The Board of directors resolved to distribute an extraordinary dividend of DKK
27.50 per share.
The forecast for profit before tax in 2007 excl. restructuring costs is
increased to USD 800-820 million from USD 780-800 million. Restructuring costs
are expected to amount to around USD 15 million.
In the second quarter there has been a considerable appreciation on the
Company's fleet including purchase options and TORM's share of OMI's fleet.
Highlights
▪ The profit before tax for the first half of 2007 was USD 739
million. The result is better than expected and highly satisfactory. Profit
after tax for the second quarter of 2007 was USD 66 million (DKK 365 million).
Profit after tax for the first half of 2007 was USD 740 million (DKK 4,154
million).
▪ Equity at 30 June 2007 amounted to USD 1,375 million (DKK 7,578 million),
corresponding to USD 19.9 per share (DKK 109.5 per share) excluding treasury
shares. A dividend of DKK 419 million (USD 76 million) was paid in April.
▪ The market value of the Company's vessels, including the order book, exceeded
book value by USD 1,238 million at 30 June 2007, equalling USD 17.9 per share
(DKK 98.6 per share), excluding treasury shares. The value of 19 purchase
options, which can be exercised from 2007, and TORM's share of OMI's vessels is
not included in the excess value.
▪ The product tanker market was highly volatile in the first half. The
increasing transport demand, primarily to the USA, ensured a solid demand for
product tankers at favourable rates at the beginning of the second quarter. The
spot market, however, started the third quarter on a weaker note than expected,
whereas the period time charter market remains strong, reflecting the
persistently strong customer demand and optimistic outlook. At 30 June, the
Company had covered 44% of the remaining earning days in 2007, excluding
earning days for the OMI vessels, at an average rate of USD 26,331 per day.
▪ The upward trend in the bulk market of the second quarter continued into the
third quarter due to an increasing demand for transport of primarily iron ore,
coal and soya beans. At 30 June, the Company had covered 94% of the remaining
earning days in 2007 at an average of USD 25,700 per day and 30% of the earning
days in 2008 at an average of USD 33,125 per day.
▪ At the Board meeting to discuss the financial report for the first half of
2007, the Board of Directors resolved to distribute an extraordinary dividend
of DKK 2 billion, equalling DKK 27.50 per share cf. separate stock announcement
about this.
▪ After the acquisition of OMI was completed, OMI has become a jointly owned
subsidiary of TORM and Teekay. The distribution of OMI's assets took effect
from 1 August 2007, with TORM taking over 24 product tankers from OMI together
with OMI's technical operations in India and a part of OMI's organization in
the USA. The integration of OMI staff, tankers and client portfolio into TORM's
organization proceeds according to the plan and fully meets expectations both
operationally and financially. From 2008 and onwards, TORM expects to realize
annual cost synergies of the order of USD 10-15 million as a result of the
acquisition of OMI.
▪ So far this year, TORM has not sold second-hand tonnage, as in previous years
due to strongly increasing vessel prices.
▪ The 2007 profit before tax forecast is raised by USD 20 million to 800-820
million excl. restructuring costs related to the acquisition of OMI.
Restructuring costs are expected to amount to around USD 15 million.
Teleconference TORM's Management will review the report on the first half of
2007 in a teleconference and webcast (www.torm.com) today,
31 August 2007, at 17.00 Copenhagen time (CET). To participate, please call 10
minutes before the call on tel.: +45 3271 4607 (from Europe) or +1 334 323 6201
(from the USA). A replay of the conference will be available from TORM's
website.
Contact A/S Dampskibsselskabet TORM Telephone +45 39 17 92 00
Tuborg Havnevej 18 Klaus Kjærulff, CEO
DK-2900 Hellerup - Denmark
Q2 2007 Q2 2006 Q1-Q2 Q1-Q2
Million USD 2007 2006 2006
Income statement
Net revenue 198.4 137.1 360.4 298.8 603.7
Time charter equivalent earnings (TCE) 155.7 102.9 281.8 232.4 455.4
Gross profit 89.4 59.8 158.5 145.8 271.4
EBITDA 77.8 72.4 138.2 154.4 301.0
Operating profit 58.6 57.6 104.2 124.5 242.1
Financial items 0.5 23.2 635.1 15.6 -1.0
Profit before tax 59.1 80.8 739.3 140.1 241.1
Net profit 66.0 80.8 740.4 138.5 234.5
Balance sheet
Total assets 3,195.6 1,753.1 3,195.6 1,753.1 2,089.0
Equity 1,375.4 870.3 1,375.4 870.3 1,280.8
Total liabilities 1,820.2 882.8 1,820.2 882.8 808.2
