COPEHNAGEN, Denmark, August 31 /PRNewswire-FirstCall/ -- The Board
of directors resolved to distribute an extraordinary dividend of
DKK 27.50 per share. The forecast for profit before tax in 2007
excl. restructuring costs is increased to USD 800-820 million from
USD 780-800 million. Restructuring costs are expected to amount to
around USD 15 million. In the second quarter there has been a
considerable appreciation on the Company's fleet including purchase
options and TORM's share of OMI's fleet. Highlights - The profit
before tax for the first half of 2007 was USD 739 million. The
result is better than expected and highly satisfactory. Profit
after tax for the second quarter of 2007 was USD 66 million (DKK
365 million). Profit after tax for the first half of 2007 was USD
740 million (DKK 4,154 million). - Equity at 30 June 2007 amounted
to USD 1,375 million (DKK 7,578 million), corresponding to USD 19.9
per share (DKK 109.5 per share) excluding treasury shares. A
dividend of DKK 419 million (USD 76 million) was paid in April. -
The market value of the Company's vessels, including the order
book, exceeded book value by USD 1,238 million at 30 June 2007,
equalling USD 17.9 per share (DKK 98.6 per share), excluding
treasury shares. The value of 19 purchase options, which can be
exercised from 2007, and TORM's share of OMI's vessels is not
included in the excess value. - The product tanker market was
highly volatile in the first half. The increasing transport demand,
primarily to the USA, ensured a solid demand for product tankers at
favourable rates at the beginning of the second quarter. The spot
market, however, started the third quarter on a weaker note than
expected, whereas the period time charter market remains strong,
reflecting the persistently strong customer demand and optimistic
outlook. At 30 June, the Company had covered 44% of the remaining
earning days in 2007, excluding earning days for the OMI vessels,
at an average rate of USD 26,331 per day. - The upward trend in the
bulk market of the second quarter continued into the third quarter
due to an increasing demand for transport of primarily iron ore,
coal and soya beans. At 30 June, the Company had covered 94% of the
remaining earning days in 2007 at an average of USD 25,700 per day
and 30% of the earning days in 2008 at an average of USD 33,125 per
day. - At the Board meeting to discuss the financial report for the
first half of 2007, the Board of Directors resolved to distribute
an extraordinary dividend of DKK 2 billion, equalling DKK 27.50 per
share cf. separate stock announcement about this. - After the
acquisition of OMI was completed, OMI has become a jointly owned
subsidiary of TORM and Teekay. The distribution of OMI's assets
took effect from 1 August 2007, with TORM taking over 24 product
tankers from OMI together with OMI's technical operations in India
and a part of OMI's organization in the USA. The integration of OMI
staff, tankers and client portfolio into TORM's organization
proceeds according to the plan and fully meets expectations both
operationally and financially. From 2008 and onwards, TORM expects
to realize annual cost synergies of the order of USD 10-15 million
as a result of the acquisition of OMI. - So far this year, TORM has
not sold second-hand tonnage, as in previous years due to strongly
increasing vessel prices. - The 2007 profit before tax forecast is
raised by USD 20 million to 800-820 million excl. restructuring
costs related to the acquisition of OMI. Restructuring costs are
expected to amount to around USD 15 million. Teleconference TORM's
Management will review the report on the first half of 2007 in a
teleconference and webcast (http://www.torm.com/) today, 31 August
2007, at 17.00 Copenhagen time (CET). To participate, please call
10 minutes before the call on tel.: +45 3271 4607 (from Europe) or
+1-334-323-6201 (from the USA). A replay of the conference will be
available from TORM's website. Q2 2007 Q2 2006 Q1-Q2 Q1-Q2 Million
USD 2007 2006 2006 Income statement Net revenue 198.4 137.1 360.4
298.8 603.7 Time charter equivalent earnings (TCE) 155.7 102.9
281.8 232.4 455.4 Gross profit 89.4 59.8 158.5 145.8 271.4 EBITDA
77.8 72.4 138.2 154.4 301.0 Operating profit 58.6 57.6 104.2 124.5
242.1 Financial items 0.5 23.2 635.1 15.6 -1.0 Profit before tax
59.1 80.8 739.3 140.1 241.1 Net profit 66.0 80.8 740.4 138.5 234.5
Balance sheet Total assets 3,195.6 1,753.1 3,195.6 1,753.1 2,089.0
Equity 1,375.4 870.3 1,375.4 870.3 1,280.8 Total liabilities
1,820.2 882.8 1,820.2 882.8 808.2 Invested capital 2,517.1 1,265.4
2,517.1 1,265.4 1,298.5 Net interest bearing debt 1,152.4 723.1
1,152.4 723.1 662.0 Cash flow From operating activities 66.0 64.6
114.1 140.3 232.5 From investing activities -196.6 33.0 -241.8
-86.5 -117.6 Thereof investment in tangible fixed assets -120.4
-56.8 -165.7 -176.5 -262.4 From financing activities 559.0 -168.1
579.3 -160.7 -238.6 Net cash flow 428.4 -70.5 451.6 -106.9 -123.7
Key financial figures Margins: TCE 78.5% 75.1% 78.2% 77.8% 75.3%
Gross profit 45.1% 43.6% 44.0% 48.8% 44.9% EBITDA 39.2% 52.8% 38.3%
51.7% 49.8% Operating profit 29.5% 42.0% 28.9% 41.7% 40.1% Return
on Equity (RoE) (p.a.)*) 19.1% 35.6% 63.1% 31.2% 21.5% Return on
Invested Capital (RoIC) (p.a.) 12.2% 18.1% 12.1% 20.4% 19.6% Equity
ratio 43.0% 49.6% 43.0% 49.6% 61.3% Exchange rate USD/DKK, end of
period 5.51 5.87 5.51 5.87 5.66 Exchange rate USD/DKK, average 5.53
5.94 5.61 6.08 5.95 Share related key figures**) Earnings per
share, EPS USD 1.0 1.2 10.7 2.0 3.4 Cash flow per share, CFPS USD
1.0 0.9 1.6 2.0 3.3 Share price, end of period (per share of DKK 10
each) DKK 207.6 135.9 207.6 135.9 186.0 Number of shares, end of
period Mill. 72.8 72.8 72.8 72.8 72.8 Number of shares (excl.
