The Group extended its loss in the first nine months of this year as the Time Charter Equivalent (“TCE”) rates continued to be depressed due to reduced tonnage demand caused partially by the COVID-19 pandemic, coupled with an excessive tonnage availability in the market. The average daily TCE rate earned in Q3 2021 and 9M 2021 by the vessels was 65% and 58% lower than the average daily TCE rate earned in Q3 2020 and 9M 2020, respectively.
The Group incurred a loss after tax of USD 8.1 million (including one-off impairment loss of USD 4.9 million on the vessels) in 9M 2021 compared to a loss after tax of USD 3.9 million (including one-off impairment loss of USD 10.7 million on the vessels) for the same period last year. The significant decline in TCE rates and the loss of earnings resulting from the sale of two vessels, Nordic Hanne and Nordic Pia, in April 2021 largely drove the loss incurred in 9M 2021.
Expenses relating to the operation of vessels in 9M 2021 was lower at USD 7.0 million (USD 8.6 million) due primarily to the sale of Nordic Hanne and Nordic Pia in April 2021.
EBITDA decreased significantly to negative USD 0.5 million (USD 14.2 million) due to the lower TCE revenue generated in 9M 2021. Other external costs remained unchanged at USD 1.0 million (USD 1.0 million).
As stated in the Company Announcement 12/2021, past attempts to search for a suitable merger partner did not materialise. The Board is currently in discussions with the Group’s various stakeholders to ensure the proper winding down of the Group in a responsible manner. In accordance with the agreement with the Lenders, the remaining three vessels are to be sold in an orderly fashion. Hence, the Group recognised an impairment loss of USD 4.5 million in Q2 2021 following the classification of the three remaining vessels, Nordic Agnetha, Nordic Amy and Nordic Anne, as assets held-for-sale. In 9M 2020, a total impairment loss of USD 10.7 million was recognised on the vessels. Due to the volatile market, it is noted that the estimation of the remaining vessels’ expected sale value is highly uncertain.
The Group recognised a further impairment loss of USD 0.4 million in 9M 2021 due to the recognition of certain incremental expenses relating to the sale of Nordic Hanne and Nordic Pia which took place in April 2021.
After accounting for depreciation, impairment losses, interest expenses and other finance expenses, the loss after tax was USD 8.1 million in 9M 2021 (loss of USD 3.9 million).
Between 31 December 2020 and 30 September 2021, equity decreased from negative USD 8.5 million to negative USD 16.7 million as a result of the cumulative loss incurred during the period.
The Group is also subject to a quarterly cash sweep mechanism under which the Group, after payment of instalments and interest under the loan agreement, must apply any cash and cash equivalents of the Group in excess of USD 6.0 million towards prepayment of the loan. There was no cash sweep in 9M 2021 (cash sweep of USD 13.3 million was used to pay down the loan in 9M 2020).
During the financial period under review, cash flow from operations was a net cash outflow of USD 0.8 million (net cash inflow of USD 14.1 million) after payment of periodic interest expenses on the term loan. Apart from the quarterly loan instalments totalling USD 2.1 million, the net proceeds from the sale of Nordic Hanne and Nordic Pia were applied towards the prepayment of bank loans in 9M 2021. As a result, cash and cash equivalents was reduced to USD 2.1 million as at 30 September 2021 from USD 5.4 million as at 31 December 2020.
As the Group moves into the new phase of winding down its business, the Chairman of the Board, Mr Knud Pontoppidan and an independent director of the Company, Mr Jens V. Mathiasen have retired from the Board of the Company with effect from 14 October 2021 as per Company Announcement 14/2021 dated 14 October 2021. Mr Esben Poulsson, an independent director of the Company, was appointed as the new Chairman of the Board of the Company on the same day.
The outlook for 2021 remains unchanged as indicated in the Company Announcement 15/2021 on 23 November 2021. The TCE revenue for 2021 is expected to be in the region of USD 8.5 million – USD 10.5 million. After accounting for operating expenditure budgeted by the respective technical managers, the Group’s EBITDA (earnings before interest, tax, depreciation and amortisation) for 2021 is expected to be in the range of USD -1.0 million – USD 1.0 million. The result before tax is forecasted at USD -9.5 million – USD -7.5 million.
Source: Nordic Shipholding A/S