Invested capital 2,517.1 1,265.4 2,517.1 1,265.4 1,298.5
Net interest bearing debt 1,152.4 723.1 1,152.4 723.1 662.0
Cash flow
From operating activities 66.0 64.6 114.1 140.3 232.5
From investing activities -196.6 33.0 -241.8 -86.5 -117.6
Thereof investment in tangible fixed assets -120.4 -56.8 -165.7 -176.5 -262.4
From financing activities 559.0 -168.1 579.3 -160.7 -238.6
Net cash flow 428.4 -70.5 451.6 -106.9 -123.7
Key financial figures
Margins:
TCE 78.5% 75.1% 78.2% 77.8% 75.3%
Gross profit 45.1% 43.6% 44.0% 48.8% 44.9%
EBITDA 39.2% 52.8% 38.3% 51.7% 49.8%
Operating profit 29.5% 42.0% 28.9% 41.7% 40.1%
Return on Equity (RoE) (p.a.)*) 19.1% 35.6% 63.1% 31.2% 21.5%
Return on Invested Capital (RoIC) (p.a.) 12.2% 18.1% 12.1% 20.4% 19.6%
Equity ratio 43.0% 49.6% 43.0% 49.6% 61.3%
Exchange rate USD/DKK, end of period 5.51 5.87 5.51 5.87 5.66
Exchange rate USD/DKK, average 5.53 5.94 5.61 6.08 5.95
Share related key figures**)
Earnings per share, EPS USD 1.0 1.2 10.7 2.0 3.4
Cash flow per share, CFPS USD 1.0 0.9 1.6 2.0 3.3
Share price, end of period(per share of DKK 10
each) DKK 207.6 135.9 207.6 135.9 186.0
Number of shares, end of period Mill. 72.8 72.8 72.8 72.8 72.8
Number of shares (excl. treasury shares),average Mill. 69.2 69.5 69.2 69.6 69.4
*) The gain from the sale of the Norden shares is not annualized when
calculating the Return on Equity
**)Adjusted for the share split in May 2007
Profit by division
Million USD Q2 2007 Q1-Q2 2007
Tanker Bulk Not Tanker Bulk Not
Division Division OMI *) allocated Total Division Division OMI
*) allocated Total
Net revenue 146.8 32.6 19.0 0.0 198.4 280.0 61.4 19.0 0.0 360.4
Port expenses, bunkers and
commissions -37.4 -1.4 -3.1 0.0 -41.9 -73.2 -2.5 -3.1 0.0 -78.8
Freight and bunker derivatives -0.8 0.0 0.0 0.0 -0.8 0.2 0.0 0.0 0.0 0.2
Time charter equivalent earnings
(TCE) 108.6 31.2 15.9 0.0 155.7 207.0 58.9 15.9 0.0 281.8
Charter hire -20.0 -14.8 -3.7 0.0 -38.5 -39.0 -30.2 -3.7 0.0 -72.9
Operating expenses -21.2 -2.6 -4.0 0.0 -27.8 -41.5 -4.9 -4.0 0.0 -50.4
Gross Profit 67.4 13.8 8.2 0.0 89.4 126.5 23.8 8.2 0.0 158.5
Profit from sale of vessels 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Administrative expenses -10.9 -2.0 -2.8 0.0 -15.7 -20.5 -3.6 -2.8 0.0 -26.9
Other operating income 3.1 0.0 1.0 0.0 4.1 5.6 0.0 1.0 0.0 6.6
Depreciation and impairment
losses -13.9 -1.5 -3.8 0.0 -19.2 -27.2 -3.0 -3.8 0.0 -34.0
Operating profit 45.7 10.3 2.6 0.0 58.6 84.4 17.2 2.6 0.0 104.2
Financial items - - - 0.5 0.5 - - - 635.1 635.1
Profit/(Loss) before tax - - - 0.5 59.1 - - - 635.1 739.3
Tax - - - 6.9 6.9 - - - 1.1 1.1
Net profit - - - 7.4 66.0 - - - 636.2 740.4
*) Contains the result of the acitvity that TORM owns in a 50/50 joint venture
with Teekay.
Tanker and Bulk
Tanker Division The Tanker Division achieved a profit before financial items of
USD 45.7 million in the second quarter of 2007 against USD 38.7 million in the
first quarter of 2007.
After a sluggish first quarter with an almost inexistent winter market, the
second quarter was better than expected. The MR segment in particular was
highly positive in the second quarter, principally as a result of gasoline
exports to the USA. The beginning of the third quarter has been characterised
by falling rates, however.
In the first quarter, the difference between earnings in the Eastern and the
Western product tanker markets was significant, but the gap narrowed in the
second quarter due to increased activity at refineries and petrochemical plants
in Asia.
The tanker market was affected by the following factors in the second quarter
of 2007:
Positive impact:
· Increased exports of gasoline to the USA due to a lower than expected US
production of gasoline leading up to the summer holiday period.
· Increased demand for tonnage in Asia.
· Oil companies' focus on modern, safe vessels for transport of oil products.
Negative impact:
· Increased refinery production in the USA at the end of the second quarter.
· A large number of newbuildings.
· Rising fuel costs.
As a consequence of a solid demand for product tankers, TORM's Tanker Division
obtained freight rates that were 30% higher for the LR2 segment, 21% higher for
the LR1 segment and 12% higher for the MR segment in the second quarter of 2007
compared with those of the second quarter of 2006.
The number of earning days for TORM in the LR2 segment rose by 52% over the
second quarter of 2006, while the number of earning days in the LR1 and MR
segments rose by 31% and 3%, respectively. Compared with the first quarter of
2007, the number of earning days was up by 6% for TORM's tanker fleet as a
whole.
