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| Financial report The financial report covers the consolidated accounts for J. Lauritzen A/S. J. Lauritzen A/S is wholly owned by the JL Foundation through Vesterhavet A/S and is included in the consolidated accounts for Vesterhavet A/S. Profit and Loss Account Total revenues of USD 897.9 million in 2003 were up 25% on the USD 718.1 million reported in 2002. The increase is mainly related to the bulk segment. 
The increase in revenues for the bulk segment from USD 209.0 million in 2002 to USD 339.1 million in 2003 was due to the increase in bulk rates as well as a 26% increase in business. The USD 43.3 million increase in reefer revenues to USD 466.7 million in 2003 was due to higher reefer freight rates and revenues from LauritzenCool Logistics’ business, partly off-set by a decrease in the pool fleet. The revenues for the gas segment of USD 77.1 million were up USD 6.2 million mainly due to a larger fleet. The revenues for land-based activities of USD 15.1 million were slightly up compared to the revenues for 2002 of USD 14.7 million. Other operating income amounted to USD 11.4 million including a profit of USD 3.5 million from the sale of land at the port of Valparaiso, Chile. Hire of chartered vessels was USD 365.2 million compared to USD 319.6 million in 2002 due to the increase in activity level within the bulk segment. Operating costs of vessels, including docking, was USD 29.5 million in 2003 compared to USD 29.6 million in 2002. An increase in costs due to acquisition of vessels and the increase in the DKK and EUR exchange rates against USD was off-set by a decrease in docking costs. Other operating costs, including bunkers, port expenditures and other voyage-related costs, comprised USD 369.9 million in 2003, up from USD 292.4 million in 2002. The increase was mainly due to the increase in activity level within the bulk segment. Total staff and other administrative costs amounted to USD 73.1 million, up from USD 58.3 million in 2002. The increase is partly due to profit-related salary expenses, redundancy payments to officers leaving as a result of the reflagging policy for the gas carriers and finally, increased DKK and SEK exchange rates. Three reefer vessels were sold and one gas carrier was scrapped in 2003, generating a net gain of USD 4.1 million. Depreciation in 2003 amounted to USD 25.2 million against depreciation and write-downs of USD 43.4 million in 2002, which included a USD 15.5 million gas carrier write-down. The result of associated companies amounted to USD 3.3 million, (2002: USD 0.9 million), with the increase deriving from the 50% holdings in Handyventure Ltd. and LauriTen Ltd. (until October 2003). Net financial items fell to USD (7.4) million in 2003, from USD (7.7) million in 2002, due to improved cash generation, repayment of long-term debt, lower interest rates and net exchange rate gains. The ordinary result before tax for 2003 gave a profit of USD 46.4 million against a loss of USD (28.9) million in 2002. Tax on the ordinary result amounted to an income of USD 30.5 million (2002: USD (3.8) million). The increase was mainly due to revaluation of deferred tax assets. The year’s net result was a profit of USD 76.2 million (2002: USD (32.4) million). Balance sheet At 31 December 2003, total assets amounted to USD 532.7 million compared to USD 411.1 million at year-end 2002. Goodwill amounted to USD 14.3 million at year-end 2003 compared to USD 16.4 million at year-end 2002 and relates to the acquisition of Cool Carriers AB at 1 January 2001. Vessels amounted to USD 266.0 million at year-end 2003 up from USD 220.3 million in 2002. The increase mainly relates to purchase of two bulk carriers and acquisition of the remaining 50% holding in joint venture LauriTen Ltd. The utility value as well as the brokers’ valuation of the fleet is, for JL as a whole, higher than the vessels’ book value. Brokers’ valuations for own tonnage amounted to a total of USD 244,3 million. The valuation of bareboat-chartered tonnage amounted to a total of USD 50,6 million whereas the value of ships owned in joint ventures amounted to a total of USD 26,1 million. Current assets increased from USD 146.7 million at year-end 2002 to USD 219.0 million at the end of 2003, mainly due to an increase in liquid funds and an increase in deferred tax assets of USD 31.3 million to USD 36.2 million at year-end 2003. 
In 2003, equity capital increased by USD 83.6 million to USD 238.3 million. Return on equity was 39% compared to (23)% in 2002. At the end of 2003, total debt amounted to USD 287.3 million up from the USD 249.8 million reported for 2002. Long-term debt, including next year’s repayments, increased by USD 27.5 million due to acquisition of vessels, while other short-term debt increased by USD 10.0 million. Cash flow At the end of 2003, total liquid funds amounted to USD 91 million compared to USD 68 million at year-end 2002, bringing JL’s cash generation back on track. Cash flow from operations totalled USD 68 million in 2003 compared to USD 19 million in 2002. 
Cash flow from investment activities increased in 2003 to USD (52) million from USD (12) million in 2002 mainly as a result of investments in bulk carriers and the acquisition of the remaining 50% holding in the LauriTen Ltd joint venture. Cash flow from financing activities amounted to USD 7 million in 2003, up from USD (7) million in 2002. The increase was attributable to financing new vessels. Transactions with related parties Related parties comprise the Board of Management and the Board of Directors as well as the Company’s owner, the JL Foundation, and all companies owned by the JL Foundation through Vesterhavet A/S. Transactions with the JL Foundation and Vesterhavet A/S are limited to rent for occupied premises as well as payments for certain joint operations charged at market rates. |