253 –157 –1,044

Cash and cash equivalents, Dec. 31 547,848 636,893 201,584 33,150

1) Interest received amounts to: 7,857 7,220 499 1,129

Interest paid amounts to: –123,912 –55,865 –10,629 –5,281

Total –116,055 –48,645 –10,130 –4,152

2) The amount for the Group includes the reversal of liability in an amount of TSEK 12,424 (9,240).

53

TransAtlantic 2011 Notes

General informationThe TransAtlantic Group conducts international contract-based shipping. The Group is organized in two business areas – Viking Supply Ships and Industrial Shipping.

The Parent Company is a limited liability company registered in Sweden, with its domicile in Gothenburg, and corporate registration number 556161-0113. The postal address for the head office is Box 8809, SE-402 71 Gothenburg, Sweden and the street address is Lind-holmsallén 10. The Parent Company is listed on the Small Cap list of the NASDAQ OMX Nordic Exchange in Stockholm.

The Board of Directors approved these consolidated accounts for publication on February 28, 2012.

Basis for the preparation of the financial reports The most significant accounting policies applied, and noted below, have been consistently applied for the years presented, unless other-wise stated.

The consolidated accounts were prepared in accordance with IFRS, rules adopted by the EU and in accordance with RFR 1 Supplementary Accounting Rules for Groups and the Swedish Annual Accounts Act.

Preparing reports in agreement with IFRS requires that several crucial accounting estimations be applied and that management makes certain assumptions in the application of the company’s accounting policies. The main estimations and assumptions made are stated at the end of this note.

New and amended standards applied by the Group None of the IFRS or IFRIC interpretations that are mandatory for the first time for the financial year beginning January 1, 2011 have had any significant impact on the Group.

New standards, amendments and interpretations of existing standards not yet in effect and not applied in advance by the Group IAS 19 “Employee benefits” was amended in June 2011. The amend-ment entails that the Group will no longer apply the “corridor approach” and will instead recognize all actuarial gains and losses in other comprehensive income as they arise. Costs for service for prior years will be recognized immediately. Interest expenses and anticipated return on plan assets will be replaced by a net interest rate, which will be calculated using the discount rate, based on the net surplus or net deficit in the defined-benefit plan. The Group intends to apply the amended standard for the financial year begin-ning January 1, 2013 and the anticipated positive impact on share-holders’ equity is expected to be approximately SEK 2 M, net after tax. The standard has not yet been adopted by the EU.

IFRS 9 “Financial Instruments” handles classification, valuation and recognition of financial liabilities and assets and replaces por-tions of IAS 39. IFRS 9 states that financial assets shall be classified in two different categories and established at the first recognition occa-sion. For financial liabilities, there are minor changes, which pertain to liabilities that are identified at fair value. The Group intends to apply the new standard not later than the financial year beginning on January 1, 2015 and has not yet evaluated the effects. The standard has not yet been adopted by the EU.

IFRS 10 “Consolidated financial statements” introduces no new policies but provides additional guidance for assisting in the estab-lishment of control when it is difficult to assess. The Group intends to apply IFRS 10 for the financial year beginning January 1, 2013 and has not yet evaluated the full impact on the financial statements. The standard has not yet been adopted by the EU.

IFRS 12 “Disclosures of interests in other entities” includes disclo-sure requirements for subsidiaries, joint arrangements, associated companies and non-consolidated structured entities. The Group intends to apply IFRS 12 for the financial year beginning January 1, 2013 and has not yet evaluated the full impact on the financial state-ments. The standard has not yet been adopted by the EU.

IFRS 13 “Fair value measurement” provides an exact definition and a shared source for fair value measurements and associated informa-tion, and application guidance since other IFRS already requires or allows fair value measurement. The Group has not yet valued the full effect of IFRS 13 in the financial statements. The Group intends to apply the new standard in the financial year beginning on January 1, 2013. The standard has not yet been adopted by the EU.

None of the IFRS or IFRIC interpretations not yet in effect are expected to have any significant impact on the Group.

Consolidated accountsThe consolidated accounts include the Parent Company, as well as subsidiaries, associated companies and joint ventures.

Subsidiaries

Subsidiaries are classified as companies in which the Group has a controlling influence through holding more than 50% of the voting rights, or in which the Group can exercise controlling influence through contracts or other agreements (including SPE companies – special companies formed with a limited and well-defined purpose).

The consolidated accounts were prepared in accordance with the purchase method. Accordingly, consolidated shareholders’ equity – excluding the Parent Company’s shareholders’ equity – only includes the changes in subsidiaries’ shareholders’ equity that occurred fol-lowing acquisition of the subsidiaries. Costs for acquisition of a sub-sidiary have been divided in the company’s various assets and liabili-ties with reference to the measurement executed in connection with the acquisition, regardless of the extent of a possible non-controlling interest.

For acquisitions that occur in stages, goodwill is established on the date controlling influence arises. If the company already owns a por-tion of the acquired company, this is revalued at fair value and the value change recognized in profit and loss for the year. Correspond-ingly, in a divestment where controlling influence is lost, the remain-ing holding is revalued at fair value and the change in value is recog-nized in profit and loss for the year.

The portion of the purchase price that exceeds the acquisition’s net assets, valued at fair value, is recognized as goodwill and is subject to annual impairment testing. If the purchase price is lower than the net assets, the difference is recognized directly in profit and loss.

Transaction expenses, with the exception of transaction fees attrib-utable to the issuance of equity instruments or liability instruments, are recognized directly in profit and loss for the year.

NotesNOTE 1 Accounting and valuation policies, significant assessments and financial risk management

54

Non-controlling interests in the subsidiary’s shareholders’ equity, including net assets at fair value recognized for the subsidiary, are recognized in the consolidated shareholders’ equity on a separate line. Holdings with non-controlling influence in the net earnings for the year are recognized on a separate line in profit and loss.

Group-internal transactions and balance-sheet items and unreal-ized gains on transactions between Group companies are eliminated. Unrealized losses are also eliminated, unless the transaction repre-sents evidence for the need to recognize impairment.

Associated companies

Associated companies are companies in which the Group has at least 20% but not more than 50% of the voting power, giving the Group a significant influence. Participations in associated compa-nies are recognized in the consolidated accounts in accordance with the equity method. The equity method means that shares in a com-pany are recognized at cost, including goodwill, at the time of the acquisition and are subsequently adjusted by the Group’s share of the change in the associated company’s net assets. The Group’s par-ticipation in the associated company’s earnings is recognized under “Profit share in associated companies.” The consolidated value of the holding is reported as “Participations in associated companies.” Unrealized Intra-Group profit is eliminated by the share of the profit attributable to the Group. Unrealized losses are also elimi-nated, unless the transaction represents evidence for the need to recognize impairment. Associated companies are recognized in the Parent Company accounts at their cost. Only dividends received after the acquisition are recognized as revenues.

Transactions with shareholders with non-controlling influence

The Group manages transactions with shareholders with non-con-trolling influence as transactions with the Group’s shareholders. In acquisitions from shareholders with no controlling influence, the difference between the purchase consideration paid and the actual acquired participation of the carrying amount of the subsidiary’s net assets is recognized in shareholders’ equity. Gains and losses in divestments to shareholders with non-controlling influence are also recognized in shareholders’ equity.

When the Group no longer has controlling influence, each remain-ing holding is revalued at fair value and the change in the carrying amount is recognized in profit and loss. The fair value is used as the first carrying amount and represents the basis for continued recogni-tion of the remaining holding as associated company, joint venture or financial asset. All amounts pertaining to the divested unit, previ-ously recognized in other comprehensive income, are recognized as if the Group had directly divested the attributable assets or liabilities. This may result in the reclassification of the amount previously recog-nized in other comprehensive income as earnings.

If ownership in an associated company decreases but a significant controlling influence is retained, wherever relevant, only a propor-tional share of the amounts previously recognized in Other compre-hensive income will be reclassified as earnings.

Translation of foreign currenciesAll transactions included in the financial reports for each Group company are valued and recognized in the currency that provides the most accurate picture of the company’s operations, its “func-tional currency.” Goodwill and adjustments in fair value arising from the acquisition of foreign operations are treated as assets and liabilities in these operations and are translated at closing-date rates.

The reporting currency of the Group and the Parent Company is SEK. The Parent Company’s functional currency is SEK.

For Group companies that have a functional currency that is differ-ent to the Group’s reporting currency, the balance sheets are trans-lated at the closing date rate and income statements are translated at the average exchange rate for the year, whereby the translation differ-ence is included under shareholders’ equity. In the case of divestment or liquidation of such companies, the accumulated translation differ-ence is recognized under capital gains/losses.

Income-statement items are translated at the transaction-date rate and any exchange-rate differences are entered in the profit/loss for the year. The exception is if the transaction represents hedging and meets the criteria for hedge accounting of cash flows or net invest-ments, since gains and losses are recognized directly against Other comprehensive income. Receivables and liabilities are translated in accordance with the principles stated under “Financial instruments” below.

Revenues Revenues and expenses pertaining to cargo assignments under-taken are recognized successively in relation to the cargo assign-ment’s degree of completion on the balance-sheet date. The cargo assignment’s degree of completion is calculated on the basis of the number of travel days on the balance-sheet date in relation to the total number of travel days for the assignment. Other revenues, such as those for external Ship Management assignments, are recognized only after agreement is reached with the customer and the service has been delivered. Direct overhead costs that are invoiced to the customer are recognized as gross amounts in profit and loss. Costs for personnel employed in the Group are recognized as gross amounts even crews of external vessels. Interest revenues are recog-nized in profit and loss distributed across the period of maturity, applying the effective interest method. Dividend revenues are rec-ognized when the right to receive payment has been established.

Direct travel expensesExpenses directly attributable to cargo assignments, such as bun-kers, harbor expenses, etc., are recognized in profit and loss under the heading Direct travel expenses.

Government subsidiesThe Swedish State subsidy to ship owners is recognized as a net amount against the payroll expenses on which it is based. Settle-ment is made monthly.

Income taxesTaxes included in the consolidated accounts pertain to current and deferred tax. The Group recognizes deferred tax on temporary dif-ferences between the carrying amount and tax value of assets and liabilities. Deferred tax assets are only recognized if it is probable that the temporary differences can be utilized against future taxable surpluses. The current nominal tax rate in each country is used in calculating deferred tax. Deferred tax liabilities for temporary dif-ferences pertaining to investments in subsidiaries and associated companies are not recognized in the consolidated accounts as long as no decision on profit taking has been made. In all cases, the Par-ent Company can steer the timing for the reversal of the temporary differences, and it is not considered probable that a reversal will occur in the foreseeable future. The tax effect of items recognized in profit and loss is recognized in profit and loss. The tax effect of items recognized directly against other comprehensive income is recognized against other comprehensive income.

55


Segment reportingThe segments contain services with differing risks and returns com-pared with those of other areas of operations. Internal reporting and follow-up is organized based on these segments. The Group has two segments, Viking Supply Ships and Industrial Shipping. Reporting is made to the company’s Group management, appointed by the President.

Tangible fixed assetsTangible fixed assets as described below are recognized at cost or after deductions for accumulated depreciation according to plan and possible impairment.

Expenses that raise the value or return of the asset through, for example, capacity enhancements or cost rationalization, increase the carrying amount of the asset. Expenses incurred by the re-flagging of vessels are capitalized in accordance with this principle.

Expenses for major recurring inspection measures are capitalized as fixed assets, since they are considered to increase the vessel’s fair value and are depreciated on a straight-line basis over the vessel’s useful life. Other outlay for repairs and maintenance is classed as expenses. Dry-dock expenses within the Group are also capitalized in accordance with this principle and are depreciated over a period of 30 months, which is the normal time between dry-dockings. Expenses, including interest, pertaining to vessels under construction are capitalized as fixed assets. Depreciation of vessels according to plan is based on an individual assessment of each vessel’s useful life and subsequent remaining residual value. Impairment is recognized if the asset’s estimated recoverable amount is lower than its carrying amount. The residual value and useful life of assets are tested on each balance-sheet date and adjusted if necessary. The type of fixed asset with the greatest residual value comprises vessels for which the resid-ual value comprises the estimated scrap value at the end of the ves-sel’s useful life.

Straight-line amortization according to plan is based on the following

useful lives:

– Vessels 20–32 years– Docking and major overhaul measures 2.5–5 years– Computers 3–5 years– Other equipment 5–10 years– Buildings 20–50 years– Land improvements 25 years

Intangible assets Intangible assets are recognized at cost or at impaired value after deductions for accumulated amortization according to plan. A use-ful life is determined for each asset and this is used for straight-line depreciation according to plan.

Straight-line amortization according to plan is based on the following

useful lives:

– Computer programs 4 years– Line networks 10 years

Amortization shall not be applied for intangible assets considered to have the capacity to provide a financial return for an indefinite period. Instead, recoverable values shall be determined for assets on an annual basis or more frequently if there are indicators that an asset’s value has changed.

The Group has goodwill and brands as intangible assets for which amortization is not applied. Goodwill is tested annually to identify possible needs for impairment recognition and is recog-nized at cost less accumulated impairment. Goodwill is distributed among cash-generating units for impairment testing, whereby cash-generating units are the traffic areas within the segments. Branding pertains to TransAtlantic, for which the recoverable value of the asset is considerably higher than its carrying amount.

Impairment Assets with an indeterminate useful life are tested annually for the need to recognize impairment. For assets subject to amortization according to plan, an assessment is made regarding whether the value of the asset should be impaired whenever there are indica-tions that its carrying amount is higher than its recoverable value. The recoverable value corresponds to the higher of fair value less selling costs and value in use. Impairment is recognized in an amount equivalent to the difference between the recoverable value and carrying amount.

Financial assetsFinancial assets are classified according to the following categories: Loans and accounts receivable and Financial assets available for sale. The classification is determined for the purpose of the investment at the time of acquisition. The classification is reviewed annually.

Financial assets for sale are valued at fair value with transaction expenses.

loan and accounts receivableLoans and accounts receivable are initially recognized at fair value and subsequently at amortized cost using the effective interest method less any provision for reduction in value. A provision for value reduction of accounts receivable is made when it is clear that the Group will not receive the full amount. The Group’s loan and accounts receivable comprise accounts and other receivables and cash and cash equivalents.

