Annual Report and Accounts 2013
Connecting
global markets
DP WORLD IS A GLOBAL OPERATOR
OF CONTAINER AND MARINE
TERMINALS WITH A NETWORK
OF MORE THAN 65 TERMINALS
SPANNING SIX CONTINENTS.
1
DP World Annual Report and Accounts 2013
Highlights
FOR MORE ON OUR STRATEGY
SEE PAGES 14-25
FINANCIAL HIGHLIGHTS
Revenue USD million
Adjusted EBITDA USD million
12
3,121*
11
2,978
10
3,078
09
2,821
13
0,000
Revenue is in USD million before separately disclosed
items. The
12
1,404*
11
1,307
10
1,240
09
1,072
13
Growing
adjusted EBITDA (earnings before interest,0,000
tax,
results of the Group are set out in detail in the Consolidated
Financial Statements and accompanying notes commencing on
page 63.
depreciation and amortisation) is a key measure of value
delivered to shareholders. EBITDA is calculated including our
share of profit from joint ventures and associates on a basis
which excludes separately disclosed items.
Profit attributable to owners of
the Company USD million
Adjusted EBITDA margin %
545*
12
459
11
10
374
09
295
13
Profit attributable to owners of the Company is before000
taking
45.0*
12
43.9
11
40.3
10
38.0
09
13 adjusted EBITDA margin is calculated by dividing EBITDA
46.0
The
3,073m
604m
separately disclosed items into account and excludes any profit
attributable to non-controlling interests (minorities).
1,414m
46.0%
by revenue, including our share of profit from joint ventures
and associates.
* The Group has restated the 2012 financial statements to reflect the impact of new accounting standards as described in note 3(F)
of the Consolidated Financial Statements.
http://ar.dpworld.com/2013
FOR MORE ON CORPORATE
RESPONSIBILITY
SEE PAGES 28-41
OVERVIEW
1Highlights
2 Chairman’s Statement
STRATEGIC REPORT
4 DP World at a Glance
6 Our Journey
8 Group Chief Executive Officer’s Review
10 Market Review
12 Our Business Model
14 Our Strategy
26 Chief Financial Officer’s Review
28 Corporate Responsibility
42 Principal Risks and Uncertainties
CORPORATE GOVERNANCE
48 Board of Directors
50 Report of the Directors
52 Corporate Governance
61 Statement of Directors’ Responsibilities
CONSOLIDATED FINANCIAL
STATEMENTS
62 Independent Auditors’ Report
63 Consolidated Income Statement
64 Consolidated Statement of
Comprehensive Income
65 Consolidated Statement of
Financial Position
66 Consolidated Statement of Changes
in Equity
68 Consolidated Statement of Cash Flows
69 Notes to Consolidated Financial Statements
CONSOLIDATED FINANCIAL
STATEMENTS
• 55 million TEU (twenty foot equivalent container units) were handled
across DP World’s global portfolio in 2013
• The first ship called at the DP World London Gateway port, Britain’s
new high-tech shipping port and Europe’s largest logistics hub
• Jebel Ali launched its new one million TEU Terminal 2 expansion,
welcoming one of the world’s largest container vessels, the MSC
La Spezia
• The lost time injury frequency rate fell by 12% during 2013
• Globally, an 8.7% reduction in our absolute CO2e emissions, which
is equivalent to a 5.8% reduction in KgCO2e/ModTEU was achieved
in 2013
• We jointly convened the third Counter-Piracy Conference in Dubai
which was attended by over 750 government and industry leaders
from around the world
• As a premier partner of Expo2020, we supported Dubai’s successful
bid for Expo2020
28
CORPORATE
GOVERNANCE
OPERATIONAL HIGHLIGHTS
pg
STRATEGIC
REPORT
FOR MORE ON OUR JOURNEY
SEE PAGES 6-7
14
pg
OVERVIEW
6
pg
2
DP World Annual Report and Accounts 2013
Chairman’s Statement
DP World is pleased to announce another set of strong financial
results, with like-for-like attributable earnings growing by 26.6%.
This performance has been achieved despite the Group facing
some challenging market conditions. Overall, we believe this
robust set of results illustrates the resilient nature of our portfolio.
VALUE FOR SHAREHOLDERS, VALUE
FOR CUSTOMERS
With an average concession life of
around 40 years, sustaining value is a
key driver. We remain confident that
we can achieve our target of a 15%
return on capital employed (ROCE)1 on
our existing portfolio and an adjusted
EBITDA margin2 of 50% by 2020.
Our investments are focused on ensuring
that we have the right capacity in the
right locations and the right services to
meet our customers’ needs today and
tomorrow. During 2013, this included
opening for business nearly four million
TEU of new capacity across Jebel Ali
(UAE), the DP World London Gateway
port (UK) and Embraport (Brazil). The
opening of additional capacity was
supported by the implementation of the
latest technology across our portfolio to
speed up our customers’ supply chains
and bring goods more swiftly to market.
SUSTAINABLE BUSINESS
“OUR PORTFOLIO
REMAINS WELL
POSITIONED TO
CAPITALISE ON THE
SIGNIFICANT MEDIUM
TO LONG-TERM
GROWTH POTENTIAL
OF THIS INDUSTRY.”
SULTAN AHMED BIN SULAYEM
CHAIRMAN
Dear Shareholders,
I am pleased to report another successful
year for your Company. Despite the
ongoing challenges affecting the world’s
economies, DP World delivered profit
for the year of $674 million. This robust
performance reflects our continued
focus on higher margin revenue and
minimising costs, on maintaining a strong
balance sheet, and on making the most of
opportunities to free up capital to re-invest
where it will bring the greatest returns.
Excluding profit from divestments
and monetisations during the year,
the profit attributable to the owners
of the Company was $604 million.
DELIVERING OUR STRATEGY
Our strategy is centred on four priorities:
driving sustained long-term shareholder
value; creating a satisfied and profitable
customer experience; ensuring our
operations are efficient, safe and secure;
and creating a learning and growth
environment for our people. Further
information regarding our business model
and strategy, including our achievements
during 2013 and our focus areas for
2014 and beyond, are contained in the
Strategic Report commencing on page 4.
FOR MORE ON OUR STRATEGY
SEE PAGES 14-25
Our aim is to be a top-tier global port
operator for decades to come. During
2013, our commitment to operating
sustainably for the long-term was
evidenced by the measures we took to
improve safety at our terminals, to reduce
our impact on the environment, and to
engage with the communities in which we
operate to help stimulate local economies.
The frequency of injuries per million hours
worked, or lost time injury frequency
rates (LTIFR), fell by 12% during 2013. In
addition, we achieved globally an 8.7%
reduction in our absolute CO2e emissions
which is equivalent to a 5.8% reduction
in KgCO2e/ModTEU (per Modified TEU)3
from our 2012 baseline. We are also
proud to have been involved in over 230
community projects and partnerships
across our portfolio during 2013 and
we were the co-convenor with the UAE
Ministry of Foreign Affairs for the third year
running of an international public-private
conference on countering maritime piracy.
Further details regarding our commitment
to integrating responsible business
practices in all aspects of our operations
and across our entire portfolio are
included in the Corporate Responsibility
section commencing on page 28.
1 Return on capital employed is EBIT (earnings before interest
and tax) before separately disclosed items as a percentage
of total assets less current liabilities.
2 The adjusted EBITDA margin is calculated by dividing
EBITDA (earnings before interest, tax, depreciation &
amortisation) by revenue, including our share of profit from
joint ventures and associates.
3KgCO2e/ModTEU means the kilograms of carbon dioxide
equivalent divided by modified twenty-foot equivalent units.
See the environment discussions in the Corporate
Responsibility section, commencing on page 28, for further
information.
3
DP World Annual Report and Accounts 2013
Robert Woods, CBE, was appointed to
the Board from 1 January 2014 as an
Independent Non-Executive Director.
OUR PEOPLE
Our dynamic and committed team of over
30,000 people worldwide is the driving
force of our Company. On behalf of the
Board, I would like to extend sincere
thanks to every single member of the
team for their outstanding effort in what
was an often difficult economic climate.
We continued to invest in our people
throughout the volatility of the past few
years, and we will continue to do so. By
encouraging and supporting innovation,
developing the skills and talent of our
people and providing them with new
opportunities to excel, we create a work
environment that is stimulating and
exciting, which in turn translates into
outstanding customer service, excellence
in operations and a vibrant company.
Further details regarding our people and
our commitment to building an inclusive,
supportive and safe work environment
are included in the people and safety
discussions in the Corporate Responsibility
section, commencing on page 28.
FOR MORE ON OUR PEOPLE
SEE PAGES 28-41
http://ar.dpworld.com/2013
Details of the Directors of the
Company as at 31 December 2013
are given on pages 48 and 49.
DIVIDEND
Following the strong performance this
year, the Board is recommending an
annual dividend of 23 US cents per share.
This comprises a 10% increase in the
ordinary dividend to 23 US cents per share.
There is no special dividend given the
relatively low reported gain on separately
disclosed items. The growth in the ordinary
dividend reflects the Board’s confidence
in our ability to generate continued
earnings growth and strong cash flows.
OUTLOOK
While the outlook in some regions remains
challenging, we have demonstrated
our ability to remain profitable despite
these headwinds. We have made an
encouraging start to 2014 and, for the
year as a whole and beyond, we expect
to see a return to normalised volume
growth driven by the addition of new
capacity in our portfolio and a gradually
improving macro environment. We
continue to focus on delivering efficiencies,
containing costs and handling higher
margin containers to drive profitability.
Our business is well positioned for medium
to long-term growth, underpinning our
confidence in meeting our 2020 target of
an adjusted EBITDA margin of 50% and
ROCE of 15% on our existing portfolio.
Finally, I am encouraged by and grateful
for the ongoing commitment of all our
partners. As we continue our exciting
journey as a leading global terminal
operator, I look forward to sharing
another year of sustained growth
and success with our shareholders.
Sultan Ahmed Bin Sulayem
Chairman
CONSOLIDATED FINANCIAL
STATEMENTS
We look forward to working with Dubai
and the UAE to host the world. This
event will not only create opportunities
for the UAE, it will also create new
opportunities for the countries of the
region and the people of the world.
As a former Chief Executive Officer of The
Peninsular & Oriental Steam Navigation
Company, Robert’s considerable experience
in our industry will be of great value
to our organisation as we continue to
drive our business forward with strong
governance and sound counsel, focused
on delivering shareholder value. I very
much look forward to working with him.
Subject to approval by shareholders, the
dividend will be paid on 6 May 2014 to
shareholders on the relevant register as
at close of business on 1 April 2014.
CORPORATE
GOVERNANCE
We were delighted to be a premier partner
of Dubai’s Expo2020 bid. Our entire team
was behind the bid and we are excited
and proud that it was successful. Our
attention now turns to making sure we
have the infrastructure in place to support
this event, and we will be working very
closely with our customers to do that. We
already have tried and tested capabilities
and we will now take this to the next level.
The close of 2013 saw long-standing Board
member Cho Ying Davy Ho step down
from his role as an Independent NonExecutive Director. He joined the Board in
May 2007, just a few months before we
publicly listed on Nasdaq Dubai. On behalf
of the Board, I would like to thank Davy for
his valuable contribution to the successful
strategic development of our business
during his time on the Board. It has been
a privilege to have Davy on the Board.
STRATEGIC
REPORT
BOARD CHANGES
OVERVIEW
In 2013, we were pleased to have our
commitment to excellent corporate
governance recognised for the second
year in a row by the S&P/Hawkamah
ESG Pan Arab Index, being named the
number one listed company across
a raft of environmental, social and
governance measures. Further details
regarding our corporate governance
framework and policies are outlined
in the Corporate Governance section
commencing on page 52.
4
DP World Annual Report and Accounts 2013
DP World at a Glance
DP World Limited is incorporated in the Dubai
International Financial Centre and is a dual primary
listed company, having been accepted for admission to
trading by NASDAQ Dubai in 2007 and to the official
list of the London Stock Exchange in 2011.
We have a portfolio of more than 65
terminals across six continents, including
container terminals, non-container
terminals and new developments in India,
Africa, Europe, and the Middle East4.
Container handling is our core business and
generates more than three quarters of our
revenue. In 2013, we handled 55 million
TEU5 across our global portfolio. With
a committed pipeline of developments
and expansions, our capacity is expected
to rise to more than 100 million TEU by
2020, in line with market demand.
We operate our portfolio under three
regions:
• Middle East, Europe and Africa
• Asia Pacific and Indian Subcontinent
• Australia and Americas
4 All figures regarding terminals and developments are as at 31 December 2013.
5 TEU means twenty foot equivalent container units.
The DP World London Gateway port (UK)
5
DP World Annual Report and Accounts 2013
OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
MIDDLE EAST, EUROPE AND AFRICA
ASIA PACIFIC AND INDIAN
SUBCONTINENT
AUSTRALIA AND AMERICAS
Our UAE operations are central to our
portfolio and are comprised of four
terminals, including our flagship facility
at Jebel Ali, one of the largest terminals
in the world. Jebel Ali is undergoing
major expansion work, with one million
TEU added in 2013 and four million
TEU to be added in 2014, which will
take capacity to 19 million TEU.
In Asia Pacific, we have a network of
eleven terminals in six countries. We
also have the largest presence of any
container terminal operator in the
Indian Subcontinent, with five terminals
in India and one in Pakistan. New
development projects are also underway
in Kulpi and Nhava Sheva (India).
We have a network of four
container terminals in Australia;
Brisbane, Sydney, Fremantle and
the country’s busiest and largest
terminal at the Port of Melbourne.
In the Middle East, we also operate a
terminal in Jeddah (Saudi Arabia). In
North Africa we operate two terminals
in Algeria in addition to a container
terminal in Sokhna (Egypt), where
we also have the concession to run
a major expansion project. In wider
Africa, we have operations at nine
terminals in four countries, including
stevedoring services in South Africa.
We operate a European portfolio of
eleven terminals in eight countries and
have a number of inland terminals
in Northern Europe. Development
projects in Turkey, France and the
Netherlands are also underway.
http://ar.dpworld.com/2013
Our Americas portfolio consists of
nine terminals across six countries,
including a new development
that is now operational at
Embraport, in Santos (Brazil).
FOR MORE ON REGIONAL FINANCIAL PERFORMANCE
SEE PAGES 26-27
CONSOLIDATED FINANCIAL
STATEMENTS
Global connections
6
DP World Annual Report and Accounts 2013
Our Journey:
From Local to Regional to Global Port Operator
At DP World, we have a heritage to be proud of, growing
from a local port operator, to one with a regional and then
global presence.
From our beginnings in 1972 at Port Rashid in Dubai (UAE), we now have a team of over
30,000 people working at more than 65 terminals around the world, including a number
of new developments. Since 2006, we have continued to expand our portfolio through
acquisitions or the winning of new concessions. We remain confident about the long-term
outlook for our industry and we will continue to invest to meet the future capacity
requirements of our customers.
2005-PRESENT:
Global port operator
1999-2004:
Regional port operator
1972-1998:
Local port operator
We evolved from serving local trade in
Dubai (UAE) starting with the development
of Port Rashid in 1972, followed in
March 1979, with the opening of Jebel
Ali port. In 1991, the operations of Port
Rashid and Jebel Ali port were combined
to create the Dubai Ports Authority.
In 1999, Dubai Ports International FZE
was formed to manage and operate
container terminals and other facilities
outside the UAE, winning concessions in
Jeddah (Saudi Arabia), Doraleh (Djibouti)
in 2000, Visakhapatnam (India) in
2002, Constanta (Romania) in 2003
and Cochin (India) in 2004.
In 2005, we acquired CSX World Terminals,
a leading global container terminal
operator. In 2006, the acquisition of The
Peninsular & Oriental Steam Navigation
Company (P&O) further increased our
global network and market position
in Asia, India, Australia, the Americas,
Europe and Africa. DP World was listed
on NASDAQ Dubai in 2007 and on
the London Stock Exchange in 2011.
7
DP World Annual Report and Accounts 2013
2013:
Our Journey continues
Our Journey continued in 2013, with
the DP World London Gateway port
welcoming its first scheduled vessel. In
Dubai, the one million TEU expansion at
Terminal 2 (T2) at Jebel Ali opened to bring
capacity at Jebel Ali port to 15 million
TEU. Our new development at Embraport
(Brazil) also became operational in 2013.
2013 also saw construction of the
Caucedo Logistics centre begin in the
Dominican Republic and DP World entered
into a management advisory services
agreement for the development of the
Khorgos Special Economic Zone and
Inland Container Depot in Kazakhstan.
DP World’s gross capacity reached
70 million TEU in 2013 and we
handled 55 million TEU across
our global portfolio.
http://ar.dpworld.com/2013
STRATEGIC
REPORT
Delivering growth
8
DP World Annual Report and Accounts 2013
Group Chief Executive Officer’s Review
In 2013, we continued to steer the business through a difficult
macroeconomic environment, remaining focused on higher
margin revenues while containing costs and improving
efficiencies across our portfolio.
These projects, consistent with the
overall nature of our portfolio, are longterm investments, with the life of our
concessions averaging approximately 40
years. Our strong cash flows and solid
balance sheet mean we are well placed
to invest today to meet the long-term
needs of our customers, whether it is in
developed markets requiring increased
efficiencies or the capability to handle the
increasing size of vessels, or in developing
markets requiring increased port capacity
to meet demand or updated infrastructure.
In the developed markets we have invested
in the DP World London Gateway port,
which offers a state-of-the art facility
to meet the future demands of the
industry. In short, our port provides the
most efficient link between deep-sea
shipping and the largest consumer market
in the UK. We are seeing an increasing
number of shipping lines calling at our
facility and since the turn of the year,
we have had eight unscheduled calls at
the DP World London Gateway port,
including an Asia-Europe service, as
our port was less impacted by adverse
weather due to its sheltered location.
Driving our strategy with relentless focus
over the course of 2013 has resulted in
an excellent set of financial results.
We are pleased to report adjusted
EBITDA6 of $1,414 million and earnings
per share (EPS)7 of 72.8 US cents,
which represents like-for-like growth
of 9% and 27% respectively. We
also increased our adjusted EBITDA
margin to 46% as we focused on
higher margin cargo during the year.
Our strong financial performance came
despite slow volume growth. Economic
headwinds combined with a highly
utilised portfolio with limited spare
capacity at key locations constrained
our ability to significantly grow volumes
Return on Capital Employed
2020 Target†
15%
15.0%
CAPITAL EXPENDITURE
We continue to invest in our portfolio
for future growth. Over the course of
2013, we spent $1,063 million in capital
expenditure, predominately at our
greenfield DP World London Gateway
port and logistics park project in the UK,
Embraport in Brazil and the expansion of
our flagship Jebel Ali facility in the UAE.
Adjusted EBITDA Margin
2020 Target†
50%
50.0%
20%
3%
10%
2013
† Targets based on current portfolio.
2020
0%
2009
In 2014, we look forward to adding
further capacity at Jebel Ali (UAE) and
Rotterdam (the Netherlands). We are
making good progress with Terminal
3 Jebel Ali and it remains on track to
deliver four million TEU of additional
capacity. Rotterdam is on schedule to
open in the second half of 2014.
Alongside investing for the sustainable
growth of our business, we also continually
review our portfolio, disposing of or
monetising assets where it makes strategic
sense to do so. In 2013, we monetised
some of our Hong Kong assets at attractive
multiples, which subsequently reduced
leverage and enabled the recycling
of capital into markets that offer the
potential to generate higher returns.
STRONG BALANCE SHEET
30%
6.7%
6%
0%
2009
46.0%
40%
12%
9%
in 2013. However, the addition of new
capacity in 2014 combined with a
projected improvement in global trade
sets a promising tone for the year ahead.
Our Market Review, commencing on
page 10, highlights the key challenges
we faced in 2013 and industry
expectations for the year ahead.
In faster growing markets we have invested
in the largest multi-modal terminal in
Brazil (Embraport), which is in the port
of Santos, 80 kilometres away from
Sao Paulo, the country’s most populous
city. Our terminal has seen encouraging
demand since opening as the growth
of the middle class population in Brazil
and wider region continues to drive
demand for containerised goods.
2013
2020
Our balance sheet remains strong
with leverage (net debt to adjusted
EBITDA) at a relatively low 1.7 times.
This provides us with the headroom and
flexibility to invest further should the
9
DP World Annual Report and Accounts 2013
right opportunities become available.
However, we continue to implement strict
financial discipline across our business
units, and will only deploy shareholder
funds if investment opportunities meet
our internal rate-of-return requirements.
STRATEGIC
REPORT
Investing in
our markets
GLOBAL STRATEGY
CONSOLIDATED
FINANCIAL STATEMENTS
2013 was also an important year with the
communication of DP World’s strategy
through a balanced scorecard framework
which comprises four organisation-wide
strategic pillars that are core to our
business (corporate responsibility, corporate
governance, communication and strategic
implementation) and four strategic priority
areas to support our mission and values
and achieve our vision (financial, internal
& operational, customer and people &
learning). Further details regarding our
strategy are outlined in Our Business Model
and Our Strategy sections, commencing
on page 12 and 14 respectively.
THE YEAR AHEAD
Moving to 2014, our overall financial
goals remain the same. We will continue
to focus on higher margin revenues
while containing costs and improving
efficiencies. We also expect a return
to volume growth driven by a gradual
pickup in the macro environment and new
capacity coming on line. Importantly, our
strong performance in 2013 comfortably
positions us to meet our medium-term
target of 100 million TEU capacity, an
adjusted EBITDA margin of 50% and
ROCE of 15% on our existing portfolio.
Further discussion regarding our
Group financial performance in 2013,
including a regional breakdown, is
contained in the Chief Financial Officer’s
Review commencing on page 26.
The DP World London Gateway port (UK)
Mohammed Sharaf
Group Chief Executive Officer
http://ar.dpworld.com/2013
6. Adjusted EBITDA (earnings before interest, tax, depreciation
and amortisation) is calculated including our share of profit
from joint ventures and associates on a basis which excludes
separately disclosed items.
7. EPS (earnings per share) is calculated by dividing the profit
after tax attributable to owners of the Company (before
separately disclosed items) by the weighted average shares
outstanding.
FOR MORE ON OUR CONSOLIDATED
FINANCIAL STATEMENTS
SEE PAGES 63-114
10
DP World Annual Report and Accounts 2013
Market Review
The growth in vessel size has resulted in an increased focus on
sustainable operations and operational efficiencies, including the
need for robust terminal equipment, systems and processes able
to cope with the new ultra-large container vessels and the
additional requirements of greater loads at peak periods.
For the global economy, 2013 was largely
dominated by continued uncertainty.
Many of the world’s major economies
showed signs of start-stop growth, which
continued to impede progress towards a
more broadly supported growth trajectory.
Once again, emerging and developing
economies provided much of the growth
in 2013; however the pace was noticeably
slower than in previous years. This was
especially visible in the recently thriving
BRIC countries8, evidencing that they are
by no means immune to market volatility.
Whilst this played out, what became clear
was the gradual emergence of a new and
sizeable middle class in many developing
countries that has begun to engage with
the global market. With 90% of trade by
volume transported by sea9, the growing
purchasing power of this demographic
provides an ongoing positive boost
for the container shipping industry.
For the shipping lines, 2013 was another
difficult year. 2013 growth in container
shipments is expected to be lower than
recent years at 4%10 implying a GDP
growth multiplier of 1.4 times. Even with
record removal of container vessel tonnage,
shipping capacity additions have again
outstripped growth in demand, a trend
apparent in six of the past eight years. This
has predictably led to an overall decline
in freight rates for the shipping lines.
Importantly, the additions in shipping
capacity in recent years have been greatly
weighted towards ultra-large container
vessels, which have been specifically
FOR MORE ON OUR STRATEGY
SEE PAGES 14-25
8 BRIC countries include Brazil, Russia, India and China.
9 International Chambers of Shipping – Sustainable
Development IMO World Maritime Day 2013.
10Alphaliner Monthly Monitor, February 2014.
11 Drewry Annual Review of Global Container Terminal
Operators, 2006 and 2013 editions.
designed for increasingly superior fuel
economy and lower unit costs. The
introduction of these new vessels onto
the main east-west routes means older
large vessels are cascaded onto secondary
trades, sometimes doubling capacity
on a service overnight. Whilst this is
part of the natural evolution in revised
networks, it has meant that many formerly
profitable routes have also experienced
large fluctuations in liner freight rates.
The shipping lines’ response in 2013 to
the pressure on rates was consolidation
through partnerships. The announcement
of ‘P3’, a vessel-sharing agreement on
the Asia-Europe, Trans-Pacific and TransAtlantic trades between the three largest
container shipping lines in the world, led
swiftly to the ‘G6’, a partnership between
two of the three major alliances (the Grand
Alliance and the New World Alliance)
as well as ongoing discussions between
the third alliance which comprises South
Korea’s Hanjin Shipping, ‘K’ Line of Japan,
Taiwanese line Yang Ming and China’s
Cosco, known as CKYH, and the few
remaining non-aligned major carriers.
Customer consolidation is leading to
step changes in capacity utilisation rather
than gradual changes because any gain
or loss is across a partnership of several
lines. Reduced economic growth, in
parallel with the increased consolidation
of business, has meant that competition
amongst container terminal operators
to gain new vessel calls has increased.
For DP World, the impact of these trends
has been largely positive because of
our geographical spread and ongoing
investment in infrastructure and equipment
to enable us to handle the larger vessels.
Our terminal capacity utilisation continues
to outpace the industry and with this
evolution of the customer network
we will aim to continue this pace.
We maintain a geographical advantage
with our broad portfolio stretching
across both developed and developing
countries, primarily focused on the core
origin and destination markets. This,
aligned with judicious acquisitions, timely
capacity developments and consistent
investment in new equipment and
technologies, has enabled us to grow
gross volumes by an average of 17%
per annum since 2004; more than
twice the average annual growth in
the market over the same period11.
11
DP World Annual Report and Accounts 2013
OVERVIEW
12 International Chambers of Shipping – Sustainable
Development IMO World Maritime Day 2013.
• Generates employment: for every
job created inside a well-run port,
up to five jobs are created outside
the port.
• Builds local knowledge
and expertise: the ports
and transportation industry builds
local knowledge and expertise
thereby increasing a country’s
future competitiveness.
• Container vessel transport:
approximately 60% of the value of
global seaborne trade (more than $5.6
trillion13 worth of goods annually) is
transported by container vessels.
• Globalisation: global increases in per
capita income and reduced trade barriers
promote an increase in tradable goods.
• Rapidly developing economies:
the emergence of new, faster growing
markets, with young growing
populations who have considerable
purchasing power, is driving growth.
• Urbanisation and emergence of
mega cities: within a decade, 47%
of the world’s urban population will
live in cities with more than one million
inhabitants14. Increasing port capacity
and infrastructure will be required to
handle this concentrated population
and container volume.
• Containerisation: the rate of
containerised goods is increasing.
• Customer demands: customers
are demanding that ports achieve
higher productivity levels and have
the infrastructure in place to cater
for larger vessels.
• Stable and long-term cash flow: we
focus on stable origin and destination
cargo as it delivers higher margins and
is less impacted by competition than
transhipment cargo. We also operate
our business through long-term
concessions, enabling better returns
as our assets mature.
• Growth rates: a focus on faster
growing emerging markets and more
resilient origin and destination cargo
enables us to grow volumes across
our portfolio.
• High barriers to entry: our long-term
concession agreements provide high
barriers to entry and support long-term
relationships with port authorities,
shipping lines and joint venture partners. • Global network, managed locally:
our terminals are managed locally,
and are supported operationally by
the advantages of a global network.
• World class operations: we
are market leaders in automated
technology with exceptional
standards of operational performance
and productivity.
• World class employees: our
dedicated, experienced and innovative
team serves customers in some of
the most dynamic economies around
the world.
• Recognised brand: we are a
recognised brand for delivering excellent
customer service, with a commitment
to good corporate governance and
corporate responsibility.
13 World Economic Forum – The Global Enabling Trade
Report 2012.
14World Economic Forum – Capturing The Future 2012.
DP World
business
attractiveness
http://ar.dpworld.com/2013
CONSOLIDATED
FINANCIAL STATEMENTS
Trends driving
growth
• Contributes to a country’s GDP: by
connecting markets, ports cut living costs
and raise living standards.
• Reinforces trade relationships:
approximately 90% of the world’s
merchandise and commodity trade is
transported by container vessels12.
• Supports economic diversification:
the ports and transportation industry
supports economic diversification by
aiding the growth of other sectors.
CORPORATE
GOVERNANCE
Added value of
ports and
transportation
STRATEGIC
REPORT
OUR BUSINESS – MACRO OVERVIEW
12
DP World Annual Report and Accounts 2013
Our Business Model
We are a global operator of container and marine terminals.
Our aim is to enhance the supply chain efficiency of our
customers by effectively handling container, bulk and general
cargo across our network.
“OUR BUSINESS IS
WELL POSITIONED
FOR GROWTH AND
WE BELIEVE WE
ARE WELL PLACED
TO CONTINUE TO
OUTPERFORM
THE MARKET.”
MOHAMMED SHARAF
GROUP CHIEF EXECUTIVE OFFICER
DP World Jebel Ali (UAE)
We continually invest in terminal
infrastructure leading to increased
efficiency and profitability within
the Group’s terminals. With the
expansion of existing terminals and
a pipeline of new developments, we
are contributing to economic growth
and development around the world.
Our people are our most important
asset and we are committed to
promoting a workplace that encourages
continuous learning and growth for
all, with a culture where innovation,
collaboration and superior performance
are a recognised and celebrated part
of who we are and what we do.
We believe our business will continue to
deliver long-term value to our shareholders
as it offers stable and long-term cash
flows, relatively high growth rates,
high barriers to entry, a global network
which is managed locally, and world
class operations and employees.
We are also committed to working closely
with our customers and joint venture
partners to deliver quality services today
and to have innovative solutions for the
needs of customers tomorrow. Whether
it is planning for new developments such
as enabling ports to handle the next
generation of ultra-large container vessels
or improving the reliability and efficiency
standards to handle more containers
safely, we are a global business partner.
We recognise good corporate governance
and corporate responsibility as key enablers
that guide our activities and they are
embedded within our values. In addition
to the movement of cargo, we work with
the governments, and the communities
that they serve, in order to make an
impact and support the community.
13
DP World Annual Report and Accounts 2013
From a macro global perspective, the ports
and greater transportation industry serves
as a vital economic lifeline and gateway
to a country by supporting economic
growth and prosperity. By efficiently
servicing vessels crossing the world’s
oceans, ports play a significant role in
contributing to a country’s GDP, reinforcing
trade relationships, supporting economic
diversification, building local knowledge
and expertise to increase competitiveness
and also generating employment.
Container vessels transport around 60% of
the value of global seaborne trade, more
than $5.6 trillion worth of goods annually
and around 90% of trade by volume15.
Key influences driving the growth of our
industry include globalisation, rapidly
developing economies, urbanisation, the
emergence of mega cities, containerisation,
greater operational efficiency and changing
customer demands. We develop and
adapt our strategy and our business to
take into account these global trends
and their impact on our industry.
15 World Economic Forum – The Global Enabling Trade
Report 2012.
Maximising
shareholder value
http://ar.dpworld.com/2013
14
DP World Annual Report and Accounts 2013
Our Strategy
Our strategy describes our plan to maximise shareholder value
through leveraging our portfolio of world-class infrastructure
assets, to strengthen global supply chains and to generate
sustainable economic growth.
OUR STRATEGY
Corporate
onsibility
resp
Vision
Mission
Values
Co
mmunication
pe
ra
tio
nal
a
Fin
nc
ial
Cu
st
Corporate
governance
Strategic
plementation
im
d
ing
n
r
lea
er
om
Peo
ple
an
DP WORLD
GLOBAL STRATEGY
ROAD MAP
As we evolve and live in a more
integrated world, we have to constantly
adapt to the changing environment
and our customers’ needs. Our strategy
therefore has to be flexible to the
changing dynamics, whilst providing clear
guidance on how to achieve our vision.
In 2013, we introduced the concept
of the balanced scorecard framework
to communicate DP World’s strategy,
with the aim of communicating a clear,
consistent and shared vision of DP World
for a sustainable future. The framework
provides measurable guidance and targets
for DP World over the medium and longterm, and uses key performance indicators
(KPIs) to measure the implementation
of the strategy across the portfolio.
The next section describes DP
World’s global strategy road map.
l/O
a
n
r
Inte
Strategic pillars
Strategic priorities
Our global strategy is communicated via two avenues: Our Vision, Mission and Values and the DP World balanced scorecard
framework. Our Vision, Mission and Values define our purpose, the means to achieve our purpose and the principles that drive
behaviour at our Company.
Our Vision
Sustainable value through
global growth, service and
excellence.
Our Vision looks to our future. It gives
direction to where we are going and
what we want our Company to become.
Our Mission
A global approach to a local
business environment where
excellence, innovation and
profitability drive our core
business philosophy of
exceptional customer service.
Our Values
• Commitment to our people
and our customers
• Profitable global growth
• Responsible corporate and
personal behavior
• Excellence and innovation
Our Mission describes our purpose. It
says what we exist to do and how this
takes us towards achieving our Vision.
Our Values are the common principles
that shape our culture. They describe
“how we do things” at DP World.
15
DP World Annual Report and Accounts 2013
OVERVIEW
http://ar.dpworld.com/2013
• People & Learning Priorities: creating
a learning and growth environment.
• Internal & Operational Priorities:
developing efficient, safe and secure
methods of managing our operations.
Our four strategic priorities are explained
in further detail in the table and case
studies to follow, including an outline of
our achievements during 2013 and KPIs.
People and Learning
Internal/Operational
Creating a learning and
growth environment
Developing efficient, safe and secure
methods of managing our operations
DP World
Balanced
Scorecard
Customer
Financial
Creating a satisfied
and profitable
customer experience
Driving sustained long-term
shareholder value
CONSOLIDATED
FINANCIAL STATEMENTS
Our organisation-wide strategic
pillars define objectives that apply
and need to be implemented across
the regions and business units in our
Group. They align our business to build
a more sustainable business model,
develop robust risk and compliance
processes, communicate effectively to
all stakeholders and implement our
strategy. They are comprised of:
• Strategy Implementation:
communicate key messages and define
measurable performance milestones.
• Corporate Governance: ensure good
corporate governance and adherence
to international best practice.
• Communications: enhance internal
and external communications.
• Corporate Responsibility: build
and sustain strong communities
through strategic community
investment, to leave a sustainable
legacy and to take the lead in
being a good corporate citizen.
Our four strategic priorities tell the
story of our strategy and describe how
we create value for our stakeholders,
by focusing on the following:
• Financial Priorities: driving sustained
long-term shareholder value.
• Customer Priorities: creating
a satisfied and profitable
customer experience.
CORPORATE
GOVERNANCE
STRATEGIC PILLARS
STRATEGIC PRIORITIES
STRATEGIC
REPORT
The DP World balanced scorecard
framework defines strategic pillars
to be implemented across the
Company and strategic priorities
which are measured against KPIs.
16
DP World Annual Report and Accounts 2013
Our Strategic Priorities
2013 ACHIEVEMENTS
Financial
Driving sustained longterm shareholder value
FOR MORE INFORMATION
SEE PAGES 18-19
Customer
Creating a satisfied
and profitable
customer experience
FOR MORE INFORMATION
SEE PAGES 20-21
People & Learning
Creating a learning
and growth
environment
FOR MORE INFORMATION
SEE PAGES 22-23
Internal/
Operational
Developing efficient,
safe and secure
methods of managing
our operations
FOR MORE INFORMATION
SEE PAGES 24-25
• We strategically adjusted our portfolio,
divesting and monetising some of
our assets in Hong Kong (China) and
recycling capital into faster growing
markets and new developments,
including Jebel Ali (UAE), Embraport
(Brazil), Rotterdam (Netherlands) and the
DP World London Gateway port (UK).
wall by 400 metres to 3,000 metres,
allowing for the simultaneous handling
of six ultra-large container vessels.
• We opened the c. $2.3bn DP World
London Gateway port and logistics
park project (UK) on schedule in
the fourth quarter of 2013.
• We opened the new extension to
Container Terminal 2 (T2) at Jebel Ali
port (UAE). The expansion adds one
million TEU, extending the T2 quay
• We welcomed the first scheduled vessel
to the DP World London Gateway
port, the MOL Caledon from South
Africa, after more than a decade of
planning and construction across
three square miles of development.
• We implemented new initiatives using
smartphone mobile applications
to integrate our entire range of
customer services at Jebel Ali port
(UAE), with the aim of increasing
• We rolled out the newly developed
software “Planning Terminal
Operations” that provides learners
with the opportunity to test and
understand different techniques safely,
then implement in live operations.
our customers’ competitiveness
and lowering supply chain costs.
• We jointly announced with Marks
and Spencer the building of a new
c. $300 million distribution centre at
the London Gateway logistics park,
which will give Marks and Spencer
closer access to key UK cities and
access to the rail network being built.
gain a better understanding of the key
drivers that engage our people. The
survey was conducted in 26 languages
and we received over 16,000 responses.
See page 36 for further information
regarding the My World survey results.
• We implemented a new framework
for leadership development. See
page 36 for further information.
• We ran the third My World employee
engagement survey during 2013 to
• We launched the industry’s largest
ever asset management programme
which will cover our entire global
operations. By managing our assets
across our portfolio, it greatly improves
efficiency, eliminates wastage and
duplication, cuts costs, and minimises
disruption to customer service.
• We joined forces with the Dubai Carbon
Centre of Excellence (DCCE) on the eve
of World Environment Day. The initial
phase of the five-year agreement with
DCCE will see them review our practices,
explore and identify energy reduction
opportunities to implement in line
with international standards. Agreed
projects will have the potential to be
applied across our global network.
• We inducted almost 5000 truck drivers
into our safety programme for external
truck drivers at Jebel Ali port (UAE)
as part of our priority to provide a
safe and secure work environment.
• We implemented the methodology
of scenario planning to strengthen
our ability to think through future
environments and ensure our strategy
is best placed to take advantage of
a changing world. The “DP World
Global Scenarios 2040” booklet
was launched in December 2013.
17
DP World Annual Report and Accounts 2013
KEY PERFORMANCE INDICATORS
6.7%
6.8%
6.0%
4.4%
3.8%
6.7%
70.7/80%
Gross capacity is the total
capacity from our global
portfolio of over 65 terminals.
Gross capacity utilisation is the
total throughput divided by the
total capacity.
Our portfolio remains highly
utilised and above the industry
average.
69.7
80%
11
69.4
79%
10
64.1
77%
09
59.7 ■ Gross Capacity (mTEU)
73% ■ Gross Capacity Utilisation (%)
13
72.8
72.8
2013 DP World Institute Training Programmes
12
11
10
09
13
65.7
55.3
45.0
35.6
72.8
2013 Capital Expenditure
$1,063 million of capital
expenditure was invested
across our portfolio in 2013,
with a significant proportion
invested in our DP World
London Gateway port (UK) and
Jebel Ali port (UAE).
Our capital expenditure in 2013
was predominantly targeted
at new facilities and the
expansion of existing facilities.
■ 49% New facilities
■ 34% Existing facilities
■ 17% Maintenance
My World Employee Engagement
Survey Response Rate
■ Leadership
■ Operations
Middle East, Europe & Africa
89
187
Asia Pacific & Indian Subcontinent
40
270
Australia & Americas
16
64
77%
11
09
77%
75%
By offering
a market-leading portfolio of products and tools, the DP World
10
Global
Programmes
35
Institute team exists to add value to the business by meeting our customer’s
needs and by enabling our people to meet their true potential.
Increase in Gross Berth Moves Per Hour
compared against our 2008 baseline
13%
12
11
10
09
13
12%
10%
5%
3%
13%
http://ar.dpworld.com/2013
72.8
72.8
GBMH (gross berth moves per
hour) is calculated by taking
the total container vessel
moves, divided by the sum of
the gross crane hours (where
gross crane hours is the time
from first lift to the last lift of
each quay crane combined).
We have calculated the GBMH
as an average across our
portfolio and the above graph
shows our GBMH improvement
as a percentage against our
2008 baseline.
Lost Time Injury Frequency Rate
6.4%
12
11
10
09
13
7.3%
8.0%
8.8%
10.1%
6.4%
We recognise the need to
have a solid understanding of
the attitudes and opinions of
our people and understand
the relationship between
employee engagement and
business performance. We
measure these key indicators
bi-annually through our My
World employee engagement
survey. In 2013, a 77% response
rate from staff at participating
business units was achieved.
Over 16,000 responses were
received in 2013.
