Hafnia Tankers Ltd. - Consolidated Financial Statement.pdf

Hafnia Tankers Ltd.

Interim Report

For the Three Months Ended March 31, 2016 and 2015

Hafnia Tankers Ltd.

Condensed Consolidated Balance Sheet

(Unaudited)

1

March 31 December 31

Note 2016 2015

ASSETS

Current assets

Cash and cash equivalents 135,329 122,856

Accounts receivable 2,577 12,919

Prepaid expenses and other receivables 17,315 13,282

Inventories 4,405 4,496

Total current assets 159,626 153,553

Non-current assets

Vessels and dry dock 4 835,160 845,245

Vessels under construction 4 101,334 96,393

Goodwill 3 6,003 6,003

Time charters acquired 3 3,113 4,141

Contract values vessels under construction 3 2,773 4,279

Prepaid financing fee - 920

Interests in associates 4,504 4,108

Pool working capital deposit 5 24,400 24,400

Deferred tax 347 338

Total non-current assets 977,634 985,827

Total assets 1,137,260 1,139,380

LIABILITIES & EQUITY

Current liabilities

Bank loans 6 43,160 41,340

Accounts payable 3,223 3,433

Payables to shareholders 30,962 -

Accrued expenses and other payables 6,909 12,261

Deferred revenue 474 -

Tax payable 85 68

Total current liabilities 84,813 57,102

Non-current liabilities

Bank loans 6 451,751 462,973

Derivatives 4,116 2,702

Total non-current liabilities 455,867 465,675

Total liabilities 540,680 522,777

Shareholders' equity

Issued, authorized and paid in share capital

Share capital 339 339

Additional paid in capital 7 351,724 351,743

Treasury shares (200) (200)

Accumulated profits 41,017 53,077

Cash flow hedging reserve (2,685) (1,767)

Translation reserve (34) (34)

Equity holders of the parent 390,161 403,158

Non-controlling interests 206,419 213,445

Total equity 596,580 616,603

Total liabilities and equity 1,137,260 1,139,380

(in thousands of U.S. dollars)

As of

Hafnia Tankers Ltd.

Consolidated Statement of Profit

(Unaudited)

2

Note 2016 2015

Revenue

Revenue 54,623 45,823

54,623 45,823

Operating expenses

Vessel operating costs (16,307) (11,105)

Technical management fee (1,146) (822)

Charter hire (8,140) (8,344)

Voyage expenses (114) (138)

Depreciation 4 (10,421) (6,560)

General and administrative expenses 8 (2,972) (2,907)

Total operating expenses (39,100) (29,875)

Other operating income

Other operating income 1,167 -

Share of associates profit 393 598

1,560 598

Operating profit 17,083 16,546

Financial expenses and income

Financial expenses (5,358) (3,543)

Financial income 27 67

Profit before tax 11,752 13,070

Taxes (38) (103)

Profit for the period 11,714 12,967

Attributable to:



11,714 12,967

Earnings per share attributable to equity holders of the parent:

Basic earnings per share (USD) 9 0.22 0.26

Diluted earnings per share (USD) 9 0.22 0.26

Basic (in thousands) 9 33,946 32,789

Diluted (in thousands) 9 33,962 32,789

March 31

For the three months ended


Shares used in computing earnings per share attributable to equity

holders of the parent:

Hafnia Tankers Ltd.

Consolidated Statement of Comprehensive Income

(Unaudited)

3

2016 2015


Other comprehensive (loss)

Items that may be reclassified subsequently to profit or loss:

Fair value losses on cash flow hedges (1,684) -

Reclassification to profit or loss related to cash flow hedges 270 -

Other comprehensive (loss) after tax (1,414) -

Total comprehensive income 10,300 12,967

Attributable to:



10,300 12,967



March 31

Hafnia Tankers Ltd.

