FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of August, 2002
A/S STEAMSHIP COMPANY TORM
(Translation of registrant's name into English)
Marina Park
Sundkrogsgade 10
DK-2100 Copenhagen 0
Denmark
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form 20-F X Form 40-F
-----
Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the information to
the commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
Yes No X
--- ---
INFORMATION CONTAINED IN THIS FORM 6-K REPORT
Set forth herein as Exhibit 1 is a copy of a Statement No. 29
- 2002 issued by A/S STEAMSHIP COMPANY TORM (the "Company") to The Copenhagen
Stock Exchange on 12th August 2002 consisting of TORM's Financial Report for 1st
half 2002, adopted by the Board of Directors of the Company on 12th August 2002.
Numbers have been adapted from European to American format.
Exhibit 1
---------
Kobenhavns Fondsbors
(The Copenhagen Stock Exchange)
Nikolaj Plads 6
1067 Copenhagen K
12th August 2002 Statement No. 29 - 2002
Contact Person: N. E. Nielsen, Chairman of the Board
(Phone +45 72270000)
Contact Person: Klaus Kjaerulff, CEO
(Phone +45 39179200)
TORM's Financial Report for 1st half 2002
Enclosed please find Financial Report for 1st half 2002, adopted by the Board of
Directors of the Company on 12th August 2002.
Yours faithfully
A/S Dampskibsselskabet TORM
Klaus Kjaerulff
Chief Executive Officer
NASDAQ: TRMD
CSE: TORM
HIGHLIGHTS 1st HALF OF 2002
- The Tanker Division achieved positive earnings ahead of expectations in
difficult trading conditions.
- Dry bulk Division continued to be loss making but were in line with
expectations. The Division covered forward for the 3rd and 4th quarters at
rates in excess of the current market.
- The liner division achieved positive results, somewhat ahead of
expectations in a difficult market.
- EBITDA for the 1st half of 2002 was in line with expectations at DKK 134.6
million, despite a significant drop in the USD exchange rate.
- Exchange rate adjustments totalled -50.5 million DKK due to the weakening
USD against the DKK. The result before write-back of deferred tax for the
half year was therefore DKK -3.1 million.
- Profits after tax for the half year is DKK 357.1 million or DKK 21 per
share.
- Estimated profit before tax in the region of DKK 30 million for the 2nd
half of 2002. For the year as a whole, a profit of close to DKK 380
million, or slightly below DKK 22 per share is expected, subject to
unchanged exchange rates.
- General offer launched on July 1 2002 for the purchase of the outstanding
share capital of Dampskibsselskabet "NORDEN" A/S (NORDEN). The offer
expired 29th July 2002. As at 9th August 2002, TORM owned more than one
third of the share capital of NORDEN after deducting treasury shares.
Despite this substantial stake in the associated company, TORM has not
included in the Company's 2002 results any pro-rata contribution of profits
from NORDEN expected to be DKK 200 million, cf. announcement from NORDEN of
14th July 2002.
