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Connecting Global Markets

Annual Report 2012

Manila (Philippines) – Photo by Gilbert Manawat

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DP World Annual Report 2012

BUSINESS ovErvIEw

corporate governance

FINANCIAL STATEMENTS

Contents

Business Overview02. 2012 Review04. Chairman’s Statement06. Our History08. Our Business10. Where We Operate12. Our Strategy14. Management Review21. 2012 Key Performance Indicators22. Corporate Responsibility26. Our People30. Case Study: Doraleh Container Terminal (Djibouti)32. Case Study: Nhava Sheva (India)34. Principal Risks and Uncertainties36. Board of Directors

Corporate Governance38. Report of the Directors40. Corporate Governance47. Statement of Directors’ Responsibilities

Financial Statements48. Independent Auditors’ Report49. Consolidated Income Statement50. Consolidated Statement of Comprehensive Income51. Consolidated Statement of Financial Position52. Consolidated Statement of Changes in Equity54. Consolidated Statement of Cash Flows55. Notes to the Consolidated Financial Statements

The creative talent of DP World employees is showcased in this Annual Report with many of the images included having been taken by our own people. Employees are credited accordingly.

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‘Every one…likes to journey in luxury when luxury is possible. And all men like the company of the “people who matter”…. So it comes that there is nothing in the life of the average man half so full of interest or so much enjoyed as the six weeks of the longest P. & O. voyage – the run to Australia. Such a journey is the cream of human experience.’

BE AT R I C E G R IM S H AW, 19 2 6

In 2006, DP World bought P&O in a historic acquisition that saw The Peninsular and Oriental Steam Navigation Company change hands for the first and only time in its 175 year history. P&O’s new owners were a young, Dubai-headquartered company with ambition. In just a few short years, DP World grew from serving shipping lines and traders in its United Arab Emirates’ home base to the third largest port operator in the world, handling around ten percent of the world’s container trade. As well as P&O Ports, DP World acquired P&O Estates, P&O Maritime and P&O Ferries – all thriving companies today under the proud P&O name.

P&O itself was more than a company. It came with nearly two centuries of history and one of the most famous names afloat. The ‘Peninsular Steam Navigation Company’, as it was originally known, was founded in 1837 when it won a government contract to carry the mail to the Iberian Peninsula of Spain and Portugal. Further contracts followed and Oriental was added to the name in 1840 when the Company expanded its routes to Egypt. By 1842 P&O had reached India and quickly established footholds further east in Ceylon, Singapore and Hong Kong. In 1852 a small P&O paddle steamer left Southampton and made it all the way to Australia to forge the farthest link in a growing global chain. P&O rapidly became a vital ‘Empire line’ carrying mail, cargo and passengers to a burgeoning British Empire. For a time the Company enjoyed a virtual monopoly on the routes east of Egypt. The Suez Canal changed all that and only after near ruin, and the construction of a new fleet, did the Company regain its position of power and pre-eminence. In time P&O became the largest shipping company in the world.

In 1887 P&O celebrated its golden jubilee, and having survived a world war and the great depression, the Company celebrated its centenary in 1937. P&O marked the passing of 150 years in 1987 and in 2012 DP World marks the 175th anniversary of P&O with the publication of P&O Across the Oceans. Across the Years, which draws on the extensive archives of the P&O Heritage Collection to tell the tales of a time when travelling the world took weeks not hours and globalisation was in its infancy.

This book is both a celebration of P&O and of DP World’s commitment to the preservation of the venerable name, history and heritage collections of The Peninsular and Oriental Steam Navigation Company. For the countless thousands of employees and those they served, P&O was, and is, a part of their story too. And since acquiring P&O in 2006, DP World has generously supported and facilitated much greater public access to the art and archives of P&O with the launch of the P&O Heritage website www.poheritage.com, and the ongoing conservation and digitisation of the Company’s vast photographic and historic collections.

Ruth Artmonsky trained as a psychologist and worked as a director of a worldwide management consultancy before turning her attention to her interests in writing and design. She has written and published a number of books on British art and design in the first half of the twentieth century including Shipboard Style (2010), which highlighted the influence of Colin Anderson of the Orient Line. P&O had a financial interest in the Orient Line from 1918, acquiring complete ownership in 1960. Researching in the P&O Heritage Collection, it was therefore natural for Ruth Artmonsky to extend her interests to P&O.

Susie Cox is an art historian and the curator of the P&O Heritage Collection, which is proudly preserved by DP World. Susie has worked with the Collection for over fifteen years and this book is testament to her knowledge and expertise.

Designed by Webb & Webb Design Ltd.Printed in Britain.

Front cover illustration: Based on The White Sisters, by Bossfield Studios, celebrating the launch of Strathaird and Strathnaver, 1931.

2012 Review

April 2012London, UK On 23 April 2012, to mark the 175th anniversary of the founding of British maritime group P&O, DP World unveiled a prestigious and fascinating book telling the P&O story through the eyes of those who travelled with, worked for and managed P&O over the years, richly illuminated by works from the official P&O Heritage Collection. Having acquired the P&O Group in 2006, DP World is the proud preserver of the P&O Heritage Collection which includes more than 25,000 documents, paintings, photographs and memorabilia dating back to the formation of P&O in 1837.

June 2012UAE, Dubai On 27 and 28 June 2012, DP World and the UAE Ministry of Foreign Affairs jointly convened the second UAE Counter-Piracy Conference under the theme “A Regional Response to Maritime Piracy: Enhancing Public-Private Partnerships and Strengthening Global Engagement.” The conference participants welcomed the progress made in combating maritime piracy over the past year and reaffirmed their commitment to strengthen the Public Private Partnership in the search for a sustainable solution to the issue of piracy.

May 2012Melbourne, Australia In May 2012, DP World Melbourne commissioned eight new energy efficient diesel-electric straddle carriers with a total of 22 on site by the end of 2012. Based on the performance of the initial set of six over a 12 month period, the diesel electric straddle carriers are operating at 11% lower fuel consumption than the existing diesel hydraulic straddle carriers. The use of this energy-efficient equipment is important in reducing DP World’s carbon footprint at Australia’s largest commercial port and provides greater container handling capacity.

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November 2012Mumbai, India DP World announced the receipt of the Letter of Award from Jawaharlal Nehru Port Trust, Government of India, to build and operate a single berth facility of 330 metres quay length alongside its existing terminal operation at Nhava Sheva, Mumbai (India). The new quay will be equipped with four rail mounted quay cranes and twelve rubber tyred gantry cranes and is expected to be operational in 2015 with an annual handling capacity of 800,000 TEU1 and a draft of 13.5 metres.

December 2012Dubai, UAE In a special ceremony at Jebel Ali, Chairman H.E. Sultan Ahmed Bin Sulayem formally oversaw the installation of the last 65 tonne block which completed the 2752 block foundation of the extended quay wall for the one million TEU expansion of Jebel Ali Container Terminal 2. The expansion, scheduled to open for business in the second quarter of 2013, extends the quay wall by 400 metres to 3000 metres, allowing the simultaneous handling of six 15,000 TEU mega-vessels.

December 2012London, UK DP World’s London Gateway received its first ship, which delivered four new automatic stacking cranes. The automated cranes will operate throughout the day and night and will therefore ensure a new level of port reliability for the UK market. The stacking areas for shipping containers will have dedicated land-side and quay-side equipment which means that road vehicles will always have equipment dedicated to their needs.

1 TEU means twenty foot equivalent container units.

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Chairman’s Statement

SULTAN AHMED BIN SULAYEM CHAIRMAN

Dear Shareholders,“DP World delivered profit for the year of $749 million2 following a strong year of operational performance from its global operations, prudent financial management and proactive management of assets within the portfolio whilst investing in the future growth of the Company.”

Delivering an improvement in profits during what has been a challenging operating environment shows that our portfolio is focused on the right markets, and on delivering the right operations and service to our customers.

This year, we have continued to actively manage our portfolio, managing our assets to maximum advantage, divesting non-core or low return assets, and repaying debt. This has enabled us to move capital into those markets where we see more profitable returns whilst significantly reducing our leverage and strengthening our capital base.

This has all been achieved without compromising our global network or compromising our focus on delivering world class customer service. When taking into account profit from divestments and monetisations, the profit attributable to owners of the Company was $749 million.

We continue to invest in our portfolio with an additional 10 million TEU becoming operational during 2013 and 2014. This new capacity will come into markets where there is significant demand for container terminal capacity, such as Brazil and the UAE, or where the existing infrastructure is insufficient to meet the changing requirements of our customers, for example in the UK and the Netherlands.

Progress against strategyDP World continues to make good progress towards the delivery of our strategy. With our focus on incremental revenue generation and improving operational efficiencies, as well as delivering new capacity, we will drive profitable growth and deliver our longer-term objective of improving returns.

Following another strong performance in 2012, we remain on track to reach global capacity of 100 million TEU, 50% adjusted EBITDA3 margin and 15% return on capital employed4 over the medium term, whilst retaining a strong capital base. We have gross capacity of 70 million with utilisation rates in excess of 80%. In 2012, we reported an increase in adjusted EBITDA margin to 45.1% and further improvement in return on capital employed to 6.8%.

DP World has invested more than $6 billion to add over 20 million TEU of operational capacity over the past five to six years and a further 10 million TEU will be added in the next two years. Today’s results are diluted by this significant investment. However, we will see further improvement as this capacity matures and as we continue to focus on price improvements, cost management and efficiencies across the remainder of our portfolio.

Our balance sheet remains very strong. With another year of strong cash performance, net cash flow from operations increased to $1,231 million. The improvement in cash flow combined with the proceeds of divestments or monetisations during 2012 has resulted in lower net debt of $2,871 million as at 31 December 2012. Our leverage (net debt to adjusted EBITDA) remains low at 2.0 times, which gives us the flexibility to continue to invest in new opportunities whilst retaining a strong capital base.

In line with our strategy, DP World is focused on investing for the long-term capacity requirements of our customers, whether it is in developed markets which do not have the efficiencies or capabilities to handle the increasing size of vessels, or in developing markets, which have limited container port capacity to meet their growing needs.

Qingdao (China) – Photo by Mr Wang

2 Profit for the year attributable to owners of the Company after separately disclosed items.3 Adjusted EBITDA is earnings before interest, tax, depreciation & amortisation before

separately disclosed items including share of profit from equity-accounted investees.4 Return on capital employed is EBIT divided by total assets less current liabilities and

includes goodwill.

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New projects at Embraport (Brazil), London Gateway (UK), Rotterdam (Netherlands) and NSCIT (India) as well as the expansion of our flagship facility at Jebel Ali (UAE), will add a significant amount of infrastructure to the DP World network.

A sustainable futureAs a Board, we believe it is a priority to integrate responsible business practices into our daily activities, allowing us to grow our business in a sustainable manner which is always consistent with our obligations to the communities and countries where we operate.

In December 2012, DP World was recognised as the number one listed company on the S&P/Hawkamah ESG Pan Arab Index for our performance against 200 environmental, social and governance metrics.

We factor in climate change and sustainability as we invest in both new capacity and our existing portfolio. Lower greenhouse gases and the development of sustainable strategies are particularly important, not just to port operators and shipping lines, but across the global supply chain. Since 2009, our efforts to reduce carbon emissions have reduced our global carbon footprint by 13%.

DP World plays a significant role in the communities in which we operate and we strongly believe that it is our responsibility to contribute to their long-term sustainability.

The Board views safety as an integral part of our business supporting the efficiencies of our operations. DP World’s safety record continues to improve and we are pleased to report further progress in 2012 with the frequency of injuries per million hours worked, or lost time injury frequency rates, falling by 9% against 2011. This trend demonstrates our commitment to providing a safe and responsible work environment across the globe.

World Expo 2020DP World is delighted to support the UAE’s bid to host the World Expo 2020 in Dubai. With our global portfolio and international “family” of over 28,000 employees, DP World exemplifies the theme of the UAE Expo bid: ‘Connecting Minds, Creating the Future’.

DividendThe Board is recommending a full year dividend of 24 US cents per share (2011: 24 US cents per share). This comprises an increase of 10% in the ordinary dividend to 21 US cents per share, supplemented by a special dividend of 3 US cents per share reflecting the profit attributable to owners of the Company from separately disclosed items. This will result in a total dividend distribution of $199 million reflecting continued confidence in our ability to generate cash and support our growth plans whilst maintaining a consistent dividend payout.

Subject to approval by shareholders, the dividend will be paid on 30 April 2013 to shareholders on the relevant register as at the close of business on 2 April 2013.

OutlookOperating conditions in each of our markets in the first two months of 2013 have been consistent with those experienced at the end of last year and the economic environment continues to remain uncertain.

We remain confident about the long-term outlook of our industry and remain well positioned to deal with a changing economic environment as well as continue to focus on our established high standards of service to customers.

EmployeesI would like to express my appreciation to the entire Board and to all of our colleagues around the world who have contributed to another year of excellent results, ensuring DP World remains a leading global terminal operator. In addition, we thank all of our partners for their commitment. As we continue this exciting journey, I look forward to sharing another year of growth and success.

Sultan Ahmed Bin SulayemChairman

Southampton (UK) – Photo by Steven Salmon

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Our History

• First stage of Port Rashid (UAE) was completed.

• DPI won the management contract for Djibouti Port, expanding into Africa.

• Jebel Ali Port (UAE) opened. • DPI won the contract to operate a new container terminal at Visakhapatnam Port (India).

• Port Rashid and Jebel Ali Port merged to form Dubai Ports Authority (DPA).

• DPI entered Europe after it won the contract to operate a new container terminal at Constanta (Romania).

• Dubai Ports International (DPI) was formed to export DPA’s success internationally.

• DPI won the contract to manage Jeddah Islamic Port (Saudi Arabia).

• DPI acquired CSX World Terminals, expanding from a regional to a global operator. The deal completed in early 2005.

1972 1979 1991 1999 2000 2002 2003 2004

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• DP World acquired P&O and became the third largest port operator in the world.

• DP World invested in Tianjin Port (China) and started construction at Doraleh Container Terminal (Djibouti). It also won the concession to develop a new container terminal at the Port of Callao (Peru).

• DP World started infrastructure work at DP World London Gateway (United Kingdom).

• DP World officially inaugurated DP World Callao (Peru).

• The Company was listed on NASDAQ Dubai.

• DP World officially inaugurated Terminal 2 at Jebel Ali Port, Dubai (UAE) and signed an agreement for the development of Rotterdam World Gateway (Netherlands).

• DP World added Tarragona (Spain), Dakar (Senegal) and Sokhna (Egypt) to its portfolio.

• DP World increased its shareholding in Chennai (India) and Karachi (Pakistan).

• DPI was rebranded under the name of DP World and separated from DPA. Going forward DP World was responsible for all ports related commercial activities.

• Greenfield sites at Yarimca (Turkey), Qingdao (China) and Vallarpadam (India) were added to the DP World portfolio.

• DP World was contracted to provide operations and maintenance logistics for Pusan Newport Company (South Korea).

• DP World opened new terminals at Doraleh (Djibouti), Algiers and Djen-Djen (Algeria) and Ho Chi Minh City (Vietnam).

• DP World entered a partnership to acquire a majority stake in the greenfield development of Embraport, Santos (Brazil).

• DP World opened its new one million TEU (Phase 1) capacity terminal at Vallarpadam (India).

• DP World expanded its portfolio with two new terminals at Paramaribo (Suriname).

• DP World listed on the London Stock Exchange.

• DP World and Citi Infrastructure Investors formed a strategic partnership to manage and operate five terminals in Australia.

2005 2006 2007 2008 2009 2010 2011

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DP World connectingglobal trade

Southampton (UK) – Photo by Andrew Sassoli Walker

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Group 5 Year Capacity GrowthTEU million

2008 2009 2010 2011 2012

ConsolidatedGross

31.0

55.5

34.4

59.7

35.1

64.1

33.6

69.4

34.7

69.7

Group 5 Year Volume GrowthTEU million

2008 2009 2010 2011 2012

ConsolidatedGross

27.8

46.2

25.6

43.4

27.8

49.6

27.5

54.7

27.1

56.1

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Our Business

Yantai (China) – Photo by Li Bo

DP World is a global operator of container and marine terminals. With a network of more than 60 terminals spanning six continents, DP World is one of the largest and most geographically diversified container terminal operators in the world. It has a global capacity of 70 million TEU and handled over 56 million TEU across its global portfolio during 2012. In 2012, DP World generated revenues of $3,121 million and EBITDA of $1,407 million.

DP World aims to enhance the supply chain efficiency of its customers by effectively handling container, bulk and general cargo across its network. It also manages cruise terminals in the UAE and Argentina. Its dedicated, experienced and professional team serves customers in some of the most dynamic economies around the world.

DP World operates its portfolio of container terminals through long-term concession agreements entered into with the owner of each port and with an average concession across the Group of approximately 40 years. DP World’s portfolio also includes three freehold terminals which do not attract a concession fee structure.

DP World continually invests in terminal infrastructure leading to increased efficiency and profitability within the Group’s terminals. Investment in terminal infrastructure can be advantageous for a country’s Foreign Direct Investment, facilitating trade and influencing domestic production while enhancing community development with the creation of local jobs. With the expansion of existing terminals and a pipeline of new developments, DP World is contributing to economic growth and development around the world.

DP World is committed to working closely with its customers and joint venture partners to deliver quality services today and to plan for the needs of customers tomorrow. Whether it is planning for new developments such as enabling ports to handle the next generation of ultra-large container ships or improving the reliability and efficiency standards to handle more containers safely, DP World is a global business partner.

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Where We Operate

We operate our portfolio under three regions:

•Middle East, Europe and Africa•Asia Pacific and Indian

Subcontinent•Australia and Americas

Middle East, Europe and AfricaUAEDP World’s UAE operation is at the core of the Group’s portfolio and is comprised of three terminals, including its flagship facility at Jebel Ali (UAE), which is one of the largest container terminals in the world. Jebel Ali is undergoing major expansion work adding 5 million TEU, taking capacity to 19 million TEU.

Middle East (excluding UAE)The Group has two container terminals in two countries, including a major new expansion project at Sokhna (Egypt).

EuropeThe Group has thirteen container terminals in seven countries and a number of inland terminals in Northern Europe. In addition, it has development projects in the United Kingdom, Turkey, France and the Netherlands.

AfricaThe Group has six container terminals in four countries, providing general and bulk cargo stevedoring. The Group has a new development project in Dakar (Senegal).

Asia Pacific and Indian SubcontinentAsia PacificThe Group has a network of ten container terminals in six countries throughout the Asia Pacific area. Additionally, it operates ATL Logistics Centre in Hong Kong.

Indian SubcontinentThe Group has five terminals in India and one in Pakistan, and has the largest presence of any container terminal operator in the Indian Subcontinent. The Group has a new development project in Kulpi (India) and another development in Nhava Sheva (India).

Australia and AmericasAustraliaThe Group manages a network of four container terminals in Australia including Brisbane, Sydney, Fremantle and Australia’s busiest and largest container terminal in the Port of Melbourne.

AmericasThe Group has five terminals in five countries. In addition, it has a new greenfield development in Brazil.

Container Terminals Non-Container Terminals New developments and major expansions

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Map of DP World’s portfolio as at 31 December 2012

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Our Strategy

Our strategic focusDP World’s vision is to create sustainable value through global growth, service and excellence. This vision is embodied in the Group’s strategic focus which is to deliver sustained long-term value to our shareholders, by providing quality customer service, developing efficient, safe and secure methods of managing world trade and offering rewarding careers to our employees.

The ports industry serves as a vital economic lifeline and gateway to a country by supporting the country’s economic growth, security and prosperity. By efficiently servicing vessels crossing the world’s oceans, ports play a significant role in contributing to a country’s GDP,5 reinforcing trade relationships, supporting economic diversification, building local knowledge and expertise to increase a country’s competitiveness and also generating employment. Container ships transport around 60% of the value of global seaborne trade, more than $4 trillion worth of goods annually.6

Key influences driving the growth of our industry include globalisation, rapidly developing economies, urbanisation, the emergence of mega cities, containerisation, efficiency and changing customer demands. We develop and adapt our strategy to take into account these global trends and their impact on our industry.

We believe our business will continue to deliver long-term value to our shareholders as it offers stable and long-term cash flows, relatively high growth rates, high barriers to entry, a global network which is managed locally, and world class operations and employees.

We recognise health and safety and corporate responsibility as key enablers that guide our activities and they are embedded within our values. We are committed to creating a safe culture throughout our portfolio and we recognise that governments, and the communities that they serve, focus on more than just the movement of cargo.

Our strategyOur strategy describes our plan to expand our portfolio of world-class infrastructure assets, to strengthen global supply chains and to generate sustainable economic growth, by focusing on key strategic priorities.

Southampton (UK) – Photo by Andrew Sassoli Walker Jebel Ali (UAE)

DP World VisionSustainable value through

global growth, service and excellence

DP World MissionA global approach to a local business environment where excellence, innovation and profitability drive our core

business philosophy of exceptional

customer service

DP World Values:• Commitment to our people and our customers• Profitable global growth• Responsible corporate and personal behaviour• Excellence and innovation

Strategic priorities to achieve DP World’s vision

FinancialOrganisation wide

strategies

Customer

Internal/Operational

People and Learning

• Corporate Governance

• Corporate Responsibility

• Strategy Implementation

• Communication

Driving sustained long-term shareholder value

Creating a satisfied and profitable customer experience

Developing efficient, safe and secure methods of managing world trade

Creating a learning and growth environment

Figure 1 : DP World’s Vision, Mission and Values

Figure 2 : DP World’s Strategy Map

We define strategic initiatives that are organisation wide, as well as strategic priorities to support our mission and values and achieve our vision. DP World’s initiatives and priorities are reassessed on a regular basis to take into account the changing environment in which we operate, including changes in supply and demand, competitive positioning, developments in technology, environmental management and the availability of resources.

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Mundra (India)

Our strategic prioritiesOur four strategic priorities are defined as:

1. Driving sustained long-term shareholder value by:i. setting challenging financial targets to drive an optimised

productivity strategy that encompasses best practices and utilises global synergies;

ii. actively managing our portfolio and ensuring access to the best sources of capital for our business in view of its long-term nature;

iii. strategically investing in core value-adding terminal businesses where we have management control and exploring partnership opportunities; and

iv. operating our portfolio of container ports through long-term concession agreements.

2. Creating a satisfied and profitable customer experience by:i. being a leader in quality and reliability and delivering to our

customers the right capacity to meet the right demand. Going beyond the port gates when necessary to add value;

ii. growing sustainable high value customer relationships through our commitment to being a market leader in investment to address changing demands; such as investing to cater for the new ultra-large container ships;

iii. being a global operator with operating advantages and efficiencies; and

iv. being dedicated to providing exceptional customer service that maintains customer trust in our business.

3. Developing efficient, safe and secure methods of managing world trade by:i. growing our portfolio sustainably and profitably by growing

the Group’s portfolio in line with market driven volume growth and investing for the future;

ii. adopting an investment strategy that focuses on origin and destination cargo and emerging markets where growth is stronger and we can add real value;

iii. managing risk and optimising business processes;iv. providing a safe and secure work environment; andv. achieving operational excellence and encouraging

innovation in our business and industry.

4. Creating a learning and growth environment by;i. being the employer of choice, offering employees rewarding

careers and developing future generations;ii. creating an open work environment where our core values

are embedded; andiii. creating a learning culture that encourages employees to

share knowledge.

5 GDP means Gross Domestic Product.6 These figures are reported by the World Shipping Council on their website

www.worldshipping.org as at 3 March 2013.

External engagementTo enhance our understanding of the drivers of the demand and supply balance, and developments in technology, corporate responsibility, environment and regulatory frameworks, we actively engage with leaders in these fields. We have worked with the World Economic Forum (WEF) since 2010 and during 2012 we worked with them on their Connected World project: Transforming Travel, Transportation and Supply Chains 2025. This project is a multi-stakeholder project to identify and leverage long-term opportunities for travel and transportation and develop scenarios for 2025. DP World has also worked with the Global Agenda Council in Dubai in 2012, which brings together leaders from academia, government, business and other fields to share ideas on key global challenges and put forward ideas and recommendations, to the WEF annual meeting in Davos. Since 2011, we have worked with Oxford University in the United Kingdom to lead scenario planning workshops for the University’s MBA programme with the aim of engaging with tomorrow’s leaders and discussing long-term strategy and responses to future industry challenges.

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Management Review

Global trade lies at the heart of DP World’s business. Ensuring our ports are well placed to capture current and future trade flows is essential to our success and creating value for all stakeholders.

The patterns of global trade continue to evolve as the balance of economic activity shifts to the south and the east and emerging markets take an increasing share of world economic activity.

Figures from the United Nations Conference of Trade and Development show that in 2011, developing countries had a 40.4% share of global manufactured exports. In some categories the export market share of these countries grew by over 30 percentage points in only 15 years.

While industrialised Asian countries still dominate these trends, one of the growing patterns is for increased intra-regional trade. Over the 2000-2010 period, south-south exports grew from 13% to 23% of world trade. China-India trade has more than doubled since 2007 and Africa is also an increasingly important part of the picture. Trade between China and Africa is likely to be over $200 billion in 2012. The World Trade Organisation has suggested at this rate of increase – 25% year on year – Africa could, within three to five years, surpass the EU and US to become China’s largest trade partner.

Another factor at play is the “Made in the World” phenomenon as manufacturing processes continue to become global; developing countries increasingly act as producers and markets for each other. World Trade Organisation figures show almost 60% of trade in goods is in intermediate goods with the average import content of exports around 40%.

With manufacturing continuing to shift to cheaper locations, middle class consumers in the emerging markets are playing an increased role in global demand for goods. These trends are set to continue.

To date, however, port development has not kept pace with these changes. Volume growth has been almost double the rate of new capacity growth, resulting in a significant lack of global container terminal capacity today.

Shortage of capacity is further exacerbated by the fact that much of the developed world port capacity is over 30 years old and increasingly no longer fit for purpose. This point takes on increased relevance with the arrival this year of a new breed of ultra-large container ships at 18,000 TEU. These vessels are around 400m in length, which is larger than the average 300-350m container berth.

The shift to these new vessels by our customers, the shipping lines, represents a significant operational change on the Asia to Europe routes. This in turn has led to a cascade of sub 8,000 TEU vessels being deployed on ‘smaller’ or emerging trade routes, which can add further to bottle-necks because many of the smaller emerging market ports are not yet capable of handling these larger vessels.

Meanwhile, cargo owners are increasingly focused on short lead times and real time inventories, pushing port operators to improve terminal efficiencies to move goods along the supply chain more quickly. Our investment in London Gateway for example is expressly for this reason, to improve the efficiency of the UK supply chain.

Responding to these different operating challenges is critical to fulfilling our customers’ requirements and ensuring an efficient supply chain. We do this through implementing processes, training and efficient equipment. We are very focused on investing to improve the reliability and performance of our container terminals for the benefit of our customers and we are already seeing results. In Dakar (Senegal) for example truck turnaround time has decreased from 8 hours to 45 minutes, in Dubai (UAE) it has reduced to 25 minutes and in Constanta (Romania) to 21 minutes. This allows a higher number of deliveries and pick ups each day and helps reduce congestion in port cities.

With the average life of a container port concession across the industry in excess of 30 years, DP World must take a long-term view in positioning the Company to respond to these trends.

In 2012 we have focused on our existing operations through the delivery of exceptional customer service from improved efficiencies in our terminals. This has allowed us to deliver good revenue growth and manage costs, resulting in a significant improvement in adjusted EBITDA margin to 45.1%.MOHAMMED SHARAF

GROUP CHIEF EXECUTIVE OFFICER

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Over the past five to six years DP World has invested more than $6 billion adding over 20 million TEU of new capacity and growing ahead of the market. Our investment has focused on ensuring we have the capacity to match customer needs by:

• matching investment to changing trade lanes (such as in Africa, Turkey, Latin America);

• matching investment for larger vessels (such as in London Gateway and Jebel Ali ); and

• matching investment to emerging market growth (such as in India).

The investment we are making now will ensure we are the best positioned port operator to respond to these significant changes to the global supply chain. We are already one of the best placed terminal operators to handle these larger vessels across our portfolio. We handled 1,283 ultra-large container ships globally in 2012, 72% more than last year. This has driven higher utilisation across our portfolio and increased our market share.

By 2015 we expect to have approximately 85 million TEU of capacity globally, with 30% of our capacity in the Middle East and Africa, markets that are forecast to grow significantly. Our aim by 2020 is to be operating 100 million TEU of capacity, retaining our 10% market share and our 75% focus on emerging markets.

Uncertainty persists in the global economic outlook. Volumes on major trade routes such as Asia to Europe will come under stress during 2013 owing to a weak Eurozone economy. However, the DP World geographic network positions us effectively to take

advantage of the strong intra-Asia trade and Middle East trades, the growing African market and the relatively stable markets of the Americas. We see plenty of opportunity to further expand our portfolio with an emphasis on emerging markets in Africa, Central and South America and Asia.

Operating and financial reviewThis year, we have focused on our existing operations through the delivery of exceptional customer service from improved efficiencies in our terminals. This has allowed us to deliver good revenue growth and manage costs, resulting in an improvement in adjusted EBITDA margin to 45.1%.

Whilst the operating environment has remained challenging in some of our regions, it is the strength of our operations in Africa, Middle East, South America and Asia which has supported our improvement in adjusted EBITDA to $1,407 million.

In 2012, we continued to actively manage our portfolio, strategically divesting or monetising some of our terminals. This makes a comparison with the prior year more challenging. Like for like growth at constant currency, where referenced below, is a better comparison as this is without the addition of (a) new capacity at Paramaribo (Suriname) (b) divested equity-accounted investees Tilbury (UK), P&O Trans Australia (POTA), Aden (Yemen), Adelaide (Australia), Vostochny (Russia) and DMS (P&O Maritime) (c) the deconsolidation of our five Australian terminals and (d) the impact of exchange rates as our financial results are translated into US dollars for reporting purposes.

Karachi (Pakistan) – Photo by Raheel Khan Qingdao (China) – Photo by Mr Cheung

USD million before separately disclosed items7 – full details on page 49 onwards 2012 2011%

change

Consolidated throughput8 (TEU ‘000) 27,097 27,471 (1%)

Revenue 3,121 2,978 5%

Share of profit (loss) from equity-accounted investees 134 142 (6%)

Adjusted EBITDA 1,407 1,307 8%

Adjusted EBITDA margin 45.1% 43.9% –

Profit for the year attributable to owners of the Company 555 459 21%7 Before separately disclosed items primarily excluded non-recurring items.8 Consolidated throughput is 100% of the throughput from all terminals we operate regardless of % ownership.

16


Management Review continued

Revenue from our consolidated terminals was $3,121 million, 5% ahead of the prior year. Containerised revenue accounted for 77% of our total revenue and was $2,411 million for the year, 2% ahead of the previous year. In spite of the 1% decline in throughput, container revenue per TEU increased 4% as we focused on handling higher revenue container volumes and implemented price increases particularly in the Middle East, Europe and Africa region. Non-container revenue was $710 million, 14% ahead of the prior year and accounted for 23% of total revenue.

During the year we divested a number of terminals from our equity-accounted investee’s portfolio, in particular in the Middle East, Europe and Africa region. Our share of profit from equity accounted investees was lower than last year at $134 million. However, excluding these divestments, the portfolio performed well, delivering 9% like for like growth at constant currency as terminals in the Americas and Australia region, and Middle East, Europe and Africa region performed strongly.

Adjusted EBITDA continued to improve reaching $1,407 million, an increase of 8%, due to strong growth in the Middle East, Europe and Africa region. Adjusted EBITDA margin expanded to 45.1% as utilisation rates improved to over 80%, terminal efficiencies improved and we maintained good cost discipline.

Profit for the year attributable to owners of the Company, before separately disclosed items, was $555 million and 21% ahead of the prior year following the increase in adjusted EBITDA growth

and a $17 million reduction in net finance costs, depreciation and amortisation from the prior year.

