First Quarter Report 2011
News Release
TORM A/S
May 19, 2011
Interim report Q1 2011
Announcement no. 7 / 19 May 2011 Interim report Q1 2011 Page 1 of 19
“We have generally experienced a stronger market during the past couple of months, while product tanker rates were low in the beginning of the first quarter,” says CEO Jacob Meldgaard. As expected, TORM recognised a loss before tax of USD 45 million in the first quarter of 2011 and maintains the forecast for 2011.
EBITDA excl. sale of vessels for the first quarter of 2011 was USD 10 million, compared to USD 37 million in the first quarter of 2010. The result before tax for the first quarter of 2011 was a loss of USD 45 million, compared to a profit of USD 3 million for the same period in 2010. The result for the first quarter of 2011 was impacted by a loss of USD 6 million from sale of vessels, compared to a profit of USD 18 million in the first quarter of 2010. The result for the first quarter of 2011 was as expected. Product tanker freight rates in the first quarter of 2011 were generally weak and lower than in the same period last year. Freight rates in the East were impacted by weak demand and competition from vessels in the crude oil market. The transatlantic market for MR tonnage was positive from mid-February with stronger rates. This was due to the effects of the cold winter in the Northern hemisphere, a number of arbitrage opportunities due to the unrest in North Africa and high levels of demand in South America. Bulk freight rates were generally under pressure throughout the first quarter, primarily due to the increase in the number of newbuilding deliveries. The number of earning days increased in the first quarter in order to service cargo contracts. TORM has identified additional cost savings of USD 10 million annually, with expected full effect from 2012 onwards. The savings will come from a range of procurement initiatives and by further optimising crew composition. In addition, the Company is evaluating its flag strategy in order to be aligned with the Danish maritime cluster. TORM has in the second quarter of 2011 agreed to defer two MR newbuildings both with delivery in 2012. They are now expected to be delivered in the first quarter of 2013 and the second quarter of 2014, respectively.
Net interest-bearing debt was down to USD 1,853 million in the first quarter of 2011, from USD 1,875 million as at 31 December 2010. TORM had undrawn credit facilities and cash of approx. USD 346 million at the end of the first quarter of 2011. Outstanding CAPEX relating to the order book amounted to USD 195 million. Equity amounted to USD 1,075 million as at 31 March 2011, equivalent to USD 15.5 per share (DKK 81.1 per share), excluding treasury shares, giving TORM an equity ratio of 33%.
As at 31 March 2011, TORM had covered 15% of the remaining earning days in 2011 in the Tanker Division at USD/day 16,345 and 60% of the remaining earning days in the Bulk Division at USD/day 16,492. TORM maintains the forecast of a loss before tax of USD 100-125 million in 2011. As 25,075 earning days for 2011 are unfixed as at 31 March 2011, a change in freight rates of USD/day 1,000 will impact the profit before tax by USD 25 million.
Teleconference
Contact TORM A/S
TORM will be holding a teleconference for financial analysts and investors at 15:00 Danish time today. Please call 10 minutes before the conference is due to start on +45 3271 4607 (from Europe) or +1 887 491 0064 (from the USA). The presentation documents can be downloaded from TORM's website.
Tuborg Havnevej 18 DK-2900 Hellerup, Denmark Tel.: +45 39 17 92 00 / Fax: +45 39 17 93 93 www.torm.com Jacob Meldgaard, CEO, tel.: +45 39 17 92 00 Roland M. Andersen, CFO, tel.: +45 39 17 92 00
Announcement no. 7 / 19 May 2011 Interim report Q1 2011 2 of 19
Key figures
Million USD Q1 2011 Q1 2010 2010
Income statement
Revenue 270.4 205.5 856.1
Time charter equivalent earnings (TCE) 147.5 147.5 560.6
Gross prof it 27.8 55.9 179.8
EBITDA 4.1 55.3 96.8
Operating prof it (EBIT) -32.5 20.3 -79.6
Prof it/(loss) before tax -44.9 2.6 -136.2
Net prof it -45.3 2.3 -135.3
Balance sheet
Total assets 3,259.8 3,225.7 3,286.1
Equity 1,075.0 1,247.7 1,115.3
Total liabilities 2,184.8 1,978.0 2,170.8
Invested capital 2,925.1 2,866.3 2,987.0
Net interest bearing debt 1,853.2 1,621.6 1,874.7
Cash flow
From operating activities -11.1 20.9 -0.6
From investing activities 33.1 41.1 -186.9
Thereof investment in tangible f ixed assets -68.0 -23.6 -253.9
From f inancing activities 0.4 2.5 185.6
Total net cash f low 22.4 64.5 -1.9
Key financial figures
Gross margins:
TCE 54.5% 71.8% 65.5%
Gross prof it 10.3% 27.2% 21.0%
EBITDA 1.5% 26.9% 11.3%
Operating prof it -12.0% 9.9% -9.3%
Return on Equity (RoE) (p.a.)*) -15.0% -2.9% -11.4%
Return on Invested Capital (RoIC) (p.a.)**) -3.8% 0.9% -2.7%
Equity ratio 33.0% 38.7% 33.9%
Exchange rate USD/DKK, end of period 5.25 5.52 5.61
Exchange rate USD/DKK, average 5.46 5.38 5.62
Share related key figures
Earnings per share, EPS USD -0.7 0.0 -2.0
Diluted earnings per share, EPS USD -0.7 0.2 -2.0
Cash f low per share, CFPS USD -0.2 0.3 0.0
Share price, end of period (per share of DKK 5 each) DKK 30.0 57.0 39.7
Number of shares, end of period Mill. 72.8 72.8 72.8
Number of shares (excl. treasury shares), average Mill. 69.3 69.2 69.3
*) Gains/losses f rom sale of vessels and the mark-to-market adjustments of 'Other f inancial assets' are not
annualised w hen calculating the return on equity.
**) Gains/losses f rom sale of vessels are not annualised w hen calculating the Return on Invested Capital.
Announcement no. 7 / 19 May 2011 Interim report Q1 2011 3 of 19
Results
The result before tax for the first quarter of 2011 was a loss of USD 45 million, compared to a profit of USD 3
million for the same period in 2010. The result before depreciation (EBITDA) for the period was USD 4 million,
compared to USD 55 million in the first quarter of 2010.
The Tanker Division reported a primary operating loss of USD 32 million in the first quarter of 2011, as against a
result of USD 2 million in the same period last year. The Tanker Division's result for the first quarter of 2011 was
impacted by a loss of USD 5 million from sale of vessels.
The Bulk Division's primary operating result in the first quarter of 2011 was USD 2 million, compared to USD 22
million in the first quarter of 2010. The result for the first quarter of 2010 includes profits of USD 18 million from
sale of vessels.
Other (not allocated) activities include a loss on investments in joint ventures of USD 2 million, financial costs of
USD 12 million and tax of USD 0 million.
TORM has identified additional cost savings of USD 10 million annually, with expected full effect from 2012
onwards. The savings will come from a range of procurement initiatives and by further optimising crew
composition. In addition, the Company is evaluating its flag strategy in order to be aligned with the Danish
maritime cluster.
Million USD
Tanker Bulk Not
Division Division allocated Total
Revenue 219.2 51.2 0.0 270.4
Port expenses, bunkers and commissions -108.5 -21.3 0.0 -129.8
Freight and bunkers derivatives -0.3 7.2 0.0 6.9
Time charter equivalent earnings 110.4 37.1 0.0 147.5
Charter hire -45.7 -30.9 0.0 -76.6
Operating expenses -42.2 -0.9 0.0 -43.1
Gross Profit 22.5 5.3 0.0 27.8
Prof it/(loss) f rom sale of vessels -5.4 -0.3 0.0 -5.7
Administrative expenses -14.6 -2.5 0.0 -17.1
Other Operating income 0.2 0.0 0.0 0.2
Share of results of jointly controlled entities 0.9 0.0 -2.0 -1.1
EBITDA 3.6 2.5 -2.0 4.1
Impairment losses on jointly controlled entities 0.0 0.0 0.0 0.0
Depreciation and impairment losses -35.9 -0.7 0.0 -36.6
Operating profit (EBIT) -32.3 1.8 -2.0 -32.5
Financial items, net - - -12.4 -12.4
Profit/(Loss) before tax - - -14.4 -44.9
Tax - - -0.4 -0.4
Net profit/(loss) - - -14.8 -45.3
The activity in TORM's 50% ow nership of FR8 Holding Pte. Ltd. is included in "Not-allocated".
Q1 2011
Announcement no. 7 / 19 May 2011 Interim report Q1 2011 4 of 19
Outlook and coverage
TORM maintains the forecast of a loss before tax of USD 100-125 million in 2011.
As at 31 March 2011, TORM had covered 15% of the remaining earning days in 2011 in the Tanker Division at
USD/day 16,345 and 60% of the remaining earning days in the Bulk Division at USD/day 16,492.
The table below shows the figures for 2011 for the period from 1 April to 31 December. The figures for 2012 and
2013 are for the full year.