GROUP FINANCIAL HIGHLIGHTS
H1 2002 H1 2001
DKKm USDm DKKm USDm
(in millions, except Key Figures)
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PROFIT AND LOSS STATEMENTS
---------------------------------------------------------------------------------------------------------
Net turnover 1,018.2 122.9 1,310.4 157.7
Operating costs -856.6 -103.4 -818.1 -98.5
------------------ ------------------
Net earnings from shipping activities 161.7 19.5 492.3 59.2
Profit from sale of vessels and interests 9.6 1.2 69.3 8.3
Administrative expenses -60.0 -7.2 -52.9 -6.4
Other operating income 23.4 2.8 34.2 4.1
------------------ ------------------
Profit before depreciation (EBITDA) 134.6 16.2 542.9 65.3
Depreciation -67.3 -8.1 -87.4 -10.5
------------------ ------------------
Profit before financial items (EBIT) 67.3 8.1 455.5 54.8
Financial Items -70.4 -8.5 -53.0 -6.4
------------------ ------------------
Profit before tax -3.1 -0.4 402.5 48.4
Tax on profit on ordinary activities 360.2 43.5 -120.7 -14.5
------------------ ------------------
Net profit 357.1 43.1 281.8 33.9
================== ==================
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BALANCE SHEET
---------------------------------------------------------------------------------------------------------
Fixed assets 2,650 356 2,250 256
Total assets 3,739 502 3,513 400
Shareholders' equity 1,428 192 928 106
Total liabilities 2,299 309 2,252 256
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KEY FIGURES
---------------------------------------------------------------------------------------------------------
Return on equity *) % 28(1) 33
ROIC *) % 17(1) 16
EBITDA/net turnover *) % 13 41
Earnings per share (EPS) *) 21 2.77 16 1.81
Market price per share end of period 51.4 6.89 59.0 6.72
Number of shares (after deduction of own shares) million 17.3 17.7
Equity ratio % 38 26
Net interest bearing debt million 1,199 161 908 103
Invested capital million 2,571 345 1,792 204
Investments in tangible fixed assets million 592 79 359 41
Cash at bank and bonds million 638 86 812 92
USD/DKK exchange rate end of period 7.45 8.79
Semiannually basis *)
Ind. write-back of deferred tax (1)
---------------------------------------------------------------------------------------------------------
Shareholders' equity DKKm
(in millions)
---------------------------------------------------------------------------------------------------------
Balance at January 1, 2002 1,392
Transitional adjustment -291
----
Adjusted balance at January 1, 2002 1,102
Exchange adjustment of shareholders' equity
in subsidiaries and associated companies 30
Exchange adjustment of loans to independent units -5
Adjustment of derivatives and own shares 13
Dividend to shareholders -69
Profit and loss statement 357
---
Shareholders' equity at June 30, 2002 1,428
OUTLOOK FOR THE YEAR
The previously forecast EBITDA of DKK 300 million is reduced to about DKK 280
million due to the weakening of the U.S. dollar against the Danish Krone. The
profit forecast for the year as a whole, excluding tax, is therefore expected to
be just below DKK 20 million and thus lower than originally estimated.
The Company decided to enter into the tonnage tax scheme resulting in a change
in income taxation for Danish shipping companies. Consequently, an amount of DKK
360 million due to write-back of deferred tax positively affected the profit and
loss statement in the second quarter of 2002. There was no cash flow effect from
this change.
The total after tax net profit for 2002, taking into account the aforementioned
changes, is thereafter estimated to be just below DKK 380 million or slightly
less than DKK 22 per share. No pro-rata provision has been made of the
associated company, NORDEN's estimated profits for 2002.
For the remainder of 2002, an exchange rate of 7.40 between the DKK and the USD
has been used for estimating the result.
The estimated result is based on actual fixtures for the first and second
quarters, while the 3rd and 4th quarters are estimates as shown in the table
below.
Estimated earnings from shipping activities (USD/day)
Product Tankers Bulk Vessels
MR LR1 LR2 Panamax Handysize
1. Quarter (a) 15,305 17,569 19,875 6,259 5,292
2. Quarter (a) 14,731 15,021 21,565 6,775 5,647
3. Quarter (e) 14,750 16,000 20,000 7,250 5,600
4. Quarter (e) 14,750 16,000 20,000 7,250 5,600
The forecast for the Company's product tankers is unchanged from the forecast
made in the 1st quarter report, while the forecast rates for the Panamax bulk
vessels have been increased by USD 500/day and reduced by 650 USD/day for the
Handysize vessels.
Signs of increased confidence in the product tanker market are illustrated by
firmer rates in the region of 7-10% being obtainable for the 4th quarter as
compared to current day-to-day spot market rates.
The product tanker division has covered some 60% of voyage exposure for the
third quarter while the bulk division has covered 100% and 70% of voyage
exposure for the 3rd and 4th quarters respectively.
For both the product tankers and bulk vessels, any significant and sustainable
rate improvements in excess of the aforementioned earnings forecast will largely
be determined by demand, which in turn is fundamentally linked to the
performance of the world economy.
