annual report and accounts 1997 - hugin...

A N N U A L R E P O RT A N D A C C O U N T S 19 9 7

D A M P S K I B S S E L S K A B E T � N O R D E N � A / S

Contents

Brief presentation ofDampskibsselskabet �NORDEN� A/S ................. 3Group Diagram ........................................................ 3Financial Highlights ................................................ 4Annual Report 1997 ................................................. 7Accounts Report 1997 .............................................. 14

Dampskibsselskabet �NORDEN� A/S

Amaliegade 49, DK-1256 Copenhagen K, DenmarkTelephone +45 3315 0451 · Telefax +45 3315 6199Telex 22374 · Cables �NORDBROWN�

Registered in Denmark No. 1710

Auditors� Report ...................................................... 17Accounting Policies ................................................. 19Accounts for the Group and the Parent Company 23Cash Flow Statement ............................................... 26Notes .......................................................................... 27Fleet List .................................................................... 34

Telefax (Tank) +45 3315 0725Telefax (Dry Cargo) +45 3342 0530Telefax (Technical) +45 3393 3733Comtext e-mail: A43DK448 · A53DK033 (Tank)Internet homepage: http://www.ds-norden.com

http://www.ds-norden.com

D A M P S K I B S S E L S K A B E T � N O R D E N � A / S · A N N U A L R E P O R T A N D A C C O U N T S 1 9 9 7

3

Dampskibsselskabet �NORDEN� A/S is theoperating company in the Motortramp Group.

�NORDEN� is engaged in worldwide tramp shippingin the dry cargo and tanker sectors.

The Company�s tanker interests were reduced duringthe year, whereas the dry cargo activities wereincreased.

At the beginning of 1998 a total of 21 units of approx.1,232,000 dwt were employed, comprising 10 drycargo vessels totalling approx. 766,000 dwt and 11tankers totalling approx. 466,000 dwt, of which 8 unitsin full or partial ownership, corresponding to approx.600,000 dwt or around half of the total tonnageemployed.

The average age of �NORDEN�s own tonnage isalmost 6 years.

Brief Presentation of Dampskibsselskabet �NORDEN� A/S

55.5%

100%100%

51%100%100%

A/S MOTORTRAMP

Dampskibsselskabet�NORDEN� A/S

NORDMAX ApSNORDFARER ApS

NORDSTADEN I/SNORDHOLT Ltd.NORDHOLM Ltd.

�NORDEN� Tankers& Bulkers Pte. Ltd

100%


4

Consolidated Financial Highlights 1993-1997Financial highlights in DKK million 1997 1996 1995 1994 1993

Proforma1)

Freight income, etc. 590.0 479.8 495.0 487.3 322.3

Expenses -471.9 -377.0 -371.2 -368.1 -237.8

Profit before depreciation 118.1 102.8 123.8 119.2 84.5

Profit on the sale of ships 26.5 0.0 30.6 3.1 65.3

Depreciation and write-downs -81.1 -61.8 -67.0 -59.8 -74.5

Operating profit 63.5 41.0 87.4 62.5 75.3

Profit from associated companies -1.5 11.2 -1.4 0.0 1.3

Net financing -7.1 -27.5 -45.7 -58.2 -46.0

Profit on ordinary operations before tax 54.9 24.7 40.3 4.3 30.6

Tax on ordinary operations 0.0 0.0 0.0 0.0 0.0

Profit for the year 54.9 24.7 40.3 4.3 30.6

Equity capital year-end 560.6 505.9 484.7 450.1 369.8

Balance year-end 1,314.9 1,222.3 1,275.3 1,338.4 1,326.0

Net cash flow for the year -77.3 -106.6 6.7 70.5 9.9

Net investments in ships for the year 145.4 89.4 -64.1 105.6 36.8

1) For 1993 such consolidated pro-forma figures have been shown (unaudited). as would have been realized, maintaining the sameaccounting policies, had the merger between Dampskibsselskabet �NORDEN�, Aktieselskab and Dampskibselskabet Orient,Aktieselskab taken place as at 1 January 1993 at the conversion ratio stipulated by the Board of Directors.Any synergies have not been taken into consideration. The pro-forma comparative figures are directly comparable with the realizedaccounting figures for 1994-1997.


5

Key Financial Ratios 1993-1997Key Financial Ratios 1997 1996 1995 1994 1993

2) Earnings per share at par value DKK 100 113.87 51.17 83.53 10.09 80.38

2) Dividend per share at par value DKK 100 18.00 12.00 15.00 8.00 14.17

2) Intrinsic value 1,163 1,049 1,005 934 972

Return on equity 10.3% 5.0% 8.6% 1.1% 8.6%

Debt/equity ratio 42.6% 41.4% 38.0% 33.6% 27.9%

2) Market price per share at year-end 825 800 740 815 1,133

Market price/intrinsic value 0.71 0.76 0.74 0.87 1.17

USD rate of exchange at year-end 682.60 594.45 554.60 608.30 677.25

2) The key financial ratios for 1993 have been adjusted for the share capital increase in 1994 at a fixed rate with a prioritysubscription right to existing shareholders. No adjustment has been made in respect of the share capital increase at year-end of1994 for the employees.The key financial ratios have been calculated in accordance with the �Recommendations and Key Figures 1997�, published by theDanish Association of Financial Analysts. Unadjusted figures are used.


6

m.t. �Nordamerika� on her maiden voyage - here on her passage through the Great Belt under the almost finished high-level bridge.


7

Annual Report 1997The Financial Results for the Year

The consolidated result after tax was a profit of DKK54.9 million, against a profit of DKK 24.7 million inthe previous year.

A dividend of 18% is proposed (1996: 12%) equivalentto DKK 8.7 million, while the remainder of the profit,DKK 46.2 million, is proposed to be consolidated toequity capital.

The result corresponds to the expectations stated inthe preliminary statement to the Copenhagen StockExchange of August 26, 1997 and must be consideredsatisfactory. In nominal terms it is the Company�s bestresult so far in its 127-year history.

International Market Conditions

In the first half of 1997 the global trading picture wascharacterized by general optimism. Although diverse,the international cyclical trends reflected continuedeconomic growth.

The minor, yet widely-spread danger signals from theregion which had experienced the strongest growthover the past ten years, i.e. Southeast Asia, were notimmediately taken seriously.

However, the crisis grew in extent and strength andled to drastic foreign-exchange adjustments, whileconcurrently South Korea, the eleventh largesteconomy in the world, was shaken by the liquidationof even large multinational companies and financialinstitutions.

This development made it necessary for the IMF totake quick action and led to serious adjustments ofthe economic freedom to manoeuvre of the affectedcountries.

Although it is still too early to assess the consequencesand extent of the crisis in Southeast Asia/Korea,particularly in relation to marine transport, there havealready been significant repercussions such asdeclining activities and thereby lower rates in general.

The fact that the development in Asia has not hadany major consequences viewed from a globalperspective is due not least to the continued stronggrowth in the USA and, to a lesser extent, in SouthAmerica and Europe.

DRY CARGO VESSELS

Freight Rates and Ship Values

In the overall view the rate level improved during1997, despite the supply of new tonnage amountingto almost 19.0 million dwt.

The market showed unhomogeneous developmentwith focus on the larger units (Capesize), where risingdemand in the steel sector during the first threequarters of the year reflected an increased level ofactivity. Towards the end of the year, however, underthe influence of the aforementioned crisis in South-east Asia/Korea, the registered activity level wassignificantly lower, a trend that has continued into1998.

