Interim report - third quarter 2007

Transcription

1 OMX Nordic Exchange Copenhagen A/S Nikolaj Plads Copenhagen K Announcement no November 2007 Interim report - third quarter 2007 The first three quarters - highlights The profit for the third quarter was USD 196 million. This corresponds to a tenfold increase compared to the same period last year. The profit for the first three quarters was USD 481 million, corresponding to DKK 2,665 million - translated at the average rate of the period - or DKK 64 per share. EBITDA for the third quarter was USD 137 million - a 180% increase compared to the same period last year. The increased operating earnings are a result of a considerable increase in the Dry Cargo Department due to high freight rates and favourable positioning. The Tanker Department's EBITDA has decreased due to a weaker spot market. In the third quarter, the Company's operations generated a positive cash flow of USD 169 million. The expansion of the fleet continues. During the quarter, the active fleet has been expanded from 191 to 213 vessels. At the same time, the number of vessels for delivery has increased from 92 to 98 vessels. After the end of the quarter, the Company has entered into considerable agreements on coverage of capacity at attractive rates in the Dry Cargo Department. By mid-november, the coverage for 2008 was 64%, while it was 31% for At the end of the period, the total theoretical Net Asset Value is estimated to be DKK 590 per share; of this, the value of the Company's 76 charter parties with purchase option is DKK 353 per share. By mid-november - according to an updated estimate - the value of the charter parties with purchase option was USD 3,574 million or DKK 448 per share. As stated in stock exchange announcement on 15 November 2007, NORDEN has made an upward adjustment of the expected annual profit for 2007 to be in the range of USD million, including realised profits from the sale of vessels of USD 165 million and a positive fair value adjustment of certain hedging instruments of USD 13 million. The upward adjustment of USD 110 million is especially due to a very strong dry cargo market. Mogens Hugo Chairman of the Board Carsten Mortensen President & CEO Today at hours (CET), NORDEN will hold an information meeting at no. 49, Amaliegade, DK-1256 Copenhagen K, where CEO Carsten Mortensen and CFO Ivar H. Myklebust will comment on the third quarter and the expectations for the whole year. Furthermore, a telephone conference will be held at hours (CET). By hours (CET) at the latest, Danish participants should dial while participants from abroad should dial or The telephone conference can also be followed live at where the accompanying presentation also is available. Further information: CEO Carsten Mortensen, tel DAMPSKIBSSELSKABET "NORDEN" A/S, 49, AMALIEGADE, 1256 COPENHAGEN K, DENMARK, CVR-NO /23

2 Contents Page Key figures and ratios for the Group 3 INTERIM REPORT Comments on the development of the period for the Group 4 Activity and earnings 4 Cash flows 4 Equity 4 Net liabilities 4 Fleet development and values 5 The share 7 Segment information 8 Dry cargo 9 Market trends 9 Financial highlights 9 Business development 10 Tankers 11 Market trends 11 Financial highlights 11 Business development 11 Expectations 13 Expectations for the rest of The Group 13 Dry cargo 13 Tankers 13 INTERIM REPORT THE THIRD QUARTER OF THE GROUP Statement 16 Accounting policies 17 Income statement 18 Income statement per quarter 19 Balance sheet 20 Cash flow statement 21 Statement of changes in equity 22 DAMPSKIBSSELSKABET "NORDEN" A/S, 49, AMALIEGADE, 1256 COPENHAGEN K, DENMARK, 2/23

3 Key figures and ratios for the Group The interim report is prepared in accordance with the International Financial Reporting Standard IAS 34 on interim reports and additional Danish disclosure requirements for interim reports of listed companies. The accounting policies are the same as applied to the annual report for KEY FIGURES ARE IN USD' /1-30/ /1-30/9 Change 1st-3rd quarter /1-31/12 INCOME STATEMENT Freight income (revenue) 1,883, , % 1,234,197 Costs -1,552, , % -1,068,132 Profit before depreciation, etc. (EBITDA) 330, , % 166,065 Profits from the sale of vessels, etc. 136,183 39, % 55,409 Depreciation -14,545-14,567 0% -20,318 Share of results of joint ventures -53 1, % 1,379 Profit from operations (EBIT) 452, , % 202,535 Fair value adjustment of certain hedging instruments 31,455-30, % -26,986 Net financials 14,861 9,414 58% 12,425 Profit before tax 498, , % 187,974 Profit for the period 480, , % 176,506 Profit for the period for the NORDEN shareholders 480, , % 176,394 BALANCE SHEET Non-current assets 589, ,769 31% 482,756 Total assets 1,312, ,800 57% 960,551 Equity (including minority interests) 1,088, ,675 69% 713,538 Non-current liabilities 120, ,851 6% 131,573 Current liabilities 104,049 79,274 31% 115,440 Invested capital 656, ,295 33% 556,567 Net interest-bearing debt -432, , % -156,971 CASH FLOWS From operating activities 343, , % 123,143 From investing activities, including vessels 16,284-82, % -84,263 From financing activities -148,257-72, % -36,266 Change in cash and cash equivalents for the period 211,419-41, % 2,614 FINANCIAL AND ACCOUNTING RATIOS Number of shares of DKK 1 each (excluding treasury shares) 41,896,900 43,336,280-3% 43,337,240 Earnings per share (EPS) (DKK) 11.3 (63) 2.5 (15) 359% 4.1 (24) Diluted earnings per share (diluted EPS) (DKK) 11.2 (62) 2.5 (15) 355% 4.1 (24) Intrinsic value per share (excluding treasury shares) (DKK 1) ) 26 (136) 15 (87) 56% 16 (93) Equity ratio 82.7% 76.6% 8% 74.0% Share price at period-end, DKK % 240 Price/intrinsic value % 2.58 Net Asset Value per share excl. purchase options for vessels (DKK 1) ) 45.0 (237) 24.2 (142) 86% 26.6 (151) Theoretical Net Asset Value per share 2) (DKK 1) ) (590) 46.9 (276) 139% 53.9 (305) USD rate at period-end % Average USD rate % ) Translated at the USD/DKK rate at period-end. 2) Please note that the calculation is subject to significant uncertainty. See the section "Fleet development and values" for further information with regard to calculation model and assumptions. The key figures and ratios are calculated in accordance with guidelines issued by the Danish Association of Financial Analysts 2005 (Anbefalinger og Nøgletal 2005). The key figures have been adjusted to reflect the reduction of the denomination of the Company's shares from DKK 20 to DKK 1. DAMPSKIBSSELSKABET "NORDEN" A/S, 49, AMALIEGADE, 1256 COPENHAGEN K, DENMARK, 3/23

