Quarterly Report • Nov 11, 2021
Quarterly Report
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This document is available on www.damicointernationalshipping.com d'Amico International Shipping S.A.
Registered office at 25C Boulevard Royal, Luxembourg Share capital US\$ 62,052,667.45 as at 30 September 2021
| 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 STRUCTURE5 | |
| ALTERNATIVE PERFORMANCE MEASURES (APM) 9 |
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| SUMMARY OF THE RESULTS IN THE THIRD QUARTER AND NINE MONTHS OF 202112 |
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| SIGNIFICANT EVENTS OF THE FIRST NINE MONTHS19 | |
| SIGNIFICANT EVENTS SINCE THE END OF THE PERIOD AND BUSINESS OUTLOOK 21 |
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| D'AMICO INTERNATIONAL SHIPPING GROUP CONSOLIDATED INTERIM FINANCIAL REPORT |
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| AS AT 30 SEPTEMBER 202124 | |
| CONDENSED CONSOLIDATED INTERIM INCOME STATEMENT 24 |
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| CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME 24 |
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| CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION 25 |
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| CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS 26 |
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| INTERIM CONDENSED STATEMENT OF CHANGES IN CONSOLIDATED SHAREHOLDERS' EQUITY 27 |
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| NOTES…………………28 |
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.
| Q3 2021 | Q3 2020 | US\$ Thousand | 9 MONTHS 2021 |
9 MONTHS 2020 |
|---|---|---|---|---|
| 42,106 | 54,082 | Time charter equivalent (TCE) earnings* | 130,997 | 204,156 |
| 14,871 | 23,935 | EBITDA * | 47,888 | 103,437 |
| 35.3% | 44.3% | as % of margin on TCE | 36.6% | 50.7% |
| (7,320) | 6,851 | EBIT * | (6,934) | 45,796 |
| (17.4)% | 12.7% | as % of margin on TCE | (5.3)% | 22.4% |
| (13,755) | (1,732) | Net profit / (loss) | (28,930) | 15,407 |
| (32.7)% | (3.2)% | as % of margin on TCE | (22.1)% | 7.6% |
| (8,239) | (372) | Adjusted Net profit / (loss)** | (22,612) | 26,059 |
| US\$ (0.011) | US\$ (0.001) | Earnings / (loss) per share | US\$ (0.024) | US\$ 0.013 |
| 5,838 | 11,437 | Operating cash flow | 24,371 | 70,499 |
| (970) | (2,090) | Gross CAPEX* | (5,154) | (9,118) |
| As at 30 September 2021 |
As at 31 December 2020 |
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| Total assets | 956,685 | 1,032,590 | ||
| Net financial indebtedness* | 539,186 | 561,543 | ||
| Shareholders' equity | 338,914 | 365,734 |
* See Alternative Performance Measures on page 9 to 11
** Excluding results on disposal and non-recurring financial items, as well as the effects of IFRS 16 – please refer also to the summary of financial results for the first half of 2021
| Q3 2021 | Q3 2020 | 9 MONTHS 2021 |
9 MONTHS 2020 |
|
|---|---|---|---|---|
| 12,113 | 14,864 | Daily operating measures - TCE earnings per employment day (US\$)1 |
12,939 | 16,973 |
| 38.0 | 41.9 | Fleet development - Total vessel equivalent | 38.3 | 44.1 |
| 20.0 | 21.9 | - Owned | 19.9 | 22.9 |
| 8.0 | 9.0 | - Bareboat chartered | 8.1 | 9.0 |
| 10.0 | 11.0 | - Time chartered | 10.3 | 12.2 |
| 0.0 | 0.0 | Vessels equivalent under commercial management | 0.0 | 1.2 |
| 0.6% | 5.6% | Off-hire days/ available vessel days2 (%) | 3.1% | 3.6% |
| 48.4% | 63.0% | Fixed rate contract/ available vessel days3 (coverage %) |
48.2% | 63.5% |
*see Alternative Performance Measures on page 9 to 11
2 This figure is equal to the ratio between the total off-hire days, inclusive of dry-docks, and the total number of available vessel days.
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.
3 Fixed rate contract days/available vessel days (coverage ratio): this figure represents the proportion of available vessel days employed on time charter contracts, inclusive of off-hire days.
Set out below is d'Amico International Shipping Group's structure as at 30 September 2021:
d'Amico International Shipping S.A. (DIS, the Group, d'Amico International Shipping or the Company) is an international marine transportation company, part of the d'Amico Group (d'Amico), which traces its origins to 1936. As at 30 September 2021, d'Amico International Shipping controls, mainly through d'Amico Tankers d.a.c. (Ireland), its fully owned subsidiary, a fleet of 38.0 vessels, of which 28.0 owned and bareboat vessels (with purchase obligations), with an average age of approximately 7.2 years, compared to an average in the product tankers industry of 11.4 years for MRs (25,000 – 54,999 dwt) and of 11.5 years 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 September 2021, 76.3% of DIS' controlled fleet was IMO Classed, allowing the Group to transport a large range of products.
d'Amico International Shipping's revenue 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' 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' fleet.
DIS 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 longterm 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 Group from its early days. Accountability, transparency and a focus on quality are pillars of its operations and key to DIS' success.
The quality of its 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 and Stamford, CT (USA). These offices are located in the key maritime centres around the world. DIS believes that its international presence allows it to meet the needs of its international clients in different geographical areas, strengthening the Group'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 September 2021, the Group employed an equivalent of 599 seagoing personnel and 24 onshore personnel.
DIS controlled as at 30 September 2021, either through ownership or charter arrangements a modern fleet of 38.0 product tankers (31 December 2020: 40.0 product tankers). DIS' product tanker vessels range from approximately 36,000 to 75,000 dwt.
