Annual Report • Jan 30, 2019
Annual Report
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| Key ratios | Q4 (Oct-Dec) | Full year | |||
|---|---|---|---|---|---|
| 2018 | 2017 | 2018 | 2017 | ||
| Total income, SEK million | 367.8 | 193.8 | 1,052.9 | 827.5 | |
| EBITDA, SEK million | 77.1 | 10.1 | 56.8 | 51.3 | |
| EBITDA, USD million | 8.9 | 1.2 | 6.5 | 6.0 | |
| Operating result, SEK million | 28.2 | –32.9 | –130.1 | –624.6 | |
| Result after financial net, SEK million | –19.4 | –42.0 | –181.9 | –186.5 | |
| Result before tax, SEK million | –19.4 | –42.0 | –181.9 | –660.2 | |
| Result after tax, SEK million | –19.5 | –42.0 | –182.1 | –660.2 | |
| Equity ratio, % | 38 | 41 | 38 | 41 | |
| Return on equity, % | –15.6 | –41.7 | –15.6 | –41.7 | |
| Available liquid funds, including unutilised credit facilities, SEK million | 160.1 | 335.5 | 160.1 | 335.5 | |
| Result per share after tax, SEK | –0.41 | –0.88 | –3.81 | –13.83 | |
| Equity per share, SEK | 22.24 | 25.60 | 22.24 | 25.60 | |
| Lost-time injuries | 0 | 0 | 0 | 0 |
Accounting policies, see page 18. Definitions: see page 16.
After three record-weak quarters, the market took an upward turn towards the end of the year. The development was largely due to increased transport demand as a result of OPEC, the United States and Russia gradually increasing oil production. In addition, increased phasing-out of older vessels also contributed to a generally better balance between supply and demand.
Just as expected, 2018 was a weak year – both for the market and for Concordia Maritime. For the full year 2018, result before tax excluding impairment was SEK –181.9 (–186.5) million and EBITDA amounted to SEK 56.8 (51.3) million, corresponding to USD 6.5 (6.0) million. Result before tax for the fourth quarter amounted to SEK –19.4 (–42.0) million. EBITDA was SEK 77.1 (10.1) million, corresponding to USD 8.9 (1.2) million. Delay effects due to previously signed charter contracts meant that, for our part, the market development in Q4 was not noticed until the end of the quarter.
Looking at the tanker market as a whole, 2018 began in a minor key and ended in a major. The first three quarters of the year were greatly affected by OPEC's reduced production and the stock withdrawals in consuming countries that have been taking place since summer 2016. Overall, this resulted in reduced transport demand, which, in combination with extensive ship deliveries, led to low freight rates.
Since October, there has been a sharp rise in virtually all segments, with freight rates at levels we have not seen in several years. The upturn was mainly due to OPEC, the United States and Russia having gradually increased oil production since July.
Overall, we now have the market situation that we have long predicted. It should be pointed out that the market is still volatile, with relatively strong upward and downward fluctuations, but at a higher level than before.
For our own part, the focus during the last year has been on having good cost control and continuing to adapt and position the fleet according to the current market conditions. We have continued to seek niche trades for our P-MAX vessels, where their unique properties are particularly beneficial. This strategy contributed to the product tanker fleet's earnings for the year being significantly higher than the market average in the MR segment. In the Suezmax segment, we chose to participate in the chartering-in of four vessels at the beginning of the year. We sold the shares in the charters to Stena Bulk at the end of the year, thereby realising the increase in value that arose from an increasingly stronger market.
Operationally, we continued to have an efficient and well-functioning operation. It is particularly pleasing to note that 2018 was another year in which there were no serious incidents or accidents on any of our vessels. This is now the fifth consecutive year that we have not had any accidents with lost workdays as a result.
2019 has started considerably stronger than the previous year. Now, at the end of January, the rates have gone down, albeit from high levels. The decline in rates is due to the decision of OPEC and its allies to cut output by a total of about 1.2 million barrels of oil per day. The reduction is partly offset by increased US exports, but with refinery maintenance and newbuilding deliveries, it means that we expect lower levels in the first half of 2019 than during the December peak, but generally higher levels than in 2018. In the second half of the year, we expect the market to strengthen as a result of a renewed increase in production and moderate ship deliveries. Through our exposure to the spot market, we are well positioned to take advantage of the positive trend in the market. The year that has ended was challenging. We now look forward to tackling an exciting 2019.
Kim Ullman, CEO
Spot market earnings for the product tanker fleet in the fourth quarter of 2018 were USD 13,700 (12,300) per day, which was higher than average earnings per day for the market1), USD 11,000 (10,300) million. Earnings for the suezmax fleet in the quarter were USD 25,800 (18,300) per day, compared with the average earnings for the market1) of USD 36,800 (17,400) per day.
The ten 65,200 dwt P-MAX tankers are the backbone of Concordia Maritime's fleet. At the end of the reporting period, three of the vessels were employed on time charter contracts. The other seven vessels were employed in the spot market under agreements with Stena Bulk. The two long-term chartered IMOIIMAX vessels Stena Image and Stena Important also continued to be employed under the cooperation with Stena Bulk.
Average earnings for the entire product tanker fleet, spot and TC, during the fourth quarter were USD 13,900 (13,200) per day. For vessels employed on the spot market, average earnings for the quarter were USD 13,700 (12,300). For the full year, average earnings for the entire product tanker fleet, spot and TC, were USD 12,900 (13,700) per day. For vessels employed on the spot market, average earnings for the year were USD 12,100 (12,700).
During the period, the suezmax fleet consisted of the suezmax tanker Stena Supreme (158,000 dwt), which is chartered in on a long-term bareboat contract, and another four vessels chartered in on shortterm contracts. All the vessels were employed on the spot market via
Stena Sonangol Suezmax Pool, controlled by Stena and the Angolan state oil company Sonangol. The pool is a long-time market leader in terms of suezmax tanker earnings. The short-time charters were conducted jointly with Stena Bulk, and Concordia Maritime's share amounted to 50 percent.
During the quarter, Concordia Maritime signed an agreement with Stena Bulk to sell the positions in the chartered-in Suezmax vessels.
