13
Hafnia Tankers Ltd. Interim Report For the Three and Six Months Ended June 30, 2017 and 2016
Hafnia Tankers Ltd.
Interim Report
For the Three and Six Months Ended June 30, 2017 and 2016
Hafnia Tankers Ltd.
Condensed Consolidated Balance Sheet
(Unaudited)
1
As of
June 30 December 31
Note 2017 2016
(in thousands of U.S. dollars)
ASSETS
Current assets
Cash and cash equivalents 64,873 95,488
Accounts receivable 9,901 9,960
Prepaid expenses and other receivables 7,999 10,605
Inventories 4,854 4,484
Total current assets 87,627 120,537
Non-current assets
Vessels and dry dock 4 1,056,445 963,476
Vessels under construction 4 - 42,893
Goodwill 3 6,003 6,003
Time charters acquired 3 - 405
Contract values vessels under construction 3 - 230
Interests in associates 2,183 1,940
Loans receivables 1,850 -
Pool working capital deposit 5 29,600 26,000
Deferred tax 74 93
Total non-current assets 1,096,155 1,041,040
Total assets 1,183,782 1,161,577
LIABILITIES & EQUITY
Current liabilities
Bank loans 6 50,603 47,713
Accounts payable 4,650 1,733
Accrued expenses and other payables 8,468 9,822
Deferred revenue - 1,212
Tax payable 63 47
Total current liabilities 63,784 60,527
Non-current liabilities
Bank loans 6 525,844 496,804
Derivatives 11 3,101 639
Total non-current liabilities 528,945 497,443
Total liabilities 592,729 557,970
Shareholders' equity
Issued, authorized and paid in share capital
Share capital 339 339
Additional paid in capital 352,423 352,423
Treasury shares (14,038) (258)
Accumulated profits 45,099 42,705
Cash flow hedging reserve (2,071) (473)
Translation reserve (34) (34)
Equity holders of the parent 381,718 394,702
Non-controlling interests 209,335 208,905
Total equity 591,053 603,607
Total liabilities and equity 1,183,782 1,161,577
Hafnia Tankers Ltd.
Condensed Consolidated Statement of Profit
(Unaudited)
2
For the three months ended For the six months ended
June 30 June 30
Note 2017 2016 2017 2016
(in thousands of U.S. dollars) (in thousands of U.S. dollars)
Revenue
Revenue 44,759 50,328 98,220 104,951
44,759 50,328 98,220 104,951
Operating expenses
Vessel operating costs (20,253) (18,714) (39,319) (35,021)
Technical management fee (1,403) (1,172) (2,781) (2,318)
Charter hire 7 (5,034) (7,839) (11,595) (15,979)
Voyage expenses (243) (160) (414) (274)
Depreciation 4 (13,140) (10,472) (25,845) (20,893)
General and administrative expenses 8 (2,714) (2,972) (5,267) (5,944)
Total operating expenses (42,787) (41,329) (85,221) (80,429)
Other operating income
Other operating income 548 2,117 1,525 3,284
Share of associates profit 130 249 242 642
678 2,366 1,767 3,926
Operating profit 2,650 11,365 14,766 28,448
Financial expenses and income
Financial expenses (6,456) (4,776) (12,447) (10,134)
Financial income 77 8 96 35
(Loss) / profit before tax (3,729) 6,597 2,415 18,349
Taxes (23) (1,095) (154) (1,133)
(Loss) / profit for the period (3,752) 5,502 2,261 17,216
Attributable to:
Equity holders of the parent (2,435) 3,571 1,468 11,175
Non-controlling interests (1,317) 1,931 793 6,041
(3,752) 5,502 2,261 17,216
Earnings per share attributable to equity
holders of the parent:
Basic (loss) / earnings per share (USD) 9 (0.07) 0.11 0.04 0.33
Diluted (loss) / earnings per share (USD) 9 (0.07) 0.11 0.04 0.33
Shares used in computing earnings per
share attributable to equity holders of
the parent:
Basic (in thousands) 9 32,800 33,946 33,352 33,946
Diluted (in thousands) 9 32,800 33,980 33,382 33,970
Hafnia Tankers Ltd.