LTIFR (lost time injury
frequency rate) is the
frequency of injuries per
million hours worked.
DP World is committed to
ensuring the safety of our
people and we will continue
to strive towards achieving our
goal of zero harm.
CONSOLIDATED
FINANCIAL STATEMENTS
12
72.8
EPS (earnings per share) is
calculated by dividing the
profit after tax attributable
to owners of the Company
(before separately disclosed
items) by the weighted average
shares outstanding.
In 2013, our EPS grew 27% on
a like-for-like basis, displaying
our ability to target higher
margin cargo, improve
efficiencies and maintain costs.
CORPORATE
GOVERNANCE
Gross Capacity mTEU
Gross Capacity Utilisation %
Earnings Per Share (US cents) exc SDI
STRATEGIC
REPORT
12
11
10
09
13
ROCE (return on capital
employed) is EBIT before
separately disclosed items as a
percentage of total assets, less
current liabilities.
Our ROCE is impacted by the
very low age profile of our
portfolio and the up front
capital investment required.
ROCE has almost doubled in
the last four years and we are
making good progress towards
our target of 15% on our
existing portfolio by 2020.
OVERVIEW
Return on Capital Employed
18
DP World Annual Report and Accounts 2013
Our Strategy in Action
Financial
To ensure we retain our status as an attractive and competitive business for
investors, we must drive sustained long-term shareholder value.
KEY GOALS AND TARGETS
We set challenging financial targets
to drive optimised productivity
and to deliver sustainable value.
Our terminals contribute to our
financial performance by:
• increasing asset utilisation;
• increasing productivity;
• reducing costs; and
• increasing current and new
sources of revenue.
By actively managing our global portfolio
and ensuring access to the best sources
of capital for the long-term, we manage
our leverage and investment grade
to ensure we remain competitive.
By operating our terminals through
long-term concessions and strategically
investing in value-adding terminals
where we have management control,
we manage our portfolio by strategically
investing and divesting to maximise
value for tomorrow and beyond.
Hong Kong CT3 (China)
“OUR AIM IS TO
MAINTAIN OR
INCREASE OVERALL
MARKET SHARE BY
BEING IN THE RIGHT
LOCATIONS AND
OFFERING THE RIGHT
PRODUCTS TO OUR
CUSTOMERS. WHEN
ENTERING OR EXITING
MARKETS, WE DO
SO WITH STRICT
FINANCIAL CRITERIA
AND A CONSIDERED
APPROACH.”
YUVRAJ NARAYAN
CHIEF FINANCIAL OFFICER
At DP World we actively manage our
portfolio and our finances with two
principal strategic aims in mind: to
maintain the diversity of our network of
terminals globally, focusing on maximising
financial returns from our business; and to
ensure we have a strong balance sheet.
During 2013, we took the opportunity to
strategically adjust our portfolio, divesting
and monetising some Hong Kong assets
and recycling capital into faster growing
markets and new developments, including
Jebel Ali (UAE), Embraport (Brazil),
Rotterdam (the Netherlands) and the
DP World London Gateway port (UK),
which are all investments for the future.
We undertook two linked transactions in
Hong Kong, a relatively mature market,
with the first being the divestment of
our CT8 terminal. At the same time we
entered a strategic partnership with
the Hong Kong arm of the Australian
headquartered Goodman Group, which
develops and manages industrial and
commercial business space, to monetise
our second Hong Kong terminal,
known as CT3, and the giant logistics
facility ATL, which is located alongside
CT3. We retain a 25% ownership of
those two assets as well as retaining
management and oversight of CT3.
19
DP World Annual Report and Accounts 2013
OVERVIEW
Over the past two years, we have divested
approximately 3.9 million TEU capacity,
however, our investment pipeline will
have added more than 10 million TEU to
our global capacity by the end of 2014.
These activities have resulted in us
maintaining the shape of our business
with around 70% of the cargo we handle
destined for or originating from the market
our terminals serve (origin and destination
cargo), and three quarters of our business
in emerging markets, which have greater
growth potential than mature markets.
http://ar.dpworld.com/2013
At the same time as maximising the value
of our existing portfolio, we maintained a
disciplined approach to new investments
during 2013. We have stringent investment
parameters in place that require a
return on capital employed of 15% over
the life of any project we invest in.
Our aim is to maintain or increase overall
market share by being in the right locations
and offering the right products to our
customers. When entering or exiting
markets, we do so with strict financial
criteria and a considered approach. With
an already well-diversified network, the
focus in 2013 was to grow capacity in
existing terminals and developments. And
since ours is a long-term business, we
make sure we match our debt profile to
our long-term objectives, avoiding shortterm liabilities and maximising returns for
our shareholders today and tomorrow.
CONSOLIDATED
FINANCIAL STATEMENTS
The Hong Kong transactions built on the
divestments and monetisations of 2012,
which saw us exiting non-core businesses
with low returns, small joint ventures and
terminals where we had little operational
control or were a minority shareholder.
It has also meant that we have
significantly reduced our net debt
to adjusted EBITDA to 1.7 times,
compared with 2.0 times in 2012.
CORPORATE
GOVERNANCE
The transactions were achieved
at compelling multiples with the
total consideration paid for the two
transactions being $742 million, with
a net gain of approximately $152
million. The transactions were aligned
with our strategic goals and direction,
reducing leverage and allowing us to
reinvest capital into other markets.
STRATEGIC
REPORT
Driving sustained
shareholder value
20
DP World Annual Report and Accounts 2013
Our Strategy in Action
Customer
Our customers’ needs are constantly changing. This means we have to
anticipate these changing needs and be agile with our response so that
we deliver a satisfied and profitable customer experience.
KEY GOALS AND TARGETS
To continue to be a leader in quality and
reliability we will:
• continually develop and innovate
services that offer superior
performance for our customers;
• deliver value for money on time;
• deliver the right capacity to
meet the right demand; and
• enhance value-adding services both
inside and outside the terminal
to grow ancillary revenue.
As part of our aim to deliver a satisfied
and profitable customer experience
we will also develop and grow
sustainable, high-value customer
relationships and provide access to a
global network. Through this focus,
we will be known as a trusted brand
that can be relied on by our customers
to deliver at all of our locations.
“LONDON GATEWAY
IS A FANTASTIC
PROPOSITION
AND A PERFECT
OPPORTUNITY
TO DESIGN
COLLABORATIVE
SUPPLY CHAINS.”
PETER SURTEES
EUROPEAN SUPPLY CHAIN DIRECTOR,
KIMBERLEY-CLARK
Our new c. $2.3 billion DP World London
Gateway port and logistics park project
in the UK is a standard bearer of our
customer strategic priority. Now open
and trading, the terminal is the UK’s first
21st century major deep-sea container
port and Europe’s largest logistics park.
Operated by DP World on the north
bank of the River Thames, it provides
unrivalled shipping access to the largest
consumer market in the UK. It will
offer cost reductions for businesses
that want to ship goods closer to the
consumer, rather than having the goods
transported further than necessary by
trucks. In essence, it is saving British
businesses time, money and reducing the
CO2 emissions in their supply chains.
Consultation with stakeholders was a key
feature of this project. A series of customer
visits and receptions throughout the UK
and in Asia have all raised the profile
of the port and its advantages. Public
advocacy programmes reached out to
customers such as DB Schenker, Freight
Liner, Maersk Line and MOL. Political
figures also visited the site, including British
Prime Minister David Cameron, as have
potential port users; from companies of
all shapes and sizes to trade associations.
It was also critical for the sustainability of
this project that we engaged positively
with the surrounding communities. From
the beginning, we consulted with the
local communities to engage them in
the project and receive their feedback.
In line with the port being completed
and additional jobs being created, the
team continued to engage with local
universities and colleges in 2013 to
inform young people in the local and
wider communities of the exciting and
fulfilling careers available at the port and
the opportunities more widely available
throughout DP World’s global portfolio.
Our stakeholder and customerfocused commitment evidenced by the
development and operation of the DP
World London Gateway port and logistics
park is already delivering results. The
port received its first ship in late 2013,
the MOL Caledon from South Africa
and also announced a c. $300 million
deal with Marks and Spencer for a major
new distribution centre providing easier
access to London and the South East.
Stakeholders and industry experts
are already taking notice:
“London Gateway offers the potential
for JLR to gain competitive advantage
by integrating consolidation and
distribution flows through the port.
We already import and export a lot
of material, and we’re growing, so
there will certainly be opportunities.”
Andy Gallon, International
Manufacturing Development
Manager, Jaguar Land Rover.
“Our members feed the nation – including
the capital. We see London Gateway
as a potential food hub for London,
enabling us to deliver on day one for
consumption on day two, which would
mean extended shelf life for products
and supply chain cost savings for our
customers.” Chris Sturman, CEO, Food
Storage & Distribution Federation.
For stakeholders, the added value of
unparalleled tidal access to the UK as
well as superior efficiencies is clear. From
the moment a ship arrives at the port
there will be minimal downtime for a
customer’s cargo with the use of innovative
operational techniques and technologies
built on the backbone of our global,
proven and tested operational practice. The
DP World London Gateway port will deliver
an unprecedented level of automated
productivity to the container delivery
process, including automated loading of
heavy goods vehicles, with traffic flows
managed using industry proven vehicle
booking systems. Other novel features
include an increased tidal window allowing
it to stay open even in severe weather.
21
DP World Annual Report and Accounts 2013
OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
Providing
access globally
CONSOLIDATED
FINANCIAL STATEMENTS
The DP World London Gateway port (UK)
and our flagship Jebel Ali port (UAE) are
unique in our portfolio of more than 65
terminals and new developments. They
are both purpose built from greenfield
sites, both deep water ports able to
handle the new generation of ultralarge container vessels, both adjacent to
huge logistics parks, and both using the
most modern information technology
to manage the handling of containers.
Ports take time to build and are a
significant investment, planned with
long-term horizons. We did not build
the DP World London Gateway port and
logistics park solely for today or even
tomorrow. It has been built for future
generations. It will support British trade
and the UK economy far into the future,
and it will bring jobs to the local and
wider community as businesses flourish.
http://ar.dpworld.com/2013
22
DP World Annual Report and Accounts 2013
Our Strategy in Action
People and Learning
In a workplace that encourages continuous learning and growth for all, we will
create an environment where innovation, collaboration and performance are a
recognised and celebrated part of our culture.
KEY GOALS AND TARGETS
We aspire to be an employer of choice
with a competitive reward scheme that
recognises outstanding performance,
and we aim to maintain employee
retention levels that are above the
industry norm. We achieve this:
• through the formal
management of an innovative,
performance-driven culture;
• recruiting and retaining a skilled
workforce that is able to meet
the needs of our business; and
• succession planning for
all critical roles.
By promoting the DP World culture
we will:
• ensure leadership styles are aligned
to the DP World leadership pillars;
• encourage open feedback as
part of promoting an open
environment that supports
innovation and collaboration; and
• encourage innovation across
all aspects of our business.
We will also provide an environment that
encourages learning and collaboration
to:
• foster continuous learning, including
using technology to support learning
across our global portfolio; and
• promote the sharing of information
and statistics to ensure the consistent
application of Human Capital
policies and procedures globally.
Our dynamic and committed team of over
30,000 people are our greatest asset.
By investing in and enhancing the skills
and knowledge of our people through
world class training programmes, we
will continue to build an outstanding
and high-performing team.
We believe in developing the talent and
potential of our people through ongoing
training not only at their home terminals
but elsewhere in our network. We run
cross-training programmes across our
global portfolio so individuals have a
wide range of experience in different
operational environments. For example,
team members from DP World Dakar
(Senegal) have received training in the UAE
and Djibouti, while staff at Embraport,
our new development in Brazil, have
been trained at DP World Callao (Peru).
This reflects our belief in moving staff
around our network to gain more
experience before they return to their
home terminal to apply the skills and
share the knowledge that they have
acquired internationally. This cross-training
enhances our skilled workforce, which
in turn optimises our business efficiency
for the benefit of our stakeholders.
Abdou Niane Ndiaye is living proof that
investment in providing training across
our network of marine terminals pays off.
Abdou comes from Dakar in Senegal and
joined DP World as a gantry crane operator
at DP World Dakar in 2008. After attending
a training course at the Company’s
Jebel Ali terminal, he has moved on to
become a fully qualified trainer himself.
Abdou observed that his experience
is an example of how the approach to
training on the job in different locations
gives local employees a broader
career path and provides them with
the technical know-how to pass on
to others in their home country. The
investment in people has paid off.
We have a myriad of learning and
development initiatives that we use
globally. During 2013, we delivered
planning terminal operations workshops
across our network with state of the
art simulation software so participants
can understand how vessel, yard and
equipment operations can be improved.
Our leadership framework was also further
developed using a range of globally
recognised academic experts to deliver a
multi-lingual leadership learning curriculum
aligned with organisational priorities and
the needs of employees at different levels,
from terminals, regions and head office.
Our iLearn web-based learning
management system offers eLearning
courses, tutor-led webinar sessions
and work-based assignments with
greater flexibility and more realistic
workplace situations. Collaborative
learning is encouraged through the
use of iPads to access both generic
and bespoke learning material, using
social networks and applications to
deliver paperless learning experiences
and personalised video messaging.
Part of the approach includes our ongoing
support for local training activities and
the well-established advanced trainer
and assessor programme, with expert
advice to terminals and port authorities
on setting-up operational training
centres that feature best practice
processes with learning materials
offered to the wider port community
in the markets in which we operate.
Our people are fundamental to our
sustained success. Contributing to their
learning and development supports our
Company’s superior performance. We will
continue to focus on the development
of our people and foster a company
culture where innovation, collaboration
and performance are a celebrated part
of who we are and what we do.
23
DP World Annual Report and Accounts 2013
OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
Encouraging
continuous learning
CONSOLIDATED
FINANCIAL STATEMENTS
Training centre at DP World Jebel Ali (UAE)
http://ar.dpworld.com/2013
24
DP World Annual Report and Accounts 2013
Our Strategy in Action
Internal/Operational
To sustain our long-term global growth we must ensure we develop
and continuously improve efficient, safe and secure ways of managing
our operations.
KEY GOALS AND TARGETS
Developing efficient, safe and secure
methods of managing our operations by:
• providing a safe and secure
environment and contributing
to a sustainable environment;
• growing revenue profitably by
excelling in customer service, retaining
existing customers and targeting
a pipeline of new customers;
• growing sustainably and
profitably, winning projects in
markets with strong economic
growth drivers and focusing on
origin and destination cargo;
• managing risk intelligently
and optimising opportunities,
reducing operations downtime
and non-operational risks, and
operating in compliance with
applicable laws and regulation;
• focusing on operational excellence
and extracting the maximum value
from our resource base which results
in increased cost productivity; and
• creating the culture and infrastructure
needed to encourage innovation
through research and development.
Efficiency, safety and security are key
elements in sustaining our long-term
growth and maintaining our operational
excellence. Ensuring cost containment
and safety supported by automation
technology and innovation is something
that our customers expect, reinforcing
our reputation for providing premier
services. We achieve this by harnessing the
collective knowledge and experience across
our global portfolio, exchanging best
practice and knowledge sharing, keeping
up to date with the latest technological
advances in our industry and cascading
that information across our network.
These ingredients all contribute to greater
efficiency. With regional collaboration, our
various Head Office departments also get
involved to ensure we are closely aligned.
With regular terminal visits and inspections
we reinforce compliance with our global
policies and verify that operational service
levels meet the standard for terminal
configuration and customer satisfaction.
By monitoring and benchmarking
terminal performance and capacity
through well-defined key performance
indicators we can better identify when
additional capacity is required to meet
the future needs of our customers.
From automated remote controlled quay
cranes to optical character recognition
systems for containers, we implement
technological advancements that will
improve our efficiency which in turn
benefits our stakeholders. A rolling series
of workshops with users of our terminal
systems, also makes sure there is a
continuous focus on quality assurance and
improving productivity at our terminals.
The best operations model in the industry
is a centralised system, with the terminal
control centre at its heart supported by
the terminal operating system (TOS).
Traditionally such systems are built around
a container. We are building ours around
equipment because that is what drives our
efficiency and effectiveness. Until now we
have primarily used third-party TOS but we
are currently developing an in-house TOS
with multiple smart applications and addons to optimise performance. The system
is already up and running in Suriname,
Tarragona (Spain), Hong Kong (China) and
a number of our African ports with plans to
implement it in Laem Chabang (Thailand),
one of the larger terminals in our network.
Our future aim is to have all knowledge
and optimisation embedded in
one platform so that we can take
advantages of integrated and centralised
asset management utilisation.
During 2013, we launched the industry’s
largest ever asset management
programme, bringing together our
activities into a harmonised risk based
management system approach strongly
aligned with our strategic objectives. This
will be compliant with the ISO 55000
standard for asset management.
Port equipment is by its nature expensive
and therefore requires careful handling.
If all our assets are managed across the
global portfolio rather than on a terminal
by terminal basis, we can greatly improve
efficiency, eliminate waste and duplication,
cut costs, and minimise disruption to
customer service. Five terminals have
already trialled the programme with
another eight scheduled to join in 2014.
Our initiatives under the umbrella of
operational excellence also bring benefits
such as reducing the amount of carbon
emissions, faster vessel start up, a shorter
equipment cycle, faster shift changes
and faster gate transactions matching
demand with supply so we can service
customers better, faster, and safer.
25
DP World Annual Report and Accounts 2013
Rotterdam World Gateway (the Netherlands)
As customers order larger vessels and seek world class ports to
handle them, development of port infrastructure is becoming
a major requirement in the industry. Our flagship port at Jebel
Ali (UAE), already able to handle the world’s largest vessels, is
preparing to be able to serve ten ultra-large container vessels at
the same time. In December 2013, the first four of 19 ship to
shore quay cranes arrived for the new four million TEU Container
Terminal 3 (T3) at Jebel Ali.
http://ar.dpworld.com/2013
With their 69.5 metre lifting height and extended reach, the new
cranes can handle the new generation of 25 container-wide
ultra-large container vessels. There will be 98 quay cranes in total
at Jebel Ali once all cranes on order are in place. T3, which is
due to open in 2014, will increase the total capacity of the port
to 19 million TEU.
STRATEGIC
REPORT
Continuously
improving
efficiency
26
DP World Annual Report and Accounts 2013
Chief Financial Officer’s Review
DP World has delivered another set of strong financial results
in 2013, with profit attributable to owners of the Company
growing 10.9% to $604 million.
“OUR RESILIENT PERFORMANCE
ILLUSTRATES THAT A PORTFOLIO
EXPOSED TO ORIGIN AND
DESTINATION CARGO IN FASTER
GROWING MARKETS, CONTINUES
TO BE THE RIGHT BUSINESS
MODEL TO PURSUE.”
YUVRAJ NARAYAN
CHIEF FINANCIAL OFFICER
In 2013, we achieved adjusted EBITDA of $1,414 million, while adjusted EBITDA margins reached a new high of 46%. On a like-for-like
basis the growth was solid with adjusted EBITDA and EPS growing by 9% and 27% respectively, driven by margin growth in our Middle
East, Europe and Africa region.
2013 revenues grew by 3.6% on a like-for-like basis, despite reporting a 0.5% decline in like-for-like consolidated volumes, which
illustrates our ability to target higher margin cargo. Our 2013 like-for-like gross volumes grew marginally by 0.7%, due to a combination of
being capacity constrained at key locations, including Jebel Ali (UAE), and tougher operating environments in the Asia Pacific and Indian
Subcontinent region, particularly in the first half of 2013. After a difficult start to 2013, we were encouraged by our volume improvement
and a strong second half of the year resulted in marginal full year volume growth.
MIDDLE EAST, EUROPE AND AFRICA
Results before separately disclosed items
Consolidated throughput (TEU ‘000)
Revenue
Share of profit from equity-accounted investees
Adjusted EBITDA
Adjusted EBITDA margin
2013
(US$m)
2012
(US$m)
18,993
2,124
8
1,095
51.6%
19,202
2,112
24
1,021
48.3%
% change
(1.1%)
0.6%
(65.2%)
7.3%
–
Like-for-like
at constant
currency %
change
0.4%
4.4%
2.6%
10.1%
52.7%16
Market conditions in the Middle East, Europe and Africa region were mixed. Resilience in our UAE and Africa portfolio mitigated the
weaker markets elsewhere. In fact, the UAE delivered another record year with throughput reaching 13.6 million TEU despite being
capacity constrained at the start of the year. Consolidated throughput for the region was down 1.1% for the year, but our revenue grew
4.4% on a like-for-like basis as our cargo mix favoured higher margin origin and destination and non-container traffic, particularly in the
UAE. This translated into a strong financial performance with adjusted EBITDA improving by 7.3% to $1,095 million, while the adjusted
EBITDA margin expanded to 51.6%.
16Like-for-like adjusted EBITDA margin.
27
DP World Annual Report and Accounts 2013
Results before separately disclosed items
2012
(US$m)
4,604
355
90
220
61.8%
5,401
457
111
299
65.6%
% change
(14.8%)
(22.2%)
(18.7%)
(26.6%)
–
Like-for-like
at constant
currency %
change
(3.9%)
(7.6%)
(4.5%)
(13.4%)
59.8%17
AUSTRALIA AND AMERICAS
Results before separately disclosed items
Consolidated throughput (TEU ‘000)
Revenue
Share of profit from equity-accounted investees
Adjusted EBITDA
Adjusted EBITDA margin
2013
(US$m)
2012
(US$m)
2,480
594
(14.0)
195
32.9%
2,494
553
(1.0)
166
30.0%
% change
(0.6%)
7.5%
–
17.7%
–
Like-for-like
at constant
currency %
change
(0.6%)
8.9%
–
31.7%
34.7%18
The Australia and Americas region delivered a resilient performance with consolidated volumes down marginally by 0.6% in 2013. The
Americas delivered a softer performance in the second half of the year due to tough prior year comparables. Overall our revenues in the
Australia and Americas region grew by 7.5% to $594 million for the year and our focus on higher margin cargo meant that our adjusted
EBITDA of $195 million was up by a pleasing 18% on the prior period, while adjusted EBITDA margins also grew to 32.9%.
CASH FLOW AND BALANCE SHEET
Cash generation remained strong with cash from operations standing at $1,299 million for 2013. Our capex reached $1,063 million as we
delivered some key projects including the DP World London Gateway port (UK) and the expansion at Jebel Ali (UAE). Gross debt rose
marginally to $5,035 million while net debt declined to $2,464 million. Our gearing remains relatively low with net debt to adjusted
EBITDA standing at 1.7 times.
CAPITAL EXPENDITURE
We maintain our 2012-2014 $3.7 billion capital expenditure guidance as our projects remain on schedule and on budget. We look forward
to adding further capacity at Jebel Ali (UAE) and Rotterdam (the Netherlands). The lower than expected reported capital expenditure in
2013 is due to timing differences and we expect that to unwind in 2014.
2020 TARGETS
In summary, we continue to work towards achieving our 2020 targets of 50% adjusted EBITDA margins and 15% ROCE on our existing
portfolio. While reported adjusted EBITDA margin stood at 46%, the margin on a like-for-like basis was 47.6%. Our ROCE for our portfolio
of assets reached 6.7% in 2013, up from 4.4% in 2010. We expect further ROCE improvement in the coming years as we continue to
grow and increase utilisation levels across the portfolio.
Yuvraj Narayan
Chief Financial Officer
http://ar.dpworld.com/2013
17 Like-for-like adjusted EBITDA margin.
18Like-for-like adjusted EBITDA margin.
CONSOLIDATED
FINANCIAL STATEMENTS
It has been well documented that market conditions in the Asia Pacific and Indian Subcontinent region were challenging, particularly in the
first half of 2013. Weaker than expected GDP growth in Asia combined with a depreciating currency and divestments and monetisations
impacted reported volumes, which were down 15% for the year. However, on a like-for-like basis the decline was a more modest 4.0%.
Reported revenues declined to $355 million while adjusted EBITDA fell to $220 million. However our focus on higher margin cargo and
cost efficiencies meant that our margin was protected with an adjusted EBITDA margin of 61.8%. On a more positive note, we witnessed
improved market conditions in the second half of 2013 in the region.
CORPORATE
GOVERNANCE
Consolidated throughput (TEU ‘000)
Revenue
Share of profit from equity-accounted investees
Adjusted EBITDA
Adjusted EBITDA margin
2013
(US$m)
STRATEGIC
REPORT
ASIA PACIFIC AND INDIAN SUBCONTINENT
OVERVIEW
Achieving
financial efficiency
28
DP World Annual Report and Accounts 2013
Corporate Responsibility
At DP World, we believe in being a responsible corporate citizen
and making a sustainable difference in the communities in which
we operate.
Corporate responsibility is good for our
people, our customers, our communities
and our environment. We recognise that
fully integrated corporate responsibility
does not happen overnight and it requires
change across systems, processes, people
and behaviours. Our business involves
long-term investments and sustainable
development takes time to develop,
integrate and build. The aim of our
corporate responsibility approach is to
integrate responsible business practices
into our daily activities to bring about
long-term sustained improvements that
meet the needs of the communities in
which we operate, both today and in the
future. We recognise that our global reach
brings diversity. Rather than applying a
uniform policy across the markets in which
we operate, our corporate responsibility
effort is based on the four quadrants of
community, environment, people & safety
and marketplace which are applied to
suit the local needs of each community.
Having a global plan with local action
provides consistency, yet enables each
business unit to consider what will
provide the greatest benefit relevant to
what they do and where they operate.
Our senior management painted a canvas with the team from “Mawaheb from Beautiful People”, an art studio in
Dubai for adults with special needs
Env
iro
t
en
Co
m
ity
n
u
DP World
Corporate
Responsibility
Sa
fety
tp
lac
e
a
ple
Peo
nd
Build an inclusive,
supportive and safe
work environment
that develops the
progression of our
people and creates
a culture of diversity,
safety and well-being
Reduce our impact
on the environment
through innovation,
new technologies and
behavioural change
nm
m
Build sustainable
communities through
strategic community
investment
e
rk
a
M
Be recognised as
a sector leader
in corporate
responsibility
and governance,
thought leadership
and innovation
29
• introduction of the corporate
responsibility scorecard to measure
progress at the regional level;
• embedding corporate responsibility
into objectives and personal
development plans; and
The Board receives a safety and
environment report at each Board meeting
to monitor the Group’s performance
against key performance metrics. Our
management also plays a role in leading by
example by actively promoting safety onsite
to create a safer working environment.
The key to involving and inspiring our
people is communication. In 2013, we
developed a clear corporate responsibility
communications plan with key messages
which was distributed to the corporate
responsibility champions for inclusion
in regional communications. We have
refreshed our external website to ensure
that external audiences are aware and
understand our approach. We also
launched an online e-learning module for
our people to improve their understanding
of what corporate responsibility is and
what it means to our Company. In 2014,
we will further focus on developing
our internal communication tools.
MEASURING PROGRESS
We regularly measure our progress
against our corporate responsibility
strategy. In 2013, we launched the
corporate responsibility scorecard, a
tool for our corporate responsibility
champions to measure progress in regions
and business units against our four
quadrant framework. The scorecard was
completed twice during 2013 and the
results were reported to the Corporate
Responsibility Advisory Committee.
Making a
sustainable
difference
http://ar.dpworld.com/2013
CONSOLIDATED
FINANCIAL STATEMENTS
Corporate responsibility is a strategic
pillar of our global strategy, an enabler
essential to facilitating the responsible
development and sustainable growth of
our business. To support the sharing of
best practice and the regional integration
of our corporate responsibility strategy,
13 corporate responsibility champions were
appointed across the regions and they met
five times during 2013 via teleconference.
COMMUNICATION
CORPORATE
GOVERNANCE
• reviewing and setting corporate
responsibility budgets.
Staff surveys were widely conducted
across our terminals to gain a better
understanding of our peoples’ knowledge
of our corporate responsibility framework
and strategy and to collect their ideas
on corporate responsibility initiatives and
interest in participating in programmes.
The results of the surveys will form the
basis for developing the 2014 corporate
responsibility business unit and regional
action plans. The corporate responsibility
champions, in collaboration with regional
management, have developed the
regional corporate responsibility plans.
We also believe that it is important to
measure changes in behaviour and
embed such change through individual
performance objectives. Significantly, an
outcome of the Corporate Responsibility
Advisory Committee in 2013 was the
decision to incorporate corporate
responsibility focused objectives for senior
management with ongoing monitoring to
be implemented in 2014 to chart progress.
STRATEGIC
REPORT
• policy development and
implementation;
Stakeholder engagement is essential
to the successful implementation of
our corporate responsibility strategy.
Increasingly our business units undertake
stakeholder engagement mapping to
understand and identify key issues so that
we can engage the wider community,
especially at our new developments. In
2013, we developed stakeholder mapping
tools for the corporate responsibility
champions to use when developing
new partnerships in the community.
OVERVIEW
The Corporate Responsibility Advisory
Committee supports the integration of
corporate responsibility into our business.
The Committee is chaired by the Group
CEO, Mohammed Sharaf and met four
times during 2013 with key outcomes
including:
DP World Annual Report and Accounts 2013
30
DP World Annual Report and Accounts 2013
Corporate Responsibility
Our Four Quadrant Approach to Corporate Responsibility
Our corporate responsibility strategy is based on the four
quadrants of community, environment, people & safety and
marketplace which are applied to suit the local needs of each
community. Our progress in 2013 and our future focus areas for
each of the quadrants are outlined in the table below.
2013 ACHIEVEMENTS
Community
Build sustainable communities
through strategic community
investment.
• Implemented a community
investment framework.
• Implemented a grant agreement
template to promote good
governance when partnering with
not-for-profit organisations.
• Implemented the corporate
responsibility scorecard for
measuring our progress against
strategy across our Group.
• Developed and implemented
a volunteering programme for
Head Office employees.
• Improved communication and increased
regional understanding of our strategic
community investment approach.
• Completed a global energy footprint
assessment for our business.
• Received an external review
of our carbon management,
achieving distinguished scores for
emission management, strategy
and governance categories.
• Invested in establishing a specialist
energy management team of engineers,
environmental specialists and operations
analysts, to drive reductions in energy
consumption across our Group.
• Won Best Implementation of
Digital Learning Award MEA and
launched a number of e-learning
initiatives and workshops to
support the continued learning
and development of our people.
• 556 people from our team received
operations specific training delivered
by our DP World Institute.
• Introduced Human Capital global
safety standards and introduced new
global engagement programmes
for implementation at our terminals
to manage risks to our people, our
assets and the environment.
• Conducted the 2013 My World
global employee engagement
survey and held subsequent
seminars to discuss the results.
• Co-convened the third Counter-Piracy
Conference themed ‘Countering
Maritime Piracy: Continued Efforts
for Regional Capacity Building’.
• Updated our website with a dedicated
corporate responsibility section to
improve external communication.
• Increased communication regarding
our corporate responsibility initiatives
with 17 related press releases
being issued during the year.
FOR MORE INFORMATION
SEE PAGES 32-33
Environment
Reduce our impact on the
environment through innovation,
new technologies and behavioural
change.
FOR MORE INFORMATION
SEE PAGES 34-35
People and Safety
Build an inclusive, supportive
and safe work environment that
develops the progression of our
people and creates a culture of
diversity, safety and well-being.
FOR MORE INFORMATION
SEE PAGES 36-40
Marketplace
Be recognised as a sector leader
in corporate responsibility and
governance, thought leadership
and innovation.
FOR MORE INFORMATION
SEE PAGE 41
31
DP World Annual Report and Accounts 2013
OVERVIEW
DP World Yarimca (Turkey)
Doraleh Container Terminal (Djibouti)
DP World Sokhna (Egypt)
projects and
230+ community
partnerships across our
global network.
We aim to:
• Further invest in the communities
in which we operate based on
identified key areas of education,
health, marine environment and
community development.
• Identify and develop appropriate tools
to measure social return on investment.
• Build our volunteering programme
across our global network.
• Build capability across our Group to
further improve the management of
strategic community investment.
of KgCO e/ModTEU
15% reduction
(per Modified TEU) since 2009.
in Mega Joules of
17% reduction
Energy used per Total Terminal
Move since 2009.
We aim to:
• Complete detailed energy consumption
assessments across our Group.
• Enhance our capability to manage
and reduce our freshwater
consumption by developing a
comprehensive usage footprint.
• Introduce and pilot renewable and
alternative energy options into
our core business functions.
• Develop and expand our capability
to recycle and manage waste
with the wider stakeholder group
for the whole supply chain.
in our lost time injury
37% reduction
frequency rate since 2009.
people have been with
52% oftheourCompany
for over five years
We aim to:
• Roll out health, safety and
environment programmes to improve
understanding and strengthen the
safety culture at our business units.
• Complete safety and
environment assessments.
• Deliver accident investigation
training to all terminals to
enhance quality investigations and
improve risk management.
• Launch our “Women are a Valuable
Asset” initiative in support of
our commitment to increasing
diversity amongst our team.
• Introduce a new talent management
system to streamline the management
of our global talent pool.
• Introduce a new state of the art
performance management, succession
and career planning system.
and industry
>750 government
leaders attended the Counter-
We aim to:
• Work in partnership with our
Internal Audit team to identify
controls and measures to enhance
transparency and governance of
corporate responsibility initiatives.
• Continue to enhance our internal
and external communication.
• Identify appropriate forums for DP
World to be an active participant
in corporate responsibility debate
and policy development.
13
231
corporate responsibility
champions appointed globally.
hours were volunteered for
community projects by our
Head Office team.
2
Piracy Conference in 2013.
http://ar.dpworld.com/2013
CONSOLIDATED
FINANCIAL STATEMENTS
FUTURE FOCUS AREAS
CORPORATE
GOVERNANCE
KEY PERFORMANCE INDICATORS
STRATEGIC
REPORT
DP World Karachi (Pakistan)
32
DP World Annual Report and Accounts 2013
Corporate Responsibility
The Community
As a global operator of container
and marine terminals, our business
is focused on long-term investments
and we therefore become a significant
part of the communities in which we
operate. We endeavour to become
an enabler in those communities by
involving ourselves in projects and
initiatives that will raise awareness, tackle
social issues and make a difference.
“WE ENCOURAGE OUR
EMPLOYEES TO
ENGAGE WITH THE
COMMUNITY AND
ACTIVELY MAKE A
DIFFERENCE.
VOLUNTEER WORK IN
SUCH PROGRAMMES
ENRICHES THE
QUALITY OF LIFE OF
BOTH VOLUNTEERS
AND THE PEOPLE
THEY HELP.”
MOHAMMED SHARAF
GROUP CHIEF EXECUTIVE OFFICER
OUR PERFORMANCE IN 2013
While our focus was on strategic
community investment during 2013, we
aim to ensure it is targeted at relevant
social issues that will have a long-term
impact. This means developing alliances
with our community partners rather than
simple philanthropic donations. One
mechanism by which we achieve this is
through volunteering, where our people
share their skills and expertise and get
involved in hands-on activity such as
reading to children or renovating a school.
As part of this approach, we have
developed a community investment
framework that describes our work,
determines our responsibilities and those
of our not-for-profit partners and helps
us maintain our focus on achieving
sustainable long-term change. This was
launched in tandem with the introduction
of our grant agreement template that sets
out accountabilities and responsibilities
when we work with not-for-profit
organisations. In 2014, we aim to develop
a community investment toolkit, including
a contributions policy and a corporate
responsibility expenditure policy.
Earlier in the year, we launched our
volunteering programme for our
Head Office team, providing them
with the opportunity to volunteer
for one day a year in the community.
From the implementation of the
volunteer framework in May 2013
the Head Office team contributed
231 hours to the community.
Across our portfolio and throughout
2013, our people demonstrated their
commitment to the communities
in which they work:
• Our Philippines operation is driving
sustainable corporate responsibility
through its work directly with
the community. Employees have
been involved in a wide variety of
activities, from regular environmental
clean-ups to supporting healthcare
initiatives by sponsoring doctors to
visit disadvantaged communities
surrounding the port and providing free
medical check-ups and consultations.
Following the devastating Typhoon
Haiyan, a relief hub was established
at the port providing free use of berth
and warehouse space and equipment.
• Our team in Hong Kong have been
working with the NGO Sheung
Kung Hui Welfare Council in Tung
Chung for over four years, providing
young people with the opportunity
to pursue their interests and discover
their abilities. Sponsored lessons,
extra-curricular activities, field trips
and a series of structured youth
activities are part of the programme.
• Qasim International Container Terminal
has adopted the Darsana Chana
village with the aim of developing a
sustainable community. Support has
included the installation of wells and
filtration units for clean drinking water,
sponsoring the education of children
and collaboration with a local nongovernment organisation to provide
education and training for local women.
• DP World is also one of the main
supporters of the Indian Maritime
University, encouraging young
men and women to become
industry leaders of tomorrow.
33
DP World Annual Report and Accounts 2013
OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
• In Caucedo, DP World hosted for the
eighth consecutive year, the Back to
School Party for over 300 children.
The theme this year was focused on
the environment and an eco-rally
was run; a fun, dynamic, educational
and physically challenging activity
for the children and their parents.
• In Australia, many of our people
dedicate their time, energy and
resources to the communities in which
they live and work. Some of the
partners we have worked with include
Variety NSW – The Children’s Charity,
Maroubra Surf Life Saving Club, Sids
and Kids, Royal Melbourne Children’s
Hospital and the Queensland Dare
to Lead Aboriginal Youth Camps.
http://ar.dpworld.com/2013
• In Europe, the team focused on
communication through an online
tool to share information on corporate
responsibility initiatives. We aim to
disseminate this across our global
network and encourage other
regions to develop similar tools.
• In Djibouti, we worked closely with
USAID, FHI360 and the Government
of Djibouti to construct and develop a
community health centre which will act
as a focal point for the local community,
port workers and truck drivers to
receive health checks and to build
greater awareness and understanding
of HIV/AIDS, malaria and tuberculosis. • In the UAE, we participated in
Clean-Up UAE in December 2013,
an environmental initiative launched
by Emirates Environmental Group
in 2002. This year, more than 200
volunteers collected approximately four
tonnes of waste. We also continued
our support for people with the
hereditary blood disorder thalassemia
by encouraging volunteers to donate
blood to help meet the shortage of
blood for emergency transfusions. In
2013, more than 100 of our people
donated blood for this cause.
CONSOLIDATED
FINANCIAL STATEMENTS
Above: DP World Sydney (Australia), going clockwise DP World Jebel Ali (UAE), DP World Constanta (Romania), DP World Cargo Services (South Africa)
34
DP World Annual Report and Accounts 2013
Corporate Responsibility
The Environment
We aim to minimise the environmental impact of our global operations – our goal
is zero harm. We operate in a range of different environments around the world
and we strive to reduce the environmental impact of our operations through
rigorous planning and management. Our focus is on reducing our resource
consumption, preventing pollution, conserving biodiversity and managing
emissions to preserve the world we live and operate in.
OUR PERFORMANCE IN 2013
We report on all safety and environmental
impacts over which we have operational
control or if one of our subsidiaries has the
authority to introduce and implement our
operating policies at the business unit.
ENERGY CONSUMPTION
Switching to energy efficient technologies
and upgrading our processes are the
backbone of our reduction strategy,
whilst in-house energy assessments and
environmental engagement programmes
raise awareness of the impact we
have on our environment and natural
resources to change behaviour.
Our focus on emissions has achieved
a 15% intensity reduction of KgCO2e/
ModTEU (per Modified TEU)19 from
our 2009 baseline and for 2013, we
recorded a 4% decrease in energy
consumption against 2012 figures in
Mega Joules of Energy used per Total
Terminal Move (MJ Energy/TTM).
Kg CO2e/ModTEU
16.4%
12
11
10
09
13
17.5%
18.0%
18.3%
19.4%
6.4%
WATER CONSERVATION
The availability of fresh water is a growing
global challenge, and operating in water
scarce areas brings with it additional
operational and commercial challenges.
We have implemented a fresh water
monitoring and reporting system to
capture data across our portfolio which
will enable us to implement appropriate
fresh water conservation techniques
globally to preserve our environment.
Our team at Jebel Ali (UAE) have already
taken steps to reduce fresh water
consumption through irrigation initiatives
that have resulted in the annual water
saving of almost 64 million litres and the
installation of water recycling plants, saving
approximately 75% of water consumption
by the technical department workshop.
WASTE MANAGEMENT
In 2013, we launched numerous waste
reduction competitions to reduce waste
generated at our terminals. These included
waste avoidance and minimisation, reusing, recycling, and the recovery and
treatment of waste to generate energy.
Some business units are now currently
adopting waste reduction options such
as reducing paper consumption through
the use of electronic processes and
communications which will have an
impact across the supply chain. Others are
reviewing their entire operations to identify
and implement as many opportunities
for reducing waste as possible.
