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 November 2005
A/S STEAMSHIP COMPANY TORM
(Translation of registrant's name into English)
Tuborg Havnevej 18
DK-2900 Hellerup
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 Announcement No. 10 - 2005 -
Third Quarter 2005 Report - issued by A/S STEAMSHIP COMPANY TORM to The
Copenhagen Stock Exchange on November 10, 2005.
Expectations for 2005 increased to more than USD 215 mill. (DKK 1,284
mill.) before tax, receipt of dividends and profit from sale of vessels.
Expectations for 2005 before tax increased to more than USD 283 mill. (DKK
1,690 mill.).
Key Points
o Profit for the third quarter 2005 was USD 52 mill. (DKK 318 mill.) before
tax, receipt of dividends and profit from sale of vessels and USD 66 mill.
(DKK 404 mill.) after tax.
o Profit for the first three quarters of 2005 was USD 216 mill. (DKK 1,274
mill.) after tax. The result is considered highly satisfactory.
o Cash flow from operations was USD 71 mill. (DKK 435 mill.) for the quarter.
o Earnings per share (EPS) were USD 1.9 (DKK 11.6) in the third quarter 2005
against USD 1.2 for the same period last year. EPS for the first three
quarters were USD 6.2 in 2005 against USD 3.6 in 2004.
o Return on Invested Capital (RoIC) was 24.0% p.a., and Return on Equity
(RoE) was 29.7% p.a. in the quarter and 31.8% (RoIC) and 33.6% (RoE) for
the first three quarters of 2005. The share capital was USD 923 mill. (DKK
5,723 mill.) as at 30 September 2005.
o Freight rates for TORM's product tankers have been significantly better
than expected especially during the third and into the fourth quarters of
2005. This was partially attributable to a temporary reduction in refinery
capacity in the U.S., brought about by the effects of hurricanes Katrina
and Rita. Furthermore, demand in Asia has generally been increasing.
However, the freight rates have slowed down in November, awaiting the
winter season.
o Dry bulk rates were slightly lower than expected. The bulk market dropped
sharply in the first half of the third quarter, but has since witnessed an
upward correction.
o Additionally, TORM received dividends and realised a gain on the sale of
vessels totalling USD 68 mill. (DKK 401 mill.).
o The upward value adjustment on the Norden shares in 2005 was USD 6 mill. as
at 30 September 2005.
Telephone Conference
Telephone conference and webcast (www.torm.com) reviewing the report for
the third quarter 2005 will take place today, 10 November 2005, at 17:00
Copenhagen time. To participate, please call 10 minutes before the call on
tel.: +45 3271 4611 (from Europe) or +1 334 323 6203 (from the USA). A
replay of the conference will be available from TORM's website.
Contact
A/S Dampskibsselskabet TORM Telephone +45 39 17 92 00
Tuborg Havnevej 18 Klaus Kjaerulff, CEO
DK-2900 Hellerup - Denmark Klaus Nyborg, CFO
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Mill. USD Q3 2005 Q3 2004 Q1-Q3 Q1-Q3 2004
2005 2004
----------------------------------------------------------------------------------------------------
Income statement
Net revenue 142.2 104.9 406.6 305.3 433.3
Time charter equivalent earnings (TCE) 109.4 81.6 318.7 244.9 350.3
Gross profit 72.1 56.6 217.7 168.6 240.9
Profit before depreciation 81.3 52.9 260.3 149.7 215.5
Profit before financial items (EBIT) 68.8 43.7 226.3 123.8 180.3
Financial items -2.7 -0.3 -4.6 1.2 30.6
Profit before tax 66.1 43.4 221.7 125.0 210.9
Net profit 65.9 43.3 215.6 124.9 201.3
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Balance sheet
Total assets 1,697.3 1,112.6 1,697.3 1,112.6 1,239.6
Shareholders' equity 922.6 657.2 922.6 657.2 788.7
Liabilities 774.7 455.4 774.7 455.4 450.9
Invested capital 1,204.8 626.0 1,204.8 626.0 692.0
Net interest bearing debt 672.4 287.8 672.4 287.8 271.8
----------------------------------------------------------------------------------------------------
Cash flow
From operating activities 71.2 45.6 252.1 144.4 227.9
From investing activities -120.6 -4.2 -509.4 -117.6 -187.1
Thereof investment in
tangible fixed assets -145.8 -4.2 -617.3 -117.6 -187.3
From financing activities 35.9 -13.5 217.7 14.7 -2.7
Net cash flow -13.5 27.9 -39.6 41.5 38.1
----------------------------------------------------------------------------------------------------
Key Financial figures
Margins:
TCE 76.9% 77.8% 78.4% 80.2% 80.8%
Gross profit 50.7% 54.0% 53.5% 55.2% 55.6%
Profit before depreciation 57.2% 50.4% 64.0% 49.0% 49.7%
Profit before financial items 48.4% 41.7% 55.7% 40.6% 41.6%
Return on Equity (RoE) (p.a.) 29.7% 28.7% 33.6% 31.3% 33.7%
Return on Invested Capital (RoIC) (p.a.) 24.0% 27.8% 31.8% 28.6% 29.6%
Equity ratio 54.4% 59.1% 54.4% 59.1% 63.6%
Exchange rate DKK/USD, end of period 6.20 6.00 6.20 6.00 5.47
Exchange rate DKK/USD, average 6.12 6.09 5.90 6.07 5.99
----------------------------------------------------------------------------------------------------
Share related key figures
Earnings per share, EPS* USD 1.9 1.2 6.2 3.6 5.8
Cash flow per share, CFPS* USD 2.0 1.3 7.2 4.1 6.5
Share price, end of period (per share) DKK 354.6 169.3 354.6 169.3 225.8
Number of shares, end of period Mill 36.4 36.4 36.4 36.4 36.4
Number of shares, average** Mill 34.8 34.8 34.8 34.8 34.8
----------------------------------------------------------------------------------------------------
* The comparative figures for Q1-Q3 2004 are restated to reflect the issue of
bonus shares in May 2004.
