First quarter report 2012
Announcement no. 24 / 10 May 2012 First quarter report 2012 Page 1 of 22
“TORM’s operational result for the first quarter of 2012 was in line with last year and reflected the continued challenging market environment. However, the net result for the period was negatively affected by vessel sales and costs related to the restructuring of the Company’s capital structure,” says CEO Jacob Meldgaard.
• EBITDA for the first quarter of 2012 was a loss of USD 7 million, compared to a gain of USD 4 million in the first quarter of 2011. The result before tax for the first quarter of 2012 was a loss of USD 79 million, compared to a loss of USD 45 million in the same period of 2011. The change was amongst others driven by a loss from vessel sales of USD 16 million in the first quarter of 2012, compared to a loss of USD 6 million for the same period of 2011. In addition, financial expenses for the first quarter of 2012 include USD 22 million in restructuring costs.
• The product tanker freight rates for especially the LR segments remained under pressure in the first quarter of 2012, whereas the MR freight rates had a positive development in the first part of the quarter. In the West, Brazilian imports continued to contribute positively to the increased ton-mile factor, whereas lower US imports and domestic demand of gasoline put the freight market under pressure. In the East, the freight markets for LR2 and LR1 remained at low levels throughout the quarter due to lack of naphtha cargoes, temporary refinery closures and limited arbitrage opportunities.
• The bulk market was under significant pressure in the first quarter of 2012 due to a high number of vessels being delivered. Furthermore, the combination of the Chinese New Year, an overall slower growth in the Chinese commodity demand and logistic delays in the South American grain season resulted in a low freight rate environment throughout the first quarter of 2012.
• The ongoing efficiency program has commenced implementation of further cost and cash improving initiatives with an expected cumulative impact of minimum USD 100 million over the next three years.
• As stated in announcement no. 14 dated 4 April 2012 and elaborated in announcement no. 20 dated 23 April 2012, TORM has reached a conditional framework agreement in principle with the bank group’s coordination committee and the major time charter partners regarding a financing and restructuring plan.
• The conditional framework agreement in principle is a prerequisite for TORM’s continued operation.
• One MR product tanker was sold and one MR product tanker newbuilding was cancelled during the first quarter of 2012. In addition, TORM took delivery of two MR product tanker newbuildings.
• Net interest-bearing debt increased in the first quarter of 2012 to USD 1,838 million from USD 1,787 million as at 31 December 2011.
• Cash totaled USD 29 million at the end of the first quarter of 2012 and the Company has no available credit lines. TORM has no order book and therefore no CAPEX related hereto.
• Equity amounted to USD 569 million as at 31 March 2012, equivalent to USD 8.2 per share (excluding treasury shares), giving TORM an equity ratio of 21%.
• By 31 March 2012, TORM had covered 14% of the remaining tanker earning days in 2012 at USD/day 14,699 and 4% of the remaining earning days in 2013 at USD/day 14,880. 105% of the remaining bulk
earning days in 2012 are covered at USD/day 13,291 and 20% of the 2013 earnings days at USD/day 16,153.
• The financial result for 2012 is subject to considerable uncertainty given TORM’s financial situation and the changes to the Company’s business model that may follow. Consequently, TORM will not to provide earnings guidance for 2012 before a long-term comprehensive financing solution is in place.
Announcement no. 24 / 10 May 2012 First quarter report 2012 2 of 22
Teleconference
Contact TORM A/S
TORM will host a teleconference for financial analysts and investors at 15:00 Danish time today. Please call 10 minutes before the conference is due to start on +45 3271 4607 (from Europe) or +1 877 491 0064 (from the USA). The presentation documents can be downloaded from TORM's website.
Tuborg Havnevej 18
DK-2900 Hellerup, Denmark
Tel.: +45 39 17 92 00 / Fax: +45 39 17 93 93
www.torm.com
Jacob Meldgaard, CEO, tel.: +45 39 17 92 00
Roland M. Andersen, CFO, tel.: +45 39 17 92 00
Key figures
Million USD Q1 2012 Q1 2011 2011
Income statement
Revenue 310.6 270.4 1,305.2
Time charter equivalent earnings (TCE) 152.0 147.5 644.3
Gross profit 27.3 27.8 81.0
EBITDA -7.1 4.1 -43.8
Operating profit (EBIT) -41.1 -32.5 -388.6
Profit/(loss) before tax -78.5 -44.9 -451.4
Net profit/(loss) -78.7 -45.3 -453.0
Balance sheet
Total assets 2,668.9 3,259.8 2,779.2
Equity 568.7 1,075.0 643.8
Total liabilities 2,100.2 2,184.8 2,135.4
Invested capital 2,393.9 2,925.1 2,425.1
Net interest bearing debt 1,837.7 1,853.2 1,786.8
Cash flow
From operating activities -56.6 -11.1 -74.8
From investing activities 5.2 33.1 168.2
Thereof investment in tangible fixed assets -44.1 -68.0 -118.4
From financing activities -4.7 0.4 -127.8
Total net cash flow -56.1 22.4 -34.4
Key financial figures
Gross margins:
TCE 48.9% 54.5% 49.4%
Gross profit 8.8% 10.3% 6.2%
EBITDA -2.3% 1.5% -3.4%
Operating profit -13.2% -12.0% -29.8%
Return on Equity (RoE) (p.a.)*) -44.1% -15.0% -51.5%
Return on Invested Capital (RoIC) (p.a.)**) -6.8% -3.8% -14.4%
Equity ratio 21.3% 33.0% 23.2%
Exchange rate USD/DKK, end of period 5.57 5.25 5.75
Exchange rate USD/DKK, average 5.64 5.46 5.36
Share related key figures
Earnings per share, EPS USD -1.1 -0.7 -6.5
Diluted earnings per share, EPS USD -1.1 -0.7 -6.5
Cash flow per share, CFPS USD -0.8 -0.2 -1.1
Share price, end of period (per share of DKK 5 each) DKK 3.2 30.0 3.7
Number of shares, end of period Million 72.8 72.8 72.8
Number of shares (excl. treasury shares), average Million 69.6 69.3 69.6
*) Gains/losses from sale of vessels and the mark-to-market adjustments of 'Other financial assets' are not
annualized when calculating the return on equity
**) Gains/losses from sale of vessels are not annualized when calculating the Return on Invested Capital.
Announcement no. 24 / 10 May 2012 First quarter report 2012 3 of 22
Results
The result before tax for the first quarter of 2012 was a loss of USD 79 million, compared to a loss of USD 45
million in the same period of 2011. The result before depreciation (EBITDA) for the first quarter of 2012 was a loss
of USD 7 million, compared to a gain of USD 4 million in the same period of 2011. The EBITDA result for the first
quarter of 2012 was negatively impacted by USD 16 million from sale of vessels, compared to a loss of USD 6
million for the same period of 2011. In addition, the result was positively impacted by mark-to-market non-cash
adjustments of USD 11 million in total compared to USD 8 million in the same period of 2011.