Condensed Consolidated Statement of Comprehensive Income
(Unaudited)
3
For the three months ended For the six months ended
June 30 June 30
2017 2016 2017 2016
(in thousands of U.S. dollars) (in thousands of U.S. dollars)
(Loss) / profit for the period (3,752) 5,502 2,261 17,216
Other comprehensive (loss) / income
Items that may be reclassified subsequently
to profit or (loss):
Fair value (losses) on cash flow hedges (1,854) (1,321) (3,002) (3,005)
Reclassification to profit or (loss) related to cash
flow hedges 270 271 540 541
Other comprehensive (loss) after tax (1,584) (1,050) (2,462) (2,464)
Total comprehensive (loss) / income (5,336) 4,452 (201) 14,752
Attributable to:
Equity holders of the parent (3,464) 2,890 (130) 9,576
Non-controlling interests (1,872) 1,562 (71) 5,176
(5,336) 4,452 (201) 14,752
Hafnia Tankers Ltd.
Condensed Consolidated Statement of Changes in Equity
(Unaudited)
4
Attributable to the equity holders of the parent
Share Additional Cash flow Non-
capital paid in Accumulated Treasury hedging Translation controlling Total
(in thousands of U.S. dollars) nominal capital profits shares reserve reserve Total interests equity
Balance as of January 1, 2016 339 351,743 53,077 (200) (1,767) (34) 403,158 213,445 616,603
Profit for the period - - 11,175 - - - 11,175 6,041 17,216
Other comprehensive (loss) for the period - - - - (1,599) - (1,599) (865) (2,464)
Total comprehensive income - - 11,175 - (1,599) - 9,576 5,176 14,752
Prepaid costs relating to future share issuance - (76) - - - - (76) - (76)
Share-based compensation - - 1,354 - - - 1,354 - 1,354
Dividend paid - - (30,947) - - - (30,947) - (30,947)
Reallocation of non-controlling interests - 27 10,384 - - - 10,411 (10,411) -
- (49) (19,209) - - - (19,258) (10,411) (29,669)
Balance as of June 30, 2016 339 351,694 45,043 (200) (3,366) (34) 393,476 208,210 601,686
Balance as of January 1, 2017 339 352,423 42,705 (258) (473) (34) 394,702 208,905 603,607
Profit for the period - - 1,468 - - - 1,468 793 2,261
Other comprehensive (loss) for the period - - - - (1,598) - (1,598) (864) (2,462)
Total comprehensive (loss) - - 1,468 - (1,598) - (130) (71) (201)
Purchase of treasury shares - - - (13,780) - - (13,780) - (13,780)
Share-based compensation - - 1,427 - - - 1,427 - 1,427
Reallocation of non-controlling interests - - (501) - - - (501) 501 -
- - 926 (13,780) - - (12,854) 501 (12,353)
Balance as of June 30, 2017 339 352,423 45,099 (14,038) (2,071) (34) 381,718 209,335 591,053
Hafnia Tankers Ltd.