** The comparative figures for Q1-Q3 2004 are restated to reflect the issue of
bonus shares in May 2004. The average number of shares excludes own shares.
Profit by division
-------------------------------------------------------------------------------------------------------------------------
Mill. USD Q3 2005 Q1-Q3 2005
-------------------------------------------------------------------------------
Tanker Bulk Not Tanker Bulk Not
division division allocatd Total division division allocated Total
-------------------------------------------------------------------------------------------------------------------------
Net revenue 103.5 38.7 0.0 142.2 275.7 130.9 0.0 406.6
Port expenses and bunkers -31.2 -1.6 0.0 -32.8 -79.1 -8.8 0.0 -87.9
-------------------------------------------------------------------------------------------------------------------------
Time charter equivalent earnings (TCE)* 72.3 37.1 0.0 109.4 196.6 122.1 0.0 318.7
Charter hire -10.9 -8.2 0.0 -19.1 -25.7 -27.3 0.0 -53.0
Operating expenses -14.4 -3.8 0.0 -18.2 -37.2 -10.8 0.0 -48.0
-------------------------------------------------------------------------------------------------------------------------
Gross profit 47.0 25.1 0.0 72.1 133.7 84.0 0.0 217.7
Profit on sale of vessels and interest 14.4 0.0 0.0 14.4 54.8 0.0 0.0 54.8
Administrative expenses -6.2 -1.6 0.0 -7.8 -17.0 -4.1 0.0 -21.1
Other operating income 2.6 0.0 0.0 2.6 8.8 0.1 0.0 8.9
-------------------------------------------------------------------------------------------------------------------------
Profit before depreciation 57.8 23.5 0.0 81.3 180.3 80.0 0.0 260.3
Depreciation -9.9 -2.6 0.0 -12.5 -26.1 -7.9 0.0 -34.0
-------------------------------------------------------------------------------------------------------------------------
Profit before financial items (EBIT) 47.9 20.9 0.0 68.8 154.2 72.1 0.0 226.3
Financial items -1.9 -1.4 0.6 -2.7 -16.2 -4.7 16.3 -4.6
-------------------------------------------------------------------------------------------------------------------------
Profit before tax 46.0 19.5 0.6 66.1 138.0 67.4 16.3 221.7
Tax 0.0 0.0 -0.2 -0.2 0.0 0.0 -6.1 -6.1
-------------------------------------------------------------------------------------------------------------------------
Net profit after tax for the period 46.0 19.5 0.4 65.9 138.0 67.4 10.2 215.6
-------------------------------------------------------------------------------------------------------------------------
* TCE is gross freight income less bunker, commissions and port expenses (TCE
= Time Charter Equivalent).
Tanker and Bulk
Tanker division
The Tanker division achieved a profit after tax in the third quarter 2005 of USD
46 mill. against USD 41 mill. in the second quarter 2005. Of this, profit from
the sale of vessels amounted to USD 14 mill. in the third quarter against USD 21
mill. in the second quarter 2005.
In line with normal seasonal developments, the market for TORM's product tankers
was at a lower level at the beginning of the third quarter 2005 until a massive,
though temporary reduction in US refining capacity occurred at the end of August
as a result of the damage caused by hurricane Katrina and to a lesser extent
Rita. The net result was a 17% reduction in US refining capacity by the end of
September resulting in a temporary increase in demand equivalent to
approximately double the normal import of oil products, amongst others gasoline,
at the expense of crude oil imports. This resulted in a significant increase in
the demand for transportation of refined oil products to the US. The main part
of the Company's fleet was optimally positioned to benefit from this situation
and accordingly increased freight rates in the west, especially, had a positive
effect mainly on the earnings of the Company's MR vessels immediately after.
The increased demand for transportation of oil products to the US moved a
substantial part of the product tanker fleet to the west, resulting in increased
rates for product tankers in the Asian market due to fewer vessels being
available. Towards the end of the quarter demand increased markedly in Asia and
freight rates were even higher than in the west. This trend is expected to
continue in the fourth quarter.
TORM's Tanker division achieved freight rates in the third quarter 2005 that
when compared to the third quarter 2004 were 4% lower for the LR2 segment, 15%
higher for the LR1 segment and 21% higher for the MR segment.
The acquisition of five MR vessels and one LR1 vessel, which TORM purchased from
the pool partner LGR di Navigazione, has been completed. Of these, three MR
vessels were delivered during the third quarter. Furthermore, the Company took
delivery during the quarter of one LR1 vessel from Malaysian Bulk Carriers
Berhad.
The number of earning days in the LR2 segment increased by 19% compared to third
quarter 2004 due to the addition of chartered-in tonnage. The number of earning
days in the LR1 and MR segments increased by 91% and 47%, respectively. Compared
to the second quarter 2005, the number of earning days increased by 21% for the
total tanker fleet.
------------------------------------------------------------------------------------
Tanker division Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Change
Q3 04
-Q3 05
------------------------------------------------------------------------------------
LR2 (Aframax, 90-110,000 DWT)
Available earning days 460 460 450 442 548 19%
Per earning day (USD):
Earnings (TCE)* 28,389 47,626 38,567 29,615 27,130 -4%
Operating expenses -4,148 -5,285 -5,526 -4,849 -5,899 42%
Operating cash flow** 18,212 37,579 27,570 18,726 14,172 -22%
------------------------------------------------------------------------------------
LR1 (Panamax, 75-85,000 DWT)
Available earning days 406 413 498 652 774 91%
Per earning day (USD):
Earnings (TCE)* 22,998 30,253 29,788 25,989 26,347 15%
Operating expenses -5,742 -7,259 -4,991 -6,836 -6,074 6%
Operating cash flow** 17,256 22,994 21,647 11,769 15,090 -13%
------------------------------------------------------------------------------------
MR (45,000 DWT)
Available earning days 1,054 1,178 1,125 1,270 1,547 47%
Per earning day (USD):
Earnings (TCE)* 19,890 24,541 26,484 25,381 24,012 21%
Operating expenses -5,581 -6,790 -6,223 -6,594 -6,274 12%
Operating cash flow** 14,308 17,751 20,261 18,788 17,738 24%
------------------------------------------------------------------------------------
* TCE = Gross freight income less bunker, commissions and port expenses.
