Hafnia Tankers Ltd. - otc.nfmf.nootc.nfmf.no/public/news/16389.pdf · Hafnia Tankers Ltd. Interim Report For the Three and Six Months Ended June 30, 2016 and 2015 . Hafnia Tankers

Hafnia Tankers Ltd.

Interim Report

For the Three and Six Months Ended June 30, 2016 and 2015

Hafnia Tankers Ltd.

Condensed Consolidated Balance Sheet

(Unaudited)

2

As of

June 30 December 31

Note 2016 2015

(in thousands of U.S. dollars)

ASSETS

Current assets

Cash and cash equivalents 110,475 122,856

Accounts receivable 4,504 12,919

Prepaid expenses and other receivables 14,126 13,282

Inventories 4,305 4,496

Total current assets 133,410 153,553

Non-current assets

Vessels and dry dock 4 902,095 845,245

Vessels under construction 4 73,248 96,393

Goodwill 3 6,003 6,003

Time charters acquired 3 2,084 4,141

Contract values vessels under construction 3 1,498 4,279

Prepaid financing fee - 920

Interests in associates 1,953 4,108

Pool working capital deposit 5 25,800 24,400

Deferred tax 317 338

Total non-current assets 1,012,998 985,827

Total assets 1,146,408 1,139,380

LIABILITIES & EQUITY

Current liabilities

Bank loans 6 44,869 41,340

Accounts payable 3,259 3,433

Accrued expenses and other payables 8,464 12,261

Deferred revenue 378 -

Tax payable 1,142 68

Total current liabilities 58,112 57,102

Non-current liabilities

Bank loans 6 481,444 462,973

Derivatives 11 5,166 2,702

Total non-current liabilities 486,610 465,675

Total liabilities 544,722 522,777

Shareholders' equity

Issued, authorized and paid in share capital

Share capital 339 339

Additional paid in capital 351,694 351,743

Treasury shares (200) (200)

Accumulated profits 45,043 53,077

Cash flow hedging reserve (3,366) (1,767)

Translation reserve (34) (34)

Equity holders of the parent 393,476 403,158

Non-controlling interests 208,210 213,445

Total equity 601,686 616,603

Total liabilities and equity 1,146,408 1,139,380

Hafnia Tankers Ltd.

Condensed Consolidated Statement of Profit

(Unaudited)

3

For the three months ended For the six months ended

June 30 June 30

Note 2016 2015 2016 2015

(in thousands of U.S. dollars) (in thousands of U.S. dollars)

Revenue

Revenue 50,328 53,339 104,951 99,162

50,328 53,339 104,951 99,162

Operating expenses

Vessel operating costs (18,714) (13,659) (35,021) (24,891)

Technical management fee (1,172) (921) (2,318) (1,743)

Charter hire 7 (7,839) (9,598) (15,979) (17,942)

Voyage expenses (160) (143) (274) (281)

Depreciation 4 (10,472) (8,072) (20,893) (14,632)

General and administrative expenses 8 (2,972) (3,505) (5,944) (6,412)

Total operating expenses (41,329) (35,898) (80,429) (65,901)

Other operating income

Other operating income 2,117 - 3,284 -

Share of associates profit 249 601 642 1,199

2,366 601 3,926 1,199

Operating profit 11,365 18,042 28,448 34,460

Financial expenses and income

Financial expenses (4,776) (4,034) (10,134) (7,577)

Financial income 8 137 35 204

Profit before tax 6,597 14,145 18,349 27,087

Taxes (1,095) (363) (1,133) (339)

Profit for the period 5,502 13,782 17,216 26,748

Attributable to:

Equity holders of the parent 3,571 8,959 11,175 17,551

Non-controlling interests 1,931 4,823 6,041 9,197

5,502 13,782 17,216 26,748

Earnings per share attributable to equity

holders of the parent:

Basic earnings per share (USD) 9 0.11 0.26 0.33 0.53

Diluted earnings per share (USD) 9 0.11 0.26 0.33 0.53

Shares used in computing earnings per share

attributable to equity holders of the parent:

Basic (in thousands) 9 33,946 33,937 33,946 33,366

Diluted (in thousands) 9 33,980 33,937 33,970 33,366

Hafnia Tankers Ltd.