2011 2012 2013 2011 2012 2013
Owned days
LR2 3,509 4,732 4,719
LR1 1,913 2,550 2,543
MR 10,328 14,868 15,250
SR 2,961 4,004 3,993
Tanker Division 18,711 26,154 26,505
Panamax 546 769 1,423
Handymax - - -
Bulk Division 546 769 1,423
Total 19,257 26,923 27,928
T/C in days T/C in costs (USD/day)
LR2 - - - - - -
LR1 4,548 4,819 2,978 21,637 21,909 23,882
MR 3,206 3,820 3,575 16,053 15,626 15,605
SR - - - - - -
Tanker Division 7,754 8,639 6,553 19,328 19,131 19,366
Panamax 4,309 4,342 4,148 16,303 15,894 16,200
Handymax 1,474 6 97 3 63 16,415 16,855 15,995
Bulk Division 5,783 5,039 4,511 16,331 16,027 16,184
Total 13,537 13,678 11,064 18,048 17,987 18,069
Total physical days Covered days
LR2 3,509 4,732 4,719 511 1 30 -
LR1 6,461 7,369 5,521 706 5 32 3 65
MR 13,534 18,688 18,825 1,279 4 04 -
SR 2,961 4,004 3,993 1,446 1 67 -
Tanker Division 26,465 34,793 33,058 3,942 1,234 3 65
Panamax 4,855 5,111 5,571 2,598 4 30 -
Handymax 1,474 6 97 3 63 1,180 6 06 6 06
Bulk Division 6,329 5,808 5,934 3,777 1,036 6 06
Total 32,794 40,601 38,992 7,719 2,270 9 71
Coverage rates (USD/day)
LR2 15% 3% 0% 22,969 22,962 -
LR1 11% 7% 7% 16,788 17,476 15,666
MR 9% 2% 0% 17,385 15,403 -
SR 49% 4% 0% 12,866 12,263 -
Tanker Division 15% 4% 1% 16,345 16,671 15,666
Panamax 54% 8% 0% 17,533 21,322 -
Handymax 80% 87% 167% 14,200 17,000 17,000
Bulk Division 60% 18% 10% 16,492 18,794 17,000
Total 24% 6% 2% 16,417 17,640 16,499
Fair value of freight rate contracts that are mark-to-market in the income statement (USD million):
Contracts not included above 0.0
Contracts included above 1.4
Note
Actual number of days can vary from projected number of days primarily due to vessel sales and delays of vessel
deliveries. T/C in costs do not include potential extra payments from profit split arrangements.
Covered %
Announcement no. 7 / 19 May 2011 Interim report Q1 2011 5 of 19
Tanker Division
The freight rates were low in the first quarter of 2011, particularly in the Eastern market, where mainly the larger
LR vessels operate. The East remained weak as the demand remained low, due to low demand for naphtha,
which became even more pronounced after the earthquake in Japan, and limited arbitrage opportunities.
Furthermore, the Eastern market was affected by the weak market for transport of crude oil, which implied that a
number of newbuildings in this segment made their virgin voyage in the product tanker segment.
In the Western market, rates also remained low in the first part of the quarter, but increased to higher levels from
mid-February. This was due to a number of circumstances: the effect of the cold winter, rising demand in South
America, an increasing number of arbitrage opportunities due to the unrest in North Africa and the high oil price.
Especially the MR segment, which dominates the Western market, was positively impacted.
The positive trend in the Western market, and the MR segment in particular, has persisted in the second quarter
and has had some positive effects on the Eastern market.
The global fleet grew by approx. 2% in the first quarter of 2011. The significant slippage in newbuilding deliveries
experienced in 2010 continued in the first quarter of 2011 and was around 60%.
The level of floating storage remains at a low level due to a forward curve in backwardation for most refined
products.
Change
Q1 10
- Q1 11
LR2 (Aframax, 90-110,000 DWT)
Available earning days 1,163 1,122 1,098 1,193 1,157 -1%
Spot rates (USD/day)1) 19,270 17,185 19,848 17,061 10,890 -43%
TCE (USD/day)2) 17,375 15,583 17,278 15,123 13,524 -22% 15,377
Operating days 1,080 1,092 1,104 1,196 1,170 8%
Operating expenses (USD/day)3) 6,908 6,301 6,571 6,614 7,698 11% 6,796
LR1 (Panamax 75-85,000 DWT)
Available earning days 1,748 1,777 2,094 2,195 2,085 19%
Spot rates (USD/day)1) 16,273 14,903 14,662 10,750 14,435 -11%
TCE (USD/day)2) 16,686 15,509 14,628 12,172 14,654 -12% 14,241
Operating days 810 749 714 644 630 -22%
Operating expenses (USD/day)3) 6,454 5,420 5,729 5,650 6,577 2% 5,844
MR (45,000 DWT)
Available earning days 3,755 3,916 4,212 4,053 4,263 14%
Spot rates (USD/day)1) 14,179 12,567 13,753 12,524 12,760 -10%
TCE (USD/day)2) 14,700 12,363 14,280 11,993 12,768 -13% 12,851
Operating days 2,790 2,951 3,128 3,281 3,412 22%
Operating expenses (USD/day)3) 6,883 6,053 6,388 6,261 6,628 -4% 6,333
SR (35,000 DWT)
Available earning days 1,002 979 951 1,007 969 -3%
Spot rates (USD/day)1) 12,954 13,673 9,478 9,692 10,410 -20%
TCE (USD/day)2) 18,034 16,099 13,851 12,090 11,319 -37% 13,340
Operating days 990 1,001 1,012 1,012 990 0%
Operating expenses (USD/day)3) 6,041 4,821 6,274 6,075 6,517 8% 5,922
2) TCE = Time Charter Equivalent Earnings = Gross freight income less bunker, commissions and port expenses.
3) Operating expenses are related to owned vessels.
1) Spot rates = Time Charter Equivalent Earnings for all charters with less than 6 months duration = Gross freight income less bunker, broker
commissions and port expenses.
Q1 11 12 month
avg.
Tanker Division Q1 10 Q210 Q310 Q410
Announcement no. 7 / 19 May 2011 Interim report Q1 2011 6 of 19
Bulk Division
The bulk freight rates were under pressure throughout the first quarter, primarily due to the increased tonnage
available from continuing high influx of newbuildings, reduced waiting times in ports and weaker demand.
Demand was negatively affected by the earthquake in Japan and floods in Australia, but positively affected by
continuing growth in China's imports of iron ore, which were approx. 10% higher in the first quarter of 2011 than in
the fourth quarter of 2010 and up 14% on the first quarter of 2010.
The global bulk fleet grew by approx. 4% in the first quarter of 2011.
The freight rates for the Capesize segment, but also to some extent for the Panamax segment, were weak, while
smaller vessels such as Supramax and Handymax were at a stable level. The pressure on Capesize rates is
mainly due to the increased influx of tonnage, as the order book is considerably larger in the Capesize segment.
Some cargoes in the Panamax segment were taken by Capesize vessels, which to some extent affected the
Panamax rates.
As part of TORM’s new dry bulk strategy, whereby the Company will become an integrated freight service
provider primarily to industrial clients, the number of earning days has increased in the first quarter due to signing
of a number of short and medium-term time charter contracts. TORM has sought to cover most of the increased
tonnage, so that the net exposure to the dry bulk market only increased to a limited extent.
Change
Q1 10
- Q1 11
Panamax (60-80,000 DWT)
Available earning days 1,119 1,060 1,189 1,193 1,524 36%
TCE (USD/day)1) 18,298 18,611 20,418 19,294 15,851 -13% 18,544
Operating days 315 182 184 184 180 -43%
Operating expenses (USD/day)2) 5,187 4,603 4,297 3,505 4,836 -7% 4,310
Handymax (40-55,000 DWT)
Available earning days - - - 30 566
TCE (USD/day)1) - - - 11,919 11,544
Operating days - - - - -
Operating expenses (USD/day)2) - - - - -
1) TCE = Time Charter Equivalent Earnings = Gross freight income less bunker, commissions and port expenses.
2) Operating expenses are related to owned vessels.
Bulk Division Q1 10 Q210 Q1 11 12 month
avg.
Q310 Q410
Announcement no. 7 / 19 May 2011 Interim report Q1 2011 7 of 19
Fleet development
TORM’s current fleet and planned future changes are shown in the table below. In the first quarter of 2011, TORM
took delivery of two new product tankers, TORM Agnes and TORM Amalie, and has as previously announced
delivered two newbuild Kamsarmax bulk vessels and an older product tanker to new owners. At the end of the
first quarter, TORM thus owned 70.5 product tankers and two bulk vessels. In addition, TORM had chartered-in
27 product tankers and 13 dry bulk vessels on longer time charter contracts (minimum one year’s duration) and
21 dry bulk vessels on shorter time charter contracts (less than one year’s duration). Another 26 product tankers
were either in pools or under commercial management with TORM.
TORM did not order any vessels in the first quarter of 2011. Thus the order book was four MR vessels and two
Kamsarmaxes at the end of the first quarter. Outstanding capex relating to the order book amounted to USD 195
million.
TORM has in the second quarter of 2011 agreed to defer two MR newbuildings both with delivery in 2012. They
are now expected to be delivered in the first quarter of 2013 and the second quarter of 2014, respectively. The
table below is as per 31 March 2011 and does not reflect the deferral of the two MR newbuildings.
Q4 2010 Changes Q1 2011 Q2 2011 Q3 2011 Q4 2011 2012 2013 2014
Owned vessels
LR2 13.0 - 13.0
LR1 7.5 - 7.5
MR 38.0 1.0 39.0 1.0 3.0 - -
SR 11.0 - 11.0
Tanker Division 69.5 1.0 70.5 - - 1.0 3.0 - -
Panamax 2.0 - 2.0 1.0 1.0
Handymax - - -
Bulk Division 2.0 - 2.0 - - - 1.0 1.0 -
Total 71.5 1.0 72.5 - - 1.0 4.0 1.0 -
TC-in vessels with contract period >= 12 months
LR2 - - -
LR1 16.0 - 16.0 1.0
MR 9.0 2.0 11.0 1.0
SR - - -
Tanker Division 25.0 2.0 27.0 2.0 - - - - -
Panamax 12.0 (1.0) 11.0 1.0 1.0 2.0 1.0 2.0
Handymax 1.0 1.0 2.0
Bulk Division 13.0 - 13.0 1.0 1.0 - 2.0 1.0 2.0
Total 38.0 2.0 40.0 3.0 1.0 - 2.0 1.0 2.0
T/C-in vessels with contract period < 12 months
LR2
LR1
MR
SR
Tanker Division - - -
Panamax 1.0 10.0 11.0
Handymax 2.0 8.0 10.0
Bulk Division 3.0 18.0 21.0
Total 3.0 18.0 21.0
Pools/Commercial managment 25.0 1.0 26.0
Total fleet 137.5 159.5
Note:
The contract duration is defined based on the contractual minimum period and does not include optional periods.
