Interim / Quarterly Report • Jul 27, 2023
Interim / Quarterly Report
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d'Amico International Shipping S.A.
Registered office at 25C Boulevard Royal, Luxembourg Share capital US\$ 62,053,278.45 as at 30 June 2023
| BOARD OF DIRECTORS AND CONTROL BODIES 3 |
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| KEY FIGURES 4 |
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| CONSOLIDATED INTERIM MANAGEMENT REPORT 5 |
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| GROUP STRUCTURE 5 | |
| ALTERNATIVE PERFORMANCE MEASURES (APM) 8 |
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| SUMMARY OF THE RESULTS IN THE SECOND QUARTER AND FIRST HALF OF 202312 | |
| SIGNIFICANT EVENTS OF THE FIRST SEMESTER 18 |
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| SIGNIFICANT EVENTS SINCE THE END OF THE PERIOD AND BUSINESS OUTLOOK 21 |
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| AUDITORS REPORT ON REVIEW OF THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 23 |
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| D'AMICO INTERNATIONAL SHIPPING GROUP CONDENSED CONSOLIDATED INTERIM |
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| FINANCIAL STATEMENTS AS AT 30 JUNE 2023 25 |
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| CONDENSED CONSOLIDATED INTERIM INCOME STATEMENT 25 |
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| CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME25 | |
| CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION 26 |
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| CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS 27 |
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| INTERIM CONDENSED STATEMENT OF CHANGES IN CONSOLIDATED SHAREHOLDERS' EQUITY 28 |
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| NOTES………. 29 |
Chairman, Chief Executive Officer Paolo d'Amico
Directors Antonio Carlos Balestra di Mottola, Chief Financial Officer Cesare d'Amico – Executive Director Marcel C. Saucy – Non-executive, Lead Independent Director Tom Loesch – Non-executive, Independent Director Monique I.A. Maller – Non-executive, Independent Director
MOORE Audit S.A.
US\$ million
| Q2 2023 | Q2 2022 | H1 2023 | H1 2022 | |
|---|---|---|---|---|
| UNREVIEWED | UNREVIEWED | US\$ Thousand | ||
| 98,443 | 73,986 Total net revenue | 205,906 | 117,993 | |
| 66,339 | 48,470 EBITDA* | 142,749 | 66,243 | |
| 67.4% | 65.5% as % of margin on Total net revenue | 69.3% | 56.1% | |
| 51,657 | 33,425 EBIT* | 112,260 | 33,715 | |
| 52.5% | 45.2% as % of margin on Total net revenue | 54.5% | 28.6% | |
| 45,717 | 25,714 Net profit (loss) | 99,833 | 19,218 | |
| 46.4% | 34.8% as % of margin on Total net revenue | 48.5% | 16.3% | |
| 47,107 | 26,686 Adjusted Net profit (loss)** | 103,612 | 22,650 | |
| 0.37 | 0.21 | Earnings per share | 0.82 | 0.16 |
| 73,771 | 8,741 | Operating cash flow | 172,978 | 18,982 |
| (30,737) | (475) | Gross CAPEX* | (35,564) | (894) |
| As at 30 June 2023 |
As at 31 December 2022 |
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| Total assets | 1,009,657 | 1,054,885 | ||
| Net financial indebtedness* | 300,427 | 409,850 | ||
| Shareholders' equity | 553,877 | 478,414 |
*see Alternative Performance Measures on page 8;
** Excluding results on disposal and non-recurring financial items – please refer also to the summary of financial results for the first half of 2023.
| Q2 2023 UNREVIEWED |
Q2 2022 UNREVIEWED |
H1 2023 UNREVIEWED |
H1 2022 UNREVIEWED |
|
|---|---|---|---|---|
| 30,831 | 23,389 Daily operating measures - TCE earnings* per employment day (US\$)1 |
32,434 | 18,559 | |
| 36.0 | 35.5 Fleet development - Total vessel equivalent* | 36.0 | 35.8 | |
| 22.0 | 17.5 - Owned | 21.3 | 17.8 | |
| 6.4 | 8.0 - Bareboat chartered-in | 6.9 | 8.0 | |
| 7.6 | 10.0 - Time chartered-in | 7.8 | 10.0 | |
| 1.9% | 1.3% Off-hire days/ available vessel days2 (%) | 2.0% | 0.8% | |
| 27.2% | 39.8% Fixed rate contract/ available vessel days3 (coverage %) |
26.2% | 42.1% |
*see Alternative Performance Measures on page 8.
1 This figure represents time charter ("TC") equivalent earnings for vessels employed on the spot market and time charter contracts, net of commissions. Please refer to the Alternative Performance Measures included further on in this report. This figure excludes TCE Earnings generated by the 'vessels under commercial management', as DIS passes these earnings on to the vessels' owners, after deducting a 2% commission on all their gross revenues.
2 This figure is equal to the ratio of the total off-hire days, including those from dry-docks, and the total number of available vessel days.
3 Fixed rate contract days/available vessel days (coverage ratio): this figure represents the proportion of available vessel days, including offhire days, employed through time charter contracts.
Set out below is d'Amico International Shipping Group's structure as at 30 June 2023:
d'Amico International Shipping S.A. (individually the "Company" or "d'Amico International Shipping", and when together with its subsidiaries "DIS", "DIS Group" or "the Group") is an international marine transportation company, part of the d'Amico Società di Navigazione SpA group (the "d'Amico Group"), which traces its origins to 1936. As at 30 June 2023, d'Amico International Shipping controls through d'Amico Tankers d.a.c. (Ireland), its fully owned subsidiary a fleet of 36.0 vessels, of which 29.0 owned and bareboat vessels (with purchase obligations), with an average age of approximately 8.0 years, compared to an average in the product tankers industry of 12.6 years for MRs (25,000 – 54,999 dwt) and 13.7 for LR1s (55,000 – 84,999 dwt). All DIS' vessels are double-hulled and are primarily engaged in the transportation of refined oil products, providing worldwide shipping services to the major oil companies and trading houses. All the vessels are compliant with IMO (International Maritime Organization) regulations, including MARPOL (the International Convention for the Prevention of Pollution from Ships), with the requirements of oil-majors and energy-related companies and other relevant international standards. Based on MARPOL/IMO rules, cargoes such as palm oil, vegetable oil and other chemicals can only be transported by vessels that meet certain requirements (IMO Classed). As at 30 June 2023, 77.8% of DIS' controlled fleet was IMO Classed, allowing the Group to transport a large range of products.
DIS' business purpose is to operate, through its main subsidiary d'Amico Tankers d.a.c., a fleet of owned and chartered-in vessels, engaged in the transportation of refined petroleum products and vegetable oils.
DIS Group's revenue, amounting to US\$ 270.8 million in H1 2023 (+54.5% from H1 2022) (please refer to DIS' Consolidated financial statements as at 31 December 2022), is mainly generated from the employment, either directly or through its partnerships, of the vessels of its fleet under spot contracts and time charters, for the marine transportation of refined petroleum products. Vessels operating under fixed rate contracts, including time charters, usually provide more steady and predictable cash flows than vessels operating on the spot market. Spot contracts offer the opportunity to maximise DIS Group's revenue during periods of increasing market rates, although they may result in lower earnings than time charters during periods of decreasing rates. This employment mix varies according to prevailing and forecasted market conditions. Gains or losses can also arise from the sale of the vessels in DIS Group's fleet.
DIS Group believes that it benefits from a strong brand name and an established reputation in the international market due to its long operating history and that such a reputation is important in maintaining and strengthening its long-term relationships with its partners and existing customers and in developing relationships with new customers. Its partners and customers appreciate the transparency and accountability, which have been priorities for the DIS Group from its early days. Accountability, transparency, and a focus on quality are pillars of its operations and key to DIS Group's success.
The quality of DIS Group's fleet is preserved through scheduled maintenance programmes, by aiming for exacting standards on owned vessels and by chartering-in vessels from owners who meet high-quality standards.
DIS has a presence in Luxembourg, Dublin (Ireland), London (U.K.), Monte Carlo (Monaco), Singapore, New York (USA) and Rome (Italy). These offices are located in the key maritime centres around the world. DIS provides transportation services employing all its vessels worldwide, rather than in specific geographical areas. DIS believes that its international presence allows it to meet the needs of its international clients in different geographical areas, strengthening the Company's recognition and its brand name worldwide. In addition, through the different opening hours of offices located in several time zones, DIS can continuously monitor its operations and assist its customers.
As at 30 June 2023, DIS employed 614 seagoing personnel and 25 onshore personnel. In addition, through related party contracts, DIS benefits from the services of employees of the d'Amico Group working in the administrative, chartering, operations, sale and purchase and technical departments of d'Amico Shipping Singapore, d'Amico Shipping USA d'Amico Società di Navigazione SpA, Rudder SAM and d'Amico Shipping UK.
The DIS Group controlled as at 30 June 2023, either through ownership or charter arrangements, a modern fleet of 36.0 product tankers (31 December 2022: 36.0 product tankers). DIS Group's product tanker vessels range from approximately 36,000 to 75,000 dwt.
Since 2012, the DIS Group has ordered 22 newbuildings, the last of which was delivered in October 2019. All these newbuildings are fuel-efficient and in compliance with recent environmental legislation. They cater therefore to the high standards required by the Group's oil major customers, in addition to being highly cost effective.
Operating a large fleet enhances the generation of earnings and operating efficiencies. A large fleet strengthens the Group's ability to advantageously position vessels and improves the fleet's availability and scheduling flexibility, providing DIS with a competitive advantage in securing spot voyages. In particular, the scale of DIS' operations provides it with the flexibility necessary to enable it to capitalise on favourable spot market conditions to maximise earnings and negotiate favourable contracts with suppliers.
The following table sets forth information about DIS' fleet on the water as at 30 June 2023.
| Name of vessel | Dwt | Year built | Builder, Country4 | IMO classed |
|---|---|---|---|---|
| LR1 fleet | ||||
| Owned | ||||
| Bright Future5 | 75,000 | 2019 | Hyundai Mipo, South Korea (Vinashin, Vietnam) | - |
| Cielo di Cagliari | 75,000 | 2018 | Hyundai Mipo, South Korea (Vinashin, Vietnam) | - |
| Cielo Rosso | 75,000 | 2018 | Hyundai Mipo, South Korea (Vinashin, Vietnam) | - |
| Cielo di Rotterdam | 75,000 | 2018 | Hyundai Mipo, South Korea (Vinashin, Vietnam) | - |
| Cielo Bianco | 75,000 | 2017 | Hyundai Mipo, South Korea (Vinashin, Vietnam) | - |
| Bareboat with purchase options and purchase obligation | ||||
| Cielo di Houston | 75,000 | 2019 | Hyundai Mipo, South Korea (Vinashin, Vietnam) | - |
| MR fleet | ||||
| Owned | ||||
| High Explorer | 50,000 | 2018 | Onomichi, Japan | IMO II/III |
| High Adventurer | 50,000 | 2017 | Onomichi, Japan | IMO II/III |
| High Challenge | 50,000 | 2017 | Hyundai Mipo, South Korea (Vinashin, Vietnam) | IMO II/III |
| High Wind | 50,000 | 2016 | Hyundai Mipo, South Korea (Vinashin, Vietnam) | IMO II/III |
| High Loyalty | 49,990 | 2015 | Hyundai Mipo, South Korea | IMO II/III |
| High Voyager | 45,999 | 2014 | Hyundai Mipo, South Korea | IMO II/III |
| High Freedom | 49,990 | 2014 | Hyundai Mipo, South Korea | IMO II/III |
| High Tide | 51,768 | 2012 | Hyundai Mipo, South Korea | IMO II/III |
| High Seas | 51,678 | 2012 | Hyundai Mipo, South Korea | IMO II/III |
| GLENDA Melissa | 47,203 | 2011 | Hyundai Mipo, South Korea | IMO III |
| GLENDA Meryl | 47,251 | 2011 | Hyundai Mipo, South Korea | IMO III |
| GLENDA Melody | 47,238 | 2011 | Hyundai Mipo, South Korea | IMO III |
| GLENDA Melanie | 47,162 | 2010 | Hyundai Mipo, South Korea | IMO III |
| Bareboat with purchase options and purchase obligations | ||||
| High Trust6 | 49,990 | 2016 | Hyundai Mipo, South Korea (Vinashin, Vietnam) | IMO II/III |
| High Trader7 | 49,990 | 2015 | Hyundai Mipo, South Korea (Vinashin, Vietnam) | IMO II/III |
| High Discovery | 50,036 | 2014 | Hyundai Mipo, South Korea | IMO II/III |
| High Fidelity | 49,990 | 2014 | Hyundai Mipo, South Korea (Vinashin, Vietnam) | IMO II/III |
4 Hyundai Mipo, South Korea (Vinashin, Vietnam) refers to vessels ordered at Hyundai Mipo and built at their Vinashin (Vietnam) facility.
5 Ex-Cielo di Londra.
6 In May 2023 d'Amico Tankers d.a.c. exercised the purchase option on MT High Trust, delivered in July 2023. 7 In May 2023 d'Amico Tankers d.a.c. exercised the purchase option on MT High Trader, delivered in July 2023.
| TC-in long-term with purchase options | ||||
|---|---|---|---|---|
| High Leader | 50,000 | 2018 | Japan Marine, Japan | IMO II/III |
| High Navigator | 50,000 | 2018 | Japan Marine, Japan | IMO II/III |
| Crimson Pearl | 50,000 | 2017 | Minaminippon Shipbuilding, Japan | IMO II/III |
| Crimson Jade | 50,000 | 2017 | Minaminippon Shipbuilding, Japan | IMO II/III |
| TC-in long-term without purchase options | ||||
| Green Planet | 50,843 | 2014 | Daesun Shipbuilding, South Korea | IMO II/III |
| High Prosperity | 48,711 | 2006 | Imabari, Japan | - |
| High SD Yihe | 48,700 | 2005 | Imabari, Japan | - |
| Handy-size fleet | ||||
| Owned | ||||
| Cielo di Salerno | 39,043 | 2016 | Hyundai Mipo, South Korea (Vinashin, Vietnam) | IMO II/III |
| Cielo di Hanoi | 39,043 | 2016 | Hyundai Mipo, South Korea (Vinashin, Vietnam) | IMO II/III |
| Cielo di Capri | 39,043 | 2016 | Hyundai Mipo, South Korea (Vinashin, Vietnam) | IMO II/III |
| Cielo di Ulsan | 39,060 | 2015 | Hyundai Mipo, South Korea (Vinashin, Vietnam) | IMO II/III |
| Cielo di New York | 39,990 | 2014 | Hyundai Mipo, South Korea | IMO II/III |
| Cielo di Gaeta | 39,990 | 2014 | Hyundai Mipo, South Korea | IMO II/III |
As at 30 June 2023, DIS directly employed 36.0 Vessels: 3 LR1s ('Long Range 1'), 5 MRs ('Medium Range') and 2 Handy-size vessels on term contracts at fixed rates, whilst 3 LR, 19 MR and 4 Handy-size vessels were at the same date employed on the spot market.
d'Amico International Shipping is part of the d'Amico Group, one of the world's leading privately-owned marine transportation companies, with over 80 years of experience in the shipping business, whose ultimate parent company is d'Amico Società di Navigazione S.p.A. (Italy). As at 30 June 2023, the d'Amico Group controlled a wide fleet of owned and chartered-in vessels, of which 36.0 were part of the DIS fleet, operating in the product tanker market. d'Amico International Shipping also benefits from the expertise of the d'Amico Group, which provides technical management services, including crewing and insurance arrangements, as well as safety, quality and environmental services for DIS' vessels.