treasury shares), average Mill. 69.2 69.5 69.2 69.6 69.4 *) The
gain from the sale of the Norden shares is not annualized when
calculating the Return on Equity **)Adjusted for the share split in
May 2007 Profit by division Million USD Q2 2007 Tanker Bulk Not
Division Division OMI *) allocated Total Net revenue 146.8 32.6
19.0 0.0 198.4 Port expenses, bunkers and commissions -37.4 -1.4
-3.1 0.0 -41.9 Freight and bunker derivatives -0.8 0.0 0.0 0.0 -0.8
Time charter equivalent earnings (TCE) 108.6 31.2 15.9 0.0 155.7
Charter hire -20.0 -14.8 -3.7 0.0 -38.5 Operating expenses -21.2
-2.6 -4.0 0.0 -27.8 Gross Profit 67.4 13.8 8.2 0.0 89.4 Profit from
sale of vessels 0.0 0.0 0.0 0.0 0.0 Administrative expenses -10.9
-2.0 -2.8 0.0 -15.7 Other operating income 3.1 0.0 1.0 0.0 4.1
Depreciation and impairment losses -13.9 -1.5 -3.8 0.0 -19.2
Operating profit 45.7 10.3 2.6 0.0 58.6 Financial items - - - 0.5
0.5 Profit/(Loss) before tax - - - 0.5 59.1 Tax - - - 6.9 6.9 Net
profit - - - 7.4 66.0 *) Contains the result of the acitvity that
TORM owns in a 50/50 joint venture with Teekay. (continued) Million
USD Q1-Q2 2007 Tanker Bulk Not Division Division OMI *) allocated
Total Net revenue 280.0 61.4 19.0 0.0 360.4 Port expenses, bunkers
and commissions -73.2 -2.5 -3.1 0.0 -78.8 Freight and bunker
derivatives 0.2 0.0 0.0 0.0 0.2 Time charter equivalent earnings
(TCE) 207.0 58.9 15.9 0.0 281.8 Charter hire -39.0 -30.2 -3.7 0.0
-72.9 Operating expenses -41.5 -4.9 -4.0 0.0 -50.4 Gross Profit
126.5 23.8 8.2 0.0 158.5 Profit from sale of vessels 0.0 0.0 0.0
0.0 0.0 Administrative expenses -20.5 -3.6 -2.8 0.0 -26.9 Other
operating income 5.6 0.0 1.0 0.0 6.6 Depreciation and impairment
losses -27.2 -3.0 -3.8 0.0 -34.0 Operating profit 84.4 17.2 2.6 0.0
104.2 Financial items - - - 635.1 635.1 Profit/(Loss) before tax -
- - 635.1 739.3 Tax - - - 1.1 1.1 Net profit - - - 636.2 740.4 *)
Contains the result of the acitvity that TORM owns in a 50/50 joint
venture with Teekay. Tanker and Bulk Tanker Division The Tanker
Division achieved a profit before financial items of USD 45.7
million in the second quarter of 2007 against USD 38.7 million in
the first quarter of 2007. After a sluggish first quarter with an
almost inexistent winter market, the second quarter was better than
expected. The MR segment in particular was highly positive in the
second quarter, principally as a result of gasoline exports to the
USA. The beginning of the third quarter has been characterised by
falling rates, however. In the first quarter, the difference
between earnings in the Eastern and the Western product tanker
markets was significant, but the gap narrowed in the second quarter
due to increased activity at refineries and petrochemical plants in
Asia. The tanker market was affected by the following factors in
the second quarter of 2007: Positive impact: - Increased exports of
gasoline to the USA due to a lower than expected US production of
gasoline leading up to the summer holiday period. - Increased
demand for tonnage in Asia. - Oil companies' focus on modern, safe
vessels for transport of oil products. Negative impact: - Increased
refinery production in the USA at the end of the second quarter. -
A large number of newbuildings. - Rising fuel costs. As a
consequence of a solid demand for product tankers, TORM's Tanker
Division obtained freight rates that were 30% higher for the LR2