On a like for like basis at constant currency,9 revenue was 10% ahead and adjusted EBITDA was 11% ahead of the prior year.

During 2012, we invested $685 million across our portfolio. This was significantly lower than expected as some of our planned capital expenditure in 2012 will now come in 2013. This will not impact the timing of the delivery of new capacity, but is simply a function of when equipment is invoiced and paid for.

Investment in new developments accounted for approximately 57% of our total capital expenditure with the majority focused on our new development at London Gateway (UK), which will open with 1.6 million TEU of capacity in the fourth quarter of 2013.

Expansion of existing facilities accounted for 27% of our total capital expenditure, supporting the expansion of Jebel Ali where an additional 1 million TEU is on track to open at Terminal 2 in 2013 and a further 4 million TEU is due to open at Terminal 3 in 2014.

Middle East, Europe and AfricaThe Middle East, Europe and Africa region delivered an excellent performance with a 19% improvement in adjusted EBITDA, and further improvement in adjusted EBITDA margin to 48.3% as both container revenue per TEU and non-container revenue increased. This reflects the strategic positioning of our terminals

Hong Kong (China) – Photo by Wong Chi Kong Jebel Ali (UAE) – Photo by Joel Naguiat

Middle East, Europe and Africa

USD million before separately disclosed items 2012 2011%

change

Consolidated throughput (TEU ‘000) 19,202 19,110 1%

Revenue 2,112 1,884 12%

Share of profit (loss) from equity-accounted investees 24 14 69%

Adjusted EBITDA 1,021 861 19%

Adjusted EBITDA margin 48.3% 45.7% –9 Like for like growth at constant currency, is without the addition of (a) new capacity at Paramaribo (Suriname) (b) divested equity-accounted investees Tilbury (UK), P&O Trans Australia (POTA), Aden

(Yemen), Adelaide (Australia), Vostochny (Russia) and DMS (P&O Maritime) (c) the deconsolidation of our five Australian terminals (d) and the impact of exchange rates as our financial results are translated into US dollars for reporting purposes.

17


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toward the stronger economies with a focus on the origin and destination markets and compensates for weaker trade across continental Europe.

Revenue was $2,112 million, 12% ahead of the prior year as container volumes increased 1% and container revenue per TEU increased 10% following price increases in this region. Non-container revenue increased 19% to $493 million, primarily driven by the UAE where we saw an increase in demand related to construction, tourism and roll-on roll-off cargo.

Our share of profit from equity-accounted investees increased to $24 million as a stronger performance from the Africa and Middle East terminals mitigated a weaker performance in European ports where volumes softened and recent divestments impacted our share of profit.

Adjusted EBITDA was $1,021 million, 19% ahead of 2011 as the increase in revenue combined with improved productivity, higher utilisation and good cost management resulted in higher adjusted EBITDA margin of 48.3%.

The UAE region delivered another excellent performance with container revenue per TEU increasing by 18%. This growth in revenue is as a result of proactive pricing measures for both container stevedoring and container storage. Non-container revenue grew by 28% as the region continued to benefit from an improvement in economic performance, driven by the tourism and retail sectors and an increase in the number of infrastructure projects.

Investment in our Middle East, Europe and Africa portfolio was $575 million during 2012. This investment was focused on London Gateway (UK), which will open with 1.6 million TEU in 2013, and the extension of Jebel Ali (UAE) where an additional 1 million TEU at Terminal 2 will open in 2013 and 4 million TEU at Terminal 3 is expected in 2014.

During the year, some of our Europe and Middle East equity-accounted terminals were divested as we took the opportunity to recycle capital into high return businesses in faster growing markets where we have management control.

Divestments included container terminals in Tilbury (UK), Aden (Yemen) and Vostochny (Russia). In addition, as part of a restructuring in Antwerp (Belgium), we divested our break bulk facility to focus on container terminal operations. Excluding these divestments, like for like revenue growth at constant currency10 was 13% ahead of the prior year and adjusted EBITDA was 20% ahead.

Asia Pacific and Indian SubcontinentThe Asia Pacific and Indian Subcontinent region took a strategic decision to focus on handling a smaller number of higher margin containers. Whilst this has reduced revenue and adjusted EBITDA, adjusted EBITDA margin increased to 65.6%. The region was also impacted by unfavourable currency movements.

Revenue across the region fell 9% to $457 million due to the reduction in container volumes, lower storage revenue in Karachi (Pakistan) and unfavourable currency movements. Non-container

We remain confident about the long-term outlook of our industry and remain well positioned to deal with a changing economic environment as well as continue to focus on our established high standards of service to customers.

Asia Pacific and Indian Subcontinent

USD million before separately disclosed items 2012 2011%

change

Consolidated throughput (TEU ‘000) 5,401 5,578 (3%)

Revenue 457 500 (9%)

Share of profit (loss) from equity-accounted investees 111 117 (6%)

Adjusted EBITDA 299 322 (7%)

Adjusted EBITDA margin 65.6% 64.5% –10 Like for like growth at constant currency normalises for the divestments or monetisation of Tilbury (UK), Aden (Yemen), Vostochny (Russia) and the translation impact of exchange rates.

18



revenue improved 8% to $63 million as we saw a greater contribution from our rail service in India and non-container revenue in some Indian ports.

Whilst our portfolio of terminals accounted for as equity accounted investees performed well in 2012, the comparison with the prior year was impacted by higher profit in 2011 from a one-off government rent and rates refund in Asia. Excluding this, profit from our portfolio of equity-accounted terminals was slightly lower than the prior year.

Adjusted EBITDA was $299 million, 7% lower than last year on account of the lower revenue and lower contribution from our share of profit from equity accounted investees. However, our decision to focus on higher margin containers in India has resulted in higher adjusted EBITDA margin of 65.6%.

Excluding unfavourable currency movements, like for like revenue growth at constant currency11 declined 3% and adjusted EBITDA declined 6% when compared with the prior year.

On 7 March 2013, DP World entered into a strategic partnership with Goodman Hong Kong Logistics Fund, monetising 75% of its interests in CSX World Terminals Hong Kong Limited (CT3), which operates berth 3 of the Kwai Chung Container Terminal (CT3) and ATL Logistics Centre Hong Kong Limited (ATL), a logistics centre located alongside CT3. As part of the strategic partnership, DP World will continue to manage the port operations. Completion, subject to regulatory approvals, is expected to be towards the end of the first half of 2013.

On the same day, DP World divested all of its interest in Asia Container Terminals Holdings Limited, the holding company of the entity that owns and operates Asia Container Terminal 8 West (CT8).

The total consideration for the two transactions was $742 million and the total net gain is expected to be approximately $151 million, subject to transaction costs and currency movements.

Australia and AmericasOur terminals in the Americas and Australia region delivered a strong underlying12 revenue performance in 2012. However this has not been converted into equally strong adjusted EBITDA growth due to weaker results from our equity-accounted investees which were impacted by pre-operational costs in Embraport (Brazil) and the impact of one-off non-core expenses in the region.

Revenue was $553 million for the year, down 7% due to the deconsolidation of Australian terminals from 12 March 2011. On an underlying basis this was 14% ahead, reflecting a 4% improvement in container revenue per TEU and a 3% improvement in non-container revenue.

We reported a loss of $1 million on our share of profit from equity-accounted investees. This was due to the higher interest costs associated with the new capital structure in relation to our joint venture in Australia, pre-operational expenses in relation to our new development in Embraport (Brazil) and the exclusion of profit from P&O Trans Australia (POTA) and Adelaide (Australia), which were divested in 2011 and 2012 respectively.

Australia and Americas

USD million before separately disclosed items 2012 2011As reported

% changeUnderlying % change

Consolidated throughput (TEU ‘000) 2,494 2,782 (10%) 12%

Revenue 553 594 (7%) 14%

Share of profit (loss) from equity-accounted investees (1) 10 (110%) (7%)

Adjusted EBITDA 166 203 (18%) 2%

Adjusted EBITDA margin 30.0% 34.2% – –11 Like for like growth at constant currency normalises for the translation impact of exchange rates.12 Underlying change shows what the % year over year change would have been had the five terminals in Australia continued to be consolidated in DP World’s accounts from 1 January 2012 to

11 March 2012 and allows a better comparison with the prior period.

Last year was also an important period in terms of progressing the delivery of four major development projects around the world. The first of these will come on stream in the next few months at Jebel Ali (UAE), with Embraport (Brazil) and London Gateway (UK) opening later this year. The fourth, the new terminal at Jebel Ali, is well underway and set to open next year.

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Adjusted EBITDA was $166 million, down 18% on a reported basis principally due to the deconsolidation of Australian terminals and divestments. On an underlying basis adjusted EBITDA was 2% ahead as we continued to grow underlying revenue and maintain good cost control. The adjusted EBITDA margin of 30% was diluted by the loss of profit from equity-accounted investees.

Like for like revenue growth at constant currency13 was 11% ahead of the prior year as volumes grew 10% and adjusted EBITDA decreased 3%.

Capital expenditureDuring 2012, we invested $685 million across our portfolio. This was significantly lower than expected as some of our planned capital expenditure in 2012 will now come in 2013. This will not impact the timing of the delivery of new capacity, but is simply a function of when equipment is invoiced and paid for.

Our three year forecast for capital expenditure between 2012 and 2014 remains at $3.7 billion with the expectation of investing approximately $1.8 billion and $1.1 billion in 2013 and 2014 respectively. From 2015 onwards we expect capital expenditure, including maintenance capital expenditure, to significantly reduce.

Investment in new developments accounted for approximately 57% of our total capital expenditure with the majority focused on our new development at London Gateway (UK) which will open with 1.6 million TEU of capacity in the fourth quarter of 2013.

Expansion of existing facilities accounted for 27% of our total capital expenditure, supporting the expansion of Jebel Ali Port where an additional 1 million TEU is on track to open at Terminal 2 in 2013 and a further 4 million TEU is due to open at Terminal 3 in 2014.

Alongside these larger capital investment projects, additional capital expenditure was focused on our existing portfolio to ensure that our terminals are improving efficiencies and productivity.

Net finance costsAs at 31 December 2012, gross debt was $4.8 billion and cash balances were $1.9 billion.

In April 2012, we repaid a $3 billion syndicated loan facility using some of the cash held on our balance sheet. The repayment of the loan facility resulted in lower finance costs of $364 million for the year and reduced finance income of $75 million. Net finance costs of $289 million remained broadly in line with the previous year.

Interest Cover (adjusted EBITDA and net finance costs) improved to 4.9 times in 2012.

TaxationDP World is not subject to income tax on its UAE operations. The tax expense relates to the tax payable on the profit earned by overseas subsidiaries, as adjusted in accordance with taxation laws and regulations of the countries in which they operate. For 2012, DP World’s income tax expense was $73 million before separately disclosed items.

The effective tax rate before separately disclosed items was 14.9%, lower than the prior year, due to a change in the mix of our profit.

Profit attributable to non-controlling interests (minority interest)Profit attributable to non-controlling interests (minority interests) was higher than the prior year at $80 million due to a stronger performance in those terminals where there is a larger non-controlling interest.

The key terminals where we have non-controlling interest in 2012 are CT3 (Hong Kong), Doraleh (Djibouti), Karachi (Pakistan), Buenos Aires (Argentina) and Southampton (UK).

Separately disclosed itemsIn 2012, DP World reported separately disclosed items of $192 million. This comprised $249 million profit on sale of businesses and our share of profit of equity-accounted investees. These profits were netted off against impairment of assets and restructuring costs, ineffective interest rate swaps and currency options and income tax expenses.

Saigon (Vietnam) – Photo by Long Le Duong Saigon (Vietnam) – Photo by Long Le Duong

13 Like for like growth at constant currency normalises for the divestments or monetisation of Australia, P&O Trans Australia, Adelaide (Australia), DMS (P&O Maritime, Australia), new capacity at Paramaribo (Suriname) and the translation impact of exchange rates.

20



Balance sheetIn 2012, total assets reduced to $16.4 billion as cash balances decreased due to the repayment of debt using cash from the balance sheet. Total equity increased to $8.7 billion due to an increase in retained earnings.

The Group’s investment in equity-accounted investees reduced to $3.3 billion as we made a number of divestments from this portfolio during the year.

Cash flowNet cash from operating activities was $1,231 million, an increase of $251 million over 2011 due to better performance from our terminals.

Net debtAs at 31 December 2012 net debt was $2.9 billion (gross debt of $4.8 billion and cash of $1.9 billion). This compares with a net debt of $3.5 billion as at 30 June 2012. Net debt is significantly lower due to increased net cash from operating activities, and proceeds from divestments.

Long-term corporate bonds totalled $3.25 billion, made up of $1.75 billion 30-year unsecured MTN due in 2037 and $1.5 billion 10-year unsecured sukuk due in 2017. In addition we have $1.5 billion of debt at the subsidiary level.

Leverage (net debt to adjusted EBITDA) decreased to 2.0 times. Following the transactions in Hong Kong, our leverage will reduce further.

Return on capital employedIn 2012, we reported an improvement in return on capital employed (EBIT divided by total assets less current liabilities) to 6.8%.

DP World has a portfolio of long-term assets with an average concession life of approximately 40 years. As at the end of 2012, 26% of our capacity was less than five years old and we have four major projects at pre-operational stage of development. This means a significant proportion of our assets are some way from delivering maximum potential EBIT which dilutes the overall returns. However, as this capacity becomes operational and matures we expect our returns to make steady progress towards 15%.

Mohammed SharafGroup Chief Executive Officer

Yuvraj NarayanChief Financial Officer

Hong Kong (China) – Photo by Wong Chi KongAntwerp (Belgium) – Photo by Ronny Vanpachtenbeke

21


2010 2011 2012

8.88.0

7.3

Per million hours worked

2010 2011 2012

1240 13071407

US$ million

2010 2011 2012

40.343.9 45.1

%

2010 2011 2012

374

459

555

US$ million

2010 2011 2012

45

8290

US$ cents

2010 2011 2012

4.4

6.06.8

%

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2012 Key Performance Indicators

Frequency of lost time injuries

7.3LTIFR (frequency of lost time injuries) is defined as the frequency of injuries per million hours worked.

DP World is committed to ensuring the safety of our employees and contractors.

Adjusted EBITDA

$1,407 millionGrowing adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) is a key measure of value delivered to shareholders. EBITDA is calculated including our share of profit from joint ventures and associates on a basis which excludes separately disclosed items.

Adjusted EBITDA margin

45.1%The adjusted EBITDA margin is based on EBITDA (earnings before interest, tax, depreciation and amortisation) calculated including our share of profit from joint ventures and associates.

Profit attributable to owners of the Company

$555 millionProfit attributable to owners of the Company is before taking separately disclosed items into account and excludes any profit attributable to non-controlling interests (minorities).

Earnings per share (cents)

90 centsEPS (earnings per share) is calculated by dividing the profit after tax attributable to owners of the Company (after separately disclosed items) by the weighted average shares outstanding. The EPS figure for 2010 has been adjusted for the share consolidation in May 2011.

Return on capital employed

6.8%Return on capital employed is EBIT (earnings before interest and taxation) before separately disclosed items as a percentage of total assets less current liabilities.

22


MARKETPLA

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Build an inclusive,

through innovation, new technologies

and behavioural change

Reduce our impact on the environment

Corporate Responsibility

Corporate responsibility at DP WorldDP World plays a significant role in the communities in which we operate. As a world class business integral to the supply chain of our customers, we act with integrity in the development of solutions for our customers and partners, leveraging the talent of our employees to contribute to a sustainable future.

Our objective is to integrate responsible business practices into our daily activities, growing our business in a sustainable manner and maintaining our commitment to corporate responsibility. We work with our customers, suppliers and communities to identify sustainability challenges and develop partnership opportunities.

During 2012, significant progress was made in integrating corporate responsibility principles throughout DP World’s business strategy with the development of a corporate responsibility strategy and the establishment of a corporate responsibility champions network designed to ensure alignment of regional and business unit activities with our strategy. An overarching Corporate Responsibility Advisory Committee, chaired by the Group Chief Executive Officer, was also formed in 2012 to assist in the review of policies, procedures and the implementation of DP World’s corporate responsibility strategy.

We recognise that our global reach brings diversity. Rather than applying a uniform policy across the jurisdictions in which we operate, DP World’s corporate responsibility strategy is based on the four quadrants of community, environment, people and safety and marketplace. The strategy is adapted to suit the local needs of each community. This approach provides consistency, yet enables each business unit to provide the greatest benefit to the communities in which they operate.

The four quadrant approach at DP WorldDP World adopts the four quadrant approach to its corporate responsibility strategy:

Community: Community engagement plans are developed by the business units, to align our efforts with the needs of our people, their community and the business. This kind of approach enables DP World to identify areas of greatest social need, what matters most in any community and how we can develop partnership plans. This engagement is guided by the Group’s community investment framework which was launched in 2012 to provide business units with support and a principled approach for developing strategic and effective community partnerships.

A full review and data collection exercise was also conducted during 2012 to understand our community reach which will help us plan further activities in 2013. This will become an annual project to help us map trends and identify focus areas requiring support.

Karachi (Pakistan) – Photo by Shahid Hameed Siddiqui Callao (Peru)

23


London Gateway (UK)

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Antwerp (Belgium) – Photo by Kenny Verhoeven

Environment: As a global organisation, DP World’s focus is on delivering responsible environmental management. We constantly seek to improve our understanding of our environmental impact and the risks and opportunities related to our operations. We take an active role and are continually working to reduce our environmental impact with an overarching goal of avoiding or, where this is not possible, minimising our environmental footprint while also contributing to lasting environmental benefits across the regions we operate in.

Environmental protection and management is considered in all of our activities with impact reduction initiatives being prioritised to direct resources to where the greatest environmental return can be realised. In addition, we constantly challenge our operations to reduce greenhouse gas emissions through improved energy management across our operations, reduce pollution, improve natural resource management and enhance biodiversity. The environmental progress of each business unit is consolidated for reporting and reviewed by the Board at every meeting.

People and Safety: Our goal is zero harm with safety as a business-wide issue at the heart of all our operations. Our policies meet or exceed national health and safety legislation in the markets in which we operate. We comply with all aspects of the internationally recognised certification system OHSAS 18001 with staff and contractors required to meet health and safety requirements and participate in comprehensive training. We have zero tolerance of conditions and behaviours contributing to workplace incidents.

Building the talents and ability of our people is at the core of our Human Capital strategy. Our recruitment, induction processes and talent management programmes focus on responsibility, behavioural change, innovation and excellence. We regularly review our policies to ensure we maintain a focus on responsibility, treating our people fairly and with respect. We also recognise that our success is enhanced by the diversity of our people. The rich and diverse mix of backgrounds, beliefs, cultures, skills and knowledge is a major contributor to our continued success. As a major employer and contributor to the communities in which we operate, it is important that we attract talent from the communities that work with us to build a sustainable future.

The well-being of our people also rests on how secure they feel as members of the DP World global family. We are committed to ensuring the safety and security of our people and our assets by investing in security management systems.

Marketplace: Given our position in the industry and our global reach we continually drive performance improvements and change to positively impact our stakeholders around the world. We are committed to conducting business with socially responsible and ethical suppliers ensuring the principles of sustainability and responsibility apply to the procurement of all goods, services and construction activities.

24


Asia Pacific and Indian Subcontinent• Hong Kong: A group of staff volunteers took fifty children

from disadvantaged families in Tung Chung to the Tree Top Cottage camp site in Tai Po for a field trip.

• Surabaya (Indonesia): A seminar on cervical and breast cancer was developed and arranged by the wives of the members of INSA (Indonesian National Shipowners’ Association) and sponsored by DP World. Approximately 200 women attended to hear more about early detection and support mechanisms.

• India: Physically challenged Indian artists who paint with their mouth or feet were involved in a corporate responsibility project backed by DP World. A countrywide partnership with the Indian Mouth and Foot Painting Artists Association (MFPA) during the festival of Diwali saw twelve paintings commissioned with four highlighted for special praise.

• Cochin (India): Support was provided for the construction of a kitchen shed at St. Mary’s High School (Vallarpadam) to be used for the preparation of nutritious lunches for school students. Donations of essential items were made to the Infant Jesus Orphanage at Ochanthuruth and support for a career guidance course for 400 local students was provided.

• Karachi (Pakistan): Staff volunteers renovated and supported the Syed Meher Ali Shah Primary School through the provision of electricity in the school, levelling the playground, painting the school buildings, replacing lights with energy saving lights, donating furniture and renovating the toilet facilities.

Corporate Responsibility continued

Middle East, Europe and Africa• Southampton (UK): Support was given to a wide range of

local community projects and health charities, including helping to establish a social enterprise café, providing IT equipment for charity internet cafés and safety equipment at a local primary school as well as contributing to local youth sports clubs which many staff run or coach.

• Constanta (Romania): A partnership with UNICEF was developed to raise funds to establish the first multifunctional centre for disadvantaged children, providing education, health, social care and counselling for parents.

• London Gateway (UK): A partnership with Essex Wildlife Trust was formed to establish a local Nature Park and Visitor Centre to raise awareness of London Gateway, its operations and local environmental issues.

• South Africa: Employees were involved in the clean up of beaches on Clean up the World Day.

• Maputo (Mozambique): A day with the employees and their children (1200 in total) provided the opportunity for all to learn about safety and health at work.

• DP World UAE Region (UAE): DP World UAE Region was the platinum sponsor for the Al Noor Fun-Fair tournament, a fundraising event aimed at treating children with various physical and cognitive challenges such as Down Syndrome, Cerebral Palsy and Autism. A five week ‘know-your-heart’ awareness campaign targeting 6,000 employees was also organised, aimed at raising awareness about heart diseases and promoting a healthy lifestyle.

Painting commissioned by DP World in partnership with the Indian Mouth and Foot Painting Artists Association

25


Santos (Brazil) – Photo from the Ecovacation Programme run by Embraport

BUSINESS ovErvIEw



Australia and Americas• Vancouver (Canada): DP World Vancouver has developed a

strategic partnership with Mission Possible, a not-for-profit organisation that supports people challenged by homelessness and poverty. Support is provided through its membership on the board of Mission Possible, by assisting with the procurement of equipment and encouraging the business community to get involved with Mission Possible. Employees have also volunteered at nine events during 2012.

• Paramaribo (Suriname): An employee survey was conducted to understand the motivations and passions of the staff, the results of which will form the basis of the Suriname corporate responsibility plan. The plan will focus on social issues, including the physically challenged, poverty, homelessness, unemployment and the environment.

• Buenos Aires (Argentina): A new solar energy system consisting of twelve photovoltaic panels that are connected to the electricity grid generating 6,000 kWh per year was installed.

• Santos (Brazil): The Ecovacation Programme, an environmental educational programme, was developed and promoted by employees from Embraport for the children of Diana Island. A handcraft course was also developed and delivered to help fishermen´s families diversify and increase their income.

• Caucedo (Dominican Republic): Consultations took place with stakeholders regarding the social and economic issues affecting the community in order to better align DP World Caucedo’s corporate responsibility plan with the needs of their community. There has been a focus on improving the quality of education in the community, with a back to school celebration organised by employee volunteers that entertained and provided school supplies to 250 children aged five to eight.

• Callao (Peru): A workshop for the local fishermen of Puerto Nuevo was organised on recycling of fish skin focusing on environmental sustainability and income diversification.

• Melbourne (Australia): Staff participated in the 2012 Good Friday Fundraising event in Melbourne where approximately A$16,000 was raised in aid of the Royal Children’s Hospital.

• Australia: During 2012, the Health and Safety team at DP World Australia ran a Health and Wellbeing programme for staff and families, including a 10,000 steps programme which promoted an active lifestyle amongst staff. Some 180 participants in the programme walked over 41 million steps in an eight week period.

Caucedo (Dominican Republic) – Back to School initiative

26


Our People

Jebel Ali (UAE) – Photo by Mark Louis Vicente

Jebel Ali (UAE) Qingdao (China) – Photo by Mr Wang

27


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DP World is a global team in excess of 28,000 people from across six continents. With a commitment to achieving operational excellence and providing exceptional customer service we hold the firm belief that everything we do is aligned to our values, ethics and contributes to the societies in which we operate.

DP World aims to cultivate a dynamic and inspiring work environment as a key driver of its success. Although our operations are geographically diverse, the values of teamwork, commitment and leadership are shared across the Group.

A career with DP World is a rewarding journey supported by sound performance management, succession planning and learning and development opportunities. During 2012, over 1,000 employees participated in programmes or undertook courses designed to support their personal and professional development. DP World is also actively working towards creating an environment in which our employees can fulfil their corporate responsibilities in a meaningful and sustainable manner.

With a solid DP World Leadership Development Framework, we are able to ensure we recruit and promote the right people to meet DP World’s needs.

Delivering growth through effective teamwork

Manila (Philippines) – Photo by Ian Baking

Antwerp (Belgium)

Paramaribo (Suriname) – Photo by Sastrowitomo W Jebel Ali (UAE)

28


Our People continued

The emerging market focus of our business is reflected in the demographic of the Group’s workforce.

A large majority of DP World’s workforce is employed in an operational capacity and this reflects the operational nature of our business.

With a relatively young workforce and a focus on succession planning, DP World is well placed to manage its operations in both the short and long term. The Board oversees the succession planning of DP World’s senior executives and reviews its plans annually. Succession planning for the Group is further supported by DP World’s People Development Framework which sets out the specific competencies and technical skills required for those identified as future successors and unique development plans are developed to bridge any skill or knowledge gaps. This enables DP World to effectively manage the succession planning needs of the Group’s critical business unit roles, including Terminal General Managers and their direct reports.

The development of new businesses and business expansion is reflected in the increase in DP World’s workforce in the last 5 years. New employees ensure that DP World’s outlook remains fresh, while retaining 58% of our staff for more than 5 years ensures stability and maintains operational continuity.

This is an aspect of employee diversity that DP World will continue to work towards improving. In 2012, DP World’s Group Chief Executive Officer, Mohammed Sharaf, welcomed the Women’s International Shipping and Trading Association (WISTA) at their UAE meeting hosted by DP World.

1) Category by regionMiddle East, Europe and AfricaAsia Pacific and Indian SubcontinentAustralia and Americas

2) Category by job levelExecutive ManagementMiddle ManagementOperational and Support Staff

3) Category by age of employeeUnder 3030 to 50Above 50

4) Category by years of service(0 to 5)(5 to 10)(10 to 20)Above 20

5) Category by genderMaleFemale

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Jebel Ali (UAE) – Photo by Shafeek Hassan

Paramaribo (Suriname) – Photo by Sastrowitomo W

Jebel Ali (UAE) Surabaya (Indonesia) – Photo by Irfan Sugianto

Jebel Ali (UAE)

30


Case Study: Doraleh Container Terminal (Djibouti)

Developing gatewaysfor growth

31


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Sitting at the intersection of some of the world’s main shipping lanes connecting Asia, Africa and Europe, Doraleh Container Terminal (DCT) is a jewel in the crown of DP World’s Africa operations and is the most technologically advanced port on the continent.

In 2000, DP World and the Djibouti Government established a joint venture and DP World was awarded a 20 year concession to operate the Port of Djibouti. This successful partnership led to a further joint venture resulting in the construction of a terminal at Doraleh which opened in 2008.

Through its modern logistics facilities and strategic location, Doraleh is well placed to become a premier container distribution hub. The terminal has an annual handling capacity of 1.2 million TEU, the largest in East Africa, with almost 50% of containers handled destined for Ethiopia. Its 18 metre draft and 1050 metre quay accommodate the largest ships with six super post-panamax STS cranes14 and sixteen RTG cranes15 handling container traffic.

Standards also keep pace with this sizeable operation as DP World achieved the ISO 28000 standard (Specifications for Security Management Systems in the Supply Chain) in 2009 and ISO 9001 (Quality Management Systems) in 2011.

Doraleh is well placed to handle transhipment and relay business. Markets in the Red Sea offer potential business opportunities for trade and the terminal plays a major role in facilitating Ethiopian trade movement, contributing to the country’s growth and development.

To keep pace with these developments, new equipment is already in the pipeline, including two new STS cranes and eight RTGs. DP World is reviewing the timing for the Phase II extension of the terminal which would double the size of the berths and the yard.

Coupled with strong growth in the region and investments in infrastructure such as a new free zone set to boost terminal traffic, Doraleh looks ready to take a further step forward to becoming a leading hub port.

14 STS cranes means ship to shore cranes15 RTG cranes means rubber tyred gantry cranes

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Case Study: Nhava Sheva (India)

Investing in emergingmarkets

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India is one of the fastest growing emerging economies of the world and DP World is committed to supporting that growth into the future. With five terminals across the country, we are privileged to be a partner in providing world class facilities for its traders.

There is a need to develop infrastructure in India and the Port of Nhava Sheva is a key example of our investment in India’s long-term future, being part of the largest port in the country at Jawaharlal Nehru Port close to the commercial capital, Mumbai, that handles almost half of India’s maritime traffic.

Starting operations in 1999 as the first private container terminal, Nhava Sheva is a major gateway to the vast hinterland beyond its gates. Links to a wide network of inland container depots in Pune, Nagpur, Ahmadabad, Hyderabad, Ludhiana and New Delhi through two sets of railway sidings, ensure efficient operation. The terminal is also connected to India’s major highway and rail networks, which give access to neighbouring Mumbai and to the hinterland of Madhya Pradesh, Maharashtra, Gujarat, Karnataka and most of North India.

Indian container ports remain the most dynamic in the Subcontinent and the scope for expanding container traffic is vast. With that in mind we have been given the letter of award from Jawaharlal Nehru Port Trust to build and operate a new single berth facility of some 330 metres quay length alongside existing facilities which will be operational in 2015.

DP World will be investing approximately $200 million to build the container terminal and 17 hectares of yard with an annual handling capacity of 800,000 TEU and a draft of 13.5 metres. The new quay has been awarded a seventeen year concession and will be equipped with four rail mounted quay cranes and twelve rubber tyred gantry cranes. The 330 metre extension will provide the capability to handle three ships simultaneously.

Our investment in Nhava Sheva also takes other forms alongside new equipment and construction. Employees are active in the local community, with school projects and environmental awareness campaigns just part of our involvement. Employee welfare is also high on the agenda, with incentives to boost productivity, increase safety awareness and round the clock paramedic services on site.

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Principal Risks and Uncertainties

Risk management frameworkRisk is an inherent part of doing business. Our risk management system is designed to identify and assess all significant risks which could adversely affect the Group’s ability to achieve its business objectives and to identify management actions which seek to mitigate those risks to an acceptable level.

Whilst not intended to be exhaustive, a summary of the Group’s principal risks are provided below:

Risk Description Mitigation

Political, Social and Economic

DP World has global operations. Our assets are exposed to, and earnings influenced by, political, social and economic events associated with the countries in which we operate. Political actions such as changes to the regulatory environment, strikes, civil strife, expropriation or nationalisation of property could cause us to incur additional costs, impact our financial earnings, and disrupt or terminate our operations.

DP World has a diversity of investments across a number of geographical jurisdictions spreading the risk. We have covered a range of risks through insurance where appropriate.

Ongoing security assessments and continual monitoring of geopolitical developments worldwide and engagement with government, local authorities and joint venture partners ensures we are well positioned to respond to changes in the political, social and economic environments in which we operate.

Uncertain Trading Environment

The Group’s results are subject to adverse impact from a downturn in the global / local macroeconomic environment.

DP World’s diversified portfolio is focused on the more resilient emerging markets and more stable origin and destination cargo.

We have a continuous focus on delivering high levels of service that meet our customers’ expectations and a proven track record of active cost management in line with the changing economic climate to mitigate any downturn in the macroeconomic environment.

Legal, Regulatory and Contractual Obligations

Our businesses operate under increasingly stringent regulatory regimes around the world and are subject to various legal and contractual obligations. New legislation and other evolving practices could impact our operations, increase the cost of compliance, limit or impose restrictions on our growth.

DP World continually monitors regulatory trends and developments. We have comprehensive policies, procedures and training in place to promote legal and regulatory compliance.