MJ Energy/TTM
72.3%
12
11
10
09
13
SCOPE 1 EMISSION
75.7%
79.0%
83.2%
87.6%
6.4%
19KgCO2e/Mod TEU (kilograms of carbon dioxide equivalent
per twenty-foot equivalent unit) is the sum total of both
scope 1 and 2 emissions normalised against Modified TEU
for business to business comparative measurement. An
example of this calculation is displayed below.
KgCO2e/TEU =
[(Scope 1 x emission factor) + (Scope 2 x emission factor)]
Number of Modified TEU
A reporting organisation’s direct
emissions. Examples include: emissions
from fuel burned onsite e.g. diesel,
gas, petrol, LPG, oil, and refrigerants.
SCOPE 2 EMISSION
A reporting organisation’s indirect
emissions. Examples include: emissions
associated with the generation of
electricity (grid), heating/cooling, or
steam purchased for own consumption.
CASE STUDY
Wastewater
Treatment
Facility at
Asian Terminals
Inc (ATI)
(Philippines)
As part of our global initiative to
implement fresh water conservation
techniques and reduce waste at our
terminals, ATI, the sole container
terminal and multi-cargo port
operator of the Manila South Harbor
(Philippines) constructed and installed
a wastewater treatment facility.
The project was initiated by ATI’s
Energy Conservation Committee.
The wastewater treatment project is
an onsite treatment of wastewater
generated from the cleaning of
equipment, which consists of an
activated sludge process that serves as
treatment of effluent from the existing
oil and water separator. Treated
water is then reused for cleaning of
heavy equipment hence no water
consumption and no discharge of
wastewater. This project saved 40,000
litres during 2013, and should continue
to achieve similar savings in the future.
35
DP World Annual Report and Accounts 2013
OVERVIEW
CASE STUDY
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
CASE STUDY
Jebel Ali re-uses
materials
The Jebel Ali Terminal 3 (T3)
development required a large area
to be levelled, ready for construction
of the new yard area and upgraded
quay. This involved dismantling six
warehouses, removing 1.1km of
interlock tiles and clearing other
material such as bollards and marine
fenders. In collaboration with the
various stakeholders, we were able
to recycle and reuse a significant
amount of the cleared material,
drastically reducing any impact on
the local environment. For example,
approximately 75% of the interlock
tiles and 50% of any fill material (such
as crushed concrete, sand, soil etc) will
be reused for the T3 development.
Most impressive of all, was that of the
six warehouses that were dismantled,
100% of the material was salvaged
and used in the construction of a new
passenger terminal at DP World’s Mina
Rashid Cruise Terminal in Dubai.
http://ar.dpworld.com/2013
Energy Reduction Project
DP World has engaged in an energy reduction project and campaign
as a complimentary approach to our CO2e emission reductions,
and to promote all round energy efficiency in our terminals. Energy
efficiency not only minimises our environmental impact but also that
of the global supply chain of which we are a key component.
The project is led by a dedicated energy management team and supported
by highly skilled environmental and operational specialists. The initial phase
saw business units across our portfolio identify and commit to shared best
practice initiatives in order to kick start savings with proven opportunities.
The delivery portion of this component will run until 2015 as identified
projects are incrementally implemented. The picture above is an example
from the electrification project being carried out at the Jebel Ali Container
Terminal 1 (UAE). The project involves converting diesel powered rubber
tyred gantry cranes to electrical supply, which dramatically reduces energy
consumption and the environmental impact of our operations.
The second phase involves a three-year programme of energy assessments
performed across all our business units. In 2013, assessments were successfully
completed in approximately one third of our business units providing
each with targeted and prioritised energy reduction opportunities.
We also held a global energy conference in March 2013. The conference
was specifically aimed at empowering regional representatives and
focusing on effective communication of alternative fuel and emerging
energy saving initiatives. This conference included key note speakers and
presentations from leading internal and external industry experts.
In addition to these activities we have increased our positive engagement
with industry suppliers. We will continue to work with our suppliers to
identify and develop the most energy efficient and environmentally friendly
technologies and then bring this technology from concept to working reality.
CONSOLIDATED
FINANCIAL STATEMENTS
DP World Jebel Ali (UAE)
36
DP World Annual Report and Accounts 2013
Corporate Responsibility
Our People
DP World Institute training programme (UAE)
We consider our dynamic and professional
team of over 30,000 people to be our
biggest competitive advantage; we value
them as individuals and as a global team.
Our global Human Capital strategy is to:
• build a high performance workforce;
• encourage a learning and
innovative organisation;
• add value to our market reputation;
• be an employer of choice; and
• contribute to diversity management.
Our recruitment policy and processes are
designed to recruit candidates that share
our values of teamwork, commitment,
responsibility, collaboration and innovation
and we prioritise internal promotion
wherever possible. Standardising our
selection and recruitment process gives
us comfort that our long-term staffing
needs will match our business demands.
By fostering a culture of excellence in
performance through role and goal
clarity we provide our people with
the opportunity to learn and grow
giving them the skills they need to
succeed and creating a solid platform
of resilient and efficient employees.
OUR PERFORMANCE IN 2013
During 2013, a wide range of initiatives
were rolled out in line with our Human
Capital strategy:
• The newly-developed Planning Terminal
Operations workshops were rolled
out across the business, allowing our
people with operational, planning
and execution duties to practice
and develop their skills in a realistic
and safe environment. We deployed
state-of-the-art simulation software
and real versions of our terminal
operating systems for our people to
investigate a range of optimisation
tools and techniques. Visual feedback
tools and KPIs demonstrate the
operational and financial impact of
different operational strategies and
plans, and allow our people to test and
understand different techniques safely,
then develop improvement plans for
implementation in live operations.
• A new framework for leadership
development was implemented
using a range of globally-recognised
academic experts, teams of regionally
based leadership facilitators and
internal resources. A new leadership
learning curriculum was developed,
built around four strategic leadership
pillars aligned with DP World’s
organisational strategies and priorities;
translating strategy, innovation
& collaboration, leading change
and corporate responsibility.
• Further progress was made with
using new technology to deliver more
flexible and far-reaching learning
solutions to our people. One example
is the iLearn web-based learning
management system, which offers
eLearning courses, tutor-led webinar
sessions and work-based assignments.
This allows for more flexible learning
that is linked more realistically to
workplace examples and situations.
• As well as continuing to deliver the
well-established Advanced Trainer and
Assessor (ATAP) programme, support
was extended to the regions and
business units to enhance their local
training activities. This has seen DP
World Institute staff provide advisory
support to terminals and port authorities
on the setting-up of operational
training. Support in developing local
training capability was also delivered.
This will result in best-practice processes
and learning material being offered
to the wider port community.
Business improvement projects were also
undertaken by our people attending DP
World Institute programmes. During 2013,
projects were launched with the aim of:
• improving radio communication
systems and technology;
• introducing new processes for
handling out-of-gauge cargo
at breakwater berths;
• improving fuel consumption
by improving yard layout;
• revising guidelines for
operational supervisors;
• reducing risk of injury by using
a seal inspection platform and
quay edge protection;
• using remote cameras to improve
operational supervision; and
• introducing focused toolbox
talks to improve equipment
operator performance.
ENGAGING OUR PEOPLE
We recognise the need to have a solid
understanding of the attitudes and
opinions of our people, and to use
this insight to foster the creation of a
highly engaged workforce and retain
our existing talent pool. Furthermore,
we benefit from understanding
the relationship between employee
engagement and business performance.
We measure these key indicators biannually through our My World employee
engagement survey which we then
use to benchmark ourselves globally.
The My World survey was conducted in
2013 in 26 languages and we received
over 16,000 responses which represents
a response rate of 77%20. Nineteen
categories were surveyed ranging from
leadership, development and growth,
corporate responsibility and diversity.
Against the global high performance
companies norm, the 2013 results
indicate that we are performing strongly
and we are pleased to see that our
people see their development and
growth and customer focus as two areas
where we are particularly strong.
The survey results indicate that safety,
working conditions and workload,
customer focus and corporate responsibility
are key to driving sustainable engagement
across our business. As well as analysing
the views of our people, we appreciate
that their views impact on other business
metrics, such as safety (lost time injury
frequency rates), operations (truck
turnaround time), financial (EBITDA)
and human capital (absenteeism).
Understanding these links allows us to
focus on the areas of priority with the aim
of improving our business performance.
20The 77% response rate is calculated based on the
participating business units within our Group that took part
in the 2013 survey.
37
DP World Annual Report and Accounts 2013
EMPLOYEE METRICS
Age of Employee
■ 35% Asia Pacific and Indian Subcontinent
■ 18% Australia and Americas
■ 47% Middle East, Europe and Africa
■ 3% Executive Management
■ 13% Middle Management
■ 84% Operational and Support Staff
■ 23% Under 30
■ 65% 30 to 50
■ 12% Above 50
The diversity of our workforce is reflected in our
business focus on growing markets.
Reflecting the operational nature of our
business, a large majority of our workforce is
employed in an operational capacity. This is
managed by an appropriate proportion of
middle management who provide support to
executive management in achieving the strategic
priorities of our Company.
We continue to have a well-diversified age
profile across our Group. A strong emphasis on
succession planning which is overseen by the
Board, reflects the importance of ensuring we
have a sustainable work force with the right
people available who have the right skills to
meet our needs today and in the future. A
framework of performance management,
individual development and succession planning
supports our business.
Years of Service
Gender Diversity of Our Team
Gender of Senior Management
■ 48%
■ 24%
■ 20%
■ 8%
■ 93% Male
■ 7% Female
■ 85% Male
■ 15% Female
This graph shows the gender diversity of our
people as at 31 December 2013. Our
commitment to diversity was evidenced in 2013
with the Board approving a board diversity
policy. Further information on our board
diversity policy is available in the Report of the
Directors on page 51. While we are proud of the
diversity of our people, this is one area that we
will work to improve in 2014 and beyond.
The gender diversity amongst our senior
managers is shown in the graph below. We
define a senior manager as a person who
contributes to the planning or direction of our
business, or a strategically significant part of our
business.
STRATEGIC
REPORT
Job Level
OVERVIEW
Region
http://ar.dpworld.com/2013
CONSOLIDATED
FINANCIAL STATEMENTS
The development of new business and business
expansion continues to be reflected in the
increase in DP World’s workforce. With 48% of
our people being considered new joiners, we
ensure that our outlook remains fresh, while
retaining 52% of our staff for more than five
years ensures we maintain a stable, welldiversified workforce providing operational and
functional expertise to support new joiners.
CORPORATE
GOVERNANCE
0 to 5 years
5 to 10 years
10 to 20 years
Above 20 years
38
DP World Annual Report and Accounts 2013
Corporate Responsibility
B EL I EF
DESTINATION ZERO HARM
k
ris
fro Lea
m
e
en
ta
nd
g
e
ag
Man
employee com
nt
to
zer
o
pr
ior
itie
s
ag
an
p
Imerst
u nd
,m
m
ro
an ve
d in
harm
Destination
Zero Harm
B o ar d
DP World Nhava Sheva (India)
e
ing kes
rn ista
m
Re
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c
Safety
tm
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e
DP World Caucedo (Dominican Republic)
OUR COMMITMENT TO SAFETY
Our people are the key to our success;
their safety, security and wellbeing
is our top priority. Our goal is zero
harm, with safety as a business
wide objective at the heart of our
operations. Our policies meet or
exceed national health and safety
legislation in the markets in which
we operate.
Regardless of where our people
are located, or the type of work we
undertake, we strive to create an injury
free, safe working environment.
We have a fully dedicated Global Safety
and Environment Department supported
by regional safety teams. Global policies
and guidelines are implemented to
achieve the safest and most efficient
methods of operation. We comply with all
aspects of the internationally recognised
certification system OHSAS 18001.
We have zero tolerance of conditions and
behaviours contributing to workplace
incidents. Compliance with our policies
and guidelines is regularly audited to
help us improve our processes and move
towards achieving our goal of zero harm.
We have released a set of new global
engagement programmes that our
terminals must implement to ensure
we manage our highest risk activities
across our organisation. These stringent
programmes are aimed at protecting
all personnel onsite, our assets and the
environment. The released engagement
programmes identify, assess and control
seven key high-risk operational areas:
working at heights, vessel safety, terminal
equipment, isolation, yard and quay
operations and terminal access gates.
Despite handling increased global
volumes during 2013, we achieved a
significant reduction in lost time injuries
(LTIs); equivalent to a 16% reduction
in our recorded lost time injuries and
a 12% reduction in our lost time
injuries frequency rate (LTIFR) when
compared with our 2012 figures.
As part of enhancing our capability to
reduce risk in the yard, we facilitated a
programme for external truck drivers. The
programme is aimed at ensuring that we
have clear guidance for engaging and
managing our external truck drivers who
enter our terminals. During 2013, Jebel
Ali (UAE) inducted approximately 5000
external truck drivers into this programme.
Furthermore, the overall reportable
injuries have consistently reduced
over the past five years and in 2013,
we achieved a 19% reduction in our
reportable injury frequency rate (RIFR)
compared with our 2012 figures.
We have also reduced the number of
injuries requiring visits to doctors or
hospitals across the same period.
OUR PERFORMANCE IN 2013
Despite our improved safety record and our
ongoing commitment to achieving a zero
harm working environment, one person
tragically lost their life in one of our facilities
in 2013. A loss of life is unacceptable and
a thorough investigation of the incident
identified root causes which have been
communicated across our organisation
to ensure that we learn from this and
implement control measures to help us
achieve and sustain our goal of zero harm.
We report on all safety and environmental
impacts over which we have operational
control or if one of our subsidiaries has the
authority to introduce and implement our
operating policies at the business unit.
Accident and incident data is collected,
analysed, reported and monitored
monthly and used to measure the safety
performance across the Group. All
accidents are thoroughly investigated and
a working group has been established
to highlight trends associated with
recurring incidents, reduce risk factors and
identify and implement control measures
aimed at eliminating future incidents.
39
DP World Annual Report and Accounts 2013
OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
Safety cage demonstration at DP World Jebel Ali (UAE)
609
12
11
10
09
13
Lost Time Injury Frequency Rate
724
773
846
871
609
A lost time injury is an injury directly related
to a workplace incident resulting in injury
or illness where, through medical direction
or personnel circumstances, the person is
unable to return and complete their next
scheduled work shift.
Reportable injuries
1,029
12
11
10
09
13
6.4%
7.3%
8.0%
8.8%
10.1%
6.4
12
11
10
09
13
The lost time injury frequency rate is the
total number of lost time injuries divided by
the total hours worked and then multiplied
by one million:
LTIFR =
Number of LTIs
Number of hours worked
x 1000000
Reportable Injury Frequency Rate
1,325
1,667
1,892
1,908
1,029
A reportable injury includes fatalities, lost
time injuries and medical treatment injuries.
Lost time injuries are defined above and
a medical treatment injury is one directly
related to a workplace incident resulting
in injury or illness where the person can
only receive prescribed medical attention
either onsite and/or offsite by an authorised
medical practitioner. Following treatment,
this person can either return to normal
or restricted duties without the loss of
a full shift.
http://ar.dpworld.com/2013
10.8%
12
11
10
09
13
13.4
17.2
19.1
20.2
10.8
The reportable injury frequency rate is the
sum total of fatalities, lost time and medical
treatment injuries divided by the total hours
worked and then multiplied by one million:
RIFR = Number of fatalities, LTIs + MTIs x 1000000
Number of hours worked
“SAFETY AT ALL OUR
PORTS AND MARINE
TERMINALS IS A TOP
PRIORITY, NOT JUST
FOR OUR OWN
PEOPLE BUT ALSO
FOR ALL THOSE WHO
MUST COME ONTO
OUR FACILITIES AS
PART OF THEIR JOB.”
SULTAN AHMED BIN SULAYEM
CHAIRMAN
CONSOLIDATED
FINANCIAL STATEMENTS
Lost time injuries
40
DP World Annual Report and Accounts 2013
Corporate Responsibility
Safety continued
CASE STUDY
The Eugen Maersk receiving assistance at DP World’s
Doraleh Container Terminal (Djibouti)
SECURITY
We are committed to the wellbeing,
safety and security of our people along
with our other assets and cargo, and our
security strategy is based on investing in
security management systems that comply
with global standards. We underpin our
strategic security objectives by embracing
and investing in the independently audited
supply chain security management ISO
28000 standard across our portfolio. We made further progress in rolling out
the ISO 28000 standard in 2013 and, to
date, we have 35 terminals certified.
We regularly undertake benchmarking
exercises to test our security preparedness
against global standards and industry
best practice. Constantly investing in
our business continuity capabilities is at
the core of our security mandate and
is a commitment to our people and
also to the communities we serve.
Doraleh Vessel Fire
The Eugen Maersk, a 397 metre, Maersk E-Class vessel en route
from Malaysia to the Netherlands, reported a fire on board and
requested urgent assistance. The nearest port of call was DP
World’s Doraleh Container Terminal in Djibouti.
An emergency response plan was immediately implemented which involved a
global team with a wealth of experience and expertise. The terminal’s
operations, engineering, safety, planning and security representatives liaised with
Maersk Line, the Harbour Master, Fire Brigade Manager and Djibouti Ports &
Free Zones Authority.
Maersk Line sent a number of its own experts and salvage specialists from
Svitzer to assist with the co-ordination and execution of the plan.
The team worked to stabilise the stacks and fabricated steel bracing structures
that were welded in place between rows to prevent container movement once
the lifting began. Over the next 12 days, the team carefully responded by
removing one container at a time, reassessing the situation after each move.
The key element throughout the whole operation was communication and the
number one priority, as always, was safety. Precautions and overall risk
management were paramount. In a note to all stakeholders as the Eugen
Maersk set sail safely, Doraleh Container Terminal CEO Nawaf Nassir Abdullah
said: “during these critical operational activities we achieved zero injury and zero
container damage. Credit goes to the entire team that made this possible.”
41
DP World Annual Report and Accounts 2013
OVERVIEW
The Marketplace
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
CONSOLIDATED
FINANCIAL STATEMENTS
Sultan Ahmed Bin Sulayem, Chairman, addressing the Counter Piracy Conference (UAE)
In 2013, we achieved further progress
in the fourth quadrant of our
corporate responsibility strategy. For
the third consecutive year, we jointly
convened the international publicprivate Counter-Piracy Conference with
the UAE Ministry of Foreign Affairs,
this year also bringing in Abu Dhabi
Ports Company. The theme this year
was “Countering Maritime Piracy:
Continued Efforts for Regional
Capacity Building”.
The regions and business units also worked
to promote DP World as a thought leader
and connect with key trade associations.
Business units are members of local
chambers of commerce and industry
confederations. In India for example,
we are part of the Confederation of
Indian Industries. In Canada, we are a
member of the British Columbia Chamber
of Commerce, BC Wharf Operators
Association and Association of Canadian
Ports. Our business unit in Argentina also
launched its first sustainability report
under Global Reporting Index guidelines
to be distributed to key stakeholders. This
document will also be presented to the
http://ar.dpworld.com/2013
United Nations Global Compact as part of
their third communication on progress.
The marketplace quadrant links
directly with our global strategy, in
particular the customer and operational
strategic priorities as we work with
customers and suppliers to ensure
responsible business operations. We
are committed to conducting business
with ethical and socially responsible
suppliers and integrating principles
and practices of sustainability and
responsibility into the procurement
of goods, services and construction
activities. Suppliers with contract
values over $100 million are requested
to submit information on corporate
responsibility credentials and policies.
In 2014, we aim to work with suppliers
to understand common corporate
responsibility standards and identify
ways in which we can work together
to ensure a sustainable and responsible
supply chain. We will also look to our
customers and their strong corporate
responsibility programmes to identify
opportunities for future co-operation.
“THE BATTLE AGAINST
PIRACY MUST
CONTINUE UNTIL
THERE ARE NO
SEAFARERS HELD OR
HURT AND NO
ATTACKS ON VESSELS
MADE.”
SULTAN AHMED BIN SULAYEM
CHAIRMAN
42
DP World Annual Report and Accounts 2013
Principal Risks and Uncertainties
Introduction to Our Approach to Risk
Risk is an inherent part of doing business. Our approach is to
identify and assess all significant risks which could adversely
affect the Group’s ability to achieve its business objectives and to
identify management actions and internal controls which can
mitigate those risks to an acceptable level.
The Board establishes the control
environment, sets the risk appetite,
approves policies and delegates
responsibilities under our risk
management framework.
The Group Head of Risk works to
establish and implement the risk
management policy, independently
reviews and challenges risk information
throughout the business, compiles and
analyses risk profiles and monitors risk
management processes within the Group
and regularly reports on risks to the
oversight bodies including the Board.
• reporting to the Board on any matters
which have arisen from the Audit
Committee’s review of risk management
and internal control processes and
any exceptions to these processes;
• periodic reviews of business units’
risk mitigation by the Group
Head of Risk and by the Group
Internal Audit function; and
• a dedicated Group Head of Risk to
lead and work with a network of
local and regional management to
continuously improve risk management.
INTERNAL CONTROLS
OUR RISK MANAGEMENT FRAMEWORK
Our risk management framework
recognises that the long-term success
of our Company relies on the ability
to effectively understand, accept and
manage risk within our business.
Our risk management framework
includes:
• a risk management policy which
is communicated throughout the
Group and reviewed annually;
• a standard set of key risk areas,
categories and definitions;
• a standardised and automated risk
assessment and reporting tool, including
standard risk assessment criteria,
evaluation of “gross” and “net” risks
and the determination of risk appetite;
• consolidation of risk assessments for
each business at Group level to identify
organisation-wide impacts and trends;
• a six-monthly risk assessment, action
planning and reporting cycle, which
includes a review of current and
emerging risks and their mitigation
by regional, executive management,
the Audit Committee and the Board;
The Board is responsible for establishing
and maintaining an effective system of
internal control. This system of internal
control is embedded in all key operations
and is designed to provide reasonable
assurance that the Group’s business
objectives will be achieved. Regular
management reporting and annual
self-certification provides a balanced
assessment of key risks and controls
and is an important component of the
Board’s assurance. The Board also receives
updates from the Audit Committee,
which receives regular information from
internal and external audit reports on
the Group’s risks and internal controls.
The Group’s internal audit function is
responsible for reporting to the Audit
Committee on the effectiveness of the
Group’s risk management process and for
evaluating the internal control environment
to ensure controls are appropriate and
operating efficiently and effectively.
The core elements of DP World’s system of
internal controls include:
• Organisational structure: a
clearly defined organisational
structure that provides clear roles,
responsibilities and delegated levels
of authority to enable effective
decision making across the Group.
• Code of conduct: a code of
conduct that sets out how the Group
expects its employees to act.
• Whistle blowing policy: a whistle
blowing programme for employees
to report complaints and concerns
about conduct which is considered
to be contrary to DP World’s
values. The programme, monitored
by the Audit Committee, makes
communication channels available
to all employees within the Group.
• Anti-bribery and corruption
policy: an anti-bribery and corruption
policy has been implemented by DP
World, supported by online training
that is directed and proportionate
to the identified areas of risk.
• Strategy and financial management:
clear strategy and financial
management which is consistent
throughout the organisation and
can be actively translated into
practical measures. Comprehensive
reporting systems, including monthly
results, annual budgets and periodic
forecasts, monitored by the Board.
• Policies and procedures: documented
policies and procedures for all Group
functions within the business, which are
communicated to all business units.
• Risk management and performance:
risk-profiling for all business units
and the Group to identify, monitor
and manage significant risks which
could affect the achievement
of the Group’s objectives.
• Assurance: assurance activities cover
key business risks which contribute
to the overall assurance framework,
including an internal audit function to
review the systems of internal control.
43
DP World Annual Report and Accounts 2013
OVERVIEW
Business Units
http://ar.dpworld.com/2013
Reporting
Oversight
Corporate Oversight
Functions
Various corporate oversight mechanisms monitor
the significant risks. Regional management and
other corporate functions including Finance, Safety
& Environment, Human Capital, IT, Company
Secretariat, Legal, Tax, Insurance, Risk and Treasury
develop policies and procedures and undertake
other activities which mitigate a wide range of
risks including employee retention, financial
control, bribery and corruption and business
continuity risks. They also provide support to the
business units to ensure objectives are met within
risk tolerance levels.
Business units perform day-to-day risk
management activities, with quarterly reviews of
risks by management. Practices are thus adapted as
required in line with changing risk levels and the
emergence of new risks.
CONSOLIDATED
FINANCIAL STATEMENTS
Internal
Audit
Internal Audit provides independent assurance to
the Board, in addition to other assurance functions.
During 2013, the team reviewed and tested
controls in a number of core business processes
across the Group including billing, procurement
activities, payroll and compliance with the
anti-bribery and fraud policy.
CORPORATE
GOVERNANCE
Board
Audit
Committee
The Board regularly monitors the implementation
of strategy and financial performance of the
Group. The Board reviews strategic plans and
objectives annually prior to approval of budgets
and receives frequent reports on our key risks,
both current and emerging. The Board receives
regular reports from the Audit Committee on the
status of risks and internal control. More
information on the activities undertaken by the
Board and the Audit Committee is contained in the
Corporate Governance section, commencing on
page 52.
STRATEGIC
REPORT
RISK ROLES AND RESPONSIBILITIES
44
DP World Annual Report and Accounts 2013
Principal Risks and Uncertainties
OUR PRINCIPAL RISKS AND UNCERTAINTIES
RISK
DESCRIPTION
MACRO AND FINANCIAL
MACRO RISK
AND ECONOMIC
INSTABILITY
FINANCIAL RISKS
Many risk factors remain beyond the
direct control of the Company and the
risk management framework, however
effective, can only provide reasonable
but not absolute assurance that key risks
are managed to an acceptable level.
We employ various controls and mitigation
strategies to reduce these inherent risks
to an acceptable level. Our principal risks
and uncertainties will evolve as these
controls and mitigating activities succeed
in reducing the residual risk over time,
or new risks emerge. As such, this list
is regularly reviewed and a number of
risks were added and removed in 2013.
Below is an overview of the principal
risks that our Group faces that could
have material adverse effects on our
business, financial condition and
reputation. While other risks exist
outside those listed, a conscious effort
has been made to disclose those of
greatest importance to the business.
Economic uncertainty or a slowdown and the resulting impact on trade could impact
our volume growth and profitability.
Uncertainty surrounding the resilience
of the global economy and the ongoing
effectiveness of fiscal stimulus and
monetary measures continue to impact
consumer confidence and present a
difficult trading outlook across the
supply chain sector. Some economic
stagnation, including downgrading
of Eurozone’s growth potential
may result in declining consumer
spending and industry confidence.
Principal financial risks include liquidity
needs, availability of capital to achieve
our growth objectives, foreign currency
and exchange rate volatility.
The outlook for the banking and capital
markets, particularly in the context of
emerging markets, remains uncertain.
This is in large part due to differing
albeit somewhat coordinated policy by
the various Central Banks (including the
Federal Reserve) on the quantitative
easing policy and the tapering thereof.
PROJECT RISK –
DEVELOPMENT
AND PLANNING
MITIGATING ACTIVITIES
We are involved in large, long-term projects that can take months or years to complete
which can expose the Group to the risk
of reduced profitability and potential
losses. These projects may be subject to
delays and cost overruns due to delays
in technology development, equipment
deliveries, engineering problems, work
stoppages, unanticipated cost increases,
shortages of materials or skilled labour
or other unforeseen problems.
• Measures have been taken to minimise
exposures and mitigate any downturn
in the macroeconomic environment.
Our business focus is on origin
and destination cargo which is less
susceptible to economic instability
and we are predominantly focused
on the faster growing emerging
markets. We have a continuous focus
on delivering high levels of service that
meet our customers’ expectations
and we proactively manage costs.
• We also have a well-diversified
global portfolio of investments
across a number of jurisdictions
which spreads our risk.
• Our Balance Sheet remains strong
with a net debt to adjusted EBITDA
of 1.7 times in 2013 and the only
major refinancing due in 2017.
• With our tariffs being predominantly
USD based, we have a natural hedge
against FX risk and our internal
policy is to mitigate all asset-liability
mismatch risk where possible and
hedge against interest rate risk.
• We have an established internal process
with clear delegated authorities for
the approval of major contracts,
which includes a review for approval
of bids submitted by vendors.
Contracts with large monetary value
require Board approval. Systems are
in place to monitor risk metrics in
the execution of such contracts.
• Skilled technical teams are also assigned
to oversee large projects and actively
monitor risks throughout the process.
• Additionally, where multilateral or
bank finance is a source of funding,
the projects are also required to meet
internationally established project
financing requirements. Where
appropriate, financing packages
are structured and covenants set
to ensure sufficient headroom to
accommodate non-material delays.
45
RISK
http://ar.dpworld.com/2013
Major customers and middle tier
customers are reforming alliances and
changing strategy on preferred ports
and hubs which could lead to downward
pressure on tariffs and profit margins.
The nature of our operations exposes
us to various operational, safety and
security risks that could impact on
our business operations, financial
results and our reputation.
• We have a well-diversified global
portfolio of investments across a
number of geographical jurisdictions
which spreads our risk.
• Our experienced business development
team undertakes initial due diligence
and we analyse current and emerging
issues and maintain business continuity
plans to respond to threats and
safeguard our operations and assets.
• Ongoing security assessments and
continuous monitoring of geopolitical
developments worldwide and
engagement with governments, local
authorities and joint venture partners
ensures we are well positioned to
respond to changes in the political
environments in which we operate.
• We focus on high levels of customer
service and grow sustainable high value
and trusted customer relationships
throughout our portfolio.
• We have a customer contract strategy
in place. Senior executive sponsors
are in constant dialogue with our
customers and we maintain an internal
watching brief on the markets.
• We remain focused on origin
and destination cargo which is
less impacted by competition
than transhipment cargo.
• The Board and senior management are
committed to creating a safe culture
throughout the Group and regularly
monitor the implementation of our
safety and security strategy which
includes employee training, regular
audits and management objectives in
relation to the safety of our people.
• We have established a safety
auditing program which is conducted
across the entire portfolio.
• These risks are decreasing
through rigorous and continuous
monitoring by management and by
having review processes, policies,
guidance documents and specific
operational procedures in place.
CONSOLIDATED
FINANCIAL STATEMENTS
SAFETY, SECURITY
AND ENVIRONMENTAL
RISK
CORPORATE
GOVERNANCE
INTERNAL/OPERATIONAL
STRATEGIC
REPORT
CUSTOMER
CONSOLIDATION
MITIGATING ACTIVITIES
Political instability or direct/indirect
interference in some of the emerging
markets creates a risk to the Group’s
operations in those countries in terms of
operations, service, revenues and volumes.
CUSTOMER
OVERVIEW
POLITICAL STABILITY
RISK
DESCRIPTION
MACRO AND FINANCIAL
DP World Annual Report and Accounts 2013
46
DP World Annual Report and Accounts 2013
Principal Risks and Uncertainties
RISK
DESCRIPTION
MITIGATING ACTIVITIES
INTERNAL/OPERATIONAL
DAMAGE TO IT
SYSTEMS AND
CYBER RISK
The continued operation of our IT systems
and infrastructure is threatened by natural
risks including floods and hurricanes.
LEGAL AND
REGULATORY
Our businesses operate under increasingly
stringent regulatory regimes around
the world and are subject to various
legal and regulatory obligations. New
legislation and other evolving practices
could impact our operations, increase
the cost of compliance and limit or
impose restrictions on our growth.
The increased pace of technological
innovation and change heightens
the risk of cyber terrorism including
information and intelligence theft.
This could result in liabilities, including
claims, loss of revenue, litigation and
harm to the Group’s reputation.
Employee diversity and gender quotas
are taking on greater importance
in the employment market.
LABOUR UNREST
Labour disputes and unrest pose a
risk to our operational continuity.
• We have quality information security
processes and procedures in place
to address IT security risks.
• We analyse current and emerging
issues and maintain business continuity
plans to respond to threats and
safeguard our operations and assets,
including having developed and tested
IT disaster recovery plans in place.
• The Group monitors changes
to regulations across its entire
portfolio to ensure that the effect
of changes are minimised and
compliance is continually managed.
• DP World has a zero tolerance
approach to bribery and fraud and has
developed training, policies and an
anti-fraud framework for preventing,
detecting and responding to frauds.
This is particularly focused on higher
risk regions to ensure that the Group
policies are enforced and understood.
• DP World has a Board diversity policy
and has set up a diversity working
group to consider the issues and
how they apply to the industry
and specifically our business.
• We have an engagement
strategy in place with unions and
employees in those areas most
affected by employee disputes.
47
RISK
DP World Annual Report and Accounts 2013
DESCRIPTION
MITIGATING ACTIVITIES
EMPLOYEE
DEVELOPMENT
AND RETENTION
CORPORATE
GOVERNANCE
CONSOLIDATED
FINANCIAL STATEMENTS
• This risk is reducing as we invest further
in our people and their performance.
• The DP World Institute develops
and delivers training programmes
across all levels which are focused
on improving operational and
managerial competencies.
• Career global mobility has also
increased, providing our people with the
opportunity to work in different areas of
the Group and to share their expertise.
• Effective personal performance
management remains a high priority
for us, and is monitored across
the Group on a regular basis.
• During 2013, future staffing needs
were identified by each business
unit and succession planning
exercises were undertaken and
mapped for senior, corporate,
regional and key terminal staff.
• Staff turnover rates are monitored
and are currently stable.
STRATEGIC
REPORT
http://ar.dpworld.com/2013
Our people are fundamental to the longterm success and growth of our Company.
Shortages in employees possessing
specific skill sets is a risk in some regions
that can have an impact on our business
continuity and productivity levels.
OVERVIEW
INTERNAL/OPERATIONAL
48
DP World Annual Report and Accounts 2013
SULTAN AHMED BIN SULAYEM CHAIRMAN
SIR JOHN PARKER
SENIOR INDEPENDENT
NON-EXECUTIVE DIRECTOR
AND VICE CHAIRMAN
APPOINTMENT
Sultan Ahmed Bin Sulayem
has served as Chairman of
the Board of the Company
since 30 May 2007.
Sir John Parker has served as
an Independent Non-Executive
Director and Vice Chairman
of the Company since 30
May 2007. He also acts as the
Senior Independent Director.
Jamal Majid Bin Thaniah has
served as a Director and Vice
Chairman of the Company
since 30 May 2007 and
became a Non-Executive
Director on 27 October 2009.
David Williams has served
as an Independent NonExecutive Director of the
Company since 30 May 2007.
EXPERIENCE
Board of Directors
He was previously Chairman
of Dubai World and in this
role oversaw businesses
in industries as diverse as
real estate development,
hospitality, retail, e-commerce
and various commodities
exchanges, as well as
businesses associated with
transportation and logistics. He
previously served as Chairman
of Port & Free Zone World FZE
and he remains one of the
two representatives of Port &
Free Zone World FZE on the
Board. He is a leading Dubai
and international businessman,
with more than 30 years’
experience in the marine
terminal industry. A citizen of
the UAE, he is 58 years old.
He serves as Chairman of
Anglo American plc and is
a Non-Executive Director
of Carnival plc, Carnival
Corporation and Airbus
Group. He previously served
as Chair of the Court of
the Bank of England, NonExecutive Chairman of BVT,
Joint Chairman of Mondi plc,
Chairman of National Grid
plc, Non-Executive Director
and Deputy Chairman and,
subsequently, Chairman of
P&O and as Vice Chairman of
Port & Free Zone World. He
is the President of the Royal
Academy of Engineering.
He was a Member of the
Prime Minister’s Business
Council for Britain. A British
citizen, he is 71 years old.
He joined Dubai Ports in 1981
and, from 2001, led Dubai
Ports Authority. He also serves
as a Non-Executive Director
of Etihad Rail (Abu Dhabi)
and as an Independent NonExecutive Director of Emaar
Properties PJSC. He previously
served as a Director of Port
& Free Zone World FZE and
he remains one of the two
representatives of Port & Free
Zone World FZE on the Board
of DP World. A citizen of the
UAE, he is 55 years old.
He is currently Joint Chairman
of Mondi plc and Senior
Independent Non-Executive
Director of Meggitt plc. He
previously served as a NonExecutive Director of Tullow
Oil plc and P&O and Senior
Independent Non-Executive
Director of both Taylor Wimpey
plc and George Wimpey plc.
He has also served as a NonExecutive Director of Dewhirst
Group plc and Medeva plc and
as Finance Director of Bunzl
plc. He is a qualified Chartered
Accountant. A British
citizen, he is 68 years old.
Member of the Audit
Committee
Chairman of the Nominations
and Governance Committee
Chairman of the Remuneration
Committee
Member of the Nominations
and Governance Committee
COMMIT TEES
JAMAL MAJID BIN THANIAH
NON-EXECUTIVE DIRECTOR
AND VICE CHAIRMAN
DAVID WILLIAMS
INDEPENDENT
NON-EXECUTIVE
DIRECTOR
David Williams will retire
from his position as an
Independent Non-Executive
Director of the Company,
effective 28 April 2014.
Chairman of the Audit
Committee
Member of the Nominations
and Governance Committee
Member of the Remuneration
Committee
49
DP World Annual Report and Accounts 2013
OVERVIEW
STRATEGIC
REPORT
MOHAMMED SHARAF
GROUP CHIEF EXECUTIVE
OFFICER
YUVRAJ NARAYAN
CHIEF FINANCIAL
OFFICER
CHO YING DAVY HO
INDEPENDENT
NON-EXECUTIVE
DIRECTOR
Mohammed Sharaf has served
as Group Chief Executive
Officer since 2005 and as
a Director of the Company
since 30 May 2007.
Yuvraj Narayan has served
as Chief Financial Officer of
the Group since 2005 and as
a Director of the Company
since 9 August 2006.
Cho Ying Davy Ho has served
as an Independent NonExecutive Director of the
Company since 30 May 2007.
He is the Non-Executive
Chairman of HDFC
Ltd, GlaxoSmithkline
Pharmaceuticals Ltd and
Siemens India. He serves on the
board of several other leading
corporations including Vedanta
Resources Plc, Mahindra and
Mahindra, and The Indian
Hotels Co Ltd. He is also a
Member of AECOM Advisory
Board and Standard Life
Asian Advisory Board. He has
been a member of numerous
Indian Government appointed
advisory committees and task
forces on matters ranging from
infrastructure reform, capital
markets and financial services.
In 2006, he was awarded the
Padma Bhushan. In 2010, he
became the first international
recipient of the Institute
of Chartered Accountants
in England and Wales
Outstanding Achievement
Award, and received the
“Knight in the Order of the
Legion of Honour” one of the
highest distinctions awarded
by the French Republic. A
citizen of the Republic of
India, he is 69 years old.
He joined Dubai Ports
Authority in 1992, and in
2001 he became Managing
Director of DP World FZE.
In this position, he oversaw
the Group’s growth into an
international business and
performed central roles in
developing its first international
operations at the terminals
of Jeddah (Saudi Arabia),
Constanta (Romania) and Vizag
(India) and in developing its
national operations at Jebel
Ali and Port Rashid terminals
(UAE). He began his shipping
career at Holland Hook
terminal in The Port of New
York/New Jersey and has more
than 20 years’ experience in
the transport and logistics
business. He is also Chairman
of Tejari World FZ LLC. He is
Joint Vice Chairman of US-UAE
Business Council and a member
of the UAE-Canada Business
Council Board. A citizen of
the UAE, he is 52 years old.
He joined DP World FZE
in 2004. He serves as a
Non-Executive Director of
IDFC Securities Limited. He
previously served as NonExecutive Director of Istithmar
World PJSC and as ANZ
Group’s Head of Corporate
and Project Finance for South
Asia before becoming Chief
Financial Officer of Salalah
Port Services in Oman. He
is a qualified Chartered
Accountant and has a wealth
of experience in the ports and
international banking sectors.
A citizen of the Republic of
India, he is 57 years old.
Having retired from many of
his Swire Group positions, he
continues to serve as Director
of several Swire Group entities
relating to properties and
cold storage. He previously
served as Director of Cathay
Pacific Airways Limited,
Modern Terminals Ltd and
Shekou Container Terminals
Ltd and as Chairman of the
Shipping Committee of the
Hong Kong General Chamber
of Commerce. A British
citizen, he is 66 years old.
Member of the Audit
Committee
Member of the Nominations
and Governance Committee
Member of the Remuneration
Committee
Member of the Nominations
and Governance Committee
http://ar.dpworld.com/2013
It was announced on 17
December 2013 that Cho Ying
Davy Ho would retire from his
position as an Independent
Non-Executive Director
effective 1 January 2014.
