Summary of year 1996
Sales and result
The Group's revenue amounted to SEK 735.8 (714.1) million. The profit before tax was SEK 11.4 (-25.6) million. The result for the year includes capital gains on the sale of ships amounting to SEK 57.3 (19.3) million.
During the year, the freight market for VLCCs and ULCCs fluctuated from lay-up level - i.e. insufficient to cover daily running costs - to relatively acceptable freight rates providing a reasonable level of profitability for our type of tonnage. On the whole, however, the average revenues for the Concordia fleet were insufficient to achieve profitable ship operation.
The Groups two ULCCs and four of its five VLCCs as well as the product tanker STENA BARBADOS were dry-docked. Shipyard costs are evenly distributed over the years while the shortfall in income during the time spent in dry dock has been charged to the result in an amount of approx. SEK 16 (1.6) million. Dry-docking of one bulk carrier is planned for 1997.
Investmens- acquisition of univers tankerships in New York
In November, the Universe Tankships Group was acquired together with its shipping organisation, one VLCC and four bulk carriers. Universe Tankships originally built the VLCCs Concordia now owns and has managed and manned them ever since they were built. As a result of the acquisition, the Company has also secured access to the qualified and unique expertise of Universe's shore-based organisation and the good crews serving in the fleet. Through the years, this organisation has been able to operate ships very cost-efficiently and to the highest standards.
Sales of ships
Close relations
Following Concordia's acquisition of Universe, a Stena company exercised a purchase option which it had had for many years to purchase the VLCC STENA CONDUCTOR at a fixed price.
Other sales of ships
In December, a further two vessels - the bulk carriers LOCUST and PINOAK - included in the acquisition of Universe, were sold.
The capital gain on these three ship sales was SEK 57.3 million.
Liquidity and financing
Close Relations
In order to increase the Group's liquidity margin, an agreement was reached in March with the parent company of its principal owner, Stena Sessan AB, whereby Stena Sessan AB, for an annual drawdown facility fee of 0.25% until the end of 1999, will provide a credit facility amounting to USD 10 million which has been secured by the Group's assets on a subordinated basis. Interest on the amount utilised is 8% . This credit facility was not utilised during the year.
Liquidity
The Group's disposable liquid funds, including unutilised credit facilities, amounted to SEK 146.9 million (75.1) on 31-12-1996. About 50% of the tankers' cash flow is blocked in order to secure repayment of the Group's Private Placement loan of USD 110 million (SEK 755.7 million) with a number of American investors. On 31 December, 1996, USD 35 million, equivalent to SEK 223.2 million, was blocked in this way. When the Group's disposable liquid funds amount to USD 25 million, equivalent to approx. SEK 172 million, about 75% of the tankers' cash flow will be blocked.
Total assets
Total assets increased from SEK 1,525.6 million to SEK 1,574.9 million as a result of, among other things, a higher USD exchange rate. The SEK/USD exchange rate was 6.87 on 31-12-96 and 6.67 at the end of 1995. Total assets were only marginally affected by the acquisition of Universe Tankships.
Net worth
The fleet was appraised as of 31-12-1996 by three independent brokers, one American and two Norwegian. The fleet's average value according to these appraisals was USD 241.3 (231.4) million. The appraisals for 1996 include the two vessels added to the fleet, the KURE and the CONVEYOR. Net worth per share is calculated at SEK 35.48 (30.25) on the basis of these appraisals and a SEK/USD exchange rate of 6.87. The corresponding worth after full conversion is calculated at be SEK 23.73 (20.87).
The equity ratio on 31-12-1996 was 23% (21) and the adjusted equity ratio after conversion, i.e. including the estimated surplus values in the fleet, was 42% (38).