Source: Fearnleys


8

Summary of the Global Bulk Fleet

Despite a reduction of the order book by approx. 4.0 million dwt in relation to the previous year, relatively large deliveries in the next two yearswill dampen the development in rates.

Ships in dwt/Jan 1998

BULKER FLEET

Existing fleet

Newbuilding

% of existing fleet

More than 20 years old

10-25

24,332

1,189

5

44%

25-40

58,499

2,137

4

39%

40-50

35,071

5,462

16

9%

50-80

65,229

8,776

13

21%

80-100

4,371

574

13

37%

100-200

68,581

7,210

11

14%

200-300

9,361

229

2

9%

300 +

1,328

-

-

-

Total

266,792

25,647

10

23%

SIZE in �000 DWT Source: Fearnleys

For the smaller sizes (Panamax = 70,000 dwt andHandymax = 45,000 dwt) 1997 did not entail anymajor fluctuations, although in this area too adeclining trend was observed towards the end of theyear.

In order to illustrate the instability of the marketdevelopment during the last five years the followingchart shows rate/value fluctuations for the twosegments in which �NORDEN� is represented.

The strong fluctuations in rates for a �Nord-Energy� type (Capesize150,000 dwt) should be registered: from USD 12,000 per day at the endof 1992 for 12 months� employment, to USD 22,000 in the first half of

1995. Today�s level is close to USD 14,000 per day.

Demand

The demand in general indicated a rising trend ofapprox. 4.0% in relation to the preceding year.Transports of iron ore and coal thus rose byrespectively 8% and 5% as a consequence of theincreasing global steel production.

Supply

The generally unchanged scrapping level comparedto 1996 resulted in a net supply of dry cargo tonnageof approx. 4%, to approx. 265.0 million dwt.

Activity and Employment

During the second half-year a substantial expansion�NORDEN�s dry cargo activities took place.Transport contracts for particularly coal, sugar andminerals were concluded. Furthermore, �NORDEN�sown fleet was supplemented with chartered vesselsin the two segments in which the Company isrepresented. At the end of 1997 the fleet thuscontrolled more than 750,000 dwt.

After its redelivery in April 1997 from an extendedtime-charter m.v. �Nordpol� (1994) has been engagedin self-discharging contracts in the Indian Ocean, likeits sister vessel m.v. �Nordkap� (1994).

Throughout 1997 �Nord-Power� (1991) and�Nord-Energy� (1991) were employed underpreviously concluded contracts and were thus notaffected by the volatile market.

The Company�s own fleet still comprises theaforementioned two Capesize bulk carriers, each of150,000 dwt, built in Korea in 1991, and twoHandymax bulk carriers, each of 50,000 dwt, built atDanyard, Denmark in 1994.

Source: Fearnleys


9

TANKERS

Freight Rates and Ship Values

The year began satisfactorily as a consequence of adelayed seasonal increase in global oil consumption.

Freight rates for product tankers in particularcontinued to rise in the first half-year, particularly inSoutheast Asia, despite the delivery of severalnewbuildings.

Contrary to expectations, there was considerableactivity on the crude oil market during the summermonths which are traditionally a less active period,and this was in particular to the benefit of the verylarge vessels. Although several factors naturallycontributed to this extraordinary rise, it wasparticularly positive to note that the primary factorwas a demand for quality tonnage from Japanese andKorean charterers. In combination with a favourablebalance of delivery of newbuildings and scrappingthis pushed up the rate level.

Unfortunately, this shortlived increase also gave riseto an unusually high level of contracting of primarilycrude oil tankers, whereas an expected consequentialimpact on the product tanker market did not emerge.In 1997 alone, almost 30.0 million dwt of tankertonnage was contracted. This is the largest volumecontracted in one single year since 1973.

The turbulence in Asia and the mild winter in westernEurope led to falling oil prices, which again causedmost oil companies and oil traders to exerciserestraint. The result was disappointing and the yearended with a relatively uninspiring market in whichnew developments were awaited and only the mostnecessary transports were undertaken.

Acquisitions and Sales

�NORDEN�s strategy of focusing solely onmedium-range (MR) product tankers and Aframaxcrude oil tankers was realized by the sale of theproduct tanker m.t. �Nordtramp�. This vessel hasbeen operated by �NORDEN� since it was deliveredfrom Burmeister & Wain Skibsværft in 1986 and wasthus �NORDEN�s oldest unit.

In April 1996 Dampskibsselskabet �NORDEN� A/Sand EAC Shipping Ltd. A/S contracted three producttankers with options for a further three vessels fromthe Kherson Shipyard in the Ukraine. The first shipwas delivered to EAC in March 1997 and the second,named the m.t. �Nordamerika�, was delivered toDampskibsselskabet �NORDEN� A/S in January1998. The third ship was originally contracted byDampskibsselskabet �NORDEN� A/S and EACjointly, but this newbuilding contract and the optionson the three additional vessels were taken over byDampskibsselskabet �NORDEN� A/S in the secondhalf of 1997 after EAC had decided to dispose of itsshipping activities.

However, it became more and more apparent that theshipyard had considerable problems in complyingwith the agreed delivery dates and therefore inJanuary 1998 the Company decided to cancel the thirdvessel. At this point a delay in delivery of more thanone year from the agreed delivery date couldbe expected. As a consequence �NORDEN�sprepayments to the shipyard, including interest, werereimbursed to the Company in January 1998.

Since �NORDEN� thus could not achieve thecommercial and technical benefits which were basedon a series totalling five units, including options,�NORDEN� in February 1998 decided to sell the m.t.�Nordamerika� to American interests with expecteddelivery in March/April 1998.


10

The order book has more than doubled in relation to the preceding year, with a concentration on the large crude oil tankers. If a reasonable marketbalance is to be achieved, a large number of vessels must be scrapped (3.6 million dwt in 1997 compared to twice that amount in 1996). It is to behoped that this development will be stimulated by the fact that more than 37% of the tanker tonnage exceeds 20 years of age.

Summary of the Global Tanker Fleet

Ships in dwt/Jan 1998

TANKER FLEET

Existing fleet

Newbuilding

% of existing fleet

More than 20 years old

10-25

6,099

545

9

51%

25-40

19,655

1,004

5

47%

40-50

11,037

3,450

31

6%

50-80

18,906

1,028

5

19%

80-100

36,840

579

2

24%

100-200

49,113

15,057

31

35%

200-300

84,887

42,571

5

41%

300 +

40,427

15,230

38

51%

Total

266,964

41,149

15

37%

SIZE �000 DWT Source: Fearnleys

As notified to the Copenhagen Stock Exchange onFebruary 17, 1998 �NORDEN� will achieve a profitof approx. DKK 40 million on the sale of m.t.�Nordamerika� and the cancellation of the third vesselfrom the Kherson Shipyard. This profit will beincluded in the annual result for 1998.

The product tanker �Nordfast�, which for the last fouryears has been chartered from interests in Singapore,was sold to Danish interests during the year. Inconnection with the sale �NORDEN� concluded along-term bareboat charter with the ship�s newowners. At the same time the vessel was the first tobe returned to DIS (the Danish International ShippingRegister) under the new Bareboat Register Act.

Employment

The desire to achieve greatest possible risk cover forown tonnage was maintained in 1997 as this tonnagewas primarily engaged on a time-charter basis,whereas the spot market was served with charteredtonnage.

Until its delivery to its new owners m.t. �Nordtramp�was engaged on time-charter for Japanese interests.