Along with the most directly comparable IFRS measures, DIS' management regularly uses Alternative Performance Measures, as they provide helpful additional information for readers of its financial statements, indicating how the business has performed over the period, filling the gaps left by the reporting standards. APMs are financial and nonfinancial measures of historical or future financial performance, financial position or cash-flows, other than a financial measure defined or specified in the Group's applicable financial reporting framework and standards (IFRS); for this reason they might not be comparable to similarly titled measures used by other companies and are not measurements under IFRS or GAAP and thus should not be considered substitutes for the information contained in the Group's financial statements. The following section sets out the Group's definitions of used APMs:
A shipping industry standard allowing the comparison of period-to-period net freight revenues, which are not influenced by whether the vessels were employed on Time charters (TC), Voyage charters or Contracts of affreightment (please see Non-Financial APM definitions below). As indicated in the Profit and Loss financial statement, it is equal to revenues less voyage costs.
Revenues originating from contracts under which the ship owner is usually paid monthly in advance charter hire at an agreed daily rate for a specified period of time, during which, the charterer is responsible for the technical management of the vessel, including crewing, and therefore also for its operating expenses (see further in Other definitions).
EBITDA is defined as the result for the period before the impact of taxes, interest, the Group's share of the result of joint ventures and associates, depreciation, and amortization. It is equivalent to the gross operating profit, which indicates the Group's revenues from sales less its cost of the services (transport) sold. EBITDA Margin is defined as EBITDA divided by Time charter equivalent earnings (as described above). DIS believes that EBITDA and EBITDA Margin are useful additional indicators investors can use to evaluate the Group's operating performance.
EBIT is defined as the result for the period before the impact of tax, interest, and the Group's share of the result of joint ventures and associates. It is equivalent to the net operating profit and the Group uses it to monitor its return after operating expenses and the cost of the use of its tangible assets. EBIT Margin is defined as operating profit as a percentage of Time charter equivalent earnings and represents for DIS a suitable measure to show the contribution of the Time-Charter Earnings in covering both fixed and variable costs.
Return on Capital Employed is a profitability ratio which measures how efficiently a company is using its capital. It is calculated by dividing the EBIT by the capital employed, that is, by total assets less current liabilities.
Gross capital expenditure, that is the expenditure for the acquisition of fixed assets as well as expenditures capitalised as a result of the intermediate or special surveys of our vessels, or of investments for the improvement of DIS vessels, as indicated under Net acquisition of fixed assets within the cash-flow from investing activities; it gives an indication about the strategic planning (expansion) of the Group (capital intensive industry).
Comprises bank loans and other financial liabilities, less cash and cash equivalents and liquid financial assets or shortterm investments available to service those debt items. The Group believes net indebtedness is relevant to investors as it is a metric on the overall debt situation of a company, indicating the absolute level of non-equity funding of the business. The relevant table in the net indebtedness section within the report on operations, reconciles net debt to the pertinent balance sheet line items.
The standard eliminates the classification of leases as either operating leases or finance leases for a lessee; instead, all leases are treated in a similar way to finance leases applying IAS 17. Leases are "capitalised" by recognising the present value of lease payments and showing them either as leased assets (right-of-use assets, RoU) or together with property, plant, and equipment (PPE). Lease items of low value (under US\$ 5 thousand) or for which the lease duration is shorter than one year are excluded from this treatment and are expensed as incurred. If lease payments are made over time, the company also recognises a financial liability representing its obligation to make future lease payments. The most significant effect is an increase in lease assets (or PPE) and financial liabilities, leading to changes in key financial metrics derived from balance sheet data.
For companies with material off-balance sheet leases, IFRS 16 changes the nature of the expenses related to those leases: the straight-line operating lease expense (time-charter-in) are replaced with a depreciation charge for the lease asset (included within operating costs) and an interest expense on the lease liability (included within finance costs).
Total theoretical number of days a vessel is available for sailing during a period. It provides an indication of the Group's fleet earnings potential during a period, which takes into account the date of delivery to and redelivery from the Group of the vessels in its fleet (please refer also to the Key figures, other operating measures).
Ratio indicating how many available vessel days are already covered by fixed rate contracts (time charter contracts or contracts of affreightment). It provides an indication of how exposed the Group is to changes in the freight market during a certain period (please refer to Time charter equivalent earnings in the Management financial review).
Daily spot rate refers to daily time-charter equivalent earnings (please refer to definition below) generated by employing DIS' vessels on the spot market (or on a voyage basis) and daily TC rate refers to daily time-charter earnings generated by employing DIS' vessels on 'time-charter' contracts (please refer to the Management financial review).
Means the period in which a vessel is unable to perform the services for which it is immediately required under a time charter. Off-hire periods can include days spent on repairs, dry-docking and surveys, whether or not scheduled. It can help to explain changes in time-charter equivalent earnings between different periods (please refer to Revenues, in the Management financial review).
A measure of the average daily revenue performance of a vessel or of DIS' fleet. DIS' method of calculating time charter equivalent earnings per day is consistent with industry standards and is determined by dividing voyage revenues (net of voyage expenses) by on-hire days for the relevant time period. Time charter equivalent earnings per day is a standard shipping industry performance measure used primarily to compare period-to-period changes in a shipping company's performance, since it is unaffected by the changes in the mix of charter contracts (i.e. spot charters, time charters and contracts of affreightment) through which the vessels are employed. It allows a comparison of the Group's performance with industry peers and market benchmarks (please refer to Key figures).
The number of vessels equivalent in a period is equal to the sum of the products of the total available vessel days over that period for each vessel and the participation of the Group (direct or indirect) in that vessel, divided by the number of calendar days in that period. It provides an indication of the Group's fleet size and earnings potential over a period (please refer to Key figures).
A contract type under which the ship owner is usually paid monthly in advance charter hire at an agreed daily rate for a specified period of time, during which the charterer is responsible for the technical management of the vessel, including crewing, and therefore also for its operating expenses (please refer to note 6). A bareboat charter is also known as a "demise charter" or a "time charter by demise".
A contract for the hire of a vessel for a specified period of time or to carry cargo from a loading port to a discharging port. The contract for a charter is commonly called a charter party and there are three main types of such contracts, a bareboat charter party, a voyage charter party and time charter party (refer to definitions in this section).
An agreement between an owner and a charterer which obliges the owner to provide a vessel to the charterer to move specific quantities of cargo, at a fixed rate, over a stated time period but without designating specific vessels or voyage schedules, thereby providing the owner with greater operating flexibility than with voyage charters alone.
The company that controls a vessel, replacing the registered owner, either through a time-charter or a bareboat charter.
For DIS these usually refer to revenues generated through time-charter contracts or contracts of affreightment (please refer to definitions in this section). Bareboat charter contracts are also usually fixed rate contracts but DIS controls rather than employs vessels through such contracts.
A contract type through which a registered owner (owner) or disponent owner (please refer to definition in this section) is paid freight for transporting cargo from a loading port to a discharging port. The charterer pays the vessel owner or disponent owner on a per-ton or lump-sum basis. The payment for the use of the vessel is known as freight. The owner or disponent owner is responsible for paying voyage expenses. Typically, the charterer is
responsible for any delay at the loading or discharging ports. A ship-owner or bareboat charterer operating its vessel on voyage charter is responsible for the technical management of the vessel, including crewing, and therefore also for its operating expenses.
Is a contract type through which the registered owner (owner) or disponent owner (please refer to definition within this section) is paid usually monthly in advance charter hire at an agreed daily rate for a specified period of time (usually a fixed rate contract). With such contracts the charterer is responsible for paying the voyage expenses and additional voyage insurance. A ship-owner or bareboat charterer operating its vessel on time-charter is responsible for the technical management of the vessel, including crewing, and therefore also for its operating expenses.
The product tanker market has remained strong throughout the first half of 2023 but has experienced some softer trends towards the end of Q2. Several temporary factors contributed to this slightly less vigorous market. Firstly, refinery maintenance in the USA, China, and Russia during the first part of the year, negatively affected exports out of these regions. In addition, a slowdown in industrial activity in the US and Europe impacted diesel demand. Finally, the uncertainty surrounding the effects of the entry into force of EU's sanctions on Russian product exports in February, led to a significant increase in imports of diesel and resulting build-up in stocks, especially by European countries, in the months preceding its implementation, dampening arbitrage opportunities later.
Nonetheless, the fundamentals for the sector remain very robust, with negligible fleet growth, a still strong postpandemic growth in oil demand, and the inefficiencies and increase in ton-miles associated with the Russian sanctions. Furthermore, the refinery turnarounds are now largely completed and a ramp-up in refining throughput (+1.6 mbpd) and exports is expected between June and August this year.
The one-year time-charter rate is always the best indicator of spot market expectations and as at the end of June 2023 was assessed at around US\$ 26,000 per day for a conventional MR2, with an Eco MR2 assessed at a premium of around US\$ 3,000 per day.
In H1 2023, DIS recorded a Net profit of US\$ 99.8 million vs. a Net profit of US\$ 19.2 million posted in the same period of 2022. Such positive variance is attributable to a much stronger product tanker market relative to the same period of last year. Excluding results on disposal and non-recurring financial items, as well as the asset impairment (in H1 2022), DIS' Net result would have amounted to US\$ 103.6 million in H1 2023 compared with US\$ 22.6 million recorded in H1 2022. In Q2 2023, DIS posted a Net profit of US\$ 45.7 million vs. a Net profit of US\$ 25.7 million in the second quarter of last year. Excluding results on disposal and non-recurring financial items, as well as the asset impairment, DIS' Net result would have amounted to US\$ 47.1 million in Q2 2023 compared with US\$ 26.7 million in Q2 2022.
DIS generated an EBITDA of US\$ 142.7 million in H1 2023 vs. US\$ 66.2 million achieved in H1 2022 (Q2 2023: US\$ 66.3 million vs. Q2 2022: US\$ 48.5 million), whilst its operating cash flow was positive for US\$ 173.0 million in H1 2023 compared with US\$ 18.9 million generated in the same period of last year.
In terms of spot performance, DIS achieved a daily spot rate of US\$ 34,216 in H1 2023 vs. US\$ 21,037 in H1 2022 (Q2 2023: US\$ 31,746 vs. Q2 2022: US\$ 28,687), due to the much stronger market relative to the same period of last year.
At the same time, 26.2% of DIS' total employment days in H1 2023, were covered through 'time-charter' contracts at an average daily rate of US\$ 27,419 (H1 2022: 42.1% coverage at an average daily rate of US\$ 15,158). A good level of time charter coverage is one of the pillars of DIS' commercial strategy and allows it to mitigate the effects of the spot market volatility, securing a certain level of earnings and cash generation even throughout negative cycles. DIS' total daily average rate (which includes both spot and time-charter contracts) was of US\$ 32,434 in the first six months of 2023, compared with US\$ 18,559 achieved in the same period of 2022 (Q2 2023: US\$ 30,831 vs. Q2 2022: US\$ 23,389).
| Q2 2023 | Q2 2022 | H1 2023 | H1 2022 | |
|---|---|---|---|---|
| UNREVIEWED | UNREVIEWED | US\$ Thousand | ||
| 130,599 | 108,742 Revenue | 270,832 | 175,280 | |
| (33,371) | (35,956) Voyage costs | (67,338) | (59,673) | |
| 97,228 | 72,786 Time charter equivalent earnings* | 203,494 | 115,607 | |
| 1,215 | 1,200 | Bareboat charter revenue * | 2,412 | 2,386 |
| 98,443 | 73,986 Total net revenue | 205,906 | 117,993 | |
| - | (515) Time charter hire costs | (27) | (1,721) | |
| (23,561) | (21,012) Other direct operating costs | (47,988) | (42,141) | |
| (7,096) | (3,462) General and administrative costs | (11,316) | (6,840) | |
| (1,447) | (527) Result on disposal of fixed assets | (3,826) | (1,048) | |
| 66,339 | 48,470 EBITDA* | 142,749 | 66,243 | |
| (14,682) | (15,045) | Depreciation and impairment | (30,489) | (32,528) |
| 51,657 | 33,425 EBIT* | 112,260 | 33,715 | |
| 1,208 | 320 Net financial income | 2,378 | 893 | |
| (6,828) | (8,064) Net financial charges | (14,208) | (15,282) | |
| 46,037 | 25,681 Profit before tax | 100,430 | 19,326 | |
| (320) | 33 Income tax | (597) | (108) | |
| 45,717 | 25,714 Net profit | 99,833 | 19,218 |
*see Alternative Performance Measures on page 8
Revenue was US\$ 270.8 million in H1 2023 (US\$ 175.3 million in H1 2022) and US\$ 130.6 million in Q2 2023 (US\$ 108.7 million in Q2 2022). The increase in gross revenue compared with the previous year is attributable mainly to a stronger freight market. In addition, the percentage of off-hire days in H1 2023 (2.0%) was higher than in the same period of the previous year (0.8%), mainly due to the timing of commercial off-hires and dry-docks.
Voyage costs reflect the mix of spot and time-charter employment contracts. These costs, which occur only for vessels employed on the spot market, amounted to US\$ (67.3) million in H1 2023 compared with US\$ (59.7) million in H1 2022 (Q2 2023: US\$ (33.4) million vs. Q2 2022: US\$ (36.0) million). The higher costs reflect DIS' higher exposure to the spot market and higher bunker prices, relative to the same period of last year.
Time charter equivalent earnings were of US\$ 203.5 million in H1 2023 vs. US\$ 115.6 million in H1 2022 and US\$ 97.2 million in Q2 2023 vs. US\$ 72.8 million in Q2 2022. In detail, DIS realized a daily average spot rate of US\$ 34,216 in H1 2023 compared with US\$ 21,037 achieved in H1 2022, and of US\$ 31,746 in Q2 2023 compared with US\$ 28,687 in Q2 2022.
In H1 2023, DIS maintained a good level of 'coverage'8 (fixed-rate contracts), securing an average of 26.2% (H1 2022: 42.1%) of its available vessel days at a daily average fixed rate of US\$ 27,419 (H1 2022: US\$ 15,158). In addition to securing revenue and supporting the operating cash flow generation, these contracts enabled DIS to strengthen its historical relationships with the main oil majors.
8 Coverage ratio (%) and daily average covered rate include a bareboat charter out contract on an LR1 vessel owned by d'Amico Tankers d.a.c., inclusive of an assumed daily Opex of US\$ 6,885 (in line with DIS' actual costs), in order to express this bareboat contract in time-charter equivalent terms. The gross revenue of this bareboat contract is reported under 'bareboat charter revenue' in the Income Statement.
DIS' total daily average TCE (Spot and Time Charter)9 was of US\$ 32,434 in H1 2022 vs. US\$ 18,559 in H1 2022, and of US\$ 30,831 in Q2 2023 vs. US\$ 23,389 in Q2 2022.
| DIS TCE daily rates | 2022 | 2023 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| (US dollars) | |||||||||
| Q1 | Q2 | H1 | Q3 | Q4 | FY | Q1 | Q2 | H1 | |
| Spot | 12,857 | 28,687 | 21,037 | 37,159 | 42,751 | 31,758 | 36,652 | 31,746 | 34,216 |
| Fixed | 14,968 | 15,373 | 15,158 | 15,497 | 19,957 | 15,925 | 26,367 | 28,383 | 27,419 |
| Average | 13,796 | 23,389 | 18,559 | 30,230 | 38,294 | 26,376 | 34,056 | 30,831 | 32,434 |
Bareboat charter revenue was of US\$ 2.4 million in H1 2023, in line with the same period of last year; it relates to the bareboat charter out contract started in October 2021 on one of d'Amico Tankers d.a.c.'s LR1 vessels.