Since 2012, DIS 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 can therefore cater 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 its 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.
| Name of vessel | Dwt | Year built | Builder, Country4 | IMO classed |
|---|---|---|---|---|
| LR1 fleet | ||||
| Owned | ||||
| Cielo di Londra | 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 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 Tide | 51,768 | 2012 | Hyundai Mipo, South Korea | IMO II/III |
| High Seas | 51,678 | 2012 | Hyundai Mipo, South Korea | IMO II/III |
| GLENDA Melissa5 | 47,203 | 2011 | Hyundai Mipo, South Korea | IMO II/III |
| GLENDA Meryl6 | 47,251 | 2011 | Hyundai Mipo, South Korea | IMO II/III |
| GLENDA Melody7 | 47,238 | 2011 | Hyundai Mipo, South Korea | IMO II/III |
| GLENDA Melanie8 | 47,162 | 2010 | Hyundai Mipo, South Korea | IMO II/III |
| High Venture | 51,087 | 2006 | STX, South Korea | IMO II/III |
| High Valor | 46,975 | 2005 | STX, South Korea | IMO II/III |
| High Priority | 46,847 | 2005 | Nakai Zosen, Japan | - |
| Bareboat with purchase options and purchase obligations | ||||
| High Trust | 49,990 | 2016 | Hyundai Mipo, South Korea (Vinashin, Vietnam) | IMO II/III |
| High Trader | 49,990 | 2015 | Hyundai Mipo, South Korea (Vinashin, Vietnam) | IMO II/III |
| High Loyalty | 49,990 | 2015 | Hyundai Mipo, South Korea | IMO II/III |
| High Freedom | 49,990 | 2014 | Hyundai Mipo, South Korea | 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 |
| High Voyager | 45,999 | 2014 | Hyundai Mipo, South Korea | IMO II/III |
| 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 |
| High Explorer | 50,000 | 2018 | Onomichi, Japan | IMO II/III |
| High Adventurer | 50,000 | 2017 | Onomichi, 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 |
The following table sets forth information about DIS' fleet on the water as at 30 September 2021.
4 Hyundai Mipo, South Korea (Vinashin, Vietnam) refers to vessels ordered at Hyundai Mipo and built at their Vinashin (Vietnam) facility.
Cielo di Salerno 39,043 2016 Hyundai Mipo, South Korea (Vinashin, Vietnam) IMO II/III
5 Vessel owned by GLENDA International Shipping d.a.c. (in which DIS has 50% interest) and time chartered to d'Amico Tankers d.a.c.
6 Vessel owned by GLENDA International Shipping d.a.c. (in which DIS has 50% interest).
7 Vessel owned by GLENDA International Shipping d.a.c. (in which DIS has 50% interest).
8 Vessel owned by GLENDA International Shipping d.a.c. (in which DIS has 50% interest) and time chartered to d'Amico Tankers d.a.c.
| 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 September 2021, d'Amico International Shipping directly employed 38.0 Vessels: 5 LR1s ('Long Range 1'), 9 MRs ('Medium Range') and 3 Handy-size vessels on term contracts at fixed rates, whilst 1 LR, 17 MR and 3 Handy-size vessels were at the same date employed on the spot market. Some of these DIS' vessels are employed through its joint venture GLENDA International Shipping d.a.c., a jointly controlled entity with the Glencore Group, in which d'Amico Tankers d.a.c. has a 50% interest. As at 30 September 2021, the JV operator owned 4 MR vessels built between February 2010 and February 2011, of which two were time-chartered to d'Amico Tankers d.a.c. and two to the Glencore Group.
d'Amico International Shipping is part of the d'Amico Group one of the world's leading privately-owned marine transportation companies, with over 70 years of experience in the shipping business, whose ultimate parent company is d'Amico Società di Navigazione S.p.A. (Italy). As at 30 September 2021, the d'Amico Group controlled a wide fleet of owned and chartered-in vessels, of which 38.0 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.
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 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.
In the third quarter of the year, the tanker market continued to face challenges amid weak demand, especially in the crude sector, due to the lingering impacts of the Covid-19 pandemic and ongoing deep OPEC+ production cuts. The market is expected to see some improvements towards the end of 2021, with OPEC+ output volumes set to increase gradually in the remaining months of the year.
In August 2021, Hurricane Ida, one of the worst storms that has ever hit the US Gulf Coast, shut down 1.7 million b/d of oil production, resulting in a supply loss estimated by the IEA in 30 million barrels. With the crude market structure in backwardation since the beginning of the year, there has been a significant drawdown of global inventories and reduced demand for floating storage, putting further pressure on the tanker markets.
In Q3 2021, refinery throughput was much lower than expected earlier in the year by the IEA, resulting in draws in inventories of refined products of 1.7 million b/d during the quarter, the largest decrease in stocks in eight years. This has likely been one of the driving forces behind the very strong refining margins, which doubled during the quarter in Europe and Singapore, reaching levels last seen in Q1 2020.
Demand developments continued posing challenges to refiners. Demand for LPG, naphtha, fuel oil and other niche products has been higher than pre-pandemic levels in both Q2 2021 and Q3 2021. Gasoline, diesel, and jet fuel overall are still lagging, despite weekly or monthly seasonal peaks registered in individual countries for road transport fuels. These three fuels remain the pillar for refinery margins for most refiners with the exception of petrochemical integrated plants.
The one-year time-charter rate is always the best indicator of spot market expectations and as at the end of September 2021 was assessed at around US\$ 11,750 per day for a conventional MR2, with an Eco MR2 assessed at a premium of around US\$ 2,000 / 2,500 per day.
In the first 9 months of 2021, DIS recorded a Net loss of US\$ (28.9) million vs. a Net profit of US\$ 15.4 million posted in the same period of last year. Such negative variance is attributable to a much weaker product tanker market relative to the first nine months of 2020. Excluding results on disposal and non-recurring financial items from the first 9 months of 2021 and 2020, as well as the asset impairment and the effects of IFRS 16, DIS' Net result would have amounted to US\$ (22.6) million in the first 9 months of the current year compared with US\$ 26.1 million recorded in the same period of 2020. In Q3 2021, DIS posted a Net loss of US\$ (13.8) million vs. a Net loss of US\$ (1.7) million registered in the third quarter of last year. Excluding non-recurring items from both Q3 2021 and Q3 2020, the Net result would have been of US\$ (8.2) million and US\$ (0.4) million respectively.
DIS generated an EBITDA of US\$ 47.9 million in the first 9 months of 2021 vs. US\$ 103.4 million achieved in the same period of last year, whilst its operating cash flow was positive for US\$ 24.4 million compared with US\$ 70.5 million generated in the same period of last year.
In terms of spot performance, DIS achieved a daily spot rate of US\$ 10,635 in the first 9 months of 2021 vs. US\$ 18,592 in the same period of 2020 (Q3 2021: US\$ 9,248 vs Q3 2020: US\$ 12,866), as a result of the much weaker market relative to the same period of last year.