After a period in the spot market m.t. �Nordholt�commenced a twelve-month time-charter forAmerican interests at the end of March.

M.t. �Nordfast� and m.t. �Nordfarer� (owned byNortide Shipping Limited, in which �NORDEN� hasa 50% interest) concluded respectively three and fouryears� employment by Shell during September. M.t.�Nordfast� then concluded a new two-yeartime-charter for Danish interests, while m.t.�Nordfarer� was engaged in the spot market.

The bareboat charter for which m.t. �Skaunord� wasengaged on delivery was extended for the rest of 1997and at the end of December this agreement wasextended further to cover 1998.

During 1997 own tonnage was supplemented withten vessels chartered or under the commercialmanagement of EAC. Following the termination ofthis cooperation, some of the tonnage, previouslyunder EAC�s commercial management, has continuedas chartered units under �NORDEN�s management.

In 1997 chartered tonnage was exclusively producttanker tonnage, which overall has made a positivecontribution to the Company�s result.

In 1997 chartered tonnage was exclusively producttanker tonnage, which overall has made a positivecontribution to the Company�s result.

The cooperation with our partners in Nordstaden I/S and Nortide Shipping Limited has functionedsatisfactorily.

During the year a total of 15 units were in operation.At the end of the year 11 units were controlled, tenproduct tankers and one crude oil tanker, comprisinga total of approx. 466,000 dwt, of which 202,000 dwtin full or partial ownerhip.

Our representative office in Singapore has made apositive contribution to �NORDEN�s activities inSoutheast Asia. In order to strengthen thisdevelopment it was decided at the end of 1997 toconsolidate the representative offices in Singapore byestablishing a subsidiary and seconding further staffin mid-1998.


11

THE MANAGEMENT OF THE COMPANY

At the annual general meeting in 1997 Mrs. AlisonJ.F. Riegels and Mr. Mogens Hugo Jørgensen retiredfrom the Board by rotation and were bothunanimously re-elected.

The Board of Directors elected Mr. Mogens HugoJørgensen as Chairman and Mrs. Alison J.F. Riegelsas Vice Chairman.

The Board and Management of the Company wouldlike to take this opportunity to thank all employeesfor their fine and loyal efforts in 1997, whichcontributed to achieving the satisfactory result.

SUBSIDIARIES

Nordmax ApSShare capital: DKK 200,000 (wholly-owned)Management: Steen Krabbe

Nordmax ApS holds a 51% participating interest viaNordstaden I/S in a 101,650 dwt tanker, m.t.�Skaunord�, which is on bareboat charter toNorwegian interests until end-1998. The consolidatedprofit after tax amounted to DKK 2.0 million, theassets to DKK 137.3 million and the equity capital toDKK 13.6 million.

Nordfarer ApSShare capital: DKK 200,000 (wholly-owned)Management: Steen Krabbe

Nordfarer ApS owns all shares in the BahamasCompany Nordholt Ltd. which owns the 39,977 dwttanker, m.t. �Nordholt�, acquired in 1995. Further-more, the Company owns all shares in the Bahamascompany Nordholm Ltd. which was inactive in 1996.The consolidated profit after tax amounted to DKK3.7 million, the assets to DKK 130.6 million and theequity capital to DKK 17.9 million.

�NORDEN� Tankers & Bulkers Pte. Ltd., SingaporeShare capital: SGD 100,000 (wholly-owned)Management: Ng Siong Tee

The company was established in November 1997.The profit after tax was TDKK �231. The assetsamounted to TDKK 549 and the equity capital toTDKK 190.

PROSPECTS FOR 1998

The development originally described as a necessaryadjustment of the economies of Southeast Asia mustnow be regarded as a significantly more thorough andextensive crisis, with the uncertainties which thisentails.

However, there is no doubt that the outcome of thischaotic situation will be a sounder economicfoundation in which equity capital and solvency willplay a more important role than before.

At the same time it is hoped that China and India �which have generally avoided these turbulentconditions � and which otherwise together constitutemore than 70% of the economy of East Asia (excludingJapan) will be stabilizing factors in the newforward-oriented development. Japan�s economy,which is often a barometer of the development in thetanker and bulker market, is still struggling toovercome several years of stagnation. Thedevelopment in Southeast Asia has dampenedexpectations of any immediate growth.

Viewed in a broader perspective world trade will beaffected, but this is not expected to be on the scalefirst visualized. The western world, led by the USA,is exerting a positive influence. Low interest rates andinflation and the continuous breakdown of tradebarriers (particularly in South America) are factorsindicating ongoing positive development in globalworld trade.


12

It is noteworthy, and also gives grounds for concern,that there were no ongoing price increases fornewbuildings during a year when more new ordersthan ever before were placed, on the contrary in fact.Not since 1973 have we seen a year with moreextensive contracting activity. In that particular year,extensive orders for VLCC (Very Large CrudeCarriers) had a strong dampening impact on marketdevelopment for the next many years.

This clearly shows that the existing shipyard capacityis sufficient and there is no need for further capacityexpansion as planned in Korea and China.

In cases where deliveries of new tonnage during thenext few years are expected to exceed the marketrequirement, other factors may contribute to restoringbalance.

Strong expectations are held that the implementationof the ISM (International Safety Management) codeby the IMO (the International Maritime Organizationunder the UN) as of July 1, 1998 will not onlycontribute to greater safety on board, but also makehigher demands of crews on board and on shore.

Since more than 30% of the global fleet exceeds 20years of age it is doubtful whether the older part ofthe fleet will meet the new requirements which areexpected to be enforced very effectively.

One consequence, particularly in view of the currentdifficult market conditions, may be an increase in thescrapping ratio, which may thus contribute torestoring the market�s equilibrium.

The units operated by �NORDEN� are all registeredunder DIS (the Danish International ShippingRegister). The aforementioned ISM requirements willbe a natural element �NORDEN�s desire to continueto offer tonnage of high quality. The Companytherefore welcomes this international initiative.

�NORDEN�s development during 1998 will beaffected by the difficult market conditions, andtherefore the result from ordinary activities (excludingprofit on sale of ships) is not expected to be positive.

In January 1998 �NORDEN� took delivery of theproduct tanker m.t. �Nordamerika� from the KhersonShipyard in the Ukraine. This vessel was deliveredwith a considerable delay.

As stated previously in this annual report this vesselwas subsequently sold to American interests. At thesame time �NORDEN� cancelled the third vessel inthe series of product/chemical tankers from KhersonShipyard.

As notified to the Copenhagen Stock Exchange onFebruary 17, 1998 �NORDEN� will �achieve a profitof approx. DKK 40 million on the aforementionedtransactions.�

�NORDEN� moreover expects to receive an amountof approx. DKK 30 million in liquidation proceedsfrom the War Insurance for Danish Vessels. Thisamount is expected to be received during May.

Despite the deterioration in market conditions, a basishas thus been created for an improved financial resultfor 1998. However, fluctations in foreign-exchangeand market conditions will exert an influence.

In view of the transactions made, the solvency andliquidity of the Company have simultaneously beenstrengthened significantly. �NORDEN� is thusprepared to meet the challenges and opportunitieswhich 1998 undoubtedly will present.


13

m.s. �Nord-Energy� in heavy seas (photo: Asger Jansen)


14

The accounts for the Group and the Parent Companyare prepared in accordance with the provisions of theDanish Presentation of Accounts Act and the guide-lines of the Copenhagen Stock Exchange for listedcompanies, including Danish accounting guidelines.