Tanker Division Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 ÆndringQ2 06- Q2 07
LR2 (Aframax, 90-110,000 DWT)
Available earning days 527 642 703 702 799 52%
Per earning day (USD):
Earnings (TCE)*) 21,507 27,282 25,940 26,738 27,926 30%
Operating expenses**) -6,695 -7,141 -5,614 -7,542 -8,204 23%
Operating cash flow***) 12,058 17,333 18,674 17,076 17,864 48%
LR1 (Panamax, 75-85,000 DWT)
Available earning days 1,060 1,194 1,193 1,279 1,392 31%
Per earning day (USD):
Earnings (TCE)*) 23,530 28,843 25,588 27,784 28,521 21%
Operating expenses**) -5,254 -6,450 -5,109 -6,793 -7,785 48%
Operating cash flow***) 11,974 13,105 11,526 12,279 12,423 4%
MR (45,000 DWT)
Available earning days 1,632 1,642 1,627 1,654 1,684 3%
Per earning day (USD):
Earnings (TCE)*) 24,755 25,306 21,861 24,520 27,621 12%
Operating expenses**) -7,320 -6,660 -6,197 -7,288 -6,503 -11%
Operating cash flow***) 18,251 19,392 16,365 16,987 20,674 13%
*) TCE = Gross freight income less bunker, commissions and port expenses.
Operating expenses are on own vessels.
**) Operating expenses is related owned vessels.
***) Operating cash flow = TCE less operating expenses and charter hire.
Bulk Division The Bulk Division achieved an operating profit of USD 10.3
million for the second quarter of 2007.
Freight rates in the Panamax segment rose further to a historically high level
at the end of the second quarter of 2007. The development in bulk rates is
still largely dependent on the development in individual markets, primarily
China and Australia as well as India, Japan and South America.
In the second quarter of 2007, freight rates in the bulk market were positively
affected by increased transports of especially iron ore, coal and soya beans.
Due to insufficient port capacity, the quarter was characterised by long waits
in Australian ports, which further pushed up freight rates.
Demand for tonnage was strong enough for the bulk market to be able to more
than absorb a relatively large addition of newbuildings in the first half of
2007.
The number of available earning days in the Panamax segment dropped by 8% in
the second quarter of 2007 relative to the second quarter of 2006 due to the
sale of three Panamax vessels in August 2006.
Bulk Division Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 ÆndringQ2 06- Q2 07
Panamax (60-80,000 DWT)
Available earning days 1,382 1,234 1,234 1,260 1,274 -8%
Per earning day (USD):
Earnings (TCE)*) 18,343 18,402 20,272 22,102 24,404 33%
Operating expenses**) -4,576 -5,662 -4,020 -5,099 -5,303 16%
Operating cash flow***) 7,681 6,872 9,846 8,170 10,711 39%
*) TCE = Gross freight income less bunker, commissions and port expenses.
Operating expenses are on own vessels.
**) Operating expenses is related owned vessels.
***) Operating cash flow = TCE less operating expenses and charter hire.
Other activities Other (non-allocated) activities consist of financial items of
USD 635 million and tax of USD
1 million. Financial items consist of profit on the investment in Norden of USD
643 million and interest expenses of USD 8 million. As a result of the
corporate tax rate cut in Denmark in the second quarter, tax is positive in the
amount of USD 1 million.
Fleet development During the second quarter of 2007, TORM took delivery of two
LR2 vessels, one LR1 vessel and one Panamax bulk carrier.
At the end of the second quarter of 2007, TORM's owned fleet consisted of 34.5
product tankers and six bulk carriers, a total of 40.5 vessels. Add to this the
21 tankers, which TORM at 30 June 2007 owned via the Company's part ownership
of OMI. Of these, 20 vessels were transferred to TORM at 1 August 2007.
31 March 2007 Addition Disposal 30 June 2007
LR2 / Aframax 7.0 TORM MargitTORM Mette - 9.0
LR1 / Panamax 6.5 TORM Venture - 7.5
MR 18.0 - - 18.0
Tank 31.5 34.5
Panamax 5.0 TORM Anholt - 6.0
Bulk 5.0 6.0
Total 36.5 40.5
Planned TORM's planned fleet expansion comprises 16.5 vessels for delivery
between the third quarter of
fleet changes 2007 and 2010. On to that must be added a newbuilding, which TORM
at 30 June owned via the Company's part ownership of OMI. The planned
investments amount to USD 650 million.
TORM has chartered in 16 product tankers on long-term charters, of which 10
already form part of the fleet. TORM holds purchase options on three of the
charters. The options can be exercised between 2009 and 2014.
TORM has chartered in 21 Panamax bulk carriers on long-term charters, of which
eight already form part of the fleet. TORM holds purchase options on 16 of the
charters. The options can be exercised between 2007 and 2018.
So far this year, TORM has not sold second-hand tonnage, as in previous years
due to strongly increasing vessel prices.
Pools At 30 June 2007, the three product tanker pools consisted of 90 vessels.