At the same time, 48.2% of DIS' total employment days in the first 9 months of 2021, were covered through 'time-charter' contracts at an average daily rate of US\$ 15,414 (9 months 2020: 63.5% coverage at an average daily rate of US\$ 16,041). 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 the negative cycles. DIS' total daily average rate (which includes both spot and timecharter contracts) was of US\$ 12,939 in the first 9 months of 2021 compared with US\$ 16,973 achieved in the same period of the previous year.
| Q3 2021 | Q3 2020 | US\$ Thousand | 9 MONTHS 2021 |
9 MONTHS 2020 |
|---|---|---|---|---|
| 59,298 | 64,337 | Revenue | 181,335 | 249,679 |
| (17,192) | (10,255) | Voyage costs | (50,338) | (45,523) |
| 42,106 | 54,082 | Time charter equivalent earnings* | 130,997 | 204,156 |
| (895) | (877) | Time charter hire costs | (2,515) | (12,132) |
| (22,564) | (25,618) | Other direct operating costs | (68,755) | (78,635) |
| (3,238) | (3,069) | General and administrative costs | (10,228) | (9,252) |
| (538) | (583) | Result on disposal of fixed assets | (1,611) | (700) |
| 14,871 | 23,935 | EBITDA* | 47,888 | 103,437 |
| (22,191) | (17,085) | Depreciation and impairment | (54,822) | (57,641) |
| (7,320) | 6,850 | EBIT* | (6,934) | 45,796 |
| 1,117 | 182 | Net financial income | 2,136 | 250 |
| (7,552) | (8,676) | Net financial (charges) | (23,975) | (30,367) |
| - | (70) | Losses on disposal of investments | - | (70) |
| (13,755) | (1,714) | Profit / (loss) before tax | (28,773) | 15,609 |
| 4 | (19) | Income taxes | (157) | (203) |
| (13,751) | (1,733) | Net profit / (loss) | (28,930) | 15,406 |
*see Alternative Performance Measures on page 9 to 11
Revenue was US\$ 59.3 million in Q3 2021 (US\$ 64.3 million in Q3 2020) and US\$ 181.3 million in the first 9 months of 2021 (US\$ 249.7 million in the same period of last year). The decrease in gross revenue compared with the same period in the previous year is attributable mainly to a lower number of vessels operated on average by DIS (9 months 2021: 38.3 vs. 9 months 2020: 44.1). The percentage of off-hire days in the first 9 months of 2021 (3.1%) was substantially in line with the same period of the previous year (3.6%).
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\$ (17.2) million in Q3 2021 and US\$ (50.3) million in the first 9 months of the current year (Q3 2020: US\$ (10.3) million and 9 months 2020: US\$ (45.5) 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 US\$ 42.1 million in Q3 2021 (US\$ 54.1 million in Q3 2020) and US\$ 131.0 million in the first 9 months of 2021 (and US\$ 204.2 million in the first 9 months of 2020). The total amount for the first 9 months of last year included US\$ 6.2 million 'time charter equivalent earnings' generated by vessels under commercial management at the time (there was no income generated from such contracts in the first nine months of 2021), which was offset by an almost equivalent amount reported under 'time-charter hire costs'.
In detail, DIS realized a daily average spot rate of US\$ 9,248 in Q3 2021 (US\$ 12,866 in Q3 2020) and of US\$ 10,635 in the first 9 months of 2021 (US\$ 18,592 in the first 9 months of 20209 ). Such negative variance relative to the first nine months of last year is attributable to the much weaker market conditions.
In the first 9 months of 2021, DIS maintained a good level of 'coverage' (fixed-rate contracts), securing an average of 48.2% (9 months 2020: 63.5%) of its available vessel days at a daily average fixed rate of US\$ 15,414 (9 months 2020: US\$ 16,041). 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.
9 Daily Average TCE for the first 9 months of 2020 excludes US\$ 6.2 million generated by the vessels under commercial management, as it is almost offset by an equivalent amount of time charter hire costs after deducting a 2% commission on gross revenues.
DIS' total daily average TCE (Spot and Time Charter)10 was US\$ 12,113 in Q3 2021 (US\$ 14,864 in Q3 2020) and US\$ 12,939 in the first 9 months of 2021 (US\$ 16,973 in the first 9 months of 2020).
| DIS TCE daily rates | 2020 | 2021 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (US dollars) | UNREVIEWED | UNREVIEWED | ||||||||
| Q1 | Q2 | Q3 | 9M | Q4 | FY | Q1 | Q2 | Q3 | 9M | |
| Spot | 17,354 | 25,118 | 12,866 | 18,592 | 11,699 | 16,771 | 9,923 | 12,720 | 9,248 | 10,635 |
| Fixed | 15,864 | 16,236 | 16,038 | 16,041 | 17,866 | 16,429 | 15,842 | 15,231 | 15,163 | 15,414 |
| Average | 16,391 | 19,555 | 14,864 | 16,973 | 15,192 | 16,560 | 12,853 | 13,893 | 12,113 | 12,939 |
Time charter hire costs. IFRS 16 Leases is effective for annual periods beginning on or after 1 January 2019 and has been 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\$ 38.1 million in the first 9 months of 2021 and by US\$ 43.1 million in the same period of 2020, as within the Income Statement, these costs were replaced with other direct operating costs, interest and depreciation.
The total amount for the first 9 months of 2020 included also US\$ 6.2 million in hire costs in relation to vessels under commercial management (1.2 average equivalent vessels), which was offset by an almost equivalent amount reported under 'time charter equivalent earnings', after deducting a 2% commission on the gross revenue generated by these ships in the period; there was no income or related costs generated from such contracts in 2021. Excluding the cost related to the vessels under commercial management and the effect of IFRS 16, DIS' 'timecharter hire costs' in the first 9 months of 2021 would have amounted to US\$ (40.6) million, lower than US\$ (49.0) million for the same period of last year. In fact, DIS operated a lower number of chartered-in vessels in the first 9 months of 2021 (10.3 equivalent ships) relative to the same period of last year (12.2 equivalent ships).
Other direct operating costs mainly consist of crew, technical and luboil 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\$ 17.3 million in the first 9 months of 2021 (US\$ 19.8 million increase in the first 9 months of 2020), as within the Income Statement, timecharter 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\$ (51.4) million in the first 9 months of 2021 vs. US\$ (58.8) million in the same period of 2020. In the first 9 months of 2021, the Company operated a smaller fleet of owned and bareboat vessels relative to the same period of last year (9 months 2021: 28.0 vs. H1 2020: 31.9). 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 'highquality' fleet represents an essential part of d'Amico's vision and strategy.
General and administrative costs amounted to US\$ (3.2) million in Q3 2021 (US\$ (3.1) million in Q3 2020) and US\$ (10.2) million in the first 9 months of 2021 (US\$ (9.3) million in the first 9 months of 2020). 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\$ (1.6) million in the first 9 months of 2021 vs. US\$ (0.7) million in the same period of last year. The amount refers to the amortisation of the net deferred result on all vessels sold and leased back in the previous years.
EBITDA was of US\$ 14.9 million in Q3 2021 (US\$ 23.9 million in Q3 2020) and US\$ 47.9 million in the first 9 months of 2021 (US\$ 103.4 million in the first 9 months of 2020), reflecting the weaker freight markets experienced in the
10 Daily Average TCE for 2020 excluded the amounts generated by the vessels under commercial management, since hire revenue for these vessels for each year is almost offset by an equivalent amounts of time charter hire costs, after deducting a 2% commission on gross revenues.
first nine months of the current year.