In order to reduce the future risk of interest rate volatility, the Company has
during July hedged USD 36 million and is contemplating to further hedge
approximately USD 33 million of its mortgage debt for the next 3-5 years in
light of the current low interest rates. The average remaining term of hedged
mortgage debt was 2.4 years at the end of July.
The estimated profit for 2002 is based on an unchanged ownership of the shares
in NORDEN. The ownership interest is carried at the officially quoted price on
the balance sheet date, in line with normal practice.
FINANCIAL RESULTS 1st HALF OF 2002
The EBITDA result for the first half of 2002 was DKK 134.6 million which was in
line with expectations, notwithstanding the significant drop in the USD exchange
rate.
The pre-tax result for the first half of 2002 was DKK -3.1 million after
exchange rate adjustments (in total -50.5 million DKK).
A generally lower level of activity in the world economy affected the tanker
market. As forecast, this resulted in a sharp drop in earnings for the period as
compared with last year. The Bulk division suffered from similar conditions,
whereas the Liner division recorded improved earnings.
Net earnings (Gross profit) from shipping activities*)
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Six months ended
DKKm June-02 Share June-01 Share
---------------------------------------------------------------------------
Product Tankers 155 97% 441 89%
Dry Bulk -15 -9% 29 6%
Liner 19 12% 14 3%
Offshore 0 0% 9 2%
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Total 159 100% 492 100%
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*) Gross earnings minus operating costs, which comprise port expenses, bunkers,
commissions, crewing, maintenance etc. and hire but excluding administration,
interest and depreciation.
PRODUCT TANKERS
---------------
Details of earnings (in USD) in respect of the Company's product tankers for the
first six months, by category, were as follows:
2nd quarter 1st quarter %
2002 2002 2001 Change
LR2/Aframax vessels
--------------------------------------------------------------------------------
Available earning days 273 270 225 1.2%
Average number of vessels 3.0 3.0 0.1%
TCE per earning days 21,565 19,875 54,382 8.5%
OPEX per earning days *) -4,548 -4,732 -3,901 -3.9%
Operating C/F per earning days **) 6,302 4,668 37,501 35.0%
LR1/Panamax vessels
--------------------------------------------------------------------------------
Available earning days 240 357 430 -32.7%
Average number of vessels 2.6 4.0 -33.4%
TCE per earning days 15,021 17,569 34,550 -14.5%
OPEX per earning days *) -6,408 -6,951 -6,683 -7.8%
Operating C/F per earning days **) 6,550 5,958 18,147 9.9%
MR vessels
--------------------------------------------------------------------------------
Available earning days 550 523 701 5.2%
Average number of vessels 6.0 5.8 4.0%
TCE per earning days 14,731 15,305 26,803 -3.8%
OPEX per earning days *) -4,904 -5,046 -3,813 -2.8%
Operating C/F per earning days **) 9,800 10,166 22,182 -3.6%
*) Operatmg expenses for own vessels
**) TCE earnings minus operating expenses and charter hire
The 3 pools achieved earnings ahead of expectations against a background of
turbulent stock markets and continuing instability in the Middle East. Demand
for clean petroleum products varied, but was generally weak.
Although a considerable number of new buildings are due for delivery throughout
the remainder of 2002, scrapping figures for the tanker segment were overall
encouraging, with 98 vessels sold for demolition as compared to 54 during the
same period last year.
In the LR2/Aframax segment, the maintenance season for the refinery complexes in
the Far East came to an end, resulting in an increase in the demand for naphtha,
the main product transported by these vessels. As a result, the LR2/Aframaxes
achieved the best results of the three segments in which the Company operates.
The LR1/Panamax and MR segments also achieved results ahead of expectations and,
although rates were volatile throughout the period, these segments benefited
from increasing demand for gasoline in the United States.
Recent moves by the U.S. Coast Guard to target charterers who utilise
sub-standard vessels could, if extensively enforced, put further pressure on
older sub-standard tonnage resulting in benefits for owners such as TORM whose
policy is to trade only modern, double hulled tonnage.