There is not contracted any newbuildings or T/C-in vessels with delivery after 2014
Current fleet Newbuildings and TC-in deliveries with a period >= 12 months
Announcement no. 7 / 19 May 2011 Interim report Q1 2011 8 of 19
Notes on the financial reporting
Accounting policies
The interim report for the first quarter of 2011 is presented in accordance with IAS 34 "Interim Financial Reporting" as adopted by the EU and additional Danish disclosure requirements for interim reports of listed companies. Except for the instances mentioned below, the interim report has been prepared using the accounting policies as for the Annual Report for 2010. The accounting policies are described in more detail in the Annual Report for 2010. As from 1 January 2011, TORM has implemented the following new or amended standards and interpretations: Amendment to IAS 24 "Related Party Disclosures", amendment to IAS 32 "Financial Instruments: Presentation: Classification of Rights Issues", smaller changes from Improvements to IFRS May 2010, amendment to IFRIC 14 “Prepayments of a Minimum Funding Requirement” and IFRIC 19 ”Extinguishing Financial Liabilities with Equity Instruments”. The new or amended standards and interpretations have not affected recognition and measurement in TORM’s interim report for the first quarter of 2011. The interim report for the first quarter of 2011 is unaudited, in line with the normal practice.
Income statement
The gross profit for the first quarter of 2011 was USD 28 million, compared to USD 56 million for the corresponding period in 2010. Administrative costs in the first quarter of 2011 were USD 17 million, compared to USD 18 million in the first quarter of 2010. The result before depreciation (EBITDA) for the period was USD 4 million, as against USD 55 million for the first quarter of 2010. The EBITDA in the first quarter was impacted by losses of USD 6 million from sale of vessels. The EBITDA for the first quarter of 2010 included profits of USD 18 million from sale of vessels. Depreciation in the first quarter of 2011 was USD 37 million, up USD 2 million on the first quarter of 2010. This increase was due to acquired tonnage. The primary operating result for the first quarter of 2011 was a loss of USD 33 million, compared to a profit of USD 20 million in the same quarter of 2010. The first quarter of 2011 was impacted by mark-to-market non-cash adjustments of USD 8 million in total, USD 6 million in connection with FFA/bunker derivatives and USD 2 million on other financial derivatives. The result after tax was a loss of USD 45 million in the first quarter of 2011, as against a profit of USD 2 million in the first quarter of 2010.
Assets
Total assets were down from USD 3,286 million as at 31 December 2010 to USD 3,260 million as at 31 March 2011. TORM estimates the fleet's total long-term earning potential each quarter based on future discounted cash flows. The estimated value for the fleet as at 31 March 2011 supports the book value.
Debt
Net interest-bearing debt was down in the first quarter of 2011 to USD 1,853 million from USD 1,875 million as at 31 December 2010.
Announcement no. 7 / 19 May 2011 Interim report Q1 2011 9 of 19
Equity
Equity declined in the first quarter of 2011 from USD 1,115 million as at 31 December 2010 to USD 1,075 million, due to the loss during the period. Equity as a percentage of total assets was 33% as at 31 March 2011, compared to 34% as at 31 December 2010. TORM held 3,230,432 treasury shares as at 31 March 2011, equivalent to 4.4% of the Company's share capital. The number of treasury shares held is down 231,148 since 31 December 2010, as shares have been allocated to staff in connection with the incentive scheme for the period 2007-2009.
Liquidity
TORM had undrawn credit facilities and cash of approx. USD 346 million at the end of the first quarter of 2011. Outstanding CAPEX relating to the order book amounted to USD 195 million.
Post balance sheet events
TORM has in the second quarter of 2011 agreed to defer two MR newbuildings both with delivery in 2012. They are now expected to be delivered in the first quarter of 2013 and the second quarter of 2014, respectively.
Financial calendar
TORM's half-year report for 2011 will be published on 18 August 2011. TORM's complete financial calendar can be found at www.torm.com/IR.
About TORM
TORM is one of the world’s leading carriers of refined oil products as well as a significant player in the dry bulk market. The Company runs a fleet of approximately 140 modern vessels in cooperation with other respected shipping companies sharing 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 NASDAQ OMX Copenhagen (ticker: TORM) and on NASDAQ in New York (ticker: TRMD). For further information, please visit www.torm.com.
Safe Harbor statements as to the future
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 statements 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 guarantee 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 the world economy 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 the regulation of shipping operations, 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.
Announcement no. 7 / 19 May 2011 Interim report Q1 2011 10 of 19
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 an obligation to update and change the listed expectations to the extent required by law.
Announcement no. 7 / 19 May 2011 Interim report Q1 2011 11 of 19
Statement by the Board of Directors and Executive Management
The Board and Management have today discussed and adopted this interim report for the period 1 January – 31 March 2011. This interim report is unaudited and was produced in accordance with current accounting requirements for listed Danish companies, including IFRS rules on quantifying and reporting which are assumed to apply to the annual report for 2011. We believe the accounting practices used are reasonable, and that this interim report gives a true and accurate picture of the Group's assets, debt, financial position, results and cash flows. Copenhagen, 19 May 2011
Management
Board
Jacob Meldgaard, CEO Roland M. Andersen, CFO
Niels Erik Nielsen, Chairman Christian Frigast, Deputy Chairman Peter Abildgaard Kari Millum Gardarnar Rasmus Johannes Hoffmann Jesper Jarlbæk Gabriel Panayotides Angelos Papoulias Nicos Zouvelos
Announcement no. 7 / 19 May 2011 Interim report Q1 2011 12 of 19
Income statement
Million USD Q1 2011 Q1 2010 2010
Revenue 270,4 205,5 856,1
Port expenses, bunkers and commissions -129,8 -59,9 -298,8
Freight and bunkers derivatives 6,9 1,9 3,3
Time charter equivalent earnings 147,5 147,5 560,6
Charter hire -76,6 -51,7 -228,6
Operating expenses -43,1 -39,9 -152,2
Gross profit (Net earnings from shipping activities) 27,8 55,9 179,8
Prof it f rom sale of vessels -5,7 18,2 1,9
Administrative expenses -17,1 -18,1 -78,2
Other operating income 0,2 1,7 4,8
Share of results of jointly controlled entities -1,1 -2,4 -11,5
EBITDA 4,1 55,3 96,8
Impairment losses on jointly controlled entities 0,0 0,0 -35,0
Depreciation and impairment losses -36,6 -35,0 -141,4
Operating profit (EBIT) -32,5 20,3 -79,6
Financial items -12,4 -17,7 -56,6
Profit before tax -44,9 2,6 -136,2
Tax -0,4 -0,3 1,0
Net profit/(loss) for the period -45,3 2,3 -135,2
Earnings per share, EPS
Earnings per share, EPS (USD) -0,7 0,0 -2,0
Earnings per share, EPS (DKK) *) 3,6 0,2 -11,0
*) The key f igures have been translated f rom USD to DKK using the average USD/DKK exchange change rate
for the period in question.
Announcement no. 7 / 19 May 2011 Interim report Q1 2011 13 of 19
Statement of comprehensive income
Million USD Q1 2011 Q1 2010 2010
Net profit/(loss) for the period -45.3 2.3 -135.2
Other comprehensive income:
Exchange rate adjustment arising on translation
of entities using a measurement currency dif ferent
f rom USD 0.0 0.0 0.0
Fair value adjustment on hedging instruments 3.3 -4.3 -4.9
Value adjustment on hedging instruments transferred
to income statement 0.9 1.6 6.3
Value adjustment on hedging instruments transferred
to assets 0.0 0.0 0.0
Fair value adjustment on available for sale investments 0.2 -0.2 -0.2
Transfer to income statement on sale of available for sale
investments 0.0 0.0 0.0
Other comprehensive income after tax 4.4 -2.9 1.2
Total comprehensive income -40.9 -0.6 -134.0
Announcement no. 7 / 19 May 2011 Interim report Q1 2011 14 of 19
Income statement per quarter
Million USD Q1 10 Q2 10 Q3 10 Q4 10 Q1 11
Revenue 205.5 201.3 225.7 223.6 270.4
Port expenses, bunkers and commissions -59.9 -70.6 -77.4 -90.9 -129.8
Freight and bunkers derivatives 1.9 -0.5 0.9 1.0 6.9
Time charter equivalent earnings 147.5 130.2 149.2 133.7 147.5
Charter hire -51.7 -54.4 -61.3 -61.2 -76.6
Operating expenses -39.9 -34.7 -38.6 -39.0 -43.1
Gross profit (Net earnings from shipping activities) 55.9 41.1 49.3 33.5 27.8
Prof it f rom sale of vessels 18.2 0.0 0.0 -16.3 -5.7