Condensed Consolidated Statement of Comprehensive Income

(Unaudited)

4


June 30 June 30

2016 2015 2016 2015


Profit for the period 5,502 13,782 17,216 26,748

Other comprehensive (loss)

Items that may be reclassified

subsequently to profit or (loss):

Fair value (losses) on cash flow hedges (1,321) (1,373) (3,005) (1,373)

Reclassification to profit or (loss)

related to cash flow hedges 271 34 541 34

Other comprehensive (loss) after tax (1,050) (1,339) (2,464) (1,339)

Total comprehensive income 4,452 12,443 14,752 25,409

Attributable to:

Equity holders of the parent 2,890 8,085 9,576 16,676

Non-controlling interests 1,562 4,358 5,176 8,733

4,452 12,443 14,752 25,409

Hafnia Tankers Ltd.

Condensed Consolidated Statement of Changes in Equity

(Unaudited)

5

Attributable to the equity holders of the parent

Non-

controlling

interests

Share

capital

nominal

Additional

paid in

capital

Accumulated

profits

Cash flow

hedging

reserve

Total

(in thousands of U.S. dollars) 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 - - 17,551 - - - 17,551 9,197 26,748

Other comprehensive (loss) for the period - - - - (875) - (875) (464) (1,339)

Total comprehensive income - - 17,551 - (875) - 16,676 8,733 25,409

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 - (737) - - - - (737) - (737)

Purchase of treasury shares - - - (200) - - (200) - (200)

Share-based compensation - - 1,261 - - - 1,261 - 1,261

Reallocation of non-controlling interests - 551 (437) - - - 113 (113) -

16 12,147 824 (200) - - 12,786 20,718 33,504

Balance as of June 30, 2015 339 351,947 30,994 (200) (875) (23) 382,182 201,946 584,128

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 - - 11,175 - - - 11,175 6,041 17,216

Other comprehensive (loss) for the period - - - - (1,599) - (1,599) (865) (2,464)

Total comprehensive income - - 11,175 - (1,599) - 9,576 5,176 14,752

Prepaid costs relating to future share issuance - (76) - - - - (76) - (76)

Share-based compensation - - 1,354 - - - 1,354 - 1,354

Dividend paid, $0.592 per share - - (30,947) - - - (30,947) - (30,947)

Reallocation of non-controlling interests - 27 10,384 - - - 10,411 (10,411) -

- (49) (19,209) - - - (19,258) (10,411) (29,669)

Balance as of June 30, 2016 339 351,694 45,043 (200) (3,366) (34) 393,476 208,210 601,686

Hafnia Tankers Ltd.

Condensed Consolidated Statement of Cash Flow

(Unaudited)

6

For the six months ended

June 30

Note 2016 2015


Operating activities

Profit for the period 17,216 26,748

Depreciation 4 20,893 14,632

Amortization of time charters acquired 3 2,057 2,339

Share-based compensation 1,354 1,261

Financial expenses 10,134 7,577

Tax expense 1,133 592

Share of associates profit 2,158 (1,199)

54,945 51,951

Changes in assets and liabilities:

Decrease / (increase) in inventories 191 (1,153)

Decrease / (increase) in accounts receivable 8,415 (1,224)

Decrease / (increase) in prepaid expenses and other receivables 217 (8,392)

(increase) in pool working capital deposit 5 (1,400) (4,500)

(decrease) / increase in accounts payable (139) 3,146

(decrease) / increase in accrued expenses and other payables (1,611) 3,414

Increase in deferred income 378 -

6,051 (8,708)

Financial expenses paid (12,320) (6,200)

Taxes paid (38) (389)

Net cash inflow from operating activities 48,638 36,654

Investing activities

Payments for vessels under construction (49,783) (57,789)

Payments for vessels including drydock (2,035) (140,643)

Net cash (outflow) from investing activities (51,818) (198,432)

Financing activities

Bank loan repayment (45,762) (38,596)

Draw down on credit facility 70,517 211,725

Cost relating to share issuance (76) (906)

Prepaid financing fee (2,899) (2,550)

Dividend paid (30,947) -

Proceeds from share capital increase - 34,030

Purchase of treasury shares - (200)

Net cash (outflow) / inflow from financing activities (9,167) 203,503

Net cash flow from operating, investing and financing activities (12,347) 41,725

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

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

currencies (35) (35)

Cash and cash equivalents at June 30 110,475 115,436

Hafnia Tankers Ltd.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

7

(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 consists 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 and six months ended June 30, 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 are expected

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

Hafnia Tankers Ltd.