BorrowingBorrowing is initially recognized at fair value, net after transaction costs. Borrowing is subsequently recognized at amortized cost. Any difference between the amount received and the repayment amount is recognized in profit and loss, distributed over the loan period using the effective interest method.

leasing agreementsThe Group acts both as lessor and lessee and has entered both finan-cial and operational leasing agreements.

In financial leasing agreements, in which the Group enjoys the financial benefits and assumes responsibility for the risks, the item leased is recognized in the balance sheet as a fixed asset. At the beginning of the lease period, the asset is recognized at the lower of the fair value of the leased item or the current value of the mini-mum lease fees. Each leased item is assigned a useful life in accord-ance with the principles stated under tangible fixed assets. Future leasing fees less financial expenses are recognized as a liability. Each lease payment is divided between the amortization of the lia-bility and the financial expense.

Operational leasing agreements are recognized straight-line over the lease period in profit and loss as net sales where the Group is the lessor and as Other external expenses where the Group is the lessee.

Note 1 cont.

56

InventoriesInventories have been valued at the lower of cost and net realizable value. Inventories mainly comprise bunker and lubricating oils. Val-uation has been made in accordance with the FIFO principle.

Pensions and similar commitmentsThe Group has defined-benefit and defined-contribution pension plans. Defined-benefit pension plans provide employees with pen-sion benefits corresponding to a predetermined amount and the Group is responsible for financing these plans so that these amounts can be paid in the future. For defined-contribution pension plans, the Group pays in an established fee to an independent legal entity. Fees are recognized as personnel expenses when they mature for payment. Subsequently, the Group has no further pension commit-ments towards employees.

Provisions are made for all defined-benefit plans on the basis of actuarial calculations in accordance with the project unit credit method, with the purpose of establishing the current value of future commitments to current and previous employees. Actuarial calcu-lations are conducted annually and are based on actuarial assump-tions applicable on the closing date. The size of the provision is determined by the current value of future pension commitments less deductions for the fair value of plan assets, unrecognized actu-arial gains/losses and unrecognized liabilities for earlier periods of service. Discount of pension commitments occurs based on the interest rates of government bonds. Actuarial gains/losses exceed-ing a “corridor” of 10% shall be recognized in profit and loss during employees’ average remaining period of service.

Borrowing costsBorrowing costs for new building projects are capitalized as fixed assets during the project period. Other borrowing costs are expensed as they are incurred.

Cash-flow statementsThe cash-flow statements are prepared in accordance with the indi-rect method. The recognized cash flow comprises only transactions entailing payments received or paid out.

Cash and cash equivalentsCash and cash equivalents include cash and bank balances, matur-ing within three months. Restricted cash and cash equivalents are recognized among Other long-term receivables.

Parent Company’s accounting policiesThe financial statements of the Parent Company are prepared in accordance with the Swedish Annual Accounts Act (1995:1554) and the Swedish Financial Accounting Standards Council’s recommen-dation RFR 2, Accounting for legal entities. The Parent Company, in its financial statements, shall apply all of the EU-approved IFRS and statements insofar as these do not conflict with the Annual Accounts Act and the relationship between accounting and taxation. The recommendation states which exceptions are to be made and can be made based on IFRS.

This means that the Parent Company applies the same accounting policies as the Group with the exception of the instances stated below:

Classification and presentation

The Parent Company’s income statement and balance sheets are set forth in accordance with the outline in the Annual Accounts Act,

while the statement of comprehensive income, the statement on changes in shareholders’ equity and cash-flow statements are based on IAS 1 Presentation of financial reports and IAS 7 Statement of cash flows. The differences in the Group’s reports that apply in the Parent Company’s income statements and balance sheets pertain primarily to shareholders’ equity, as well as the presence of provi-sions as a separate heading.

Associated companies and subsidiaries

Participations in associated companies and subsidiaries are recog-nized in the Parent Company using the cost method. Carrying amounts are tested on each balance-sheet date to determine any need for impairment. Only dividends received are recognized as revenue, on the condition that these are derived from profits earned after the acquisition. Dividends that exceed these profits are consid-ered a repayment of the investment and reduce the participation’s carrying amount.

Transaction expenses are included in the carrying amount for holdings in subsidiaries and associated companies. However, trans-action expenses for subsidiaries are recognized directly in profit/loss in the Group.

Group contributions and shareholders’ contributions

Shareholders’ contributions are recognized directly against share-holder’s equity for the recipient and are capitalized in shares and participations by the contributor to the extent that impairment is not required. The Swedish Financial Reporting Board has withdrawn UFR 2 Group contributions and shareholders contributions. Rederi AB TransAtlantic has thus amended its recognition of Group contri-bution for 2011 in accordance with RFR 2 Accounting for legal enti-ties. The amendment is applied retroactively which is why the com-parative year 2010 has been recalculated. The changed accounting has had a positive impact on other financial income and expenses of SEK 215 M for 2011 and a negative impact of SEK 49 M for 2010. The tax effect of Group contributions is recognized after Changes in the income statement and not in Other comprehensive income. The amended accounting had a negative effect of SEK 57 M on tax expense for 2011, and a positive effect of SEK 13 M for 2010. Earnings for comparative year 2010 fell SEK 36 M, while other comprehensive income rose by an equal amount. The changed accounting had no impact on total shareholders’ equity.

Untaxed reserves

The amounts included in untaxed reserves comprise taxable tempo-rary differences. As a result of the link between accounting and tax-ation, in a legal entity, the deferred tax liability attributable to untaxed reserves is not recognized separately, but in its gross amount in the balance sheet.

Financial income

Net financial income in the Parent Company includes dividends on shares in subsidiaries and these are only recognized when the right to receive payment has been established.

Financial instruments

The Parent Company applies the same policies pertaining to finan-cial instrument as the Group, except for measurement regulations in IAS 39. In the Parent Company, financial fixed assets are valued at cost less any impairment losses, and financial current assets are val-ued at the lower of cost or market value.

57


Acquisition of own shares

When own shares are acquired, unrestricted shareholders’ equity is reduced by the expense for the acquisition. When own shares are transferred, unrestricted shareholders’ equity is increased by the income derived from the transfer.

Risk managementThe Group’s operations entail a number of operational and financial risks that may affect earnings. The most significant risks are: opera-tional risks, market risks, liquidity risks and credit risks.

The Group’s overriding goal is to minimize the impact of finan-cial and operational risks on the consolidated income statements and balance sheets.

The Board of Directors has identified these risks and developed a plan to avoid or minimize the impact on the consolidated income statement and balance sheets through various measures. Through clear policies and reporting paths, it is stated how these risks shall be managed and how presentation is to be made.

The Group’s policy is thus to work with various types of insur-ance or financial instruments to minimize various types of risks.

Operational risks

The general economic trend in the countries where the Group is active is a crucial factor for financial development, since the eco-nomic trend has a major effect on the flows of goods, volumes, and the resultant demand for maritime transports. The trend in markets other than those where the Group is active can also affect demand for the Group’s services, since the maritime transport market is highly international. The Group endeavors to maintain close contact with its customers and signs long-term cargo agreements with them to restrict the impact of economic fluctuations.

Earnings can be impacted by the loss of a vessel. These costs can be minimized through active service and damage-prevention work, resulting in lower risk of major individual cost increases. An offhire insurance that provides financial compensation in the event of pro-longed operational disruption has been taken for part of the fleet of vessels, primarily those vessels involved in scheduled services.

Capital risk

The Group’s capital structure shall secure the operation of current business and enable desired future investments and development.

Capital is assessed on the basis of the debt/equity ratio, meaning interest-bearing net loan liabilities in relation to shareholders’ equity. The net loan liability comprises long and short-term interest-bearing borrowing less cash and cash equivalents.

Total borrowing amounted to SEK 2,983 M (2,170). Cash and cash equivalents, negative in the amount of SEK 548 M (neg: 637), are deducted. The net debt amounted to SEK 2,435 M (1,533) and share-holders’ equity to SEK 2,493 M (2,396). The debt/equity ratio was 98% (64).

The increase in borrowing in 2011 was a result of deliveries of the AHTS vessels Njord and Magne Viking, the ongoing newbuild of Brage Viking, and the acquisition of SBS Marine (Holdings) Ltd., and Österströms International AB. These events are also com-mented in the Board of Directors’ Report.

Market risks

Currency risks

Shipping is a highly international business, which means that only a portion of the Group’s cash flow is generated in SEK and this means that currency fluctuations have a major impact on the Groups earn-ings and cash flows. The foreign-exchange risk is primarily

restricted by matching the exposure to revenues in various curren-cies with costs in the corresponding currency. In the same manner, assets in a certain currency are matched with liabilities in the same currency. The remaining exposure is hedged using various hedging instruments in accordance with Group policy, see Note 32.

Interest-rate risks

Shipping is a capital-intensive business, in which long-term loans are the principal form of financing. Accordingly, interest-rate fluctu-ations have a major impact on the Group’s earnings and cash flow. To reduce this risk, interest levels are hedged to a large extent for varying periods of time and using various types of hedging instru-ments, see Note 32.

Liquidity risk

To avoid disruptions in payments flows, the Group ensures the availability of sufficiently large liquidity reserves in the form of bank deposits and loan pledges to cope with unforeseen fluctua-tions in cash flow, refer to Notes 22 and 26.

Credit risks

The Group only provides short working credit. These credits are mainly provided to major customers, with whom the Group has a long-term relationship. New customers are subject to a credit check prior to credit being provided. When longer-term credit is provided, this is conducted against collateral.

Bunker risks

Cost changes for bunker oil can have a significant impact on earn-ings. Cargo contracts often include clauses that imply that the cus-tomer carries the risk of price changes. For the portion of consump-tion for which the Group does not have such clauses, the Group uses forward contracts for bunker oil, see Note 32.

Derivative instruments/hedge accountingThe Group has derivative instruments that hedge highly probable forecast transactions (cash-flow hedging).

The Group utilizes derivative instruments to cover the risks of exchange-rate fluctuations and exposure in interest-rate risks. The Group’s policy is to only hold instruments that qualify for hedge accounting. Hedge accounting requires that the explicit purpose of the hedging measure is classed as hedging, that it has an unequivo-cal connection with the hedge item and that the hedging measure effectively protects the hedged position.

When a hedge is established, the relationship between the hedg-ing instrument and the hedged item is documented, as are the objective of the hedging and the strategy for implementing hedging measures. The Group also documents its assessment, both at the onset of the hedge and on an ongoing basis during its period of application, regarding the effectiveness of the hedge in evening out changes in cash flow for the hedged items.

Derivative instruments are recognized at fair value at the time of acquisition and continuously revalued at fair value. Unrealized value changes for effective hedging pertaining to cash flow are rec-ognized in other comprehensive income. Changes in the fair value of a derivative formally identified to hedge the fair value, and fulfill the conditions for hedge accounting, are recognized in the profit and loss with changes in the fair value, attributable to the hedged risk of the hedged asset or liability. For derivatives that do not qual-ify for hedge accounting, the unrealized value changes, including the effective portion of the hedge, shall be recognized directly in profit and loss.

Note 1 cont.

58

NOTE 2 Distribution of net sales


SEK 000s 2011 2010 2011 2010

Cargo revenues 2,069,600 1,534,304 691,557 685,338

Time charter revenues 760,813 622,842 308,610 353,240

Expenses invoiced on to external customers 155,030 235,779 33,840 1,520

Expenses invoiced on to internal customers — — 295,529 217,108

Other 4,025 1,171 3,279 1,214

Total 2,989,468 2,394,096 1,332,815 1,258,420

The fair value of financial instruments is established through assessment in an active market (market appraisal) or through estab-lished valuation methods if no active market exists.

Measurement of fair valueFair value of financial instruments traded on an active market is based on listed market prices and belongs to measurement level 1 according to IFRS 7. In the event that there are no listed market prices, fair value is measured through discounted cash flows. When measurements of discounted cash flows have been conducted, all variables, such as discount rates of interest and exchange rates for measurements, have been retrieved from market listings wherever possible. These measurements belong to measurement level 2. Other measurements, for which a variable is based on own assess-ments, belong to measurement level 3.

The nominal value less any credits was used as fair value for accounts receivable and accounts payable.

Significant estimations and assessmentsEstimations and assessments are conducted continuously and are based on historical experience and reasonable assumptions of future development.

Important estimations and assumptions for accounting purposes:The Group makes estimations about the future that affect its income statements and balance sheets.

The estimations with the greatest impact are:– The useful life of tangible fixed assets and their residual value.– Income taxes where the Group maintains operations in different

countries with different tax systems (such as tonnage taxation).– The pension liability and pension cost.

Useful-life periods and residual value are assessed in connection with annual impairment testing, which, in 2011, resulted in changes to the carrying amount, see Note 10. Pension calculations are con-ducted by an actuary based on assumptions established by the company.

Important assessments in the application of the Group’s accounting policiesThe assessments made by the Group on the basis of its established accounting policies mainly consist of the classification of leasing agreements and assumptions concerning future cash flows for ves-sels. The assessment of future cash flows for vessels is based on forecasts prepared in connection with the Group’s budget process, which, taking into account the impact of economic fluctuations and other known changes, is calculated at its current value with a dis-count factor of 8–10%.

For the Group, it has been determined that the assumptions con-cerning future cash flows for vessels correspond to the assessment and estimation that have the greatest impact on the Group’s income statement and balance sheet.

During 2011, the operation successively switched to governance through the two business areas Industrial Shipping and Viking Supply Ships. However, the Group’s financial control continued to also monitor the Ship Management/Group-wide support function. As of 2012, the remaining external ship management operation will be allocated to each business area and the shared costs will be distributed among the respective business areas.

The Viking Supply Ships business area comprises ice-classified and also icebreaking anchor-handling vessels that are partly used for icebreaking (primarily for the Swedish Maritime Administra-tion), and partly for assignments for the offshore industry, with the repositioning of rigs and anchors for these. The acquisition of SBS Marine adds a new operation and vessel type, Platform Supply Ves-sels, which mainly transports supplies to rigs for customers in the offshore industry.

Industrial Shipping focuses mainly on contract-based shipping for Nordic base industry. The business area comprises several dif-ferent areas of operation, which are integrated with each other and cooperate on tonnage and customer contracts. The RoRo Baltic Divi-

sion conducts scheduled traffic using specially adapted RoRo and container vessels, which form a full-coverage maritime transport system in the Baltic Sea. The Bulk Division comprises ice-classified vessels in the medium-size bulk segment, which operates primarily in Europe, and also conducts RoRo traffic between Canada and the southern portion of the US east coast. The Container Division con-ducts container-based scheduled services between Sweden and the UK, and feeder traffic between Sweden and Germany.