Condensed Consolidated Statement of Cash Flow
(Unaudited)
5
For the six months ended
June 30
Note 2017 2016
(in thousands of U.S. dollars)
Operating activities
Profit for the period 2,261 17,216
Depreciation 4 25,845 20,893
Amortization of time charters acquired 3 405 2,057
Share-based compensation 1,427 1,354
Financial expenses 12,447 10,134
Tax expense 154 1,133
Share of associates profit (242) 2,158
42,297 54,945
Changes in assets and liabilities:
(increase) / decrease in inventories (370) 191
Decrease in accounts receivable 59 8,415
(increase) / decrease in prepaid expenses and other receivables (1,527) 217
(increase) in loans receivables (1,850) -
(increase) in pool working capital deposit 5 (3,600) (1,400)
Decrease / (increase) in amortized financing fees 1,702 (1,119)
Increase / (decrease) in accounts payable 2,952 (139)
(decrease) in accrued expenses and other payables (1,438) (1,611)
(decrease) / increase in deferred income (1,212) 378
(5,284) 4,932
Financial expenses paid (12,363) (12,320)
Taxes paid (119) (38)
Net cash inflow from operating activities 24,531 47,519
Investing activities
Payments for vessels under construction (71,140) (49,783)
Payments for vessels including drydock (4,549) (2,035)
Net cash (outflow) from investing activities (75,689) (51,818)
Financing activities
Bank loan repayment (25,854) (45,762)
Draw down on credit facility 60,375 70,517
Cost relating to share issuance - (76)
Prepaid financing fee (163) (1,780)
Dividend paid - (30,947)
Purchase of treasury shares (13,780) -
Net cash inflow / (outflow) from financing activities 20,578 (8,048)
Net cash flow from operating, investing and financing activities (30,580) (12,347)
Cash and cash equivalents at January 1 95,488 122,856
Effects of exchange rate changes on the balance of cash held in foreign
currencies (35) (35)
Cash and cash equivalents at June 30 64,873 110,475
Hafnia Tankers Ltd.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
6
(All amounts other than share data are provided in thousands of U.S. dollars, unless otherwise indicated)
1 — General Information
Hafnia Tankers Ltd. (the “Company”) is a private limited company incorporated on October 15, 2013 in the Republic of
the Marshall Islands.
The Company and its subsidiaries (together, the “Group”) provide seaborne transportation of petroleum products
worldwide.
The Company currently holds Class A Units representing approximately 64.9% of the outstanding membership interests
of the Company’s direct subsidiary Hafnia Tankers LLC, while the balance of Hafnia Tankers LLC’s outstanding
membership interests consists of exchangeable Class B and Class C Units held by existing investors representing an
interest of approximately 34.8% and 0.3%, respectively, which are presented as non-controlling interests in the
Company’s financial statements.
2 — Accounting Policies
Basis of Preparation
These unaudited condensed consolidated financial statements for the three and six months ended June 30, 2017 and
2016 have been prepared in accordance with International Accounting Standard (“IAS”) 34 “Interim Financial
Reporting” as issued by the International Accounting Standards Board (“IASB”). Certain information and footnote
disclosures required by International Financial Reporting Standards as issued by the IASB (“IFRS”) for a complete set
of annual financial statements have been omitted, and therefore, these unaudited condensed consolidated financial
statements should be read in conjunction with the Group’s annual consolidated financial statements for the year ended
December 31, 2016.
Accounting Policies
The same accounting policies and methods of computation have been followed in these condensed consolidated
financial statements as were applied in the preparation of the Group’s financial statements for the year ended December
31, 2016, except for the adoption of accounting policies required by IFRS standards effective for accounting periods
beginning after January 1, 2017. The new standards have not had any material effect on the Group’s financial
statements.
Accounting Standards and Interpretations Not Yet Adopted
The IASB has issued new or revised accounting standards (IAS and IFRS) and interpretations (IFRICs) that are not
compulsory for the Group in the preparation of the financial statements for the current period. None of them are
expected to have a material impact on the financial reporting for the Group.
Hafnia Tankers Ltd.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
7
3 — Intangible Assets
Contract values
vessels under Time charters
(in thousands of U.S. dollars) Goodwill construction acquired Total
Cost
Balance at January 1, 2016 6,003 26,549 12,333 44,885
Addition - - - -
Disposals - - (9,501) (9,501)
Cost at December 31, 2016 6,003 26,549 2,832 35,384
Accumulated amortization
Balance at January 1, 2016 - (22,270) (8,192) (30,462)
Amortization - (4,049) (3,736) (7,785)
Disposals - - 9,501 9,501
Accumulated amortization at December 31, 2016 - (26,319) (2,427) (28,746)
Carrying amount at December 31, 2016 6,003 230 405 6,638
Cost
Balance at January 1, 2017 6,003 26,549 2,832 35,384
Addition - - - -
Disposals - (26,549) (2,832) (29,381)
Cost at June 30, 2017 6,003 - - 6,003
Accumulated amortization
Balance at January 1, 2017 - (26,319) (2,427) (28,746)
Amortization - (230) (405) (635)
Disposals - 26,549 2,832 29,381
Accumulated amortization at June 30, 2017 - - - -
Carrying amount at June 30, 2017 6,003 - - 6,003
Goodwill has been allocated for impairment testing purposes to the following cash-generating units (CGUs), short-
range (“SR”), medium-range (“MR”) and long-range 1 (“LR1”). As of June 30, 2017 the value in use test for the SR,
MR and LR1 CGUs was greater than its carrying amount and thus no impairment losses have been recognized during
the period ended June 30, 2017.