At the end of 2007, the three pools are expected to comprise 91 vessels,
excluding the addition of 24 vessels from OMI.
Results
Second quarter 2007 The second quarter of 2007 showed a gross profit of USD 89
million, against USD 60 million in the same quarter of 2006. The profit before
depreciation (EBITDA) for the period was USD 78 million against USD 72 million
in the second quarter of 2006.
Depreciation amounted to USD 19 million in the second quarter of 2007.
The operating profit for the second quarter of 2007 was USD 59 million, against
USD 58 million in the same quarter of 2006. Of this amount, the Tanker and Bulk
Divisions contributed USD 46 million and USD 10 million respectively, while
TORM's share of OMI contributed USD 3 million.
Financial items were positive by USD 0.5 million, against USD 23 million in the
corresponding quarter of 2006. The difference is mainly due to the fact that
TORM did not receive dividends from Norden, as the Company sold its shares.
In the second quarter, TORM recognised a tax gain of USD 7 million due to the
lowering of the corporate tax rate in Denmark from 28% to 25%.
Profit after tax was USD 66 million, against USD 81 million in the second
quarter of 2006.
Assets Total assets rose from USD 2,229 million to USD 3,196 million in the
second quarter of 2007, primarily as a result of the OMI acquisition.
Liabilities In the second quarter of 2007, the Company's net interest bearing
debt increased from USD 659 million to USD 1,152 million due to dividend
payments, the acquisition of OMI and the sale of the Norden shares. The Company
has considerable undrawn loan facilities at its disposal.
Equity During the second quarter of 2007, equity declined from USD 1,389
million to USD 1,375 million. This was an effect of earnings and dividend
payments during the period. Mainly as a result of the acquisition of OMI,
equity as a percentage of total assets dropped from 62.3% at 31 March 2006 to
43.0% at 30 June 2007.
At 30 June 2007, TORM held 3,564,364 treasury shares, corresponding to 4.9% of
the Company's share capital, which is unchanged from 31 March 2007.
OMI In June 2007, TORM acquired the US tanker shipping company OMI in a 50/50
joint venture with Teekay Corporation. TORM's 50% ownership interest in OMI is
recognised on a pro rata basis in TORM's consolidated financial statements
effective from 1 June 2007 by aggregating items similar in nature.
Consequently, OMI is included in the interim financial statements at 50% of one
month's profit, presented as a separate segment in the statement of profit by
division and at 50% of the balance sheet total at 30 June 2007. In accordance
with TORM's accounting policies the recognition is based on a preliminary
takeover balance sheet at 1 June 2007, which is shown on page 7.
The valuation of vessels, which constitute 85% of total assets in the
preliminary takeover balance sheet, is subject to great certainty. In addition
to this the recognition of assets and liabilities, which were not previously
recognised in OMI's balance sheet, including T/C contracts, purchase options
and other commercial agreements as well as customer and supplier relations. At
present, the takeover balance sheet is expected to be finalised in connection
with the preparation of the annual report for 2007 at the latest. If the sum of
the acquired net assets is increased relative to the takeover balance sheet,
goodwill will be reduced correspondingly.
Million USD Preliminary opening
balance at the
date of acquisition
at fair value
Intangible assets 3.7
Tangible fixed assets 1,009.3
Freight receivables, etc. 25.9
Other receivables 2.4
Prepayments 9.3
Marketable securities 28.5
Cash and cash equivalents 100.7
Mortgage debt and bank loans -276.1
Other financial liabilities -16.2
Trade payables -13.2
Other liabilities -48.6
Deferred income -5.7
Net assets acquired 820.0
Goodwill 89.3
Cash consideration paid 909.3
Cash and cash equivalents, acquired -100.7
Cash flow out, net 808.6
Integration of OMI TORM's and Teekay Corporation's acquisition of OMI was
completed on 8 June 2007, whereby OMI became a jointly owned subsidiary of TORM
and Teekay. The distribution of OMI's assets between TORM and Teekay took
effect from 1 August 2007, with TORM taking over 24 product tankers from OMI
together with OMI's technical operations in India and a part of OMI's
organization in the USA. Additionally one product tanker and one newbuilding
will remain in OMI until the beginning of 2008.
In addition to giving TORM a very modern and uniformed product tanker fleet and
ensuring TORM's presence in the American market, the acquisition increases
TORM's global competitiveness.
The integration of OMI staff, tankers and client portfolio into TORM's
organization proceeds according to the plan and fully meets expectations both
operationally and financially. From 2008 and onwards, TORM expects to realize
annual cost synergies of the order of USD 10-15 million as a result of the
acquisition of OMI.
Subsequent events As of 1 August, TORM took over 24 product tankers from OMI
together with OMI's technical operations in India and a part of OMI's
organisation in the USA. In addition to that, one product tanker and one
newbuilding will remain in OMI until the beginning of 2008.
Expectations The 2007 profit before tax forecast is raised by USD 20 million to
800-820 million excl. restructuring costs related to the acquisition of OMI.
Restructuring costs are expected to amount to around USD 15 million.