Depreciation, impairment, and impairment reversal amounted to US\$ (22.2) million in Q3 2021 (US\$ (17.1) million in Q3 2020) and to US\$ (54.8) million in the first 9 months of 2021 (US\$ (57.6) million in the first 9 months of 2020). The amount for the first 9 months of 2021 includes US\$ (5.8) million impairment booked on a vessel owned by d'Amico Tankers d.a.c. classified as 'asset held for sale' (in accordance with IFRS 5) at the end of the period, with the difference between its fair value less cost to sell and its book value charged to the Income Statement. The amount for the first 9 months of 2020 includes US\$ (6.3) million impairment booked on five vessels owned by d'Amico Tankers d.a.c. and one vessel owned by Glenda International Shipping (a jointly controlled entity with the Glencore Group, in which d'Amico Tankers d.a.c. has a 50% interest), which were classified as 'assets held for sale' (in accordance with IFRS 5) as at 30 September 2020, with the difference between their fair value less cost to sell and their book value charged to the Income Statement.
EBIT was of US\$ (7.3) million in Q3 2021 (US\$ 6.9 million in Q3 2020) and of US\$ (6.9) million in the first 9 months of 2021 (US\$ 45.8 million in the first 9 months of 2020).
Net financial income was of US\$ 1.1 million in Q3 2021 (US\$ 0.2 million in Q3 2020) and of US\$ 2.1 million the first 9 months 2021 (US\$ 0.3 million in the first 9 months of 2020). The amount for the first 9 months of 2021 comprises mainly US\$ 1.6 million unrealized gain in relation to the ineffective part of DIS' interest rate swap agreements, US\$ 0.2 million unrealized gain on freight derivative instruments used for hedging purposes, US\$ 0.3 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\$ (7.6) million in Q3 2021 (US\$ (8.7) million in Q3 2020) and US\$ (24.0) million in the first 9 months of 2021 (US\$ (30.4) million in the first 9 months of 2020). The amount for the first 9 months of the year, comprises mainly US\$ (23.8) 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, as well as US\$ (0.1) million of unrealised losses mainly in relation to the ineffective part of DIS' interest rate swap agreements. The amount recorded in the same period of last year included US\$ (27.6) million in interest expenses and amortized financial fees due on DIS' bank loan facilities, actual expenses on interest rate swaps and interest on financial leases, as well as US\$ (2.6) million of unrealised losses mainly in relation to the ineffective part of DIS' interest rate swap agreements.
DIS recorded a Loss before tax of US\$ (13.8) million in Q3 2021 vs. a loss of US\$ (1.7) million in Q3 2020, and a loss of US\$ (28.8) million in the first 9 months of 2021 vs. a profit of US\$ 15.6 million in the same period of 2020.
Income taxes were close to zero in Q3 2021 and amounted to US\$ (0.2) million in the first 9 months of 2021, in line with the same period of last year.
Due to the challenging market experienced in the current year, DIS recorded a Net loss of US\$ (13.8) million in Q3 2021 vs. US\$ (1.7) million in Q3 2020 and a Net loss of US\$ (28.9) million in the first 9 months of 2021 vs. a Net profit of US\$ 15.4 million in the same period of last year.
Excluding results on disposals and non-recurring financial items from Q3 2021 (US\$ 0.3 million11) and from the same period of 2020 (US\$ (0.7) million12), as well as the asset impairment (US\$ (5.8) million in the third quarter of 2021 and US\$ (0.3) million in the same period of 2020) and the net effects of IFRS 16 from both periods (Q3 2021: US\$ (0.1) million and Q3 2020: US\$ (0.4) million), DIS' Net result would have amounted to US\$ (8.2) million in the third quarter of 2021 compared with US\$ (0.4) million recorded in the same quarter of last year.
Excluding results on disposals and non-recurring financial items from the first 9 months of 2021 (US\$ 0.05 million13) and from the same period of 2020 (US\$ (3.2) million14), as well as the asset impairment (US\$ (5.8) million in the first 9 months of 2021 and US\$ (6.3) million in the same period of 2020) and the net effects of IFRS 16 from both periods (9 months 2021: US\$ (0.6) million and 9 months 2020: US\$ (1.1) million), DIS' Net result would have
11 US\$ (0.5) million loss on disposal, US\$ 0.9 million mainly due to realized and unrealized loss on Interest rates swap agreements.
12 US\$ (0.6) million loss on disposal, US\$ (0.1) million mainly due to realized and unrealized loss on Interest rates swap agreements.
13 US\$ (1.61) million loss on disposal, US\$ 1.66 million mainly due to realized and unrealized loss on Interest rates swap agreements.
14 US\$ (0.7) million loss on disposal, US\$ (2.5) million mainly due to realized and unrealized loss on Interest rates swap agreements.
amounted to US\$ (22.6) million in the first 9 months of 2021 compared with US\$ 26.1 million recorded in the same period of the previous year.
| As at | As at | |
|---|---|---|
| (US\$ Thousand) | 30 September 2021 | 31 December 2020 |
| ASSETS | ||
| Non-current assets | 857,368 | 918,187 |
| Current assets, excluding assets held for sale | 88,831 | 114,403 |
| Assets held for sale | 10,486 | - |
| Total assets | 956,685 | 1,032,590 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| Shareholders' equity | 338,914 | 365,734 |
| Non-current liabilities | 461,746 | 539,382 |
| Total current liabilities | 156,025 | 127,474 |
| Total liabilities and shareholders' equity | 956,685 | 1,032,590 |
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 September 2021). According to the valuation report provided by a primary broker, the estimated market value of DIS' owned and bareboat fleet as at 30 September 2021 was of US\$ 743.3 million, of which US\$ 731.8 million refer to vessels classified as 'Non-current assets'.
Gross Capital expenditures (Capex) were of US\$ 5.2 million in the first 9 months of 2021 vs. US\$ 9.1 million in the same period of 2020. The amounts for the first 9 months of 2021 includes mainly the capitalised dry-dock costs pertaining to owned and bareboat vessels.
Current assets as at 30 September 2021 amounted to US\$ 99.3 million. As at the same date, in addition to the working capital items (inventories and trade receivables amounting to US\$ 10.5 million and US\$ 33.0 million, respectively), current assets include 'cash and cash equivalent' of US\$ 42.0 million and US\$ 0.4 million relating to funds deposited by d'Amico Tankers d.a.c. with financial institutions in respect of interest rate swap contracts.
