August 29, 2020
NORDIC SHIPHOLDING A/S
Company Announcement: 08/2020
Published via NASDAQ OMX on August 29, 2020
H1 Result 2020
The comparison figures for period ended 30 June 2019 are stated in parenthesis.
The very high Time Charter Equivalent (“TCE”) rates arising from the short-term surge in demand for tonnage caused by the COVID-19 pandemic and the oil price war which started in Q1 2020 positively impacted the Group’s earnings in H1 2020. As a result, the average daily TCE rate earned in H1 2020 by the 5 vessels was approximately 20% and 83% higher than the average TCE rate earned in Q4 2019 and H1 2019, respectively.
For the 6 months ended 30 June 2020, the Group generated a profit after tax of
USD 5.7 million (loss of USD 1.3 million) primarily due to improved TCE revenue generated.
Despite the sale of Nordic Ruth in July 2019, TCE revenue rose 59.8% to USD 19.4 million (USD 12.2 million) in H1 2020 principally from higher TCE revenue by the vessels in the pools compared to the same period last year.
Expenses relating to the operation of vessels in H1 2020 decreased to USD 5.7 million (USD 7.1 million) mainly due to the sale of Nordic Ruth in July 2019.
EBITDA increased significantly to USD 13.0 million (USD 4.3 million) as a result of improved TCE revenue in H1 2020. Other external costs increased marginally by USD 0.1 million to USD 0.7 million (USD 0.6 million).
In line with management’s strategy to secure longer term financing in the renegotiation of the Group’s loan facilities, two co-brokers were appointed in May 2020 to officially test the buying interest for one vessel, Nordic Hanne, a handysize tanker. Hence, the Group recognised an impairment loss of USD 2.0 million in H1 2020 following the reclassification of Nordic Hanne as an asset held-for-sale. It is noted that the estimation of Nordic Hanne’s expected sale value is highly uncertain. No other impairment nor reversal of impairment have been taken for the other four vessels.
After accounting for depreciation, impairment loss, interest expenses and other finance expenses, the Group generated a profit after tax of USD 5.7 million in H1 2020 (loss of USD 1.3 million).
Between 31 December 2019 and 30 June 2020, equity increased from USD 7.9 million to USD 13.6 million as a result of the cumulative profit earned during the period. Consequently, the equity ratio improved from 8.1% to 15.0%.
As part of the loan restructuring concluded with the lending banks in Q4 2018, the financial covenants under the original loans such as (i) minimum value (fair market value of vessels as a percentage of outstanding loan) and (ii) minimum equity ratio are waived whilst the minimum liquidity level is reduced. The relief from these financial covenants are provided till and including 30 September 2020. In addition, the quarterly loan instalments due from December 2018 to September 2020 are deferred to December 2020 where all of the Group’s debts to the lending banks mature. The Company, together with its majority shareholder, are in active discussions with the lending banks on securing longer term financing for the Group. It is management’s expectation that the lenders will finance the Company in a period longer than 31 December 2020.
The Group is also subject to a quarterly cash sweep mechanism under which the Group after payment of instalments and interest under the loan agreement, must apply any cash and cash equivalents of the Group in excess of USD 6.0 million towards prepayment of the loan. During H1 2020, this cash sweep mechanism was activated on 31 March 2020 and on 30 June 2020, and a total of USD 11.1 million excess cash was used to pay down the loan (USD NIL cash sweep for H1 2019).
During the financial period under review, cash flow generated from operations was USD 11.9 million (USD 0.2 million) contributed by earnings from the pools.
As at 30 June 2020, cash and cash equivalents stood at USD 6.2 million (USD 8.8 million, including balances held in dry-docking reserve bank accounts).
The outlook for 2020 remains unchanged as indicated in the Company Announcement 07/2020 on 26 August 2020.
The Company continues to pursue growth and potential consolidation opportunities that are accretive to the Company.
For further information please contact:
Knud Pontoppidan, Chairman of the board, Nordic Shipholding A/S: +45 39 29 10 00