Project Risk Business development is subject to regulatory approvals and political, capital raising, construction and commercial risks. Crystallisation of associated risks could impact the Group’s results.

DP World has a thorough approvals process prior to committing to business development or major expansion opportunities, including reviewing political risk, regulatory obligations and construction risk.

Skilled technical teams are assigned to oversee large projects and actively monitor risks throughout the process.

Foreign Exchange Rate Exposures

The global diversity of the Group’s operations results in foreign currency exposure. Adverse currency movements and volatility may impact financial performance.

The Group’s policy is to identify the impact of foreign exchange exposure and to monitor and mitigate material currency exposures through hedge programmes where applicable.

Health, Safety and Operational Risks

The nature of our operations exposes us to various operational, health, safety and security risks. The occurrence of any such risks could impact our business operations, financial results and our reputation.

The Board and senior management are committed to creating a safe culture throughout the Group. The Board monitors the implementation of health and safety strategies, including employee training programmes.

We mitigate these risks with continuous monitoring by management and by having management review processes, policies, guidance documents and specific operational procedures in place.

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Internal controlsThe Board is responsible for establishing and maintaining an effective system of internal control. This system of internal control is embedded in all key operations and is designed to provide reasonable assurance that the Group’s business objectives will be achieved. Regular management reporting and annual self-certification provides a balanced assessment of key risks and controls and is an important component of the Board’s assurance. The Board also receives updates from the Audit Committee, which receives regular information from internal and external audit reports on the Group’s risks and internal controls. The Group’s internal audit function is responsible for reporting to the Audit Committee on the effectiveness of the Group’s risk management process and for evaluating the internal control environment to ensure controls are appropriate and operating efficiently and effectively.

The core elements of DP World’s system of internal controls consists of:

• Organisational structure: A clearly defined organisational structure that provides clear roles, responsibilities and delegated levels of authority to enable effective decision making across the Group.

• Code of conduct: A code of conduct, originated from the top of the Group that sets out how the Group expects its employees to act.

• Whistle blowing policy: A whistle blowing programme for employees to report complaints and concerns about conduct which is considered to be contrary to DP World’s values. The programme, monitored by the Audit Committee, makes communication channels available to all employees within the Group.

• Anti bribery and corruption policy: An Anti Bribery and Corruption policy has been implemented by DP World, supported by online training that is directed and proportionate to the identified areas of risk.

• Strategy and financial management: Clear strategy and financial management which is consistent throughout the organisation and can be actively translated into practical measures. Comprehensive reporting systems, including monthly results, annual budgets and periodic forecasts, monitored by the Board.

• Policies and procedures: Documented policies and procedures for all Group functions within the business, which are communicated to all business units.

• Risk management and performance: Risk-profiling for all business units and the Group to identify, monitor and manage significant risks which could affect the achievement of the Group’s objectives.

• Assurance: Assurance activities cover key business risks which contribute to the overall assurance framework, including an internal audit function to review the systems of internal control.

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Board of Directors

Sultan Ahmed Bin SulayemChairmanSultan Ahmed Bin Sulayem has served as Chairman of the Board of the Company since 30 May 2007. He was previously Chairman of Dubai World and in this role oversaw businesses in industries as diverse as real estate development, hospitality, retail, e-commerce and various commodities exchanges, as well as businesses associated with transportation and logistics. He previously served as Chairman of Port & Free Zone World FZE and he remains one of the two representatives of Port & Free Zone World FZE on the Board. He is a leading Dubai and international businessman, with more than 30 years’ experience in the marine terminal industry. A citizen of the United Arab Emirates, he is 57 years old.

Sir John Parker tÝ�Senior Independent Non-Executive Director and Vice ChairmanSir John Parker has served as an Independent Non-Executive Director and Vice Chairman of the Company since 30 May 2007. He also acts as Senior Independent Director and is Chairman of the Company’s Nominations and Governance Committee and Chairman of the Company’s Remuneration Committee. He serves as Chairman of Anglo American plc. He is also Non-Executive Director of Carnival plc, Carnival Corporation and EADS Airbus. He previously served as Chair of the Court of the Bank of England, Non-Executive Chairman of BVT, Joint Chairman of Mondi plc, Chairman of National Grid plc, Non-Executive Director and Deputy Chairman and, subsequently, Chairman of P&O and as Vice Chairman of Port & Free Zone World. He was a Member of the Prime Minister’s Business Council for Britain. A British citizen, he is 70 years old.

Jamal Majid Bin Thaniah �Non-Executive Director and Vice ChairmanJamal Majid Bin Thaniah has served as a Director and Vice Chairman of the Company since 30 May 2007 and became a Non-Executive Director on 27 October 2009. He joined Dubai Ports in 1981 and, from 2001, led Dubai Ports Authority. He also serves as a Non-Executive Director of Etihad Rail (Abu Dhabi) and was appointed as an Independent Non-Executive Director of Emaar Properties PJSC on 23 April 2012. He previously served as a Director of Port & Free Zone World FZE and he remains one of the two representatives of Port & Free Zone World FZE on the Board of DP World. A citizen of the United Arab Emirates, he is 54 years old.

David Williams tÝ�Independent Non-Executive DirectorDavid Williams has served as an Independent Non-Executive Director of the Company since 30 May 2007. He is also Chairman of the Company’s Audit Committee. He is currently Joint Chairman of Mondi plc and Senior Independent Non-Executive Director of Meggitt plc. He previously served as a Non-Executive Director of Tullow Oil plc and P&O and Senior Independent Non-Executive Director of both Taylor Wimpey plc and George Wimpey plc. He has also served as a Non-Executive Director of Dewhirst Group plc and Medeva plc and as Finance Director of Bunzl plc. He is a qualified Chartered Accountant. A British citizen, he is 67 years old.

t Member of the Audit CommitteeÝ Member of the Remuneration Committee� Member of the Nominations and Governance Committeeê Member of the Executive Committee

Sultan Ahmed Bin Sulayem Sir John Parker Jamal Majid Bin Thaniah David Williams

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Deepak Parekh tÝ�Independent Non-Executive DirectorDeepak Parekh was appointed as an Independent Non-Executive Director of the Company on 22 March 2011. He is the Non-Executive Chairman of HDFC Ltd, India’s premier Housing Finance Institution. He is also the Non-Executive Chairman of GlaxoSmithkline Pharmaceuticals Ltd, Infrastructure Development Finance Company and Siemens India and on the board of several other leading corporations including Mahindra and Mahindra, and The Indian Hotels Co Ltd. He has been a member of numerous Indian Government appointed advisory committees and task forces on matters ranging from infrastructure reform, capital markets and financial services. In 2010, he became the first international recipient of the Institute of Chartered Accountants in England and Wales Outstanding Achievement Award, and received the “Knight in the Order of the Legion of Honour” one of the highest distinctions awarded by the French Republic. A citizen of the Republic of India, he is 68 years old.

Cho Ying Davy Ho tÝ�Independent Non-Executive DirectorCho Ying Davy Ho has served as an Independent Non-Executive Director of the Company since 30 May 2007. Having retired from many of his Swire Group positions, he continues to serve as Director of several Swire Group entities relating to properties and cold storage. He previously served as Director of Cathay Pacific Airways Limited, Modern Terminals Ltd and Shekou Container Terminals Ltd and as Chairman of the Shipping Committee of the Hong Kong General Chamber of Commerce. A British citizen, he is 65 years old.

Mohammed Sharaf �êGroup Chief Executive OfficerMohammed Sharaf has served as Group Chief Executive Officer of the Group since 2005 and as a Director of the Company since 30 May 2007. He joined Dubai Ports Authority in 1992, and in 2001 he became Managing Director of DP World FZE. In this position, he oversaw the Group’s growth into an international business and performed central roles in developing its first international operations at the terminals of Jeddah (Saudi Arabia), Constanta (Romania) and Vizag (India) and in developing its national operations at Jebel Ali and Port Rashid terminals. He began his shipping career at Holland Hook terminal in The Port of New York/New Jersey and has more than 20 years’ experience in the transport and logistics business. He is also Chairman of Tejari World FZ LLC. A citizen of the United Arab Emirates, he is 51 years old.

Yuvraj Narayan êChief Financial OfficerYuvraj Narayan has served as Chief Financial Officer of the Group since 2005 and as a Director of the Company since 9 August 2006. He joined DP World FZE in 2004. He serves as Non-Executive Director of IDFC Securities Limited. He previously served as Non-Executive Director of Istithmar World PJSC and as ANZ Group’s Head of Corporate and Project Finance for South Asia before becoming Chief Financial Officer of Salalah Port Services in Oman. He is a qualified Chartered Accountant and has a wealth of experience in the ports and international banking sectors. A citizen of the Republic of India, he is 56 years old.

Deepak Parekh Cho Ying Davy Ho Mohammed Sharaf Yuvraj Narayan

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The Directors present their report and accounts for the year ended 31 December 2012.

Principal activitiesThe Business Overview on pages 2 to 35 describes the principal activities, operations, performance and financial position of the Group. The results of the Group are set out in detail on pages 49 to 54 and in the accompanying notes. The principal subsidiaries, joint ventures and associates are listed on pages 103 to 104.

Principal changes in the GroupOn 25 January 2012, the Company sold all of its 34% shareholding in Tilbury Container Services Limited to a subsidiary of Otter Ports Holdings Ltd, owner of Forth Ports Limited.

On 4 July 2012, DP World Australia Limited, in which the Company has a 25% shareholding, sold all of its 60% shareholding in Adelaide Container Terminal Pty Ltd to Flinders Ports Adelaide Container Terminal Pty Ltd for A$134 million (approx $138 million).

On 20 September 2012, DP World Yemen LLC, in which the Company has a 66.6% indirect shareholding, divested its 50% shareholding in Dubai and Aden Port Development Company to its joint venture partner Yemen Gulf of Aden Ports Corporation. The value of the net assets divested by DP World Limited was $27 million.

On 20 September 2012, the Company announced the divestment of all of its 60% shareholding in DP World Breakbulk NV and A Projects NV to Oriental. The transaction completed on 30 December 2012 for a consideration to the Company of $23 million.

On 22 October 2012, the Company divested its 25% shareholding in Vostochnaya Stevedoring Company (Russia) for a total consideration of $230 million. The purchaser was the existing 75% majority shareholder, Global Ports Investments PLC.

On 1 November 2012, the Company announced the receipt of the Letter of Award from Jawaharlal Nehru Port Trust, Government of India, to build and operate a single berth facility of 330m quay length alongside its existing terminal operation at Nhava Sheva, Mumbai. DP World will be investing approximately $200 million to build the new facility which is expected to be operational in 2015.

DirectorsDuring the year, Deepak Parekh was appointed as a member of the Nominations and Governance Committee.

In accordance with the UK Corporate Governance Code (the “Code”) and the Company’s Articles of Association (the “Articles”), Directors offer themselves annually for re-appointment.

Biographical details of the current Directors of the Company are given on pages 36 and 37 together with details of Board Committee memberships.

Details of the Directors’ remuneration and their interests in shares are given on page 46 in the Corporate Governance Section of this Report.

Financial instrumentsDetails regarding the use of financial instruments and financial risk management are included in the Notes to Consolidated Financial Statements on pages 96 to 101.

ResultsThe Group’s Consolidated Financial Statements for the year ended 31 December 2012 are shown on pages 49 to 54.

DividendsThe Directors recommend a final dividend in respect of the year ended 31 December 2012 of 24 US cents per share. This comprises of an increase of 10% in the ordinary dividend to 21 US cents per share, supplemented by a special dividend of 3 US cents per share. Subject to approval by shareholders, the final dividend will be paid on 30 April 2013 to shareholders on the Register at close of business on 2 April 2013.

Post-balance sheet eventsThese events are disclosed in the Notes to Consolidated Financial Statements on page 104.

EmployeesDP World is a global team in excess of 28,000 people which continues to be as diverse as the communities and countries in which it operates. DP World adheres to local labour regulations and statutes, yet emphasises that it is one company seeking common goals. To reinforce this, common approaches are implemented, where possible, for reward, performance management and succession planning. These frameworks are used to facilitate the delivery of business objectives and DP World’s values. For example, where appropriate at a local level, at least one of the objectives that earns bonus must be linked to a safety measure. DP World’s performance management process is applied in a way that cascades the annual corporate business goals throughout the organisation.

DP World’s strategy for learning and development is delivered through the DP World Institute, with a focus on blended learning which suits a global company and enables employees to learn via eLearning as well as traditional methods. The emphasis is on developing people to excel in their current role, while identifying opportunities for future roles via succession planning.

More information is included on pages 26 to 29 in the Our People section.

Corporate responsibilityThe corporate responsibility (“CR”) section is found on pages 22 to 25. This section focuses on DP World’s CR strategy, integrating responsible business practices into process and procedures across the Group.

Report of the Directors

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Substantial shareholdingsAs at the date of this report, the Company has been notified that the following entity has an interest in the Company’s shares amounting to 5% or more.

Class SharesPercentage

of class

Port and Free Zone World FZE Ordinary 667,735,000 80.45%

Going concernThe Directors, having made enquiries, consider that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future and therefore they consider it appropriate to adopt the going concern basis in preparing the accounts. Further details can be found under Note 2(c) to the consolidated financial statements.

Audit informationHaving made the required enquiries, so far as the Directors in office at the date of the signing of this report are aware, there is no relevant audit information of which the auditors are unaware and each Director has taken all reasonable steps to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information.

Creditor payment policyThe policy is to pay suppliers in accordance with terms and conditions agreed when the orders are placed. The international nature of the Group means that the Group adopts policies applicable to the jurisdictions of its operations.

Articles of AssociationThe Articles set out the internal regulation of the Company and cover such matters as the rights of shareholders, the appointment and removal of Directors and the conduct of the Board and general meetings. Subject to DIFC Companies Law and the Articles, the Directors may exercise all the powers of the Company and may delegate authorities to Committees and day-to-day management and decision making to individual Executive Directors. Details of the main Board Committees can be found on pages 42 to 44.

IndemnityAll Directors are entitled to indemnification from the Company to the extent permitted by the law against claims and legal expenses incurred in the course of their duties.

Authority to purchase sharesAt the Company’s Annual General Meeting (“AGM”) on 30 April 2012, the Company was authorised to make market purchases of up to 29,050,000 ordinary shares (representing approximately 3.5% of the Company’s issued share capital). No such purchases were made during 2012. Shareholders will be asked to approve the renewal of a similar authority at the Company’s AGM to be held on 25 April 2013.

AuditorsThe auditors, KPMG LLP, have indicated their willingness to continue in office. A resolution to re-appoint them as auditors will be proposed at the AGM to be held on 25 April 2013.

Share capitalAs at 31 December 2012, the Company’s issued share capital was US$1,660,000,000 comprising 830,000,000 ordinary shares of US$2.00 each.

Annual General MeetingThe Company’s AGM will be held on 25 April 2013 at The Wheelhouse, Jebel Ali Port, Dubai, United Arab Emirates. Full details are set out in the Notice of AGM.

By order of the Board

B AllinsonBoard Legal Adviser and Company Secretary26 March 2013

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The Company is incorporated in the Dubai International Financial Centre (DIFC).

The Company has a dual listing which requires compliance with the disclosure obligations of the Dubai Financial Services Authority’s (DFSA) Markets Rules (Markets Rules), the Disclosure and Transparency Rules and the Listing Rules of the UK Listing Authority. The Board reviews and monitors the policies and procedures that are in place to ensure compliance with the Corporate Governance principles of the UK Corporate Governance Code (the “Code”) and Market Rules.

During the financial year ended 31 December 2012, the Company has applied the Corporate Governance principles of the Code and Market Rules.

Throughout the financial year, the Company complied with the provisions of the Code other than provision A.3.1 in that the Chairman did not meet the independence criteria laid out in provision B.1.1 of the Code at the time of his appointment.

The Chairman, Sultan Ahmed Bin Sulayem, was Chairman of Dubai World and Port & Free Zone World FZE at the time that DP World was admitted to listing in Dubai and remains one of Port & Free Zone World FZE’s representatives on the DP World Board.

The Company appointed Sir John Parker as Joint Vice Chairman and Senior Independent Non-Executive Director. Sir John Parker chairs the Nominations and Governance Committee and, together with the Chairman, leads on governance matters and the annual performance review of the Board and its Committees. The Board believes that this support ensures that robust governance is maintained and that appropriate challenge to the executives is in place.

The following is an explanation of the Company’s corporate governance policies.

DirectorsThe Board of eight Directors manages the Company’s business. The primary responsibility of the Board is to foster the long-term success of the Company. The Board is ultimately responsible for the management and is accountable for all operations of the Company.

The Board met 8 times during the year either in person or via telephone or video conference. In addition, written resolutions (as provided by the Articles) were used as required for the approval of decisions that exceeded the delegated authorities provided to Executive Directors and Committees.

Although there is a prescribed pattern of presentation to the Board, including matters specifically reserved for the Board’s decision (which include strategy; the annual budget; dividends; major transactions; health, safety and environment policies; insurance and risk management; and internal controls), all Board meetings tend to have further subjects for discussion and decision taking. Board papers, including an agenda, are sent out in advance of the meetings. Board meetings are discursive in style and all Directors are encouraged to offer their opinions.

The Matters Reserved to the Board are available on DP World’s website.

The Board has delegated the following responsibilities to management: the development and recommendation of strategic plans for consideration by the Board that reflect the longer term

Bernadette Allinson, Board Legal Adviser and Company Secretary

Corporate Governance

Attendance by individual Directors at meetings of the Board and its Committees in 2012

Director Board Audit

Nominations and

Governance Remuneration

Sultan Ahmed Bin Sulayem 8(8) – – –

Jamal Majid Bin Thaniah 8(8) – 1(2) –

Mohammed Sharaf 8(8) – 2(2) –

Yuvraj Narayan 8(8) – – –

Sir John Parker 7(8) 3(4) 2(2) 3(3)

David Williams 6(8) 4(4) 2(2) 3(3)

Cho Ying Davy Ho 8(8) 4(4) 2(2) 3(3)

Deepak Parekh* 6(8) 3(4) 1(2)* 3(3)* Deepak Parekh was appointed to Nominations and Governance Committee on 18 December 2012.

Figures in brackets denote the maximum number of meetings that could have been attended.

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objectives and priorities established by the Board; implementation of DP World’s strategies and policies as determined by the Board; monitoring the operating and financial results against plans and budgets; monitoring the quality of the investment process against objectives, prioritising the allocation of capital and technical resources; and developing and implementing risk management systems subject to the continued oversight of the Board and the Audit Committee as set out on page 42.

Details of the Directors of the Company are given on pages 36 and 37.

Independent Non-Executive DirectorsIn compliance with the Code, at least half the Board (excluding the Chairman) comprises Independent Non-Executive Directors.

In order for the Independent Non-Executive Directors to contribute fully to the Board, and in particular to challenge the Executive Directors over strategic matters where appropriate, it is important that the Independent Non-Executive Directors bring experience, probity and independence to the Board. Accordingly, the independence of the Independent Non-Executive Directors is considered annually.

The Board believes the Independent Non-Executive Directors have retained independent character and judgement. The Board considers that the varied and relevant experience of all the Independent Directors combines to provide an exceptional balance of skills and knowledge which is of great benefit to the Company.

Roles of the Chairman, Group Chief Executive Officer and Senior Independent DirectorThe positions of Chairman and Group Chief Executive Officer are held by separate individuals with separate roles and responsibilities which have been approved by the Board. The Chairman, in conjunction with the Senior Independent Director is responsible for leadership and effective management of the Board in all aspects of its role and its governance. The Chairman chairs the Board meetings ensuring, with the support of the Senior Independent Director, that the agendas are forward looking and that relevant business is brought to the Board for consideration in accordance with the schedule of matters reserved to the Board and that each Director has the opportunity to consider the matter brought to the meeting and to contribute accordingly. The Group Chief Executive Officer, as leader of the Company’s executive team, retains responsibility for the leadership and day-to-day management of the Company and the execution of its strategy as approved by the Board.

Sir John Parker has acted as Senior Independent Director since the IPO of the Company in 2007. His responsibilities include supporting the Chairman in the leadership of the Board and meeting with the Non-Executive Directors at least once a year to appraise the Chairman’s performance and holding discussions with the Non-Executive Directors without the Executives present.

Board performanceBoard evaluationThe Board undertakes a formal and rigorous annual evaluation of its own performance and that of its Committees and individual Directors. For 2012, an external review of the Board’s performance was undertaken by an independent third party to consider the Board’s effectiveness. The review was carried out using questionnaires and the key areas of focus were strategy, succession planning, training and development, Board processes and structure, information flow and communication.

Evaluation processThe following actions were taken as part of the evaluation of the Board performance during 2012:

• a questionnaire was sent to each Director;• the Senior Independent Non-Executive Director and Chairman

held one-to-one interviews with each Director, using their questionnaire responses as a starting point for the interview;

• questionnaires were also used to perform reviews of the Committees;

• the questionnaire responses from the Board members and reviews of the Committees were shared with the external facilitator, Professor Andrew Kakabadse;

• the external facilitator subsequently met with the Directors to discuss the review;

• the external facilitator presented to the Board on how boards in a variety of other countries discharged their governance obligations which provided a benchmark against which to judge the performance of the DP World Board;

• a paper discussing the key issues raised during the evaluation process was prepared and submitted for Board consideration; and

• following consideration of the Board paper and further discussions between the Board and the external facilitator, an action plan for 2013 was set by the Board.

ConclusionsThe external review concluded that “the Board displayed a powerful desire for continuous learning and constant improvement of its processes and procedures. The Directors exhibited great interest in adopting latest governance thinking and board best practice. The quality of debate and desire for feedback in order to enhance board and organisational performance were distinct, shared features of the members of the Board.”

Tracking from previous evaluation and next steps for 2013As a result of the evaluation conducted of the Board’s performance during 2011, the Company implemented a formally documented professional development framework whereby all Board members are regularly updated on available directors’ training courses to further develop and enhance their professional skills. The Board also received an independent presentation on boardroom best practices.

During 2012, the use of an electronic board portal for the dissemination of Board papers was introduced with the aim of improving Board effectiveness, streamlining information flow and ensuring the timely delivery of Board papers to the Directors.

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The actions arising from the 2012 Board evaluation have been incorporated into a Board action plan for 2013. The principal actions reflect the continued focus of the Board on succession and strategic planning.

In compliance with the UK Corporate Governance Code, the Board will undertake an independent review of its effectiveness once every three years. All Directors will also have access to the Board Legal Adviser and Company Secretary and independent professional advice at the Company’s expense, if required.

Relations with shareholdersThe Company is committed to communicating its strategy and activities clearly to its shareholders and, to that end, maintains an active dialogue with investors through a planned programme of investor relations activities.

The Company’s full and half year results and quarterly throughput announcements are reported to investors through a combination of presentations and conference calls. The full and half year reporting is then followed by investor meetings in major cities in locations where the Company has institutional shareholders including Australia, Europe, North America and the UAE.

Regular attendance at Industry and Regional Investor Conferences provides opportunities to meet with existing and prospective shareholders in order to update them on performance or to introduce them to the Company. In addition, DP World frequently hosts investor and analyst visits to DP World’s ports around the world, offering analysts and shareholders a better understanding of the day-to-day business and the opportunity to meet regional and port management teams.

All presentations and related investor communications are available in a dedicated section of DP World’s website.

The Board receives regular updates on the views of shareholders through briefings from the Chairman, Group Chief Executive Officer and Chief Financial Officer as well as reports from the Company’s brokers and investor relations team. The Chairman, the Senior Independent Director and the chairmen of the Board’s Committees are available to meet major investors on request. The Senior Independent Director has a specific responsibility to be available to shareholders who have concerns, and for whom contact with the Chairman, Group Chief Executive Officer or Chief Financial Officer has either failed to resolve their concerns, or for whom such contact is inappropriate.

AccountabilityThe Board is responsible for DP World’s system of internal control and for reviewing its effectiveness. The internal control system is designed to manage rather than eliminate the risk of failure to achieve business objectives, and can only provide reasonable and not absolute assurance against material mis-statement or loss.

The system of internal control described below has been in place throughout the year.

Board committeesThe Board has Remuneration, Audit and Nominations and Governance Committees, with formally delegated duties and responsibilities and written terms of reference. The Board also has an Executive Committee which is an operational committee to manage the Group’s operations and implement the strategic policies approved by the Board. From time to time, separate committees may be set up by the Board to consider specific issues when the need arises.

Audit CommitteeMembersDavid Williams (Chairman)Sir John ParkerCho Ying Davy HoDeepak Parekh

The Audit Committee assists the Board in discharging its responsibilities with regard to financial reporting and external and internal audits and controls. The ultimate responsibility for reviewing and approving the Annual Report and Accounts and the half-yearly reports remains with the Board.

The membership of the Audit Committee is comprised of four Independent Non-Executive Directors and is chaired by David Williams, whom the Board considers has appropriate financial expertise to fulfil this role.

The Audit Committee meets formally at least four times a year and otherwise as required.

In accordance with its terms of reference, the principal matters considered by the Audit Committee during 2012 included:

• a review of the level and constitution of external audit and non-audit fees and the independence and objectivity of external auditors;

• monitoring and reviewing the effectiveness of internal audit activities, including discussions with the Vice President – Internal Audit;

• reviewing the effectiveness of the Group’s financial reporting, internal controls and compliance with applicable legal requirements and monitoring risk and compliance procedures across the Group;

• reviewing the Company’s results statements, interim management statements and Annual Report and Accounts before publication and making appropriate recommendations to the Board following review;

• reviewing accounting policies in light of international accounting developments; and

• receiving reports where appropriate in accordance with its terms of reference on business conduct issues, including any instances of alleged fraud and actions taken as a result of investigation.

The full terms of reference of the Audit Committee can be found on DP World’s website.

Corporate Governance continued

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External and internal auditors are invited to attend the Audit Committee meetings, along with any other Director or member of staff considered necessary by the Committee to complete its work. The Committee meets with external auditors and internal auditors without Executive Directors or members of staff present, as it considers appropriate (and at least once a year).

External AuditorsThe Audit Committee is responsible for recommending a firm of auditors of appropriate independence and experience and for the approval of all audit fees and terms of engagement. The Committee’s policy is to undertake a formal assessment of the auditors’ independence each year which includes:

• a review of non–audit services provided to the Group and related fees;

• discussion with the auditors of a written report detailing any relationships with the Company and any other parties that could affect independence or the perception of independence;

• a review of the auditors’ own procedures for ensuring the independence of the audit firm and partners and staff involved in the audit, including the regular rotation of the audit partner; and

• obtaining written confirmation from the auditors that, in their professional judgement, they are independent.

The Audit Committee has implemented the following policy relating to the provision of non-audit services by the Company’s auditors.

Audit related servicesThese services are undertaken by the auditors:

• review of interim financial information; and• formalities relating to borrowings, shareholder and other

circulars.

Permitted non-audit servicesThe selection of providers of permitted non-audit services is subject to a tender process, where appropriate. Non-audit work and the fees involved are approved in advance by the Audit Committee. Below are examples of permitted non-audit services:

• tax planning, advice and compliance assistance; and• mergers and acquisitions.

Prohibited non-audit services• bookkeeping or other services related to the accounting

records;• financial information systems design and implementation; and• investment banking services.

Throughout the year, the Committee monitored the cost and nature of non-audit work undertaken by the auditors and is, therefore, in a position to take action if it believes that there is a threat to the auditors’ independence through the award of this work.

KPMG LLP are appointed as external auditors to the Company. The Committee has undertaken an annual review of the independence

and objectivity of the auditors and an assessment of the effectiveness of the audit process, which included a report from the external auditors of their own internal quality procedures. It also received assurances from the Auditors regarding their independence. On the basis of this review, the Committee recommended to the Board that it recommend that shareholders support the re-appointment of the Auditors at the 2013 AGM.

Risk management processThe Group risk management process has the following key features:

• through a series of interviews, management discussions and risk assessment workshops, all major businesses within the Group determine the most significant risks to the achievement of their business objectives. Appropriate risk management activity is then determined and any required action plans are implemented. This is a continual process, and may be associated with a variety of financial, operational and compliance matters including organisation structures, business strategies, disruption in information technology systems, competition, natural catastrophe and regulatory requirements;

• the risks and associated controls are summarised in the risk portfolios and are presented to the Board for review; and

• at the year end, the regional management certifies that the risk management process is in place and an assessment has been conducted throughout their businesses and that appropriate internal control procedures are in place or in hand to manage the risks identified.

Further details on the risk management process can be found under Note 5 to the consolidated financial statements. Details of the Group’s principal risks and uncertainties are set out on page 34.

Internal controlsThe Board is responsible for maintaining a sound system of internal controls and has established a control framework within which the Group operates and the Audit Committee has undertaken a review of the effectiveness of internal controls and risk management in accordance with its remit. The core elements of DP World’s system of internal control are set out on page 35. The key high level control procedures include:

• an organisation structure which supports clear lines of communication and accountability and delegation of authority rules which specify responsibility;

• business strategies prepared at regional level and approved by the Board. In addition, there are annual budgeting and strategic planning processes. Financial forecasts are prepared every quarter. Actual performance is compared to budget, latest forecast and prior year on a monthly basis. Significant variances are investigated and explained through normal monthly reporting channels;

• key performance indicators produced to summarise and monitor business activity;

• evaluation and approval procedures for major capital expenditure and significant treasury transactions;

• regular reviews of the effectiveness of the Group’s health, safety, welfare, environment and security processes; and

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• the internal audit department providing additional assurance to the Board and the audit committee that key controls are operating as intended.

The risk management process and the system of internal control are subject to continuous improvement.

Guidelines regarding insider tradingThe Company takes all reasonable steps to avoid the risk of insider trading. The Company has adopted processes to keep all members of staff informed about their duties with respect to the handling of inside information, as well as dealings in DP World’s shares.

The Company has adopted a share dealing code which sets out the restrictions and ‘close’ periods applicable to trading in securities. Memoranda and guidelines regarding dealings (either selling or buying) in shares have been circulated within the Group. The share dealing code applies to the Directors, Senior Managers and certain other of the Group’s employees.

FraudDP World has a Fraud policy and a Fraud Incident Response Plan, which takes effect in the event of serious incidents to oversee case management and to ensure appropriate actions are taken.

The Audit Committee receives an update at each meeting on any material frauds. The Audit Committee has reviewed DP World’s ’whistle blowing’ procedures to ensure that arrangements are in place to enable Company employees to raise concerns about possible improprieties on a confidential basis.

Anti bribery and corruptionDP World has implemented an Anti Bribery and Corruption Policy in addition to processes and procedures to meet the requirements of the UK Bribery Act 2010. During 2012, online training on the importance of compliance with the Anti Bribery and Corruption Policy was rolled out to management and key employees across the Group.

Nominations and Governance CommitteeMembersSir John Parker (Chairman)David WilliamsCho Ying Davy HoJamal Majid Bin ThaniahMohammed SharafDeepak Parekh

The Nominations and Governance Committee assists the Board in discharging its responsibilities relating to the size and composition of the Board. It is also responsible for periodically reviewing the Board’s structure and identifying potential candidates to be appointed as Directors as the need may arise. The Nominations and Governance Committee is responsible for evaluating the balance of skills, knowledge, experience and diversity on the Board and, in particular:

• identifying individuals qualified to become Board members;• recommending individuals to be considered for election at the

next Annual General Meeting of the Company or to fill vacancies; and

• preparing a description of the role and capabilities required for a particular appointment.

The full terms of reference of the Nominations and Governance Committee can be found on DP World’s website.

The Nominations and Governance Committee is comprised of six members, four of whom are Independent Non-Executive Directors. The Chairman of the Nominations and Governance Committee is Sir John Parker.

The Nominations and Governance Committee meets formally at least twice a year and otherwise as required.