Current assets include also Assets held-for-sale. The amount of US\$ 10.5 million refers to a vessel owned by d'Amico Tankers d.a.c., included in the category 'Assets held for sale' (in accordance with IFRS 5) as at 30 September 2021, with the difference between its fair value and its book value charged to the Income Statement. Following the impairment allocation, a net carrying value of US\$ 10.5 million was transferred to this line of the Statement of Financial Position as at the end of the period.
Non-current liabilities were of US\$ 461.7 million as at 30 September 2021 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 September 2021, working capital items amounting to US\$ 22.9 million (mainly relating to trade and other payables), US\$ 36.5 million lease liabilities, and US\$ 6.3 million other current financial liabilities.
Shareholders' equity amounted to US\$ 338.9 million as at 30 September 2021 (US\$ 365.7 million as at 31 December 2020). The variance relative to year-end 2020 is due to the Net result generated in the first 9 months of 2021, partially offset by the change in the valuation of cash-flow hedges.
DIS' net debt as at 30 September 2021 amounted to US\$ 539.2 million compared to US\$ 561.5 million as at 31 December 2020. Due to the application of IFRS 16 these balances include an additional liability, amounting to US\$ 86.9 million as at the end of September 2021 vs. US\$ 96.4 million as at the end of 2020. The net debt (excluding IFRS16) / fleet market value ratio was of 60.9% as at 30 September 2021 vs. 65.9% as at 31 December 2020 and compared with 64.0% as at the end of 2019 and 72.9% as at the end of 2018.
| As at | As at | |
|---|---|---|
| US\$ Thousand | 30 September 2021 | 31 December 2020 |
| Liquidity - Cash and cash equivalents | 42,045 | 62,071 |
| Current financial assets | 3,226 | 2,565 |
| Other current financial assets – related party | 35 | 2,160 |
| Total current financial assets | 45,306 | 66,796 |
| Bank loans and other lenders – current | 90,274 | 46,523 |
| Liabilities from leases - current | 36,511 | 43,411 |
| Other current financial liabilities – parties | 6,307 | 6,824 |
| Other current financial liabilities – related party | - | 4,309 |
| Total current financial debt | 133,092 | 101,067 |
| Net current financial debt | 87,786 | 34,271 |
| Other non-current financial assets – 3rd parties | 10,346 | 12,110 |
| Total non-current financial assets | 10,346 | 12,110 |
| Bank loans non-current | 212,017 | 263,089 |
| Liabilities from leases – non-current | 246,779 | 269,941 |
| Other non-current financial liabilities – 3rd parties | 2,950 | 6,352 |
| Total non-current financial debt | 461,746 | 539,382 |
| Net non-current financial debt | 451,400 | 527,272 |
| Net financial indebtedness | 539,186 | 561,543 |
* See Alternative Performance Measures on page 9 to 11
The balance of Total Current Financial Assets was of US\$ 45.3 million as at the end of September 2021. The total amount comprises Cash and cash equivalents of US\$ 42.0 million, and the current portion of deferred losses on disposal on sale and leaseback transactions, amounting to US\$ 3.2 million.
Total Non-Current Financial Assets comprise mainly deferred losses on disposal on sale and leaseback transactions.
The total outstanding bank debt (Bank loans) as at 30 September 2021 amounted to US\$ 302.3 million, of which US\$ 90.3 million is due within one year. In addition to some short-term credit lines, DIS' debt as at 30 September 2021 comprises mainly the following long-term facilities granted to d'Amico Tankers d.a.c. (Ireland), the key operating company of the Group:
(iii) DnB NOR Bank 5-years term-loan facility to finance 1 MR vessel built in 2012, with an outstanding debt of US\$ 12.2 million;
(iv) ING 5-years term-loan facility to finance 1 MR vessel built in 2012, with an outstanding debt of US\$ 11.7 million;
Lease liabilities include the leases on M/T High Fidelity, M/T High Discovery, M/T High Freedom, M/T High Trust, M/T High Loyalty, M/T High Trader, M/T Cielo di Houston and M/T High Voyager, which were sold and leased back between 2017 and 2019. In addition, 'lease liabilities' include as at 30 September 2021, US\$ 86.9 million arising from the application of IFRS 16 on contracts classified until 2018 as 'operating leases'.
Other Non-current financial liabilities include the negative fair value of derivative hedging instruments (interest rate swap agreements) and the deferred profit on disposal on sale and leaseback transactions.
DIS' net cash flow for the first 9 months of 2021 was negative for US\$ (20.9) million vs. US\$ 22.1 million in the same period of 2020 (Q3 2021: US\$ (10.2) million vs. Q3 2020: US\$ 6.7 million).
| Q3 2021 | Q3 2020 US\$ Thousand |
9 MONTHS 2021 |
9 MONTHS 2020 |
|---|---|---|---|
| 5,838 | 11,437 Cash flow from operating activities | 24,371 | 70,499 |
| (970) | 10,436 Cash flow from investing activities | (1,954) | 22,084 |
| (15,072) | (15,220) Cash flow from financing activities | (43,307) | (70,457) |
| (10,204) | 6,653 Change in cash balance | (20,890) | 22,126 |
| 34,608 | 32,990 Cash and cash equivalents net of bank overdrafts at the beginning of the period | 45,294 | 17,517 |
| 24,404 | 39,643 Cash and cash equivalents net of bank overdrafts at the end of the period | 24,404 | 39,643 |
| 42,045 | 59,339 Cash and cash equivalents at the end of the period | 42,045 | 59,339 |
| (17,641) | (19,696) Bank overdrafts at the end of the period | (17,641) | (19,696) |
Cash flow from operating activities was positive, amounting to US\$ 5.8 million in Q3 2021 vs. US\$ 11.4 million in Q3 2020, and to US\$ 24.4 million in the first 9 months of 2021 vs. US\$ 70.5 million in the first 9 months of 2020. This negative variance is attributable to the much weaker spot market in the first 9 months of 2021 relative to the same period of last year.
The net Cash flow from investing activities was negative for US\$ (1.0) million in Q3 2021 (US\$ 10.4 million in Q3 2020) and for US\$ (2.0) million in the first 9 months of 2021 (US\$ 22.1 million in the first 9 months of 2020). The amount for the first 9 months of 2021 comprises mainly the costs relating to drydocks which occurred in the period, partially off-set by the reimbursement of US\$ 3.2 million of a sellers' credit relating to the sale and TC-back of two MRs in 2017. The amount for the same period of last year comprised costs relating to drydocks occurred in the period, off-set by US\$ 30.7 million generated from the sale of M/T Cielo di Guangzhou and M/T Glenda Meredith in Q2 2020 and M/T High Progress in Q3 2020, and by US\$ 0.5 million arising from the reduction of d'Amico Tankers' shareholders loan to DM Shipping, following the sale of its two vessels in FY 2019.