Average earnings for the suezmax fleet were USD 25,800 (18,300) per day for the quarter and USD 18,500 (18,200) per day for the full year.
There were no repairs or scheduled drydocking during the quarter.
| Average earnings (\$/day) |
Share of chartered days (%) |
|
|---|---|---|
| Product tankers,spot | 18,500 | 44 |
| Suezmax, spot | 30,400 | 45 |
The contracted average earnings are based on initial projections, which may change considerably during the course of an individual voyage. This means that the final accounting result may differ materially from the average earnings stated above.
| Average earnings, Concordia Maritime |
Average earnings, market2,3) |
||||||||
|---|---|---|---|---|---|---|---|---|---|
| USD per day | No. of ships | Q4 2018 |
Q4 2017 |
Full year 2018 |
Full year 2017 |
Q4 2018 |
Q4 2017 |
Full year 2018 |
Full year 2017 |
| Product tankers | 12.0 | 13,700 | 12,300 | 12,100 | 12,700 | 11,000 | 10,300 | 8,800 | 10,300 |
| Suezmax | 3 | 25,800 | 18,300 | 18,500 | 18,200 | 36,800 | 17,400 | 16,300 | 15,800 |
1) From 1 January 2018, spot earnings are presented net of commercial management commission. This generates earnings that are USD 300–600 higher than when commercial management commission is included. Comparative figures have been recalculated according to the new presentation principle.
2) Clarksons w.w. average MR Clean Earnings
3) Clarksons w.w. Suezmax Long Run Historical Earnings
Concordia Maritime's spot market product and chemical tanker fleet achieved higher earnings per day than the Clarksons theoretical index in the fourth quarter of 2018. Niche trades for the P-MAX vessels and a good performance from the Stena Bulk pool, given the weak market, are among the main drivers.
Delay effects due to previously signed charter contracts mean that the market earnings during Q4 cannot match the theoretical market index for the Suezmax segment.
| USD millions | Q4 2018 |
Q3 2018 |
Q2 2018 |
Q1 2018 |
Q4 2017 |
Q3 2017 |
Q2 2017 |
Q1 2017 |
|---|---|---|---|---|---|---|---|---|
| Product tankers, time charter | 4.1 | 4.5 | 5.8 | 7.6 | 4.8 | 3.3 | 3.6 | 4.0 |
| Product tankers, spot, owned and leased tonnage | –0.5 | –4.1 | –4.5 | –4.4 | –1.8 | –0.5 | 0.0 | 0.7 |
| Product tankers, spot, short-term chartered tonnage | –0.6 | –1.1 | –0.4 | –0.1 | –0.2 | –0.3 | –0.2 | –0.2 |
| Sale of ships | — | — | — | — | — | — | — | — |
| Product tankers, total | 3.0 | –0.7 | 0.9 | 3.0 | 2.8 | 2.5 | 3.4 | 4.5 |
| Suezmax, spot, owned and leased tonnage | –0.1 | –1.1 | –1.2 | –1.3 | –0.7 | –1.3 | –1.4 | –0.4 |
| Suezmax, spot, short-term chartered tonnage | 6.71) | 0.2 | –0.0 | — | — | — | — | — |
| Sale of ships | — | — | — | — | — | — | — | — |
| Suezmax, total | 6.6 | –0.9 | –1.2 | –1.3 | –0.7 | –1.3 | –1.4 | –0.4 |
| Admin. and other | –0.7 | –0.5 | –0.8 | –0.8 | –0.9 | –0.8 | –0.9 | –0.8 |
| Total | 8.9 | –2.1 | –1.1 | 0.9 | 1.2 | 0.4 | 1.1 | 3.3 |
1) The figure includes the sales amount for shares in the period charters of Suezmax vessels.
At the end of the quarter, the price of a standard product tanker was about USD 36.5 million. The price of an IMOII class MR tanker like our IMOIIMAX vessels was about USD 39.5 million. This is the same price as when we placed our order with the shipyard in 2012. The price of a standard suezmax tanker at the end of the quarter was about USD 60.5 million.
The charts show the value at the end of each period and refer to standard vessels.
In Q4,scrapping increased a little compared with previous quarters. At the same time, the previously weak market has contributed to a slight decline in the number of deliveries.
Source: Clarkson
Result after tax for the quarter was SEK –19.5 (–42.0) million. The significantly stronger tanker market at the end of the quarter meant higher earnings for the vessels on the spot market, which, in combination with the sale of shares in period charters of Suezmax vessels, generated a positive EBITDA during the quarter. During the quarter, an item of SEK 26.0 million was reported in financial net as a result of a negative revaluation of the Company's bunker spread positions (a consequence of the oil price's sharp decline towards the end of the quarter). Costs for operation and administration were at the same level as in the same period the previous year.
Result before tax for the full year was SEK –182.1 (–660.2) million. A weak tanker market meant weak EBITDA earnings. Costs for operation and administration were at the same level as in the previous year. Financial net for the year was improved by the sale of bunker positions in the third quarter. The value of the Company's bunker spread positions varied from quarter to quarter during the year, which affected financial net. However, the annual effect of this is marginal.
Equity per share was SEK 22.24 (25.60).
The Parent Company's functional currency is SEK, but the majority of the transactions in the Group are in USD. The Group's result is generated in USD, which means the result in SEK is a direct function of the SEK/USD exchange rate trend. In the second and third quarters of 2018, an equity hedge was carried out through the forward sale of USD 23 million with a maturity of 24 months. At the end of the fourth quarter, this hedging was valued at SEK 0.3 million and was recognised in the hedging reserve through OCI.
The closing amount in the hedging reserve at the end of the quarter was SEK –59.6 (11.7) million as a result of the changed market value of the bunker positions that are subject to hedge accounting. The closing balance for the translation differences, which are recognised in equity, amounted to SEK 481.9 (386.1) million at the reporting date. The changes are recognised in equity through OCI.
Investments in property, plant and equipment during the quarter amounted to SEK 1.8 (19.4) million. Investments for the full year 2018 amounted to SEK 2.9 (78.0) million. The investments during the year were mainly related to scheduled periodic drydocking.