DRY BULK
--------
The dry bulk market continued to experience generally unsatisfactory rate levels
during the second quarter although grain rates in the Atlantic firmed somewhat.
The division continued its strategy of hedging forward positions through a
combination of time charters, contracts of affreightment and FFAs. As such, the
division outperformed the BIFFEX index by approximately 5%. As no significant
improvement is expected for the remainder of the year, the division still
expects an overall loss, albeit less than originally forecast. With a better
balance between the supply and demand of tonnage expected in 2003, the division
anticipates profitable earnings in 2003.
LINER
-----
The liner division achieved results better than expected. Eastbound sailings
were fully booked at satisfactory rates with equipment for the oil industry
providing most of the revenue. Westbound bookings were also satisfactory with
substantial quantities of cocoa carried, particularly in the early part of the
year. The outlook for the third quarter is in line with expectations, and a
higher level of activity is anticipated in the fourth quarter.
OFFSHORE
--------
The anchor handling/supply vessel TORM HERON re-delivered to owners in June.
TORM KESTREL continues to trade profitably and is expected to contribute
positively to the year's result.
FINANCIAL ITEMS
---------------
The average interest rate paid on loans and currency swaps for the first half of
2002 was 4.03% incl. margin. For 2002 and 2003, approximately 96% and 50% of the
Company's interest rate exposure is hedged. A change in interest rates of 1% on
the remaining variable debt would result in a change in interest expense of DKK
0.8 million for 2002.
During the first six months of 2002, the Company sold USD 19 million against DKK
at an average exchange rate of 8.55 for cash requirement purposes. For the
remainder of the year USD 5 million has been sold forward at an average exchange
rate of 8.76 against DKK.
Additionally, as of June 30, 2002, the Company had holdings in Danish bonds with
a market value of DKK 583 million. The annualised return for the period was
5.85%.
As of July 1 the Company sold bonds with a value of DKK 250 million in order to
fund the purchase of the shares in NORDEN. Furthermore the Company has obtained
a credit facility for the purpose of financing the purchase of additional NORDEN
shares.
If interest rates at year-end 2002 were to change by 1%, the fair value of the
bonds would change by DKK 13 million.
FLEET VALUE
-----------
The Company's fleet and order book of eight new buildings had an excess value of
approximately USD 13 million or DKK 105 million as at June 30, 2002 or DKK 5.77
per share after exchange rate adjustments in both ship values and relevant loans
on the balance sheet date in accordance with the Company's normal practice. The
fleet and new building contracts have been valued by two independent
international shipbrokers. It is the Company's policy to update ship values
every half and full year.
OFFER TO ACQUIRE DAMPSKIBSSELSKABET "NORDEN" A/S
------------------------------------------------
In line with TORM's formulated strategy of growth through the purchase of new
ships, pooling and M&A activity, and having regard to the continuing need for
further consolidation in the shipping industry, the Board decided at a meeting
held on June 29, to authorise the Management to purchase shares in NORDEN
representing about 30.8% of the outstanding shares in NORDEN excluding treasury
shares. This purchase was followed on July 1 by a general offer for 90% of the
Company's share capital, valid until July 29, 2002, at a price of DKK 360 per
share.
The Board and Management considers that the merits of combining these two long
established companies are considerable. Aside from obvious synergies, a high
level of expertise has been built up in the two companies individually which
would, if combined, create in a substantial, Danish based international shipping
company with a meaningful competitive edge. NORDEN's engagement in the MR
product tanker segment would boost TORM's capacity in this size, which is where
growth is most required. Conversely, NORDEN's considerable strength in the dry
bulk segment would, when combined with that of TORM, create a sizeable dry bulk
business with a noteable presence in the main segments of the dry bulk market
As at June 30, 2002, TORM owned just below 5% of the shares in NORDEN. As of
12th August, 2002 TORM owned 727,803 shares, equivelant to 33.35% of NORDEN's
sharecapital after deducting Treasury shares (10%). Upon expiry, the tender
offer was not renewed or raised and acceptances received have been honoured in
accordance with the conditions of the tender offer.