segment, 21% higher for the LR1 segment and 12% higher for the MR
segment in the second quarter of 2007 compared with those of the
second quarter of 2006. The number of earning days for TORM in the
LR2 segment rose by 52% over the second quarter of 2006, while the
number of earning days in the LR1 and MR segments rose by 31% and
3%, respectively. Compared with the first quarter of 2007, the
number of earning days was up by 6% for TORM's tanker fleet as a
whole. Tanker Division Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 AEndring Q2 06
- Q2 07 LR2 (Aframax, 90-110,000 DWT) Available earning days 527
642 703 702 799 52% Per earning day (USD): Earnings (TCE)*) 21,507
27,282 25,940 26,738 27,926 30% Operating expenses**) -6,695 -7,141
-5,614 -7,542 -8,204 23% Operating cash flow***) 12,058 17,333
18,674 17,076 17,864 48% LR1 (Panamax, 75-85,000 DWT) Available
earning days 1,060 1,194 1,193 1,279 1,392 31% Per earning day
(USD): Earnings (TCE)*) 23,530 28,843 25,588 27,784 28,521 21%
Operating expenses**) -5,254 -6,450 -5,109 -6,793 -7,785 48%
Operating cash flow***) 11,974 13,105 11,526 12,279 12,423 4% MR
(45,000 DWT) Available earning days 1,632 1,642 1,627 1,654 1,684
3% Per earning day (USD): Earnings (TCE)*) 24,755 25,306 21,861
24,520 27,621 12% Operating expenses**) -7,320 -6,660 -6,197 -7,288
-6,503 -11% Operating cash flow***) 18,251 19,392 16,365 16,987
20,674 13% *) TCE = Gross freight income less bunker, commissions
and port expenses. Operating expenses are on own vessels. **)
Operating expenses is related owned vessels. ***) Operating cash
flow = TCE less operating expenses and charter hire. Bulk Division
- The Bulk Division achieved an operating profit of USD 10.3
million for the second quarter of 2007. Freight rates in the
Panamax segment rose further to a historically high level at the
end of the second quarter of 2007. The development in bulk rates is
still largely dependent on the development in individual markets,
primarily China and Australia as well as India, Japan and South
America. In the second quarter of 2007, freight rates in the bulk
market were positively affected by increased transports of
especially iron ore, coal and soya beans. Due to insufficient port
capacity, the quarter was characterised by long waits in Australian
ports, which further pushed up freight rates. Demand for tonnage
was strong enough for the bulk market to be able to more than
absorb a relatively large addition of newbuildings in the first
half of 2007. The number of available earning days in the Panamax
segment dropped by 8% in the second quarter of 2007 relative to the
second quarter of 2006 due to the sale of three Panamax vessels in
August 2006. Bulk Division Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 AEndring
Q2 06 - Q2 07 Panamax (60-80,000 DWT) Available earning days 1,382
1,234 1,234 1,260 1,274 -8% Per earning day (USD): Earnings (TCE)*)
18,343 18,402 20,272 22,102 24,404 33% Operating expenses**) -4,576
-5,662 -4,020 -5,099 -5,303 16% Operating cash flow***) 7,681 6,872
9,846 8,170 10,711 39% *) TCE = Gross freight income less bunker,
commissions and port expenses. Operating expenses are on own
vessels. **) Operating expenses is related owned vessels. ***)
Operating cash flow = TCE less operating expenses and charter hire.
Other activities - Other (non-allocated) activities consist of
financial items of USD 635 million and tax of USD 1 million.