Consolidated Statement of Changes in Equity

(Unaudited)

4


Treasury

shares

Translation

reserve Total equity

Balance as of January 1, 2015 323 339,800 12,618 - - (23) 352,718 172,495 525,213

Profit for the period - - 8,593 - - - 8,593 4,374 12,967

Total comprehensive income - - 8,593 - - - 8,593 4,374 12,967

Capital contribution 16 13,183 - - - 13,199 20,831 34,030

Cost related to capital contribution - (850) - - - (850) - (850)

Prepaid costs relating to future share issuance - (364) - - - - (364) - (364)

Share-based compensation - - 631 - - - 631 - 631

Reallocation of non-controlling interests - 406 (211) - - - 195 (195) -

16 12,375 420 - - - 12,811 20,636 33,447

Balance as of March 31, 2015 339 352,175 21,631 - - (23) 374,122 197,505 571,627

Balance as of January 1, 2016 339 351,743 53,077 (200) (1,767) (34) 403,158 213,445 616,603

Profit for the period - - 7,604 - - - 7,604 4,110 11,714

Other comprehensive (loss) for the period - - - - (918) - (918) (496) (1,414)

Total comprehensive income - - 7,604 - (918) - 6,686 3,614 10,300

Prepaid costs relating to future share issuance - (29) - - - - (29) - (29)

Share-based compensation - - 668 - - - 668 - 668

Dividend paid - - (30,962) - - - (30,962) - (30,962)

Reallocation of non-controlling interests - 10 10,630 - - - 10,640 (10,640) -

- (19) (19,664) - - - (19,683) (10,640) (30,323)

Balance as of March 31, 2016 339 351,724 41,017 (200) (2,685) (34) 390,161 206,419 596,580

Non-

controlling

interest

Attributable to the equity holders of the parent

Total

Share

capital

nominal

Additional

paid in

capital

Accumulated

profits

Cash flow

hedging

reserve

Hafnia Tankers Ltd.

Consolidated Statement of Cash Flow

(Unaudited)

5

Note 2016 2015

Operating activities


Depreciation 4 10,421 6,560

Amortization of time charters acquired 3 1,028 1,163

Share-based compensation 668 631

Financial expenses 5,358 3,543

Tax expense 38 103

Share of associates profit (393) (598)

28,834 24,369

Changes in assets and liabilities:

Decrease / (increase) in inventories 91 (389)

Decrease / (increase) in accounts receivable 10,342 (911)

(increase) in prepaid expenses and other receivables (1,553) (4,992)

(increase) in pool working capital deposit 5 - (3,000)

(decrease) in accounts payable (175) (516)

(decrease) / increase in accrued expenses and other payables (3,401) 683

Increase in deferred income 474 495

5,778 (8,630)

Financial expenses paid (7,313) (3,027)

Taxes paid (30) (5)

Net cash inflow from operating activities 27,269 12,707

Investing activities

Payments for vessels under construction (3,435) (11,447)

Payments for vessels including drydock (336) (136,287)

Net cash (outflow) from investing activities (3,771) (147,734)

Financing activities

Bank loan repayment (35,177) (34,124)

Draw down on credit facility 27,167 169,725

Cost relating to share issuance (29) (860)

Prepaid financing fee (2,952) (2,256)

Proceeds from share capital increase - 34,030

Net cash (outflow) / inflow from financing activities (10,991) 166,515

Net cash flow from operating, investing and financing activities 12,507 31,488

Cash and cash equivalents at January 1 122,856 73,746

Effects of exchange rate changes on the balance of cash held in foreign (35) (35)

Cash and cash equivalents at March 31 135,329 105,199



March 31

Hafnia Tankers Ltd.

Notes to the Consolidated Financial Statements

(Unaudited)

6

(All amounts other than share data are provided in thousands of U.S. dollars, unless otherwise indicated)

Consolidated Financial Statements

1. General Information

Hafnia Tankers Ltd. (the “Company”) is a private limited company incorporated on October 15, 2013 in the

Republic of the Marshall Islands.

The Company and its subsidiaries (together, the “Group”) provide seaborne transportation of petroleum

products worldwide.

The Company currently holds Class A Units representing approximately 64.9% of the outstanding membership

interests of the Company’s direct subsidiary Hafnia Tankers LLC, while the balance of Hafnia Tankers LLC’s

outstanding membership interests consist of exchangeable Class B and Class C Units held by existing investors

representing an interest of approximately 34.8% and 0.3%, respectively, which are presented as non-

controlling interests in the Company’s financial statements.