The key assumptions behind the forecast are as follows:
Assumptions Q1 07A Q2 07A Q3 07 Q4 07
LR2 Earning days 702 799 906 922
TCE rate (USD/day) 26,738 27,926 22,119 29,834
LR1 Earning days 1,279 1,392 1,678 1,719
TCE rate (USD/day) 27,784 28,521 25,068 28,111
MR Earning days 1,654 1,684 2,702 2,633
TCE rate (USD/day) 24,520 27,621 16,797 21,273
SR Earning days 1,104 1,092
TCE rate (USD/day) 16,297 19,709
Panamax Earning days 1,260 1,274 1,283 1,273
TCE rate (USD/day) 22,102 24,404 24,500 26,000
A Realized figures.
For competitive reasons, TORM does not provide the Company's own expectations
for
product tanker rates. The table above sets out the rates as quoted on the
IMAREX forward
market at 22 August 2007.
Sensitivity At the end of the second quarter of 2007, 94% of earning days
remaining in the year for the Company's Panamax bulk carriers were covered at
an average rate of 25.700 per day. For the Tanker Division, 44% of earning days
remaining for the year, excluding earning days for the OMI vessels, were
covered at an average rate of USD 26,331 per day at the end of the second
quarter.
At 30 June, TORM had hedged the price for 8.6% of the remaining bunker
requirements for 2007, and the market value of these contracts was USD 0.3
million.
Safe HarborForward looking statements
Matters discussed in this release may constitute forward-looking statements.
Forward-looking statements reflect our current views with respect to future
events and financial performance and may include statements concerning plans,
objectives, goals, strategies, future events or performance, and underlying
assumptions and other statements, which are other than statements of historical
facts. The forward-looking statements in this release are based upon various
assumptions, many of which are based, in turn, upon further assumptions,
including without limitation, Management's examination of historical operating
trends, data contained in our records and other data available from third
parties. Although TORM believes that these assumptions were reasonable when
made, because these assumptions are inherently subject to significant
uncertainties and contingencies which are difficult or impossible to predict
and are beyond our control, TORM cannot assure you that it will achieve or
accomplish these expectations, beliefs or projections.
Important factors that, in our view, could cause actual results to differ
materially from those discussed in the forward looking statements include the
strength of world economies and currencies, changes in charter hire rates and
vessel values, changes in demand for “tonne miles” of oil carried by oil
tankers, the effect of changes in OPEC's petroleum production levels and
worldwide oil consumption and storage, changes in demand that may affect
attitudes of time charterers to scheduled and unscheduled dry-docking, changes
in TORM's operating expenses, including bunker prices, dry-docking and
insurance costs, changes in governmental rules and regulations including
requirements for double hull tankers or actions taken by regulatory
authorities, potential liability from pending or future litigation, domestic
and international political conditions, potential disruption of shipping routes
due to accidents and political events or acts by terrorists. Risks and
uncertainties are further described in reports filed by TORM with the US
Securities and Exchange Commission, including the TORM Annual Report on Form
20-F and its reports on Form 6-K.
Forward looking statements are based on management's current evaluation, and
TORM is only under obligation to update and change the listed expectations to
the extent required by law.
The TORM share
On 23 May 2007, TORM carried out a 2:1 share split, changing the denomination
of the Company's shares from DKK 10 to DKK 5. The price of the TORM share was
DKK 207.6 at 30 June 2007 against DKK 192.9, adjusted to the new denomination,
at the beginning of the quarter, an increase of DKK 14.7.
In the second quarter, before the share split, the Company distributed a
dividend of DKK 11.5 per share, equalling DKK 419 million.
The total return to shareholders for the second quarter of 2007 was thus DKK
20.5 per share (calculated excluding reinvestment), corresponding to a total
return of 10.6%.
Accounting policies
The report for the first half of 2007 has been prepared using the same
accounting policies as for the Annual Report 2006.
The accounting policies are described in more detail in the Annual Report 2006.
The financial report for the first half of 2007 is unaudited, in line with the
normal practice.
Information
Teleconference TORM will host a telephone conference for financial analysts and
investors on 31 August 2007 at 17:00 Copenhagen time (CET), reviewing the
report for the first half of 2007. The conference call will be hosted by Klaus
Kjærulff, CEO, and will be conducted in English.
To participate, please call 10 minutes before the conference starts on tel.:
+45 3271 4607 (from Europe) or +1 334 323 6201 (from the USA). The
teleconference will also be webcast via TORM's website www.torm.com The
presentation material can be downloaded from the website.
Next reporting Due to the acquisition of OMI Corporation TORM's third quarter
report is deferred to the
22 November 2007.
Statement by the Board of Directors and Management on the Interim Report
The Board of Directors and Management have considered and approved the interim
report for the period 1 January - 30 June 2007.
The interim report, which is unaudited, has been prepared in accordance with
the general Danish financial reporting requirements governing listed companies,
including the measurement and recognition provisions in IFRS which are expected
to be applicable for the Annual Report for 2007.
We consider the accounting policies applied to be appropriate, and in our
opinion the interim report gives a true and fair view of the Group's assets,
liabilities, financial position and of the results of operations and
consolidated cash flows.