Administrative expenses -18.1 -17.5 -24.5 -18.1 -17.1
Other operating income 1.7 1.3 0.9 0.9 0.2
Share of results of jointly controlled entities -2.4 -1.3 -3.1 -4.7 -1.1
EBITDA 55.3 23.6 22.6 -4.7 4.1
Impairment losses on jointly controlled entities 0.0 0.0 0.0 -35.0 0.0
Depreciation and impairment losses -35.0 -34.4 -35.1 -36.9 -36.6
Operating profit (EBIT) 20.3 -10.8 -12.5 -76.6 -32.5
Financial items -17.7 -13.6 -14.2 -11.1 -12.4
Profit before tax 2.6 -24.4 -26.7 -87.7 -44.9
Tax -0.3 0.3 0.2 0.8 -0.4
Net profit/(loss) for the period 2.3 -24.1 -26.5 -86.9 -45.3
Earnings per share, EPS
Earnings per share, EPS (USD) 0.0 -0.3 -0.4 -1.3 -0.7
Announcement no. 7 / 19 May 2011 Interim report Q1 2011 15 of 19
Assets
Million USD 31 March 31 March 31 December
2011 2010 2010
NON-CURRENT ASSETS
Intangible assets
Goodw ill 89.2 89.2 89.2
Other intangible assets 2.0 2.2 2.1
Total intangible assets 91.2 91.4 91.3
Tangible fixed assets
Land and buildings 3.6 3.7 3.6
Vessels and capitalized dry-docking 2,605.1 2,358.9 2,560.1
Prepayments on vessels 108.0 295.0 227.1
Other plant and operating equipment 8.7 9.9 9.5
Total tangible f ixed assets 2,725.4 2,667.5 2,800.3
Financial assets
Investment in jointly controlled entities 71.2 120.6 72.9
Loans to jointly controlled entities 9.8 37.7 10.2
Other investments 3.1 3.0 3.0
Other f inancial assets 6.0 6.0 6.0
Total f inancial assets 90.1 167.3 92.1
TOTAL NON-CURRENT ASSETS 2,906.7 2,926.2 2,983.7
CURRENT ASSETS
Bunkers 52.7 26.5 41.1
Freight receivables, etc. 108.4 56.8 108.2
Other receivables 22.6 13.0 12.7
Other f inancial assets 0.0 0.0 0.0
Prepayments 27.0 16.9 20.4
Cash and cash equivalents 142.4 186.3 120.0
TOTAL CURRENT ASSETS 353.1 299.5 302.4
TOTAL ASSETS 3,259.8 3,225.7 3,286.1
Announcement no. 7 / 19 May 2011 Interim report Q1 2011 16 of 19
Equity and liabilities
Million USD 31 March 31 March 31 December
2011 2010 2010
EQUITY
Common shares 61,1 61,1 61,1
Treasury shares -17,3 -17,9 -17,9
Revaluation reserves -2,3 -2,4 -2,5
Retained prof it 1 027,0 1 208,8 1 072,3
Proposed dividends 0,0 0,0 0,0
Hedging reserves 2,4 -6,0 -1,8
Translation reserves 4,1 4,1 4,1
TOTAL EQUITY 1 075,0 1 247,7 1 115,3
LIABILITIES
Non-current liabilities
Deferred tax liability 54,2 54,8 54,3
Mortgage debt and bank loans 1 750,9 1 631,3 1 750,4
Finance lease liabilities 30,7 31,6 31,0
Acquired liabilities related to options on vessels 0,0 1,5 0,0
TOTAL NON-CURRENT LIABILITIES 1 835,8 1 719,2 1 835,7
Current liabilities
Mortgage debt and bank loans 212,0 143,2 211,3
Finance lease liabilities 2,0 1,8 2,0
Trade payables 58,0 27,3 48,0
Current tax liabilities 1,1 3,2 1,7
Other liabilities 74,5 80,1 70,2
Acquired liabilities related to options on vessels 1,4 1,8 1,9
Acquired time charter contracts 0,0 1,4 0,0
Deferred income 0,0 0,0 0,0
TOTAL CURRENT LIABILITIES 349,0 258,8 335,1
TOTAL LIABILITIES 2 184,8 1 978,0 2 170,8
TOTAL EQUITY AND LIABILITIES 3 259,8 3 225,7 3 286,1
Announcement no. 7 / 19 May 2011 Interim report Q1 2011 17 of 19
Equity as at 1 January – 31 March 2011
Million USD Common Treasury Retained Proposed Revaluat ion Hedging Translat ion Tot al
shares shares prof it dividends reserves reserves reserves
Equity at 1 January 2011 61.1 -17.9 1,072.3 0.0 -2.5 -1.8 4.1 1,115.3
Changes in equity Q1 2011:
Purchase treasury shares, cost - - - - - - - 0.0
Disposal treasury shares, cost - 0.6 - - - - - 0.6
Gain/loss f rom disposal treasury shares - - -0.6 - - - - -0.6
Share-based compensation - - 0.6 - - - - 0.6
Comprehensive income for the period - - -45.3 - 0.2 4.2 0.0 -40.9
Total changes in equity Q1 2011 0.0 0.6 -45.3 0.0 0.2 4.2 0.0 -40.3
Equity at 31 March 2011 61.1 -17.3 1,027.0 0.0 -2.3 2.4 4.1 1,075.0
Equity as at 1 January – 31 March 2010
Million USD Common Treasury Retained Proposed Revaluat ion Hedging Translat ion Tot al
shares shares prof it dividends reserves reserves reserves
Equity at 1 January 2010 61.1 -18.1 1,205.1 0.0 -2.2 -3.3 4.1 1,246.7
Changes in equity Q1 2010:
Purchase treasury shares, cost - - - - - - - 0.0
Disposal treasury shares, cost - 0.2 - - - - - 0.2
Gain/loss f rom disposal treasury shares - - -0.2 - - - - -0.2
Share-based compensation - - 1.6 - - - - 1.6
Comprehensive income for the period - - 2.3 - -0.2 -2.7 - -0.6
Total changes in equity Q1 2010 0.0 0.2 3.7 0.0 -0.2 -2.7 0.0 1.0
Equity at 31 March 2010 61.1 -17.9 1,208.8 0.0 -2.4 -6.0 4.1 1,247.7
Announcement no. 7 / 19 May 2011 Interim report Q1 2011 18 of 19
Statement of cash flows
Million USD
Q1 2011 Q1 2010 2010
Cash flow from operating activities
Operating prof it -32.5 20.3 -79.6
Adjustments:
Reversal of prof it f rom sale of vessels 5.7 -18.2 -1.9
Reversal of depreciation and impairment losses 36.6 35.0 141.4
Reversal of impairment of jointly controlled entities 0.0 0.0 35.0
Reversal of share of results of jointly controlled entities 1.1 2.4 11.5
Reversal of other non-cash movements -6.7 -4.0 -8.0
Dividends received 0.0 0.0 0.0
Dividends received f rom joint controlled entities 0.7 0.3 1.7
Interest received and exchange rate gains 3.6 0.1 0.5
Interest paid and exchange rate losses -15.8 -14.2 -54.4
Income taxes paid/repaid -1.2 -2.9 -3.6
Change in bunkers, accounts receivables and payables -2.6 2.1 -43.2
Net cash flow from operating activities -11.1 20.9 -0.6
Cash flow from investing activities
Investment in tangible f ixed assets -68.0 -23.6 -253.9
Investment in equity interests and securities 0.0 0.0 0.0
Loans to jointly controlled entities 0.5 1.1 3.3
Payment of liability related to options on vessels 0.0 0.0 0.0
Received share on options on vessels 0.0 0.0 0.0
Sale of equity interests and securities 0.0 0.0 0.0
Sale of non-current assets 100.6 63.6 63.7
Net cash flow from investing activities 33.1 41.1 -186.9
Cash flow from financing activities
Borrow ing, mortgage debt 26.7 25.7 344.7
Borrow ing, f inance lease liabilities 0.0 0.0 0.0
Repayment/redemption, mortgage debt -25.5 -22.0 -153.7
Repayment/redemption, f inance lease liabilities -0.8 -1.2 -5.3
Dividends paid 0.0 0.0 0.0
Purchase/disposals of treasury shares 0.0 0.0 0.0
Net cash flow from financing activities 0.4 2.5 185.7
Net cash flow from operating, investing and financing activities 22.4 64.5 -1.8
Cash and cash equivalents, beginning balance 120.0 121.8 121.8
Cash and cash equivalents, ending balance 142.4 186.3 120.0
Announcement no. 7 / 19 May 2011 Interim report Q1 2011 19 of 19
Quarterly statement of cash flows
Million USD
Q1 10 Q2 10 Q3 10 Q4 10 Q1 11
Cash flow from operating activities
Operating prof it 20.3 -10.8 -12.5 -76.6 -32.5
Adjustments:
Reversal of prof it f rom sale of vessels -18.2 0.0 0.0 16.3 5.7
Reversal of depreciation and impairment losses 35.0 34.4 35.1 36.9 36.6
Reversal of impairment of jointly controlled entities 0.0 0.0 0.0 35.0 0.0
Reversal of share of results of jointly controlled entities 2.4 1.3 3.1 4.7 1.1
Reversal of other non-cash movements -4.0 -3.8 -0.3 0.1 -6.7
Dividends received 0.0 0.0 0.0 0.0 0.0
Dividends received f rom joint controlled entities 0.3 0.9 0.2 0.3 0.7
Interest received and exchange rate gains 0.1 0.3 2.2 -2.1 3.6
Interest paid and exchange rate losses -14.2 -12.7 -14.0 -13.5 -15.8
Income taxes paid/repaid -2.9 0.0 -0.3 -0.4 -1.2
Change in bunkers, accounts receivables and payables 2.1 -9.8 7.8 -43.3 -2.6
Net cash flow from operating activities 20.9 -0.2 21.3 -42.6 -11.1
Cash flow from investing activities
Investment in tangible f ixed assets -23.6 -69.6 -66.8 -93.9 -68.0
Investment in equity interests and securities 0.0 0.0 0.0 0.0 0.0
Loans to jointly controlled entities 1.1 1.2 0.4 0.6 0.5
Payment of liability related to options on vessels 0.0 0.0 0.0 0.0 0.0
Received share on options on vessels 0.0 0.0 0.0 0.0 0.0
Sale of equity interests and securities 0.0 0.0 0.0 0.0 0.0
Sale of non-current assets 63.6 0.1 0.0 0.0 100.6
Net cash flow from investing activities 41.1 -68.3 -66.4 -93.3 33.1
Cash flow from financing activities
Borrow ing, mortgage debt 25.7 54.8 92.1 172.1 26.7
Borrow ing, f inance lease liabilities 0.0 0.0 0.0 0.0 0.0
Repayment/redemption, mortgage debt -22.0 -50.3 -23.6 -57.8 -25.5
Repayment/redemption, f inance lease liabilities -1.2 -1.2 -1.3 -1.6 -0.8
Dividends paid 0.0 0.0 0.0 0.0 0.0
Purchase/disposals of treasury shares 0.0 0.0 0.0 0.0 0.0
Net cash flow from financing activities 2.5 3.3 67.2 112.7 0.4
Net cash flow from operating, investing and financing activities 64.5 -65.2 22.1 -23.2 22.4
Cash and cash equivalents, beginning balance 121.8 186.3 121.1 143.2 120.0
Cash and cash equivalents, ending balance 186.3 121.1 143.2 120.0 142.4
Announcement no. 7 / 19 May 2011 Interim report Q1 2011 Page 1 of 19
“We have generally experienced a stronger market during the past couple of months, while product tanker rates were low in the beginning of the first quarter,” says CEO Jacob Meldgaard. As expected, TORM recognised a loss before tax of USD 45 million in the first quarter of 2011 and maintains the forecast for 2011.