The Tanker Division reported an operating loss of USD 42 million in the first quarter of 2012, compared to an
operating loss of USD 32 million in the same period last year.
The Bulk Division had an operating profit in the first quarter of 2012 of USD 3 million, compared to a profit of USD
2 million in the first quarter of 2011.
Other (not allocated) activities include financial expenses of USD 22 million in costs related to the restructuring of
the Company’s capital structure.
Million USD Q1 2012
Tanker Bulk Not
Division Division allocated Total
Revenue 251.4 59.2 0.0 310.6
Port expenses, bunkers and commissions -138.7 -33.5 0.0 -172.2
Freight and bunkers derivatives -0.4 14.0 0.0 13.6
Time charter equivalent earnings 112.3 39.7 0.0 152.0
Charter hire -51.2 -33.2 0.0 -84.4
Operating expenses -39.6 -0.7 0.0 -40.3
Gross profit (Net earnings from shipping activities) 21.5 5.8 0.0 27.3
Profit from sale of vessels -15.9 0.0 0.0 -15.9
Administrative expenses -14.9 -1.7 0.0 -16.6
Other operating income 0.5 0.0 0.0 0.5
Share of results of jointly controlled entities 0.1 0.0 -2.5 -2.4
EBITDA -8.7 4.1 -2.5 -7.1
Impairment losses on jointly controlled entities 0.0 0.0 0.0 0.0
Amortizations and depreciation -33.3 -0.7 0.0 -34.0
Operating profit/(loss) (EBIT) -42.0 3.4 -2.5 -41.1
Financial income - - 3.6 3.6
Financial expenses - - -41.0 -41.0
Profit/(loss) before tax - - -39.9 -78.5
Tax - - -0.2 -0.2
Net profit/(loss) for the period - - -40.1 -78.7
The activity in TORM's 50% ownership of FR8 Holding Pte. Ltd. is included in 'Not-allocated'.
Announcement no. 24 / 10 May 2012 First quarter report 2012 4 of 22
Outlook and coverage
The financial result for 2012 is subject to considerable uncertainty given TORM’s financial situation and the
changes to the Company’s business model that may follow. Consequently, TORM has decided not to provide
earnings guidance for 2012 before a long-term comprehensive financing solution is in place.
With 21,136 earning days for 2012 open as at 31 March 2012, a change of USD/day of 1,000 in freight rates will
currently impact the profit before tax by approx. USD 21 million.
As at 31 March 2012, TORM had covered 14% of the remaining earning days in 2012 in the Tanker Division at
USD/day 14,699 and 105% of the remaining earning days in the Bulk Division at USD/day 13,291. The table
below shows the figures for 2012 for the period from 1 April to 31 December. 2013 and 2014 are full year figures.
2012 2013 2014 2012 2013 2014
Ow ned days
LR2 2,409 3,179 3,267
LR1 1,890 2,510 2,511
MR 10,487 13,995 14,056
SR 2,996 3,975 3,944
Tanker Division 17,782 23,658 23,778
Panamax 542 706 730
Handymax - - -
Bulk Division 542 706 730
Total 18,323 24,364 24,508
T/C-in days T/C-in costs (USD/day)
LR2 516 730 726 20,731 20,738 20,918
LR1 3,411 2,979 2,201 21,833 23,881 24,005
MR 3,011 3,941 3,267 15,050 14,151 14,135
SR - - - - - -
Tanker Division 6,938 7,650 6,194 18,807 18,568 18,437
Panamax 3,027 3,785 4,159 15,811 16,080 16,035
Handymax 506 363 365 16,086 15,995 15,995
Bulk Division 3,533 4,148 4,524 15,850 16,073 16,032
Total 10,471 11,798 10,718 17,809 17,691 17,422
Total physical days Covered days
LR2 2,925 3,909 3,993 269 138 116
LR1 5,301 5,489 4,712 893 365 175
MR 13,498 17,936 17,323 1,942 743 -
SR 2,996 3,975 3,944 266 - -
Tanker Division 24,720 31,308 29,972 3,369 1,246 291
Panamax 3,569 4,491 4,889 2,804 13 -
Handymax 506 363 365 1,485 955 869
Bulk Division 4,075 4,854 5,254 4,289 968 869
Total 28,794 36,162 35,226 7,658 2,214 1,160
Coverage rates (USD/day)
LR2 9% 4% 3% 13,991 17,900 17,900
LR1 17% 7% 4% 14,970 15,666 15,666
MR 14% 4% 0% 14,720 13,932 -
SR 9% 0% 0% 14,346 - -
Tanker Division 14% 4% 1% 14,699 14,880 16,555
Panamax 79% 0% 0% 13,057 11,240 -
Handymax 293% 263% 238% 13,732 16,220 16,399
Bulk Division 105% 20% 17% 13,291 16,153 16,399
Total 27% 6% 3% 13,910 15,437 16,438
Fair value of f reight rate contracts that are mark-to-market in the income statement (million USD):
Contracts not included above 0.0
Contracts included above 13.8
Notes
Actual no. of days can vary f rom the projected no. of days primarily due to vessel sales and delays of vessel
deliveries. T/C-in costs do not include potential extra payments f rom profit split arrangements.
Covered %
Announcement no. 24 / 10 May 2012 First quarter report 2012 5 of 22
Tanker Division
The product tanker freight rates for especially the larger segments (LRs) remained under pressure in the first
quarter of 2012. There was a positive sentiment in the MR segment in the first half of the quarter. In the West,
Brazil continued to import various refined products from other continents, which has increased the ton-mile factor
and positively affected freight rates. As expected, the gasoline imports into the USA trailed off during the first
quarter of 2012, as the producers moved from winter to summer specifications affecting the MR rates.
Furthermore, the US gasoline demand was down by 6% year-on-year. The refinery closures in the West
continued, as e.g. Valero announced suspension of a refinery due to poor refining margins.
In the East, the freight markets for LR2 and LR1 remained at low levels throughout the quarter due to the lack of
naphtha cargoes. For instance, naphtha imports to Japan were 11% down in February 2012 compared to the
same period in 2011. The Arabic Gulf market was also heavily impacted by the temporary refinery closures due to
maintenance. In addition, the jet fuel arbitrage into Europe was limited.
The global product tanker fleet has grown by ~1% in the first quarter of 2012 (source: SSY).
