COLOR GROUP ANNUAL REPORT 2007 // INTRODUCTION
Annual Report 2007
COLOR GROUP ANNUAL REPORT 2007
COLOR GROUP ANNUAL REPORT 2007 // INTRODUCTION
// INTRODUCTION // HIGHLIGHTS // SOCIETY AND THE ENVIRONMENT
// DIRECTORS’ REPORT AND ACCOUNTS
Principal fi gures and Key fi guresCOLOR GROUP ASA
DEVELOPMENT OF TRAFFIC
Passengers 4 294 691 4 279 868 4 433 072 4 211 284 4 241 870
Cars 879 458 828 284 809 188 823 029 818 467
Freight units (12m-equivalents) 176 634 192 412 177 195 158 357 142 223
PROFIT/LOSS (in NOK mill.) 1) (in EUR mill.)
Revenues 4 762 4 585 4 682 3 944 3 816 598
Operating expenses -4 003 -3 726 -3 740 -3 151 -2 963 -503
EBITDA 2) 759 859 942 793 853 95
Depreciation -399 -397 -495 -367 -367 -50
Charter, leasing expenses -65 -66 -77 -74 -37 -8
Operating income before write-down/loss/gain 296 396 369 352 449 37
Gain and loss on sales, write-downs 1 8
EBIT 296 396 378 353 457 37
Net fi nancial items -124 -31 -122 -89 -107 -16
Pre-tax income 171 365 256 263 349 21
Taxes -50 -104 -87 -94 -108 -6
Net income 121 261 169 169 241 15
BALANCE SHEET (in NOK mill.)
Current assets 1 879 1 534 615 769 549 236
Fixed assets 6 741 5 073 5 699 5 521 3 374 847
Total assets 8 620 6 608 6 314 6 290 3 923 1 083
Current liabilities 1 008 842 566 595 407 127
Long-term debt 4 863 2 928 3 216 3 270 1 361 611
Deferred taxes 574 599 557 512 432 72
Shareholders’ equity 2 005 2 074 1 973 1 912 1 720 252
Total liabilities and shareholders’ equity 8 620 6 608 6 314 6 290 3 923 1 083
LIQUIDITY (in NOK mill.) / SOLIDITY (%)
Cash and cash equivalents as at 31 Dec. 3) 1 307 1 463 1 508 1 465 631 164
Cash fl ow from operations 4) 694 793 865 714 816 87
Equity ratio % 23 31 31 31 44
Net interest-bearing debt 4 955 2 950 3 082 3 017 1 130 622
EMPLOYEES / SUNDRY EXPENSES
Number of employees 5) 3 967 3 821 3 827 3 268 3 065
Costs of wages 1 409 1 296 1 303 1 102 1 053 177
Port fees 152 143 138 121 114 19
Defi nitions:
1) Translated into EURO, exchange rate as at 31 Dec. 07.
2) Operating profi t/loss before ordinary depreciation and charter expenses
3) Including non-utilised credit facilities
4) EBITDA less charter expenses
5) Including part-time employees in 2007, 2006 and 2005.
IFRS NASACCOUNTING STANDARD
CONSOLIDATED 2007 2006 2005 2004 2003 2007
The introduction of “Color Magic” and “Color Fantasy”
marks a new era in quality cruises based on a regular
sailing schedule. The launching of the SuperSpeed concept
has revolutionised a 150-year old shipping tradition and
brought Norway closer to the European continent.
Industrial renewal on this scale requires innovation, and
the will and ability to implement the plan at all levels in
the organisation.
Trond Kleivdal, Group President
’’
’’
of quality cruises on the longer
voyages”, states Kleivdal.
FUTURE-ORIENTED
ENGAGEMENT
Norwegian industry is dependent
on effi cient transport routes to
its markets. Both Norway and the
EU have stated clearly that the
increasing transport requirements
in Europe must be solved by trans-
ferring freight transport from the
roads to sea and rail transport.
“This development is particularly
important for Norway as from a
geographic aspect, we are a
peninsular in relation to the rest
of Europe. Color Line has already
registered a considerable increase
in freight. Based on our modern
ports and ships, industrial enter-
prises now have access to an
effective, intelligent and reliable
transport system which has
effi ciently reduced the distance
between Norway and the conti-
nent. We have established effi cient
motorways at sea,” says Trond
Kleivdal.
Color Line’s engagement is also
important for the shore-based
tourist industry, bringing in large
volumes of tourists who arrive by
sea with their cars onboard.
“Our ships represent a consider-
able growth potential. With the in-
troduction of SuperSpeed, popular
summer and winter destinations
particularly in Norway and Den-
mark will now be regarded as close
to hand for large groups of the
population,” points out Kleivdal.
WELL-SHOD FOR FURTHER
GROWTH
Concurrently with the introduc-
tion of new tonnage and a new
organisation, Color Line will be
focusing on the company’s human
resources.
“We must be certain that we are
professional in our operations and
in the manner in which we take
care of our colleagues. For this
reason, we wish to establish good
platforms for further develop-
ment, competence enhancement
and career plans.” Kleivdal empha-
sizes that Color Line is dependent
on a competent and motivated
staff to enable the company to
fulfi l its ambitious vision.
“We are to be the best in
Europe in the fi elds of cruise and
sea transport, and this is why we
must also have the most motivat-
ed employees.”
Kleivdal underlines that the
measures taken in 2007 and in
the fi rst six months of 2008 have
created a solid foundation that will
secure lasting values for share-
holders as well as fulfi lling the
expectations of employees, pas-
sengers and society as a whole.
“We are now in a good position
and we are well shod for further
growth. Our investments will start
to give positive results towards the
end of 2008. Now is the time to
deliver the goods!” ■
During the period
2004 to 2008,
Color Line has in-
vested almost NOK
7.5 billion on four
custom-built ships,
and on modern ports and termi-
nals in Kristiansand, Larvik, Oslo,
Hirtshals and Kiel. The world’s two
largest cruise ships with car decks,
Color Magic and Color Fantasy,
revitalised the cruise traffi c be-
tween Oslo and Kiel in the autumn
of 2007.
In the spring of 2008, the trans-
port stages between Kristiansand,
Larvik and Hirtshals in Denmark
will also be renewed through the
introduction of the new transpor-
tation concept, SuperSpeed 1 and
SuperSpeed 2.
AN INDUSTRIAL VOYAGE
These new ships and port facili-
ties mark the start of a new era for
Color Line.
“Our industry is facing major
challenges both nationally and
internationally. Following compre-
hensive analyses, we decided some
years ago to meet these challenges
with bold initiatives. We decided to
renew our tonnage and to special-
ise in quality cruises and effi cient
transport”, says Trond Kleivdal,
Color Line’s Group President.
These strategic decisions were
followed up by fi rm action. New
ships were contracted and the
older tonnage was sold at prices
that exceeded book values. In
parallel with the development of
tonnage, Color Line implemented
essential organisational changes
in 2007.
“There was a requirement for
uniting energies. We now have a
keenly focused and transparent
organisation that is well suited for
effi cient transport on the short
services and for the organisation
During the course of 2008, Color Line will be in the fi nal stages of the most ambitious
investment programme in the history of the company. A new foundation has been laid,
based on innovation and the ability to implement such a wide-reaching plan. Color Line is
now ready to fulfi l its ambitious vision: To be the best shipping company in Europe in the
cruise and transportation sectors, having a base in Norway.
D
Time to deliver the goods
COLOR GROUP ANNUAL REPORT 2007 // INTRODUCTION
4 5
Trond Kleivdal, Group President
In addition, the reorganisation
provides openings for invest-
ments in new projects, report-
ing lines are improved and
distribution of responsibility
is clearly defi ned. To sum up,
the new organisation has enabled
Color Line to consolidate its vision
to be the best shipping company in
Europe in the fi elds of cruise and
transport.
CRUISE AND TRANSPORT
As a result of the reorganisation,
the subsidiary company Color Line
was split into two main business
areas, the Cruise Division which is
handled by Color Line Cruises AS
and subsidiaries, and the Trans-
port Division handled by Color Line
Transport AS and subsidiaries. All
employees on board the ships are
employed by Color Line Crew AS.
Color Group ASA holds all the
shares in the sub-group Color Line
AS which is the parent company of
the newly established companies
Color Line Cruises AS, Color Line
Transport AS and Color Line Crew
AS.
All fi nancing and appurtenant
fi nancial activities take place in
the parent company Color Group
ASA and the owner company
O.N. Sunde AS.
EXECUTIVE MANAGEMENT
Group management of Color Line
AS comprises seven units, head-
ed by Trond Kleivdal, the Group
President.
The business area Cruise is re-
sponsible for the Oslo – Kiel service
and for Color Line Germany. The
operative management for Color
Line Cruises is located in Oslo. The
Cruise Division is headed by Knut
Hals, Group Director.
In 2007, Color Group improved its effi ciency through the reorganisation of the subsidiary
company Color Line AS. The reason behind this process was to enable the company to
operate successfully in an increasingly competitive market and at the same time be in a
position to offer quality cruises and effi cient transport.
I
Reorganisation
En bildetekst gjør seg altid godt,
og mener vi må ha det på slike
bilder.
COLOR GROUP ANNUAL REPORT 2007 // INTRODUCTION
6 7
Boge GulbrandsenGroup Director Strategy,
Market and Business
Development
Mette KrabberødGroup Director
Financial
Trond KleivdalGroup President
Color Line
Svein SørensenGroup Director
Color Line Marine
Laila ValdalGroup Director
Color Line Transport
Lasse Winge KristensenGroup Director
Human Resources
Knut HalsGroup Director
Color Line Cruises
Helge Otto MathisenGroup Director
Communications and
Public Relations
The business area Transport is
responsible for the Kristiansand –
Hirtshals service, the Larvik – Hirts-
hals service, the Sandefjord –
Strømstad service in addition to
Color Line Denmark, Color Line
Cargo and Color Hotel Skagen. The
operative management of Color
Line Transport is based in Sande-
fjord.
Laila Valdal is Group Director
for the Transport Division. The
other group directors are Svein
Sørensen, Color Line Marine AS,
Boge Gulbrandsen, Strategy, Market
and Business Development, Helge
Otto Mathisen, Communications
and Public Relations, Mette Krab-
berød, Financial and Lasse Winge
Kristensen, Human Resources. ■
COLOR GROUP ANNUAL REPORT 2007 // INTRODUCTION
8 9
Ships in operationColor Line is Norway’s largest and one of Europe’s leading cruise and ferry companies. The
company has a workforce of approx. 3 500 in four countries and with effect from March 2008,
operates seven ships on fi ve international services between seven ports in Norway, Germany,
Denmark and Sweden.
January February March April May June July August September October November December
M/S COLOR FANTASY
Oslo-Kiel
M/S COLOR FANTASY
Oslo-Kiel
M/S KRONPRINS HARALD
Oslo-Frederikshavn
M/S COLOR FESTIVAL
Kristiansand-Hirtshals
M/S CHRISTIAN IV
Larvik-Hirtshals
M/S PETER WESSEL
Sandefjord-Strömstad
M/S COLOR VIKING
Sandefjord-Strömstad
M/S BOHUS
Bergen/Stavanger-Hirtshals
M/S PRINSESSE RAGNHILD
Kristiansand-Hirtshals
F/F SILVIA ANA
Oslo-Kiel
M/S COLOR MAGIC
THE FLEET 2008
Year built: 2004, Aker Yards, Turku FinlandHome port: OsloTonnage: 75 027 GRTLength: 224 metresBeam: 35 metres
Draft: 6.8 metresClass: Det Norske VeritasMax. capacity: 2 700Passenger cars: 750Trailers: lane metres: 1 270
M/S COLOR MAGICYear built: 2007, Aker Yards, Turku FinlandHome port: OsloTonnage: 75 100 GRTLength: 224 metresBeam: 35 metres
Draft: 6.8 metresClass: Det Norske VeritasMax. capacity: 2 700Passenger cars: 550Trailers: lane metres: 1 270
M/S PRINSESSE RAGNHILDYear built: 1981/1982 HDW Kiel/Astilleros, Cadiz, SpainHome port: OsloTonnage: 35 855 GRTLength: 202.25 metres
Beam: 26.6 metres Draft: 6.5 metresClass: Det Norske VeritasMax. capacity: 1 515Passenger cars: 600Trailers: lane metres: 900
M/S SUPERSPEED 1Built: Aker Yards, Rauma, FinlandHome port: KristiansandTonnage: 33 500 GRTLength: 211.3 metresBeam: 26 metres
Draft: 6.5 metresClass: Det Norske VeritasMax. capacity: 1 929Passenger cars: 764Trailers: lane metres: 2 036
M/S SUPERSPEED 2Year built Aker Yards, Rauma, FinlandHome port: KristiansandTonnage: 33 500 BRTLength: 211.3 metresBeam: 26 metres
Draft: 6.5 metresClass: Det Norske VeritasMax. capacity: 1 929Passenger cars: 764Trailers: lane metres: 2 036
M/S COLOR VIKINGYear built 1985, Nakskov, DenmarkHome port: SandefjordTonnage: 19 736 BRTLength: 137 metresBeam: 24 metres
Draft: 5.64 metresClass: Det Norske VeritasMax. capacity: 1 720 Passenger cars: 350Trailers: lane metres: 490
M/S BOHUSYear built 1971, Aalborg, DenmarkHome port: SandefjordTonnage: 9 149 BRTLength: 123.4 metresBeam: 19.2 metres
Draft: 5.4 metresClass: Det Norske VeritasMax. capacity: 1 165 Passenger cars: 230Trailers: lane metres: 462
O.N. Sunde AS
O.N. Sunde AS is an investment company with
ownership interests in businesses engaged in ship-
ping, tourism, clothing, sports and leisure, property,
chemical industry and fi nancial investments. These
companies employ more than 6 000 persons.
O.N. Sunde has a 100 percent stake in Color Group
ASA which owns and operates Color Line AS. Most
of the group’s business takes place in Color Line AS,
Sunpor Kunststoff GmbH and Gresvig Holding AS.
COLOR GROUP ASA
Color Group ASA is engaged in the transport of pas-
sengers and freight, hotel operation, restaurants,
trade, entertainment and tour production. The
company has its head offi ce in Oslo and is an active
holding company for the wholly-owned subsidiary
company Color Line AS.
SUNPOR KUNSTSTOFF GMBH
This company is based in Austria, manufacturing
expanding polystyrene (EPS). This material is used
for insulation in buildings and as shock-absorbing
material for use in packaging and bicycle helmets.
GRESVIG HOLDING AS
This group comprises the business areas sports and
textiles and is one of the leading players in Norway
on the market for sports and leisure equipment
operating the chains G-Sport, Super G, Sportshuset
and Intersport. Voice Norge AS is also part of the
Gresvig Holding AS group. Voice Norge is mainly
engaged in the distribution and marketing of
private brands and other branded goods for which
the company has established exclusive distribution
in Norway through the four chain concepts VIC,
Match, Voice of Europe and Boys of Europe. ■
Group structure:
O.N. Sunde AS
Color Group ASATourism/Transport
Sunpor Kunststoff GmbHChemical industry
Alcam ASShipowning
ONS Invest AS
O.N. Sunde Eiendom AS
Gresvig Holding ASSport/Leisure
Voice Norge ASClothing distribution/Fashion
COLOR GROUP ANNUAL REPORT 2007 // HIGHLIGHTS
Highlights 2007
10 11
have been specially designed for
short cruises and adapted to tack-
le the logistic challenges of turning
around a ship in port and handling
several thousand passengers and
more than 500 vehicles in the
shortest possible time.
“Cooperating with effi cient land
organisations, we can if necessary
turn the ship around in Oslo or Kiel
in just two and a half hours. This is
impressively quick when you take
into account that the new ships
are two to three times larger than
the previous vessels and can take
almost twice as many passengers”,
explains the Captain.
AMONG THE WORLD’S BEST
Color Magic and Color Fantasy are
the world’s largest cruise ships
equipped with a car deck. From bow
to stern these ships are actually
twice the length of the Royal Palace
in Oslo and from keel to the high-
est point onboard, they are almost
as high as the Oslo City Hall. The 15
decks onboard contain everything
from the engine room and car deck
to cabins, suites, restaurants, shops,
spa and a broad range of entertain-
ment and leisure activities.
“Color Line’s ships have always
been well-run, but when you start
operating a completely new ship,
everyone is on their toes. Magic
and Fantasy can be compared
with the very best cruise ships in
the world. This creates anticipa-
tion and all crew members exert
themselves to do their very best”,
says Hansen.
NORWEGIAN FLAG AND CREW
As the ship’s master, Captain
Hansen frequently receives
positive feedback from Nor-
wegian and foreign guests
with regard to the ship and
its crew who are mainly
Norwegian or Scandina-
vian.
“To be able to operate a
ship with a Norwegian crew and
to sail under the Norwegian fl ag is
a considerable competitive advan-
tage. The fact that colleagues on
board and on shore speak the same
language contributes towards ef-
fi cient operation, but is also con-
nected with a feeling of ownership.
The crew feel a sense of ownership
to the ship and the company and
want to show that they are the best
in the world in the fi eld of short
cruises. Even the big international
cruise companies have started to
show interest in our activities to
see how we manage”, says Captain
Erling B. Hansen. ■
Just two days after
the celebrations, the
ship left on its maiden
voyage from Oslo to
Kiel with both guests
and a well-prepared
crew looking forward to a unique
experience.
“Running a cruise ship can be
compared with a giant jigsaw
puzzle where all the pieces must
fi nd their right place before every-
thing functions well. This has been
the case on board this ship right
from the start. It is all a question
of thorough planning and a real-
ly competent crew. When we left
port with a passenger complement
for the very fi rst time, every crew
member knew exactly what they
had to do”, says Erling B. Hansen,
Captain of Color Magic.
A HIGH LEVEL
When Color Line signed the con-
tract for the building of Color
Magic in May 2005, planning work
started up immediately, aimed at
putting the ship into operation
quickly, maintaining the same high
service level as on the sister ship,
Color Fantasy.
During the building period, the
Aker Yards’ shipyard in Rauma, Fin-
land, was visited on many occasions
in order to do everything possible to
make the ship even more effi cient
than its sister ship. Well in advance
of completion, a number of offi cers
and crew from the sister ship were
selected to crew the new ship.
“When you have been on board
a ship for a time, you will always
fi nd details that can be improved
in some way, particularly with re-
gard to effi cient operation”, says
Hansen, who was previously Cap-
tain on board Color Fantasy and
several other Color Line ships. As
a result of these adaptations, Color
Magic is equipped with a larger
logistics centre than on its sister
ship and one of the decks is used
for additional passenger cabins.