Operating expenses are on own vessels.
** Operating cash flow = TCE less operating expenses and charter hire.
Bulk division
The Bulk division achieved a profit after tax in the third quarter of 2005 of
USD 20 mill.
Following very high freight rates in the first quarter, rate levels fell
markedly until the middle of the third quarter, in part mirroring what occurred
in 2004 albeit the decline at that time was not as significant.
Commodity price increases, especially in respect of iron ore in the second
quarter 2005, which resulted in a fall in Chinese imports during the second and
early part of the third quarter, combined with normal seasonal decrease in
midyear, led to an overall decline in activity.
Towards the end of the European and American holiday season activity increased
once again, primarily resulting in stronger demand for the larger Capesize
vessels for the transportation of iron ore from Australia and South America to
especially China and Europe. This in turn positively affected the Panamax
segment.
Due to significant forward coverage, however, the lower freight rates prevailing
in the third quarter have not correspondingly affected TORM's earnings. Compared
to the same period last year, freight rates achieved by the Bulk division in the
third quarter of 2005 were 8% higher and 2% lower for TORM's Panamax and
Handysize vessels, respectively.
----------------------------------------------------------------------------------
Bulk division Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Change
Q3 04
-Q3 05
----------------------------------------------------------------------------------
Panamax (60-80,000 DWT)
Available earning days 1,438 1,455 1,324 1,203 1,240 -14%
Per earning day (USD):
Earnings (TCE)* 25,562 26,260 30,641 30,962 27,523 8%
Operating expenses -4,818 -4,502 -4,794 -4,607 -4,294 -11%
Operating cash flow** 16,876 16,491 20,495 21,792 12,241 -27%
----------------------------------------------------------------------------------
Handysize (20-35,000 DWT)
Available earning days 237 215 199 206 215 -9%
Per earning day (USD):
Earnings (TCE)* 14,806 19,189 18,952 17,645 14,514 -2%
Operating expenses -3,556 -2,651 -2,916 -3,908 -3,690 4%
Operating cash flow** 10,340 16,135 15,306 13,172 9,150 -12%
----------------------------------------------------------------------------------
* TCE = Gross freight income less bunker, commissions and port expenses.
Operating expenses are on own vessels.
** Operating cash flow = TCE less operating expenses and charter hire.
In the bulk segment the Company is at present renewing existing coverage for its
Panamax vessels. During the very firm bulk market that existed during long
periods in 2004 the Company entered into a number of one-year agreements, all of
which are up for renewal between October 2005 and March 2006.
Due to a smaller number of chartered-in vessels, the number of available earning
days compared to the third quarter of 2004 was 14% and 9% lower for TORM's
Panamax and Handy size vessels, respectively.
Other activities
Other (non allocated) activities consist of exchange rate and value adjustments
of USD 1 mill. in the third quarter.
Fleet development
TORM has renewed its owned fleet considerably in 2005. During that period, the
Tanker division has added eleven tankers with a total value of USD 491 mill.,
while 4.5 older tankers have been disposed of for a total gain of USD 55 mill.
In the Bulk division, one bulk carrier has been added as a result of a purchase
option being exercised.
During the third quarter 2005 TORM has disposed of its MR product tanker TORM
Asia, built 1994, generating a gain of USD 14 mill. and exercised the purchase
option on the Company's two long-term chartered LR2 product tankers TORM Gudrun
and TORM Kristina at prices considerably below current market levels. The
ownership of these vessels will transfer to TORM during the first quarter 2006.
At the end of the third quarter 2005, TORM's fleet comprised 29 tankers and 10
bulk carriers, totalling 39 vessels, corresponding to a net increase of 21% (by
DWT).
--------------------------------------------------------------------------------
31 Dec 2004 Addition Disposal 30 Sep 2005
--------------------------------------------------------------------------------
LR2 / Aframax 5.0 -- -- 5.0
LR1 / Panamax 4.5 TORM Sara TORM Margrethe* 6.0
TORM Signe TORM Hilde*
TORM Sofia Kirsten (50%)
TORM Emilie
MR 13.0 TORM Helvig TORM Olga 18.0
TORM Ragnhild TORM Asia
TORM Cecilie
TORM Caroline
TORM Camilla
TORM Carina
TORM Clara
--------------------------------------------------------------------------------
Tankers 22.5 11.0 4.5 29.0
--------------------------------------------------------------------------------
Panamax 7.0 TORM Rotna -- 8.0
Handysize 2.0 -- -- 2.0
--------------------------------------------------------------------------------
Bulk 9.0 1.0 -- 10.0
--------------------------------------------------------------------------------
Total 31.5 12.0 4.5 39.0
--------------------------------------------------------------------------------
* Chartered back for five years.
Planned fleet changes
As mentioned above, the Company has exercised the purchase options on two LR2
product tankers. Until now the vessels have been chartered-in to TORM under
long-term agreements.
Following the exercising of the aforementioned options and the placing of
additional new-building contracts, TORM's order book will consist of nine LR2
product tankers for delivery January 2006 - January 2009 and 2.5 LR1 product
tankers (of which one is sold) for delivery up to January 2007.