4 Comments on the development of the period for the Group Activity and earnings In the third quarter, the Company's freight income (revenue) was USD 779 million, a 146% increase compared to the same period last year. The increase can primarily be attributed to higher freight rates in the dry cargo segment and an increased number of ship days in both segments. The profit before depreciation and profit from sales (EBITDA) was USD 137 million in the third quarter (2006: USD 49 million). For the first three quarters, the EBITDA was USD 330 million, corresponding to an increase of 189% compared to the same period last year. The EBITDA margin for the first three quarters amounted to 18% (14%). In the first three quarters, the profit from operations (EBIT) was USD 452 million (USD 140 million), including profits from the sale of vessels amounting to USD 136 million (USD 39 million). In the first three quarters, fair value adjustment of certain hedging instruments amounted to net USD 31 million (USD -30 million), of which USD 9 million related to bunker hedging contracts and USD 22 million related to Forward Freight Agreements (FFA). For the entire year, fair value adjustment of certain hedging instruments is estimated to be net USD 13 million (USD -27 million), based on unchanged market prices and quantities. The profit for the third quarter was USD 196 million (USD 20 million). For the first three quarters, the profit amounted to USD 481 million (USD 107 million). The result yields a rate of return on equity of 71% (p.a.). Cash flows During the third quarter, the Company's available funds increased by USD 140 million (USD 0 million). During the first three quarters, the Company's available funds increased by USD 211 million. During the first three quarters, the Company's operations generated a positive cash flow of USD 343 million, whereas the cash flows from the investing and financing activities were USD 16 million and USD -148 million, respectively. The investing activity mainly relates to investments in vessels and newbuildings of USD -255 million and proceeds from the sale of vessels of USD 273 million. The financing activity relates to repayment of loans, acquisition of treasury shares and distributed dividends for Equity The Company's equity amounted to USD 1,088 million at the end of the quarter and has thus been increased by USD 199 million in the third quarter and by USD 375 million or 53% during the first three quarters. The change in equity since the beginning of the year is primarily due to the profit of the period of USD 481 million as well as acquisition of treasury shares and distribution of dividends totalling USD -108 million. Net liabilities The Company's total net liabilities were USD 1,430 million (USD 706 million) at the end of the third quarter. The net change is primarily due to partly increased future timecharter payments (costs) and partly increased future coverage (income). Net liabilities are defined as the present value of future payments in respect of, among other things, timecharters (excluding daily operating costs), lenders and shipyards, less expected known freight payments received (excluding daily operating costs) and cash and cash equivalents. Net present values At period-end in USD million Q Q Future payments -3,577-1,575 Expected known payments received including cash and cash equivalents 2, Net liabilities -1, Equity development 1 January - 30 September USD' Equity at 1 January 713, ,203 Profit for the period 480, ,284 Acquisition/sale of treasury shares -69,335-3,597 Value adjustment, hedging instruments 757 2,907 Dividend paid -38,880-74,541 Share-based payment 1, Equity at period-end 1,088, ,675 DAMPSKIBSSELSKABET "NORDEN" A/S, 49, AMALIEGADE, 1256 COPENHAGEN K, DENMARK, 4/23