ADAPTED FOR SHORT CRUISES
Color Fantasy and Color Magic
The atmosphere in Kiel on Saturday, 15 September 2007 was charged with excitement
when an armada of leisure craft escorted M/S Color Magic into port. More than 150 000
spectators viewed the naming ceremony performed by the ship’s godmother Veronica
Ferres, either in the port itself or via big screens placed at different locations in the city.
J
A Magical start for Color Magic
13
COLOR GROUP ANNUAL REPORT 2007 // HIGHLIGHTS
12
Erling B. Hansen,
Captain, Color Magic
ration between Kristiansand and
Hirtshals on 13 March. SuperSpeed
2 will commence ferry operations
between Larvik and Hirtshals in
June.
DYNAMIC AND ELEGANT
The SuperSpeed ships are of mo-
dern design and have completely
new technological solutions. Com-
fort, capacity and effi ciency were
important themes when these ships
were planned. In addition, high im-
portance is attached to effi ciency
in the ports of Kristiansand, Larvik
and Hirtshals. These ships have a
fast turnaround time in port.
“SuperSpeed was created
through close cooperation be-
tween Color Line, the architect
and Aker Yards. These ships rep-
resent a high level of custom
building. No other ships can match
SuperSpeed’s combination of ef-
fi cient goods transport, comfort
and modern design”, emphasises
Laila Valdal.
She underlines that SuperSpeed
represents a large-scale long term
investment for Color Line both at
sea and ashore.
“We are building a new terminal
in Larvik and have invested in up-
grading work of the ports in both
Kristiansand and Hirtshals. In our
view, these investments are abso-
lutely necessary in order to secure
Color Line’s position on the market.
SuperSpeed is the cornerstone in
our transport sector and in com-
bination with the ferries in Sande-
fjord will ensure modern and ef-
fi cient operation for the future”.■
“SuperSpeed is the
ship of the future.
It carries a large
number of passen-
gers, cars and cargo
quickly and effi cient-
ly to the continent in an extremely
comfortable manner”, says Laila
Valdal, Group Director, responsible
for Color Line Transport AS and
godmother for SuperSpeed 1.
She goes on to explain that the
preferences of the travelling pub-
lic have changed in recent years,
particularly on the routes between
Larvik/Kristiansand and Hirtshals.
“Previously, we had a mixture of
transport and cruise guests. How-
ever, the requirement for fast and
effi cient transport between Nor-
way and the continent has shown
a steady increase. The introduction
of the SuperSpeed ferries shows
that Color Line takes guests’ re-
quirements seriously. SuperSpeed
is an innovative transport concept
which is effi cient, fast, smart and
comfortable”, says Valdal proudly.
IMPORTANT FOR
TRANSPORT AND THE
TOURIST INDUSTRY
The new SuperSpeed ships have
trebled Color Line’s freight capa-
city and the company expects a
major increase in freight volumes.
“Transferring freight from the
roads to seaborne and rail trans-
port will be an effi cient contri-
bution towards solving Europe’s
transport challenges”, says Laila
Valdal.
She points out that SuperSpeed
also represents an appreciable
growth potential for the land-
based tourist industry in Norway
and Denmark.
“For example, winter destina-
tions in Norway and the popular
tourist attractions on Jutland will
now be close at hand for Norwe-
gian and Danish tourists”, says
Valdal.
SuperSpeed 1 was put into ope-
With the introduction of the SuperSpeed ships, Color Line has renewed ferry transport
across the Skagerrak radically. SuperSpeed is a revolutionary transport concept and a
necessary investment for the future.
S
Investing in the future
COLOR GROUP ANNUAL REPORT 2007 // HIGHLIGHTS
14 15
Laila Valdal, Group Director
Color Line Transport For effi cient handling of the increased traffi c, Color Line has invested in a
completely new terminal in Larvik. The ports of Hirtshals and Kristiansand
have been upgraded, including an extension of the vehicle parking area.
Facts SuperSpeed● Length: 211 metres
● Kristiansand-Hirtshals: 3h 15min.
● Larvik-Hirtshals: 3h 45min
● Passenger cars: 764
● Max capacity: 1929
● Hazardous cargo allowed
● Trucker cabins: 54
● Effectly roll-on and roll-off
CONTINUITY AND
PREDICTABILITY
Eirik Borge explains that the com-
pany was faced with a major chal-
lenge in the spring of 2007 when
Color Line withdrew Color Travel-
ler from the service between
Larvik and Frederikshavn.
“We were left with one daily de-
parture by Peter Wessel which was
also laid up for periods. At the same
time, due to the work of extending
the ports, Color Line was obliged
to switch between Frederiks-
havn and Hirtshals. We handled
this by increasing road transport
and we are now looking forward to
the establishment of SuperSpeed
in Larvik. Two daily departures will
give us a high degree of continu-
ity and predictability and will make
it easier for drivers to plan their
driving times and rest periods in
conjunction with the departures”,
says Borge. He emphasises that
DHL is dependant on the regular
service of the SuperSpeed ferries,
even in inclement weather.
“These ships are constructed for
all year round service and we must
assume they will take Skagerrak
winters in their stride”, says Eirik
Borge with a smile. ■“For DHL Freight
Norway it is essential
that there is a well
functioning seaborne
transport system.
SuperSpeed gives
us greater fl exibility and stabili-
ty”, says Eirik Borge, CEO of DHL
Freight Norway.
He mentions several factors
which contribute towards simpli-
fying DHL’s everyday routines.
“SuperSpeed gives us four daily
departures and shorter transport
times between Norway and Den-
mark. This provides a considerable
increase in capacity and means
that we know there will always
be space for our vehicles, even in
the busy seasons. Frequent depar-
tures will probably also contribute
towards better balance in the dis-
tribution of freight, which will have
a positive impact on our working
schedule. Moreover, the new ter-
minals in Larvik, Kristiansand and
Hirtshals will contribute towards
even more rational and effi cient
freight transport on our part”, says
Borge.
AN IMPORTANT ADVANTAGE
The largest part of DHL Freight
Norway’s continental business is
conducted from its base in Lar-
vik, due to the concentration of
industry in the region. Eirik Borge
believes that SuperSpeed will
provide the region with a trading
advantage.
“We have already received in-
quiries from clients on the conti-
nent who now see the opportunity
of becoming established on new
markets”.
Borge is convinced that Super-
Speed will provide positive spin-off
effects for business, industry and
tourism in the region.
“SuperSpeed has brought us even
closer to the continent”.
With the introduction of SuperSpeed, Europe is just a short drive away. For DHL Freight
Norway the result is a distinct advantage – the SuperSpeed concept means that transport
times to and from the continent are shortened appreciably, says CEO Eirik Borge.
F
Continental pleasures
COLOR GROUP ANNUAL REPORT 2007 // HIGHLIGHTS
16 17
SuperSpeed – more than a ship. The SuperSpeed ferries will have two daily departures in each direction. Each departure is equivalent to the capacity of 14 Boeing 737 aircraft. On board the ferries there is a good selection of shops, restaurants, and lounges – everything to make a voyage across the Skagerrak a pleasant experience. Rolf Kjær, Director of newbuildings
’’’’
18 19
cost air travel, other cruise com-
panies, ferry companies and other
operators in the fi elds of holiday
and leisure.
At the same time the company
must relate to changed framework
conditions outside the control of
the group such as the continuing
high prices for oil and energy and
new tax legislation introduced in
order to meet global climate chal-
lenges.
A NEW ERA
In order to make the most of the
opportunities that lie ahead, Color
Line has invested in new ships and
concepts. New trends in holiday,
leisure and freight transport have
formed a basis for these invest-
ments. The new ships have a much
higher capacity and a higher level
of comfort than the ships they have
replaced. In order to utilize this ca-
pacity in a profi table manner, the
customer base must be extended,
new technology must be applied
and operations optimized. ■
In order to be in a position
to implement the renewal
of the company and to ope-
rate two concepts as profes-
sionally and cost effi ciently
as possible, a reorganisation
programme of Color Group was
implemented during the fi rst six
months of 2007.
TWO BUSINESS DIVISIONS
In the reorganisation process, the
subsidiary company Color Line
was divided into two divisions:
transport and cruise. On the le-
gal side, the group structure was
changed by means of a de-merger
of Color Line AS which, following
the restructuring process became
the parent company of Color Line
Cruises AS, Color Line Transport
AS and Color Line Crew AS. All sea-
going personnel in the group are
employed in the latter company.
In practice, the reorganisa-
tion means that the business
area cruise is responsible for the
Oslo-Kiel cruise service while the
business segment transport is
responsible for the Kristiansand
– Hirtshals, Larvik – Hirtshals and
Sandefjord – Strømstad services.
Cruise and transport take care of
the operative management in Oslo
and Sandefjord respectively.
A CHANGE IN THE
COMPETITION PATTERN
The background for the decision
to restructure the group is the fact
that competition and customers
requirements and anticipations
have changed dramatically in just
a few years. In the tourist market,
Color Line is competing with low
From December 2004 until May 2008, Color Line will have invested NOK 7.5 billion in
new ships, ports and concepts. This initiative implies specialization in effi cient transport
systems on the short routes and high quality cruise entertainment on the long routes.
I
Cultivating Concepts
COLOR GROUP ANNUAL REPORT 2007 // HIGHLIGHTS
There will still be gaming machines onboard ships
The new regulations represent a tightening up
of the rules and lay down specifi c requirements
for ships offering gaming machines. The aim
of the new act is to secure satisfactory public
control in order to prevent social problems, at
the same time avoiding foreign registration of
Norwegian ships. The new regulations are also
intended to prevent ship traffi c, established
mainly for gambling purposes.
The Inspectorate of Lotteries and Founda-
tions has prepared draft regulations covering
the type of gaming that would be allowed on
board ships- The draft has been distributed
for consultation by the Ministry of Culture and
Ecclesiastica. The new regulations may come
into force from 1. July 2008.
In October 2007 the Ministry of Culture
and Ecclesiastica issued new regula-
tions governing gaming machines on-
board ships. The new regulations re-
quire that ships that have gaming
machines onboard must operate regular
all-year round services between Norwe-
gian and foreign ports. The ships must
also have freight capacity for the large
scale transport of goods and vehicles.
20 21
COLOR GROUP ANNUAL REPORT 2007 // HIGHLIGHTS
We can now offer a choice selection of popular mountain destinations to a large market.Simen Bjørgen, The mayor of Lom
’’’’
Five million guest days
In 2007, Color Line brought in about
5 million guest days to the land-based
tourist industry in Norway. There is
also additional spending by foreign
tourists travelling by Color Line ships
who go ashore in Norway. 2008 will
be the fi rst complete year in which
both Color Fantasy and Color Magic
are in operation and it is expected that
German tourists travelling by these
ships will spend about NOK 750 mil-
lion in Norway. This is an increase of
more than 75 percent compared with
2004 which was the last complete
year of operation without the new
ships.
“A motorway” to Lom
At the food and tourist fair Grüne Woche in Berlin, the mayor of Lom, Simen
Bjørgen said that SuperSpeed is important and that the region will work
actively to attract round trip passengers to plan their route to include Lom
and Gudbrandsdalen when travelling from east to west.
“We have scenery, we have history and we can offer a wide range of
attractions. It is now up to the food and tourist industry in the region to take
an initiative”, said the mayor to Aftenposten. Bjørgen is of the opinion that the
tourist industry and other industries in Gudbrandsdalen will certainly benefi t
if passengers are encouraged to visit inland Norway after they arrive at the
ports of Larvik and Kristiansand.
A short journey to the ski slopes for 25 million Danes and Germans
In 2007, Color Line brought in
several hundred thousand guests
heading for the major ski resorts
in south Norway. in 2008 the new
SuperSpeed ships will represent a
considerable growth potential for the
important winter destinations which
will now be considered close to hand
for large groups of the population in
Denmark and Germany.
Spin-off effects in Larvik
The establishment of a new port in
Larvik for SuperSpeed 2 will have
major spin-off effects both in the port
and for the tourist industry in the
region. The SuperSpeed ferries have
no cabins and all overnight stays
will therefore be ashore. Moreover,
the concept represents effi cient and
regular logistics solutions to and
from the continent which will benefi t
business and industry in the entire
region.
The important round trip market
The Norwegian round trip market
represents approx. 2 million arrivals
each year and total holiday spending
of approx. NOK 15 billion. The intro-
duction of SuperSpeed will open up
one of the most important routes to
Hordaland and inner Rogaland from
Kristiansand through Setesdalen.
In this way Kristiansand will be the
gateway to west Norway.
Edmund H. Utne,
Director of Hotel Ullensvang, Hardanger
COLOR GROUP ANNUAL REPORT 2007 // SOCIETY AND THE ENVIRONMENT
“Color Line has developed into one of Europe’s leading cruise
ferry companies. The company operates at the intersection of
transport and tourism and plays an important part in bringing
foreign tourists into Norway”
Extract from the Government’s strategy for environmentally friendly growth of the maritime industries.
Society and the environment
’’
22 23
COLOR GROUP ANNUAL REPORT 2007 // SOCIETY AND THE ENVIRONMENT
24 25
Sold ships for more than NOK 1 billion in 2007In connection with the fl eet renewal
programme, Color Line sold four
of it’s ships in 2007. The market for
older tonnage was good in 2007 and
these sales brought in a total of more
than NOK 1 billion. All the ships were
sold above book value.
Kronprins Harald was sold to Irish
Ferries, Peter Wessel to MSC (Medi-
terranean Shipping Company) and
Silvia Ana was sold to Buquebus.
Finally, Color Festival was sold to
Corsica Ferries.
EngagementsThe employees on board Color Line’s
new ships have attended either the
cruise school or the SuperSpeed
school. In addition to providing
basic knowledge on Color Line and
its fl eet, the curriculum includes
“engagement” which is Color Line’s
core value. The objective is that
engaged employees are to contribute
towards the guests’ enjoyment so that
they want to repeat the experience.
An effi cient junctionHirtshals is a junction for traffi c be-
tween the Continent and Norway,
served by a four lane motorway and
rail connection leading right into the
port. In 2008 this port will be able to
handle more than 23 000 passengers
daily – equivalent to more than 156
full Boeing 737 aircraft.
A new turn-around proce-dure gave a cleaner portIn 2005, an investigation showed that
Color Viking’s propellers raised up sludge
from the sea bed in Sandefjord port. As a
result of this investigation, Color Line re-
vised the turn-around procedure by using
less engine power and by turning the ship
around further out in the port where the
water is deeper. A new investigation im-
plemented by Den Norske Veritas in 2007
shows that this has had a positive effect:
“No connection is shown between
the departures of Color Viking and an
increase in particle volume in waters in
port. It can therefore be concluded that
the implemented measure has had a
positive effect”.
The show with the largest audienceEvery evening at 7 pm and 9 pm
shows are performed in the show
lounge on board Color Magic and
Color Fantasy. The show programme
is changed in each direction, south-
bound and northbound. The lounge
has more than 500 seats and dur-
ing the course of the year, each of
the two shows are seen by approx.
200 000 guests – the largest audi-
ence of any performance in Norway.
Innovative and environ-mentally friendly“SuperSpeed is an innovative and en-
vironmentally friendly concept. It is
particularly gratifying that Color Line
has taken this wide-reaching initiative
in Norway. This is where we can be
best in competition with other coun-
tries”.
This is a quotation from a speech
by Dag Terje Andersen, the Minister
of Trade and Industry during the
foundation stone ceremony for the
new terminal at Revet in Larvik.
A popular workplaceDuring the course of the next three years, Norwegian shipowning companies will require
almost 4 000 new seamen. In order to meet this requirement, Maritime Forum started
up a major recruiting campaign aimed at encouraging more young people to choose a
career at sea. One of the campaign measures is the website www.ikkeforalle.no which
presents different professions at sea and the different shipowning companies.
Despite the keen competition for employees in the maritime sector, Color Line receives
considerably more applications then there are vacancies. On Maritime Forum’s
recruiting pages, the presentation of Color Fantasy is the most visited feature of all and
when the sister ship Color Magic was to be manned, 1 500 to 2 000 applications were
received despite the fact that very few jobs were advertised externally.
Color Line is a popular employer onshore as well. When Color Line advertised the
fi rst 20 jobs at the new customer centre in Larvik, more than 200 applications were
received.
Thank you for the gift!“Thank you for the gift Color Line!
We will do our utmost to utilize the
potential that SuperSpeed repre-
sents for industry and tourism in our
region”. This quotation is from a
speech by Erik Haatvedt, mayor of
Tinn municipality at the laying of the
foundation stone for the new termi-
nal at Revet in Larvik.
“In recent years the Norwe-
gian Tourist Industry has become
much more profi cient in working
together and in combining travel,
overnight stays and attractions”,
says Tuftin.
PRECISE MARKET
INFORMATION
The Color Magic naming cere-
mony was the initial step in the
Optima Germany project. However,
the project itself started in 2006.
One of the most important aims
of the pilot project was to obtain
precise factual information on the
German tourist market so that the
marketing of Norway could be as
effi cient as possible.
“With regard to what the Ger-
man market wants, we have now
progressed from guesswork to
knowledge so that jointly we can
build up and spread knowledge
of Norway in Germany and apply
effi cient marketing measures on
the market emphasises Tuftin.
MAKING NORWAY EASILY
AVAILABLE
When it comes to focusing on Nor-
way, Tuftin believes that Color Line
plays a very important part.
“There is no doubt that Co-
lor Line’s engagement in both
the new cruise ships to Germany
and the SuperSpeed concept be-
tween Norway and Denmark is an
extremely important factor for the
fl ow of tourists. These ships con-
tribute towards making Norway
easily accessible and this is one
of the most important factors
for increasing tourism”, says
Tuftin. ■
The event was co-
vered by no less than
7 German TV chan-
nels and 160 accredi-
ted journalists. A total
of NOK 15 million was
invested in this event which was
attended by, among others, Oslo
City, Fjord Norway, The Export
Council for Fish and numerous
other Norwegian organisations
and companies. The campaign is
part of the co-operation program-
me Optima Germany. The aim of
the project is to optimize market
communications based on Norway
as a branded product and to serve
as a new tool for product develop-
ment and host development in the
tourist industry in Norway.