The accounting policies applied are unchanged from1996.

The consolidated profit after tax amounted to DKK54.9 million, against DKK 24.7 million in 1996.Excluding sale of ships this is an improvement ofapprox. DKK 14 million.

The Group�s equity capital totalled DKK 560.6 million,against DKK 505.9 million in 1996, corresponding toan increase of DKK 54.7 million.

In 1997 the balance sheet was increased by DKK 92.6million from DKK 1,222.3 million at end-1996 to DKK1,314.9 million at end-1997. However, since equitycapital has increased more in proportional terms thesolvency ratio has risen from 41.4% at end-1996 to42.6% at end-1997.

Ships

Freight income, etc. (net turnover) has increased byDKK 110.2 million from 1996. This increase is due toimproved freight rates for the Company�s tankers inthe first half-year and a rising USD exchange rate.

During the summer freight rates for both dry cargoand tankers declined to a lower, less satisfactory level.This has affected the result for the second half-year,but to a lesser degree for dry cargoes, since most ofthe Company�s vessels were engaged in previouslyconcluded charter parties and cargo contracts.

Operating expenses for ships, including provisionsfor docking expenses, were higher than budget due

to a rising USD exchange rate in 1997. �NORDEN�squality standards are given very high priority, sincethey constitute an important competition parameter.

In June �NORDEN� utilized an option to purchasem.t. �Nordtramp� for the purpose of resale to Greekinterests. The profit of DKK 24.9 million, includingan unutilized docking provision, is included in �Profit on the sale of ships�.

After three years� time-charter from Singaporeinterests m.t. �Nordfast� was sold to Danish interestsin June and subsequently chartered by �NORDEN�on bareboat terms.

Depreciation and write-downs have increased byDKK 19.3 million. As a precautionary measurewrite-downs have been made for m.s. �Nordpol� andm.s. �Nordkap� totalling DKK 19.6 million inaccordance with our accounting principles.

�NORDEN�s net financing costs fell by DKK 20.4million against 1996, which is primarily related to arealized capital gain of 22.4 million on prematureredemption of loans in ships.

�NORDEN�s ships are included in the balance sheetat acquisition price in Danish kroner, less accumulateddepreciation and write-downs.The book value of thevessels is subject to ongoing comparison with theirpotential earnings capabilities and relevant valueindicators. Ships are written down if earnings are con-sidered unsatisfactory in the long term, or a significantlasting depreciation has taken place.

To support the evaluation of the vessels� book valuethe Company submits its vessels to continuousevaluation by two independent brokers. The brokers�assessments are in USD, thus making the exchangerate of great significane when comparing with bookvalues in DKK.

Accounts Report 1997


15

Docking

Continuous provision is made for docking at anamount equivalent to a proportional share of theestimated costs of the vessel�s next docking. On saleof the ship any unutilized docking provision will becarried as income under �Profit on the sale of ships�since the sale price of the vessel and thus the profiton sale will depend on the general condition of thevessel.

M.s. �Nord-Energy� was docked in Portugal in Junein order to repair damage to paintwork in the holds.This work was performed under the guarantee.

M.t. �Nordfast� was docked in Spain in November.This docking progressed according to plan and inaccordance with budget. In connection with thedocking the vessel was transferred to the DanishInternational Shipping Register (DIS).

Taxation

No deferred tax is set off in the balance sheet. Deferredtax primarily concerns timing differences betweentaxable and accounting depreciation of vessels. TheCompany expects that tax commitments ondepreciation of its own vessels can continue to bedeferred for several years. Deferred tax is thereforestated solely as a note to the annual accounts.

Forward Cover Transactions

Long-term foreign-exchange loans denominated inUSD are included at the exchange rate on thebalance-sheet date. The loans are raised in order toobtain foreign-exchange cover for the ShippingCompany�s future revenue in USD such as freightincome and the proceeds on sale of ships. �NORDEN�thus fulfils the cover provisions set out in theguidelines.

As a consequence the value adjustment on long-termforeign-exchange loans in connection with theadjustment from the original to the year-end exchangerate is included as an accrued item, i.e. as a short-termoutstanding or debt item. The accrual is reduced instep with repayment of the loan and carried to theprofit and loss account as a deduction or addition tothe net dollar income (value adjustment).

At the close of 1997 the unrealized value adjustmentof the Group�s USD loans constituted a capital loss ofDKK 73.7 million, which is included under �Currentassets�.

Associated Companies

�NORDEN�s share of the profit (50%) of NortideShipping Limited is included under associatedcompanies. The company�s only vessel, the producttanker m.t. �Nordfarer� suffered a collision inNovember with a subsequent period of off-hire. Thisis the reason for the unsatisfactory result.

Cash Flow

In 1997 �NORDEN��s liquidity was reduced by DKK77.3 million and at the close of 1997 amounts to a totalof DKK 9.0 million. The decrease in liquidity is relatedto the considerable prepayments made by theCompany in 1997 for the newbuildig programme atthe Kherson Shipyard in the Ukraine.

These prepayments have been secured via bankguarantees from international banks. At the beginningof 1998 the first newbuilding was delivered and resoldto American interests, while the second newbuildingwas cancelled. The prepaid amounts were reimbursedwith interest, thereby significantly improving�NORDEN�s liquidity.


16

Risk Profile

In foreign-exchange terms �NORDEN�s businessareas are based on USD, since the Company�s freightincome and income from sale of ships is paidexclusively in USD, which is the currency of accountfor the shipping sector.

In order to minimize the exchange-rate risk�NORDEN� seeks to match foreign-exchange incomewith expenditure, and assets with liabilities, primarilyby denominating as many costs and liabilities aspossible in USD if this is deemed to be financiallyresponsible. If not, the amounts are covered in theforeign-exchange market in accordance with thestrategy chosen.

Since �NORDEN� is a USD-based company, theCompany�s�s actual foreign-exchange risk comprisesthe costs not defrayed in USD. In terms of amountthis concerns the equivalent of approx. USD 10 millionin DKK per year. The Company�s policy is to obtainforward cover of these costs for a period of betweensix months and two years, depending on thedevelopment in the USD rate. At the close of 1997forward cover for costs had been arranged for a periodof approx. six months.

�NORDEN�s surplus liquidity is accumulated inUSD, since it is reinvested in ships which areUSD-denominated assets when the timing is right.

The shipping sector is a capital-intensive industry.Even at a solvency ratio of 40% �NORDEN�s totalliabilities will exceed the equity capital by approx. 1.5times. The interest paid for this financing thereforehas a significant impact on the profit for the year.

Since �NORDEN� � as part of its overall riskmanagement � wishes to contain its financial risks,the Company has chosen the policy of locking theinterest rate for a period which can fluctuate between2 and 6 years for the Company�s overall loan portfolio,including interest-rate dependent bareboat contracts.At the close of 1997 the interest rate for the Group onaverage had been locked for six years at attractivelevels.

Allocation of Profits

The Board of Directors recommends to the generalmeeting that the profit of the Parent Company beallocated as follows:

Dividend, 18% (1996: 12%) DKK 8.7 millionCarried forward toequity capital DKK 46.2 million

DKK 54.9 million


17

The Board of Directors and Management todayconsidered and adopted the Consolidated Accountsand the Annual Report and Accounts.

The Annual Accounts are presented in accordancewith current accounting provisions.

The Consolidated Accounts and the Annual Accountsare submitted for approval by the General Meeting.