-----------------------------------------------------------------------------------------------------
Year 2005 2006 2007 2008-9 Total
------ ---------------------- --------------------- ---------------------------
Quarter 4 1 2 3 4 1 2 3 4 1 2 3 4 1
-----------------------------------------------------------------------------------------------------
LR2 -- 2 1 1 -- 1 1 -- -- 1 -- 1 -- 1 9
LR1 -- 1* -- -- 0.5 1 -- -- -- -- -- -- -- -- 1.5
-----------------------------------------------------------------------------------------------------
Net
total -- 2 1 1 0.5 2 1 -- -- 1 -- 1 -- 1 10.5
-----------------------------------------------------------------------------------------------------
* One LR1 newbuilding is sold for delivery in Q1 2006.
Additionally, TORM holds purchase options on eight Panamax bulk vessels, of
which three already form part of the chartered fleet. The options can be
exercised in 2007 and thereafter.
Pools
As at 30 September 2005 the three product tanker pools consisted of 73 vessels.
At the end of 2005, 74 vessels are expected to be in the pools.
Results
Third quarter 2005
The third quarter 2005 showed a gross profit of USD 72 mill. (USD 57 mill. in
the same quarter 2004). Profit before depreciation for the period was USD 81
mill. (USD 53 mill.).
Depreciation was USD 13 mill. in the third quarter 2005 (USD 9 mill.). The
increased depreciation is the result of the increases to the Company's fleet.
Profit before financial items for the third quarter 2005 was USD 69 mill. (USD
44 mill.). Of this, the Tanker - and the Bulk division contributed USD 48 mill.
and USD 21 mill., respectively.
Financial items were negative by USD 3 mill. (USD 0 mill.), mainly due to the
payment of interest on the Company's mortgage debt.
Profit after tax was USD 66 mill. (USD 43 mill.). Of this the Tanker division
contributed USD 46 mill. after tax, while the Bulk division's profit after tax
was USD 20 mill.
Assets
Total assets increased in the third quarter 2005 from USD 1,581 mill. to USD
1,697 mill., mainly as a result of increased non-current assets during the
period from USD 1,421 mill. to USD 1,548 mill. This was related to the net
effect from vessels purchased and sold as well as the increased value of the
investment in Dampskibsselskabet "NORDEN" A/S (Norden) countered by depreciation
during the period.
The investment in Norden is valued at DKK 3,146 per share, the closing price on
the Copenhagen Stock Exchange on 30 September 2005.
Liabilities
During the third quarter 2005, net interest bearing debt increased from USD 617
mill. to USD 672 mill. The increase was mainly due to higher net borrowing in
connection with the delivery of vessels, countered by positive cash earnings in
the period. The Company has considerable undrawn loan facilities available.
Shareholders' equity
During the third quarter 2005, shareholders' equity increased from USD 853 mill.
to USD 923 mill. as a result of improved earnings during the period.
Shareholders' equity as a percentage of total assets increased from 54.0% at
30 June 2005 to 54.4% at 30 September 2005.
At 30 September 2005, TORM owned 1,558,472 own shares corresponding to 4.3% of
the Company's share capital, which is unchanged from 30 June 2005.
Nine months 2005
Gross profit for the first nine months of 2005 was USD 218 mill. (against USD
169 mill. for the first nine months of 2004). The increase was mainly due to a
combination of increasing freight rates and a higher number of earning days in
the Tanker division.
Profit before depreciation was USD 260 mill. (USD 150 mill.).
Profit before tax, receipt of dividends and profit on sale of vessels for the
first nine months of 2005 was USD 154 mill.
Profit after tax for the first nine months of 2005 was USD 216 mill. including
profit on sale of vessels of USD 55 mill., receipt of dividend of USD 13 mill.
and taxes of minus USD 6 mill.
This result is considered highly satisfactory.
Subsequent events
There have been no events subsequent to the end of the reporting period which
materially change the financial position of the Company.
Norden
In the first three quarters of 2005, the value of the Norden shares has
increased by USD 6 mill. This reflects an increase in the share price, measured
in DKK, from DKK 2,726/share at 31 December 2004 to DKK 3,146/share at 30
September 2005, countered by an increase in the USD/DKK exchange rate from 5.47
to 6.20 in the same period.
Expectations
As a result of a better than expected earnings to date, as well as the market
outlook for the remainder of the year for the Tanker division and a bulk market
almost in line with expectations, the expectations for 2005 as a whole are now
increased to more than USD 215 mill. (DKK 1,284 mill.) before tax, receipt of
dividends and profit from sale of vessels.
In addition to this, TORM expects gains from sales of vessels of USD 55 mill.
and receipt of dividends of USD 13 mill. resulting in a total expected profit
before tax increased to more than USD 283 mill. (DKK 1,690 mill.).
Earnings in the Tanker division have been higher than originally expected for
the first nine months of 2005, which despite a lower number of earning days due
to a delay in deliveries has resulted in higher earnings for the division. The
fourth quarter of 2005 has started significantly better than expected due to
strong Asian demand and continued lack of capacity in the US refineries, which,
as mentioned, increases the import into the US of oil products.
TORM's Bulk division is continuing its strategy of chartering out vessels on
one- and two-year contracts. Accordingly, 44% of earnings for the Company's bulk
vessels are already covered for 2006. This coverage is expected to be increased
in the coming months.
Sensitivity
At the beginning of the fourth quarter 2005, 73% of the earning days for the
remainder of the year in respect of the Company's Panamax bulk vessels were
chartered out at an average rate of USD 24,600 USD/day. For the Tanker division,
about 32% of the earning days for the fourth quarter were covered at the outset
of the fourth quarter.