Member of the Audit
Committee
Member of the Nominations
and Governance Committee
Member of the Remuneration
Committee
CONSOLIDATED
FINANCIAL STATEMENTS
Deepak Parekh was appointed
as an Independent NonExecutive Director of the
Company on 22 March 2011.
CORPORATE
GOVERNANCE
DEEPAK PAREKH
INDEPENDENT
NON-EXECUTIVE
DIRECTOR
50
DP World Annual Report and Accounts 2013
Report of the Directors
The Directors present their report and accounts for the year ended
31 December 2013.
The Corporate Governance section, commencing on page 52 and
the Audit Committee report, commencing on page 55, form part
of this Directors’ Report. Disclosures elsewhere in the Annual
Report and Accounts are cross-referenced where appropriate.
Taken together, they fulfil our disclosure requirements as discussed
in the Corporate Governance section, commencing on page 52.
The Strategic Report, commencing on page 4 describes the
principal activities, operations, performance and financial position
of the Group. The results of the Group are set out in detail in the
Consolidated Financial Statements and accompanying notes,
commencing on page 63.
The principal subsidiaries, joint ventures and associates are listed on
pages 113 to 114.
BERNADETTE ALLINSON
BOARD LEGAL ADVISER AND COMPANY SECRETARY
DIRECTORS
On 17 December 2013, the Company announced that effective
1 January 2014, Robert Woods will replace retiring director Cho
Ying Davy Ho who has served as an Independent Non-Executive
Director of DP World since 30 May 2007. David Williams, who has
served as an Independent Non-Executive Director of DP World
since 30 May 2007, will retire from his position on 28 April 2014.
In accordance with the UK Corporate Governance Code (the
“Code”) and the Company’s Articles of Association (the “Articles”),
all Directors offer themselves annually for re-appointment.
Biographical details of the Directors of the Company as at
31 December 2013 are given on pages 48 and 49 together
with details of Board Committee memberships.
Details of the Directors’ remuneration and their interests in shares
are given on page 60 in the Corporate Governance section of
this Report.
FINANCIAL INSTRUMENTS
Details regarding the use of financial instruments and financial risk
management are included in the Notes to Consolidated Financial
Statements on pages 63 to 114.
RESULTS
The Group’s Consolidated Financial Statements for the year ended
31 December 2013 are shown on pages 63 to 68.
DIVIDENDS
The Directors recommend a final dividend in respect of the year
ended 31 December 2013 of 23 US cents per share. This comprises
of an increase of 10% in the ordinary dividend to 23 US cents per
share. Subject to approval by shareholders, the dividend will be
paid on 6 May 2014 to shareholders on the Register at close of
business on 1 April 2014.
POST-BALANCE SHEET EVENTS
There are no post-balance sheet events that require disclosure in
the Notes to Consolidated Financial Statements.
CORPORATE RESPONSIBILITY
DP World is committed to integrating responsible business
practices across our Group and in all aspects of our operations. Our
corporate responsibility strategy and achievements during 2013 are
discussed further in the Corporate Responsibility section
commencing on page 28.
51
DP World Annual Report and Accounts 2013
BOARD DIVERSITY
The Board is looking to enrich its diversity in 2014 and will provide
an update in next year’s Annual Report and Accounts.
SUBSTANTIAL SHAREHOLDINGS
As at the date of this report, the Company has been notified that
the following entity has an interest in the Company’s shares
amounting to 5% or more.
Shares
Percentage
of class
Ordinary 667,735,000
80.45%
Class
Port and Free Zone
World FZE
GOING CONCERN
The Directors, having made enquiries, consider that the Company
and the Group have adequate resources to continue in operational
existence for the foreseeable future and therefore they consider
it appropriate to adopt the going concern basis in preparing
the accounts.
Further details can be found under note 2(C) to the Consolidated
Financial Statements.
AUDIT INFORMATION
Having made the required enquiries, so far as the Directors in
office at the date of the signing of this report are aware, there is
no relevant audit information of which the auditors are unaware
and each Director has taken all reasonable steps to make
themselves aware of any relevant audit information and to
establish that the auditors are aware of that information.
http://ar.dpworld.com/2013
All Directors are entitled to indemnification from the Company to
the extent permitted by the law against claims and legal expenses
incurred in the course of their duties.
AUTHORITY TO PURCHASE SHARES
At the Company’s Annual General Meeting (“AGM”) on 25 April
2013, the Company was authorised to make market purchases of
up to 29,050,000 ordinary shares (representing approximately
3.5% of the Company’s issued share capital). No such purchases
were made during 2013. Shareholders will be asked to approve the
renewal of a similar authority at the Company’s AGM to be held
on 28 April 2014.
AUDITORS
The auditors, KPMG LLP, have indicated their willingness to
continue in office. A resolution to re-appoint them as auditors will
be proposed at the AGM to be held on 28 April 2014.
SHARE CAPITAL
As at 31 December 2013, the Company’s issued share capital was
US$1,660,000,000 comprising 830,000,000 ordinary shares of
US$2.00 each.
ANNUAL GENERAL MEETING
The Company’s AGM will be held on 28 April 2014 at The
Wheelhouse, Jebel Ali Port, Dubai, United Arab Emirates.
Full details are set out in the Notice of AGM.
By order of the Board
B Allinson
Board Legal Adviser and Company Secretary
20 March 2014
CONSOLIDATED
FINANCIAL STATEMENTS
As part of the annual performance evaluation of the effectiveness
of the Board, Board Committees and individual Directors, the
Board will consider the balance of skills, experience, independence
and knowledge of the Board and the diversity representation of
the Board.
INDEMNITY
CORPORATE
GOVERNANCE
The Board Nominations and Governance Committee (“the
Committee”) reviews and assesses Board composition on behalf of
the Board and recommends the appointment of new Directors.
In reviewing Board composition, the Committee will consider the
benefits of all aspects of diversity including, but not limited to,
those described above, in order to maintain an appropriate range
and balance of skills, experience and background on the Board. In
identifying suitable candidates for appointment to the Board, the
Committee will consider candidates on merit against objective
criteria and with due regard to the benefits of maintaining a
balanced and diverse Board.
The Articles set out the internal regulation of the Company and
cover such matters as the rights of shareholders, the appointment
and removal of Directors and the conduct of the Board and general
meetings. Subject to DIFC Companies Law and the Articles, the
Directors may exercise all the powers of the Company and may
delegate authorities to Committees and day-to-day management
and decision making to individual Executive Directors. Details of
the main Board Committees can be found on pages 54 to 58.
STRATEGIC
REPORT
DP World recognises and embraces the benefits of having a diverse
Board, and seeks increasing diversity at Board level which it sees as
an essential element in maintaining the Company’s competitive
advantage. A truly diverse Board will include and make good use
of differences in the skills, regional and industry experience,
background, race, gender and other qualities of directors. These
differences will be considered in determining the optimum
composition of the Board.
ARTICLES OF ASSOCIATION
OVERVIEW
The Corporate Responsibility section also contains information
regarding our global team of over 30,000 people and our
commitment to minimising the environmental impact of our global
operations, including CO2 emissions, waste and water management.
52
DP World Annual Report and Accounts 2013
Corporate Governance
COMPLIANCE STATEMENT
DP World Limited (the Company) is incorporated in the Dubai
International Financial Centre (DIFC). The Company has a dual
primary listing which requires compliance with the regulatory
obligations of the Dubai Financial Services Authority (DFSA) and
the UK Financial Conduct Authority (FCA). The Board reviews and
monitors the policies and procedures that are in place to ensure
compliance with the Corporate Governance principles of the UK
Corporate Governance Code (the Code) and the DFSA Market
Rules (the Market Rules).
The edition of the Code published in September 2012 applied
throughout our financial year ending 31 December 2013, but the
FCA has yet to change the Listing Rules and therefore requires that
certain compliance statements are made in relation to the Code as
it was published in 2010 by the Financial Reporting Council. Any
reference throughout this Annual Report & Accounts to the
application of, or compliance with the Code, refers to both versions
of the Code, unless otherwise stated.
During the financial year ended 31 December 2013, the Company
has applied the Corporate Governance principles of the Code and
Market Rules.
Throughout the financial year, the Company complied with the
provisions of the Code other than provision A.3.1 in that the
Chairman did not meet the independence criteria laid out in
provision B.1.1 of the Code at the time of his appointment. The
Chairman, Sultan Ahmed Bin Sulayem, was Chairman of Dubai
World and Port & Free Zone World FZE at the time that DP World
was admitted to listing in Dubai and remains one of Port & Free
Zone World FZE’s representatives on the DP World Board.
The Company appointed Sir John Parker as Joint Vice Chairman
and Senior Independent Non-Executive Director. Sir John Parker
chairs the Nominations and Governance Committee and, together
with the Chairman, leads on governance matters and the annual
performance review of the Board and its Committees. The Board
believes that this support ensures that robust governance is
maintained and that appropriate challenge to the executives is
in place.
DIRECTORS
The Board of eight Directors manages the Company’s business.
The primary responsibility of the Board is to foster the long-term
success of the Company.
All Directors have access to the Board Legal Adviser and Company
Secretary and independent professional advice at the Company’s
expense, if required.
The Board met seven times during the year either in person or via
telephone or video conference. In addition, written resolutions (as
provided by the Articles) were used as required for the approval of
decisions that exceeded the delegated authorities provided to
Executive Directors and Committees.
ATTENDANCE BY INDIVIDUAL DIRECTORS AT MEETINGS OF THE BOARD AND ITS COMMITTEES IN 2013
Director
Sultan Ahmed Bin Sulayem
Jamal Majid Bin Thaniah
Mohammed Sharaf
Yuvraj Narayan
Sir John Parker
David Williams
Cho Ying Davy Ho
Deepak Parekh
Figures in brackets denote the maximum number of meetings that could have been attended.
Board
7(7)
7(7)
7(7)
7(7)
7(7)
7(7)
7(7)
7(7)
Audit
–
–
–
–
3(4)
4(4)
4(4)
3(4)
Nominations
and
Governance
–
2(2)
2(2)
–
2(2)
2(2)
2(2)
2(2)
Remuneration
–
–
–
–
3(3)
3(3)
3(3)
3(3)
53
DP World Annual Report and Accounts 2013
INDEPENDENT NON-EXECUTIVE DIRECTORS
BOARD PERFORMANCE
BOARD EVALUATION
In compliance with the Code, at least half the Board (excluding the
Chairman) comprised of Independent Non-Executive Directors
during 2013. David Williams, who has served as an Independent
Non-Executive Director of DP World since 30 May 2007, will retire
from his position on 28 April 2014. During the course of 2014, we
intend to expand the Board in line with DP World’s commitment to
best governance practices and in compliance with our corporate
governance obligations.
The Board undertakes a formal and rigorous annual evaluation of
its own performance and that of its Committees and individual
Directors. In compliance with the UK Corporate Governance Code,
the Board evaluation is facilitated by an external and independent
reviewer every three years. An externally facilitated review was
conducted for the 2012 financial year and in 2013 the Board
evaluation was facilitated internally by the Board Legal Adviser and
Company Secretary.
In December 2013, the Company announced that effective 1
January 2014, Robert Woods will replace retiring director Cho Ying
Davy Ho who has served as an Independent Non-Executive
Director of DP World since 30 May 2007.
The 2013 review was carried out using questionnaires and the
key areas of focus were strategy, succession planning, training
and development, Board processes and structure, information
flow and communication.
In order for the Independent Non-Executive Directors to contribute
fully to the Board, and in particular to challenge the Executive
Directors over strategic matters where appropriate, it is important
that the Independent Non-Executive Directors bring experience,
probity and independence to the Board. Accordingly, the
independence of the Independent Non-Executive Directors is
considered annually.
EVALUATION PROCESS
The Board believes the Independent Non-Executive Directors have
retained independent character and judgement. The Board
considers that the varied and relevant experience of all the
Independent Directors provides an exceptional balance of skills and
knowledge which is of great benefit to the Company.
http://ar.dpworld.com/2013
The following actions were taken as part of the 2013
evaluation process:
• a questionnaire was sent to each Director;
• the Senior Independent Non-Executive Director and Chairman
held one-to-one interviews with each Director, using their
questionnaire responses as a starting point for the interview;
• questionnaires were also used to perform reviews
of the Committees;
• the questionnaire responses from the Board members
and reviews of the Committees were shared with the
Senior Independent Non-Executive Director (SID);
• the SID subsequently met with each Director
individually to discuss and review;
• a paper discussing the key issues raised during
the evaluation process was prepared and
submitted for Board consideration; and
• following consideration of the Board paper, an
action plan for 2014 was set by the Board.
CONSOLIDATED
FINANCIAL STATEMENTS
Details of the Directors of the Company are given on pages 48
and 49.
Sir John Parker has acted as Senior Independent Director since the
initial public offering of the Company in 2007. His responsibilities
include supporting the Chairman in the leadership of the Board
and meeting with the Independent Non-Executive Directors at
least once a year to appraise the Chairman’s performance and
holding discussions with the Independent Non-Executive Directors
without the executives present.
CORPORATE
GOVERNANCE
The Board has delegated the following responsibilities to
management: the development and recommendation of strategic
plans for consideration by the Board that reflect the long-term
objectives and priorities established by the Board; implementation
of DP World’s strategies and policies as determined by the Board;
monitoring the operating and financial results against plans and
budgets; monitoring the quality of the investment process against
objectives, prioritising the allocation of capital and technical
resources; and developing and implementing risk management
systems, subject to the continued oversight of the Board and the
Audit Committee as set out on page 56.
The positions of Chairman and Group Chief Executive Officer are
held by separate individuals with separate roles and responsibilities
which have been approved by the Board. The Chairman, in
conjunction with the Senior Independent Director is responsible for
leadership and effective management of the Board in all aspects of
its role and its governance. The Chairman chairs the Board
meetings ensuring, with the support of the Senior Independent
Director, that the agendas are forward looking and that relevant
business is brought to the Board for consideration in accordance
with the schedule of matters reserved to the Board and that each
Director has the opportunity to consider the matters brought to
the meeting and to contribute accordingly. The Group Chief
Executive Officer, as leader of the Company’s executive team,
retains responsibility for the leadership and day-to-day
management of the Company and the execution of its strategy as
approved by the Board.
STRATEGIC
REPORT
The Matters Reserved to the Board are available on
DP World’s website.
ROLES OF THE CHAIRMAN, GROUP CHIEF EXECUTIVE OFFICER AND
SENIOR INDEPENDENT DIRECTOR
OVERVIEW
Although there is a prescribed pattern of presentation to the
Board, including matters specifically reserved for the Board’s
decision (which include: strategy; the annual budget; dividends;
major transactions; safety and environment policies; insurance and
risk management; and internal controls), all Board meetings tend to
have further subjects for discussion and decision taking. Board
papers, including an agenda, are sent out in advance of the
meetings. Board meetings are discursive in style and all Directors
are encouraged to offer their opinions.
54
DP World Annual Report and Accounts 2013
Corporate Governance
CONCLUSIONS
The review concluded that the Board continued to display
commitment to good governance and adopting board best
practice. Particular attention to board composition was noted, with
an emphasis on achieving optimum board diversity.
TRACKING FROM PREVIOUS EVALUATION AND NEXT STEPS
FOR 2014
As a result of the evaluation conducted of the Board’s performance
during 2012, the Company enhanced the strategic planning
decision and performance discussion. The Board ensured a
constant improvement of its processes and procedures and quality
of debate during 2013.
All presentations and related investor communications are available
in a dedicated section of DP World’s website.
The Board receives regular updates on the views of shareholders
through briefings from the Chairman, Group Chief Executive
Officer and Chief Financial Officer as well as reports from the
Company’s corporate brokers and investor relations team. In 2013
the Company maintained corporate broking relationships with
Citigroup Global Markets Limited, Deutsche Bank AG and Nomura
International PLC.
The actions arising from the 2013 Board evaluation have been
incorporated into a Board action plan for 2014. The principal
actions reflect the continued focus of the Board on board diversity,
succession planning and strategic decisions.
The Chairman, the Senior Independent Director and the chairmen
of the Board’s Committees are available to meet major investors on
request. The Senior Independent Non-Executive Director has a
specific responsibility to be available to shareholders who have
concerns, and for whom contact with the Chairman, Group Chief
Executive Officer or Chief Financial Officer has either failed to
resolve their concerns, or for whom such contact is inappropriate.
RELATIONS WITH SHAREHOLDERS
ACCOUNTABILITY
The Company is committed to communicating its strategy and
activities clearly to its shareholders and, to that end, maintains an
active dialogue with investors through a planned programme of
investor relations activities.
The Company’s full and half-year results and quarterly throughput
announcements are reported to investors through a combination
of presentations and conference calls. The full and half-year
reporting is then followed by investor meetings in major cities in
locations where the Company has or is targeting institutional
shareholders. These locations may include Australia, Asia, Europe,
North America and the UAE.
Regular attendance at Industry and Regional Investor Conferences
provides opportunities to meet with existing and prospective
shareholders in order to update them on performance or to
introduce them to the Company. In addition, DP World frequently
hosts investor and analyst visits to DP World’s ports around the
world, offering analysts and shareholders a better understanding
of the day-to-day business and the opportunity to meet regional
and port management teams.
The Board is responsible for DP World’s system of internal control
and for reviewing its effectiveness. The internal control system is
designed to manage rather than eliminate the risk of failure to
achieve business objectives, and can only provide reasonable and
not absolute assurance against material mis-statement or loss.
The system of internal control described below has been in place
throughout the year.
BOARD COMMITTEES
The following is an explanation of the Company’s corporate
governance framework, including details regarding the principal
Board Committees.
The Board’s principal Committees include the Remuneration, Audit
and Nominations and Governance Committees, with formally
delegated duties and responsibilities and written terms of
reference. From time to time, additional committees may be set up
by the Board to consider specific issues when the need arises.
CORPORATE GOVERNANCE FRAMEWORK
Audit Committee
Board of Directors
Disclosure Panel
Remuneration
Committee
Nominations and
Governance
Committee
Reporting
Oversight
Owners/
Shareholders
55
DP World Annual Report and Accounts 2013
MEMBERS
For 2013, the membership of the Audit Committee was comprised
of four Independent Non-Executive Directors and was chaired by
David Williams, whom the Board considers has appropriate
financial expertise to fulfil this role.
The full terms of reference of the Audit Committee can be found
on DP World’s website.
External and internal auditors are invited to attend the Audit
Committee meetings, along with any other Director or member of
staff considered necessary by the Committee to complete its work.
The Committee meets with external auditors and internal auditors
without Executive Directors or members of staff present at least
once a year, and additionally as it considers appropriate.
In accordance with its terms of reference, the principal matters
considered by the Audit Committee during 2013 included:
• a review of the level and constitution of external
audit and non-audit fees and the independence
and objectivity of external auditors;
• monitoring and reviewing the effectiveness of
internal audit activities, including discussions
with the Director of Internal Audit;
• reviewing the effectiveness of the Group’s financial
reporting, internal controls and compliance with
applicable legal requirements and monitoring risk
and compliance procedures across the Group;
• reviewing the Company’s results statements, interim
management statements and Annual Report and
Accounts before publication and making appropriate
recommendations to the Board following review;
• reviewing accounting policies in light of developments
to international accounting standards; and
• receiving reports where appropriate in accordance with its terms
of reference on business conduct issues, including any instances
of alleged fraud and actions taken as a result of investigation.
With regards to the 2013 Accounts, the primary matters discussed
by the Audit Committee included:
http://ar.dpworld.com/2013
Impairment of assets of $75 million in the Middle East, Europe and
Africa region and $24 million in the Asia Pacific and Indian
subcontinent region was assessed. The impairment was mainly due
to significant adverse effects in the market and economic
conditions which were outside the control of the Group. Further
information can be found under note 12 to the Consolidated
Financial Statements.
2. TAXATION
The Group recognises liabilities for anticipated tax claims based
on estimates of whether additional taxes will be due. Deferred tax
assets are recognised for all unused tax losses to the extent that it
is probable that taxable profit will be available against which the
losses can be utilised. Significant management judgement is
required to determine these amounts based upon the likely
timing and level of future taxable profits together with future
tax planning strategies.
3. PENSION AND POST-EMPLOYMENT BENEFITS
The cost of defined benefit pension plans and other postemployment benefits is determined using actuarial valuations.
The actuarial valuation involves making assumptions about
discount rates, expected rates of return on assets, future salary
increases, mortality rates and future pension increases. Due to the
long-term nature of these plans, such estimates are subject to
significant uncertainty.
4. LITIGATIONS AND CONTINGENT LIABILITIES
The level of provisioning for contingent and other liabilities is an
issue where management and legal judgements are important.
The Committee addresses the judgement and estimates relating to
Taxation, Pension and Litigations through a range of reporting
from senior management and a process of challenging the
appropriateness of management’s views including the degree to
which these are supported by professional advice from external
legal and other advisory firms.
The above issues were discussed with management during the year
and with the auditor at the time the Committee reviewed and
agreed the auditors’ Group audit plan, when the auditor reviewed
the half year interim financial statements in June 2013 and also at
the conclusion of the audit of the financial statements.
CONSOLIDATED
FINANCIAL STATEMENTS
The Audit Committee meets formally at least four times a year and
otherwise as required.
The Committee reviewed management’s key assumptions to
understand their impact on the cash generating unit’s recoverable
amounts. The Committee was satisfied that the significant
assumptions used for determining the recoverable amount had
been appropriately scrutinised, challenged and were sufficiently
robust. The Committee was further satisfied with the sensitivity
analysis carried out by the management with regard to these
impairment tests.
CORPORATE
GOVERNANCE
The Audit Committee assists the Board in discharging its
responsibilities with regard to financial reporting and external and
internal audits and controls. The ultimate responsibility for
reviewing and approving the Annual Report and Accounts and the
half-yearly reports remains with the Board.
The impairment testing of goodwill and port concession rights
requires an estimation of the value in use of cash-generating units
to which the goodwill is allocated or in which the port concession
rights with indefinite life exist. Estimating the value in use requires
the Group to make an estimate of the expected future cash flows
from the cash-generating unit and also to choose a suitable
discount rate in order to calculate the present value of those
cash flows.
STRATEGIC
REPORT
David Williams (Chairman)
Sir John Parker
Cho Ying Davy Ho
Deepak Parekh
1. IMPAIRMENT TESTING OF GOODWILL AND PORT
CONCESSION RIGHTS
OVERVIEW
Audit Committee
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DP World Annual Report and Accounts 2013
Corporate Governance
Audit Committee continued
EXTERNAL AUDITORS
The Audit Committee is responsible for recommending a firm of
auditors of appropriate independence and experience and for the
approval of all audit fees and terms of engagement. The
Committee’s policy is to undertake a formal assessment of the
auditors’ independence each year which includes:
• a review of non-audit services provided
to the Group and related fees;
• discussion with the auditors of a written report detailing any
relationships with the Company and any other parties that
could affect independence or the perception of independence;
• a review of the auditors’ own procedures for
ensuring the independence of the audit firm and
partners and staff involved in the audit, including
the regular rotation of the audit partner; and
• obtaining written confirmation from the auditors that, in
their professional judgement, they are independent.
The Audit Committee has implemented the following policy
relating to the provision of non-audit services by the Company’s
auditors.
AUDIT RELATED SERVICES
These services are undertaken by the auditors:
• review of interim financial information; and
• formalities relating to borrowings,
shareholder and other circulars.
PERMITTED NON-AUDIT SERVICES
The selection of providers of permitted non-audit services is subject
to a tender process, where appropriate. Non-audit work and the
fees involved are approved in advance by the Audit Committee.
Below are examples of permitted non-audit services:
• tax planning, advice and compliance assistance; and
• mergers and acquisitions.
PROHIBITED NON-AUDIT SERVICES
• bookkeeping or other services related to the accounting records;
• financial information systems design and implementation; and
• investment banking services.
Throughout the year, the Committee monitored the cost and
nature of non-audit work undertaken by the auditors and is,
therefore, in a position to take action if it believes that there is
a threat to the auditors’ independence through the award of
this work.
KPMG LLP are appointed as external auditors to the Company. The
Committee has undertaken an annual review of the independence
and objectivity of the auditors and an assessment of the
effectiveness of the audit process, which included a report from
the external auditors of their own internal quality procedures.
It also received assurances from the Auditors regarding their
independence. On the basis of this review, the Committee
recommended to the Board that it recommend that shareholders
support the re-appointment of the Auditors at the AGM on
28 April 2014.
RISK MANAGEMENT PROCESS
The Group risk management process has the following key
features:
• all major businesses within the Group identify risks to the
achievement of their business objectives through a structured
online risk assessment process. Appropriate risk management
activity is determined and any required action plans are
implemented. Risks are assessed on the basis of impact and
likelihood to enable prioritisation of major and significant
risks. This is a continual process, and may be associated with
a variety of financial, operational and compliance matters
including organisation structures, business strategies,
disruption in information technology systems, competition,
natural catastrophe and regulatory requirements;
• the risks and associated controls are summarised in the risk
portfolios and are presented to the Board for review; and
• at the year-end, the regional management certifies that
the risk management process is in place and an assessment
has been conducted throughout their businesses and
that appropriate internal control procedures are in
place or in hand to manage the risks identified.
Further details on the risk management process can be found
under note 6 to the Consolidated Financial Statements. Details of
the Group’s principal risks and uncertainties are set out on pages
42 to 47.
INTERNAL CONTROLS
The Board is responsible for maintaining a sound system of internal
controls and has established a control framework within which the
Group operates. The Audit Committee has undertaken a review of
the effectiveness of internal controls and risk management in
accordance with its remit. The core elements of DP World’s system
of internal control are set out on page 42. The key high level
control procedures include:
• an organisation structure which supports clear lines
of communication and accountability and delegation
of authority rules which specify responsibility;
• business strategies prepared at regional level and approved
by the Board. In addition, there are annual budgeting
and strategic planning processes. Financial forecasts are
prepared every quarter. Actual performance is compared
to budget, latest forecast and prior year on a monthly
basis. Significant variances are investigated and explained
through normal monthly reporting channels;
• key performance indicators produced to
summarise and monitor business activity;
• evaluation and approval procedures for major capital
expenditure and significant treasury transactions;
• regular reviews of the effectiveness of the Group’s health,
safety, welfare, environment and security processes; and
• the internal audit department providing additional
independent assurance to the Board and the Audit
Committee that key controls are operating as intended.
The risk management process and the system of internal control
are subject to continuous improvement.
57
DP World Annual Report and Accounts 2013
The Company has adopted a share dealing code which sets out the
restrictions and “close” periods applicable to trading in securities.
Memoranda and guidelines regarding dealings (either selling or
buying) in shares have been circulated within the Group.
MEMBERS
FRAUD
The Audit Committee receives an update at each meeting on any
material frauds. The Audit Committee has reviewed DP World’s
“whistle blowing” procedures to ensure that arrangements are in
place to enable Company employees to raise concerns about
possible improprieties on a confidential basis.
DP World has an anti-bribery and corruption policy with
supporting processes and procedures to meet the requirements of
the UK Bribery Act 2010. During 2013, online training on the
importance of compliance with the anti-bribery and corruption
policy was completed by selected members of management and
key employees across the Group.
The full terms of reference of the Nominations and Governance
Committee can be found on DP World’s website.
The Nominations and Governance Committee is comprised of six
members, four of whom are Independent Non-Executive Directors.
The Chairman of the Nominations and Governance Committee is
Sir John Parker.
The Nominations and Governance Committee meets formally at
least twice a year and otherwise as required.
2013 ACTIVITIES
• identified and nominated candidates for Board approval to
replace Cho Ying Davy Ho who retired effective 1 January 2014;
• reviewed the Board composition, with particular
consideration given to the Board Diversity policy; and
• reviewed the adequacy of the Group’s succession plan.
Executive Committee
The Executive Committee has primary responsibility for the
day-to-day management of DP World’s operations and strategic
policy implementation (such policies being established and
approved by the Board). The Executive Committee is comprised of
the Executive Directors and certain senior managers.
The Executive Committee meets regularly as required.
http://ar.dpworld.com/2013
CONSOLIDATED
FINANCIAL STATEMENTS
ANTI-BRIBERY AND CORRUPTION
The Nominations and Governance Committee assists the Board in
discharging its responsibilities relating to the size and composition
of the Board. It is also responsible for periodically reviewing the
Board’s structure and identifying potential candidates to be
appointed as Directors as the need may arise. The Nominations
and Governance Committee is responsible for evaluating the
balance of skills, knowledge, experience and diversity on the Board
and, in particular:
• identifying individuals qualified to become Board members;
• recommending individuals to be considered for
election at the next Annual General Meeting
of the Company or to fill vacancies; and
• preparing a description of the role and capabilities
required for a particular appointment.
CORPORATE
GOVERNANCE
DP World has a fraud policy and a fraud incident response plan,
which takes effect in the event of serious incidents to oversee case
management and to ensure appropriate actions are taken. Fraud
risk assessments are conducted across the Group to identify
potential fraud risk scenarios in core business processes and to
monitor the internal controls in place to mitigate such risks.
Sir John Parker (Chairman)
David Williams
Cho Ying Davy Ho
Jamal Majid Bin Thaniah
Mohammed Sharaf
Deepak Parekh
STRATEGIC
REPORT
Nominations and Governance
Committee
The Company takes all reasonable steps to avoid the risk of insider
trading. The Company has adopted processes to keep all members
of staff informed about their duties with respect to the handling of
inside information, as well as dealings in DP World’s shares.
OVERVIEW
GUIDELINES REGARDING INSIDER TRADING
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DP World Annual Report and Accounts 2013
Corporate Governance
Remuneration Committee
The reward policy for Executive Directors and senior management
consists of the following key components:
MEMBERS
Market benchmark:
Sir John Parker (Chairman)
David Williams
Cho Ying Davy Ho
Deepak Parekh
The Remuneration Committee determines and agrees with the
Board the framework and broad policy for the remuneration of the
Group Chief Executive Officer and Chief Financial Officer and other
members of senior management. The policy of the committee is to
review remuneration based on independent assessment and
market practice. The remuneration of Independent Non-Executive
Directors is a matter for the Chairman and executive members of
the Board. No executive is involved in any decisions as to their own
remuneration. The Remuneration Committee:
• determines and agrees with the Board, the
Company’s framework for remuneration;
• recommends and monitors the level and structure
of remuneration to senior management;
• keeps under review its own performance,
constitution and terms of reference; and
• considers other matters as referred to it by the Board.
The full terms of reference of the Remuneration Committee can be
found on DP World’s website.
The membership of the Remuneration Committee is comprised of
four members, all of whom are Independent Non-Executive
Directors. The Chairman of the Remuneration Committee is Sir
John Parker.
The Remuneration Committee meets formally at least twice a year
and otherwise as required.
2013 ACTIVITIES
• reviewed salary structures;
• reviewed the Company’s Performance Delivery Plan; and
• reviewed remuneration disclosure in the
Annual Report and Accounts.
REMUNERATION
EXECUTIVE REWARD POLICY
The reward policy for Executive Directors and senior management
(Executive Committee and other experienced managers) is guided
by the following key principles:
• business strategy support: aligned with our business strategy
with focus on both short-term goals and the creation of longterm value ensuring alignment to shareholders’ interests;
• competitive pay: ensures competitiveness against our
target market;
• fair pay: ensures consistent, equitable and fair treatment within
the organisation; and
• performance-related pay: linked to performance targets via
short and long-term incentive plans and the pay review process.
• the target market position is between median and
upper quartile on a total remuneration basis;
• for Executive Directors and senior management based in
Dubai, practice and policy reflect the structure of the Dubai
pay market, whilst at the same time ensuring competitiveness
on an international basis. Variable pay is also reviewed and
balanced against the total remuneration package; and
• DP World engages the services of Hay Group as the main
provider of market information and as advisers on particular
remuneration matters. This is subject to periodic review.
Base salary:
• fixed cash compensation based on level of
responsibility as determined by the application
of a formal job evaluation methodology;
• reflects local practice in each of the geographies
in which DP World operates, but is also set against
common market policy positions; and
• reviewed annually on 1 April to take into account market
pay movements, individual performance, relativity to market
on an individual basis and DP World’s ability to pay.
ALLOWANCES AND BENEFITS
• Can either be cash or non-cash elements based on
level of responsibility as determined by the application
of a formal job evaluation methodology.
• Reflects local practice in each of the geographies
in which DP World operates, but are also set
against common market policy positions.
• For Executive Directors and senior management based in Dubai,
cash allowances are a normal component of the package
and typically cover accommodation, utility, transport and club
elements in line with Dubai market practice. Benefits include the
provision of children’s education assistance, travel assistance,
medical and dental insurance and post-retirement benefits.
• Reviewed annually to ensure that DP World remains competitive
within the market place and that it continues to provide the
reward mechanisms to aid retention in line with its ability to pay.
PERFORMANCE DELIVERY PLAN (PDP)
• Cash-based incentive plan to motivate, drive and reward
performance over an operating cycle of one year.
• The PDP combines business financial performance and
individual performance objectives. Levels of awards,
financial and personal measures and weightings will
vary depending on the role, geography and level of
responsibility of the individual. For individuals outside the
Executive Directors and senior management category, the
principle is then typically cascaded throughout the business
units’ organisational levels in line with local policies.
• Appropriateness of the levels of awards, financial and personal
measures and weightings are reviewed on an annual basis
to ensure they continue to support our business strategy.
• Payment is in cash and is expected to be made in April each
year for performance over the previous financial year, subject
to review and sign-off by the Remuneration Committee.
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DP World Annual Report and Accounts 2013
LONG-TERM INCENTIVE PLAN (LTIP)
The financial component is based on performance assessed against
a budgeted Profit After Tax (PAT) measure. Payout on the financial
component is triggered if the Company achieves 95% of its target.
Maximum payout on the financial component will occur if the
Company achieves 105% of its target. The payout for performance
between the 95% and 105% of target is on a straight-line basis.
The personal component is based on performance assessed
against Specific, Measurable, Achievable, Relevant & Timebound
(SMART) objectives. The objectives are particular to each individual
role and can include financial based objectives and more
qualitative ones.
The LTIP for the 2011-2013 (award to be paid in 2014), 2012-2014
(award to be paid in 2015) and 2013-2015 (award to be paid in
2016) performance cycles is based on performance over three
years assessed against two budgeted measures with 70% of the
award linked to a Return On Capital Employed measure and 30%
linked to an Earnings Per Share measure.
The LTIP for the cycles described above is worth a maximum of
100% of average annual base salary for the Executive Directors
and the Chief Operating Officer and a maximum of 75% of
average annual base salary for other senior managers.
http://ar.dpworld.com/2013
CONSOLIDATED
FINANCIAL STATEMENTS
The Performance Delivery Plan (PDP) for the financial year ended
2013 (award to be paid in 2014) and 2012 (award paid in 2013) is
worth a maximum of 75% of annual base salary. It is made up of
two components; a financial component worth 70% of the overall
award value and a personal component worth 30% of the overall
award value.
CORPORATE
GOVERNANCE
As described above, the Company has adopted a short-term and a
long-term incentive plan for its Executive Directors and senior
managers. Details of these plans are outlined below.
STRATEGIC
REPORT
INCENTIVE PLANS
OVERVIEW
• Cash-based rolling incentive plan to motivate,
drive and reward sustained performance over the
long-term operating cycle of three years.
• The LTIP reflects business financial performance only.
Levels of awards, financial measures and weightings will
vary depending on the role, geography and levels of
responsibility of the individuals. In addition to the Executive
Directors and senior managers, employees performing the
top 100 jobs (as determined by job size) are also eligible to
participate in the LTIP in line with the same financial metrics
as described for Executive Directors and senior managers
with varying levels of award in line with their job size.
• Appropriateness of the levels of awards, financial measures
and weightings are reviewed on an annual basis to ensure
they continue to support our business strategy.
• Payment is in cash and is expected to be made in April each
year for performance over the previous three financial years,
subject to review and sign-off by the Remuneration Committee.
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DP World Annual Report and Accounts 2013
Corporate Governance
EXECUTIVE DIRECTORS’ SERVICE CONTRACTS
AND REMUNERATION
POST RETIREMENT BENEFITS
As mentioned above, the Executive Directors’ remuneration
structure follows the market practice in the UAE, and all payments
are made tax free reflecting the UAE’s status.
Mohammed Sharaf participates in the government pension
scheme in accordance with local labour law. Yuvraj Narayan
participates in an end of service benefit scheme in accordance with
local labour law.
Each of the Executive Directors is employed pursuant to a
service agreement.
NON-EXECUTIVE DIRECTORS’ LETTERS OF APPOINTMENT
AND FEES
Mohammed Sharaf
Mohammed Sharaf’s service agreement is with DP World FZE
(a subsidiary of the Company). It can be terminated on six months’
notice by either party. In addition, DP World FZE can terminate the
agreement, without notice, on payment of six months’ base salary.
Mohammed Sharaf is entitled to receive a base salary and certain
other benefits under his service agreement.
He was also granted a Performance Delivery Plan award of 71.25%
(out of a maximum of 75%) for performance linked to the 2012
financial year and a Long-Term Incentive Plan award of 75.30%
(out of a maximum of 100%) for performance linked to the
2010-2012 cycle.
His total remuneration for the year ended 31 December 2013
(which includes his base salary and these other benefits)
was $1,542,638.
Yuvraj Narayan
Yuvraj Narayan’s service agreement is with DP World FZE. It can
be terminated on six months’ notice by either party. In addition,
DP World FZE can terminate the agreement, without notice,
on payment of six months’ base salary.
Yuvraj Narayan is entitled to receive a base salary and certain other
benefits under his service agreement.
He was also granted a Performance Delivery Plan award of 75%
(out of a maximum of 75%) for performance linked to the 2012
financial year and a Long-Term Incentive Plan award of 75.30%
(out of a maximum of 100%) for performance linked to the
2010-2012 cycle.
His total remuneration for the year ended 31 December 2013
(which includes his base salary and these other benefits)
was $1,269,520.
The Non-Executive Directors do not have service contracts with the
Company. Their terms of appointment are governed by letters of
appointment. The Company has no contractual obligation to
provide any benefits to any of the Non-Executive Directors upon
termination of their directorship.
Each Non-Executive Director’s letter of appointment is with the
Company and is envisaged to be for a period of three years,
subject to annual re-appointment by the shareholders at each
AGM. It can be terminated on six months’ notice by either party.
For the year ended 31 December 2013, the fees and other
remuneration payable to each of the Non-Executive Directors,
which includes remuneration for their services in being a member
of, or chairing, a Board Committee are set out below:
• Sir John Parker received a Non-Executive
Director fee of $515,955
• David Williams received a Non-Executive
Director fee of $146,047
• Cho Ying Davy Ho received a NonExecutive Director fee of $114,787
• Deepak Parekh received a Non-Executive
Director fee of $114,785
The Chairman, Sultan Ahmed Bin Sulayem, and Non-Executive Vice
Chairman, Jamal Majid Bin Thaniah are not remunerated by
the Company.
DIRECTORS’ INTERESTS IN SHARES
The following is a table of the Directors’ shareholdings:
Mohammed Sharaf
Yuvraj Narayan
Sir John Parker
$2.00 ordinary
shares held
as at
1 January 2013
$2.00 ordinary
shares held
as at
31 Dec 2013
Change
28,221
14,668
7,262
28,221
14,668
7,262
–
–
–
61
DP World Annual Report and Accounts 2013
Statement of Directors’ Responsibilities
in respect of the preparation of the Annual Report and
the Consolidated Financial Statements
The Directors have general responsibility for taking such steps as
are reasonably open to them to safeguard the assets of the Group
and to prevent and detect fraud and other irregularities.
The Directors are also responsible for preparing a Directors’ Report
and Corporate Governance Statement in accordance with
applicable law and regulations.
The Directors consider the Annual Report and the Consolidated
Financial Statements, taken as a whole, to be fair, balanced and
understandable, and provide necessary information for
shareholders to assess the Company’s performance, business
model and strategy.
By order of the Board
B Allinson
Board Legal Adviser and Company Secretary
20 March 2014
http://ar.dpworld.com/2013
CONSOLIDATED
FINANCIAL STATEMENTS
The Directors have responsibility for ensuring that the Company
keeps accounting records which disclose with reasonable accuracy
at any time the financial position of the Company and which
enable them to ensure that the Consolidated Financial Statements
comply with the applicable laws in the relevant jurisdiction.