EBITDA excl. sale of vessels for the first quarter of 2011 was USD 10 million, compared to USD 37 million in the first quarter of 2010. The result before tax for the first quarter of 2011 was a loss of USD 45 million, compared to a profit of USD 3 million for the same period in 2010. The result for the first quarter of 2011 was impacted by a loss of USD 6 million from sale of vessels, compared to a profit of USD 18 million in the first quarter of 2010. The result for the first quarter of 2011 was as expected. Product tanker freight rates in the first quarter of 2011 were generally weak and lower than in the same period last year. Freight rates in the East were impacted by weak demand and competition from vessels in the crude oil market. The transatlantic market for MR tonnage was positive from mid-February with stronger rates. This was due to the effects of the cold winter in the Northern hemisphere, a number of arbitrage opportunities due to the unrest in North Africa and high levels of demand in South America. Bulk freight rates were generally under pressure throughout the first quarter, primarily due to the increase in the number of newbuilding deliveries. The number of earning days increased in the first quarter in order to service cargo contracts. TORM has identified additional cost savings of USD 10 million annually, with expected full effect from 2012 onwards. The savings will come from a range of procurement initiatives and by further optimising crew composition. In addition, the Company is evaluating its flag strategy in order to be aligned with the Danish maritime cluster. TORM has in the second quarter of 2011 agreed to defer two MR newbuildings both with delivery in 2012. They are now expected to be delivered in the first quarter of 2013 and the second quarter of 2014, respectively.
Net interest-bearing debt was down to USD 1,853 million in the first quarter of 2011, from USD 1,875 million as at 31 December 2010. TORM had undrawn credit facilities and cash of approx. USD 346 million at the end of the first quarter of 2011. Outstanding CAPEX relating to the order book amounted to USD 195 million. Equity amounted to USD 1,075 million as at 31 March 2011, equivalent to USD 15.5 per share (DKK 81.1 per share), excluding treasury shares, giving TORM an equity ratio of 33%.
As at 31 March 2011, TORM had covered 15% of the remaining earning days in 2011 in the Tanker Division at USD/day 16,345 and 60% of the remaining earning days in the Bulk Division at USD/day 16,492. TORM maintains the forecast of a loss before tax of USD 100-125 million in 2011. As 25,075 earning days for 2011 are unfixed as at 31 March 2011, a change in freight rates of USD/day 1,000 will impact the profit before tax by USD 25 million.
Teleconference
Contact TORM A/S
TORM will be holding a teleconference for financial analysts and investors at 15:00 Danish time today. Please call 10 minutes before the conference is due to start on +45 3271 4607 (from Europe) or +1 887 491 0064 (from the USA). The presentation documents can be downloaded from TORM's website.
Tuborg Havnevej 18 DK-2900 Hellerup, Denmark Tel.: +45 39 17 92 00 / Fax: +45 39 17 93 93 www.torm.com Jacob Meldgaard, CEO, tel.: +45 39 17 92 00 Roland M. Andersen, CFO, tel.: +45 39 17 92 00
Announcement no. 7 / 19 May 2011 Interim report Q1 2011 2 of 19
Key figures
Million USD Q1 2011 Q1 2010 2010
Income statement
Revenue 270.4 205.5 856.1
Time charter equivalent earnings (TCE) 147.5 147.5 560.6
Gross prof it 27.8 55.9 179.8
EBITDA 4.1 55.3 96.8
Operating prof it (EBIT) -32.5 20.3 -79.6
Prof it/(loss) before tax -44.9 2.6 -136.2
Net prof it -45.3 2.3 -135.3
Balance sheet
Total assets 3,259.8 3,225.7 3,286.1
Equity 1,075.0 1,247.7 1,115.3
Total liabilities 2,184.8 1,978.0 2,170.8
Invested capital 2,925.1 2,866.3 2,987.0
Net interest bearing debt 1,853.2 1,621.6 1,874.7
Cash flow
From operating activities -11.1 20.9 -0.6
From investing activities 33.1 41.1 -186.9
Thereof investment in tangible f ixed assets -68.0 -23.6 -253.9
From f inancing activities 0.4 2.5 185.6
Total net cash f low 22.4 64.5 -1.9
Key financial figures
Gross margins:
TCE 54.5% 71.8% 65.5%
Gross prof it 10.3% 27.2% 21.0%
EBITDA 1.5% 26.9% 11.3%
Operating prof it -12.0% 9.9% -9.3%
Return on Equity (RoE) (p.a.)*) -15.0% -2.9% -11.4%
Return on Invested Capital (RoIC) (p.a.)**) -3.8% 0.9% -2.7%
Equity ratio 33.0% 38.7% 33.9%
Exchange rate USD/DKK, end of period 5.25 5.52 5.61
Exchange rate USD/DKK, average 5.46 5.38 5.62
Share related key figures
Earnings per share, EPS USD -0.7 0.0 -2.0
Diluted earnings per share, EPS USD -0.7 0.2 -2.0
Cash f low per share, CFPS USD -0.2 0.3 0.0
Share price, end of period (per share of DKK 5 each) DKK 30.0 57.0 39.7
Number of shares, end of period Mill. 72.8 72.8 72.8
Number of shares (excl. treasury shares), average Mill. 69.3 69.2 69.3
*) Gains/losses f rom sale of vessels and the mark-to-market adjustments of 'Other f inancial assets' are not
annualised w hen calculating the return on equity.
**) Gains/losses f rom sale of vessels are not annualised w hen calculating the Return on Invested Capital.
Announcement no. 7 / 19 May 2011 Interim report Q1 2011 3 of 19
Results
The result before tax for the first quarter of 2011 was a loss of USD 45 million, compared to a profit of USD 3
million for the same period in 2010. The result before depreciation (EBITDA) for the period was USD 4 million,
compared to USD 55 million in the first quarter of 2010.
The Tanker Division reported a primary operating loss of USD 32 million in the first quarter of 2011, as against a
result of USD 2 million in the same period last year. The Tanker Division's result for the first quarter of 2011 was
impacted by a loss of USD 5 million from sale of vessels.
The Bulk Division's primary operating result in the first quarter of 2011 was USD 2 million, compared to USD 22
million in the first quarter of 2010. The result for the first quarter of 2010 includes profits of USD 18 million from
sale of vessels.
Other (not allocated) activities include a loss on investments in joint ventures of USD 2 million, financial costs of
USD 12 million and tax of USD 0 million.
TORM has identified additional cost savings of USD 10 million annually, with expected full effect from 2012
onwards. The savings will come from a range of procurement initiatives and by further optimising crew
composition. In addition, the Company is evaluating its flag strategy in order to be aligned with the Danish
maritime cluster.
Million USD
Tanker Bulk Not
Division Division allocated Total
Revenue 219.2 51.2 0.0 270.4
Port expenses, bunkers and commissions -108.5 -21.3 0.0 -129.8
Freight and bunkers derivatives -0.3 7.2 0.0 6.9
Time charter equivalent earnings 110.4 37.1 0.0 147.5
Charter hire -45.7 -30.9 0.0 -76.6
Operating expenses -42.2 -0.9 0.0 -43.1
Gross Profit 22.5 5.3 0.0 27.8
Prof it/(loss) f rom sale of vessels -5.4 -0.3 0.0 -5.7
Administrative expenses -14.6 -2.5 0.0 -17.1
Other Operating income 0.2 0.0 0.0 0.2
Share of results of jointly controlled entities 0.9 0.0 -2.0 -1.1
EBITDA 3.6 2.5 -2.0 4.1
Impairment losses on jointly controlled entities 0.0 0.0 0.0 0.0
Depreciation and impairment losses -35.9 -0.7 0.0 -36.6
Operating profit (EBIT) -32.3 1.8 -2.0 -32.5
Financial items, net - - -12.4 -12.4
Profit/(Loss) before tax - - -14.4 -44.9
Tax - - -0.4 -0.4
Net profit/(loss) - - -14.8 -45.3
The activity in TORM's 50% ow nership of FR8 Holding Pte. Ltd. is included in "Not-allocated".
Q1 2011
Announcement no. 7 / 19 May 2011 Interim report Q1 2011 4 of 19
Outlook and coverage
TORM maintains the forecast of a loss before tax of USD 100-125 million in 2011.
As at 31 March 2011, TORM had covered 15% of the remaining earning days in 2011 in the Tanker Division at
USD/day 16,345 and 60% of the remaining earning days in the Bulk Division at USD/day 16,492.
The table below shows the figures for 2011 for the period from 1 April to 31 December. The figures for 2012 and
2013 are for the full year.
