Result for the year

Revenues

Revenues totalled USD 457.6m in 2006 compared to USD 591.7m in 2005. The USD 134.1m decrease mainly related to a strategic reduction in chartered vessels at Lauritzen Bulkers as well as declining spot rates in the bulk market. Sale of reefer vessels in 2005 and 2006 affected revenues, although this was partly off-set by an increase in Lauritzen Tankers’ revenues. Revenues of Lauritzen Kosan decreased due to employment of vessels in jointly controlled operations, cf. Figure 4.

Other operating income amounted to USD 17.2m, up from USD 4.4m in 2005. The increase is mainly related to technical management.

Costs

Hire of chartered vessels amounted to USD 219.1m, down USD 37.7m from the USD 256.8m reported in 2005. The decrease was mainly due to re-delivery of chartered bulk carriers, partly off-set by a small increase in the number of chartered reefer vessels and product tankers.

Operating costs of vessels totalled USD 43.1m, up from USD 34.5m in 2005 primarily due to an increased number of owned bulk carriers.

Other operating costs including bunkers, port expenditures and other voyage-related costs amounted to USD 39.1m compared to USD 53.1m in 2005. The decrease is due to the reduction of chartered bulk vessels.

Staff costs, office, fleet and other administration costs totalled USD 73.4m, up from USD 65.1m in 2005 mainly as a result of increased average headcount as well as higher wages.

Result before depreciation (EBITDA)

EBITDA amounted to USD 100.1m compared to USD 186.6m in 2005, cf. Figure 5.

EBITDA for Lauritzen Bulkers fell from USD 130.8m in 2005 to USD 77.6m in 2006 primarily due to the softening of the bulk market.

EBITDA for Lauritzen Kosan was USD 33.5m in line with 2005. The effect of improved market conditions was off-set by a change in the size and mix of the gas tanker fleet.

EBITDA for Lauritzen Reefers was USD (0.2)m, down from USD 24.5m in 2005 mainly as a result of the sale of reefer vessels in 2005 and 2006, but also due to reduced margins on chartered vessels.

EBITDA for Lauritzen Tankers amounted to USD 6.4m, slightly below the figure of USD 6.8m for EBITDA reported for 2005.

EBITDA for land-based activities and unallocated items decreased from USD (8.4)m in 2005 to USD (17.1)m in 2006 due to down-sizing of land-based operations as well as increases in other costs. The increase in other costs was primarily due to USD exchange rate, internal hedging and organisational growth related to JL’s newbuilding programme.

Depreciation and sale of vessels

Two bulk carriers, nine gas carriers and one reefer vessel were sold in 2006 generating a profit of USD 43.7m. In 2005 three bulk carriers, three gas carriers and seven reefer vessels were sold generating gains of USD 52.7m.

Depreciation amounted to USD 27.2m, compared to USD 25.6m in 2005. Depreciation on vessels increased by USD 1.6m as a result of changes to the size and mix of owned vessels.

Net result in associated companies totalled USD 9.7m compared to USD 17.7m in 2005. The decrease mainly related to sales of vessels owned in joint ventures partly off-set by an increase in JL’s share of the profits of NYKLauritzenCool and new investments in part-owned vessels during the second half of the year.

Figure 4: Revenues 2002-2006 (USDm)

Figure 5: Selected key figures 2002-2006 (USDm)

Figures and financial ratios for 2003 and earlier have not been adjusted to comply with International Financial Reporting Standards (IFRS).

Financial items

Net financial income totalled USD 9.2m, up from USD (0.1)m in 2005 due to an improved average net cash position and due to net gains on securities and currency positions.

Tax and results

Profits before tax were USD 136.3m, down from USD 231.6m in 2005. The income tax was USD (10.8)m compared to USD (21.2)m in 2005.

The result for 2006 was USD 125.6m compared to the USD 210.4m reported in 2005. This result was better than expected, primarily due to gains from the sale of vessels and the improved bulk market in the second half of the year.

Balance sheet

Total assets were up by USD 105.0m on 2005 from USD 824.7m to USD 929.7m.

Goodwill amounted to USD 1.7m at year-end 2006 in line with year-end 2005. This related to the acquisition of Quantum Tankers in 2004.

Vessel values amounted to USD 394.4m compared to USD 268.1m in 2005, an increase mainly due to the acquisition of bulk carriers and a product tanker. All vessels are recognised at values below or equal to their utility values or broker valuations or both. Broker valuations totalled USD 638.4m.

Prepayments were up USD 139.1m to 211.4m due to the bulk, gas carrier and product tanker newbuilding programme.

Investments in associated companies increased to USD 48.9m, up from USD 44.8m in 2005. The increase was mainly due to net investments in vessels owned by partnerships and the Group’s share of the net results reported by joint ventures.
The book value of vessels owned in joint ventures amounted to USD 129.2m, whereas their broker valuation was USD 207.7m.

Other non-current receivables amounted to a total of USD 40.2m, down from USD 51.8m in 2005. These were mainly due to subleases of financially leased reefer vessels.

Total shareholders’ equity was up USD 72.3m at USD 686.1m, cf. Figure 6. Return on JL’s share of equity was 19.3% compared to 39.8% in 2005.

At year-end 2006, total liabilities amounted to USD 243.6m, up USD 32.7m on 2005. Mortgages on vessels and lease debt including next year’s repayments fell by USD 27.3m to USD 49.9m. Debts of USD 49.1m relating to financially leased vessels were off-set by a corresponding amount related to subleases of these vessels included in other receivables. At year-end, debt attributable to JL’s own fleet amounted to USD nil.

Cash flow

Cash and cash equivalents amounted to USD (55.7)m compared to USD 69.7m at year-end 2005, cf. Note 27.

Cash flow from operations totalled USD 79.8m, down from USD 217.0m in 2005, cf. Figure 7. In 2006, cash flow from investment activities decreased to USD (137.2)m from USD (161.6)m in 2005, mainly as a result of less investments in securities partly off-set by an increase in investments in vessels.

Cash flow from financing activities (loan repayments and dividends) amounted to USD (68.0)m in 2006 compared to USD (103.4)m in 2005.

Figure 6: Capital structure (USDm)

Figure 7: Cash flow from operations (USDm)