The Company's net investments in financial assets during the quarter amounted to SEK –85.3 (19.4) million and were related to trading in bonds. These are classified as short-term deposits in the Company's balance sheet. Net investments in financial assets for the full year amounted to SEK –102.5 (–39.8) million and were mainly related to bond purchases. These are classified as short-term deposits in the Company's balance sheet.
The Company has entered into a bunker hedge, which at the end of the quarter covered a total of 70,000 mt at an average price of USD 634.50 per mt, effective November 2019–June 2021. Hedge accounting is applied for the position, and the fair value is recognised in other comprehensive income. A fair value change of SEK –68.2 million for this position was reported in OCI during the quarter.
The Company also has positions of a more speculative nature for the price differential between bunker grades HSFO and MGO for the full year 2020 and the first six months of 2021. The total volume is 54,000 mt, with an average spread of USD 282. Changes in the market value of the positions are recognised in the income statement, and are SEK –26.0 (0.0) million for the quarter. These are classified as current receivables in the Company's balance sheet.
The Company has FFA positions of a more speculative nature in the price developments for freight route TD20 for the first quarter of 2019. The total volume is 30,000 mt. Changes in the market value of the positions are recognised in the income statement, and amount to SEK 0.4 (0.0) million for the quarter. These are classified as a current requirement in the Company's balance sheet.
The Group's standard process is to conduct six-monthly assessments of the fleet to determine whether there is any indication of impairment. The fleet is defined as a cash-generating unit, and an impairment loss is recognised when the carrying amount of an asset or cash-generating unit exceeds its recoverable amount. The recoverable amount is the higher of fair value (external valuations) and value in use (future discounted cash flows). At the end of December 2018, the fleet's carrying amount did not exceed its recoverable amount, which meant that there was no impairment loss recognised.
Three vessels from the sailing fleet of 23 (10 owned, 3 on bareboat contracts and 10 on 50% time charters) were out on time charters at the end of the quarter. Earnings for the vessels that are not signed out to time charters are related to the freight level on the open market. This fleet deployment means that income is affected by the seasonal variations that occur in tanker shipping.
The number of employees in the Group at 31/12/2018 was 6 (6). The Group employed 488 (473) temporary seagoing employees through Stena Sphere's manning company.
The Parent Company's sales for the quarter amounted to SEK 124.4 (15,0) million, with intragroup invoicing representing SEK 0.7 (0.0) million of this amount. The Parent Company's sales for the full year 2018 totalled SEK 224.6 (44.8) million. Result before tax for 2018 was SEK –83.2 (6.7) million. The Parent Company's available liquid funds at the end of the quarter amounted to SEK 1,036.0 (1,222.2) million, which includes receivables from Group companies in the cash pool and unutilised credit facilities.
There are no significant events to report after the end of the reporting date.
| Quarter 4 | Full year | |||||
|---|---|---|---|---|---|---|
| SEK millions | 2018 | 2017 | 2018 | 2017 | ||
| Total income1) | 367.8 | 193.8 | 1,052.9 | 827.5 | ||
| Operating result | 28.2 | –32.9 | –130.1 | –624.6 | ||
| Result after financial items |
–19.4 | –42.0 | –181.9 | –660.2 | ||
| Result per share after tax, SEK |
–0.41 | –0.88 | –3.81 | –13.83 |
| SEK millions | 31 Dec 2018 |
31 Dec 2017 |
|---|---|---|
| Available liquid funds2) | 160.1 | 335.5 |
| Interest-bearing liabilities | 1,539.1 | 1,635.6 |
| Equity | 1,061.5 | 1,221.9 |
| Equity ratio, % | 38 | 41 |
As a result of the SEK/USD exchange rate, the Company's profit in SEK has changed, while profit in USD remains unchanged.
2) Including unutilised available credit facilities but not short-term investments in corporate bonds and equities. 3) Reported in OCI.
1) Accounting policies, see page 18.
Sustainability work at Concordia Maritime is conducted on a long-term basis and with relevance, openness and transparency as its main guiding principles. The work is based on a materiality analysis in which the main and most relevant sustainability issues are identified.
No Concordia Maritime vessel was involved in any incident that resulted in discharges of bunker oil or cargo during the quarter. This was another quarter in which there were no workplace accidents on vessels resulting in an individual employee being unable to return to a work shift on the day after the accident. There was one medical treatment case during the quarter (Stena Primorsk: a crew member suffered a cut finger) and no restricted work cases.
There was one incident that included material damage during the quarter (Stena Primorsk: mooring ropes broke).
Concordia Maritime's vessels were not involved in any piracy-related incidents.
Nine vetting inspections were conducted during the quarter. There were 29 observations during these inspections, resulting in an average of 3.2 observations per inspection. One inspection during the quarter had more than 5 observations – Stena Primorsk generated 7 observations during an inspection in October. There were 35 vetting inspections during the full year, with 90 observations, resulting in an average of 2.6 observations per inspection.
No port state control resulted in the detention in port of any Concordia Maritime vessel during the quarter. No port state control resulted in the detention in port of any of the Company's vessels during the year.
Efforts to reduce bunker consumption continued during the quarter. Bunker consumption in tonnes per day at sea for the quarter fell by 0.68 tonnes during the quarter, which means an annual outcome of a reduction in consumption of 0.23 tonnes, which is a little below this year's target. Reduced bunker consumption means lower emissions. See the table on page 8.