Innovation Norway, Color Line
and other players in the tourist in-
dustry have agreed on the objec-
tive of increasing the number of
guest days for German tourists
in Norway by 100 000 each year
in the years ahead. From the time
Color Magic’s sister ship, Color
Fantasy was put into operation
on the Oslo – Kiel service in 2004,
the number of German passen-
gers has increased by about 50
percent. The potential is much
greater however. Germany is one
of the most important tourist
markets for Norway. Despite this,
Norway’s market share of foreign
travel from Germany is less than
1 percent.
AN ENORMOUS POTENTIAL
“This is not nearly enough in re-
lation to the enormous potential
represented by this market”, says
Per-Arne Tuftin, director of tou-
rism in Innovation Norway. One
of the most important criteria for
success in attracting more tourists
to Norway is a co-operation
constellation between tourist en-
terprises.
The naming ceremony for M/S Color Magic in Kiel on 15 September 2007, attended by
almost 150 000 people did not just mark the start-up of the operation of a brand new ship
between Norway and Germany. It also represented the most comprehensive Norwegian
marketing campaign in Germany in 2007.
T
Spin-off effects for tourism in Norway
COLOR GROUP ANNUAL REPORT 2007 // SOCIETY AND THE ENVIRONMENT
26 27
Political aims
Moving more goods traffi c from the roads to
seaborne transport is a political objective both
in Norway and in the EU. In 2007, Color Line
increased its total capacity for the transport of
passengers and goods. Both the SuperSpeed fer-
ries which take large quantities of freight from
the roads and the company’s cruise ships which
are equipped with spacious trailer and container
decks contribute towards this political aim.
A systematic charting of Color Line’s dis-
charge to sea and air took place last year. The
company is now well prepared to introduce fur-
ther environmental protection measures in the
years ahead. The company works to ensure that
all its activities have the least possible impact
on the environment on land, at sea and in the
air. This work takes place in close co-operation
or understanding with the authorities, the clas-
sifi cation company, research environments and
environmental organisations.
TRIPLED
The SuperSpeed ferry can accept three times
as many trailers as the ships they are replacing.
Based on a fully loaded ship, the CO2 discharge
per vehicle will be halved on the voyage from
Kristiansand to Hirtshals. Discharge from the
shopping centre, restaurants, entertainment
events and cabins is included. ■
formance in the operation of the
ships is registered in an electronic
non-conformance system (TQM)
which the ships and the land based
organization have access to. In this
system the non-conformance is
registered and deadlines are given
for the implementation of correc-
tive measures and in particular
who is responsible for implement-
ing these measures.
“In the case of minor non-
conformance, this can usually be
corrected onboard. If this is not
possible, the non-conformance
is taken over by the shore based
offi ce which will implement neces-
sary measures. In all cases, we look
for the cause of the non-conform-
ance and establish good solutions
on a permanent basis”, says the
Safety Manager.
ELECTRONIC
PREPAREDNESS SYSTEM
In order to strengthen prepared-
ness even further, Color Line is
in the process of installing a new
preparedness system (Crisis Issue
Manager). This is an effi cient
electronic system for use in
connection with warnings and
measures in the case of serious
occurrences and operational
faults.
“In the case of serious occur-
rences and operational faults it is
essential to involve the right per-
sons as quickly as possible and to
ensure that all those involved are
notifi ed immediately. Should an
operating fault lead to cancellation
or delay of a departure it is impor-
tant that the right people at the
port of arrival and in Color Line’s
administration are notifi ed so
that the situation can be handled
correctly”, says Hansen.
About 80 persons who all play
key parts in relation to the pre-
paredness plans at sea and at
shore are linked up to the web
based preparedness system which
also handles notifi cation by e-mail,
sms and speech messengers to all
those involved.
“For example key personnel
who are called out by the system
and requested to muster at a spe-
cifi c location, may reply by mobile
phone stating when they can be
present. All information is auto-
matic and is currently updated in
the preparedness system. In this
way, all those with access to the
system in a preparedness situation
will have an overview of who has
done what and who will be present
and where”, says Arild Hansen. He
goes on to state that in 2007 Color
Line has also introduced a new
electronic chemical register on all
ships. This system is a tool for the
control of all chemicals on board
the ships. ■
Color Line has a
long tradition of be-
ing one of the fi rst
to install equipment
for increased safe-
ty. Some years ago,
Color Line was the fi rst shipowning
company in the world to install
watertight barriers on car decks.
Detectors are installed in all
cabins and in all zones on all the
ships in the fl eet. Electronic moni-
tors on the bridge provide the
duty offi cers and the Captain,
who bears the responsibility for
safety onboard, with an overview
of the entire ship. In addition, all
crew members are drilled in safety
routines by means of practices at
least every other week.
GOOD SAFETY SYSTEMS
“The physical safety devices on
board are extremely reliable and
all crew members are trained in
safety procedures. However, it is
equally important to have a basis
in good systems and standards
that ensure that all safety assign-
ments are carried out correctly”,
says Safety Manager Arild Hansen
in Color Line Marine.
The basis for all safety work
onboard Color Line ships are the
international ISM-code and ISPS-
code which require shipowning
companies to establish a manage-
ment system which can be docu-
mented and verifi ed. Based on
these codes, safety manuals have
been prepared for each individual
ship. These cover all aspects of
safety on board. Procedures are
based on the ISM- and ISPS-codes
and are revised each year on four
levels: by the Captain on board,
the safety division in Color Line
Marine, the Shipping Directorate
and Det Norske Veritas (DNV).
REGISTRATION OF
NON-CONFORMANCE – AND
APPROPRIATE ACTION
In daily operations, any non-con-
Color Line gives priority to safety before all else. All the ships in the fl eet have their own
safety offi cers, and onshore the safety division in Color Line Marine ensures that safety
standards and systems are always updated and are complied with.
C
Safety before all else
COLOR GROUP ANNUAL REPORT 2007 // SOCIETY AND THE ENVIRONMENT
28 29
long term framework conditions
for Color Line’s operations inas-
much as the Government believes
it is important that subsidies are
balanced, that the net wages sys-
tem is continued through the intro-
duction of a tax scheme for ship-
owning companies modelled on
the equivalent European Scheme.
VALUABLE EXPERIENCES
The process with regard to the tour-
ist industry strategy is similar to the
maritime strategy and the require-
ments of the tourist industry have
to a great extent been heeded.
Strengthening the building up of
competence and providing favour-
able fi nancing schemes linked to in-
novation and creativity has served
to increase the feasibility of raising
the quality of products and services
to a level that will satisfy internation-
al market requirements. There is a
proposal for establishing a national
quality assurance scheme for tour-
ism in co-operation with the indus-
try. A new investment fund totalling
NOK 2.2 billion is to be established,
and tourism will be one of the high
interest areas with particular em-
phasis on projects with a network
dimension. This is in line with Color
Line’s tourist strategy. Subsidies
for brand building and marketing
of Norway as a tourist destination
have been strengthened. In the
Government budget for 2008, sup-
port for the marketing of Norway
was increased by NOK 15 million
up to NOK 215 million in 2008. This
means that support has been dou-
bled in the course of three years.
A separate section is to be estab-
lished in the Ministry of Trade and
Industry with special responsibility
for tourist policy, and co-operation
between the tourist industry and
the authorities is to be formalised
in the same manner as the mari-
time sector, through the Marut
organisation. ■
Both “a steady
course – the Govern-
ment strategy for
e nv i ro n m e n t a l l y
friendly growth in
the maritime indu-
stries” and “valuable experiences
– a national strategy for the tourist
industry” have an effect on the long
term framework conditions for Color
Line, one of Norway’s largest players
in both these segments.
STABLE AND COMPETITIVE
FRAMEWORK CONDITIONS
Proper management of Color
Line’s considerable investments in
new ships, concepts and infrastruc-
ture is conditional upon stable and
competitive framework conditions.
“The Government’s two strate-
gies for tourism and the maritime
industry respectively received
wide support in the Storting and
paved the way for long term and
comptetitive framework condi-
tions for Color Line” says the
Group Director for Communication
and Public Relations, Helge Otto
Mathisen.
“A STEADY COURSE”
The maritime strategy mentions
Color Line in particular: Color
Line AS has developed into one of
Europe’s leading cruise ferry com-
panies. The company operates in
the intersection between trans-
port and tourism and plays an
important part in bringing foreign
tourists into Norway.
Color Line is also mentioned in
the section “from road to sea”. If
more freight is to be seaborne the
infrastructure must be developed
to ensure an effi cient link-up be-
tween ports, roads and rail (inter-
modality). In this connection the
SuperSpeed concept is highlighted
as an important example of inno-
vation: With high freight capacity
and short turn around times in the
ports, Color Line has extended the
motorways on both sides of the
Skagerrak and has shortened tra-
velling time considerably.
“Steady course” will affect the
In 2007 the Government launched national strategies for the marine industries and the
tourist industry. Both shipping and tourism are included as two of the Government’s fi ve
priority industries in the Soria Moria declaration. These strategies focus on increased
value creation, profi tability and growth and set out clearly how the Government wishes to
achieve this aim.
B
Clear national strategies for shipping and tourism
New important portal for Norwegian tourist and travel companies
The new platform which is to be put into opera-
tion in 2009 will be a future oriented tool which
will contribute towards Color Line achieving its
target to be Europe’s best shipowning company
in the fi elds of cruise and transport. The new plat-
form will however also provide spin-off effects
in relation to the land based tourist industry.
Via the new portal, customers will be able to
reserve tickets for complete packages as is the
case today, but in addition, they will be able to
compose their holiday travel in detail and pay
for everything on the same site. Through the
new booking system, many Norwegian land
based tourist enterprises will have a unique
opportunity of reaching out to the Eu-
ropean tourist market in a business-
like and cost-effi cient manner. ■
After several months of planning, Color
Line selected the Group’s new booking
and Internet system in December
2007.
COLOR GROUP ANNUAL REPORT 2007 // SOCIETY AND THE ENVIRONMENT
30 31
Helge Otto Mathisen,
Group Director, Communications
and Public relations
COLOR GROUP ANNUAL REPORT 2007 // DIRECTORS REPORT AND FINANCIAL STATEMENT
Directors report and Financial statement
32 33
COLOR GROUP ANNUAL REPORT 2007 // DIRECTORS REPORT AND FINANCIAL STATEMENT
34 35
ent weather. The price of bunkers
was also higher in 2007 than in
the preceding year. Net fi nancial
items for the Group changed from
– NOK 31 million in 2006 to – NOK
124 million in 2007. The difference
is mainly due to positive results re-
lated to fi xed interest rate hedging
agreements and other currency/
derivative instruments, in addition
to increased fi nancing expenses in
connection with the renewal of the
fl eet.
The accounts have been closed
with a pre-tax result of NOK 171 mil-
lion and a result after tax of NOK
121 million. The equivalent fi gures
for 2006 were NOK 365 million
and NOK 261 million.
The parent company Color
Group ASA recorded a pre-tax re-
sult of NOK 29 million compared
with NOK 240 million in 2006. The
result after tax is NOK 21 million
in 2007 compared with NOK 173
million in 2006. The Directors pro-
pose that the profi t be transferred
to other equity.
At yearend, distributable equity
in the parent company totalled
NOK 598 million. For 2007, the
parent company will receive an
intercompany contribution from
the owner company in the amount
of NOK 22 million.
FINANCIAL MATTERS
Balance sheet and fi nancing
The Group focuses on long term
fi nancial fl exibility of action. In
2007, Color Group ASA extended
its bond loan COLG05 (maturing
in 2012) in the amount of NOK 123
million. The Groups’ bond loans are
registered on the Oslo Stock Ex-
change. As at 31 December 2007,
the outstanding amount in bond
loans totalled NOK 1 412 million. In
connection with the building of the
new terminal at Revet in Larvik,
Larviksterminalen AS (a subsidiary
company of Color Line Transport
AS) has established a 10 year draw-
ing rights facility with a 20 year
payment profi le in the amount of
NOK 240 million.
In 2005, Color Line AS con-
cluded an agreement with Aker
Finnyards Inc. for the building of a
cruise ferry which was delivered in
September in 2007 at a contract
price of approx. EUR 325 million.
A contract was also concluded for
the building of two Ro/Pax Super-
Speed ships at a contract sum of
approx. EUR 126.7 million per ship.
The ships are to be delivered dur-
ing the fi rst and second quarter of
2008 respectively. These ships are
fi nanced for approx. 80 percent
of the contract sum, maturing 12
years from date of delivery, with a
profi le as a 15 year loan.
As at 31 December 2007 the
Group’s balance totalled NOK
8 620 million. This represented
an increase of NOK 2 013 million
compared with 2006. The change
is mainly attributable to the effect
of the takeover of M/S Color Mag-
ic and the sale of M/S Kronprins
Harald and F/F Silvia Ana. As at
31 December 2007 shareholders’
equity totalled NOK 2 005 million
compared with NOK 2 074 mil-
lion in 2006. Equity ratio was ap-
prox. 23 percent compared with
approx. 31 percent in 2006. In its
loan agreements, the Group has
commitments linked to liquidity,
equity and debt servicing ratio. All
commitments were fulfi lled as at
31 December 2007.
Fleet planning
In connection with the renewal
programme for the fl eet and the
discontinuation of the Bergen/
Stavanger – Hirtshals service, M/S
Kronprins Harald, M/S Peter
Wessel, F/F Silva Ana and M/S Color
Festival were sold during the course
of 2007. M/S Kronprins Harald and
F/F Silvia Ana were handed over in
2007 and M/S Color Festival and
M/S Peter Wessel are to be handed
over in 2008. All ships were sold or
sales agreed at a gain in relation
to book value. The sales sums are
as follows: M/S Kronprins Harald:
EUR 43.6 million, M/S Peter Wessel
EUR 25 million, F/F Silvia Ana USD
16 million and M/S Color Festival
EUR 49 million. M/S Kronprins
Harald and F/F Silvia Ana were de-
livered in 2007 providing a book
value gain of approx. NOK 35 mil-
lion.
As a result of the discontinua-
tion of the West Coast Service, M/S
Prinsesse Ragnhild was transferred
to the Oslo – Hirtshals service.
Cash Flow
In 2007 the Group’s cash fl ow
from operational activities totalled
NOK 781 million. Net cash fl ow
from investing and fi nancing ac-
tivities totalled –NOK 802 million.
The Group’s total equity reserve,
including granted drawing rights
and liquid securities totalled ap-
prox. NOK 1 307 million as at 31
December 2007. Ordinary planned
instalments on the Group’s interest
bearing debt to credit institutions
in 2008 are approx. 336 million.
The fi nancial risk situation
The Group is exposed to foreign ex-
change risk due to fl uctuations in
NOK against other currencies, par-
ticularly USD, EUR and DKK. The
Group is also exposed to interest
risk and fl uctuations in the price
of bunker products. Color Group
practises an active fi nancial risk
ABOUT THE GROUP
Color Group ASA is the parent
company of Color Line AS. Color
Line AS is Norway’s largest, and
one of Europe’s leading cruise and
transportation companies. Color
Line offers market oriented and
profi table tourist and transport
services.
A reorganisation of Color Group
was implemented in 2007. The
subsidiary company, Color Line
was split into two main operative
divisions, the cruise division ope-
rated by Color Line Cruises AS
and subsidiary companies and the
transport division which is hand-
led by Color Line Transport AS
and subsidiary companies. All sea-
going employees in the Group are
employed by the newly established
company Color Line Crew AS. The
reorganisation was implemented
by means of a de-merger of Color
Line AS, with subsequent assign-
ment of shares in order to achieve
the present day group structure.
Color Group ASA own all the
shares in the sub-group Color Line
AS which is the parent company of
the newly established companies
Color Line Cruises AS, Color Line
Transport AS and Color Line Crew
AS.
The business area cruise is
responsible for the Oslo-Kiel
service, the Oslo-Hirtshals service
and Color Line Germany. The ope-
rative management of Color Line
Cruises is in Oslo.
The business area transport is
responsible for the Kristiansand
– Hirtshals service, the Larvik
-Hirtshals service, the Sandefjord
– Strømstad service and Color Line
Denmark, Color Line Cargo and
Color Hotel Skagen. The operative
management of Color Line Trans-
port is in Sandefjord.
Major changes are taking place
in European tourism and transport.
Color Line anticipates future growth
and further segmentation of the two
markets, cruise and transport. Cruise
offers a wide scope of activities and
entertainment on board where the
ship itself is the actual destination.
Transport offers a cost effi cient and
fast transport and cargo concept. By
focusing on high quality cruises on
the longest voyages and effi cient
transport services on the short voy-
ages, Color Line is well equipped to
meet future challenges. The number
of guests in 2007 was approx 4.3
million, a fi gure that is almost un-
changed compared with 2006. The
composition of tonnage differs in
2006 with M/S Color Traveller (re-
turned following the end of the
charter period in December 2006)
operating on the Larvik – Hirtshals
service, in addition to high capacity
on the Oslo – Kiel service from Sep-
tember 2007 with the launching of
M/S Color Magic and the phasing
out of M/S Kronprins Harald. Utilisa-
tion of freight capacity was higher in
2007 than in 2006. The Group car-
ried approx. 180 000 freight units (12
metre equivalents) in 2007.
In 2007, the Directors decided to
discontinue the West Norway ser-
vice. The fi nancial result for the West
Norway line had developed nega-
tively, primarily due to increased
operating costs in the form of the
signifi cantly higher price for bunkers,
the recent institution of NoX-tax and
an increase in sailing schedule inter-
ruptions due to inclement weather
involving many more cancellations
than anticipated.
PROFIT AND LOSS ACCOUNT
Changes in
accounting principles
Color Group ASA is a Norwegian
public limited company with its
head offi ce in Oslo, which up to and
including the year 2006 has pre-
sented its accounts in accordance
with NAS (Norwegian Accounting
standards). The consolidated ac-
counts for Color Group for the ac-
counting year 2007 with compara-
ble fi gures for 2006 and (balance
sheet) 2005 are submitted in ac-
cordance with IFRS (International
Financial Reporting Standards).
In connection with the switch to
IFRS the opening balance as at 1
January 2006 for Color Group has
been revised. The total effect for
the Group at the time of transfer
to IFRS was a negative charge on
equity in the amount of NOK 51.1
million.
Result for the Group
Operating income including gain
on the sale of capital acquisitions
totalled NOK 4 762 million in 2007
compared with NOK 4 585 million
in 2006. In 2007 the Group record-
ed an operating income before de-
preciation and charter expenses
of NOK 759 million compared with
NOK 859 million in 2006. Opera-
ting income in 2007 totalled NOK
296 million compared with NOK
396 million in 2006.