2011 2012 2013 2011 2012 2013
Owned days
LR2 3,509 4,732 4,719
LR1 1,913 2,550 2,543
MR 10,328 14,868 15,250
SR 2,961 4,004 3,993
Tanker Division 18,711 26,154 26,505
Panamax 546 769 1,423
Handymax - - -
Bulk Division 546 769 1,423
Total 19,257 26,923 27,928
T/C in days T/C in costs (USD/day)
LR2 - - - - - -
LR1 4,548 4,819 2,978 21,637 21,909 23,882
MR 3,206 3,820 3,575 16,053 15,626 15,605
SR - - - - - -
Tanker Division 7,754 8,639 6,553 19,328 19,131 19,366
Panamax 4,309 4,342 4,148 16,303 15,894 16,200
Handymax 1,474 6 97 3 63 16,415 16,855 15,995
Bulk Division 5,783 5,039 4,511 16,331 16,027 16,184
Total 13,537 13,678 11,064 18,048 17,987 18,069
Total physical days Covered days
LR2 3,509 4,732 4,719 511 1 30 -
LR1 6,461 7,369 5,521 706 5 32 3 65
MR 13,534 18,688 18,825 1,279 4 04 -
SR 2,961 4,004 3,993 1,446 1 67 -
Tanker Division 26,465 34,793 33,058 3,942 1,234 3 65
Panamax 4,855 5,111 5,571 2,598 4 30 -
Handymax 1,474 6 97 3 63 1,180 6 06 6 06
Bulk Division 6,329 5,808 5,934 3,777 1,036 6 06
Total 32,794 40,601 38,992 7,719 2,270 9 71
Coverage rates (USD/day)
LR2 15% 3% 0% 22,969 22,962 -
LR1 11% 7% 7% 16,788 17,476 15,666
MR 9% 2% 0% 17,385 15,403 -
SR 49% 4% 0% 12,866 12,263 -
Tanker Division 15% 4% 1% 16,345 16,671 15,666
Panamax 54% 8% 0% 17,533 21,322 -
Handymax 80% 87% 167% 14,200 17,000 17,000
Bulk Division 60% 18% 10% 16,492 18,794 17,000
Total 24% 6% 2% 16,417 17,640 16,499
Fair value of freight rate contracts that are mark-to-market in the income statement (USD million):
Contracts not included above 0.0
Contracts included above 1.4
Note
Actual number of days can vary from projected number of days primarily due to vessel sales and delays of vessel
deliveries. T/C in costs do not include potential extra payments from profit split arrangements.
Covered %
Announcement no. 7 / 19 May 2011 Interim report Q1 2011 5 of 19
Tanker Division
The freight rates were low in the first quarter of 2011, particularly in the Eastern market, where mainly the larger
LR vessels operate. The East remained weak as the demand remained low, due to low demand for naphtha,
which became even more pronounced after the earthquake in Japan, and limited arbitrage opportunities.
Furthermore, the Eastern market was affected by the weak market for transport of crude oil, which implied that a
number of newbuildings in this segment made their virgin voyage in the product tanker segment.
In the Western market, rates also remained low in the first part of the quarter, but increased to higher levels from
mid-February. This was due to a number of circumstances: the effect of the cold winter, rising demand in South
America, an increasing number of arbitrage opportunities due to the unrest in North Africa and the high oil price.
Especially the MR segment, which dominates the Western market, was positively impacted.
The positive trend in the Western market, and the MR segment in particular, has persisted in the second quarter
and has had some positive effects on the Eastern market.
The global fleet grew by approx. 2% in the first quarter of 2011. The significant slippage in newbuilding deliveries
experienced in 2010 continued in the first quarter of 2011 and was around 60%.
The level of floating storage remains at a low level due to a forward curve in backwardation for most refined
products.
Change
Q1 10
- Q1 11
LR2 (Aframax, 90-110,000 DWT)
Available earning days 1,163 1,122 1,098 1,193 1,157 -1%
Spot rates (USD/day)1) 19,270 17,185 19,848 17,061 10,890 -43%
TCE (USD/day)2) 17,375 15,583 17,278 15,123 13,524 -22% 15,377
Operating days 1,080 1,092 1,104 1,196 1,170 8%
Operating expenses (USD/day)3) 6,908 6,301 6,571 6,614 7,698 11% 6,796
LR1 (Panamax 75-85,000 DWT)
Available earning days 1,748 1,777 2,094 2,195 2,085 19%
Spot rates (USD/day)1) 16,273 14,903 14,662 10,750 14,435 -11%
TCE (USD/day)2) 16,686 15,509 14,628 12,172 14,654 -12% 14,241
Operating days 810 749 714 644 630 -22%
Operating expenses (USD/day)3) 6,454 5,420 5,729 5,650 6,577 2% 5,844
MR (45,000 DWT)
Available earning days 3,755 3,916 4,212 4,053 4,263 14%
Spot rates (USD/day)1) 14,179 12,567 13,753 12,524 12,760 -10%
TCE (USD/day)2) 14,700 12,363 14,280 11,993 12,768 -13% 12,851
Operating days 2,790 2,951 3,128 3,281 3,412 22%
Operating expenses (USD/day)3) 6,883 6,053 6,388 6,261 6,628 -4% 6,333
SR (35,000 DWT)
Available earning days 1,002 979 951 1,007 969 -3%
Spot rates (USD/day)1) 12,954 13,673 9,478 9,692 10,410 -20%
TCE (USD/day)2) 18,034 16,099 13,851 12,090 11,319 -37% 13,340
Operating days 990 1,001 1,012 1,012 990 0%
Operating expenses (USD/day)3) 6,041 4,821 6,274 6,075 6,517 8% 5,922
2) TCE = Time Charter Equivalent Earnings = Gross freight income less bunker, commissions and port expenses.
3) Operating expenses are related to owned vessels.
1) Spot rates = Time Charter Equivalent Earnings for all charters with less than 6 months duration = Gross freight income less bunker, broker
commissions and port expenses.
Q1 11 12 month
avg.
Tanker Division Q1 10 Q210 Q310 Q410
Announcement no. 7 / 19 May 2011 Interim report Q1 2011 6 of 19
Bulk Division
The bulk freight rates were under pressure throughout the first quarter, primarily due to the increased tonnage
available from continuing high influx of newbuildings, reduced waiting times in ports and weaker demand.
Demand was negatively affected by the earthquake in Japan and floods in Australia, but positively affected by
continuing growth in China's imports of iron ore, which were approx. 10% higher in the first quarter of 2011 than in
the fourth quarter of 2010 and up 14% on the first quarter of 2010.
The global bulk fleet grew by approx. 4% in the first quarter of 2011.
The freight rates for the Capesize segment, but also to some extent for the Panamax segment, were weak, while
smaller vessels such as Supramax and Handymax were at a stable level. The pressure on Capesize rates is
mainly due to the increased influx of tonnage, as the order book is considerably larger in the Capesize segment.
Some cargoes in the Panamax segment were taken by Capesize vessels, which to some extent affected the
Panamax rates.
As part of TORM’s new dry bulk strategy, whereby the Company will become an integrated freight service
provider primarily to industrial clients, the number of earning days has increased in the first quarter due to signing
of a number of short and medium-term time charter contracts. TORM has sought to cover most of the increased
tonnage, so that the net exposure to the dry bulk market only increased to a limited extent.
Change
Q1 10
- Q1 11
Panamax (60-80,000 DWT)
Available earning days 1,119 1,060 1,189 1,193 1,524 36%
TCE (USD/day)1) 18,298 18,611 20,418 19,294 15,851 -13% 18,544
Operating days 315 182 184 184 180 -43%
Operating expenses (USD/day)2) 5,187 4,603 4,297 3,505 4,836 -7% 4,310
Handymax (40-55,000 DWT)
Available earning days - - - 30 566
TCE (USD/day)1) - - - 11,919 11,544
Operating days - - - - -
Operating expenses (USD/day)2) - - - - -
1) TCE = Time Charter Equivalent Earnings = Gross freight income less bunker, commissions and port expenses.
2) Operating expenses are related to owned vessels.
Bulk Division Q1 10 Q210 Q1 11 12 month
avg.
Q310 Q410
Announcement no. 7 / 19 May 2011 Interim report Q1 2011 7 of 19
Fleet development
TORM’s current fleet and planned future changes are shown in the table below. In the first quarter of 2011, TORM
took delivery of two new product tankers, TORM Agnes and TORM Amalie, and has as previously announced
delivered two newbuild Kamsarmax bulk vessels and an older product tanker to new owners. At the end of the
first quarter, TORM thus owned 70.5 product tankers and two bulk vessels. In addition, TORM had chartered-in
27 product tankers and 13 dry bulk vessels on longer time charter contracts (minimum one year’s duration) and
21 dry bulk vessels on shorter time charter contracts (less than one year’s duration). Another 26 product tankers
were either in pools or under commercial management with TORM.
TORM did not order any vessels in the first quarter of 2011. Thus the order book was four MR vessels and two
Kamsarmaxes at the end of the first quarter. Outstanding capex relating to the order book amounted to USD 195
million.
TORM has in the second quarter of 2011 agreed to defer two MR newbuildings both with delivery in 2012. They
are now expected to be delivered in the first quarter of 2013 and the second quarter of 2014, respectively. The
table below is as per 31 March 2011 and does not reflect the deferral of the two MR newbuildings.
Q4 2010 Changes Q1 2011 Q2 2011 Q3 2011 Q4 2011 2012 2013 2014
Owned vessels
LR2 13.0 - 13.0
LR1 7.5 - 7.5
MR 38.0 1.0 39.0 1.0 3.0 - -
SR 11.0 - 11.0
Tanker Division 69.5 1.0 70.5 - - 1.0 3.0 - -
Panamax 2.0 - 2.0 1.0 1.0
Handymax - - -
Bulk Division 2.0 - 2.0 - - - 1.0 1.0 -
Total 71.5 1.0 72.5 - - 1.0 4.0 1.0 -
TC-in vessels with contract period >= 12 months
LR2 - - -
LR1 16.0 - 16.0 1.0
MR 9.0 2.0 11.0 1.0
SR - - -
Tanker Division 25.0 2.0 27.0 2.0 - - - - -
Panamax 12.0 (1.0) 11.0 1.0 1.0 2.0 1.0 2.0
Handymax 1.0 1.0 2.0
Bulk Division 13.0 - 13.0 1.0 1.0 - 2.0 1.0 2.0
Total 38.0 2.0 40.0 3.0 1.0 - 2.0 1.0 2.0
T/C-in vessels with contract period < 12 months
LR2
LR1
MR
SR
Tanker Division - - -
Panamax 1.0 10.0 11.0
Handymax 2.0 8.0 10.0
Bulk Division 3.0 18.0 21.0
Total 3.0 18.0 21.0
Pools/Commercial managment 25.0 1.0 26.0
Total fleet 137.5 159.5
Note:
The contract duration is defined based on the contractual minimum period and does not include optional periods.