Financial items consist of profit on the investment in Norden of
USD 643 million and interest expenses of USD 8 million. As a result
of the corporate tax rate cut in Denmark in the second quarter, tax
is positive in the amount of USD 1 million. Fleet development -
During the second quarter of 2007, TORM took delivery of two LR2
vessels, one LR1 vessel and one Panamax bulk carrier. At the end of
the second quarter of 2007, TORM's owned fleet consisted of 34.5
product tankers and six bulk carriers, a total of 40.5 vessels. Add
to this the 21 tankers, which TORM at 30 June 2007 owned via the
Company's part ownership of OMI. Of these, 20 vessels were
transferred to TORM at 1 August 2007. 31 March Addition Disposal 30
June 2007 2007 TORM Margit LR2 / Aframax 7.0 TORM Mette - 9.0 LR1 /
Panamax 6.5 TORM Venture - 7.5 MR 18.0 - - 18.0 Tank 31.5 34.5
Panamax 5.0 TORM Anholt - 6.0 Bulk 5.0 6.0 Total 36.5 40.5 Planned
fleet changes - TORM's planned fleet expansion comprises 16.5
vessels for delivery between the third quarter of fleet changes
2007 and 2010. On to that must be added a newbuilding, which TORM
at 30 June owned via the Company's part ownership of OMI. The
planned investments amount to USD 650 million. TORM has chartered
in 16 product tankers on long-term charters, of which 10 already
form part of the fleet. TORM holds purchase options on three of the
charters. The options can be exercised between 2009 and 2014. TORM
has chartered in 21 Panamax bulk carriers on long-term charters, of
which eight already form part of the fleet. TORM holds purchase
options on 16 of the charters. The options can be exercised between
2007 and 2018. So far this year, TORM has not sold second-hand
tonnage, as in previous years due to strongly increasing vessel
prices. Pools - At 30 June 2007, the three product tanker pools
consisted of 90 vessels. At the end of 2007, the three pools are
expected to comprise 91 vessels, excluding the addition of 24
vessels from OMI. Results Second quarter 2007 - The second quarter
of 2007 showed a gross profit of USD 89 million, against USD 60
million in the same quarter of 2006. The profit before depreciation
(EBITDA) for the period was USD 78 million against USD 72 million
in the second quarter of 2006. Depreciation amounted to USD 19
million in the second quarter of 2007. The operating profit for the
second quarter of 2007 was USD 59 million, against USD 58 million
in the same quarter of 2006. Of this amount, the Tanker and Bulk
Divisions contributed USD 46 million and USD 10 million
respectively, while TORM's share of OMI contributed USD 3 million.
Financial items were positive by USD 0.5 million, against USD 23
million in the corresponding quarter of 2006. The difference is
mainly due to the fact that TORM did not receive dividends from
Norden, as the Company sold its shares. In the second quarter, TORM
recognised a tax gain of USD 7 million due to the lowering of the
corporate tax rate in Denmark from 28% to 25%. Profit after tax was
USD 66 million, against USD 81 million in the second quarter of
2006. Assets - Total assets rose from USD 2,229 million to USD
3,196 million in the second quarter of 2007, primarily as a result
of the OMI acquisition. Liabilities - In the second quarter of
2007, the Company's net interest bearing debt increased from USD
659 million to USD 1,152 million due to dividend payments, the
acquisition of OMI and the sale of the Norden shares. The Company
has considerable undrawn loan facilities at its disposal. Equity -
During the second quarter of 2007, equity declined from USD 1,389
million to USD 1,375 million. This was an effect of earnings and
dividend payments during the period. Mainly as a result of the
acquisition of OMI, equity as a percentage of total assets dropped
from 62.3% at 31 March 2006 to 43.0% at 30 June 2007. At 30 June
2007, TORM held 3,564,364 treasury shares, corresponding to 4.9% of
the Company's share capital, which is unchanged from 31 March 2007.
OMI - In June 2007, TORM acquired the US tanker shipping company
OMI in a 50/50 joint venture with Teekay Corporation. TORM's 50%
ownership interest in OMI is recognised on a pro rata basis in
TORM's consolidated financial statements effective from 1 June 2007
by aggregating items similar in nature. Consequently, OMI is
included in the interim financial statements at 50% of one month's
profit, presented as a separate segment in the statement of profit
by division and at 50% of the balance sheet total at 30 June 2007.
In accordance with TORM's accounting policies the recognition is
based on a preliminary takeover balance sheet at 1 June 2007, which
is shown on page 7. The valuation of vessels, which constitute 85%
of total assets in the preliminary takeover balance sheet, is
subject to great certainty. In addition to this the recognition of
assets and liabilities, which were not previously recognised in
OMI's balance sheet, including T/C contracts, purchase options and
other commercial agreements as well as customer and supplier
relations. At present, the takeover balance sheet is expected to be
finalised in connection with the preparation of the annual report
for 2007 at the latest. If the sum of the acquired net assets is
increased relative to the takeover balance sheet, goodwill will be
reduced correspondingly. Million USD Preliminary opening balance at
the date of acquisition at fair value Intangible assets 3.7
Tangible fixed assets 1,009.3 Freight receivables, etc. 25.9 Other
receivables 2.4 Prepayments 9.3 Marketable securities 28.5 Cash and
cash equivalents 100.7 Mortgage debt and bank loans -276.1 Other
financial liabilities -16.2 Trade payables -13.2 Other liabilities
-48.6 Deferred income -5.7 Net assets acquired 820.0 Goodwill 89.3
Cash consideration paid 909.3 Cash and cash equivalents, acquired
-100.7 Cash flow out, net 808.6 Integration of OMI - TORM's and
Teekay Corporation's acquisition of OMI was completed on 8 June
2007, whereby OMI became a jointly owned subsidiary of TORM and
Teekay. The distribution of OMI's assets between TORM and Teekay
took effect from 1 August 2007, with TORM taking over 24 product
tankers from OMI together with OMI's technical operations in India
and a part of OMI's organization in the USA. Additionally one
product tanker and one newbuilding will remain in OMI until the
beginning of 2008. In addition to giving TORM a very modern and
uniformed product tanker fleet and ensuring TORM's presence in the
American market, the acquisition increases TORM's global
competitiveness. The integration of OMI staff, tankers and client
portfolio into TORM's organization proceeds according to the plan
and fully meets expectations both operationally and financially.