The fi nancial result for Color
Group ASA in 2007 was weaker
than the preceding year. The re-
duction is primarily ascribed to
non-recurring expenses in connec-
tion with the delivery of new ships
and the winding up of the Bergen/
Stavanger - Hirtshals service. Ope-
ration during the fi rst six months
of the year was also affected by
an extraordinary interruption in
operation of the Larvik – Hirtshals
service, lasting approx. one month
in addition to several cancellations
early in the year due to inclem-
Director’s report 2007COLOR GROUP ASA
COLOR GROUP ANNUAL REPORT 2007 // DIRECTORS REPORT AND FINANCIAL STATEMENT
36 37
creased total annual capacity for
the transport of passengers and
goods. With the introduction of the
SuperSpeed ferries, more goods
will be moved from the roads to
seaborne transport. This is a de-
clared political aim both in Norway
and in the EU. Color Line’s cruise
ships have spacious trailer and
container decks and combine
holiday and leisure activities in
parallel with large seaborne freight
capacities between Norway and
Germany.
Cost - and environmentally ef-
fi cient solutions have been imple-
mented in co-operation with leading
technological environments such
as Aker Yards, the marine engine
manufacturer Wärtsilä, Marine Tek
in Trondheim and Det Norske Veri-
tas. Replacing ships that are more
than 20 years old is in itself im-
portant for the environment. New
ships are environmentally effi cient,
they have effi cient hull designs and
modern propulsion machinery.
Guidelines for the operation of
the SuperSpeed ferries are stricter
than the requirements laid down
by Norwegian and international
authorities. For many years, Color
Line has used bunkers with a low
sulphur content and has imple-
mented a modern system for the
sorting of waste at source. In ad-
dition, the Company makes every
effort to reduce harmful discharge
to the air. This work takes place in
co-operation with, or in close un-
derstanding with authorities, the
classifi cation company, research
environments and environmental
organisations.
In 2007 Color Line has system-
ati-cally chartered the company’s
discharge to sea and air and is now
well prepared to introduce fur-
ther environmental measures in
the years ahead. The SuperSpeed
ferries can accept three times as
many trailers as the ships they re-
place. On a fully loaded ship, the
CO2 discharge per vehicle is halved
on the voyage from Kristiansand to
Hirtshals. This includes discharge
from the shopping centre, restau-
rants, entertainment and cabins.
A SuperSpeed ferry discharges
slightly more that 50 tonnes
of CO2 between Kristiansand
and Hirtshals. If the ship is fi lled
with passengers and passen-
ger cars only, a car containing
two adults and one child would
discharge the equivalent of ap-
prox. 70 kilos of CO2 between Kris-
tiansand and Hirtshals. Compared
with driving a car from Norway via
Sweden to Denmark, this discharge
fi gure is lower.
Color Line has installed environ-
mentally effi cient and fuel effi cient
combustion engines in its new
ships. The use of bunkers with a low
sulphur content in effi cient engines
results in low discharges of SOx.
The SuperSpeed ferries also use
diesel engines for the production of
energy onboard. Both propulsion
engines (main engines) and engines
for generating electricity (auxiliary
engines) are medium-speed diesel
engines. These engines can run on
heavy fuel, straight-run oils such
as light marine diesel (MDO) and in
the future also biodiesel subject to
certain criteria. Color Line wishes
to be among the fi rst to run marine
engines on a mixture of biodiesel
and present day fuel provided this
is aesthetically justifi able, available
on the market and conforms to the
recommendations of the authori-
ties and the engine manufacturer.
Color Line co-operates closely with
the Finnish marine engine manu-
facturer Wärtsilä in order to reduce
discharge to air.
THE BOARD OF DIRECTORS
AND SHAREHOLDERS
O.N. Sunde AS owns indirectly 100
percent of the companies 71 800
shares. O.N. Sunde AS is wholly
owned by Director and Group
president Olav Nils Sunde and his
family.
PROSPECTS/OCCURRENCES
AFTER BALANCE SHEET
DATE
Changed market conditions
The cruise and seaborne trans-
port industry is characterized by
a high level of investment result-
ing from an ongoing requirement
for the development of existing
tonnage and investments in new
tonnage. This places heavy de-
mands on cost management and
earning potential. The interna-
tional market for sea transport is
going through a period of major
change. In Europe, the increase in
low price air travel and the con-
siderable increase in the price of
fuel have contributed towards a
fall-off in the number of passen-
gers and an increase in operating
expenses. At the same time devel-
opments in the transport of goods
have been positive.
Strong focus on the environ-
ment by the authorities in the EU
and in Norway involving a defi ned
objective for the transfer of goods
traffi c from road to seaborne and
rail transport has contributed to-
wards stable and long-term frame-
work conditions for shipowners. It
is expected that there will be fur-
ther positive political measures in
the fi eld of transport and industry
which will strengthen the com-
petitiveness of seaborne transport
with particular emphasis on inter-
modality in the ports.
Sale of tonnage
In total in 2007, the company sold
or agreed to sell ships for more
than NOK 1 billion. The sale of
these ships is part of the compa-
ny’s comprehensive fl eet renewal
programme combined with the
decision to discontinue the West
Coast service. All ships have been
sold at a gain in relation to book
value. The market for second-hand
tonnage has been good, and Color
Line has sold off its older tonnage
in line with its adopted strategy
management strategy. This stra-
tegy is entrenched in the Board-
approved annual budgets. The
Group makes use of fi nancial in-
struments in order to curb the
risk of fl uctuations in the Group’s
cash fl ow. On balance sheet date,
approx. 35 percent of the Group’s
interest bearing debt was secured
through fi xed interest agreements.
The Group’s credit risk is moni-
tored systematically. The Group
has a limited market risk as its
business relates to a large number
of customers.
Continued operation
Based on the Group’s result and
its fi nancial position, the Directors
confi rm that the Annual Financial
Statement has been prepared un-
der the assumption of continued
operation as a going concern and
that the report provides a correct
picture of the parent companies
and the Group’s assets, liabilities,
fi nancial position and result.
WORKING ENVIRONMENT
AND PERSONNEL
As at 31 December 2007 the
Group employed a workforce of
3 967 employees, including those in
part-time positions. 2 853 persons
worked onboard the ships. In 2007
the average absence due to illness
in the Group was approx. 6.5 per-
cent for shore-based employees,
(7 percent in 2006) and approx.
9.8 percent for seagoing employ-
ees (11 percent in 2006). Absence
fi gures have been the subject of
special attention and a great deal
of work as been put in to the chart-
ing of causes of absence and in
effi cient measures to reduce this
percentage. This work will be in-
tensifi ed in 2008. This includes the
establishment of a new position as
health and environmental offi cer
in Color Line.
The Directors consider that the
working environment in the Group
is good and will continue to focus
a high level of attention on the
environment and on absence due
to illness in respect of both shore
based and seagoing personnel in
line with the company’s policy and
with trends in society.
EQUAL OPPORTUNITIES
It is Color Group ASA’s objective
that there shall be full equality
between female and male employ-
ees. The Group has taken steps to
ensure that no discrimination takes
place in this area. Of the 2 853 em-
ployees on board the ships, 1 276
are women. There are 286 leading
positions of which 42 are held by
women. The percentage of women
in leading positions on board the
ships is relatively low as technical/
maritime jobs have traditionally
been dominated by males and so
far few women hold the necessary
certifi cates.
Of the 1 114 shore-base person-
nel, 559 are women. There are two
women in the Color Line AS group
management. The percentage of
women in shore-based manage-
ment positions is approx. 39 per-
cent.
SAFETY
Color Line works continuously to
improve the company’s results with
regard to safety. The safety of pas-
sengers, crew members and the
surroundings is Color Line’s fi rst
priority, and the company makes
every effort to prevent the occur-
rence of hazardous situations that
could result in incidents or damage
to the environment. Color Line is
represented in international and
national projects and bodies en-
gaged in the fi eld of safety and the
environment.
The new act concerning the
safety of ships which replaces the
Seaworthiness Act of 1903 came
into force in 2007. The law now
places more responsibility and obli-
gations on the company compared
with the earlier act.
A new chemical register from Eco
Online was introduced onboard all
ships in 2007. The system will con-
tribute towards improved control
of the use of hazardous chemicals
onboard the ships. Despite safety
being a high priority area in Color
Line, there was one serious ac-
cident in 2007. A fi re broke out in
the main terminal panel onboard
M/S Petter Wessel and the ship
had to be towed in to port in Fre-
derikshavn. There were no serious
accidents in 2007 involving injury
or pollution.
THE ENVIRONMENT
It is internationally recognized that
the Norwegian Merchant Fleet and
the maritime industry are spear-
heading environmental work. In
line with its environmental policy,
the Board of the Norwegian Ship-
owners Association has resolved
that Norwegian shipping and the
marine oil and gas industry shall
not have environmentally harmful
discharges to sea or air. This vision
sets a goal for the environmental
work of the Norwegian Shipowners
Association and Norwegian ship-
owners.
Norwegian shipowners shall be a
driving force to ensure high inter-
national environmental standards
in the UN shipping organisation
IMO and other international bodies
and shall be innovative in the devel-
opment of environmentally friendly
solutions. An important condition
for safety and environmental work
is to contribute towards specifi c
measures that are controlled by in-
ternational regulations.
COLOR LINE AND
THE ENVIRONMENT
Through the comprehensive con-
tracting of new ships, Color Line
has been able to embody the best
available technology for the opera-
tion of both ships and ports. Color
Line has reduced its fl eet from 10
to 7 ships and at the same time in-
COLOR GROUP ANNUAL REPORT 2007 // DIRECTORS REPORT AND FINANCIAL STATEMENT
38 39
of concentrating on high quality
cruises and effi cient transport.
The sales contributed positively to
the company’s fi nancial fl exibility
of action.
Delivery of
SuperSpeed 1 and 2
In accordance with the contract,
SuperSpeed was to have been
delivered in December 2007. Due
to high pressure in the European
shipbuilding industry and certain
technical problems, delivery of Su-
perSpeed 1 was delayed and was
delivered on 27 February 2008.
The fi nancial consequences for
Color Line are limited and are to
a certain extend compensated by
the contractual daily fi nes from
Aker Yards throughout the period.
According to the contract, Super-
Speed 2 was due for delivery at
the end of April 2008 but delivery
of this ship was also somewhat
delayed for the same reasons as
mentioned above. With regard to
the fi nancing of SuperSpeed 2,
alternative fi nancing solutions are
being evaluated in which the ship
is not included in the company’s
balance sheet.
Renewal and change
During the period from 2004 to
2008, Color Line has implement-
ed a comprehensive and forward
looking renewal programme of
its fl eet costing a total of approx.
7.5 million encompassing the two
cruise ships M/S Color Fantasy and
M/S Color Magic and the two new
SuperSpeed ferries.
2008 will be the fi rst entire year
of operation for both M/S Color
Fantasy and M/S Color Magic. In
March 2008 SuperSpeed 1 will
be put into operation on the Kris-
tiansand – Hirtshals service and it
is planned that SuperSpeed 2 will
be put into service based at the
new terminal at Revet in Larvik.
The building of the new terminal
in Larvik is progressing accord-
ing to schedule and will be one of
Europe’s most modern and ad-
vanced ferry/freight terminals
ensuring effi cient roll on/roll off
operations. Although the Super-
Speed vessels can accommodate
almost twice as many cars as M/S
Petter Wessel and M/S Kristian IV,
loading and discharging the vessels
can be accomplished in less than
one hour. A long term agreement
with the port authorities in Larvik
provides both fi nancial predicta-
bility and fl exibility with regard to
increased freight volumes and
traffi c from and to the new ter-
minal. From the turn of the year
2007/2008 the company concen-
trated all its business in Denmark
at Hirtshals which in 2008 will be
one of Europe’s largest and most
effi cient ports. In 2007, Color Line
decided to develop a new booking
system and a new internet plat-
form.
Equal competition
Color Line operates in a demand-
ing competition situation with re-
gard to both passengers and the
freight market. The company faces
competition partly from other
ferry companies and partly from
alternative forms of transport.
The market is international and
Color Line is dependant on stable
framework conditions that are in
line with the conditions for foreign
competitors in the EU in order to
develop further as a Norwegian
corporation.
Color Line works actively to es-
tablish terms for Norwegian mari-
time personnel that are equal to
those of the company’s competi-
tors in the other Nordic countries
and in the EU. This initiative takes
place in co-operation with Color
Line maritime personnel and their
unions, the Norwegian Shipowners
Association, the Maritime Forum
and the Norwegian authorities.
Both the European commission,
through its general maritime policy
“Towards a Future Maritime Policy
for the Union: A European vision
for the oceans and seas”, and the
Norwegian Government through
its strategy for environmentally
friendly growth in the maritime in-
dustries “steady course”, are con-
tributing towards equal and long
term framework conditions for
Color Line’s operations. State Aid
Guidelines for Maritime Transport
(SAG) which, among other things
controls the important framework
conditions for Norwegian and
European shipping exposed to
competition, are provisionally fi xed
up to 2011.
Prospects for 2008
For 2008 the Group anticipates a
better result after tax than in 2007,
primarily due to the completion of
the new building programme and
the implementation of new and
more effi cient operating concepts.
The directors are of the opinion
that the company is well equipped
to meet the challengers of 2008.
Oslo, 11. march 2008
Morten GarmanChairman of the Board
Olav Nils SundeGroup President/Owner Color Group ASA
Mette KrabberødDirector
2007 2006 Note 2007 2006
Amounts in TNOK
Income statementCOLOR GROUP ASA
GROUP (IFRS)PARENT COMPANY (NAS)
129 273 128 251 Sales revenues 3,7 4 725 661 4 584 922
0 0 Other operating income 2,7 35 932 0
129 273 128 251 Total operating income 4 761 593 4 584 922
0 0 Cost of goods -1 592 147 -1 579 060
-6 541 -8 244 Cost of wages 4,17,18,19 -1 408 995 -1 296 093
-12 834 -17 393 Other operating expenses 7,14 -1 001 622 -850 368
-19 375 -25 637 Total operating expenses -4 002 764 -3 725 521
109 898 102 614 Operating income before depreciation charter hire and leasing expenses 758 829 859 401
-22 212 -22 212 Ordinary depreciation 4,8,9,10 -398 554 -397 077
0 0 Charter and leasing expenses 14 -64 656 -66 350
87 686 80 402 Operating result 295 619 395 974
-58 767 159 669 Net fi nancial expenses 15,16 -124 194 -31 173
28 919 240 071 Pre-tax income 171 425 364 801
-8 209 -67 237 Taxes 23 -50 181 -103 583
20 710 172 834 Result for the year 4,24 121 244 261 218
16 291 -191 162 Group contribution 1,26
COLOR GROUP ANNUAL REPORT 2007 // DIRECTORS REPORT AND FINANCIAL STATEMENT
40 41
2007 2006 2005 ASSETS Note 2007 2006 2005
Amounts in TNOK
Balance SheetCOLOR GROUP ASA
GROUP (IFRS)PARENT COMPANY (NAS)
2007 2006 For the period 1 january - 31 december 2007 2006
Amounts in TNOK
Cash Flow StatementCOLOR GROUP ASA
2007 2006 2005 LIABILITIES AND SHAREHOLDERS’ EQUITY Note 2007 2006 2005
PARENT COMPANY (NAS) GROUP (IFRS)
Fixed assets
Intangible assets
196 863 218 897 240 931 Goodwill and other intangible assets 4,9,26 671 301 671 301 671 301
196 863 218 897 240 931 Total intangible assets 671 301 671 301 671 301
Property plant and equipment
0 0 0 Plants under construction 2,4,8,10,26 230 504 43 963 12 655
0 0 0 Land, buildings and other real estate 2,4,8,10,26 317 090 337 349 326 531
416 594 773 Machines, F.F.&E 2,4,8,10,26 49 514 63 479 60 166
0 0 0 Ships 2,4,8,10,26 5 344 658 3 814 822 4 116 479
416 594 773 Total property plant and equipment 5 941 766 4 259 613 4 515 831
Financial assets
2 546 638 2 500 929 2 500 929 Investments in subsidiaries 5,6 0 0 0
4 613 774 2 627 732 2 746 597 Long term receivables and investments 6,16 127 751 142 224 641 397
7 160 412 5 128 661 5 247 526 Total fi nancial assets 127 751 142 224 641 397
7 357 691 5 348 152 5 489 230 Total fi xed assets 6 740 818 5 073 138 5 828 529
Current assets
0 0 0 Inventories 11 185 032 168 611 163 870
744 22 25 Accounts receivable and other receivables 16 837 735 1 050 634 336 700
Other fi nancial assets 16 136 850 50 835 262
212 003 226 244 101 169 Bank deposits and cash 16 243 605 264 299 134 238
212 747 226 266 101 194 Total 1 403 222 1 534 379 635 070
0 0 0 Assets for sale 8 476 184 0 0
212 747 226 266 101 194 Total current assets 1 879 406 1 534 379 635 070
7 570 438 5 574 418 5 590 424 TOTAL ASSETS 8 620 224 6 607 517 6 463 599
Contributed capital
Share capital (71 800 000 shares,
143 600 143 600 143 600 nominal value NOK 2.- per share) 6,20,21,26 143 600 143 600 143 600
1 478 436 1 478 436 1 478 436 Premium fund 21 1 478 436 1 478 436 1 478 436
1 622 036 1 622 036 1 622 036 Total contributed capital 1 622 036 1 622 036 1 622 036
811 066 774 065 792 395 Other shareholders’ equity 21,26 382 684 451 974 299 367
2 433 102 2 396 101 2 414 431 Total shareholders’ equity 2 004 720 2 074 010 1 921 403
LIABILITIES
Provisions
58 721 61 953 69 057 Deferred taxes 22,26 573 641 598 800 537 546
868 2 309 831 Pension commitments 4,19 171 194 164 009 153 642
59 589 64 262 69 888 Total provisions 744 835 762 809 691 188
Long-term debt
3 602 572 1 694 672 1 901 234 Debt to credit institutions 2,12,16 3 451 119 1 646 228 1 861 568
1 411 500 1 394 000 1 180 000 Bond loans 12,16 1 411 500 1 282 000 1 180 000
5 014 072 3 088 672 3 081 234 Total long-term debt 4 862 619 2 928 228 3 041 568
Current liabilities
63 675 25 383 24 871 Trade creditors and other current liabilities 13,16 638 581 539 084 566 220
Current share of long term debt 12,16 336 000 286 000 174 000
Other fi nancial commitments 13 33 469 17 386 69 220
63 675 25 383 24 871 Total current liabilities 1 008 050 842 470 809 440
7 570 438 5 574 418 5 590 424 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 8 620 224 6 607 517 6 463 599
28 919 240 071 Income before taxes 171 425 364 801
22 212 22 212 Ordinary depreciation 398 554 397 077
833 1 478 Pensions costs without cash fl ow effect 7 272 8 441
0 0 Changes in inventories -16 421 -4 741
0 0 Changes in accounts receivable 13 093 -1 190
0 0 Changes in accounts payable 36 505 -15 144
-30 468 -264 989 Changes in other accruals 170 952 -143 090
21 496 -1 228 Net cash fl ow provided by operations 781 380 606 154
0 0 Proceeds from sale of property and equipment 484 805 0
0 0 Purchases of property and equipment -3 005 764 -140 859
0 0 Net cash fl ow from investment activities -2 520 959 -140 859
2 225 059 845 000 Proceeds from taking up of long-term debt 2 292 033 845 000
-299 659 -837 562 Repayments of long-term debt -307 642 -846 340
-1 885 243 0 Payment long-term receivables 0 -183 070
0 228 625 Receipt of long-term receivables 0 0
-75 894 -109 760 Intercompany credits/debits -265 506 -150 824
-35 737 126 303 Net cash fl ow from fi nancing activities 1 718 885 -335 234
-14 241 125 075 Net change in liquid resources -20 694 130 061
226 244 101 169 Closing balance liquid resources 1 Jan. 264 299 134 238
212 003 226 244 Closing balance liquid resources 31 Dec. 243 605 264 299
Shareholders’ equity 1 Jan. 2006 143 600 1 478 436 -2 298 301 665 1 921 403
Result for the year 261 218 261 218
Translation difference -18 0 -18
Total revenues and expenses for the period 143 600 1 478 436 -2 316 562 883 2 182 603
Owner’s contribution -108 593 -108 593
Shareholders’ equity 31 Dec. 2006 143 600 1 478 436 -2 316 454 290 2 074 010
Shareholders’ equity 1 Jan. 2007 143 600 1 478 436 -2 316 454 290 2 074 010
Result for the year 121 244 121 244
Translation difference 630 0 630
Total revenues and expenses for the period 143 600 1 478 436 -1 686 575 534 2 195 884
Owner’s contribution -191 162 -191 162
Shareholders’ equity 31 Dec. 2007 143 600 1 478 436 -1 686 384 370 2 004 720
COLOR GROUP ANNUAL REPORT 2007 // DIRECTORS REPORT AND FINANCIAL STATEMENT
42 43
Note 1 ACCOUNTING PRINCIPLES
General Information
Color Group comprises Color Group ASA and its subsidi-
ary companies. Color Group ASA is a public limited com-
pany registered in Norway with its head offi ce in Oslo. The
Group’s activities are mainly concentrated on two core
areas, cruise and transport. These business areas are
described in note 3, Information segment.