A change in the freight rates compared to the above mentioned of 1,000 USD/day
of the non-covered freight rates in the remaining quarter of the year would all
other things being equal lead to a change in net profit of USD 2.6 mill.
Safe Harbor
FORWARD LOOKING STATEMENTS
Matters discussed in this release may constitute forward-looking statements.
Forward-looking statements reflect our current views with respect to future
events and financial performance and may include statements concerning plans,
objectives, goals, strategies, future events or performance, and underlying
assumptions and other statements, which are other than statements of historical
facts. The forward-looking statements in this release are based upon various
assumptions, many of which are based, in turn, upon further assumptions,
including without limitation, management's examination of historical operating
trends, data contained in our records and other data available from third
parties. Although TORM believes that these assumptions were reasonable when
made, because these assumptions are inherently subject to significant
uncertainties and contingencies which are difficult or impossible to predict and
are beyond our control, TORM cannot assure you that it will achieve or
accomplish these expectations, beliefs or projections.
Important factors that, in our view, could cause actual results to differ
materially from those discussed in the forward-looking statements include the
strength of world economies and currencies, changes in charter hire rates and
vessel values, changes in demand for "tonne miles" of oil carried by oil
tankers, the effect of changes in OPEC's petroleum production levels and
worldwide oil consumption and storage, changes in demand that may affect
attitudes of time charterers to scheduled and unscheduled dry-docking, changes
in TORM's operating expenses, including bunker prices, dry-docking and insurance
costs, changes in governmental rules and regulations including requirements for
double hull tankers or actions taken by regulatory authorities, potential
liability from pending or future litigation, domestic and international
political conditions, potential disruption of shipping routes due to accidents
and political events or acts by terrorists. Risks and uncertainties are further
described in reports filed by TORM with the US Securities and Exchange
Commission, including the TORM Annual Report on Form 20-F and its reports on
Form 6-K.
Forward looking statements are based on management's current evaluation, and
TORM is only under obligation to update and change the listed expectations to
the extent required by law.
The TORM share
The price of a TORM share was DKK 354.6 as at 30 September 2005 against DKK
331.5 at the end of the second quarter 2005, an increase of DKK 23.1
corresponding to a total return of 7.0% in the quarter ("TSR").
Accounting Policies
The consolidated accounts have been prepared using the same accounting policies
as in the first and second quarter 2005 reports, but accounting policies have
been changed as of 1 January 2005 to comply with International Financial
Reporting Standards (IFRS). The changes, including comparative figures for 2004,
are described in the section "Effect of IFRS adoption" in the Annual Report
2004. Reconciliation of net profit and shareholders' equity for the third
quarter of 2004 between previous GAAP and IFRS is presented below:
--------------------------------------------------------------------------------
Shareholders'
Effect of IFRS adoption - third quarter 2004 Net income Equity
--------------------------------------------------------------------------------
According to previous GAAP 112.1(1) 658.3(2)
Effect of:
Cost of exercise of share options -0.1
Unrealized value adjustment, shares -68.7
Exchange rate adjustment due to change of
measurement currency in the
administrative entity -0.1
Liability, unexercised share options -1.0
-----------------------------
According to current GAAP 43.3 657.2
--------------------------------------------------------------------------------
(1) After change of measurement currency to USD from DKK in the administrative
entity.
(2) Shareholders' equity according to first half 2004 report translated into
USD using the exchange rate at the balance sheet date.
TORM does not apply IAS 34 in the preparation of interim financial statements.
The report for the third quarter of 2005 is unaudited in line with normal
practice.
Information
Telephone conference
TORM hosts a telephone conference for financial analysts and investors on 10
November 2005 at 17:00, Copenhagen time, reviewing the report for the third
quarter 2005. The conference call will be hosted by Klaus Kjaerulff, CEO, and
Klaus Nyborg, CFO, and will be conducted in English.
Please call 10 minutes before the call starts on tel.: +45 3271 4611 (from
Europe) or +1 334 323 6203 (from the US). The telephone conference will also be
broadcast via TORM's website, www.torm.com, which will also contain the
presentation material.
Next reporting
TORM's Annual Report 2005 will be released on 8 March 2006.
Statement by the Board of Directors and Management on the Interim Report
The Board of Directors and Management have considered and approved the interim
report for the period 1 January - 30 September 2005.
The interim report, which is unaudited, has been prepared in accordance with the
general Danish financial reporting requirements governing listed companies,
including the measurement and recognition provisions in IFRS which are expected
to be applicable for the Annual Report for 2005.
We consider the accounting policies applied to be appropriate, and in our
opinion the interim report gives a true and fair view of the Group's assets,
liabilities, financial position and of the results of operations and
consolidated cash flows.
Copenhagen, 10 November 2005
Management Board of Directors
Klaus Kjaerulff, CEO Niels Erik Nielsen, Chairman
Klaus Nyborg, CFO Christian Frigast, Deputy chairman
Lennart Arrias
Ditlev Engel
Rex Harrington
Peder Mouridsen
Gabriel Panayotides
About TORM
TORM is one of the world's leading carriers of refined oil products as well as
being a significant participant in the dry bulk market. The Company operates a
combined fleet of close to 100 modern vessels, principally through a pooling
cooperation with other respected shipping companies who share TORM's commitment
to safety, environmental responsibility and customer service.
TORM was founded in 1889 and has consistently adapted itself to, and benefited
from, the enormous changes which characterise the shipping industry in general.
The Company conducts business worldwide and is headquartered in Copenhagen,
Denmark. TORM's shares are listed on the Copenhagen Stock Exchange (ticker TORM)
as well as on the NASDAQ (ticker TRMD). For further information, please visit
www.torm.com.