Time charter hire costs. IFRS 16 Leases is effective for annual periods beginning on or after 1 January 2019 and was adopted by the Company. IFRS 16 substantially changes the Group's Consolidated Financial Statements, significantly affecting the treatment by lessees of contracts which in previous periods were treated as operating leases. With some exceptions, liabilities for payments on contracts previously classified as operating leases are now discounted at the lessee's incremental borrowing rate, leading to the recognition of a lease liability and a corresponding right of use asset (amounting to the liability plus the present value of any restoration costs and any incremental costs in entering the lease, as well as any lease payments made prior to commencement of the lease, minus any lease incentives already received). Therefore, starting from 1 January 2019, 'time-charter hire costs' includes only time-charter contracts whose residual term is shorter than 12 months as at that date or for contracts starting later, whose duration is shorter than 12 months from their commencement date. The application of IFRS16 reduced 'charter hire costs' by US\$ 22.0 million in H1 2023 and by US\$ 24.2 million in H1 2022, as within the Income Statement, these costs were replaced with other direct operating costs, interest, and depreciation.
Excluding the effect of IFRS 16, DIS' 'time-charter hire costs' would have amounted to US\$ (22.0) million in H1 2023 compared with US\$ (25.9) million in the same period of last year. In H1 2023, DIS operated a lower number of chartered-in vessels (7.8 equivalent ships) relative to the first half of last year (10.0 equivalent ships).
Other direct operating costs mainly consist of crew, technical and luboil expenses relating to the operation of owned vessels, together with insurance expenses for both owned and chartered-in vessels. The adjustment to 'other direct operating costs' arising from the application of IFRS 16 increases such expenses by US\$ 9.9 million in H1 2023 (US\$ 10.9 million increase in H1 2022), as within the Income Statement, time-charter hire costs are replaced by other direct operating costs, interest, and depreciation. Excluding the effects of IFRS 16, DIS' 'other direct operating costs' would have amounted to US\$ (38.1) million in H1 2023 vs. US\$ (31.2) million in H1 2022. In H1 2023, the Company operated a larger fleet of owned and bareboat vessels relative to the same period of last year (H1 2023: 28.2 vs. H1 2022: 25.8). DIS constantly monitors its operating costs, while focusing on crew with appropriate skills, high SQE (Safety, Quality & Environment) standards and full compliance with very stringent market regulations. Maintaining a 'top-quality' fleet represents an essential part of d'Amico's vision and strategy.
General and administrative costs amounted to US\$ (11.3) million in H1 2023 vs. US\$ (6.8) million in H1 2022. These costs relate mainly to onshore personnel, together with office costs, consultancies, travel expenses and others.
Result on disposal of vessel was negative for US\$ (3.8) million in H1 2023 vs. US\$ (1.0) million in same period of last year. The amount refers to the amortisation of the net deferred result on vessels sold and leased back in the previous years. In addition, the amount for H1 2023 includes US\$ (3.1) million negative charge related to the accelerated amortization of the deferred losses on M/T High Freedom, M/T High Trust, M/T High Trader and M/T High Loyalty, whose purchase options were exercised by d'Amico Tankers d.a.c. in the first half of the current year.
EBITDA was of US\$ 142.7 million in H1 2023 compared with US\$ 66.2 million in the same period of last year (Q2 2023: US\$ 66.3 million vs. Q2 2022: US\$ 48.5 million), reflecting the better freight markets experienced in the first six months of the current year.
Depreciation, impairment, and impairment reversal amounted to US\$ (30.5) million in H1 2023 vs. US\$ (32.5)
9 Total daily average TCE includes a bareboat charter out contract on an LR1 vessel owned by d'Amico Tankers d.a.c., inclusive of an assumed daily Opex of US\$ 6,885 (in line with DIS' actual costs), in order to express this bareboat contract in time-charter equivalent terms. The gross revenue of this bareboat contract is reported under 'bareboat charter revenue' in the Income Statement.
million in H1 2022 (Q2 2023: US\$ (14.7) million vs. Q2 2022: US\$ (15.0) million). The amount for H1 2022 includes an impairment of US\$ (2.1) million on a MR vessel (M/T High Priority) owned by d'Amico Tankers d.a.c., whose sale was announced in Q1 2022 and finalized in Q2 2022. In accordance with IFRS 5, this vessel was classified as 'asset held for sale' at the end of Q1 2022, with the difference between its fair value less cost to sell and its book value charged to the Income Statement.
EBIT was of US\$ 112.3 million in H1 2023 compared with US\$ 33.7 million in H1 2022 (Q2 2023: US\$ 51.7 million vs. Q2 2022: US\$ 33.4 million).
Net financial income was of US\$ 2.4 million in H1 2023 vs. US\$ 0.9 million in H1 2022 (Q2 2023: US\$ 1.2 million vs. Q2 2022: US\$ 0.3 million). The amount for H1 2023 comprises mainly interest income on short-term securities and funds held with financial institutions on deposit or current accounts. The amount for H1 2022 comprised mainly US\$ 0.9 million unrealized gain in relation to the ineffective part of DIS' interest rate swap agreements, US\$ 0.03 million commercial foreign exchange gain, as well as bank interest income on funds held with financial institutions on deposit and current accounts.
Net financial charges amounted to US\$ (14.2) million in H1 2023 vs. US\$ (15.3) million in H1 2022 (Q2 2023: US\$ (6.8) million vs. Q2 2022: US\$ (8.1) million). The amount for H1 2023 comprises mainly US\$ (13.8) million in interest expenses and amortized financial fees due on DIS' bank loan facilities, actual expenses on interest rate swaps and interest on lease liabilities. The amount recorded in the same period of last year included US\$ (14.1) million in interest expenses and amortized financial fees due on DIS' bank loan facilities, actual expenses on interest rate swaps and interest on lease liabilities, as well as US\$ (0.6) million realized loss on freight derivative instruments and US\$ (0.4) million realized loss on foreign exchange derivative instruments used for hedging purposes.
DIS recorded a Profit before tax of US\$ 100.4 million in H1 2023 vs. US\$ 19.3 million in H1 2022 and a profit of US\$ 46.0 million in Q2 2023 vs. US\$ 25.7 million in Q2 2022.
Income taxes amounted to US\$ (0.6) million in H1 2023 vs. US\$ (0.1) million in H1 2022.
In H1 2023, DIS recorded a Net profit of US\$ 99.8 million vs. a Net profit of US\$ 19.2 million achieved in the same period of 2022 and a Net profit of US\$ 45.7 million in Q2 2023 vs. a Net profit of US\$ 25.7 million in Q2 2022. Excluding the result on disposals and non-recurring financial itemsfrom H1 2023 (US\$ (3.8) million) and from H1 2022 (US\$ (1.4) million), as well as the asset impairment (US\$ (2.1) million in H1 2022), DIS' Net result would have amounted to US\$ 103.6 million in H1 2023 compared with US\$ 22.6 million recorded in the same period of the previous year.
| As at | As at | |
|---|---|---|
| US\$ Thousand | 30 June 2023 | 31 December 2022 |
| ASSETS | ||
| Non-current assets | 818,297 | 818,401 |
| Current assets | 191,360 | 236,484 |
| Total assets | 1,009,657 | 1,054,885 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| Shareholders' equity | 553,877 | 478,414 |
| Non-current liabilities | 326,252 | 419,681 |
| Current liabilities | 129,528 | 156,790 |
| Total liabilities and shareholders' equity | 1,009,657 | 1,054,885 |
Non-current assets mainly relate to DIS' owned vessels net book value, including right-of-use assets (there are no vessels under construction as at 30 June 2023). According to the valuation report provided by a primary broker, the estimated market value of DIS' owned and bareboat fleet as at 30 June 2023 was of US\$ 1,075.0 million.
Gross Capital expenditures (Capex) were of US\$ 35.6 million in H1 2023 vs. US\$ 0.9 million in H1. These amounts include mainly the capitalised dry-dock costs pertaining to owned and bareboat vessels. In addition, the amount for H1 2023 includes approximately US\$ 30.0 million related to d'Amico Tankers' exercise of its purchase option on M/T High Explorer (an MR vessel, time-chartered-in by d'Amico Tankers since 2018).
Current assets as at 30 June 2023 amounted to US\$ 191.4 million. As at the same date, in addition to the working capital items (inventories and trade receivables amounting to US\$ 14.7 million and US\$ 57.1 million, respectively), current assets include 'cash and cash equivalent' of US\$ 113.3 million.
Non-current liabilities were of US\$ 326.3 million as at 30 June 2023 and mainly consist of the long-term portion of the debt due to banks (disclosed under the Net Indebtedness section of the report) and of lease liabilities.
Current liabilities, other than the debt due to banks and other lenders (disclosed under the Net Indebtedness section of the report), includes as at 30 June 2023, working capital items amounting to US\$ 30.3 million (mainly relating to trade and other payables), US\$ 64.8 million of lease liabilities, and US\$ 2.7 million of other current financial liabilities. As at 30 June 2023, the outstanding lease liabilities on M/T High Trust and M/T High Trader are included in 'Current liabilities', as d'Amico Tankers d.a.c. exercised its purchase options on these vessels in Q2 2023 and acquired full ownership of the ships in July 2023.
Shareholders' equity amounted to US\$ 553.9 million as at 30 June 2023 (US\$ 478.4 million as at 31 December 2022). The increase relative to year-end 2022 is mainly due to the Net result generated in the first half of 2023, as well as to the change in the valuation of cash-flow hedges during the period and the gross dividend of US\$22.0 million, approved and distributed in Q2 of this year.
DIS' Net debt as at 30 June 2023 amounted to US\$ 300.4 million compared to US\$ 409.9 million as at 31 December 2022. Due to the application of IFRS 16 these balances include from 1 January 2019 an additional lease liability amounting to US\$ 28.8 million as at the end of June 2023 vs. US\$ 39.8 million as at the end of 2022. The net debt (excluding the IFRS16 effect) / fleet market value ratio was of 25.3% as at 30 June 2023 vs. 36.0% as at 31 December 2022 (60.4% as at 31 December 2021, 65.9% as at 31 December 2020, 64.0% as at the end of 2019 and 72.9% as at the end of 2018).
| As at | As at | |
|---|---|---|
| US\$ Thousand | 30 June 2023 | 31 December 2022 |
| Liquidity - Cash and cash equivalents | 113,301 | 117,896 |
| Other current financial assets | 6,245 | 8,754 |
| Other current financial assets – related party ** | 36 | 33 |
| Total current financial assets | 119,582 | 126,683 |
| Bank loans and other lenders – current | 31,066 | 51,086 |
| Liabilities from leases – current | 64,847 | 71,740 |
| Other current financial liabilities – 3rd parties | 2,727 | 3,129 |
| Total current financial debt | 98,640 | 125,955 |
| Net current financial debt (asset) | (20,942) | (728) |
| Other non-current financial assets – third parties | 4,874 | 9,077 |
| Other non-current financial assets – related party ** | 9 | 26 |
| Total non-current financial assets | 4,883 | 9,103 |
| Bank loans – non-current | 245,414 | 266,124 |
| Liabilities from financial lease – non-current | 77,969 | 150,225 |
| Other non-current financial liabilities – 3rd parties | 2,869 | 3,332 |
| Total non-current financial debt | 326,252 | 419,681 |
| Net non-current financial debt | 321,369 | 410,578 |
| Net financial indebtedness | 300,427 | 409,850 |
* See Alternative Performance Measures on page 8
** Please refer to the disclosures on related parties in the notes to the consolidated Financial Statements
The balance of Total Current Financial Assets was of US\$ 119.6 million as at the end of June 2023. The total amount comprises mainly Cash and cash equivalents of US\$ 113.3 million, the current portion of deferred losses on disposal on sale and leaseback transactions, amounting to US\$ 2.1 million and the positive fair value of derivative financial instruments (mainly interest rate swaps), amounting to US\$ 4.1 million.
Total Non-Current Financial Assets comprise mainly the non-current portion of deferred losses on disposal on sale and leaseback transactions, amounting to US\$ 1.8 million and the positive fair value of derivative financial instruments (interest rate swaps), amounting to US\$ 3.1 million.
The total outstanding bank debt (Bank loans) as at 30 June 2023 amounted to US\$ 276.5 million, of which US\$ 31.1 million is due within one year. DIS' bank debt as at 30 June 2023 comprises mainly the following long-term facilities granted to d'Amico Tankers d.a.c. (Ireland), the key operating company of the Group:
Lease liabilities include the leases on M/T High Trust, M/T High Trader, and M/T Cielo di Houston, which were sold and leased back between 2018 and 2019 and the leases on M/T High Fidelity and M/T High Discovery, whose previous leases were terminated in Q3 2022, with the vessels then refinanced with new 10-year leases. As at 30 June 2023, the outstanding lease liabilities on M/T High Trust and M/T High Trader are included in 'Liabilities from leases – current', as d'Amico Tankers d.a.c. exercised its purchase options on these two vessels in May 2023 and acquired full ownership of the ships in July 2023. In addition, 'lease liabilities' include as at 30 June 2023, US\$ 28.8 million arising from the application of IFRS 16 on contracts classified until 2018 as 'operating leases'.
Other Non-current financial liabilities include mainly the deferred profit on disposal on sale and leaseback transactions.
| Q2 2023 UNREVIEWED |
Q2 2022 UNREVIEWED |
US\$ Thousand | H1 2023 | H1 2022 |
|---|---|---|---|---|
| 73,771 | 8,741 Cash flow from operating activities | 172,978 | 18,982 | |
| (30,737) | 8,633 Cash flow from investing activities | (35,564) | 18,411 | |
| (84,904) | (17,771) Cash flow from financing activities | (132,351) | (34,111) | |
| (41,870) | (397) Change in cash balance | 5,063 | 3,282 | |
| 155,171 | 30,085 Cash and cash equivalents net of bank overdrafts at the beginning of the period |
108,238 | 26,406 | |
| 113,301 | 46,040 Cash and cash equivalents at the end of the period | 113,301 | 46,040 | |
| - | (16,352) Bank overdrafts at the end of the period | - | (16,352) | |
| 113,301 | 29,688 Cash and cash equivalents net of bank overdrafts at the end of the period |
113,301 | 29,688 |
In H1 2023, DIS' Net Cash Flow was positive for US\$ 5.1 million vs. US\$ 3.3 million in H1 2022.
Cash flow from operating activities was positive, amounting to US\$ 173.0 million in H1 2023 vs. US\$ 18.9 million in H1 2022. This positive variance is attributable to the better operating performance achieved in the first six months of 2023, relative to the same period of last year.
The net Cash flow from investing activities was negative for US\$ (35.6) million in H1 2023 (positive, amounting to US\$ 18.4 million in H1 2022). The amount for H1 2023, includes d'Amico Tankers d.a.c.'s exercise of its purchase option on the M/T High Explorer for a consideration of JPY 4.1 billion (equivalent to approximately US\$ 30.0 million). In addition, the total amount for the year, comprises also the costs relating to drydocks which occurred in the period. The amount for H1 2022 comprised mainly the costs relating to drydocks which occurred in the period, off-set by US\$ 19.3 million generated from the sale of the M/T High Valor in Q1 2022 and M/T High Priority in Q2 2022.