1.1. Framework for preparing
the annual fi nancial statement
Group
Color Group ASA has taken up a bond loan which is regis-
tered on the Oslo Stock Exchange. Stock Exchange regu-
lations require that the Group must report in accordance
with international fi nancial reporting standards (IFRS)
and the interpretations issued by the International Finan-
cial Reporting Interpretations Committee (IFRIC).
This is the enterprises’ fi rst IFRS consolidated fi nancial
statement and the accounts are presented in accordance
with IFRS 1. The fi gures for comparison from 2006 and (ba-
lance sheet) 2005 have been translated to IFRS cf. note 26.
All new and amended standards and interpretations
that are relevant for Color Group and that were in force
with effect from the commencement of the accounting
period on 1 January 2007 have been applied when pre-
paring the annual fi nancial statements. At the time the
accounts were closed, numerous new and amended stan-
dards and interpretations had not yet come into force and
the Group decided that these should not be applied. In
the opinion of management, these standards and inter-
pretations will not effect the annual fi nancial statements
signifi cantly.
Preparing the accounts in accordance with IFRS re-
quires the use of estimates. Moreover, consolidated ac-
counting principles require that management shall make
discretionary decisions. Areas that to a large extent are
based on such discretionary evaluations, and are very
complex or areas in which conditions and estimates are
signifi cant for the consolidated accounts are duly descri-
bed in the notes.
The consolidated accounts have been prepared on the
historical cost principle, adjusted in respect of fi nancial
instruments and measured at real value.
The Parent Company
The fi nancial statement for the parent company, Color
Group ASA has been prepared in accordance with the
provisions of the Accounting Act of 1998 and generally
accepted accounting principles in Norway (NAS).
1.2 Translation of foreign exchange
Accounts relating to the individual units in the Group are
presented in the currency normally used in the fi nancial
area where the unit operates (functional currency). The
Group’s presentation currency is NOK and this is also the
parent company’s presentation and functional currency.
Subsidiary companies which have other functional cur-
rency are translated to NOK. Balance sheet items are
translated at the exchange rate ruling at yearend, while
items on the income statement are translated on the ba-
sis of an average exchange rate. Translation differences
are entered against shareholders’ equity and are speci-
fi ed separately.
Transactions and balance sheet items
Money items (assets and liabilities) in foreign currency
are translated at the exchange rate on balance sheet
date. Foreign exchange gain and loss in connection with
the translation of the money items in foreign currency at
yearend, on the closing date of the balance sheet are en-
tered in the income statement. Income statement items
are translated at the exchange rate ruling at the time of
transaction. Foreign currency gains and losses arising
upon payment of such transactions are entered in the
income statement.
1.3 Principles of consolidation
Subsidiary companies comprise all units in which the
Group has a deciding infl uence on the unit’s fi nancial and
operational strategy, normally through a stake of more
than a 50% in the company, and voting control. When
deciding whether the Group has deciding infl uence, the
effect of potential voting rights that may be exercised or
converted on balance sheet date is included. Subsidiary
companies are consolidated from the time control has
been taken over by the Group and are withdrawn from
consolidation when deciding infl uence ceases.
The purchase method of accounting is applied in con-
nection with the acquisition of subsidiary companies.
Procurement and cost is measured at the actual value
of assets used as payment of the purchase, equity in-
struments that are issued, commitments that have been
taken over through the transfer of control and direct ex-
penses connected with the actual acquisition. Identifi a-
ble purchased assets, debts undertaken and conditional
commitments are entered in the accounts at real value at
time of acquisition, irrespective of any minority interests.
Notes of the Accounts 2007COLOR GROUP ASA
Share Premium Translation Retained capital fund differences profi t
Amounts in TNOK
2 182 603
2 074 010
2 004 720
2 195 884
562 883
454 290
384 370
575 534
-2 316
-2 316
-1 686
-1 686
1 478 436
1 478 436
1 478 436
1 478 436
143 600
143 600
143 600
143 600
Total revenues and expenses for the period
Shareholders’ equity 31 Dec. 2006
Shareholders’ equity 31 Dec. 2007
Total revenues and expenses for the period
Statement of changes in equityCOLOR GROUP ASA
COLOR GROUP ANNUAL REPORT 2007 // DIRECTORS REPORT AND FINANCIAL STATEMENT
44 45
1.11 Fixed assets retained for sale
and winding–up of business
Fixed assets and groups of fi xed assets and liabilities are
classifi ed as retained for sale if the book value is to be
regained through a sales transaction, instead of conti-
nued use. This is only considered to be fulfi lled when a
sale is highly probable and the fi xed assets are available
for immediate sale in their present form. Management
must have committed the company to a sale and it must
be expected that the sale will be implemented within one
year from the date of classifi cation.
Fixed assets and groups of fi xed assets and liabilities
that are retained for sale are measured either at the
previous book value or actual value with the deduction
of sales costs, whichever is the lowest. Depreciation of
assets classifi ed for sale ceases with effect from the date
of classifi cation.
1.12 Inventory
Inventories that comprise trade goods, consumer goods
and bunkers are valued at either cost price or net sales
value with the deduction of sales costs, whichever is the
lowest. The FIFO method is applied to procurement cost.
1.13 Cash and cash equivalents
Cash and cash equivalents comprises cash in hand and
bank deposits.
1.14 Shareholders’ equity
Ordinary shares are classifi ed as share capital. Expen-
ses directly connected with the issuing of new shares
with the deduction of tax, are entered as a reduction of
remuneration received in shareholders funds.
Translation differences arise in connection with cur-
rency differences in the consolidation of foreign units.
1.15 Pension commitments and pension costs
The companies in the Group have different pension
schemes. In general, pension schemes are fi nanced by
payments to insurance companies, based on accrued
actuarial calculations.
For the most part, pension schemes are defi ned be-
nefi t schemes. Pension funds are valued at actual value.
Net commitments linked with defi ned benefi t pension
schemes are calculated separately in each scheme by
estimating the amount for future benefi ts earned by the
individual employee through work performed during the
year under review and earlier periods. These future bene-
fi ts are discounted in order to calculate the present day
value and actual value of the pension funds is deducted
to fi nd net commitments. The discount rate is equal to
the balance day interest on government bonds with parti-
cularly high creditworthiness and with approximately the
same tenor as the Group’s commitments. The schemes
are based on a linear earning model. When the benefi ts in
Expenses connected with the acqusition are allocated
to identifi able assets and liabilities based on their actual
value at time of acquisition. Procurement costs that ex-
ceed the share of actual value of identifi able net assets in
subsidiary companies are entered in the balance sheet as
goodwill. If procurement cost is lower than actual value
of net assets in subsidiary companies, the difference is
entered in the balance sheet at time of acqusition.
Intercompany transactions, intercompany accounts
and non-capitalized earnings between companies in the
same Group are eliminated. Non-capitalized loss is elimi-
nated but is evaluated as an indicator of the drop in value
in relation to the writedown of the transferred assets.
Accounting principles in subsidiary companies are
amended whenever necessary in order to conform to the
Group’s accounting principles.
1.4 Principles of taking to income
Income from the sale of goods and services is entered in
the accounts at actual net value after deduction of VAT,
discounts and reductions.
Income from the sale of goods and services is calcula-
ted from the time material risks and rights have passed
over to the buyer, the Group no longer has ownership or
control of the goods, the income amounts can be reliably
measured, it is probable that the fi nancial gain linked to
the sale passes to the Group and that the costs incurred
in connection with the sale can be measured reliably.
Income is calculated as follows:
Sale of services (travel)
Sale of services is calculated at the start of the voyage,
that is to say, the time of transfer of risk.
Sales of goods
Sales of goods in the Group are recorded when delivery
of the goods is made, this being the time of transfer of
risk. Payment of retail sales is frequently in the form of
cash payment or by credit card. Such sales are taken to
income, including credit card fees that are incurred at the
time of the transaction. Fees are entered as sales costs.
Interest earned
Interest earned is taken to income in accordance with the
true rate of interest method.
Income from dividends
Dividends from investments are recorded when the
Group has an unconditional right to receive the dividend.
Public subsidies
Public subsidies are recorded when it is reasonably cer-
tain that the company will fulfi l the subsidy conditions
and the subsidies will in fact be received. Public subsidies
that compensate the business for disbursements are
taken to income as and when the costs are incurred.
Subsidies are deducted from the expense to be covered
by the subsidy.
1.5 Cost of loans
Costs of loans that can be directly related to the acqusi-
tion of qualifi ed assets are capitalized as part of the rele-
vant assets’ expenses until the fi xed asset is ready for its
intended use. Such loan expenses are capitalized as part
of the assets’ procurement cost when it is probable that
this will result in future fi nancial benefi ts for the Group
and the expenses can be measured in a reliable manner.
Other loan expenses are recorded in the income state-
ment in the period when they are incurred.
1.6 Taxes
Tax cost comprises tax payable and changes in deferred
tax. Deferred tax/tax benefi t is calculated on all differen-
ces between value of assets and liabilities in the accounts
and tax value, with the exception of:
● Temporary differences connected to goodwill which
is not deductable with regard to tax.
● Temporary differences related to investments in
subsidiary companies controlled by the Group when
the temporary differences will be reversed and this is
not expected to take place in the foreseeable future.
Deferred tax benefi t is entered in the accounts when it
is probable that the company will have suffi cient taxable
profi t in subsequent periods in order to utilize the tax be-
nefi t. Earlier deferred tax benefi t is entered in the acco-
unts by the company to the extent that it is probable that
the company can make use of the deferred tax benefi t.
Likewise, the company will reduce deferred tax benefi t to
the extent the company no longer considers it probable
that it can utilize the deferred tax benefi t.
Deferred tax and deferred tax benefi t is measured on
the basis of anticipated future tax rates in the companies
in the Group in which temporary differences have arisen.
Deferred tax and deferred tax benefi t are entered at
nominal value in the balance sheet.
1.7 Tangible assets
Assets that are classifi ed as long-term in nature or use
are entered as fi xed assets. Tangible fi xed assets are
mainly comprised of ships, port facilities, land, buildings
and machines/F.F.&E. Tangible fi xed assets are entered at
procurement cost including costs linked to the procure-
ment less deductions for depreciation and write-down in
respect of reduced value. Subsequent major embellish-
ment costs are added to the value of the fi xed assets in
the balance sheets or are entered separately when it is
probable that future fi nancial benefi ts linked to the ex-
pense will be measured reliably. Other repair, classifi cation
and maintenance costs, including costs for the docking of
ships are entered in the income statement in the period
when the expense is incurred. Land is not depreciated.
Other property plant and equipment is depreciated in ac-
cordance with the straight line method so that the pro-
curement cost of fi xed assets is depreciated to residual
value over anticipated usable lifetime, which is:
● Ships. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20-35 years
● Buildings/port facilities . . . . . . . . . . . . . . . . . .20-30 years
● Machines and F.F.&E. . . . . . . . . . . . . . . . . . . . . . 4-10 years
The usable lifetime of tangible assets and the residual
value is re-assessed every balance day and amended if
necessary. In respect of the Group’s ships, components
are broken down into components having high wear and
tear and components with low wear and tear. Compo-
nents with high wear and tear are depreciated without
residual value. Scrap value is estimated every year-end,
and any changes in estimates of scrap value are entered
in the accounts as a change in estimate.
Gain and loss upon disposal are entered in the income
statement and make up the difference between sales
price and value in the balance sheet.
Plants under construction are classifi ed as fi xed assets
and are entered at cost price until production or develop-
ment is completed. Plants under construction are not de-
preciated until the fi xed assets are taken into use.
1.8 Intangible assets
Intangible assets procured separately are entered in the
balance sheet at actual value at time of procurement. In-
tangible assets are depreciated according to the straight
line method over the asset’s anticipated lifetime. If the
lifetime of the asset is not limited and economic use
cannot be estimated, the asset is not depreciated, but is
tested annually with regard to fall-off in value.
1.9 Goodwill
The difference between procurement cost at takeover
and actual value of net identifi able assets at the time of
takeover is classifi ed as goodwill.
Goodwill is entered in the balance sheet at procure-
ment cost with the deduction of any accumulated write-
downs. Goodwill is not depreciated but is tested annually
in respect of any loss in value. The test of loss in value
is carried out by allocating goodwill to the Group’s cash
generating units that are expected to benefi t from the
merger. Assets and liabilities taken over in connection
with mergers are entered at actual value in the Group’s
opening balance sheet.
1.10 Leasing, hired plant and equipment
The Group has operational leases only. Lease payments
are classifi ed as operating expenses which are entered in
the income statement currently over the lease period.
COLOR GROUP ANNUAL REPORT 2007 // DIRECTORS REPORT AND FINANCIAL STATEMENT
46 47
2.2 The purchase and sale of assets, investment
commitments
Purchase and sale of ships
M/S Color Magic was delivered to the Group in Septem-
ber 2007 at a price of approx. EUR 325 million. In 2007,
the Group has sold and handed over 2 ships for a total
sales sum of approx. NOK 440 million.
Investment commitments
The Larvik terminal
In 2006, Larvik municipality adopted a new development
plan for the Revet area outside Larvik which is to be the
new port area for the town of Larvik. A 30 year lease was
concluded in 2007 for this area with the option of an
extension of 20 years. The Group is to build a new ferry
terminal costing approx. NOK 280 million. This invest-
ment is fi nanced externally by approx. NOK 240 million
with 10 years drawing rights and an instalment profi le of
30 years.
A new booking and internet platform
In 2007 an agreement was concluded on the develop-
ment/delivery of a new booking system and a new in-
ternet platform with a total investment framework of
approx. NOK 150 million. The system is due to become
operative in 2009.
SuperSpeed 1 and 2
In December 2005, Color Line AS signed a contract
with Aker Finnyards Inc. for the building of 2 new ships
(SuperSpeed 1 and 2) for a total contract sum of approx.
EUR 254 million. Delivery was originally planned to take
place in December 2007 for the fi rst vessel and in the
fi rst six months of 2008 for the second vessel. Delivery
did not take place before the accounts for 2007 were
closed due to delays at the shipyard. The SuperSpeed 1
and 2 ferries are fi nanced by means of approx. 80 per-
cent bound capital maturing at 12 years on a 15 year ba-
sis from date of delivery. CIRR fi xed interest agreements
and swap agreements have been concluded with a ma-
turity of 12 years, giving a net interest of 3.91 percent for
NOK and 3.55 percent for EUR. The currency distribution
of the loan is 70 percent NOK and 30 percent EUR. At
yearend 2007 the Group has paid NOK 307 million in
pre-payments for the ships and NOK 70 million in sundry
project expenses, see note 16.
In connection with the building contracts agreements
were also concluded with Kristiansand Line AS and Oslo
Line AS who have consigned the fi nancing commitment
and the fi xed interest agreements whereby Color Line has
the right to assign the newbuildings at time of delivery at
contract price and with coverage of expenses, including
inspection expenses. The ships have been leased back
to Color Line on operational leases maturing at twelve
years in which contract price, expenses incurred during
the scheme are changed, the share of the increase in be-
nefi t that the employee has earned the right to is entered
in the income statement in accordance with the straight
line method over the remaining earning period. Costs
are entered in the income statement immediately if the
employee has already received an unconditional right to
an increased benefi t. Estimate deviations, not entered in
the balance sheet at the time of change-over to IFRS, are
zeroed and entered directly against shareholders’ equity.
Estimate deviations arising after 1 January 2006 are en-
tered in the income statement and distributed over the
assumed average remaining earning period to the extent
that these exceed 10 percent of the present value of the
defi ned benefi ts pension commitments and actual value
of the pension funds.