5 Fleet development and values NORDEN continued the expansion of its fleet during the third quarter. The gross fleet, consisting of the active fleet as well as vessels for delivery, amounted to 311 vessels at the end of the third quarter against 283 vessels at the end of the first halfyear. During the quarter, the core fleet of owned vessels and vessels chartered-in for more than three years expanded by 10 units to 168 vessels. During the third quarter, the Company's active dry cargo fleet expanded by 21 units to 191 units, while the number of vessels for delivery increased by 3 units. The total effect of the Company's focus on developing critical mass within the Handysize segment, which NORDEN started to do in 2006, is that 22 units now are for future delivery within this segment, including new contracts made during the third quarter for 4 owned newbuildings. At the end of the third quarter, the Company's active tanker fleet amounted to 22 units against 21 units at the end of the second quarter. During the quarter, the number of tankers for delivery to the core fleet increased by 3 units to 23 units, primarily due to the Company's focus on the MR product tanker segment. At the end of the quarter, Norient Product Pool operated a total of 41 active units, 26 of which are ice-class vessels. At the end of the quarter, the total order book of the two pool partners comprised 35 units, 7 of which are expected to be delivered during the remainder of the year. As at 30 September, the Company's 12 owned vessels and the contracts for 35 newbuildings are estimated to have an added value of USD 799 million compared to book value of the vessels and newbuilding prices. This corresponds to USD 19 (DKK 100) per share, excluding the Company's stock of treasury shares. Net Asset Value per share is hereafter totally USD 45 (DKK 237) per share against USD 24 (DKK 142) the previous year. Theoretical value of purchase options Furthermore, the Company's long-term chartered vessels with extension and purchase options are estimated to have a theoretical value of USD 2,817 million or DKK 353 per share. This is an increase of 39% compared to the first half-year of This gives a total theoretical Net Asset Value of DKK 590 per share (DKK 276). The estimated theoretical value of the charter parties with purchase option is to a considerable degree based on an assumption of the long-term freight rate level, assumed to be reached after 10 years in the model. As basis for the long-term freight rate, the Company applies the historical median rate since If the Company instead of this assumes that the long-term freight rate level corresponds to the ten-year historical average or the present newbuilding parity (i.e. the necessary rate to ensure a 10% return on investment in a newbuilding at present price levels), then the theoretical value could be estimated to be USD 3,516 million and USD 3,726 million, respectively, i.e. 25%-32% higher. The table on the next page states the different rate assumptions and values. Due to the heavy development and considerable volatility in the freight rates after the end of the quarter, the Company has chosen to update the estimated value of the charter parties with purchase option. Thus, this value had increased to USD 3,574 million or DKK 448 per share by mid-november. The valuation is based on a Black 76 model, according to which current forward rates and possible alternative developments in freight rates and the prices of vessels are simulated under assumptions of volatility, correlation between freight rates and the prices of vessels and normalised rates and prices around NORDEN's fleet At 30 September 2007 Dry Cargo Department Tanker Department Product tankers Vessel type Capesize Post-Panamax Panamax Handymax Handysize Total Aframax MR Handysize Total Size (dwt) >150, , , , , , , ,000 Total Vessels in operation Owned vessels * Chartered vessels (with purchase option) 3-11 * Chartered for at least three years Total active core fleet Other chartered vessels Total active fleet Vessels to be delivered to core fleet Newbuildings (owned) *** 12 ** Chartered vessels (with purchase option) ** Chartered for at least three years Total for delivery to core fleet Total gross fleet * Of which 1 unit sold. ** Of which 4 units are 50%-owned. *** Of which 4 units are 50%-owned and 4 sold, of this 2 units 50%-owned. DAMPSKIBSSELSKABET "NORDEN" A/S, 49, AMALIEGADE, 1256 COPENHAGEN K, DENMARK, 5/23

6 historical levels. This significant input is based on analyses of historical data for each segment. Furthermore, assumptions have been made in respect of interest rates, exchange rates and daily operating costs. Based on these assumptions, the utilisation of extension and purchase options is optimised for each vessel in each scenario. NORDEN applies freight rate curves per segment. The freight rate curve is based on three assumptions. For the first five years, market rates are applied. For the long-term level from year 10, the historical median since 1989 is applied. The intervening rates are straight-line interpolated. The model applies a constant volatility in the freight rates per segment. The values of the charter parties and the corresponding volatilities are thus primarily dependent on the short-term freight rates. The majority of the values are denominated in USD and concentrated in the short end of the freight rate curve. The valuation does not include the value of the current hedging of charter parties. Purchase options denominated in JPY are translated at the forward USD/JPY rate. The calculation of the theoretical Net Asset Value is subject to significant uncertainty, however. Fleet values (before tax) At 30 September 2007 Owned (active and newbuildings) USD million Calculated value of charter parties with purchase option USD million Assumed volatility Carrying amount/ cost Freight rates (based on 1-year T/C) Tonnage values (based on 5-year secondhand prices) Market Charter Purchase Dry cargo Number value* Number party option Total Capesize % 17% Post-Panamax % 18% Panamax % 18% Handymax ,267 19% 15% Handysize % 15% Tankers Aframax MR % 13% Handysize Total 47 1,469 2, ,751 1,066 2, * Including charter party, if any. Scenarios for calculated value of charter parties with purchase option At 30 September 2007 USD mio. Tankers Aframax MR 16, , , , Handysize Total - 2,817-3,516-3,726-4,587 DKK per share * Source: Clarksons. ** Source: Fearnleys. Base case Values with alternative assumptions for the long-term freight rate Long-term Total value Long-term Total value Long-term Total value Long-term Total value freight rate of charter freight rate of charter freight rate of charter freight rate of charter = 18-year party and = 10-year party and = newbuilding party and = 5-year party and median purchase average purchase parity purchase average purchase Dry cargo Capesize (USD/day)* 18,343 option 407 (USD/day)* 32,422 option 482 (USD/day)** 33,493 option 485 (USD/day)* 50,397 option 578 Post-Panamax 16, , , , Panamax 11, ,600 1,104 19,701 1,173 26,541 1,426 Handymax 10,435 1,267 16,318 1,517 15,732 1,571 23,414 1,897 Handysize 8, , , , The determination of the theoretical value of the charter parties including purchase option is subject to considerable uncertainty, the value being dependent on the future development in freight rates and tonnage values as well as deviations in other assumptions. DAMPSKIBSSELSKABET "NORDEN" A/S, 49, AMALIEGADE, 1256 COPENHAGEN K, DENMARK, 6/23

