Nordic Shipholding — Earnings Release 2018

Mar 28, 2019

Company Announcement 2/2019

Company Announcement 2/2019

March 28, 2019

**NORDIC SHIPHOLDING A/S

****Company Announcement: 2/2019

**

Published via NASDAQ OMX on March 28, 2019

Nordic Shipholding A/S – Annual Report 2018

Summary

In 2018, Nordic Shipholding A/S (‘NSH A/S’) incurred a loss after tax of USD 23.8 million (which included an impairment loss of USD 13.2 million on the six vessels) compared to a smaller loss of USD 3.6 million incurred in 2017.  Excluding the one-off impairment loss of USD 13.2 million (2017: USD Nil), the loss after tax was USD 10.6 million.  The actual EBITDA earned in 2018 was in line with the revised expectations of the Board and the actual results before tax was USD 1.2 million better than the forecast indicated in the Q3 2018 Interim Report.

The Board of Directors of NSH A/S has approved the Annual Report for 2018 on March 28, 2019.

2018 in brief:

• The Group, with its six vessels, continued to be a tonnage provider in the product tanker segment in 2018.  The five handysize tankers remained commercially managed by the UPT Handy Pool (Nordic Agnetha, Nordic Amy and Nordic Ruth) and Hafnia Handy Pool (Nordic Pia and Nordic Hanne) while the LR1 tanker (Nordic Anne) remained commercially managed by Straits Tankers Pool.

  - Gross revenue earned by the six vessels reached USD 32.8 million, which resulted in a Time Charter Equivalent (“TCE”) revenue of USD 19.2 million and an EBITDA of USD 2.0 million. The Group also took an impairment loss of USD 13.2 million on the vessels. 

  - The softening of the tanker market from March to October 2018, compounded by the higher bunker prices, contributed to the weak performance of the Group.  As a result, the average daily TCE rates earned by the six vessels deployed in the three pools came in below their forecasted daily rate.

  - After accounting for depreciation, impairment loss and financial income and expenses, the Group incurred a loss of USD 23.8 million.  Equity totalled USD 11.8 million and equity ratio reached 11.4%.

  - The cash sweep mechanism under the loan agreement was not activated in 2018.  In 2018, the Group utilised USD 5.0 million of the previously swept excess cash to offset the scheduled loan amortisation from January 2018 to September 2018.            

• Arising from the agreement with the lending banks in Q1 2018 to amend certain loan covenants, in particular, the Minimum Value Covenant, a USD 3.85 million Banker’s Guarantee was provided by the majority shareholder of the Group as additional security to the lenders.

  - The Group breached certain loan covenants in Q3 2018.  Following successful negotiations among management, the major shareholder and the lenders, an agreement has been reached which resulted in an improved balance sheet structure for the Group.  Elements of the re-negotiated financing agreements include but are not limited to (i) the major shareholder providing additional liquidity in the form of loans, (ii) increase in interest margin, and (iii) covenants and undertakings modified/relieved in order to secure that the Company will have more time - up to September 2020 to finalise the implementation of its various strategies.

  - The legal dispute with a total value of about USD 1.5 million, disclosed in 2017 Annual Report, was resolved at the end of September 2018. That dispute was related to a sizeable demurrage and deviation claim.  The Group had received the full amount of about USD 1.5 million in early-November 2018.

  - Management has decided to sell the 19-year old (2000-built) Nordic Ruth, the Group’s oldest handysize vessel, in Q4 2018.  Hence, Nordic Ruth has been reclassified as an asset-held for sale. 

Forecast for 2019:

• Based on current estimates and barring unforeseen circumstances, the Group is forecasting a loss in 2019 (not taking into account any reversal or write-down of impairment), however, it is a substantial improvement compared to 2018.

  - In February 2019, Nordic Ruth Pte. Ltd. (wholly-owned subsidiary of NSH A/S) has entered into a Sale and Purchase Memorandum of Agreement to sell Nordic Ruth at a gross sale price of USD 6.1 million.  The sale is expected to take place in Q2 2019 and the net proceeds from the sale will be applied entirely to prepay the loan facility. 

  - Nordic Anne, Nordic Agnetha and Nordic Amy will undergo their second special survey in April 2019, May 2019 and July 2019, respectively.

  - The projected TCE revenue from the 5 product tankers and the TCE revenue earned by Nordic Ruth until she is sold, are expected to be in the region of USD 23.0 million – USD 26.0 million.

  - After accounting for operating expenditure budgeted by the respective technical managers, the Group expects EBITDA (earnings before interest, tax, depreciation and amortisation) to be in the range of USD 5.0 million – USD 8.0 million with a budgeted stable positive cash flow.

  - The result before tax is expected to be between USD -6.0 million – USD -3.0 million.  This outlook for 2019 does not take into account any impairment or write-back of impairment of vessels’ carrying values.

The Board will continue to look at growth and consolidation opportunities that are accretive to the Company. 

For further information please contact:

Knud Pontoppidan, Chairman of the board, Nordic Shipholding A/S: +45 39 29 10 00

Attachment

• Annual Report 2018