August 26, 2015
NORDIC SHIPHOLDING A/S
Company Announcement: 05/2015
Published via NASDAQ OMX on August 26, 2015
H1 Result 2015
Summary
The comparison figures for period ended 30 June 2014 are stated in parenthesis.
This H1 report covers the period 1 January 2015 to 30 June 2015.
The Group generated a profit before tax of USD 3.7 million in H1 2015 as compared to a loss before tax of USD 3.4 million for the same period last year. The turnaround performance in H1 2015 was due to higher average TCE rates from the vessels deployed in Handytankers Pool, higher TCE income earned by the LR1 vessel (Nordic Anne) and lower vessel operating expenses.
Compared to H1 2014, gross revenue earned in H1 2015 was lower by 2.0% as the H1 2015 revenue comprised time-charter income (i.e. net of voyage expenses) from the LR1 vessel (Nordic Anne) whilst the H1 2014 gross revenue represented freight income from the LR1 vessel.
TCE earnings rose 32.0% to USD 16.8 million (USD 12.8 million) in H1 2015 due to higher TCE earnings for the vessels in the Handytankers Pool arising primarily from higher gross freight rates and reduced bunker expenses. The TCE income from the 3-year time-charter locked in for Nordic Anne in H1 2015 was higher than the LR1 pool earnings in H1 2014.
Expenses relating to the operation of vessels in H1 2015 decreased 25.3% to USD 7.0 million (USD 9.4 million). The significant cost savings in H1 2015 was attributed to the change of technical managers in 2014 and one-off cost incurred in 2014 (USD 1.5 million) relating to the change of technical managers.
EBITDA rose considerably to USD 8.8 million (USD 1.3 million) as a result of higher TCE earnings in H1 2015 and one-off costs incurred in H1 2014 arising from (i) the change of technical managers amounting to USD 1.5 million and (ii) higher professional fees in beginning of 2014 due to the restructuring in December 2013.
Based on the continued uncertain shipping environment and broker valuations obtained, management has assessed not to write-back any portion of the impairment that was written-down in 2012.
Depreciation amounted to USD 3.3 million (USD 3.0 million). The increase was due partially to periodic dry-docking.
Excluding the write-off in financial assets of USD 0.2 million in H1 2015 (USD NIL), net finance expenses were slightly lower at USD 1.6 million (USD 1.7 million) as the Group repaid the working capital loan in full in December 2014 and made regular loan amortisation and cash sweep of USD 6.5 million on the loan facility in the first six months of 2015.
After taking into account depreciation, interest expense and other non-operating items, the result after tax in H1 2015 reached USD 3.7 million as compared to a loss of USD 3.4 million in H1 2014.
Under the loan agreement, on a quarterly basis, cash in excess of USD 6.0 million will be used to pay down the loan facility. During H1 2015, this cash sweep mechanism was activated on 31 March 2015 and 30 June 2015, and a total of USD 4.5 million excess cash was used to pay down the loan. This is in addition to the regular loan amortisation totalling USD 2.0 million.
As a consequence of the result and repayment on loans, the equity increased from USD 24.8 million to USD 34.2 million and the equity ratio improved from 18.5% to 25.8% between 30 June 2014 and 30 June 2015.
Cash flow generated from operations was USD 8.9 million (USD 2.7 million) mainly arising from the distributions earned by the Handytankers Pool and time-charter income received for Nordic Anne, offset by payment of periodic interest expenses on the term loan. The Group invested USD 0.7 million in dry-docking and made a repayment of USD 6.5 million on the term loan facility.
Cash balance as at 30 June 2015 stood at USD 6.1 million (USD 4.4 million).
In H1 2015, the average daily TCE rate earned by the vessels in the Handytankers Pool was better than the forecasted daily rate, whilst the TCE rate earned by the LR1 vessel (Nordic Anne) tracked the forecast.
As a result of the improved performance in H1 2015 and combined with a slightly higher forecasted TCE by the Handytankers Pool manager for H2 2015, the forecasted financials indicated in the 2014 Annual Report have been revised upwards. For 2015, the Group expects the TCE revenue from the 5 product tankers in the pool and the time-charter income from Nordic Anne to be in the region of USD 31.0 million – USD 34.0 million, an increase from USD 29.0 million – USD 32.0 million.
After accounting for operating expenditure, the Group expects the EBITDA (earnings before interest, tax, depreciation and amortisation) to be in the range of USD 15.0 million – USD 18.0 million. Previously, the forecasted EBITDA was in the range of USD 13.0 million – USD 16.0 million. Result before tax is expected to be between USD 5.0 million – USD 8.0 million, revised upwards from USD 3.0 million – USD 6.0 million. The Group does not expect any write-downs of vessels’ value unless significant weakness in the product tanker sector sets in.
In terms of cash flow, the Group’s cash flows is expected to be between USD 9.0 million – USD 12.0 million in 2015 (previously forecasted to be between USD 5.0 million – USD 8.0 million), after repaying the regular loan amortisation of USD 4.0 million. Under the loan agreement with the lending banks, cash in excess of USD 6.0 million will be used to pay down the long-term facility. In H1 2015, a total of USD 4.5 million of excess cash was used to pay down the loan. In view of the upward revision in the overall performance for 2015, an excess cash of between USD 2.5 million to USD 5.5 million is forecasted to be used to further pay down the loan in H2 2015. This is in addition to the regular loan amortisation.
The Board is continually seeking suitable investment opportunities to grow the Company and maximise shareholder returns.
For further information please contact:
Knud Pontoppidan, Chairman of the board, Nordic Shipholding A/S: +45 39 29 10 00