| Q4 2018 | Q4 2017 | Full year 2018 | Full year 2017 | Target 2018 | |
|---|---|---|---|---|---|
| LTI | 0 | 0 | 0 | 0 | 0 |
| LTIF | 0 | 0 | 0 | 0 | 0 |
| Number of inspections with more than 5 observations (owned vessels) | 1 | 0 | 2 | 0 | 0 |
| Average number of vetting observations per inspection (entire fleet) | 3.2 | 2.3 | 2.6 | 2.2 | <4 |
| Number of port state controls resulting in detention | 0 | 0 | 0 | 0 | 0 |
| Number of piracy-related incidents | 0 | 0 | 0 | 0 | 0 |
| Material damage | 1 | 0 | 11 | 3 | 0 |
| Medical treatment case | 1 | 0 | 1 | 2 | 0 |
| Restricted work case | 0 | 0 | 0 | 0 | 0 |
| High potential near miss | 0 | 1 | 5 | 4 | 0 |
| High risk observation | 0 | 1 | 0 | 1 | 0 |
| Q4 2018 | Q4 2017 | Full year 2018 | Full year 2017 | Target 2018 | |
|---|---|---|---|---|---|
| Oil spills, litres | 0 | 0 | 0 | 0 | 0 |
| Reduced fuel consumption, mt/day (owned vessels)1) | 0.68 | 0.97 | 0.23 | 0.97 | 0.3 |
| CO2 reduction, mt |
1,544 | 1,884 | 2,028 | 8,220 | 2,800 |
| SOx reduction, mt |
9.9 | 12 | 19.2 | 68 | 36 |
| NOx reduction, mt |
47 | 57 | 60 | 234 | 80 |
| Reduction in emissions of particulates, mt | 0.6 | 0.7 | 0.8 | 3.0 | 0.9 |
1) Bunker consumption for days at sea for the last 12 months is measured on the last day of the quarter. This 12-month figure is then compared with the same period the previous year.
Definitions: see page 15.
Concordia Maritime follows both the UN Global Compact Initiative and the Universal Declaration of Human Rights. The corporate members undertake to comply with ten principles on human rights, environment, labour and anti-corruption, and to respect them throughout the value chain.
In 2016, Concordia Maritime became a member of the Maritime Anti-Corruption Network (MACN), an international initiative created by maritime industry players to share experiences and promote best practice in combating all forms of corruption and bribery.
Concordia Maritime complies with the OECD guidelines for multinational enterprises. The guidelines deal with how these enterprises are to relate to human rights, environment and labour.
Concordia Maritime complies with the International Labour Organization's (ILO) eight fundamental conventions, which represent a minimum global standard for labour. The conventions address fundamental human rights at work.
Concordia Maritime is a member of the World Ocean Council, a global organisation consisting of shipping-related businesses that want to join together in taking responsibility for the world's ocean.
It is Concordia Maritime's aim to contribute to positive social development in various ways. The projects or initiatives that are supported must be clearly linked to Concordia Maritime's values and be related to shipping. They must contribute to a safer everyday life for each seagoing individual, support the progression towards more environmentally and socially sustainable shipping, or contribute to positive development of the local markets in which the Company operates.
During the quarter, Concordia Maritime increased its involvement in keeping the world's ocean clean by working with Håll Sverige Rent (Keep Sweden Tidy), where the focus is on educating the public about the importance of keeping the ocean clean, and by starting a collaboration with the Swedish Institute for the Marine Environment on mapping micro plastic in the world's ocean.
Since Concordia Maritime's scholarship program was launched in 2011, it has served as a springboard for maritime students in Bermuda. Scholarships are awarded annually to one or more applicants. In addition to the financial award, there is also an opportunity for supervision and mentoring.
Concordia Maritime is one of the participants supporting Mercy Ships Cargo Day. Mercy Ships provides surgery, dental care and other qualified medical care in places where the need is greatest. The activities are conducted on board the world's largest private hospital ship, Africa Mercy. mercyshipscargoday.org
Concordia Maritime has a small internal organisation, and purchases services from related-party companies in Stena Sphere, which include Stena Bulk. The latter company conducts tanker business that coincides with Concordia Maritime in some respects. Accordingly, there is an agreement, entered into many years ago, which regulates the relationship between the two companies with respect to new business. Under the terms of this agreement, Concordia Maritime has the right to opt for 0, 50 or 100 percent participation in each new transaction (with the exception of shorter transactions of less than 12 months).
Stena Bulk specialises in transportation of refined petroleum products and vegetable oils. Under an agreement with Stena Bulk, Concordia Maritime is entitled to the financial result arising from vessels chartered in by Stena Bulk for a period of more than one year, should Concordia Maritime decide to participate in such charters. Other business generated by Stena Bulk is not available to Concordia Maritime.
Payment is based on commission on freight rates as follows: 1 percent for P-MAX, 1.25 percent for Suezmax and 2 percent for IMOIIMAX.
| Quarter 4 | Full year | |||
|---|---|---|---|---|
| SEK MILLIONS | 2018 | 2017 | 2018 | 2017 |
| Group | 70.4 | 61.5 | 256.9 | 257.3 |
| Parent | 0.3 | 0.2 | 1.2 | 1.2 |
All related party transactions are conducted on commercial terms and at market-related prices.
| SEK millions | Q4 2018 | Q4 2017 | Full year 2018 | Full year 2017 |
|---|---|---|---|---|
| Consolidated income statement | ||||
| Average exchange rate SEK/USD | 9.04 | 8.32 | 8.69 | 8.54 |
| Time charter income, leasing of vessels | 28.6 | 21.0 | 130.6 | 64.4 |
| Time charter income, operational services | 54.2 | 27.7 | 206.4 | 92.6 |
| Spot charter income1) | 234.5 | 145.1 | 665.4 | 670.5 |
| Other income | 50.5 | 0.0 | 50.5 | 0.0 |
| Total income | 367.8 | 193.8 | 1,052.9 | 827.5 |
| Voyage-related operating costs | –88.2 | –47.0 | –293.4 | –228.1 |
| Operating costs, ships1) | –135.6 | –71.9 | –447.9 | –290.9 |
| Personnel costs, temporary seagoing | –51.7 | –50.0 | –202.7 | –199.2 |
| Personnel costs, land-based | –6.6 | –6.6 | –20.4 | –21.2 |
| Other external expenses | –8.6 | –8.3 | –31.7 | –36.8 |
| Depreciation/impairment | –48.9 | –43.0 | –186.9 | –675.9 |
| Total operating costs1) | –339.6 | –226.7 | –1,183.0 | –1,452.2 |
| Operating result | 28.2 | –32.9 | –130.1 | –624.6 |
| Interest and similar income | –27.1 | 8.7 | 30.9 | 37.3 |
| Interest and similar expense | –20.4 | –17.8 | –82.7 | –72.9 |
| Financial net | –47.6 | –9.1 | –51.8 | –35.6 |
| Result before tax | –19.4 | –42.0 | –181.9 | –660.2 |
| Tax | –0.1 | 0.0 | –0.2 | 0.0 |
| Result after tax | –19.4 | –42.0 | –182.1 | –660.2 |
1) Accounting policies, see page 18.