Copenhagen, March 17, 1998

Management

Steen Krabbe

Board of Directors

Mogens Hugo Jørgensen Alison J. F. Riegels Chairman Vice Chairman

Erik Gregers Hansen Kirsten Hansen

Erling Højsgaard Allan Thomsen

The Annual General Meeting will be held on April 28, 1998 at 10.00 hours at the premises ofthe Danish Shipowners� Association, Amaliegade 33, Copenhagen.

Signatures


18

We have audited the financial statements of the�NORDEN� Group and the Parent Company for theyear 1997 presented by the management.

Basis of Opinion

We planned and conducted our audit in accordancewith generally accepted auditing standards to obtainreasonable assurance that the financial statements arefree of material misstatements. Based on an evaluationof materiality and risk, we have, during the audit,tested the basis and documentation for the amountsand disclosures in the financial statements. Our auditincludes an assessment of the accounting policies

applied and estimates made. In addition, we haveevaluated the overall adequacy of the presentation ofinformation in the financial statements.Our audit has not resulted in any qualifications.

Opinion

In our opinion, the financial statements have beenprepared in accordance with the accountingprovisions of Danish legislation and give a true andfair view of the Group and Parent Company�s assetsand liabilities, financial position and profit/loss forthe year.

Auditor�s Certificate

Copenhagen, March 17, 1998

KPMG C. Jespersen Coopers & Lybrand

Finn L. Meyer Knud AndersenState-Authorized Public Accountant State-Authorized Public Accountant


19

The accounts for the Group and the Parent Companyare prepared in accordance with the provisions of theDanish Presentation of Accounts Act and theguidelines of the Copenhagen Stock Exchange for thepreparation of the accounts of stock-exchange listedcompanies. The accounting policies are unchangedfrom 1996.

THE CONSOLIDATED ACCOUNTS

The consolidated accounts comprise the accounts ofthe Parent Company and subsidiaries in which theParent Company holds the majority of the votingrights, directly or indirectly.

The consolidated accounts are prepared byaggregating the audited accounts of the ParentCompany and the subsidiaries by combining theincome and expenses as well as assets and liabilitiesof a uniform nature. NORDSTADEN I/S isconsolidated on a pro rata basis at 51% of each itemof the accounts, corresponding to the Group�s interestsin the partnership.

The accounts on which consolidation is based areprepared in accordance with the Group�s accountingpolicies.

On consolidating the Group companies� profit andloss accounts and balance sheets, intra-Group incomeand expenses as well as intra-Group accounts, profitsand losses are eliminated.

Shares in subsidiaries are offset against the pro ratashare of the subsidiaries� intrinsic book value at thetime of acquisition (the past equity method).

Newly established or acquired companies are enteredto the consolidated accounts as of the date ofacquisition. Companies that are sold are included as

of the date of sale. Comparative figures are notadjusted in connection with the purchase or sale ofcompanies. The annual accounts and the notes containsufficient information for a meaningful comparisonin those cases where the composition of the Grouphas changed significantly in the course of theaccounting year.

THE PROFIT AND LOSS ACCOUNT

Freight Income and Operating Expenses

The freight income generated by the ships and theexpenses incidental to the operation thereof arerecognized under the accruals concept pursuant tothe charter parties concluded. Income and expensesattributable to the financial year are thus included inthe profit and loss account. Bareboat hire for shipschartered under bareboat charters has been bookedas expenses under operating expenses.

Other Operating Income

Other operating income primarily relates tomanagement income, administration fees and rentsreceived.

Other Expenses

Other expenses include costs incidental to the upkeepof property, office expenses, external assistance, etc.

Profit on the Sale of Ships

Profit on the sale of ships is entered as the differencearising on subtracting the book value from the netsales price. In addition, the item includes any profits/losses on the repayment of the related ship loans inforeign currencies.

Accounting Policies


20

Financial Items

Interest income and interest expenses are booked tothe profit and loss account at the amounts attributableto the accounting year. Dividends on shares are carriedas income in the year in which they are distributed.

Realized gains and losses on securities are entered tothe profit and loss account. Unrealized gains are notentered to the profit and loss account, but aretransferred to the revaluation reserve under equitycapital until the securities are realized or writtendown. Unrealized losses not covered by the previousyears� revaluation are booked as expenses in the profitand loss account.

Realized as well as unrealized exchange-rate profitsand losses on current assets and current liabilities areentered to the profit and loss account. Forexchange-rate profits and losses on long-term foreigncurrency loans, please refer to Accounts in ForeignCurrencies below.

Extraordinary Items

Extraordinary items include income and expensesderiving from transactions outside the ordinaryactivities.

Tax

The anticipated tax payable on the taxable income ofthe year has been charged to the profit and lossaccount and included in the balance sheet undercurrent liabilities.

The Parent Company and the wholly-ownedsubsidiaries are jointly taxed. Corporation tax payablein respect of the jointly taxed companies is allocatedbetween profit- and loss-making Danish companiesin proportion to their taxable income (full allocation).

No provision is made for deferred tax since the timingdeviations resulting from the Group�s present andexpected future investment policy will be of apermanent nature. The timing deviations are a resultof income and expenses not being booked in identicalperiods in the profit and loss account and tax accounts.The deferred tax is stated in a note to the accounts.

THE BALANCE SHEET

Tangible Fixed Assets

Properties include office and residential buildingsbooked at cost of acquisition with deduction of thedepreciation charged over the expected useful livesof the assets amounting to a maximum of 50 years.

Ships are entered at cost of acquisition lessaccumulated depreciation and write-downs. For newships, financing and loan costs incurred during theperiod of construction are included. Depreciation onships is charged on a straight-line basis over theexpected useful lives, i.e. a 20-year period. Ondeciding the method of depreciation for second-handships, the ships� condition and age at the time ofacquisition is taken into consideration, alwaysprovided that the depreciation period will not exceed20 years as from delivery as a newbuilding. In thecase of major and permanent value decreases,individual write-downs are made.

Ships chartered under bareboat charters are notincluded in the balance sheet, but are marked withan asterisk in the fleet list. A note discloses the numberof ships on bareboat charter, the duration of thecharter parties, the bareboat hire for the year to come,the bareboat hire in total, the term of the agreementsand any purchase options or other commitments.

Fixtures and equipment are included at acquisitioncost less accumulated depreciation. Fixtures and


21

equipment are depreciated on a straight-line basisover an expected useful life of 5-10 years.

Minor new acquisitions are not carried as assets, butcharged to the profit and loss account as expenses.

Shares in Subsidiaries

Shares in subsidiaries are included in the accounts ofthe Parent Company at the pro rata ownership shareof the subsidiaries� equity capital (the equity method).Where the equity capital of a subsidiary is negative,an amount equivalent to the negative equity capitalof the subsidiary will be offset against amounts owedby the subsidiary, or entered as a liability item.

The Parent Company�s share of the subsidiaries�results is included in the profit and loss account. Theshares of the profits are divided between Profit onordinary activities before tax, Tax on the profit on ordinaryactivities and Extraordinary items after tax.

The profit for the year and the equity capital of theParent Company are thereafter identical to those ofthe Group.

Shares in Associated Companies

Shares in associated companies are included at thepro rata ownership share of the associated companies�equity capital (the equity method).

The share of the associated companies� results isincluded in the profit and loss account. The shares ofthe profits are divided between Profit on ordinaryactivities before tax, Tax on the profit on ordinary activitiesand Extraordinary items after tax.

Stocks

Stocks primarily comprise stocks of oil on board ships.

