Torvald Klaveness’ preliminary result for 2015

Despite weakening shipping markets Torvald Klaveness delivered a stable underlying EBITDA, and maintained a high solidity and good liquidity in 2015. The sale of the five selfunloader vessels towards the end of the year will significantly strengthen the group’s liquidity. The result was negatively impacted by impairments and provisions related to the group’s container and dry bulk investments. Torvald Klaveness continues to invest in new ships and new digital initiatives. The new building program is increased to seven vessels and new digital service concepts will be rolled out in 2016.

The group, consisting of Rederiaksjeselskapet Torvald Klaveness and its subsidiaries, delivered the following consolidated accounts (numbers in USD million):

2015 Preliminary Result

The markets for both dry bulk and container vessels weakened in 2015. Klaveness was exposed to these markets, but earnings from specialized vessels combined with generally cautious positioning contributed to a relatively stable development for the group as evidenced by an EBITDA of USD 52 million, or in line with previous years at USD 67 million when correcting for provisions for future TC-In contract losses and cancellation costs. The specialized vessels, consisting of six combination carriers and five selfunloader vessels, were the main contributors to the EBITDA.

Towards the end of 2015, Klaveness decided to sell its five selfunloader vessels to CSL and Algoma. All vessels were delivered to their new owners in January 2016, and net proceeds of USD 144 million were realized after repayment of a revolving credit facility. A gain of USD 30 million will be recorded in the 2016 results.

On the back of continued stable markets for the combination carriers, the existing new building program of three vessels was expanded to a total of six vessels in 2015. The vessels, which are being constructed at two yards in China, will be delivered in the 2016-2019 period, with the first two vessels arriving this year. With this program, Klaveness will double its combination carrier business.

The market for Klaveness’ container vessels weakened significantly towards the end of the year after a strengthening during the first half. All of the group’s container vessels were employed throughout the year with few idle days at rates above the general market due to their fuel efficiency. Still, given the market softening and outlook at year-end it was necessary to impair the vessels with USD 17.5 million, impacting the results negatively. Excluding the impairment, the container vessels had a small negative impact on the group’s net profit after tax.

The dry bulk market deteriorated significantly in 2015 to almost unprecedented levels. As a result, Klaveness decided to cancel one of the two Kamsarmax vessels being constructed in China at a cost of USD 2.8 million. Klaveness also has two longer TC-In contracts where provision for future losses of USD 12.1 million was taken in 2015. The other Kamsarmax under construction will be delivered end of February 2016. An impairment of USD 8 million has been taken on this vessel to reflect current market values.

In addition to managing own vessels, Klaveness act as an operator and manages a portfolio of physical and financial contracts linked to the panamax and supramax dry bulk markets. Klaveness also offers commercial management through pools for external owners in the same segments. Despite very challenging market conditions, this activity generated net revenue of USD 20 million and a marginal profit in 2015. The total fleet operated was 133 and the number of participating vessels in the Klaveness pools counted 53 vessels at year-end.

A new strategic direction was set for the group in 2015, focusing on Klaveness’ vision to improve the nature of shipping. The new strategy is focused on development in three core areas; expanding the combination carrier business into a global service, building the leading digital dry bulk operator, and developing intuitive and useful digital services to shipping. In addition to ordering new vessels, Klaveness invested in new digital solutions in 2015. A digital laboratory, called KLAB, was established, and digital is now an integral part of the group’s strategy. New digital services will be rolled out to customers and users in 2016.

The group’s liquidity and financial position is regarded as good, and the group is well positioned for potential further growth.

Klaveness’ ship owning activities are organized under the ownership of the subsidiary Klaveness Ship Holding AS. This company is also the issuer of the KSH01 and KSH02 bonds. Separate consolidated preliminary results for Klaveness Ship Holding have therefore also been published today.

For questions please contact:

Lasse Kristoffersen, CEO, telephone +47 2252 6238

Rebekka Glasser Herlofsen, CFO, telephone +47 2252 6441

Oslo, 18 February 2016

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