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J. Lauritzen: Financial report for 2013

“2013 was yet a difficult year for J. Lauritzen (JL) and the result is certainly unsatisfactory by any measure. But the efforts made and changes implemented during the year are significant and will, when they take effect , mean a new JL,very different from the JL of the past and stronger positioned for the future,”says Jan Kastrup-Nielsen, President and CEO. JL’s result was USD (284.6)m compared to USD (349.7)m in 2012.

The result had been anticipated since mid-2013 and as such, has been analyzed, understood and worked with over the past six months. The result was significantly impacted by one - off items with a net effect of USD (185.0)m (2012: USD (254.4)m) partly caused by Lauritzen Bulkers again being hit by a sizeable counterparty default in the capesize bulk carrier segment.

Adjusted for one -off items ,JL’s result was USD (99.6)m compared to USD (95.4)m in 2012. To secure our long- term financial strength, we decided that structural changes in our capital base and our business portfolio were needed. To achieve this, the following actions were taken during the year:

•The Lauritzen Foundation decided to convert two subordinated loans into equity. At year- end 2012, the loans amounted to a total of DKK 903m (USD 160m).

•Our fleet of ten wholly-owned product tankers was solden bloc in October 2013 to Hafnia
Tankers at a price of USD 305m, releasing net cash of USD 125m.

•After the balance date, three shuttle tankers were sold with expected delivery between 1 April 2014 and 15 May 2014 to Knutsen NYK Offshore Tankers, Norway at a price of USD 191m, releasing net cash of USD 65m. The sale is still subject to certain approvals.

Other main initiatives and events:

•At year-end, JL offered holders of our Senior Unsecured Bond Issue 2010/2015 to buy back these bonds at a price of NOK 105. The offer was very well received with bonds valued at NOK 259m being repurchased, equal to 37% of outstanding bonds.

•Part- owned Axis Offshore exercise dan option to contract an additional accommodation unit for delivery in late 2015. Our shareholding in Axis Offshore was reduced to 34% (voting rights remain unchanged at 50%). Instead of having a 50% share of a “two unit” ASV company, we now own 34% of a “three unit” ASV company.

•During the second half of the year, Lauritzen Bulkers took a total of eleven ECO design newbuildings on long-term time-charter for delivery 2014- 17 with both extension and purchase options.

•In addition hereto, four supramax ECO design new buildings with delivery 2016 -17 has been contracted ( concluded in early 2014 )Due to the sale of our product and shuttle tankers, both Lauritzen Tankers and Lauritzen Offshore Shuttletankers were defined as “discontinued operations ”, with assets and related liabilities reclassified as “held for sale” at year - end 2013, cf. enclosed Income Statement and Financial Position.
Source: J. Lauritzen (JL)