Contract values for vessels under construction are related to newbuild contracts which were acquired as a result of the
merger between BTS Tanker Partners Limited and Hafnia Tankers LLC on December 31, 2013 (the “Combination”).
The value of the contracts is added to the cost of vessels under construction on a straight line until the time when the
vessels are delivered. The final vessel was delivered in the second quarter of 2017.
Time charters acquired are related to time charter contracts which were acquired as a result of the Combination. The
value of the contracts is amortized on a straight line over the remaining contract period. The amortization expense of
USD 405 for the period ended June 30, 2017 is recognized as charter hire. The final time charter contract acquired ran
until the second quarter of 2017.
Hafnia Tankers Ltd.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
8
4 — Tangible Assets
Vessels under
(in thousands of U.S. dollars) Vessels Dry dock construction Total
Cost
Balance at January 1, 2016 890,029 24,636 96,393 1,011,058
Additions 751 5,756 103,082 109,589
Transfers 153,382 3,200 (156,582) -
Disposals - (2,574) - (2,574)
Cost at December 31, 2016 1,044,162 31,018 42,893 1,118,073
Accumulated depreciation
Balance at January 1, 2016 (62,226) (7,194) - (69,420)
Depreciation (39,185) (5,673) - (44,858)
Disposals - 2,574 - 2,574
Accumulated depreciation at December 31, 2016 (101,411) (10,293) - (111,704)
Carrying amount at December 31, 2016 942,751 20,725 42,893 1,006,369
Cost
Balance at January 1, 2017 1,044,163 31,018 42,893 1,118,074
Additions 24 4,525 71,370 75,919
Transfers 111,863 2,400 (114,263) -
Disposals - (1,639) - (1,639)
Cost at June 30 2017 1,156,050 36,304 - 1,192,354
Accumulated depreciation
Balance at January 1, 2017 (101,410) (10,293) - (111,703)
Depreciation (22,476) (3,369) - (25,845)
Disposals - 1,639 - 1,639
Accumulated depreciation at June 30, 2017 (123,886) (12,023) - (135,909)
Carrying amount at June 30, 2017 1,032,164 24,281 - 1,056,445
Vessels are pledged to secure the bank loans of the Group.
In accordance with IAS 36 Impairment of Assets, the Company has determined its cash-generating units (CGUs) based
on the vessel classes, namely SR, MR and LR1. As of June 30, 2017, the fair value less cost to sell of the SR, MR and
LR1 vessels were less than their carrying amounts and accordingly, a value in use calculation was performed. The
significant assumptions applied in determining the value in use of the SR, MR and LR1 fleet are the future charter rates,
vessel operating expenses and the discount rate. The Company estimated the future cash flows of the SR, MR and LR1
CGUs based on a combination of the current time charter rates for the next three years and the most recent ten-year
historical average for one-year time charter rates for periods thereafter. The Company estimated the operating expenses
based on budgets agreed with third party technical managers for 2017 adjusted for an escalation factor. The future cash
flows were then discounted to their present value.
The value in use calculation was greater than the carrying amount for both SR, MR and LR1 vessels and as a result of
this testing, no impairment charge was recorded.
As of June 30, 2017, the Company had nil vessels under construction. The final vessel was delivered in the second
quarter of 2017.