TORM achieved LR2 spot rates of USD/day 10,814 in the first quarter of 2012, which was at the same level as in
the first quarter last year, as this segment has been negatively affected by Aframax and Suezmax newbuildings
competing for gasoil cargoes from the East to the West. LR1 spot rates were at USD/day 12,515, down 13% yearon-
year, however, TORM had anticipated the weaker East market and positioned many LR1s in the West and
thereby beating available spot benchmarks. TORM’s largest segment, MR, again proved to be the best
performing segment with spot rates of USD/day 14,363 in the first quarter of 2012 (up 13% year-on-year). SR
spot rates were USD/day 12,823 in the first quarter of 2012, which is 23% higher than in the same period of 2011.
The Tanker Division’s operating result for the first quarter of 2012 was USD -42 million, which after correction for
vessel sale is at par with the same period in 2011. Mark-to-market effects were USD 1 million. The result was
negatively impacted by TORM’s financial situation leading to an increased number of waiting days and a reduced
laden/ballast ratio.
Q4 11 Q1 12 Change
Q1 11
- Q1 12
LR2 (Aframax, 90-110,000 DWT)
Available earning days 1,157 1,153 1,158 1,092 899 -22%
Spot rates1) 10,890 10,612 10,836 11,959 10,814 -1%
TCE per earning day2) 13,524 12,542 12,423 15,647 7,865 -42% 12,119
Operating days 1,170 1,183 1,196 1,121 1,001 -14%
Operating expenses per operating day3) 7,698 5,781 6,721 6,133 5,976 -22% 6,153
LR1 (Panamax 75-85,000 DWT)
Available earning days 2,085 2,164 2,208 2,081 2,076 0%
Spot rates1) 14,435 15,174 9,841 7,678 12,515 -13%
TCE per earning day2) 14,654 14,962 9,467 9,020 12,977 -11% 11,607
Operating days 630 637 644 644 637 1%
Operating expenses per operating day3) 6,577 6,135 6,481 6,419 6,389 -3% 6,356
MR (45,000 DWT)
Available earning days 4,263 4,373 4,511 4,477 4,681 10%
Spot rates1) 12,760 15,315 11,749 14,080 14,363 13%
TCE per earning day2) 12,768 15,867 12,910 13,335 14,082 10% 14,049
Operating days 3,412 3,549 3,496 3,496 3,557 4%
Operating expenses per operating day3) 6,628 6,629 6,732 5,929 6,743 2% 6,508
SR (35,000 DWT)
Available earning days 969 996 992 978 989 2%
Spot rates1) 10,410 13,403 10,582 9,483 12,823 23%
TCE per earning day2) 11,319 11,983 12,020 9,809 13,122 16% 11,733
Operating days 990 1,001 1,012 1,012 1,001 1%
Operating expenses per operating day3) 6,517 5,183 5,436 6,919 5,577 -14% 5,779
12 month
avg.
Tanker Division Q1 11 Q2 11 Q3 11
1) Spot rates = Time Charter Equivalent Earnings for all charters with less than six months duration = Gross freight income less bunker, commissions and port expenses.
2) TCE = Time Charter Equivalent Earnings = Gross freight income less bunker, commissions and port expenses.
3) Operating expenses are related to owned vessels.
Announcement no. 24 / 10 May 2012 First quarter report 2012 6 of 22
Bulk Division
The bulk market came under significant pressure in the first quarter of 2012 due to a high number of vessels
being delivered. Furthermore, the combination of the Chinese New Year, an overall slower growth in the Chinese
commodity demand and logistic delays in the South American grain season resulted in a low market throughout
the first quarter of 2012. Generally the Pacific market outperformed the Atlantic market.
In the Pacific spot market, the freight rates for Panamax were about USD/day 7-8,000. The Supramax segment
had freight rates of USD/day 8-9,000 except for a minor freight rate spike at USD/day 12-13,000 in mid February
mainly due to increased demand for coal in India.
The Atlantic spot market for Panamax remained basically flat at USD/day 4-5,000 throughout the first quarter of
2012. Supramax spot market had similarly low activity and freight rate levels.
The number of newbuilding deliveries in the first quarter of 2012 continued at the high levels previously seen in
2011 with 69 Capesize, 111 Panamax and 85 Handymax vessels being delivered (source: SSY).
TORM’s Panamax time charter equivalent (TCE) earnings were in the first quarter of 2012 USD/day 9,670 or 37%
below the same period in 2011. The realized first quarter 2012 TCE earnings for Handymax were USD/day
11,763, which is 5% higher than in the same period of 2011.
The Bulk Division’s result was an operating profit of USD 3 million, which included positive mark-to-market effects
of USD 10 million. TORM experienced an increasing number of waiting days and ballasting time in the first
quarter of 2012 due to the adverse effects from the Company’s financial situation.
Q1 12 Change
Q1 11
- Q1 12
Panamax (60-80,000 DWT)
Available earning days 1,524 2,068 2,279 3,127 1,848 21%
TCE per earning day2) 15,461 16,015 12,140 14,357 9,670 -37% 13,046
Operating days 180 182 184 184 182 1%
Operating expenses per operating day3) 4,836 3,904 5,126 3,896 3,934 -19% 4,215
Handymax (40-55,000 DWT)
Available earning days 566 1,133 1,152 1,361 642 13%
TCE per earning day2) 11,154 12,554 12,510 13,403 11,763 5% 12,558
Operating days - - - - - -
Operating expenses per operating day3) - - - - - - -
12 month
avg.
Bulk Division Q1 11 Q2 11 Q3 11 Q4 11
1) TCE = Time Charter Equivalent Earnings = Gross freight income less bunker, commissions and port expenses.
2) Operating expenses are related to owned vessels.
Announcement no. 24 / 10 May 2012 First quarter report 2012 7 of 22
Fleet development
During the first quarter of 2012, TORM sold the MR product tanker TORM Lana as part of the Company’s general
plan to preserve liquidity and reduce debt. TORM also took delivery of two MR product tanker newbuildings,
TORM Arawa and TORM Anabel, during the first quarter of 2012. Finally, TORM entered into an agreement
during first quarter of 2012 to cancel one MR product tanker newbuilding, which was scheduled for delivery in the
second quarter of 2014. Following the cancellation, TORM’s owned fleet consists of 66.5 product tankers and two
dry bulk vessels and TORM does not have any newbuildings on order. At the end of the first quarter of 2012,
outstanding CAPEX relating to the order book was thus zero compared to USD 195 million in 2011.
TORM’s fleet as at 31 March 2012 is shown in the table below. In addition to the 68.5 owned vessels, TORM had
chartered-in 30 product tankers and 13 bulk vessels on longer time charter contracts (minimum one year
contracts) and five bulk vessels on shorter time charter contracts (less than one year contracts). Another 20
product tankers were either in pools or under commercial management with TORM.