Remuneration CommitteeMembersSir John Parker (Chairman)David WilliamsCho Ying Davy HoDeepak Parekh

The Remuneration Committee determines and agrees with the Board the framework and broad policy for the remuneration of the Group Chief Executive Officer and Chief Financial Officer and other members of senior management. The policy of the committee is to review remuneration based on independent assessment and market practice. The remuneration of Independent Non-Executive Directors is a matter for the Chairman and executive members of the Board. No executive is involved in any decisions as to their own remuneration. The Remuneration Committee:

• determines and agrees with the Board, the Company’s framework for remuneration;

• recommends and monitors the level and structure of remuneration to senior management;

• keeps under review its own performance, constitution and terms of reference; and

• considers other matters as referred to it by the Board.

The full terms of reference of the Remuneration Committee can be found on DP World’s website.

The membership of the Remuneration Committee is comprised of four members, all of whom are Independent Non-Executive Directors. The chairman of the Remuneration Committee is Sir John Parker.

The Remuneration Committee meets formally at least twice a year and otherwise as required.

Executive CommitteeThe Executive Committee has primary responsibility for the day-to-day management of DP World’s operations and strategic policy implementation (such policies being established and approved by the Board). The Executive Committee is comprised of the Executive Directors and certain Senior Managers.


45


The Executive Committee meets formally at least four times a year and otherwise as required.

RemunerationExecutive reward policyThe reward policy for Executive Directors and senior management (Executive Committee and other experienced managers) is guided by the following key principles:

• business strategy support: aligned with our business strategy with focus on both short-term goals and the creation of long-term value ensuring alignment to shareholders’ interests;

• competitive pay: ensures competitiveness against our target market;

• fair pay: ensures consistent, equitable and fair treatment within the organisation; and

• performance-related pay: linked to performance targets via short and long-term incentive plans and the pay review process.

The reward policy for Executive Directors and senior management consists of the following key components:

Market benchmark:• the target market position is between median and upper

quartile on a total remuneration basis;• for Executive Directors and senior management based in

Dubai, practice and policy reflect the structure of the Dubai pay market, whilst at the same time ensuring competitiveness on an international basis. Variable pay is also reviewed and balanced against the total remuneration package; and

• DP World engages the services of Hay Group as the main provider of market information and as advisers on particular remuneration matters. This is subject to periodic review.

Base salary:• fixed cash compensation based on level of responsibility as

determined by the application of a formal job evaluation methodology;

• reflects local practice in each of the geographies in which DP World operates, but is also set against common market policy positions; and

• reviewed annually on 1 April to take into account market pay movements, individual performance, relativity to market on an individual basis and DP World’s ability to pay.

Allowances and benefits• Can either be cash or non-cash elements based on level of

responsibility as determined by the application of a formal job evaluation methodology.

• Reflects local practice in each of the geographies in which DP World operates, but are also set against common market policy positions.

• For Executive Directors and senior management based in Dubai, cash allowances are a normal component of the package and typically cover accommodation, utility, transport and club elements in line with Dubai market practice. Benefits include the provision of children’s education assistance, travel assistance, medical and dental insurance and post retirement benefits.

• Reviewed annually to ensure that DP World remains competitive within the market place and that it continues to provide the reward mechanisms to aid retention in line with its ability to pay.

Performance Delivery Plan (PDP)• Cash-based incentive plan to motivate, drive and reward

performance over an operating cycle of one year.• The PDP combines business financial performance and

individual performance objectives. Levels of awards, financial and personal measures and weightings will vary depending on the role, geography and level of responsibility of the individual. For individuals outside the Executive Directors and senior management category, the principle is then typically cascaded throughout the business units’ organisational levels in line with local policies.

• Appropriateness of the levels of awards, financial and personal measures and weightings are reviewed on an annual basis to ensure they continue to support our business strategy.

• Payment is in cash and is expected to be made in April each year for performance over the previous financial year, subject to review and sign-off by the Remuneration Committee.

Long-Term Incentive Plan (LTIP)• Cash-based rolling incentive plan to motivate, drive and reward

sustained performance over the long-term operating cycle of three years.

• The LTIP reflects business financial performance only. Levels of awards, financial measures and weightings will vary depending on the role, geography and levels of responsibility of the individuals. In addition to the Executive Directors and Senior Managers, employees performing the top 100 jobs (as determined by job size) are also eligible to participate in the LTIP in line with the same financial metrics as described for Executive Directors and Senior Managers with varying levels of award in line with their job size.

• Appropriateness of the levels of awards, financial measures and weightings are reviewed on an annual basis to ensure they continue to support our business strategy.

• Payment is in cash and is expected to be made in April each year for performance over the previous three financial years, subject to review and sign-off by the Remuneration Committee.

Incentive plansAs described above, the Company has adopted a short-term and a long-term incentive plan for its Executive Directors and Senior Managers. Details of these plans are outlined below.

The Performance Delivery Plan (PDP) for the financial years ended 2012 (award to be paid in 2013) and 2011 (award paid in 2012) is worth a maximum of 75% of annual base salary. It is made up of 2 components; a financial component worth 70% of the overall award value and a personal component worth 30% of the overall award value.

The financial component is based on performance assessed against a budgeted Profit After Tax (PAT) measure. Payout on the financial component is triggered if the Company achieves 95% of

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its target (Threshold). Maximum payout on the financial component will occur if the Company achieves 105% of its target. The payout for performance between the 95% and 105% of target is on a straight-line basis.

The personal component is based on performance assessed against Specific, Measurable, Achievable, Relevant & Timebound (SMART) objectives. The objectives are particular to each individual role and can include financial based objectives and more qualitative ones.

The Long-Term Incentive Plan (LTIP) for the 2010-2012 (award to be paid in 2013) and 2009-2011 (award paid in 2012) performance cycles is based on performance over 3 years assessed against a budgeted earnings per share (EPS) measure linked to corporate EBITDA targets.

The LTIP for the 2012-2014 (award to be paid in 2015) and 2011-2013 (award to be paid in 2014) performance cycles is based on performance over 3 years assessed against two budgeted measures with 70% of the award linked to a Return On Capital Employed (ROCE) measure and 30% linked to the same earnings per share measure described above.

The LTIP for the cycles described above is worth a maximum of 100% of average annual base salary for the Executive Directors and the Chief Operating Officer and a maximum of 75% of average annual base salary for other Senior Managers.

Executive Directors’ service contracts and remunerationAs mentioned above, the Executive Directors’ remuneration structure follows the market practice in the UAE, and all payments are made tax free reflecting the UAE’s status.

Each of the Executive Directors is employed pursuant to a service agreement with the Group.

Mohammed SharafMohammed Sharaf’s service agreement is with DP World FZE (a subsidiary of the Company). It can be terminated on six months’ notice by either party. In addition, DP World FZE can terminate the agreement, without notice, on payment of six months’ base salary.

Mohammed Sharaf is entitled to receive a base salary and certain other benefits under his service agreement.

He was also granted a Performance Delivery Plan award of 72.2% (out of a maximum of 75%) for performance linked to the 2011 financial year and a Long Term Incentive Plan award of 21.71% (out of a maximum of 100%) for performance linked to the 2009-2011 cycle.

His total remuneration for the year ended 31 December 2012 (which includes his base salary and these other benefits) was $1,250,351.

Yuvraj NarayanYuvraj Narayan’s service agreement is with DP World FZE. It can be terminated on six months’ notice by either party. In addition,

DP World FZE can terminate the agreement, without notice, on payment of six months’ base salary.

Yuvraj Narayan is entitled to receive a base salary and certain other benefits under his service agreement.

He was also granted a Performance Delivery Plan award of 75% (out of a maximum of 75%) for performance linked to the 2011 financial year and a Long Term Incentive Plan award of 21.71% (out of a maximum of 100%) for performance linked to the 2009-2011 cycle.

His total remuneration for the year ended 31 December 2012 (which includes his base salary and these other benefits) was $1,044,183.

Post retirement benefitsMohammed Sharaf participates in the government pension scheme in accordance with local labour law. Yuvraj Narayan participates in an end of service benefit scheme in accordance with local labour law.

Non-Executive Directors’ letters of appointment and feesThe Non-Executive Directors do not have service contracts with the Company. Their terms of appointment are governed by letters of appointment. The Company has no contractual obligation to provide any benefits to any of the Non-Executive Directors upon termination of their directorship.

Each Non-Executive Director’s letter of appointment is with the Company and is envisaged to be for a period of three years, subject to annual re-election by the shareholders at each AGM. It can be terminated on six months’ notice by either party.

For the year ended 31 December 2012, the fees and other remuneration payable to each of the Non-Executive Directors, which includes remuneration for their services in being a member of, or chairing, a Board Committee are set out below:

Sir John Parker received a Non-Executive Director fee of $593,578.David Williams received a Non-Executive Director fee of $160,711.Cho Ying Davy Ho received a Non-Executive Director fee of $110,943.Deepak Parekh received a Non-Executive Director fee of $110,943.

The Chairman, Sultan Ahmed Bin Sulayem, and Non-Executive Vice Chairman, Jamal Majid Bin Thaniah are not remunerated by the Company.

Directors’ interests in sharesThe following is a table of the Directors’ shareholdings:

$2.00 ordinary

shares held as at 1 January

2012

$2.00 ordinary

shares held as at 31 Dec

2012 Change

Mohammed Sharaf 28,221 28,221 –

Yuvraj Narayan 14,668 14,668 –

Sir John Parker 7,262 7,262 –


47


The following statement, which should be read in conjunction with the Auditors’ responsibility section of the Independent Auditors’ Report, is made with a view to distinguishing the respective responsibilities of the Directors and of the Auditors in relation to the consolidated financial statements.

The Directors are required to prepare consolidated financial statements for each financial year which give a true and fair view of the state of affairs of DP World Limited (“the Company”) and its subsidiaries (collectively referred to as “the Group”) as at the end of the financial year and of the profit and loss for the financial year.

The consolidated financial statements are prepared in accordance with International Financial Reporting Standards. In preparing the consolidated financial statements, the Directors are required to select appropriate accounting policies and then apply them consistently, make judgements and estimates that are reasonable and prudent and state whether all accounting standards which they consider to be applicable have been followed, subject to any material departures disclosed and explained in the consolidated financial statements. The Directors also use a going concern basis in preparing the consolidated financial statements unless this is inappropriate.

The Directors have responsibility for ensuring that the Company keeps accounting records which disclose with reasonable accuracy at any time the financial position of the Company and which enable them to ensure that the consolidated financial statements comply with the applicable laws in the relevant jurisdiction.

The Directors have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

The Directors are also responsible for preparing a Directors’ Report and Corporate Governance Statement in accordance with applicable law and regulations.

The Directors consider the Annual Report and the consolidated financial statements, taken as a whole, to be fair, balanced and understandable, and provide necessary information for shareholders to assess the Company’s performance, business model and strategy.

By order of the Board

B AllinsonBoard Legal Adviser and Company Secretary26 March 2013

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Statement of Directors’ Responsibilities in respect of the preparation of the Annual Report and the Consolidated Financial Statements

48


Independent Auditors’ Report

The Shareholders,

DP World Limited

Report on the consolidated financial statementsWe have audited the accompanying consolidated financial statements of DP World (“the Company”) and its subsidiaries (collectively referred to as “the Group”), which comprise the consolidated statement of financial position as at 31 December 2012, the consolidated statements of comprehensive income (comprising a separate consolidated income statement and a consolidated statement of comprehensive income), consolidated statements of changes in equity and cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information.

Management’s responsibility for the consolidated financial statementsManagement is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ responsibilityOur responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with relevant ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgement, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 December 2012, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards.

Matters on which we are required to report by exceptionWe have nothing to report in respect of the following:

Under the Listing Rules, we are required to review:

• the Director’s statement, set out on page 47, in relation to going concern;• the part of the Corporate Governance statement on page 40 relating to the Company’s compliance with the nine provisions of the

UK Corporate Governance Code specified for our review; and• certain elements of the report to shareholders by the Board on Directors’ remuneration.

KPMG LLPDubai

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Consolidated income statementfor the year ended 31 December 2012

Year ended 31 December 2012 Year ended 31 December 2011

Notes

Before separately

disclosed items USD’000

Separately disclosed items

(Note 11) USD’000

Total USD’000

Before separately

disclosed items USD’000

Separately disclosed items

(Note 11) USD’000

Total USD’000

Revenue 7 3,121,017 – 3,121,017 2,977,731 – 2,977,731Cost of sales (2,002,806) – (2,002,806) (2,005,159) – (2,005,159)

Gross profit 1,118,211 – 1,118,211 972,572 – 972,572General and administrative expenses (276,900) (55,850) (332,750) (256,961) (243,862) (500,823)Other income 21,643 – 21,643 21,029 – 21,029Profit on sale and termination of

businesses (net of tax) 11 – 237,204 237,204 – 484,354 484,354Share of profit/(loss) from equity-

accounted investees (net of tax) 15 133,897 20,710 154,607 141,711 (3,047) 138,664

Results from operating activities 996,851 202,064 1,198,915 878,351 237,445 1,115,796

Finance income 9 75,211 – 75,211 135,361 – 135,361Finance costs 9 (364,092) (10,373) (374,465) (422,931) (10,770) (433,701)

Net finance costs (288,881) (10,373) (299,254) (287,570) (10,770) (298,340)

Profit before tax 707,970 191,691 899,661 590,781 226,675 817,456Income tax expense 10 (72,954) – (72,954) (59,042) (7,211) (66,253)

Profit for the year 8 635,016 191,691 826,707 531,739 219,464 751,203

Profit attributable to:Owners of the Company 555,390 193,216 748,606 458,620 224,672 683,292Non-controlling interests 79,626 (1,525) 78,101 73,119 (5,208) 67,911

635,016 191,691 826,707 531,739 219,464 751,203

Earnings per shareBasic and diluted earnings per share –

US cents 22 90.19 82.32

The accompanying notes 1 to 35 form an integral part of these consolidated financial statements.

The Independent Auditors’ Report is set out on page 48.

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Consolidated statement of comprehensive incomefor the year ended 31 December 2012

Notes2012

USD’0002011

USD’000

Profit for the year 826,707 751,203

Other comprehensive incomeForeign exchange translation differences for foreign operations* 104,135 (202,057)Foreign exchange profit recycled to consolidated income statement on sale of businesses (2,131) (425,773)Effective portion of net changes in fair value of cash flow hedges (24,768) (52,308)Net change in cash flow hedges recycled to consolidated income statement 10,373 –Net change in fair value of available-for-sale financial assets 16 (132) 8,939Defined benefit plan actuarial losses 24 (49,900) (110,400)Share in other comprehensive income of equity-accounted investees (8,686) (10,268)

Income tax on other comprehensive income:Fair value of cash flow hedges 10,444 14,595Defined benefit plan actuarial losses 500 2,245

Other comprehensive income for the year, net of income tax 39,835 (775,027)

Total comprehensive income/(loss) for the year 866,542 (23,824)

Total comprehensive income/(loss) attributable to:Owners of the Company 788,531 (82,589)Non-controlling interests 78,011 58,765

866,542 (23,824)* A significant portion of this includes foreign exchange translation differences arising from the translation of goodwill and purchase price adjustments which are denominated in foreign currencies at

the Group level. The translation differences arising on account of translation of the financial statements of foreign operations whose functional currencies are different from that of the Group’s presentation currency on Group consolidation are also reflected here. There are no differences on translation from functional to presentation currency as the Company’s functional currency is currently pegged to the presentation currency (refer to note 2(d)).



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Consolidated statement of financial positionas at 31 December 2012

Notes2012

USD’0002011

USD’000

Assets Non-current assets Property, plant and equipment 12 5,413,262 5,124,120Goodwill 13 1,588,918 1,607,655Port concession rights 13 3,115,084 3,223,958Investment in equity-accounted investees 15 3,348,317 3,451,264Deferred tax assets 10 105,753 101,212Other investments 16 60,833 73,193Accounts receivable and prepayments 17 263,428 260,114

Total non-current assets 13,895,595 13,841,516

Current assets Inventories 53,283 54,979Accounts receivable and prepayments 17 603,103 624,020Bank balances and cash 18 1,881,928 4,159,364Assets held for sale 28 – 77,706

Total current assets 2,538,314 4,916,069

Total assets 16,433,909 18,757,585

Equity Share capital 19 1,660,000 1,660,000Share premium 20 2,472,655 2,472,655Shareholders’ reserve 20 2,000,000 2,000,000Retained earnings 2,936,637 2,367,164Hedging and other reserves 20 (122,229) (104,408)Actuarial reserve 20 (398,302) (352,402)Translation reserve 20 (482,909) (586,555)

Total equity attributable to equity holders of the Company 8,065,852 7,456,454Non-controlling interests 663,993 765,013

Total equity 8,729,845 8,221,467

Liabilities Non-current liabilities Deferred tax liabilities 10 1,070,931 1,078,355Employees’ end of service benefits 23 55,747 49,393Pension and post-employment benefits 24 273,796 235,750Interest bearing loans and borrowings 25 4,049,621 4,563,309Accounts payable and accruals 26 504,755 467,240

Total non-current liabilities 5,954,850 6,394,047

Current liabilities Income tax liabilities 10 180,267 169,585Bank overdrafts 18 195 1,017Pension and post-employment benefits 24 11,845 12,621Interest bearing loans and borrowings 25 702,835 3,178,446Accounts payable and accruals 26 854,072 780,402

Total current liabilities 1,749,214 4,142,071

Total liabilities 7,704,064 10,536,118

Total equity and liabilities 16,433,909 18,757,585


The consolidated financial statements were authorised for issue on 20 March 2013.

Mohammed Sharaf Yuvraj NarayanGroup Chief Executive Officer Chief Financial Officer


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Consolidated statement of changes in equityfor the year ended 31 December 2012

Attributable to equity holders of the Company

Share capital

USD’000 Share premium

USD’000

Shareholders’ reserve

USD’000

Retained earnings USD’000

Hedging and other reserves

USD’000

Actuarial reserve

USD’000

Translation reserve

USD’000 Total

USD’000

Non-controlling interests USD’000

Total equity USD’000

Balance as at 1 January 2012 1,660,000 2,472,655 2,000,000 2,367,164 (104,408) (352,402) (586,555) 7,456,454 765,013 8,221,467

Total comprehensive income for the year:Profit for the year – – – 748,606 – – – 748,606 78,101 826,707Total other comprehensive income, net of income tax – – – – (17,821) (45,900) 103,646 39,925 (90) 39,835

Total comprehensive income for the year – – – 748,606 (17,821) (45,900) 103,646 788,531 78,011 866,542

Transactions with owners, recorded directly in equityDividends paid (refer to note 21) – – – (199,200) – – – (199,200) – (199,200)

Total transactions with owners – – – (199,200) – – – (199,200) – (199,200)

Changes in ownership interests in subsidiariesAcquisition of non-controlling interests without change in control* – – – 20,067 – – – 20,067 (66,457) (46,390)Transactions with non-controlling interests, recorded directly in equityDividends paid – – – – – – – – (90,050) (90,050)Derecognition of non-controlling interests on monetisation of investment in

subsidiaries – – – – – – – – (22,524) (22,524)

Total transactions with non-controlling interests – – – 20,067 – – – 20,067 (179,031) (158,964)

Balance as at 31 December 2012 1,660,000 2,472,655 2,000,000 2,936,637 (122,229) (398,302) (482,909) 8,065,852 663,993 8,729,845

Balance as at 1 January 2011 1,660,000 2,472,655 2,000,000 1,823,491 (64,658) (249,700) 40,074 7,681,862 814,064 8,495,926

Total comprehensive income for the year:Profit for the year – – – 683,292 – – – 683,292 67,911 751,203Total other comprehensive income, net of income tax – – – – (36,550) (102,702) (626,629) (765,881) (9,146) (775,027)

Total comprehensive income for the year – – – 683,292 (36,550) (102,702) (626,629) (82,589) 58,765 (23,824)

Transactions with owners, recorded directly in equityDividends paid (refer to note 21) – – – (142,760) – – – (142,760) – (142,760)Settlement of share-based payment transactions – – – – (3,200) – – (3,200) – (3,200)

Total transactions with owners – – – (142,760) (3,200) – – (145,960) – (145,960)

Changes in ownership interests in subsidiariesAcquisition of non-controlling interest, recorded directly in equity** – – – 3,141 – – – 3,141 (20,141) (17,000)Transactions with non-controlling interests, recorded directly in equityDividends paid – – – – – – – – (51,665) (51,665)Derecognition of non-controlling interests on monetisation of investment in

subsidiaries – – – – – – – – (51,763) (51,763)Acquisition of subsidiary with non-controlling interests (refer to note 30) – – – – – – – – 15,753 15,753



* This mainly includes acquisition of remaining 10% interest in a subsidiary in Middle East, Europe and Africa Region for a consideration of USD 46,390 thousand resulting in a gain on acquisition of USD 20,067 thousand.

** During the previous year, the Group acquired an additional 10% non-controlling interest of USD 20,141 thousand in a subsidiary in ‘Australia & Americas’ region for a consideration of USD 17,000 thousand resulting in a gain on acquisition.



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Attributable to equity holders of the Company

Share capital

USD’000 Share premium

USD’000

Shareholders’ reserve

USD’000

Retained earnings USD’000

Hedging and other reserves

USD’000

Actuarial reserve

USD’000

Translation reserve

USD’000 Total

USD’000

Non-controlling interests USD’000

Total equity USD’000

Balance as at 1 January 2012 1,660,000 2,472,655 2,000,000 2,367,164 (104,408) (352,402) (586,555) 7,456,454 765,013 8,221,467

Total comprehensive income for the year:Profit for the year – – – 748,606 – – – 748,606 78,101 826,707Total other comprehensive income, net of income tax – – – – (17,821) (45,900) 103,646 39,925 (90) 39,835

Total comprehensive income for the year – – – 748,606 (17,821) (45,900) 103,646 788,531 78,011 866,542

Transactions with owners, recorded directly in equityDividends paid (refer to note 21) – – – (199,200) – – – (199,200) – (199,200)

Total transactions with owners – – – (199,200) – – – (199,200) – (199,200)

Changes in ownership interests in subsidiariesAcquisition of non-controlling interests without change in control* – – – 20,067 – – – 20,067 (66,457) (46,390)Transactions with non-controlling interests, recorded directly in equityDividends paid – – – – – – – – (90,050) (90,050)Derecognition of non-controlling interests on monetisation of investment in

subsidiaries – – – – – – – – (22,524) (22,524)



Balance as at 1 January 2011 1,660,000 2,472,655 2,000,000 1,823,491 (64,658) (249,700) 40,074 7,681,862 814,064 8,495,926

Total comprehensive income for the year:Profit for the year – – – 683,292 – – – 683,292 67,911 751,203Total other comprehensive income, net of income tax – – – – (36,550) (102,702) (626,629) (765,881) (9,146) (775,027)

Total comprehensive income for the year – – – 683,292 (36,550) (102,702) (626,629) (82,589) 58,765 (23,824)

Transactions with owners, recorded directly in equityDividends paid (refer to note 21) – – – (142,760) – – – (142,760) – (142,760)Settlement of share-based payment transactions – – – – (3,200) – – (3,200) – (3,200)

Total transactions with owners – – – (142,760) (3,200) – – (145,960) – (145,960)

Changes in ownership interests in subsidiariesAcquisition of non-controlling interest, recorded directly in equity** – – – 3,141 – – – 3,141 (20,141) (17,000)Transactions with non-controlling interests, recorded directly in equityDividends paid – – – – – – – – (51,665) (51,665)Derecognition of non-controlling interests on monetisation of investment in

subsidiaries – – – – – – – – (51,763) (51,763)Acquisition of subsidiary with non-controlling interests (refer to note 30) – – – – – – – – 15,753 15,753



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Consolidated statement of cash flowsfor the year ended 31 December 2012

Notes2012

USD’0002011

USD’000

Cash flows from operating activities Profit for the year 826,707 751,203Adjustments for: Depreciation, amortisation and impairment 8 460,532 672,973Share of profit from equity-accounted investees (net of tax) (154,607) (138,664)Finance costs 9 374,465 433,701Loss/(gain) on sale of property, plant and equipment and port concession rights 1,490 (6,928)Profit on sale and termination of businesses (net of tax) (237,204) (484,354)Finance income 9 (75,211) (135,361)Income tax expense 10 72,954 66,253

Gross cash flows from operations 1,269,126 1,158,823Change in inventories 1,641 (2,637)Change in accounts receivable and prepayments 25,036 60,374Change in accounts payable and accruals 47,141 (114,941)Change in provisions, pensions and post-employment benefits (36,743) (48,575)

Cash generated from operating activities 1,306,201 1,053,044Income taxes paid (74,856) (72,687)

Net cash from operating activities 1,231,345 980,357

Cash flows from investing activities Additions to property, plant and equipment 12 (641,934) (449,508)Additions to port concession rights 13 (43,017) (31,673)Proceeds from disposal of property, plant and equipment and port concession rights 17,744 31,559Net proceeds from monetisation of investment in subsidiaries 14,744 1,404,649Net cash outflow on acquisition of interest in a subsidiary 30 – (31,315)Cash outflow on acquisition of non-controlling interests without change in control (46,390) (17,000)Interest received 77,594 108,980Net proceeds from sale of investment in equity-accounted investees 421,308 111,230Dividends received from equity-accounted investees 197,839 160,588Additional investment in equity-accounted investees (15,283) (11,527)Net loan given to equity-accounted investees (500) (53,385)Return of capital from equity-accounted investees 28,244 –Return of capital from other investments 12,228 –

Net cash from investing activities 22,577 1,222,598

Cash flows from financing activities Repayment of interest bearing loans and borrowings (3,204,428) (197,457)Drawdown of interest bearing loans and borrowings 241,411 216,024Interest paid (292,575) (447,405)Dividend paid to the owners of the Company (199,200) (142,760)Dividends paid to non-controlling interests (90,050) (51,665)

Net cash used in financing activities (3,544,842) (623,263)

Net (decrease)/increase in cash and cash equivalents (2,290,920) 1,579,692Cash and cash equivalents as at 1 January 4,158,347 2,567,516Effect of exchange rate fluctuations on cash held 14,306 11,139

Cash and cash equivalents as at 31 December 18 1,881,733 4,158,347

Cash and cash equivalents comprise the following: Bank balances and cash 1,881,928 4,159,364Bank overdrafts (195) (1,017)

Cash and cash equivalents 1,881,733 4,158,347



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Notes to consolidated financial statements(forming part of the financial statements)

2 Basis of preparation(a) Statement of complianceThese consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”).

The consolidated financial statements were approved by the Board of Directors on 20 March 2013.

(b) Basis of measurementThe consolidated financial statements have been prepared on the historical cost basis except for derivative financial instruments and available-for-sale financial assets which are measured at fair value.

The methods used to measure fair values are discussed further in note 4.

(c) Funding and liquidityThe Group’s business activities, together with factors likely to affect its future development, performance and position are set out in the Chairman’s Statement and Operating and Financial Review. In addition, note 5 sets out the Group’s objectives, policies and processes for managing the Group’s financial risk including capital management and note 29 provides details of the Group’s exposure to credit risk, liquidity risk and interest rate risk from financial instruments.

The Board of Directors remain satisfied with the Group’s funding and liquidity position. At 31 December 2012, the Group has a net debt of USD 2,870,723 thousand (2011: USD 3,583,408 thousand). The Group’s credit facility covenants are currently well within the covenant limits. The Group generated gross cash of USD 1,269,126 thousand (2011: USD 1,158,823 thousand) from operating activities and its interest cover for the year is 4.9 times (2011: 4.5 times) (calculated using adjusted EBITDA and net finance cost).

Based on the above, the Board of Directors have concluded that the going concern basis of preparation continues to be appropriate.

(d) Functional and presentation currencyThe functional currency of the Company is UAE Dirhams. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency.

These consolidated financial statements are presented in United States Dollars (“USD”), which in the opinion of management is the most appropriate presentation currency in view of the global presence of the Group. All financial information presented in USD is rounded to the nearest thousand.

UAE Dirham is currently pegged to USD and there are no differences on translation from functional to presentation currency.

(e) Use of estimates and judgementsThe preparation of consolidated financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

1 Reporting entityDP World Limited (“the Company”) was incorporated on 9 August 2006 as a Company Limited by Shares with the Registrar of Companies of the Dubai International Financial Centre (“DIFC”) under the Companies Law, DIFC Law No. 3 of 2006. The consolidated financial statements of the Company for the year ended 31 December 2012 comprise the Company and its subsidiaries (collectively referred to as “the Group”) and the Group’s interests in equity-accounted investees. The Group is engaged in the business of international marine terminal operations and development, logistics and related services.

Port & Free Zone World FZE (“the Parent Company”), which originally held 100% of the Company’s issued and outstanding share capital, made an initial public offer of 19.55% of its share capital to the public and the Company was listed on the Nasdaq Dubai with effect from 26 November 2007. The Company was further admitted to trade on the London Stock Exchange with effect from 1 June 2011.

Port & Free Zone World FZE is a wholly owned subsidiary of Dubai World Corporation (“the Ultimate Parent Company”).

The Company’s registered office address is P.O. Box 17000, Dubai, United Arab Emirates.

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Notes to consolidated financial statements continued

(a) JudgementsInformation about critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the consolidated financial statements are as follows:

(i) Provision for income taxes and deferred tax assetsThe Group is subject to income taxes in numerous jurisdictions. Significant judgement is required in determining the worldwide provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for anticipated tax claims based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies.

(ii) Impairment of available-for-sale financial assetsAvailable-for-sale financial assets are impaired when objective evidence of impairment exists. A significant or prolonged decline in the fair value of an investment is considered as objective evidence of impairment. The Group considers that generally a decline of 20% will be considered as significant and a decline of over 9 months will be considered as prolonged.

(iii) Fair value of financial instrumentsWhere the fair value of financial assets and financial liabilities recorded in the consolidated statement of financial position cannot be derived from active markets, they are determined using valuation techniques including the discounted cash flow model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. The judgements include consideration of inputs such as market risk, credit risk and volatility.

(iv) Contingent liabilitiesThere are various factors that could result in a contingent liability being disclosed if the probability of any outflow in settlement is not remote. The assessment of the outcome and financial effect is based upon management’s best knowledge and judgement of current facts as at the reporting date.

(b) EstimatesInformation about assumptions and estimation uncertainties that have significant risk of resulting in a material adjustment within the next financial year are as follows:

(i) Useful life of property, plant and equipment and port concession rights with finite lifeThe useful life of property, plant and equipment and port concession rights with finite life is determined by the Group’s management based on their estimate of the period over which an asset or port concession right is expected to be available for use by the Group. This estimate is reviewed and adjusted if appropriate at each financial year end. This may result in a change in the useful economic lives and therefore depreciation and amortisation expense in future periods.

(ii) Impairment testing of goodwill and port concession rightsThe Group determines whether goodwill and port concession rights with indefinite life are impaired, at least on an annual basis. This requires an estimation of the value in use of the cash-generating units to which the goodwill is allocated or in which the port concession rights with indefinite life exist. Estimating the value in use requires the Group to make an estimate of the expected future cash flows from the cash-generating unit and also to choose a suitable discount rate in order to calculate the present value of those cash flows.

(iii) Impairment of accounts receivableAn estimate of the collectible amount of accounts receivable is made when collection of the full amount is no longer probable. For significant amounts, this estimation is performed on an individual basis. Amounts which are not individually significant, but which are past due, are assessed collectively and a provision applied according to the length of time past due, based on historical recovery rates. Any difference between the amounts actually collected in future periods and the amounts expected, will be recognised in the consolidated income statement.

(iv) Pension and post-employment benefitsThe cost of defined benefit pension plans and other post-employment benefits is determined using actuarial valuations. The actuarial valuation involves making assumptions about discount rates, expected rates of return on assets, future salary increases, mortality rates and future pension increases. Due to the long-term nature of these plans, such estimates are subject to significant uncertainty.

2 Basis of preparation continued

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3 Significant accounting policiesThe accounting policies set out below have been applied consistently in the period presented in these consolidated financial statements and have been applied consistently by the Group entities.

