Summary
Including the one-off impairment loss of USD 0.2 million arising from the sale of Nordic Ruth, the Group incurred a loss after tax of USD 3.9 million in 2019 compared to a loss after tax of USD 23.8 million in 2018 (including an impairment loss of USD 13.2 million).
The actual financial performance for 2019 was in line with the revised expectations of the Board, as indicated in the Q3 2019 Interim Report.
The Board of Directors of NSH A/S has approved the Annual Report for 2019 on March 24, 2020.
2019 in brief:
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The Group, with its five vessels, continued to be a tonnage provider in the product tanker segment in 2019. Upon the completion of their respective second special surveys in August 2019, Nordic Agnetha joined Nordic Pia and Nordic Hanne in the Hafnia Handy Pool whilst Nordic Anne, a LR1 tanker, resumed her earning days in the Hafnia LR Pool (formerly known as Straits Tankers Pool). Nordic Amy commenced her second special survey in September 2019 and joined the rest of the handysize vessels in the Hafnia Handy Pool in October 2019.
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Nordic Ruth Pte. Ltd., a wholly-owned subsidiary of Nordic Shipholding A/S, has successfully delivered the M/T Nordic Ruth to her new owners in July 2019. Arising from the sale, a further impairment loss of USD 0.2 million was recognised in 2019. Net proceeds from the sale were used to reduce the bank loan with the lenders.
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Revenue earned by the vessels reached USD 36.1 million, which resulted in a Time Charter Equivalent (“TCE”) revenue of USD 22.5 million and an EBITDA of USD 6.8 million.
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The Group started 2019 on a positive note as the average daily TCE rate in Q1 2019 was approximately 23% higher than the average daily TCE rate in Q4 2018. The daily TCE rate started to soften from May 2019 before improving from October 2019.
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After accounting for depreciation, impairment loss and financial income and expenses, the Group incurred a loss of USD 3.9 million. Equity totalled USD 7.9 million and equity ratio reached 8.1%.
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The cash sweep mechanism under the loan agreement was not activated in 2019. As part of the loan restructuring concluded in Q4 2018, the quarterly loan instalments due from December 2018 to September 2020 are deferred to December 2020.
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The covenants waivers arising from the loan restructuring concluded in Q4 2018 among management, the major shareholder and the lenders will expire by end-September 2020. At the year-end, as all parties are still in the process to achieve a longer-term agreement, the bank loans and loans from the majority shareholder is reclassified to ‘current liabilities’.
Forecast for 2020:
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With the substantial improvement in the tanker market from October 2019 till end of February 2020, the Group is expecting a cash sweep of approximately USD 3.3 million at the end of Q1 2020.
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Performance in the tanker market started positively for the first 2 months of 2020 as rates have improved significantly since October 2019. However, for the rest of the year, the Group’s performance will be impaired by the negative impact on the world economy arising from the unprecedented drop in oil price and even more so by the COVID-19 situation. As the implications of these events are still unfolding, the Group for the time being, is unable to provide a forecast for 2020. A forecast will be provided when there is more certainty.