2. Accounting Policies

Basis of Preparation

These unaudited condensed consolidated financial statements for the three months ended March 31, 2016 and

2015 have been prepared in accordance with International Accounting Standard (“IAS”) 34 “Interim Financial

Reporting” as issued by the International Accounting Standards Board (“IASB”). Certain information and

footnote disclosures required by International Financial Reporting Standards as issued by the IASB (“IFRS”)

for a complete set of annual financial statements have been omitted, and therefore, these unaudited condensed

consolidated financial statements should be read in conjunction with the Group’s annual consolidated financial

statements for the year ended December 31, 2015.

Accounting Policies

The same accounting policies and methods of computation have been followed in these condensed

consolidated financial statements as were applied in the preparation of the Group’s financial statements for the

year ended December 31, 2015, except for the adoption of accounting policies required by IFRS standards

effective for accounting periods beginning after January 1, 2016. The new standards have not had any material

effect on the Group’s financial statements.

Accounting Standards and Interpretations Not Yet Adopted

The IASB has issued new or revised accounting standards (IAS and IFRS) and interpretations (IFRICs) that

are not compulsory for the Group in the preparation of the financial statements for the current period. None of

them is expected to have a material impact on the financial reporting for the Group.

Hafnia Tankers Ltd.


(Unaudited)

7

3 — Intangible Assets

Goodwill has been allocated for impairment testing purposes to the following cash-generating units (CGUs), short-

range (“SR”), medium range (“MR”) and long-range 1 (“LR1”). As of March 31, 2016, the value in use test for each

CGU was greater than its carrying amount and thus no impairment losses have been recognized during the period ended

March 31, 2016.

Contract values for vessels under construction are related to newbuild contracts which were acquired as a result of the

merger between BTS Tanker Partners Limited and Hafnia Tankers LLC on December 31, 2013 (the “Combination”).

The value of the contracts is added to the cost of vessels under construction on a straight line until the time when the

vessels are delivered. The final vessel is expected to be delivered in the first quarter of 2017.

Time charters acquired are related to time charter contracts which were acquired as a result of the Combination. The

value of the contracts is amortized on a straight line over the remaining contract period. The amortization expense of

USD 1,028 for the period ended March 31, 2016 is recognized as charter hire. The final time charter contract acquired is

expected to run until the third quarter of 2017.


Cost

Balance at January 1, 2015

Disposals

Cost at December 31, 2015

Accumulated amortization


Amortization

Disposals

Accumulated amortization at December 31, 2015

Carrying amount at December 31, 2015

Cost


Cost at March 31, 2016

Accumulated amortization


Amortization

Accumulated amortization at March 31, 2016

Carrying amount at March 31, 2016

Time charters

acquiredGoodwill

Contract values

vessels under

construction

-

-

6,003

6,003

6,003

-

-

-

6,003

47,932

(21,383)

26,549

(28,673)

(14,980)

6,003

-

6,003

-

-

(23,776)

2,773

21,383

(22,270)

4,279

26,549

26,549

13,315

(982)

12,333

(4,657)

(4,517)

(22,270)

(1,506)

Total

67,250

(22,365)

44,885

(33,330)

(19,497)

982

(30,462)

(2,534)

(32,996)

11,889

(8,192)

(1,028)

(9,220)

3,113

22,365

(30,462)

14,423

44,885

44,885

(8,192)

4,141

12,333

12,333

Hafnia Tankers Ltd.


(Unaudited)

8

4 — Tangible Assets

Vessels are pledged to secure the bank loans of the Group.

In accordance with IAS 36 Impairment of Assets, the Company has determined its cash-generating units (CGUs) based

on the vessel classes, namely short-range (“SR”), medium-range (“MR”) and long-range 1 (“LR1”). As of March 31,

2016, the fair value less cost to sell of the LR1 fleet was greater than its carrying amount. However, the fair value less

cost to sell of the SR and the MR vessels was less than their carrying amounts and accordingly, a value in use

calculation was performed. The significant assumptions applied in determining the value in use of the SR and MR fleet

are the future charter rates, vessel operating expenses and the discount rate. The Company estimated the future cash

flows of the SR and MR CGUs based on a combination of the latest forecast of time charter rates for the next three

years and the most recent ten-year historical average for one year time charter rates for periods thereafter. The Company

estimated the operating expenses based on budgets agreed with third party technical managers for 2016 adjusted for an

escalation factor. The future cash flows were then discounted to their present value.