Income Statement
------------------------------------------------------------------------------------------
Mill. USD Q3 2005 Q3 2004 Q1-Q3 Q1-Q3 2004
2005 2004
------------------------------------------------------------------------------------------
Net revenue 142.2 104.9 406.6 305.3 433.3
Port expenses and bunkers -32.8 -23.3 -87.9 -60.4 -83.0
------------------------------------------------------------------------------------------
Time charter equivalent earnings (TCE) 109.4 81.6 318.7 244.9 350.3
Charter hire -19.1 -13.2 -53.0 -41.3 -59.6
Operating expenses -18.2 -11.8 -48.0 -35.0 -49.8
------------------------------------------------------------------------------------------
Gross profit 72.1 56.6 217.7 168.6 240.9
Profit on sale of vessels and interest 14.4 0.0 54.8 0.0 0.0
Administrative expenses -7.8 -6.9 -21.1 -27.2 -38.6
Other operating income 2.6 3.2 8.9 8.3 13.2
------------------------------------------------------------------------------------------
Profit before depreciation 81.3 52.9 260.3 149.7 215.5
Depreciation -12.5 -9.2 -34.0 -25.9 -35.2
------------------------------------------------------------------------------------------
Profit before financial items (EBIT) 68.8 43.7 226.3 123.8 180.3
Financial items -2.7 -0.3 -4.6 1.2 30.6
------------------------------------------------------------------------------------------
Profit before tax 66.1 43.4 221.7 125.0 210.9
Tax -0.2 -0.1 -6.1 -0.1 -9.6
------------------------------------------------------------------------------------------
Net profit after tax for the period 65.9 43.3 215.6 124.9 201.3
------------------------------------------------------------------------------------------
Earnings per share, EPS (USD) 1.9 1.2 6.2 3.6 5.8
Earnings per share, EPS (DKK)* 11.6 7.6 36.5 21.8 34.7
------------------------------------------------------------------------------------------
* Calculated from USD to DKK at the average DKK/USD exchange rate for the
relevant period.
Income statement by quarter
--------------------------------------------------------------------------------
Mill. USD Q3 04 Q4 04 Q1 05 Q2 05 Q3 05
--------------------------------------------------------------------------------
Net revenue 104.9 128.0 132.3 132.1 142.2
Port expenses and bunkers -23.3 -22.6 -26.7 -28.4 -32.8
--------------------------------------------------------------------------------
Time charter equivalent earnings (TCE) 81.6 105.4 105.6 103.7 109.4
Charter hire -13.2 -18.3 -16.5 -17.4 -19.1
Operating expenses -11.8 -14.8 -13.5 -16.3 -18.2
--------------------------------------------------------------------------------
Gross profit 56.6 72.3 75.6 70.0 72.1
Profit on sale of vessels and interest 0.0 0.0 19.4 21.0 14.4
Administrative expenses -6.9 -11.4 -6.6 -6.7 -7.8
Other operating income 3.2 4.9 3.5 2.8 2.6
--------------------------------------------------------------------------------
Profit before depreciation 52.9 65.8 91.9 87.1 81.3
Depreciation -9.2 -9.3 -10.3 -11.2 -12.5
--------------------------------------------------------------------------------
Profit before financial items (EBIT) 43.7 56.5 81.6 75.9 68.8
Financial items -0.3 29.4 -7.3 5.4 -2.7
--------------------------------------------------------------------------------
Profit before tax 43.4 85.9 74.3 81.3 66.1
Tax -0.1 -9.5 -5.8 -0.1 -0.2
--------------------------------------------------------------------------------
Net profit after tax for the period 43.3 76.4 68.5 81.2 65.9
--------------------------------------------------------------------------------
Assets
----------------------------------------------------------------------------------------
Mill. USD 30 Sep 2005 30 Sep 2004 31 Dec 2004
----------------------------------------------------------------------------------------
NON-CURRENT ASSETS
Tangible fixed assets
Leasehold improvements 0.1 0.0 0.0
Land and buildings 0.4 0.4 0.4
Vessels and capitalized dry-docking 1,077.4 599.5 647.6
Vessels under construction and prepayments
for vessels 77.6 25.1 37.3
Other plant and operating equipment 2.3 2.7 2.7
----------------------------------------------------------------------------------------
Total tangible fixed assets 1,157.8 627.7 688.0
----------------------------------------------------------------------------------------
Other non-current assets
Other investments 390.2 319.0 368.5
----------------------------------------------------------------------------------------
TOTAL NON-CURRENT ASSETS 1,548.0 946.7 1,056.5
----------------------------------------------------------------------------------------
CURRENT ASSETS
Inventories of bunkers 9.0 4.9 5.8
Freight receivables, etc 43.9 25.4 36.0
Other receivables 14.9 6.4 12.8
Prepayments 7.2 4.1 4.9
Securities 5.2 56.2 58.1
Cash and cash equivalents 25.9 68.9 65.5
----------------------------------------------------------------------------------------
106.1 165.9 183.1
Non-current assets held for sale 43.2 0.0 0.0
----------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 149.3 165.9 183.1
----------------------------------------------------------------------------------------
TOTAL ASSETS 1,697.3 1,112.6 1,239.6
----------------------------------------------------------------------------------------
Liabilities and Shareholders' Equity
------------------------------------------------------------------------------------
Mill. USD 30 Sep 2005 30 Sep 2004 31 Dec 2004
------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Common shares 61.1 61.1 61.1
Own shares -7.7 -7.8 -7.8
Revaluation reserves 329.7 273.8 323.4
Retained profit 537.8 335.2 312.3
Proposed dividend 0.0 0.0 99.9
Hedging reserves 1.7 -5.1 -0.3
Translation reserves 0.0 0.0 0.1
------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 922.6 657.2 788.7
------------------------------------------------------------------------------------
LIABILITIES
Long-term liabilities
Mortgage debt and bank loans 646.7 363.0 333.3
------------------------------------------------------------------------------------
TOTAL LONG-TERM LIABILITIES 646.7 363.0 333.3
------------------------------------------------------------------------------------