The Short Sea Bulk Division conducts transport with smaller bulk tonnage preferably in the Baltic Sea. The Integrated Logistics Divi-sion develops integrated transport solutions where TransAtlantic provides a larger portion of the total transport chain.

Ship Management/Group-wide comprises company manage-ment, central administration, financial management and ship man-agement for both own ships and external clients. As of 2012, the operation has been divided and allocated to the individual business areas.

Transactions between the business areas and support functions have been conducted on market terms.

NOTE 3 Segment reporting

59


Viking Supply Ships Industrial ShippingShip Management/

Group-wide Total

SEK 000s 2011 2010 2011 2010 2011 2010 2011 2010

Sales 568,490 298,396 2,258,923 1,865,191 1,387,875 1,150,694 4,215,288 3,314,281

Internal sales — — — — –1,225,820 –920,185 –1,225,820 –920,185

Net revenue 568,490 298,396 2,258,923 1,865,191 162,055 230,509 2,989,468 2,394,096

Depreciation/amortization/impairments –212,601 –77,137 –183,934 –262,797 –18,407 –88,684 –414,942 –428,618

Profit share in associated companies –451 — — — — — –451 —

Operating profit/loss –48,649 65,531 –219,330 –323,359 –80,336 712,761 –348,315 454,933

Financial income

Financial income 1,999 1,379 9,845 2,156 8,830 4,324 20,674 7,859

Financial expense –79,420 –21,444 –38,126 –30,427 –21,159 –3,994 –138,705 –55,865

Profit/loss before tax1) –126,070 45,466 –247,611 –351,630 –92,665 713,091 –466,346 406,927

Income tax 31,798 178,354

Profit/loss for the year –434,548 585,281

Assets 4,664,468 3,158,639 822,130 1,080,472 779,615 864,126 6,266,213 5,103,237

Capital participations in associated companies 153 153 153 153

Undistributed assets2) 16,373 7,583

Total assets 4,664,468 3,158,639 822,130 1,080,472 779,768 864,279 6,282,739 5,110,973

Liabilities 2,844,351 1,659,607 705,885 772,927 211,535 281,376 3,761,771 2,713,910

Undistributed liabilities2) 27,950 586

Total liabilities 2,844,351 1,659,607 705,885 772,927 211,535 281,376 3,789,721 2,714,496

Gross investments3) 1,155,097 235,879 55,710 27,720 27,863 4,061 1,238,670 267,660

1) The loss before tax for the Viking Supply Ships business area includes restructuring and acquisition effects totaling SEK 52 M comprising costs and impairments in connection with the establishment of the Danish offshore structure, as well as preparation for the introduction of Viking Supply Ships on the Oslo Stock Exchange totaling SEK 48 M, and costs of SEK 4 M in connection with the acquisition of SBS Marine (Holdings) Ltd. The loss before tax for the Industrial Shipping business area includes restructuring and acquisition expenses totaling SEK 142 M for 2011. Costs comprise restructuring the business area in connection with the acquisition and integration of Österströms totaling SEK 45 M, costs for the former President totaling SEK 5 M, as well as costs in connection with the acquisition of Österströms International AB totaling SEK 3 M. In addition, vessel impairments in the business area totaled SEK 32 M, and goodwill impairment was SEK 58 M. Profit before tax for 2010 in Ship Management/Group-wide includes effects of SEK 775 M attributable to the acquisition of TransViking, restructuring items in the Industrial Shipping business area comprising vessel impairments totaling SEK 241 M, and capital loss from vessel divestment totaling SEK 6 M.

2) Undistributed assets and liabilities comprise financial instruments.

3) Investments for the year in Viking Supply Ships comprised mainly of three new-builds in progress, the acquisition of SBS Marine (Holdings) Ltd., and capitalized docking fees. Investments in the previous year comprised mainly of new-builds in progress, as well as capitalized docking fees. In the Industrial Shipping business area, investments for the year comprised the acquisition of Österströms International AB, as well as capitalized docking fees. Investments in the preceding year comprised primarily capitalized docking fees. In Ship Management/Group-wide, investments for the year comprised cash and cash equivalents reserved in blocked accounts, acquisition of capital investment shares and equipment. Investments in the previous year in the business area comprised investment in new office building, and investments in computer software and equipment.

Secondary segmentDistribution by geographic area:

Group

SEK 000s 2011 2010

Net sales

Nordic countries 1,568,165 1,327,485

Rest of Europe 1,114,975 781,786

North America 275,368 283,446

Rest of the world 30,960 1,379

Total 2,989,468 2,394,096

Assets

Nordic countries 5,965,141 4,414,924

Rest of Europe 317,598 696,049

North America — —

Rest of the world — —

Total 6,282,739 5,110,973

Investments

Nordic countries 924,743 251,778

Rest of Europe 313,927 15,882

North America — —

Rest of the world — —

Total 1,238,670 267,660

Parent CompanyThe Parent Company’s net sales include sales to other Group compa-nies in the amount of TSEK 304,664 (233,830).

The Parent Company’s other external operating expenses include purchases from other Group companies of TSEK 87,545 (60,572).

NOTE 4 Purchases and sales among Group companies

NOTE 5 Other operating income


SEK 000s 2011 2010 2011 2010

Acquisition effectsTransViking — 774,915 — —

Capitalized own work 2,233 7,215 — —

Capital gain/loss 7,798 — 112 —

Other — 2,198 — 366

Total 10,031 784,328 112 366

Note 3 cont.

60

NOTE 6 Other operating expenses

Operating profit/loss includes exchange-rate differences pertaining to operating receivables and operating liabilities in accordance with the following:


SEK 000s 2011 2010 2011 2010

Exchange-rate difference –8,806 –32,578 –4,027 –28,383

Capital losses –5,400 –5,348 — —

Total –14,206 –37,926 –4,027 –28,383

Refer also to Note 1.

Salaries and other remuneration by country

2011 2010

SEK 000s Board1) and

PresidentOther

employeesBoard and President

Other employees

Parent Company

Sweden 11,484 248,677 4,468 226,420

Total, Parent Company 11,484 248,677 4,468 226,420

Subsidiaries in Sweden 2,492 121,896 67 202,600

Foreign subsidiaries:

Netherlands 90 949 — —

Denmark — 10,120 — —

UK — 15,301 634 4,074

Finland — 4,036 — 2,728

Estonia 126 695 — —

Latvia 244 226 — —

Poland 406 470 — —

Russia 632 3,700 603 2,260

Total, foreign subsidiaries 1,498 35,497 1,237 9,062

Group total 15,474 406,070 5,772 438,082

1) The amount for the Parent Company includes consulting fees totaling TSEK 3,132, and non-recurring remuneration to the departing President totaling TSEK 3,937. The Parent Company received a government shipping subsidy of TSEK 122,448 (102,153) and the total shipping subsidy received by the Group amounted to TSEK 130,651 (153,684). The figures in the Note above pertain to amounts before reductions for the government shipping subsidy received.

Salaries and other remuneration paid to the Board of Directors and senior executives

Board fee

Remuneration paid to the Board of Directors Jan 1 – Dec 31 (SEK 000s) 2011 2010

Christen Sveaas, Chairman 400 100

Folke Patriksson, Deputy Chairman 200 350

Åge Korsvold1) 167 50

Christer Olsson 200 200

Håkan Larsson 200 200

Magnus Sonnorp3) 200 133

Henning E. Jensen2) 33 —

Helena Levander4) — 150

Jenny Lindén Urnes5) — 67

Lena Patriksson Keller4) — 150

Björn Rosengren4) — 150

Christer Lindgren, employee representative — —

1,400 1,550

1) Resigned at the Extraordinary General Meeting in November 2011.2) Elected at the Extraordinary General Meeting in November 2011.3) Elected at the Annual General Meeting in April 2010.4) Resigned at the Extraordinary General Meeting in September 2010.5) Resigned at the Annual General Meeting in April 2010.

During the ten-year period 2004–2013, the Deputy Chairman of the Board is entitled to a pension corresponding to 70% of his final annual salary. Subsequently, a lifelong defined-benefit pension is paid corre-sponding to the ITP plan. To cover the company’s pension commit-ment, which amounted to TSEK 10,248 as at December 31, 2011, pension-insurance plans have been signed with a market capitalization of TSEK 9,987 as at December 31, 2011. During 2011, the company had no expenses for this commitment. There are no other pension commit-ments for the Parent Company’s Board members.

NOTE 7 Average number of employees, sickness absence, salaries, other remuneration and social security costs, etc.

2011 2010

Average number of employees

No. of employees

Of whom, women %

No. of employees

Of whom, women %

Parent Company

Sweden – land based 87 46% 113 40%

– shipboard 317 2% 344 2%

Total, Parent Company 404 12% 457 11%

Subsidiaries

Sweden – land based 75 41% 47 41%

– shipboard 177 8% 360 8%

Denmark – land based 13 31% — —

– shipboard 36 8% — —

UK – land based 11 27% 38 22%

– shipboard 133 2% — —

Finland – land based 8 38% 4 25%

Russia – land based 6 33% 5 20%

Poland – land based 6 0% — —

Estonia – land based 8 0% — —

Latvia – land based 4 25% — —

Netherlands 3 33% — —

Norway 4 50% — —

Total, subsidiaries 484 14% 453 13%

Group total 888 13% 911 12%

Salaries, other remuneration and social security costs

2011 2010

SEK 000s

Salaries and remu-

neration

Social security costs (of

which, pen-sion costs)

Salaries and remu-

neration

Social security costs (of

which, pen-sion costs)

Parent Company 260,161 136,121 230,888 140,078

(39,225) (48,412)

Subsidiaries in Sweden 124,388 84,032 202,667 109,273

(21,271) (38,865)

Foreign subsidiaries 36,995 6,298 10,299 1,185

(2,913) (957)

Group total 421,544 226,451 443,854 250,536

(63,409) (88,234)

61


Termination notice on the part of the company for other senior execu-tives is six to 12 months. This group follows the ITP plan and is entitled to company cars. These individuals are entitled to a lifelong pension from the age of 65, corresponding to the ITP plan. As in 2010, the group

included one woman in 2011. The Group paid no separate fees to mem-bers of the Boards of subsidiaries and Group companies. The separate Corporate Governance section in the Annual Report addresses matters regarding decisions on remuneration.

Remuneration paid to senior executives

Salary Other benefits Pension premium Consulting fees Total

SEK 000s 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010

CEO Rolf Skaarberg1) — — — — — — 3,132 — 3,132 —

CEO Stefan Eliasson2) 6,404 2,400 46 49 502 469 — — 6,952 2,918

Other senior executives, four persons (4)3) 5,624 4,594 374 252 1,182 1,555 3,423 — 10,603 6,401

Total 12,028 6,994 420 301 1,684 2,024 6,555 — 20,687 9,319

1) Rolf Skaarberg was President of the Parent Company during the period April 1 – December 30, 2011. During the year, remuneration of TNOK 300 per month was paid to Rolf Skaarberg in accordance with a consultancy agreement signed with Kistefos AS. Henning E. Jensen assumed the position of President on December 31, 2011 and he also receives remuneration in accordance with a consultancy agreement with Kistefos AS. Remuneration of TNOK 200 per month was paid.

2) The amount includes six months’ termination notice salary and 12 months’ severance pay to Stefan Eliasson, who resigned as President on March 31, 2011.

3) The Group’s former CFO and former Head of Viking Supply Ships were paid fees via consultancy agreements for eight and five months, respectively, during the year.

NOTE 8 Audit assignments

Expensed fees and reimbursements during the year amounted to:


SEK 000s 2011 2010 2011 2010

Fees pertaining to audit assignments

– PwC 3,427 2,204 2,380 1,920

– BDO 209 390 177 354

– KPMG 816 — — —

– Other audit companies 984 653 — —

Fees pertaining to auditing operations in addition to the audit assignment

– PwC 1,923 1,361 1,618 1,187

– Other audit companies 48 1 — —

Fees pertaining to tax advice

– PwC 4,341 1,187 4,012 1,168

– Other audit companies 48 78 11 —

Other services

– PwC 991 — 16 —

Total 12,787 5,874 8,214 4,629

NOTE 9 Other profitsGroup Parent Company

SEK 000s 2011 2010 2011 2010

Interest-hedge derivative

– Fair value gains 608 — — —

Total 608 0 0 0

1) Refer also to Note 32 Financial risk management and derivative instruments, section “Fair values derivative instruments.”

Note 7 cont.

62

NOTE 10 Tangible and intangible fixed assets

Vessels1) Group Parent Company

SEK 000s 2011 2010 2011 2010

Costs

Costs, Jan 1 4,499,976 2,605,777 — —

Purchases during the year (incl. improvement costs) 49,181 28,382 — —

Acquisitions through corporate acquisitions 772,226 1,992,385 — —

Reclassifications 1,174,756 245,822 — —

Sales/scrapping3) –679,348 –93,438 — —

Translation difference for the year 39,817 –278,952 — —

Accumulated costs, Dec. 31 5,856,608 4,499,976 — —

Accumulated depreciation according to plan

Depreciation, Jan 1 –1,048,559 –735,135 — —

Acquisitions through corporate acquisitions — –274,911 — —

Sales/scrapping 228,766 47,097 — —

Translation difference for the year –423 87,246 — —

Depreciation according to plan for the year –274,578 –172,856 — —

Accumulated depreciation according to plan, Dec. 31 –1,094,794 –1,048,559 — —

Impairment

Impairment, Jan 1 –281,114 –81,435 — —

Sales/scrapping 112,015 28,312 — —

Translation difference for the year –1,793 13,207 — —

Impairment for the year –32,040 –241,198 — —

Accumulated impairment, Dec. 31 –202,932 –281,114 — —

Residual value according to plan, Dec. 312) 4,558,882 3,170,303 — —

The average remaining service life of vessels is 13 (13) years.