(a) Basis of consolidation(i) Business combinationsExcept for transactions involving entities under common control, where the provisions of IFRS 3, ‘Business Combinations’ are not applicable, business combinations are accounted for using the acquisition method as at the acquisition date – i.e. when control is transferred to the Group. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, the Group takes into consideration potential voting rights that are currently exercisable.

The Group measures goodwill at the acquisition date as:

• the fair value of the consideration transferred; plus• the recognised amount of any non-controlling interests in the acquiree; plus• if the business combination is achieved in stages, the fair value of the pre-existing equity interest in the acquiree; less• the net recognised amount (generally fair value) of the identifiable assets (including previously unrecognised port concession rights)

acquired and liabilities (including contingent liabilities and excluding future restructuring) assumed.

When the excess is negative, a bargain purchase gain is immediately recognised in the consolidated income statement.

The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in the consolidated income statement.

Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.

Any contingent consideration payable is measured at fair value at the acquisition date. If the contingent consideration is classified as equity, then it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes in the fair value of the contingent consideration are recognised in the consolidated income statement.

(ii) Non-controlling interestsFor each business combination, the Group elects to measure any non-controlling interests at their proportionate share of the acquiree’s identifiable net assets, which is generally at fair value.

Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so, causes the non-controlling interests to have a debit balance.

Changes in the Group’s interests in a subsidiary that do not result in a loss of control are accounted for as transactions with owners in their capacity as owners and therefore no goodwill is recognised as a result of such transactions. The difference between the fair value of any consideration paid and relevant share acquired in the carrying value of net assets of the subsidiary is recorded in equity under retained earnings.

(iii) SubsidiariesSubsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have been changed where necessary to align them with the policies adopted by the Group.

(iv) Loss of controlOn the loss of control, the Group derecognises the assets and liabilities of a subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in the consolidated

2 Basis of preparation continued(v) Business combinationsIn accounting for business combinations, judgement is required in identifying whether an identifiable intangible asset is to be recorded separately from goodwill. Additionally, estimating the acquisition date fair value of the identifiable assets acquired and liabilities assumed involves management judgement. These measurements are based on information available at the acquisition date and are based on expectations and assumptions that have been deemed reasonable by the management. Changes in these judgements, estimates and assumptions can materially affect the results of operations.

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income statement. If the Group retains any interest in the previous subsidiary, then such interest is re-measured at fair value at the date that control is lost. Subsequently, that retained interest is accounted for as an equity-accounted investee or as an available-for-sale financial asset depending on the level of influence retained.

(v) Special purpose entitiesThe Group has established DP World Sukuk Limited (a limited liability company incorporated in the Cayman Islands) as a special purpose entity (“SPE”) for the issue of Sukuk Certificates. These certificates are listed on Nasdaq Dubai and London Stock Exchange. The Group does not have any direct or indirect shareholding in this entity. A SPE is consolidated based on an evaluation of the substance of its relationship with the Group and based on the SPE’s risks and rewards, the Group concludes that it controls the SPE. The SPE controlled by the Group was established under terms that impose strict limitations on the decision-making powers of the SPE’s management and it results in the Group receiving the majority of the benefits related to the SPE’s operations and net assets, being exposed to risks incident to the SPE’s activities, and retaining the majority of the residual or ownership risks related to the SPE or its assets. Refer to accounting policy on non-derivative financial liabilities in note 3 (c) (ii).

(vi) Investments in associates and joint ventures (equity-accounted investees)Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies. Significant influence is presumed to exist when the Group holds between 20 percent and 50 percent of the voting power of another entity.

Joint ventures are those entities over whose activities the Group has joint control, established by contractual agreement and requiring unanimous consent for strategic financial and operating decisions.

Investment in equity-accounted investees are accounted for using the equity method and are initially recorded at cost including transaction costs. The Group’s investment includes goodwill identified on acquisition, fair value adjustments net of any accumulated impairment losses. The consolidated financial statements include the Group’s share of the income and expenses of equity-accounted investees, after adjustments to align the accounting policies with those of the Group, from the date that significant influence or joint control commences until the date that significant influence or joint control ceases.

When the Group’s share of losses exceeds its interest in an equity-accounted investee, the carrying amount of that interest (including any long-term investments) is reduced to nil and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee. If the equity-accounted investees subsequently reports profits, the Group resumes recognising its share of those profits only after its share of the profits equals the share of losses not recognised.

The financial statements of the equity-accounted investees are prepared for the same reporting period as the Group. The transactions between the Group and its equity-accounted investees are made at normal market prices.

At each reporting date, the Group determines whether there is any objective evidence that the investment in the equity-accounted investees are impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the equity-accounted investees and its carrying value and recognises the same in the consolidated income statement.

Upon loss of joint control or significant influence, the Group measures and recognises any retained investment at its fair value. The difference between the carrying amount of the equity-accounted investees upon loss of joint control or significant influence and the fair value of the retained investment and proceeds from disposal is recognised as profit or loss in the consolidated income statement.

(vii) Transactions eliminated on consolidationIntra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from the transactions with equity-accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

(b) Foreign currency(i) Foreign currency transactionsThese consolidated financial statements are presented in USD, which is the Group’s presentation currency. Transactions in foreign currencies are translated to the respective functional currencies of the Group entities at exchange rates at the date of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items in a foreign currency that are measured at historical cost are translated to the functional currency using the exchange rate at the date of transaction. Foreign currency differences arising on retranslation of monetary items are recognised in the consolidated income


3 Significant accounting policies continued

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statement, except for differences arising on the retranslation of available-for-sale equity instruments, of a financial liability designated as a hedge of the net investment in a foreign operation, or qualifying cash flow hedges, which are recognised directly in consolidated statement of other comprehensive income (refer to note 3b (iii)).

(ii) Foreign operationsThe assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to USD at exchange rates at the reporting date. The income and expenses of foreign operations are translated to USD at rates approximating to the foreign exchange rates ruling at the date of the transactions. Foreign exchange differences arising on translation are recognised in consolidated statement of other comprehensive income and presented in the translation reserve in equity. However, if the foreign operation is not a wholly owned subsidiary, then the relevant proportion of the translation difference is allocated to non-controlling interests.

When a foreign operation is disposed such that control, significant influence or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to the consolidated income statement as part of the gain or loss on disposal. When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Group disposes of only part of its investment in an associate or joint venture that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to the consolidated income statement.

Foreign exchange gains and losses arising from a monetary item receivable from or payable to a foreign operation, the settlement of which is neither planned nor likely in the foreseeable future, are considered to form part of a net investment in a foreign operation and are recognised in consolidated statement of other comprehensive income and presented in the translation reserve in equity.

(iii) Hedge of a net investment in a foreign operationForeign currency differences arising on the retranslation of a financial liability designated as a hedge of a net investment in a foreign operation are recognised in consolidated statement of other comprehensive income, to the extent that the hedge is effective. To the extent that the hedge is ineffective, such differences are recognised in the consolidated income statement. When the hedged net investment is disposed off, the associated cumulative amount in consolidated statement of other comprehensive income is transferred to the consolidated income statement as part of the gain or loss on disposal.

(c) Financial instruments(i) Non-derivative financial assetsInitial recognition and measurementThe Group classifies non-derivative financial assets into the following categories: held to maturity financial assets, loans and receivables and available-for-sale financial assets. The Group determines the classification of its financial assets at initial recognition.

All non-derivative financial assets are recognised initially at fair value, plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs.

The Group initially recognises loans and receivables and deposits on the date that they are originated. All other financial assets (including assets designated at fair value through profit or loss) are recognised initially on the trade date, which is the date that the Group becomes a party to the contractual provisions of the instrument.

The Group’s non-derivative financial assets comprise investments in an unquoted infrastructure fund, debt securities held to maturity, trade and other receivables, due from related parties and cash and cash equivalents.

Subsequent measurementThe subsequent measurement of non-derivative financial assets depends on their classification as follows:

Held to maturity financial assetsIf the Group has a positive intent and ability to hold debt securities to maturity, then these are classified as held-to-maturity. Subsequent to initial recognition, held-to-maturity financial assets are measured at amortised cost using the effective interest method, less any impairment losses. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. The effective interest rate amortisation is included in finance cost in the consolidated income statement. Gains and losses are also recognised in the consolidated income statement when these financial assets are derecognised.

Loans and receivablesLoans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Subsequent to


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initial recognition, loans and receivables are measured at amortised cost using the effective interest rate method, less any impairment losses. Loans and receivables comprise bank balances and cash, due from related parties and, trade and other receivables.

Bank balances and cashBank balances and cash in the consolidated statement of financial position comprise cash in hand, bank balances and deposits.

For the purpose of consolidated statement of cash flows, cash and cash equivalents consist of bank balances and cash as defined above and cash classified as held for sale, net of bank overdrafts. Bank overdrafts form an integral part of the Group’s cash management and is included as a component of cash and cash equivalents for the purpose of the consolidated statement of cash flows.

Available-for-sale investmentsAvailable-for-sale financial assets comprise equity securities. Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale or are not classified in any of the above categories of financial assets. Subsequent to initial recognition these are measured at fair value and changes therein are recognised in consolidated statement of other comprehensive income and presented in the other reserves in equity. When an investment is derecognised, the balance accumulated in equity is reclassified to the consolidated income statement.

De-recognition of non-derivative financial assetsThe Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Group is recognised as a separate asset or liability.

(ii) Non-derivative financial liabilitiesInitial recognition and measurementThe Group’s non-derivative financial liabilities consist of loans and borrowings, bank overdrafts, amounts due to related parties, and trade and other payables. The Group determines the classification of its financial liabilities at initial recognition.

All non-derivative financial liabilities are recognised initially at fair value and in the case of other financial liabilities net of directly attributable transaction costs.

The Group initially recognises debt securities issued and subordinated liabilities on the date they are originated. All other financial liabilities (including liabilities designated at fair value through profit or loss) are recognised initially on the trade date, which is the date that the Group becomes a party to the contractual provisions of the instrument.

Fees paid on the establishment of loan facilities are recognised as transaction costs to the extent there is evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.

Subsequent measurementThe subsequent measurement of non-derivative financial liabilities depends on their classification as follows:

Subsequent to initial recognition, these financial liabilities are measured at amortised cost using effective interest rate method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. The effective interest rate amortisation is included in finance costs in the consolidated income statement.

A substantial modification of the terms of an existing financial liability or a part of it shall be accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Any gain or loss on extinguishment is recognised in the consolidated income statement. If discounted present value of the cash flows (including any fees paid) under a new term arrangement is at least 10% different from the discounted present value of the remaining cash flows of the original liability, this is accounted for as an extinguishment of the old liability and the recognition of a new liability. Furthermore, qualitative assessment to assess extinguishment is also performed. Some of the factors considered in performing a qualitative assessment include change in interest basis, extension of debt tenor, change in collateral arrangements and change in currency of lending.

De-recognition of non-derivative financial liabilitiesThe Group derecognises a financial liability when its contractual obligations are discharged or cancelled or expired.

(iii) Derivative financial instrumentsThe Group holds derivative financial instruments such as forward currency contracts and interest rate swaps to hedge its foreign



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currency and interest rate risk exposures. On initial designation of the derivatives as the hedging instrument, the Group formally documents the relationship between the hedging instrument and hedged item, including the risk management objective and strategy in undertaking the hedge transaction and hedged risk together with the methods that will be used to assess the effectiveness of the hedging relationship. The Group makes an assessment, both at the inception of the hedge relationship as well as on an ongoing basis, of whether the hedging instruments are expected to be “highly effective” in offsetting the changes in the fair value or cash flows of the respective hedged items attributable to the hedged risk and whether the actual results of each hedge are within the acceptable range.

Derivatives are recognised initially at fair value and attributable transaction costs are recognised in the consolidated income statement when incurred. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.

Derivative instruments that are not designated as hedging instruments in hedge relationships are classified as financial liabilities or assets at fair value through profit or loss.

Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are accounted for as described below:

Cash flow hedgesWhen a derivative is designated as the hedging instrument in a hedge of the variability in cash flows attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction or the foreign currency risk in an unrecognised firm commitment that could affect the consolidated income statement, then such hedges are classified as cash flow hedges.

Changes in the fair value of the derivative hedging instrument designated as a cash flow hedge are recognised directly in consolidated statement of other comprehensive income to the extent that the hedge is effective and presented in the hedging reserve in equity. Any ineffective portion of changes in the fair value of the derivative is recognised immediately in the consolidated income statement.

When the hedged item is a non-financial asset, the amount recognised in consolidated statement of other comprehensive income is transferred to the carrying amount of the asset when it is recognised. In other cases, the amount recognised in consolidated statement of other comprehensive income is transferred to the consolidated income statement in the same period that the hedged item affects the consolidated income statement. If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, or the designation is revoked, then hedge accounting is discontinued prospectively. The cumulative gain or loss previously recognised in consolidated statement of other comprehensive income remains there until the forecast transaction or firm commitment occurs. If the forecast transaction or firm commitment is no longer expected to occur, then the balance in equity is reclassified to profit or loss.

(iv) Offsetting of financial instrumentsFinancial assets and financial liabilities are offset and the net amount presented in the consolidated statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either to set off on a net basis, or to realise the assets and settle the liability simultaneously.

(d) Property, plant and equipment(i) Recognition and measurementItems of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses (refer to note 3(i)).

Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of a self-constructed asset includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to a working condition for its intended use and the cost of dismantling and removing the items and restoring the site on which they are located.

Borrowing costs that are directly attributable to acquisition and construction of a qualifying asset are included in the cost of that asset. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

When parts of an item of property, plant and equipment have different useful lives, they are depreciated as separate items (major components) of property, plant and equipment.

Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and recognised within ‘other income’ in the consolidated income statement.

Capital work-in-progressCapital work-in-progress is measured at cost less impairment losses and not depreciated until such time the assets are ready for intended use and transferred to the respective category under property, plant and equipment.


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DredgingDredging expenditure is categorised into capital dredging and major maintenance dredging. Capital dredging is expenditure which includes creation of a new harbour, deepening or extension of the channel berths or waterways in order to allow access to larger ships which will result in future economic benefits for the Group. This expenditure is capitalised and amortised over the expected period of the relevant concession agreement. The expenditure is also capitalised under port concession rights due to the application of IFRIC 12 ‘Service Concession Arrangements’.

Major maintenance dredging is expenditure incurred to restore the channel to its previous condition and depth. On an average, the Group incurs such expenditure every 10 years. At the completion of maintenance dredging, the channel has an average service potential of 10 years. Any unamortised expense is written-off on the commencement of any new dredging activities. Maintenance dredging is regarded as a separate component of the asset and is capitalised and amortised evenly over 10 years.

(ii) Subsequent costsThe cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The carrying amounts of the replaced parts are derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in the consolidated income statement as incurred.

(iii) DepreciationDepreciation is recognised in the consolidated income statement on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment and is based on cost less residual value.

Dredging costs are depreciated on a straight line basis based on the lives of various components of dredging.

Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. No depreciation is provided on freehold land.

The estimated useful lives of assets are as follows:

AssetsUseful life

(years)

Buildings 5–50Plant and equipment 3–25Ships 10–35Dredging (included in land and buildings) 10–99

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted prospectively, if required.

(e) GoodwillGoodwill arises on the acquisition of subsidiaries, associates and joint ventures. Goodwill represents the excess of the cost of the acquisition over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the acquiree. When the excess is negative (negative goodwill), it is recognised immediately in the consolidated income statement.

Subsequent measurementGoodwill is measured at cost less accumulated impairment losses (refer to note 3(i)).

In respect of equity-accounted investees, the carrying amount of goodwill is included in the carrying amount of the investment and is not tested for impairment separately.

(f) Port concession rightsThe Group classifies the port concession rights as intangible assets as the Group bears demand risk over the infrastructure assets. Substantially all of the Group’s terminal operations are conducted pursuant to long-term operating concessions or leases entered into with the owner of a relevant port for terms generally between 25 and 50 years (excluding the port concession rights relating to associates and joint ventures). The Group commonly starts negotiations regarding renewal of concession agreements with approximately 5-10 years remaining on the term and often obtains renewals or extensions on the concession agreements in advance of their expiration in return for a commitment to make certain capital expenditures in respect of the subject terminal. In addition, such negotiations may result in the re-basing of rental charges to reflect prevailing market rates. However, based on the Group’s experience, incumbent operators are typically granted renewal often because it can be costly for a port owner to switch operators, both administratively and due to interruptions to port operations and reduced productivity associated with such transactions. Port concession rights consist of:



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(i) Port concession rights arising on business combinationsThe cost of port concession rights acquired in a business combination is the fair value as at the date of acquisition. Other port concession rights acquired separately are measured on initial recognition at cost.

Following initial recognition, port concession rights are carried at cost less accumulated amortisation and any accumulated impairment losses (refer to note 3(i)). Internally generated port concession rights, excluding capitalised development costs, are recognised in the consolidated income statement as incurred. The useful lives of port concession rights are assessed to be either finite or indefinite.

Port concession rights with finite lives are amortised on a straight line basis over the useful economic life and assessed for impairment whenever there is an indication that the port concession rights may be impaired. Port concession rights with indefinite lives (arising where freehold rights are granted) are not amortised and are tested for impairment at least on an annual basis.

The amortisation period and amortisation method for port concession rights with finite useful lives are reviewed at least at each financial year end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the assets are accounted for by changing the amortisation period or method, as appropriate, and treated as changes in accounting estimates. The amortisation expenses on port concession rights with finite useful lives are recognised in the consolidated income statement on a straight line basis in the expense category consistent with the function of port concession rights.

Port concession rights with indefinite useful lives are tested for impairment annually either individually or at the cash-generating unit level. Such port concession rights are not amortised. The useful life of port concession rights with an indefinite life is reviewed annually to determine whether the indefinite life assessment continues to be supportable. If not, the change in the useful life assessment from indefinite to finite is made on a prospective basis.

(ii) Port concession rights arising from Service Concession Arrangements (IFRIC 12)The Group recognises port concession rights arising from a service concession arrangement, in which the grantor controls or regulates the services provided and the prices charged, and also controls any significant residual interest in the infrastructure such as property, plant and equipment, if the infrastructure is existing infrastructure of the grantor or the infrastructure is constructed or purchased by the Group as part of the service concession arrangement.

Port concession rights also include certain property, plant and equipment which are reclassified as intangible assets in accordance with IFRIC 12 ‘Service Concession Arrangements’. These assets are amortised based on the lower of their useful lives or concession period.

Gains or losses arising from de-recognition of port concession rights are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the consolidated income statement when the asset is de-recognised.

The estimated useful lives for port concession rights range within a period of 5–75 years (including the concession rights relating to associates and joint ventures).

(g) InventoriesInventories mainly consist of spare parts and consumables. Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on weighted average method and includes expenditure incurred in acquiring inventories and bringing them to their existing location and condition. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

(h) LeasesThe determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date. The arrangement is assessed for whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.

(i) Group as a lesseeAssets held by the Group under leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Assets held under operating leases are not recognised in the Group’s consolidated statement of financial position. Payments made under operating leases are recognised in the consolidated income statement on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease.

The Group leases certain property, plant and equipment. Leases of property, plant and equipment where the Group has substantially all the risks and rewards of ownership are classified as finance lease. On initial recognition, the leased assets are measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the leased asset is accounted for in accordance with the accounting policy applicable to that asset. Minimum lease payments made under finance


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leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Contingent payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.

(ii) Group as a lessorLeases where the Group retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as income in the period in which they are earned.

(iii) Leasing and sub-leasing transactionsA series of leasing and sub-leasing transactions between the Group and third parties, which are closely interrelated, negotiated as a single transaction, and which take place concurrently or in a continuous sequence are considered linked and accounted for as one transaction when the overall economic effect cannot be understood without reference to the series of transactions as a whole.

These leasing and sub-leasing transactions are designed to achieve certain benefits for the third parties in overseas locations in return for a cash benefit to the Group. Such cash benefit is accounted in the consolidated income statement based on its economic substance. Under these leasing and sub-leasing transactions, current and non-current liabilities have been decreased by the loan receivable and the placement of deposits. Those liabilities, receivables and deposits (and income and charges arising therefrom) are netted off in the consolidated financial statements, in order to reflect the overall commercial effect of the arrangement.

(iv) Leases of land in port concessionLeases of land have not been classified as finance leases as the Group believes that the substantial risks and rewards of ownership of the land have not been transferred. The existence of a significant exposure of the lessor to performance of the asset through contingent rentals was a basis of concluding that substantially all the risks and rewards of ownership have not passed.

(i) Impairment(i) Financial assets(a) Loans and receivables and held to maturity investmentsThe Group considers evidence of impairment for loans and receivables and held to maturity investment securities at both a specific asset level and collective level. All individually significant receivables and held to maturity investment securities are assessed for specific impairment.

(b) Loans and receivables and held to maturity investmentsAn impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the original effective interest rate. Impairment losses are recognised in the consolidated income statement and reflected in an allowance account against loans and receivables or held to maturity investments. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through the consolidated income statement.

(c) Available-for-sale financial assetsFor available-for-sale financial investments, the Group assesses at each reporting date whether there is objective evidence that an investment or a group of investments is impaired. A significant or prolonged decline in the fair value of an equity investment is considered as an objective evidence of impairment. The Group considers that generally a decline of 20% will be considered as significant and a decline of over 9 months will be considered as prolonged.

Impairment losses on available-for-sale financial assets are recognised by reclassifying the losses accumulated in the other reserve in equity to the consolidated income statement. The cumulative loss that is reclassified from equity to the consolidated income statement is the difference between the acquisition cost, net of any principal repayment and amortisation, and the current fair value, less any impairment loss recognised previously in the consolidated income statement. Any subsequent recovery in the fair value of an impaired available-for-sale equity security is recognised in consolidated statement of other comprehensive income.

(ii) Non-financial assetsThe carrying amounts of the Group’s non-financial assets, other than inventories and deferred tax assets are reviewed for impairment whenever there is an indication of impairment. If any such indication exists then the asset’s recoverable amount is estimated. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or cash generating unit. A cash-generating unit is the



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smallest identifiable asset group that generates cash flows that largely are independent from other assets and groups.

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount. Impairment losses are recognised in the consolidated income statement. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis.

For goodwill and port concession rights that have indefinite lives or that are not yet available for use, recoverable amount is estimated annually and when circumstances indicate that carrying value may be impaired. Goodwill acquired in business combination is allocated to groups of cash generating units that are expected to benefit from the synergies of the combination. An impairment loss in respect of goodwill is not reversed.

In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount, which would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

(j) Assets held for saleAssets (or disposal groups comprising assets and liabilities) which are expected to be recovered primarily through sale rather than through continuing use are classified as held for sale. Immediately before classification as held for sale, the assets (or components of a disposal group) are re-measured in accordance with the Group’s accounting policies. Thereafter, generally the assets (or disposal group) are measured at the lower of their carrying amount or fair value less costs to sell. Any impairment loss on a disposal group is first allocated to goodwill, and then to remaining assets and liabilities on a pro rata basis, except that no loss is allocated to inventories, financial assets, deferred tax assets and employee benefit assets which continue to be measured in accordance with the Group’s accounting policies. Impairment losses on initial classification as held for sale and subsequent gains or losses on re-measurement are recognised in the consolidated income statement. Gains are not recognised in excess of any cumulative impairment loss.

Port concession rights and property, plant and equipment once classified as held for sale or distribution are not amortised or depreciated. In addition, equity accounting of equity-accounted investees ceases once classified as held for sale.

(k) Share capitalOrdinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity. Any excess payment received over par value is treated as share premium.

(l) Employee benefits(i) Pension and post-employment benefitsThe Group’s net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods. That benefit is discounted to determine the present value, and the fair value of any plan assets is deducted. The calculation is performed by a qualified actuary using the projected unit credit method. The discount rate is the yield at the reporting date on AA credit rated bonds that have maturity dates approximating to the terms of the Group’s obligations.

When the benefits of a plan are improved, the portion of the increased benefit relating to past service by employees is recognised as an expense in the consolidated income statement on a straight line basis over the average period until the benefits become vested. To the extent that the benefits vest immediately, the expense is recognised immediately in the consolidated income statement.

When the actuarial calculation results in a benefit to the Group, the recognised asset is limited to the total of any unrecognised past service costs and the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. In order to calculate the present value of economic benefits, consideration is given to any minimum funding requirements that apply to any plan in the Group. An economic benefit is available to the Group if it is realisable during the life of the plan, or on settlement of the plan liabilities.

Where the present value of the deficit contributions exceeds the IAS 19 deficit an additional liability is recognised.

Actuarial gains and losses that arise in calculating the Group’s obligation in respect of a plan are recognised in the period in which they arise directly in consolidated statement of other comprehensive income. The cost of providing benefits under the defined benefit plans is determined separately for each plan using the projected unit credit method, which attributes entitlement to benefits to the current period (to determine current service cost) and to the current and prior periods (to determine the present value of defined benefit obligation) and is based on actuarial advice.


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Contributions, including lump sum payments, in respect of defined contribution pension schemes and multi-employer defined benefit schemes where it is not possible to identify the Group’s share of the scheme, are charged to the consolidated income statement as they fall due.

(ii) Long-term service benefitsThe Group’s net obligation in respect of long-term service benefits, other than pension plans, is the amount of future benefit that employees have earned in return for their service in the current and prior periods. The obligation is calculated using the projected unit credit method and is discounted to its present value and the fair value of any related assets is deducted. The discount rate is the yield at the reporting date on AA credit rated bonds that have maturity dates approximating to the terms of the Group’s obligations.

(m) ProvisionsA provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as a finance cost in the consolidated income statement.

Provision for an onerous contract is recognised when the expected benefits to be derived by the Group from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract.

(n) RevenueRevenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duty.

Revenue mainly consists of containerised stevedoring and other containerised revenue. Non-containerised revenue mainly includes logistics and handling of break bulk cargo. The following specific recognition criteria must also be met before revenue is recognised:

Rendering of servicesRevenue from providing containerised stevedoring, other containerised services and non-containerised services is recognised on the delivery and completion of those services.

Service concession arrangementsRevenues relating to construction contracts which are entered into with local authorities for the construction of the infrastructure necessary for the provision of services are measured at the fair value of the consideration received or receivable.

(o) Finance income and expenseFinance income comprises interest income on funds invested and gains on hedging instruments that are recognised in the consolidated income statement. Interest income is recognised as it accrues, using the effective interest method.

Finance costs comprises interest expense on borrowings, unwinding of the discount on provisions, impairment losses recognised on financial assets and losses on hedging instruments that are recognised in the consolidated income statement.

Finance income and expense also include realised and unrealised exchange gains and losses.

(p) Income taxIncome tax expense comprises current and deferred tax. Income tax expense is recognised in the consolidated income statement except to the extent that it relates to a business combination, or items recognised directly in consolidated statement of other comprehensive income.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date in the countries where the Group operates and generates taxable income. It also includes any adjustment to tax payable in respect of previous years.

Deferred tax is recognised using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:

• the temporary differences arising on the initial recognition of goodwill and the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss; and



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• the temporary differences relating to investments in subsidiaries and jointly controlled entities to the extent that they probably will not reverse in the foreseeable future.

The measurement of deferred tax reflects the tax consequences that would follow the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.

A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

(q) Discontinued operationA discontinued operation is a component of the Group’s business that represents a separate major line of business or geographical area of operations that has been disposed or is held for sale. Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier. When an operation is classified as a discontinued operation, the comparative consolidated income statement and consolidated statement of comprehensive income is restated as if the operation had been discontinued from the start of the comparative period.

In the consolidated income statement of the reporting period, and of the comparable period of the previous year, income and expenses from discontinued operations are reported separately from income and expenses from continuing operations, down to the level of profit after taxes, even when the Group retains a non-controlling interest in the subsidiary after the sale. The resulting profit or loss (after taxes) is reported separately in the consolidated income statement and disclosed in the notes to consolidated financial statements.

(r) Earnings per shareThe Group presents basic earnings per share (“EPS”) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year.

(s) Segment reportingAn operating segment is a component of the Group that engages in business activities from which it may earn revenue and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. All operating segments’ operating results are reviewed regularly by the Group’s Board of Directors to assess performance.

Segment results that are reported to the Board of Directors include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items mainly comprise corporate assets (primarily Company’s head office), head office expenses and income tax assets and liabilities.

Segment capital expenditure is the total cost incurred during the year to acquire property, plant and equipment, and port concession rights other than goodwill.

(t) Separately disclosed itemsThe Group presents, as separately disclosed items on the face of the consolidated income statement, those items of income and expense which, because of the nature and expected infrequency of the events giving rise to them, merit separate presentation to allow users to understand better the elements of financial performance in the period, so as to facilitate a comparison with prior periods and a better assessment of trends in financial performance.

(u) New standard and interpretation not yet effectiveA number of new standards, amendments to standards and interpretations are not yet effective for annual periods beginning after 1 January 2012, and have not been applied in preparing these consolidated financial statements. These are:

• IAS 1 – Presentation of Items of Other Comprehensive Income (‘OCI’) – Amendments to IAS 1 – The amendments to IAS 1 change the grouping of items presented in OCI. Items that could be reclassified (or ‘recycled’) to profit or loss at a future point in time (for example, upon de-recognition or settlement) would be presented separately from items that will never be reclassified. The amendment affects presentation only and has therefore no impact on the Group’s financial position or performance. The amendment becomes effective for annual periods beginning on or after 1 July 2012.

• IFRS 9 – Financial Instruments (2009 and 2010) – IFRS 9 as issued reflects the first phase of the IASB’s work on the replacement of IAS 39 and applies to classification and measurement of financial assets and financial liabilities as defined in IAS 39. The standard is


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effective for annual periods beginning on or after 1 January 2015. In subsequent phases, the IASB will address hedge accounting and impairment of financial assets. The adoption of the first phase of IFRS 9 will have an effect on the classification and measurement of the Group’s financial assets, but will potentially have no impact on classification and measurements of financial liabilities. The Group will quantify the effect in conjunction with the other phases, when issued, to present a comprehensive picture.

• IFRS 10 – Consolidated Financial Statements (2011) – IFRS 10 replaces the portion of IAS 27 Consolidated and Separate Financial Statements that addresses the accounting for consolidated financial statements. It also includes the issues raised in SIC-12 Consolidation – Special Purpose Entities.

IFRS 10 establishes a single control model that applies to all entities including special purpose entities. The changes introduced by IFRS 10 will require management to exercise significant judgement to determine which entities are controlled, and therefore, are required to be consolidated by a parent, compared with the requirements that were in IAS 27. The Group is currently assessing the impact that this standard will have on its financial position and performance. The standard is effective for annual periods beginning on or after 1 January 2013.

• IFRS 11 – Joint Arrangements (2011) – IFRS 11 replaces IAS 31 Interests in Joint Ventures and SIC-13 Jointly-controlled Entities — Non-monetary Contributions by Venturers.

IFRS 11 removes the option to account for jointly-controlled entities (JCEs) using proportionate consolidation. Instead, JCEs that meet the definition of a joint venture must be accounted for using the equity method. The Group is currently assessing the impact that this standard will have on its financial position and performance. The standard is effective for annual periods beginning on or after 1 January 2013.

• IFRS 12 – Disclosure of Involvement with Other Entities (2011) – IFRS 12 includes all of the disclosures that were previously in IAS 27 related to consolidated financial statements, as well as all of the disclosures that were previously included in IAS 31 and IAS 28. These disclosures relate to an entity’s interests in subsidiaries, joint arrangements, associates and structured entities. A number of new disclosures are also required. This standard becomes effective for annual periods beginning on or after 1 January 2013. The application of this standard affects disclosure only and will have no impact on the Group’s financial position or performance.

• IFRS 13 – Fair Value Measurement – IFRS 13 establishes a single source of guidance under IFRS for all fair value measurements. IFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under IFRS when fair value is required or permitted. The Group is currently assessing the impact that this standard will have on the financial position and performance of the Group. This standard becomes effective for annual periods beginning on or after 1 January 2013.