| SEK millions | Q4 2018 | Q4 2017 | Full year 2018 | Full year 2017 |
|---|---|---|---|---|
| Items that have been/can be transferred to result for the period | ||||
| Translation differences | –4.5 | 6.0 | 95.8 | –173.3 |
| Exchange differences transferred to income statement | 0.0 | 0.0 | 0.0 | –2.8 |
| Cash flow hedges, interest-related | 0.0 | 0.0 | 0.0 | –5.9 |
| Changes in fair value of cash flow hedges for the period | –68.2 | 0.0 | –68.2 | 0.0 |
| Changes in fair value of cash flow hedges transferred to result for the period | –0.9 | –0.8 | –3.5 | –1.7 |
| Items that cannot be transferred to result for the year | ||||
| Changes in the fair value of equity instruments at fair value through OCI | –2.4 | 0.0 | –2.4 | 0.0 |
| Comprehensive income for the period | –95.4 | –36.9 | –160.4 | –843.9 |
| SEK millions | Q4 2018 | Q4 2017 | Full year 2018 | Full year 2017 |
|---|---|---|---|---|
| Per-share data, SEK | ||||
| Number of shares | 47,729,798 | 47,729,798 | 47,729,798 | 47,729,798 |
| Result per share, before/after dilution | –0.41 | –0.88 | –3.81 | –13.83 |
| Equity per share, SEK | 22.24 | 25.60 | 22.24 | 25.60 |
| SEK millions | 31 Dec 2018 | 31 Dec 2017 |
|---|---|---|
| Closing exchange rate SEK/USD | 8.85 | 8.18 |
| Assets | ||
| Ships and equipment | 2,303.0 | 2,305.7 |
| Financial assets | 14.6 | 0.1 |
| Total non-current assets | 2,317.6 | 2,305.8 |
| Current receivables | 253.5 | 196.2 |
| Short-term deposits | 97.4 | 222.8 |
| Cash and bank balances | 126.41) | 243.6 |
| Total current assets | 477.4 | 662.6 |
| Total assets | 2,795.0 | 2,968.5 |
| Equity and liabilities | ||
| Equity | 1,061.5 | 1,221.9 |
| Non-current liabilities | 1,301.5 | 1,412.6 |
| Current liabilities | 432.0 | 334.0 |
| Total equity and liabilities | 2,795.0 | 2,968.5 |
1) Including restricted funds of SEK 64.9 million.
| SEK millions | Share capital |
Other paid-in capital |
Translation reserve |
Hedging reserve |
Fair value reserve |
Retained earnings |
Total |
|---|---|---|---|---|---|---|---|
| Changes Jan-Dec 2018 | |||||||
| Opening balance 01.01.2018 | 381.8 | 61.9 | 386.1 | 11.7 | 0.0 | 380.4 | 1,221.9 |
| Comprehensive income for the period | 0.0 | 0.0 | 95.8 | –71.7 | –2.4 | –182.1 | –160.4 |
| Closing balance 31.12.2018 | 381.8 | 61.9 | 481.9 | –60.0 | –2.4 | 198.3 | 1,061.5 |
| Changes Jan-Dec 2017 | |||||||
| Opening balance 01.01.2017 | 381.8 | 61.9 | 562.3 | 19.3 | 0.0 | 1,064.4 | 2,089.8 |
| Comprehensive income for the period | 0.0 | 0.0 | –176.2 | –7.6 | 0.0 | –660.2 | –844.0 |
| Dividend | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | –23.9 | –23.9 |
| Closing balance 31.12.2017 | 381.8 | 61.9 | 386.1 | 11.7 | 0.0 | 380.4 | 1,221.9 |
| SEK millions | Quarter 4 2018 | Quarter 4 2017 | Full year 2018 | Full year 2017 |
|---|---|---|---|---|
| Operating activities | ||||
| Result before tax | –19.4 | –42.1 | –181.9 | –660.2 |
| Adjustments: | ||||
| Depreciation | 48.9 | 43.0 | 186.9 | 675.9 |
| Other items | –69.6 | –4.9 | –93.8 | –30.6 |
| Cash flow from operating activities before changes in working capital | –40.0 | –4.0 | –88.9 | –14.9 |
| Changes in working capital | 29.0 | 0.8 | –27.4 | 61.1 |
| Cash flow from operating activities | –11.0 | –3.2 | –116.3 | 46.2 |
| Investing activities | ||||
| Sale of non-current assets | 0.0 | –2.7 | 1.9 | 307.4 |
| Investment in non-current assets | –1.8 | –19.4 | –2.9 | –78.0 |
| Sale of financial assets | 94.9 | 45.4 | 208.8 | 321.1 |
| Investment in financial assets | –9.6 | –64.8 | –106.3 | –281.3 |
| Other financial items | –0.2 | 0.0 | 0.2 | –0.6 |
| Cash flow from investing activities | 83.4 | –41.6 | 101.3 | 268.5 |
| Financing activities | ||||
| New loans | 0.0 | 0.0 | 0.0 | 0.0 |
| Amortisation of loans | –4.4 | –68.9 | –99.6 | –408.8 |
| Dividend to shareholders | 0.0 | 0.0 | 0.0 | –23.9 |
| Other financing | –5.1 | 0.2 | –19.5 | –9.5 |
| Cash flow from financing activities | –9.5 | –68.7 | –119.1 | –442.2 |
| Cash flow for the period | 62.9 | –113.6 | –134.0 | –127.6 |
| Balance at beginning of period (Note 1) | 63.5 | 350.7 | 243.6 | 406.3 |
| Exchange differences (Note 2) | 0.0 | 6.5 | 16.8 | –35.1 |
| Balance at end of period (Note 1) | 126.4 | 243.6 | 126.4 | 243.6 |
| Note 1. Balance consists of cash, bank balances and credit facility | ||||
| Note 2. Exchange differences attributable to: | ||||
| Cash and cash equivalents at beginning of year | –1.1 | 1.5 | 19.4 | –40.5 |
| Cash flow for the period | 1.1 | 5.0 | –2.5 | 5.4 |
| 0.0 | 6.5 | 16.8 | –35.1 |
| SEK millions | Full year 2018 | Full year 2017 |
|---|---|---|
| Net sales | 224.6 | 44.8 |
| Operating costs, ships | –182.5 | –52.4 |
| Other external expenses | –10.9 | –12.3 |
| Personnel expenses | –14.8 | –15.6 |
| Operating result | 16.4 | –35.5 |
| Result from subsidiaries | 0.0 | 49.7 |
| Other interest and similar income | 33.3 | 57.1 |
| Interest and similar expense | –132.9 | –64.7 |
| Result before tax | –83.2 | 6.7 |
| Tax | 0.0 | 0.0 |
| Result after tax | –83.2 | 6.7 |
| SEK millions | 31 Dec 2018 | 31 Dec 2017 |
|---|---|---|
| Assets | ||
| Ships and equipment | 0.0 | 0.0 |
| Financial assets | 0.5 | 0.0 |
| Investments in Group companies | 745.8 | 745.8 |
| Total non-current assets | 746.3 | 745.8 |
| Current receivables | 8.4 | 3.1 |
| Receivables from Group companies | 1,022.6 | 1,192.1 |
| Cash and bank balances | 78.31) | 20.1 |
| Total current assets | 1,109.3 | 1,215.3 |
| Total assets | 1,855.6 | 1,961.1 |
| Equity and liabilities | ||
| Equity | 484.1 | 567.3 |
| Non-current liabilities | 1,066.2 | 1,178.8 |
| Current liabilities | 305.3 | 215.0 |
| Total equity and liabilities | 1,855.6 | 1,961.1 |
1) Including restricted funds of SEK 64.9 million.