1.16 Allocations
An allocation is entered when the Group has a commit-
ment (legal or self-incurred) resulting from an earlier oc-
currence and it is probable that a fi nancial settlement will
take place as a result of this commitment and the amount
can be reliably measured. When an allocation in the ac-
counts is measured by applying the cash fl ows necessary
to pay for the commitment, the amount entered in the
balance sheet is the present value of these cash fl ows.
Restructuring allocations are entered when the Group
has approved a detailed and formal restructuring plan
and the restructuring has either started or been publi-
cised. Allocations for restructuring comprise only direct
costs resulting from and necessary for the restructuring,
and are not part of the normal operations of the unit.
1.17 Conditional commitments and assets
Conditional commitments are not entered in the fi nancial
statements. Information is provided on material conditio-
nal commitments, but conditional commitments where
the probability for the commitments arising is low are
excepted. A conditional asset is not entered in the annual
accounts, but information is provided if there is a certain
probability that a benefi t will be ascribed to the Group.
1.18 Occurrences after the closing
of the balance sheet
New information after closing of the balance sheet con-
cerning the company’s fi nancial position on balance day
is taken into account in the annual fi nancial statement.
Occurrences taking place after balance sheet day that
do not affect the company’s fi nancial position on balance
sheet day but will effect the company’s fi nancial position
in the future are reported if they are of material impor-
tance.
1.19 Financial instruments
Financial assets and fi nancial commitments are ente-
red in the Group balance sheet when the Group beco-
mes a party to the contractual conditions in the instru-
ments. The Group’s fi nancial instruments are classifi ed
in the following three categories: actual value in income
statement, lendings and receivables and other fi nancial
commitments.
Financial assets:
Financial assets at actual value in the income statement
are fi rst entered on the balance sheet at actual value on
the day the contract is concluded and thereafter measu-
red at actual value on each balance day.
Client receivables and other short term receivables
are fi rst registered in the accounts at actual value and
thereafter at amortised cost corrected in respect of any
written-down amount. Current receivables having a ma-
turity of less than 3 months or receivables evaluated as
insignifi cant are not normally discounted. Earned servi-
ces that have not been invoiced are taken to income on
balance day and entered as receivables.
Financial Commitments:
Financial commitments at actual value in the income
statement are entered on the balance sheet for the fi rst
time at the actual value on the date the contract is con-
cluded and measured thereafter at actual value on each
balance day.
Interest bearing loans are fi rst entered on the balance
sheet at actual value with the deduction of transaction
expenses. Subsequent accounting is at amortised cost,
any difference between cost and redemption amount
is calculated over the period of maturity as part of the
effective interest rate.
Accounts payable and other current obligations are
fi rst measured at actual value and thereafter at amor-
tized cost. Current obligations that fall due within three
months or obligations considered as insignifi cant are not
normally discounted. Income paid in advance on balance
sheet day is entered as a liability.
1.20 Royalty
Operating revenues in the parent company refer for the
most part to royalty income.
In connection with the reorganisation of Color Group,
the ferry business in Color Group ASA was transferred to
Color Line AS with effect from 1998. The rights to the use
of the name and trademarks and use of the developed
shipping lines, quay rights etc. were not subject to take-
over. Royalty agreements have been concluded between
the companies regulating Color Line’s right to the use
of rights connected with the use of ferry business and
remuneration for such use.
1.21 Shares in subsidiary companies
Investments in subsidiary companies are evaluated ac-
cording to the cost method. Group contributions from
the parent company to subsidiary companies after
tax are entered in the accounts as an increase in the
investment in the subsidiary company. Dividend received
and group contribution from the subsidiary company is
entered in the accounts as income from investments in
the subsidiary company.
Dividend received and paid out and group contributions
and other contributions are taken to income in the same
year as they are allocated in the subsidiary company.
1.22 The main rule for evaluation and
classifi cation of assets and liabilities in the
parent company
Assets for permanent ownership or use are classifi ed as
fi xed assets. Other assets are classifi ed as current assets.
Receivables for repayment within one year are classifi ed
as current assets. Equivalent criteria are applied in the
classifi cation of current and long term debt. Fixed assets
are evaluated at procurement cost and written down to
actual value when the drop in value is not considered
to be of a short-term nature. Fixed assets having a limi-
ted fi nancial lifetime are subject to a depreciation plan.
Long-term loans are entered in the balance sheet at the
nominal amount received at time of establishment.
Current assets are valued at procurement cost or actual
value, whichever is the lowest. Shares in a trade portfolio
are appraised at actual value on balance day. Changes
in value are entered in the income statement. Current
liabilities are entered in the balance sheet at the nominal
amount received at time of transaction.
1.23 Operating expenses
Expenses in the parent company are expensed in the
same period as the appurtenant income.
1.24 Goodwill in the parent company
Goodwill in the parent company is depreciated according
to the straight line method over the anticipated lifetime
of goodwill.
Note 2: MAJOR INDIVIDUAL TRANSACTIONS
2.1 Reorganisation
In 2007 the Color Group was reorganized. Prior to this
the Group was organized in two main business areas, the
ferry business operated by Color Line AS and subsidiary
companies and the hotel business operated by Color
Hotels AS and subsidiaries. In the new organisation, the
Group is divided into two main business areas, the cruise
division and the transport division, operated by Color Line
Cruises AS and Color Line Transport AS respectively.
Hotel operations are included in the transport divi-
sion. The reorganisation was implemented by means
of a de-merger of Color Line AS, followed by internal
share-assignments leading to the present day corporate
structure.
COLOR GROUP ANNUAL REPORT 2007 // DIRECTORS REPORT AND FINANCIAL STATEMENT
48 49
the building period, fi nancing as described and fi xed inte-
rest agreements are refl ected in the bare boat rate. If this
right is not exercised, Color Line AS takes over fi nancing
with the appurtenant fi xed interest agreements and will
take delivery of the ships on own account. Kristiansand
Line AS and Oslo Line AS are indirectly wholly owned by
ON. Sunde AS.
Note 3: SEGMENT REPORTING
Segment information is presented for each business seg-
ment. This structure is based on a format for information
to Group Management. Purchase and sales of services
within the Group are based on the arm length principal.
The presented business segments are continued in their
entirety. The Group’s operations also take place outside
Norway. No internal result and balance sheet based on
geographical division is prepared.
The Group’s main business areas:
The business area cruise is legally organized in the com-
pany Color Line Cruises AS which markets and sells
cruises, conference travel, travel and hotel packages for
individuals and groups/organizations between Norway,
Denmark and Germany. Freight operations are also inclu-
ded. The business area transport is legally organized in
the company Color Line Transport AS which markets and
sells cost effi cient transport services between Norway,
Sweden and Denmark for individuals, groups and organi-
zations. Freight business is also included in addition to the
sale of travel and hotel packages.
Note 4: UNCERTAIN ESTIMATES
The estimates that are taken as a basis for items in the
income statement and the balance sheet have been
subject to appraisal. Changes in estimates in the
accounts are entered in the income statement in the
period in which the estimate is changed.
Depreciation of property plant and equipment is based
on the estimated lifetime of the tangible assets. Chan-
ges in investment decisions and market conditions may
affect the depreciation time as well as future result.
Calculation of pension commitments is based on seve-
ral fi nancial conditions. Any change in these conditions
will affect the future result.
Goodwill is based on future cash fl ows. These cash fl ows
are subject to uncertainty. Changes in the conditions will
change the value of the cash fl ow and may result in a
write down of goodwill.
Note 6: RELATED PARTIES
All the shares in Color Group ASA are owned
indirectly by O.N. Sunde AS, a company wholly-owned
by Olav Nils Sunde and his family. As at 31 Decem-
ber 2007, Color Group ‘s interest bearing receivable
against the O.N. Sunde Group was NOK 291 million
compared with NOK 379 million as at 31 December
2006. NOK 100 million of this receivable is long term.
In 2007, NOK 15 million has been charged in interest.
The equivalent fi gure for 2006 was NOK 16 million.
Reference is also made to the SuperSpeed 1 and 2
agreement described in Note 2.
There are no fi gures from 2006 for comparison as 2007 is the fi rst year with this organisational structure.
Interest is charged on outstanding amounts equivalent to the interest rate that Color Group ASA pays in
the market. In addition to fi nance expenses, the subsidiary company Color Line AS also pays a royalty to
Color Group ASA for the name and line rights. In 2007, Color Group received NOK 128 million in royalty. The
equivalent fi gure in 2006 was NOK 125 million.
Amounts in TNOK
Amounts in TNOK
Note 3: Key fi gures from the business divisions:
Note 5: SUBSIDIARY COMPANIES
The Group comprises the parent company Color Group ASA and the following subsidiaries
are owned directly and indirectly.
Operating income 2 729 686 2 031 907 4 761 593
Operating expenses -2 222 848 -1 752 105 -3 974 953
Sales fi xed assets/restructuring -17 890 -9 921 -27 811
Ordinary depreciation -251 207 -147 348 -398 555
Charter hire, leasing expenses -48 034 -16 623 -64 657
Operating result/segment result (EBIT) 189 707 105 910 295 619
Net fi nancial expenses -124 194
Pre-tax result 171 425
Tax costs -50 181
Result for the year 121 244
Segment assets 5 851 018 1 007 811 6 858 829
Non-allocated assets 1 761 395
Consolidated total assets 8 620 224
Segment commitments 4 851 169 388 826 5 239 995
Non-allocated commitments 3 380 229
Consolidated total commitments 4 851 169 388 826 8 620 224
Investments during the period (gross) 2 659 050 95 423 2 754 473
Non-allocated investments 251 291
Consolidated total investments 2 659 050 95 423 3 005 764
Owned by Color Group ASA (parent company)
Color Line AS Oslo 49 740 100 2 546 538
Color Hotels AS 100 100 100
Total direct ownership 2 546 638
COMPANIES OWNED INDIRECTLY
Owned by Color Line AS
Color Line Cruises AS Oslo 430 520 100
Color Line Transport AS Oslo 414 142 100
Color Line Crew AS Oslo 3 033 100
Color Line Marine AS Sandefjord 7 250 100
Color Line Marine Verksted AS Sandefjord 4 000 100
Bergen Line AS Oslo 100 100
Norway Line AS Oslo 100 100
Color Scandi Line Oslo 100 100
Owned by Color Line Cruises AS
Color Line GmbH Kiel 26 (EUR) 100
Terminalbygget AS Oslo 100 100
M/V Color Harald AS Oslo 1 500 100
I/S Jahre Line Oslo 100
Owned by Color Line Transport AS
Color Hotel Skagen AS Skagen 5 700 (DKK) 100
Color Line Danmark AS Hirtshals 5 000 (DKK) 100
Hirtshals Skipsproviantering AS Hirtshals 500 (DKK) 100
Larvikterminalen AS Oslo 100 100
M/V Color Skagen AS Oslo 1 000 1004 761 593
2 546 638
295 619
8 620 224
8 620 224
121 244
Division Cruise Division Transport Group
Registered offi ce Share Capital Stake 31.12.2007 Book value in balance sheet
Operating income
Total direct ownership
Operating result/segment result (EBIT)
Consolidated total assets
Consolidated total commitments
Result for the year
2 729 686
189 707
4 851 169
2 031 907
105 910
388 826
Color Group ASA is mainly engaged in the external
fi nancing of all the companies in the Group. As at
31 December 2007, the inter-company outstanding
accounts were as follows:
Amounts in TNOKNote 6: Related parties
Color Hotels AS 7 172 6 798
Color Line AS 4 174 289 2 592 069
Hotel Skagen AS 22 773 22 480
Total 4 204 234 2 621 347
2007 2006
2 621 347Total 4 204 234
M/V Color Harald and M/V Color Skagen are to be incorporated in Color Line AS
3 005 764Consolidated total investments 2 659 050 95 423
COLOR GROUP ANNUAL REPORT 2007 // DIRECTORS REPORT AND FINANCIAL STATEMENT
50 51
In connection with the newbuildings, fi nancing
costs during the building period have been capi-
talized. Capitalization during the year totals TNOK
31 340. An interest rate of 5% has been applied.
Facilities on leased land are depreciated over the
lease period.
Assets retained for sale
As a result of the implementation of the adopted
Depreciation method: All property plant and equipment is depreciated according to the straight-line method over the estimated lifetime.
Depreciation rates: 2.85-20%, 10-20%, 5-20%
Borrowing expenses are capitalized on the appurtenant item and depreciated over the estimated lifetime of the assets.
investment programme for new tonnage, the sale
of M/S Peter Wessel and M/S Color Festival was
agreed in October and November 2007. Book value
of these ships totals TNOK 476 184 which has been
withdrawn from property plant and equipment.
Anticipated gain is approx. NOK 95 million. Ordinary
depreciation of the ships ceased on the same date.
Assets designated for sale are shown as current
assets.
Amounts in TNOK
Amounts in TNOK
Amounts in TNOK
Note 7: INCOME AND EXPENSES
Total operating income comprises the following items:
Note 11: INVENTORIES
Inventories comprise the following types of goods
Total operating expenses comprises the following items:
Passenger revenues 4 128 4 025
Freight revenues 392 398
Other 242 162
Total 4 762 4 585
Inventories for onward sale 147 611 141 608
Consumer goods 27 056 19 882
Bunkers 10 365 7 121
Total 185 032 168 611
Cost of technical operation 319 284
Other operating expenses on board 239 203
Other operating expenses ashore etc. 444 363
Total 1 002 850
2007 2006
2007 2006
2007 2006
4 585
168 611
850
Total
Total
Total
4 762
185 032
1 002
Amounts in TNOKNOTE 8: PROPERTY, PLANT AND EQUIPMENT, ASSETS FOR SALE
Procurement cost
Procurement cost as at 1 Jan. 2006 7 027 362 433 088 607 436 12 655 8 080 541
Additions 39 258 27 337 42 956 31 308 140 859
Disposals -23 822 -23 822
Reclassifi ed as retained for sale 0
Procurement cost as at 31 Dec. 2006 7 066 620 436 603 650 392 43 963 8 197 578
Procurement cost as at 1 Jan. 2007 7 066 620 436 603 650 392 43 963 8 197 578
Additions 2 740 466 12 589 25 044 227 665 3 005 764
Disposals -556 590 -8 178 -2 409 -41 124 -608 301
Reclassifi ed as retained for sale -830 721 -830 721
Procurement cost as at 31 Dec. 2007 8 419 775 441 014 673 027 230 504 9 764 320
Accumulated depreciation and write downs
Depreciations and write-downs as at. 1 Jan 2006 2 910 883 372 922 280 905 3 564 710
Depreciations for the year 340 915 24 024 32 138 397 077
Disposals -23 822 -23 822
Depreciations and write-downs as at 31 Dec. 2006 3 251 798 373 124 313 043 0 3 937 965
Depreciations and write-downs as at 1 Jan 2007 3 251 798 373 124 313 043 3 937 965
Depreciations for the year 329 506 25 877 43 171 398 554
Disposals -506 187 -7 501 -277 -513 965
Depreciations and write-downs as at 31 Dec. 2007 3 075 117 391 500 355 937 0 3 822 554
Balance sheet values
As at Dec. 2006 3 814 822 63 479 337 349 43 963 4 259 613
As at Dec. 2007 5 344 658 49 514 317 090 230 504 5 941 766
8 197 578
9 764 320
3 937 965
3 822 554
5 941 766
Land, buildings Buildings under Ships F.F. & E real estate construction Total
Procurement cost as at 31 Dec. 2006
Procurement cost as at 31 Dec. 2007
Depreciations and write-downs as at 31 Dec. 2006
Depreciations and write-downs as at 31 Dec. 2007
As at Dec. 2007
7 066 620
8 419 775
3 251 798
3 075 117
5 344 658
436 603
441 014
373 124
391 500
49 514
650 392
673 027
313 043
355 937
317 090
43 963
230 504
0
0
230 504
Note 9: GOODWILL/INTANGIBLE ASSETS
The book value of goodwill as at 31 December 2007
is TNOK 671 301. The equivalent value as at 31 Decem-
ber 2006 was also TNOK 671 301.
All goodwill is acquired by takeovers and has been
of strategic importance in retaining and strengt-
hening the market positions of the Group. Goodwill is
recorded in the transport segment.
Goodwill is not depreciated in the income state-
ment. Annual tests are carried out based on future
cash fl ows which can be referred to each individual
goodwill element. A long-term forecast of 5 years
is applied as well as extensions that exceed 5 years.
Tests implemented in 2007 did not show any require-
ment for writing down goodwill.
Goodwill is related to the acquisition of ferry business. Goodwill is depreciated over the estimated fi nancial lifetime. A depreciation period of
20 years is in line with the conditions that formed the basis for evaluation upon acquisition of the business.
Amounts in TNOKNOTE 10: PLANT, PROPERTY AND EQUIPMENT, COLOR GROUP ASA
Cost price 1 Jan. 891 444 677 445 568
Additions in the year 0
Disposals in the year 0
Cost price 31 Dec. 891 444 677 445 568
Acc. depreciation 1 Jan. 297 225 780
Ordinary depreciation in year 178 22 034 22 212
Disposals in the year 0
Acc. depreciation 31 Dec. 475 247 814 248 289
Book value 31 Dec. 416 196 863 197 279
Depreciation rate 20 % 5 %
445 568
248 289
197 279
Machines, F.F. & E Goodwill, intangible assets Total
Cost price 31 Dec.
Acc. depreciation 31 Dec.
Book value 31 Dec.
891
475
416
444 677
247 814
196 863
Amounts in TNOK
NOTE 12: LONG TERM INTEREST BEARING DEBT, MORTGAGES AND GUARANTEES
Long term loans
Mortgage loans 3 602 572 1 694 672 3 451 119 1 646 228
Bond loans (registered on Oslo Stock Exchange) 1 411 500 1 394 000 1 411 500 1 282 000
Total interest bearing long term commitments 5 014 072 3 088 672 4 862 619 2 928 228
Current Commitments
Short-term part of mortgage 0 0 336 000 174 000
Redeemable bond loan 0 0 0 112 000
Total interest bearing current commitments 0 0 336 000 286 000
Total interest bearing commitments 5 014 072 3 088 672 5 198 619 3 214 190
5 014 072 Total interest bearing long term commitments
Parent Company Group 2007 2006 2007 2006
3 088 672 2 928 2284 862 619
0Total interest bearing current commitments 0 286 000336 000
5 014 072 Total interest bearing commitments 3 088 672 3 214 1905 198 619
In its loan agreements the Group has commitments linked to liquidity, shareholders’ equity and degree of debt servicing. All commitments are
fulfi lled as at 31 December 2007.