Cash flow from financing activities was negative, amounting to US\$ (43.3) million in the first 9 months of 2021. This figure comprises mainly: (i) US\$ (23.0) million in scheduled bank debt repayments; ii) US\$ 13.8 million bank
debt drawdown, deriving from a US\$ 3.8 million refinancing with Crédit Agricole of M/T High Priority (a MR vessel, which was leased by d'Amico Tankers as at 31 December 2020 and whose purchase option was exercised on 5 February 2021), and a US\$ 10.0 million draw-down on the hot-money credit line with Banca Intesa; iii) US\$ (35.5) million repayment of lease liabilities, including US\$ (9.6) million deriving from the exercise of the purchase option on M/T High Priority; (iv) US\$ (0.3) million acquisition of DIS' treasury shares.
In the first 9 months of 2021, the main events for the d'Amico International Shipping Group were the following:
Executed buyback program: On 14 January 2021, d'Amico International Shipping S.A. announced that during the period between 5 January and 13 January 2021, n. 1,543,118 own shares (representing 0.124% of the outstanding share capital of the Company) were repurchased on the regulated market managed by Borsa Italiana S.p.A. at the average share price of Euro 0.0949, for a total consideration of Euro 146,469.26.
On 25 January 2021, d'Amico International Shipping S.A. announced that during the period between 14 January and 22 January 2021, n. 1,305,897 own shares (representing 0.105% of the outstanding share capital of the Company) were repurchased on the regulated market managed by Borsa Italiana S.p.A. at the average share price of Euro 0.0936, for a total consideration of Euro 122,217.85. As at 22 January 2021, d'Amico International Shipping S.A. held nr. 18,326,911 own shares, representing 1.48% of its outstanding share capital.
The transactions were made and coordinated by an independent equity broker duly engaged for this purpose, Equita SIM S.p.A., in compliance with the Board of Directors resolution of 13 November 2019 and under the authorization to purchase own shares approved by DIS Shareholders' Meeting on 20 April 2016 (as reminded by means of a press release issued on 13 November 2019).
Medium-to-Long Term Incentive Plan: With reference to the management of the bonus relating to the conclusion of the first cycle (vesting period 2019-2020) of the Medium-to-Long Term Incentive Plan adopted by the Company, (hereinafter the LTI Plan), since DIS reached the objectives set, the Beneficiaries were rewarded with the relevant "cash" portion of the bonus with the final balance paid in shares, through a deferred allocation over two years and in two tranches with the first one in 2022, according to the provisions of the Plan's Information Document (published in the Corporate Governance section of DIS' website).
Buyback programme: On 6 May 2021, the Board of Directors of d'Amico International Shipping S.A. resolved to start an own shares buy-back programme pursuant to the new authorization recently issued by the annual general meeting of shareholders held on 20 April 2021 (the "Programme"). As per the shareholders' new authorization, the Company can repurchase up to 186,157,950 ordinary shares of the Company (including the Own Shares already repurchased and held in the Company's portfolio in compliance with Article 430-15 of the Luxembourg Law).
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 45,000,000.00.
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 April 20th, 2021 (i.e. date of the relevant shareholder's meeting approving the renewal of the authorization) and thus expiring on April 20th, 2026.
Regarding the Programme's implementation, the Company confirms that 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, 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 that was duly engaged for this purpose by the CFO, who 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 sales operations 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.
Fourth exercise period of DIS' Ordinary shares warrants 2017-2022: On 31 May 2021, d'Amico International Shipping S.A. confirmed that the holders of "d'Amico International Shipping's Warrants 2017 – 2022", ISIN code n. LU1588548724 (the "Warrants") could apply for their Warrants to be exercised on any Banking Day (days on which banks in Luxembourg and in Italy are generally open for business as defined in the terms and conditions of the Warrants) starting from 1st June, 2021 until 30th June, 2021, both dates included (the "Fourth Exercise Period"), with the right to subscribe for newly issued ordinary shares of DIS admitted to trading on the MTA market organized and managed by Borsa Italiana S.p.A., each without par value and with the same rights and features as DIS' ordinary shares outstanding at the issue date (the "Warrant Shares"), in the ratio of one (1) ordinary DIS share for one (1) Warrant exercised. The exercise price for the Fourth Exercise Period amounted to EUR 0.382 (zero point three hundred and eighty-two Euros) per Warrant Share.
Capital increase following the fourth exercise period of DIS' Ordinary shares warrants 2017-2022: on 2 July 2021 following the completion of the Fourth Warrants exercise period, in which 343 Warrants were exercised, leading to the issuance of 343 new ordinary shares, the Company's share capital amounted to US\$ 62,052,667.45, divided into 1,241,053,349 shares with no nominal value.
Vessel Purchase: In February 2021, 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 Priority, a 46,847 dwt MR product tanker vessel, built in 2005 by Nakai Zosen, Japan, for a consideration of US\$ 9.7 million. The Vessel had been sold and leased back by d'Amico Tankers in 2017, for a 5-year period, with purchase options starting from the 2nd anniversary and a purchase obligation at the end of the 5th year.
'Time Charter-Out' Fleet: In January 2021, d'Amico Tankers d.a.c. extended a time charter-out contract with a leading trading house for two of its LR1 vessels for 9-18 months, both starting from January 2021.
In February 2021, d'Amico Tankers d.a.c. fixed one of its Handy-size vessels with an oil-major for 6 months with an option for a further 6 months, starting from March 2021.
In March 2021, d'Amico Tankers d.a.c. extended a time charter-out contract with an oil-major for one of its Handysize vessels for 12 months, starting from the end of May 2021.
In April 2021, d'Amico Tankers d.a.c. fixed one of its Handy-size vessels with a leading trading house for 12 months with an option for further 12 months, starting from the end of April 2021.
In May 2021, d'Amico Tankers d.a.c. fixed one of its MR vessels with a leading trading house for 12 months with an option for further 12 months, starting from the end of May 2021, extended a time charter-out contract with an oil-major for one of its MR vessels for 24 months, starting from mid-September 2021 and extended a time charterout contract with a leading trading house for one of its LR1 vessels for 6 months, starting from mid-September 2021.
In June 2021 d'Amico Tankers d.a.c. extended a time charter-out contract with an oil-major for one of its LR1 vessels for 6 months with an option for a further 6 months, starting from mid-July 2021 and fixed one of its MR vessels with a leading trading house for 12 months with an option for further 12 months starting mid-June 2021.
In July 2021, d'Amico Tankers d.a.c. fixed one of its Handy-size vessels with a reputable counterparty for 6 months with an option for a further 3 months, starting from July 2021.
In September 2021 d'Amico Tankers d.a.c. fixed one of its LR1 vessels with a leading trading house for 6 months with an option for further 6 months, starting in September 2021.