There is not contracted any newbuildings or T/C-in vessels with delivery after 2014
Current fleet Newbuildings and TC-in deliveries with a period >= 12 months
Announcement no. 7 / 19 May 2011 Interim report Q1 2011 8 of 19
Notes on the financial reporting
Accounting policies
The interim report for the first quarter of 2011 is presented in accordance with IAS 34 "Interim Financial Reporting" as adopted by the EU and additional Danish disclosure requirements for interim reports of listed companies. Except for the instances mentioned below, the interim report has been prepared using the accounting policies as for the Annual Report for 2010. The accounting policies are described in more detail in the Annual Report for 2010. As from 1 January 2011, TORM has implemented the following new or amended standards and interpretations: Amendment to IAS 24 "Related Party Disclosures", amendment to IAS 32 "Financial Instruments: Presentation: Classification of Rights Issues", smaller changes from Improvements to IFRS May 2010, amendment to IFRIC 14 “Prepayments of a Minimum Funding Requirement” and IFRIC 19 ”Extinguishing Financial Liabilities with Equity Instruments”. The new or amended standards and interpretations have not affected recognition and measurement in TORM’s interim report for the first quarter of 2011. The interim report for the first quarter of 2011 is unaudited, in line with the normal practice.
Income statement
The gross profit for the first quarter of 2011 was USD 28 million, compared to USD 56 million for the corresponding period in 2010. Administrative costs in the first quarter of 2011 were USD 17 million, compared to USD 18 million in the first quarter of 2010. The result before depreciation (EBITDA) for the period was USD 4 million, as against USD 55 million for the first quarter of 2010. The EBITDA in the first quarter was impacted by losses of USD 6 million from sale of vessels. The EBITDA for the first quarter of 2010 included profits of USD 18 million from sale of vessels. Depreciation in the first quarter of 2011 was USD 37 million, up USD 2 million on the first quarter of 2010. This increase was due to acquired tonnage. The primary operating result for the first quarter of 2011 was a loss of USD 33 million, compared to a profit of USD 20 million in the same quarter of 2010. The first quarter of 2011 was impacted by mark-to-market non-cash adjustments of USD 8 million in total, USD 6 million in connection with FFA/bunker derivatives and USD 2 million on other financial derivatives. The result after tax was a loss of USD 45 million in the first quarter of 2011, as against a profit of USD 2 million in the first quarter of 2010.
Assets
Total assets were down from USD 3,286 million as at 31 December 2010 to USD 3,260 million as at 31 March 2011. TORM estimates the fleet's total long-term earning potential each quarter based on future discounted cash flows. The estimated value for the fleet as at 31 March 2011 supports the book value.
Debt
Net interest-bearing debt was down in the first quarter of 2011 to USD 1,853 million from USD 1,875 million as at 31 December 2010.
Announcement no. 7 / 19 May 2011 Interim report Q1 2011 9 of 19
Equity
Equity declined in the first quarter of 2011 from USD 1,115 million as at 31 December 2010 to USD 1,075 million, due to the loss during the period. Equity as a percentage of total assets was 33% as at 31 March 2011, compared to 34% as at 31 December 2010. TORM held 3,230,432 treasury shares as at 31 March 2011, equivalent to 4.4% of the Company's share capital. The number of treasury shares held is down 231,148 since 31 December 2010, as shares have been allocated to staff in connection with the incentive scheme for the period 2007-2009.
Liquidity
TORM had undrawn credit facilities and cash of approx. USD 346 million at the end of the first quarter of 2011. Outstanding CAPEX relating to the order book amounted to USD 195 million.
Post balance sheet events
TORM has in the second quarter of 2011 agreed to defer two MR newbuildings both with delivery in 2012. They are now expected to be delivered in the first quarter of 2013 and the second quarter of 2014, respectively.
Financial calendar
TORM's half-year report for 2011 will be published on 18 August 2011. TORM's complete financial calendar can be found at www.torm.com/IR.
About TORM
TORM is one of the world’s leading carriers of refined oil products as well as a significant player in the dry bulk market. The Company runs a fleet of approximately 140 modern vessels in cooperation with other respected shipping companies sharing 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 NASDAQ OMX Copenhagen (ticker: TORM) and on NASDAQ in New York (ticker: TRMD). For further information, please visit www.torm.com.
Safe Harbor statements as to the future
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 statements 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 guarantee 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 the world economy 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 the regulation of shipping operations, 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.
Announcement no. 7 / 19 May 2011 Interim report Q1 2011 10 of 19
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 an obligation to update and change the listed expectations to the extent required by law.
Announcement no. 7 / 19 May 2011 Interim report Q1 2011 11 of 19
Statement by the Board of Directors and Executive Management
The Board and Management have today discussed and adopted this interim report for the period 1 January – 31 March 2011. This interim report is unaudited and was produced in accordance with current accounting requirements for listed Danish companies, including IFRS rules on quantifying and reporting which are assumed to apply to the annual report for 2011. We believe the accounting practices used are reasonable, and that this interim report gives a true and accurate picture of the Group's assets, debt, financial position, results and cash flows. Copenhagen, 19 May 2011
Management
Board
Jacob Meldgaard, CEO Roland M. Andersen, CFO
Niels Erik Nielsen, Chairman Christian Frigast, Deputy Chairman Peter Abildgaard Kari Millum Gardarnar Rasmus Johannes Hoffmann Jesper Jarlbæk Gabriel Panayotides Angelos Papoulias Nicos Zouvelos
Announcement no. 7 / 19 May 2011 Interim report Q1 2011 12 of 19
Income statement
Million USD Q1 2011 Q1 2010 2010
Revenue 270,4 205,5 856,1
Port expenses, bunkers and commissions -129,8 -59,9 -298,8
Freight and bunkers derivatives 6,9 1,9 3,3
Time charter equivalent earnings 147,5 147,5 560,6
Charter hire -76,6 -51,7 -228,6
Operating expenses -43,1 -39,9 -152,2
Gross profit (Net earnings from shipping activities) 27,8 55,9 179,8
Prof it f rom sale of vessels -5,7 18,2 1,9
Administrative expenses -17,1 -18,1 -78,2
Other operating income 0,2 1,7 4,8
Share of results of jointly controlled entities -1,1 -2,4 -11,5
EBITDA 4,1 55,3 96,8
Impairment losses on jointly controlled entities 0,0 0,0 -35,0
Depreciation and impairment losses -36,6 -35,0 -141,4
Operating profit (EBIT) -32,5 20,3 -79,6
Financial items -12,4 -17,7 -56,6
Profit before tax -44,9 2,6 -136,2
Tax -0,4 -0,3 1,0
Net profit/(loss) for the period -45,3 2,3 -135,2
Earnings per share, EPS
Earnings per share, EPS (USD) -0,7 0,0 -2,0
Earnings per share, EPS (DKK) *) 3,6 0,2 -11,0
*) The key f igures have been translated f rom USD to DKK using the average USD/DKK exchange change rate
for the period in question.
Announcement no. 7 / 19 May 2011 Interim report Q1 2011 13 of 19
Statement of comprehensive income
Million USD Q1 2011 Q1 2010 2010
Net profit/(loss) for the period -45.3 2.3 -135.2
Other comprehensive income:
Exchange rate adjustment arising on translation
of entities using a measurement currency dif ferent
f rom USD 0.0 0.0 0.0
Fair value adjustment on hedging instruments 3.3 -4.3 -4.9
Value adjustment on hedging instruments transferred
to income statement 0.9 1.6 6.3
Value adjustment on hedging instruments transferred
to assets 0.0 0.0 0.0
Fair value adjustment on available for sale investments 0.2 -0.2 -0.2
Transfer to income statement on sale of available for sale
investments 0.0 0.0 0.0
Other comprehensive income after tax 4.4 -2.9 1.2
Total comprehensive income -40.9 -0.6 -134.0
Announcement no. 7 / 19 May 2011 Interim report Q1 2011 14 of 19
Income statement per quarter
Million USD Q1 10 Q2 10 Q3 10 Q4 10 Q1 11
Revenue 205.5 201.3 225.7 223.6 270.4
Port expenses, bunkers and commissions -59.9 -70.6 -77.4 -90.9 -129.8
Freight and bunkers derivatives 1.9 -0.5 0.9 1.0 6.9
Time charter equivalent earnings 147.5 130.2 149.2 133.7 147.5
Charter hire -51.7 -54.4 -61.3 -61.2 -76.6