As with all commercial enterprises, Concordia Maritime's activities are associated with certain risks, the occurrence of which may have a material adverse effect on the Company's business, earnings, financial position and future prospects or result in a fall in value for the Company's shares, meaning that investors could lose all or part of their invested capital. The risks below are not presented in order of importance and are not the only risks and uncertainties the Company faces. Additional risks and uncertainties of which the Company is currently unaware or does not consider significant may also develop into factors that may have a material adverse effect on the Company's business, earnings, financial position or future prospects. The description does not claim to be complete or exact, as risks and their extent vary over time.
The overall risk areas are corporate risks, market risks, operational risks and financial risks.
More information about risks and risk management can be found in Concordia Maritime's 2017 annual report, which is available at www.concordiamaritime.com.
CO2
Carbon dioxide.
Incident that could have resulted in a serious accident.
An accident that results in an individual being unable to carry out his or her duties or return to work on a scheduled shift on the day after the injury, unless this is due to delays getting medical treatment ashore. Also includes fatalities.
Safety performance measure which is the number of LTIs per million exposure hours in man-hours (LTIF = LTIs x 1,000,000/ exposure hours).
An event that results in damage to the vessel, and/or vessel equipment costing more than USD 2,000 to repair (excludes system/equipment failure).
Medical Treatment Case (MTC) Work-related injury requiring treatment by a doctor, dentist, surgeon or qualified health professional. MTC does not include LTI, RWC, hospitalisation for observation or a consultative examination by a doctor.
Nitric oxide.
An injury that results in an individual being unable to carry out normal duties during a scheduled work shift or being temporarily or permanently assigned other duties on the day after the injury.
Sulphur oxide.
Hiring of vessels on a voyage-by-voyage basis.
Hiring of vessels for a specified period at a fixed rate.
Result after financial net plus depreciation minus tax paid (cash flow before change in working capital and investments and before effect of ship sales). The Company believes that the key figure provides a deeper understanding of the Company's profitability.
Performance measure which indicates operating result before interest, taxes, impairment, depreciation and amortisation. The Company believes that the key figure provides a deeper understanding of the Company's profitability.
Equity as a percentage of total assets. The Company believes that the key figure makes it easier for investors to form a picture of the Company's capital structure.
Result excluding impairment and tax Performance measure which indicates result before tax and impairment The Company believes that the key figure provides a deeper understanding of the Company's profitability and better comparability over reporting periods.
Performance measure which indicates result per share before tax and impairment The Company believes that the key figure provides a deeper understanding of the Company's profitability and better comparability over reporting periods.
Result after financial net plus finance costs as an average of the last twelve months expressed as a percentage of average capital employed on a 12-month rolling basis. Capital employed refers to total assets minus non-interestbearing liabilities, including deferred tax liability. The Company believes that the key figure provides a deeper understanding of the Company's profitability.
Result after tax as an average of the last twelve months expressed as a percentage of average equity on a 12-month rolling basis. The Company believes that the key figure provides a deeper understanding of the Company's profitability.
Result after financial net plus finance costs as an average of the last twelve months expressed as a percentage of average total assets on a 12-month rolling basis. The Company believes that the key figure provides a deeper understanding of the Company's profitability.