'Time Charter-In' Fleet: the time-charter-in contracts for the M/T SW Southport I and M/T SW Tropez I, two MR vessels built in 2004, ended and the vessels were redelivered to their owners in January and February 2021, respectively.
'Bareboat Charter-Out' Fleet: In October 2021, d'Amico Tankers d.a.c. fixed one of its LR1 vessels on a 5-year bareboat charter contract with a reputable industrial counterparty. In addition, the bareboat charterer has the option to extend the contract for two further years.
'Time Charter Out' Fleet: In October 2021, d'Amico Tankers d.a.c. extended a time charter out contract with a leading trading house on one of its MR vessels for 6 months with an option for further 6 months.
In November 2021, d'Amico Tankers d.a.c. fixed one of its LR1 vessels with a leading trading house for 6 months with an option for further 6 months, starting in November 2021.
Vessel Sale: In October 2021, d'Amico Tankers d.a.c signed a memorandum of agreement for the sale of the M/T High Venture, a 51,087 dwt MR product tanker vessel, built in 2006 by STX, South Korea, for a consideration of US\$ 10.7 million.
| As at 30 September 2021 | As at 11 November 2021 | |||||||
|---|---|---|---|---|---|---|---|---|
| LR1 | MR | Handysize | Total | LR1 | MR | Handysize | Total | |
| Owned | 5.0 | 9.0 | 6.0 | 20.0 | 5.0 | 9.0 | 6.0 | 20.0 |
| Bareboat chartered* | 1.0 | 7.0 | 0.0 | 8.0 | 1.0 | 7.0 | 0.0 | 8.0 |
| Long-term time chartered | 0.0 | 9.0 | 0.0 | 9.0 | 0.0 | 9.0 | 0.0 | 9.0 |
| Short-term time chartered | 0.0 | 1.0 | 0.0 | 1.0 | 0.0 | 1.0 | 0.0 | 1.0 |
| Total | 6.0 | 26.0 | 6.0 | 38.0 | 6.0 | 26.0 | 6.0 | 38.0 |
The profile of d'Amico International Shipping's vessels on the water is summarized as follows.
* 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 among other congestion and average sailing speeds and (vii) average sailing distances. Some of the factors that could drive a recovery in the product tankers market in the medium-term are detailed below:
fell 27.9 million barrels, or 900,000 b/d, to 2,824 million barrels. A less than seasonal build in industry product stocks was the main driver. Total oil inventories stood 214.8 million barrels below the 2016-2020 average and at 162.2 million barrels lower than the pre-Covid 2015-2019 average. In terms of forward demand, OECD industry stocks covered 61.8 days at end-August, a decrease of 0.4 days month-on-month and 3.7 days less relative to the 2016-2020 five-year average.
2022, requiring operators to measure their vessels' energy efficiency existing ship index (EEXI), reflecting their technical efficiency, and their carbon intensity indicator (CII), assessing how efficiently they are managed. Both measures aim to cut emissions progressively from 2023 to 2030.
• The expected technological change required to meet increasingly demanding environmental regulation is reducing appetite for newbuilding orders, since such vessels could be obsolete soon after delivery. Furthermore, the increase in newbuilding costs and decrease in yard availability is also negatively affecting the appetite for new constructions.
| Q3 2021 | Q3 2020 | US\$ Thousand | 9 MONTHS 2021 |
9 MONTHS 2020 |
|---|---|---|---|---|
| 59,298 | 64,337 | Revenue | 181,335 | 249,679 |
| (17,192) | (10,255) | Voyage costs | (50,338) | (45,523) |
| 42,106 | 54,082 | Time charter equivalent earnings* | 130,997 | 204,156 |
| (895) | (877) | Time charter hire costs | (2,515) | (12,132) |
| (22,564) | (25,618) | Other direct operating costs | (68,755) | (78,635) |
| (3,238) | (3,069) | General and administrative costs | (10,228) | (9,252) |
| (538) | (583) | Result on disposal of fixed assets | (1,611) | (700) |
| 14,871 | 23,935 | EBITDA* | 47,888 | 103,437 |
| (22,191) | (17,085) | Depreciation and impairment | (54,822) | (57,641) |
| (7,320) | 6,850 | EBIT* | (6,934) | 45,796 |
| 1,117 | 182 | Net financial income | 2,136 | 250 |
| (7,552) | (8,676) | Net financial (charges) | (23,975) | (30,367) |
| - | (70) | Losses on disposal of investments | - | (70) |
| (13,755) | (1,714) | Profit / (loss) before tax | (28,773) | 15,609 |
| 4 | (19) | Income taxes | (157) | (203) |
| (13,751) | (1,733) | Net profit / (loss) | (28,930) | 15,406 |
| The net result is attributable to the equity holders of the Company | ||||
| (0.011) | (0.001) | Earnings /(loss) per share in US\$ (1) | (0.024) | 0.013 |
*see Alternative Performance Measures on page 9 to 11
| 9 MONTHS | 9 MONTHS | |||
|---|---|---|---|---|
| Q3 2021 | Q3 2020 | US\$ Thousand | 2021 | 2020 |
| (13,751) | (1,733) | Profit / (loss) for the period | (28,930) | 15,406 |
| Items that can subsequently be reclassified into Profit or Loss | ||||
| 230 | 657 | Cash flow hedges | 2,504 | (3,397) |
| (46) | 73 | Exchange differences in translating foreign operations | (61) | (89) |
| (13,567) | (1,003) | Total comprehensive income for the period | (26,487) | 11,916 |
The net result is entirely attributable to the equity holders of the Company
( 1 ) Basic earnings per share (e.p.s.) was calculated on an average number of outstanding shares equal to 1,222,854,116 in the first nine months of 2021 (1,230,890,447 shares in the first nine months of 2020) and on an average of 1,222,726,438 outstanding shares in the third quarter of 2021 (Q3, 2020: 1,230,890,447 outstanding shares). In Q3/nine months of 2021 and Q3/nine months 2020 diluted e.p.s. was equal to basic e.p.s.