Copenhagen, 31 August 2007
Management Board of Directors
Klaus Kjærulff, CEO Niels Erik Nielsen, Chairman
Mikael Skov, COO Christian Frigast, Deputy Chairman
Peter Abildgaard
Lennart Arrias
Margrethe Bligaard
Gabriel Panayotides
Nicos Zouvelos
About TORM
TORM is one of the world's leading carriers of refined oil products as well as
being a significant participant in the dry bulk market. The Company operates a
combined fleet of more than 100 modern vessels, principally through a pooling
cooperation with other respected shipping companies who share TORM's commitment
to safety, environmental responsibility and customer service.
TORM was founded in 1889. The company conducts business worldwide and is
headquartered in Copenhagen, Denmark. TORM's shares are listed on the
Copenhagen Stock Exchange (ticker TORM) as well as on the NASDAQ (ticker TRMD).
For further information, please visit www.torm.com.
Income Statement
Million USD Q2 2007 Q2 2006 Q1-Q2 2007 Q1-Q2 2006 2006
Revenue 198.4 137.1 360.4 298.8 603.7
Port expenses, bunkers and commissions -41.9 -37.8 -78.8 -74.1 -148.9
Freight and bunkers derivatives -0.8 3.6 0.2 7.7 0.6
Time Charter Equivalent Earnings (TCE) 155.7 102.9 281.8 232.4 455.4
Charter hire -38.5 -22.6 -72.9 -46.0 -106.3
Operating expenses -27.8 -20.5 -50.4 -40.6 -77.7
Gross profit 89.4 59.8 158.5 145.8 271.4
Profit from sale of vessels 0.0 19.4 0.0 19.4 54.4
Administrative expenses -15.7 -8.8 -26.9 -15.9 -34.6
Other operating income 4.1 2.0 6.6 5.1 9.8
Depreciation and impairment losses -19.2 -14.8 -34.0 -29.9 -58.9
Operating profit 58.6 57.6 104.2 124.5 242.1
Financial items 0.5 23.2 635.1 15.6 -1.0
Profit before tax 59.1 80.8 739.3 140.1 241.1
Tax 6.9 0.0 1.1 -1.6 -6.6
Net profit 66.0 80.8 740.4 138.5 234.5
Earnings per share, EPS *)
Earnings per share, EPS (USD) 1.0 1.2 10.7 2.0 3.4
Earnings per share, EPS (DKK)**) 5.3 6.9 59.9 12.1 20.1
*) The comparative figures for EPS are restated to reflect the share split
carried out in May 2007.
**) Calculated from USD to DKK at the average USD/DKK exchange rate for the
relevant period.
Income statement by quarter
Million USD Q2 06 Q3 06 Q4 06 Q1 07 Q2 07
Revenue 137.1 158.0 146.9 162.0 198.4
Port expenses, bunkers and commissions -37.8 -36.4 -38.4 -36.9 -41.9
Freight and bunkers derivatives 3.6 -5.8 -1.3 1.0 -0.8
Time charter equivalent earnings 102.9 115.8 107.2 126.1 155.7
Charter hire -22.6 -28.5 -31.8 -34.4 -38.5
Operating expenses -20.5 -20.5 -16.6 -22.6 -27.8
Gross profit (Net earnings from shipping activities) 59.8 66.8 58.8 69.1 89.4
Profit from sale of vessels 19.4 34.8 0.2 0.0 0.0
Administrative expenses -8.8 -6.4 -12.3 -11.2 -15.7
Other operating income 2.0 2.6 2.1 2.5 4.1
Depreciation and impairment losses -14.8 -14.4 -14.6 -14.8 -19.2
Operating profit 57.6 83.4 34.2 45.6 58.6
Financial items 23.2 -10.3 -6.3 634.6 0.5
Profit before tax 80.8 73.1 27.9 680.2 59.1
Tax 0.0 -6.2 1.2 -5.8 6.9
Net profit 80.8 66.9 29.1 674.4 66.0
Assets
Million USD 30 June 2007 30 June 2006 31 Dec. 2006
NON-CURRENT ASSETS
Intangible assets
Goodwill 89.3 0.0 0.0
Other intangible assets 3.7 0.0 0.0
Total intangible assets 93.0 0.0 0.0
Tangible fixed assets
Land and buildings 0.4 0.4 0.4
Vessels and capitalized dry-docking 2,267.0 1,139.6 1,136.4
Prepayments on vessels 189.7 134.4 183.3
Other plant and operating equipment 7.5 2.8 3.6
Total tangible fixed assets 2,464.6 1,277.2 1,323.7
Financial fixed assets
Other investments 10.7 328.0 644.4
TOTAL NON-CURRENT ASSETS 2,568.3 1,605.2 1,968.1
CURRENT ASSETS
Inventories of bunkers 16.3 12.0 12.1
Freight receivables, etc. 84.8 45.8 49.7
Other receivables 28.8 25.2 21.5
Prepayments 12.8 5.6 4.6
Cash and cash equivalents 484.6 49.8 33.0
627.3 138.4 120.9
Non-current assets held for sale 0.0 9.5 0.0
TOTAL CURRENT ASSETS 627.3 147.9 120.9
TOTAL ASSETS 3,195.6 1,753.1 2,089.0
Liabilities and Equity