Stocks of oil are included at the lower of cost or netrealizable value. The cost is calculated by the �firstin, first out� (FIFO) method.

Debtors

Amounts owed to the company are included atnominal value less provision for individual losses.

Securities

Securities consist of stock-exchange listed shares,stock-exchange listed bonds and mortgage deeds, andare included in the balance sheet at the officiallyquoted stock-exchange prices or estimated marketvalue at year-end.

Provisions for Docking Expenses

Provisions for docking expenses are made on anongoing basis as a pro rata share of the estimated costof each individual ship�s next docking.

Creditors

Amounts owed by the Company are entered at theirnominal value.

Accounts in Foreign Currencies

Transactions in foreign currencies are converted intoDanish kroner at the rate of exchange prevailing onthe date of the transaction.

Debtors and liabilities in foreign currency areconverted into Danish kroner at the exchange rateprevailing on the balance-sheet date. Whereforward-exchange contracts are concluded to hedgeagainst currency fluctuations, the forward exchangerate is applied.


22

Long-term loans in USD are thus included at the rateon the balance-sheet date. The loans are raised toachieve forward cover of the Shipping Company�sfuture revenues in USD in the form of freight incomeand proceeds from sale of ships. This is in compliancewith the cover provisions.

As a consequence the exchange-rate adjustment onlong-term foreign-exchange loans as a result of theamendment from original rate to year-end exchangerate is included as an accrued item under current assetsand liabilities. This item will be reduced and carriedto the profit and loss account in step with repaymentas a deduction from or addition to (exchange-rateadjustment) the net dollar income.

Cash Flow Statement for the Group

The Cash Flow Statement is prepared according to theindirect method, based on the operating profit.

The Cash Flow Statement shows the cash flow of theGroup for the year and its cash position at year-end.The cash flow is generated from or applied within thefollowing three main areas: operations, investmentsand financing.

The Cash Balance comprises easily negotiable securities(current assets) with little risk of value adjustment andcash at bank and in hand.

Cash Generated from Operations is entered as theoperating profit adjusted for non-liquid operatingitems, change in the working capital, financial receiptsand payments and with deduction/addition ofcorporation tax paid or received.

Working Capital comprises current assets and currentliabilities excluding the items included underinvestments, financing or liquidity.

Investments comprise purchase and sale of fixed assetsand prepayments on newbuildings included underfixed assets as well as the net proceeds on sale of shipsacquired for the purpose of resale. Investmentsfurthermore include an increase in investments insubsidiaries and associated companies.

Financing comprises the raising and servicing/repayment of long-term loans and short-term loanswhich cannot be allocated to cash generated fromoperations, as well as payments to or funds providedby shareholders including distribution of dividendfor previous financial years.

Positive amounts indicate cash receipts, whereasnegative amounts are cash payments.


23

1 Freight Income 583,943 473,973 525,425 422,340 2 Other operating income 6,018 5,827 7,178 6,755

Net turnover 589,961 479,800 532,603 429,095

3 Operating expenses -416,812 -327,228 -405,507 318,883 4 Staff expenses -42,165 -37,536 -37,531 -33,954 5 Other expenses -12,889 -12,214 -12,450 -11,951

Result before depreciation 118,095 102,822 77,115 64,307

Profit on the sale of ships 26,489 0 26,489 0 6 Depreciation and write-downs -81,122 -61,778 -63,764 -44,420

Operating profit 63,462 41,044 39,840 19,887

7 Share of result, Nortide Shipping Ltd. -1,443 11,160 -1,443 11,160 8 Share of result before tax, subsidiaries - - 5,474 4,529 9 Financial income 33,692 12,274 1,383 19,10610 Financial expenses -40,821 -39,812 -30,364 -30,016

Profit on ordinary activities before tax 54,890 24,666 54,890 24,666

11 Tax 0 0 0 0

RESULT FOR THE YEAR 54,890 24,666 54,890 24,666

The Group The Parent Company

1996Note 199619971997

DKK 1000

Profit and Loss Account 1 January - 31 December 1997


24

12 Properties 13,861 13,105 13,861 13,10513 Ships 833,918 914,088 615,833 678,64514 Fixtures and equipment 2,604 3,214 2,604 3,21415 Prepayments on newbuildings 234,831 89,438 234,831 89,438

Tangible fixed assets 1,085,214 1,019,845 867,129 784,402

16 Shares in subsidiaries - - 31,718 25,823Amounts owed by subsidiaries - - 67,252 78,123

7 Shares in Nortide Shipping Ltd. 64,203 57,169 64,203 57,169Financial fixed assets 64,203 57,169 163,173 161,115

Fixed assets 1,149,417 1,077,014 1,030,302 945,517

Stocks 10,914 8,061 10,699 7,010

Freight debtors 37,353 27,858 37,318 26,127Amounts owed by affiliated companies 126 164 7,607 4,324Amounts owed by associated companies 337 712 337 712Other debtors 1,848 3,543 1,360 1,876

17 Accruals 90,598 18,590 64,477 18,563Debtors 130,262 50,867 111,099 51,602

18 Securities 373 550 373 550

Cash at bank and in hand 23,968 85,803 6,568 72,729

Current assets 165,517 145,281 128,739 131,891

TOTAL ASSETS 1,314,934 1,222,295 1,159,041 1,077,408


1996Note 199619971997

DKK 1000

Balance Sheet at 31 December 1997 · Assets


25

Koncernen Moderselskabet1996Note 199619971997

Beløb i DKK 1.000

Balance Sheet at 31 December 1997 · Liabilities and Equity Capital

19 Share capital 48,205 48,205 48,205 48,20520 Share premium account 68,599 68,599 68,599 68,59921 Revaluation reserve 3 16 3 1622 Reserve for net revaluation

by the equity method 0 0 46,687 33,948Extra reserve 100,000 100,000 100,000 100,000

23 Profit carried forward 343,754 289,064 297,067 255,116Equity capital 560,561 505,884 560,561 505,884

Provision for docking expenses 19,890 22,478 17,001 20,922Provisions 19,890 22,478 17,001 20,922

Danish Ship Finance 224,537 195,540 224,537 195,540Bank loans 320,948 376,522 183,538 238,954

24 Long-term liabilities 545,485 572,062 408,075 434,494

24 Servicing of long-term loans within 1 year 77,897 63,936 61,079 49,696Bank debt 15,293 0 15,293 0Trade creditors 11,597 7,616 11,096 6,706Amounts owed to affiliate companies 0 0 6,095 6,793Amounts owed to associate companies 40,956 0 40,956 0Other creditors 24,084 27,321 19,714 23,243

17 Accruals 10,494 17,213 10,494 23,885Dividend proposed 8,677 5,785 8,677 5,785Current liabilities 188,998 121,871 173,404 116,108

Total liabilities 734,483 693,933 581,479 550,602

LIABILITIES AND EQUITY CAPITAL 1,314,934 1,222,295 1,159,041 1,077,408

25 Mortgages26 Contingent liabilities

The Group The Parent CompanyDKK 1000


26

Operating profit 63,462 41,044Reversed depreciation and write-downs 81,122 61,778Reversed profit on the sale of ships -26,489 -101Reversed provision for docking expenses 9,328 -12,362Other adjustments 3,427 -3,253Increase or decrease in working capital -10,379 -782Cash flow from operations before financial items 120,471 86,324Financial receipts 14,101 11,966Financial disbursements -40,821 -39,812CASH GENERATED FROM OPERATIONS 93,751 58,478