CORPORATE
GOVERNANCE
The Consolidated Financial Statements are prepared in accordance
with International Financial Reporting Standards. In preparing the
Consolidated Financial Statements, the Directors are required to
select appropriate accounting policies and then apply them
consistently, make judgements and estimates that are reasonable
and prudent and state whether all accounting standards which
they consider to be applicable have been followed, subject to any
material departures disclosed and explained in the Consolidated
Financial Statements. The Directors also use a going concern basis
in preparing the Consolidated Financial Statements unless this is
inappropriate.
STRATEGIC
REPORT
The Directors are required to prepare Consolidated Financial
Statements for each financial year which give a true and fair view
of the state of affairs of DP World Limited (“the Company”) and its
subsidiaries (collectively referred to as “the Group”) as at the end
of the financial year and of the profit and loss for the financial year.
OVERVIEW
The following statement, which should be read in conjunction with
the Auditors’ responsibility section of the Independent Auditors’
Report, is made with a view to distinguishing the respective
responsibilities of the Directors and of the Auditors in relation to
the Consolidated Financial Statements.
62
DP World Annual Report and Accounts 2013
Independent Auditors’ Report
The Shareholders
DP World Limited
Report on the consolidated financial statements
We have audited the accompanying consolidated financial
statements of DP World (“the Company”) and its subsidiaries
(collectively referred to as “the Group”), which comprise the
consolidated statement of financial position as at 31 December
2013, the consolidated statements of comprehensive income
(comprising a separate consolidated income statement and a
consolidated statement of comprehensive income), consolidated
statements of changes in equity and cash flows for the year then
ended, and notes, comprising a summary of significant accounting
policies and other explanatory information.
Management’s responsibility for the consolidated
financial statements
Management is responsible for the preparation and fair
presentation of these consolidated financial statements in
accordance with International Financial Reporting Standards, and
for such internal control as management determines is necessary to
enable the preparation of consolidated financial statements that
are free from material misstatement, whether due to fraud or error.
Auditors’ responsibility
Our responsibility is to express an opinion on these consolidated
financial statements based on our audit. We conducted our audit
in accordance with International Standards on Auditing. Those
standards require that we comply with ethical requirements and
plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free from
material misstatement.
An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the consolidated financial
statements. The procedures selected depend on our judgement,
including the assessment of the risks of material misstatement
of the consolidated financial statements, whether due to fraud
or error. In making those risk assessments, we consider internal
control relevant to the entity’s preparation and fair presentation
of the consolidated financial statements 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
entity’s internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the
reasonableness of accounting estimates made by management,
as well as evaluating the overall presentation of the consolidated
financial statements.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements give a true and
fair view of the consolidated financial position of the Group as at
31 December 2013, and of its consolidated financial performance
and its consolidated cash flows for the year then ended in
accordance with International Financial Reporting Standards.
Matters on which we are required to report by exception
We have nothing to report in respect of the following:
Under the Listing Rules, we are required to review:
• the director’s statement, set out on page 61, in relation to
going concern;
• the part of the corporate governance statement on page 52
relating to the Company’s compliance with the nine provisions
of the UK Corporate Governance Code specified for our
review; and
• certain elements of the report to shareholders by the Board on
Directors’ remuneration.
On behalf of KPMG LLP
63
DP World Annual Report and Accounts 2013
Consolidated Income statement
for the year ended 31 December 2013
Year ended 31 December 2013
Before
Separately
separately disclosed items
disclosed items
(Note 12)
Notes
USD’000
USD’000
Revenue
Cost of sales
3,073,248
(1,849,087)
Gross profit
General and administrative expenses
Other income
Profit on sale and termination of
businesses
Share of profit/(loss) from equityaccounted investees (net of tax)
1,224,161
(311,243)
21,458
Results from operating activities
8
84,366
16
10
10
Net finance costs
Profit before tax
Income tax expense
Profit for the year
Earnings per share
Basic and diluted earnings per share –
US cents
–
–
3,121,017
(2,003,318)
1,117,699
(279,459)
21,643
–
(55,850)
–
1,117,699
(335,309)
21,643
237,204
237,204
–
(101,433)
–
1,224,161
(412,676)
21,458
158,188
158,188
–
80,061
133,897
20,710
154,607
1,071,192
993,780
202,064
1,195,844
52,450
84,493
(369,439)
–
–
84,493
(369,439)
75,211
(371,229)
–
(10,373)
75,211
(381,602)
(284,946)
–
(284,946)
(296,018)
(10,373)
(306,391)
11
733,796
(59,558)
52,450
(4,900)
786,246
(64,458)
697,762
(72,954)
191,691
–
889,453
(72,954)
9
674,238
47,550
721,788
624,808
191,691
816,499
35,215
12,335
639,636
82,152
545,182
79,626
193,216
(1,525)
738,398
78,101
674,238
47,550
721,788
624,808
191,691
816,499
24 77.06 The accompanying notes 1 to 34 form an integral part of these consolidated financial statements.
The Independent Auditors’ Report is set out on page 62.
604,421
69,817
* Refer to note 3(F).
www.dpworld.com/investors
Total
USD’000
88.96
CONSOLIDATED
FINANCIAL STATEMENTS
Profit attributable to:
Owners of the Company
Non-controlling interests
Separately
disclosed items
(Note 12)
USD’000
3,073,248 3,121,017
(1,849,087) (2,003,318)
(4,305)
1,018,742
Before
separately
disclosed items
USD’000
CORPORATE
GOVERNANCE
Finance income
Finance costs
–
–
–
12
Total
USD’000
STRATEGIC
REPORT
Year ended 31 December 2012 (Restated*)
OVERVIEW
64
DP World Annual Report and Accounts 2013
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2013
Notes
Profit for the year
Other comprehensive income
Items that are or may be reclassified subsequently to consolidated income statement:
Foreign exchange translation differences for foreign operations**
Foreign exchange profit recycled to consolidated income statement on sale of businesses
Net change in cash flow hedges recycled to consolidated income statement
Net change in fair value of available-for-sale financial assets
Share in other comprehensive income of equity-accounted investees
Effective portion of net changes in fair value of cash flow hedges
Related tax on fair value of cash flow hedges
Items that will never be reclassified to consolidated income statement:
Remeasurements of post-employment benefit obligations
Related tax
2013
USD’000
2012
USD’000
(Restated*)
721,788
816,499
(133,211)
(4,316)
–
3,160
17,772
96,743
(18,863)
17
104,135
(2,131)
10,373
(132)
(8,686)
(24,768)
10,444
38,880
(1,480)
(30,769)
500
Other comprehensive income for the year, net of income tax
(1,315)
58,966
Total comprehensive income for the year
Total comprehensive income attributable to:
Owners of the Company
Non-controlling interests
26
720,473
875,465
628,586
91,887
797,454
78,011
720,473
875,465
* Refer to note 3(F).
**A significant portion of this includes foreign exchange translation differences arising from the translation of goodwill and purchase price adjustments which are denominated in foreign currencies at
the Group level. The translation differences arising on account of translation of the financial statements of foreign operations whose functional currencies are different from that of the Group’s
presentation currency on Group consolidation are also reflected here. There are no differences on translation from functional to presentation currency as the Company’s functional currency is currently
pegged to the presentation currency (refer to note 2(D)).
The accompanying notes 1 to 34 form an integral part of these consolidated financial statements.
The Independent Auditors’ Report is set out on page 62.
65
DP World Annual Report and Accounts 2013
Consolidated Statement of Financial Position
as at 31 December 2013
Notes
Total non-current assets
Current assets
Inventories
Accounts receivable and prepayments
Bank balances and cash
Assets held for sale
Total current assets
6,069,785
1,532,238
2,904,481
2,700,703
4,393
62,923
181,110
13
14
14
16
11
17
18
5,413,262
1,588,918
3,115,084
3,348,317
2,724
60,833
263,428
5,124,120
1,607,655
3,223,958
3,451,264
360
73,193
260,114
13,455,633 13,792,566 13,740,664
51,717
680,694
2,572,470
–
53,283
609,422
1,881,928
–
54,979
627,297
4,159,364
77,706
3,304,881
2,544,633
4,919,346
18
19
Total equity attributable to equity holders of the Company
Non-controlling interests
Total equity
Liabilities
Non-current liabilities
Deferred tax liabilities
Employees’ end of service benefits
Pension and post-employment benefits
Interest bearing loans and borrowings
Accounts payable and accruals
Total non-current liabilities
Current liabilities
Income tax liabilities
Bank overdrafts
Pension and post-employment benefits
Interest bearing loans and borrowings
Accounts payable and accruals
Total current liabilities
Total liabilities
Total equity and liabilities
16,760,514 16,337,199 18,660,010
20
21
21
21
21
21
1,660,000
2,472,655
2,000,000
3,408,504
(31,384)
(343,269)
(620,706)
1,660,000
2,472,655
2,000,000
2,968,068
(122,229)
(379,171)
(482,909)
1,660,000
2,472,655
2,000,000
2,408,803
(104,408)
(352,402)
(586,555)
22
8,545,800
475,741
8,116,414
663,993
7,498,093
765,013
9,021,541
11
25
26
27
28
8,780,407
8,263,106
935,586
61,740
169,778
4,776,690
281,246
967,902
55,747
223,234
4,049,621
504,755
977,503
49,393
194,111
4,563,309
467,240
6,225,040
5,801,259
6,251,556
210,347
1,407
10,068
258,327
1,033,784
186,586
195
11,845
702,835
854,072
172,862
1,017
12,621
3,178,446
780,402
1,513,933
1,755,533
4,145,348
7,738,973
7,556,792 10,396,904
11
19
26
27
28
16,760,514 16,337,199 18,660,010
* Refer to note 3 (F).
The accompanying notes 1 to 34 form an integral part of these consolidated financial statements. The consolidated financial statements
were authorised for issue on 20 March 2014.
Mohammed Sharaf
Chief Executive Officer
The Independent Auditors’ Report is set out on page 62.
www.dpworld.com/investors
Yuvraj Narayan
Chief Financial Officer
CONSOLIDATED
FINANCIAL STATEMENTS
Total assets
Equity
Share capital
Share premium
Shareholders’ reserve
Retained earnings
Hedging and other reserves
Actuarial reserve
Translation reserve
CORPORATE
GOVERNANCE
1 January
2012
USD’000
(Restated*)
STRATEGIC
REPORT
Assets
Non-current assets
Property, plant and equipment
Goodwill
Port concession rights
Investment in equity-accounted investees
Deferred tax assets
Other investments
Accounts receivable and prepayments
31 December
2012
USD’000
(Restated*)
OVERVIEW
31 December
2013
USD’000
66
DP World Annual Report and Accounts 2013
Consolidated Statement of Changes in Equity
for the year ended 31 December 2013
Share
capital
USD’000
Share
premium
USD’000
Shareholders’
reserve
USD’000
1,660,000
2,472,655
2,000,000
Total comprehensive income for the year
Profit for the year
Total other comprehensive income, net of income tax
–
–
–
–
–
–
Total comprehensive income for the year
–
–
–
Transactions with owners, recorded directly in equity
Dividends paid (refer to note 23)
–
–
–
Total transactions with owners
–
–
–
–
–
–
–
–
–
–
–
–
Balance as at 31 December 2013
1,660,000
2,472,655
2,000,000
Balance as at 1 January 2012 (Restated*)
Impact of IAS 19 amendment (refer to note 3(F))
1,660,000
–
2,472,655
–
2,000,000
–
Balance as at 1 January 2012 (Restated – refer to note 3(F))
1,660,000
2,472,655
2,000,000
Total comprehensive income for the year
Profit for the year
Total other comprehensive income, net of income tax
–
–
–
–
–
–
Total comprehensive income for the year
–
–
–
Transactions with owners, recorded directly in equity
Dividends paid (refer to note 23)
–
–
–
Total transactions with owners
–
–
–
–
–
–
–
–
–
–
–
–
Balance as at 1 January 2013 (Restated*)
Transactions with non-controlling interests, recorded directly in equity
Dividends paid
Derecognition of non-controlling interests on loss of control in Asia Pacific and
Indian subcontinent region
Total transactions with non-controlling interests
Changes in ownership interests in subsidiaries
Acquisition of non-controlling interests without change in control**
Transactions with non-controlling interests, recorded directly in equity
Dividends paid
Derecognition of non-controlling interests on monetisation of investment in
subsidiaries
Total transactions with non-controlling interests
Balance as at 31 December 2012
–
–
–
1,660,000
2,472,655
2,000,000
* Refer to note 3 (F).
**This mainly includes acquisition of remaining 10% interest in a subsidiary in Middle East, Europe and Africa Region for a consideration of USD 46,390 thousand resulting in a gain on acquisition
of USD 20,067 thousand.
The accompanying notes 1 to 34 form an integral part of these consolidated financial statements.
The Independent Auditors’ Report is set out on page 62.
67
DP World Annual Report and Accounts 2013
Attributable to equity holders of the Company
Total
USD’000
Non-controlling
interests
USD’000
Total
equity
USD’000
(122,229)
(379,171)
(482,909)
8,116,414
663,993
8,780,407
639,636
–
–
90,845
–
35,902
–
(137,797)
639,636
(11,050)
82,152
9,735
721,788
(1,315)
639,636
90,845
35,902
(137,797)
628,586
91,887
720,473
(199,200)
–
–
–
(199,200)
–
(199,200)
(199,200)
–
–
–
(199,200)
–
(199,200)
–
–
–
–
–
(64,064)
(64,064)
–
–
–
–
–
(216,075)
(216,075)
–
–
–
–
–
(280,139)
(280,139)
(31,384)
(343,269)
(620,706)
8,545,800
475,741
9,021,541
2,367,164
41,639
(104,408)
–
(352,402)
–
(586,555)
–
7,456,454
41,639
765,013
–
8,221,467
41,639
2,408,803
(104,408)
(352,402)
(586,555)
7,498,093
765,013
8,263,106
738,398
–
–
(17,821)
–
(26,769)
–
103,646
738,398
59,056
78,101
(90)
816,499
58,966
738,398
(17,821)
(26,769)
103,646
797,454
78,011
875,465
(199,200)
–
–
–
(199,200)
–
(199,200)
(199,200)
–
–
–
(199,200)
–
(199,200)
20,067
–
–
–
20,067
(66,457)
(46,390)
–
–
–
–
–
(90,050)
(90,050)
–
–
–
–
–
(22,524)
(22,524)
20,067
–
–
–
20,067
(179,031)
(158,964)
2,968,068
(122,229)
(379,171)
(482,909)
8,116,414
663,993
8,780,407
www.dpworld.com/investors
CONSOLIDATED
FINANCIAL STATEMENTS
3,408,504
CORPORATE
GOVERNANCE
Translation
reserve
USD’000
STRATEGIC
REPORT
Actuarial
reserve
USD’000
2,968,068
Hedging and
other reserves
USD’000
OVERVIEW
Retained
earnings
USD’000
68
DP World Annual Report and Accounts 2013
Consolidated Statement of Cash Flows
for the year ended 31 December 2013
Cash flows from operating activities
Profit for the year
Adjustments for:
Depreciation and amortisation
Impairment
Share of profit from equity-accounted investees (net of tax)
Finance costs
(Gain)/loss on sale of property, plant and equipment and port concession rights
Profit on sale and termination of businesses (net of tax)
Finance income
Income tax expense
2013
USD’000
Notes
2012
USD’000
(Restated*)
721,788
9
9
10
10
11
816,499
395,499
99,153
(80,061)
369,439
(6,571)
(158,188)
(84,493)
64,458
410,632
49,900
(154,607)
381,602
1,490
(237,204)
(75,211)
72,954
Gross cash flows from operations
Change in inventories
Change in accounts receivable and prepayments
Change in accounts payable and accruals
Change in provisions, pensions and post-employment benefits
1,321,024
2,110
(88,153)
59,033
4,674
1,266,055
1,641
25,036
47,141
(33,672)
Cash generated from operating activities
Income taxes paid
1,298,688
(86,955)
1,306,201
(74,856)
Net cash from operating activities
1,211,733
1,231,345
Cash flows from investing activities
Additions to property, plant and equipment
Additions to port concession rights
Proceeds from disposal of property, plant and equipment and port concession rights
Net proceeds from monetisation of investment in subsidiaries and equity-accounted investees
Cash outflow on acquisition of non-controlling interests without change in control
Receipt of deferred consideration on disposal of equity-accounted investees
Interest received
Dividends received from equity-accounted investees
Additional investment in equity-accounted investees
Net loan repaid by/(advanced to) equity-accounted investees
Return of capital from equity-accounted investees
Return of capital from other investments
Net cash (used in)/from investing activities
Cash flows from financing activities
Repayment of interest bearing loans and borrowings
Drawdown of interest bearing loans and borrowings
Interest paid
Dividend paid to the owners of the Company
Dividends paid to non-controlling interests
Net cash used in financing activities
(304,314) (3,544,842)
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents as at 1 January
Effect of exchange rate fluctuations on cash held
696,618 (2,290,920)
1,881,733 4,158,347
(7,288)
14,306
Cash and cash equivalents as at 31 December
Cash and cash equivalents
* Refer to note 3 (F).
The accompanying notes 1 to 34 form an integral part of these consolidated financial statements.
(1,025,530)
(37,892)
10,103
658,685
–
16,140
43,103
94,523
(38,256)
68,323
–
–
(641,934)
(43,017)
17,744
436,052
(46,390)
–
77,594
197,839
(15,283)
(500)
28,244
12,228
(210,801)
22,577
(633,090) (3,204,428)
912,987
241,411
(320,947)
(292,575)
(199,200)
(199,200)
(64,064)
(90,050)
2,571,063
19
Cash and cash equivalents comprise the following:
Bank balances and cash
Bank overdrafts
The Independent Auditors’ Report is set out on page 62.
13
14
1,881,733
2,572,470
(1,407)
1,881,928
(195)
2,571,063
1,881,733
69
DP World Annual Report and Accounts 2013
Notes to Consolidated Financial Statements
(forming part of the financial statements)
1
REPORTING ENTITY
Port & Free Zone World FZE is a wholly owned subsidiary of Dubai World Corporation (“the Ultimate Parent Company”).
The Company’s registered office address is P.O. Box 17000, Dubai, United Arab Emirates.
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”).
The consolidated financial statements were approved by the Board of Directors on 20 March 2014.
(B) BASIS OF MEASUREMENT
The consolidated financial statements have been prepared on the historical cost basis except for derivative financial instruments and
available-for-sale financial assets which are measured at fair value.
(C) FUNDING AND LIQUIDITY
The Group’s business activities, together with factors likely to affect its future development, performance and position are set out in the
Chairman’s Statement and Operating and Financial Review. In addition, note 6 sets out the Group’s objectives, policies and processes for
managing the Group’s financial risk including capital management and note 30 provides quantitative details of the Group’s exposure to
credit risk, liquidity risk and interest rate risk from financial instruments.
The Board of Directors remain satisfied with the Group’s funding and liquidity position. At 31 December 2013, the Group has a net
debt of USD 2,463,954 thousand (2012: USD 2,870,723 thousand). The Group’s credit facility covenants are currently well within the
covenant limits. The Group generated gross cash of USD 1,321,024 thousand (2012: USD 1,266,055 thousand) from operating activities
and its interest cover for the year is 5 times (2012: 4.7 times) (calculated using adjusted EBITDA and net finance cost before separately
disclosed items).
Based on the above, the Board of Directors have concluded that the going concern basis of preparation continues to be appropriate.
(D) FUNCTIONAL AND PRESENTATION CURRENCY
The functional currency of the Company is UAE Dirhams. Each entity in the Group determines its own functional currency and items
included in the financial statements of each entity are measured using that functional currency.
These consolidated financial statements are presented in United States Dollars (“USD”), which in the opinion of management is the most
appropriate presentation currency of the Company in view of the global presence of the Group. All financial information presented in USD
is rounded to the nearest thousand.
UAE Dirham is currently pegged to USD and there are no differences on translation from functional to presentation currency.
(E) USE OF ESTIMATES AND JUDGEMENTS
The preparation of consolidated financial statements in conformity with IFRS requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, income and expenses. Actual
results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in
which the estimate is revised and in any future periods affected.
www.dpworld.com/investors
CONSOLIDATED
FINANCIAL STATEMENTS
The methods used to measure fair values are discussed further in note 5.
CORPORATE
GOVERNANCE
2 BASIS OF PREPARATION
(A) STATEMENT OF COMPLIANCE
STRATEGIC
REPORT
Port & Free Zone World FZE (“the Parent Company”), which originally held 100% of the Company’s issued and outstanding share capital,
made an initial public offer of 19.55% of its share capital to the public and the Company was listed on the Nasdaq Dubai with effect from
26 November 2007. The Company was further admitted to trade on the London Stock Exchange with effect from 1 June 2011.
OVERVIEW
DP World Limited (“the Company”) was incorporated on 9 August 2006 as a Company Limited by Shares with the Registrar of Companies
of the Dubai International Financial Centre (“DIFC”) under the Companies Law, DIFC Law No. 3 of 2006. The consolidated financial
statements of the Company for the year ended 31 December 2013 comprise the Company and its subsidiaries (collectively referred to as
“the Group”) and the Group’s interests in equity-accounted investees. The Group is engaged in the business of international marine
terminal operations and development, logistics and related services.
70
DP World Annual Report and Accounts 2013
Notes to Consolidated Financial Statements continued
2 BASIS OF PREPARATION CONTINUED
(i)Judgements
Information about critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in
the consolidated financial statements are as follows:
(a) Provision for income taxes and deferred tax
The Group is subject to income taxes in numerous jurisdictions. Significant judgement is required in determining the worldwide provision
for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary
course of business. The Group recognises liabilities for anticipated tax payments based on estimates of whether additional taxes will be
due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact
the income tax and deferred tax provisions in the period in which such determination is made.
Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be available against
which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can
be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies.
(b) Impairment of available-for-sale financial assets
Available-for-sale financial assets are impaired when objective evidence of impairment exists. A significant or prolonged decline in the fair
value of an investment is considered as objective evidence of impairment. The Group considers that generally a decline of 20% will be
considered as significant and a decline of over nine months will be considered as prolonged.
(c) Fair value of financial instruments
Where the fair value of financial assets and financial liabilities recorded in the consolidated statement of financial position cannot be
derived from active markets, they are determined using valuation techniques including the discounted cash flow model. The inputs to
these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in
establishing fair values. The judgements include consideration of inputs such as market risk, credit risk and volatility.
(d) Contingent liabilities
There are various factors that could result in a contingent liability being disclosed if the probability of any outflow in settlement is not
remote. The assessment of the outcome and financial effect is based upon management’s best knowledge and judgement of current facts
as at the reporting date.
(ii)Estimates
Information about assumptions and estimation uncertainties that have significant risk of resulting in a material adjustment within the next
financial year are as follows:
(a) Useful life of property, plant and equipment and port concession rights with finite life
The useful life of property, plant and equipment and port concession rights with finite life is determined by the Group’s management
based on their estimate of the period over which an asset or port concession right is expected to be available for use by the Group. This
estimate is reviewed and adjusted if appropriate at each financial year end. This may result in a change in the useful economic lives and
therefore depreciation and amortisation expense in future periods.
(b) Impairment testing of goodwill and port concession rights
The Group determines whether goodwill and port concession rights with indefinite life are impaired, at least on an annual basis. This
requires an estimation of the value in use of the cash-generating units to which the goodwill is allocated or in which the port concession
rights with indefinite life exist. Estimating the value in use requires the Group to make an estimate of the expected future cash flows from
the cash-generating unit and also to choose a suitable discount rate in order to calculate the present value of those cash flows.
(c) Impairment of accounts receivable
An estimate of the collectible amount of accounts receivable is made when collection of the full amount is no longer probable. For
significant amounts, this estimation is performed on an individual basis. Amounts which are not individually significant, but which are past
due, are assessed collectively and a provision applied according to the length of time past due, based on historical recovery rates. Any
difference between the amounts actually collected in future periods and the amounts expected, will be recognised in the consolidated
income statement.
(d) Pension and post-employment benefits
The cost of defined benefit pension plans and other post-employment benefits is determined using actuarial valuations. The actuarial
valuation involves making assumptions about discount rates, expected rates of return on assets, future salary increases, mortality rates and
future pension increases. Due to the long-term nature of these plans, such estimates are subject to significant uncertainty.
(e) Business combinations
In accounting for business combinations, judgement is required in identifying whether an identifiable intangible asset is to be recorded
separately from goodwill. Additionally, estimating the acquisition date fair value of the identifiable assets acquired and liabilities assumed
involves management judgement. These measurements are based on information available at the acquisition date and are based on
expectations and assumptions that have been deemed reasonable by the management. Changes in these judgements, estimates and
assumptions can materially affect the results of operations.
71
3
DP World Annual Report and Accounts 2013
CHANGES IN ACCOUNTING POLICIES
The Group has adopted the following new standards and amendments to standards, including any consequential amendments to other
standards, with a date of initial application of 1 January 2013.
IFRS 10 Consolidated Financial Statements (2011)
IFRS 11 Joint Arrangements
IFRS 12 Disclosure of Interests in Other Entities
IFRS 13 Fair Value Measurement
Presentation of Items of Other Comprehensive Income (Amendments to IAS 1)
IAS 19 Employee Benefits (2011)
STRATEGIC
REPORT
a.
b.
c.
d.
e.
f.
OVERVIEW
Except for the changes below, the Group has consistently applied the accounting policies set out in note 4 to all periods presented in these
consolidated financial statements.
The nature and effects of the changes are explained below:
As a result of IFRS 10 (2011), the Group has changed its accounting policy for determining whether it has control over and consequently
whether it consolidates its investees. IFRS 10 (2011) introduces a new control model that focuses on whether the Group has power over an
investee, exposure or rights to variable returns from its involvement with the investee and ability to use its power to affect those returns.
In accordance with the transitional provisions of IFRS 10 (2011), the Group reassessed the control conclusion for its investees at 1 January
2013 resulting in no change.
As a result of IFRS 11, the Group has changed its accounting policy for its interests in joint arrangements. Under IFRS 11, the Group has
classified its interests in joint arrangements as either joint operations (if the Group has rights to assets, and obligations for liabilities,
relating to an arrangement) or joint ventures (if the Group has rights only to the net assets of an arrangement). When making this
assessment, the Group considered the structure of the arrangements, the legal form of any separate vehicles, the contractual terms of the
arrangements and other facts and circumstances. Previously, the structure of the arrangement was the sole focus of classification.
The Group has concluded that there are no joint operations.
(C) DISCLOSURE OF INTERESTS IN OTHER ENTITIES
As a result of IFRS 12, the Group has expanded its disclosures about its interests in equity-accounted investees and non-controlling
interests (see notes 16, 22 and 34).
(D) FAIR VALUE MEASUREMENT
IFRS 13 establishes a single framework for measuring fair value and making disclosures about fair value measurements when such
measurements are required or permitted by other IFRSs. It unifies the definition of fair value as the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It replaces and expands
the disclosure requirements about fair value measurements in other IFRSs, including IFRS 7. As a result, the Group has included additional
disclosures in this regard (see note 30).
Notwithstanding the above, the change had no significant impact on the measurements of the Group’s assets and liabilities.
(E) PRESENTATION OF ITEMS OF OTHER COMPREHENSIVE INCOME (OCI)
As a result of the amendments to IAS 1, the Group has modified the presentation of items of OCI in its consolidated statement of
comprehensive income, to present separately items that would be reclassified to consolidated income statement from those that would
never be. Comparative information has been re-presented accordingly.
(F) POST-EMPLOYMENT DEFINED BENEFIT PLANS
IAS 19 Revised (2011) – Employee Benefits – includes a number of amendments to the accounting for defined benefit plans. The following
changes have had an impact on the Group:
• Expected returns on plan assets are no longer recognised in profit or loss. Net interest is recognised in profit or loss, calculated using
the discount rate used to measure the net defined benefit liability. The difference between the actual return on plan assets and the
interest income is recognised as a re-measurement in other comprehensive income.
• Administration costs are recognised in profit or loss and no longer being taken into account in measuring the defined benefit obligation.
• Unvested past service costs can no longer be deferred and recognised over the future vesting period. Instead, all past service costs are
recognised at the earlier of when the amendment occurs and when the Group recognises related restructuring or termination costs.
(Until 2012, the Group’s past service costs were recognised as an expense on a straight-line basis over the average period until the
benefits become vested).
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CONSOLIDATED
FINANCIAL STATEMENTS
(B) JOINT ARRANGEMENTS
CORPORATE
GOVERNANCE
(A)SUBSIDIARIES
72
DP World Annual Report and Accounts 2013
Notes to Consolidated Financial Statements continued
3
CHANGES IN ACCOUNTING POLICIES CONTINUED
Other amendments include new disclosures, such as, quantitative sensitivity disclosures.
The effect of the adoption of IAS 19R is explained below:
As at
31 December
2013
USD’000
As at
31 December
2012
USD’000
As at
1 January
2012
USD’000
49,274
25,107
24,167
50,562
19,131
31,431
41,639
–
41,639
For the
year ended
31 December
2013
USD’000
For the
year ended
31 December
2012
USD’000
Impact on income statement:
Increase in cost of sales
Increase in general and administrative expenses – refer to note (b) below
Increase in finance costs – see note (c) below
413
2,502
7,017
512
2,559
7,137
Total impact on income statement
9,932
10,208
25,107
19,131
Impact on statement of financial position:
Decrease in pension and post-employment benefits – refer to note (a) below
Increase in actuarial reserve
Increase in retained earnings
Impact on other comprehensive income
(a) The transition to revised IAS 19 resulted in a reduction of net defined benefit plan obligations due to the administration costs being
taken to the consolidated income statement each year rather than being reserved as part of the discounted obligation.
(b) Certain pension administration costs are directly recognised in consolidated income statement as per revised IAS 19.
(c) The interest expense/(income) under IAS 19R is calculated as net interest based on the discount rate that is used to measure the net
defined benefit liability. Expected returns on plan assets are no longer recognised in profit or loss. These changes in the standard give
rise to an adjustment in profit and loss with a corresponding impact in actuarial reserve.
The segment information has accordingly been adjusted based on the above restatements (refer to note 7).
4
SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently in the year presented in these consolidated financial statements and
have been applied consistently by the Group entities.
(A) BASIS OF CONSOLIDATION
(i) Business combinations
Except for transactions involving entities under common control, where the provisions of IFRS 3, "Business Combinations" are not
applicable, business combinations are accounted for using the acquisition method as at the acquisition date – i.e. when control is
transferred to the Group. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its
activities. In assessing control, the Group takes into consideration potential voting rights that are currently exercisable.
The Group measures goodwill at the acquisition date as:
• the fair value of the consideration transferred; plus
• the recognised amount of any non-controlling interests in the acquiree; plus
• if the business combination is achieved in stages, the fair value of the pre-existing equity interest in the acquiree; less
• the net recognised amount (generally fair value) of the identifiable assets (including previously unrecognised port concession rights)
acquired and liabilities (including contingent liabilities and excluding future restructuring) assumed.
In an acquisition, if the purchase price is lower than the fair value of the assets acquired, the resulting gain will be recognised immediately
in the statement of consolidated income statement.
The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally
recognised in the consolidated income statement.
Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a
business combination are expensed as incurred.
Any contingent consideration payable is measured at fair value at the acquisition date. If the contingent consideration is classified as equity,
then it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes in the fair value of the contingent
consideration are recognised in the consolidated income statement.
73
DP World Annual Report and Accounts 2013
For each business combination, the Group elects to measure any non-controlling interests at their proportionate share of the acquiree’s
identifiable net assets, which is generally at fair value.
Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so, causes the
non-controlling interests to have a debit balance.
(iii)Subsidiaries
(iv) Loss of control
(v) Structured entities
The Group has established DP World Sukuk Limited (a limited liability company incorporated in the Cayman Islands) as a structured entity
(“SE”) for the issue of Sukuk Certificates. These certificates are listed on Nasdaq Dubai and London Stock Exchange. The Group does not
have any direct or indirect shareholding in this entity.
A SE is consolidated based on an evaluation of the substance of its relationship with the Group and its risks and rewards. The SE was
established by the Group under the terms that impose strict limitations on the decision-making powers of the SE’s management thereby
resulting into majority of the benefits related to the SE’s operations and net assets being received by the Group. Consequently, the Group
is also exposed to risks incident to the SE’s activities and retains the majority of the residual or ownership risks related to the SE or its
assets. Therefore, Group concludes that it controls the SE. Refer to accounting policy on non-derivative financial liabilities in note 4(C)(ii).
(vi) Investments in associates and joint ventures (equity-accounted investees)
Associates are those entities in which the Group has significant influence, but not control or joint control, over the financial and operating
policies. Significant influence is presumed to exist when the Group holds between 20 per cent and 50 per cent of the voting power of
another entity.
Joint ventures are those entities over whose activities the Group has joint control, whereby the Group has rights to the net assets of the
arrangement, rather than rights to its individual assets and obligations for its individual liabilities.
Investments in equity-accounted investees are accounted for using the equity method and are initially recorded at cost including
transaction costs. The Group’s investment includes fair value adjustments (including goodwill) net of any accumulated impairment losses.
The consolidated financial statements include the Group’s share of the income and expenses of equity-accounted investees, after
adjustments to align the accounting policies with those of the Group, from the date that significant influence or joint control commences
until the date that significant influence or joint control ceases.
When the Group’s share of losses exceeds its interest in an equity-accounted investee, the carrying amount of that interest (including any
long-term investments) is reduced to nil and the recognition of further losses is discontinued except to the extent that the Group has an
obligation or has made payments on behalf of the investee. If the equity-accounted investees subsequently reports profits, the Group
resumes recognising its share of those profits only after its share of the profits equals the share of losses not recognised.
The financial statements of the equity-accounted investees are prepared for the same reporting period as the Group. The transactions
between the Group and its equity-accounted investees are made at normal market prices.
At each reporting date, the Group determines whether there is any objective evidence that the investment in the equity-accounted
investees are impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable
amount of the equity-accounted investees and its carrying value and recognises the same in the consolidated income statement.
Upon loss of joint control or significant influence, the Group measures and recognises any retained investment at its fair value. The
difference between the carrying amount of the equity-accounted investees upon loss of joint control or significant influence and the fair
value of the retained investment and proceeds from disposal is recognised as profit or loss in the consolidated income statement.
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CONSOLIDATED
FINANCIAL STATEMENTS
On the loss of control, the Group derecognises the assets and liabilities of a subsidiary, any non-controlling interests and the other
components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in the consolidated
income statement. If the Group retains any interest in the previous subsidiary, then such interest is re-measured at fair value at the date
that control is lost. Subsequently, that retained interest is accounted for as an equity-accounted investee or as an available-for-sale financial
asset depending on the level of influence retained.
CORPORATE
GOVERNANCE
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of
subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.
The accounting policies of subsidiaries have been changed where necessary to align them with the policies adopted by the Group.
STRATEGIC
REPORT
Changes in the Group’s interests in a subsidiary that do not result in a loss of control are accounted for as transactions with owners in
their capacity as owners and therefore no goodwill is recognised as a result of such transactions. The difference between the fair value
of any consideration paid and relevant share acquired in the carrying value of net assets of the subsidiary is recorded in equity under
retained earnings.
OVERVIEW
4 SIGNIFICANT ACCOUNTING POLICIES CONTINUED
(ii) Non-controlling interests
74
DP World Annual Report and Accounts 2013
Notes to Consolidated Financial Statements continued
4 SIGNIFICANT ACCOUNTING POLICIES CONTINUED
(vii) Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in
preparing the consolidated financial statements. Unrealised gains arising from the transactions with equity-accounted investees are
eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as
unrealised gains, but only to the extent that there is no evidence of impairment.
(B) FOREIGN CURRENCY
(i) Foreign currency transactions
These consolidated financial statements are presented in USD, which is the Group’s presentation currency. Transactions in foreign
currencies are translated to the respective functional currencies of the Group entities at exchange rates at the date of the transactions.
Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the
exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are
retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items in a
foreign currency that are measured at historical cost are translated to the functional currency using the exchange rate at the date of
transaction. Foreign currency differences arising on retranslation of monetary items are recognised in the consolidated income statement,
except for differences arising on the retranslation of available-for-sale equity instruments, of a financial liability designated as a hedge of
the net investment in a foreign operation, or qualifying cash flow hedges, which are recognised directly in consolidated statement of other
comprehensive income (refer to note 4(B)(iii)).
(ii) Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to USD at
exchange rates at the reporting date. The income and expenses of foreign operations are translated to USD at rates approximating to the
foreign exchange rates ruling at the date of the transactions. Foreign exchange differences arising on translation are recognised in the
consolidated statement of other comprehensive income and presented in the translation reserve in equity. However, if the foreign
operation is not a wholly owned subsidiary, then the relevant proportion of the translation difference is allocated to non-controlling
interests.
When a foreign operation is disposed such that control, significant influence or joint control is lost, the cumulative amount in the
translation reserve related to that foreign operation is reclassified to the consolidated income statement as part of the gain or loss on
disposal. When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation while retaining control, the
relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Group disposes of only part of its
investment in an associate or joint venture that includes a foreign operation while retaining significant influence or joint control, the
relevant proportion of the cumulative amount is reclassified to the consolidated income statement.
Foreign exchange gains and losses arising from a monetary item receivable from or payable to a foreign operation, the settlement of
which is neither planned nor likely in the foreseeable future, are considered to form part of a net investment in a foreign operation and are
recognised in consolidated statement of other comprehensive income and presented in the translation reserve in equity.
(iii) Hedge of a net investment in a foreign operation
Foreign currency differences arising on the retranslation of a financial liability designated as a hedge of a net investment in a foreign
operation are recognised in the consolidated statement of other comprehensive income, to the extent that the hedge is effective. To the
extent that the hedge is ineffective, such differences are recognised in the consolidated income statement. When the hedged net
investment is disposed of, the associated cumulative amount in consolidated statement of other comprehensive income is transferred to
the consolidated income statement as part of the gain or loss on disposal.
(C) FINANCIAL INSTRUMENTS
(i) Non-derivative financial assets
Initial recognition and measurement
The Group classifies non-derivative financial assets into the following categories: held to maturity financial assets, loans and receivables
and available-for-sale financial assets. The Group determines the classification of its financial assets at initial recognition.
All non-derivative financial assets are recognised initially at fair value, plus, any directly attributable transaction costs.
The Group initially recognises loans and receivables and deposits on the date that they originated. All other financial assets are recognised
initially on the trade date, which is the date that the Group becomes a party to the contractual provisions of the instrument.
The Group’s non-derivative financial assets comprise investments in an unquoted infrastructure fund, debt securities held to maturity,
trade and other receivables, due from related parties and cash and cash equivalents.
Subsequent measurement
The subsequent measurement of non-derivative financial assets depends on their classification as follows:
75
DP World Annual Report and Accounts 2013
If the Group has a positive intent and ability to hold debt securities to maturity, then these are classified as held-to-maturity. Subsequent to
initial recognition, held-to-maturity financial assets are measured at amortised cost using the effective interest method, less any
impairment losses. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are
an integral part of the effective interest rate. The effective interest rate amortisation is included in finance cost in the consolidated income
statement. Gains and losses are also recognised in the consolidated income statement when these financial assets are derecognised.
Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Subsequent to
initial recognition, loans and receivables are measured at amortised cost using the effective interest rate method, less any impairment
losses. Loans and receivables comprise bank balances and cash, due from related parties and, trade and other receivables.
Bank balances and cash
STRATEGIC
REPORT
Loans and receivables
OVERVIEW
4 SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Held to maturity financial assets
Bank balances and cash in the consolidated statement of financial position comprise cash in hand, bank balances and deposits.
Available-for-sale investments
De-recognition of non-derivative financial assets
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to
receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the
financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Group is recognised as a
separate asset or liability.
(ii) Non-derivative financial liabilities
Initial recognition and measurement
The Group’s non-derivative financial liabilities consist of loans and borrowings, bank overdrafts, amounts due to related parties, and trade
and other payables. The Group determines the classification of its financial liabilities at initial recognition.
All non-derivative financial liabilities are recognised initially at fair value and in the case of other financial liabilities net of directly
attributable transaction costs.
The Group initially recognises debt securities issued and subordinated liabilities on the date they originated. All other financial liabilities are
recognised initially on the trade date, which is the date that the Group becomes a party to the contractual provisions of the instrument.
Fees paid on the establishment of loan facilities are recognised as transaction costs to the extent there is evidence that it is probable that
some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of
the facility to which it relates.
Subsequent measurement
The subsequent measurement of non-derivative financial liabilities depends on their classification as follows:
Subsequent to initial recognition, these financial liabilities are measured at amortised cost using effective interest rate method. Amortised
cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective
interest rate. The effective interest rate amortisation is included in finance costs in the consolidated income statement.