ASSET MANAGEMENT
----------------
During the month of June, the Company took delivery of 2 MR new buildings from
the STX yard in Korea. Both vessels immediately joined the MR pool, which now
consists of 16 vessels. The vessels were named TORM MARY and TORM VITA and are
the first in a series of 6 MR vessels to be delivered to TORM in 2002 and 2003.
The letter of intent entered into during the last quarter with Hyundai Heavy
Industries, South Korea, for the construction of a series of Panamax tankers was
converted into a firm contract, which was signed in June. TORM exercised its
option for a second vessel, whereby the total order, including pool partners,
now stands at eight vessels, two of which are for TORM's own account. TORM and
pool partners hold options for a further six vessels. Upon delivery, the vessels
will all join the LR1 pool.
OWN SHARES
----------
At a meeting of the Board on June 29, the Board authorised the Management to
purchase up to 8% of the Company's own shares whenever considered optimal by the
Management. The Company owns 4.99% of the share capital in TORM as of today.
AWARD OF THE MARINE MONEY PRIZE
-------------------------------
At the annual Marine Money Week Conference held in New York in June, TORM was
awarded first prize as the top performing shipping company in the world in 2001,
based on a series of criteria used by this leading shipping publication. A total
of 53 publicly listed shipping companies were examined.
DANISH GAAP ACCOUNTING POLICIES
-------------------------------
As a consequence of the enactment of the new Danish Company Accounting Act as
per January 1, 2002 and the dual listing on the NASDAQ a number of changes have
been made to accounting policies. The accounting policies listed below have been
revised, while the remaining accounting policies have been consistently applied.
Capital leases
The bareboat arrangements for the vessels that the Company has entered into
which meet the definition of capital leases are accounted for by initially
recognizing assets and related lease obligations at an amount equal to the
present value of the underlying minimum lease payments measured at the beginning
of the lease term. The capitalised leased assets are amortised according to the
Company's depreciation policy for owned assets. Previously, the Company chose to
treat these agreements as operating leases.
The change in policy resulted in an increase in net profit of DKK 8 million for
the six-month period ended June 30, 2002 and resulted in a transitional
adjustment to reduce shareholders' equity by DKK 15 million.
Sale and lease back agreements
Gains related to sale and lease back agreements are deferred and amortised in
proportion to the gross rental on the time charter over the life of the related
agreements. Previously, all such gains were recognised at the date of the
transaction.
The change in policy resulted in an increase in net profit of DKK 20 million for
the six-month period ended June 30, 2002 and a transitional adjustment to reduce
shareholders' equity by DKK 84 million.
Swaps of vessels
The Company records the gains on the swap of vessels in the profit and loss
statement at the date of the swap, except when the vessels are similar
productive assets. Previously, any gain on the swap of vessels were recorded in
the profit and loss statement at the date of the swap transaction, except when
the vessels were sister vessels of equivalent age.
The change in accounting policy resulted in a transitional adjustment to reduce
shareholders' equity by DKK 7 million and has no impact on net profit.
Dividends
Dividends are recorded as a liability when declared at the annual general
meeting. Previously, dividends were recorded as a liability in the fiscal year
to which they relate.
The change in policy resulted in a transitional adjustment to increase
shareholders' equity by DKK 73 million and has no impact on net profit.
Own shares
Own shares are accounted for as a component of shareholders' equity at the cost
paid for such shares. In previous years, own shares were reflected as an asset
and adjusted at market value through the profit and loss statement.
The change in policy resulted in a decrease in net profit of DKK 2 million for
the six-month period ended June 30, 2002 and a transitional adjustment to reduce
shareholders' equity by DKK 44 million.
Foreign currency contracts and derivatives
Foreign currency contracts and derivatives are measured at fair value at the
balance sheet date. For fair value hedges, the change in fair value is set off
against the exchange rate adjustment of the hedged item. For cash flow hedges,
the change in fair value on the contract is recorded as part of shareholders'
equity and then transferred to the profit and loss statement when the hedged
item is realised. The change in fair value on contracts that do not qualify for
hedge accounting is recorded in the profit and loss statement. Previously, these
foreign currency contracts and derivatives were accounted for as off-balance
sheet items.