1) The item “vessels” includes leasing items held by the Group according to financial leasing agreements involving the following amounts:


SEK 000s 2011 2010 2011 2010

Costs

Costs, Jan 1 — 597,832 — —

Acquisitions for the year of chartered vessels2) — –597,832 — —

Accumulated costs, Dec. 31 — 0 — —


Depreciation, Jan 1 — –142,247 — —

Acquisitions for the year of chartered vessels2) — 157,082 — —

Depreciation according to plan for the year — –14,835 — —

Accumulated depreciation according to plan, Dec. 31 — — — —

Residual value according to plan, Dec. 313) — — — —

2) Vessel values in today’s market situation are more difficult to assess than normal. The valuation of the Group’s vessels occurred using external measurements and internal impairment tests. During 2011, impairments occurred on TransFalcon totaling SEK 8 M, TransFrej with SEK 18 M and TransNjord with SEK 6 M, all within the Industrial Shipping business area. The impairments were based on assessed current market capitalization since work has commenced to divest these vessels. Following these impairments, the recognized vessel values were estimated to be on par with the assessed market capitalization. During 2010, impairments were made within Industrial Shipping on TransFighter at SEK 128 M, the SCA vessels (Obbola, Östrand and Ortviken) at SEK 85 M, TransNjord at SEK 25 M and Map at SEK 3 M.

3) In connection with TransAtlantic acquiring the three owner companies for the SCA vessels Cove, Kirmar and Sanaga Shipping Ltd in 2010, an agreement was signed giving SCA the rights to acquire the companies. This option to acquire the vessels was utilized by SCA in June 2011, entailing that the vessels were thus divested at a capital gain of SEK 6 M.


Buildings and land, SEK 000s 2011 2010 2011 2010

Costs

Costs, Jan 1 48,003 47,778 46,745 46,091

Acquisitions for the year (incl. improvement expenses) — 313 –1 654

Translation difference for the year 16 –88 — —

Accumulated costs, Dec. 31 48,019 48,003 46,744 46,745

63



Buildings and land, SEK 000s 2011 2010 2011 2010


Depreciation, Jan 1 –9,412 –8,463 –8,966 –7,980

Translation difference for the year –8 75 — —

Depreciation according to plan for the year –1,023 –1,024 –992 –986

Accumulated depreciation according to plan, Dec. 31 –10,443 –9,412 –9,958 –8,966

Impairment

Impairment, Jan 1 — — — —

Impairment for the year1) –16,000 — –16,000 —

Accumulated impairment, Dec. 31 –16,000 — –16,000 —

Residual value according to plan, Dec. 31 21,576 38,591 20,786 37,779

– of which, land value 5,855 5,855 5,855 5,855

Carrying amount

Taxation values for properties in Sweden

– buildings 10,725 10,725 10,725 10,725

– land 2,054 2,054 2,054 2,054

Total 12,779 12,779 12,779 12,779

Carrying amount for properties in Sweden 20,786 37,779 20,786 37,779

1) A decision was taken in 2011 to divest the Group’s office property in Skärhamn. In connection with this decision, a market valuation was conducted, resulting in an impairment of SEK 16 M.


Equipment, SEK 000s 2011 2010 2011 2010

Costs

Costs, Jan 1 118,287 116,049 30,339 30,102

Purchases during the year (incl. improvement costs) 11,996 4,861 895 1,067

Acquisitions through corporate acquisitions 22,299 — — —

Sales/scrapping –12,485 –1,400 –2,372 –830

Translation difference for the year 759 –1,223 — —




Acquisitions through corporate acquisitions –7,251 — — —

Sales/scrapping 20,221 1,400 1,300 372

Translation difference for the year –670 1,043 — —

Depreciation according to plan for the year –22,630 –12,140 –5,026 –5,714


Residual value according to plan, Dec. 313) 52,861 40,622 4,800 10,003

3) The item “Equipment” includes leasing objects held by the Group in accordance with financial leasing contracts in the following amounts:


Equipment, financial leasing, SEK 000s 2011 2010 2011 2010

Costs

Costs, Jan 1 68,008 64,920 — —

Acquisitions during the year (incl. improvement costs) — 3,088 — —

Acquisitions during the year through corporate acquisitions 8,420 — — —

Concluded leasing agreements –12,921 — — —

Accumulated costs, Dec. 31 63,507 68,008 — —


Depreciation, Jan 1 –42,470 –37,477 — —

Acquisitions during the year through corporate acquisitions –5,502 — — —

Concluded leasing agreements 12,374 — — —

Depreciation according to plan for the year –5,189 –4,993 — —

Accumulated depreciation according to plan, Dec. 31 –40,787 –42,470 — —

Residual value according to plan, Dec. 31 22,720 25,538 — —

Refer also to Note 30 Commitments

Note 10 cont.

64


Construction in progress and advances for tangible fixed assets, SEK 000s 2011 2010 2011 2010

Costs

Costs, Jan 1 644,288 405,822 8,393 5,588

Acquisitions during the year (incl. improvement costs)4) 804,457 148,393 1,176 6,849

Acquisitions through corporate acquisitions 6,283 337,140 — —

Reclassifications –1,174,756 –245,822 — —

Divestments –2,122 –4,044 –9,569 –4,044

Translation difference for the year 2,028 2,798 — —

Accumulated costs, Dec. 31 280,177 644,288 — 8,393

Residual value according to plan, Dec. 31 280,177 644,288 — 8,393

4) The amount includes capitalized financial expense totaling SEK 62 M (26). The interest rate on newbuild credit was 4.95% during the year.


Goodwill, SEK 000s 2011 2010 2011 2010

Costs

Costs, Jan 1 2,348 2,348 8,278 8,278

Acquisitions during the year1) 58,137 — — —

Translation difference for the year 111 — — —


Accumulated impairment

Impairment, Jan 1 — — –8,278 –8,278

Impairment for the year –58,137 — — —

Accumulated impairment, Dec. 31 –58,137 — –8,278 –8,278

Carrying amount, Dec. 31 2,459 2,348 — —

1) Acquisitions for the year pertain to the acquisition of Österströms International AB on June 8, 2011. The entire value was impaired during the year. The acquisition calculation is still preliminary and will be finally established not later than June 30, 2012. Impairment was justified by a testing of the conditions for profitability in the markets in which the Österströms companies operate.

In connection with the merger with Gorthon Lines in 2005, there was impairment in the Parent Company of the goodwill item that arose in the minority acquisition of shares in Gor-thon Lines AB in 2001. This goodwill value was included up to the merger in the item “Participations in associated companies.” The goodwill item represented surplus values in the vessel fleet that is currently owned by a subsidiary.


Brands, SEK 000s 2011 2010 2011 2010

Costs

Costs, Jan 1 7,015 7,015 — —

Residual value according to plan, Dec. 31 7,015 7,015 — —


Other intangible assets, SEK 000s 2011 2010 2011 2010

Costs

Costs, Jan 1 10,543 9,114 6,938 101,628

Acquisitions during the year 8,555 1,429 154 1,426

Acquisitions through corporate acquisitions 8,838 — — —

Sales/scrapping –3,605 — –1,579 –96,116





Acquisitions through corporate acquisitions –2,574 — — —

Sales/scrapping 466 — 466 74,757


Depreciation according to plan for the year –4,909 –1,400 –832 –8,173


Impairment1)

Impairment, Jan 1 — — — —

Impairment for the year –5,625 — — —

Accumulated impairment, Dec. 31 –5,625 — — —

Residual value according to plan, Dec. 31 4,463 3,063 9 1,800

1) During the year, impairment occurred of capitalized development costs for software in Arctic Ice Management AB. The impairment was based on the suspension of development work since the commercial value was currently deemed as uncertain.

Group: In addition to capitalized computer software, value comprises traffic systems developed within the Industrial Shipping business area held by the subsidiary TransAtlantic European Services AB and was added to the Group through the acquisition of the remaining 26% of shares in 2004. Parent Company: The amount comprises capitalized computer software.

65


NOTE 11 Profit from participations in associated companies


SEK 000s 2011 2010 2011 2010

Share of profits from other associated companies1) –451 — –14,915 1,270

Total –451 — –14,915 1,270

1) Share of profits in the Parent Company for 2010 and 2011 pertains to equity income from Partrederiet för Odin Viking DA. Share of profits in the Group for 2011 pertains to earnings from Östersjöfrakt AB. This company, which is 20%-owned, was included in the acquisition of the Österströms Group (refer also to Note 33).

NOTE 13 Financial revenue


SEK 000s 2011 2010 2011 2010

Interest revenue 7,857 7,859 499 1,129

Interest revenue from Group companies — — 39,426 16,119

Exchange-rate differences 12,817 — 14,602 —

Total 20,674 7,859 54,527 17,248

NOTE 15 Taxes


SEK 000s 2011 2010 2011 2010

Tax in profit and loss

– Current tax –17,919 –1,593 — —

– Deferred tax 49,717 179,947 –8,454 66,948

Total 31,798 178,354 –8,454 66,948


2011 2010 2011 2010

SEK 000s % SEK 000s % SEK 000s % SEK 000s %

Difference between recognized tax expense and tax expense based on the current tax rate

Recognized profit/loss before tax –466,346 406,927 1,224,545 –284,057

Tax at current Swedish tax rate, 26.3% 122,649 26 –107,022 –26 –322,055 –26 74,707 26

– Difference in tax rate in countries in which operations are conducted –1,080 –0 –22,819 –6 — — — —

– Effect of non-taxable acquisition TransViking — — 204,557 51 — — — —

– Effect of adjusted tonnage tax regulations in Norway2) — — 40,460 10 — — — —

– Tonnage-tax based operations –32,917 –7 9,753 2 — — — —

– Effect of recognizing in functional currency 2,956 1 –8,844 –2 — — — —

– Effect of non-taxable revenue 1,496 0 3,113 1 432,969 35 2,439 1

– Effect of non-deductible expenses –224 –0 –334 — –118,246 –10 –15,351 –5

– Effect of non-deductible impairment of goodwill –15,290 –3 — — — — — —

– Effect of taxable income3) –44,120 –9 — — — — — —

– Change in value of pension commitments –1,270 –0 –728 — –1,027 –0 –488 –0

– Dissolved tax liability connected to purchase-option4) — — 77,788 19 — — 5,617 2

– Deficit for tax receivable not recognized –2,104 –0 –25,124 –6 — — — —

– Adjustment of preceding year’s tax –521 –0 1,540 0 –253 — 21 0

– Other 2,223 1 6,013 1 158 0 3 0

Tax expense 31,798 7% 178,354 44% –8,454 –1% 66,948 24%

NOTE 12 Profit from participations in Group companies


SEK 000s 2011 2010 2011 2010

Dividend — — 1,376,857 1,772

Group contribution1) — — 214,636 –48,646

Impairment of shareholding — — –433,280 –59,100

Impairment of Group receivables — — –30

Net capital gain/loss from sales of sub-sidiaries — — 269,971 79

Total — — 1,428,184 –105,925

1) Recognized directly against shareholders’ equity in prior years.

NOTE 14 Financial expenses


SEK 000s 2011 2010 2011 2010

Interest expenses 138,705 55,733 10,629 4,869

Interest expenses paid to Group companies — — 57,764 7,150

Exchange-rate differences — 132 — 14,381

Other financial expenses — — 1,246 412

Total 138,705 55,865 69,639 26,812

66

NOTE 16 Earnings per share1)

Group

SEK 2011 2010

Weighted average number of shares excluding shares in custody 57,798,159 35,321,750

Bonus-issue element 8,447,758 5,735,353

Total 66,245,917 41,057,103

Group

Earnings attributable to the Parent Company’s shareholders (SEK): 2011 2010

Total –429,936,000 583,832,000

Group

SEK 2011 2010

Earnings per share attributable to the Parent Company’s shareholders –7.44 16.53

Bonus-issue element 0.95 –2.31

Total –6.49 14.22

1) In a new share issue with preferential rights for old shareholders, where the issue price is lower than the share’s fair value, a so-called bonus-issue element arises, which impacts the calculation of earnings per share for the current period, and periods prior to the new issue. The bonus-issue element in the new share issue represents the value that the com-pany’s shareholders are deprived of through a discount price on the share.

In the Group, there are no equity instruments that can result in dilution effects.


SEK 000s 2011 2010 2011 2010

Deferred tax assets

– Pension commitments considering time of deductibility 12,536 13,806 12,090 13,117

– Financial instruments, valuation at market value 34 — — —

– Loss carryforwards 149,124 101,831 130,952 133,769

161,694 115,637 143,042 146,886

Offsetting of tax receivables and tax liabilities in the same country of operation –56,117 –75,261 –12,555 –7,944

Deferred long-term tax receivables in the balance sheet 105,577 40,376 130,487 138,942

Deferred tax liabilities

– Tangible fixed assets, temporary differences1) –56,117 –71,227 –12,555 –7,944

– Financial instruments, valuation at market value — –4,035 — —

– Other liabilities considering time of deductibility2) –9,739 –28,421 — —

–65,856 –103,683 –12,555 –7,944

Offsetting of tax receivables and tax liabilities in the same country of operation 56,117 75,261 12,555 7,944

Deferred long-term tax liability in the balance sheet –9,739 –28,422 — —

Net deferred tax receivable/(tax liability)5) 95,838 11,954 130,487 138,942

1) Temporary differences resulting from tax treatment of amortization/depreciation.

2) In January 2010, the Norwegian Supreme Court annulled the non-recurring tax that was expensed in 2007 in connection with the introduction of the new Norwegian tonnage tax regulations. The consequence of this ruling was that the Group was able to restore provisions corresponding to approximately SEK 63 M during the year. A new law was passed by the Norwegian Parliament on June 18, 2010, which entailed that shipping companies, in return for a reduced non-recurring tax, once again had the opportunity to be subject to the new tonnage tax regulations. The tax consequences of this entry for TransAtlantic entail a non-recurring charge of SEK 23 M. The amendment in the Norwegian tonnage tax during the year had a net positive impact of SEK 40 M on the Group’s tax expense.

3) During 2011, vessels in the Viking Supply Ships business area were transferred internally in the Group, thereby redeeming taxable capital gains. The capital gains effects were eliminated in the consolidated profit.

4) The option to acquire Cove, Kimar and Sanaga Shipping LTD (owner companies to Obbola, Östrand and Ortviken) was exercised during the year when the tax liability connected to the option value was redeemed.

5) The deferred tax receivable/tax liability is recognized net in each country of operation since offsetting rights are deemed to exist. The loss carryforwards in the Group for Swedish units amount to SEK 457 M (197) net after deduction for untaxed reserves, of which SEK 354 M (101) was capitalized. Loss carryforwards in the Parent Company amounted to SEK 498 M (509), for which deferred tax assets were recognized in their entirety.