Short-term liabilities
Mortgage debt and bank loans 56.8 49.9 62.1
Trade accounts payable 18.8 8.9 15.7
Current tax liability 14.3 0.0 9.1
Other liabilities 32.0 25.8 23.3
Accruals 6.1 7.8 7.4
------------------------------------------------------------------------------------
TOTAL SHORT-TERM LIABILITIES 128.0 92.4 117.6
------------------------------------------------------------------------------------
TOTAL LIABILITIES 774.7 455.4 450.9
------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 1,697.3 1,112.6 1,239.6
------------------------------------------------------------------------------------
Shareholders' Equity
------------------------------------------------------------------------------------------------------------------------------------
Mill. USD Common Own Revaluation Retained Proposed Hedging Translation Total
shares shares reserves earnings dividend reserves reserves
------------------------------------------------------------------------------------------------------------------------------------
Balance at 1 January 2005, IFRS* 61.1 -7.8 323.4 312.3 99.9 -0.3 0.1 788.7
------------------------------------------------------------------------------------------------------------------------------------
Changes in Shareholders' equity Q1-Q3 2005:
Exchange rate adjustment arising on
translation of foreign entities -- -- -- -- -- -- -0.1 -0.1
Reversal of deferred gain/loss on cash flow
hedges at beginning of period -- -- -- -- -- 0.3 -- 0.3
Deferred gain/loss on cash flow hedges at
period end -- -- -- -- -- 1.7 -- 1.7
Reversal of fair value adjustment on
available for sale investments at
beginning of period -- -- -323.4 -- -- -- -- -323.4
Fair value adjustment on available for sale
investment at period end -- -- 329.7 -- -- -- -- 329.7
------------------------------------------------------------------------------------------------------------------------------------
Net income recognized directly in equity 0.0 0.0 6.3 0.0 0.0 2.0 -0.1 8.2
Profit for the period -- -- -- 215.6 -- -- -- 215.6
------------------------------------------------------------------------------------------------------------------------------------
Total income for the period 0.0 0.0 6.3 215.6 0.0 2.0 -0.1 223.8
Disposal of own shares, cost -- 0.1 -- -- -- -- -- 0.1
Dividends paid -- -- -- -- -94.5 -- -- -94.5
Dividends paid on own shares -- -- -- 4.1 -- -- -- 4.1
Exchange rate adjustment on dividends paid -- -- -- 5.4 -5.4 -- -- 0.0
Exercise of share options -- -- -- 0.4 -- -- -- 0.4
------------------------------------------------------------------------------------------------------------------------------------
Total changes in Shareholders' equity Q1-Q3
2005 0.0 0.1 6.3 225.5 -99.9 2.0 -0.1 133.9
------------------------------------------------------------------------------------------------------------------------------------
Balance at 30 September 2005 61.1 -7.7 329.7 537.8 0.0 1.7 0.0 922.6
------------------------------------------------------------------------------------------------------------------------------------
* IFRS Shareholders equity as of 1 January 2005 according to Annual Report
2004. Please refer to Annual Report 2004 for a reconciliation from the
previous to the current accounting policies.
Cash flow statement
------------------------------------------------------------------------------------------------
Mill. USD Q3 Q3 Q1-Q3 Q1-Q3 2004
2005 2004 2005 2004
------------------------------------------------------------------------------------------------
Cash flow from operating activities
Profit before financial items 68.8 43.7 226.3 123.8 180.3
Interest income, exchange rate gains and dividends
received 0.6 0.8 15.5 14.4 37.6
Interest expenses -6.7 -3.7 -17.4 -11.1 -15.7
------------------------------------------------------------------------------------------------
Adjustments:
Reversal of depreciation and impairment loss 12.5 9.2 34.0 25.9 35.2
Reversal of other non-cash movements 3.0 -6.7 -6.5 -2.0 3.2
Paid taxes 0.0 0.0 0.0 0.0 -0.5
Change in inventories, accounts receivables and
payables -7.0 2.3 0.2 -6.6 -12.2
------------------------------------------------------------------------------------------------
Net cash inflow from operating activities 71.2 45.6 252.1 144.4 227.9
------------------------------------------------------------------------------------------------
Cash flow from investing activities
Investment in tangible fixed assets -145.8 -4.2 -617.3 -117.6 -187.3
Investment in equity interests and securities 3.2 0.0 37.5 0.0 0.0
Sale of fixed assets 36.4 0.0 125.2 0.0 0.2
including profit on sale of vessels -14.4 0.0 -54.8 0.0 0.0
(included in operating activities)
------------------------------------------------------------------------------------------------
Net cash inflow/(outflow) from investing activities -120.6 -4.2 -509.4 -117.6 -187.1
------------------------------------------------------------------------------------------------
Cash flow from financing activities
Borrowing, mortgage debt and other financial
liabilities 158.6 0.0 526.5 117.1 146.1
Repayment/redemption, mortgage debt -122.7 -13.5 -218.4 -39.2 -85.6
Repayment/redemption, lease liabilities 0.0 0.0 0.0 -30.4 -30.4
Dividends paid 0.0 0.0 -90.4 -33.8 -33.8
Purchase/disposals of own shares 0.0 0.0 0.0 1.0 1.0
------------------------------------------------------------------------------------------------
Cash inflow/(outflow) from financing activities 35.9 -13.5 217.7 14.7 -2.7
------------------------------------------------------------------------------------------------
Increase/(decrease) in cash and cash equivalents -13.5 27.9 -39.6 41.5 38.1
Cash and cash equivalents, beginning of period 39.4 41.0 65.5 27.4 27.4
------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period 25.9 68.9 25.9 68.9 65.5
------------------------------------------------------------------------------------------------
Quarterly cash flow statement
------------------------------------------------------------------------------------------------
Mill. USD Q3 04 Q4 04 Q1 05 Q2 05 Q3 05
------------------------------------------------------------------------------------------------