# of vessels
Q4 2011 Net changes Q1 2012 2012 2013 2014 2015
Owned vessels
LR2 9.0 - 9.0
LR1 7.5 - 7.5
MR 38.0 1.0 39.0
Handysize 11.0 - 11.0
Tanker Division 65.5 1.0 66.5 - - - -
Panamax 2.0 - 2.0
Handymax - -
Bulk Division 2 .0 - 2.0 - - - -
Total 67.5 1.0 68.5 - - - -
TC-in vessels with contract period >= 12 months
LR2 2.0 - 2.0
LR1 16.0 - 16.0
MR 12.0 - 12.0
Handysize - -
Tanker Division 30.0 - 30.0
Panamax 11.0 - 11.0
Handymax 2.0 - 2.0
Bulk Division 13.0 - 13.0
Total 43.0 - 43.0
TC-in vessels with contract period < 12 months
LR2
LR1
MR
Handysize
Tanker Division - - -
Panamax 18.0 - 15.0 3.0
Handymax 8.0 -6.0 2.0
Bulk Division 26.0 - 21.0 5.0
Total 26.0 - 21.0 5.0
Pools/commecial management 22.0 -2.0 20.0
Total fleet 158.5 - 22.0 136.5
Current fleet
Newbuildings and T/C-in deliveries
with a period >= 12 months
Note:
The contract duration is def ined based on the contractual minimum period and does not include optional periods.
There is not committed any newbuildings or T/C-in vessels w ith delivery af ter 2014.
Announcement no. 24 / 10 May 2012 First quarter report 2012 8 of 22
Notes on the financial reporting
Income statement
The gross profit for the first quarter of 2012 was USD 27 million, compared to USD 28 million for the
corresponding period in 2011.
The first quarter of 2012 was negatively impacted by USD 16 million from sale of vessels, compared
to a loss of USD 6 million in the first quarter of 2011. Administrative costs in the first quarter of 2012
were USD 17 million, which is slightly lower than in the first quarter of 2011.
The result before depreciation (EBITDA) for the first quarter of 2012 was a loss of USD 7 million,
compared to a profit of USD 4 million for the corresponding period of 2011.
Depreciation in the first quarter of 2012 was USD 34 million, down by USD 3 million on the first
quarter of 2011. This decrease was mainly due to a smaller owned fleet.
The primary operating result for the first quarter of 2012 was a loss of USD 41 million, compared to
a loss of USD 33 million in the same quarter of 2011.
The first quarter of 2012 was positively impacted by mark-to-market non-cash adjustments of USD
11 million in total: USD 9 million in connection with FFA/bunker derivatives and the net effect from
other financial derivatives amounting to USD 2 million. In comparison, the first quarter of 2011 had
USD 8 million in mark-to-market non-cash adjustments. Financial expenses include USD 22 million
in fees to advisors of the Company and the Company’s creditors related to the long-term
comprehensive financing and restructuring solution.
The result after tax was a loss of USD 79 million in the first quarter of 2012, compared to a loss of
USD 45 million in the first quarter of 2011.
Assets
Total assets were down from USD 2,779 million as at 31 December 2011 to USD 2,669 million as at
31 March 2012. TORM estimates the fleet's total long-term earning potential each quarter based on
future discounted cash flows. The estimated value for the fleet as at 31 March 2012 supports the
book value.
Debt
Net interest-bearing debt as at 31 March 2012 was USD 1,838 million, compared to USD 1,787
million as at 31 December 2011.
As at 31 March 2012, TORM was in breach of its financial covenants under the existing loan
agreements, and due to this TORM no longer has the unconditional right to defer payments.
Equity
Equity declined in the first quarter of 2012 from USD 644 million as at 31 December 2011 to USD
569 million due to the loss during the period. Equity as a percentage of total assets was 21% as at
31 March 2012, compared to 23% as at 31 December 2011.
TORM held 3,230,432 treasury shares as at 31 March 2012, equivalent to 4.4% of the Company's
share capital. This is the same level as of 31 December 2011.
Liquidity
TORM had cash of USD 29 million at the end of the first quarter of 2012 and no credit lines
available. TORM has no order book and therefore no CAPEX related hereto.
Announcement no. 24 / 10 May 2012 First quarter report 2012 9 of 22
Post balance sheet events
As stated in announcement no. 14 dated 4 April 2012, TORM has reached a conditional framework agreement in
principle with the bank group’s coordination committee and the major time charter partners regarding a financing
and restructuring plan.
On 23 April 2012, TORM published an updated Annual Report for 2011 that amongst others reflected the abovementioned
framework agreement. Note 2 to the consolidated financial statements “Liquidity, capital resources,
going concern and subsequent events” states that the successful outcome of the current negotiations with
TORM’s banks and other stakeholders to secure the implementation of the comprehensive financing and
restructuring plan outlined in the conditional framework agreement in principle is a prerequisite for TORM’s
continued operation. The Annual Report also contained an updated independent auditor’s report that had
changed from a “disclaimer of opinion” to an “unqualified audit opinion but with emphasis of matter”.
As published in announcement no. 20 dated 23 April 2012, TORM’s Board of Directors has informed that the
banks and the time charter partners in exchange for the concessions made as part of the above-mentioned
conditional agreement in principle will achieve a substantial majority of the share capital in the Company in
connection with definitive implementation of the agreement in principle. Under the conditional agreement in
principle, existing shareholders will achieve in aggregate 7.5% of the future share capital in the Company.
As stated in announcement no. 21 dated 23 April 2012, TORM’s annual general meeting approved to decrease
the share capital of the Company by an amount of nominally DKK 363,272,000 from nominally DKK 364.000.000
to nominally DKK 728,000 by decreasing the nominal amount per share (denomination) from DKK 5 to DKK 0.01
by transfer of nominally DKK 363,272,000 to a special reserve fund. In addition, the Board of Directors was
granted authorizations to increase the share capital with a range of methods.
As stated in announcement no. 23 dated 30 April 2012, TORM expects the temporary standstill agreement with
banks and time charter partners to be renewed.
Financial calendar
TORM's second quarter report for 2012 will be published on 21 August 2012. TORM's complete financial calendar
can be found at www.torm.com/investor-relations.
About TORM
TORM is one of the world’s leading carriers of refined oil products as well as a significant player in the dry bulk market. The Company runs a fleet
of approximately 140 modern vessels in cooperation with other respected shipping companies sharing TORM’s commitment to safety,
environmental responsibility and customer service.
TORM was founded in 1889. The Company conducts business worldwide and is headquartered in Copenhagen, Denmark. TORM’s shares are
listed on NASDAQ OMX Copenhagen (ticker: TORM) and on NASDAQ in New York (ticker: TRMD). For further information, please visit
www.torm.com.