From 2008 and onwards, TORM expects to realize annual cost
synergies of the order of USD 10-15 million as a result of the
acquisition of OMI. Subsequent events - As of 1 August, TORM took
over 24 product tankers from OMI together with OMI's technical
operations in India and a part of OMI's organisation in the USA. In
addition to that, one product tanker and one newbuilding will
remain in OMI until the beginning of 2008. Expectations - The 2007
profit before tax forecast is raised by USD 20 million to 800-820
million excl. restructuring costs related to the acquisition of
OMI. Restructuring costs are expected to amount to around USD 15
million. The key assumptions behind the forecast are as follows:
Assumptions Q1 07(A) Q2 07(A) Q3 07 Q4 07 LR2 Earning days 702 799
906 922 TCE rate (USD/day) 26,738 27,926 22,119 29,834 LR1 Earning
days 1,279 1,392 1,678 1,719 TCE rate (USD/day) 27,784 28,521
25,068 28,111 MR Earning days 1,654 1,684 2,702 2,633 TCE rate
(USD/day) 24,520 27,621 16,797 21,273 SR Earning days 1,104 1,092
TCE rate (USD/day) 16,297 19,709 Panamax Earning days 1,260 1,274
1,283 1,273 TCE rate (USD/day) 22,102 24,404 24,500 26,000 (A)
Realized figures. For competitive reasons, TORM does not provide
the Company's own expectations for product tanker rates. The table
above sets out the rates as quoted on the IMAREX forward market at
22 August 2007. Sensitivity - At the end of the second quarter of
2007, 94% of earning days remaining in the year for the Company's
Panamax bulk carriers were covered at an average rate of 25.700 per
day. For the Tanker Division, 44% of earning days remaining for the
year, excluding earning days for the OMI vessels, were covered at
an average rate of USD 26,331 per day at the end of the second
quarter. At 30 June, TORM had hedged the price for 8.6% of the
remaining bunker requirements for 2007, and the market value of
these contracts was USD 0.3 million. 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 On 23 May 2007, TORM carried
out a 2:1 share split, changing the denomination of the Company's
shares from DKK 10 to DKK 5. The price of the TORM share was DKK
207.6 at 30 June 2007 against DKK 192.9, adjusted to the new
denomination, at the beginning of the quarter, an increase of DKK
14.7. In the second quarter, before the share split, the Company
distributed a dividend of DKK 11.5 per share, equalling DKK 419
million. The total return to shareholders for the second quarter of
2007 was thus DKK 20.5 per share (calculated excluding
reinvestment), corresponding to a total return of 10.6%. Accounting
policies The report for the first half of 2007 has been prepared
using the same accounting policies as for the Annual Report 2006.
The accounting policies are described in more detail in the Annual
Report 2006. The financial report for the first half of 2007 is
unaudited, in line with the normal practice. Information
Teleconference TORM will host a telephone conference for financial
analysts and investors on 31 August 2007 at 17:00 Copenhagen time
(CET), reviewing the report for the first half of 2007. The
conference call will be hosted by Klaus Kjaerulff, CEO, and will be
conducted in English. To participate, please call 10 minutes before
the conference starts on tel.: +45-3271-4607 (from Europe) or
+1-334-323-6201 (from the USA). The teleconference will also be
webcast via TORM's website http;//http://www.torm.com/ . The
presentation material can be downloaded from the website. Next
reporting Due to the acquisition of OMI Corporation TORM's third
quarter report is deferred to the 22 November 2007. 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 June 2007. 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 2007. 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, 31 August 2007 Management Board of Directors
Klaus Kjaerulff, CEO Niels Erik Nielsen, Chairman Mikael Skov, COO
Christian Frigast, Deputy Chairman Peter Abildgaard Lennart Arrias
Margrethe Bligaard Gabriel Panayotides Nicos Zouvelos 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 more than 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. 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
