Annual Report and Accounts 2013

Chairman's Statement

“OUR PORTFOLIO REMAINS WELL POSITIONED TO CAPITALISE ON THE SIGNIFICANT MEDIUM TO LONG-TERM GROWTH POTENTIAL OF THIS INDUSTRY.”

Sultan Ahmed Bin Sulayem Chairman

DP World is pleased to announce another set of strong financial results, with like-for-like attributable earnings growing by 26.6%. This performance has been achieved despite the Group facing some challenging market conditions. Overall, we believe this robust set of results illustrates the resilient nature of our portfolio.

Dear Shareholders,
I am pleased to report another successful year for your Company. Despite the ongoing challenges affecting the world’s economies, DP World delivered profit for the year of $674 million. This robust performance reflects our continued focus on higher margin revenue and minimising costs, on maintaining a strong balance sheet, and on making the most of opportunities to free up capital to re-invest where it will bring the greatest returns.

Excluding profit from divestments and monetisations during the year, the profit attributable to the owners of the Company was $604 million.

Delivering our strategy

Our strategy is centred on four priorities: driving sustained long-term shareholder value; creating a satisfied and profitable customer experience; ensuring our operations are efficient, safe and secure; and creating a learning and growth environment for our people. Further information regarding our business model and strategy, including our achievements during 2013 and our focus areas for 2014 and beyond, are contained in the Strategic Report.

Value for shareholders, value for customers

With an average concession life of around 40 years, sustaining value is a key driver. We remain confident that we can achieve our target of a 15% return on capital employed (ROCE)1 on our existing portfolio and an adjusted EBITDA margin2 of 50% by 2020.

Our investments are focused on ensuring that we have the right capacity in the right locations and the right services to meet our customers’ needs today and tomorrow. During 2013, this included opening for business nearly four million TEU of new capacity across Jebel Ali (UAE), the DP World London Gateway port (UK) and Embraport (Brazil). The opening of additional capacity was supported by the implementation of the latest technology across our portfolio to speed up our customers’ supply chains and bring goods more swiftly to market.

Sustainable business

Our aim is to be a top-tier global port operator for decades to come. During 2013, our commitment to operating sustainably for the long-term was evidenced by the measures we took to improve safety at our terminals, to reduce our impact on the environment, and to engage with the communities in which we operate to help stimulate local economies.

The frequency of injuries per million hours worked, or lost time injury frequency rates (LTIFR), fell by 12% during 2013. In addition, we achieved globally an 8.7% reduction in our absolute CO2e emissions which is equivalent to a 5.8% reduction in KgCO2e/ModTEU (per Modified TEU)3 from our 2012 baseline. We are also proud to have been involved in over 230 community projects and partnerships across our portfolio during 2013 and we were the co-convenor with the UAE Ministry of Foreign Affairs for the third year running of an international public-private conference on countering maritime piracy.

Further details regarding our commitment to integrating responsible business practices in all aspects of our operations and across our entire portfolio are included in the Corporate Responsibility section.

In 2013, we were pleased to have our commitment to excellent corporate governance recognised for the second year in a row by the S&P/Hawkamah ESG Pan Arab Index, being named the number one listed company across a raft of environmental, social and governance measures. Further details regarding our corporate governance framework and policies are outlined in the Corporate Governance section.

We were delighted to be a premier partner of Dubai’s Expo2020 bid. Our entire team was behind the bid and we are excited and proud that it was successful. Our attention now turns to making sure we have the infrastructure in place to support this event, and we will be working very closely with our customers to do that. We already have tried and tested capabilities and we will now take this to the next level.

We look forward to working with Dubai and the UAE to host the world. This event will not only create opportunities for the UAE, it will also create new opportunities for the countries of the region and the people of the world.

Our People

Our dynamic and committed team of over 30,000 people worldwide is the driving force of our Company. On behalf of the Board, I would like to extend sincere thanks to every single member of the team for their outstanding effort in what was an often difficult economic climate.

We continued to invest in our people throughout the volatility of the past few years, and we will continue to do so. By encouraging and supporting innovation, developing the skills and talent of our people and providing them with new opportunities to excel, we create a work environment that is stimulating and exciting, which in turn translates into outstanding customer service, excellence in operations and a vibrant company.

Further details regarding our people and our commitment to building an inclusive, supportive and safe work environment are included in the people and safety discussions in the Corporate Responsibility section.

Board Changes

The close of 2013 saw long-standing Board member Cho Ying Davy Ho step down from his role as an Independent Non-Executive Director. He joined the Board in May 2007, just a few months before we publicly listed on Nasdaq Dubai. On behalf of the Board, I would like to thank Davy for his valuable contribution to the successful strategic development of our business during his time on the Board. It has been a privilege to have Davy on the Board.

Robert Woods, CBE, was appointed to the Board from 1 January 2014 as an Independent Non-Executive Director.

As a former Chief Executive Officer of The Peninsular & Oriental Steam Navigation Company, Robert’s considerable experience in our industry will be of great value to our organisation as we continue to drive our business forward with strong governance and sound counsel, focused on delivering shareholder value. I very much look forward to working with him.

Details of the Directors of the Company as at 31 December 2013 are given in the Board of Directors section.

Dividend

Following the strong performance this year, the Board is recommending an annual dividend of 23 US cents per share. This comprises a 10% increase in the ordinary dividend to 23 US cents per share. There is no special dividend given the relatively low reported gain on separately disclosed items. The growth in the ordinary dividend reflects the Board’s confidence in our ability to generate continued earnings growth and strong cash flows.

Subject to approval by shareholders, the dividend will be paid on 6 May 2014 to shareholders on the relevant register as at close of business on 1 April 2014.

Outlook

While the outlook in some regions remains challenging, we have demonstrated our ability to remain profitable despite these headwinds. We have made an encouraging start to 2014 and, for the year as a whole and beyond, we expect to see a return to normalised volume growth driven by the addition of new capacity in our portfolio and a gradually improving macro environment. We continue to focus on delivering efficiencies, containing costs and handling higher margin containers to drive profitability. Our business is well positioned for medium to long-term growth, underpinning our confidence in meeting our 2020 target of an adjusted EBITDA margin of 50% and ROCE of 15% on our existing portfolio.

Finally, I am encouraged by and grateful for the ongoing commitment of all our partners. As we continue our exciting journey as a leading global terminal operator, I look forward to sharing another year of sustained growth and success with our shareholders.

Sultan Ahmed Bin Sulayem Chairman
1 Return on capital employed is EBIT (earnings before interest and tax) before separately disclosed items as a percentage of total assets less current liabilities. 2 The adjusted EBITDA margin is calculated by dividing EBITDA (earnings before interest, tax, depreciation & amortisation) by revenue, including our share of profit from joint ventures and associates. 3 KgCO2e/ModTEU means the kilograms of carbon dioxide equivalent divided by modified twenty-foot equivalent units. See the environment discussions in the Corporate Responsibility section, for further information.