• IAS 19 (Revised 2011) – IAS 19 changes the definition of short term and other long-term employee benefits to clarify the distinction between the two. For defined benefit plans, removal of the accounting policy choice for recognition of actuarial gains and losses is not expected to have any impact on the Group. The Group is currently assessing the impact that this standard will have on its financial position and performance. The standard is effective for annual periods beginning on or after 1 January 2013.

• IAS 27 (Revised 2011) – As a consequence of the new IFRS 10 and IFRS 12, what remains of IAS 27 is limited to accounting for subsidiaries, jointly controlled entities, and associates in separate financial statements. The Group is currently assessing the impact that this standard will have on the financial position and performance of the Group. This amendment becomes effective for annual periods beginning on or after 1 January 2013.

• IAS 28 (Revised 2011) – As a consequence of the new IFRS 11 and IFRS 12, IAS 28 has been renamed as IAS 28 Investments in Associates and Joint Ventures, and describes the application of the equity method to investments in joint ventures in addition to associates. The Group is currently assessing the impact that this standard will have on the financial position and performance of the Group. This amendment becomes effective for annual periods beginning on or after 1 January 2013.

• IAS 31 (Revised 2011) – As a consequence of the new IFRS 11 and IFRS 12, IAS 31 has been replaced with this new standard. The Group is currently assessing the impact that this standard will have on its financial position and performance. The amendment becomes effective for annual periods beginning on or after 1 January 2013.

Management anticipates that the above standards, amendments to standards and interpretations will be adopted by the Group to the extent applicable to them from their effective dates. The extent of the impact on adoption of these standards, amendments and interpretations has not been determined.



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5 Financial risk managementOverviewThe Group has exposure to the following risks from its use of financial instruments:

(a) credit risk

(b) liquidity risk

(c) market risk

This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring and managing risk. Further quantitative disclosures are included throughout these consolidated financial statements. Also refer to note 29 for further details.

Risk management frameworkThe Board of Directors have overall responsibility for the establishment and oversight of the Group’s risk management framework.

The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. The Group, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

4 Determination of fair valuesA number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

(i) Property, plant and equipmentThe fair value of property, plant and equipment recognised as a result of a business combination is based on market values. The market value of property is the estimated amount for which a property could be exchanged on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. The market value of items of plant, equipment, fixtures and fittings is based on the quoted market prices for similar items.

(ii) Port concession rightsPort concession rights acquired in a business combination are accounted at their fair values. The fair value is based on the discounted cash flows expected to be derived from the use and eventual sale of the assets.

(iii) Investments in debt securities and available-for-sale financial assetsThe fair values of equity and debt securities are determined by reference to their quoted closing bid price at the reporting date. The fair value of the unquoted infrastructure investment fund classified as available-for-sale is based on the independent valuation of the fund. The fair value of investments in unquoted bonds is determined based on the discounted cash flows at a market related discount rate. The fair value of debt securities held to maturity is determined for disclosure purposes only.

(iv) Trade and other receivables/payablesThe fair value of trade and other receivables and trade and other payables approximates to the carrying values due to the short term maturity of these instruments.

(v) DerivativesThe fair value of forward exchange contracts and interest rate swaps is based on the bank quotes at the reporting dates.

(vi) Non-derivative financial liabilitiesFair value for quoted bonds is based on their market price as at the reporting date. Other loans include term loans and finance leases. These are largely at variable interest rates and therefore, the carrying value normally equates to the fair value.

The fair value of bank balances and cash and bank overdrafts approximates to the carrying value due to the short term maturity of these instruments.

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The Group Audit Committee oversees how management monitors compliance with the Group’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The Group Audit Committee is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad-hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.

(a) Credit riskCredit risk is the risk of financial loss to the Group if a customer fails to meet its contractual obligations, and arises principally from the Group’s receivables from customers, amounts due from related parties and investment securities.

Trade and other receivablesThe Group trades mainly with recognised and creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures and are required to submit financial guarantees based on their creditworthiness. In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant.

The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified. The collective loss allowance is determined based on historical data of payment statistics for similar financial assets.

Other financial assetsCredit risk arising from other financial assets of the Group comprises cash and cash equivalents and certain derivative instruments. The Group’s exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments.

The Group manages its credit risks with regard to bank deposits, throughout the Group, through a number of controls, which include assessing the credit rating of the bank either from public credit ratings, or internal analysis where public data is not available and consideration of the support for financial institutions from their central banks or other regulatory authorities.

Financial guaranteesThe Group’s policy is to consider the provision of a financial guarantee to wholly-owned subsidiaries, where there is a commercial rationale to do so. Guarantees may also be provided to associates and joint ventures in very limited circumstances and always only for the Group’s share of the obligation. The provision of guarantees always requires the approval of senior management.

(b) Liquidity riskLiquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient cash to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.

The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank facilities and by ensuring adequate internally generated funds. The Group’s terms of business require amounts to be paid within 60 days of the date of provision of the service. Trade payables are normally settled within 45 days of the date of purchase.

(c) Market riskMarket risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

The Group buys and sells derivatives and also incurs financial liabilities, in order to manage market risks. All such transactions are carried out within the guidelines set by the Board of Directors in the Group Treasury policy. Generally, the Group seeks to apply hedge accounting in order to manage the volatility in the consolidated income statement.

(i) Currency riskThe proportion of the Group’s net operating assets denominated in foreign currencies (i.e. other than the functional currency of the Company, UAE Dirhams) is approximately 73% (2011: 62%) with the result that the Group’s USD consolidated statement of financial position, and in particular owner’s equity, can be affected by currency movements when it is retranslated at each year end rate. The Group partially mitigates the effect of such movements by borrowing in the same currencies as those in which the assets are denominated and using cross currency swaps. The impact of currency movements on operating profit is partially mitigated by interest costs being incurred in foreign currencies. The Group operates in some locations where the local currency is fixed to the Group’s


5 Financial risk management continued

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presentation currency of USD further reducing the risk of currency movements.

Interest on borrowings is denominated in the currency of the borrowings. Generally, borrowings are denominated in currencies that match the cash flows generated by the underlying foreign operations of the Group. This provides an economic hedge without derivatives being entered into and therefore hedge accounting is not applied in these circumstances.

A portion of the Group’s activities generate part of their revenue and incur some costs outside their main functional currency. Due to the diverse number of locations in which the Group operates there is some natural hedging that occurs within the Group. When it is considered that currency volatility could have a material impact on the results of an operation, hedging using forward foreign currency contracts is undertaken to reduce the short-term effect of currency movements.

When the Group’s businesses enter into capital expenditure or lease commitments in currencies other than their main functional currency, these commitments are hedged in most instances using forward contracts and currency swaps in order to fix the cost when converted to the functional currency. The Group classifies its forward exchange contracts hedging forecast transactions as cash flow hedges and states them at fair value.

(ii) Interest rate riskThe Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s long-term debt obligations with a fixed/floating interest rate and bank deposits. The Group issued two fixed rate bonds, a 10 year Sukuk with a profit rate of 6.25% and a 30 year Medium Term Note with a coupon of 6.85% which collectively represents USD 3,229,299 thousand of the Group’s outstanding debt as at the reporting date.

The Group’s policy is to manage its interest cost by entering into interest rate swap agreements, in which the Group agrees to exchange, at specified intervals, the difference between fixed and variable rate interest amounts calculated by reference to an agreed-upon notional principal amount. These swaps are designated to hedge underlying debt obligations.

At 31 December 2012, after taking into account the effect of interest rate swaps, approximately 89% (2011: 68%) of the Group’s borrowings are at a fixed rate of interest.

Capital managementThe Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Capital consists of share capital, share premium, shareholders’ reserve, retained earnings, hedging and other reserves, actuarial reserve and translation reserve. The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value. The Board seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position.

Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements.

The key performance ratios as at 31 December are as follows:

2012 USD’000

2011 USD’000

Total interest bearing loans and borrowings (refer to note 25) 4,752,456 7,741,755Less: cash and cash equivalents (refer to note 18) (1,881,733) (4,158,347)

Total net debt 2,870,723 3,583,408

Adjusted EBITDA (refer to note 6) 1,407,483 1,307,462

Net finance cost before separately disclosed items 288,881 287,570

Net debt/adjusted EBITDA 2.0 2.7

Interest cover before separately disclosed items 4.9 4.5

5 Financial risk management continued

72


6 Segment informationThe internal management reports which are prepared under IFRS are reviewed by the Board of Directors (“Chief Operating Decision Maker”) based on the location of the Group’s assets and liabilities. The Group has identified the following geographic areas as its basis of segmentation. The Group measures segment performance based on the earnings before separately disclosed items, interest, tax, depreciation and amortisation (“Adjusted EBITDA”).

• Asia Pacific and Indian subcontinent• Australia and Americas• Middle East, Europe and Africa

Each of these operating segments have an individual appointed as Segment Director responsible for these segments, who in turn reports to the Chief Operating Decision Maker.

In addition to the above reportable segments, the Group also reports unallocated head office costs, finance costs, finance income and tax expense under head office segment.

Information regarding the results of each reportable segment is included below.

The following table presents certain results, assets and liabilities information regarding the Group’s segments as at the reporting date.

Asia Pacific and Indian subcontinent Australia and Americas

Middle East, Europe and Africa Head office Inter-segment Total

2012 USD’000

2011 USD’000

2012 USD’000

2011 USD’000

2012 USD’000

2011 USD’000

2012 USD’000

2011 USD’000

2012 USD’000

2011 USD’000

2012 USD’000

2011 USD’000

(Including separately disclosed items)Revenue 456,578 499,765 552,751 594,065 2,111,688 1,883,901 – – – – 3,121,017 2,977,731

Segment results from operations* 217,755 118,471 109,330 589,973 955,186 490,986 (156,310) (149,887) – – 1,125,961 1,049,543

Finance income – – – – – – 75,211 135,361 – – 75,211 135,361Finance costs – – – – – – (374,465) (433,701) – – (374,465) (433,701)

Profit/(loss) for the year 217,755 118,471 109,330 589,973 955,186 490,986 (455,564) (448,227) – – 826,707 751,203

* Segment results from operations comprise profit for the year before net finance cost.

Net finance cost and tax expense from various geographical locations and head office have been grouped under head office.



2012 USD’000

2011 USD’000

2012 USD’000

2011 USD’000

2012 USD’000

2011 USD’000

2012 USD’000

2011 USD’000

2012 USD’000

2011 USD’000

2012 USD’000

2011 USD’000

Segment assets 4,993,196 5,076,106 1,804,715 1,847,887 9,448,179 8,031,636 8,862,301 11,185,296 (8,674,482) (7,383,340) 16,433,909 18,757,585

Segment liabilities 427,202 422,189 140,115 227,370 1,538,016 1,414,480 6,178,971 7,810,438 (1,831,438) (586,299) 6,452,866 9,288,178Tax liabilities* – – – – – – 1,251,198 1,247,940 – – 1,251,198 1,247,940

Total liabilities 427,202 422,189 140,115 227,370 1,538,016 1,414,480 7,430,169 9,058,378 (1,831,438) (586,299) 7,704,064 10,536,118

Capital expenditure 7,894 15,954 98,650 84,279 575,034 378,668 3,373 2,280 – – 684,951 481,181

Depreciation 32,848 32,504 64,458 61,103 187,636 194,133 5,069 5,137 – – 290,011 292,877

Amortisation/impairment 57,781 170,231 48,675 37,371 64,065 172,494 – – – – 170,521 380,096

Share of profit of equity-accounted investees before separately disclosed items 110,853 117,354 (973) 10,107 24,017 14,250 – – – – 133,897 141,711

Tax expense – – – – – – 72,954 59,042 – – 72,954 59,042

* Tax liabilities and tax expenses from various geographical locations have been grouped under head office.


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7 Revenue2012

USD’0002011

USD’000

Revenue consists of:Containerised stevedoring revenue 1,366,200 1,382,642Containerised other revenue 1,044,967 973,073Non-containerised revenue 709,850 622,016

3,121,017 2,977,731

The Group does not have any customer which contributes more than 10 percent of the Group’s total revenue.

6 Segment information continuedEarnings before separately disclosed items, interest, tax, depreciation and amortisation (“Adjusted EBITDA”)



2012 USD’000

2011 USD’000

2012 USD’000

2011 USD’000

2012 USD’000

2011 USD’000

2012 USD’000

2011 USD’000

2012 USD’000

2011 USD’000

2012 USD’000

2011 USD’000

Revenue before separately disclosed items 456,578 499,765 552,751 594,065 2,111,688 1,883,901 – – – – 3,121,017 2,977,731

Adjusted EBITDA 299,391 322,158 165,845 203,142 1,020,534 860,660 (78,287) (78,498) – – 1,407,483 1,307,462Finance income – – – – – – 75,211 135,361 – – 75,211 135,361Finance costs – – – – – – (364,092) (422,931) – – (364,092) (422,931)Tax expense – – – – – – (72,954) (59,042) – – (72,954) (59,042)Depreciation and amortisation (90,629) (102,772) (77,333) (68,481) (237,601) (252,721) (5,069) (5,137) – – (410,632) (429,111)

Adjusted net profit/(loss) for the year before separately disclosed items 208,762 219,386 88,512 134,661 782,933 607,939 (445,191) (430,247) – – 635,016 531,739

Adjusted for separately disclosed items 8,993 (100,915) 20,818 455,312 172,253 (116,953) (10,373) (17,980) – – 191,691 219,464

Profit/(loss) for the year 217,755 118,471 109,330 589,973 955,186 490,986 (455,564) (448,227) – – 826,707 751,203

8 Profit for the year (including separately disclosed items)2012

USD’0002011

USD’000

Profit for the year is stated after charging the following costs:Staff costs 646,846 575,143Depreciation and amortisation 410,632 429,111Impairment 49,900 243,862Operating lease rentals 384,521 412,398

9 Finance income and costs (including separately disclosed items)2012

USD’0002011

USD’000

Finance incomeInterest income 67,295 123,392Exchange gains 6,688 7,350Other net financing income in respect of pension plans 1,228 4,619

75,211 135,361

Finance costsInterest expense (350,222) (378,563)Exchange losses (13,067) (44,344)Other net financing expense in respect of pension plans (803) (24)

Finance costs before separately disclosed items (364,092) (422,931)Adjusted for separately disclosed items (refer to note 11) (10,373) (10,770)

Finance costs after separately disclosed items (374,465) (433,701)

Net finance costs after separately disclosed items (299,254) (298,340)

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10 Income taxThe major components of income tax expense for the year ended 31 December:

2012 USD’000

2011 USD’000

Current income tax expenseCurrent year 108,912 58,190Adjustment for prior periods (20,738) 2,538

88,174 60,728Deferred tax credits (15,220) (1,686)

72,954 59,042

Income tax expense 72,954 59,042Tax on separately disclosed items – 7,211

Total tax expenses 72,954 66,253Share of income tax of equity-accounted investees 38,189 42,321

Total tax charge 111,143 108,574

Current income tax liabilities 180,267 169,585

All tax items included within separately disclosed items are detailed in note 11.

The Group is not subject to income tax on its UAE operations. The tax expense relates to the tax payable on the profit earned by the overseas subsidiaries, associates and joint ventures as adjusted in accordance with the taxation laws and regulations of the countries in which they operate. The applicable tax rates in the regions in which the Group operates are set out below:

Geographical segmentsApplicable

corporate tax rate

Asia Pacific and Indian subcontinent 16.5% to 35.0%Australia and Americas 15.0% to 36.0%Middle East, Europe and Africa 0% to 34.0%

The relationship between the tax expense and the accounting profit can be explained as follows:

2012 USD’000

2011 USD’000

Net profit before tax 899,661 817,456

Tax at the Group’s domestic tax rate – –Higher income tax on foreign earnings 182,888 439,146Permanent differences including non-taxable income and non-deductible expenses (86,530) (385,070)Tax charge on equity-accounted investees 38,189 42,321Current year losses not recognised for deferred tax asset 31,785 29,978Brought forward losses utilised (32,691) (247)Deferred tax in respect of fair value adjustments (43,036) (28,529)Others 11,933 (547)

Tax expense before prior year adjustments 102,538 97,052Tax (over)/under provided in prior periods: – current tax (20,738) 2,538 – deferred tax 29,343 8,984

Total tax expense from operations 111,143 108,574Adjustment for separately disclosed items – (7,211)

Total tax expenses (A) 111,143 101,363

Net profit before tax 899,661 817,456Adjustment for separately disclosed items (191,691) (226,675)Adjustment to share of income tax of equity-accounted investees 38,189 42,321

Adjusted profit before tax and before separately disclosed items (B) 746,159 633,102

Effective tax rate before separately disclosed items (A/B) 14.90% 16.01%


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11 Separately disclosed items2012

USD’0002011

USD’000

Impairment of assets and restructuring costs (55,850) (243,862)Share of profit/(loss) of equity-accounted investees 20,710 (3,047)Profit on sale and termination of business 237,204 484,354Ineffective interest rate swaps and currency options (10,373) (10,770)Income tax expense – (7,211)

191,691 219,464

Impairment of assets and restructuring costs represents the following:

Impairment of property, plant and equipment of USD 14,100 thousand in the ‘Middle East, Europe and Africa’ region and USD 35,800 thousand in the ‘Australia and Americas’ region. USD 5,500 thousand relates to the restructuring costs of a subsidiary in the ‘Middle East, Europe and Africa’ region and USD 450 thousand in the ‘Australia and Americas’ region. The impairment is mainly due to significant adverse effects in the market and economic condition which are outside the control of the Group (2011: Impairment of property, plant and equipment of USD 29,993 thousand in the ‘Australia and Americas’ region and USD 22,890 thousand in the ‘Middle East, Europe and Africa’ region. Impairment of net assets in a subsidiary of USD 99,963 thousand in the ‘Asia Pacific and Indian subcontinent’ region representing the difference between the value in use and the carrying amount as at the reporting date. Impairment of USD 91,016 thousand of investments in equity-accounted investees in the ‘Middle East, Europe and Africa’ region, representing the difference between the fair value less cost to sell and the carrying amount as at the reporting date).

Share of profit/(loss) of equity-accounted investees includes USD 11,717 thousand share of equity earnings of a joint venture upon sale of an entity within this group in the ‘Australia and Americas’ region and USD 8,993 thousand share of profit on transfer of certain assets by an associate in the ‘Asia Pacific and Indian subcontinent’ region. (2011: represents USD 3,047 thousand impairment of deferred tax assets in an equity-accounted investee in the ‘Middle East, Europe and Africa’ region).

10 Income tax continuedUnrecognised deferred tax assetsDeferred tax is not recognised on trading losses of USD 486,771 thousand (2011: USD 428,749 thousand) where utilisation is uncertain, either because they have not been agreed with tax authorities, or because the likelihood of future taxable profits is not sufficiently certain, or because of the impact of tax holidays on infrastructure projects. Under current legislation, USD 331,196 thousand (2011: USD 303,676 thousand) of these trading losses can be carried forward indefinitely.

Deferred tax is also not recognised on capital and other losses of USD 288,722 thousand (2011: USD 356,423 thousand) due to the fact that their utilisation is uncertain.

Movement in temporary differences during the year:

1 January 2012

USD’000

Recognised in consolidated

income statement

USD’000

Translation and other

movements USD’000

31 December 2012

USD’000

Deferred tax liabilitiesProperty, plant and equipment 136,879 13,480 (2,006) 148,353Investment in equity-accounted investees 21,219 10,985 755 32,959Fair value adjustment on acquisitions 492,053 (40,563) 8,696 460,186Others 428,204 888 341 429,433

Total 1,078,355 (15,210) 7,786 1,070,931

Deferred tax assetsProperty, plant and equipment 6,531 (3,377) 584 3,738Pension and post-employment benefits 9,488 (919) 1,534 10,103Financial instruments 14,185 – 10,511 24,696Provisions 32,546 (27,741) 477 5,282Tax value of losses carried forward recognised 22,793 32,430 (6,740) 48,483Others 15,669 (383) (1,835) 13,451

Total 101,212 10 4,531 105,753

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Profit on sale and termination of businesses represents:

• USD 193,533 thousand profit on monetisation of investments in equity-accounted investees in the ‘Middle East, Europe and Africa’ region.

• USD 53,288 thousand profit on monetisation of investments in an equity-accounted investee in the ‘Australia and Americas’ region, offset by a tax charge of USD 7,937 thousand.

• USD 6,312 thousand loss on termination of a concession in the ‘Middle East, Europe and Africa’ region.• USD 4,632 thousand profit on monetisation of a subsidiary in the ‘Middle East, Europe and Africa’ region. (2011: relates to the profit

(net of tax) of USD 435,509 thousand on monetisation of 75% interest in the Australia Ports business and sale of interest in an associate in the ‘Australia and Americas’ region resulting in a profit (net of tax) of USD 49,796 thousand. The profit on sale and termination of businesses includes foreign exchange reserves recycled to the consolidated income statement on account of loss of control. This is offset by USD 951 thousand loss on termination of a non-core business in the ‘Asia Pacific and Indian subcontinent’ region).

Ineffective interest rate swaps and currency options: USD 10,373 thousand relates to the loss on ineffective interest rate swaps in the ‘Asia Pacific and Indian subcontinent’ region. (2011: represents USD 10,770 thousand loss on foreign currency options in the ‘Australia and Americas’ region).

Income tax expense: 2012: Nil (2011: represents USD 12,785 thousand of deferred tax assets impaired in a subsidiary in the ‘Middle East, Europe and Africa’ region which is offset by USD 5,574 thousand of tax credit on impairment of assets in the ‘Australia and Americas’ region).


11 Separately disclosed items continued

12 Property, plant and equipmentLand and buildings USD’000

Plant and equipment

USD’000Ships

USD’000

Capital work-in-progress

USD’000Total

USD’000

CostAs at 1 January 2012 3,069,584 2,486,928 216,479 791,760 6,564,751Additions during the year 7,530 39,771 48,582 546,051 641,934Transfers from capital work-in-progress 27,347 51,097 – (78,444) –Translation adjustment (2,815) (2,667) (9,000) 59,650 45,168Disposals (3,662) (68,093) (15,700) (2,211) (89,666)Disposal of subsidiaries (24,400) (44,756) – – (69,156)

As at 31 December 2012 3,073,584 2,462,280 240,361 1,316,806 7,093,031

Depreciation and impairmentAs at 1 January 2012 482,535 883,323 74,773 – 1,440,631Charge for the year 137,944 138,964 13,103 – 290,011Impairment (refer to note 11) 4,900 19,000 26,000 – 49,900Translation adjustment 1,640 4,424 276 – 6,340On disposals (2,752) (57,661) (10,300) – (70,713)On disposal of subsidiaries (9,500) (26,900) – – (36,400)

As at 31 December 2012 614,767 961,150 103,852 – 1,679,769

Net book valueAs at 31 December 2012 2,458,817 1,501,130 136,509 1,316,806 5,413,262

In the prior years, the Group had entered into agreements with third parties pursuant to which the Group participated in a series of linked transactions including leasing and sub-leasing of certain cranes of the Group (“the Crane French Lease Arrangements”). At 31 December 2012, cranes with aggregate net book value amounting to USD 288,710 thousand (2011: USD 304,449 thousand) were covered by these Crane French Lease Arrangements. These cranes are accounted for as property, plant and equipment as the Group retains all the risks and rewards incidental to the ownership of the underlying assets.

At 31 December 2012, property, plant and equipment with a carrying amount of USD 2,391,298 thousand (2011: USD 1,148,903 thousand) are pledged to secure bank loans (refer to note 25). At 31 December 2012, the net carrying value of the leased plant and equipment and other assets was USD 48,796 thousand (2011: USD 59,067 thousand).

Borrowing costs capitalised to property, plant and equipment amounted to USD 44,900 thousand (2011: USD 10,512 thousand) with a capitalisation rate in the range of 4.68 % to 5.13% per annum (2011: 4.73% to 5.08% per annum).

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13 Goodwill and port concession rightsGoodwill USD’000

Port concession rights

USD’000Total

USD’000

CostAs at 1 January 2012 1,607,655 3,941,977 5,549,632Additions – 43,017 43,017Re-classification – (37,991) (37,991)Disposals (58,237) (1,613) (59,850)Translation adjustment 39,500 (10,742) 28,758

As at 31 December 2012 1,588,918 3,934,648 5,523,566

AmortisationAs at 1 January 2012 – 718,019 718,019Charge for the year – 120,621 120,621On disposals – (1,332) (1,332)Translation adjustment – (17,744) (17,744)

As at 31 December 2012 – 819,564 819,564

Net book valueAs at 31 December 2012 1,588,918 3,115,084 4,704,002

Port concession rights include concession agreements which are mainly accounted for as business combinations and acquisitions. These concessions were determined to have finite and indefinite useful lives based on the terms of the respective concession agreements and the income approach model was used for the purpose of determining their fair values.

12 Property, plant and equipment continuedLand and buildings USD’000

Plant and equipment

USD’000Ships

USD’000

Capital work-in-progress

USD’000Total

USD’000

CostAs at 1 January 2011 3,000,931 2,491,086 131,080 604,271 6,227,368Acquired through business combination 29,099 – – – 29,099Additions during the year 8,342 22,827 73,951 344,388 449,508Transfers from capital work-in-progress 73,911 59,061 7,031 (140,003) –Translation adjustment (19,881) (52,201) 4,417 (16,896) (84,561)Disposals (22,818) (33,845) – – (56,663)

As at 31 December 2011 3,069,584 2,486,928 216,479 791,760 6,564,751

Depreciation and impairmentAs at 1 January 2011 364,690 756,326 20,135 – 1,141,151Charge for the year 106,763 163,266 22,848 – 292,877Impairment (refer to note 11) 17,918 4,932 30,033 – 52,883Translation adjustment (4,089) (11,173) 1,757 – (13,505)On disposals (2,747) (30,028) – – (32,775)

As at 31 December 2011 482,535 883,323 74,773 – 1,440,631

Net book valueAs at 31 December 2011 2,587,049 1,603,605 141,706 791,760 5,124,120

78


At 31 December 2012, port concession rights with a carrying amount of USD 502,896 thousand (2011: USD 344,668 thousand) are pledged to secure bank loans (refer to note 25).

Goodwill USD’000

Port concession rights

USD’000Total

USD’000

CostAs at 1 January 2011 1,670,301 4,118,142 5,788,443Acquired through business combination (refer to note 30) 9,693 32,474 42,167Additions – 31,673 31,673Impairment loss (12,790) – (12,790)Disposals – (2,385) (2,385)Translation adjustment (59,549) (237,927) (297,476)

As at 31 December 2011 1,607,655 3,941,977 5,549,632

Amortisation and impairment lossesAs at 1 January 2011 – 540,329 540,329Charge for the year – 136,234 136,234Impairment loss – 96,710 96,710On disposals – (1,642) (1,642)Translation adjustment – (53,612) (53,612)

As at 31 December 2011 – 718,019 718,019

Net book valueAs at 31 December 2011 1,607,655 3,223,958 4,831,613


13 Goodwill and port concession rights continued

14 Impairment testingGoodwill acquired through business combinations and port concession rights with indefinite useful lives have been allocated to various cash-generating units (“CGU”), which are reportable business units, for the purposes of impairment testing.

Impairment testing is done at an operating port level that represents an individual CGU. Details of the CGUs by operating segment are shown below:

Carrying amount of goodwillCarrying amount of port concession

rights with indefinite useful life

2012

USD’0002011

USD’0002012

USD’0002011

USD’000 Discount rates Perpetuity growth rate

Cash-generating units aggregated by operating segment

Asia Pacific and Indian subcontinent 224,868 233,123 – – 8.00%–15.50% 2.50%Australia and Americas 271,309 323,104 – – 8.00%–14.50% 2.50%Middle East, Europe and Africa 1,092,741 1,051,428 1,030,134 989,012 7.00%–12.50% 2.50%–2.60%

Total 1,588,918 1,607,655 1,030,134 989,012

The recoverable amount of the CGU has been determined based on their value in use calculated using cash flow projections based on the financial budgets approved by management covering a three year period and a further outlook for five years, which is considered appropriate in view of the outlook for the industry and the long-term nature of the concession agreements held i.e. generally for a period of 25–50 years.

Key assumptions used in value in use calculationsThe following describes each key assumption on which management has based its cash flow projections to undertake impairment testing of goodwill and port concession rights with indefinite useful lives.

Budgeted margins – The basis used to determine the value assigned to the budgeted margin is the average gross margin achieved in the year immediately before the budgeted year, adjusted for expected efficiency improvements, price fluctuations and manpower costs.

Discount rates – These represent the cost of capital adjusted for the respective location risk factors. The Group uses the post-tax Weighted Average Cost of Capital which reflects the country specific risk adjusted discount rate.

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Cost inflation – The forecast general price index is used to determine the cost inflation during the budget year for the relevant countries where the Group is operating.

Perpetuity growth rate – In management’s view, the perpetuity growth rate is the minimum growth rate expected to be achieved beyond the eight year period. This is based on the overall regional economic growth forecasted and the Group’s existing internal capacity changes for a given region. The Group also takes into account competition and regional capacity growth to provide a comprehensive growth assumption for the entire portfolio.

The values assigned to key assumptions are consistent with the past experience of management.

Sensitivity to changes in assumptionsThe calculation of value in use for the CGU is sensitive to future earnings and therefore a sensitivity analysis was performed. The analysis demonstrated that a 10% decrease in earnings for a future period of three years from the reporting date would not result in an impairment.

14 Impairment testing continued

15 Investment in equity-accounted investeesSummary financial information for equity-accounted investees, not adjusted for the percentage ownership held by the Group:


Middle East, Europe and Africa Total

2012 USD’000

2011 USD’000

2012 USD’000

2011 USD’000

2012 USD’000

2011 USD’000

2012 USD’000

2011 USD’000

Current assets 515,254 492,575 373,871 425,910 324,725 316,072 1,213,850 1,234,557Non-current assets 8,068,891 7,533,647 2,861,185 2,799,767 2,389,594 2,311,415 13,319,670 12,644,829

Total assets 8,584,145 8,026,222 3,235,056 3,225,677 2,714,319 2,627,487 14,533,520 13,879,386

Current liabilities 666,372 511,661 168,232 236,265 209,422 181,051 1,044,026 928,977Non-current liabilities 1,903,811 1,528,068 1,846,981 1,458,954 1,022,209 841,070 4,773,001 3,828,092

Total liabilities 2,570,183 2,039,729 2,015,213 1,695,219 1,231,631 1,022,121 5,817,027 4,757,069

Revenue 1,268,308 1,203,610 852,553 749,426 623,095 694,793 2,743,956 2,647,829Expenses (979,062) (937,343) (846,046) (765,353) (536,398) (639,529) (2,361,506) (2,342,225)

Net profit/(loss) 289,246 266,267 6,507 (15,927) 86,697 55,264 382,450 305,604

The Group’s share of profit from equity-accounted investees (before separately disclosed items) 133,897 141,711

The Group’s investments in net assets of equity-accounted investees as at 31 December 3,348,317 3,451,264

For ownership percentages in equity-accounted investees, refer to note 34.

16 Other investments2012

USD’0002011

USD’000

Debt securities held to maturity (Note a) 11,277 12,815Available-for-sale financial assets (Note b) 49,556 60,378

60,833 73,193

(a) The movement in debt securities held to maturity mainly relates to redemption of USD 1,538 thousand during the year.

(b) Available-for-sale financial assets consist of an unquoted investment in an Infrastructure Fund.

The movement schedule for these investments is as follows:

2012 USD’000

2011 USD’000

As at 1 January 60,378 51,439Return of capital during the year (10,690) –Change in fair value recognised in consolidated statement of other comprehensive income (132) 8,939

As at 31 December 49,556 60,378

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17 Accounts receivable and prepayments2012

Non-current USD’000

2012 USD’000

2012 Total

USD’000

Trade receivables (net) – 244,534 244,534Advances paid to suppliers – 53,962 53,962Other receivables and prepayments 56,115 198,646 254,761Employee benefit assets (refer to note 24) 216 – 216Due from related parties (refer to note 27) 207,097 105,961 313,058

263,428 603,103 866,531

2011 Non-current

USD’0002011

USD’000

2011 Total

USD’000

Trade receivables (net) – 232,957 232,957Advances paid to suppliers – 28,268 28,268Other receivables and prepayments 53,425 258,700 312,125Employee benefit assets (refer to note 24) 155 – 155Due from related parties (refer to note 27) 206,534 104,095 310,629

260,114 624,020 884,134

The Group’s exposure to credit and currency risks are disclosed in note 29.