Cash flow from financing activities was negative, amounting to US\$ (132.4) million in H1 2023. This figure comprises mainly: (i) US\$ (49.1) million in bank debt repayments, of which US\$ (23.4) million were due to the reimbursement of the facility for the M/T Cielo di Londra, whose debt, due to expire in March 2024, should be refinanced in Q3 2023; ii) US\$ 17.8 million bank debt drawdown, related mainly to the financing of the M/T High Explorer, purchased by d'Amico Tankers d.a.c. in Q2 2023; iii) US\$ (78.2) million repayment of lease liabilities, including US\$ (62.0) million related to the termination of the leases on High Voyager, High Freedom and High Loyalty, following d'Amico Tankers d.a.c.'s exercise of the respective purchase options; iv) US\$ (22.0) million dividend distribution in Q2 2023; v) US\$ (0.8) million in share buybacks.
In H1 2023, the main events for the d'Amico International Shipping Group were the following:
Dividend distribution: In March 2023, the Board of Directors of d'Amico International Shipping proposed to the Shareholders a dividend to be paid in cash of US\$ 22,011,953.96 gross (US\$ 18,710,160.87 net, after deducting the 15% applicable withholding tax), corresponding to US\$ 0.0153 per issued and outstanding share net of withholding taxes, to be paid out of the distributable reserves, including the share premium reserve.
Approval of the 2022 statutory and consolidated Financial Statement, the dividend distribution and the 2022- 2024 medium-long term incentive plan: In April 2023, the Annual General Shareholders' meeting of d'Amico International Shipping S.A. approved the 2022 statutory and consolidated financial statements of the Company, showing a consolidated net profit of US\$ 134,869,615. The Annual General Shareholders' meeting furthermore resolved the payment of the gross dividend in cash proposed by the Board of Directors. The payment of the above-
mentioned dividend was made to the Shareholders on April 26th, 2023 with related coupon n. 5 detachment date (ex-date) occurring on April 24th, 2023 and record date on April 25th, 2023 (no dividend was paid with reference to the 18,170,238 shares repurchased by the Company, treasury shares not carrying a dividend right). In addition, the Annual General Shareholders' meeting of DIS approved the 2022-2024 Medium-Long Term Incentive Plan as illustrated in the Information Document – drafted in accordance with art. Art. 84-bis of the Regulation adopted by CONSOB – and related report of the Board of Directors, both approved on March 9th, 2023 and available on the Company's web site.
Approval of the implementation of a reverse stock split with respect to all the shares of the Company and the related resolutions regarding the authorized capital and the buyback authorization: In June 2023, d'Amico International Shipping S.A.'s board of directors (the "Board of Directors" or the "Board") resolved to implement the share consolidation with respect to all the shares of the Company at a ratio of one (1) to ten (10) (the "Reverse Stock Split"), as approved by the Company's extraordinary general meeting of shareholders held on 13 June 2023 (the "EGM"), in compliance with the relevant delegation of powers conferred by the EGM. The Board resolved to set the date in which the Reverse Stock Split was implemented and effective at 19 June 2023 (the "Effective Date"). To avoid the creation of fractions of consolidated shares as a result of the Reverse Stock Split, as resolved by the EGM, with effect as of the Effective Date, nine (9) of the existing treasury shares of the Company were cancelled, thereby reducing the number of shares issued of the Company from the previous 1,241,065,569 to 1,241,065,560 without reducing the share capital of the Company. As a result of the Reverse Stock Split, as of the Effective Date, the share capital of the Company was set at USD 62,053,278.45, divided into 124,106,556 shares with no nominal value and with ISIN code LU2592315662. Furthermore, as a consequence of the Reverse Stock Split, in accordance with the EGM resolution, as of the Effective Date (i) the Company's authorised share capital, including the issued share capital, amounted to USD 87,500,000, divided into 175,000,000 shares with no nominal value and (ii) the Board was authorized for a period of 5 years from 19 June 2023 (therefore until 19 June 2028), within the limits of the authorised share capital, to, inter alia, increase the Company's issued capital up to the maximum amount of the authorised capital and to remove or limit the statutory preferential subscription right of the shareholders. In addition, as provided for in the EGM resolution and disclosed via press release, as of the Effective Date, the buyback authorization renewal was implemented.
Early termination of the previous share buyback authorized period and start of the new own shares buyback programme: In June 2023 d'Amico International Shipping S.A.'s extraordinary general meeting of shareholders resolved to terminate with effect on June 19th, 2023, the Board of Directors' five years authorization to repurchase the Company's own shares – as resolved by the annual general meeting of shareholders held on April 20th, 2021 (following the "Authorization"). During the Authorization, DIS did not repurchase any own shares but assigned a total of 263,209 own shares to the beneficiaries of the Company's 2019-2021 Medium-Long Term Variable Incentive Plan.
The Board of Directors resolved to start on the 19th of June 2023 the own shares buyback programme pursuant to the new authorization issued by the extraordinary general meeting of shareholders held on 13 June 2023 (the "Programme"). According to Article 430-15 et seq. of the Luxembourg law of August 10, 1915 concerning commercial companies, as amended from time to time (the "Luxembourg Law"), Article 8 of the Company's articles of association (the "Articles of Association"), the relevant provisions of the EU Reg. no 596/2014 and its delegated and implementing acts (the "Market Abuse Regulation"), together with the applicable Italian and Luxembourg laws, regulations and the best market practices which are accepted on the Italian regulated market and currently authorized or authorized in future by the applicable laws and regulations. The Programme is aimed at creating an "inventory of treasury shares" that will be available as a means of payment, exchange, transfer, contribution, assignment, sale or other types of disposals associated notably with transactions linked to the Company and/or its subsidiaries' operations and with any projects offering an effective investment opportunity in line with the strategic policy of the Company. The Programme shall be carried out using available reserves and/or distributable earnings sufficient for the planned repurchase of fully paid-up own shares, subject to these transactions not having the effect of reducing the Company's net assets below the amount mentioned in paragraph 1 & 2 of Article 461-2 of the Luxembourg Law (i.e. the aggregate of the subscribed share capital and the reserves which may not be distributed according to the law or the Articles of Association of the Company), and at a price per share within the following range: (i) a minimum which shall not be 10% lower than the official share price reported in the trading session on the day before each individual transaction is executed; (ii) a maximum which shall not be 10% higher than the official share price reported in the trading session on the day before each individual transaction is executed. As per the shareholders' new authorization, up to 18,615,795 ordinary shares of the Company can be repurchased (including the Own Shares already repurchased and held in the Company's portfolio in compliance with Article 430-15 of the Luxembourg Law). Furthermore, according
to the resolution of the Board of Directors the maximum value of own shares that can be repurchased under the Programme cannot exceed Euro 100 million.
The repurchase and disposal of own shares shall be carried out in one or more tranches on the regulated market managed and organized by Borsa Italiana S.p.A., in accordance with the relevant provisions of the Market Abuse Regulation, in respect of the operative instructions issued from the organizational and management rules of the markets, so as to assure a fair deal to all the shareholders, and will be executed and coordinated by Equita SIM S.p.A. an equity broker duly engaged for this purpose, which will act completely independently and without any influence from the Company regarding the moment of such repurchases and disposals, in accordance with the relevant applicable laws and of the above mentioned Shareholders' new authorization. In all cases, each transaction shall be executed and publicized in accordance with Luxembourg and/or Italian laws and regulations where applicable, as well as according to the relevant provisions concerning exemptions from market abuse applicable legislation for buyback programs and stabilization of financial instruments. In particular, any authorized own shares sale and purchase transactions shall be carried out at any time, not being subject to any time limit and notably in order to pursue the purposes of the Programme.
The authorization to repurchase and sell the Company's own shares in one or more tranches has been granted to the Board of Directors, with the option to delegate, for a maximum period of five (5) years from 19th June, 2023 (i.e. the Reverse Stock Split effective date) and thus expiring on 19th June, 2028.
'Time Charter-Out' Fleet: In January 2023, d'Amico Tankers d.a.c. fixed a time charter-out contract with an oil-major for one of its handysize vessels for a minimum of 11 months and a maximum of 13 months, starting from January 2023.
In February 2023, d'Amico Tankers d.a.c. fixed a time charter-out contract with a leading trading-house for one of its handysize vessels for 12 months, starting from February 2023. In the same month, d'Amico Tankers d.a.c. fixed a time charter-out contract with another leading trading-house for one of its MR vessels for 12 months, starting from April 2023.
In April 2023, d'Amico Tankers d.a.c. fixed a time charter-out contract with an oil-major for one of its MR vessels for 6 months, starting in April 2023.
In May 2023, d'Amico Tankers d.a.c. fixed a time charter-out contract with an oil-major for one of its MR vessels for 32 months, starting in May 2023.
Exercise of the purchase option on a TC-in MR vessels: In January 2023, d'Amico International Shipping S.A. announced that its operating subsidiary d'Amico Tankers d.a.c. exercised its purchase option on the M/T High Explorer, a 50,000 dwt MR product tanker vessel, built in 2018 by Onomichi Dockyard Co., Japan, for a consideration of JPY 4.1 billion (equivalent to approximately US\$ 30.0 million), with delivery having occurred in May 2023.
Exercise of the purchase option on bareboat chartered MR vessels: In January 2023, d'Amico International Shipping S.A. announced that its operating subsidiary d'Amico Tankers d.a.c. exercised its purchase option on the M/T High Freedom, a 49,999 dwt MR product tanker vessel, built in 2014 by Hyundai Mipo, South Korea, for a consideration of US\$ 20.1 million, with delivery having occurred in May 2023.
In May 2023, d'Amico International Shipping S.A. announced that its operating subsidiary d'Amico Tankers d.a.c. exercised its purchase option on:
'Time Charter-Out' Fleet: In July 2023, d'Amico Tankers d.a.c. fixed a time charter-out contract with a leading tradinghouse for one of its MR vessels for a minimum of 10 months and a maximum of 13 months, starting from August 2023.
The profile of d'Amico International Shipping's vessels on the water is summarized as follows.
| As at 30 June 2023 | As at 27 July 2023 | |||||||
|---|---|---|---|---|---|---|---|---|
| LR1 | MR | Handysize | Total | LR1 | MR | Handysize | Total | |
| Owned | 5 | 13 | 6 | 24 | 5 | 15 | 6 | 26 |
| Bareboat chartered-in* | 1 | 4 | - | 5 | 1 | 2 | - | 3 |
| Long-term time chartered-in | - | 3 | - | 3 | - | 3 | - | 3 |
| Short-term time chartered-in | - | 4 | - | 4 | - | 4 | - | 4 |
| Total | 6 | 24 | 6 | 36 | 6 | 24 | 6 | 36 |
* with purchase obligation
The key drivers that should affect the product tankers' freight markets and d'Amico International Shipping's performance are (i) the growth in global oil supply, (ii) refinery margins and throughput, (iii) demand for refined products, (iv) the structure of forward prices for both crude oil and refined petroleum products, (v) the product tankers' fleet growth rate, (vi) the efficiency of the fleet due to factors such as congestion, transhipments, and average sailing speeds and (vii) average sailing distances and ballast to laden ratios. Some of the factors that should continue supporting the current strong markets are detailed below:
• In the longer-term, recovering demand and structural shifts in the location of refineries are likely to continue boosting long-haul product trades.
MOORE Audit S.A. 5, rue de Turi
L-3378 Livange
T +352 26 26 84 1 F +352 26 26 84 99 E [email protected]
www.moore-audit.lu
To the Shareholders of d'Amico International Shipping S.A. 25C, Boulevard Royal L-2449 Luxembourg
Livange, 27 July 2023
We have reviewed the accompanying condensed consolidated interim financial statements of d'Amico International Shipping S.A. and its subsidiaries (the "Group"), which comprise the condensed consolidated interim statement of financial position as at 30 June 2023 and the related condensed consolidated interim income statement, condensed consolidated interim statement of comprehensive income, condensed consolidated statement of cash flows and condensed interim statement of changes in consolidated shareholders' equity for the six-month period then ended, and notes, comprising a summary of significant accounting policies and other explanatory notes.
The Board of Directors is responsible for the preparation and fair presentation of these condensed consolidated interim financial statements in accordance with International Accounting Standard 34 "Interim financial reporting" as adopted by the European Union, and for such internal control as the Board of Directors determines is necessary to enable the preparation of condensed consolidated interim financial statements that are free from material misstatement whether due to fraud or error.
Our responsibility is to express a conclusion on these condensed consolidated interim financial statements based on our review.
W e c o n d u ct e d o ur r e vi e w i n a c c or d a n c e wit h I nt er n ati o n al St a n d ar d o n R e vi e w E n g a g e m e nt s ("I S R E") 2 4 1 0 " R e vi e w of I nt eri m Fi n a n ci al I nf or m ati o n P erf or m e d b y t h e I n d e p e n d e nt A u dit or of t h e E ntit y" a s a d o pt e d f or L u x e m b o ur g b y t h e "l n stit ut d e s R e vi s e ur s d' E ntr e pri s e s". T hi s st a n d ar d r e q uir e s u s t o c o m pl y wit h r el e v a nt et hi c al r e q uir e m e nt s a n d c o n cl u d e w h et h er a n yt hi n g h a s c o m e t o o ur att e nti o n t h at c a u s e s u s t o b eli e v e t h at t h e c o n d e n s e d c o n s oli d at e d i nt eri m fi n a n ci al st at e m e nt s, t a k e n a s a w h ol e, ar e n ot pr e p ar e d i n all m at eri al r e s p e ct s i n a c c or d a n c e wit h t h e a p pli c a bl e fi n a n ci al fr a m e w or k.
A r e vi e w of c o n d e n s e d c o n s oli d at e d i nt eri m fi n a n ci al st at e m e nt s i n a c c or d a n c e wit h I S R E 2 4 1 0 i s a li mit e d a s s ur a n c e e n g a g e m e nt. T h e " R e vi s e ur d' E ntr e pri s e s A gr e e" p erf or m s pr o c e d ur e s, pri m aril y c o n si sti n g of m a ki n g i n q uiri e s of p er s o n s r e s p o n si bl e f or fi n a n ci al a n d a c c o u nti n g m att er s wit hi n t h e Gr o u p, a n d a p pl yi n g a n al yti c al a n d ot h er r e vi e w pr o c e d ur e s.
A r e vi e w i s s u b st a nti all y l e s s i n s c o p e t h a n a n a u dit c o n d u ct e d i n a c c or d a n c e wit h I nt er n ati o n al St a n d ar d s o n A u diti n g a n d c o n s e q u e ntl y d o e s n ot e n a bl e u s t o o bt ai n a s s ur a n c e t h at w e w o ul d b e c o m e a w ar e of all si g nifi c a nt m att er s t h at mi g ht b e i d e ntifi e d i n a n a u dit. A c c or di n gl y, w e d o n ot e x pr e s s a n a u dit o pi ni o n.
B a s e d o n o ur r e vi e w, n ot hi n g h a s c o m e t o o ur att e nti o n t h at c a u s e s u s t o b eli e v e t h at t h e a c c o m p a n yi n g c o n d e n s e d c o n s oli d at e d i nt eri m fi n a n ci al st at e m e nt s ar e n ot pr e p ar e d, i n all m at eri al r e s p e ct s, i n a c c or d a n c e wit h I nt er n ati o n al A c c o u nti n g St a n d ar d 3 4 I nt eri m fi n a n ci al r e p orti n g a s a d o pt e d b y t h e E ur o p e a n U ni o n.