http;//http://www.torm.com/. Income Statement Million USD Q2 2007
Q2 2006 Q1-Q2 2007 Q1-Q2 2006 2006 Revenue 198.4 137.1 360.4 298.8
603.7 Port expenses, bunkers and commissions -41.9 -37.8 -78.8
-74.1 -148.9 Freight and bunkers derivatives -0.8 3.6 0.2 7.7 0.6
Time Charter Equivalent Earnings (TCE) 155.7 102.9 281.8 232.4
455.4 Charter hire -38.5 -22.6 -72.9 -46.0 -106.3 Operating
expenses -27.8 -20.5 -50.4 -40.6 -77.7 Gross profit 89.4 59.8 158.5
145.8 271.4 Profit from sale of vessels 0.0 19.4 0.0 19.4 54.4
Administrative expenses -15.7 -8.8 -26.9 -15.9 -34.6 Other
operating income 4.1 2.0 6.6 5.1 9.8 Depreciation and impairment
losses -19.2 -14.8 -34.0 -29.9 -58.9 Operating profit 58.6 57.6
104.2 124.5 242.1 Financial items 0.5 23.2 635.1 15.6 -1.0 Profit
before tax 59.1 80.8 739.3 140.1 241.1 Tax 6.9 0.0 1.1 -1.6 -6.6
Net profit 66.0 80.8 740.4 138.5 234.5 Earnings per share, EPS *)
Earnings per share, EPS (USD) 1.0 1.2 10.7 2.0 3.4 Earnings per
share, EPS (DKK)**) 5.3 6.9 59.9 12.1 20.1 *) The comparative
figures for EPS are restated to reflect the share split carried out
in May 2007. **) Calculated from USD to DKK at the average USD/DKK
exchange rate for the relevant period. Income statement by quarter
Million USD Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Revenue 137.1 158.0 146.9
162.0 198.4 Port expenses, bunkers and commissions -37.8 -36.4
-38.4 -36.9 -41.9 Freight and bunkers derivatives 3.6 -5.8 -1.3 1.0
-0.8 Time charter equivalent earnings 102.9 115.8 107.2 126.1 155.7
Charter hire -22.6 -28.5 -31.8 -34.4 -38.5 Operating expenses -20.5
-20.5 -16.6 -22.6 -27.8 Gross profit (Net earnings from shipping
activities) 59.8 66.8 58.8 69.1 89.4 Profit from sale of vessels
19.4 34.8 0.2 0.0 0.0 Administrative expenses -8.8 -6.4 -12.3 -11.2
-15.7 Other operating income 2.0 2.6 2.1 2.5 4.1 Depreciation and
impairment losses -14.8 -14.4 -14.6 -14.8 -19.2 Operating profit
57.6 83.4 34.2 45.6 58.6 Financial items 23.2 -10.3 -6.3 634.6 0.5
Profit before tax 80.8 73.1 27.9 680.2 59.1 Tax 0.0 -6.2 1.2 -5.8
6.9 Net profit 80.8 66.9 29.1 674.4 66.0 Assets Million USD 30 June
30 June 31 Dec. 2007 2006 2006 NON-CURRENT ASSETS Intangible assets
Goodwill 89.3 0.0 0.0 Other intangible assets 3.7 0.0 0.0 Total
intangible assets 93.0 0.0 0.0 Tangible fixed assets Land and
buildings 0.4 0.4 0.4 Vessels and capitalized dry-docking 2,267.0
1,139.6 1,136.4 Prepayments on vessels 189.7 134.4 183.3 Other
plant and operating equipment 7.5 2.8 3.6 Total tangible fixed
assets 2,464.6 1,277.2 1,323.7 Financial fixed assets Other
investments 10.7 328.0 644.4 TOTAL NON-CURRENT ASSETS 2,568.3
1,605.2 1,968.1 CURRENT ASSETS Inventories of bunkers 16.3 12.0
12.1 Freight receivables, etc. 84.8 45.8 49.7 Other receivables
28.8 25.2 21.5 Prepayments 12.8 5.6 4.6 Cash and cash equivalents
484.6 49.8 33.0 627.3 138.4 120.9 Non-current assets held for sale
0.0 9.5 0.0 TOTAL CURRENT ASSETS 627.3 147.9 120.9 TOTAL ASSETS
3,195.6 1,753.1 2,089.0 Liabilities and Equity Million USD 30 June
30 June 31 Dec. 2007 2006 2006 EQUITY Common shares 61.1 61.1 61.1
Treasury shares -18.1 -18.1 -18.1 Revaluation reserves 7.2 263.4
579.8 Retained profit 1.316.1 552.5 574.5 Proposed dividends 0.0
0.0 73.9 Hedging reserves 4.9 7.5 5.6 Translation reserves 4.2 3.9
4.0 TOTAL EQUITY 1,375.4 870.3 1,280.8 LIABILITIES Non-current
liabilities Deferred tax liability 56.0 55.8 62.8 Mortgage debt and
bank loans 770.6 716.3 639.1 TOTAL NON-CURRENT LIABILITIES 826.6
772.1 701.9 Current liabilities Mortgage debt and bank loans 866.4
56.6 55.9 Other financial liabilities 2.1 0.0 0.0 Trade payables
37.5 15.6 18.7 Current tax liabilities 11.1 10.0 4.6 Other
liabilities 67.6 27.1 26.0 Deferred income 8.9 1.4 1.1 TOTAL
CURRENT LIABILITIES 993.6 110.7 106.3 TOTAL LIABILITIES 1,820.2
882.8 808.2 TOTAL EQUITY AND LIABILITIES 3,195.6 1,753.1 2,089.0
Equity 1 January - 30 June 2007 Million USD Common Treasury
Retained Proposed shares shares profit dividends Equity at 1
January 2007 61.1 -18.1 574.5 73.9 Changes in equity Q1-Q2 2007:
Exchange rate adjustment arising on translation of entities using a
measurement currency different from USD - - - - Reversal of
deferred gain/loss on hedge instruments at the beginning of year -