Charter hire for 2007 refers to M/S Kronprins Harald. This ship was sold on 1 January 2007 and leased back on a bare boat charter up to
September 2007.
The Group has current leases with the local port authorities in regular ports of call. These contracts comprise lease of land, buildings, area and
berths for the ships. Terms of the leases are partially fi xed or are variable based on number of calls, passengers and vehicles. The company owns
the terminal buildings in Oslo, Hirtshals and Strømstad.
In 2001 an agreement was concluded concerning the right to use the brand name Color Line on the new multi-purpose arena in Hamburg, Germany
up to November 2013. In 2007, TEUR 743 was paid in rent compared with TEUR 729 for 2006.
Operational framework conditions have been concluded for the leasing of IT equipment, vehicles and other movables.
Mortgage loans (fi nance institutions) are secured by mortgages in ships and other assets. Leases for terminal areas are also mortgaged
as well as negative mortgage in ships. Color Group ASA has concluded a framework agreement for guarantee of the Group’s tax withholdings of
NOK 60 million. In addition the Group has pledged approx. NOK 60 million to the travel guarantee fund in addition to other pledges for subsidiary
companies totalling approx. 52 million.
Book value of assets pledged as security (ships,buildings, accounts payable) 6 218 814 4 246 146
Group 2007 2006
4 246 1466 218 814
Interest conditions on all loans and credits are fi xed in accordance with NIBOR with the addition of an agreed margin.
At yearend 2007, interest rates were on average:
Mortgage loans: 6.20%
Bond debt: 7.05%
The following table shows the total cash fl ows in the years ahead for coverage of instalments and interest
on current long term fi nancing agreements in the form of long term bank loans and bond loans. Amounts in TNOK
Less than 1 year 545 175 99 449 570 811 99 449
1-2 years 492 252 376 449 517 009 376 449
2-3 years 474 344 414 433 498 220 414 433
3-4 years 456 435 56 365 479 431 56 365
5 years and more 2 935 389 856 365 3 126 537 856 365
Total 4 903 595 1 803 061 5 192 008 1 803 0614 903 595 Total
Parent Company Group2007 Mortgage loans Bond dept Mortgage loans Bond dept
1 803 061 1 803 0615 192 008
Balance sheet value and actual value of long-term loans Amounts in TNOK
Mortgage loans 3 451 119 1 646 228 3 451 119 1 646 228
Bond loans 1 411 500 1 282 000 1 411 500 1 282 000
Total 4 862 619 2 928 228 4 862 619 2 928 2284 862 619Total
Balance sheet value Actual value 2007 2006 2007 2006
2 928 228 2 928 2284 862 619
Balance sheet value of the Group’s mortgage loans in different currencies are as follows: Amounts in TNOK
NOK 5 014 072 3 019 247 5 056 764 3 137 340
DKK 0 69 425 141 855 76 888
Total 5 014 072 3 088 672 5 198 619 3 214 2285 014 072Total
Parent Company Group 2007 2006 2007 2006
3 088 672 3 214 2285 198 619
COLOR GROUP ANNUAL REPORT 2007 // DIRECTORS REPORT AND FINANCIAL STATEMENT
52 53
Note 16: FINANCIAL RISK AND USE
OF FINANCIAL INSTRUMENTS
The Group’s risk management policy
The main fi nancial risks in the Group concern bun-
kers, foreign exchange, interest and liquidity risk. It
is the Group’s policy to avoid active speculation in
fi nancial risks, but to use fi nancial derivates as a buf-
fer against risks connected with fi nancial exposure in
operation and fi nancing of the Group’s business.
Currency risk
Currency risk arises when there are differences
between income and expenses in each type of cur-
rency, particularly USD, EUR and DKK and in relation
to investments/purchase of fi xed assets and repay-
Amounts in TNOK
Amounts in TNOK
Amounts in TNOK
Note 13: TRADE CREDITORS AND OTHER CURRENT COMMITMENTS
NOTE 14: LEASES
NOTE 15: NET FINANCIAL EXPENSES
Trade creditors 217 876 181 371
Debt to credit institutions 36 720 38 176
1 year’s instalment long-term debt 336 000 286 000
Other current commitments (fi nancial instruments) 33 469 17 386
Unpaid government charges and special taxes 99 199 81 512
Pre-paid income 79 383 64 510
Sundry current debt 205 403 173 515
Total 1 008 050 842 470
Charter hire 27 149 34 883
Hire of internal communications equipment 35 052 29 114
Other 2 455 2 353
Total charter hire, leasing commitments 64 656 66 350
Lease of terminals and queuing areas 18 341 21 341
Total lease commitments 82 997 87 691
Interest earned 32 987 17 577
Net gain/loss on fi nancial instruments at actual value
in income statement 69 932 82 601
Interest costs -211 531 -165 438
Foreign exchange gain/loss -15 582 34 087
Total -124 194 -31 173
2007 2006
2007 2006
2007 2006
842 470
66 350
21 341
87 691
-31 173
Total
Total charter hire, leasing commitments
Lease of terminals and queuing areas
Total lease commitments
Total
1 008 050
64 656
18 341
82 997
-124 194
ment of loans in foreign currency. The Group has
an active policy to reduce currency risk through the
hedging of currencies and the use of multi currency
loans. In a normal situation it is the Group’s policy
to cover a material part of the current currency risk
6 to 12 months ahead by means of hedging contracts,
options and swaps. Taking into account concluded
currency contracts and currency on hand as at
31 Dec. 2007, the Group has good exchange rate
cover and fl uctuations in exchange rates, primarily
in USD, EUR and DKK against NOK will have limited
effect on the result.
Interest risk
The Group is primarily exposed to interest risk through
COLOR GROUP ANNUAL REPORT 2007 // DIRECTORS REPORT AND FINANCIAL STATEMENT
54 55
its loan portfolio. The object of interest risk manage-
ment is that changes in the interest level can have
a negative effect on the result. The Group has con-
cluded interest swap agreements in order to achieve
the desired ratio between fi xed and fl oating rates of
interest. At yearend 2007, the Company had 3 swap
agreements at a nominal value of NOK 750 million
with a remaining term of approx. 18 months at an av-
erage interest rate of 5.34 percent. CIRR-fi xed inte-
rest contracts have also been concluded with Finnish
Export Credit in connection with the delivery of M/S
Color Magic amounting to NOK 2 107 mill, of which 50
percent is at a fi xed interest rate of 4.2 percent plus
margin and 50 percent is swapped to a six month
fl oating rate of interest, NIBOR less 1.315 percent p.a.
for 12 years. Total interest bearing debt is NOK 5 198
million. Fixed interest derivates have been concluded
for a total of NOK 1 803 million representing approx.
35 percent of total interest bearing debt as at 31 Dec.
2007. A change in the interest level of +/- 1 percent,
taking into account the concluded interest hedging
agreements, will affect the result by approx. +/- NOK
29 million before tax.
The table below quantifi es the future interest risk
taking into account cash in hand/bank deposits,
structure of maturity for mortgages, bond loans and
interest swap agreements. The fi gures are based on
existing balance sheet commitments as at 31 Dec.
2007.
Bunkers risk
The cost of bunkers represented approx. 10 percent
of the Group’s operating expenses in 2007 and re-
presents an operational risk resulting from the fl uc-
tuations in the price of oil. As at 31 December 2007,
the Group had no future hedging agreements for
bunkers. It has been calculated that a change in the
price of bunkers of +/- 10 percent in 2008 will have
an effect on the result of approx. +/- NOK 40 million
before tax.
Amounts in TNOKInterest sensibility, Group
Mortgage loans 3 451 119 3 148 089 2 845 059 2 542 029
Unsecured bond loans 1 411 500 1 134 500 800 000 800 000
Total debt to credit institutions 4 862 619 4 282 589 3 645 059 3 342 029
Cash in hand/bank 243 605 243 605 243 605 243 605
Interest swaps 1 715 965 878 150 790 335 614 705
Net interest bearing debt after interest swaps 2 903 049 3 160 834 2 611 119 2 483 719
Interest sensitivity at +/- 1% change 29 030 31 608 26 111 24 837
3 342 0293 645 059
Less than 1 year 1-2 years 3-4 years 5 years and over
4 862 619 4 282 589 Total debt to credit institutions
There is no difference between balance sheet value and actual value in respect of fi nancial assets.
Liquidity risk
Liquidity risk is linked to the risk of the Group
being unable to fulfi l its fi nancial commitments as and
when they fall due. The Group focuses on maintaining
a level of liquidity preparedness which, as a minimum
will cover a peak period of charges against income.
Liquidity preparedness is managed at Group level
and 12 monthly budgets are prepared and monitored
on a weekly basis. Liquidity available as at 31 Decem-
ber 2007 is NOK 1 307 million (including undrawn
credit lines). Surplus liquidity is placed primarily on
the short term money market. Reference is also made
to note 12 concerning maturity analysis and future
instalments and interest on interest bearing debt.
Capital management
An important objective is to secure fi nancial free-
dom of action both in the short and long term and
to maintain a good credit rating, thereby achieving
favourable loan conditions which bear a reasonable
relationship to the Group’s operations. The Company
manages its capital structure and makes any chan-
ges that are necessary based on current evalua-
tions of the fi nancial situation for the operation. The
Company’s capital structure is followed up by calcu-
lating the debt-equity ratio.
Credit risk
The Group’s fi nancial assets are mainly comprised of
receivables for sales, other receivables, liquid resour-
ces and fi nancial instruments. These receivables re-
present the Group’s maximum exposure and credit
risk related to fi nancial assets.
The fi gure for trade debtors in the balance sheet
is net after any allocations for potential loss, based
on previous experience and evaluation of the present
day situation. The largest part of the company’s trade
debtors fall due for payment within 3 months. The
credit risk for fi nancial derivates is considered to be
low as agreements on these assets have been con-
cluded with banks of high creditworthiness, thereby
reducing the risk that the other party will be unable
to fulfi l its commitments.
See the table on the next page concerning exposu-
re to credit risk: trade creditors/other current assets.
Determining actual value of fi nancial assets and
commitments.
The actual value of hedging contracts is determi-
ned by applying the futures rate on balance sheet
date. Actual value of currency swap agreement is
calculated by determining the present day value of
future cash fl ows. Actual value of interest swap con-
tracts is calculated by discounting the cash fl ows in
the contracts at nil coupon rates in the yield curve in
the relevant currency. Actual value of the above men-
tioned instruments is calculated by the company’s ex-
ternal bankers.
The balance sheet value of cash in hand and credit
lines is equal to actual value. Similarly, balance sheet
value of trade debtors and accounts payable is practi-
cally equal to actual value as these are concluded on
normal terms at short maturity. Actual value of long-
term bank loans is practically equal to book value as
it is assumed that the company could have achieved
approximately the same conditions if the loans had
been raised on balance sheet day. Bond loans are re-
gistered on the stock exchange and are subject to a
fl oating rate of interest falling due quarterly. Actual
value is evaluated at book value as in the opinion of
the company the loans may be bought back in their
entirety at par.
Amounts in TNOK
Amounts in TNOK
Exposure to credit risk: trade debtors/other current assets
Overview of balance sheet values and actual values for the company’s fi nancial assets and commitments.
Trade debtors 84 944 97 856
Write-downs for anticipated loss -4 062 -3 881
Net trade debtors 80 882 93 975
Pre-paid property, plant and equipment 307 289 540 994
Project costs, property, plant and equipment 70 664 0
Inter-company receivables 190 524 279 442
Sundry current receivables 188 376 136 223
Trade debtors and other receivables 837 735 1 050 634
Other fi nancial receivables 136 850 50 835
Financial assets
Loans and receivables:
Bank Deposits/cash in hand 243 605 264 299
Net trade debtors 80 882 93 975
Sundry current receivables 188 376 136 223
Actual value in income statement:
Interest swaps 136 850 43 732
Bunkers derivates 1 945
Currency derivates contracts 5 198
Financial commitments
Financial commitments at amortized cost:
Accounts payable and other current debt 638 581 539 084
Bank loans 3 787 119 1 820 190
Bond loans 1 411 500 1 394 000
Actual value in income statement:
Currency derivates contract 33 469
Interest swaps 17 386
2007 2006
2007 2006
93 975
1 050 634
Net trade debtors
Trade debtors and other receivables
80 882
837 735
2 483 7192 611 119 2 903 049 3 160 834 Net interest bearing debt after interest swaps
24 83726 111 29 030 31 608 Interest sensitivity at +/- 1% change
50 835Other fi nancial receivables 136 850
COLOR GROUP ANNUAL REPORT 2007 // DIRECTORS REPORT AND FINANCIAL STATEMENT
56 57
Amounts in TNOK
Amounts in TNOK
Amounts in TNOK
Note 18: REMUNERATION TO SENIOR EXECUTIVES
Auditors’ fees – Deloitte
Pension costs for the year (yield) are as follows:
Remuneration to senior executives etc.
Olav Nils Sunde, Group President Color Group ASA 80 137 2 219
Trond Kleivdal, Group President Color Line AS 2 669 750 192 233 3 844
Knut Hals, Senior Group Executive Color Line Cruises AS 1 919 500 233 211 2 863
Laila Valdal, Senior Group Executive Color Line Transport AS 1 625 500 175 169 2 469
Total senior executives 6 213 80 1 750 737 615 9 395
Director’s fees
Total Directors fees* 560 560
Statutory auditing services 245 1 410
Fees for other certifi cation services 204 556
Fees for tax advice etc. 21 79
Fees for other services unrelated to audit 444 1 030
Total audit and advisory fees 914 3 075
Financial assumptions
Discount rate 4,50% 4,35%
Expected annual wage adjustment 4,50% 4,50%
Expected annual adjustment of pensions 2,25% 1,60%
Expected annual G-adjustment 4,25% 4,25%
Estimated yield 5,40% 5,40%
Pension costs for the year are as follows:
Pension yield for the year 44 401 31 322
Interest cost on pension commitments 19 700 15 800
Anticipated yield pension funds -15 910 -13 866
Administration 1 040 1 091
Employers’ tax 4 640 4 132
Changes in estimates and estimate deviation in income statement -9 233 0
Cost of pensions 44 638 38 479
Reconciling of pension commitments and pension funds against balance sheet
Present value of pension commitments incurred 501 968 456 281
Value of pension funds -311 625 -308 300
Employers’ tax 21 276 21 262
Unrecognized deviation in estimate -40 425 -5 234
Pension commitments in balance sheet 171 000 164 000
9 395
560
44 638
171 000
38 479
164 000
Pension Other Total Salary Fees Bonus costs remuneration remuneration
Parent Company Group
2007 2006
Total senior executives
Total Directors fees*
Total audit and advisory fees 914 3 075
6 213 80
560
1 750
737
615
Cost of pensions
Pension commitments in balance sheet
Reconciling of pension commitments and pension funds against balance sheet
Pension costs for the year are as follows:
Financial assumptions
*Fees to Chairman of the Board, Morten Garman NOK 160 000 and to each Director NOK 80 000
A premium of TNOK 37 365 was paid in 2007. Next years premium is expected to total TNOK 38 224.
The scheme is managed by an insurance company and the composition of funds is based on the statutory management performed by this company.
In the calculation for 2007, disability table IR 02 and mortality table K05 are applied. In 2006 table K63 was applied.
Amounts in TNOK
Amounts in TNOK
NOTE 17: COST OF WAGES
Parent company (Color Group)
Cost of wages 966 674 873 618
Employers tax 190 880 173 633
Pension costs (note 19) 73 815 73 734
Other benefi ts 177 626 175 108
Total 1 408 995 1 296 093
Average man-years 2 865 3 004
Cost of wages 6 202 5 827
Employer’s tax 1 063 900
Pension costs (note 19) -764 1 478
Other benefi ts 40 39
Total 6 541 8 244
Average man-years 6 6
2007 2006
2007 2006
1 296 093
8 244
3 004
6
Total
Total
Average man-years
Average man-years
1 408 995
6 541
2 865
6
Guidelines for remuneration to
senior executives 2008
Remuneration to senior executives in the Group is to be
based on the following main principles:
The principle for basic salary
Those in executive positions shall receive a competitive
basic salary based on position, responsibility, competence
and performance of the individual executive.
The principle for variable benefi ts,
incentive schemes etc
Executives may receive a variable salary in order to
contribute towards profi t orientation. A variable salary is
based on achievement of targets for the Group, Division
or Company in which the executive is employed.
The principle of non-cash benefi ts.
Executives may be offered different schemes, such as
company car schemes, insurance, pensions and similar.
Benefi ts in kind shall be primarily in the form of home te-
lephone, mobile phone and newspaper – items that can
improve the availability of the executive for the company.
Executives are entitled to participate in a defi ned benefi ts
pension scheme.
Post termination salary scheme
The Group president of Color Line, Trond Kleivdal will, in
the case of a possible termination that is not covered by
the provisions of the Working Environment Act receive
three years salary equivalent to NOK 8.1 million. The
Group Director of Color Line Cruises AS, Knut Hals will in
a similar situation receive 1 year’s salary, the equivalent of
NOK 1.9 million. Laila Valdal, Group Director of Color Line
Transport AS would receive 1 years salary, the equivalent
of NOK 1 575 million.
Information on the preparation and
decision-making process
Remuneration to the Group President is dealt with by the
Board on an annual basis. The Board prepares annual
guidelines and a statement is submitted to the General
Meeting for discussion pursuant to the provisions of Sec-
tion 5-6 of the Public Limited Company’s Act (Norway).
Report concerning the policy for remuneration
to executives in 2007.
Guidelines for executive salaries were in accordance
with the above policy during the previous fi nancial year.
Remuneration to executives is charged to the company
as an expense and has otherwise no direct consequence
for the company’s shareholders.
Note 19: PENSIONS
As at 31 December there were 464 members in the group
pension scheme for shore-based personnel in Norway, 5
of these members being employed in the parent com-
pany. The group pension scheme for seamen comprises
2 011 members. In addition, the Group pays the shipow-
ners part of pension benefi ts for seamen which in 2007
amounted to NOK 31.4 million and in 2006 NOK 29.1 mil-
lion.
In addition to pension commitments covered by the
insurance scheme, the Group has unfunded pension
commitments that are directly covered by the Company.