Million USD 30 June 2007 30 June 2006 31 Dec. 2006
EQUITY
Common shares 61.1 61.1 61.1
Treasury shares -18.1 -18.1 -18.1
Revaluation reserves 7.2 263.4 579.8
Retained profit 1.316.1 552.5 574.5
Proposed dividends 0.0 0.0 73.9
Hedging reserves 4.9 7.5 5.6
Translation reserves 4.2 3.9 4.0
TOTAL EQUITY 1,375.4 870.3 1,280.8
LIABILITIES
Non-current liabilities
Deferred tax liability 56.0 55.8 62.8
Mortgage debt and bank loans 770.6 716.3 639.1
TOTAL NON-CURRENT LIABILITIES 826.6 772.1 701.9
Current liabilities
Mortgage debt and bank loans 866.4 56.6 55.9
Other financial liabilities 2.1 0.0 0.0
Trade payables 37.5 15.6 18.7
Current tax liabilities 11.1 10.0 4.6
Other liabilities 67.6 27.1 26.0
Deferred income 8.9 1.4 1.1
TOTAL CURRENT LIABILITIES 993.6 110.7 106.3
TOTAL LIABILITIES 1,820.2 882.8 808.2
TOTAL EQUITY AND LIABILITIES 3,195.6 1,753.1 2,089.0
Equity 1 January - 30 June 2007
Million
USD Common Treasury Retained Proposed Revaluation Hedging Translation Total
shares shares profit dividends reserves reserves reserves
Equity at 1 January 2007 61.1 -18.1 574.5 73.9 579.8 5.6 4.0 1.280.8
Changes in equity Q1-Q2 2007:
Exchange rate adjustment arising on translation
of entities using a measurement currency different
from USD - - - - - - 0.2 0.2
Reversal of deferred gain/loss on hedge instruments at the
beginning of year - - - - - -5.6 - -5.6
Deferred gain/loss on hedge instruments at the end of the
Period - - - - - 4.9 - 4.9
Fair value adjustment on available for sale investments - - - - 70.7 - - 70.7
Transfer to profit or loss on sale of available for sale
Investments - - - - -643.3 - - -643.3
Net gains/losses recognised directly in
equity 0.0 0.0 0.0 0.0 -572.6 -0.7 0.2 -573.1
Net profit for the period 740.4 740.4
Total recognized income/expenses for the
period 0.0 0.0 740.4 0.0 -572.6 -0.7 0.2 167.3
Purchase treasury shares, cost - - - - - - - 0.0
Disposal treasury shares, cost - - - - - - - 0.0
Dividends paid - - - -76.4 - - - -76.4
Dividends paid on treasury shares - - 3.7 - - - - 3.7
Exchange rate adjustment on dividends paid - - -2.5 2.5 - - - 0.0
Exercise of share options - - - - - - - 0.0
Total changes in equity Q1-Q2 2007: 0.0 0.0 741.6 -73.9 -572.6 -0.7 0.2 94.6
Equity at 30 June 2007 61.1 -18.1 1,316.1 0.0 7.2 4.9 4.2 1,375.4
Equity 1 January - 30 June 2006
Million
USD Common Treasury Retained Proposed Revaluation Hedging Translation Total
shares shares profit dividends reserves reserves reserves
Equity at 1 January 2006 61.1 -7.7 415.3 132.4 296.4 3.3 3.9 904.7
Changes in equity Q1-Q2 2006:
Exchange rate adjustment arising on translation
of entities using a measurement currency different
from USD - - - - - - 0.0 0.0
Reversal of deferred gain/loss on hedge instruments at the
beginning of year - - - - - -3.3 - -3.3
Deferred gain/loss on hedge instruments at the end of the
period - - - - - 7.5 - 7.5
Reversal of fair value adjustment on available for sale
investments at the beginning of the year - - - - -296.4 - - -296.4
Fair value adjustment on available for sale investments at
period end - - - - 263.4 - - 263.4
Net gains/losses recognised directly in
equity 0.0 0.0 0.0 0.0 -33.0 4.2 0.0 -28.8
Net profit for the period 138.5 138.5
Total recognized income/expenses for the
period 0.0 0.0 138.5 0.0 -33.0 4.2 0.0 109.7
Purchase treasury shares, cost - -10.4 - - - - - -10.4
Disposal treasury shares, cost - 0.0 - - - - - 0.0
Dividends paid - - - -140.1 - - - -140.1
Dividends paid on treasury shares - - 6.0 - - - - 6.0
Exchange rate adjustment on dividends paid - - -7.7 7.7 - - - 0.0
Exercise of share options - - 0.4 - - - - 0.4
Total changes in equity Q1-Q2 2006: 0.0 -10.4 137.2 -132.4 -33.0 4.2 0.0 -34.4
Equity at 30 June 2006 61.1 -18.1 552.5 0.0 263.4 7.5 3.9 870.3
Cash flow statement
Million USD Q2 2007 Q2 2006 Q1-Q2 Q1-Q2 2006
2007 2006
Cash flow from operating activities