Cash flow from operating activities
Profit before financial items 43.7 56.5 81.6 75.9 68.8
Interest income, exchange rate gains and
dividends received 0.8 23.2 1.3 13.6 0.6
Interest expenses -3.7 -4.6 -4.8 -5.9 -6.7
------------------------------------------------------------------------------------------------
Adjustments:
Reversal of depreciation and impairment loss 9.2 9.3 10.3 11.2 12.5
Reversal of other non-cash movements -6.7 5.2 -9.4 -0.1 3.0
Paid taxes 0.0 -0.5 0.0 0.0 0.0
Change in inventories, accounts receivables
and payables 2.3 -5.6 4.4 2.8 -7.0
------------------------------------------------------------------------------------------------
Net cash inflow from operating activities 45.6 83.5 83.4 97.5 71.2
------------------------------------------------------------------------------------------------
Cash flow from investing activities
Investment in tangible fixed assets -4.2 -69.7 -221.6 -249.9 -145.8
Investment in equity interests and securities 0.0 0.0 0.0 34.3 3.2
Sale of fixed assets 0.0 0.2 47.4 41.4 36.4
including profit on sale of vessels 0.0 0.0 -19.4 -21.0 -14.4
(included in operating activities)
------------------------------------------------------------------------------------------------
Net cash inflow/(outflow) from investing activities -4.2 -69.5 -193.6 -195.2 -120.6
------------------------------------------------------------------------------------------------
Cash flow from financing activities
Borrowing, mortgage debt and other financial
liabilities 0.0 29.0 159.1 208.8 158.6
Repayment/redemption, mortgage debt -13.5 -46.4 -21.7 -74.0 -122.7
Repayment/redemption, lease liabilities 0.0 0.0 0.0 0.0 0.0
Dividends paid 0.0 0.0 0.0 -90.4 0.0
Purchase/disposals of own shares 0.0 0.0 0.0 0.0 0.0
------------------------------------------------------------------------------------------------
Cash inflow/(outflow) from financing activities -13.5 -17.4 137.4 44.4 35.9
------------------------------------------------------------------------------------------------
Increase/(decrease) in cash and cash equivalents 27.9 -3.4 27.2 -53.3 -13.5
Cash and cash equivalents, beginning of period 41.0 68.9 65.5 92.7 39.4
------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period 68.9 65.5 92.7 39.4 25.9
------------------------------------------------------------------------------------------------
Reconciliation to United States Generally Accepted Accounting Principles (US
GAAP)
--------------------------------------------------------------------------------
Mill. USD Net income Shareholders'
Q1-Q3 2005 Equity
30 Sep 2005
--------------------------------------------------------------------------------
As reported under IFRS
215.6 922.6
--------------------------------------------------------------------------------
Adjustments:
Reversal of write-down of vessels 0.1 -1.3
Unrealised gains/losses on marketable securities -0.1 0.0
Share options 0.0 0.0
Deferred gain on a sale/lease back -16.8 -16.8
Deferred tax 12.1 -60.6
--------------------------------------------------------------------------------
Total adjustments -4.7 -78.7
--------------------------------------------------------------------------------
US GAAP figures before change in accounting principles 210.9 843.9
Cumulative effect of change in accounting
principles 1 January 2005 8.7 0.0
--------------------------------------------------------------------------------
US GAAP figures after change in accounting principles 219.6 843.9
--------------------------------------------------------------------------------
A review of principles and methods used in the reconciliation, please refer to
the TORM Annual Report for 2004.
As of 1 January 2005, the Company changed its method of accounting for vessel
dry docking costs under U.S. GAAP, from the accrual method to the deferral
method. Under the accrual method, dry docking costs had been accrued as a
liability and an expense on an estimated basis, in advance of the next scheduled
dry docking. Subsequent payments for dry docking were charged against the
accrued liability. Under the deferral method, costs incurred in replacing or
renewing the separate assets that constitute the dry docking costs are
capitalized and depreciated on a straight line basis over the estimated period
until the next dry docking. Dry docking activities include, but are not limited
to, inspection, service on turbocharger, replacement of shaft seals, service on
boiler, replacement of hull anodes, applying of antifouling and hull paint,
steel repairs and refurbishment and replacement of other parts of the vessel.
This change was made to conform with prevailing shipping industry accounting
practices and the Company's accounting under IFRS. On 1 January 2005 the Company
recorded the effect of the change in accounting principle on periods prior to
2005 as a cumulative effect of accounting change of USD 8.7 million (net of
income tax of USD 0.4 (income)) or USD 0.3 per basic share. The effect of this
change in accounting method on the U.S. GAAP Shareholders' Equity was an
increase of USD 8.7 million.
The Company is still evaluating how the Danish Tonnage Tax Scheme should be
accounted for under IFRS. In the interim financials for the nine months ended 30
September 2005, the Company has accounted for the Danish Tonnage Tax Scheme
under IFRS, in a manner that was consistent with its historical accounting under
Danish GAAP. As a result, the Danish Tonnage Tax Scheme appears as a reconciling
item in the Statement of Reconciliation of Net Income to U.S. GAAP for the
period ended 30 September 2005. If the Company subsequently concludes that the
accounting treatment of the Danish Tonnage Tax Scheme should be changed under
IFRS, this will result in consequent changes to the previously reported
Statement of Reconciliation of Net Income and the Reconciliation of
Shareholders' Equity to U.S. GAAP, relating to the Danish Tonnage Tax Scheme.
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: November 15, 2005
By: /s/ Klaus Nyborg
-------------------------
Klaus Nyborg
Chief Financial Officer
03810.0001 #617394