18 Bank balances and cash2012

USD’0002011

USD’000

Cash at banks and in hand 472,409 468,673Short-term deposits 1,362,752 3,637,270Deposits under lien 46,767 53,421

Bank balances and cash 1,881,928 4,159,364Bank overdrafts (195) (1,017)

Cash and cash equivalents for consolidated statement of cash flows 1,881,733 4,158,347

Short-term deposits are made for varying periods between one day and three months depending on the immediate cash requirements of the Group and earn interest at the respective short-term deposit market rates. Bank overdrafts are repayable on demand.

The deposits under lien amounting to USD 46,767 thousand (2011: USD 53,421 thousand) are placed to collateralise some of the borrowings of the Company’s subsidiaries.

19 Share capitalThe share capital of the Company as at 31 December was as follows:

2012 USD’000

2011 USD’000

Authorised1,250,000,000 of USD 2.00 each 2,500,000 2,500,000

Issued and fully paid830,000,000 of USD 2.00 each 1,660,000 1,660,000

20 ReservesShare premiumShare premium represents surplus received over and above the nominal cost of the shares issued to the shareholders and forms part of the shareholder equity. The reserve is not available for distribution except in circumstances as stipulated by the law.

Shareholders’ reserveShareholders’ reserve forms part of the distributable reserves of the Group.

Hedging reserveThe hedging reserve comprises the effective portion of the cumulative net change in the fair value of the cash flow hedging instruments related to hedge transactions that have not yet occurred.

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Other reservesThe other reserves mainly include statutory reserves of subsidiaries as required by applicable local legislations. This reserve also includes the unrealised fair value changes on available-for-sale investments.

Actuarial reserveThe actuarial reserve comprises the cumulative actuarial losses recognised in consolidated statement of other comprehensive income.

Translation reserveThe translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Group’s presentation currency. It also includes foreign exchange translation differences arising from translation of goodwill and purchase price adjustments which are denominated in foreign currencies at the Group level.

20 Reserves continued

21 Dividends

2012 USD’000

2011 USD’000

Declared and paid during the year: Final dividend 24 US cents per share/ 17 US cents per share 199,200 142,760

Proposed for approval at the annual general meeting (not recognised as a liability as at 31 December): Final dividend: 24 US cents per share/24 US cents per share 199,200 199,200

22 Earnings per shareBasic earnings per shareThe calculation of basic earnings per share is based on the profit attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding.

2012 USD’000

2011 USD’000

Profit attributable to ordinary shareholders 748,606 683,292

Number of shares

Number of shares

Number of ordinary shares outstanding as at 31 December 830,000,000 830,000,000

2012 USD

2011 USD

Basic earnings per share after separately disclosed items – (US cents) 90.19 82.32

Basic earnings per share before separately disclosed items – (US cents) 66.91 55.26

The Company has no share options outstanding at the year end and therefore the basic and diluted earnings per share are not different.

23 Employees’ end of service benefitsMovements in the provision recognised in the consolidated statement of financial position are as follows:

2012 USD’000

2011 USD’000

As at 1 January 49,393 45,988Provision made during the year* 11,522 13,933Amounts paid during the year (5,168) (10,528)

As at 31 December 55,747 49,393* The provision for expatriate staff gratuities, included in Employees’ end of service benefits, is calculated in accordance with the regulations of the Jebel Ali Free Zone Authority. This is based on the

liability that would arise if employment of all staff were terminated at the reporting date.

The UAE government had introduced Federal Labour Law No.7 of 1999 for pension and social security. Under this Law, employers are required to contribute 15% of the ‘contribution calculation salary’ of those employees who are UAE nationals. These employees are also required to contribute 5% of the ‘contribution calculation salary’ to the scheme. The Group’s contribution is recognised as an expense in the consolidated income statement as incurred.

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24 Pension and post-employment benefitsThe Group’s subsidiary P&O participates in a number of pension schemes throughout the world. The principal scheme is located in the UK (the “P&O UK scheme”). The P&O UK scheme is a funded defined benefit scheme and was closed to routine new members on 1 January 2002. The assets of the scheme are managed on behalf of the trustee by independent fund managers.

P&O also operates a number of smaller defined benefit and defined contribution schemes. In addition, P&O participates in various industry schemes, the most significant of which is the Merchant Navy Officers’ Pension Fund (the “MNOPF Scheme”). These generally have assets held in separate trustee administered funds.

Reconciliation of assets and liabilities recognised in the consolidated statement of financial position

2012 USD’000

2011 USD’000

Non-currentDefined benefit schemes net liabilities 272,200 234,400Liabilities from defined contribution schemes 800 600Liability in respect of long service leave 580 595

273,580 235,595CurrentLiability for current deferred compensation 11,845 12,621

Net liabilities 285,425 248,216

Net liabilitiesReflected in the consolidated statement of financial position as follows:Employee benefits assets (included within non-current receivables (refer to note 17)) (216) (155)Employee benefits liabilities: Non-current 273,796 235,750Employee benefits liabilities: Current 11,845 12,621

285,425 248,216

The defined benefit pension schemes net liabilities of USD 272,200 thousand (2011: USD 234,400 thousand) is in respect of the total P&O schemes shown below. The USD 2,700 thousand (2011: USD 1,700 thousand) net liabilities in respect of the P&O’s share of equity-accounted investees are included within investment in equity-accounted investees in the consolidated statement of financial position.

An expense of USD 16,600 thousand (2011: 17,600 thousand) has been recognised in the consolidated income statement in respect of employee benefits excluding pensions, USD 7,800 thousand (2011: USD 12,500 thousand) in general and administrative expenses and USD 8,800 thousand (2011: USD 5,100 thousand) in cost of sales.

The current portion of employee benefits liabilities includes a liability of USD 9,800 thousand (2011: USD 10,500 thousand) in respect of annual leave, USD 1,800 thousand (2011: USD 2,000 thousand) in respect of long service leave, and USD 245 thousand (2011: USD 121 thousand) in respect of sick leave and other miscellaneous employee benefit items.


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Expenses recognised in the consolidated income statement of 2012:

Defined benefit pension schemes

P&O UK scheme

USD’000MNOPF scheme

USD’000Other schemes

USD’000

Total group schemes USD’000

Share of equity accounted investees schemes USD’000

2012 P&O UK

schemes USD’000

Employer’s current service cost 500 – 3,500 4,000 600 4,600Employer’s past service cost – – – – – –Gain due to settlements/curtailments – – – – – –

500 – 3,500 4,000 600 4,600

Expected return on scheme assets (87,600) (7,900) (6,800) (102,300) (600) (102,900)Finance costs 87,500 8,900 7,600 104,000 500 104,500

Total (100) 1,000 800 1,700 (100) 1,600

Total defined benefit expenses 400 1,000 4,300 5,700 500 6,200Total defined contribution expenses – – – 10,000 8,500 18,500

Total 400 1,000 4,300 15,700 9,000 24,700

Expenses recognised in the consolidated income statement of 2011:


P&O UK scheme

USD’000MNOPF scheme

USD’000Other schemes

USD’000


Share of equity accounted

investees schemes USD’000

2012 P&O UK schemes USD’000

Employer’s current service cost 600 – 3,800 4,400 700 5,100Employer’s past service cost (1,400) – (13,500) (14,900) (1,400) (16,300)Gain due to settlements/curtailments (2,900) – (5,600) (8,500) – (8,500)

(3,700) – (15,300) (19,000) (700) (19,700)

Expected return on scheme assets (100,400) (9,600) (7,200) (117,200) (1,600) (118,800)Finance costs 95,900 9,500 8,800 114,200 1,700 115,900

Total (4,500) (100) 1,600 (3,000) 100 (2,900)

Total defined benefit expenses (8,200) (100) (13,700) (22,000) (600) (22,600)Total defined contribution expenses – – – 13,600 6,600 20,200

Total (8,200) (100) (13,700) (8,400) 6,000 (2,400)

The expenses for defined benefit and defined contribution schemes are recognised in the following line items in the consolidated income statement of 2012:


P&O UK scheme

USD’000

MNOPF scheme

USD’000

Other schemes USD’000

Defined contribution

pension schemes USD’000

Total group

schemes USD’000

Share of equity-

accounted investees schemes USD’000

Total USD’000

Operating expenses – – 2,900 3,000 5,900 – 5,900General and administrative expenses 500 – 600 7,000 8,100 – 8,100Share of results of equity-accounted

investees – – – – – 9,000 9,000

500 – 3,500 10,000 14,000 9,000 23,000

Finance costs (100) 1,000 800 – 1,700 – 1,700

Total 400 1,000 4,300 10,000 15,700 9,000 24,700

24 Pension and post-employment benefits continued

84


The expenses for defined benefit and defined contribution schemes are recognised in the following line items in the consolidated income statement of 2011:


P&O UK scheme

USD’000

MNOPF scheme

USD’000


Defined contribution

pension schemes USD’000


Share of equity-accounted


Total USD’000

Operating expenses – – 3,600 7,300 10,900 – 10,900General and administrative expenses (3,700) – (18,900) 6,300 (16,300) – (16,300)Share of results of equity-accounted

investees – – – – – 6,000 6,000

(3,700) – (15,300) 13,600 (5,400) 6,000 600Finance costs (4,500) (100) 1,600 – (3,000) – (3,000)

Total (8,200) (100) (13,700) 13,600 (8,400) 6,000 (2,400)

Total amount of actuarial losses gross of tax recognised in consolidated statement of other comprehensive income.

2012 USD’000

2011 USD’000

Actuarial loss recognised in the year 52,700 120,900Movement in minimum funding liability (2,800) (10,500)

49,900 110,400

The cumulative amount of actuarial losses recognised in the consolidated statement of other comprehensive income is USD 420,700 thousand (2011: USD 368,000 thousand).

Actuarial valuations and assumptionsThe latest valuations of the defined benefit schemes have been updated to 31 December 2012 by qualified independent actuaries. The principal assumptions are included in the table below.

The assumptions used by the actuaries are the best estimates chosen from a range of possible actuarial assumptions, which, due to the timescale covered, may not necessarily be borne out in practice.

P&O UK scheme

2012

MNOPF scheme

2012

Other schemes

2012

Share of equity-

accounted investees schemes

2012

Discount rates 4.15% 4.15% 4.40% 4.40%Discount rates bulk annuity asset 4.00% – – –Expected rates of salary increases 2.50% – 1.90% 5.30%Pension increases: deferment 2.75% 2.20% 2.90% 2.50% payment 2.75% 3.00% 2.90% 2.50%Inflation 3.05% 3.05% 3.10% 4.00%Inflation bulk annuity asset 3.00% – – –Expected rate of return on scheme assets 4.49% 4.65% 5.21% 7.30%



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P&O UK scheme

2011

MNOPF scheme

2011

Other schemes

2011

Share of equity-accounted

investees schemes

2011

Discount rates 4.65% 4.65% 2.26% 4.29%Discount rates bulk annuity asset 4.60% – – –Expected rates of salary increases 2.50% – 2.62% 3.65%Pension increases: deferment 2.80% 2.10% 2.84% 2.34% payment 2.80% 3.05% 2.84% 2.34%Inflation 3.10% 3.10% 3.07% 2.46%Inflation bulk annuity asset 3.05% – – –Expected rate of return on scheme assets 5.09% 5.14% 5.95% 6.21%

From 1 December 2011, changes have been made to the benefits provided by the P&O UK scheme. These include a restriction to pay increases equal to the lower of RPI and 2.5% in a Scheme Year. This restriction is reflected in the pay increase assumption above and there is no allowance for promotional increases.

The assumptions for pensioner longevity under both the P&O UK scheme and the MNOPF scheme are based on analysis of pensioner death trends under the respective schemes over many years.

For illustration, the life expectancies for the two schemes at age 65 now and in the future are detailed in the table below.

Male Female

Age 65 now

Age 65 in 20 years’

timeAge 65

now

Age 65 in 20 years’

time

2012P&O UK scheme 23.8 26.8 25.6 28.7MNOPF scheme 22.0 24.5 25.9 28.2

2011P&O UK scheme 23.7 26.7 25.4 28.5MNOPF scheme 21.9 24.4 25.7 28.1

The expected long-term rates of return for each of the main asset classes are subjective judgements based on market indicators, economic background, historical analysis of returns and industry forecasts. They take into account the schemes’ strategic asset allocations across the sectors of the main asset classes.

P&O UK scheme MNOPF scheme Other schemes

Share of equity-accounted investees

schemes

Expected long-term

rate of return %

p.a.Fair value USD’000

Expected long-term

rate of return %


Expected long-term

rate of return %


Group schemes

fair value USD’000

Fair value USD’000

Total fair value

USD’000

2012Equities 7.00 343,500 7.00 40,200 6.70 84,100 467,800 500 468,300Bonds 3.85 241,800 3.40 93,000 3.60 79,400 414,200 3,800 418,000Other 2.85 20,700 5.30 34,300 5.30 24,500 79,500 6,500 86,000Value of insured pensioner liability 4.00 1,361,400 – – – – 1,361,400 – 1,361,400

4.49 1,967,400 4.65 167,500 5.21 188,000 2,322,900 10,800 2,333,700

2011Equities 7.35 286,300 7.35 30,900 7.60 62,100 379,300 300 379,600Bonds 5.00 199,100 4.25 89,200 3.90 45,000 333,300 3,100 336,400Other 3.00 10,400 5.50 30,600 5.20 13,800 54,800 5,600 60,400Value of insured pensioner liability 4.60 1,237,000 – – – – 1,237,000 – 1,237,000

5.09 1,732,800 5.14 150,700 5.95 120,900 2,004,400 9,000 2,013,400


86


Reconciliation of the opening and closing present value of defined benefit obligations:

P&O UK scheme

USD’000

MNOPF scheme

USD’000




2012 Total

USD’000

Present value of obligation at 1 January 2012 (1,892,800) (191,000) (152,200) (2,236,000) (10,700) (2,246,700)Employer’s interest cost (87,500) (8,900) (7,600) (104,000) (500) (104,500)Employer’s current service cost (500) – (3,500) (4,000) (600) (4,600)Past service costs – – – – – –Gain due to settlements/curtailments – – – – – –Contributions by scheme participants (200) – (1,300) (1,500) (100) (1,600)Foreign currency exchange (84,100) (8,600) (7,800) (100,500) (600) (101,100)Benefits paid 103,500 9,200 7,000 119,700 600 120,300Obligations pertaining to equity-accounted investees

recognised during the year – – – – – –Amounts re-classified from other benefits – – (68,500) (68,500) – (68,500)Actuarial loss on obligation (168,000) (20,500) (11,800) (200,300) (1,600) (201,900)Transfer to assets/liabilities classified as held for sale – – – – – –

Present value of obligation at 31 December 2012 (2,129,600) (219,800) (245,700) (2,595,100) (13,500) (2,608,600)

Reconciliation of the opening and closing present value of defined benefit obligations:

P&O UK scheme

USD’000

MNOPF scheme

USD’000





2011 Total

USD’000

Present value of obligation at 1 January 2011 (1,779,600) (174,400) (151,600) (2,105,600) (24,400) (2,130,000)Employer’s interest cost (95,900) (9,500) (8,800) (114,200) (1,700) (115,900)Employer’s current service cost (600) – (3,800) (4,400) (700) (5,100)Past service costs 1,400 – 13,500 14,900 1,400 16,300Gain due to settlements/curtailments 2,900 – 5,600 8,500 – 8,500Contributions by scheme participants (200) – (1,300) (1,500) (400) (1,900)Foreign currency exchange 11,800 1,400 200 13,400 (1,100) 12,300Benefits paid 107,500 9,000 7,500 124,000 3,100 127,100Obligations pertaining to equity-accounted investees

recognised during the year – – – – (6,800) (6,800)Amounts re-classified from other benefits – – (2,900) (2,900) – (2,900)Actuarial loss on obligation (140,100) (17,500) (10,600) (168,200) (1,800) (170,000)Transfer to assets/liabilities classified as held for sale – – – – 21,700 21,700

Present value of obligation at 31 December 2011 (1,892,800) (191,000) (152,200) (2,236,000) (10,700) (2,246,700)



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Reconciliation of the opening and closing fair value of scheme assets:

P&O UK scheme

USD’000

MNOPF scheme

USD’000


Total group

schemes USD’000


2012 Total

USD’000

Fair value of scheme assets at 1 January 2012 1,732,800 150,700 120,900 2,004,400 9,000 2,013,400Expected return on scheme assets 87,600 7,900 6,800 102,300 600 102,900Contributions by employer 13,500 7,000 7,400 27,900 400 28,300Contributions by scheme participants 200 – 1,300 1,500 100 1,600Foreign currency exchange 77,500 6,700 6,200 90,400 500 90,900Benefits paid (103,500) (9,200) (7,000) (119,700) (600) (120,300)Assets pertaining to equity-accounted investee

recognised during the year – – – – – –Amounts reclassified from defined

contribution schemes – – 48,500 48,500 – 48,500Actuarial gain on assets 159,300 4,400 3,900 167,600 800 168,400

Fair value of scheme assets at 31 December 2012 1,967,400 167,500 188,000 2,322,900 10,800 2,333,700

Defined benefit schemes net liabilities (162,200) (52,300) (57,700) (272,200) (2,700) (274,900)Minimum funding liability – – – – – –

Net liability recognised in the consolidated statement of financial position at 31 December 2012 (162,200) (52,300) (57,700) (272,200) (2,700) (274,900)

Actual gain on scheme assets – – – – – –

Where a surplus arises on a scheme in accordance with IAS19 and IFRIC14, the surplus is recognised as an asset only if it represents an unconditional economic benefit available to the Group in the future. Any surplus in excess of this benefit is not recognised in the consolidated statement of financial position. A minimum funding liability arises where the statutory funding requirements are such that future contributions in respect of past service will result in a future unrecognisable surplus.


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Reconciliation of the opening and closing fair value of scheme assets:

P&O UK scheme

USD’000

MNOPF scheme

USD’000


Total group

schemes USD’000



2011 Total

USD’000

Fair value of scheme assets at 1 January 2011 1,688,900 141,000 115,100 1,945,000 19,200 1,964,200Expected return on scheme assets 100,400 9,600 7,200 117,200 1,600 118,800Contributions by employer 14,000 7,100 7,200 28,300 1,300 29,600Contributions by scheme participants 200 – 1,400 1,600 400 2,000Foreign currency exchange (9,200) (900) (900) (11,000) 600 (10,400)Benefits paid (107,500) (9,000) (7,500) (124,000) (2,900) (126,900)Assets pertaining to equity-accounted investee

recognised during the year – – – – 6,500 6,500Actuarial gain/(loss) on assets 46,000 2,900 (1,600) 47,300 (100) 47,200Transfer to assets/liabilities classified as held for sale – – – – (17,600) (17,600)

Fair value of scheme assets at 31 December 2011 1,732,800 150,700 120,900 2,004,400 9,000 2,013,400

Defined benefit schemes net liabilities (160,000) (40,300) (31,300) (231,600) (1,700) (233,300)Minimum funding liability – (2,800) – (2,800) – (2,800)

Net liability recognised in the consolidated statement of financial position at 31 December 2011 (160,000) (43,100) (31,300) (234,400) (1,700) (236,100)

Actual gain on scheme assets 146,400 12,500 7,000 165,900 1,300 167,200

It is anticipated that the Group will make the following contributions to the pension schemes in 2013:

P&O UK scheme

USD’000

MNOPF scheme

USD’000




Total USD’000

Pension scheme contributions 13,800 7,100 7,600 28,500 400 28,900

31 December 2012Present value of defined benefit obligation (2,129,600) (219,800) (245,700) (2,595,100) (13,500) (2,608,600)Fair value of scheme assets 1,967,400 167,500 188,000 2,322,900 10,800 2,333,700

Deficit in the scheme (162,200) (52,300) (57,700) (272,200) (2,700) (274,900)Minimum funding obligation – – – – – –Net liability recognised in the consolidated

statement of financial position (162,200) (52,300) (57,700) (272,200) (2,700) (274,900)Experience gain on scheme assets 159,300 4,400 3,900 167,600 500 168,100Percentage of scheme assets at year end (%) 8% 3% 2% 7% 5% 7%Experience loss on scheme liabilities (30,400) (5,400) (1,600) (37,400) (1,400) (38,800)Percentage of scheme liabilities at year end (%) –2% –3% –1% –2% –13% –2%(Loss)/gain due to change in assumptions (137,600) (15,100) (10,200) (162,900) 100 (162,800)Movement in minimum funding liability – 2,800 – 2,800 – 2,800



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P&O UK scheme

USD’000

MNOPF scheme

USD’000




Total USD’000

31 December 2011Present value of defined benefit obligation (1,892,800) (191,000) (152,200) (2,236,000) (10,700) (2,246,700)Fair value of scheme assets 1,732,800 150,700 120,900 2,004,400 9,000 2,013,400

Deficit in the scheme (160,000) (40,300) (31,300) (231,600) (1,700) (233,300)Minimum funding obligation – (2,800) – (2,800) – (2,800)Net liability recognised in the consolidated statement

of financial position (160,000) (43,100) (31,300) (234,400) (1,700) (236,100)Experience gain/(loss) on scheme assets 46,000 2,900 (200) 48,700 (300) 48,400Percentage of scheme assets at year end (%) 3% 2% –0.17% 2% –3% 2%Experience loss on scheme liabilities (13,200) (3,200) (10,600) (27,000) (1,400) (28,400)Percentage of scheme liabilities at year end (%) –1% –2% –9% –1% –16% –1%Loss due to change in assumptions (126,900) (14,300) (1,400) (142,600) (200) (142,800)Movement in minimum funding liability – 10,500 – 10,500 – 10,500

31 December 2010Present value of defined benefit obligation (1,779,600) (174,400) (151,600) (2,105,600) (24,400) (2,130,000)Fair value of scheme assets 1,688,900 141,000 115,100 1,945,000 19,200 1,964,200Minimum funding obligation – (13,300) – (13,300) – (13,300) Net liability recognised in the consolidated statement

of financial position (90,700) (46,700) (36,500) (173,900) (5,200) (179,100)Experience (loss)/gain on scheme assets (70,300) 11,900 2,200 (56,200) 600 (55,600)Percentage of scheme assets at year end (%) –4% 8% 2% –3% 3% –3%Experience gain/(loss) on scheme liabilities 101,600 (7,400) 5,200 99,400 (600) 98,800Percentage of scheme liabilities at year end (%) 6% –5% 5% 5% –3% 5%Gain/(loss) due to change in assumptions 39,900 (8,700) (6,000) 25,200 – 25,200Movement in minimum funding liability – (13,300) – (13,300) – (13,300)

31 December 2009Present value of defined benefit obligation (1,991,800) (163,600) (184,500) (2,339,900) (24,000) (2,363,900)Fair value of scheme assets 1,812,000 127,100 142,900 2,082,000 17,500 2,099,500Surplus or deficit in the scheme (179,800) (36,500) (41,600) (257,900) (6,500) (264,400)Experience gain on scheme assets 202,200 5,600 11,600 219,400 300 219,700Percentage of scheme assets at year end (%) 11% 4% 8% 11% 2% 10%Experience gain on scheme liabilities – – 200 200 – 200Percentage of scheme liabilities at year end (%) 0% 0% 0% 0% 0% 0%Loss due to change in assumptions (326,400) (22,700) (28,700) (377,800) (4,400) (382,200)

31 December 2008Present value of define benefit obligation (1,508,400) (126,000) (142,300) (1,776,700) (14,200) (1,790,900)Fair value of scheme assets 1,450,400 105,900 118,500 1,674,800 12,000 1,686,800Surplus or deficit in the scheme (58,000) (20,100) (23,800) (101,900) (2,200) (104,100)Experience loss on scheme assets (278,500) (33,500) (38,700) (350,700) (3,900) (354,600)Percentage of scheme assets at year end (%) –19% –32% –33% –21% –33% –21%Experience (loss)/gain on scheme liabilities (11,300) (3,300) 2,200 (12,400) – (12,400)Percentage of scheme liabilities at year end (%) 1% 3% –2% 1% 0% 1%Gain due to change in assumptions 213,300 14,500 28,000 255,800 4,300 260,100


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P&O UK schemeFormal actuarial valuations of the P&O UK scheme are normally carried out triennially by qualified independent actuaries, the latest completed regular valuation report for the scheme being at 31 March 2010, using the projected unit credit method.

At this date, the market value of the P&O UK scheme’s assets were USD 1,774,000 thousand and the value of accrued benefits to members allowing for future increases in earnings was USD 1,865,000 thousand giving a deficit of USD 91,000 thousand and a funding ratio of 95%.

Excluding the deficit reduction payments, the average contribution rate for the P&O UK scheme was 29.1% for the year to 31 December 2011 and 21.8% for the year to 31 December 2012.

The principal long-term assumptions in the P&O UK scheme’s 2010 valuation are:

Nominal % per annum

Price inflation 3.60Investment return on pre-retirement portfolio 6.71Investment return on post-retirement portfolio 4.07Bulk Purchase Annuity liabilities 4.40Earnings escalation 5.10Increase in accrued pensions on excess over Guaranteed Minimum Pensions 3.00

As a result of this valuation P&O committed to regular monthly deficit payments from April 2011 totalling USD 1,060 thousand until November 2019.

In December 2007, as part of a process developed with P&O to de-risk the pension scheme, the Trustee transferred USD 1,600,000 thousand of P&O UK scheme assets to Paternoster (UK) Ltd, in exchange for a bulk annuity insurance policy to ensure that the assets (in the Company’s statement of financial position and in the scheme) will always be equal to the current value of the liability of the pensions in payment at 30 June 2007, thus removing the funding risks for these liabilities.

Merchant Navy Officers’ Pension Fund (“MNOPF”)The MNOPF scheme is a defined benefit multi-employer scheme in which officers employed by companies within the Group have participated.

The scheme is divided into two sections, the old section and the new section, both of which are closed to new members and the latest valuation was carried out at 31 March 2009.

The old section has been closed to benefit accrual since 1978. The scheme’s independent actuary advised that at 31 March 2009 the market value of the scheme’s assets for the old section was USD 1,595,000 thousand, representing approximately 89% of the value of the benefits accrued to members. The Trustee has determined that the asset growth of the Fund, in excess of that assumed in calculating the technical provisions, between the formal date of the valuation and 18 November 2009 has been sufficient to eliminate the shortfall. Therefore no contributions are required to meet the shortfall. The assets of the old section were substantially invested in bonds.

The Group could not identify its share of the underlying assets and liabilities of the old section on a consistent and reasonable basis and is therefore accounting for contributions and payments to the old section under IAS 19 as if it were a defined contribution scheme.

As at 31 March 2009, the date of the most recent formal actuarial valuation, the new section had assets with a market value of USD 2,217,000 thousand, representing approximately 68% of the benefits accrued to members. The valuation assumptions were as follows:

Nominal % Per annum

Investment return on pre-retirement portfolio 7.25Investment return on post-retirement portfolio 4.75Rate of national average earnings increase 4.50Rate of pension increases (where increases apply) 3.00

At the date of the valuation, approximately 48% of the new section’s assets were invested in pooled investment vehicles, 35% in equities, 9% in bonds and 8% in cash and other assets.



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Subsequent to valuation, the Trustee and Employers have agreed to contribute in addition to those arising from the 31 March 2003 and 31 March 2006 valuations to the section by participating employers over the period to 30 September 2022. These additional payments have a present value of USD 632,000 thousand as at 30 September 2010.

The Trustee will decide the payment terms for each participating employer in accordance with the Trustee’s Contribution Collection Policy. The Group’s share is USD 29,500 thousand.

In addition Group companies are making regular annual deficit payments in respect of the 31 March 2003 valuation of USD 2,485 thousand until 30 March 2014 and in respect of the 31 March 2006 valuation of USD 1,864 thousand until 30 September 2014.

P&O’s share of the net deficit of the new section at 31 December 2012 is estimated at 4.807%.

Merchant Navy Ratings’ Pension Fund (“MNRPF”)The Merchant Navy Ratings’ Pension Fund (“the MNRPF Scheme”) is an industry wide multi-employer defined benefit pension scheme in which sea staff employed by companies within P&O have participated. The scheme has a significant funding deficit and has been closed to further benefit accrual.

As at 31 March 2011, the date of the most recent full triennial actuarial valuation carried out by an independent actuary, the scheme had assets with a market value of USD 1,084,000 thousand, representing 76% of the benefits accrued to members allowing for future increases. Approximately 54% of the scheme’s assets were invested in bonds, 19% in equities and 27% in property and other return seeking assets. The valuation assumptions were as follows:

Nominal % Per annum

Investment return on pre-retirement portfolio 6.00Investment return on post-retirement portfolio 4.50Rate of national average earnings increase 4.60Rate of pension increases (where increases apply) 3.60

Certain Group companies which are no longer current employers in the MNRPF had settled their statutory debt obligation, were not considered to have any legal obligation with respect to the ongoing deficit in the fund. However, following a legal challenge, by Stena Line Limited, the High Court decided that the Trustees could require all employers that had ever participated in the scheme to make contributions to fund the deficit. Although the Group appealed the decision, it was not overturned.

The Trustees notified these Group companies of their estimated share of current deficit during December 2012 equating to 3.0%. The method of deficit allocation has still to be approved by the court however based on this initial indication the Group has provided for this liability after an allowance for the impact of irrecoverable contributions in respect of companies no longer in existence or able to pay their share. The net impact of USD 20,000 thousand has been reflected as an actuarial movement in the consolidated statement of other comprehensive income.

Other schemesOther defined benefit schemes include schemes in Australia, Canada, Indonesia, Pakistan, Hong Kong and Philippines.

Other industry schemes are mainly overseas multi-employer schemes, in which the Group is unable to identify its share of the underlying assets and liabilities on a consistent and reasonable basis. The Group is therefore accounting for contributions to these schemes as if they were defined contribution schemes for IAS 19 purposes.

The Group operates a defined contribution Mandatory Provident Fund retirement benefits scheme (“the MPF Scheme”) in Hong Kong, under the Mandatory Provident Fund Schemes Ordinance, for those employees who are eligible to participate in the MPF scheme. Contributions are made based on a percentage of the employees’ relevant income and are charged to the consolidated income statement as they become payable in accordance with the rules of the MPF scheme. The assets of the MPF scheme are held separately from those of the Group in an independently administered fund. The Group’s employer contributions vest fully with the employees when contributed into the MPF scheme.

The Group also operates a defined contribution retirement benefits scheme (“the ORSO scheme”) in Hong Kong for those employees who are eligible to participate in this scheme. The ORSO scheme operates in a similar way to the MPF scheme, except that when an employee leaves the ORSO scheme before the employer contributions vest fully, the ongoing employer contributions payable by the Group are reduced by the relevant amount of the forfeited employer contributions.


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25 Interest bearing loans and borrowingsThis note provides information about the terms of the Group’s interest-bearing loans and borrowings, which are measured at amortised cost. Information about the Group’s exposure to interest rate, foreign currency and liquidity risk are described in note 29.