(Unaudited)

8

3 — Intangible Assets

Contract values

vessels under Time charters

(in thousands of U.S. dollars) Goodwill construction acquired Total

Cost

Balance at January 1, 2015 6,003 47,932 13,315 67,250

Addition - - - -

Disposals - (21,383) (982) (22,365)

Cost at December 31, 2015 6,003 26,549 12,333 44,885

Accumulated amortization

Balance at January 1, 2015 - (28,673) (4,657) (33,330)

Amortization - (14,980) (4,517) (19,497)

Disposals - 21,383 982 22,365

Accumulated amortization at December 31, 2015 - (22,270) (8,192) (30,462)

Carrying amount at December 31, 2015 6,003 4,279 4,141 14,423

Cost


Addition - - - -

Disposals - - - -

Cost at June 30, 2016 6,003 26,549 12,333 44,885

Accumulated amortization

Balance at January 1, 2016 - (22,270) (8,192) (30,462)

Amortization - (2,781) (2,057) (4,838)

Disposals - - - -

Accumulated amortization at June 30, 2016 - (25,051) (10,249) (35,300)

Carrying amount at June 30, 2016 6,003 1,498 2,084 9,585

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 June 30, 2016, the fair value less cost to sell the

LR1 fleet was greater than its carrying amount, and the value in use test for the SR and MR CGUs was greater than its

carrying amount and thus no impairment losses have been recognized during the period ended June 30, 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 2,057 for the period ended June 30, 2016 is recognized as charter hire. The final time charter contract acquired is

expected to run until the second quarter of 2017.

Hafnia Tankers Ltd.


(Unaudited)

9

4 — Tangible Assets

Vessels under

(in thousands of U.S. dollars) Vessels Dry dock construction Total

Cost


Additions 136,653 8,254 203,674 348,581

Transfers 256,390 5,600 (261,990) -

Disposals - (725) - (725)

Cost at December 31, 2015 890,029 24,636 96,393 1,011,058

Accumulated depreciation

Balance at January 1, 2015 (32,513) (3,728) - (36,241)

Depreciation (29,713) (4,191) - (33,904)

Disposals - 725 - 725

Accumulated depreciation at December 31, 2015 (62,226) (7,194) - (69,420)

Carrying amount at December 31, 2015 827,803 17,442 96,393 941,638

Cost

Balance at January 1, 2016 890,029 24,636 96,393 1,011,058

Additions 458 1,577 52,564 54,599

Transfers 74,108 1,600 (75,709) (1)

Disposals - (359) - (359)

Cost at June 30 2016 964,595 27,454 73,248 1,065,297

Accumulated depreciation

Balance at January 1, 2016 (62,226) (7,194) - (69,420)

Depreciation (18,251) (2,642) - (20,893)

Disposals - 359 - 359

Accumulated depreciation at June 30, 2016 (80,477) (9,477) - (89,954)

Carrying amount at June 30, 2016 884,118 17,977 73,248 975,343

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 SR, MR and LR1. As of June 30, 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 were 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

current 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 June 30, 2016, the Group has five vessels under construction. These vessels are expected to be delivered to the

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

The contractual obligation arising from these newbuild contracts amounted to USD 115,640 as of June 30, 2016.

Hafnia Tankers Ltd.


(Unaudited)

10

5 — Other Assets

As of

June 30 December 31

2016 2015


Deposit of working capital to the pools, long term 25,800 24,400

25,800 24,400

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

In February 2016, the Group signed a USD 360,000 credit facility. The facility refinanced an existing USD 340,584

credit facility. The credit facility will mature in March 2023 and is priced at LIBOR plus a margin of 2.25%. 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.

For the three months ended June 30, 2016, the Group drew down USD 21,000 on the USD 236,775 credit facility and

USD 22,350 on the USD 360,000 credit facility to finance newbuild vessels delivered in the quarter.

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 June 30, 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 June 30, 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.

As of June 30, 2016 <1 year 1-5 years >5 years Total


Bank loans 44,869 183,413 298,031 526,313

As of December 31, 2015 <1 year 1-5 years >5 years Total


Bank loans 41,340 196,552 266,421 504,313

Hafnia Tankers Ltd.