These commitments apply to 19 members and are inclu-
ded in net pension commitments in the amount of TNOK
4 264. Estimated values are applied in the evaluation of
pension funds and commitments incurred. These estima-
tes are adjusted annually in accordance with a statement
of the transfer value of the pension funds and an actuarial
calculation of the commitments.
Group
COLOR GROUP ANNUAL REPORT 2007 // DIRECTORS REPORT AND FINANCIAL STATEMENT
58 59
Amounts in TNOK
Amounts in TNOK
Amounts in TNOK
Note 20: SHARE CAPITAL
The share capital comprises 71 800 000 shares of NOK 2.00 each. All shares carry equal rights.
All shares are owned indirectly by Director and Group President Olav Nils Sunde and his family.
NOTE 22: DEFERRED TAX
Specifi cation of the taxation effect of temporary differences and carry-forward loss
Note 23: COST OF TAXES
01.01.1998 48 273 700 2 96 547
1999 6 726 300 2 13 453
31.12.1999 55 000 000 2 110 000
2003 15 600 000 2 31 200
31.12.2003 70 600 000 2 141 200
2004 1 200 000 2 2 400
31.12.2004 71 800 000 2 143 600
31.12.2007 71 800 000 2 143 600
Plant, property and equipment 1 891 296 1 752 629
Intangible assets 174 811 214 527
Financial assets 112 403 4 061
Profi t and loss account 326 882 36 275
Current assets -3 942 43 439
Liabilities -193 819 88 001
Carry-forward loss -258 911 -360
Total 2 048 720 2 138 572
Deferred tax commitment as at 31 Dec. 573 641 598 800
Tax cost for the year:
Tax payable 376
Tax, Group contribution 75 340 74 341
Changes in deferred tax -25 159 28 866
Cost of taxes, ordinary result 50 181 103 583
Reconciling from nominal to actual tax rate:
Pre-tax result including extraordinary result
Ordinary result 171 425 364 801
Estimated income tax at nominal tax rate 47 999 102 144
Tax effect of following items:
Non-deductable expenses 2 182 1 545
Non-taxable income -106
Cost of taxes ordinary result 50 181 103 583
Effective tax rate 29,3 % 28,4 %
Tax cost for the year:
Tax, Group contribution 11 440 74 341
Changes in deferred tax -3 231 -7 104
Cost of taxes, ordinary result 8 209 67 237
Reconciling from nominal to actual tax rate:
Pre-tax result including extraordinary result
Ordinary result 28 919 240 071
Estimated income tax at nominal tax rate 8 097 67 220
Tax effect of following items:
Non-deductable expenses 112 17
Cost of taxes ordinary result 8 209 67 237
Effective tax rate 28,4 % 28,0 %
Plant property and equipment 174 686 193 594
Profi t and loss account 26 882 33 601
Current assets 9 022 -1 676
Liabilities -868 -4 258
Total 209 722 221 261
Deferred tax commitment as at 31 Dec. 58 721 61 953
110 000
141 200
143 600
143 600
96 547
No. shares Nom. value NOK Total
Group: Benefi t/Commitments 2007 2006
Group 2007 2006
Parent company 2007 2006
Parent company: Benefi t/Commitments 2007 2006
31.12.1999
31.12.2003
31.12.2004
31.12.2007
01.01.1998
55 000 000
70 600 000
71 800 000
71 800 000
48 273 700
2
2
2
2
2
Amounts in TNOKNOTE 21: SHAREHOLDERS’ EQUITY, PARENT COMPANY
Equity 1 Jan. 2006 143 600 1 478 436 792 395 2 414 431
Result for the year 172 834 172 834
Translation adjustment 0 0
Total income and expenses for the period 143 600 1 478 436 965 229 2 587 265
Group contribution received/contributed, owner -191 162 -191 162
Shareholders’ equity 31 Dec. 2006 143 600 1 478 436 774 065 2 396 101
Equity 1 Jan. 2007 143 600 1 478 436 774 065 2 396 101
Result for the year 20 710 20 710
Translation adjustment 0 0
Total income and expenses for the period 143 600 1 478 436 794 775 2 416 811
Group contribution received/contributed, owner 16 291 16 291
Shareholders’ equity 31 Dec. 2007 143 600 1 494 727 794 775 2 433 102
2 587 265
2 396 101
2 433 102
2 138 572
103 583
67 237
221 261
598 800
102 144
67 220
103 583
67 237
61 953
2 416 811
Share Premium Other capital fund equity Total
Total income and expenses for the period
Shareholders’ equity 31 Dec. 2006
Shareholders’ equity 31 Dec. 2007
Total
Cost of taxes, ordinary result
Cost of taxes, ordinary result
Total
Deferred tax commitment as at 31 Dec.
Estimated income tax at nominal tax rate
Estimated income tax at nominal tax rate
Cost of taxes ordinary result
Cost of taxes ordinary result
Deferred tax commitment as at 31 Dec.
Total income and expenses for the period
143 600
143 600
143 600
2 048 720
50 181
8 209
209 722
573 641
47 999
8 097
50 181
8 209
58 721
143 600
1 478 436
1 478 436
1 494 727
1 478 436
965 229
774 065
794 775
794 775
Amounts in TNOKPension costs for the year (yield) in Color Group ASA are as follows:
Present value of pension earnings for the year 939 1 643
Interest costs on pension commitments 344 617
Expected yield on pension funds -260 -495
Expensed Employers’ tax 171 244
Book estimate deviation -2 081 417
Pension costs -887 2 426
Pension commitments and pension funds
Estimated commitments 8 666 19 640
Estimated value of pension funds 4 836 11 135
Estimated net pension commitments 3 830 8 505
Calculated Employers’ tax 107 1 199
Calculated pension commitments 3 937 9 704
Unrecognized change in estimate (corridor) -3 069 -7 395
Calculated pension commitments in balance sheet 868 2 309
In the actuarial calculation carried out by an independent specialist,
the following assumptions are taken as a basis:
Discount rate 4,50% 4,40%
Expected return 5,40% 5,40%
Expected wage adjustments 4,50% 4,50%
Expected increase in pensions 2,30% 1,60%
Increase in infl ation 4,30% 4,30%
868
3 830
3 937
-887
2 309
8 505
9 704
2 426
2007 2006
Calculated pension commitments in balance sheet
Estimated net pension commitments
Calculated pension commitments
Pension costs
28,0 %Effective tax rate 28,4 %
28,4 %Effective tax rate 29,3 %
COLOR GROUP ANNUAL REPORT 2007 // DIRECTORS REPORT AND FINANCIAL STATEMENT
60 61
Amounts in TNOKReconciling of balance sheet and shareholders’ equity
Assets
Fixed assets
Intangible assets 671 301 671 301 600 571 70 730 671 301
Total intangible assets 671 301 0 671 301 600 571 70 730 671 301
Plants under construction 12 655 12 655 43 963 43 963
Land, buildings and other real estate 326 531 326 531 337 349 337 349
Machines and F.F&E 60 166 60 166 63 479 63 479
Ships 4 105 638 10 841 4 116 479 3 789 278 25 544 3 814 822
Total tangible fi xed assets 4 504 990 10 841 4 515 831 4 234 069 25 544 4 259 613
Shares and other participations 25 429 25 429 25 429
Other receivables 496 891 119 077 615 968 680 898 -538 674 116 795
Total fi xed asset investments 522 320 119 077 641 397 680 898 -538 674 142 224
Total fi xed assets
Current assets
Other fi nancial assets 262 262 50 835 50 385
Inventories 163 870 163 870 168 611 168 611
Trade debtors 92 785 92 785 93 975 93 975
Other receivables 224 109 19 806 243 915 691 153 265 505 956 658
Liquid assets 134 238 134 238 264 299 264 299
Total current assets 615 002 20 068 635 070 1 218 038 316 340 1 534 378
Total assets 6 313 613 149 986 6 463 599 6 733 576 -126 060 6 607 516
Liabilities and shareholders’ equity
Contributed equity 1 622 036 1 622 036 1 622 036 1 622 036
Other equity 350 484 -51 117 299 367 266 717 185 257 451 974
Total equity 1 972 520 -51 117 1 921 403 1 888 753 185 257 2 074 010
Liabilities
Deferred tax 557 425 -19 879 537 546 545 693 53 107 598 800
Pension commitments, other commitments 1 880 151 762 153 642 4 825 159 184 164 009
Total allocations and commitments 559 305 131 883 691 188 550 518 212 291 762 809
Mortgage debt 2 035 568 -174 000 1 861 568 1 820 228 -174 000 1 646 228
Bond debt 1 180 000 1 180 000 1 394 000 -112 000 1 282 000
Total long-term debt 3 215 568 -174 000 3 041 568 3 214 228 -286 000 2 928 228
Current debt 566 220 243 220 809 440 539 083 303 386 842 469
Total current debt 566 220 243 220 809 440 539 083 303 386 842 469
Total debt 6 313 613 149 986 6 463 599 6 192 582 414 934 6 607 517
671 301
4 259 613
142 224
6 607 516
2 074 010
762 809
2 928 228
6 607 517
1 534 378
Effect of Effect og switch to IFRS switch to IFRS NAS 1 Jan. 2006 IFRS NAS 31 Dec. 2006 IFRS
Total intangible assets
Total tangible fi xed assets
Total fi xed asset investments
Total assets
Total equity
Total allocations and commitments
Total long-term debt
Total debt
Total current assets
671 301
4 504 990
522 320
6 313 613
1 972 520
559 305
3 215 568
6 313 613
615 002
0
10 841
119 077
149 986
-51 117
131 883
-174 000
149 986
20 068
671 301
4 515 831
641 397
6 463 599
1 921 403
691 188
3 041 568
6 463 599
635 070
600 571
4 234 069
680 898
6 733 576
1 888 753
550 518
3 214 228
6 192 582
1 218 038
70 730
25 544
-538 674
-126 060
185 257
212 291
-286 000
414 934
316 340
Note 25: DEVELOPMENTS AFTER
BALANCE SHEET DATE
Delivery of SuperSpeed 1 and 2 was originally planned
for December 2007 and during the fi rst six months
of 2008 respectively. Delivery had not taken place
by balance sheet date due to delays at the ship-
yard. SuperSpeed 1 was delivered on 27 February
2008. The fi nancial consequences for Color Line are
limited and the company has received contractual
fi nes from Aker Finnyards during the entire period.
Color Line has not exercised its rights with regard to
SuperSpeed 1 as described in Note 2. According to the
contract, SuperSpeed 2 was due for delivery end April
2008. The shipyard has given notice that the ship will
be delayed in relation to the planned delivery.
The Company will receive contractual daily fi nes
from Aker Finnyards for the period between con-
tractual delivery and actual delivery date.
In 2007 the Group concluded agreements on the
sale of the ships M/S Color Festival and M/S Petter
Wessel, delivery to take place in January and April
2008 respectively.
Note 26: EXPLANATION CONCERNING
THE SWITCH TO IFRS
As mentioned in Note 1, this is Color Group’s fi rst
consolidated fi nancial statement presented accor-
ding to IFRS. The accounting principles in Note 1
have been applied in the preparation of the fi nancial
accounts as at 31 Dec. 2007 and the comparison in-
formation for 2006. Moreover, in preparing the IFRS
opening balance as at 1 January 2006 which is the
Group’s switchover date to IFRS, the fi gures in the
accounts, previously presented in accordance with
the Norwegian accounting standard have been revi-
sed to correspond to IFRS.
Amounts in TNOK
NOTE 24: RESULT PER SHARE
The result per share is calculated as an annual result providing an average
of the number of outstanding shares throughout the year.
Result for the year after tax 121 244 261 218
Weighed average no. shares 71 800 000 71 800 000
Result per share 1,69 3,64
2007 2006
261 218
71 800 000
3,64
Result for the year after tax
Weighed average no. shares
Result per share
121 244
71 800 000
1,69
Reconciling of the balance sheet and shareholders’ equityCOLOR GROUP ASA
COLOR GROUP ANNUAL REPORT 2007 // DIRECTORS REPORT AND FINANCIAL STATEMENT
62 63
4) Pensions
Pension commitments in the accounts according to
NAS at 1 Jan. 2006 are lower than the actual pension
commitments. This has an effect on shareholders’
equity as at 1 Jan. 2006 of NOK 132 million after tax
and as at 31 Dec. 2006, NOK 123 million after tax. The
effect on the result in the revised income statement
for 2006 is improved by NOK 12.3 million before tax.
5) Group contribution
Calculated allocation for Group contribution is clas-
sifi ed in NAS as a current liability on balance sheet
date. According to IFRS, dividend and Group contri-
bution shall be included in shareholders’ equity until
declaration of dividend has been fi nally decided by
the company’s general meeting. This change effects
shareholders’ equity positively as at 1 Jan. 2006 in
the amount of NOK 108.6 million and in the amount
of NOK 191.2 million as at 31 Dec. 2006.
6) Reclassifi cation of the fi rst year’s
instalment on long-term debt
In accordance with NAS the Group chose to classify
the fi rst year’s instalment as long-term debt. Accor-
ding to IFRS, the fi rst year’s instalment of long-term
debt shall be classifi ed as a current liability. Reclassifi -
cation as at 1 Jan. 2006 amounted to NOK 174 million
and as at 31 Dec. 2006, NOK 286 million.
Amounts in TNOK
Amounts in TNOK
7) Deferred tax
The changes referred to above have had the following effect on deferred tax.
The taxation rate is 28 percent.
8) Reconciling of shareholders’ equity
The changes mentioned above have had the following effect on the Group’s shareholders’ equity
Deferred tax at start of period NAS 557 425 545 693 561 004
Other 0 0 1 400
Goodwill 0 6 169 12 339
Property plant and equipment 2 934 7 152 19 194
Pensions -51 382 -47 938 -42 908
Group contribution 42 230 74 342 -6 335
Financial instruments -13 661 13 382 28 947
Deferred tax at end of period in IFRS 537 546 598 800 573 641
Shareholders’ equity at start of period NAS 1 972 520 1 888 753 1 874 832
Other 0 0 3 600
Goodwill 0 64 560 129 122
Property plant and equipment 7 805 18 392 49 357
Pensions -132 126 -123 270 -110 335
Group contribution 108 593 191 164 -16 290
Financial instruments -35 389 34 411 74 434
Shareholders’ equity at end of period IFRS 1 921 403 2 074 010 2 004 720
573 641
2 004 720
1 Jan. 2006 31 Dec. 2006 31 Dec. 2007
1 Jan. 2006 31 Dec. 2006 31 Dec. 2007
Deferred tax at end of period in IFRS
Shareholders’ equity at end of period IFRS
537 546
1 921 403
598 800
2 074 010
NOTES ON THE RECONCILING
OF SHAREHOLDERS’ EQUITY
1) Goodwill
Goodwill related to the ferry business has in NAS
been subject to planned depreciation over a period
of 15 years for day time services and 20 years for
night-time services. According to IFRS, goodwill shall
no longer be depreciated but tested annually to see
if there is a basis for write-down. The test for any
drop in value is performed on the basis of estimates
for the Group’s discounted cash fl ows. The effect of
income is positive in the amount of approx. NOK 70
million before tax.
2) Tangible fi xed assets
According to NAS tangible fi xed assets are entered
at historical cost and depreciated according to the
straight line method at a calculated residual value.
In IFRS scrap value is also applied and at the same
time the depreciation period refl ects to a greater
extent the useful life of ships and other tangible as-
sets. IFRS also requires that the company’s tangible
assets (ships) are decomposed and that the diffe-
rent components (groups) are depreciated over es-
timated useful life. The Group has decided to break
down its ships into three main groups, hull, engines
and equipment, and hotel/restaurants. Based on the
decomposed procurement costs and residual values
for the Group’s ships, a recalculation of accumulated
depreciation and book values has been carried out as
at 1 Jan. 2006. The implementation effect on share-
holders’ equity after tax as at 1 Jan. 2006 is NOK 7.8
million and NOK 18.4 million as at 31 Dec. 2006. In re-
spect of other tangible assets, the historical cost from
NAS has been carried forward. The changes involve a
reduction in ordinary depreciation of 14.7 million.
3) Other receivables/commitments
According to IFRS, fi nancial contracts shall be inclu-
ded at actual value. In the accounts, the value of ne-
gotiable interest contracts is included in connection
with the new buildings of ships. As at 31 Dec. 2007
these contracts had a value of TNOK 133 040, compa-
red with TNOK 89 308 in the preceding year, thereby
reducing net fi nancial items. The value as at 31 Dec.
2006 was TNOK 43 732 giving a result in 2006 of
TNOK 23 926.
In connection with the newbuilding of ships, the
cost of borrowing on ships upon completion has been
capitalized. During the building period these expen-
ses that relate to pre-payments are included under
other receivables. As at 31 Dec. 2007 these expen-
ses amounted TNOK 28 501 incurred in 2007. The
amount is included as a deduction in net fi nancial
items. Capitalized borrowing expenses as at 31 Dec.
2006 totalled TNOK 14 344 providing a result in 2006
of TNOK 14 344.
Other hedging contracts have been concluded. As
at 31 Dec. 2007 these contracts had a value of – TNOK
29 659. The change in 2007 was – TNOK 19 376.
The amount is included as a reduction of net fi nan-
cial items. The value as at 31 Dec. 2006 was – TNOK
10 283. The effect on the result for 2006 was TNOK
58 675.
Amounts in TNOKReconciling of income statement for 2006
Operating income
Operating income 4 584 922 4 584 922
Operating expenses
Cost of sales -1 579 060 -1 579 060
Cost of wages -1 308 394 12 301 -1 296 093
Other operating expenses -849 861 -849 861
Losses on accounts receivables -507 -507
Ordinary depreciation and charter hire -548 860 85 433 -463 427
Gain/loss on sales and write-downs 0 0
Operating result (EBIT) 298 240 97 734 395 974
Financial income and expenses
Financial income 51 664 82 601 134 265
Financial expenses -179 782 14 344 -165 438
Share of result, associated companies 0 0
Pre-tax result for the year 170 122 96 945 364 801
Cost of taxes NAS -62 708 -40 875 -103 583
Result for the year 107 414 261 218
395 974
261 218
364 801
4 584 922
NAS Effect of conversion to IFRS IFRS
Operating result (EBIT)
Result for the year
Pre-tax result for the year
Operating income
298 240
107 414
170 122
4 584 922
97 734
96 945
COLOR GROUP ANNUAL REPORT 2007 // DIRECTORS REPORT AND FINANCIAL STATEMENT
64