| SEK millions | Quarter 4 2018 | Quarter 4 2017 | Full year 2018 | Full year 2017 |
|---|---|---|---|---|
| Operating result | 28.2 | –32.9 | –130.1 | –624.6 |
| Depreciation/impairment | 48.9 | 43.0 | 186.9 | 675.9 |
| EBITDA | 77.1 | 10.1 | 56.8 | 51.3 |
| Result excluding impairment and tax | ||||
| SEK millions | Quarter 4 2018 | Quarter 4 2017 | Full year 2018 | Full year 2017 |
| Result after tax | –19.4 | –42.0 | –182.1 | –660.2 |
| Impairment | 0.0 | 0.0 | 0.0 | 473.7 |
| Tax | 0.1 | 0.0 | 0.2 | 0.0 |
| Result excluding impairment and tax | –19.4 | –42.0 | –181.9 | –186.5 |
| Result per share excluding impairment and tax | ||||
| SEK millions | Quarter 4 2018 | Quarter 4 2017 | Full year 2018 | Full year 2017 |
| Result excluding impairment and tax | –19.4 | –42.0 | –181.9 | –186.5 |
| Number of shares (millions) | 47.729798 | 47.729798 | 47.729798 | 47.729798 |
| Result per share excluding impairment and tax | –0.41 | –0.88 | –3.81 | –3.91 |
| Return on equity | ||||
| SEK millions | Full year 2018 | Full year 2017 | ||
| Result after tax | –182.1 | –660.2 | ||
| Equity | 1,165.5 | 1,582.2 | ||
| Return on equity | –16% | –42% | ||
| Return on capital employed | ||||
| SEK millions | Full year 2018 | Full year 2017 | ||
| Result after financial net | –181.9 | –660.2 | ||
| Finance costs | 82.7 | 70.7 | ||
| Result after financial net plus finance costs | –99.2 | –589.4 | ||
| Total assets | 2,922.1 | 3,468.5 | ||
| Non-interest-bearing liabilities | –157.1 | –105.8 | ||
| Capital employed | 2,765.0 | 3,362.6 | ||
| Return on capital employed | –3.6% | –17.5% | ||
| Return on total capital | ||||
| SEK millions | Full year 2018 | Full year 2017 | ||
| Result after financial net | –181.9 | –660.2 | ||
| Finance costs | 82.7 | 70.7 | ||
| Result after financial net plus finance costs | –99.2 | –589.4 | ||
| Total assets | 2,922.1 | 3,468.5 | ||
| Return on total capital | –3.4% | –17.0% |
| SEK millions | Full year 2018 | Full year 2017 |
|---|---|---|
| Equity | 1,061.5 | 1,221.9 |
| Total assets | 2,795.0 | 2,968.5 |
| Equity ratio | 38.0% | 41.2% |
This interim financial report in summary for the Group has been prepared in accordance with IAS 34 Interim Financial Reporting and relevant provisions of the Swedish Annual Accounts Act. The interim report for the Parent Company has been prepared in accordance with chapter 9 of the Swedish Annual Accounts Act. For the Group and Parent Company, the same accounting policies have been applied as in the most recent annual report.
With effect from the 2018 financial year, IAS 18 Revenue will be replaced by IFRS 15 Revenue from Contracts with Customers. The Company has chosen to apply a prospective transition, which means that there has been no restatement of comparative figures. Application of IFRS 15 has not resulted in any significant changes in the Group's financial statements.
As part of the transition to IFRS 15, the Company has divided time charter income into a portion related to leasing of vessels and a portion related to operating activities. The division of time charter income is based on the vessel's cost composition, i.e. the relationship between operating expenses and capital costs.
The Company's surplus liquidity is invested in bonds and shares. With effect from the 2018 financial year, the bonds are reported as "financial assets at fair value through profit or loss" in accordance with IFRS 9, which means they are recognised at fair value in the income statement. The accounting is unchanged from the previous accounting under IAS 39. The bonds are measured at fair value according to Level 1, observable market data. The shares are reported as "financial assets at fair value through other comprehensive income"
in accordance with IFRS 9, which means they are recognised at fair value in other comprehensive income. The shares are measured at fair value according to Level 1, observable market data.
The transition to IFRS 9 has not had any material impact on the income statement, other comprehensive income or the statement of financial position in respect of the hedge accounting applied in accordance with IAS 39 for the interest rate swap that was terminated in 2017 and for which the capital gain is recognised in the income statement through OCI over the term of the agreement.
IFRS 16 is effective for the reporting of leases from 1 January 2019. For lessees, classification as operating leases and finance leases under IAS 17 disappears and is replaced with a model in which assets and liabilities for all leases are recognised in the balance sheet. Recognition exemptions are allowed for leases that have a low value and leases with a lease term of 12 months or less. In the income statement, depreciation is recognised separately from interest expenses associated with the lease liability. The effect for the Company will be that long-term leases for two vessels that are currently reported as operating leases will be reported as finance leases after the transition to IFRS 16. The total effect of the transition to IFRS 16 on the Company's financial statements is an increase corresponding to USD 72 million for both assets and liabilities in the balance sheet.
The Company has signed a bunker position which runs until June 2021. Hedge accounting is applied for this position and the fair value is recognised in other comprehensive income.
The Concordia Maritime Group applies International Financial Reporting Standards (IFRS) as adopted by the EU. The Group applies the same accounting policies and calculation methods in the quarterly reports as in the annual report for 2017, in addition to those described in this report.
The Group's interim report has been prepared in accordance with IAS 34 and the Swedish Annual Accounts Act.
The report for the Parent Company has been prepared in accordance with the Swedish Annual Accounts Act. The Board of Directors and CEO confirm that the interim report provides a true and fair overview of the operations, financial position and performance of the Parent Company and Group, and describes material risks and uncertainties faced by the Parent Company and Group companies. The report has not been reviewed by the Company's auditors.