Temporary differences regarding investments in subsidiaries were not recognized, since capital gains/losses are not taxable in accordance with the applicable tax legislation. Deferred tax assets are recognized only to the extent that it is probable that the amounts could be utilized against future taxable surpluses.

Group

2011 2010

Before tax Tax After tax Before tax Tax After tax

Tax attributable to other comprehensive income

Change in hedging provision –29,055 4,295 –24,760 25,284 –6,033 19,251

Change in translation provision 13,272 — 13,272 –36,598 — –36,598

–15,783 4,295 –11,488 –11,314 –6,033 –17,347

67


NOTE 17 Participations in Group companies, associated companies and joint ventures

Holding Holding value

Corp. Reg. No.Registered

office

Amount of shares/par-ticipations

% of share capital

Carrying amount Dec. 31, 2011,

SEK 000s


SEK 000s

Share in equity Dec. 31, 2011,

SEK 000s


SEK 000s

Subsidiaries owned by Parent Company1)

Transatlantic Specialtonnage AB2) 556074-5431 Skärhamn 20,000 100 1,360,910 —

Transatlantic Shipping AB3) 556208-0373 Skärhamn 2,118,115 100 214,263 444,263

Transatlantic European Services AB 556520-6504 Västerås 1,000 100 18,021 18,021

Transatlantic Crewing AB2) 556426-8646 Skärhamn 1,000 100 — 120

Transatlantic Services AB4) 556161-7928 Helsingborg 1,000 100 — 100

Transatlantic Administration AB3) 556662-6866 Skärhamn 1,000 100 1,400 7,400

Transatlantic Administration (2) AB5) 556550-2159 Skärhamn 1,000 100 257 257

Transatlantic Icebreaker Management Sweden AB2) 556679-1454 Skärhamn 1,000 100 — 5,106

SOIC Shipmanagement AB 556803-0372 Skärhamn 510 51 51 51

Österströms International AB6) 556777-2180 Stockholm 166,667 100 10,883 —

Viking Supply Ships A/S8) 33369794 Copenhagen 5,000 100 1,901,295 —

Trans Viking Management AS2) 981240030 Sarpsborg 50 100 — 361

Partrederiet Odin Viking DA 989,573,152 Kristiansand 50 11,326 26,242

Transatlantic Nederland BV3) Rotterdam 10 100 32,402 47,401

TRS Transatlantic Shipping GmbH3) HRB110034 Hamburg 100 27,042 42,042

Transatlantic Shipping LTD Gibraltar 100 27 27

Transatlantic Shipping (2) LTD Gibraltar 100 32 32

Transatlantic Ship Management LTD Gibraltar 100 26 26

Transhawk LTD Gibraltar 100 4,072 72

Gorthon International Shipping LTD Bermuda 12,000 100 84 84

Cove Shipping LTD9) Isle of Man 100 — 7,121

Kirmar Shipping LTD9) Isle of Man 100 — 7,121

Sanaga Shipping LTD9) Isle of Man 100 — 7,121

Gorthon Shipping Inc. Canada 100 100 1 1

OY Transatlantic Services AB Helsinki 100 76 76

Hays Mews Properties Ltd10) 2531990 London 100 100 — 1

Transatlantic LLC 1107746094060 Moscow 100 34 34

Total 3,582,202 613,080

The Parent Company’s accumulated cost for shares in subsidiaries amounted to TSEK 2,247,697 (854,791).

Other Group companies

Percy Tham i Oxelösund AB 556022-4908 Oxelösund 1,000 100

TRVI Offshore & Icebreaking AB 556710-9003 Skärhamn 1,551,000 100

TRVI Offshore & Icebreaking 3 AB 556733-1102 Skärhamn 100,000 100

TRVI Offshore & Icebreaking 4 AB 556733-1094 Skärhamn 100,000 100

Trans Viking Offshore AB11) 556858-2463 Gothenburg 1,000 100

Transatlantic Crewing AB2) 556426-8646 Gothenburg 1,000 100

Transatlantic Icebreaker Management AB2) 556679-1454 Gothenburg 1,000 100

Arctic Ice Management AB12) 556807-0972 Gothenburg 99 100

Österströms Rederi AB7) 556073-3767 Norrköping 15,000 100

Österströms Logistics AB7) 556320-7215 Valdemarsvik 1,000 100

Österströms Nordic AB7) 556284-6740 Norrköping 5,000 100

Multidocker Cargo Handling AB7) 556149-1860 Norrköping 1,000 100

Västerviks Logistik och Industri AB7) 556598-0454 Västervik 10,000 100

Rederi AB Nordship7) 556309-9141 Norrköping 500 100

Trans Viking Icebreaking & Offshore AS 979,437,943 Kristiansand 1,100 100

Trans Viking Management AS 981240030 Sarpsborg 50 100

Partrederiet Odin Viking DA 989,573,152 Kristiansand — 50

Transatlantic Specialtonnage AS 987069295 Oslo 100 100

Viking Supply Ships Crewing ApS11) 33775199 Copenhagen 800 100

Viking Supply Ships 3 ApS11) 33775172 Copenhagen 800 100

Viking Supply Ships 4 ApS11) 33859082 Copenhagen 800 100

68

1) The Parent Company in the Group is Rederi AB Transatlantic, 556161-0113, with its registered office in Gothenburg.

2) The company was acquired/transferred Group-internal in 2011 in conjunction with the formation of the Viking Supply Ships Group.

3) Impairment occurred during the year.4) In 2011, the company merged with Transatlantic Administration AB. 5) In 2011, the company changed name from ACL Ship Management AB to Transatlantic

Administration 2 AB.6) The company is the Parent Company in the Österströms Group, which was acquired

in 2011. Refer also to Note 33 on Corporate Acquisitions. 7) The company was included in the Österströms Group, which was acquired in 2011.

8) The company was formed in 2011 and is the Parent Company in the Viking Supply Ships Group.

9) The companies, which owned the vessels Obbola, Östrand and Ortbviken, were divested in 2011.

10) The company was discontinued in 2011.11) The company was established in 2011.12) The company was acquired in 2011; refer also to Note 33 on Corporate Acquisitions. 13) SBS Marine (Holdings) Ltd., which was acquired from Viking Supply Ships A/S in 2011,

is the Parent Company of the Aberdeen-based company group that conducts opera-tions using Platform Supply Vessels. Refer also to Note 33 Corporate Acquisitions.

14) The company was included as a subsidiary of SBS (Holdings) Ltd., which was acquired in 2011.

Holding Holding value

Corp. Reg. No.Registered

office

Amount of shares/par-ticipations

% of share capital


SEK 000s


SEK 000s


SEK 000s


SEK 000s

SBS Marine (Holdings) Ltd13) SC303430 Aberdeen, UK 7,900,001 100

SBS Aberdeen Ltd14) SC250818 Aberdeen, UK 30,001 100

Stoneywood Crewing Services Ltd14) SC351608 Aberdeen, UK 1 100

Bankhead Management Ltd14) 43805 Guernsey, UK 2 100

SBSL (Holdings) Ltd14) SC180512 Aberdeen, UK 76,924 100

SBS Marine Ltd14) SC202464 Aberdeen, UK 1,000 100

Transatlantic UK Ltd 3384716 Goole, UK 10,000 100

Österström UK Ltd7) Hull, UK 100 100

Paltrans Cargo Services Ltd 2547016 Goole, UK 100 100

Nordon Shipping Company B.V. Rotterdam 35 100

Andromeda Shipping Company B.V. Rotterdam 35 100

Capricorn Shipping Company B.V. Rotterdam 35 100

Swing Shipping Company B.V. Rotterdam 35 100

Holding Zeena Maritiem B.V.7) 34119948 Zuiddorpe 200 100

Zeena Maritiem Management B.V.7) 20088567 Zuiddorpe 400 100

Österströms Netherlands B.V.7) 34088147 Zuiddorpe 400 100

Zeeron Maritiem B.V.7) 24179737 Zuiddorpe 525 100

Zeefi Maritiem B.V.7) 34119950 Zuiddorpe 200 100

Zeefor Maritiem B.V.7) 34119948 Zuiddorpe 180 100

Zeehorn Maritiem B.V.7) 24234773 Zuiddorpe 1,919 100

Zeedor Maritiem B.V.7) 34088151 Zuiddorpe 4,000 100

Zeedal Maritiem B.V.7) 34088150 Zuiddorpe 48 100

Zeehelm Maritiem B.V.7) 12061348 Zuiddorpe 18,000 100

Zeegra Maritiem B.V.7) 24145899 Zuiddorpe 35 100

Zeenim Maritiem B.V.7) 34119949 Zuiddorpe 200 100

Zeeranc Maritiem B.V.7) 20070758 Zuiddorpe 400 100

Zeelis Maritiem B.V.7) 34149137 Zuiddorpe 40 100

Zeeros Maritiem B.V.7) 24138471 Zuiddorpe 300 100

Nachricht B.V.7) 33259663 Zuiddorpe 400 100

Sea Message B.V.7) 23079359 Zuiddorpe 40 100

Multidocker Netherlands B.V.7) 33290480 Zuiddorpe 590 100

MS Frej Claus-Markus Speck KG HRA1211 Hörsten 72

MS Odin Claus-Markus Speck KG HRA1215 Hörsten 66

Agila GmbH & Co. KG Seeschiffahrt HRA5055 Hörsten 67

Österströms OY7) 1931010-50 Finland 100 100

Daugava Shipping Services SIA7) Latvia 10,000 100

Österströmi Laevanduse7) Estonia 196 98

Österströms Spolka Z.o.o7) Poland 100 100

Euroforest Shipping Ltd Malta 60 60

Consolidated value of associated companies

Östersjöfrakt AB7) 556393-0709 Norrköping 200 20

MS Agila Verwaltungs GmbH HRB7664 Hörsten 49 153 153 153 153

Total 153 153 153 153

69


NOTE 18 Other long-term receivables


SEK 000s 2011 2010 2011 2010

Value, Jan 1 29,907 65,939 24,886 63,830

Acquisitions during the year 41,520 5,491 13,840 2,456

Divestments during the year –5,542 –41,523 –3,038 –41,400

Value, Dec 31 65,885 29,907 35,688 24,886

Largest individual items consist of:


SEK 000s 2011 2010 2011 2010

Endowment insurances 22,414 24,416 21,467 22,875

Blocked bank funds 41,520 — 13,840 —

Other 1,951 5,491 361 2,011

Total 65,885 29,907 35,668 24,886

Refer also to Note 32 Financial risk management and derivative instruments.

NOTE 19 Inventories

Inventories comprise bunkers, lubricating oil and load-handling equipment.

The carrying amount for accounts receivable is classified as follows:


SEK 000s 2011 2010 2011 2010

Invoiced receivables 336,491 232,025 77,547 113,931

Provision for doubtful receivables –763 –41 –21 —

Total 335,728 231,984 77,526 113,931

The carrying amount for accounts receivable corresponds to the fair value since the discount effect is negligible.

The provision for doubtful receivables changed as follows:


SEK 000s 2011 2010 2011 2010

Value, Jan 1 41 3,158 — —

Provision for doubtful receivables 763 — 763 —

Reversed provisions –41 –3,117 –742 —

Value, Dec 31 763 41 21 —

Confirmed losses on accounts receivable amounted to TSEK 2,274 (3,117). In addition to the recognized provisions, only minor credit risks are deemed to occur in the remaining accounts receivable. The maximum exposure for credit risks on the closing date is the carrying amount for each category of receivables mentioned above.

Age analysis:


SEK 000s 2011 2010 2011 2010

Not due 252,625 128,490 63,799 54,703

Due date exceeded by up to 30 days 68,208 74,166 11,090 42,535

Due date exceeded by 31–60 days 4,858 5,873 464 2,400

Due date exceeded by 61 days or more 10,037 23,455 2,173 14,293

Total 335,728 231,984 77,526 113,931

NOTE 20 Accounts receivable

NOTE 21 Prepaid expenses and accrued income


SEK 000s 2011 2010 2011 2010

Prepaid personnel expenses 13,838 23,238 12,768 20,567

Accrued travel revenue 52,087 38,915 17,852 11,948

Accrued interest revenue 10 880 — 862

Prepaid docking fees for chartered tonnage 412 — — 10,015

Other prepaid expenses and accrued income 67,666 21,251 16,419 10,599

Total 134,013 84,284 47,039 53,991

NOTE 22 Cash-flow statement

In cases in which loan financing of investment projects is paid directly to the shipyard/supplier and does not pass through the company/Group’s cash balance, the investment amount is recog-nized in the cash-flow statement as a net amount after deductions for financing. The recognized investment fee therefore comprises the company’s cash payment.

The acquisition/divestment of shares in subsidiaries is recog-nized in the consolidated financial statements as paid/received pur-chase consideration less the acquired/divested subsidiary’s cash and cash equivalents on the date of acquisition/divestment.


SEK 000s 2011 2010 2011 2010

Cash and cash equivalents

Cash and bank balances, Jan 1 636,893 327,400 33,150 73,082

Changes in cash and bank balances for the year –47,525 309,493 168,434 –39,932

Cash and cash equivalents, Dec 31 589,368 636,893 201,584 33,150

Less blocked/pledged cash and cash equivalents –41,520 — — —

unappropriated cash and cash equiva-lents1), Dec 31 547,848 636,893 201,584 33,150

1) Of the Group’s available cash and cash equivalents of SEK 548 M, SEK 157 M pertains to a specific account to secure the Group’s cash commitments for the delivery of the AHTS vessel Brage Viking, which was delivered on January 12, 2012. This reserved cash and cash equivalents may be utilized at a specific fee. The Group’s cash and cash equivalents include advance from external clients totaling SEK 28 M to be utilized in external ship management operations. In a loan agreement, the Group has committed to, at any time, ensure that cash and cash equivalents do not fall below the highest amount of either 5% of the Group’s interest-bearing liabilities or corresponding NOK 125 M, less 50% of the Group’s unutilized credit facilities.