- - - Deferred gain/loss on hedge instruments at the end of the
Period - - - - Fair value adjustment on available for sale
investments - - - - Transfer to profit or loss on sale of available
for sale Investments - - - - Net gains/losses recognised directly
in equity 0.0 0.0 0.0 0.0 Net profit for the period 740.4 Total
recognized income/expenses for the period 0.0 0.0 740.4 0.0
Purchase treasury shares, cost - - - - Disposal treasury shares,
cost - - - - Dividends paid - - - -76.4 Dividends paid on treasury
shares - - 3.7 - Exchange rate adjustment on dividends paid - -
-2.5 2.5 Exercise of share options - - - - Total changes in equity
Q1-Q2 2007: 0.0 0.0 741.6 -73.9 Equity at 30 June 2007 61.1 -18.1
1,316.1 0.0 (continued) Million USD Revaluation Hedging Translation
Total reserves reserves reserves Equity at 1 January 2007 579.8 5.6
4.0 1.280.8 Changes in equity Q1-Q2 2007: Exchange rate adjustment
arising on translation of entities using a measurement currency
different from USD - - 0.2 0.2 Reversal of deferred gain/loss on
hedge instruments at the beginning of year - -5.6 - -5.6 Deferred
gain/loss on hedge instruments at the end of the Period - 4.9 - 4.9
Fair value adjustment on available for sale investments 70.7 - -
70.7 Transfer to profit or loss on sale of available for sale
Investments -643.3 - - -643.3 Net gains/losses recognised directly
in equity -572.6 -0.7 0.2 -573.1 Net profit for the period 740.4
Total recognized income/expenses for the period -572.6 -0.7 0.2
167.3 Purchase treasury shares, cost - - - 0.0 Disposal treasury
shares, cost - - - 0.0 Dividends paid - - - -76.4 Dividends paid on
treasury shares - - - 3.7 Exchange rate adjustment on dividends
paid - - - 0.0 Exercise of share options - - - 0.0 Total changes in
equity Q1-Q2 2007: -572.6 -0.7 0.2 94.6 Equity at 30 June 2007 7.2
4.9 4.2 1,375.4 Equity 1 January - 30 June 2006 Million USD Common
Treasury Retained Proposed shares shares profit dividends Equity at
1 January 2006 61.1 -7.7 415.3 132.4 Changes in equity Q1-Q2 2006:
Exchange rate adjustment arising on translation of entities using a
measurement currency different from USD - - - - Reversal of
deferred gain/loss on hedge instruments at the beginning of year -
- - - Deferred gain/loss on hedge instruments at the end of the
period - - - - Reversal of fair value adjustment on available for
sale investments at the beginning of the year - - - - Fair value
adjustment on available for sale investments at period end - - - -
Net gains/losses recognised directly in equity 0.0 0.0 0.0 0.0 Net
profit for the period 138.5 Total recognized income/expenses for
the period 0.0 0.0 138.5 0.0 Purchase treasury shares, cost - -10.4
- - Disposal treasury shares, cost - 0.0 - - Dividends paid - - -
-140.1 Dividends paid on treasury shares - - 6.0 - Exchange rate
adjustment on dividends paid - - -7.7 7.7 Exercise of share options
- - 0.4 - Total changes in equity Q1-Q2 2006: 0.0 -10.4 137.2
-132.4 Equity at 30 June 2006 61.1 -18.1 552.5 0.0 (Continued)
Million USD Revaluation Hedging Translation Total reserves reserves
reserves Equity at 1 January 2006 296.4 3.3 3.9 904.7 Changes in
equity Q1-Q2 2006: Exchange rate adjustment arising on translation
of entities using a measurement currency different from USD - - 0.0
0.0 Reversal of deferred gain/loss on hedge instruments at the
beginning of year - -3.3 - -3.3 Deferred gain/loss on hedge
instruments at the end of the period - 7.5 - 7.5 Reversal of fair
value adjustment on available for sale investments at the beginning
of the year -296.4 - - -296.4 Fair value adjustment on available
for sale investments at period end 263.4 - - 263.4 Net gains/losses
recognised directly in equity -33.0 4.2 0.0 -28.8 Net profit for
the period 138.5 Total recognized income/expenses for the period
-33.0 4.2 0.0 109.7 Purchase treasury shares, cost - - - -10.4
Disposal treasury shares, cost - - - 0.0 Dividends paid - - -
-140.1 Dividends paid on treasury shares - - - 6.0 Exchange rate
adjustment on dividends paid - - - 0.0 Exercise of share options -
- - 0.4 Total changes in equity Q1-Q2 2006: -33.0 4.2 0.0 -34.4
Equity at 30 June 2006 263.4 7.5 3.9 870.3 Cash flow statement