A substantial modification of the terms of an existing financial liability or a part of it shall be accounted for as an extinguishment of the
original financial liability and the recognition of a new financial liability. Any gain or loss on extinguishment is recognised in the
consolidated income statement. If discounted present value of the cash flows (including any fees paid) under a new term arrangement is
at least 10% different from the discounted present value of the remaining cash flows of the original liability, this is accounted for as an
extinguishment of the old liability and the recognition of a new liability. Furthermore, qualitative assessment to assess extinguishment is
also performed. Some of the factors considered in performing a qualitative assessment include change in interest basis, extension of debt
tenure, change in collateral arrangements and change in currency of lending.
De-recognition of non-derivative financial liabilities
The Group derecognises a financial liability when its contractual obligations are discharged or cancelled or expired.
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CONSOLIDATED
FINANCIAL STATEMENTS
Available-for-sale financial assets comprise equity securities. Available-for-sale financial assets are non-derivative financial assets that are
designated as available-for-sale or are not classified in any of the above categories of financial assets. Subsequent to initial recognition,
these are measured at fair value and changes therein, other than impairment losses and foreign currency differences on debt instruments
are recognised in the consolidated statement of other comprehensive income and presented in the other reserves in equity. When an
investment is derecognised, the balance accumulated in equity is reclassified to the consolidated income statement.
CORPORATE
GOVERNANCE
For the purpose of consolidated statement of cash flows, cash and cash equivalents consist of bank balances and cash as defined above
and cash classified as held for sale, net of bank overdrafts. Bank overdrafts form an integral part of the Group’s cash management and is
included as a component of cash and cash equivalents for the purpose of the consolidated statement of cash flows.
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DP World Annual Report and Accounts 2013
Notes to Consolidated Financial Statements continued
4 SIGNIFICANT ACCOUNTING POLICIES CONTINUED
(iii) Derivative financial instruments
The Group holds derivative financial instruments such as forward currency contracts and interest rate swaps to hedge its foreign currency
and interest rate risk exposures. On initial designation of the derivatives as the hedging instrument, the Group formally documents the
relationship between the hedging instrument and hedged item, including the risk management objective and strategy in undertaking the
hedge transaction and hedged risk together with the methods that will be used to assess the effectiveness of the hedging relationship.
The Group makes an assessment, both at the inception of the hedge relationship as well as on an ongoing basis, of whether the hedging
instruments are expected to be “highly effective” in offsetting the changes in the fair value or cash flows of the respective hedged items
attributable to the hedged risk and whether the actual results of each hedge are within the acceptable range.
Derivatives are recognised initially at fair value and attributable transaction costs are recognised in the consolidated income statement
when incurred. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value
is negative.
Derivative instruments that are not designated as hedging instruments in hedge relationships are classified as financial liabilities or assets at
fair value through profit or loss.
Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are accounted for as described below:
Cash flow hedges
When a derivative is designated as the hedging instrument in a hedge of the variability in cash flows attributable to a particular risk
associated with a recognised asset or liability or a highly probable forecast transaction or the foreign currency risk in an unrecognised firm
commitment that could affect the consolidated income statement, then such hedges are classified as cash flow hedges.
Changes in the fair value of the derivative hedging instrument designated as a cash flow hedge are recognised directly in consolidated
statement of other comprehensive income to the extent that the hedge is effective and presented in the hedging reserve in equity. Any
ineffective portion of changes in the fair value of the derivative is recognised immediately in the consolidated income statement.
When the hedged item is a non-financial asset, the amount recognised in the consolidated statement of other comprehensive income is
transferred to the carrying amount of the asset when it is recognised. In other cases, the amount recognised in consolidated statement of
other comprehensive income is transferred to the consolidated income statement in the same period that the hedged item affects the
consolidated income statement. If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated
or exercised, or the designation is revoked, then hedge accounting is discontinued prospectively. The cumulative gain or loss previously
recognised in consolidated statement of other comprehensive income remains there until the forecast transaction or firm commitment
occurs. If the forecast transaction or firm commitment is no longer expected to occur, then the balance in equity is reclassified to profit
or loss.
(iv) Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount presented in the consolidated statement of financial position when,
and only when, the Group has a legal right to offset the amounts and intends either to set off on a net basis, or to realise the assets and
settle the liability simultaneously.
(D) PROPERTY, PLANT AND EQUIPMENT
(i) Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses (refer to note 4(I)).
Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of a self-constructed asset includes the
cost of materials and direct labour, any other costs directly attributable to bringing the asset to a working condition for its intended use
and the cost of dismantling and removing the items and restoring the site on which they are located.
Borrowing costs that are directly attributable to acquisition and construction of a qualifying asset are included in the cost of that asset.
Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.
When parts of an item of property, plant and equipment have different useful lives, they are depreciated as separate items (major
components) of property, plant and equipment.
Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with
the carrying amount of property, plant and equipment and recognised within "other income" in the consolidated income statement.
Capital work-in-progress
Capital work-in-progress is measured at cost less impairment losses and not depreciated until such time the assets are ready for intended
use and transferred to the respective category under property, plant and equipment.
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Dredging expenditure is categorised into capital dredging and major maintenance dredging. Capital dredging is expenditure which
includes creation of a new harbour, deepening or extension of the channel berths or waterways in order to allow access to larger ships
which will result in future economic benefits for the Group. This expenditure is capitalised and amortised over the expected period of the
relevant concession agreement. The expenditure is also capitalised under port concession rights due to the application of IFRIC 12 "Service
Concession Arrangements".
(ii) Subsequent costs
(iii)Depreciation
Depreciation is recognised in the consolidated income statement on a straight-line basis over the estimated useful lives of each part of an
item of property, plant and equipment and is based on cost less residual value.
Dredging costs are depreciated on a straight line basis based on the lives of various components of dredging.
The estimated useful lives of assets are as follows:
Assets
Useful life
(years)
Buildings
Plant and equipment
Ships
Dredging (included in land and buildings)
5–50
3–25
10–35
10–99
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted prospectively, if required.
(E)GOODWILL
Goodwill arises on the acquisition of subsidiaries, associates and joint ventures. Goodwill represents the excess of the cost of the
acquisition over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the acquiree. In an
acquisition, if the purchase price is lower than the fair value of the assets acquired, the resulting gain will be recognised immediately in the
statement of consolidated income statement.
Subsequent measurement
Goodwill is measured at cost less accumulated impairment losses (refer to note 4(I)).
In respect of equity-accounted investees, the carrying amount of goodwill is included in the carrying amount of the investment and is not
tested for impairment separately.
(F) PORT CONCESSION RIGHTS
The Group classifies the port concession rights as intangible assets as the Group bears demand risk over the infrastructure assets.
Substantially all of the Group’s terminal operations are conducted pursuant to long-term operating concessions or leases entered into with
the owner of a relevant port for terms generally between 25 and 50 years (excluding the port concession rights relating to associates and
joint ventures). The Group commonly starts negotiations regarding renewal of concession agreements with approximately 5–10 years
remaining on the term and often obtains renewals or extensions on the concession agreements in advance of their expiration in return for
a commitment to make certain capital expenditures in respect of the subject terminal. In addition, such negotiations may result in the
re-basing of rental charges to reflect prevailing market rates. However, based on the Group’s experience, incumbent operators are typically
granted renewal often because it can be costly for a port owner to switch operators, both administratively and due to interruptions to port
operations and reduced productivity associated with such transactions. Port concession rights consist of:
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CONSOLIDATED
FINANCIAL STATEMENTS
Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will
obtain ownership by the end of the lease term. No depreciation is provided on freehold land.
CORPORATE
GOVERNANCE
The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable
that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The carrying
amounts of the replaced parts are derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in
the consolidated income statement as incurred.
STRATEGIC
REPORT
Major maintenance dredging is expenditure incurred to restore the channel to its previous condition and depth. On an average, the Group
incurs such expenditure every ten years. At the completion of maintenance dredging, the channel has an average service potential of ten
years. Any unamortised expense is written-off on the commencement of any new dredging activities. Maintenance dredging is regarded
as a separate component of the asset and is capitalised and amortised evenly over ten years.
OVERVIEW
4 SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Dredging
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DP World Annual Report and Accounts 2013
Notes to Consolidated Financial Statements continued
4 SIGNIFICANT ACCOUNTING POLICIES CONTINUED
(i) Port concession rights arising on business combinations
The cost of port concession rights acquired in a business combination is the fair value as at the date of acquisition. Other port concession
rights acquired separately are measured on initial recognition at cost.
Following initial recognition, port concession rights are carried at cost less accumulated amortisation and any accumulated impairment
losses (refer to note 4(I)). Internally generated port concession rights, excluding capitalised development costs, are recognised in the
consolidated income statement as incurred. The useful lives of port concession rights are assessed to be either finite or indefinite.
Port concession rights with finite lives are amortised on a straight line basis over the useful economic life and assessed for impairment
whenever there is an indication that the port concession rights may be impaired. Port concession rights with indefinite lives (arising where
freehold rights are granted) are not amortised and are tested for impairment at least on an annual basis.
The amortisation period and amortisation method for port concession rights with finite useful lives are reviewed at least at each financial
year end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the assets
are accounted for by changing the amortisation period or method, as appropriate, and treated as changes in accounting estimates. The
amortisation expenses on port concession rights with finite useful lives are recognised in the consolidated income statement on a straight
line basis.
Port concession rights with indefinite useful lives are tested for impairment annually either individually or at the cash-generating unit level.
Such port concession rights are not amortised. The useful life of port concession rights with an indefinite life is reviewed annually to
determine whether the indefinite life assessment continues to be supportable. If not, the change in the useful life assessment from
indefinite to finite is made on a prospective basis.
(ii) Port concession rights arising from Service Concession Arrangements (IFRIC 12)
The Group recognises port concession rights arising from a service concession arrangement, in which the grantor controls or regulates the
services provided and the prices charged, and also controls any significant residual interest in the infrastructure such as property, plant and
equipment, if the infrastructure is existing infrastructure of the grantor or the infrastructure is constructed or purchased by the Group as
part of the service concession arrangement.
Port concession rights also include certain property, plant and equipment which are reclassified as intangible assets in accordance with
IFRIC 12 "Service Concession Arrangements". These assets are amortised based on the lower of their useful lives or concession period.
Gains or losses arising from de-recognition of port concession rights are measured as the difference between the net disposal proceeds
and the carrying amount of the asset and are recognised in the consolidated income statement when the asset is de-recognised.
The estimated useful lives for port concession rights range within a period of 5–50 years (including the concession rights relating to
associates and joint ventures).
(G)INVENTORIES
Inventories mainly consist of spare parts and consumables. Inventories are measured at the lower of cost and net realisable value. The cost
of inventories is based on weighted average method and includes expenditure incurred in acquiring inventories and bringing them to their
existing location and condition. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs
of completion and selling expenses.
(H)LEASES
The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date.
The arrangement is assessed for whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the
arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
(i) Group as a lessee
Assets held by the Group under leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are
classified as operating leases. Assets held under operating leases are not recognised in the Group’s consolidated statement of financial
position. Payments made under operating leases are recognised in the consolidated income statement on a straight-line basis over the
term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease.
The Group leases certain property, plant and equipment. Leases of property, plant and equipment where the Group has substantially all
the risks and rewards of ownership are classified as finance lease. On initial recognition, the leased assets are measured at an amount
equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the leased
asset is accounted for in accordance with the accounting policy applicable to that asset. Minimum lease payments made under finance
leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to
each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Contingent payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease
adjustment is confirmed.
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DP World Annual Report and Accounts 2013
Leases where the Group retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. Initial
direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease
term on the same basis as rental income. Contingent rents are recognised as income in the period in which they are earned.
OVERVIEW
4 SIGNIFICANT ACCOUNTING POLICIES CONTINUED
(ii) Group as a lessor
(iii) Leasing and sub-leasing transactions
These leasing and sub-leasing transactions are designed to achieve certain benefits for the third parties in overseas locations in return for a
cash benefit to the Group. Such cash benefit is accounted in the consolidated income statement based on its economic substance. Under
these leasing and sub-leasing transactions, current and non-current liabilities have been decreased by the loan receivable and the
placement of deposits. Those liabilities, receivables and deposits (and income and charges arising therefrom) are netted off in the
consolidated financial statements, in order to reflect the overall commercial effect of the arrangement.
Leases of land have not been classified as finance leases as the Group believes that the substantial risks and rewards of ownership of the
land have not been transferred. The existence of a significant exposure of the lessor to performance of the asset through contingent
rentals was a basis of concluding that substantially all the risks and rewards of ownership have not passed.
The Group considers evidence of impairment for loans and receivables and held to maturity investment securities at both a specific asset
level and collective level. All individually significant receivables and held to maturity investment securities are assessed for specific
impairment.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount
and the present value of the estimated future cash flows discounted at the original effective interest rate. Impairment losses are recognised
in the consolidated income statement and reflected in an allowance account against loans and receivables or held to maturity investments.
When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through the
consolidated income statement.
(b) Available-for-sale financial assets
For available-for-sale financial investments, the Group assesses at each reporting date whether there is objective evidence that an
investment or a group of investments is impaired. A significant or prolonged decline in the fair value of an equity investment is considered
as an objective evidence of impairment. The Group considers that generally a decline of 20% will be considered as significant and a
decline of over nine months will be considered as prolonged.
Impairment losses on available-for-sale financial assets are recognised by reclassifying the losses accumulated in the other reserve in equity
to the consolidated income statement. The cumulative loss that is reclassified from equity to the consolidated income statement is the
difference between the acquisition cost, net of any principal repayment and amortisation, and the current fair value, less any impairment
loss recognised previously in the consolidated income statement. Any subsequent recovery in the fair value of an impaired available-forsale equity security is recognised in consolidated statement of other comprehensive income.
(ii) Non-financial assets
The carrying amounts of the Group’s non-financial assets, other than inventories and deferred tax assets are reviewed for impairment
whenever there is an indication of impairment. If any such indication exists then the asset’s recoverable amount is estimated. The
recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing
value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset or cash-generating unit. A cash-generating unit is the smallest
identifiable asset group that generates cash flows that largely are independent from other assets and groups.
An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount.
Impairment losses are recognised in the consolidated income statement. Impairment losses recognised in respect of cash-generating units
are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the
other assets in the unit (group of units) on a pro rata basis.
For goodwill and port concession rights that have indefinite lives or that are not yet available for use, recoverable amount is estimated
annually and when circumstances indicate that carrying value may be impaired. Goodwill acquired in business combination is allocated to
groups of cash-generating units that are expected to benefit from the synergies of the combination. An impairment loss in respect of
goodwill is not reversed.
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CONSOLIDATED
FINANCIAL STATEMENTS
(I)IMPAIRMENT
(i) Financial assets
(a) Loans and receivables and held to maturity investments
CORPORATE
GOVERNANCE
(iv) Leases of land in port concession
STRATEGIC
REPORT
A series of leasing and sub-leasing transactions between the Group and third parties, which are closely interrelated, negotiated as a single
transaction, and which take place concurrently or in a continuous sequence are considered linked and accounted for as one transaction
when the overall economic effect cannot be understood without reference to the series of transactions as a whole.
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DP World Annual Report and Accounts 2013
Notes to Consolidated Financial Statements continued
4
SIGNIFICANT ACCOUNTING POLICIES CONTINUED
In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the
loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the
recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying
amount, which would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
(J) ASSETS HELD FOR SALE
Assets (or disposal groups comprising assets and liabilities) which are expected to be recovered primarily through sale rather than through
continuing use are classified as held for sale. Immediately before classification as held for sale, the assets (or components of a disposal
group) are re-measured in accordance with the Group’s accounting policies. Thereafter, generally the assets (or disposal group) are
measured at the lower of their carrying amount or fair value less costs to sell. Any impairment loss on a disposal group is first allocated to
goodwill, and then to remaining assets and liabilities on a pro rata basis, except that no loss is allocated to inventories, financial assets,
deferred tax assets and employee benefit assets which continue to be measured in accordance with the Group’s accounting policies.
Impairment losses on initial classification as held for sale and subsequent gains or losses on re-measurement are recognised in the
consolidated income statement. Gains are not recognised in excess of any cumulative impairment loss.
Port concession rights and property, plant and equipment once classified as held for sale or distribution are not amortised or depreciated.
In addition, equity accounting of equity-accounted investees ceases once classified as held for sale.
(K) SHARE CAPITAL
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction
from equity. Any excess payment received over par value is treated as share premium.
(L) EMPLOYEE BENEFITS
(i) Pension and post-employment benefits
The Group’s net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of
future benefit that employees have earned in return for their service in the current and prior periods. That benefit is discounted to
determine the present value, and the fair value of any plan assets is deducted. The calculation is performed annually by a qualified actuary
using the projected unit credit method. The discount rate is the yield at the reporting date on AA credit rated bonds that have maturity
dates approximating to the terms of the Group’s obligations.
When the actuarial calculation results in a benefit to the Group, the recognised asset is limited to the present value of economic benefits
available in the form of any future refunds from the plan or reductions in future contributions to the plan. In order to calculate the present
value of economic benefits, consideration is given to any minimum funding requirements that apply to any plan in the Group. An
economic benefit is available to the Group if it is realisable during the life of the plan, or on settlement of the plan liabilities.
Where the present value of the deficit contributions exceeds the IAS 19 deficit an additional liability is recognised.
Re-measurements of the net defined benefit liability, which comprise of actuarial gains and losses, the return on plan assets (excluding
interest) and the effect of the asset ceiling (if any, excluding interest) are recognised directly in consolidated statement of other
comprehensive income. The cost of providing benefits under the defined benefit plans is determined separately for each plan using the
projected unit credit method, which attributes entitlement to benefits to the current period (to determine current service cost) and to the
current and prior periods (to determine the present value of defined benefit obligation) and is based on actuarial advice. The Group
determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to
measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset), taking into
account any changes in the net defined benefit liability (asset) during the period as a result of contributions and benefit payments. Net
interest expense and other expenses related to defined benefit plans are recognised in profit or loss.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain
or loss on curtailment is recognised immediately in profit or loss. The Group recognise gains and losses on the settlement of a defined
benefit plan when the settlement occurs.
Contributions, including lump sum payments, in respect of defined contribution pension schemes and multi-employer defined benefit
schemes where it is not possible to identify the Group’s share of the scheme, are charged to the consolidated income statement as they
fall due.
(ii) Long-term service benefits
The Group’s net obligation in respect of long-term service benefits, other than pension plans, is the amount of future benefit that
employees have earned in return for their service in the current and prior periods. The obligation is calculated using the projected unit
credit method and is discounted to its present value and the fair value of any related assets is deducted. The discount rate is the yield at
the reporting date on AA credit rated bonds that have maturity dates approximating to the terms of the Group’s obligations.
(iii) Short-term service benefits
Short-term employee benefits are expensed as the related service is provided. A liability is recognised for the amount expected to be paid
if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the
obligation can be estimated reliably.
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A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated
reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by
discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the
risks specific to the liability. The unwinding of the discount is recognised as a finance cost in the consolidated income statement.
(N)REVENUE
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably
measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or
receivable, taking into account contractually defined terms of payment and excluding taxes or duty.
Rendering of services
Revenue from providing containerised stevedoring, other containerised services and non-containerised services is recognised on the
delivery and completion of those services.
Service concession arrangements (IFRIC 12)
(O) FINANCE INCOME AND EXPENSE
Finance income comprises interest income on funds invested and gains on hedging instruments that are recognised in the consolidated
income statement. Interest income is recognised as it accrues, using the effective interest method.
Finance costs comprises interest expense on borrowings, unwinding of the discount on provisions, impairment losses recognised on
financial assets and losses on hedging instruments that are recognised in the consolidated income statement.
Finance income and expense also include realised and unrealised exchange gains and losses on monetary assets and liabilities (refer to
note 4(B)(i)).
(P) INCOME TAX
Income tax expense comprises current and deferred tax. Income tax expense is recognised in the consolidated income statement except to
the extent that it relates to a business combination, or items recognised directly in consolidated statement of other comprehensive income.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the
reporting date in the countries where the Group operates and generates taxable income. It also includes any adjustment to tax payable in
respect of previous years.
Current tax assets and liabilities are offset only if certain criteria are met.
Deferred tax is recognised using the liability method, providing for temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:
• the temporary differences arising on the initial recognition of goodwill and the initial recognition of assets or liabilities in a transaction
that is not a business combination and that affects neither accounting nor taxable profit or loss; and
• the temporary differences relating to investments in subsidiaries and jointly controlled entities to the extent that they probably will not
reverse in the foreseeable future.
The measurement of deferred tax reflects the tax consequences that would follow the manner in which the Group expects, at the end of
the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the
laws that have been enacted or substantively enacted by the reporting date.
A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable
that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each reporting date and
are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Deferred tax assets and liabilities are offset only if certain criteria are met.
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CONSOLIDATED
FINANCIAL STATEMENTS
Revenues relating to construction contracts which are entered into with local authorities for the construction of the infrastructure
necessary for the provision of services are measured at the fair value of the consideration received or receivable.
CORPORATE
GOVERNANCE
Revenue mainly consists of containerised stevedoring and other containerised revenue. Non-containerised revenue mainly includes logistics
and handling of break bulk cargo. The following specific recognition criteria must also be met before revenue is recognised:
STRATEGIC
REPORT
Provision for an onerous contract is recognised when the expected benefits to be derived by the Group from a contract are lower than the
unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of the
expected cost of terminating the contract and the expected net cost of continuing with the contract.
OVERVIEW
4 SIGNIFICANT ACCOUNTING POLICIES CONTINUED
(M)PROVISIONS
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Notes to Consolidated Financial Statements continued
4 SIGNIFICANT ACCOUNTING POLICIES CONTINUED
(Q) DISCONTINUED OPERATION
A discontinued operation is a component of the Group’s business that represents a separate major line of business or geographical area of
operations that has been disposed or is held for sale. Classification as a discontinued operation occurs upon disposal or when the
operation meets the criteria to be classified as held for sale, if earlier. When an operation is classified as a discontinued operation, the
comparative consolidated income statement and consolidated statement of comprehensive income is restated as if the operation had been
discontinued from the start of the comparative period.
In the consolidated income statement of the reporting period, and of the comparable period of the previous year, income and expenses
from discontinued operations are reported separately from income and expenses from continuing operations, down to the level of profit
after taxes, even when the Group retains a non-controlling interest in the subsidiary after the sale. The resulting profit or loss (after taxes)
is reported separately in the consolidated income statement and disclosed in the notes to the consolidated financial statements.
(R) EARNINGS PER SHARE
The Group presents basic earnings per share (“EPS”) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss
attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year.
(S) SEGMENT REPORTING
An operating segment is a component of the Group that engages in business activities from which it may earn revenue and incur
expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. All operating segments’
operating results are reviewed regularly by the Group’s Board of Directors to assess performance.
Segment results that are reported to the Board of Directors include items directly attributable to a segment as well as those that can be
allocated on a reasonable basis. Unallocated items mainly comprise corporate assets (primarily Company’s head office), head office
expenses and income tax assets and liabilities.
Segment capital expenditure is the total cost incurred during the year to acquire property, plant and equipment, and port concession
rights other than goodwill.
(T) SEPARATELY DISCLOSED ITEMS
The Group presents, as separately disclosed items on the face of the consolidated income statement, those items of income and expense
which, because of the nature and expected infrequency of the events giving rise to them, merit separate presentation to allow users to
understand better the elements of financial performance in the period, so as to facilitate a comparison with prior periods and a better
assessment of trends in financial performance.
(U) NEW STANDARD AND INTERPRETATION NOT YET EFFECTIVE
A number of new standards, amendments to standards and interpretations are not effective for annual periods beginning 1 January 2013,
and have not been applied in preparing these consolidated financial statements. Those which may be relevant to the Group are set out
below. The Group does not plan to adopt these standards early.
IFRS 9 Financial Instruments (2010), IFRS 9 Financial Instruments (2009)
• IFRS 9 (2009) introduces new requirements for the classification and measurement of financial assets. Under IFRS 9 (2009), financial
assets are classified and measured based on the business model in which they are held and the characteristics of their contractual cash
flows. IFRS 9 (2010) introduces additional changes relating to financial liabilities. The IASB currently has an active project to make
limited amendments to the classification and measurement requirements of IFRS 9 and add new requirements to address the
impairment of financial assets and hedge accounting.
IFRS 9 (2010) and (2009) are effective for annual periods beginning on or after 1 January 2015, with early adoption permitted. The
adoption of these standards is not expected to have any significant impact on the Group’s financial statements.
5
DETERMINATION OF FAIR VALUES
A number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial
assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods.
When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset
or liability.
(I) PROPERTY, PLANT AND EQUIPMENT
The fair value of property, plant and equipment recognised as a result of a business combination is based on market values. The market value
of property is the estimated amount for which a property could be exchanged on the date of valuation between a willing buyer and a willing
seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without
compulsion. The market value of items of plant, equipment, fixtures and fittings is based on the quoted market prices for similar items.
(II) PORT CONCESSION RIGHTS
Port concession rights acquired in a business combination are accounted at their fair values. The fair value is based on the discounted cash
flows expected to be derived from the use and eventual sale of the assets.
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DP World Annual Report and Accounts 2013
The fair values of equity and debt securities are determined by reference to their quoted closing bid price at the reporting date. The fair
value of the unquoted infrastructure investment fund classified as available-for-sale is based on the independent valuation of the fund. The
fair value of debt securities held to maturity is determined based on the discounted cash flows at a market related discount rate. The fair
value of debt securities held to maturity is determined for disclosure purposes only.
OVERVIEW
5 DETERMINATION OF FAIR VALUES CONTINUED
(III) INVESTMENTS IN DEBT SECURITIES AND AVAILABLE-FOR-SALE FINANCIAL ASSETS
(IV) TRADE AND OTHER RECEIVABLES/PAYABLES
(V)DERIVATIVES
The fair value of forward exchange contracts and interest rate swaps is based on the bank quotes at the reporting dates. Similar contracts
are traded in an active market and the quotes reflect the actual transactions in similar instruments.
STRATEGIC
REPORT
The fair value of trade and other receivables and trade and other payables approximates to the carrying values due to the short-term
maturity of these instruments.
(VI) NON-DERIVATIVE FINANCIAL LIABILITIES
The fair value of bank balances and cash and bank overdrafts approximates to the carrying value due to the short-term maturity of
these instruments.
6 FINANCIAL RISK MANAGEMENT
OVERVIEW
This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for
measuring and managing risk. Further quantitative disclosures are included throughout these consolidated financial statements. Also refer
to note 30 for further details.
RISK MANAGEMENT FRAMEWORK
The Board of Directors have overall responsibility for the establishment and oversight of the Group’s risk management framework.
The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits
and controls, and to monitor risks and adherence to limits. The Group, through its training and management standards and procedures,
aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.
The Group Audit Committee oversees how management monitors compliance with the Group’s risk management policies and procedures
and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The Group Audit Committee is
assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad-hoc reviews of risk management controls and
procedures, the results of which are reported to the Audit Committee.
(a) Credit risk
Credit risk is the risk of financial loss to the Group if a customer fails to meet its contractual obligations, and arises principally from the
Group’s receivables from customers, amounts due from related parties and investment securities.
Trade and other receivables
The Group trades mainly with recognised and creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit
terms are subject to credit verification procedures and are required to submit financial guarantees based on their creditworthiness. In addition,
receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant.
The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables.
The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss
component established for groups of similar assets in respect of losses that have been incurred but not yet identified. The collective loss
allowance is determined based on historical data of payment statistics for similar financial assets.
Other financial assets
Credit risk arising from other financial assets of the Group comprises cash and cash equivalents and certain derivative instruments.
The Group’s exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the carrying amount
of these instruments.
www.dpworld.com/investors
CONSOLIDATED
FINANCIAL STATEMENTS
The Group has exposure to the following risks from its use of financial instruments:
(a) credit risk
(b) liquidity risk
(c) market risk
CORPORATE
GOVERNANCE
Fair value for quoted bonds is based on their market price as at the reporting date. Other loans include term loans and finance leases.
These are largely at variable interest rates and therefore, the carrying value normally equates to the fair value.
84
DP World Annual Report and Accounts 2013
Notes to Consolidated Financial Statements continued
6
FINANCIAL RISK MANAGEMENT CONTINUED
The Group manages its credit risks with regard to bank deposits, throughout the Group, through a number of controls, which include
assessing the credit rating of the bank either from public credit ratings, or internal analysis where public data is not available and
consideration of the support for financial institutions from their central banks or other regulatory authorities.
Financial guarantees
The Group’s policy is to consider the provision of a financial guarantee to wholly-owned subsidiaries, where there is a commercial rationale
to do so. Guarantees may also be provided to associates and joint ventures in very limited circumstances and always only for the Group’s
share of the obligation. The provision of guarantees always requires the approval of senior management.
(b) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing
liquidity is to ensure, as far as possible, that it will always have sufficient cash to meet its liabilities when due, under both normal and
stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.
The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank facilities and by
ensuring adequate internally generated funds. The Group’s terms of business require amounts to be paid within 60 days of the date of
provision of the service. Trade payables are normally settled within 45 days of the date of purchase.
(c) Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the Group’s income or the
value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures
within acceptable parameters, while optimising the return.
The Group buys and sells derivatives and also incurs financial liabilities, in order to manage market risks. All such transactions are carried
out within the guidelines set by the Board of Directors in the Group Treasury policy. Generally, the Group seeks to apply hedge accounting
in order to manage the volatility in the consolidated income statement.
(i) Currency risk
The proportion of the Group’s net operating assets denominated in foreign currencies (i.e. other than the functional currency of the
Company, UAE Dirhams) is approximately 69% (2012: 73%) with the result that the Group’s USD consolidated statement of financial
position, and in particular shareholder’s equity, can be affected by currency movements when it is retranslated at each year-end rate. The
Group partially mitigates the effect of such movements by borrowing in the same currencies as those in which the assets are denominated
and using cross currency swaps. The impact of currency movements on operating profit is partially mitigated by interest costs being
incurred in foreign currencies. The Group operates in some locations where the local currency is fixed to the Group’s presentation currency
of USD further reducing the risk of currency movements.
Interest on borrowings is denominated in the currency of the borrowings. Generally, borrowings are denominated in currencies that match
the cash flows generated by the underlying foreign operations of the Group. This provides an economic hedge without derivatives being
entered into and therefore hedge accounting is not applied in these circumstances.
A portion of the Group’s activities generate part of their revenue and incur some costs outside their main functional currency. Due to the
diverse number of locations in which the Group operates there is some natural hedging that occurs within the Group. When it is
considered that currency volatility could have a material impact on the results of an operation, hedging using forward foreign currency
contracts is undertaken to reduce the short-term effect of currency movements.
When the Group’s businesses enter into capital expenditure or lease commitments in currencies other than their main functional currency,
these commitments are hedged in most instances using forward contracts and currency swaps in order to fix the cost when converted to
the functional currency. The Group classifies its forward exchange contracts hedging forecast transactions as cash flow hedges and states
them at fair value.
(ii) Interest rate risk
The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s long-term debt obligations with a
fixed/floating interest rate and bank deposits. The Group issued two fixed rate bonds, a ten year Sukuk with a profit rate of 6.25% and a
30 year Medium Term Note with a coupon of 6.85% which collectively represents USD 3,231,337 thousand of the Group’s outstanding
debt as at the reporting date.
The Group’s policy is to manage its interest cost by entering into interest rate swap agreements, in which the Group agrees to exchange,
at specified intervals, the difference between fixed and variable rate interest amounts calculated by reference to an agreed-upon notional
principal amount. These swaps are designated to hedge underlying debt obligations.
At 31 December 2013, after taking into account the effect of interest rate swaps, approximately 90% (2012: 89%) of the Group’s
borrowings are at a fixed rate of interest.
85
DP World Annual Report and Accounts 2013
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future
development of the business. Capital consists of share capital, share premium, shareholders’ reserve, retained earnings, hedging and other
reserves, actuarial reserve and translation reserve. The primary objective of the Group’s capital management is to ensure that it maintains a
strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value. The Board seeks to maintain
a balance between the higher returns that might be possible with higher levels of borrowings and the advantages and security afforded by
a sound capital position.
The key performance ratios as at 31 December are as follows:
2013
USD’000
2012
USD’000
Total net debt
2,463,954
2,870,723
Total Equity
9,021,541
8,780,407
Adjusted EBITDA (restated) (refer to note 7)
1,414,241
1,404,412
284,946
296,018
Net debt/Equity
0.27
0.33
Net debt/adjusted EBITDA
1.74
2.04
5.0
4.7
Net finance cost before separately disclosed items
Interest cover before separately disclosed items
7
SEGMENT INFORMATION
The internal management reports which are prepared under IFRS are reviewed by the Board of Directors ("Chief Operating Decision
Maker") based on the location of the Group’s assets and liabilities. The Group has identified the following geographic areas as its basis of
segmentation. The Group measures segment performance based on the earnings before separately disclosed items, interest, tax,
depreciation and amortisation (“Adjusted EBITDA”).
• Asia Pacific and Indian subcontinent
• Australia and Americas
• Middle East, Europe and Africa
Each of these operating segments have an individual appointed as Segment Director responsible for these segments, who in turn reports
to the Chief Operating Decision Maker.
In addition to the above reportable segments, the Group also reports unallocated head office costs, finance costs, finance income and tax
expense under the head office segment.
Information regarding the results of each reportable segment is included below.
The following table presents certain results, assets and liabilities information regarding the Group’s segments as at the reporting date.
Asia Pacific and Indian
subcontinent
2013
USD’000
2012
USD’000
(Restated)
Australia and Americas
2013
USD’000
2012
USD’000
(Restated)
Middle East,
Europe and Africa
2013
USD’000
Head office*
Inter-segment
Total
2012
USD’000
(Restated)
2013
USD’000
2012
USD’000
(Restated)
2013
USD’000
2012
USD’000
(Restated)
2013
USD’000
2012
USD’000
(Restated)
–
–
–
– 3,073,248 3,121,017
(Including separately disclosed items)
Revenue
355,217
456,578
594,183
552,751 2,123,848 2,111,688
Segment results from
operations**
Finance income
Finance costs
267,980
–
–
217,755
–
–
125,061
–
–
109,330
–
–
782,004
–
–
955,186
–
–
(168,311)
84,493
(369,439)
(159,381)
75,211
(381,602)
–
–
–
– 1,006,734 1,122,890
–
84,493
75,211
– (369,439) (381,602)
Profit/(loss) for the
year
267,980
217,755
125,061
109,330
782,004
955,186
(453,257)
(465,772)
–
–
* Net finance cost, tax expenses and tax liabilities from various geographical locations and head office, have been grouped under head office.
**Segment results from operations comprise profit for the year before net finance cost.
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721,788
816,499
CONSOLIDATED
FINANCIAL STATEMENTS
5,035,017 4,752,456
(2,571,063) (1,881,733)
CORPORATE
GOVERNANCE
Total interest bearing loans and borrowings (refer to note 27)
Less: cash and cash equivalents (refer to note 19)
STRATEGIC
REPORT
Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements.
OVERVIEW
6 FINANCIAL RISK MANAGEMENT CONTINUED
CAPITAL MANAGEMENT
86
DP World Annual Report and Accounts 2013
Notes to Consolidated Financial Statements continued
7
SEGMENT INFORMATION CONTINUED
Asia Pacific and Indian
subcontinent
2013
USD’000
Segment assets
2012
USD’000
(Restated)
Australia and Americas
2013
USD’000
2012
USD’000
(Restated)
Middle East,
Europe and Africa
2013
USD’000
Head office*
2012
USD’000
(Restated)
2013
USD’000
Inter-segment
2012
USD’000
(Restated)
2013
USD’000
Total
2012
USD’000
(Restated)
2013
USD’000
2012
USD’000
(Restated)
3,827,246 4,993,196 1,737,515 1,804,715 9,654,817 9,448,179 9,371,725 8,765,591 (7,830,789) (8,674,482) 16,760,514 16,337,199
Segment liabilities
Tax liabilities
237,295
–
427,202
–
Total liabilities
89,632
–
140,115 1,586,005 1,538,016 5,605,650 6,128,409
–
–
– 1,145,933 1,154,488
(925,542) (1,831,438) 6,593,040
–
– 1,145,933
6,402,304
1,154,488
140,115 1,586,005 1,538,016 6,751,583 7,282,897
(925,542) (1,831,438) 7,738,973
7,556,792
237,295
427,202
89,632
Capital expenditure
21,496
7,894
72,986
98,650
965,720
575,034
3,220
3,373
–
–
1,063,422
684,951
Depreciation
27,478
32,848
62,900
64,458
181,481
187,636
4,988
5,069
–
–
276,847
290,011
Amortisation/
impairment
75,365
57,781
11,995
48,675
130,445
64,065
–
–
–
–
217,805
170,521
Share of profit of
equity-accounted
investees before
separately
disclosed items
90,107
110,853
(14,105)
(973)
8,364
24,017
–
–
–
–
84,366
133,897
–
–
–
–
–
64,458
72,954
–
–
64,458
72,954
Tax expense
–
* Net finance cost, tax expenses and tax liabilities from various geographical locations and head office, have been grouped under head office.
Earnings before separately disclosed items, interest, tax, depreciation and amortisation (“Adjusted EBITDA”).
Asia Pacific and Indian
subcontinent
Revenue before
separately disclosed
items
Adjusted EBITDA
Finance income
Finance costs
Tax expense
Depreciation and
amortisation
Australia and Americas
2013
USD’000
2012
USD’000
(Restated)
2013
USD’000
355,217
456,578
219,700
–
–
–
(78,843)
2012
USD’000
(Restated)
Middle East,
Europe and Africa
2013
USD’000
Head office*
Inter-segment
Total
2012
USD’000
(Restated)
2013
USD’000
2012
USD’000
(Restated)
2013
USD’000
2012
USD’000
(Restated)
2013
USD’000
2012
USD’000
(Restated)
594,183
552,751 2,123,848 2,111,688
–
–
–
– 3,073,248 3,121,017
299,391
–
–
–
195,235
–
–
–
165,845 1,095,171 1,020,534
–
–
–
–
–
–
–
–
–
(95,865)
84,493
(369,439)
(59,558)
(81,358)
75,211
(371,229)
(72,954)
–
–
–
–
– 1,414,241 1,404,412
–
84,493
75,211
– (369,439) (371,229)
–
(59,558)
(72,954)
(90,629)
(74,895)
(77,333)
(236,773)
(237,601)
(4,988)
(5,069)
–
–
(395,499)
(410,632)
Adjusted net profit/
(loss) for the year
before separately
disclosed items
Adjusted for
separately disclosed
items
140,857
208,762
120,340
88,512
858,398
782,933
(445,357)
(455,399)
–
–
674,238
624,808
127,123
8,993
4,721
20,818
(76,394)
172,253
(7,900)
(10,373)
–
–
47,550
191,691
Profit/(loss) for the
year
267,980
217,755
125,061
109,330
782,004
955,186
(453,257)
(465,772)
–
–
721,788
816,499
* Net finance cost, tax expenses and tax liabilities from various geographical locations and head office, have been grouped under head office.
8
REVENUE
Revenue consists of:
Containerised stevedoring revenue
Containerised other revenue
Non-containerised revenue
The Group does not have any customer which contributes more than ten per cent of the Group’s total revenue.
2013
USD’000
2012
USD’000
1,396,510
1,026,792
649,946
1,366,200
1,044,967
709,850
3,073,248
3,121,017
87
9
DP World Annual Report and Accounts 2013
PROFIT FOR THE YEAR (INCLUDING SEPARATELY DISCLOSED ITEMS)
2013
USD’000
2012
USD’000
(Restated)
54,140
30,353
–
67,295
6,688
1,228
84,493
75,211
Finance costs
Interest expense
Exchange losses
Other net financing expense in respect of pension plans
(320,957)
(40,279)
(8,203)
(350,222)
(13,067)
(7,940)
Finance costs before separately disclosed items
Adjusted for separately disclosed items (refer to note 12)
(369,439)
–
(371,229)
(10,373)
Finance costs after separately disclosed items
(369,439)
(381,602)
Net finance costs after separately disclosed items
(284,946)
(306,391)
10 FINANCE INCOME AND COSTS (INCLUDING SEPARATELY DISCLOSED ITEMS)
Finance income
Interest income
Exchange gains
Other net financing income in respect of pension plans
11 INCOME TAX
The major components of income tax expense for the year ended 31 December:
2013
USD’000
2012
USD’000
(Restated)
Current income tax expense
Current year
Adjustment for prior periods
105,500
(7,487)
108,912
(20,738)
Deferred tax credits
98,013
(33,555)
88,174
(15,220)
64,458
72,954
Income tax expense
Tax on separately disclosed items
59,558
4,900
72,954
–
Total tax expenses
Share of income tax of equity-accounted investees
64,458
18,577
72,954
38,189
Total tax charge
83,035
111,143
Current income tax receivable (included within accounts receivable and pre-payments)
Current income tax liabilities
Current tax liabilities have been offset if certain criteria are met. Comparatives have been reclassified accordingly.