Operating expenses -39.9 -34.7 -38.6 -39.0 -43.1
Gross profit (Net earnings from shipping activities) 55.9 41.1 49.3 33.5 27.8
Prof it f rom sale of vessels 18.2 0.0 0.0 -16.3 -5.7
Administrative expenses -18.1 -17.5 -24.5 -18.1 -17.1
Other operating income 1.7 1.3 0.9 0.9 0.2
Share of results of jointly controlled entities -2.4 -1.3 -3.1 -4.7 -1.1
EBITDA 55.3 23.6 22.6 -4.7 4.1
Impairment losses on jointly controlled entities 0.0 0.0 0.0 -35.0 0.0
Depreciation and impairment losses -35.0 -34.4 -35.1 -36.9 -36.6
Operating profit (EBIT) 20.3 -10.8 -12.5 -76.6 -32.5
Financial items -17.7 -13.6 -14.2 -11.1 -12.4
Profit before tax 2.6 -24.4 -26.7 -87.7 -44.9
Tax -0.3 0.3 0.2 0.8 -0.4
Net profit/(loss) for the period 2.3 -24.1 -26.5 -86.9 -45.3
Earnings per share, EPS
Earnings per share, EPS (USD) 0.0 -0.3 -0.4 -1.3 -0.7
Announcement no. 7 / 19 May 2011 Interim report Q1 2011 15 of 19
Assets
Million USD 31 March 31 March 31 December
2011 2010 2010
NON-CURRENT ASSETS
Intangible assets
Goodw ill 89.2 89.2 89.2
Other intangible assets 2.0 2.2 2.1
Total intangible assets 91.2 91.4 91.3
Tangible fixed assets
Land and buildings 3.6 3.7 3.6
Vessels and capitalized dry-docking 2,605.1 2,358.9 2,560.1
Prepayments on vessels 108.0 295.0 227.1
Other plant and operating equipment 8.7 9.9 9.5
Total tangible f ixed assets 2,725.4 2,667.5 2,800.3
Financial assets
Investment in jointly controlled entities 71.2 120.6 72.9
Loans to jointly controlled entities 9.8 37.7 10.2
Other investments 3.1 3.0 3.0
Other f inancial assets 6.0 6.0 6.0
Total f inancial assets 90.1 167.3 92.1
TOTAL NON-CURRENT ASSETS 2,906.7 2,926.2 2,983.7
CURRENT ASSETS
Bunkers 52.7 26.5 41.1
Freight receivables, etc. 108.4 56.8 108.2
Other receivables 22.6 13.0 12.7
Other f inancial assets 0.0 0.0 0.0
Prepayments 27.0 16.9 20.4
Cash and cash equivalents 142.4 186.3 120.0
TOTAL CURRENT ASSETS 353.1 299.5 302.4
TOTAL ASSETS 3,259.8 3,225.7 3,286.1
Announcement no. 7 / 19 May 2011 Interim report Q1 2011 16 of 19
Equity and liabilities
Million USD 31 March 31 March 31 December
2011 2010 2010
EQUITY
Common shares 61,1 61,1 61,1
Treasury shares -17,3 -17,9 -17,9
Revaluation reserves -2,3 -2,4 -2,5
Retained prof it 1 027,0 1 208,8 1 072,3
Proposed dividends 0,0 0,0 0,0
Hedging reserves 2,4 -6,0 -1,8
Translation reserves 4,1 4,1 4,1
TOTAL EQUITY 1 075,0 1 247,7 1 115,3
LIABILITIES
Non-current liabilities
Deferred tax liability 54,2 54,8 54,3
Mortgage debt and bank loans 1 750,9 1 631,3 1 750,4
Finance lease liabilities 30,7 31,6 31,0
Acquired liabilities related to options on vessels 0,0 1,5 0,0
TOTAL NON-CURRENT LIABILITIES 1 835,8 1 719,2 1 835,7
Current liabilities
Mortgage debt and bank loans 212,0 143,2 211,3
Finance lease liabilities 2,0 1,8 2,0
Trade payables 58,0 27,3 48,0
Current tax liabilities 1,1 3,2 1,7
Other liabilities 74,5 80,1 70,2
Acquired liabilities related to options on vessels 1,4 1,8 1,9
Acquired time charter contracts 0,0 1,4 0,0
Deferred income 0,0 0,0 0,0
TOTAL CURRENT LIABILITIES 349,0 258,8 335,1
TOTAL LIABILITIES 2 184,8 1 978,0 2 170,8
TOTAL EQUITY AND LIABILITIES 3 259,8 3 225,7 3 286,1
Announcement no. 7 / 19 May 2011 Interim report Q1 2011 17 of 19
Equity as at 1 January – 31 March 2011
Million USD Common Treasury Retained Proposed Revaluat ion Hedging Translat ion Tot al
shares shares prof it dividends reserves reserves reserves
Equity at 1 January 2011 61.1 -17.9 1,072.3 0.0 -2.5 -1.8 4.1 1,115.3
Changes in equity Q1 2011:
Purchase treasury shares, cost - - - - - - - 0.0
Disposal treasury shares, cost - 0.6 - - - - - 0.6
Gain/loss f rom disposal treasury shares - - -0.6 - - - - -0.6
Share-based compensation - - 0.6 - - - - 0.6
Comprehensive income for the period - - -45.3 - 0.2 4.2 0.0 -40.9
Total changes in equity Q1 2011 0.0 0.6 -45.3 0.0 0.2 4.2 0.0 -40.3
Equity at 31 March 2011 61.1 -17.3 1,027.0 0.0 -2.3 2.4 4.1 1,075.0
Equity as at 1 January – 31 March 2010
Million USD Common Treasury Retained Proposed Revaluat ion Hedging Translat ion Tot al
shares shares prof it dividends reserves reserves reserves
Equity at 1 January 2010 61.1 -18.1 1,205.1 0.0 -2.2 -3.3 4.1 1,246.7
Changes in equity Q1 2010:
Purchase treasury shares, cost - - - - - - - 0.0
Disposal treasury shares, cost - 0.2 - - - - - 0.2
Gain/loss f rom disposal treasury shares - - -0.2 - - - - -0.2
Share-based compensation - - 1.6 - - - - 1.6
Comprehensive income for the period - - 2.3 - -0.2 -2.7 - -0.6
Total changes in equity Q1 2010 0.0 0.2 3.7 0.0 -0.2 -2.7 0.0 1.0
Equity at 31 March 2010 61.1 -17.9 1,208.8 0.0 -2.4 -6.0 4.1 1,247.7
Announcement no. 7 / 19 May 2011 Interim report Q1 2011 18 of 19
Statement of cash flows
Million USD
Q1 2011 Q1 2010 2010
Cash flow from operating activities
Operating prof it -32.5 20.3 -79.6
Adjustments:
Reversal of prof it f rom sale of vessels 5.7 -18.2 -1.9
Reversal of depreciation and impairment losses 36.6 35.0 141.4
Reversal of impairment of jointly controlled entities 0.0 0.0 35.0
Reversal of share of results of jointly controlled entities 1.1 2.4 11.5
Reversal of other non-cash movements -6.7 -4.0 -8.0
Dividends received 0.0 0.0 0.0
Dividends received f rom joint controlled entities 0.7 0.3 1.7
Interest received and exchange rate gains 3.6 0.1 0.5
Interest paid and exchange rate losses -15.8 -14.2 -54.4
Income taxes paid/repaid -1.2 -2.9 -3.6
Change in bunkers, accounts receivables and payables -2.6 2.1 -43.2
Net cash flow from operating activities -11.1 20.9 -0.6
Cash flow from investing activities
Investment in tangible f ixed assets -68.0 -23.6 -253.9
Investment in equity interests and securities 0.0 0.0 0.0
Loans to jointly controlled entities 0.5 1.1 3.3
Payment of liability related to options on vessels 0.0 0.0 0.0
Received share on options on vessels 0.0 0.0 0.0
Sale of equity interests and securities 0.0 0.0 0.0
Sale of non-current assets 100.6 63.6 63.7
Net cash flow from investing activities 33.1 41.1 -186.9
Cash flow from financing activities
Borrow ing, mortgage debt 26.7 25.7 344.7
Borrow ing, f inance lease liabilities 0.0 0.0 0.0
Repayment/redemption, mortgage debt -25.5 -22.0 -153.7
Repayment/redemption, f inance lease liabilities -0.8 -1.2 -5.3
Dividends paid 0.0 0.0 0.0
Purchase/disposals of treasury shares 0.0 0.0 0.0
Net cash flow from financing activities 0.4 2.5 185.7
Net cash flow from operating, investing and financing activities 22.4 64.5 -1.8
Cash and cash equivalents, beginning balance 120.0 121.8 121.8
Cash and cash equivalents, ending balance 142.4 186.3 120.0
Announcement no. 7 / 19 May 2011 Interim report Q1 2011 19 of 19
Quarterly statement of cash flows
Million USD
Q1 10 Q2 10 Q3 10 Q4 10 Q1 11
Cash flow from operating activities
Operating prof it 20.3 -10.8 -12.5 -76.6 -32.5
Adjustments:
Reversal of prof it f rom sale of vessels -18.2 0.0 0.0 16.3 5.7
Reversal of depreciation and impairment losses 35.0 34.4 35.1 36.9 36.6
Reversal of impairment of jointly controlled entities 0.0 0.0 0.0 35.0 0.0
Reversal of share of results of jointly controlled entities 2.4 1.3 3.1 4.7 1.1
Reversal of other non-cash movements -4.0 -3.8 -0.3 0.1 -6.7
Dividends received 0.0 0.0 0.0 0.0 0.0
Dividends received f rom joint controlled entities 0.3 0.9 0.2 0.3 0.7
Interest received and exchange rate gains 0.1 0.3 2.2 -2.1 3.6
Interest paid and exchange rate losses -14.2 -12.7 -14.0 -13.5 -15.8
Income taxes paid/repaid -2.9 0.0 -0.3 -0.4 -1.2
Change in bunkers, accounts receivables and payables 2.1 -9.8 7.8 -43.3 -2.6
Net cash flow from operating activities 20.9 -0.2 21.3 -42.6 -11.1
Cash flow from investing activities
Investment in tangible f ixed assets -23.6 -69.6 -66.8 -93.9 -68.0
Investment in equity interests and securities 0.0 0.0 0.0 0.0 0.0
Loans to jointly controlled entities 1.1 1.2 0.4 0.6 0.5
Payment of liability related to options on vessels 0.0 0.0 0.0 0.0 0.0
Received share on options on vessels 0.0 0.0 0.0 0.0 0.0
Sale of equity interests and securities 0.0 0.0 0.0 0.0 0.0
Sale of non-current assets 63.6 0.1 0.0 0.0 100.6
Net cash flow from investing activities 41.1 -68.3 -66.4 -93.3 33.1
Cash flow from financing activities
Borrow ing, mortgage debt 25.7 54.8 92.1 172.1 26.7
Borrow ing, f inance lease liabilities 0.0 0.0 0.0 0.0 0.0
Repayment/redemption, mortgage debt -22.0 -50.3 -23.6 -57.8 -25.5
Repayment/redemption, f inance lease liabilities -1.2 -1.2 -1.3 -1.6 -0.8
Dividends paid 0.0 0.0 0.0 0.0 0.0
Purchase/disposals of treasury shares 0.0 0.0 0.0 0.0 0.0
Net cash flow from financing activities 2.5 3.3 67.2 112.7 0.4
Net cash flow from operating, investing and financing activities 64.5 -65.2 22.1 -23.2 22.4
Cash and cash equivalents, beginning balance 121.8 186.3 121.1 143.2 120.0
Cash and cash equivalents, ending balance 186.3 121.1 143.2 120.0 142.4