The value in use calculation was greater than the carrying amount for both SR and MR vessels and as a result of this

testing, no impairment charge was recorded.

Vessels under construction

As of March 31, 2016, the Group has seven vessels under construction. These vessels are expected to be delivered to the

Group between the second quarter of 2016 and the first quarter of 2017.

The contractual obligation arising from these newbuild contracts amounted to USD 157,381 as of March 31, 2016.


Cost


Additions

Transfers

Disposals

Cost at December 31, 2015

Accumulated depreciation


Depreciation

Disposals

Accumulated depreciation at December 31, 2015

Carrying amount at December 31, 2015

Cost


Additions

Cost at March 31 2016

Accumulated depreciation


Depreciation

Accumulated depreciation at March 31, 2016

Carrying amount at March 31, 2016 936,494 101,334

Total

663,202

348,581

-

(725)

1,011,058

(36,241)

(33,904)

725

(69,420)

941,638

1,011,058

5,277

1,016,335

(69,420)

Vessels under

Construction

154,709

203,674

-

16,126

Dry dock

11,507

8,254

5,600

(725)

24,636

(3,728)

(4,191)

725

(7,194)

17,442

24,636

(8,538)

(10,421)

(261,990)

-

96,393

-

-

-

-

96,393

96,393

4,941

(79,841)

-

-

28

24,664

(7,194)

(1,344)

101,334

496,986

136,653

256,390

-

890,029

(32,513)

(29,713)

-

(62,226)

(62,226)

(9,077)

(71,303)

819,034

827,803

890,029

308

890,337

Vessels

Hafnia Tankers Ltd.


(Unaudited)

9

5 — Other Assets

Participating in pools requires a deposit of working capital. The deposit ranges from USD 600 to USD 1,000 per vessel.

The deposit is paid upon entrance to the pool and is repaid when the pool is exited. The amount is non-interest bearing.

6 — Bank Loans

During the period ended March 31, 2016, the Group signed a USD 360,000 credit facility with ABN AMRO Bank N.V,

Danish Ship Finance, Danske Bank A/S, ING Bank N.V., BNP Paribas, Nordea Bank Norge ASA, Skandinaviska

Enskilda Banken AB (publ) and Swedbank AB (publ). The facility refinances an existing USD 340,584 credit facility.

The Credit facility is comprised of (i) a USD 124,000 term loan facility, (ii) a USD 100,000 revolving credit facility and

(iii) a USD 136,000 delayed draw term loan facility. The credit facility will mature in March 2023 and is priced at

LIBOR plus a margin of 2.25%. The credit facility will refinance 12 MR product tankers, provide post-delivery

financing for our six MR newbuilds to be delivered in 2016 and 2017 and provide USD 40,000 for general corporate

purposes. The refinanced USD 360,000 credit facility has in accordance with IFRS 9 been treated as a modification to

the previous USD 340,584 credit facility.

During the period ended March 31, 2016, the Group repaid USD 28,800 on its junior credit facility that had been part of

the financing of the acquisition of four LR1 vessels in the first quarter of 2015.

The interest rates on the drawn amounts are LIBOR plus a margin ranging from 2.25% to 2.60% and are to be repaid in

quarterly installments with a balloon payment at the end of the seventh year.

The drawn amounts are secured by first priority mortgages on vessels.

The drawn amounts are subject to the following significant financial covenants:

Working capital above zero

A minimum liquidity above USD 10,000 and above 5% of total debt

Equity above USD 100,000 and above 30% of the total assets

The Group was fully compliant with all loan covenants at March 31, 2016.

The Group is subject to a minimum security value clause under which the vessel values must not exceed a percentage of

the debt. The Group was fully compliant with this clause at March 31, 2016.

The following table summarizes the current contractual maturities of the Group’s bank loans and presents the total

principal amount based on the earliest date on which the Group can be required to pay.

Deposit of working capital to the pools, long term

March 31


As of

December 31

2015

24,400

24,400

2016

24,400

24,400

Hafnia Tankers Ltd.