Million USD Q2 2007 Q2 2006 Q1-Q2 Q1-Q2 2006 2007 2006 Cash flow
from operating activities Operating profit 58.6 57.6 104.2 124.5
242.1 Adjustments: Reversal of profit from sale of vessels 0.0
-19.4 0.0 -19.4 -54.4 Reversal of depreciation and impairment
losses 19.2 14.8 34.0 29.9 58.9 Reversal of other non-cash
movements -1.8 2.2 4.5 7.7 6.0 Dividends received 1.1 26.2 1.3 26.4
26.4 Interest income and exchange rate gains 10.0 6.3 10.6 7.4 10.1
Interest expenses -15.2 -10.7 -24.6 -21.0 -40.7 Income taxes paid
0.0 0.0 0.7 0.0 -3.1 Change in inventories, accounts receivables
and payables -5.9 -12.4 -16.6 -15.2 -12.8 Net cash inflow/(outflow)
from operating activities 66.0 64.6 114.1 140.3 232.5 Cash flow
from investing activities Investment in tangible fixed assets
-120.4 -56.8 -165.7 -176.5 -262.4 Purchase of enterprises and
activities *) -808.6 0.0 -808.6 0.0 0.0 Sale of/investment in
equity interests and marketable securities 732.4 0.0 732.4 0.2 0.2
Sale of non-current assets 0.0 89.8 0.1 89.8 144.6 Net cash
inflow/(outflow) from investing activities -196.6 33.0 -241.8 -86.5
-117.6 Cash flow from financing activities Borrowing, mortgage debt
and other financial liabilities 781.3 87.7 806.8 98.9 162.1
Repayment/redemption, mortgage debt -149.6 -111.3 -154.8 -115.1
-256.2 Dividends paid -72.7 -134.1 -72.7 -134.1 -134.1
Purchase/disposals of treasury shares 0.0 -10.4 0.0 -10.4 -10.4
Cash inflow/(outflow) from financing activities 559.0 -168.1 579.3
-160.7 -238.6 Increase/(decrease) in cash and cash equivalents
428.4 -70.5 451.6 -106.9 -123.7 Cash and cash equivalents,
beginning balance 56.2 120.3 33.0 156.7 156.7 Cash and cash
equivalents, ending balance 484.6 49.8 484.6 49.8 33.0 *) See
preliminary opening balance for OMI at page 7. Quarterly cash flow
statement Million USD Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Cash flow from
operating activities Operating profit 57.6 83.4 34.2 45.6 58.6
Adjustments: Reversal of profit from sale of vessels -19.4 -34.8
-0.2 0.0 0.0 Reversal of depreciation and impairment loss 14.8 14.4
14.6 14.8 19.2 Reversal of other non-cash movements 2.2 -2.5 0.8
6.3 -1.8 Dividends received 26.2 0.0 0.0 0.2 1.1 Interest income
and exchange rate gains 6.3 1.3 1.4 0.6 10.0 Interest expenses
-10.7 -10.2 -9.5 -9.4 -15.2 Income taxes paid 0.0 0.0 -3.1 0.7 0.0
Change in inventories, accounts receivables and payables -12.4 11.1
-8.7 -10.7 -5.9 Net cash inflow/(outflow) from operating activities
64.6 62.7 29.5 48.1 66.0 Cash flow from investing activities
Investment in tangible fixed assets -56.8 -18.4 -67.5 -45.3 -120.4
Purchase of enterprises and activities *) 0.0 0.0 0.0 0.0 -808.6
Sale of/investment in equity interests and marketable securities
0.0 0.0 0.0 0.0 732.4 Sale of non-current assets 89.8 62.2 -7.4 0.1
0.0 Net cash inflow/(outflow) from investing activities 33.0 43.8
-74.9 -45.2 -196.6 Cash flow from financing activities Borrowing,
mortgage debt and other financial liabilities 87.7 2.9 60.3 25.5
781.3 Repayment/redemption, mortgage debt -111.3 -58.7 -82.4 -5.2
-149.6 Dividends paid -134.1 0.0 0.0 0.0 -72.7 Purchase/disposals
of treasury shares -10.4 0.0 0.0 0.0 0.0 Cash inflow/(outflow) from
financing activities -168.1 -55.8 -22.1 20.3 559.0
Increase/(decrease) in cash and cash equivalents -70.5 50.7 -67.5
23.2 428.4 Cash and cash equivalents, beginning balance 120.3 49.8
100.5 33.0 56.2 Cash and cash equivalents, ending balance 49.8
100.5 33.0 56.2 484.6 *) See preliminary opening balance for OMI at
page 7. Reconciliation to United States Generally Accepted
Accounting Principles (US GAAP) Million USD Net income Equity Q1-Q2
2007 30 June 2007 As reported under IFRS 740.4 1,375.4 Adjustments:
Deferred gain on a sale/lease back 2.1 -11.0 Deferred tax -0.9 2.7
Total adjustments 1.2 -8.3 According to US GAAP 741.6 1,367.1 For a
review of principles and methods used in the reconciliation, please
refer to the TORM Annual Report for 2006. DATASOURCE: A/S
Dampskibsselskabet TORM CONTACT: Contact: Klaus Kjaerulff, CEO,
Telephone +45-39-17-92-00, A/S Dampskibsselskabet TORM, Tuborg
Havnevej 18, DK-2900 Hellerup - Denmark
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