7 Activity with regard to the core fleet Third quarter 2007 Contracted NORDEN's during Vessel type Delivery share Newbuildings Q3 Handymax Q % Q3 Handysize bulkcarrier Q % Q3 Handysize bulkcarrier Q % Q3 Handysize bulkcarrier Q % Q3 Handysize bulkcarrier Q % Q3 MR tanker Q % Q3 MR tanker Q % Q3 MR tanker Q % Long-term charters with purchase option Q3 Handymax Q % Q3 Handysize bulkcarrier Q % Q3 MR tanker Q % Long-term charters without purchase option Q3 Handymax Q Q3 Handymax Q Sale (agreed upon or recognised during the third quarter) Q3 Panamax Q % Q2 Handymax Q % Q3 Handymax N/B Q % Q3 Handymax N/B Q % Due to the capital reduction, the Company's Articles of Association have been amended with regard to the amount of share capital. The Company's share capital hereafter consists of 44,600,000 shares of DKK 1 per share. The capital reduction does not affect the Company's equity. Further major events On 1 September, Ivar H. Myklebust started as new CFO (head of finance) and member of Management. Ivar H. Myklebust succeeds Jens Fehrn-Christensen, who had chosen to retire. NORDEN has sold a product tanker for delivery in the fourth quarter of 2007, when the profit from the sale of USD 25 million after tax will be recognised. Furthermore, a Handymax bulkcarrier and a product tanker with a total profit from sale of approximately USD 63 million after tax were sold for delivery in the first and third quarter of 2008, respectively. The share The price of the NORDEN share has increased by 56% from the end of the second quarter to the end of the third quarter, when the price was DKK 558 per share with nominal denomination DKK 1. By mid-november, NORDEN is among the 10 most traded shares at OMX Nordic Exchange Copenhagen A/S. In the third quarter, the average daily turnover for the share amounted to DKK 113 million (source: OMX). At the Company's extraordinary general meeting on 20 June 2007, it was decided to reduce the Company s share capital by nominally DKK 1,475,000 through cancellation of 1,475,000 treasury shares. The statutory notice to creditors has now been observed, and the capital reduction has been registered with the Danish Commerce and Companies Agency. DKK per share Turnover Share price Share price and liquidity Million DKK 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov 0 DAMPSKIBSSELSKABET "NORDEN" A/S, 49, AMALIEGADE, 1256 COPENHAGEN K, DENMARK, 7/23

8 Segment information Third quarter 2007 Third quarter 2006 USD'000 Dry Not Dry Not cargo Tankers allocated Total cargo Tankers allocated Total Freight income 734,900 44, , ,608 38, ,828 Costs -603,195-35,290-3, , ,439-23,756-1, ,687 Profit before depreciation, etc. (EBITDA) 131,705 9,126-3, ,458 36,169 14,464-1,492 49,141 Profits from sale of vessels, etc. 20, , Depreciation -2,740-1, ,501-2,790-2, ,255 Share of results of joint ventures Profit from operations (EBIT) 149,823 6,993-3, ,159 33,465 12,967-1,892 44,540 Fair value adjustment of certain hedging instruments 39, ,280-25, ,021 Net financials 0 0 6,357 6, ,054 2,054 Profit before tax 189,103 6,993 2, ,796 7,706 12, ,573 Profit for the period 189,103 6, ,650 7,706 12, ,733 First to third quarter 2007 First to third quarter 2006 USD'000 Dry Not Dry Not cargo Tankers allocated Total cargo Tankers allocated Total Freight income 1,740, , ,883, ,902 93, ,529 Costs -1,446,434-96,153-10,009-1,552, ,545-55,468-4, ,208 Profit before depreciation, etc. (EBITDA) 294,047 46,443-10, ,481 80,357 38,159-4, ,321 Profits from sale of vessels, etc. 59,089 77, ,183 39, ,101 Depreciation -9,136-4, ,545-7,700-5,695-1,172-14,567 Share of results of joint ventures , ,476 Profit from operations (EBIT) 343, ,193-10, , ,720 33,986-5, ,331 Fair value adjustment of certain hedging instruments 31, ,455-29, ,000 Net financials ,861 14, ,414 9,414 Profit before tax 375, ,193 3, ,382 81,982 33,724 4, ,745 Profit for the period 375, ,193-13, ,820 81,982 33,724-8, ,284 DAMPSKIBSSELSKABET "NORDEN" A/S, 49, AMALIEGADE, 1256 COPENHAGEN K, DENMARK, 8/23

9 Dry cargo Market trends During the third quarter, the dry cargo market almost only experienced increases. All-in-all, at the end of the quarter, the freight market was 51% up on the beginning of the quarter measured by the Baltic Dry Index (BDI). In the third quarter, the BDI was on average 107% up on the same period last year. The spot as well as the period market experienced considerable increases. Since the end of the quarter, the BDI has increased further, and by the end of October - for the first time ever - it surpassed 11,000. By mid-november, the BDI was approximately 10,900. The market is still basically driven by fundamentally strong growth in the demand for raw materials all over the world. Especially China's imports of iron ore carry weight, but also the trade in raw materials, which historically has been of less importance, increasingly influences the tonnage demand positively. Furthermore, great pressure on capacity and infrastructure in general leads to changes in transport patterns, and the total effect is an increased demand for vessel capacity. Not all factors were positive however. A change compared to the first half-year was that China no longer was net importer of coal in the third quarter, and the bottleneck problems, which from the beginning of the year - especially in Australia - have been characterising the dry cargo market and contributed to the rate increases, have been easing during the third quarter. According to R.S. Platou, the tonnage supply in the third quarter increased by 6.5% compared to the same period last year while the tonnage demand increased by 12.1%. The growth in demand consists of 8.2% organic growth while the remaining growth is attributed to increased transport distances and bottlenecks. Prices of newbuildings as well as secondhand tonnage within all segments increased to new record-high levels, which underlines the strong expectations for the future. During the quarter, the prices of Handymax newbuildings as well as secondhand tonnage have increased by 10% and 30%, respectively (source: Clarksons). The present rate levels cause considerably higher prices of secondhand tonnage with short-term delivery instead of new tonnage with 3-4 years of delivery. At the end of the quarter, the price of a three-year Handymax was USD 72 million whereas the price of a newbuilding with future delivery was USD 46 million (source: Clarksons). Another effect of the favourable freight market is a stronger order book, which at the end of the quarter corresponded to 50% of the existing fleet. With regard to the future dry cargo rates, the expectations of the market are still at a very high level. By mid-november, the one-year T/C rate for Supramax was thus approximately USD 68,000 per day while the three-year T/C rate was approximately USD 49,000 per day. Financial highlights For the third quarter, the Dry Cargo Department's EBITDA was USD 132 million (USD 36 million), which is almost four times as much as in the same period last year. The result is an EBITDA margin of 18% (13%). This is due to substantially higher realised T/C equivalents and a considerably increased number of ship days. NORDEN took advantage of the favourable prices of secondhand tonnage to secure considerable profits from the sale of vessels. During the third quarter, the Company entered into agreements on the sale of totally 3 dry cargo vessels, 2 of which were newbuildings. The profit for the quarter includes realised profits from the sale of 1 vessel of totally USD 21 million (USD 0 million). In the third quarter, the total profit from operations (EBIT) was USD 150 million (USD 33 million). During the first three quarters of the year, the Dry Cargo Department's EBITDA was USD 294 million (USD 80 million). The profit has been obtained in historically favourable freight markets and at the same time reflects the Company's increased Baltic Dry Index 12,000 10,000 8,000 6,000 4,000 2, Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Employment and rates, dry cargo Number of ship days in NORDEN Incl. single voyages Excl. single voyages T/C equivalent NORDEN Spot T/C avg. market Third quarter 2007 Capesize , ,697 Panamax 8,559 8,352 41,962 61,871 Handymax 6,277 5,745 36,636 50,625 Handysize 1,187 1,159 30,446 34,905 Total 16,506 15,739 Third quarter 2006 Capesize ,555 51,772 Panamax 3,491 3,307 21,573 27,357 Handymax 6,268 5,537 20,793 25,727 Handysize ,021 16,842 Total 10,551 9,598 Third quarter 2007 vs. third quarter 2006 Capesize 31% 31% 6% 125% Panamax 145% 153% 95% 126% Handymax 0% 4% 76% 97% Handysize 181% 200% 90% 107% Total 56% 64% DAMPSKIBSSELSKABET "NORDEN" A/S, 49, AMALIEGADE, 1256 COPENHAGEN K, DENMARK, 9/23