70

NOTE 23 Share capital

Share capital

2011 2010

SEK Series A shares Series B shares Total Series A shares Series B shares Total

Share capital, Jan 1 36,359,210 518,154,290 554,513,500 18,179,600 266,125,140 284,304,740

New share issue1,2) 36,359,210 518,154,290 554,513,500 18,179,610 259,077,150 277,256,760

Cancellation of treasury shares — — — — –7,048,000 –7,048,000

Share capital, Dec 31 72,718,420 1,036,308,580 1,109,027,000 36,359,210 518,154,290 554,513,500

Number of shares

2011 2010

Series A shares Series B shares Total Series A shares Series B shares Total

Number of shares, Jan 1 3,635,921 51,815,429 55,451,350 1,817,960 26,612,514 28,430,474

New share issue1,2) 3,635,921 51,815,429 55,451,350 1,817,961 25,907,715 27,725,676

Cancellation of treasury shares — — — — –704,800 –704,800

Number of shares, Dec 31 7,271,842 103,630,858 110,902,700 3,635,921 51,815,429 55,451,350

Number of treasury shares, Jan 1 — — — — –704,800 –704,800

Cancellation of treasury shares — — — — 704,800 704,800

Number of treasury shares, Dec 31 — — — — — —

Total number of shares outstanding 7,271,842 103,630,858 110,902,700 3,635,921 51,815,429 55,451,350

Number of votes

2011 2010

Series A shares Series B shares Total Series A shares Series B shares Total

Number of votes 72,718,420 103,630,858 176,349,278 36,359,210 51,815,429 88,174,639

Treasury shares with no voting rights 72,718,420 103,630,858 176,349,278 36,359,210 51,815,429 88,174,639

The quotient value is SEK 10 per share. The Group has no option programs.

1) The acquisition of the shares outstanding in Trans Viking implemented in September 2010 was paid for using newly issued shares in TransAtlantic. At the same time, there was a cancellation of all earlier bought-back treasury shares. Refer also to Note 33 Corporate Acquisitions.

2) In December 2011, a new share issue was completed with preferential rights to existing shareholders at 1:1 relationship. Subscription price was the same as the quotient value, i.e. SEK 10 per share.

Remuneration to employees following the completion of their employment mainly takes the form of ongoing payments to inde-pendent authorities or insurance companies, which subsequently assume responsibility for the commitments to employees. These types of arrangements are called defined-contribution plans.

The commitment for old-age pensions and survivor pensions for employees in Sweden is covered through insurance with Alecta. According to a statement from the Emerging Issues Task Force of the Swedish Financial Reporting Board, URF 3, this is a defined-benefit multiemployer scheme. For the 2011 financial year, the Group did not have access to such information that makes it possi-ble to report this plan as a defined-benefit scheme. The pension scheme in accordance with ITP, which is safeguarded through insurance with Alecta, is therefore reported as a defined-contribu-tion scheme. Alecta’s surplus can be distributed to the insurers and/or the insured. At the end of 2011, Alecta’s surplus in the form

of the collective consolidation level was 113% (146). The collective consolidation level comprises the market value of Alecta’s assets as a percentage of the insurance commitment calculated in accordance with Alecta’s actuarial calculation assumption, which does not coin-cide with IAS 19.

Defined-benefit plans are characterized by the fact that the Group retains its commitment until the pension has been paid. The costs and provisions for defined-benefit plans are assessed through actu-arial calculations with the purpose of determining the current value of the commitment. Defined-benefit plans exist only in Sweden.

Commitments are secured through pension insurances with investments primarily in interest funds and equity funds.

The tables below provide data on the Group’s defined-benefit plans, the assumptions used in the calculations, the expenses recog-nized and the values of the commitments and insurance plan assets.

NOTE 24 Dividend per share

No dividends were paid during 2011 and 2010. At the Annual Gen-eral Meeting on April 27, 2012, it will be proposed that no dividend be paid for the 2011 financial year.

NOTE 25 Pension provisions

71


Note 25 cont.

Group

SEK M 2011 2010 2009 2008 2007

Multiyear overview

At December 31

Current value of defined-benefit obligations 27,033 30,243 35,079 36,945 39,488

Fair value of pension capital –31,149 –35,124 –38,241 –42,626 –45,053

Unrecognized actuarial (losses)/gains 1,617 3,183 1,881 4,979 4,913

Payroll tax liability 9,306 10,249 10,790 10,268 12,634

Net liability 6,807 8,551 9,509 9,566 11,982


SEK 000s 2011 2010 2011 2010

Assumptions applied in actuarial calculations

Sweden

Average discount rate, % 3.40% 3.75% 3.40% 3.75%

Forecast return on pension capital, % 5.10% 6.00% 5.10% 6.00%

Estimated long-term pay increase, % 3.00% 3.00% 3.00% 3.00%

Estimated long-term inflation, % 2.00% 2.00% 2.00% 2.00%

Assumptions regarding mortality are the same as those specified by the Swedish Financial Supervisory Authority (FFFS 2007:31).

Pension expenses for the year

Cost of benefits earned during the year 1,309 1,749 10 10

Interest expense 1,158 1,348 697 816

Depreciation of actuarial gains/losses –161 –50 –161 –50

Adjustment costs 40 –129 — —

Forecast return on pension capital –1,865 –1,876 –991 –1,026

Expenses for the year pertaining to defined-benefit pension plans 481 1,042 –445 –250

Expenses for the year pertaining to defined-contribution pension plans 50,914 70,882 31,638 39,535

Payroll tax expense for the year 15,283 19,171 9,897 10,433

Pension expense for the year included in personnel expenses 66,678 91,095 41,090 49,718

Actual return on pension capital 2.0% 4.4% 1.7% 5.1%

All items are recognized as personnel expenses. Of the costs for defined-contri-bution plans, TSEK 36,175 (55,977) comprises premiums to Alecta.

Changes in fair value of pension capital

Pension capital, Jan. 1 35,124 38,241 19,738 22,156

Expected return 1,865 1,876 991 1,026

Adjusted liability/cost for plan adjusted during the year –2,488 –2,290 — —

Withdrawal –3,413 –3,858 –3,023 –3,472

Premiums/deposits 1,282 1,460 18 18

Actuarial gains/(losses) –1,221 –305 –680 10

Pension capital, Dec. 31 31,149 35,124 17,044 19,738

These assets consist primarily of funds investing in shares, bonds and money market instruments.

Changes in defined-benefit pension obligation

Obligation, Jan. 1 30,243 35,079 18,587 21,761

Cost of benefits earned during the year 1,309 1,749 10 10

Adjusted liability/cost for plan adjusted during the year –2,429 –2,601 — —

Interest expense 1,158 1,348 697 816

Pension payments –3,413 –3,858 –3,023 –3,472

Actuarial (gains)/losses 165 –1,474 –32 –528

Obligation, Dec. 31 27,033 30,243 16,239 18,587

72


SEK 000s 2011 2010 2011 2010

Changes in actuarial losses/gains

Unrecognized actuarial (losses)/gains, Jan 1 3,183 1,881 3,102 2,614

10% of the largest Obligation/Pension capital amount 3,512 3,824 1,974 2,216

Unrecognized actuarial (losses)/gains outside the corridor — — 1,129 399

Depreciation of actuarial losses/(gains) –161 –50 –161 –50

Adjustment of actuarial losses/(gains) –19 183 — —

Actuarial gains/(losses) on obligation –165 1,474 32 528

Actuarial gains/(losses) on pension capital –1,221 –305 –680 10

unrecognized actuarial (losses)/gains, Dec. 31 1,617 3,183 2,293 3,102

Change in payroll tax liability

Liability in balance sheet, Jan. 1 10,249 10,790 9,737 10,100

Change in payroll-tax liability for the year –943 –541 –762 –363

Payroll tax liability, Dec. 31 9,306 10,249 8,975 9,737

Liability in balance sheet

Pension obligation 27,033 30,243 16,239 18,587

Unrecognized actuarial (losses)/gains 1,617 3,183 2,293 3,102

Payroll tax liability 9,306 10,249 8,975 9,737

liability in balance sheet, Dec. 31 37,956 43,675 27,507 31,426

Net liability in balance sheet

Pension capital –31,149 –35,124 –17,044 –19,738

Pension obligation 27,033 30,243 16,239 18,587

Unrecognized actuarial (losses)/gains 1,617 3,183 2,293 3,102

Payroll tax liability 9,306 10,249 8,975 9,737

Net liability, Dec. 31 6,807 8,551 10,463 11,688

Reconciliation of changes in net liability

Liability in balance sheet, Jan. 1 8,551 9,509 11,688 12,319

Pension expenses for the year 481 1,042 –445 –250

Payment to capital under management –1,282 –1,460 –18 –18

Withdrawal from capital under management 3,413 3,858 3,023 3,472

Pension payments –3,413 –3,858 –3,023 –3,472

Change in payroll-tax liability for the year –943 –541 –762 –363

Net liability, Dec. 31 6,807 8,551 10,463 11,688

GroupThe TransAtlantic Group’s total interest-bearing liabilities amounted to SEK 2,983 M (2,135) at the closing-date rate. In addition, there were non-interest-bearing liabilities totaling SEK 807 M (580). Parts of the interest-bearing liabilities are associated with so-called covenants, according to which the Group must fulfill certain key data.1)

Parent CompanyThe Parent Company’s total interest-bearing liabilities amounted to SEK 1,232 M (569). In addition, there were non-interest-bearing liabilities and provisions totaling SEK 411 M (479).

Total interest-bearing liabilities, distributed by currency

Group

SEK 000s Dec 31, 2011 Dec 31, 2010

USD 462,291 138,465

EUR 864,921 821,989

NOK 1,584,512 592,040

Other foreign currencies — 176,714

SEK 71,034 406,147

Total 2,982,758 2,135,355

1) TransAtlantic continues to evaluate a proposal for agreement with a bank due to the Group not fulfilling certain financial covenants in 2010, and for the third and fourth quarters of 2011. Furthermore, discussions are being held with two more banks about Trans Atlantic’s inability to fully fulfill the loan agreement’s financial covenants requirements for Q4, 2011. For these loans, TransAtlantic received refinancing offers, which are under consideration.

NOTE 26 Liabilities

73


NOTE 27 Accrued expenses and deferred income


SEK 000s 2011 2010 2011 2010

Accrued personnel costs 77,601 71,709 46,047 42,883

Accrued interest expenses 38,624 5,242 13,602 300

Accrued travel expenses 100,400 85,736 20,303 33,226

Accrued other expenses 164,030 43,776 50,231 30,082

Total 380,655 206,463 130,183 106,491

Note 26 cont.

Total contractual commitments

Group

SEK 000s 2012 2013–2016 After 2016

Loans (excluding liabilities pertaining to financial leasing)2) 1,027,625 1,403,333 1,053,972

Liabilities pertaining to financial leasing 9,553 6,483 —

Derivative instruments 7,320 20,630 —

Accounts payable 178,503 — —

Other liabilities 488,873 75,918 6,807

1,711,874 1,506,364 1,060,779

Parent Company

SEK 000s 2012 2013–2016 Efter 2016

Liabilities to credit institutions3) 60,762 — —

Liabilities to Group companies 204,844 234,528 1,172,638

Accounts payable 64,130 — —

Other liabilities 158,852 10,000 31,950

488,588 244,528 1,204,588

2) Of the Group’s long-term liabilities, SEK 636 M has been reclassified to current liabilities since certain financial covenants in the loan agreements were not fulfilled.

3) Of the Parent Company’s long-term liabilities, SEK 41 M has been reclassified to current liabilities since certain financial covenants in the loan agreement was not fulfilled.

GroupThe Parent Company has credit facilities in the form of unutilized overdraft facilities totaling SEK 93 M (24). Utilized overdraft facilities at the balance-sheet date totaled SEK 10 M (76).

Parent CompanyThe Parent Company has credit facilities in the form of unutilized overdraft facilities totaling SEK 70 M (24). Utilized overdraft facilities at the balance date totaled SEK 0 M (76).

NOTE 28 Pledged assets


SEK 000s 2011 2010 2011 2010

Current and long-term ship loans and share in current and long-term liabilities of shipping consortiums

– Vessel mortgages 3,196,024 2,545,992 — —

– New building contracts 280,177 636,590 — —

Current and long-term other liabilities to credit institutions

– Fixed assets held through financial leasing agreements 587,436 25,538 — —

– chattel mortgages 86,030 24,085 — —

– shares in subsidiaries 2,833,350 124,011 3,262,205 21,362

– collateral in receivables 32,580 20,011 — —

– bank balances 198,417 328,995 13,840 —

Provisions for pensions

– endowment insur-ance and pension assets 53,564 59,539 38,511 42,613

Total 7,267,578 3,764,761 3,314,556 63,975

NOTE 29 Contingent liabilities


SEK 000s 2011 2010 2011 2010

Sureties — — 2,146,550 1,029,772

– of which, for subsidiaries — — 2,146,550 1,029,772

The Parent Company has provided a guarantee regarding a subsidi-ary’s completion of time-charter agreements, which also comprise parts of the undertaking of the divested subsidiary Transbulk. For the latter, there is also a reciprocal guarantee from an external party for an equivalent amount. Transbulk was divested in 2005. In addition, the Parent Company has also provided guarantee for commitments in a leasing agreement pertaining to a minimum residual value.

74

Financial leasing

At the end of 2011, financial leasing comprised only the leasing of con-tainers and equipment used in the Industrial Shipping business area.

Operational leasing revenues

Operational leasing revenues comprise vessels leased on time- and bareboat charter contracts.

At December 31, 2011, the number of vessels leased by the Group was 34 (15 at Dec 31, 2010) and the number of vessels leased to others was 15 (14).

SEK M 2011 20122013

–2016After 2016

Leasing expenses

Operational leasing 472 315 838 820

Of which: – Bareboat charter 169 198 717 820

– T/C 302 116 121 —

– Other 1 1 — —

Financial leasing 6 9 6 —

– Containers and machines 6 9 6 —

Leasing revenues

Operational leasing 888 417 1,151 873

– T/C 888 417 1,151 873

The above future leasing fees are the Group’s nominal minimum fees.

In the consolidated balance sheets, the following items are recog-nized as financial leasing on the closing date.

SEK M 2011 2010

Fixed assets

Equipment

– Cost 68 65

– Purchases during the year 2 3

– Accumulated depreciation –47 –42

Total 23 26

Liabilities pertaining to financial leasing

– Long-term portion 6 12

– Current portion 8 6

Total 14 18

Provisions, tax liabilities 2 2

See also Note 10.