M O O R E A u di S. A.
'-------f.---------,-:. -------t. R a p h a el L c H E T T E R
R e vi s e ur d' E ntr e pri s e s A gr e e
| Q2 2023 UNREVIEWED |
Q2 2022 UNREVIEWED |
US\$ Thousand | Note | H1 2023 | H1 2022 |
|---|---|---|---|---|---|
| 130,599 | 108,742 Revenue | (2) | 270,832 | 175,280 | |
| (33,371) | (35,956) Voyage costs | (3) | (67,338) | (59,673) | |
| 97,228 | 72,786 Time charter equivalent earnings* | (4) | 203,494 | 115,607 | |
| 1,215 | 1,200 | Bareboat charter revenue * | (2) | 2,412 | 2,386 |
| 98,443 | 73,986 Total net revenue | 205,906 | 117,993 | ||
| - | (515) Time charter hire costs | (5) | (27) | (1,721) | |
| (23,561) | (21,012) Other direct operating costs | (6) | (47,988) | (42,141) | |
| (7,096) | (3,462) General and administrative costs | (7) | (11,316) | (6,840) | |
| (1,447) | (527) Result on disposal of fixed assets | (8) | (3,826) | (1,048) | |
| 66,339 | 48,470 EBITDA* | 142,749 | 66,243 | ||
| (14,682) | (15,045) Depreciation and impairment | (11) | (30,489) | (32,528) | |
| 51,657 | 33,425 EBIT* | 112,260 | 33,715 | ||
| 1,208 | 320 Net financial income | (9) | 2,378 | 893 | |
| (6,828) | (8,064) Net financial charges | (9) | (14,208) | (15,282) | |
| 46,037 | 25,681 Profit before tax | 100,430 | 19,326 | ||
| (320) | 33 Income tax | (10) | (597) | (108) | |
| 45,717 | 25,714 Net profit | 99,833 | 19,218 | ||
| The net result is attributable to the equity holders of the Company | |||||
| 0.37 | 0.21 | Profit per share in US\$ (1) | 0.82 | 0.16 |
*see Alternative Performance Measures on page 8
| Q2 2023 UNREVIEWED |
Q2 2022 UNREVIEWED |
US\$ Thousand | H1 2023 | H1 2022 |
|---|---|---|---|---|
| 45,717 | 25,714 | Profit for the period | 99,833 | 19,218 |
| Items that can subsequently be reclassified into Profit or Loss | ||||
| (229) | 2,127 | Cash flow hedges | (2,598) | 7,875 |
| 20 | (29) | Exchange differences in translating foreign operations | 838 | (142) |
| 45,508 | 27,812 | Total comprehensive income for the period | 98,073 | 26,951 |
The net result is entirely attributable to the equity holders of the Company.
(1 ) Disclosure of earnings per share is provided in note n.26.
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KŶďĞŚĂůĨŽĨƚŚĞŽĂƌĚ
| Q2 2023 UNREVIEWED |
Q2 2022 UNREVIEWED |
US\$ Thousand | H1 2023 | H1 2022 |
|---|---|---|---|---|
| 45,717 | 25,714 | Profit for the period | 99,833 | 19,218 |
| 14,682 | 15,045 | Depreciation and amortisation of PPE and RoU | 30,489 | 30,448 |
| - | - | Impairment | - | 2,080 |
| 320 | (33) | Current and deferred income tax | 597 | 108 |
| 2,547 | 3,770 | Net lease cost | 5,463 | 7,614 |
| 3,073 | 3,964 | Other net financial charges (income) | 6,367 | 6,765 |
| 1,448 | 527 | Movement in deferred result on disposal of S&L assets | 3,826 | 1,048 |
| - | 24 | Unrealised foreign exchange result | (11) | 24 |
| 7 | (118) | Other non-cash changes in shareholders' equity | 838 | (146) |
| 183 | (9)* | Allotment and accruals LTI | 211 | (9)* |
| 67,977 | 48,884 Cash flow from operating activities before changes in working capital |
147,613 | 67,150 | |
| (1,171) | (4,407) | Movement in inventories | 3,641 | (6,279) |
| 20,110 | (32,777) | Movement in amounts receivable | 34,051 | (33,961) |
| (10,238) | 6,781 | Movement in amounts payable | (3,650) | 7,352 |
| (82) | (25) | Taxes (paid) received | (87) | (106) |
| (2,547) | (3,770) | Payment of interest portion of lease liability | (5,463) | (7,614) |
| (278) | (5,945) | Net interest paid | (3,127) | (7,560) |
| 73,771 | 8,741 | Net cash flow from operating activities | 172,978 | 18,982 |
| (30,737) | (475) | Acquisition of fixed assets and dry-dock expenditures | (35,564) | (894) |
| - | 9,108 | Net sale of fixed assets | - | 19,305 |
| (30,737) | 8,633 Net cash flow from investing activities | (35,564) | 18,411 | |
| (35) | 129 | Other changes in shareholder's equity | (35) | 129 |
| (774) | - | Purchase of Treasury shares | (774) | - |
| (22,012) | - | Dividend paid | (22,012) | - |
| - | (4) | Movement in other financial assets | - | 73 |
| (31,035) | (8,819) | Bank loan repayments | (49,100) | (31,676) |
| 17,750 | - | Bank loans drawdowns | 17,750 | 15,345 |
| (48,798) | (9,077) | Repayments of principal portion of lease liabilities | (78,180) | (17,982) |
| (84,904) | (17,771) Net cash flow from financing activities | (132,351) | (34,111) | |
| (41,870) | (397) | Net increase (decrease) in cash and cash equivalents | 5,063 | 3,282 |
| 155,171 | 30,085 Cash and cash equivalents net of bank overdrafts at the beginning of the period |
108,238 | 26,406 | |
| 113,301 | 29,688 Cash and cash equivalents net of bank overdrafts at the end of the period |
113,301 | 29,688 | |
| 113,301 | 46,040 | Cash and cash equivalents at the end of the period | 113,301 | 46,040 |
| - | (16,352) | Bank overdrafts at the end of the period | - | (16,352) |
*For comparative reasons, the allotment of 6months and Q2 2022 LTI shares in the amount of US\$(9) thousand is reclassified from Net cashflows from financing activities to Cash flow from operating activities before changes in working capital, therefore changing such cash-flows by US\$|9|thousand.
Financing activities not requiring the use of cash are reconciled within note 21.
| Share capital |
Retained Earnings |
Share premium |
Other Reserves | Total | |||
|---|---|---|---|---|---|---|---|
| US\$ Thousand | Share-based payments |
Other | Cash-flow hedge |
||||
| Balance as at 1 January 2023 | 62,053 | 53,938 | 368,827 | 238 | (16,349) | 9,707 | 478,414 |
| Purchase of Treasury shares | - | - | - | - | (774) | - | (774) |
| LTI allotment, share-based (2019-2020 plan) | - | (109) | - | (19) | 128 | - | - |
| LTI vesting ofshare-based plans | - | - | - | 211 | - | - | 211 |
| Dividend payment | - | - | (22,012) | - | - | - | (22,012) |
| Capitalisation of costs related to operations on capital* | - | - | (35) | - | - | - | (35) |
| Total comprehensive income | - | 99,833 | - | - | 838 | (2,598) | 98,073 |
| Balance as at 30 June 2023 | 62,053 | 153,662 | 346,780 | 430 | (16,157) | 7,109 | 553,877 |
* Reversal Stock Split of 13 June 2023
| Share capital |
Retained Earnings |
Share premium |
Other Reserves | Total | |||
|---|---|---|---|---|---|---|---|
| US\$ Thousand | (Accumulated losses) |
Share based payments |
Other | Cash-flow hedge |
|||
| Balance as at 1 January 2022 | 62,053 | (80,568) | 368,823 | 38 | (16,505) | (1,459) | 332,382 |
| Treasury shares | - | - | - | - | 129 | - | 129 |
| Other changes | - | (254) | - | - | 241 | - | (13) |
| Total comprehensive income | - | 19,218 | - | - | (142) | 7,875 | 26,951 |
| Balance as at 30 June 2022 | 62,053 | (61,604) | 368,823 | 38 | (16,277) | 6,416 | 359,449 |
The following notes form an integral part of the interim consolidated financial report.
d'Amico International Shipping S.A. (individually the "Company" or "d'Amico International Shipping", and when together with its subsidiaries "DIS", "DIS Group" or "the Group") a Sociéte Anonyme, was incorporated under the laws of the Grand-Duchy of Luxembourg on 9 February 2007; its statutory seat is in Luxembourg. The ultimate parent company of the Group is d'Amico Società di Navigazione. DIS is an international marine transportation company, operating, mainly through its fully owned subsidiary, d'Amico Tankers d.a.c. (Ireland), as well as other indirectly controlled subsidiaries. All DIS' vessels are double-hulled and are primarily engaged in the transportation of refined oil products, providing worldwide shipping services to the major oil companies and trading houses.
This condensed consolidated interim financial statements as at, and for the six months period ended 30 June 2023 have been prepared in accordance with IAS 34 – Interim Financial reporting, as adopted by the European Union.
The condensed consolidated interim financial statements are presented in U.S. Dollars, which is the functional currency of the Company and its principal subsidiaries. Rounding is applied to the nearest thousand.
| 1. ACCOUNTING POLICIES |
|
|---|---|
| --------------------------- | -- |
The principal accounting policies, which have been consistently applied, are set out below.
The interim condensed consolidated financial statements do not contain all information and disclosures required in the annual financial statements and should be read in conjunction with the Group's annual financial statements as at 31 December 2022.
The consolidated financial statements are prepared on the basis of the historic cost convention, with the exception of certain financial assets and labilities, which are stated at fair value through profit or loss or other comprehensive income for the effective portion of the hedges.
The preparation of the financial statements requires Directors to make accounting estimates and in some cases assumptions in the application of accounting principles. The Management decisions are based on historical experience as well as on expectations associated with the realization of future events, considered reasonable under the circumstances. Critical accounting estimates and judgments are exercised in all areas of the business and are reviewed on an ongoing basis.
d'Amico International Shipping provides transportation services of refined petroleum products and vegetable oil, operating in only one business segment, Product Tankers. Furthermore, the Group only has one geographical segment, employing all its vessels worldwide, rather than in specific geographical areas. The Group's top management monitors, evaluates and allocates the Group's resources across the whole fleet, operations are run in one single currency – the US\$ – and DIS considers, therefore, the product tankers business as a single segment.
The accounting policies adopted are consistent with those of the previous financial year.
There were no new or amended accounting standards having a material impact on the condensed consolidated interim financial statements of the DIS Group.
Based on current assessments, the accounting standards issued and not yet applied are not expected to have a material impact on the condensed consolidated interim financial statements of the DIS Group.
US\$ LIBOR rates for periods of 3 months and 6 months, which have been the reference rates for all of our mortgage loans, should not be published anymore from 30 June 2023. All our loans which will be affected have or will include transition clauses to the Secured Overnight Financing Rate (SOFR), the new risk-free reference rate. All new loans from January 2022, already include the SOFR as the reference rate, from the loan's start date. The reference rate can either be based on the Term SOFR, or the Cumulative Compounded SOFR in arrears. Effective hedges can be performed for loans linked to both the Term SOFR and the Cumulative Compounded SOFR in arrears (please refer to note n. 19 for more details relating to the transition to SOFR).
| US\$ thousand | Q2 2023 UNREVIEWED |
Q2 2022 UNREVIEWED |
H1 2023 | H1 2022 |
|---|---|---|---|---|
| Revenues from voyage-charter (spot) – freight and demurrage |
96,046 | 83,343 | 209,030 | 127,889 |
| Revenue from operating leases (time-charter) | 30,594 | 18,849 | 53,875 | 34,109 |
| Revenue from subleasing (time-charter) | 3,610 | 6,550 | 7,569 | 13,238 |
| Other revenues | 349 | - | 358 | 44 |
| Revenue, excluding bareboat charter revenue | 130,599 | 108,742 | 270,832 | 175,280 |
| Bareboat charter revenue* | 1,215 | 1,200 | 2,412 | 2,386 |
| Total revenue | 131,814 | 109,942 | 273,244 | 177,666 |
*see also Alternative Performance Measures on page 8
Revenue represents vessel income comprising time charter hire, freight and demurrage and is recognized over time. DIS has only one revenue stream and it originates from the employment of its vessels for the transportation of refined petroleum products, vegetable and palm oils and easy chemicals.
All contractual revenues – as defined by IFRS15 – result from freight and demurrage: for these revenues, payment is settled at completion of the voyage, and therefore no performance obligations are recognised to be outstanding.
Revenues from voyage charters are recognized from loading port to discharge port. Costs to fulfil a contract, relating to ballast voyages to the next loading port, are recognized from loading port to discharge port and are capitalised at the reporting date; the accrual adjustments as at 30 June 2023, to ensure the above recognition of costs and revenues, led to a decrease in revenues of US\$1.7 million and a decrease in voyage costs of US\$0.8 million.
Revenue from operating leases represent income from owned vessels that are time-chartered-out. Revenue from subleasing represents revenue on vessels controlled through time-charter-in contracts, that are time-charted-out. Other revenues comprise income from deviations, including compensation for bunker expenses.
Bareboat charter revenue represents vessel income from the employment of a vessel through a bareboat hire contract; in such contracts the charterer is responsible for the vessel's technical management, including the payment of its crew costs. Bareboat charter revenue in the first-half of 2023 was of US\$2.4 million.
| US\$ thousand | Q2 2023 UNREVIEWED |
Q2 2022 UNREVIEWED |
H1 2023 | H1 2022 |
|---|---|---|---|---|
| Bunkers (fuel) | (20,321) | (23,163) | (39,957) | (38,190) |
| Commissions | (3,858) | (3,344) | (7,682) | (5,160) |
| Port charges | (6,500) | (7,501) | (14,114) | (13,101) |
| Other | (2,692) | (1,948) | (5,585) | (3,222) |
| Total | (33,371) | (35,956) | (67,338) | (59,673) |
Voyage costs arise from the employment, directly or through our partnerships, of DIS' vessels, through voyage charters or contracts of affreightment. When vessels are employed through time-charters they do not incur voyage costs.
| US\$ thousand | Q2 2023 UNREVIEWED |
Q2 2022 UNREVIEWED |
H1 2023 | H1 2022 |
|---|---|---|---|---|
| Time-charter equivalent earnings | 97,228 | 72,786 | 203,494 | 115,607 |
*see also Alternative Performance Measures on page 8
Time charter equivalent earnings represent revenue less voyage costs. In the first half of 2023 vessel days on fixed rate contracts represented about 27.2% of total available vessel days (H1 2022: 42.1%).
| 5. | TIME CHARTER HIRE COSTS | |||||
|---|---|---|---|---|---|---|
| US\$ thousand | Q2 2023 UNREVIEWED |
Q2 2022 UNREVIEWED |
H1 2023 | H1 2022 | ||
| Time-charter hire costs | - | (515) | (27) | (1,721) |
Time charter hire costs represent the cost of chartering-in vessels from third parties. The amounts relate essentially to the cost of chartering-in vessels with terms that are shorter than one year at their start date (short-term leases; please refer also to note 1 of the Group's 2022 consolidated financial statements).
| 6. OTHER DIRECT OPERATING COSTS |
||||
|---|---|---|---|---|
| US\$ thousand | Q2 2023 UNREVIEWED |
Q2 2022 UNREVIEWED |
H1 2023 | H1 2022 |
| Crew costs | (9,666) | (8,792) | (18,963) | (17,276) |
| Technical expenses | (3,323) | (2,382) | (7,482) | (5,272) |
| Luboil | (552) | (530) | (1,112) | (1,018) |
| Technical and quality management | (3,040) | (2,395) | (5,834) | (4,949) |
| Insurance | (1,421) | (634) | (2,805) | (1,348) |
| Operating costs related to leased vessels | (4,930) | (5,340) | (9,917) | (10,950) |
| Other costs | (629) | (939) | (1,875) | (1,328) |
| Total | (23,561) | (21,012) | (47,988) | (42,141) |
Other direct operating costs include crew and insurance costs, technical expenses, lubricating oils, technical and quality management fees and sundry expenses originating from the operation of the Group's vessels. Operating
costs related to leased vessels represent one of the non-lease components of TC contracts, which is expensed in the income statement.