10 activity, e.g. by the doubling of the capacity within the Panamax segment where especially a considerably expanded fleet of short-term chartered vessels contributed to the earnings. Including the profits from the sale of 3 Handymax vessels totalling USD 59 million (USD 39 million), the profit from operations (EBIT) was USD 344 million (USD 112 million) in the first three quarters of the year. Measured by the number of ship days, the fleet capacity increased by 56% compared to the same period last year. The increase has primarily taken place in the Panamax segment and furthermore been due to the involvement in the Handysize segment. In the Company's largest segments, Handymax and Panamax, the realised T/C equivalents were up on the level for the third quarter of 2006 by 76% and 95%, respectively. the period within the Capesize, Panamax and Handymax segments. Thus, the coverage for 2008 had increased to 64% by mid-november, while it was 31% for Due to the volatile market and the considerable changes in the Company's overall position after the end of the quarter, this report contains a separate table on page 15 stating the capacity and coverage by mid-november. To exemplify the coverage that the Company has secured, two agreements for the employment of 2 Capesize vessels can be singled out - effective from the second and third quarter of 2008, respectively, these have been chartered-out for five years at rates in the range of USD 65,000 per day. These agreements will make a profit for the Company in the region of USD 190 million in the five years and in this way contribute to the Company's focus on securing stable, long-term earnings. Business development During the third quarter, the Company expanded the core fleet within the Handymax and Handysize segments, in which contracts were made for the future delivery of another 9 units. Of these, 5 units were contracted as owned newbuildings for delivery in the period Throughout the quarter, NORDEN continued to charter-in more vessels on short-term charter parties within the Panamax segment, and has thus taken advantage of the very favourable freight markets. At the end of the period, the department had covered 87% (2006: 83%) of the total known capacity for 2007 measured by the number of ship days. At this point, the coverage for 2008 was 50%. However, after the end of the quarter, the Company has taken advantage of the very high rate levels to cover a considerable part of the capacity at attractive levels. In this way, the Company has covered more than 10,000 ship days for Employment and rates, dry cargo Number of ship days in NORDEN Incl. single voyages Excl. single voyages T/C equivalent NORDEN Spot T/C avg. market First - third quarter 2007 Capesize 1,505 1,505 42,665 96,717 Panamax 20,816 20,390 37,260 48,259 Handymax 18,015 16,599 31,510 41,274 Handysize 2,890 2,840 26,265 28,605 Total 43,226 41,334 First - third quarter 2006 Capesize 1,145 1,102 38,643 39,513 Panamax 9,514 8,401 20,304 21,021 Handymax 18,168 15,669 18,616 20,715 Handysize ,269 13,922 Total 29,249 25,558 First - third quarter 2007 vs. first - third quarter 2006 Capesize 31% 37% 10% 145% Panamax 119% 143% 84% 130% Handymax -1% 6% 69% 99% Handysize 585% 636% 61% 105% Total 48% 62% DAMPSKIBSSELSKABET "NORDEN" A/S, 49, AMALIEGADE, 1256 COPENHAGEN K, DENMARK, 10/23