The change in policy resulted in an increase in net profit of DKK 2 million for
the six-month period ended June 30, 2002 and a transitional adjustment to reduce
shareholders' equity by DKK 27 million.
Mortgage debt and bank loans
Mortgage debt and bank loans relating to the financing of vessels are recorded
at the exchange rate prevailing at the balance sheet date. As these are
considered an effective exchange rate hedge of the vessels, the adjustment is
recorded as part of shareholders' equity and then transferred to the profit and
loss statement when the vessel is sold. Previously, the mortgage debt and bank
loans relating to the financing of vessels in integrated entities were recorded
at the historical exchange rate at the time of acquisition.
The change in policy did not affect the profit for the period, while there was a
transitional adjustment to reduce shareholders' equity by DKK 187 million.
The table below provides a summary of the impact on the results for the
six-month period ended June 30, 2002:
The table below provides a summary of the impact on the results for the
six-month period ended June 30, 2002:
Adjustments Adjustments
Historical change in policy tonnage-tax Restated
DKKm DKKm DKKm DKKm
(in millions)
----------------------------------------------------------------------------------------------------------
PROFIT AND LOSS STATEMENT
----------------------------------------------------------------------------------------------------------
Net turnover 1,016 2 1,018
Net earnings from shipping activities 127 35 162
Profit from sale of vessels and interests 9 9
Other operating income 23 23
Profit before depreciation 91 44 135
Profit before tax -28 25 -3
Net Profit -31 26 362 357
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BALANCE SHEET
----------------------------------------------------------------------------------------------------------
Fixed assets 2,454 196 2,650
Total assets 3,535 204 3,739
Shareholders' equity 1,344 -278 362 1,428
Provisions 438 -64 -362 12
Liabilities 1,753 546 2,299
Total liabilities and shareholders' equity 3,535 204 0 3,739
Reconciliation to United States Generally Accepted Accounting Principles as of
June 30, 2002
--------------------------------------------------------------
H1 2002
DKKm USDm
(in millions)
--------------------------------------------------------------
PROF1T AND LOSS STATEMENTS
Profit as reported under
Danish GAAP (restated) 357.1 43.1
Provision for repair and
capitalization of docking costs -7.1 -0.9
Unrealized losses on marketable securities -0.5 -0.1
Foreign currency translation 60.2 7.3
Derivative Financial Instruments 10.7 1.3
Tonnage Taxation -360.2 -43.5
Tax effect of US GAAP Adjustments -19.0 -2.3
----- ----
Net profit 41.2 5.0
--------------------------------------------------------------
Diluted earnings per share 2.38 0.32
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Contacts
Klaus Kjaerulff
Chief Executive Officer
A/S Dampskibsselskabet TORM
+045 39 17 92 00
kk@torm.dk
----------
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In addition to the factors and matters discussed elsewhere in this report,
important factors that, in TORM's view, could cause actual results to differ
materially from those discussed in the forward looking statements include the
strengths of world economies and currencies, general market conditions,
including fluctuations in charterhire rates and vessel values, changes in demand
in the shipping market, including the effect of changes in OPEC's petroleum
production levels and worldwide oil consumption and storage, changes in the
Company's operating expenses, including bunker prices, dry-docking and insurance
costs, changes in governmental rules and regulations or actions taken by
regulatory authorities, potential liability from pending future litigation,
general domestic and international political conditions, potential disruption of
shipping routes due to accidents or political events, and other important
factors described from time to time in the reports filed by TORM with the
Copenhagen Stock exchange and the Securities and Exchange Commission.
--------------------------------------------------------------------------------
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
A/S STEAMSHIP COMPANY TORM
(registrant)
Dated:August 12, 2002 By: /s/ Klaus Nyborg
--------------------------
Klaus Nyborg
Chief Financial Officer
03810.0001 #343098