As at 30 June 2023, d'Amico International Shipping S.A. and its subsidiaries had 639 employees, of which 614 were seagoing and 25 onshore personnel. Onshore personnel costs are included under general and administrative costs. The Group has no liabilities with regards to pensions and other post-retirement benefits.
| 7. GENERAL AND ADMINISTRATIVE COSTS |
||||
|---|---|---|---|---|
| US\$ thousand | Q2 2023 UNREVIEWED |
Q2 2022 UNREVIEWED |
H1 2023 | H1 2022 |
| Personnel | (3,471) | (1,396) | (4,851) | (2,621) |
| Other general and administrative costs | (3,625) | (2,066) | (6,465) | (4,219) |
| Total | (7,096) | (3,462) | (11,316) | (6,840) |
Personnel costs relate to onshore personnel salaries, director fees and remuneration earned by senior managers, including the amount expensed relating to the Long-Term Incentive Plan granted to the key managers and executive directors of DIS, adopted in 2019 and subsequently renewed; for the period ending 30 June 2023, a consolidated total charge has been recorded for payments under such two-years' rolling plans.
The other general and administrative costs comprise consultancy, office rental fees, and other sundry expenses originating from the operation of d'Amico International Shipping Group's companies. They include intra-group management fees on brand and for commercial, operational, administrative, internal audit, legal and IT services, amounting to US\$5.5 million in H1 2023 and US\$2.6 million in Q2 2023. They also include negligible expenses relating to short-term leases, relating mainly to office equipment, and Net Wealth Tax for the holding company (accrued in the first six months of 2023 for an amount of equivalent US\$11.6 thousand).
| 8. | RESULT FROM DISPOSAL OF FIXED ASSETS | ||||
|---|---|---|---|---|---|
| US\$ thousand | Q2 2023 UNREVIEWED |
Q2 2022 UNREVIEWED |
H1 2023 | H1 2022 | |
| Result from disposal of vessels | (1,447) | (527) | (3,826) | (1,048) |
Amounts refer to the amortisation of the deferred results on the disposal of all vessels sold and leased-back; following the exercise of the purchase options on High Freedom, High Trust, High Trader, and High Loyalty, DIS' H1'23 'result on disposal' includes US\$(3.1) million arising from the accelerated amortization of the deferred losses on such vessels.
| US\$ thousand | Q2 2023 UNREVIEWED |
Q2 2022 UNREVIEWED |
H1 2023 | H1 2022 |
|---|---|---|---|---|
| Financial Income | ||||
| Loans and receivables at amortised cost: | ||||
| Interest Income | 1,152 | 15 | 2,322 | 18 |
| Realised commercial exchange differences | - | (93) | - | 34 |
| Realised on derivative instruments | 56 | - | 56 | - |
| At fair value through income statement: | ||||
| Unrealised gains on derivative instruments | - | 371 | - | 814 |
| Unrealised exchange differences | - | 27 | - | 27 |
| Total financial income | 1,208 | 320 | 2,378 | 893 |
| Financial Charges | ||||
| Financial liabilities at amortised cost: | ||||
| Interest expense and financial fees | (3,940) | (3,450) | (8,358) | (6,521) |
| Lease cost | (2,546) | (3,771) | (5,464) | (7,617) |
| Realised commercial exchange differences | (343) | - | (377) | - |
| Realised on derivative instruments | - | (964) | - | (964) |
| Realised on investing activities | - | (109) | - | (109) |
| At fair value through income statement: | ||||
| Unrealised losses on derivative instruments | 1 | 230 | (9) | (71) |
| Total financial charges | (6,828) | (8,064) | (14,208) | (15,282) |
| Net financial charges | (5,620) | (7,744) | (11,830) | (14,389) |
In H1 2023, financial income includes realised interest income amounting to US\$2.3 million deriving from funds held with financial institutions on deposit and current accounts, as well as from investments in government securities, together with US\$0.06 million realised foreign exchange differences on forward currency contracts.
Financial charges in the first half of 2023 include realised expenses of US\$14.2 million, comprising US\$7.9 million interest on bank loans relating to DIS' owned vessels, interest on overdraft facilities and the realised result on interest rate swaps, US\$0.5 million financial fees, as well as US\$5.5 million interest implicit in leases and US\$0.4 million realised commercial exchange differences. Unrealised losses represent mainly changes in the fair value of the ineffective portion of hedging interest-rate swaps, of negligible value.
| 10. TAX |
||||
|---|---|---|---|---|
| US\$ thousand | Q2 2023 UNREVIEWED |
Q2 2022 UNREVIEWED |
H1 2023 | H1 2022 |
| Income tax | (320) | 33 | (597) | (108) |
d'Amico Tankers d.a.c. (DTL) qualified to be re-elected under the terms of the Tonnage Tax regime in Ireland, for a period of 10 years, ending on 31 December 2024.
The income tax liability under the tonnage tax regime is based on the controlled fleet's notional shipping income, which in turn depends on the total net tonnage of the controlled fleet. The first-half 2023 total tonnage tax provision for d'Amico Tankers d.a.c. amounts to US\$85.7 thousand (US\$43.0 thousand in Q2 2023). Current income tax includes also charges relating to activities that are not eligible for tonnage tax and that are taxed at either 12.5% or 25.0%.
| US\$ thousand | Total PPE | RoU | Total PPE & RoU |
|---|---|---|---|
| Gross carrying amount | |||
| at Jan.1 2023 | 765,294 | 332,919 | 1,098,213 |
| Additions | 35,564 | - | 35,564 |
| Change in contractual terms | - | (987) | (987) |
| Transfer from RoU | 82,108 | - | 82,108 |
| Transfer to PPE | - | (82,108) | (82,108) |
| Write-off | - | (10,953) | (10,953) |
| Exchange differences | 9 | 18 | 27 |
| at June 30, 2023 | 882,975 | 238,889 | 1,121,864 |
| Accumulated depreciation & impairment | |||
| at Jan.1 2023 | 179,661 | 109,254 | 288,915 |
| Transfer from RoU | 16,872 | - | 16,872 |
| Transfer to PPE | - | (16,872) | (16,872) |
| Write-off | - | (10,953) | (10,953) |
| Depreciation charge | 17,114 | 13,375 | 30,489 |
| Exchange differences | (1) | - | (1) |
| at June 30, 2023 | 213,646 | 94,804 | 308,450 |
| Carrying amount at December 31, 2022 | 585,633 | 223,665 | 809,298 |
| Carrying amount at June 30, 2023 | 669,329 | 144,085 | 813,414 |
For comparison purpose we report below the summary values for property, plant and equipment and right of use assets, as at year-end 2022:
| US\$ thousand | Total PPE | RoU | Total PPE & RoU |
|---|---|---|---|
| Gross carrying amount | |||
| at Jan.1 2022 | 725,790 | 373,688 | 1,099,478 |
| Reclassification | (20,932) | - | (20,932) |
| Additions | 35,301 | 42,020 | 77,321 |
| Change in contractual terms | - | (18,753) | (18,753) |
| Acquisition of Glenda International Shipping's vessels | 41,279 | - | 41,279 |
| Disposals | - | (63,922) | (63,922) |
| Transfer to Assets held-for-sale | (16,119) | - | (16,119) |
| Exchange differences | (25) | (114) | (139) |
| at December 31, 2022 | 765,294 | 332,919 | 1,098,213 |
| Accumulated depreciation & impairment | |||
| at Jan.1 2022 | 179,069 | 98,975 | 278,044 |
| Reclassification | (21,163) | - | (21,163) |
| Disposals | - | (21,889) | (21,889) |
| Transfer to Assets held-for-sale | (7,011) | - | (7,011) |
| Impairment upon reclassification to AHFS | 2,080 | - | 2,080 |
| Impairment reversal | (1,991) | - | (1,991) |
| Depreciation charge | 28,677 | 32,168 | 60,845 |
| at December 31, 2022 | 179,661 | 109,254 | 288,915 |
| Carrying amount at December 31, 2021 | 546,721 | 274,713 | 821,434 |
The net book value of DIS' property plant and equipment and right of use assets as at 30 June 2023, amounts to US\$813.4 million, comprising property, plant and equipment amounting to US\$669.3 million and right of use assets amounting to US\$144.1 million.
The net book value of DIS' Fleet (the Group's shipping related assets, owned or leased) amounts to US\$811.9 million as at 30 June 2023, and consists of the net book value of the Fleet on the water and associated dry-docks, amounting to US\$669.1 million, as well as the capitalised and depreciated value of DIS' shipping related lease obligations and associated dry-docks (Rights of Use assets, as per IFRS 16), amounting to US\$142.8 million. A detailed description of the Fleet is provided in the relevant section of the management report.
The value of other non-shipping related PPE and ROU assets as at 30 June 2023 amounts to US\$1.5 million and comprise mostly office rental lease obligations and the net book value of fixture, fittings and office equipment.
The net book value of leased vessels for which a purchase obligation or a bargain purchase option exists, amount to US\$71.4 million as at 30 June 2023.
The following table indicates purchase obligations and options for all vessels sold and leased-back through bareboat contracts:
| Vessel name, M/T | Year Purchase obligation |
Option to repurchase | |
|---|---|---|---|
| the lease begins | the vessel | ||
| Cielo di Houston | 2019 | n.a. | from 5th year |
| High Discovery | 2022 | 10th year from sale | from 2nd year |
| High Fidelity | 2022 | 10th year from sale | from 3rd year |
The capitalised and depreciated value of DIS' leases obligations (Rights of Use assets) are discounted using DIS' marginal borrowing rate, which is obtained by adding to the swap interest rate for liabilities with the same term as the lease obligations, the margin applied to the most recent third-party financings; for leases previously identified as such in accordance with IAS 17, the lease payments are discounted using DIS' (the lessee's) implicit rate in the lease.
Dry-dock includes expenditure for the fleet's dry-docking programme and associated amortization; additions in the period ended 30 June 2023, relate to instalments paid to the yard for dry-docks, for PPE, corresponding to US\$5.8 million (in the period no dry-docks were performed for RoU vessels). In the first half of 2023, seven of DIS' owned vessels dry-docked.
All financings on the vessels owned by the Group are secured through mortgages.
The total market value of the Group's fleet as 30 June 2023, amounts to US\$1,128.0 million and includes DTL's owned vessels and DTL's right-of-use assets. The value of DIS' owned vessels and of its leased vessels with purchase obligations and bargain purchase options is based on charter-free broker valuations and amounts to US\$1,075.0 million, while for the remaining Right-of-use Assets it is based on their value-in-use and amounts to US\$53.0 million, as described below.
The Fleet's recoverable amount is defined as the higher of its fair value less costs to sell and its value-in-use, represented by the net present value of the cash flows from the vessels' remaining useful life. Impairments and their reversal are non-recurring and will be based on the management's assessment of the sustainability of a number of market factors.
As at the reporting date, there wasn't an impairment indicator since as that date the fair value (broker valuations) of DIS' Fleet was higher than its book-value.
Whenever an impairment indicator exists, the impairment test is performed.
As at 30 June 2023, the Fleet's fair value, measured as its market value, less 1% cost of sale, exceeds its net book value by US\$305 million. Therefore, at the reporting date there isn't an indication of impairment.
The management of the Group therefore does not consider necessary to recognise an impairment of the Fleet's value; they confirm to closely monitor DIS' vessels market values and value-in-use calculations.
| US\$ Thousand | As at 30 June 2023 |
31 December 2022 | ||||
|---|---|---|---|---|---|---|
| Non-current | Current | Total | Non-current | Current | Total | |
| Fair value of derivative instruments | 3,107 | 4,071 | 7,178 | 3,303 | 6,479 | 9,782 |
| Deferred loss on leased assets | 1,767 | 2,101 | 3,868 | 5,774 | 2,275 | 8,049 |
| Financial receivable | 9 | 109 | 118 | 26 | 33 | 59 |
| Total other financial assets | 4,883 | 6,281 | 11,164 | 9,103 | 8,787 | 17,890 |
| Fair value of derivative instruments | (36) | (11) | (47) | (9) | (36) | (45) |
| Deferred profit on leased assets | (2,794) | (363) | (3,157) | (3,284) | (558) | (3,842) |
| Other financial liabilities | (39) | (2,353) | (2,392) | (39) | (2,535) | (2,574) |
| Total other financial liabilities | (2,869) | (2,727) | (5,596) | (3,332) | (3,129) | (6,461) |
As at 30 June 2023, non-current financial assets amount to US\$4.9 million and include mainly the fair value of interest rate swap (IRS) hedging instruments, amounting to US\$3.1 million and the deferred losses arising on the disposal of vessels which were leased back, which will be amortised over the term of such contracts, amounting to US\$1.8 million; financial lease receivable (sublease of office space by the subsidiary d'Amico Tankers UK Ltd) of US\$9 thousand is also included in this item. The Group's exposure to various risks associated with the financial instruments and the derivative instruments' fair value calculation techniques are discussed within note 22.
As at 30 June 2023, current financial assets amount to US\$ 6.3 million. This value includes mainly the fair value of hedging instruments (IRS and foreign exchange forward contracts) amounting to US\$4.1 million, US\$ 2.1 million deferred losses arising on the disposal of vessels which were leased back and a financial lease receivable of US\$109 thousand.
As at 30 June 2023, other non-current financial liabilities amount to US\$ 2.9 million, including mainly US\$ 2.8 million in deferred profit arising on the disposal of vessels which were leased back; negligible amounts represent the fair value of interest-rate-swap hedging instruments amounting to US\$ 0.04 million and a provision for actuarial charges.
As at 30 June 2023, other current financial liabilities amount to US\$ 2.7 million, comprising mainly US\$ 2.4 million financial interest accrued on bank loans, US\$ 0.4 million in deferred profit arising on the disposal of vessels which were leased back and a negligible amount of US\$11 thousand representing the fair value of foreign exchange forward hedging instruments.
| 13. INVENTORIES |
||
|---|---|---|
| US\$ thousand | As at 30 June 2023 |
As at 31 December 2022 |
| Inventories | 14,663 | 18,303 |
Inventories represent stocks of Intermediate Fuel Oil (IFO), Marine Diesel Oil (MDO) – collectively bunker fuels – and lube-oils on board vessels. The amounts expensed during the period are detailed in notes 3 and 6.
| US\$ Thousand | As at 30 June 2023 |
As at 31 December 2022 |
|---|---|---|
| Contractual receivables | 40,537 | 63,783 |
| Contract assets (accruals) | 10,821 | 22,591 |
| Prepayments (TC) charters, other receivables & accruals | 2,049 | 1,964 |
| Other debtors | 3,708 | 3,160 |
| Total | 57,115 | 91,498 |
As at 30 June 2023, receivables and other current assets include contractual receivables amounting to US\$40.5 million, net of allowance for credit losses of US\$0.3 million. Contractual receivables are recognised when the right to consideration becomes unconditional, that is in the case of voyage charters, when the voyage is completed, and the customer is billed.