11 Tankers Market trends During the third quarter, the product tanker market decreased by 19%, measured by the Baltic Clean Tanker Index (BCTI). The BCTI was on average 30% down on the same period last year. During the third quarter, the BCTI was on average 21% down on the second quarter. The decreased rate level was especially reflected in the Handysize segment, in which the average spot rates were 50% down on the second quarter. Within the Aframax segment, the average spot rates decreased 35%. The weak spot market has started to affect the prices of secondhand tonnage as well as newbuildings, stagnating after increases in the first half of the year. The asset prices and period rates, however, are still at high levels. The expectations of the market with regard to the oil price expressed by the forward curve on oil have changed during the quarter. In the first half-year, the forward price of oil was higher than the oil price in the spot market (backwardation). This was an incentive to build oil stocks in the short term. Today, the market expects a declining price in future and therefore oil stocks are now being drained. During the third quarter, the American gasoline stocks were at the lowest level in five years. Even though scrapping has increased by 65% during the first three quarters compared to the entire year of 2006, the scrapping volume in the third quarter was low, only 0.3% of the fleet was scrapped. This was at the same level as the second quarter. The tonnage supply within NORDEN's segments increased by 1.8% during the quarter (source: SSY). Financial highlights During the third quarter, the Tanker Department's EBITDA decreased to USD 9 million (USD 14 million), corresponding to an EBITDA margin of 21%. This is primarily due to reduced realised T/C equivalents in the MR segment and an increased cost level within the Aframax segment caused by the change from owned to chartered tonnage. NORDEN did not sell any tankers in the third quarter. The total profit from operations (EBIT) was thus USD 7 million (USD 13 million). During the first three quarters of the year, the Tanker Department obtained an EBITDA of USD 46 million (USD 38 million) as a result of higher earnings due to increased spot market activity within the Aframax segment and that the Company's Handysize product tankers have performed better than the market. Due to the Company's strategic decision to reduce the capital binding in the Aframax segment, 2 Aframax tankers were sold in the first half-year. Together with the profit from the sale of 1 Handysize product tanker, NORDEN achieved profits from sale of USD 77 million (USD 0 million). For the first three quarters of the year, profit from operations (EBIT) was thus USD 119 million (USD 34 million). Business development Within the MR product tanker segment, the Company has had an active quarter. The Company ordered 3 newbuildings and 1 long-term charter with purchase option for delivery in 2009 and The Company thus follows the strategy of making profits in the short term and expanding the fleet in the long term. The fleet capacity, measured by the number of ship days, increased by 25% compared to the same period last year. The increase happened within the product tanker segments, in which the activity was increased by 39% compared to the same period last year. At the end of the quarter, the department had covered 50% (2006: 47%) of the total known capacity for 2007 measured by the number of ship days. At this point, the coverage for 2008 was 31%, an increase compared to the end of the first half-year of 2007, when the Company had covered 27% of the total known capacity. Baltic Clean Tanker Index 1,800 1,600 1,400 1,200 1, Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Employment and rates, tankers Number of ship days in NORDEN Total number of ship days Of which employed in the spot market T/C equivalent NORDEN 12 months T/C avg. market Third quarter 2007 Aframax ,320 31,885 Product tanker - MR ,717 24,952 Product tanker - Handysize ,841 23,317 Total 1,810 1,149 Third quarter 2006 Aframax ,161 33,731 Product tanker - MR ,983 26,692 Product tanker - Handysize ,528 23,077 Total 1, Third quarter 2007 vs. third quarter 2006 Aframax -19% 340% 5% -5% Product tanker - MR 35% 2% -9% -7% Product tanker - Handysize 42% 8% 1% 1% Total 25% 29% DAMPSKIBSSELSKABET "NORDEN" A/S, 49, AMALIEGADE, 1256 COPENHAGEN K, DENMARK, 11/23

12 Norient Product Pool (NPP) has decided to operate in the LR1 segment, i.e. product tankers of 60-75,000 dwt. For the time being, NORDEN has chartered-in 1 LR1 product tanker for a three-year period and made this capacity available to NPP. During 2008, NPP will expand with a fleet of 5 LR1 vessels. All vessels are ice-class 1A, and the vessels will operate globally. The new activities within the LR1 segment will make NPP's range of products to the customers wider and thereby contribute positively to NPP's total market position. Employment and rates, tankers Number of ship days in NORDEN Total number of ship days Of which employed in the spot market T/C equivalent NORDEN 12 months T/C avg. market First - third quarter 2007 Aframax ,341 31,885 Product tanker - MR 1,642 1,002 26,809 24,952 Product tanker - Handysize 2,557 1,560 25,537 23,317 Total 4,965 3,290 First - third quarter 2006 Aframax ,798 32,526 Product tanker - MR 1, ,676 26,295 Product tanker - Handysize 1,748 1,168 22,102 24,167 Total 3,885 2,069 First - third quarter 2007 vs. first - third quarter 2006 Aframax -13% 1074% 51% -2% Product tanker - MR 31% 19% 4% -5% Product tanker - Handysize 46% 34% 16% -4% Total 28% 59% DAMPSKIBSSELSKABET "NORDEN" A/S, 49, AMALIEGADE, 1256 COPENHAGEN K, DENMARK, 12/23

13 Expectations Expectations for the rest of 2007 The Group As stated in stock exchange announcement no. 38 dated 15 November 2007, NORDEN made an upward adjustment of the expected annual profit for 2007 to be in the range of USD million, including realised profits from the sale of vessels of USD 165 million and a positive fair value adjustment of certain hedging instruments of USD 13 million. The upward adjustment of USD 110 million is especially due to a very strong dry cargo market. The estimated fair value adjustment of certain hedging instruments is based on known contracts and prices at the end of the third quarter. The cash flow effect of gross investments for the entire year 2007 remains in the range of USD million. Dry cargo The Dry Cargo Department now expects an EBIT in the range of USD million, including profits from the sale of vessels of USD 63 million. The previous expectations were USD million. The upward adjustment of USD 110 million is due to a very strong dry cargo market. Forward-looking statement The report includes forward-looking statements reflecting the management s current perception of future trends and financial performance. The statements for 2007 and the years to come naturally carry some uncertainty, and NOR- DEN's actual results may therefore differ from the expectations. Factors that may cause the results achieved to differ from the expectations are, among other things, but not exclusively so, changes in the macro-economic and political conditions especially in the Company s key markets, changes in NORDEN's assumptions of rate development and operating costs, volatility in rates and vessel prices, changes in legislation, possible interruptions in traffic and operations as a result of external events, etc. The interim report is not intended to be a solicitation to purchase or trade in shares in Dampskibsselskabet "NORDEN" A/S. Tankers The Tanker Department now expects an EBIT in the range of USD million, including profits from the sale of vessels of USD 103 million. The previous expectations on 4 October 2007 were an EBIT of USD million. The downward adjustment of USD 5 million is due to a weaker tanker market. Expectations for 2007 USD million Dry cargo Tankers Total EBITDA Realised profits from the sale of vessels EBIT Fair value adjustment of certain hedging instruments Profit after tax The report is published in the Danish and the English languages. In the event of any discrepancies, the Danish version shall be governing. DAMPSKIBSSELSKABET "NORDEN" A/S, 49, AMALIEGADE, 1256 COPENHAGEN K, DENMARK, 13/23