Investment commitmentsContracted remaining investment commitments in the Group that are not recognized in the balance sheet are attributable to the new-build Brage Viking, which was delivered in January 2012, in the Viking Supply Ships business area. In the preceding year, there were also commit-ments for sister vessels Njord and Magne Viking, which were delivered in 2011. The remaining commitment on the closing date amounted to:

SEK M 2011 2010

Vessels 278 919

Leasing commitments

The Group leases vessels, buildings and equipment through leasing agreements.

Operational leasing

Operational leasing mainly entails the leasing of vessels on a bare-boat or T/C basis, for which contract periods and leasing terms are different for each vessel. The largest contract pertains to the leasing of three vessels, the TransWood, TransPine and TransHawk, formerly owned by the TransAtlantic Group, on a bareboat basis, with a remain-ing contract period of four years, and leasing of paper-transport vessels TransPaper, TransPulp and TransTimber, which operate on time charter for StoraEnso, for which there is a remaining contract period of about ten years. The Group is thereafter entitled to redeem the above-mentioned vessels at their market value. The above-mentioned leasing contract is variable with respect to the interest-rate element. The Group has hedged this exposure with interest derivatives.

The acquisition of Österströms International AB included a con-tract, which is under negotiation, pertaining to the long-term lease of eight bulk vessels with a remaining contract period of approxi-mately 14 years. Discussions are in progress with vessel owners about certain amendments to the contract, including a reduction by one vessel, which has been deducted in the minimum lease charges stated below. In addition to these long-term leased vessels, there was an additional long-term leased vessel, in the Österströms Group on closing date, with a remaining contract period of approximately three years, and 11 short-term leased vessels with an average remain-ing contract period of about six months. Refer also to Note 33.

In the acquisition of SBS Marine (Holdings) Ltd., contracts were included pertaining to the lease of two Platform Supply Vessels. These contracts extend until April and August 2014, respectively. The contracts entail the possibility to acquire these vessels during the 2012–2014 period.

NOTE 30 Commitments

75


In June 2011, TransAtlantic secured a loan of NOK 150 M from Kistefos AS, at a variable interest rate of 8.5%, which was repaid in November 2011. The decision to acquire SBS Marine (Holdings) Ltd., a company fully owned by Kistefos AS, was taken at the Extraordinary General Meeting in November 2011. Furthermore, Kistefos AS has made management available through a consultancy agreement for which remuneration totaling SEK 10 M, of which SEK 4 M pertaining to costs for the former CEO Rolf Skaarberg for the April – December period was paid. During the year, SEK 6 M in guarantee fees was paid to one of Kistefos AS’ companies pertaining to loans to two of the AHTS vessels.

In addition, TransAtlantic sub-leases sections of office premises owned by one of Kistefos’ companies in Kristiansand. The annual rent was set at market-based prices and amounted to TNOK 512 in 2011. In addition, services were provided pertaining to engineering and accounting for Odin Viking totaling TNOK 713.

During the year, TransAtlantic extended the lease contract per-taining to a container vessel, TransAlrek, which is owned by a

German shipping consortium, in which TransAtlantic’s Deputy Chairman Folke Patriksson has a non-controlling interest via his company Enneff Rederi AB. The agreement is based on market terms and conditions and extends to 2014 with an option for Trans-Atlantic to extend the contract for two additional years. The daily rate amounts to EUR 3,850 through June 2012 and will then increase to EUR 4,000 through June 2014.

TransAtlantic leases a small piece of land to Enneff Fastigheter i Skärhamn AB, a company owned by the Deputy Chairman Folke Patriksson, at market prices. The rent amounts to SEK 25,000 annu-ally. The agreement was signed in 2007.

Vessel operations for four of the Group’s Dutch-owned vessels are handled by an external company partly owned by Felix Feleus, who is also the Managing Director of Transatlantic Netherlands BV. Fees for vessel operations are on commercial terms and in 2011 amounted to TEUR 171 annually for four vessels.

Pertaining to remuneration paid to the Board of Directors and senior executives, refer to Note 7.

NOTE 31 Related-party transactions

In its operations, the TransAtlantic Group is exposed to various types of financial risks, such as changes in exchange rates and inter-est rates, as well as liquidity and credit risks. The Group’s goal is to minimize such negative effects in the consolidated income state-ment and balance sheet.

Risk management is handled by the Group’s central finance depart-ment on the basis of the finance policy established by the Board of Directors. The policy contains clear instructions on how various finan-cial risks are to be handled, where different types of derivative instru-ments are key elements in minimizing financial risks. The policy also includes instructions for managing credit- and liquidity risks through financing and loan commitments.

The Group applies hedge accounting pertaining to currency risks in the cash flow in accordance with the regulations included in IAS 39, the content of which is described in Note 1, Derivative instruments.

Credit risksThe Group has a policy for providing credits to customers and other business partners. Credits provided are primarily short-term credits in the form of receivables from customers. Credit risk in cash and cash equivalents is managed by investing the liquidity with major Swedish banks.

liquidity risksLiquidity risk is attributable to the event that the Group has an inad-equate liquidity reserve. This can lead to difficulties in honoring current payment liabilities in operating activities, planned invest-ments and amortization.

The Financial Department continuously prepares liquidity fore-casts for the Group that are aimed at foreseeing the Group’s liquid-ity requirement for operating activities, taking into account future investment requirements and amortization. Based on this work, a liquidity reserve is ensured by maintaining bank balances/invest-ments and obtained lines of credit. For information regarding the maturity structure of liabilities, see also Note 26.

Surplus liquidity is invested in accordance with the established finance policy and instructions to the investment committee.

Currency risksCurrency exposure for assets shall primarily be financed through financing being made in the same currency as the asset. Most of the vessels have such a hedge for 2011. The Parent Company has a number of foreign subsidiaries, whose net assets are exposed to currency-translation risks. These currency positions have not been hedged.

In accordance with the finance policy, currency risks affecting cash flow must primarily be managed by balancing currency flows so that inward and outward flows offset one another. For antici-pated imbalances, these positions shall be hedged at least 70% for the immediate six-month period, at 60% for the following six months, at 45% for Year 2 and 20% for Year 3. The Group is mainly exposed to USD, EUR and NOK. During 2011, in accordance with the policy, a number of hedge contracts were taken out in these currencies on a continuous basis to reduce cash-flow risks during 2012. No hedging took place for other currencies since no significant imbalance exist, or there is uncertainty regarding time of payment.

NOTE 32 Financial risk management and derivative instruments

76

Financial instruments by category

Accounts receivable and cash and cash

equivalentsDerivatives used for hedging purposes

Assets measured at fair value in profit

and lossFinancial assets available for sale Total

Dec 31, 2011

Dec 31, 2010

Dec 31, 2011

Dec 31, 2010

Dec 31, 2011

Dec 31, 2010

Dec 31, 2011

Dec 31, 2010

Dec 31, 2011

Dec 31, 2010

Assets in the balance sheet

Financial assets available for sale3) — — — — — — 105 105 105 105

Derivative instruments2) — — 16,373 28,382 — — — — 16,373 28,382

Accounts receivable and other receivables, excl. interim receivables4) 402,192 343,770 — — — — — — 402,192 343,770

Shares listed on the Oslo Stock Exchange1) — — — — 13,610 — — — 13,610 0

Cash and cash equivalents4) 547,848 636,893 — — — — — 547,848 636,893

950,040 980,663 16,373 28,382 13,610 — 105 105 980,128 1,009,150

Liability in balance sheet

Borrowing excl. liabilities per-taining to financial leasing4) — — — — — — 2,992,759 2,201,654 2,992,759 2,201,654

Liabilities pertaining to financial leasing4) — — — — — — 18,911 17,523 18,911 17,523

Derivative instruments2) — — — — 27,950 8,913 — — 27,950 8,913

Accounts payable and other lia-bilities, excl. interim liabilities4) — — — — — — 369,446 279,943 369,446 279,943

— — — — 27,950 8,913 3,381,116 2,499,120 3,409,066 2,508,033

1) Fair value based on listed market values, where financial instruments are traded on an active market (Level 1).2) Fair values for which there are no listed market values, but instead are based on measurements of discounted cash flows.

Variables in the measurement model, such as exchange rates and interest rates, are derived from market listings when possible (Level 2).3) Other measurements in which one variable is based on own assessments (Level 3).4) Recognized at amortized cost.

As of the reporting date, March 31, 2011, the Group had the following open currency-derivative contracts:

Agreement value, SEK M Forward rates

(weighted averages)

SEK 000s 2011 2010 2011 2010

Currency forward agreements USD/EUR 125 — 1.29 —

Currency forward agreements SEK/USD — 114 — 7.13

Currency forward agreements SEK/EUR — 52 — 9.22

Currency forward agreements SEK/NOK — 9 — 1.13

Currency derivatives mature at one to 12 months from the closing date.If hedging had not been implemented, future earnings would

have been SEK 0 M higher if the closing-date exchange rate applied at the time at which the forward agreements were redeemed.

Interest-rate risksThe finance policy states that interest-rate risk must be hedged through financial instruments that limit exposure to raised interest rates. The Group’s policy is that 25–50% of interest-bearing loans, taking into account implemented hedging transactions, should have an interest rate fixing below one year, 25–50% should have an inter-est rate fixing between one and three years and 25–50% should have an interest rate fixing of longer than three years.

Interest-rate termsThe Group uses various kinds of interest-hedging instruments. The Group has decided to currently have a somewhat shorter interest rate fixing period than stated in the financial policy. At the closing date, the Group held the following interest-rate terms:

Hedged underlying loan values for which the Group bears the interest-rate risk (including interest-rate exposed lease commitment):

SEK MOne year

or less 1–3 years 3–5 years Total

Total interest-hedged loan values 2,063 724 678 3,465

% of total interest-bearing loan values 59% 21% 20% 100%

Weighted average interest rate for interest-bearing loans amounted to:


% 2011 2010 2011 2010

4.53 3.26 5.30 2.97

With a change in interest rates of 1 percentage point, the Group’s interest expense would change by SEK 3 M.

Goods risksTo minimize cost fluctuations for bunkers, the Group has principally signed customer contracts that entail compensation for the Group in the event of changes in bunkers prices. Only a small proportion of the Group’s future bunkers consumption will be exposed to price changes. At the closing date, the Group had no bunkers derivatives.

77


Note 32 cont.

Fair values derivative instrumentsFair values for derivative instruments on the closing date were as follows:

Group

2011 2010

SEK 000s Assets Liabilities Assets Liabilities

Currency options — — 956 —

Currency forward agreements 495 390 6,627 —

Interest-rate swap1) 15,878 27,560 20,799 8,913

Total 16,373 27,950 28,382 8,913

1) Hedge accounting is not applied for the Group’s interest-hedging instruments. Value changes on these instruments are recognized in consolidated profit and loss, refer also to Note 9.

Acquisitions for the year consist of shares in:

Company Acquisition date Acquired share No. of employees Country Business area

Arctic Ice Management AB 2011-02-28 100 2 Sweden Viking Supply Ships

Österströms International AB 2011-06-08 100 100 Sweden Industrial Shipping

SBS Marine (Holdings) Ltd. 2011-10-01 100 141 UK Viking Supply Ships

An agreement was signed at the end of February 2011 to acquire all shares in Arctic Ice Management AB, a company with Ice Manage-ment technology. The purchase consideration for the shares in Arc-tic Ice Management was calculated at SEK 8 M with a possible sup-plementary purchase consideration of a maximum of SEK 6 M. On December 31, 2011, purchase consideration totaling SEK 6 M had been paid. The Group only had minor transaction costs in connec-tion with this acquisition. Net sales and earnings from the acquisi-tion date amounted to SEK 0 M and SEK –8 M, respectively. If the acquired operation had been wholly owned from the beginning of the year, the Group’s net sales would have been SEK 0 M higher, and the consolidated profit would have been SEK –1 M lower for the Jan-uary 1–February 27 period.

In June 2011, the acquisition of all shares in Österströms Interna-tional AB from Skärgårdshavet AB was concluded. Österströms International AB is the Parent Company of the Stockholm-based shipping and logistics group, which conducts operations primarily in the Baltic Sea area. The acquisition is a step in strengthening Industrial Shipping’s presence in the Baltic Sea area by offering cus-tomers better and more efficient service by the possibility of door to door transportation through combined Bulk, RoRo and Container transports. The purchase consideration comprises a fixed portion totaling SEK 40 M and a variable portion amounting to SEK 0–40 M. The variable portion is based on achieving profitability targets for the years 2012–2013 in Industrial Shipping. The total purchase con-sideration on the date of acquisition was calculated at SEK 50 M, of which SEK 40 M was paid on possession date. Any variable portion will be paid in 2014. Transaction costs totaling SEK 3 M in connec-tion with the acquisition was charged against consolidated earnings for 2011. The acquisition of Österströms contributed eight long-term leased vessels. This agreement, which is being renegotiated, has

been treated as operational leasing. A reclassification of the lease agreement to financial leasing would result in the vessels being included in the consolidated balance sheet. The preparation of the final acquisition analysis is not complete, but will be established during the first half of 2012. The results pertaining to the acquired participations were included in the consolidated profit and loss from the acquisition date. Net sales and earnings, excluding acquisi-tion costs from the acquisition date, amounted to SEK 533 M and SEK –48 M, respectively. If the acquired operation had been wholly owned from the beginning of the year, the Group’s net sales would have been SEK 422 M higher, and the consolidated profit would have been SEK –23 M lower for the period January 1–June 7.

On November 7, 2011, TransAtlantic concluded the acquisition of all shares in SBS Marine (Holdings) Ltd. from Kistefos. SBS Marine (Holdings) Ltd. is a UK offshore shipping company based in Aberdeen. The company operates a fleet of six PSV vessels (Platform Supply Vessel), of which four are owned and two are leased on a bareboat basis with a purchase option. The acquisition is a step in the investments in Viking Supply Ships to strengthen the business area’s product offering. The purchase consideration for the shares amounted to SEK 307 M. Transaction costs in connection with the acquisition amounted to SEK 4 M and were charged against con-solidated earnings for 2011. The results pertaining to the acquired participations were included in the consolidated profit and loss from October 1, 2011 when controlling influence was transferred. Net sales and earnings, excluding acquisition costs, contributed to the TransAtlantic Group in 2011 amounted to SEK 55 and 4 M, respectively. If the acquired operation had been wholly owned from the beginning of the year, the Group’s net sales would have been SEK 171 M higher, and the consolidated profit would have been SEK 8 M higher for the January 1–September 30, 2011 period.

