August 21, 2019
NORDIC SHIPHOLDING A/S
Company Announcement: 10/2019
Published via NASDAQ OMX on August 21, 2019
H1 Result 2019
Summary
The comparison figures for period ended 30 June 2018 are stated in parenthesis.
The Group started 2019 on a positive note as the average daily Time Charter Equivalent (“TCE”) rate in Q1 2019 for the six vessels was approximately 23% higher than the average TCE rate in Q4 2018. However, the TCE rate started to decline from May 2019. The average TCE earned by the six vessels in H1 2019 was 19% higher than the average TCE earned in H1 2018.
For the 6 months ended 30 June 2019, the Group incurred a loss after tax of
USD 1.3 million (loss of USD 11.8 million which included a one-off impairment loss of USD 8.2 million for the vessels).
TCE earnings rose 19.0% to USD 12.2 million (USD 10.2 million) in H1 2019.
Expenses relating to the operation of vessels in H1 2019 decreased marginally to USD 7.1 million (USD 7.2 million).
EBITDA increased significantly to USD 4.3 million (USD 1.9 million) as a result of improved TCE earnings in H1 2019. Other external costs were reduced by USD 0.4 million to USD 0.6 million (USD 1.0 million) due mainly to the reduction in management fees charged by the corporate manager of the Group and other corporate expenses.
The Group recognised an impairment loss on asset-held-for-sale of USD 0.3 million in H1 2019 related to the sale of Nordic Ruth in July 2019. The Group did not make any impairment nor reversal of impairment on the remaining vessels in H1 2019.
Between 31 December 2018 and 30 June 2019, equity decreased from USD 11.8 million to USD 10.6 million as a result of the cumulative loss during the period. Consequently, the equity ratio decreased from 11.4% to 10.4%.
As part of the loan restructuring concluded with the lending banks in Q4 2018, the financial covenants under the original loans such as (i) minimum value (fair market value of vessels as a percentage of outstanding loan) and (ii) minimum equity ratio are waived whilst the minimum liquidity level is reduced. The relief from these financial covenants are provided till 30 September 2020. In addition, the quarterly loan instalments are deferred from December 2018 to September 2020.
The Group is also subject to a quarterly cash sweep mechanism under which the Group after payment of instalments and interest under the loan agreement, must apply any cash and cash equivalents of the Group (excluding the bank balance held in dry-docking reserve bank accounts) in excess of USD 6.0 million towards prepayment of the loan. There was no cash sweep in H1 2019 and H1 2018.
During the financial period, cash flow generated from operations was USD 0.2 million (cash flow used in operations of USD 0.2 million) mainly contributed by earnings from the three pools. In H1 2019, the Group did not capitalise any dry-dock expenditure (the Group paid USD 0.5 million for the dry-docking of Nordic Ruth in H1 2018). The Group did not make any loan repayments in H1 2019 (USD NIL million in H1 2018 as the Group used previously swept cash for the scheduled amortisation) on the term loan facility.
As at 30 June 2019, cash and cash equivalents (including balances held in dry-docking reserve bank accounts) was USD 8.8 million (USD 3.6 million).
As announced in July 2019, Nordic Ruth Pte. Ltd., a wholly-owned subsidiary of Nordic Shipholding A/S, has successfully delivered the M/T Nordic Ruth to her new owners. Net proceeds from the sale were used to reduce the term loan with the lenders.
The outlook for 2019 remains unchanged as indicated in the 2018 Annual Report.
The TCE revenue generated in the first half of 2019 generally tracked the forecasts provided by the respective pool managers. Together with the projected TCE revenue for the remaining 6 months, forecasted TCE revenue for 2019 is maintained in the region of USD 23.0 million – USD 26.0 million. Projected TCE revenue is based on updated forecasts by the respective commercial managers for the five product tankers.
After accounting for operating expenditure budgeted by the respective technical managers, the Group’s EBITDA (earnings before interest, tax, depreciation and amortisation) for 2019 is maintained in the range of USD 5.0 million – USD 8.0 million with a budgeted stable positive cash flow. The result before tax, as indicated in the 2018 Annual Report, is unchanged at USD -6.0 million – USD -3.0 million. This outlook for 2019 does not take into account any impairment or write-back of impairment of vessels’ carrying values.
The Company continues to pursue growth and potential consolidation opportunities that are accretive to the Company.
For further information please contact:
Knud Pontoppidan, Chairman of the board, Nordic Shipholding A/S: +45 39 29 10 00
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