2012 USD’000

2011 USD’000

Non-current liabilitiesSecured bank loans 669,322 720,482Mortgage debenture stock 2,307 2,212Unsecured loan stock 5,287 5,071Unsecured bank loans 106,916 552,842Unsecured bond issues 3,237,234 3,235,320Finance lease liabilities 28,555 47,382

4,049,621 4,563,309

Current liabilitiesSecured bank loans 203,111 100,242Unsecured bank loans 484,909 3,062,653Unsecured loans 3,719 3,619Finance lease liabilities 11,096 11,932

702,835 3,178,446

Total 4,752,456 7,741,755

Terms and debt repayment scheduleTerms and conditions of outstanding loans were as follows:

Currency NotesNominal

interest rateYear of

maturityFace value

USD’000

2012 Carrying amount

USD’000

Secured loansEGP Variable 2013 1,868 1,868EUR Variable 2017–2023 103,353 103,353GBP Variable 2031 119,846 119,846GBP 8.5% 2017 18,000 18,000HKD Variable 2015 837 837INR Variable 2015–2017 39,820 39,820PKR Variable 2018 76,345 76,345USD 3%–8% 2017–2022 29,794 29,794USD Variable 2013–2020 481,784 481,784ZAR 9.5% 2017 786 786Unsecured loansCAD Variable 2013 158,030 158,030SAR Variable 2017 19,205 19,205INR Variable 2014–2019 70,260 70,260USD 4.14%–7% 2013–2024 29,330 29,330USD 8% 2013 1,200 1,200USD Variable 2013 315,000 315,000EUR Variable 2013 2,519 2,519Mortgage debenture stockGBP 3.5% undated 2,307 2,307Unsecured loan stockGBP 7.5% undated 5,287 5,287Unsecured BondUSD 7.88% 2027 8,000 7,935Unsecured sukuk bondsUSD (b) * 2017 1,500,000 1,490,661Unsecured MTNsUSD (b) 6.85% 2037 1,750,000 1,738,638Finance lease liabilities in various currencies 4.14%–14% 2013–2054 39,651 39,651

4,773,222 4,752,456* The profit rate on this Islamic Bond is 6.25%.


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Terms and debt repayment scheduleTerms and conditions of outstanding loans were as follows:

Currency NotesNominal

interest rateYear of

maturityFace value

USD’000

2011 Carrying amount

USD’000

Secured loansEGP Variable 2013 3,099 3,099EUR Variable 2017–2024 117,248 117,248EUR 2% 2024 14,824 14,824HKD Variable 2015 1,206 1,206INR Variable 2015–2017 76,632 76,632PKR Variable 2018 75,306 75,306USD 3%–8% 2013–2019 7,089 7,089USD Variable 2014–2020 524,320 524,320ZAR 10% 2017 1,000 1,000Unsecured loansCAD Variable 2013 167,995 167,995INR Variable 2014 45,272 45,272INR 11.25% 2012 28,295 28,295SAR Variable 2017 23,232 23,232USD 4.14% 2024 30,893 30,893USD 6.21% 2012 1,000 1,000USD 8% 2012 1,200 1,200USD (a) Variable 2012 3,000,000 2,997,792USD Variable 2013 309,999 309,999USD Variable 2012 11,017 11,017EUR Variable 2012 2,419 2,419Mortgage debenture stockGBP 3.50% undated 2,212 2,212Unsecured loan stockGBP 7.50% undated 5,071 5,071Unsecured BondUSD 7.88% 2027 8,000 7,935Unsecured sukuk bondsUSD (b) * 2017 1,500,000 1,488,922Unsecured MTNsUSD (b) 6.85% 2037 1,750,000 1,738,463Finance lease liabilities in various currencies 4.14%–14% 2012–2054 59,314 59,314

7,766,643 7,741,755* The profit rate on this Islamic Bond is 6.25%.

(a) During the year, the Group has repaid USD 3,000,000 thousand outstanding under its revolving credit facility utilising its existing cash resources.

(b) The Group has issued conventional bond of USD 1,750,000 thousand as Medium Term Note and a Sukuk (Islamic Bond) of USD 1,500,000 thousand. The Medium Term note and Sukuk are currently listed on Nasdaq Dubai and the London Stock Exchange (LSE).

Certain property, plant and equipment and port concession rights are pledged against the facilities obtained from the banks (refer to note 12 and note 13). The deposits under lien amounting to USD 46,767 thousand (2011: USD 53,421 thousand) are placed to collateralise some of the borrowings of the Company’s subsidiaries (refer to note 18).

There has been no issuance or repayment of debt securities in the current year (2011: Nil). At 31 December 2012, the undrawn committed borrowing facilities of USD 1,897,511 thousand (2011: USD 1,037,021 thousand) were available to the Group, in respect of which all conditions precedent had been met.

25 Interest bearing loans and borrowings continued

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Finance lease liabilitiesThe Group classifies certain property, plant and equipment as finance leases where it retains all risks and rewards incidental to the ownership. The net carrying values of these assets are disclosed in note 12.

Future minimum lease payments under finance leases together with the present value of the net minimum lease payments are as follows:

Future minimum lease

payments USD’000

Interest USD’000

2012 Present value

of minimum lease payments

USD’000

Less than one year 13,715 (2,619) 11,096Between one and five years 25,938 (5,011) 20,927More than five years 15,328 (7,700) 7,628

At 31 December 54,981 (15,330) 39,651

Future minimum lease

payments USD’000

Interest USD’000

2011 Present value of minimum lease

payments USD’000

Less than one year 15,833 (3,901) 11,932Between one and five years 43,689 (8,866) 34,823More than five years 22,647 (10,088) 12,559

At 31 December 82,169 (22,855) 59,314

The finance leases do not contain any escalation clauses and do not provide for contingent rents.


25 Interest bearing loans and borrowings continued

26 Accounts payable and accrualsNon-current

USD’000Current

USD’000

2012 Total

USD’000

Trade payables – 115,415 115,415Other payables and accruals 384,248 642,625 1,026,873Provisions* 499 41,000 41,499Fair value of derivative financial instruments 120,008 41,850 161,858Amounts due to related parties (refer to note 27) – 13,182 13,182

As at 31 December 504,755 854,072 1,358,827

Non-current USD’000

Current USD’000

2011 Total

USD’000

Trade payables – 138,616 138,616Other payables and accruals 386,071 549,699 935,770Provisions* 269 26,479 26,748Fair value of derivative financial instruments 80,900 53,336 134,236Amounts due to related parties (refer to note 27) – 12,272 12,272

As at 31 December 467,240 780,402 1,247,642* During the current year, additional provision of USD 33,451 thousand was made (2011: USD 13,598 thousand) and an amount of USD 18,700 thousand was utilised (2011: USD 31,550 thousand).

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27 Related party transactionsFor the purpose of these consolidated financial statements, parties are considered to be related to the Group, if the Group has the ability, directly or indirectly, to control the party or exercise significant influence over it in making financial and operating decisions, or vice versa, or where the Group and the party are subject to common control or significant influence i.e. part of the same Parent Group.

Related parties represent associated companies, shareholders, directors and key management personnel of the Group, the Parent Company, Ultimate Parent Company (Dubai World Corporation) and entities jointly controlled or significantly influenced by such parties. Pricing policies and terms of these transactions are approved by the Group’s management. The terms and conditions of the related party transactions were made on an arm’s length basis.

The Ultimate Parent Company operates a Shared Services Unit (“SSU”) which recharges the proportionate costs of services provided to the Group. SSU also processes the payroll for the Company and certain subsidiaries and recharges the respective payroll costs.

Transactions with related parties included in the consolidated financial statements are as follows:

Equity- accounted investees USD’000

Other related parties

USD’000

2012 Total

USD’000

Expenses charged:Concession fee – 48,169 48,169Shared services – 2,354 2,354Other services – 29,249 29,249Revenue earned:Management fee income 24,889 – 24,889

Equity- accounted

investees USD’000

Other related parties

USD’000

2011 Total

USD’000

Expenses charged:Concession fee – 48,166 48,166Shared services – 9,259 9,259Other services – 20,676 20,676Revenue earned:Management fee income 23,248 – 23,248

Balances with related parties included in the consolidated statement of financial position are as follows:

Due from related parties Due to related parties

2012 USD’000

2011 USD’000

2012 USD’000

2011 USD’000

Ultimate Parent Company 1,871 2,730 194 –Parent Company 53,450 54,154 – –Equity-accounted investees 232,973 232,052 124 386Other related parties 24,764 21,693 12,864 11,886

313,058 310,629 13,182 12,272

Guarantees issued on behalf of equity-accounted investees amount to USD 98,720 thousand (2011: USD 12,020 thousand).

Compensation of key management personnelThe remuneration of Directors and other key members of the management during the year were as follows:

2012 USD’000

2011 USD’000

Short-term benefits and bonus 8,135 8,620Post retirement benefits 720 722

8,855 9,342

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28 Assets held for sale2012

USD’0002011

USD’000

Middle East, Europe and Africa region – 77,706

Assets held for sale in 2011 represent the investments in Tilbury Container Services Limited which was disposed in January 2012.

29 Financial instruments(a) Credit risk(i) Exposure to credit riskThe carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was as follows:

2012 USD’000

2011 USD’000

Available-for-sale financial assets 49,556 60,378Debt securities held to maturity 11,277 12,815Loans and receivables 693,705 727,190Bank balances 1,881,928 4,159,364

2,636,466 4,959,747

The maximum exposure to credit risk for trade receivables (net) at the reporting date by operating segments is as follows:

2012 USD’000

2011 USD’000

Asia Pacific and Indian subcontinent 17,758 21,939Australia and Americas 39,996 40,332Middle East, Europe and Africa 186,780 170,686

244,534 232,957

The ageing of trade receivables (net) at the reporting date was:

2012 USD’000

2011 USD’000

Neither past due nor impaired on the reporting date: 174,112 172,756Past due on the reporting datePast due 0–30 days 60,440 48,006Past due 31–60 days 7,526 8,892Past due 61–90 days 1,328 1,227Past due >90 days 1,128 2,076

244,534 232,957

The Group believes that the unimpaired amounts that are past due by more than 30 days are still collectible, based on the historic payment behaviour.

Movement in the allowance for impairment in respect of trade receivables during the year was:

2012 USD’000

2011 USD’000

As at 1 January 35,954 31,829Provision recognised during the year 2,966 4,125

As at 31 December 38,920 35,954

Based on historic default rates, the Group believes that, apart from the above, no impairment allowance is necessary in respect of trade receivables not past due or past due.

Trade receivables with the top ten customers represent 45% (2011: 40%) of the trade receivables.


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(b) Liquidity risk2012The following are the undiscounted contractual maturities of financial liabilities, including estimated interest payments and includes the impact of netting agreements.

Carrying amount

USD’000

Contractual cash flows

USD’000

Less than 1 year

USD’0001–2 years USD’000

2–5 years USD’000

More than 5 years

USD’000

Non-derivative financial liabilitiesSecured bank loans 872,433 (1,120,723) (169,021) (171,607) (513,525) (266,570)Unsecured bond issues 3,237,234 (6,627,141) (214,255) (214,255) (2,096,411) (4,102,220)Mortgage debenture stocks 2,307 (4,405) (81) (81) (242) (4,001)Unsecured loans and loan stock 9,006 (19,472) (4,268) (397) (1,190) (13,617)Finance lease liabilities 39,651 (54,981) (13,715) (11,645) (14,293) (15,328)Unsecured syndicate bank loans – – – – – –Unsecured other bank loans 591,825 (634,830) (509,236) (55,643) (40,435) (29,516)Trade and other payables 635,824 (644,505) (251,576) (109,422) (254,830) (28,677)Bank overdraft 195 (195) (195) – – –Financial guarantees* – (266,814) (266,814) – – –Derivative financial liabilitiesInterest rate swaps 161,823 (238,381) (41,096) (36,399) (87,129) (73,757)Forward exchange contracts 35 192 192 – – –

Total 5,550,333 (9,611,255) (1,470,065) (599,449) (3,008,055) (4,533,686)* Refer to note 33 for further details.

2012The following table indicates the periods in which the undiscounted cash flows associated with derivatives that are expected to occur. The timing of these cash flows are not materially different from the impact on the consolidated income statement.

Carrying amount

USD’000

Expected cash flows

USD’000

Less than 1 year



More than 5 years

USD’000

Interest rate swapsLiabilities (161,823) (238,381) (41,096) (36,399) (87,129) (73,757)Forward exchange contractsLiabilities (35) 192 192 – – –

Total (161,858) (238,189) (40,904) (36,399) (87,129) (73,757)

2011The following are the undiscounted contractual maturities of financial liabilities, including estimated interest payments and includes the impact of netting agreements.

Carrying amount

USD’000

Contractual cash flows

USD’000

Less than 1 year



More than 5 years

USD’000

Non-derivative financial liabilitiesSecured bank loans 820,724 (1,009,331) (148,023) (167,074) (512,560) (181,674)Unsecured bond issues 3,235,320 (6,841,396) (214,255) (214,255) (642,765) (5,770,121)Mortgage debenture stocks 2,212 (4,300) (78) (78) (233) (3,911)Unsecured loans and loan stock 8,690 (19,109) (4,149) (380) (1,141) (13,439)Finance lease liabilities 59,314 (82,169) (15,833) (15,211) (28,478) (22,647)Unsecured syndicate bank loans 2,997,792 (3,007,078) (3,007,078) – – –Unsecured other bank loans 617,703 (693,468) (108,626) (494,390) (62,808) (27,644)Trade and other payables 861,872 (869,382) (475,801) (180,512) (179,796) (33,273)Bank overdraft 1,017 (1,017) (1,017) – – –Financial guarantees* – (12,020) (12,020) – – –Derivative financial liabilitiesInterest rate swaps 133,541 (210,470) (40,316) (33,821) (77,420) (58,913)Forward exchange contracts 539 (397) (397) – – –Cross currency options 156 – – – – –

Total 8,738,880 (12,750,137) (4,027,593) (1,105,721) (1,505,201) (6,111,622)* Refer to note 33 for further details.

29 Financial instruments continued

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2011The following table indicates the periods in which the undiscounted cash flows associated with derivatives that are expected to occur. The timing of these cash flows are not materially different from the impact on the consolidated income statement.

Carrying amount

USD’000

Expected cash flows

USD’000

Less than 1 year



More than 5 years

USD’000

Interest rate swapsLiabilities (133,541) (210,470) (40,316) (33,821) (77,420) (58,913)Forward exchange contractsLiabilities (539) (397) (397) – – –Cross currency optionsLiabilities (156) – – – – –

Total (134,236) (210,867) (40,713) (33,821) (77,420) (58,913)

(c) Market risk(i) Currency riskExposure to currency riskThe Group’s financial instruments in different currencies were as follows:

USD* USD’000

GBP USD’000

EUR USD’000

AUD USD’000

INR USD’000

CAD USD’000

Others USD’000

2012 Total

USD’000

Cash and cash equivalents 1,508,112 77,411 162,594 32,751 14,634 21,700 64,726 1,881,928Trade receivables 145,088 21,700 31,731 4,000 7,676 15,500 18,839 244,534Secured bank loans

and mortgage debenture stock (534,568) (126,237) (103,353) – (39,820) – (70,762) (874,740)

Unsecured bank loans and loan stock (345,531) (5,287) (2,519) – (70,260) (158,030) (19,204) (600,831)

Bank overdraft – – – – (195) – – (195)Trade payables (36,597) (15,900) (25,542) (2,100) (24,168) (2,300) (8,808) (115,415)

Net consolidated statement of financial position exposures 736,504 (48,313) 62,911 34,651 (112,133) (123,130) (15,209) 535,281

* The functional currency of the Company is UAE Dirham. UAE Dirham is currently pegged to USD and therefore the Group has no foreign currency risk on these balances.

The Group’s financial instruments in different currencies were as follows:

USD* USD’000

GBP USD’000

EUR USD’000

AUD USD’000

INR USD’000

CAD USD’000

Others USD’000

2011 Total

USD’000

Cash and cash equivalents 3,841,137 64,697 103,070 66,340 13,237 14,754 56,129 4,159,364Trade receivables 114,704 23,297 44,650 11,493 8,761 12,114 17,938 232,957Secured bank loans

and mortgage debenture stock (531,411) (2,212) (132,071) – (76,632) – (80,610) (822,936)

Unsecured bank loans and loan stock (3,351,901) (5,071) (2,419) – (73,566) (167,995) (23,233) (3,624,185)

Bank overdraft – – – – (155) – (862) (1,017)Trade payables (33,656) (15,220) (36,113) (5,281) (39,288) (3,106) (5,952) (138,616)

Net consolidated statement of financial position exposures 38,873 65,491 (22,883) 72,552 (167,643) (144,233) (36,590) (194,433)

* The functional currency of the Company is UAE Dirham. UAE Dirham is currently pegged to USD and therefore the Group has no foreign currency risk on these balances.



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The following significant exchange rates applied during the year:

Average rate during Reporting date spot rate

2012 2011 2012 2011

GBP 0.631 0.623 0.618 0.644EUR 0.778 0.719 0.757 0.772AUD 0.966 0.969 0.964 0.979INR 53.361 46.610 54.898 53.013CAD 0.999 0.989 0.996 1.021

(ii) Sensitivity analysisA 10 percent strengthening of the USD against the following currencies at 31 December would have increased/(decreased) consolidated income statement and consolidated statement of other comprehensive income by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant. Furthermore, as each entity in the Group determines its own functional currency, the effect of translating financial assets and liabilities of the respective entity would mainly impact consolidated statement of other comprehensive income.

Consolidated income statementConsolidated statement of other

comprehensive income

2012 USD’000

2011 USD’000

2012 USD’000

2011 USD’000

GBP 7,349 1,461 (5,368) 7,277EUR 1,584 3,207 6,990 (2,543)AUD – – 3,850 8,061INR 3,557 4,116 (12,459) (18,627)CAD 1,193 1,991 (13,681) (16,026)

A 10 percent weakening of the USD against the above currencies at 31 December would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant.

(iii) Interest rate risk(i) ProfileAt the reporting date the interest rate profile of the Group’s interest bearing financial instruments was:

Carrying amount

2012 USD’000

2011 USD’000

Fixed rate instrumentsFinancial assets 11,277 12,815Financial liabilities (3,285,137) (3,383,712)Interest rate swaps (925,243) (1,857,983)

(4,199,103) (5,228,880)

Variable rate instrumentsFinancial assets 1,362,752 3,637,270Financial liabilities (1,467,514) (4,359,060)Interest rate swaps 925,243 1,857,983

820,481 1,136,193

(ii) Cash flow sensitivity analysis for variable rate instrumentsA change of 100 basis points (“bp”) in interest rates at the reporting date would have increased/(decreased) consolidated income statement and consolidated statement of other comprehensive income by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant.


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Consolidated income statementConsolidated statement of other

comprehensive income

100 bp increase USD’000

100 bp decrease USD’000

100 bp increase USD’000

100 bp decrease USD’000

2012Variable rate instruments 8,205 (8,205) – –Interest rate swap 741 (741) 10,489 (10,489)

Cash flow sensitivity (net) 8,946 (8,946) 10,489 (10,489)

2011Variable rate instruments 11,362 (11,362) – –Interest rate swap – – 18,580 (18,580)

Cash flow sensitivity (net) 11,362 (11,362) 18,580 (18,580)

(d) Fair valuesFair values versus carrying amountsThe fair values of financial assets and liabilities, together with the carrying amounts shown in the consolidated statement of financial position are as follows:

2012 2011

Carrying amount

USD’000Fair value USD’000

Carrying amount

USD’000Fair value USD’000

Assets carried at fair valuesAvailable-for-sale financial assets 49,556 49,556 60,378 60,378

49,556 49,556 60,378 60,378

Assets carried at amortised costDebt securities held to maturity 11,277 11,149 12,815 12,670Loans and receivables 693,705 693,705 727,190 727,190Cash and cash equivalents 1,881,928 1,881,928 4,159,364 4,159,364

2,586,910 2,586,782 4,899,369 4,899,224

Liabilities carried at fair valuesInterest rate swaps (161,823) (161,823) (133,541) (133,541)Forward exchange contracts (35) (35) (539) (539)Cross currency options – – (156) (156)

(161,858) (161,858) (134,236) (134,236)

Liabilities carried at amortised costSecured bank loans* (872,433) (872,433) (820,724) (820,724)Mortgage debenture stocks (2,307) (2,662) (2,212) (2,124)Unsecured bond issues (3,237,234) (3,734,175) (3,235,320) (3,107,661)Unsecured loan stock (9,006) (9,006) (8,690) (8,690)Finance lease liabilities (39,651) (39,651) (59,314) (59,314)Unsecured bank and other loans* (591,825) (591,825) (3,615,495) (3,615,495)Trade and other payables (635,824) (635,824) (861,872) (861,872)Bank overdraft (195) (195) (1,017) (1,017)

(5,388,475) (5,885,771) (8,604,644) (8,476,897)* A significant portion of these loans carry a variable rate of interest and hence, the fair values reported are same as carrying values.



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Fair value hierarchyThe table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:

• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities• Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as

prices) or indirectly (i.e. derived from prices)• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs)

Level 1 USD’000

Level 2 USD’000

Level 3 USD’000

2012Available-for-sale financial assets – 49,556 –Derivative financial liabilities – (161,858) –

– (112,302) –

2011Available-for-sale financial assets – 60,378 –Derivative financial liabilities – (134,236) –

– (73,858) –


30 Business combinationThere were no business combinations in 2012.

2011On 16 August 2011, the Company acquired 60% interest in Integra Port Services N.V and Suriname Port Services N.V (“Suriname Group”) for a total cost of USD 31,315 thousand (net of cash). The Suriname Group is engaged in the ports business in the Republic of Suriname.

This acquisition has resulted in recognition of goodwill of USD 9,693 thousand, port concession rights of USD 32,474 thousand and non-controlling interest of USD 15,753 thousand.

From the date of acquisition, Suriname Group has contributed revenue of USD 5,898 thousand and profit of USD 1,567 thousand. If the acquisition had taken place at the beginning of the year, the revenue would have been USD 15,600 thousand and profit would have been USD 4,144 thousand.

31 Operating leasesOperating lease commitments – Group as a lesseeFuture minimum rentals payable under non-cancellable operating leases as at 31 December are as follows:

2012 USD’000

2011 USD’000

Within one year 303,685 192,961Between one to five years 735,859 711,097Between five to ten years 1,102,940 1,086,178Between ten to twenty years 1,351,947 1,398,808Between twenty to thirty years 1,311,794 1,357,630Between thirty to fifty years 1,221,425 1,201,046Between fifty to seventy years 1,052,910 1,063,338More than seventy years 1,029,272 1,075,017

8,109,832 8,086,075

The above operating leases (Group as a lessee) mainly consist of terminal operating leases arising out of concession arrangements which are long term in nature. In addition, this also includes leases of plant, equipment and vehicles. In respect of terminal operating leases, contingent rent is payable based on revenues/profits earned in the future period. The majority of leases contain renewable options for additional lease periods at rental rates based on negotiations or prevailing market rates.

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Operating lease commitments – Group as a lessorFuture minimum rentals receivable under non-cancellable operating leases as at 31 December are as follows:

2012 USD’000

2011 USD’000

Within one year 21,646 22,691Between one to five years 84,718 75,966More than five years 25,640 25,887

132,004 124,544

The above operating leases (Group as a lessor) mainly consist of rental of property, plant and equipment leased out by the Group. The leases contain renewal options for additional lease periods and at rental rates based on negotiations or prevailing market rates.


31 Operating leases continued

32 Capital commitments2012

USD’0002011

USD’000

Estimated capital expenditure contracted for as at 31 December 1,178,529 538,383

33 Contingencies(a) The Group has contingent liabilities amounting to USD 15,538 thousand (2011: USD 99,491 thousand) in respect of payment

guarantees, USD 152,556 thousand (2011: USD 82,117 thousand) in respect of performance guarantees and USD 853 thousand (2011: 195 thousand) in respect of letters of credit issued by the Group’s bankers. The bank guarantees and letters of credit are arising in the ordinary course of business from which it is anticipated that no material liabilities will arise.

(b) The Group has contingent liabilities in respect of guarantees issued on behalf of equity-accounted investees (refer to note 27).

(c) The Group through its 100% owned subsidiary Mundra International Container Terminal Private Limited (“MICT”) has developed and is operating the container terminal at the Mundra port in Gujarat.

In 2006, MICT received a show cause notice from Gujarat Maritime Board (“GMB”) requiring MICT to demonstrate that the undertaking given by its parent company, P&O Ports (Mundra) Private Limited, with regard to its shareholding in MICT has not been breached in view of P&O Ports being taken over by the Group (DP World).

Based on the strong merits of the case and on the advice received from legal counsel, management believes that the above litigation is unsubstantiated, and in management’s view, it will have no impact on the Group’s ability to continue to operate the port.

(d) Chennai Port Trust (“CPT”) had raised a demand for an amount of USD 21,773 thousand (2011: USD 22,548 thousand) from Chennai Container Terminal Limited (“CCTL”), a subsidiary of the Company, on the basis that CCTL had failed to fulfil its obligations in respect of non-transhipment containers for a period of four consecutive years from 1 December 2003. CCTL had subsequently paid USD 11,633 thousand (2011: USD 12,047 thousand) under dispute in 2008. CCTL had initiated arbitration proceedings against CPT in this regard. The arbitral tribunal passed its award on November 26, 2012 ruling in favour of CCTL. As per the local legislation, CPT can make an application for setting aside the award within a period of 90 days from the date of award. No such application for setting aside the arbitration has been made by CPT as at the reporting date.

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34 Significant Group entitiesThe extent of the Group’s ownership in its various subsidiaries, associates and joint ventures and their principal activities are as follows:

(a) Significant holding companiesLegal Name

Ownership interest

Country of incorporation

Principal activities

DP World FZE 100% United Arab Emirates

Management and operation of seaports, airports and

leasing of port equipmentThunder FZE 100% United Arab Emirates Holding companyPeninsular and Oriental Steam Navigation

Company Limited 100% United KingdomManagement and operation

of seaportsDP World Australia (POSN) Pty Ltd 100% Australia Holding companyDPI Terminals Asia Holding Limited 100% British Virgin Islands Holding companyDPI Terminals (BVI) Limited 100% British Virgin Islands Holding companyDP World Ports Cooperatieve U.A. 100% Netherlands Holding companyDP World Maritime Cooperatieve U.A. 100% Netherlands Holding companyDPI Terminals Holdings C.V. 100% Netherlands Holding company

(b) Significant subsidiaries – PortsLegal Name

Ownership interest



Terminales Rio de la Plata SA 55.62% Argentina Container terminal operations

DP World Antwerp N.V. 100% BelgiumContainer terminal and

other operations

DP World (Canada) Inc. 100% CanadaContainer terminal operations

and stevedoringEgyptian Container Handling Company (ECHCO) – S.A.E. 100% Egypt Container terminal operations

DP World Germersheim, GmbH and Co. KG 100% GermanyContainer terminal operator and

barge management operatorCSX World Terminals Hong Kong Limited 66.66% Hong Kong Container terminal operationsChennai Container Terminal Private Limited 100% India Container terminal operationsIndia Gateway Terminal Pvt. Ltd 81.63% India Container terminal operationsMundra International Container Terminal Private Limited 100% India Container terminal operationsNhava Sheva International Container Terminal

Private Limited 100% India Container terminal operationsDP World Middle East Limited 100% Kingdom of Saudi Arabia Container terminal operationsDP World Maputo SA 60% Mozambique Container terminal operationsQasim International Container Terminal Pakistan Ltd 75% Pakistan Container terminal operationsDP World Callao SRL 100% Peru Container terminal operationsDoraleh Container Terminal SARL 33.33%* Republic of Djibouti Container terminal operationsIntegra Port Services N.V. 60% Republic of Suriname Container terminal operations

Suriname Port Services N.V. 60% Republic of SurinameGeneral cargo

terminal operationsConstanta South Container Terminal SRL 75% Romania Container terminal operationsDP World Dakar S.A. 90% Senegal Container terminal operationsDP World Tarragona S.A. 60% Spain Container terminal operationsDP World UAE Region FZE 100% United Arab Emirates Container terminal operationsDP World Fujairah FZE 100% United Arab Emirates Container terminal operationsSouthampton Container Terminals Limited 51% United Kingdom Container terminal operationsSaigon Premier Container Terminal 80% Vietnam Container terminal operations* Although the Group only has a 33.33% effective ownership interest in Doraleh Container Terminal SARL, this entity is treated as a subsidiary, as the Group is able to govern the financial and

operating policies of the company by virtue of an agreement with the other investor.

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(c) Associates and joint ventures – PortsLegal Name

Ownership interest



Djazair Port World Spa 50% Algeria Container terminal operationsDP World Djen Djen Spa 50% Algeria Container terminal operationsDP World Australia (Holding) Pty Ltd 25% Australia Container terminal operationsAntwerp Gateway N.V 42.50% Belgium Container terminal operationsCaucedo Investment Inc. 50% British Virgin Islands Container terminal operationsEurofos S.A.R.L 50% France Container terminal operationsGenerale de Manutention Portuaire S.A 50% France Container terminal operationsAsia Container Terminals Limited 55.16%** Hong Kong Container terminal operationsVishaka Container Terminals Private Limited 26% India Container terminal operationsPT Terminal Petikemas Surabaya 49% Indonesia Container terminal operationsPusan Newport Co. Ltd 42.10% Korea Container terminal operationsQingdao Qianwan Container Terminal Co. Ltd 29% People’s Republic of China Container terminal operationsTianjin Orient Container Terminals Co Ltd 24.50% People’s Republic of China Container terminal operationsDP World Yantai Company Limited 32.50% People’s Republic of China Container terminal operationsAsian Terminals Inc 50.54%** Philippines Container terminal operationsLaem Chabang International Terminal Co. Ltd 34.50% Thailand Container terminal operations

(d) Other non-port businessLegal Name

Ownership interest



P&O Maritime Services Pty Ltd 100% Australia Maritime servicesATL Logistics Centre Hong Kong Limited 34% Hong Kong Warehouse owner/operatorContainer Rail Road Services Private Limited 100% India Container rail freight operationsEmpresa de Dragagem do Porto de Maputo, SA 25.50% Mozambique Dredging servicesPort Secure Djibouti 40% Republic of Djibouti Port security servicesDP World Cargo Services (Pty) Limited 70% South Africa Cargo servicesDubai International Djibouti FZE 100% United Arab Emirates Port management and operation

P&O Maritime FZE 100% United Arab Emirates

Management of marine assets service and

port support operations

(e) Ports under developmentLegal Name

Ownership interest



Empresa Brasileira de Terminais Portuarious S.A. 33.33% Brazil Container terminal operationsRotterdam World Gateway B.V. 30% Netherlands Container terminal operationsDP World Properties Liman Isletmeleri Anonim Sirketi 100% Turkey Container terminal operationsLondon Gateway Port Ltd 100% United Kingdom Container terminal operations** Although the Group has more than 50% effective ownership interest in these entities, they are not treated as subsidiaries, but instead treated as joint ventures. The underlying joint venture

agreement with the other shareholders does not provide significant control to the Group.


34 Significant group entities continued

35 Subsequent eventsOn 7 March 2013, the Group entered into a strategic partnership with Goodman Hong Kong Logistics Fund, monetising 75% of its interests in CSX World Terminals Hong Kong Limited (CT3), which operates berth 3 of the Kwai Chung Container Terminal (‘CT3’) and ATL Logistics Centre Hong Kong Limited (ATL), a logistics centre located alongside CT3 for a total cash consideration of USD 463,000 thousand. As part of the strategic partnership, the Group will continue to manage the port operations. Completion, subject to regulatory approvals, is expected to be towards the end of the first half of 2013.

On the same day, the Group divested all of its 55.16% interest in Asia Container Terminals Holdings Limited, the holding company of the entity that owns and operates Asia Container Terminal 8 West (CT8), for a cash consideration of USD 279,000 thousand, to Hutchison Port Holdings Trust (HPH Trust).

The total consideration to be received by the Group for the two transactions is USD 742,000 thousand including the repayment of certain shareholder loans. The proceeds will go towards maintaining a strong capital position. The net financial impact will be computed and disclosed in the consolidated financial statements for the six months ended 30 June 2013, after taking into account the impact of recycling of the foreign currency translation reserve and other costs related to the transaction.

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Tel: +971 4 881 1110 Fax: +971 4881 1331

www.dpworld.com

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Connecting Global Marketsar.dpworld.com › 2012 › pdf › DPWorldAR12_FINAL.pdf · Melbourne, Australia In May 2012, DP World Melbourne commissioned eight new energy ... be equipped