14 Capacity and coverage, 30 September 2007 Dry cargo Ship days 2007 Q Q Gross capacity Costs for gross capacity* Capesize 460 2,196 1,895 12,459 16,340 31,263 19,647 16,497 Panamax 9,274 16,949 7,181 75,296 42,467 37,535 15,496 15,865 Handymax 5,463 13,547 10, ,409 25,271 15,277 11,828 12,020 Handysize 1,487 3,946 4,385 99,130 21,322 17,810 14,581 10,940 Total 16,684 36,638 23, ,293 34,231 26,804 14,051 12,790 Coverage Revenue from coverage Capesize ,631-1, ,383 56,617 47,283 44,619 Panamax -7,820-9,457-2,373-1,482 47,548 45,705 33,842 27,730 Handymax -5,250-5,661-1, ,668 28,482 20,664 25,080 Handysize -1, ,282 19,855 18,861 25,013 Total -14,532-17,286-5,340-2,599 40,463 40,292 31,753 28,232 Net capacity Capesize ,241 Panamax 1,454 7,491 4,808 73,814 Handymax 213 7,886 8, ,540 Handysize 485 3,409 4,256 99,100 Total 2,152 19,352 18, ,694 Coverage in % Capesize 100% 74% 56% 2% Panamax 84% 56% 33% 2% Handymax 96% 42% 17% 1% Handysize 67% 14% 3% 0% Total 87% 47% 22% 1% *Costs for owned vessels are stated as calculated T/C equivalent. NORDEN's avg. T/C equivalents (USD per day) Tankers Ship days 2007 Q Q Gross capacity Costs for gross capacity* Aframax ,785 28, MR 598 2,294 1,855 42,443 15,488 15,797 15,324 16,343 Handysize 1,005 4,838 5,900 55,884 14,991 15,831 15,564 12,100 Total 1,787 7,350 7,755 98,326 16,578 16,205 15,507 13,932 Coverage Revenue from coverage Aframax , MR ,629 21,918 21,932 21,995 Handysize , ,983 21,731 21,665 20,722 Total , ,035 21,790 21,742 21,613 Net capacity Aframax MR 327 1,585 1,642 42,399 Handysize 442 3,298 5,376 55,865 Total 898 5,100 7,019 98,264 Coverage in % Aframax 30% 0% 0% 0% MR 45% 31% 11% 0% Handysize 56% 32% 9% 0% Total 50% 31% 9% 0% *Costs for owned vessels are stated as calculated T/C equivalent. NORDEN's avg. T/C equivalents (USD per day) DAMPSKIBSSELSKABET "NORDEN" A/S, 49, AMALIEGADE, 1256 COPENHAGEN K, DENMARK, 14/23

15 Capacity and coverage, 15 November 2007 Dry cargo Ship days 15/11-31/ /11-31/ Gross capacity Costs for gross capacity* Capesize 235 2,165 1,926 12,609 16,340 30,194 21,035 16,493 Panamax 5,232 17,588 7,329 75,179 46,974 37,786 15,700 15,871 Handymax 3,074 12,619 10, ,459 32,811 17,121 11,811 12,053 Handysize 752 4,601 5, ,389 20,555 19,737 15,113 11,091 Total 9,293 36,973 24, ,635 39,377 28,042 14,366 12,843 Coverage Revenue from coverage Capesize ,164-1,788-2,635 40,383 58,733 54,774 63,754 Panamax -4,829-13,127-3,013-1,785 56,460 53,186 38,814 32,328 Handymax -3,138-7,357-2,774-2,494 36,411 33,817 28,611 33,613 Handysize ,242 29,324 18,877 25,013 Total -8,873-23,639-7,703-6,944 47,565 46,666 38,513 44,683 Net capacity Capesize ,974 Panamax 403 4,460 4,316 73,394 Handymax -64 5,262 7, ,965 Handysize 80 3,610 4, ,359 Total ,333 16, ,691 Coverage in % Capesize 100% 100% 93% 21% Panamax 92% 75% 41% 2% Handymax 102% 58% 27% 2% Handysize 89% 22% 3% 0% Total 95% 64% 31% 2% *Costs for owned vessels are stated as calculated T/C equivalent. NORDEN's avg. T/C equivalents (USD per day) Tankers Ship days 15/11-31/ /11-31/ Gross capacity Costs for gross capacity* Aframax ,785 28, MR 306 2,294 1,855 42,443 15,488 15,797 15,324 16,343 Handysize 549 4,838 5,900 55,884 15,315 15,831 15,564 12,100 Total 949 7,350 7,755 98,326 16,706 16,205 15,507 13,932 Coverage Revenue from coverage Aframax , MR ,223 21,918 21,932 21,995 Handysize , ,543 21,744 21,665 20,722 Total , ,012 21,799 21,742 21,613 Net capacity Aframax MR 172 1,585 1,642 42,399 Handysize 233 3,313 5,376 55,865 Total 471 5,116 7,019 98,264 Coverage in % Aframax 29% 0% 0% 0% MR 44% 31% 11% 0% Handysize 58% 32% 9% 0% Total 50% 30% 9% 0% *Costs for owned vessels are stated as calculated T/C equivalent. NORDEN's avg. T/C equivalents (USD per day) DAMPSKIBSSELSKABET "NORDEN" A/S, 49, AMALIEGADE, 1256 COPENHAGEN K, DENMARK, 15/23