All tax items included within separately disclosed items are detailed in note 12.
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17,806
6,319
210,347
186,586
CONSOLIDATED
FINANCIAL STATEMENTS
646,846
410,632
384,521
49,900
CORPORATE
GOVERNANCE
610,768
395,499
352,513
99,153
Profit for the year is stated after charging the following costs:
Staff costs
Depreciation and amortisation
Operating lease rentals
Impairment
STRATEGIC
REPORT
2012
USD’000
OVERVIEW
2013
USD’000
88
DP World Annual Report and Accounts 2013
Notes to Consolidated Financial Statements continued
11 INCOME TAX CONTINUED
The Group is not subject to income tax on its UAE operations. The tax expense relates to the tax payable on the profit earned by the
overseas subsidiaries, associates and joint ventures as adjusted in accordance with the taxation laws and regulations of the countries in
which they operate. The applicable tax rates in the regions in which the Group operates are set out below:
Geographical segments
Applicable corporate tax rate
Asia Pacific and Indian subcontinent
Australia and Americas
Middle East, Europe and Africa
16.5% to 34.0%
26.0% to 36.0%
0% to 34.0%
The relationship between the tax expense and the accounting profit can be explained as follows:
2013
USD’000
2012
USD’000
(Restated)
Net profit before tax
786,246
889,453
Tax at the Group’s domestic tax rate
Higher income tax on foreign earnings
Permanent differences including non-taxable
income and non-deductible expenses
Tax charge on equity-accounted investees
Current year losses not recognised for deferred tax asset
Brought forward losses utilised
Deferred tax in respect of fair value adjustments
Others
–
103,866
–
182,888
(47,101)
18,577
39,828
(3,295)
(46,818)
20,979
(86,530)
38,189
31,785
(32,691)
(43,036)
11,933
Tax expense before prior year adjustments
Tax (over)/under provided in prior periods:
– current tax
– deferred tax
86,036
102,538
(7,487)
(414)
(20,738)
29,343
Total tax expense from operations
Adjustment for separately disclosed items
78,135
4,900
111,143
–
Total tax expenses
83,035
111,143
786,246
(52,450)
18,577
889,453
(191,691)
38,189
(B)
752,373
735,951
(A/B)
11.04%
15.10%
(A)
Net profit before tax
Adjustment for separately disclosed items
Adjustment to share of income tax of equity-accounted investees
Adjusted profit before tax and before separately disclosed items
Effective tax rate before separately disclosed items
UNRECOGNISED DEFERRED TAX ASSETS
Deferred tax is not recognised on trading losses of USD 617,982 thousand (2012: USD 486,771 thousand) where utilisation is uncertain,
either because they have not been agreed with tax authorities, or because the likelihood of future taxable profits is not sufficiently certain,
or because of the impact of tax holidays on infrastructure projects. Under current legislation, USD 418,901 thousand (2012: USD 331,196
thousand) of these trading losses can be carried forward indefinitely.
Deferred tax is also not recognised on capital and other losses of USD 338,378 thousand (2012: USD 288,722 thousand) due to the fact
that their utilisation is uncertain.
89
DP World Annual Report and Accounts 2013
11 INCOME TAX CONTINUED
1 January
2013
(Restated)
USD’000
Set off of tax
Net deferred tax liabilities
(9,385)
2,843
(44,329)
4,357
(46,514)
(13,242)
2,944
(14,153)
(2,182)
(26,633)
31 December
2013
USD’000
125,726
38,746
401,704
431,608
997,784
(62,198)
935,586
(103,029)
967,902
679
(908)
198
536
(12,925)
(539)
144
(2,764)
(19,980)
(1,741)
(3,389)
1,527
4,561
6,431
4,914
4,077
32,169
14,439
Total before set off
105,753
(12,959)
(26,203)
66,591
Set off of tax
Net deferred tax assets
(103,029)
2,724
(62,198)
4,393
Deferred tax liabilities have been offset if certain criteria are met. Comparatives have been reclassified accordingly.
12 SEPARATELY DISCLOSED ITEMS
Restructuring costs
Impairment of assets
Share of (loss)/profit of equity-accounted investees
Profit on sale and termination of businesses
Ineffective interest rate swaps and currency options
Income tax expense
2013
USD’000
2012
USD’000
(2,280)
(99,153)
(4,305)
158,188
–
(4,900)
(5,950)
(49,900)
20,710
237,204
(10,373)
–
47,550
191,691
Restructuring costs relates to the restructuring of subsidiaries in the "Middle East, Europe and Africa" region and in the "Asia Pacific and
Indian subcontinent" region. (2012: relates to the restructuring costs of a subsidiary in the "Middle East, Europe and Africa" region and in
the "Australia and Americas" region).
Impairment of assets relates to the impairment of assets of USD 75,153 thousand in the "Middle East, Europe and Africa" region and
USD 24,000 thousand in the "Asia Pacific and Indian subcontinent" region. The impairments are in the following asset categories:
Property, plant and equipment USD 43,816 thousand (2012: USD 49,900), Goodwill USD 3,268 thousand (2012: Nil), Port concession
rights USD 23,871 thousand (2012: Nil), Investment in equity-accounted investees USD 24,000 thousand (2012: Nil) and other assets USD
4,198 thousand (2012: Nil). These impairments were mainly due to significant adverse effects in the market and economic conditions
which were outside the control of the Group. (2012: Impairment of property, plant and equipment of USD 14,100 thousand in the
"Middle East, Europe and Africa" region and USD 35,800 thousand in the "Australia and Americas" region).
Share of (loss)/profit of equity-accounted investees: USD 1,241 thousand relates to the share of ineffective hedge in an associate in
the "Middle East, Europe and Africa" region and USD 3,064 thousand relates to the share of restructuring costs in the "Australia and
Americas" region. (2012: includes USD 11,717 thousand share of equity earnings of a joint venture upon sale of an entity within this group
in the "Australia and Americas" region and USD 8,993 thousand share of profit on transfer of certain assets by an associate in the "Asia
Pacific and Indian subcontinent" region).
www.dpworld.com/investors
CONSOLIDATED
FINANCIAL STATEMENTS
3,738
10,103
24,696
5,282
48,483
13,451
CORPORATE
GOVERNANCE
Deferred tax assets
Property, plant and equipment
Pension and post-employment benefits
Financial instruments
Provisions
Tax value of losses carried forward recognised
Others
148,353
32,959
460,186
429,433
1,070,931
Translation
and other
movements
USD’000
STRATEGIC
REPORT
Deferred tax liabilities
Property, plant and equipment
Investment in equity-accounted investees
Fair value adjustment on acquisitions
Others
Total before set off
Recognised in
consolidated
income
statement
USD’000
OVERVIEW
Movement in temporary differences during the year:
90
DP World Annual Report and Accounts 2013
Notes to Consolidated Financial Statements continued
12 SEPARATELY DISCLOSED ITEMS CONTINUED
PROFIT ON SALE AND TERMINATION OF BUSINESSES FOR 2013 REPRESENTS:
• USD 152,224 thousand profit on monetisation of investments in the "Asia Pacific and Indian subcontinent" region.
• USD 5,964 thousand profit on monetisation of investments in an equity-accounted investee in the "Australia and Americas" region.
PROFIT ON SALE AND TERMINATION OF BUSINESSES FOR 2012 REPRESENTS:
• USD 193,533 thousand profit on monetisation of investments in equity-accounted investees in the "Middle East, Europe and
Africa" region.
• USD 53,288 thousand profit on monetisation of investments in an equity-accounted investee in the "Australia and Americas" region,
offset by a tax charge of USD 7,937 thousand.
• USD 6,312 thousand loss on termination of a concession in the "Middle East, Europe and Africa" region.
• USD 4,632 thousand profit on monetisation of a subsidiary in the "Middle East, Europe and Africa" region.
Ineffective interest rate swaps and currency options: 2013: Nil (2012: USD 10,373 thousand relates to the loss on ineffective interest rate
swaps in the "Asia Pacific and Indian subcontinent" region).
Income tax expense relates to the restructuring of subsidiaries in the "Asia Pacific and Indian subcontinent" region (2012: Nil).
13 PROPERTY, PLANT AND EQUIPMENT
Land and
buildings
USD’000
Plant and
equipment
USD’000
Ships
USD’000
Capital workin-progress
USD’000
Total
USD’000
Cost
As at 1 January 2013
Additions during the year
Transfers from capital work-in-progress
Translation adjustment
Disposals
Disposal of subsidiaries
3,073,584
5,227
353,024
(63,202)
(1,264)
(59,230)
2,462,280
52,225
511,749
10,088
(40,088)
(67,300)
240,361
26,340
–
(13,999)
(7,900)
–
1,316,806
941,738
(864,773)
20,850
–
(8,982)
7,093,031
1,025,530
–
(46,263)
(49,252)
(135,512)
As at 31 December 2013
3,308,139
2,928,954
244,802
1,405,639
7,887,534
Depreciation and impairment
As at 1 January 2013
Charge for the year
Impairment losses (refer to note 12)
Translation adjustment
On disposals
On disposal of subsidiaries
614,767
103,978
7,197
7,038
(711)
(38,040)
As at 31 December 2013
694,229
Net book value
As at 31 December 2013
2,613,910
961,150
152,247
36,525
(37,175)
(37,289)
(57,906)
103,852
20,622
–
(10,700)
(7,900)
–
–
–
94
–
–
–
1,679,769
276,847
43,816
(40,837)
(45,900)
(95,946)
1,017,552
105,874
94
1,817,749
1,911,402
138,928
1,405,545
6,069,785
In the prior years, the Group had entered into agreements with third parties pursuant to which the Group participated in a series of linked
transactions including leasing and sub-leasing of certain cranes of the Group (“the Crane French Lease Arrangements”). At 31 December
2013, cranes with aggregate net book value amounting to USD 272,972 thousand (2012: USD 288,710 thousand) were covered by these
Crane French Lease Arrangements. These cranes are accounted for as property, plant and equipment as the Group retains all the risks and
rewards incidental to the ownership of the underlying assets.
At 31 December 2013, property, plant and equipment with a carrying amount of USD 2,451,173 thousand (2012: USD 2,391,298
thousand) are pledged to secure bank loans (refer to note 27). At 31 December 2013, the net carrying value of the leased plant and
equipment and other assets were USD 50,065 thousand (2012: USD 48,796 thousand).
Borrowing costs capitalised to property, plant and equipment amounted to USD 36,691 thousand (2012: USD 44,900 thousand) with a
capitalisation rate in the range of 4.68% to 5.13%per annum (2012: 4.68% to 5.13% per annum).
91
DP World Annual Report and Accounts 2013
13 PROPERTY, PLANT AND EQUIPMENT CONTINUED
Plant and
equipment
USD’000
Ships
USD’000
Capital workin-progress
USD’000
Total
USD’000
216,479
48,582
–
(9,000)
(15,700)
–
791,760
546,051
(78,444)
59,650
(2,211)
–
6,564,751
641,934
–
45,168
(89,666)
(69,156)
As at 31 December 2012
3,073,584
2,462,280
240,361
1,316,806
7,093,031
Depreciation and impairment
As at 1 January 2012
Charge for the year
Impairment losses (refer to note 12)
Translation adjustment
On disposals
On disposal of subsidiaries
482,535
137,944
4,900
1,640
(2,752)
(9,500)
883,323
138,964
19,000
4,424
(57,661)
(26,900)
74,773
13,103
26,000
276
(10,300)
–
–
–
–
–
–
–
1,440,631
290,011
49,900
6,340
(70,713)
(36,400)
As at 31 December 2012
614,767
961,150
103,852
–
1,679,769
Net book value
As at 31 December 2012
2,458,817
1,501,130
136,509
1,316,806
5,413,262
Goodwill
USD’000
Port
concession
rights
USD’000
Total
Intangible
Assets
USD’000
14 GOODWILL AND PORT CONCESSION RIGHTS
Cost
As at 1 January 2013
Additions
Disposals
Disposal of subsidiaries
Impairment losses (refer to note 12)
Translation adjustment
1,588,918
–
–
(34,880)
(3,268)
(18,532)
3,934,648
37,892
(790)
(27,981)
–
(144,116)
5,523,566
37,892
(790)
(62,861)
(3,268)
(162,648)
As at 31 December 2013
1,532,238
3,799,653
5,331,891
Amortisation and impairment
As at 1 January 2013
Charge for the year
Impairment loss (refer note 12)
On disposals
On disposal of subsidiaries
Translation adjustment
–
–
–
–
–
–
819,564
118,652
23,871
(610)
(5,462)
(60,843)
819,564
118,652
23,871
(610)
(5,462)
(60,843)
As at 31 December 2013
–
895,172
895,172
1,532,238
2,904,481
4,436,719
Net book value
As at 31 December 2013
Port concession rights include concession agreements which are mainly accounted for as part of business combinations and acquisitions.
These concessions were determined to have finite and indefinite useful lives based on the terms of the respective concession agreements
and the income approach model was used for the purpose of determining their fair values.
www.dpworld.com/investors
CONSOLIDATED
FINANCIAL STATEMENTS
2,486,928
39,771
51,097
(2,667)
(68,093)
(44,756)
CORPORATE
GOVERNANCE
3,069,584
7,530
27,347
(2,815)
(3,662)
(24,400)
STRATEGIC
REPORT
Cost
As at 1 January 2012
Additions during the year
Transfers from capital work-in-progress
Translation adjustment
Disposals
Disposal of subsidiaries
OVERVIEW
Land and
buildings
USD’000
92
DP World Annual Report and Accounts 2013
Notes to Consolidated Financial Statements continued
14 GOODWILL AND PORT CONCESSION RIGHTS CONTINUED
At 31 December 2013, port concession rights with a carrying amount of USD 357,785 thousand (2012: USD 502,896 thousand) are
pledged to secure bank loans (refer to note 27).
Goodwill
USD’000
Port
concession
rights
USD’000
Total
Intangible
Assets
USD’000
Cost
As at 1 January 2012
Additions
Re-classification
Disposals
Translation adjustment
1,607,655
–
–
(58,237)
39,500
3,941,977
43,017
(37,991)
(1,613)
(10,742)
5,549,632
43,017
(37,991)
(59,850)
28,758
As at 31 December 2012
1,588,918
3,934,648
5,523,566
Amortisation
As at 1 January 2012
Charge for the year
On disposals
Translation adjustment
–
–
–
–
718,019
120,621
(1,332)
(17,744)
718,019
120,621
(1,332)
(17,744)
As at 31 December 2012
–
819,564
819,564
Net book value
As at 31 December 2012
1,588,918
3,115,084
4,704,002
15 IMPAIRMENT TESTING
Goodwill acquired through business combinations and port concession rights with indefinite useful lives have been allocated to various
cash-generating units (“CGU”), which are reportable business units, for the purposes of impairment testing.
Impairment testing is done at operating port (or group of ports) level that represents an individual CGU. Details of the CGUs by operating
segment are shown below:
Carrying amount of goodwill
Carrying amount of
port concession rights with
indefinite useful life
Discount rates
Perpetuity growth rate
2013
USD’000
2012
USD’000
2013
USD’000
2012
USD’000
%
%
Cash-generating units aggregated
by operating segment
Asia Pacific and Indian subcontinent
Australia and Americas
Middle East, Europe and Africa
169,905
252,245
1,110,088
224,868
271,309
1,092,741
–
–
1,043,125
–
–
1,030,134
7.00–13.50
6.00–12.50
6.00–16.50
2.50
2.50
2.50–2.60
Total
1,532,238
1,588,918
1,043,125
1,030,134
The recoverable amount of the CGU has been determined based on their value in use calculated using cash flow projections based on the
financial budgets approved by management covering a three-year period and a further outlook for five years, which is considered
appropriate in view of the outlook for the industry and the long-term nature of the concession agreements held i.e. generally for a period
of 25–50 years.
KEY ASSUMPTIONS USED IN VALUE IN USE CALCULATIONS
The following describes each key assumption on which management has based its cash flow projections to undertake impairment testing
of goodwill and port concession rights with indefinite useful lives.
Budgeted margins – The basis used to determine the value assigned to the budgeted margin is the average gross margin achieved in the
year immediately before the budgeted year, adjusted for expected efficiency improvements, price fluctuations and manpower costs.
Discount rates – These represent the cost of capital adjusted for the respective location risk factors. The Group uses the post-tax industry
average Weighted Average Cost of Capital which reflects the country specific risk adjusted discount rate.
Cost inflation – The forecast general price index is used to determine the cost inflation during the budget year for the relevant countries
where the Group is operating.
93
DP World Annual Report and Accounts 2013
15 IMPAIRMENT TESTING CONTINUED
OVERVIEW
Perpetuity growth rate – In management’s view, the perpetuity growth rate is the minimum growth rate expected to be achieved beyond
the eight-year period. This is based on the overall regional economic growth forecasted and the Group’s existing internal capacity changes
for a given region. The Group also takes into account competition and regional capacity growth to provide a comprehensive growth
assumption for the entire portfolio.
The values assigned to key assumptions are consistent with the past experience of management.
The calculation of value in use for the CGU is sensitive to future earnings and therefore a sensitivity analysis was performed. The analysis
demonstrated that a 10% decrease in earnings for a future period of three years from the reporting date would not result in impairment.
16 INVESTMENT IN EQUITY-ACCOUNTED INVESTEES
The following table summarises the segment wise financial information for equity-accounted investees, adjusted for fair value adjustments
at acquisition and reconciled to the carrying amount of the Group’s interest in equity-accounted investees as included in the Consolidated
Statement of Financial Position:
Australia and Americas
Middle East, Europe and Africa
2012
USD’000
Total
2012
USD’000
2013
USD’000
2012
USD’000
2013
USD’000
2013
USD’000
2012
USD’000
Cash and cash equivalents
Other current assets
Non-current assets
350,997
185,851
9,395,336
326,968
188,286
8,068,891
105,483
137,905
2,802,062
192,294
181,577
2,861,185
204,675
176,657
2,651,225
153,073
661,155
672,335
171,652
500,413
541,515
2,389,594 14,848,623 13,319,670
Total assets
9,932,184
2,714,319 16,010,191 14,533,520
8,584,145
3,045,450
3,235,056
3,032,557
Current financial liabilities
Other current liabilities
Non-current financial
liabilities
Other non-current liabilities
89,567
627,011
218,337
448,035
31,599
184,462
–
168,232
38,253
197,706
18,349
191,073
159,419
1,009,179
236,686
807,340
1,432,290
625,330
926,318
977,493
1,710,022
111,826
1,714,456
132,525
677,990
422,176
647,208
375,001
3,820,302
1,159,332
3,287,982
1,485,019
Total liabilities
2,774,198
2,570,183
2,037,909
2,015,213
1,336,125
1,231,631
6,148,232
5,817,027
Net assets (100%)
7,157,986
6,013,962
1,007,541
1,219,843
1,696,432
1,482,688
9,861,959
8,716,493
2,700,703
3,348,317
2,553,590
2,743,956
Group’s share of net
assets in equity
accounted investees
Revenue
Depreciation and
amortisation
Other expenses
Interest expense
Other finance income
Income tax expense
Net profit/(loss)
Group’s share of profit/
(loss) (before separately
disclosed items)
1,317,725
1,268,308
716,099
852,553
519,766
623,095
(68,973)
(396,628)
(27,183)
1,752
(6,435)
(79,292)
(445,680)
(390,654)
(409,409) (1,706,612) (1,758,923)
(35,543)
(255,248)
(143,688)
6,498
83,394
38,926
(18,652)
(90,028)
(107,167)
(335,663)
(582,941)
(139,974)
48,731
(111,840)
(290,571)
(538,756)
(93,841)
31,498
(87,392)
(41,044)
(727,043)
(88,091)
32,911
28,247
(20,791)
(810,758)
(14,304)
930
(1,123)
196,038
289,246
(78,921)
6,507
22,299
86,697
139,416
382,450
90,107
110,853
(14,105)
(973)
8,364
24,017
84,366
133,897
17,772
(8,686)
Group’s share of other
comprehensive income
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CONSOLIDATED
FINANCIAL STATEMENTS
2013
USD’000
CORPORATE
GOVERNANCE
Asia Pacific and Indian
subcontinent
STRATEGIC
REPORT
SENSITIVITY TO CHANGES IN ASSUMPTIONS
94
DP World Annual Report and Accounts 2013
Notes to Consolidated Financial Statements continued
17 OTHER INVESTMENTS
Debt securities held to maturity (refer to note a)
Available-for-sale financial assets (refer to note b)
2013
USD’000
2012
USD’000
10,207
52,716
11,277
49,556
62,923
60,833
(a) The movement in debt securities held to maturity mainly relates to redemption of USD 1,055 thousand (2012: USD 1,538 thousand)
during the year.
(b) Available-for-sale financial assets consist of an unquoted investment in an Infrastructure Fund.
The movement schedule for these investments is as follows:
2013
USD’000
2012
USD’000
As at 1 January
Return of capital during the year
Change in fair value recognised in consolidated statement of other comprehensive income
49,556
–
3,160
60,378
(10,690)
(132)
As at 31 December
52,716
49,556
2013
Non-current
USD’000
2013
Current
USD’000
2013
Total
USD’000
–
–
65,253
372
115,485
270,074
36,483
263,067
–
111,070
270,074
36,483
328,320
372
226,555
181,110
680,694
861,804
2012
Non-current
USD’000
2012
Current
USD’000
2012
Total
USD’000
–
–
56,115
216
207,097
244,534
53,962
204,965
–
105,961
244,534
53,962
261,080
216
313,058
263,428
609,422
872,850
18 ACCOUNTS RECEIVABLE AND PRE-PAYMENTS
Trade receivables (net) (refer to note 30(A)(i))
Advances paid to suppliers
Other receivables and pre-payments
Employee benefit assets (refer to note 26)
Due from related parties (refer to note 29)
Trade receivables (net)
Advances paid to suppliers
Other receivables and pre-payments
Employee benefit assets (refer to note 26)
Due from related parties (refer to note 29)
The Group’s exposure to credit and currency risks are disclosed in note 30.
95
DP World Annual Report and Accounts 2013
19 BANK BALANCES AND CASH
Cash at banks and in hand
Short-term deposits
Deposits under lien
368,830
2,151,205
52,435
472,409
1,362,752
46,767
Bank balances and cash
Bank overdrafts
2,572,470
(1,407)
1,881,928
(195)
Cash and cash equivalents for consolidated statement of cash flows
2,571,063
1,881,733
Short-term deposits are made for varying periods between one day and three months depending on the immediate cash requirements of
the Group and earn interest at the respective short-term deposit market rates. Bank overdrafts are repayable on demand.
STRATEGIC
REPORT
2012
USD’000
OVERVIEW
2013
USD’000
The deposits under lien are placed to collateralise some of the borrowings of the Company’s subsidiaries.
The share capital of the Company as at 31 December was as follows:
2012
USD’000
Authorised
1,250,000,000 of USD 2.00 each
2,500,000
2,500,000
Issued and fully paid
830,000,000 of USD 2.00 each
1,660,000
1,660,000
21 RESERVES
SHARE PREMIUM
Share premium represents surplus received over and above the nominal cost of the shares issued to the shareholders and forms part of the
shareholder equity. The reserve is not available for distribution except in circumstances as stipulated by the law.
SHAREHOLDERS’ RESERVE
Shareholders’ reserve forms part of the distributable reserves of the Group.
HEDGING RESERVE
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of the cash flow hedging instruments
related to hedge transactions that have not yet occurred.
OTHER RESERVES
The other reserves mainly include statutory reserves of subsidiaries as required by applicable local legislations. This reserve also includes the
unrealised fair value changes on available-for-sale investments.
ACTUARIAL RESERVE
The actuarial reserve comprises the cumulative actuarial losses recognised in consolidated statement of other comprehensive income.
TRANSLATION RESERVE
The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign
operations whose functional currencies are different from that of the Group’s presentation currency. It also includes foreign exchange
translation differences arising from translation of goodwill and purchase price adjustments which are denominated in foreign currencies at
the Group level.
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CONSOLIDATED
FINANCIAL STATEMENTS
2013
USD’000
CORPORATE
GOVERNANCE
20 SHARE CAPITAL
96
DP World Annual Report and Accounts 2013
Notes to Consolidated Financial Statements continued
22 NON-CONTROLLING INTERESTS ("NCI")
The following table summarises the financial information for the material NCI of the Group:
2013
USD’000
Middle East,
Europe and
Africa region
2013
USD’000
Other
individually
immaterial
subsidiaries*
2013
USD’000
Gross Total
2012
USD’000
Middle East,
Europe and
Africa region
Balance sheet information:
Non-current assets
Current assets
Non-current liabilities
Current liabilities
497,259
167,675
(171,342)
(124,341)
487,189
185,412
(226,693)
(106,449)
Net assets (100%)
369,251
339,459
Carrying amount of fair value adjustments
304,490
289,834
Total
673,741
629,293
Carrying amount of NCI as at 31 December
372,018
Income statement information:
Revenue
Profit after tax
Other comprehensive income, net of tax
316,073
80,600
12,204
103,723
475,741
346,901
2012
USD’000
Other
individually
immaterial
subsidiaries*
2012
USD’000
Gross Total
317,092
663,993
318,510
76,557
(4,841)
Total comprehensive income (100%), net of tax
Profit allocated to NCI
Other comprehensive income allocated to NCI
92,804
51,418
7,566
30,734
2,169
82,152
9,735
71,716
50,327
(1,546)
27,774
1,456
78,101
(90)
Total comprehensive income attributable to NCI
58,984
32,903
91,887
48,781
29,230
78,011
2013
USD’000
2012
USD’000
Declared and paid during the year:
Final dividend 24 US cents per share
199,200
199,200
Proposed for approval at the Annual General Meeting
(Not recognised as a liability as at 31 December):
Final dividend: 23 US cents per share/24 US cents per share
190,900
199,200
Cash flow statement information:
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Dividends paid to NCI
129,849
42,663
113,695
90,504
11,895
87,029
38,604
25,325
* There are no material subsidiaries in the other operating segments of the Group with NCI.
23 DIVIDENDS
97
DP World Annual Report and Accounts 2013
The calculation of basic earnings per share is based on the profit attributable to ordinary shareholders and the weighted average number
of ordinary shares outstanding.
2012
USD’000
(Restated)
Profit attributable to owners of the Company (after separately disclosed items) – (a)
639,636
738,398
Profit attributable to owners of the Company (before separately disclosed items) – (b)
604,421
545,182
Number of
shares
Number of
shares
Number of ordinary shares outstanding as at 31 December – (c)
830,000,000 830,000,000
2012
USD’000
(Restated)
Basic earnings per share after separately disclosed items – (US cents) – (a/c)
77.06
88.96
Basic earnings per share before separately disclosed items – (US cents) – (b/c)
72.82
65.68
The Company has no share options outstanding at the year end and therefore the basic and diluted earnings per share are not different.
Movements in the provision recognised in the consolidated statement of financial position are as follows:
2013
USD’000
2012
USD’000
As at 1 January
Provision made during the year*
Amounts paid during the year
55,747
11,961
(5,968)
49,393
11,522
(5,168)
As at 31 December
61,740
55,747
* The provision for expatriate staff gratuities, included in Employees’ end of service benefits, is calculated in accordance with the regulations of the Jebel Ali Free Zone Authority. This is based on the
liability that would arise if employment of all staff were terminated at the reporting date.
The UAE government had introduced Federal Labour Law No.7 of 1999 for pension and social security. Under this Law, employers are
required to contribute 15% of the "contribution calculation salary" of those employees who are UAE nationals. These employees are also
required to contribute 5% of the "contribution calculation salary" to the scheme. The Group’s contribution is recognised as an expense in
the consolidated income statement as incurred.
26 PENSION AND POST-EMPLOYMENT BENEFITS
The Group participates in a number of pension schemes throughout the world. The principal scheme is located in the UK (the “P&O UK
Scheme”). The P&O UK Scheme is a funded defined benefit scheme and was closed to routine new members on 1 January 2002. The
pension fund is legally separated from the Group and managed by a Trustee board. The assets of the scheme are managed on behalf
of the Trustee by independent fund managers.
The Group also operates a number of smaller defined benefit and defined contribution schemes. In addition, the Group participates
in various industry multi-employer schemes, the most significant of which is the Merchant Navy Officers’ Pension Fund (the “MNOPF
Scheme”) and is in the UK. These generally have assets held in separate trustee administered funds which are legally separated from
the Group.
The board of a pension fund in the UK is required by law to act in the best interests of the fund participants and is responsible for setting
certain policies (e.g. investment, contributions and indexation policies) and determining recovery plans if appropriate.
These defined benefit funds expose the Group to actuarial risks, such as longevity risk, currency risk, interest rate risk and market
(investment) risk. In addition, in certain multi-employer industry schemes, the Group can be exposed to a pro-rata share of the credit risk
of other participating employers.
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CONSOLIDATED
FINANCIAL STATEMENTS
25 EMPLOYEES’ END OF SERVICE BENEFITS
CORPORATE
GOVERNANCE
2013
USD’000
STRATEGIC
REPORT
2013
USD’000
OVERVIEW
24 EARNINGS PER SHARE
BASIC EARNINGS PER SHARE
98
DP World Annual Report and Accounts 2013
Notes to Consolidated Financial Statements continued
26 PENSION AND POST-EMPLOYMENT BENEFITS CONTINUED
RECONCILIATION OF ASSETS AND LIABILITIES RECOGNISED IN THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Non-current
Defined benefit schemes net liabilities
Liabilities from defined contribution schemes
Liability in respect of long service leave
Current
Liability for current deferred compensation
2013
USD’000
2012
USD’000
(Restated*)
168,000
706
700
221,634
784
600
169,406
223,018
10,068
11,845
Net liabilities
179,474
234,863
Net liabilities
Reflected in the consolidated statement of financial position as follows:
Employee benefits assets (included within non-current receivables (refer to note 18)
Employee benefits liabilities: Non-current
Employee benefits liabilities: Current
(372)
169,778
10,068
(216)
223,234
11,845
179,474
234,863
* Refer to note 3 (F).
The defined benefit pension schemes net liabilities of USD 168,000 thousand (2012 Restated*: USD 221,634 thousand) is in respect of the
total Group schemes shown on page 100 and 101.
The current portion of employee benefits liabilities includes a liability of USD 8,400 thousand (2012: USD 10,000 thousand) in respect of
annual leave, USD 1,200 thousand (2012: USD 1,600 thousand) in respect of long service leave, and USD 468 thousand (2012: USD 245
thousand) in respect of sick leave and other miscellaneous employee benefit items.
An expense of USD 30,354 thousand (2012 Restated*: USD 33,600 thousand) has been recognised in the consolidated income statement
for the long-term employee benefit schemes. USD 7,200 thousand (2012 Restated*: USD 7,000 thousand) in respect of defined benefit
schemes, USD 9,700 thousand (2012: USD 10,000 thousand) in respect of defined contribution schemes and USD 13,454 thousand (2012:
USD 16,600 thousand) in respect of other employee benefits.
A net finance cost of USD 8,100 thousand (2012 Restated*: USD 8,100 thousand) in respect of defined benefit funds has been recognised
in the consolidated income statement.
Total amount of actuarial losses gross of tax recognised in consolidated statement of other comprehensive income.
2013
USD’000
Actuarial (gain)/loss recognised in the year
Movement in minimum funding liability
2012
USD’000
(Restated*)
(44,080)
5,200
36,169
(5,400)
(38,880)
30,769
* Refer to note 3 (F).
ACTUARIAL VALUATIONS AND ASSUMPTIONS
The latest valuations of the defined benefit schemes have been updated to 31 December 2013 by qualified independent actuaries. The
principal assumptions are included in the table below.
The assumptions used by the actuaries are the best estimates chosen from a range of possible actuarial assumptions, which, due to the
timescale covered, may not necessarily be borne out in practice.
Discount rates
Discount rates bulk annuity asset
Expected rates of salary increases
Pension increases: deferment
Pension increases: payment
Inflation
P&O UK
scheme
2013
MNOPF
scheme
2013
Other
schemes
2013
4.35%
4.20%
2.50%
3.00%
3.00%
3.60%
4.35%
–
–
2.60%
3.45%
3.60%
4.50%
–
1.90%
3.24%
3.24%
3.60%
99
DP World Annual Report and Accounts 2013
26 PENSION AND POST-EMPLOYMENT BENEFITS CONTINUED
Other
schemes
2013
4.15%
4.00%
2.50%
2.75%
2.75%
3.05%
4.15%
–
–
2.20%
3.00%
3.05%
4.40%
–
1.90%
2.90%
2.90%
3.10%
From 1 December 2011, changes have been made to the benefits provided by the P&O UK scheme. These include a restriction to pay
increases equal to the lower of Retail Price Index and 2.5% in a Scheme Year. This restriction is reflected in the pay increase assumption
above and there is no allowance for promotional increases.
For illustration, the life expectancies for the two schemes at age 65 now and in the future are detailed in the table below.
Male
Female
Age 65 in
20 years’ time
Age 65 now
Age 65 in
20 years’ time
2013
P&O UK scheme
MNOPF scheme
23.1
22.5
26.1
25.3
25.5
26.1
28.6
29.0
2012
P&O UK scheme
MNOPF scheme
23.8
22.0
26.8
24.5
25.6
25.9
28.7
28.2
At 31 December 2013 the weighted average duration of the defined benefit obligation was 16.2 years (2012: 16.4 years).
Reasonably possible changes to one of the actuarial assumptions, holding other assumptions constant, would have increased the net
defined benefit liability as at 31 December 2013 by the amounts shown below:
USD’000
19,500
8,400
12,600
0.1% reduction in discount rate
0.1% increase in inflation assumption and related assumptions
0.25% p.a. increase in the long-term rate of mortality improvement
The schemes’ strategic asset allocations across the sectors of the main asset classes are:
2013
Equities
Bonds
Other
Value of insured pensioner liability
2012
Equities
Bonds
Other
Value of insured pensioner liability
P&O UK
scheme
USD’000
MNOPF
scheme
USD’000
Other
schemes
USD’000
Group
schemes
fair value
USD’000
403,400
216,800
61,200
1,313,900
58,200
102,500
13,900
–
84,200
90,300
33,900
–
545,800
409,600
109,000
1,313,900
1,995,300
174,600
208,400
2,378,300
343,500
241,800
20,700
1,361,400
40,200
93,000
34,300
–
84,100
79,400
24,500
–
467,800
414,200
79,500
1,361,400
1,967,400
167,500
188,000
2,322,900
With the exception of the insured pensioner liability all material investments have quoted prices in active markets.
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CONSOLIDATED
FINANCIAL STATEMENTS
Age 65 now
CORPORATE
GOVERNANCE
The assumptions for pensioner longevity under both the P&O UK scheme and the MNOPF scheme are based on an analysis of pensioner
death trends under the respective schemes over many years.
STRATEGIC
REPORT
MNOPF
scheme
2013
OVERVIEW
Discount rates
Discount rates bulk annuity asset
Expected rates of salary increases
Pension increases: deferment
Pension increases: payment
Inflation
P&O UK
scheme
2013
100
DP World Annual Report and Accounts 2013
Notes to Consolidated Financial Statements continued
26 PENSION AND POST-EMPLOYMENT BENEFITS CONTINUED
Reconciliation of the opening and closing present value of defined benefit obligations and fair value of scheme assets for the period ended
31 December 2013:
P&O UK
scheme
USD’000
MNOPF
scheme
USD’000
Other
schemes
USD’000
Total group
schemes
USD’000
Present value of obligation at 1 January 2013
Employer’s interest cost
Employer’s current service cost
Contributions by scheme participants
Effect of movement in exchange rates
Benefits paid
Experience gains/(loss) on scheme liabilities
Actuarial gain/(loss) on scheme liabilities due to change in demographic assumptions
Actuarial (loss)/gains scheme liabilities due to change in financial assumptions
(2,084,534)
(81,300)
(500)
–
(39,046)
100,700
2,800
44,880
(11,600)
(217,000)
(8,400)
–
–
(4,300)
8,600
6,700
(3,900)
2,000
(243,000) (2,544,534)
(10,300)
(100,000)
(4,200)
(4,700)
(1,100)
(1,100)
(4,800)
(48,146)
9,100
118,400
(3,300)
6,200
–
40,980
1,700
(7,900)
Present value of obligation at 31 December 2013
(2,068,600)
(216,300)
(255,900) (2,540,800)
P&O UK
scheme
USD’000
MNOPF
scheme
USD’000
Other
schemes
USD’000
Total group
schemes
USD’000
Fair value of scheme assets at 1 January 2013
Interest income on assets
Return on plan assets (lesser)/greater than the discount rate
Contributions by employer
Contributions by scheme participants
Effect of movement in exchange rates
Benefits paid
Administration costs incurred during the year
1,967,400
76,900
(300)
13,400
–
40,600
(100,700)
(2,000)
167,500
6,700
(2,500)
8,000
–
3,700
(8,600)
(200)
188,000
8,300
7,600
8,600
1,100
4,200
(9,100)
(300)
2,322,900
91,900
4,800
30,000
1,100
48,500
(118,400)
(2,500)
Fair value of scheme assets at 31 December 2013
1,995,300
174,600
208,400
2,378,300
Defined benefit schemes net liabilities
Minimum funding liability
(73,300)
–
(41,700)
(5,500)
(47,500)
–
(162,500)
(5,500)
Net liability recognised in the consolidated statement of financial position at 31
December 2013
(73,300)
(47,200)
(47,500)
(168,000)
Reconciliation of the opening and closing present value of defined benefit obligations and fair value of scheme assets for the period ended
31 December 2012:
P&O UK
scheme
USD’000
(Restated*)
MNOPF
scheme
USD’000
(Restated*)
Other
schemes
USD’000
(Restated*)
Total group
schemes
USD’000
(Restated*)
Present value of obligation at 1 January 2012
Employer’s interest cost
Employer’s current service cost
Contributions by scheme participants
Effect of movement in exchange rates
Benefits paid
Amounts re-classified from defined contribution schemes
Experience losses on scheme liabilities
Actuarial gain/(loss) on scheme liabilities due to change in demographic assumptions
Actuarial losses on scheme liabilities due to change in financial assumptions
(1,851,100)
(85,400)
(500)
(200)
(85,165)
101,800
–
(30,000)
–
(133,969)
(188,400)
(8,700)
–
–
(8,500)
8,600
–
(4,900)
–
(15,100)
(152,300)
(7,600)
(4,000)
(1,300)
(7,500)
7,400
(65,800)
(1,600)
–
(10,300)
(2,191,800)
(101,700)
(4,500)
(1,500)
(101,165)
117,800
(65,800)
(36,500)
–
(159,369)
Present value of obligation at 31 December 2012
(2,084,534)
(217,000)
(243,000)
(2,544,534)
101
DP World Annual Report and Accounts 2013
26 PENSION AND POST-EMPLOYMENT BENEFITS CONTINUED
MNOPF
scheme
USD’000
Other
schemes
USD’000
Total group
schemes
USD’000
1,732,800
80,200
166,900
13,500
200
77,500
(101,800)
–
(1,900)
150,700
7,100
5,200
7,000
–
6,700
(8,600)
–
(600)
120,900
6,300
4,900
7,400
1,300
6,100
(7,400)
48,500
–
2,004,400
93,600
177,000
27,900
1,500
90,300
(117,800)
48,500
(2,500)
Fair value of scheme assets at 31 December 2012
167,500
188,000
2,322,900
(117,134)
–
(49,500)
–
(55,000)
–
(221,634)
–
Net liability recognised in the consolidated statement of financial position at
31 December 2012
(117,134)
(49,500)
(55,000)
(221,634)
* Refer to note 3 (F).
The below table shows the movement in minimum funding liability on the MNOPF Scheme:
2013
USD’000
2012
USD’000
(Restated*)
Minimum funding liability as on 1 January
Movement during the year
Effect of movement in exchange rates
–
(5,200)
(300)
(5,400)
5,400
–
Minimum funding liability as on 31 December
(5,500)
–
* Refer to note 3 (F).