Hafnia Tankers Ltd.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
9
5 — Other Assets
As of
June 30 December 31
2017 2016
(in thousands of U.S. dollars)
Deposit of working capital to the pools, long term 29,600 26,000
29,600 26,000
Participating in pools requires a deposit of working capital. The deposit ranges from USD 600 to USD 1,000 per vessel.
The deposit is paid upon entrance to the pool and is repaid when the pool is exited. The amount is non-interest bearing.
6 — Bank Loans
As of
June 30 December 31
2017 2016
(in thousands of U.S. dollars)
Current portion 50,603 47,713
Non-current portion 525,844 496,804
Carrying amount 576,447 544,517
We consider that the carrying amount of the bank loans to approximate their fair value due to the interest rates being at
floating rates.
Summary of borrowing arrangements
For the six months ended June 30, 2017, the Group drew down USD 60,375 on the USD 360,000 credit facility to
finance newbuild vessels delivered during the period.
The interest rates on the drawn amounts are LIBOR plus a margin of 2.25% and are to be repaid in quarterly
installments with a balloon payment at the end of the seventh year.
The drawn amounts are secured by first priority mortgages on vessels.
The drawn amounts are subject to the following significant financial covenants:
• Working capital above zero
• A minimum liquidity above USD 10,000 and above 5% of total debt
• Equity above USD 100,000 and above 30% of the total assets
The Group was fully compliant with all loan covenants at June 30, 2017.
The Group is subject to a minimum security value clause under which the security value must at all times exceed a
given percentage of the aggregate outstanding amount of debt. The Group was fully compliant with this clause at June
30, 2017.
The following table summarizes the current contractual maturities of the Group’s bank loans and presents the total
principal amount based on the earliest date on which the Group can be required to pay.
Hafnia Tankers Ltd.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
10
As of June 30, 2017 <1 year 1-5 years >5 years Total
(in thousands of U.S. dollars)
Bank loans 50,603 328,705 197,139 576,447
As of December 31, 2016 <1 year 1-5 years >5 years Total
(in thousands of U.S. dollars)
Bank loans 47,713 191,134 305,670 544,517
7 — Charter Hire
The table below shows the Group’s time chartered-in vessel commitments as of June 30, 2017, assuming no off-hire
days:
Optional
Earliest extension Subject to Purchase
Type Delivery re-delivery period profit split option
MR 6-13-2017 5-14-2025 2 years No Yes
MR 7-11-2017 6-11-2025 2 years No Yes
LR1 9-15-2012 9-5-2018 No No No
LR1 9-9-2012 8-29-2018 No No No
LR1 12-2-2016 8-4-2018 No No No
The cost of Charter Hire recognized as expense during the three months ended June 30, 2017 was USD 4,957 (June 30,
2016: USD 7,112).
Minimum charter hire
Year (in thousands of U.S. dollars)
2017 13,767
2018 22,131
2019 11,607
2020 11,639
2021 11,607
2022 11,607
2023 11,607
2024 11,639
2025 4,706
Total as of June 30, 2017 110,310
Total as of December 31, 2016 122,400
Hafnia Tankers Ltd.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
11
8 — General and Administrative Expenses
For the three months ended For the six months ended
June 30 June 30
2017 2016 2017 2016
(in thousands of U.S. dollars) (in thousands of U.S. dollars)
Wages and salaries (1,247) (1,478) (2,494) (2,876)
Outsourced functions (131) (92) (246) (200)
Contributions to defined contribution plans (47) (51) (96) (100)
Other social security costs (6) (6) (9) (12)
Other administrative costs (309) (269) (483) (631)
Auditors, consultants and legal fees (268) (390) (513) (771)
(2,008) (2,286) (3,841) (4,590)
Share based compensation (non-cash) (706) (686) (1,426) (1,354)
(706) (686) (1,426) (1,354)
(2,714) (2,972) (5,267) (5,944)
9 — Earnings Per Share
For the three months ended
June 30
2017 2016
(Loss) / profit for the period (USD thousand) (3,752) 5,502
Consolidated (loss) / profit attributable to non-controlling interests (USD thousands) (1,317) 1,931
(Loss) / profit attributable to equity holders of the parent (USD thousand) (2,435) 3,571
Weighted average number of shares (in thousands) 32,800 33,946
