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Investor Presentaiton

107 A.P. Moller-Maersk Annual Report 2020 Financials Consolidated financial statements Notes index Amounts in USD million = Note 23 Significant accounting policies - continued Hub activities Activities under the APM Terminals brand generating revenue by providing port services only in major trans- shipment ports such as Rotterdam, Maasvlakte-II, Algeciras, Tangier, Tangier-Med II, Port Said, and joint ventures in Salalah, Tanjung Pelepas and Bremerhaven. The respective terminals are included under the Ocean segment, as the primary purpose of those ports is to provide transhipment services to A.P. Moller - Maersk's Ocean business, whereas third-party volumes sold in those locations are considered secondary. Maersk Oil Trading Sourcing marine fuels and lubricants for A.P. Moller-Maersk's fleet in addition to refinery activities and sales to external parties, including Maersk Tankers. Logistics & Services Supply chain management Activities within supply chain management and 4PL services. Intermodal Operating activities with the main stream of revenue de- riving from the transportation of containers from vendors (shippers) to the port of shipment, and from discharge port to the point of stripping (consignee) by truck and/or rail. Inland services Operating activities in inland activities facilities fully or partially controlled by APM Terminals, with the main rev- enue stream being inland services such as full container storage, bonded warehousing, empty depot, local trans- portation, etc. Freight forwarding Operating activities within sea and air freight forwarding services. Other services Operating activities within warehousing and distribution, trade finance with export finance solutions, post-shipment and import finance solutions, and Star Air, operating cargo aircrafts on behalf of UPS. Terminals & Towage Terminals activities Activities in ports fully or partially controlled by the APM Terminals brand, with the main revenue stream being port activities not considered a hub activity as described above. Towage activities Activities under the Svitzer brand, a provider of offshore towage and salvage services. Manufacturing & Others Maersk Container Industry Manufacturer that produces dry containers and reefer containers. Maersk Supply Service Provides marine services and integrated solutions to the energy sector worldwide with a large fleet of anchor han- dling tug supply vessels and subsea support vessels. Hamburg Süd tramp activity Bulk and tanker activity acquired as part of the Hamburg Süd acquisition. Other businesses Consists of Maersk Training, a provider of training services to the maritime, oil and gas, offshore wind and crane industries. The reportable segments do not comprise costs in A.P. Moller-Maersk's corporate functions. These func- tions are reported as unallocated items. Revenue between segments is limited, except for the Terminals & Towage segment, where a large part of the services is delivered to the Ocean segment as well as the sale of containers from Maersk Container Industry to the Ocean segment. Sales of products and services between segments are based on market terms. Income statement Revenue for all businesses is recognised when the per- formance obligation has been satisfied, which happens upon the transfer of control to the customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange for the goods and services. Revenue from shipping activities is recognised over time as the performance obligation is satisfied, including a share of revenue from incomplete voyages at the balance sheet date. Invoiced revenue related to an esti- mated proportion of remaining voyage time and activi- ties at the destination port is deferred. Number of days of a voyage, as a percentage of the total number of days a voyage is estimated to last, is considered as a close ap- proximation of percentage of completion. Detention and demurrage fees are recognised over time up until the time of the customer's late return or pick-up of contain- ers. Retrospective volume rebates provided to certain customers which give rise to variable consideration are based on the expected value method and allocated to Ocean freight revenue. Revenue from terminal operations and towing activities is recognised upon completion of the service. In container ter- minals operated under certain restrictive terms of pricing and service, etc., the value of tangible assets constructed on behalf of the concession grantor is recognised as reve- nue during the construction. Revenue from most freight forwarding activities is recog- nised over time. Revenue from the sale of goods is recognised upon the transfer of control to the buyer. Share of profit/loss in associated companies and joint ven- tures is recognised net of tax and corrected for the share of unrealised intra-group gains and losses. The item also comprises any impairment losses for such investments and their reversal. Tax comprises an estimate of current and deferred in- come tax as well as adjustments to previous years of those. Income tax is tax on taxable profits, and consists of corporation tax, withholding tax of dividends, etc. In addi- tion, tax comprises tonnage tax. Tonnage tax is classified as tax when creditable in, or paid in lieu of, income tax. Tax is recognised in the income statement to the extent that it arises from items recognised in the income state- ment, including tax on gains on intra-group transactions that have been eliminated in the consolidation. Earnings per share are calculated as the A.P. Møller-Mærsk A/S' share of the profit/loss for the year divided by the number of shares (of DKK 1,000 each), excluding A.P. Moller - Maersk's holding of own shares. Diluted earnings per share are adjusted for the dilution effect of share-based compensation issued by the parent company. Statement of comprehensive income Other comprehensive income consists of gains and losses not recognised in the income statement, including ex- change rate adjustments arising from the translation from functional currency to presentation currency, fair value adjustments of other equity investments (at FVOCI), cash flow hedges, forward points and currency basis spread as well as actuarial gains/losses on defined benefit plans, etc. A.P. Moller - Maersk's share of other comprehensive income in associated companies and joint ventures is also included. On disposal or discontinuation of an entity, A.P. Moller Maersk's share of the accumulated exchange rate adjustment relating to the relevant entity with a non-USD functional currency is reclassified to the income statement. Accumulated value adjustments of equity instruments classified as equity instruments at fair value through other comprehensive income will remain in equity upon disposal. Other comprehensive income includes current and de- ferred income tax to the extent that the items recognised in other comprehensive income are taxable or deductible. Balance sheet Intangible assets are measured at cost less accumulated amortisation and impairment losses. Amortisation is calculated on a straight-line basis over the estimated useful lives of the assets. Intangible assets regarding ac- quired customer relationships and brand names are am- ortised over a useful life of 15 and 20 years, respectively. IT software is amortised over a useful life of 3-5 years.
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