Safe Harbor statements as to the future
Matters discussed in this release may constitute forward-looking statements. Forward-looking statements reflect our current views with respect to
future events and financial performance and may include statements concerning plans, objectives, goals, strategies, future events or performance,
and underlying assumptions and statements other than statements of historical facts. The forward-looking statements in this release are based
upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management’s examination of
historical operating trends, data contained in our records and other data available from third parties. Although TORM believes that these
assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which
are difficult or impossible to predict and are beyond our control, TORM cannot guarantee that it will achieve or accomplish these expectations,
beliefs or projections.
Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward- looking statements include
the strength of the world economy and currencies, changes in charter hire rates and vessel values, changes in demand for “tonne miles” of oil
carried by oil tankers, the effect of changes in OPEC’s petroleum production levels and worldwide oil consumption and storage, changes in
demand that may affect attitudes of time charterers to scheduled and unscheduled dry-docking, changes in TORM’s operating expenses, including
bunker prices, dry-docking and insurance costs, changes in the regulation of shipping operations, including requirements for double hull tankers or
actions taken by regulatory authorities, potential liability from pending or future litigation, domestic and international political conditions, potential
disruption of shipping routes due to accidents and political events or acts by terrorists.
Risks and uncertainties are further described in reports filed by TORM with the US Securities and Exchange Commission, including the TORM
Annual Report on Form 20-F and its reports on Form 6-K. Forward-looking statements are based on management’s current evaluation, and TORM
is only under an obligation to update and change the listed expectations to the extent required by law.
Announcement no. 24 / 10 May 2012 First quarter report 2012 10 of 22
Statement by the Board of Directors and Executive Management
The Board and Management have today discussed and adopted this interim report for the period 1 January – 31
March 2012.
This interim report is unaudited and was prepared in accordance with the International Financial Reporting
Standards for Interim Financial Reporting, IAS 34, as adopted by the EU and additional disclosure requirements
of listed Danish companies.
Reference is made to the Annual Report for 2011’s note 2 to the consolidated financial statements “Liquidity,
capital resources, going concern and subsequent events”, in which it is stated that the successful outcome of the
current negotiations with TORM’s banks and other stakeholders to secure the implementation of the
comprehensive financing and restructuring plan outlined in the conditional framework agreement in principle is a
prerequisite for TORM’s continued operation. In a forced sale, or if TORM is otherwise not able to continue as a
going concern, the net value of the Company’s assets, liabilities and off balance sheet items would be
significantly lower than the current carrying amounts.
We believe the accounting practices used are reasonable, and that this interim report gives a true and accurate
picture of the Group's assets, debt, financial position, results and cash flows.
Copenhagen, 10 May 2012
Executive Management
Board of Directors
Jacob Meldgaard, CEO
Roland M. Andersen, CFO
Niels Erik Nielsen, Chairman
Christian Frigast, Deputy Chairman
Jesper Jarlbæk
Kari Millum Gardarnar
Rasmus Johannes Hoffmann
Announcement no. 24 / 10 May 2012 First quarter report 2012 11 of 22
Consolidated income statement
Million USD Q1 2012 Q1 2011 2011
Revenue 310.6 270.4 1,305.2
Port expenses, bunkers and commissions -172.2 -129.8 -675.0
Freight and bunkers derivatives 13.6 6.9 14.1
Time charter equivalent earnings 152.0 147.5 644.3
Charter hire -84.4 -76.6 -398.3
Operating expenses -40.3 -43.1 -165.0
Gross profit (Net earnings from shipping activities) 27.3 27.8 81.0
Profit/(loss) from sale of vessels -15.9 -5.7 -52.6
Administrative expenses -16.6 -17.1 -71.2
Other operating income 0.5 0.2 3.2
Share of results of jointly controlled entities -2.4 -1.1 -4.2
EBITDA -7.1 4.1 -43.8
Impairment losses on jointly controlled entities 0.0 0.0 -13.0
Impairment losses on tangible and intangible assets 0.0 0.0 -187.0
Amortizations and depreciation -34.0 -36.6 -144.8
Operating profit/(loss) (EBIT) -41.1 -32.5 -388.6
Financial income 3.6 2.5 9.9
Financial expenses -41.0 -14.9 -72.7
Profit/(loss) before tax -78.5 -44.9 -451.4
Tax -0.2 -0.4 -1.6
Net profit/(loss) for the period -78.7 -45.3 -453.0
Earnings/(loss) per share, EPS
Earnings/(loss) per share, EPS (USD) -1.1 -0.7 -6.5
Earnings/(loss) per share, EPS (DKK)* -6.4 -3.6 -34.9
Diluted earnings/(loss) per share, (USD) -1.1 -0.7 -6.5
Diluted earnings/(loss) per share, (DKK)* -6.4 -3.6 -34.9
*) The key figures have been translated from USD to DKK using the average US D/DKK exchang e change rate
for the period in question.
Announcement no. 24 / 10 May 2012 First quarter report 2012 12 of 22
Consolidated income statement per quarter
Million USD Q1 12 Q 4 11 Q3 11 Q2 11 Q1 11
Revenue 310.6 367.3 331.8 335.7 270.4
Port expenses, bunkers and commissions -172.2 -202.5 -182.8 -159.9 -129.8
Freight and bunkers derivatives 13.6 5.1 -0.9 3.0 6.9
Time charter equivalent earnings 152.0 169.9 148.1 178.8 147.5
Charter hire -84.4 -118.6 -103.5 -99.6 -76.6
Operating expenses -40.3 -39.5 -42.3 -40.1 -43.1