Operating profit 58.6 57.6 104.2 124.5 242.1
Adjustments:
Reversal of profit from sale of vessels 0.0 -19.4 0.0 -19.4 -54.4
Reversal of depreciation and impairment losses 19.2 14.8 34.0 29.9 58.9
Reversal of other non-cash movements -1.8 2.2 4.5 7.7 6.0
Dividends received 1.1 26.2 1.3 26.4 26.4
Interest income and exchange rate gains 10.0 6.3 10.6 7.4 10.1
Interest expenses -15.2 -10.7 -24.6 -21.0 -40.7
Income taxes paid 0.0 0.0 0.7 0.0 -3.1
Change in inventories, accounts receivables and
payables -5.9 -12.4 -16.6 -15.2 -12.8
Net cash inflow/(outflow) from operating activities 66.0 64.6 114.1 140.3 232.5
Cash flow from investing activities
Investment in tangible fixed assets -120.4 -56.8 -165.7 -176.5 -262.4
Purchase of enterprises and activities *) -808.6 0.0 -808.6 0.0 0.0
Sale of/investment in equity interests and marketable
securities 732.4 0.0 732.4 0.2 0.2
Sale of non-current assets 0.0 89.8 0.1 89.8 144.6
Net cash inflow/(outflow) from investing
activities -196.6 33.0 -241.8 -86.5 -117.6
Cash flow from financing activities
Borrowing, mortgage debt and other financial
liabilities 781.3 87.7 806.8 98.9 162.1
Repayment/redemption, mortgage debt -149.6 -111.3 -154.8 -115.1 -256.2
Dividends paid -72.7 -134.1 -72.7 -134.1 -134.1
Purchase/disposals of treasury shares 0.0 -10.4 0.0 -10.4 -10.4
Cash inflow/(outflow) from financing activities 559.0 -168.1 579.3 -160.7 -238.6
Increase/(decrease) in cash and cash equivalents 428.4 -70.5 451.6 -106.9 -123.7
Cash and cash equivalents, beginning balance 56.2 120.3 33.0 156.7 156.7
Cash and cash equivalents, ending balance 484.6 49.8 484.6 49.8 33.0
*) See preliminary opening balance for OMI at page 7.
Quarterly cash flow statement
Million USD Q2 06 Q3 06 Q4 06 Q1 07 Q2 07
Cash flow from operating activities
Operating profit 57.6 83.4 34.2 45.6 58.6
Adjustments:
Reversal of profit from sale of vessels -19.4 -34.8 -0.2 0.0 0.0
Reversal of depreciation and impairment loss 14.8 14.4 14.6 14.8 19.2
Reversal of other non-cash movements 2.2 -2.5 0.8 6.3 -1.8
Dividends received 26.2 0.0 0.0 0.2 1.1
Interest income and exchange rate gains 6.3 1.3 1.4 0.6 10.0
Interest expenses -10.7 -10.2 -9.5 -9.4 -15.2
Income taxes paid 0.0 0.0 -3.1 0.7 0.0
Change in inventories, accounts receivables and
payables -12.4 11.1 -8.7 -10.7 -5.9
Net cash inflow/(outflow) from operating activities 64.6 62.7 29.5 48.1 66.0
Cash flow from investing activities
Investment in tangible fixed assets -56.8 -18.4 -67.5 -45.3 -120.4
Purchase of enterprises and activities *) 0.0 0.0 0.0 0.0 -808.6
Sale of/investment in equity interests and marketable
securities 0.0 0.0 0.0 0.0 732.4
Sale of non-current assets 89.8 62.2 -7.4 0.1 0.0
Net cash inflow/(outflow) from investing activities 33.0 43.8 -74.9 -45.2 -196.6
Cash flow from financing activities
Borrowing, mortgage debt and other financial
liabilities 87.7 2.9 60.3 25.5 781.3
Repayment/redemption, mortgage debt -111.3 -58.7 -82.4 -5.2 -149.6
Dividends paid -134.1 0.0 0.0 0.0 -72.7
Purchase/disposals of treasury shares -10.4 0.0 0.0 0.0 0.0
Cash inflow/(outflow) from financing activities -168.1 -55.8 -22.1 20.3 559.0
Increase/(decrease) in cash and cash equivalents -70.5 50.7 -67.5 23.2 428.4
Cash and cash equivalents, beginning balance 120.3 49.8 100.5 33.0 56.2
Cash and cash equivalents, ending balance 49.8 100.5 33.0 56.2 484.6
*) See preliminary opening balance for OMI at page 7.
Reconciliation to United States Generally Accepted Accounting Principles (US
GAAP)
Million USD Net incomeQ1-Q2 2007 Equity30 June 2007
As reported under IFRS 740.4 1,375.4
Adjustments:
Deferred gain on a sale/lease back 2.1 -11.0
Deferred tax -0.9 2.7
Total adjustments 1.2 -8.3
According to US GAAP 741.6 1,367.1
For a review of principles and methods used in the reconciliation, please refer
to the TORM Annual Report for 2006.