Revenue-related contract assetsrepresent accrued income arising from the Group's right to consideration for work performed but not billed at the reporting date on the aforementioned voyage charters (conditional right to consideration for the part of the contractual obligation performed, which is invoiced at the end of the performance obligation), and amounts to US\$10.8 million as at 30 June 2023.
Prepayments, other receivables and accruals amount to US\$2.0 million as of 30 June 2023 and represent prepayments for TC-in contracts, other prepayments, and rebillable expenses.
The balance of Other debtors as at 30 June 2023 consists of non-trade receivables and agency advances, amounting to US\$3.7 million.
| 15. | CASH AND CASH EQUIVALENTS |
|---|---|
| ----- | --------------------------- |
| US\$ thousand | As at 30 June 2023 |
As at 31 December 2022 |
|---|---|---|
| Cash and cash equivalents | 113,301 | 117,896 |
Cash and cash equivalent represent cash-on-board, cash at bank and short-term deposits (with no cash restrictions), as well as holdings of highly liquid and investment grade government securities, with a maturity of up to 3 months.
Changes to Shareholders' equity during the first six months of 2023 are detailed in the statement of changes in shareholders' equity.
In the month of June 2023, d'Amico International Shipping completed a reverse stock split with respect to all the shares of the Company at a ratio of one (1) to ten (10) (the "Reverse Stock Split"), which became effective on 19 June 2023 (the "Effective Date"), as previously approved by the Company's extraordinary general meeting of shareholders held on 13 June 2023 (the "EGM") and implemented by the Board of Directors resolution on 14 June 2023 in compliance with the relevant delegation of powers conferred by the EGM. To avoid the creation of fractions of consolidated shares as a result of the Reverse Stock Split, nine (9) of the existing Treasury shares of the Company were cancelled, reducing the number of issued shares of the Company from 1,241,065,569 to 1,241,065,560, without reducing the share capital of the Company.
As a result of the Reverse Stock Split, as of the Effective Date, the share capital of the Company is set at USD 62,053,278.45, and is divided into 124,106,556 shares with no nominal value. As of the Effective Date, the consolidated shares of the Company trade under the new ISIN code LU2592315662.
As at 30 June 2023, the share capital of d'Amico International Shipping amounts to US\$ 62,053,278.45 corresponding to 124,106,556 ordinary shares with no nominal value.
As at 30 June 2023, the item includes the previous years' and current year's net results after deductions for dividends distributed.
The share premium reserve initially arose from the Group's IPO and related increase of share capital in May 2007 and thereafter from further capital increases. By statutory provision these reserves are available for distribution. Certain costs and charges connected with the listing process and further capital raises (mainly bank commissions and related advisory fees and charges), have been deducted from the share premium reserve and are reported under Other changes within the consolidated Statement of changes in equity.
Other reserves include the following items:
| US\$ Thousand | As at 30 June 2023 |
As at 31 December 2022 |
|---|---|---|
| Total Other reserves | (8,618) | (6,404) |
| Cash-flow hedge reserve (trough OCI) | 7,109 | 9,707 |
| Share-based payments reserve | 430 | 238 |
| Other of which |
(16,157) | (16,349) |
| Treasury shares | (19,834) | (19,188) |
| Retranslation reserve (through OCI) | 252 | (347) |
| Legal and Consolidation reserves | 3,425 | 3,186 |
Reference is made to the previously disclosed Reverse Stock Split. Treasury shares as at 30 June 2023 consist of 2,005,959 ordinary shares, with a book value of US\$ 19.6 million, corresponding to 1.62% of the issued shares as at the same date. These shares were acquired as part of DIS' authorised own shares buyback programmes. A new own shares buyback programme was authorised by the Annual General meeting of Shareholders held on 18 April 2023, allowing the Company to purchase up to 18,615,795 of its own ordinary shares (including the Own Shares already repurchased and held in the Company's portfolio, in compliance with Article 430-15 of the Luxembourg Law). The purpose of the new programme is the same as that of the previous programme, terminating in April 2023. During 2023 DIS delivered to the beneficiaries of its Long-Term Incentive Plan adopted in 2019, comprising DIS Group's key managers and executive directors, n.13,474 own shares at a total average cost of US\$ 128 thousand (0.0011% of its share capital), as the second tranche of the compensation in-kind on the 2019-2020 period. In 2023, DIS purchased n. 100,000 own shares.
The reserve represents the valuation of the Group's interest rate swap and foreign exchange forward agreements transacted to hedge interest exposure on some of its bank facilities. Details of the fair value of the derivative financial instruments is set out in note 22.
The reserve is the result of the translation into US\$ of the shareholders' equity of the Group's companies having a functional currency other than the United States Dollars.
This reserve is legally required in Luxembourg and is not distributable.
| US\$ thousand | As at 30 June 2023 |
As at 31 December 2022 |
|---|---|---|
| Banks and other lenders – Non-current liabilities | 245,414 | 266,124 |
| Banks and other lenders – Current liabilities | 31,066 | 51,086 |
| Total | 276,480 | 317,210 |
The following tables show the carrying amounts for each facility as at the balance sheet closing dates of 30 June 2023 and 31 December 2022, expressed in US\$ thousand.
| Lender / Details | Asset | Repayment terms |
interest% | Loan-to value |
Financial covenants |
Short term |
Long term |
Total 30 June |
||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| covenant | 2023 | |||||||||||||
| DTL | ||||||||||||||
| Crédit Agricole CIB & ING Bank N.V. London Branch/ November 2020 US\$ 29.0m Term Loan Facility |
High Wind | 20 consecutive quarterly instalments + US\$ 10.91m balloon at maturity |
CME Term SOFR + 0.26161% CAS + 2.50% |
< 76.9% | Liquid assets > US\$ 25m Net worth > US\$ 100m Net worth ratio > 25% |
1,263 | 12,807 | 14,070 | ||||||
| Skandinaviska Enskilda Banken AB December 2021 US\$ 20m Term Loan Facility |
Cielo Bianco | 20 consecutive quarterly instalments + US\$ 12.4m balloon at maturity |
Compounded SOFR + 0.26161% CAS + 2.40 % or + 2.30% according to vessel employment |
< 76.9% | Liquid assets > US\$ 25m Net Worth > US\$ 100m Net worth ratio > 25% |
1,520 | 16,200 | 17,720 | ||||||
| Banco BPM SpA/ December 2021 US\$15.5m Term Loan Facility |
Cielo di Salerno | 20 consecutive quarterly instalments + US\$ 8.97m balloon at maturity |
Compounded SOFR + 0.26161% CAS + 2.4 % |
< 76.9% | Liquid assets > US\$ 25m Net worth > US\$ 100m Net worth ratio > 25% |
1,305 | 12,563 | 13,868 | ||||||
| ABN Amro N.V./ | Cielo di Gaeta | 20 consecutive quarterly instalments + US\$ 6.2m balloon at maturity |
Compounded SOFR + 0.26161% CAS + |
< 76.9% | Liquid assets > US\$ 25m Net worth > US\$ 100m Net worth ratio > 25% |
1,555 | 10,137 | 11,692 | ||||||
| December 2021 US\$43m Term Loan Facility (amended and restated from time to |
Cielo di Hanoi | 20 consecutive quarterly instalments + US\$ 8.5m balloon at maturity |
2.40 % or + 2.35% according to vessel employment + Sustainability |
< 76.9% | Liquid assets > US\$ 25m Net worth > US\$ 100m Net worth ratio > 25% |
1,292 | 11,719 | 13,011 | ||||||
| time – Sustainability Linked Loan) |
Cielo di Ulsan | 20 consecutive quarterly instalments + US\$ 7.5m balloon at maturity |
differential (+/- 5bps) |
< 76.9% | Liquid assets > US\$ 25m Net worth > US\$ 100m Net worth ratio > 25% |
1,302 | 10,771 | 12,073 | ||||||
| Tokyo Century Corp. November 2015 US\$ 21.78m Term Loan Facility |
High Challenge | 24+18 consecutive quarterly instalments + US\$ 6.6m balloon at maturity |
CME Term SOFR + 2.40% |
<87.0% | Liquid assets > US\$ 25m Net worth > US\$ 100m Net worth ratio > 25% |
1,452 | 11,253 | 12,705 | ||||||
| Danish Ship Finance A/S / July 2022 |
High Seas | 28 consecutive | Compounded | Liquid assets > US\$ 25m | 1,800 | 9,450 | 11,250 | |||||||
| US\$ 25.2m Term Loan Facility |
High Tide | quarterly instalments, no balloon at maturity |
SOFR + 2.30% | < 76.9% | Net worth > US\$ 100m Net worth ratio > 25% |
1,800 | 9,450 | 11,250 | ||||||
| Cielo di Cagliari | 20 consecutive quarterly instalments + US\$ 13.6m balloon at maturity |
1,696 | 19,076 | 20,772 | ||||||||||
| ING Bank N.V., London Branch & Skandinaviska Enskilda Banken AB/ July 2022 US\$82m Term Loan Facility |
Cielo Rosso | 20 consecutive quarterly instalments + US\$ 13.6m balloon at maturity |
Compounded SOFR + 2.20% |
< 76.9% | Liquid assets > US\$ 25m Net worth > US\$ 100m |
1,696 | 19,076 | 20,772 | ||||||
| Cielo di Rotterdam | 20 consecutive quarterly instalments + US\$ 13.6m balloon at maturity |
+ Sustainability differential (+/- 10bps) |
Net worth ratio > 25% | 1,696 | 19,076 | 20,772 | ||||||||
| Cielo di New York | 20 consecutive quarterly instalments + US\$ 7.05m balloon at maturity |
1,762 | 12,784 | 14,546 | ||||||||||
| Glenda Melanie | 20 consecutive quarterly instalments, no balloon at maturity 20 consecutive quarterly instalments + US\$ 0.471m balloon |
1,845 | 5,996 | 7,841 | ||||
|---|---|---|---|---|---|---|---|---|
| Crédit Agricole CIB & ING Bank N.V. London Branch/ September |
Glenda Melody | at maturity 20 consecutive quarterly instalments + US\$ 0.9m balloon at |
Compounded | < 76.9% | Liquid assets > US\$ 25m Net worth > US\$ 100m |
1,886 | 6,600 | 8,486 |
| 2022 US\$ 54.213m | Glenda Meryl | maturity | SOFR + 2.30% | Net worth ratio > 25% | 1,800 | 6,750 | 8,550 | |
| Term Loan Facility | Glenda Melissa | 20 consecutive quarterly instalments + US\$ 0.9m balloon at maturity |
1,800 | 6,750 | 8,550 | |||
| Cielo di Capri | 20 consecutive quarterly instalments + US\$ 8.34m balloon at maturity |
1,390 | 13,203 | 14,593 | ||||
| Skandinaviska Enskilda Banken AB/December 2022 US\$ 20m Term Loan Facility |
High Adventurer | 20 consecutive quarterly instalments + US\$ 11.7m balloon at maturity |
Compounded SOFR + 2.30%+ Sustainability differential (+/- 10bps) |
< 76.9% | Liquid assets > US\$ 25m Net worth > US\$ 100m Net worth ratio > 25% |
1,660 | 17,510 | 19,170 |
| The Iyo Bank/ May 2023 US\$ 17.5m Term Loan Facility |
High Explorer | 32 consecutive quarterly instalments + US\$ 6.7m balloon at maturity |
CME Term SOFR + 2.00% |
<90% | n.a. | 1,350 | 16,150 | 17,500 |
| Crédit Agricole Italia S.p.A./ December 2022 US\$ 3.5m ESG Facility |
n.a. | 10 consecutive quarterly instalments starting from September 2024, no |
CME Term SOFR + 2.00% + KPI ESG differential (+ 5bps /- 7bps) |
n.a. | n.a. | |||
| Financial fees | balloon at maturity | - (804) |
250 (2,157) |
250 (2,961) |
||||
| Total as at 30 June 2023 | 31,066 | 245,414 | 276,480 |
| Lender / Details | Asset | Repayment terms |
interest% | Loan-to value |
Financial covenants |
Short term |
Long term |
Total 31 Dec. |
|---|---|---|---|---|---|---|---|---|
| covenant | 2022 | |||||||
| DTL | ||||||||
| Crédit Agricole CIB + 8 syndicated Banks / March 2016 US\$ 250m Term Loan Facility (supplemented and amended) |
Cielo di Londra | 17 consecutive quarterly instalments + balloon at maturity |
US\$ LIBOR + 2.00 % or + 2.15% according to vessel employment |
< 76.9% | Liquid assets > US\$ 25m Net worth > US\$ 100m Net worth ratio > 25% |
1,720 | 22,120 | 23,840 |
| Crédit Agricole CIB & ING Bank N.V. London Branch/ November 2020 US\$ 29.0m Term Loan Facility |
High Wind | 20 consecutive quarterly instalments + US\$ 10.91m balloon at maturity |
US\$ LIBOR + 2.00%-2.15% for first year and 2.50% for the remaining period |
< 76.9% | Liquid assets > US\$ 25m Net worth > US\$ 100m Net worth ratio > 25% |
1,263 | 13,438 | 14,701 |
| Skandinaviska Enskilda Banken AB December 2021 US\$ 20m Term Loan Facility |
Cielo Bianco | 20 consecutive quarterly instalments + US\$ 12.4m balloon at maturity |
US\$ LIBOR + 2.40 % or + 2.30% according to vessel employment |
< 76.9% | Liquid assets > US\$ 25m Net Worth > US\$ 100m Net worth ratio > 25% |
1,520 | 16,960 | 18,480 |
| ABN Amro N.V./ | Cielo di Gaeta | 20 consecutive quarterly instalments + US\$ 6.2m balloon at maturity |
US\$ LIBOR + 2.40 %1 |
< 76.9% | Liquid assets > US\$ 25m Net worth > US\$ 100m Net worth ratio > 25% |
1,554 | 10,916 | 12,470 |
| December 2021 US\$43m Term Loan Facility (amended and restated from time to |
Cielo di Hanoi | 20 consecutive quarterly instalments + US\$ 8.5m balloon at maturity |
US\$ LIBOR + 2.40 %1 |
< 76.9% | Liquid assets > US\$ 25m Net worth > US\$ 100m Net worth ratio > 25% |
1,293 | 12,365 | 13,658 |
| time – Sustainability Linked Loan) |
Cielo di Ulsan | 20 consecutive quarterly instalments + US\$ 7.5m balloon at maturity |
US\$ LIBOR + 2.40 %1 |
< 76.9% | Liquid assets > US\$ 25m Net worth > US\$ 100m Net worth ratio > 25% |
1,302 | 11,421 | 12,723 |
| Banco BPM SpA/ December 2021 US\$15.5m Term Loan Facility |
Cielo di Salerno | 20 consecutive quarterly instalments + US\$ 8.97m balloon at maturity |
US\$ LIBOR + 2.40% |
< 76.9% | Liquid assets > US\$ 25m Net worth > US\$ 100m Net worth ratio > 25% |
1,305 | 13,216 | 14,521 |
| Tokyo Century Corp. November 2015 US\$ 21.78m Term Loan Facility |
High Challenge | 24+18 consecutive quarterly instalments + US\$ 6.6m balloon at maturity |
Term SOFR + 2.40% |
<87.0% | Liquid assets > US\$ 25m Net worth > US\$ 100m Net worth ratio > 25% |
1,452 | 11,979 | 13,431 |
| Danish Ship Finance A/S / July 2022 |
High Seas | 28 consecutive quarterly | Compounded | Liquid assets > US\$ 25m | 1,800 | 10,350 | 12,150 | ||
|---|---|---|---|---|---|---|---|---|---|
| US\$ 25.2m Term Loan Facility |
High Tide | instalments, no balloon at maturity |
SOFR + 2.30% | < 76.9% | Net worth > US\$ 100m Net worth ratio > 25% |
1,800 | 10,350 | 12,150 | |
| Cielo di Cagliari | 20 consecutive quarterly instalments + US\$ 13.2m balloon at maturity |
1,696 | 19,923 | 21,619 | |||||
| 20 consecutive quarterly instalments + ING Bank N.V., London Cielo Rosso US\$ 13.2m balloon at Branch & Skandinaviska maturity Compounded |
Liquid assets > US\$ 25m | 1,696 | 19,923 | 21,619 | |||||
| Enskilda Banken AB/ July 2022 US\$82m Term Loan Facility |
Cielo di Rotterdam |
20 consecutive quarterly instalments + US\$ 13.2m balloon at maturity |
SOFR + 2.20% | < 76.9% | Net worth > US\$ 100m Net worth ratio > 25% |
1,696 | 19,923 | 21,619 | |
| Cielo di New York |
20 consecutive quarterly instalments + US\$ 13.2m balloon at maturity |
1,762 | 13,668 | 15,430 | |||||
| Glenda Melanie | 20 consecutive quarterly instalments, no balloon at maturity |
1,845 | 6,919 | 8,764 | |||||
| Glenda Melody | 20 consecutive quarterly instalments + US\$ 0.471m balloon at maturity |
1,886 | 7,543 | 9,429 | |||||
| Crédit Agricole CIB & ING Bank N.V. London Branch/ September 2022 US\$ 54.213m |
Glenda Meryl | 20 consecutive quarterly instalments + US\$ 0.9m balloon at maturity |
Compounded SOFR + 2.30% |
< 76.9% | Liquid assets > US\$ 25m Net worth > US\$ 100m Net worth ratio > 25% |
1,800 | 7,650 | 9,450 | |
| Term Loan Facility | Glenda Melissa | 20 consecutive quarterly instalments + US\$ 0.9m balloon at maturity |
1,800 | 7,650 | 9,450 | ||||
| Cielo di Capri | 20 consecutive quarterly instalments + US\$ 8.34m balloon at maturity |
1,390 | 13,898 | 15,288 | |||||
| Skandinaviska Enskilda Banken AB/December 2022 US\$ 20m Term Loan Facility |
High Adventurer | 20 consecutive quarterly instalments + US\$ 11.7m balloon at maturity |
Compounded SOFR + 2.30%+ Sustainability differential (+/- 10bps) |
< 76.9% | Liquid assets > US\$ 25m Net worth > US\$ 100m Net worth ratio > 25% |
1,660 | 18,340 | 20,000 | |
| Banca Intesa / Hot Money |
n.a. | n.a. | n.a. | n.a. | n.a. | 10,000 | - | 10,000 | |
| Bank of Ireland/ Overdraft for working capital |
n.a. | n.a. | n.a. | n.a. | n.a. | 5,287 | - | 5,287 | |
| MPS / Overdraft | n.a. | n.a. | n.a. | n.a. | n.a. | 2,415 | - | 2,415 | |
| Banco Popolare/ Overdraft |
n.a. | n.a. | n.a. | n.a. | n.a. | 1,956 | - | 1,956 | |
| Financial fees | (812) | (2,428) | (3,240) | ||||||
| Total as at 31 December 2022 | 51,086 | 266,124 | 317,210 |
All bank loans are guaranteed by d'Amico International Shipping S.A. and comply with their respective covenants.