Gross profit/(loss) (Net earnings from shipping
activities) 27.3 11.8 2.3 39.1 27.8
Profit from sale of vessels -15.9 -54.0 0.0 7.1 -5.7
Administrative expenses -16.6 -19.6 -16.8 -17.7 -17.1
Other operating income 0.5 0.3 0.4 2.3 0.2
Share of results of jointly controlled entities -2.4 1.1 -2.9 -1.3 -1.1
EBITDA -7.1 -60.4 -17.0 29.5 4.1
Impairment losses on jointly controlled entities 0.0 -13.0 0.0 0.0 0.0
Impairment losses on tangible and intangible assets 0.0 -187.0 0.0 0.0 0.0
Amortizations and depreciation -34.0 -35.6 -36.1 -36.5 -36.6
Operating profit/(loss) (EBIT) -41.1 -296.0 -53.1 -7.0 -32.5
Financial income 3.6 8.4 -0.5 -0.5 2.5
Financial expenses -41.0 -25.1 -16.5 -16.2 -14.9
Profit/(loss) before tax -78.5 -312.7 -70.1 -23.7 -44.9
Tax -0.2 -0.3 -0.3 -0.6 -0.4
Net profit/(loss) for the period -78.7 -313.0 -70.4 -24.3 -45.3
Earnings/(loss) per share, EPS
Earnings/(loss) per share, EPS (USD) -1.1 -4.5 -1.0 -0.3 -0.7
Diluted earnings/(loss) per share, (USD) -1.1 -4.5 -1.0 -0.3 -0.7
Announcement no. 24 / 10 May 2012 First quarter report 2012 13 of 22
Consolidated statement of comprehensive income
Million USD Q1 2012 Q1 2011 2011
Net profit/(loss) for the period -78.7 -45.3 -453.0
Other comprehensive income:
Exchange rate adjustment arising on translation
of entities using a measurement currency different
from USD 0.7 0.0 -0.4
Fair value adjustment on hedging instruments -1.9 3.3 -29.7
Value adjustment on hedging instruments transferred
to income statement 4.2 0.9 1.7
Fair value adjustment on available for sale investments 0.3 0.2 8.7
Transfer to income statement on sale of available for sale
investments 0.0 0.0 0.0
Other comprehensive income after tax 3.3 4.4 -19.7
Total comprehensive income -75.4 -40.9 -472.7
Announcement no. 24 / 10 May 2012 First quarter report 2012 14 of 22
Consolidated balance sheet
31 March 31 March 31 December
Million USD 2012 2011 2011
NON-CURRENT ASSETS
Intangible assets
Goodwill 0.0 89.2 0.0
Other intangible assets 1.9 2.0 1.9
Total intangible assets 1.9 91.2 1.9
Tangible fixed assets
Land and buildings 1.8 3.6 2.0
Vessels and capitalized dry-docking 2,289.6 2,605.1 2,258.6
Prepayments on vessels 0.0 108.0 69.2
Other plant and operating equipment 7.7 8.7 8.1
Total tangible fixed assets 2,299.1 2,725.4 2,337.9
Financial assets
Investment in jointly controlled entities 47.8 71.2 50.3
Loans to jointly controlled entities 8.2 9.8 8.2
Other investments 12.5 3.1 11.6
Other financial assets 0.0 6.0 0.0
Total financial assets 68.5 90.1 70.1
TOTAL NON-CURRENT ASSETS 2,369.5 2,906.7 2,409.9
CURRENT ASSETS
Bunkers 64.9 52.7 84.6
Freight receivables 126.8 108.4 140.2
Other receivables 37.8 22.6 26.0
Prepayments 40.5 27.0 11.8
Cash and cash equivalents 29.4 142.4 85.5
299.4 353.1 348.1
Non-current assets held for sale 0.0 0.0 21.2
TOTAL CURRENT ASSETS 299.4 353.1 369.3
TOTAL ASSETS 2,668.9 3,259.8 2,779.2
Announcement no. 24 / 10 May 2012 First quarter report 2012 15 of 22
Consolidated balance sheet
31 March 31 March 31 December
Million USD 2012 2011 2011
EQUITY
Common shares 61.1 61.1 61.1
Treasury shares -17.3 -17.3 -17.3
Revaluation reserves 6.5 -2.3 6.2
Retained profit 541.6 1,027.0 620.0
Proposed dividends 0.0 0.0 0.0
Hedging reserves -27.5 2.4 -29.8
Translation reserves 4.3 4.1 3.6
TOTAL EQUITY 568.7 1,075.0 643.8
LIABILITIES
Non-current liabilities
Deferred tax liability 53.5 54.2 53.7
Mortgage debt and bank loans 0.0 1,750.9 0.0
Finance lease liabilities 31.0 30.7 29.4
Deferred income 6.1 0.0 6.4
TOTAL NON-CURRENT LIABILITIES 90.6 1,835.8 89.5
Current liabilities
Mortgage debt and bank loans 1,791.7 212.0 1,794.6
Finance lease liabilities 44.4 2.0 48.3
Trade payables 87.7 58.0 115.6
Current tax liabilities 0.7 1.1 1.2
Other liabilities 83.9 74.5 85.0
Acquired liabilities related to options on vessels 0.0 1.4 0.0
Deferred income 1.2 0.0 1.2
TOTAL CURRENT LIABILITIES 2,009.6 349.0 2,045.9
TOTAL LIABILITIES 2,100.2 2,184.8 2,135.4
TOTAL EQUITY AND LIABILITIES 2,668.9 3,259.8 2,779.2
Announcement no. 24 / 10 May 2012 First quarter report 2012 16 of 22
Consolidated statement of changes in equity as at 1 January – 31
March 2012
Consolidated statement of changes in equity as at 1 January – 31
March 2011
Common Treasury Retained Proposed Revaluation Hedging Translation Total
shares shares prof it dividends reserves reserves reserves
Million USD
Equity at 1 January 2012 61.1 -17.3 620.0 0.0 6.2 -29.8 3.6 643.8
Comprehensive income for the year:
Net prof it/(loss) for the year - - -78.7 - - - - -78.7
Other comprehensive income for the year - - - - 0.3 2.3 0.7 3.3
Total comprehensive income for the year - - -78.7 - 0.3 2.3 0.7 -75.4
Share-based compensation - - 0.3 - - - - 0.3
Total changes in equity Q1 2012 0.0 0.0 -78.4 0.0 0.3 2.3 0.7 -75.1
Equity at 31 March 2012 61.1 -17.3 541.6 0.0 6.5 -27.5 4.3 568.7
Common Treasury Retained Proposed Revaluation Hedging Translation Total
shares shares prof it dividends reserves reserves reserves
Million USD
Equity at 1 January 2011 61.1 -17.9 1,072.3 0.0 -2.5 -1.8 4.1 1,115.3
Comprehensive income for the year:
Net prof it/(loss) for the year - - -45.3 - - - - -45.3
Other comprehensive income for the year - - - - 0.2 4.2 0.0 4.4
Total comprehensive income for the year - - -45.3 - 0.2 4.2 0.0 -40.9
Disposal treasury shares, cost - 0.6 - - - - - 0.6
Loss f rom disposal of treasury shares - - -0.6 - - - - -0.6
Share-based compensation - - 0.6 - - - - 0.6
Total changes in equity Q1 2011 0.0 0.6 -45.3 0.0 0.2 4.2 0.0 -40.3
Equity at 31 March 2011 61.1 -17.3 1,027.0 0.0 -2.3 2.4 4.1 1,075.0
Announcement no. 24 / 10 May 2012 First quarter report 2012 17 of 22
Consolidated statement of cash flows
Million USD Q1 2012 Q1 2011 2011
Cash flow from operating activities
Operating profit -41.1 -32.5 -388.6
Adjustments:
Reversal of profit/(loss) from sale of vessels 15.9 5.7 52.6
Reversal of amortizations and depreciation 34.0 36.6 144.8
Reversal of impairment of jointly controlled entities 0.0 0.0 13.0
Reversal of impairment of tangible and intangible assets 0.0 0.0 187.0
Reversal of share of results of jointly controlled entities 2.4 1.1 4.2
Reversal of other non-cash movements -9.5 -6.7 -6.8
Dividends received from jointly controlled entities 0.0 0.7 1.4
Interest received and exchange rate gains 0.2 3.6 5.0
Interest paid and exchange rate losses -18.0 -15.8 -67.0
Advisor fees related to financing and restructuring plan -22.0 0.0 0.0
Income taxes paid/repaid -0.5 -1.2 -2.7
Change in bunkers, accounts receivables and payables -18.0 -2.6 -17.7
Net cash flow from operating activities -56.6 -11.1 -74.8
Cash flow from investing activities
Investment in tangible fixed assets -44.1 -68.0 -118.4
Loans to jointly controlled entities 0.0 0.5 2.1
Sale of non-current assets 49.3 100.6 284.5
Net cash flow from investing activities 5.2 33.1 168.2
Cash flow from financing activities
Borrowing, mortgage debt 22.5 26.7 87.0
Borrowing, finance lease liabilities 0.0 0.0 46.8
Repayment/redemption, mortgage debt -26.4 -25.5 -254.1
Repayment/redemption, finance lease liabilities -0.8 -0.8 -7.5
Net cash flow from financing activities -4.7 0.4 -127.8
Net cash flow from operating, investing and financing activities -56.1 22.4 -34.4
Cash and cash equivalents, beginning balance 85.5 120.0 120.0
Cash and cash equivalents, ending balance 29.4 142.4 85.6
Announcement no. 24 / 10 May 2012 First quarter report 2012 18 of 22
Consolidated quarterly statement of cash flows
Million USD Q1 12 Q4 11 Q3 11 Q2 11 Q1 11
Cash flow from operating activities
Operating profit -41.1 -296.0 -53.1 -7.0 -32.5
Adjustments:
Reversal of profit/(loss) from sale of vessels 15.9 54.0 0.0 -7.1 5.7
Reversal of amortizations and depreciation 34.0 35.6 36.1 36.5 36.6
Reversal of impairment of jointly controlled entities 0.0 13.0 0.0 0.0 0.0
Reversal of impairment of tangible and intangible assets 0.0 187.0 0.0 0.0 0.0
Reversal of share of results of jointly controlled entities 2.4 -1.1 2.9 1.3 1.1
Reversal of other non-cash movements -9.5 -0.5 5.7 -5.3 -6.7
Dividends received from jointly controlled entities 0.0 0.2 0.2 0.3 0.7
Interest received and exchange rate gains 0.2 -0.2 -1.3 2.9 3.6
Interest paid and exchange rate losses -18.0 -19.5 -13.8 -17.9 -15.8
Advisor fees related to financing and restructuring plan -22.0 0.0 0.0 0.0 0.0
Income taxes paid/repaid -0.5 -0.4 -1.1 0.0 -1.2
Change in bunkers, accounts receivables and payables -18.0 14.9 3.8 -33.9 -2.6
Net cash flow from operating activities -56.6 -13.0 -20.6 -30.2 -11.1
Cash flow from investing activities
Investment in tangible fixed assets -44.1 -11.6 -4.4 -34.4 -68.0
Loans to jointly controlled entities 0.0 0.5 0.5 0.6 0.5
Sale of non-current assets 49.3 75.4 14.4 94.1 100.6
Net cash flow from investing activities 5.2 64.4 10.4 60.3 33.1
Cash flow from financing activities
Borrowing, mortgage debt 22.5 0.0 0.0 60.3 26.7
Borrowing, finance lease liabilities 0.0 0.0 0.0 46.8 0.0
Repayment/redemption, mortgage debt -26.4 -59.4 -38.5 -130.7 -25.5
Repayment/redemption, finance lease liabilities -0.8 -2.3 -2.6 -1.8 -0.8
Net cash flow from financing activities -4.7 -61.7 -41.1 -25.4 0.4
Net cash flow from operating, investing and financing activities -56.1 -10.3 -51.3 4.7 22.4
Cash and cash equivalents, beginning balance 85.5 95.8 147.1 142.4 120.0
Cash and cash equivalents, ending balance 29.4 85.5 95.8 147.1 142.4
Announcement no. 24 / 10 May 2012 First quarter report 2012 19 of 22
Notes
Note 1 - Impairment test
As at 31 March 2012, Management performed a review of the recoverable amount of the assets by assessing the
recoverable amount for the significant assets within the Tanker Division, the Bulk Division and the investment in 50% of
FR8. The methodology used for calculating the value in use is unchanged compared to the Annual Report for 2011 and
accordingly the freight rate estimates in the period 2012 to 2015 are based on the Company's business plans, which in 2014
and 2015 assume a gradual increase towards the 10-year historic average. The freight rates from 2016 are based on the
10-year historic average freight rates from Clarksons adjusted by the inflation rate. The WACC is unchanged compared to
31 December 2011.
Based on this review, Management concluded that assets within the Tanker Division, the Bulk Division and the investment
in FR8 were not impaired as of 31 March 2012 whereas the impairment losses recognized in 2009, 2010 and 2011 in FR8
and in 2011 in the Tanker Division were maintained.
The 10-year historic average freight rates as of 31 March 2012 are as follows:
- LR2 USD/day 27,088
- LR1 USD/day 22,676
- MR USD/day 20,164
Management believes that these major assumptions are reasonable.
The calculation of value in use is very sensitive to changes in the key assumptions which are considered to be related to the
future development in freight rates, the WACC applied as discounting factor in the calculations and the development in
operating expenses. The sensitivities have been assessed as follows, all other things being equal:
- A decrease in the tanker freight rates of USD/day 500 would result in a further impairment of USD 139 million for
the Tanker Division
- An increase of the WACC of 1% would result in a further impairment of USD 203 million for the Tanker Division
- An increase of the operating expenses of 5% would result in a further impairment of USD 86 million for the Tanker
Division
It should be emphasized that in a forced sale the recoverable amount of the vessels would be significantly lower than the
carrying amount under a going concern assumption.