16 INTERIM REPORT THE THIRD QUARTER OF THE GROUP Statement The Board of Directors and Management today reviewed and approved the interim report for the third quarter of 2007 of Dampskibsselskabet "NORDEN" A/S. The interim report is prepared in accordance with the International Financial Reporting Standard IAS 34 on interim reports and the general Danish financial requirements. In line with previous policies, the interim report is not audited or auditor-reviewed. We consider the accounting policies applied to be appropriate and the accounting estimates made to be adequate. Furthermore, we find the overall presentation of the interim report to present a true and fair view. In our opinion, the interim report therefore gives a true and fair view of the assets and liabilities of the Group, the financial position as well as the result of the Group's activities and cash flows for the interim period. Copenhagen, 29 November 2007 Management Carsten Mortensen President & CEO Ivar H. Myklebust Executive Vice President & CFO Board of Directors Mogens Hugo Chairman Alison J. F. Riegels Vice Chairman Einar K. Fredvik Erling Højsgaard Dag Rasmussen Anton Kurt Vendelbo Christensen Egon Christensen Ole Clausen DAMPSKIBSSELSKABET "NORDEN" A/S, 49, AMALIEGADE, 1256 COPENHAGEN K, DENMARK, 16/23

17 Accounting policies Basis of accounting The interim report comprises the summarised consolidated accounts for Dampskibsselskabet "NORDEN" A/S. Accounting policies The interim report is prepared in accordance with the International Financial Reporting Standard IAS 34 on interim reports and additional Danish disclosure requirements for interim reports of listed companies. The accounting policies are the same as applied to the annual report for 2006, prepared in accordance with the international financial reporting standards (IFRS). New IAS/IFRSs Effective on 1 January 2007, NORDEN has implemented IFRS 7 with regard to disclosures on financial instruments, including financial risks. The amendment affects neither profit nor equity. New financial reporting standards IASB has adopted the following new financial reporting standards and interpretive guidance, taking effect on 1 January 2007 or at a later date and considered relevant to NORDEN: IFRS 8 on segment information and related amendments to IAS 34 (taking effect on 1 January 2009), involving that the segment information has to be based on the internal management's reporting. Furthermore, IASB has adopted amendments to IAS 1 on the presentation of statement of changes in equity etc. in the annual report as well as amendments to IAS 23, involving that borrowing costs have to be part of the cost price of certain tangible assets. The amendments to IAS 1 and IAS 23 have not been adopted by the EU yet. IFRS 8 and IAS 23 will be more closely examined to determine which disclosures are required. DAMPSKIBSSELSKABET "NORDEN" A/S, 49, AMALIEGADE, 1256 COPENHAGEN K, DENMARK, 17/23

18 Income statement USD' /1-30/9 1/1-30/9 1/7-30/9 1/7-30/9 Freight income (revenue) 1,883, , , ,828 Costs -1,552, , , ,687 Profit before depreciation, etc. (EBITDA) 330, , ,458 49,141 Profits from the sale of vessels, etc. 136,183 39,101 20, Depreciation -14,545-14,567-4,501-5,255 Share of results of joint ventures -53 1, Profit from operations (EBIT) 452, , ,159 44,540 Fair value adjustment of certain hedging instruments 1) 31,455-30,000 39,280-26,021 Net financials 14,861 9,414 6,357 2,054 Profit before tax 498, , ,796 20,573 Tax on the profit for the period -17,562-12,461-3, Profit for the period 480, , ,650 19,733 Attributable to: Shareholders of NORDEN 480, , ,618 19,703 Minority interests Total 480, , ,650 19,733 Earnings per share (EPS), USD Diluted earnings per share, USD ) Specification of "Fair value adjustment of certain hedging instruments" Bunker hedging: Fair value adjustment for: 1/1-30/9 1/7-30/ ,599 3, ,716 2, ,018 6,231 Realised fair value adjustment reclassified to "Costs"* -7,646-4,541 Total 9,372 1,690 FFA: Fair value adjustment for 2007 Fair value adjustment for ,547 6,428 18,484 6,428 Realised fair value adjustment reclassified to "Freight income"* 3,881 18,202 24,912 12,678 Total 22,083 37,590 Total 31,455 39,280 *As the hedging instruments are realised, the accumulated fair value adjustments are reclassified to profit from operations in the same item as the hedged transaction. For further information, see the section "Accounting policies" in the annual report for DAMPSKIBSSELSKABET "NORDEN" A/S, 49, AMALIEGADE, 1256 COPENHAGEN K, DENMARK, 18/23

19 Income statement per quarter USD rd quarter 2 nd quarter 1 st quarter 4 th quarter 3 rd quarter Freight income (revenue) 779, , , , ,828 Costs -641, , , , ,687 Profit before depreciation, etc. (EBITDA) 137, ,409 87,614 51,744 49,141 Profits from the sale of vessels, etc. 20,834 47,185 68,164 16, Depreciation -4,501-4,891-5,153-5,751-5,255 Share of results of joint ventures Profit from operations (EBIT) 153, , ,104 62,204 44,540 Fair value adjustment of certain hedging instruments 1) 39,280-1,727-6,098 3,014-26,021 Net financials 6,357 5,572 2,932 3,011 2,054 Profit before tax 198, , ,938 68,229 20,573 Tax on the profit for the period -3,146-2,112-12, Profit for the period 195, , ,634 69,222 19,733 Attributable to: Shareholders of NORDEN 195, , ,604 69,192 19,703 Minority interests Total 195, , ,634 69,222 19,733 Earnings per share (EPS), USD Diluted earnings per share, USD ) Please, see previous page. DAMPSKIBSSELSKABET "NORDEN" A/S, 49, AMALIEGADE, 1256 COPENHAGEN K, DENMARK, 19/23