(Unaudited)

10

7 — Charter Hire

The table below shows the Group’s time chartered-in vessel commitments as of March 31, 2016, assuming no off-hire

days:

8 — General and Administrative Expenses

1-5 years

174,250

>5 years

277,501

TotalAs of March 31, 2016

As of December 31, 2015


Bank loans

<1 year

43,160

<1 year

41,340

494,911

Total

504,313

>5 years

266,421

1-5 years

196,552


Bank loans

No

No

Optional

extension

No

No

1 year

2 years

2 years

Purchase Earliest

re-delivery

12-31-2016

2-21-2017

5-11-2016

9-14-2025

9-14-2025

9-5-2018

8-29-2018

Type

MR

MR

MR

MR

MR

LR1

LR1

Delivery

1-16-2014

1-16-2014

1-16-2014

9-15-2017

9-15-2017

9-15-2012

9-9-2012

option

No

No

No

Yes

Yes

No

No

Subject to

profit split

Yes

Yes

Yes

No

No

No

No


Minimum Charter hire

130,79711,639

2020

11,639

2025

8,173

2024 Total

2016

17,624

2021

11,607

2017

15,863

2022

11,607

2018

19,431

2023

11,607

2019

11,607

Wages and salaries

Outsourced functions

Contributions to defined contribution plans

Other social security costs

Other administrative costs

Auditors, consultants and legal fees

Share based compensation (non-cash)

(631)

(2,907)

(1,674)

(50)

(3)

(281)

(214)

(2,276)

(631)

2015

(362)

(381)

(2,304)

(668)

(668)

(2,972)

2016

(1,398)

(49)

(6)


March 31


(108) (54)

Hafnia Tankers Ltd.


(Unaudited)

11

9 — Earnings Per Share

During the period ended March 31, 2016, potentially dilutive securities include 18,191,712 of Class B Units and

162,911 Class C Units. The Class B Units and the Class C Units have not had a dilutive effect for the period ended

March 31, 2016. The Class B Units and the Class C Units are exchangeable on a one-for-one basis for the Company’s

common shares. The Class B Units and the Class C Units are considered in computing diluted profit or loss per share on

an “if-converted” basis. During the period ended March 31, 2016, a total of 2,300,000 warrants, 200,000 options and

16,434 Restricted Stock Units with a potential dilutive effect has been granted to employees. The warrant and options

have not had a dilutive effect in 2016 as they are not in the money.

10 — Categories of Financial Instruments

11 — Cash Flow Hedging

During the period ended March 31, 2016, the Group entered into agreements to hedge part of the interest rate exposure

to comply with the adopted Risk Management Policy. The agreements are two to three year interest rate caps with a

strike of 3% for a total of USD 300,000 covering the period from 2020 to 2022/2023. The periods until 2020 are

covered by the hedge agreements entered into in the second quarter of 2015. The cost of the hedging instruments are

paid over the two to three year period.

The fair market value of the total hedging agreements as of March 31, 2016 was negative USD 4,116.

Profit for the period (USD thousand)

Consolidated profit attributable to non-controlling interests

Profit attributable to the Group (USD thousand)

Weighted average number of shares (in thousands)

Diluted weighted average number of shares in issue (in thousands)

Earnings per share (USD)

Diluted earnings per share (USD)

2015

12,967

4,374

8,593

32,789

32,789

0.26

0.26 0.22

2016

11,714

4,110

7,604

33,946

33,962

0.22


March 31

Financial assets

Cash and cash equivalents

Receivables

Financial liabilities

Bank loans

Financial liabilities measure at amortised cost

Derivative instruments in designated hedge accounting relationships

494,911

8,718

4,116

March 31

2016

135,329

31,654

December 31

2015

122,856

40,122

As of


504,313

12,974

2,702

Hafnia Tankers Ltd.


(Unaudited)

12

12 — Fair Value Measurements

Except for the hedge agreements entered into in the second quarter of 2015 and the first quarter of 2016, no assets or

liabilities are measured at fair value after initial recognition, and the carrying values of financial instruments

approximate their respective fair values. Therefore, no additional disclosure related to fair value measurement has been

provided in these financial statements.

13 — Subsequent Events

Except for the below, there have not been any significant events after the balance sheet date at March 31, 2016.

In April, 2016, the Group paid out USD 30,962 in dividends to the common shareholders. Since the dividends were

authorized by the Board of Directors on March 23, 2016, they have been presented as a payable to shareholders in the

balance sheet at March 31, 2016.

Documents

Hafnia Tankers Ltd. - Consolidated Financial Statement.pdf