Q1 Result 2022
Summary
The comparison figures for the period ended 31 March 2022 are stated in parenthesis.
The operating performance of the Group for Q1 2022 was impacted by the sale of two of the remaining three vessels. Nordic Anne and Nordic Agnetha were delivered to their new owners in February 2022 and March 2022, respectively.
In Q1 2022, the average Time Charter Equivalent (“TCE”) rates continued to improve due to increased tonnage demand. The average daily TCE rate earned in Q1 2022 by the vessels was 57% higher than the average daily TCE rate earned in Q1 2021.
The Group generated a profit after tax of USD 2.9 million (including write-off of certain loan interest of USD 2.7 million on the vessels) in Q1 2022 compared to a loss after tax of USD 1.5 million for the same period last year. Despite the improvement in average TCE rates in Q1 2022, the loss of earnings from the sale of vessels (in addition to Nordic Anne and Nordic Agnetha, Nordic Hanne and Nordic Pia were sold in April 2021) resulted in lower TCE revenue in Q1 2022 as compared to Q1 2021.
Expenses relating to the operation of vessels in Q1 2022 was lower at USD 1.7 million (USD 2.9 million) due primarily to the sale of the respective vessels.
EBITDA increased to USD 0.7 million (USD 0.4 million). Other external costs increased by USD 0.2 million to USD 0.5 million (USD 0.3 million) due mainly to legal fees relating to the extension of the Group’s loan facility.
The Group recognised a reversal of previously recognised write-downs on assets held-for-sale of USD 0.2 million in Q1 2022 as certain actual incremental expenses relating to the sale of vessels were lower than estimated.
After accounting for depreciation, impairment losses, write-down and reversals on assets held-for-sale, financial expenses and financial income, the profit after tax was USD 2.9 million in Q1 2022 (loss of USD 1.5 million).
Between 31 December 2021 and 31 March 2022, equity improved from negative USD 14.3 million to negative USD 11.4 million as a result of the profit recognised during the period.
The Group is also subjected 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 were no cash sweep in Q1 2022 and in Q1 2021.
During the financial period under review, cash flow from operations was a net cash inflow of USD 2.4 million (net cash outflow of USD 0.4 million) due partially to the bunker proceeds received upon the delivery of the respective vessels to the new owners. The net proceeds from the sale of Nordic Anne and Nordic Agnetha were applied towards the repayment of bank loans in Q1 2022. Overall, cash and cash equivalents improved to USD 4.4 million as at 31 March 2022 from USD 2.5 million as at 31 December 2021.
As announced on 21 January 2022 (Company Announcement 2/2022), the Group had reached an agreement with the Lenders to extend the maturity of the existing bank loan facilities till 31 March 2022. With the delivery of the last vessel, Nordic Amy, to her new owner on 1 April 2022, the remaining outstanding loan balances were settled via proceeds from the sale of Nordic Amy, internal cash and utilisation of USD 2.3 million under the banker’s guarantee issued by the majority shareholder of the Company to the lenders.
To support the ongoing efforts to clarify the future activities of the Group, the majority shareholder of the Company intends, if necessary, to support the Group, financially or otherwise, in the course of business of the Group with a view to ensuring that the Group will be able to continue its operations as a going concern for at least the financial year 2022. For the avoidance of doubt, the intent does not constitute a legal obligation to provide any funding or support to the Group. The majority shareholder of the Company has also agreed to extend the maturity of the shareholder’s loans till mid-April 2023.
The outlook for 2022 remains unchanged as indicated in the 2021 Annual Report. Notwithstanding the sale of all the remaining vessels, the TCE revenue for 2022 was forecasted to remain in the region of USD 2.5 million – USD 3.0 million, pending the finalisation of the pools’ accounts. After accounting for estimated vessel operating costs and administrative operating expenditure, the Group’s expected EBITDA (earnings before interest, tax, depreciation and amortisation) for 2022 would be in the range of USD -0.5 million – USD 0.5 million, and the result before tax, positively impacted by one-off income, would be between USD 2.0 million – USD 3.0 million.