Investments in tangible fixed assets -1,268 -1,091Prepayments on newbuildingsr -145,393 -89,438Sale of tangible fixed assets 200 770Net proceeds on sale of ships 14,573 0INVESTMENS -131,888 -89,759

Dividend to shareholders -5,785 -7,231Funds provided by shareholders -5,785 -7,231

Raising of long-term loans 43,642 0Servicing of/repayment of long-term loans -117,968 -68,114Raising of loans from associated companies 40,956 0Loan financing -33,370 -68,114

FINANCING -39,155 -75,345

INCREASE OR DECREASE IN THE CASH BALANCE FOR THE YEAR -77,292 -106,626

Cash balance 1/1 86,353 192,643Value adjustment of securities for the year -13 336Increase or decrease in the cash balance for the year -77,292 -106,626CASH BALANCE 31/12 9,048 86,353

The cash balance comprises:Securities 373 550Cash at bank and in hand 23,968 85,803Short-term bank debt -15,293 0

9,048 86,353

19961997

DKK 1000

Cash Flow Statement for the Group


27

1 Freight incomeTank 386,951 271,182 328,433 219,549Dry cargo 196,992 202,791 196,992 202,791

583,943 473,973 525,425 422,340 2 Other operating income

Commercial management income 4,873 4,540 4,873 4,540Administration fees 501 446 1,661 1,374Rents received 614 740 614 740Gain on sale of fixtures and equipment 30 101 30 101

6,018 5,827 7,178 6,755 3 Operating expenses

Of the said item bareboat charter hire form.t. �Nordtramp� 8,000 17,500 - -and m.t. �Nordfast� cf. note 26 5,600 0 - -

13,600 17,500 - - 4 Staff expenses

Wages and salaries 36,186 32,344 31,552 28,762Remuneration to the Parent Company Directors 375 392 375 392Remuneration to the Parent Company Management 1,791 1,442 1,791 1,442Pension and social security costs 3,813 3,358 3,813 3,358

42,165 37,536 37,531 33,954

Number of employees (average) 174 173 149 149

5 Fees to auditors elected by the general meeting

Other expenses include the total fees tothe accounting firms attributable to the pastaccounting year:KPMG C. Jespersen 268 262Coopers & Lybrand 280 365Including services other than auditing:KPMG C. Jespersen 68 61Coopers & Lybrand 80 80

6 Depreciation and write-downsShips 80,170 60,882 62,812 43,524Properties 100 100 100 100Fixtures and equipment 852 796 852 796

81,122 61,778 63,764 44,420

Notes


1996Note 199619971997

DKK 1000


28

7 Share of profit and investment inNortide Shipping Ltd., Bermuda(associated company, share of ownership 50%)Acquisition cost 1/1 43,316 43,316 43,316 43,316Acquisition cost 31/12 43,316 43,316 43,316 43,316

Value adjustments 1/1 13,853 -391 13,853 -391Share of the profit for the year -1,443 11,160 -1,443 11,160Exchange rate adjustment of investment 8,477 3,084 8,477 3,084Value adjustments 31/12 20,887 13,853 20,887 13,853

Book value 31/12 64,203 57,169 64,203 57,169

8 Share of profit before tax, subsidiariesNordmax ApS, Copenhagen 1,992 4,562Nordfarer ApS, Copenhagen 3,713 -33�NORDEN� Tankers & Bulkers Pte. Ltd., Singapore -231 -

5,474 4,529

9 Financial incomeDividends 0 22 0 22Bond yields 26 864 26 864Realized gains on securities 0 1,121 0 1,121Interest income and exchange rate adjustmentsaffiliated companies - - 9,821 8,492Capital gain on redemption of loans 29,461 0 29,461 0Other interest income 2,529 2,495 1,914 2,018Exchange rate adjustments 1,676 7,772 161 6,589

33,692 12,274 41,383 19,106

10 Financial expensesInterest expenses 40,821 39,812 30,170 29,753Interest expenses and exchange rate adjustmentsaffiliated companies - - 194 263Exchange rate adjustments 0 0 0 0

40,821 39,812 30,364 30,01611 Tax

Tax on the profit for the year 0 0 0 0No corporation tax paid in 1997.Deferred tax relates to differences in the bookand tax values of ships, fixtures and fittings,tools and equipment, current assets and provi-sions and loans inforeign currencies respectively.Deferred tax amounts to 100,800 80,900 76,800 58,800

Notes


1996Note 199619971997

DKK 1000


29

12 PropertiesCost of acquisition 1/1 13,405 14,116 13,405 14,116Additions for the year 856 856Disposals for the year 0 -711 0 -711Cost of acquisition 31/12 14,261 13,405 14,261 13,405

Depreciation and write-downs 1/1 -300 -361 -300 -361Depreciation and write-downs for the year -100 -100 -100 -100Reversed write-downs 0 161 0 161Depreciation and write-downs 31/12 -400 -300 -400 -300

Book value 31/12 13,861 13,105 13,861 13,105

At the latest official valuation as at 1/1,the properties of the Group andthe Parent Company were assessed at 15,900 15,900 15,900 15,900

13 ShipsCost of acquisition 1/1 1,155,909 1,155,909 870,472 870,472Cost of acquisition 31/12 1,155,909 1,155,909 870,472 870,472

Depreciation and write-downs 1/1 -241,821 -180,939 -191,827 -148,303Depreciation for the year -60,595 -60,882 -43,237 -43,524Write-downs for the year -19,575 0 -19,575 0Depreciation and write-downs 31/12 -321,991 -241,821 -254,639 -191,827

Book value 31/12 833,918 914,088 615,833 678,645

Amount insured in million USD 174,6 186,0 132,5 132,5

14 Fixtures and equipmentCost of acquisition 1/1 6,053 5,267 6,053 5,267Additions for the year 412 1,091 412 1,091Disposals for the year -1,017 -305 -1,017 -305Cost of acquisition 31/12 5,448 6,053 5,448 6,053

Depreciation 1/1 -2,839 -2,229 -2,839 -2,229Depreciation for the year -852 -796 -852 -796Reversed depreciation onassets sold 847 186 847 186Depreciation 31/12 -2,844 -2,839 -2,844 -2,839

Book value 31/12 2,604 3,214 2,604 3,214

Notes


1996Note 199619971997

DKK 1000


30

15 Prepayments on newbuildings 234,831 89,438 234,831 89,438

Prepayments on two newbuildings contractedfrom Kherson Shipyard, Ukraine. In January1998 �NORDEN� took delivery of the first ship,which has been sold to American interests withdelivery in March 1998. The company decidedto cancel the next newbuilding and the prepaidamounts were reimbursed with interest inJanuary 1998.

16 Shares in subsidiariesCost of acquisition 1/1 5,728 5,728Additions for the year 421 0Cost of acquisition 31/12 6,149 5,728

Value adjustments 1/1 20,095 15,566Profit for the year 5,474 4,529Value adjustments 31/12 25,569 20,095

Book value 31/12 31,718 25,823

To be specified as follows: Company capital Share owned Instrinsic value

Nordmax ApS, Copenhagen 200 100% 13,610 11,618Nordfarer ApS, Copenhagen 200 100% 17,918 14,205�NORDEN� Tankers & Bulkers Pte. Ltd.,Singapore SGD 100 100% 190 -

31,718 25,823

17 AccrualsOf which exchange rate adjustmentsof long-term loans in USDUnder current assets 73,674 0 47,642 0Under short-term debt 0 4,170 0 11,040

The exchange rate adjustments result from thedifference between the historical rates of exchangeand the rate of exchange at the balance sheetdate, cf. accounting policies and accounts report.