| Q3 2021 | Q3 2020 | US\$ Thousand | 9 MONTHS 2021 |
9 MONTHS 2020 |
|---|---|---|---|---|
| (13,751) | (1,732) | Profit (loss) for the period | (28,930) | 15,406 |
| Depreciation and amortisation | 49,059 | 51,354 | ||
| 16,428 | 16,805 | Impairment | 5,763 | 6,286 |
| 5,763 (4) |
2,300 19 |
Current and deferred income tax | 157 | 203 |
| 4,185 | 4,930 | Net finance lease cost | 13,101 | 15,072 |
| 2,250 | 3,564 | Other Financial charges (income) | 8,738 | 15,045 |
| 538 | 583 | Result on disposal of fixed assets | 1,611 | (700) |
| - | 70 | Balance on disposal of investments | 2 | 70 |
| (71) | 322 | Other non-cash changes | (76) | (65) |
| 15,338 | 24,839 | Cash flow from operating activities before changes in working capital | 49,425 | 104,071 |
| 267 | 708 | Movement in inventories | (1,591) | 2,483 |
| (1,813) | (381) | Movement in amounts receivable | 2,485 | 1,667 |
| (1,131) | (6,217) | Movement in amounts payable | (3,628) | (11,238) |
| (41) | (43) | Taxes (paid) received | (184) | (506) |
| (4,183) | (4,935) | Net cash payments for the interest portion of IFRS16 related leases | (13,100) | (15,072) |
| (2,599) | (2,534) | Net interest paid | (9,036) | (10,906) |
| 5,838 | 11,437 | Net cash flow from operating activities | 24,371 | 70,499 |
| (970) | (2,090) | Acquisition of fixed assets | (5,154) | (9,118) |
| - | 12,507 | Proceeds from disposal of fixed assets | - | 30,692 |
| - | - | Deferred cash-in from the sale of fixed assets | 3,200 | - |
| - | 19 | Movement in financing to equity accounted investee | - | 510 |
| (970) | 10,436 | Net cash flow from investing activities | (1,954) | 22,084 |
| *- | 5 | Share capital increase | * - | 5 |
| (17) | 73 | Other changes in shareholder's equity | (31) | (354) |
| - | - | Purchase of treasury shares | (336) | - |
| - | - | Shareholders' financing | - | (5,000) |
| 658 | 1,426 | Movement in other financial receivables | 1,769 | 2,256 |
| - | - | Net movement in other financial payable | - | (2,700) |
| (6,996) | (17,627) | Bank loan repayments | (22,956) | (46,618) |
| - | 9,956 | Bank loan drawdowns | 13,756 | 9,956 |
| (8,717) | (9,053) | Repayments for the principal portion of the lease liability | (35,509) | (28,002) |
| (15,072) | (15,220) | Net cash flow from financing activities | (43,307) | (70,457) |
| (10,204) | 6,653 | Net increase/ (decrease) in cash and cash equivalents | (20,890) | 22,126 |
| 34,608 | 32,990 | Cash and cash equivalents net of bank overdrafts at the beginning of the period | 45,294 | 17,517 |
| 24,404 | 39,643 | Cash and cash equivalents net of bank overdrafts at the end of the period | 24,404 | 39,643 |
| 42,045 | 59,339 | Cash and cash equivalents at the end of the period | 42,045 | 59,339 |
| (17,641) | (19,696) | Bank overdrafts at the end of the period | (17,641) | (19,696) |
* Following the exercise of the warrants, on 1 July 2021 a capital increase amounting to US\$ 157 occurred; that amount falls below DIS' US\$ thousand reporting threshold.
| Share capital |
Retained Earnings |
Share premium |
Other Reserves | Total | ||
|---|---|---|---|---|---|---|
| US\$ Thousand | (Accumulated losses) |
Other | Cash-Flow hedge |
|||
| Balance as at 1 January 2021 | 62,053 | (43,307) | 368,853 | (16,155) | (5,710) | 365,734 |
| Share capital increase | *- | - | *- | - | - | *- |
| Treasury shares | - | - | - | (336) | - | (336) |
| Other changes | - | - | (31) | 34 | - | 3 |
| Total comprehensive income | - | (28,930) | - | (61) | 2,504 | (26,487) |
| Balance as at 30 September 2021 | 62,053 | (72,237) | 368,822 | (16,518) | (3,206) | 338,914 |
* Following the exercise of the warrants, on 1 July 2021 a capital increase amounting to US\$ 157 occurred; that amount falls below DIS' US\$ thousand reporting threshold.
| Share capital |
Retained Earnings / |
Share premium |
Other Reserves | Total | ||
|---|---|---|---|---|---|---|
| US\$ Thousand | (Accumulated losses) |
Other | Cash-Flow hedge |
|||
| Balance as at 1 January 2020 | 62,052 | (59,801) | 368,846 | (15,380) | (3,252) | 352,465 |
| Capital increase | 1 | - | 4 | - | - | 5 |
| Treasury shares | - | - | - | (261) | - | (261) |
| Other changes | - | 67 | - | (67) | - | - |
| Total comprehensive income | - | 15,406 | - | (93) | (3,397) | 11,916 |
| Balance as at 30 September 2020 | 62,053 | (44,328) | 368,850 | (15,801) | (6,649) | 364,125 |
The following notes form an integral part of the interim consolidated financial report.
d'Amico International Shipping S.A. (the "Company", DIS) 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 information as at, and for the nine months period ended 30 September 2021 have been prepared in accordance with IAS 34 – Interim Financial reporting, as adopted by the European Union.
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 2020.
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 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.
The principal accounting policies, which have been consistently applied, are set out below.
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 of its vessels worldwide, rather than in specific geographical areas. The Group's top management monitors, evaluates and allocates the Group's resources as a whole, 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 are no new accounting principles that have been adopted for the accounting period ending 30 September 2021.
US\$ LIBOR rates for periods of 3 months and 6 months, which are the reference rates for all of our mortgage loans, should not be published anymore from 30 June 2023. Management is currently assessing how the replacement of US\$ LIBOR by a risk-free-rate will impact DIS' Group loans and interest rate hedging exposures, but a final
assessment is not possible until the Alternative Reference Rates committee in the US has defined the terms for a forward-looking term rate.
There are no standards that are not yet effective and that would be expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions. Early adoption of any new standard is not currently envisaged.
The Group is currently involved in a number of on-going commercial disputes concerning both our owned and chartered vessels. The majority are cargo contamination claims. The disputes are mostly covered by the P&I Club insurance and therefore no significant financial exposure is expected.
All 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.
There are neither contingent liabilities nor commitments made by the Group which are not recognized at the reporting date in relation with the Group's interests in its joint ventures.
11 November 2021
On behalf of the Board
Chairman, Chief Executive Officer Chief Financial Officer
Paolo d'Amico Antonio Carlos Balestra di Mottola
The manager responsible for preparing the company's financial reports, Mr. Antonio Carlos Balestra di Mottola, in his capacity as Chief Financial Officer of d'Amico International Shipping SA (the "Company") declares to the best of his knowledge, that the nine months and third quarter 2021 financial statements prepared in accordance with the applicable set of accounting standards as published in this report, give a true and fair view of the assets, liabilities, financial position and income statement of the Company and its consolidated subsidiaries and that the interim management report includes a fair review of the development and performance of the business and the position of the Company and its consolidated subsidiaries, together with a description of the principal risks and uncertainties that they face.
Antonio Carlos Balestra di Mottola Chief Financial Officer
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