Note 2 - Vessels and capitalized dry-docking
31 March 31 March 31 Dec.
USD million 2012 2011 2011
Cost:
Balance at 1 January 2,999.3 3,113.9 3,113.9
Additions 2.5 3.8 20.7
Disposals -48.7 -140.2 -334.6
Transferred to/from other items 102.4 199.3 199.3
Balance 3,055.5 3,176.8 2,999.3
Depreciation and impairments:
Balance at 1 January 740.7 553.8 553.8
Disposals -7.9 -17.6 -67.8
Depreciation for the year 33.1 35.5 140.6
Impairment loss 0.0 0.0 97.8
Transferred to/from other items 0.0 0.0 16.3
Balance 765.9 571.7 740.7
Carrying amount 2,289.6 2,605.1 2,258.6
Announcement no. 24 / 10 May 2012 First quarter report 2012 20 of 22
Note 3 - Prepayments on vessels
31 March 31 March 31 Dec.
USD million 2012 2011 2011
Cost:
Balance at 1 January 69.2 243.3 243.3
Additions 41.2 64.0 94.8
Disposals -8.0 0.0 -7.8
Transferred to/from other items -102.4 -199.3 -199.3
Transferred to non-current assets held for sale 0.0 0.0 -61.8
Balance 0.0 108.0 69.2
Depreciation and impairments:
Balance at 1 January 0.0 16.3 16.3
Transferred to/from other items 0.0 -16.3 -16.3
Balance 0.0 0.0 0.0
Carrying amount 0.0 108.0 69.2
Note 4 - Mortgage debt and bank loans
31 March 31 March 31 Dec.
Million USD 2012 2011 2011
Mortgage debt and bank loans
To be repaid as follows:
Falling due within one year 1,791.7 212.0 1,794.7
Falling due between one and two years 0.0 208.3 0.0
Falling due between two and three years 0.0 836.1 0.0
Falling due between three and four years 0.0 195.4 0.0
Falling due between four and five years 0.0 415.2 0.0
Falling due after five years 0.0 95.9 0.0
Carrying amount 1,791.7 1,962.9 1,794.7
As at 31 March 2012, TORM’s equity ratio of 21.3% and cash at bank of USD 29.4 million resulted in a
breach of its financial covenants under the existing loan agreements. As at 31 March 2012 TORM therefore
does not have an unconditional right to defer payments on the loans for more than 12 months, and the
mortgage debt and bank loans are in principle payable on demand. Accordingly the mortgage debt and
bank loans are classified as current liabilities in the balance sheet.
As at 10 May 2012, none of these defaults have been remediated.
Announcement no. 24 / 10 May 2012 First quarter report 2012 21 of 22
Note 5 - Segment information
Million USD Q1 2012 Q1 2011
Tanker Bulk Not Tanker Bulk Not
Division Division
allocated
Total Division Division
allocated
Total
Revenue 251.4 59.2 0.0 310.6 219.2 51.2 0.0 270.4
Port expenses, bunkers and commissions -138.7 -33.5 0.0 -172.2 -108.5 -21.3 0.0 -129.8
Freight and bunkers derivatives -0.4 14.0 0.0 13.6 -0.3 7.2 0.0 6.9
Time charter equivalent earnings 112.3 39.7 0.0 152.0 110.4 37.1 0.0 147.5
Charter hire -51.2 -33.2 0.0 -84.4 -45.7 -30.9 0.0 -76.6
Operating expenses -39.6 -0.7 0.0 -40.3 -42.2 -0.9 0.0 -43.1
Gross profit/(loss) (Net earnings from
shipping activities) 21.5 5.8 0.0 27.3 22.5 5.3 0.0 27.8
Profit from sale of vessels -15.9 0.0 0.0 -15.9 -5.4 -0.3 0.0 -5.7
Administrative expenses -14.9 -1.7 0.0 -16.6 -14.6 -2.5 0.0 -17.1
Other operating income 0.5 0.0 0.0 0.5 0.2 0.0 0.0 0.2
Share of results of jointly controlled entities 0.1 0.0 -2.5 -2.4 0.9 0.0 -2.0 -1.1
EBITDA -8.7 4.1 -2.5 -7.1 3.6 2.5 -2.0 4.1
Amortizations and depreciation -33.3 -0.7 0.0 -34.0 -35.9 -0.7 0.0 -36.6
Operating profit/(loss) (EBIT) -42.0 3.4 -2.5 -41.1 -32.3 1.8 -2.0 -32.5
Financial income - - 3.6 3.6 - - 2.5 2.5
Financial expenses - - -41.0 -41.0 - - -14.9 -14.9
Profit/(loss) before tax - - -39.9 -78.5 - - -14.4 -44.9
Tax - - -0.2 -0.2 - - -0.4 -0.4
Net profit/(loss) for the period - - -40.1 -78.7 - - -14.8 -45.3
The activity in TORM's 50% ownership of FR8 Holding Pte. Ltd. is included in 'Not-allocated'.
During the year, there have been no transactions between the Tanker Division and the Bulk Division, and therefore all revenue
derives from external customers.
Note 6 - Post balance sheet date events
As stated in announcement no. 14 dated 4 April 2012, TORM has reached a conditional framework agreement in principle
with the bank coordination committee and the major time charter partners regarding a financing and restructuring plan.
On 23 April 2012, TORM published an updated Annual Report for 2011 that amongst others reflected the above-mentioned
framework agreement. Note 2 to the consolidated financial statements “Liquidity, capital resources, going concern and
subsequent events” states that the successful outcome of the current negotiations with TORM’s banks and other stakeholders
to secure the implementation of the comprehensive financing and restructuring plan outlined in the conditional framework
agreement in principle is a prerequisite for TORM’s continued operation. The Annual Report also contained an updated
independent auditor’s report that had changed from a “disclaimer of opinion” to an “unqualified audit opinion but with emphasis
of matter”.
As published in announcement no. 20 dated 23 April 2012, TORM’s Board of Directors has informed that the banks and the
time charter partners in exchange for the concessions made as part of the above-mentioned conditional agreement in
principle will achieve a substantial majority of the share capital in the Company in connection with definitive implementation of
the agreement in principle. Under the conditional agreement in principle, existing shareholders will achieve in aggregate 7.5%
of the future share capital in the Company.
As stated in announcement no. 21 dated 23 April 2012, TORM’s annual general meeting approved to decrease the share
capital of the Company by an amount of nominally DKK 363,272,000 from nominally DKK 364.000.000 to nominally DKK
728,000 by decreasing the nominal amount per share (denomination) from DKK 5 to DKK 0.01 by transfer of nominally DKK
363,272,000 to a special reserve fund. In addition, the Board of Directors was granted authorizations to increase the share
Announcement no. 24 / 10 May 2012 First quarter report 2012 22 of 22
capital with a range of methods.
As stated in announcement no. 23 dated 30 April 2012, TORM expects the temporary standstill agreement with banks and
time charter partners to be renewed.
Note 7 - Accounting policies
The interim report for the period 1 January – 31 March 2012 is presented in accordance with IAS 34 "Interim Financial
Reporting" as adopted by the EU and additional Danish disclosure requirements for interim reports of listed companies. The
interim report has been prepared using the accounting policies as for the Annual Report for 2011. The accounting policies
are described in more detail in the Annual Report for 2011. As from January 1, 2012 TORM has implemented the
amendment to IFRS 7 regarding disclosures about transfer of financial assets. The amended standard has not affected
recognition and measurement in TORM's interim report for the first quarter of 2012. The interim report of the first quarter of
2012 is unaudited, in line with the normal practice.