18 SecuritiesShares 12 12 12 12Bonds 322 485 322 485Mortgages deeds and instruments of debt 39 53 39 53

373 550 373 550

Notes


1996Note 199619971997

DKK 1000


31

Notes


1996Note 199619971997

DKK 1000

19 Share capitalShare capital 1/1 48,205 48,205 48,205 48,205Share capital 31/12 48,205 48,205 48,205 48,205

The share capital consists of 482,050 sharesat par value DKK 100 each.

20 Share premium accountBalance 1/1 68,599 68,599 68,599 68,599Balance 31/12 68,599 68,599 68,599 68,599

21 Revaluation reserveBalance 1/1 16 801 16 801Adjustment of securities -13 -785 -13 -785Balance 31/12 3 16 3 16

22 Reserve for net revaluationby the equity methodBalance 1/1 0 0 33,948 15,568Transferred from profit carried forward 0 0 12,739 18,380Balance 31/12 0 0 46,687 33,948

23 Profit carried forwardBalance 1/1 289,064 267,099 255,116 251,531Profit for the year 54,890 24,666 54,890 24,666Dividend proposed -8,677 -5,785 -8,677 -5,785Transferred to reserve for net revaluationby the equity method - - -12,739 -18,380alue adjustment of investment,Nortide Shipping Ltd 8,477 3,084 8,477 3,084Balance 31/12 343,754 289,064 297,067 255,116


32

25 MortgagesAs security for long-term bank loans and loansfrom Danish Ship Finance have been registeredon ships (number) 6 6 4 4at a book value of DKK million 833.9 914.0 615.8 678.6mortgages registered at USD million 150.2 150.2 115.4 115.4

As security for the liabilities for the Groupsecurities and bank deposits have beendeposited in the amount of USD million 0 6.8 0 6.8

Notes


1996Note 199619971997

DKK 1000

24 Long-term liabilitiesLong-term liabilities that fall due morethan 5 years after 31/12 amount toLoans in USD - USD million 32.4 45.6 23.4 33.0Servicing of long-term liabilities falling duewithin one year is stated under short-term debtand includes bank loans.The Group has fixed the rate of interest on loansin USD by means of financial instruments withan average scope of 6 years.


33

26 Contingent liabilitiesThe company took m.t. �Nordfast� on abareboat charter running for 12 years as fromAugust 1997. Under the charter party thecompany has a continuous purchase optionfrom January 1, 2000 at a favourable pricecompared to the current market price.The bareboat charter hire will amount toapprox. USD 2.3 million in 1998 and is estimatedto amount to an average of USD 2.3 million peryear for the remainder of the term.

�NORDEN� has furnished a Letter of Awarenessfor Nordstaden I/S with a view to meeting ajoint and several loan commitment, the balanceof which amounts to USD 23.5 26.7 23.5 26.7

Nordmax ApS is jointly and severally liable asa partner in Nordstaden I/S for a maximumamount of DKK million. 3.0 3.2 3.0 3.2

�NORDEN� is liable for the bank loan ofNordholt Ltd., amounting to USD million 10.6 11.9 10.6 11.9

The company is jointly and severally liable withthe other jointly taxed companies as regardsliability for the joint tax.

Guarantee commitments do not exceedDKK million 2.7 2.7 2.7 2.7


1996Note 199619971997

DKK 1000

Notes


34

Building year DWT

DRY CARGO VESSELS

Owned tonnageM.s. �Nordpol� 1994 50,388 3.5/10.0M.s. �Nordkap� 1994 50,455 3.5/10.0M.s. �Nord-Power� 1991 150,108 7.0/10.5M.s. �Nord-Energy� 1991 150,149 7.0/10.5

Time charter tonnageM.s. �Aries SB� 1984 41,213M.s. �Edip Karahasan 1989 43,665M.s. �Yong An 2� 1995 44,072M.s. �Shou Ning Hai� 1985 45,149M.s. �Aspen Trader� 1994 45,296M.s. �Cape Providence� 1987 146,019

TANKERS

Owned and controlled tonnageM.t. �Nordfast� 1987 29,997*) 10.0/14.9M.t. �Nordfarer� 1988 29,998 9.5/14.9M.t. �Nordholt� 1988 39,977 9.5/14.9M.t. �Skaunord� 1992 101,650 6.5/12.8

Time charter tonnageM.t. �Danila� 1992 29,751M.t. �Mekhanik Khemelevskiy� 1986 29,990M.t. �Mekhanik Vraskov� 1986 29,990M.t. �Emerald Gloria� 1991 41,502M.t. �Dynamic Express� 1993 42,235M.t. �Highseas� 1989 45,017M.t. �Nord Gloria� 1992 45,720

New ordersM.t. �Kherson tbn (1432)� 1998 29,500 0.0/14.9M.t. �Kherson tbn (1433)� 1998 29,500 0.0/14.9

Average age profile, owned tonnageincluding ships on order 5.7

*) Bareboat charter

The Group�s Tonnage at the end of 1997Average age profile in years for

respective types

Own tonnage/world tonnage

MOGENS HUGO JØRGENSENManaging DirectorC. W. Obel Aktieselskab

Chairman of the Board of Directors:A/S Motortramp

Member of the Board of Directors:Skandinavisk Holding A/SSkandinavisk Tobakskompagni A/SUnidanmark A/SGN Store Nord A/S

Auditors

KPMG C. JespersenCoopers & Lybrand

ALISON J. F. RIEGELS

Vice Chairman of the Board ofDirectors:A/S Motortramp

BOARD OF DIRECTORS

ERIK G. HANSENPresidentEQT Partners A/S

Chairman of the Board of Directors:Dansk Portefølje Holding A/SEnergy Holding A/SInvesteringsselskabet af 14. november1997 A/S

Member of the Board of Directors:Bisca Holding A/SCarli Gry International A/SEjendomsselskabet Norden A/STTIT A/SA/S Motortramp

ERLING HØJSGAARDManaging DirectorInternational Bulk Shipping ApS

Chairman of the Board of Directors:Interbulk A/S

Member of the Board of Directors:A/S MotortrampGolf Shipping A/S

STEEN KRABBEPresident

Chairman of the Board of Directors:Danish Shipowners� Association

Chairman of the Board of Directors:Knud I. Larsen A/S

MANAGEMENT

Ownership

Stockholders under Section 28Aof the Danish Public Companies Act:

A/S Motortramp, StensvedApoteksassistenternes Pensionskasse, Copenhagen

KIRSTEN HANSEN*)Crew Manager

ALLAN THOMSEN*)Captain

*) employee-elected representative

From left to right: Steen Krabbe, Alison J. F. Riegels, Erik G. Hansen, Mogens Hugo Jørgensen, Kirsten Hansen, Allan Thomsen og Erling Højsgaard.

DAMPSKIBSSELSKABET �NORDEN� A/S · AMALIEGADE 49, DK-1256 COPENHAGEN K · TELEPHONE +45 3315 0451 · TELEFAX +45 3315 6199

DESIGN: DREWSEN DESIGN A/S · PRINTING: NORDGRAF A/S

@Hugin 1998. All rights reserved.

97Table of Contents

Overview

Summary 1997

Key figures

Report of the Board of Directors

Income Statement

Balance Sheet

Cash Flow Analysis

Notes

Shareholders Policy

Norden

Main menu

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annual report and accounts 1997 - hugin...

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