Diluted weighted average number of shares in issue (in thousands) 32,800 33,980
(Loss) / earnings per share (USD) (0.07) 0.11
Diluted (loss) / earnings per share (USD) (0.07) 0.11
For the six months ended
June 30
2017 2016
Profit for the period (USD thousand) 2,261 17,216
Consolidated profit attributable to non-controlling interests (USD thousands) 793 6,041
Profit attributable to equity holders of the parent (USD thousand) 1,468 11,175
Weighted average number of shares (in thousands) 33,352 33,946
Diluted weighted average number of shares in issue (in thousands) 33,382 33,970
Earnings per share (USD) 0.04 0.33
Diluted earnings per share (USD) 0.04 0.33
During the period ended June 30, 2017, potentially dilutive securities include 18,191,712 Class B Units and 162,911
Class C Units (June 30, 2016: 18,191,712 Class B Units and 162,911 Class C Units). The Class B Units and the Class C
Units have not had a dilutive effect for the period ended June 30, 2017. The Class B Units and the Class C Units are
exchangeable on a one-for-one basis for the Company’s common shares. The Class B Units and the Class C Units are
considered in computing diluted profit or loss per share on an “if-converted” basis. As of June 30, 2017, a total of
2,300,000 warrants, 300,000 options and 35,164 Restricted Stock Units with a potential dilutive effect has been granted
to employees (June 30, 2016: 2,300,000 warrants, 200,000 options and 16,434 Restricted Stock Units). The warrant and
options have not had a dilutive effect in 2017 as they are not in the money.
Hafnia Tankers Ltd.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
12
10 — Categories of Financial Instruments
As of
June 30 December 31
2017 2016
Financial assets (in thousands of U.S. dollars)
Cash and cash equivalents 64,873 95,488
Receivables 44,318 39,354
Financial liabilities
Bank loans 576,447 544,517
Financial liabilities measured at amortised cost 10,656 13,548
Derivative instruments in designated hedge accounting relationships 3,101 639
11 — Cash Flow Hedging
As all of the Groups debt has variable interest rates, the Group is exposed to fluctuations in interest rates.
Therefore, in order to protect the Group from significant increases in interest rates, the Group has entered into several
interest rate caps with a strike of 3% against the three months Libor rate. The interest rate caps has a notional amount
of USD 300,000 (representing 50% of peak debt) with the last cap expiring in 2023.
The underlying risk of the interest rate cap is the three month LIBOR, which is identical to the hedged risk component
(i.e. the variable interest rate on the debt).
The hedge ratio of the hedging relationship was determined based on the policy to hedge up to 75% of the exposure at
the time the hedge was established, and on the fact that Management believe that there is some correlation between
freight rates and interest rates.
The Group does not consider the hedge relationship to include sources of ineffectiveness, as there is no difference in
interest rate benchmark, or credit risk between the interest rate cap and the debt, the nominal amount of the hedging
instrument represents 50% of the exposure, and hence there is no risk of over hedging, and the term of the hedging
instrument does not exceed the term of the loans.
The Group pays quarterly interests on the interest rate cap. The fair market value of the total hedging agreements as of
June 30, 2017 was a liability of USD 3,101. The fair market value of the hedging agreement is comprised of
discounted premiums, a liability of USD 6,644, and the value of the hedging instruments, USD 3,543.
12 — Fair Value Measurements
Except for the hedge agreements entered into in the second quarter of 2015 and the first quarter of 2016, no assets nor
liabilities are measured at fair value after initial recognition, and the carrying values of financial instruments
approximate their respective fair values. Therefore, no additional disclosure related to fair value measurement has been
provided in these financial statements.
13 — Subsequent Events
There have not been any significant events after the balance sheet date at June 30, 2017.
The Condensed Consolidated Financial Statements were authorized for issuance by the Board of Directors on August
18, 2017.