NOTE 33 Acquisitions

The Parent Company holds financial instruments corresponding to a fair value of SEK 0 M (16). This value has not been recognized in the Parent Company.

78

Impact on the consolidated balance sheet

SEK MArctic Ice

Management ABÖsterströms

International ABSBS Marine

(Holdings) Ltd. Total

Vessels — 51 732 783

Other tangible fixed assets — 9 — 9

Intangible fixed assets 8 3 — 11

Financial fixed assets — 18 24 42

Total fixed assets 8 81 756 845

Current assets1) — 196 115 311

Total assets 8 277 871 1,156

Long-term liabilities — –88 –353 –441

Current liabilities — –197 –211 –408

Total liabilities 0 –285 –564 –849

Fair value of net assets 8 –8 307 307

Purchase consideration –8 –50 –307 –365

Acquisition goodwill — 58 — 58

Impairment — –58 — –58

Goodwill Dec 31, 2011 — — — —

Impact on the consolidated cash and cash equivalents in 2011:

Purchase consideration in cash paid –4 –40 –307 –351

Acquired cash balance 0 31 7 38

Total –4 –9 –300 –313

1) In connection with the acquisitions, an analysis was conducted of the companies’ receivables, and the assessment is that they are expected to be included as a carrying amount.

Heléne Mellquist was recruited as CFO from January 1, 2012. On January 1, 2012, TransAtlantic’s Offshore/Icebreaking

business area changed name to Viking Supply Ships.In January 2012, TransAtlantic’s Viking Supply Ship business

area received delivery of the AHTS vessel Brage Viking from the shipyard Astilleros Zamakona in Balbao, Spain. The vessel has been registered in the Danish ships register, DIS.

Kim H. Sörensen was appointed the new Head of Industrial Shipping. Kim H. Sörensen was previously CEO of Europe Region, Damco, a subsidiary of AP Möller Maersk. Kim H. Sörensen will assume the position on March 1, 2012 and will thus replace Percy Österström, who will be leaving the daily operation to focus com-pletely on developing the business area’s expanding market and strengthen customer relations in his role as Senior Vice President.

NOTE 34 Events after the closing date

79

TransAtlantic 2011 Signatures of the Board

The Board of Directors and the President assure that the consolidated accounts were prepared in accordance with the international account-ing standards (IFRS) as adopted by the EU and that they provide a fair view of the Group’s financial position and results. The annual report was compiled in accordance with generally accepted account-ing standards and provides a fair view of the Parent Company’s

financial position and results. The Administration Report for the Group and the Parent Company provides a fair view of the trend for the Group’s and the Parent Company’s operations, position and earnings and describes significant risks and uncertainties facing the Parent Company and the companies that are included in the Group.

Gothenburg, February 28, 2012

The income statement and balance sheets will be presented to the Annual General Meeting on April 27, 2012 for approval.

Christen Sveaas Folke Patriksson Håkan Larsson Chairman Deputy Chairman Board member

Christer Olsson Magnus Sonnorp Christer Lindgren Board member Board member Board member/ Employee representative

Henning E. JensenPresident and Board member

PricewaterhouseCoopers AB

Our Auditors’ Report was submitted on March 23, 2012


80

Auditor’s reportTo the annual meeting of the shareholders of Rederi AB TransAtlantic, corporate identity number 556161-0113

Report on the annual accounts and consolidated financial statementsWe have audited the annual accounts and consolidated accounts of Rederi AB TransAtlantic for the year 2011. The annual accounts and consolidated accounts of the company are included in the printed version of this document on pages 44–80.

Responsibilities of the Board of Directors and the President for the annual accounts and consolidated accounts.

The Board of Directors and the President are responsible for the prepa-ration and fair presentation of these annual accounts and consolidated accounts in accordance with International Financial Reporting Stand-ards, as adopted by the EU, and the Annual Accounts Act, and for such internal control as the Board of Directors and the President determine is necessary to enable the preparation of annual accounts and consoli-dated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibility Our responsibility is to express an opinion on these annual accounts and consolidated accounts based on our audit. We conducted our audit in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the annual accounts and consolidated accounts are free from material misstatement.

An audit involves performing procedures to obtain audit evi-dence about the amounts and disclosures in the annual accounts and consolidated accounts. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the annual accounts and consolidated accounts, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company’s prepara-tion and fair presentation of the annual accounts and consolidated accounts in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors and the President, as well as evaluating the overall presenta-tion of the annual accounts and consolidated accounts.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionsIn our opinion, the annual accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the parent company as of 31 December 2011 and of its financial performance and its cash flows for the year then ended in accordance with the Annual Accounts Act, and the consolidated

accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the group as of 31 December 2011 and of their financial performance and cash flows in accordance with International Financial Reporting Standards, as adopted by the EU, and the Annual Accounts Act. The statutory administration report is consistent with the other parts of the annual accounts and consolidated accounts.

We therefore recommend that the annual meeting of shareholders adopt the income statement and balance sheet for the parent company

and the group.

Report on other legal and regulatory requirements In addition to our audit of the annual accounts and consolidated accounts, we have examined the proposed appropriations of the com-pany’s profit or loss and the administration of the Board of Directors and the President of Rederi AB TransAtlantic for the year 2011.

Responsibilities of the Board of Directors and the PresidentThe Board of Directors is responsible for the proposal for appropria-tions of the company’s profit or loss, and the Board of Directors and the President are responsible for administration under the Companies Act.

Auditor’s responsibility Our responsibility is to express an opinion with reasonable assurance on the proposed appropriations of the company’s profit or loss and on the administration based on our audit. We conducted the audit in accordance with generally accepted auditing standards in Sweden.

As a basis for our opinion on the Board of Directors’ proposed appropriations of the company’s profit or loss, we examined the Board of Directors’ reasoned statement and a selection of supporting evidence in order to be able to assess whether the proposal is in accordance with the Companies Act.

As a basis for our opinion concerning discharge from liability, in addition to our audit of the annual accounts and consolidated accounts, we examined significant decisions, actions taken and cir-cumstances of the company in order to determine whether any mem-ber of the Board of Directors or the President is liable to the company. We also examined whether any member of the Board of Directors or the President is liable to the company. We also examined whether any member of the Board of Directors or the President has, in any other way, acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

OpinionsWe recommend to the annual meeting of shareholders that the loss be dealt with in accordance with the proposal in the statutory administra-tion report and that the members of the Board of Directors and the President be discharged from liability for the financial year.

Gothenburg, March 23, 2012PricewaterhouseCoopers AB


81

TransAtlantic 2011 Definitions and Glossary

DefinitionsCAP:A financial interest-rate instrument used to

ensure that interest expense does not exceed

a certain set level.

Capital employed:Interest-bearing liabilities and shareholders’

equity.

Debt/equity ratio:Interest-bearing liabilities minus cash and

cash equivalents divided by shareholders’

equity.

Desinvestment:Divestment of fixed assets.

Dividend yield:Dividend per share divided by closing share

price at year-end.

Earnings per share:Profit after financial items less tax on profit for

the year (current and deferred tax) according to

the consolidated income statement.

EBIT:Earnings Before Interest and Taxes, corre-

sponding to operating profit/loss.

EBITDA:Earnings Before Interest, Taxes, Depreciation,

and Amortization, corresponding to profit/loss

before capital expenses and tax.

Equity/assets ratio:Shareholders’ equity divided by total assets.

Equity per share:Equity divided by the number of shares out-

standing.

Hedge:A general term for financial measures taken to

avoid undesirable effects on earnings due to

variations in interest rates, exchange rates, etc.

IFRS:International Financial Reporting Standards, an

international accounting standard that all listed

companies must adopt. Certain older standards

included in the IFRS collective name are referred

to as IAS (International Accounting Standards).

Interest-coverage ratio:Operating profit/loss before depreciation plus

interest income divided by interest expense.

Net indebtedness:Interest-bearing liabilities less cash and cash

equivalents.

Operating cash flow:Profit/loss after financial income/expenses

adjusted for capital gains/losses, depreciation/

amortization and impairment.

Operating profit/loss:Profit/loss before financial items and tax,

and before restructuring costs.

Operating profit/loss (before tax):Profit/loss before tax and before restructuring

costs.

Operating profit/loss per business area:Profit/loss after financial items and before

Group-wide expenses and central/Group-wide

net financial income/expenses.

Profit per business area:Profit/loss for each business area, recognized

before Group-wide expenses.

P/E ratio:Closing share price at the end of the period

divided by profit after financial items less full

tax per share.

Percentage of risk-bearing capital:Shareholders’ equity and deferred tax liabili-

ties (including non-controlling interests)

divided by total assets.

Profit margin:Profit after financial items divided by net sales.

Restructuring costs:Includes revenues and expenses of nonrecur-

ring nature, such as capital gains/losses from

the sale of vessels, impairment of vessels and

costs related to personnel cutbacks.

Return on capital employed:EBIT divided by average capital employed.

Return on equity:Profit after financial items less tax on profit for

the year, divided by average shareholders’

equity.

Total cash flow:Cash flow from operating activities, investing

activities and financing activities.

82

GlossaryAHTS – Anchor Handling, Tug & Supply Ships:Combination vessels operating in the offshore

market, intended for use in anchor-handling,

tug operations and transportation of supplies.

Bareboat charter:The leasing of a vessel without a crew to a

charter party for a fixed period. In principle,

the charterer pays all operating costs.

Breakbulk:General cargo or bulk cargo that is “breakbulk”

loaded, meaning with no pallets or other type

of carrier.

Bunker:Name of the vessel’s fuel, i.e. the oil used for

powering the vessel’s engines.

Bulk carrier:Vessel for the transportation of loose goods in

large quantities, such as coal, ore and grain.

Charterer:A cargo owner or party that charters a vessel.

Deadweight tons (DWT):The total weight of cargo, bunkers and unat-

tached equipment that a vessel can carry.

ERRV:Emergency Response and Rescue Vessels.

Feeder traffic:Feeder services with smaller vessels to ports

where reloading to larger vessels is under-

taken.

FEu:Container size. Forty Equivalent Units, i.e. a

40-foot container.

HSE policy:Health, safety and environmental policy.

IMO:International Maritime Organization, UN inter-

national maritime body.

ISM code (International Safety Management):Quality and safety regulations stipulated by

IMO for international merchant shipping. Certi-

fication in accordance with the ISM Code is

administered by the national maritime author-

ity, which in Sweden is the Swedish Maritime

Administration.

ISO:International Standards Organization.

Joint Venture:Business operations performed by two or more

companies jointly, with shared risk-taking.

lolo vessel (lift on lift off):Vessel that is loaded/unloaded using its

onboard or fixed dockside cranes.

Marpol:International Convention for Prevention

of Maritime Pollution from Ship. IMO environ-

mental convention.

MRM:Maritime Resource Management.

NETSS:Stora Enso’s logistics system for Northern

Europe. “North Europe Transport & Supply

System.”

Offshore:General term for industrial activities in connec-

tion with the exploitation of oil resources at

sea.

Paper carrier:A forest-products carrier specially adapted for

paper cargo.

PSV:Platform Supply Vessel.

Rates:Freight or transport charges/prices.

Rolo vessel: (Roll on/off lift on/off):Vessel with both cargo hatches and ramps and

can therefore combine loading/unloading with

trucks and/or cranes.

RoRo vessel (Roll on Roll off):Vessel on which cargo is driven on board via

one or more ramps located on the vessel.

SECu:Stora Enso Cargo Unit.

Side-port vessel/side loader:Vessel that is loaded using trucks and/or roll-

ing platforms through side ports, often in com-

bination with lifts between various decks.

Ship Management:All the services required to operate a vessel,

including the crew.

Spot market:The sector of the chartering market in which a

vessel is chartered for individual voyages as

opposed to long-term charters.

Solas:International Convention for Safety of Life at

Sea. IMO safety convention.

SSPA:Svensk Skeppsprovningsanstalt. (Swedish

shipbuilding testing institute).

Supply vessel:Vessel that transports supplies to oilrigs and

platforms in the North Sea.

TAP agreement:Agreement covering temporarily employed per-

sonnel on Swedish-registered vessel, which is

not based on a Swedish labor agreement.

Timecharter (T/C):Leasing a vessel to a charter party for a fixed

period of time. The ship-owner pays all the

operating costs except bunkers and port dues.

83

TransAtlantic 2011 Annual General Meeting and Calendar 2012

The shareholders of Rederi AB TransAtlantic (publ)

are hereby notified of the Annual General Meeting

to be held on Friday, April 27, 2012 at 4:00 p.m. at

the Gothenburg Art Gallery Museum, Gothenburg.

RegistrationShareholders who intend to participate in the General Meeting must: • be listed in the shareholder register maintained

by EuroClear Sweden AB not later than Saturday, April 21, 2012

• notify the company of their intention to partici-pate not later than 4:00 p.m. on Monday, April 23, 2012, to the address: Rederi AB TransAtlan-tic, c/o Computershare AB, Box 610, SE-182 16 Danderyd, or by telephone: +46 (0)771-24 64 00 or on Rederi AB TransAtlantic’s website, www.rabt.se.

Registration must include the shareholder’s name, personal identity number or corporate reg-istration number, registered shareholding,

address, telephone number (daytime), informa-tion on any assistants (maximum of two), and when applicable, information on proxies or repre-sentatives. In the event the shareholder intends to be represented by proxy, a power of attorney and other authorization documents must be enclosed with the registration.

Shareholders whose shares are registered with a trustee must temporarily register the shares in their own name with EuroClear Sweden AB to be entitled to participate in the General Meeting. Such reregistration process must be completed not later than Friday, April 20, 2012. The trustee (bank or fund broker) must be instructed in adequate time prior to that date.

Notification of the Annual General Meeting will be published on Wednesday, March 28, 2012, in Dagens Industri, Göteborgs-Posten and Post och Inrikes tidning.

Further information regarding the notification and agenda can be found on the company website, www.rabt.se.

Annual General Meeting

Calendar 2012April 27 Annual General Meeting

May 15 Interim Report January–March

August 8 Interim Report January–June

November 2 Interim Report January–September

84

Annual Report 2011

TransAtlantic A

nnual Report 2

011

Rederi AB TransAtlantic (publ)

Visiting address:

Lindholmsallén 10

Box 8809,

SE-402 71 Gothenburg, Sweden

Tel: +46 (0)31–763 23 00


www.rabt.se

Solberg. Print: Billes Tryckeri

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