It is anticipated that the Group will make the following contributions to the pension schemes in 2014:
Pension scheme contributions
P&O UK
scheme
USD’000
MNOPF
scheme
USD’000
Other
schemes
USD’000
Total group
schemes
USD’000
14,210
8,555
9,011
31,776
P&O UK SCHEME
Formal actuarial valuations of the P&O UK scheme are normally carried out triennially by qualified independent actuaries, the latest
completed regular valuation report for the scheme being at 31 March 2010, using the projected unit credit method.
As a result of valuation P&O committed to regular monthly deficit payments from April 2011 of USD 1,060 thousand until November 2019.
In December 2007, as part of a process developed with the Group to de-risk the pension scheme, the Trustee transferred USD 1,600,000
thousand of P&O UK Scheme assets to Paternoster (UK) Ltd, in exchange for a bulk annuity insurance policy to ensure that the assets (in
the Company’s statement of financial position and in the Scheme) will always be equal to the current value of the liability of the pensions
in payment at 30 June 2007, thus removing the funding risks for these liabilities.
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CONSOLIDATED
FINANCIAL STATEMENTS
Where a surplus arises on a scheme in accordance with IAS19 and IFRIC14, the surplus is recognised as an asset only if it represents an
unconditional economic benefit available to the Group in the future. Any surplus in excess of this benefit is not recognised in the
statement of financial position. A minimum funding liability arises where the statutory funding requirements are such that future
contributions in respect of past service will result in a future unrecognisable surplus.
CORPORATE
GOVERNANCE
1,967,400
Defined benefit schemes net liabilities
Minimum funding liability
STRATEGIC
REPORT
Fair value of scheme assets at 1 January 2012
Interest income on assets
Return on plan assets greater than the discount rate
Contributions by employer
Contributions by scheme participants
Effect of movement in exchange rates
Benefits paid
Amounts reclassified from defined contribution schemes
Administration costs incurred during the year
OVERVIEW
P&O UK
scheme
USD’000
102
DP World Annual Report and Accounts 2013
Notes to Consolidated Financial Statements continued
26 PENSION AND POST-EMPLOYMENT BENEFITS CONTINUED
MERCHANT NAVY OFFICERS’ PENSION FUND (“MNOPF”)
The MNOPF Scheme is an industry wide multi-employer defined benefit scheme in which officers employed by companies within the
Group have participated.
The scheme is divided into two sections, the Old Section and the New Section, both of which are closed to new members.
The Old Section has been closed to benefit accrual since 1978. The scheme’s independent actuary advised that at 31 March 2012 the
market value of the scheme’s assets for the Old Section was USD 2,129,729 thousand, representing approximately 100% of the value of
the benefits accrued to members. The assets of the Old Section were substantially invested in bonds and a bulk insured annuity contract.
The Group could not identify its share of the underlying assets and liabilities of the Old Section on a consistent and reasonable basis and is
therefore accounting for contributions and payments to the Old Section under IAS 19 as if it were a defined contribution scheme.
The most recent formal actuarial valuation of the New Section was carried out as at 31 March 2012.
Following the valuation, the Trustee and employers have agreed contributions in addition to those arising from the 31 March 2003, 31
March 2006 and 31 March 2009 valuations which will be paid to the Section by participating employers over the period to 30 September
2023. These contributions include an allowance for the impact of irrecoverable contributions in respect of companies no longer in
existence or not able to pay their share. The Group’s aggregated outstanding contributions from these valuations are payable as follows
2014 USD 8,555 thousand, 2015 to 2020 USD 6,752 thousand per annum and 2021 to 2023 USD 1,288 thousand per annum.
The Trustee set the payment terms for each participating employer in accordance with the Trustee’s Contribution Collection Policy which
includes credit vetting.
The Group’s share of the net deficit of the New Section at 31 December 2013 is estimated at 4.807%.
MERCHANT NAVY RATINGS’ PENSION FUND (“MNRPF”)
The Merchant Navy Ratings’ Pension Fund (“the MNRPF Scheme”) is an industry-wide multi-employer defined benefit pension scheme in
which sea staff employed by companies within the Group have participated. The scheme has a significant funding deficit and has been
closed to further benefit accrual.
The most recent formal actuarial valuation was carried out as at 31 March 2011.
Certain Group companies, which are no longer current employers in the MNRPF, had settled their statutory debt obligation and were not
considered to have any legal obligation with respect to the ongoing deficit in the fund. However, following a legal challenge by Stena Line
Limited, the High Court decided that the Trustees could require all employers that had ever participated in the scheme to make
contributions to fund the deficit. Although the Group appealed the decision, it was not overturned.
The Trustees notified these Group companies of their estimated share of the current deficit during December 2012 equating to 3.0%. The
method of deficit allocation and the associated recovery plan has still to be approved by the court, however, based on this initial indication
the Group has provided for this liability after an allowance for the impact of irrecoverable contributions in respect of companies no longer
in existence or not able to pay their share. The net impact of USD 17,300 thousand (Restated) was reflected as an actuarial movement in
the consolidated statement of other comprehensive income in 2012.
103
DP World Annual Report and Accounts 2013
27 INTEREST BEARING LOANS AND BORROWINGS
669,322
2,307
5,287
106,916
3,237,234
28,555
4,776,690
4,049,621
202,209
42,886
3,867
9,365
203,111
484,909
3,719
11,096
258,327
702,835
5,035,017
4,752,456
Year of
maturity
Face value
USD’000
2013
Carrying
amount
USD’000
Variable 2014–2020
3% to 8% 2019–2022
Variable 2017–2023
Variable
2019
9.5%
2017
Variable
2031
8.5%
2017
476,012
42,786
88,117
68,976
496
578,793
3,642
476,012
42,786
88,117
68,976
496
578,793
3,642
Variable
2017
Variable
2018
Variable 2014–2019
Variable
2018
4.14%
2024
Variable
Payable
on
demand
8%
Payable
on
demand
15,178
135,224
64,136
257,209
26,683
2,667
15,178
135,224
64,136
257,209
26,683
2,667
1,200
1,200
Current liabilities
Secured bank loans
Unsecured bank loans
Unsecured loans
Finance lease liabilities
Total
TERMS AND DEBT REPAYMENT SCHEDULE
Terms and conditions of outstanding loans were as follows:
Currency
Notes
Secured loans
USD
USD
EUR
PKR
ZAR
GBP
GBP
Unsecured loans
SAR
CAD
INR
USD
USD
EUR
USD
Mortgage debenture stock
GBP
Unsecured loan stock
GBP
Unsecured Bond
USD
Unsecured sukuk bonds
USD
Unsecured MTNs
USD
Finance lease liabilities in various currencies
* The profit rate on this Islamic Bond is 6.25%.
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(a)
(a)
Nominal
interest rate
3.5%
Undated
2,355
2,355
7.5%
Undated
5,399
5,399
7.88%
2027
8,000
7,940
*
2017
1,500,000
1,492,513
6.85%
2037
1.13%– 2014–2054
10.43%
1,750,000
26,867
1,738,824
26,867
5,053,740
5,035,017
CONSOLIDATED
FINANCIAL STATEMENTS
1,056,613
2,355
5,399
455,544
3,239,277
17,502
Non-current liabilities
Secured bank loans
Mortgage debenture stock
Unsecured loan stock
Unsecured bank loans
Unsecured bond issues
Finance lease liabilities
CORPORATE
GOVERNANCE
2012
USD’000
STRATEGIC
REPORT
2013
USD’000
OVERVIEW
This note provides information about the terms of the Group’s interest-bearing loans and borrowings, which are measured at amortised
cost. Information about the Group’s exposure to interest rate, foreign currency and liquidity risk are described in note 30.
104
DP World Annual Report and Accounts 2013
Notes to Consolidated Financial Statements continued
27 INTEREST BEARING LOANS AND BORROWINGS CONTINUED
TERMS AND DEBT REPAYMENT SCHEDULE
Terms and conditions of outstanding loans were as follows:
Currency
Secured loans
EGP
EUR
GBP
GBP
HKD
INR
PKR
USD
USD
ZAR
Unsecured loans
CAD
SAR
INR
USD
USD
USD
EUR
Mortgage debenture stock
GBP
Unsecured loan stock
GBP
Unsecured Bond
USD
Unsecured sukuk bonds
USD
Unsecured MTNs
USD
Finance lease liabilities in various currencies
Notes
(a)
(a)
Nominal
interest rate
Year of
maturity
Face value
USD’000
2012
Carrying
amount
USD’000
Variable
Variable
Variable
8.5%
Variable
Variable
Variable
3%–8%
Variable
9.5%
2013
2017–2023
2031
2017
2015
2015–2017
2018
2017–2022
2013–2020
2017
1,868
103,353
119,846
18,000
837
39,820
76,345
29,794
481,784
786
1,868
103,353
119,846
18,000
837
39,820
76,345
29,794
481,784
786
Variable
2013
Variable
2017
Variable 2014–2019
4.14%–7% 2013–2024
8%
2013
Variable
2013
Variable
2013
158,030
19,205
70,260
29,330
1,200
315,000
2,519
158,030
19,205
70,260
29,330
1,200
315,000
2,519
3.5%
undated
2,307
2,307
7.5%
undated
5,287
5,287
7.88%
2027
8,000
7,935
*
2017
1,500,000
1,490,661
6.85%
2037
4.14%–14% 2013–2054
1,750,000
39,651
1,738,638
39,651
4,773,222
4,752,456
* The profit rate on this Islamic Bond is 6.25%.
(a) The Group has issued conventional bond of USD 1,750,000 thousand as Medium Term Note and a Sukuk (Islamic Bond) of
USD 1,500,000 thousand. The Medium Term note and Sukuk are currently listed on Nasdaq Dubai and the London Stock Exchange
(LSE).
Certain property, plant and equipment and port concession rights are pledged against the facilities obtained from the banks (refer to note
13 and note 14). The deposits under lien amounting to USD 48,507 thousand (2012: USD 46,767 thousand) are placed to collateralise
some of the borrowings of the Company’s subsidiaries (refer to note 19).
There has been no issuance or repayment of debt securities in the current year (2012: Nil). At 31 December 2013, the undrawn committed
borrowing facilities of USD 1,506,129 thousand (2012: USD 1,897,511 thousand) were available to the Group, in respect of which all
conditions precedent had been met.
FINANCE LEASE LIABILITIES
The Group classifies certain property, plant and equipment as finance leases where it retains all risks and rewards incidental to the
ownership. The net carrying values of these assets are disclosed in note 13.
105
DP World Annual Report and Accounts 2013
27 INTEREST BEARING LOANS AND BORROWINGS CONTINUED
Future
minimum
lease
payments
USD’000
2013
Present
value of
minimum lease
Interest
payments
USD’000
USD’000
11,258
17,929
9,770
(1,894)
(4,120)
(6,076)
9,364
13,809
3,694
At 31 December
38,957
(12,090)
26,867
2012
Present value
of minimum
Interest lease payments
USD’000
USD’000
Less than one year
Between one and five years
More than five years
13,715
25,938
15,328
(2,619)
(5,011)
(7,700)
11,096
20,927
7,628
At 31 December
54,981
(15,330)
39,651
Non-current
USD’000
Current
USD’000
2013
Total
USD’000
Trade payables
Other payables and accruals
Provisions*
Fair value of derivative financial instruments
Amounts due to related parties (refer to note 29)
–
256,027
1,018
24,201
–
146,359
796,671
54,411
28,170
8,173
146,359
1,052,698
55,429
52,371
8,173
As at 31 December
281,246
1,033,784
1,315,030
Non-current
USD’000
Current
USD’000
2012
Total
USD’000
Trade payables
Other payables and accruals
Provisions*
Fair value of derivative financial instruments
Amounts due to related parties (refer to note 29)
–
384,248
499
120,008
–
115,415
642,625
41,000
41,850
13,182
115,415
1,026,873
41,499
161,858
13,182
As at 31 December
504,755
854,072
1,358,827
CORPORATE
GOVERNANCE
Future
minimum
lease
payments
USD’000
STRATEGIC
REPORT
Less than one year
Between one and five years
More than five years
OVERVIEW
Future minimum lease payments under finance leases together with the present value of the net minimum lease payments are as follows:
The finance leases do not contain any escalation clauses and do not provide for contingent rents.
* During the current year, additional provision of USD 41,940 thousand was made (2012: USD 33,451 thousand) and an amount of USD 28,010 thousand was utilised (2012: USD 18,700 thousand).
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CONSOLIDATED
FINANCIAL STATEMENTS
28 ACCOUNTS PAYABLE AND ACCRUALS
106
DP World Annual Report and Accounts 2013
Notes to Consolidated Financial Statements continued
29 RELATED PARTY TRANSACTIONS
For the purpose of these consolidated financial statements, parties are considered to be related to the Group, if the Group has the ability,
directly or indirectly, to control the party or exercise significant influence over it in making financial and operating decisions, or vice versa,
or where the Group and the party are subject to common control or significant influence i.e. part of the same Parent Group.
Related parties represent associated companies, shareholders, directors and key management personnel of the Group, the Parent
Company, Ultimate Parent Company (Dubai World Corporation) and entities jointly controlled or significantly influenced by such parties.
Pricing policies and terms of these transactions are approved by the Group’s management. The terms and conditions of the related party
transactions were made on an arm’s-length basis.
The Ultimate Parent Company operates a Shared Services Unit (“SSU”) which recharges the proportionate costs of services provided to the
Group. SSU also processes the payroll for the Company and certain subsidiaries and recharges the respective payroll costs.
Transactions with related parties included in the consolidated financial statements are as follows:
Expenses charged:
Concession fee
Shared services
Other services
Revenue earned:
Management fee income
Liabilities settled and recharged:
Expenses charged:
Concession fee
Shared services
Other services
Revenue earned:
Management fee income
Equityaccounted
investees
USD’000
Other related
parties
USD’000
2013
Total
USD’000
–
–
–
48,169
–
30,574
48,169
–
30,574
19,946
–
–
2,877
19,946
2,877
Equityaccounted
investees
USD’000
Other related
parties
USD’000
2012
Total
USD’000
–
–
–
48,169
2,354
29,249
48,169
2,354
29,249
24,889
–
24,889
Balances with related parties included in the consolidated statement of financial position are as follows:
Due from related parties
Ultimate Parent Company
Parent Company
Equity-accounted investees
Other related parties
Due to related parties
2013
USD’000
2012
USD’000
2013
USD’000
2012
USD’000
2,114
54,304
145,755
24,382
1,871
53,450
232,973
24,764
377
–
57
7,739
194
–
124
12,864
226,555
313,058
8,173
13,182
Guarantees issued on behalf of equity-accounted investees amount to USD 81,401 thousand (2012: USD 98,720 thousand).
COMPENSATION OF KEY MANAGEMENT PERSONNEL
The remuneration of Directors and other key members of the management during the year were as follows:
Short-term benefits and bonus
Post-retirement benefits
2013
USD’000
2012
USD’000
9,543
702
8,135
720
10,245
8,855
107
DP World Annual Report and Accounts 2013
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting
date was as follows:
2012
USD’000
52,716
10,207
1,685
669,405
2,572,470
49,556
11,277
–
693,705
1,881,928
3,306,483
2,636,466
STRATEGIC
REPORT
Available-for-sale financial assets
Debt securities held to maturity
Derivative financial assets
Loans and receivables
Bank balances
2013
USD’000
OVERVIEW
30 FINANCIAL INSTRUMENTS
(A) CREDIT RISK
(i) Exposure to credit risk
The maximum exposure to credit risk for trade receivables (net) at the reporting date by operating segments is as follows:
Neither past due nor impaired on the reporting date:
Past due on the reporting date
Past due 0–30 days
Past due 31–60 days
Past due 61–90 days
Past due >90 days
21,288
41,323
207,463
17,758
39,996
186,780
270,074
244,534
2013
USD’000
2012
USD’000
168,120
174,112
81,384
16,911
2,456
1,203
60,440
7,526
1,328
1,128
270,074
244,534
The Group believes that the unimpaired amounts that are past due by more than 30 days are still collectible, based on the historic
collection trends.
Movement in the allowance for impairment in respect of trade receivables during the year was:
As at 1 January
Provision recognised during the year
As at 31 December
2013
USD’000
2012
USD’000
38,920
8,379
47,299
35,954
2,966
38,920
Based on historic default rates, the Group believes that, apart from the above, no impairment allowance is necessary in respect of trade
receivables not past due or past due.
Trade receivables with the top ten customers represent 47% (2012: 45%) of the trade receivables.
www.dpworld.com/investors
CONSOLIDATED
FINANCIAL STATEMENTS
The ageing of trade receivables (net) at the reporting date was:
2012
USD’000
CORPORATE
GOVERNANCE
Asia Pacific and Indian subcontinent
Australia and Americas
Middle East, Europe and Africa
2013
USD’000
108
DP World Annual Report and Accounts 2013
Notes to Consolidated Financial Statements continued
30 FINANCIAL INSTRUMENTS CONTINUED
(B) LIQUIDITY RISK
2013
The following are the undiscounted contractual maturities of financial liabilities, including estimated interest payments and the impact of
netting agreements.
Carrying
amount
USD’000
Non derivative financial liabilities
Secured bank loans
Unsecured bond issues
Mortgage debenture stocks
Unsecured loans and loan stock
Finance lease liabilities
Unsecured other bank loans
Trade and other payables
Bank overdraft
Financial guarantees and letters of credit*
Derivative financial liabilities
Interest rate swaps
Forward exchange contracts
Total
Contractual
cash flows
USD’000
Less than
1 year
USD’000
1,258,822
3,239,277
2,355
9,266
26,867
498,430
1,200,037
1,407
–
(1,679,351)
(6,412,886)
(4,496)
(19,795)
(38,957)
(556,793)
(1,223,934)
(1,407)
(316,834)
(197,180)
(214,255)
(82)
(4,272)
(11,258)
(80,985)
(944,011)
(1,407)
–
51,953
418
(140,288)
(534)
(36,730)
(381)
6,288,832 (10,395,275) (1,490,561)
1–2 years
USD’000
2–5 years
USD’000
More than
5 years
USD’000
(207,770)
(490,221)
(784,180)
(214,255) (2,002,661) (3,981,715)
(82)
(247)
(4,085)
(405)
(1,215)
(13,903)
(9,580)
(8,349)
(9,770)
(56,606)
(395,097)
(24,105)
(110,067)
(112,038)
(57,818)
–
–
–
–
–
–
(33,322)
(131)
(59,567)
(22)
(10,669)
–
(632,218) (3,069,417) (4,886,245)
* Refer to note 33 for further details.
2013
The following table indicates the periods in which the undiscounted cash flows associated with derivatives that are expected to occur. The
timing of these cash flows are not materially different from the impact on the consolidated income statement.
Interest rate swaps
Assets
Liabilities
Forward exchange contracts
Assets
Liabilities
Total
Carrying
amount
USD’000
Expected
cash flows
USD’000
Less than
1 year
USD’000
1–2 years
USD’000
2–5 years
USD’000
1,685
(51,953)
(349)
(140,288)
(129)
(36,730)
(95)
(33,322)
(125)
(59,567)
–
(418)
–
(534)
–
(381)
–
(131)
–
(22)
(50,686)
(141,171)
(37,240)
(33,548)
(59,714)
More than
5 years
USD’000
–
(10,669)
–
–
(10,669)
2012
The following are the undiscounted contractual maturities of financial liabilities, including estimated interest payments and includes the
impact of netting agreements.
Carrying
amount
USD’000
Non derivative financial liabilities
Secured bank loans
Unsecured bond issues
Mortgage debenture stocks
Unsecured loans and loan stock
Finance lease liabilities
Unsecured syndicate bank loans
Unsecured other bank loans
Trade and other payables
Bank overdraft
Financial guarantees and letters of credit*
Derivative financial liabilities
Interest rate swaps
Forward exchange contracts
Total
* Refer to note 33 for further details.
Contractual
cash flows
USD’000
Less than
1 year
USD’000
1–2 years
USD’000
872,433
3,237,234
2,307
9,006
39,651
–
591,825
635,824
195
–
(1,120,723)
(6,627,141)
(4,405)
(19,472)
(54,981)
–
(634,830)
(644,505)
(195)
(267,667)
(169,021)
(214,255)
(81)
(4,268)
(13,715)
–
(509,236)
(251,576)
(195)
–
(171,607)
(214,255)
(81)
(397)
(11,645)
–
(55,643)
(109,422)
–
–
(513,525)
(2,096,411)
(242)
(1,190)
(14,293)
–
(40,435)
(254,830)
–
–
(266,570)
(4,102,220)
(4,001)
(13,617)
(15,328)
–
(29,516)
(28,677)
–
–
161,823
35
(238,381)
192
(41,096)
192
(36,399)
–
(87,129)
–
(73,757)
–
5,550,333
(9,612,108)
(1,203,251)
(599,449)
(3,008,055)
(4,533,686)
2–5 years
USD’000
More than
5 years
USD’000
109
DP World Annual Report and Accounts 2013
30 FINANCIAL INSTRUMENTS CONTINUED
Carrying
amount
USD’000
Total
Less than
1 year
USD’000
1–2 years
USD’000
2–5 years
USD’000
More than
5 years
USD’000
(161,823)
(238,381)
(41,096)
(36,399)
(87,129)
(73,757)
(35)
192
192
–
–
–
(161,858)
(238,189)
(40,904)
(36,399)
(87,129)
(73,757)
The Group’s financial instruments in different currencies were as follows:
GBP
USD’000
EUR
USD’000
AUD
USD’000
INR
USD’000
CAD
USD’000
Others
USD’000
2013
Total
USD’000
Bank balances and cash
2,260,973
Trade receivables
160,500
Secured bank loans and
mortgage debenture stock (518,797)
Unsecured bank loans and
loan stock
(285,092)
Bank overdraft
–
Trade payables
(51,151)
79,415
26,027
111,145
31,167
21,262
8,400
1,856
15,730
26,600
13,100
71,219
15,150
2,572,470
270,074
(584,789)
(88,117)
–
–
–
(5,399)
(1,407)
(44,160)
(2,667)
–
(22,377)
–
–
(2,300)
(64,136)
–
(19,601)
(135,224)
–
(1,700)
(15,178)
–
(5,070)
(507,696)
(1,407)
(146,359)
(530,313)
29,151
27,362
(66,151)
(97,224)
(3,353)
925,905
Net consolidated
statement of financial
position exposures
1,566,433
(69,474) (1,261,177)
* The functional currency of the Company is UAE Dirham. UAE Dirham is currently pegged to USD and therefore the Group has no foreign currency risk on these balances.
The Group’s financial instruments in different currencies were as follows:
USD*
USD’000
GBP
USD’000
EUR
USD’000
AUD
USD’000
INR
USD’000
CAD
USD’000
Others
USD’000
2012
Total
USD’000
Bank balances and cash
1,508,112
Trade receivables
145,088
Secured bank loans and
mortgage debenture stock (534,568)
Unsecured bank loans and
loan stock
(345,531)
Bank overdraft
–
Trade payables
(36,597)
77,411
21,700
162,594
31,731
32,751
4,000
14,634
7,676
21,700
15,500
64,726
18,839
1,881,928
244,534
(126,237)
(103,353)
–
(39,820)
–
(70,762)
(874,740)
(5,287)
–
(15,900)
(2,519)
–
(25,542)
–
–
(2,100)
(70,260)
(195)
(24,168)
(158,030)
–
(2,300)
(19,204)
–
(8,808)
(600,831)
(195)
(115,415)
(48,313)
62,911
34,651
(112,133)
(123,130)
(15,209)
535,281
Net consolidated statement
of financial position
exposures
736,504
* The functional currency of the Company is UAE Dirham. UAE Dirham is currently pegged to USD and therefore the Group has no foreign currency risk on these balances.
The following significant exchange rates applied during the year:
Average rate during
GBP
EUR
AUD
INR
CAD
www.dpworld.com/investors
Reporting date spot rate
2013
2012
2013
2012
0.640
0.753
1.036
58.510
1.030
0.631
0.778
0.966
53.361
0.999
0.605
0.726
1.119
61.922
1.064
0.618
0.757
0.964
54.898
0.996
CONSOLIDATED
FINANCIAL STATEMENTS
USD*
USD’000
CORPORATE
GOVERNANCE
(C) MARKET RISK
(i) Currency risk
Exposure to currency risk
STRATEGIC
REPORT
Interest rate swaps
Liabilities
Forward exchange contracts
Liabilities
Expected
cash flows
USD’000
OVERVIEW
2012
The following table indicates the periods in which the undiscounted cash flows associated with derivatives that are expected to occur. The
timing of these cash flows are not materially different from the impact on the consolidated income statement.
110
DP World Annual Report and Accounts 2013
Notes to Consolidated Financial Statements continued
30 FINANCIAL INSTRUMENTS CONTINUED
(ii) Sensitivity analysis
A ten per cent strengthening of the USD against the following currencies at 31 December would have increased/(decreased) consolidated
income statement and consolidated statement of other comprehensive income by the amounts shown below. This analysis assumes that
all other variables, in particular interest rates, remain constant. Furthermore, as each entity in the Group determines its own functional
currency, the effect of translating financial assets and liabilities of the respective entity would mainly impact consolidated statement of
other comprehensive income.
Consolidated income statement
USD’000
2013
GBP
EUR
AUD
INR
CAD
449
431
(7)
967
598
Consolidated statement of
other comprehensive income
USD’000
2013
USD’000
2013
USD’000
2013
7,349
1,584
–
3,557
1,193
(58,924)
3,239
3,040
(7,350)
(10,803)
(5,368)
6,990
3,850
(12,459)
(13,681)
A ten per cent weakening of the USD against the above currencies at 31 December would have had the equal but opposite effect on the
above currencies to the amounts shown above, on the basis that all other variables remain constant.
(iii) Interest rate risk
(i)Profile
At the reporting date the interest rate profile of the Group’s interest bearing financial instruments was:
Carrying amount
2013
USD’000
Fixed rate instruments
Financial assets
Financial liabilities
Interest rate swaps
2012
USD’000
10,207
11,277
(3,348,705) (3,285,137)
(1,170,471)
(925,243)
(4,508,969) (4,199,103)
Variable rate instruments
Financial assets
Financial liabilities
Interest rate swaps
2,151,205 1,362,752
(1,687,719) (1,467,514)
1,170,471
925,243
1,633,957
820,481
(ii) Cash flow sensitivity analysis for variable rate instruments
A change of 100 basis points (“bp”) in interest rates at the reporting date would have increased/(decreased) consolidated income
statement and consolidated statement of other comprehensive income by the amounts shown below. This analysis assumes that all other
variables, in particular foreign currency rates, remain constant.
Consolidated income statement
Consolidated statement of
other comprehensive income
100 bp
increase
USD’000
100 bp
decrease
USD’000
100 bp
increase
USD’000
100 bp
decrease
USD’000
2013
Variable rate instruments
Interest rate swaps
16,340
1,745
(16,340)
(1,745)
–
13,449
–
(13,449)
Cash flow sensitivity (net)
18,085
(18,085)
13,449
(13,449)
2012
Variable rate instruments
Interest rate swaps
8,205
741
(8,205)
(741)
–
10,489
–
(10,489)
Cash flow sensitivity (net)
8,946
(8,946)
10,489
(10,489)
111
DP World Annual Report and Accounts 2013
OVERVIEW
30 FINANCIAL INSTRUMENTS CONTINUED
(D) FAIR VALUES
Fair values versus carrying amounts
The fair values of financial assets and liabilities, together with the carrying amounts shown in the consolidated statement of financial
position are as follows:
2013
Liabilities carried at fair values
Interest rate swaps
Forward exchange contracts
Fair value
USD’000
52,716
1,685
52,716
1,685
49,556
–
49,556
–
54,401
54,401
49,556
49,556
10,207
669,405
2,572,470
10,110
669,405
2,572,470
11,277
693,705
1,881,928
11,149
693,705
1,881,928
3,252,082
3,251,985
2,586,910
2,586,782
(51,953)
(418)
(51,953)
(418)
(161,823)
(35)
(161,823)
(35)
(52,371)
(52,371)
(161,858)
(161,858)
(1,258,822) (1,258,822)
(872,433)
(2,355)
(2,458)
(2,307)
(3,239,277) (3,378,952) (3,237,234)
(9,266)
(9,266)
(9,006)
(26,867)
(26,867)
(39,651)
(498,430)
(498,430)
(591,825)
(1,200,037) (1,200,037)
(635,824)
(1,407)
(1,407)
(195)
(872,433)
(2,662)
(3,734,175)
(9,006)
(39,651)
(591,825)
(635,824)
(195)
(6,236,461) (6,376,239) (5,388,475)
(5,885,771)
* A significant portion of these loans carry a variable rate of interest and hence, the fair values reported approximates carrying values.
Fair value hierarchy
The table below analyses financial instruments carried at fair value, by valuation method (also refer to note 5 (V). The different levels have
been defined as follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices)
or indirectly (i.e. derived from prices).
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Level 1
USD’000
2013
Available-for-sale financial assets
Derivative assets
Derivative financial liabilities
2012
Available-for-sale financial assets
Derivative financial liabilities
www.dpworld.com/investors
Level 2
USD’000
Level 3
USD’000
–
–
–
52,716
1,685
(52,371)
–
–
–
–
2,030
–
–
–
49,556
(161,858)
–
–
–
(112,302)
–
CONSOLIDATED
FINANCIAL STATEMENTS
Liabilities carried at amortised cost
Secured bank loans*
Mortgage debenture stocks
Unsecured bond issues
Unsecured loan stock
Finance lease liabilities
Unsecured bank and other loans*
Trade and other payables
Bank overdraft
Fair value
USD’000
CORPORATE
GOVERNANCE
Assets carried at amortised cost
Debt securities held to maturity
Loans and receivables
Cash and cash equivalents
2012
Carrying
amount
USD’000
STRATEGIC
REPORT
Assets carried at fair values
Available-for-sale financial assets
Interest rate swaps
Carrying
amount
USD’000
112
DP World Annual Report and Accounts 2013
Notes to Consolidated Financial Statements continued
31 OPERATING LEASES
OPERATING LEASE COMMITMENTS – GROUP AS A LESSEE
Future minimum rentals payable under non-cancellable operating leases as at 31 December are as follows:
Within one year
Between one to five years
Between five to ten years
Between ten to twenty years
Between twenty to thirty years
Between thirty to fifty years
Between fifty to seventy years
More than seventy years
2013
USD’000
2012
USD’000
290,998
1,115,598
1,254,322
1,499,439
981,565
1,198,978
923,174
983,526
303,685
735,859
1,102,940
1,351,947
1,311,794
1,221,425
1,052,910
1,029,272
8,247,600
8,109,832
The above operating leases (Group as a lessee) mainly consist of terminal operating leases arising out of concession arrangements which
are long term in nature. In addition, this also includes leases of plant, equipment and vehicles. In respect of terminal operating leases,
contingent rent is payable based on revenues/profits earned in the future period. The majority of leases contain renewable options for
additional lease periods at rental rates based on negotiations or prevailing market rates.
OPERATING LEASE COMMITMENTS – GROUP AS A LESSOR
Future minimum rentals receivable under non-cancellable operating leases as at 31 December are as follows:
Within one year
Between one to five years
More than five years
2013
USD’000
2012
USD’000
25,567
68,817
23,536
21,646
84,718
25,640
117,920
132,004
The above operating leases (Group as a lessor) mainly consist of rental of property, plant and equipment leased out by the Group. The
leases contain renewal options for additional lease periods and at rental rates based on negotiations or prevailing market rates.
32 CAPITAL COMMITMENTS
Estimated capital expenditure contracted for as at 31 December
2013
USD’000
2012
USD’000
788,972
1,178,529
33 CONTINGENCIES
(a) The Group has contingent liabilities amounting to USD 21,651 thousand (2012: USD 15,538 thousand) in respect of payment
guarantees, USD 212,192 thousand (2012: USD 152,556 thousand) in respect of performance guarantees and USD 1,590 thousand
(2012: 853 thousand) in respect of letters of credit issued by the Group’s bankers. The bank guarantees and letters of credit are arising
in the ordinary course of business from which it is anticipated that no material liabilities will arise.
(b) The Group has contingent liabilities in respect of guarantees issued on behalf of equity-accounted investees (refer to note 29).
(c) The Group through its 100% owned subsidiary Mundra International Container Terminal Private Limited (“MICT”) has developed and
is operating the container terminal at the Mundra port in Gujarat.
In 2006, MICT received a show cause notice from Gujarat Maritime Board (“GMB”) requiring MICT to demonstrate that the
undertaking given by its parent company, P&O Ports (Mundra) Private Limited, with regard to its shareholding in MICT has not been
breached in view of P&O Ports being taken over by the Group (DP World).
Based on the strong merits of the case and on the advice received from legal counsel, management believes that the above litigation
is unsubstantiated, and in management’s view, it will have no impact on the Group’s ability to continue to operate the port.
(d) Chennai Port Trust (“CPT”) had raised a demand for an amount of USD 19,303 thousand (2012: USD 21,773 thousand) from Chennai
Container Terminal Limited (“CCTL”), a subsidiary of the Company, on the basis that CCTL had failed to fulfil its obligations in respect
of non-transhipment containers for a period of four consecutive years from 1 December 2003. CCTL had subsequently paid USD
10,313 thousand (2012: USD 11,633 thousand) under dispute in 2008. CCTL had initiated arbitration proceedings against CPT in this
regard. The arbitral tribunal passed its award on November 26, 2012 ruling in favour of CCTL. However, CPT appealed against this
order, which was upheld by Chennai High Court on 8 January 2014 and accordingly a provision has been recognised against the
above receivable. CCTL lodged an appeal before the Division Bench of Madras High Court along with a stay petition on 31 January
2014. The Appeal was taken up for hearing and admitted on 3 February 2014. CPT also made a statement before the Court that no
further action would be taken by CPT against CCTL. The Court has posted the matter for hearing on 15 April 2014.
113
DP World Annual Report and Accounts 2013
34 SIGNIFICANT GROUP ENTITIES
(A) SIGNIFICANT HOLDING COMPANIES
Legal Name
Ownership
interest
Thunder FZE
Peninsular and Oriental Steam Navigation Company
Limited
DP World Australia (POSN) Pty Ltd
DPI Terminals Asia Holding Limited
DPI Terminals (BVI) Limited
DP World Ports Cooperatieve U.A.
DP World Maritime Cooperatieve U.A.
DPI Terminals Holdings C.V.
100%
100%
United Arab Emirates Management and operation of seaports,
airports and leasing of port equipment
United Arab Emirates
Holding company
United Kingdom Management and operation of seaports
Australia
British Virgin Islands
British Virgin Islands
Netherlands
Netherlands
Netherlands
Ownership
interest
Country of incorporation
Principal activities
55.62%
100%
Argentina
Belgium
DP World (Canada) Inc.
100%
Canada
Egyptian Container Handling Company (ECHCO)
–S.A.E.
DP World Germersheim, GmbH and Co. KG
Chennai Container Terminal Private Limited
India Gateway Terminal Pvt. Ltd
Mundra International Container Terminal Private
Limited
Nhava Sheva International Container Terminal Private
Limited
DP World Middle East Limited
100%
Egypt
Container terminal operations
Multi-purpose terminal operations and
ancillary container services
Container terminal operations and
stevedoring
Container terminal operations
100%
100%
81.63%
100%
Germany
India
India
India
Container terminal operations
Container terminal operations
Container terminal operations
Container terminal operations
100%
India
Container terminal operations
100%
Kingdom of Saudi
Arabia
Mozambique
Pakistan
Peru
Republic of Djibouti
Republic of Suriname
Republic of Suriname
Romania
Senegal
Spain
United Arab Emirates
United Arab Emirates
United Kingdom
United Kingdom
Vietnam
Container terminal operations
(B) SIGNIFICANT SUBSIDIARIES – PORTS
Legal Name
Terminales Rio de la Plata SA
DP World Antwerp N.V.
DP World Maputo SA
Qasim International Container Terminal Pakistan Ltd
DP World Callao S.R.L.
Doraleh Container Terminal SARL
Integra Port Services N.V.
Suriname Port Services N.V.
Constanta South Container Terminal SRL
DP World Dakar S.A.
DP World Tarragona S.A.
DP World UAE Region FZE
DP World Fujairah FZE
Southampton Container Terminals Limited
London Gateway Port Limited
Saigon Premier Container Terminal
www.dpworld.com/investors
60%
75%
100%
33.33%*
60%
60%
75%
90%
60%
100%
100%
51%
100%
80%
Holding company
Holding company
Holding company
Holding company
Holding company
Holding company
Container terminal operations
Container terminal operations
Container terminal operations
Container terminal operations
Container terminal operations
General cargo terminal operations
Container terminal operations
Container terminal operations
Container terminal operations
Container terminal operations
Container terminal operations
Container terminal operations
Container terminal operations
Container terminal operations
CONSOLIDATED
FINANCIAL STATEMENTS
100%
100%
100%
100%
100%
100%
CORPORATE
GOVERNANCE
100%
Principal activities
STRATEGIC
REPORT
DP World FZE
Country of incorporation
OVERVIEW
The extent of the Group’s ownership in its various subsidiaries, associates and joint ventures and their principal activities are as follows:
114
DP World Annual Report and Accounts 2013
Notes to Consolidated Financial Statements continued
34 SIGNIFICANT GROUP ENTITIES CONTINUED
(C) ASSOCIATES AND JOINT VENTURES – PORTS
Ownership
interest
Country of incorporation
Principal activities
Djazair Port World Spa
DP World Djen Djen Spa
DP World Australia (Holding) Pty Ltd
Antwerp Gateway N.V
Empresa Brasileira de Terminais Portuarious S.A.
Caucedo Investment Inc.
Eurofos S.A.R.L
Generale de Manutention Portuaire S.A
Goodman DP World Hong Kong Limited
50%
50%
25%
42.50%
33.33%
50%
50%
50%
25%
Algeria
Algeria
Australia
Belgium
Brazil
British Virgin Islands
France
France
Hong Kong
Vishaka Container Terminals Private Limited
PT Terminal Petikemas Surabaya
Pusan Newport Co. Ltd
Qingdao Qianwan Container Terminal Co. Ltd
Tianjin Orient Container Terminals Co Ltd
DP World Yantai Company Limited
Asian Terminals Inc
Laem Chabang International Terminal Co. Ltd
26%
India
49%
Indonesia
42.10%
Korea
29%
People’s Republic of China
24.50%
People’s Republic of China
12.50%
People’s Republic of China
50.54%**
Philippines
34.50%
Thailand
Container terminal operations
Container terminal operations
Container terminal operations
Container terminal operations
Container terminal operations
Container terminal operations
Container terminal operations
Container terminal operations
Container terminal operations and
warehouse operations
Container terminal operations
Container terminal operations
Container terminal operations
Container terminal operations
Container terminal operations
Container terminal operations
Container terminal operations
Container terminal operations
Legal name
(D) OTHER NON-PORT BUSINESS
Legal name
P&O Maritime Services Pty Ltd
Container Rail Road Services Private Limited
Empresa de Dragagem do Porto de Maputo, SA
Port Secure Djibouti
DP World Cargo Services (Pty) Limited
Dubai International Djibouti FZE
P&O Maritime FZE
(E) PORTS UNDER DEVELOPMENT
Legal name
Nhava Sheva (India) Gateway Terminal Private Limited
Rotterdam World Gateway B.V.
DP World Yarımca Liman I˛sletmeleri Anonim S˛ irketi
Ownership
interest
Country of incorporation
Principal activities
100%
100%
25.50%
40%
70%
100%
100%
Australia
India
Mozambique
Republic of Djibouti
South Africa
United Arab Emirates
United Arab Emirates
Maritime services
Container rail freight operations
Dredging services
Port security services
Cargo services
Port management and operation
Maritime services
Ownership
interest
Country of incorporation
Principal
100%
30%
100%
India
Netherlands
Turkey
Container terminal operations
Container terminal operations
Container terminal operations
* Although the Group only has a 33.33% effective ownership interest in Doraleh Container Terminal SARL, this entity is treated as a subsidiary, as the Group is able to govern the financial and operating
policies of the company by virtue of an agreement with the other investor.
** Although the Group has more than 50% effective ownership interest in this entity, it is not treated as a subsidiary, but instead treated as a joint arrangement. The underlying joint venture agreement
with the other shareholder does not provide significant control to the Group.
115
DP World Annual Report and Accounts 2013
Notes
OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
CONSOLIDATED
FINANCIAL STATEMENTS
www.dpworld.com/investors
116
Notes
DP World Annual Report and Accounts 2013
5th Floor, JAFZA 17
Jebel Ali Free Zone
PO Box 17000
Dubai - U.A.E.
Tel: +971 4881 1110
Fax: +971 4881 1331
www.dpworld.com