Lease liabilities are repaid over the lease term. They have the following residual lease terms as the period end dates:
| US\$ Thousand | As at 30 June 2023 |
As at 31 December 2022 |
|---|---|---|
| Total future minimum lease payments (gross investment) | 161,429 | 263,561 |
| due within one year | 69,824 | 81,932 |
| due in one to five years | 63,422 | 106,637 |
| due over five years | 28,183 | 74,992 |
| Principal component of minimum lease payments | 142,816 | 221,965 |
|---|---|---|
| due within one year | 64,847 | 71,740 |
| due in one to five years | 53,691 | 81,827 |
| due over five years | 24,278 | 68,398 |
| Finance charge included in the minimum lease payments | 18,613 | 41,596 |
| of which pertaining to the period | 5,464 | 17,157 |
The carrying amount of the assets held as Right-of-Use, as well as the main lease terms, are disclosed in note 11; the average annual rate of return on these leases reflect market rates at the time those transactions were closed.
| US\$ thousand | As at 30 June 2023 |
As at 31 December 2022 |
|---|---|---|
| Trade payables | 17,124 | 25,339 |
| Other creditors | 1,103 | 2,695 |
| Accruals & deferred income | 12,051 | 2,700 |
| Total | 30,278 | 30,734 |
Payables and other current liabilities as at 30 June 2023, mainly include trade payables. The Group has financial risk management policies in place to ensure all payables are settled within agreed terms (refer to note 22).
| 20. | CURRENT TAX PAYABLE | ||
|---|---|---|---|
| US\$ thousand | As at 30 June 2023 |
As at 31 December 2022 |
|
| Current tax liabilities | 610 | 101 |
The balance as at 30 June 2023 reflects the amount of corporate tax, including tonnage tax, payable by the Company and its subsidiaries.
| US\$ Thousand | As at 31 December 2022 |
NET CASH-FLOWS |
NON-CASH CHANGES | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Amortised financial fees |
Lease cost |
Change in contractual terms write-off*, and foreign exchange |
Derivatives P&L realised movements |
Derivatives P&L unrealised movements |
Cash flow hedge OCI |
||||
| Lease liabilities (1) | 221,965 | (83,644) | - | 5,464 | (969) | - | - | - | 142,816 |
| Banks and other lenders (2) Derivatives held to hedge long-term |
317,210 | (41,008) | 278 | - | - | - | - | - | 276,480 |
| borrowings (3) | (7,801) | - | - | - | - | - | (9) | 824 | (6,968) |
(1) Please refer to note n.18
(2) Please refer to note n.17
(3) The total fair value of derivative hedging instruments as at 31 December 2022 was an asset of US\$ 9,736 thousand which included the fair value of interest rate swaps amounting to US\$7,801 thousand (asset) and the fair value of foreign exchange forward instruments amounting to US\$1,935 thousand (asset); the total fair value of derivative hedging instruments as at 30 June 2023 was an asset of US\$7,131 thousand and included the fair value of interest rate swaps amounting to US\$6,968 thousand (asset) and the fair value of foreign exchange forward instruments amounting to US\$163 thousand (asset). For more details please refer to note n.12.
Shipping freight rates and vessel values can vary significantly during the business cycle. Furthermore, DIS Group is a multinational that has operations throughout the world and is therefore exposed to the market risk of changes in foreign currency exchange rates. Since deposits and credit facilities necessary to fund investments in newbuildings or the purchase of vessels earn or pay interest at variable rates, the Group is also exposed to interest rate risk. DIS is also exposed to fluctuations in the price of bunkers.
The Group constantly monitors the above financial risks and seeks to reduce its exposure to them also through derivative hedging instruments.
These half-year, condensed financial statements do not include all financial risk management information and disclosures required in the annual financial statements and for a detailed description of this information they should be read in conjunction with the Group's annual financial statements as at 31 December 2022, note 24; DIS' financial risk situation as described in its last annual report, has not changed significantly in the six months to 30 June 2023. There have been no changes in the risk management policies since the year end.
The fair value of financial assets and financial liabilities are determined as follows:
The following table shows the carrying amounts and the fair values of financial assets and liabilities as at 30 June 2023, together with their levels within the fair value hierarchy.
| 30 June 2023 | |||||||
|---|---|---|---|---|---|---|---|
| Amortised | FVTPL | Derivatives | Total | Fair Value | Total | ||
| US\$ Thousand | cost used for hedging (FV) |
Level 1 | Level 2 | ||||
| Assets | |||||||
| Other financial assets | 3,987 | - | 7,177 | 11,164 | - | 7,177 | 7,177 |
| Receivables and other current assets | 57,115 | - | - | 57,115 | - | - | - |
| Cash and cash equivalents | 113,301 | - | - | 113,301 | - | - | - |
| Liabilities | |||||||
| Banks and other lenders | 276,480 | - | - | 276,480 | - | - | - |
| Liabilities from leases | 142,816 | - | - | 142,816 | - | - | - |
| Other financial liabilities | 5,503 | 19 | 47 | 5,596 | - | 47 | 47 |
| Payables and other current liabilities | 30,278 | - | - | 30,278 | - | - | - |
The following table presents the Group's assets and liabilities that are measured at fair value as at 31 December 2022, together with their levels within the fair value hierarchy.
| 31 December 2022 | |||||||
|---|---|---|---|---|---|---|---|
| Amortised | FVTPL | Derivatives | Total | Fair Value | Total | ||
| US\$ Thousand | cost used for hedging (FV) |
Level 1 Level 2 |
|||||
| Assets | |||||||
| Other financial assets | 8,108 | - | 9,782 | 17,890 | - | 9,782 | 9,782 |
| Receivables and other current assets | 91,498 | - | - | 91,498 | - | - | - |
| Cash and cash equivalents | 117,896 | - | - | 117,896 | - | - | |
| Liabilities | |||||||
| Banks and other lenders | 317,210 | - | - | 317,210 | - | - | - |
| Liabilities from leases | 221,965 | - | - | 221,965 | - | - | - |
| Other financial liabilities | 6,416 | 28 | 45 | 6,489 | - | 73 | 73 |
| Payables and other current liabilities | 30,734 | - | - | 30,734 | - | - | - |
The Level 2 financial instruments in the above tables refer to derivative instruments and their fair value is obtained through valuations provided by the corresponding bank at the end of the period. Counterparties are financial institutions which are rated from Aaa to Baa1; taking this into consideration, no adjustments for non-performance risk are deemed necessary.
The carrying value of assets and liabilities, such as short-term trade receivables and payables, which are not measured at fair value, approximates their fair value.
Pursuant to IAS 24, the Company's related parties are entities and individuals capable of exercising control, joint control or significant influence over DIS and its subsidiaries, companies belonging to the d'Amico Group, and joint ventures of d'Amico International Shipping. Furthermore, members of DIS' Board of Directors, and executives with strategic responsibilities and their families are also considered related parties. The business relationships with the related parties are generally conducted under the same conditions as for non-related parties.
DIS carries out transactions with related parties, including its immediate parent company d'Amico International S.A., a company incorporated in Luxembourg, its ultimate Italian parent company, d'Amico Società di Navigazione S.p.A (DSN) and certain of DSN's subsidiaries (d'Amico Group).
During the first six months of 2023 the most significant related party transactions included management service agreements (for technical, crewing, IT, Administrative and legalservices) with Società di Navigazione S.p.A., a brand fee with d'Amico Società di Navigazione S.p.A., a commercial and operational management service agreement with d'Amico Shipping Singapore and d'Amico Shipping USA and a service agreement for the purchase of Intermediate Fuel Oil and Marine Diesel Oil, with Rudder SAM, a d'Amico Group controlled company.
The effects of related party transactions on the Group's consolidated income statement for the first half of 2023 and first half of 2022, are the following:
| H1 2023 | H1 2022 | |||
|---|---|---|---|---|
| US\$ thousand | Total | Of which related parties |
Total | Of which related parties |
| Revenue | 270,832 | 4,572 | 175,280 | 5,333 |
| Voyage costs | (67,338) | (226) | (59,673) | (202) |
| Bareboat charter revenues | 2,412 | - | 2,386 | - |
| Time-charter hire costs | (27) | - | (1,721) | - |
| Other direct operating costs | (47,988) | (4,370) | (42,141) | (33) |
| General and administrative costs | (11,316) | (4,759) | (6,840) | (6,179) |
| Result on disposal of fixed assets | (3,826) | - | (1,048) | - |
| Depreciation and impairment | (30,489) | (241) | (32,528) | (248) |
| Net financial income (charges) | (11,830) | (30) | (14,389) | (45) |
The figure reported for related party voyage costs reflects the margin earned by Rudder SAM on back-to-back transactions with third-party suppliers.
The effects of related party transactions on the Group's consolidated balance sheets as at 30 June 2023 and 31 December 2022, not elsewhere disclosed in the present report, are the following:
| As at 30 June 2023 | As at 31 December 2022 | ||||
|---|---|---|---|---|---|
| US\$ Thousand | Total | Of which related parties |
Total | Of which related |
|
| ASSETS | |||||
| Non-current assets | |||||
| Property, plant and equipment and Right-of-use assets | 813,414 | 624 | 809,298 | 1,559 | |
| Other non-current financial assets | 4,883 | 9 | 9,103 | - | |
| Current assets | |||||
| Inventories | 14,663 | - | 18,303 | - | |
| Receivables and other current assets | 57,115 | 10,124 | 91,498 | 4,367 | |
| Other current financial assets | 6,281 | 36 | 8,787 | - | |
| Cash and cash equivalents | 113,301 | - | 117,896 | - | |
| LIABILITIES | |||||
| Non-current liabilities | |||||
| Banks and other lenders | 245,414 | - | 266,124 | - | |
| Non-current lease liabilities | 77,969 | 549 | 150,225 | 982 | |
| Other non-current financial liabilities | 2,869 | - | 3,332 | - | |
| Current liabilities | |||||
| Banks and other lenders | 31,066 | - | 51,086 | - | |
| Liabilities from leases | 64,847 | 146 | 71,740 | 488 | |
| Payables and other current liabilities | 30,278 | 8,148 | 30,734 | 7,422 | |
| Other current financial liabilities | 2,727 | - | 3,129 | - | |
| Current taxes payable | 610 | - | 101 | - |
The Group is currently involved in a number of on-going commercial disputes concerning both our owned and chartered-in vessels. The majority are cargo contamination claims. The disputes are mostly covered by insurance policies with the Group's P&I Club and therefore are not expected to generate any significant financial exposure.
All of the Group's Irish operating companies are qualified to be taxed under the Tonnage Tax regime in Ireland. The regime includes a provision whereby a proportion of capital allowances previously claimed by the Group may be subject to tax in the event that vessels are sold, or the Group fails to comply with the ongoing requirements to remain within the regime.
The table below shows the complete list of the Group's companies, and for each of these companies, d'Amico International Shipping's percentage ownership, its method of consolidation, registered office, share capital and currency.
| Name | Registered Office | Share Capital | Currency | Interest % | Consolidation Method |
|---|---|---|---|---|---|
| d'Amico International Shipping S.A. | Luxembourg | 62,052,778 | US\$ | n.a. | Integral |
| d'Amico Tankers d.a.c. | Dublin / Ireland | 100,001 | € | 100.0% | Integral |
| High Pool Tankers Limited | Dublin / Ireland | 2 | € | 100.0% | Proportional |
| d'Amico Tankers Monaco SAM | Monaco | 150,000 | € | 99.8% | Integral |
| d'Amico Tankers UK Ltd | London / UK | 50,000 | US\$ | 100.0% | Integral |
Glenda international Shipping ceased trading on 22 September 2022, the date in which it sold its last vessel to d'Amico Tankers.
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