Gothenburg, 30 January 2019
Carl-Johan Hagman Chairman
Stefan Brocker Mats Jansson Helena Levander Michael G:son Löw
Alessandro Chiesi Daniel Holmgren Mahmoud Sifaf Kim Ullman
CEO
| SEK millions | Q4 2018 | Q3 2018 | Q2 2018 | Q1 2018 | Q4 2017 | Q3 2017 | Q2 2017 | Q1 2017 |
|---|---|---|---|---|---|---|---|---|
| Profit/loss items | ||||||||
| Total income1) | 367.8 | 258.6 | 227.0 | 199.6 | 193.8 | 197.7 | 211.1 | 233.0 |
| Operating costs | ||||||||
| excluding impairment1) | –339.6 | 324.5 | –282.4 | –236.0 | –226.7 | –245.9 | –256.5 | –257.4 |
| Operating result (EBIT) | 28.2 | –66.4 | –55.5 | –36.4 | –32.9 | –521.8 | –45.4 | –24.4 |
| of which result from sale of investments in jointly-controlled enti ties (vessels) |
— | — | — | — | — | — | — | — |
| Financial net | –47.6 | –0.5 | –1.6 | –2.2 | –9.1 | –11.2 | 1.6 | –16.8 |
| Result after financial net | –19.4 | –66.9 | –57.0 | –38.7 | –42.0 | –533.1 | –43.9 | –41.2 |
| Result after tax | –19.4 | –67.0 | –57.0 | –38.7 | –42.0 | –533.1 | –43.9 | –41.2 |
| Cash flow from | ||||||||
| operating activities | –11.0 | –31.4 | –69.3 | –4.4 | –3.2 | 39.5 | 11.4 | –1.6 |
| EBITDA | 77.1 | –18.0 | –9.3 | 7.0 | 10.1 | 1.9 | 10.0 | 29.3 |
| Balance-sheet items | ||||||||
| Ships (number) | 2,303.0 (11) | 2,359.0 (11) | 2,421.7 (11) | 2,303.9 (11) | 2,305.7 (11) | 2,319.5 (11) | 2,892.1 (11) | 3,104.7 (11) |
| Ships under construction | ||||||||
| (number) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Liquid funds incl. investments |
223.9 | 263.9 | 359.7 | 435.5 | 466.4 | 546.9 | 589.1 | 722.7 |
| Other assets | 253.5 | 280.9 | 262.2 | 206.3 | 196.2 | 201.4 | 261.4 | 267.0 |
| Interest-bearing liabilities |
1,539.1 | 1,625.8 | 1,686.2 | 1,620.2 | 1,635.6 | 1,702.3 | 1,808.6 | 1,975.3 |
| Other liabilities and | ||||||||
| provisions | 194.4 | 121.2 | 119.5 | 120.3 | 111.0 | 106.8 | 106.7 | 98.8 |
| Equity | 1,061.5 | 1,156.9 | 1,238.1 | 1,205.3 | 1,221.9 | 1,259.0 | 1,827.4 | 2,020.4 |
| Total assets | 2,795.0 | 2,903.9 | 3,043.8 | 2,945.8 | 2,968.5 | 3,068.1 | 3,742.7 | 4,094.6 |
| Key ratios, % | ||||||||
| Equity ratio | 38 | 40 | 41 | 41 | 41 | 41 | 49 | 49 |
| Return on total capital | –3 | –5 | –20 | –18 | –17 | –14 | 0 | 0 |
| Return on capital employed |
–4 | –5 | –21 | –19 | –18 | –14 | 0 | 0 |
| Return on equity | –16 | –17 | –54 | –48 | –42 | –32 | –3 | –3 |
| Operating margin | 8 | –26 | –24 | –18 | –17 | –264 | –21 | –11 |
| Share data | ||||||||
| Total income1) | 7.71 | 5.42 | 4.76 | 4.18 | 4.06 | 4.14 | 4.42 | 4.88 |
| Operating costs | ||||||||
| excluding impairment | –7.11 | –6.81 | –5.92 | –4.95 | –4.75 | –5.15 | –5.37 | –5.22 |
| Operating result | 0.59 | –1.39 | –1.16 | –0.76 | –0.69 | –10.93 | –0.95 | –0.51 |
| Financial net | –1.00 | –0.01 | –0.03 | –0.05 | –0.19 | –0.23 | 0.03 | –0.35 |
| Result after tax | –0.41 | –1.40 | –1.19 | –0.81 | –0.88 | –11.17 | –0.92 | –0.86 |
| Cash flow from | ||||||||
| operating activities | –0.23 | –0.66 | –1.45 | –0.09 | –0.07 | 0.83 | 0.24 | –0.03 |
| EBITDA | 1.62 | –0.38 | –0.19 | 0.15 | 0.21 | 0.04 | 0.21 | 0.61 |
| Equity | 22.24 | 24.24 | 25.94 | 25.25 | 25.60 | 26.38 | 38.29 | 42.33 |
Definitions: see page 16.
Kim Ullman, CEO +46 31 85 50 03 or +46 704 85 50 03 kim.ullman@ concordiamaritime.com
Ola Helgesson, CFO +46 31 85 50 09 or +46 704 85 50 09 ola.helgesson@ concordiamaritime.com
2018 Annual report 21 March 2019 Q1 2019 & 2019 AGM 25 April 2019
Distribution For environmental reasons, we only publish our interim reports digitally. Concordia Maritime's interim reports and additional financial information about the Company can be read or downloaded from concordiamaritime.com
This information is information that Concordia Maritime Aktiebolag (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 2.00 p.m. CET on 30 January 2019.
Concordia Maritime SE-405 19 Gothenburg, Sweden Tel +46 31 85 50 00 Corp. ID 556068–5819 www.concordiamaritime.com
| PRODUCT TANKERS | Employment | Partner |
|---|---|---|
| P-MAX | ||
| Stena Premium | Spot | Stena Bulk |
| Stena Polaris | Spot | Stena Bulk |
| Stena Performance | Spot | Stena Bulk |
| Stena Provence | Time charter to Sep 2019 | Stena Bulk |
| Stena Progress | Time charter to May 2019 | Stena Bulk |
| Stena Paris | Time charter to July 2019 | Stena Bulk |
| Stena Primorsk | Spot | Stena Bulk |
| Stena Penguin | Spot | Stena Bulk |
| Stena Perros | Spot | Stena Bulk |
| Stena President | Spot | Stena Bulk |
| IMOIIMAX | ||
| Stena Image1) | Spot | Stena Bulk |
| Stena Important2) | Spot | Stena Bulk |
| MR ECO | ||
| Unnamed vessel3) | Spot | Stena Bulk |
| Unnamed vessel4) | Spot | Stena Bulk |
| Unnamed vessel4) | Spot | Stena Bulk |
| Unnamed vessel5) | Spot | Stena Bulk |
| Unnamed vessel6) | Spot | Stena Bulk |
| Unnamed vessel6) | Spot | Stena Bulk |
| CRUDE OIL TANKERS | ||
| Suezmax | ||
| Stena Supreme7) | Spot | Stena Sonangol Suezmax Pool |
1) Contracted on a bareboat basis until 2024, with annual purchase options from 2020
2) Contracted on a bareboat basis until 2026, with purchase obligation in the same year and annual purchase options from 2021
3) 50% charter December 2017 – November 2018 (with option for further 12 months)
4) 50% charter June/July 2017 – June/July 2019
5) 50% charter January 2018 – January 2020
6) 50% charter April/May 2018 – April/May 2019
7) Contracted on a bareboat basis until 2028, with annual purchase options from 2019
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