(Unaudited)

11

7 — Charter Hire

The table below shows the Group’s time chartered-in vessel commitments as of June 30, 2016, assuming no off-hire

days:

Optional

Earliest extension Subject to Purchase

Type Delivery re-delivery period profit split option

MR 1-16-2014 12-31-2016 No Yes No

MR 1-16-2014 2-21-2017 No Yes No

MR 1-16-2014 5-11-2017 No Yes No

MR 9-15-2017 9-14-2025 2 years No Yes

MR 9-15-2017 9-14-2025 2 years No Yes

LR1 9-15-2012 9-5-2018 No No No

LR1 9-9-2012 8-29-2018 No No No

(in thousands of U.S. dollars) 2016 2017 2018 2019 2020

Minimum charter hire 14,260 17,893 19,431 11,607 11,639

Total as of

June 30 December 31

2021 2022 2023 2024 2025 2016 2015

11,607 11,607 11,607 11,639 8,173 129,463 133,710

8 — General and Administrative Expenses


June 30 June 30

2016 2015 2016 2015


Wages and salaries (1,478) (1,670) (2,876) (3,344)

Outsourced functions (92) (99) (200) (153)

Contributions to defined contribution plans (51) (47) (100) (97)

Other social security costs (6) (4) (12) (7)

Other administrative costs (269) (388) (631) (669)

Auditors, consultants and legal fees (390) (666) (771) (880)

(2,286) (2,874) (4,590) (5,150)

Share based compensation (non-cash) (686) (631) (1,354) (1,262)

(686) (631) (1,354) (1,262)

(2,972) (3,505) (5,944) (6,412)

Hafnia Tankers Ltd.


(Unaudited)

12

9 — Earnings Per Share

For the three months ended

June 30

2016 2015

Profit for the period (USD thousand) 5,502 13,782

Consolidated profit attributable to non-controlling interests 1,931 4,823

Profit attributable to equity holders of the parent (USD thousand) 3,571 8,959

Weighted average number of shares (in thousands) 33,946 33,937

Diluted weighted average number of shares in issue (in thousands) 33,980 33,937

Earnings per share (USD) 0.11 0.26

Diluted earnings per share (USD) 0.11 0.26

For the six months ended

June 30

2016 2015

Profit for the period (USD thousand) 17,216 26,748

Consolidated profit attributable to non-controlling interests 6,041 9,197

Profit attributable to equity holders of the parent (USD thousand) 11,175 17,551

Weighted average number of shares (in thousands) 33,946 33,366

Diluted weighted average number of shares in issue (in thousands) 33,970 33,366

Earnings per share (USD) 0.33 0.53

Diluted earnings per share (USD) 0.33 0.53

During the period ended June 30, 2016, potentially dilutive securities include 18,191,712 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 June 30,

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 June 30, 2016, a total of 2,300,000 warrants, 200,000 options and 34,291

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

As of

June 30 December 31

2016 2015

Financial assets (in thousands of U.S. dollars)

Cash and cash equivalents 110,475 122,856

Receivables 33,354 40,122

Financial liabilities

Bank loans 526,313 504,313

Financial liabilities measure at amortised cost 9,259 12,974

Derivative instruments in designated hedge accounting

relationships 5,166 2,702

Hafnia Tankers Ltd.


(Unaudited)

13

11 — Cash Flow Hedging

The Group has agreements to hedge part of the interest rate exposure to comply with the adopted Risk Management

Policy. The cost of the hedging instruments is paid over the period of the contracts.

The fair market value of the total hedging agreements as of June 30, 2016 was negative USD 5,166. The fair market

value of the hedging agreement is comprised of discounted premiums, negative USD 7,867, and the value of the

hedging instruments, USD 2,701.

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 June 30, 2016.

In August, 2016, the Group took delivery of the fourth MR newbuild vessels (Hafnia Daisy) under the newbuild

program. To finance the payment at delivery, a drawdown on our USD 360,000 credit facility of USD 21,600 was

made.

The Condensed Consolidated Financial Statements were authorized for issuance by the Board of Directors on August

18, 2016.

Documents

Hafnia Tankers Ltd. - otc.nfmf.nootc.nfmf.no/public/news/16389.pdf · Hafnia Tankers Ltd. Interim Report For the Three and Six Months Ended June 30, 2016 and 2015 . Hafnia Tankers