SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 


Form 6-K
 

 
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 under
the Securities Exchange Act of 1934
For the month of August 2018

Commission File Number 001-32640

DHT HOLDINGS, INC.
(Exact name of Registrant as specified in its charter)

Clarendon House
2 Church Street, Hamilton HM 11
Bermuda
(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
 
Form 20-F                                 Form 40-F
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): _____
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b )(7): _____
 

 

 
Press Releases
 
The press release issued by DHT Holdings, Inc. (the Company or DHT ) on August 7, 2018 related to its results for the second quarter of 2018 is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
 
Incorporation by Reference
 
Exhibit 99.1 to this Report on Form 6-K shall be incorporated by reference into the Company s registration statements on Form F-3 (file Nos. 333-199697 and 333-219069), initially filed with the Securities and Exchange Commission on October 30, 2014 and June 30, 2017, respectively, as amended, in each case to the extent not superseded by information subsequently filed or furnished (to the extent the Company expressly states that it incorporates such furnished information by reference) by the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934, in each case as amended.
 
 

 
 
EXHIBIT LIST
 
 
 
Exhibit
 
Description
 
 
 
99.1
 
Press Release dated August 7, 2018
 
 
 
 
 
 
 
 
 
 
 
 

 
 
SIGNATURES
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
     
   
DHT Holdings, Inc.
 
   
(Registrant)
 
       
Date: August 9, 2018
By:
/s/ Laila C. Halvorsen  
    Name:     Laila C. Halvorsen  
    Title:       Chief Financial Officer  
       
 
 
 
 
 
Exhibit 99.1
 



DHT Holdings, Inc. Second Quarter 2018 Results

HAMILTON, BERMUDA, August 7, 2018 – DHT Holdings, Inc. (NYSE:DHT) (“DHT” or the “Company”) today announced:

FINANCIAL AND OPERATIONAL HIGHLIGHTS:

USD mill. (except per share)
Q2 2018
Q1 2018
Q4 2017
Q3 2017
Q2 2017
2017
2016
Adjusted Net Revenue 1
34.4
46.2
56.6
54.8
59.6
241.8
290.7
Adjusted EBITDA 2
12.7
24.0
33.5
31.4
36.7
152.1
209.4
Net Income/(Loss)
(28.2)
(9.2)
(7.5) 3
(5.1)
4.8
6.6 3
9.3 3
EPS – basic
(0.20)
(0.06)
(0.05)
(0.04)
0.04
0.05
0.10
EPS – diluted 4
(0.20)
(0.06)
(0.05)
(0.04)
0.04
0.05
0.10
Interest Bearing Debt
856.0
764.4
786.2
826.0
841.1
786.2
701.5
Cash
76.9
69.8
77.3
86.5
104.0
77.3
109.3 5
Dividend 6
0.02
0.02
0.02
0.02
0.02
0.14
0.58
Spot Exposure 7
70.4%
70.7%
73.6%
67.9%
63.5%
66.4%
57.8%
Unscheduled off hire 7
0.0%
0.1%
0.1%
0.3%
0.2%
0.2%
1.8%
Scheduled off hire 7
0.0%
0.7%
0.3%
2.7%
2.8%
2.0%
1.7%

 
QUARTERLY HIGHLIGHTS:
 
·
Adjusted EBITDA for the quarter of $12.7 million. Net loss for the quarter of $28.2 million or loss of $0.20 per basic share. The net result was affected by a non-cash finance expense of $4.3 million (or $0.03 per basic share) related to the $484 million refinancing.

·
The Company’s VLCCs achieved time charter equivalent earnings of $14,700 per day in the second quarter of 2018 of which the Company’s VLCCs on time-charter earned $22,000 per day and the Company’s VLCCs operating in the spot market achieved $11,900 per day (after adoption of IFRS 15 as of January 1, 2018).

·
Thus far in the third quarter of 2018, 60% of the available VLCC spot days have been booked at an average rate of $21,100 per day.

·
For the second quarter of 2018, the Company will return $2.9 million to shareholders in the form of a cash dividend of $0.02 per share, payable on August 31, 2018 for shareholders of record as of August 24, 2018.

·
In April, the Company entered into a $484 million secured credit facility agreement with all nine of its existing relationship banks for the refinancing of 13 of the Company’s VLCCs. Also, the Company entered into an agreement with ABN Amro to increase the revolving credit facility from $43.4 million to $57.3 million. The revolving credit is currently undrawn.

SUBSEQUENT EVENTS HIGHLIGHTS:
 
·
On July 27, 2018 the Company took delivery of the first of its two VLCC newbuildings from HHI. The vessel is named DHT Bronco. The second newbuilding from HHI is expected to be delivered in September 2018.
 
·
In July, the Company entered into agreements to install exhaust gas cleaning systems, also known as scrubbers, on twelve of its VLCCs. The Company has entered into agreement with Alfa Laval to supply the systems and has also secured shipyard capacity to install all systems within 2019. These twelve systems will come in addition to the two systems being installed on the newbuildings DHT Bronco, delivered in July 2018, and DHT Mustang set for delivery from Hyundai Heavy Industries (“HHI”) in Q3 2018. The Company has received proposals to finance the majority of the project with debt and is confident to conclude this in the near future.
 
 
 

 
 
·
In August, the Company entered into 5-year interest rate swaps with Nordea totaling $168.8 million with an average fixed rate of 3.01% - as compared to current 3m Libor of about 2.34%. $168.8 million equals 22% of total outstanding bank mortgage debt.

·
As of August 7, 2018 DHT has a fleet of 27 VLCCs, 26 in the water and one under construction scheduled for delivery in Q3 2018, as well as two Aframaxes. The total dwt of the fleet is 8,590,740. Seven of the VLCCs and one of the Aframaxes are on time charters. For more details on the fleet, please refer to our web site: http://dhtankers.com/index.php?name=AboutDHT%2FFleet.html .

 

Footnotes:
1 Shipping Revenues net of voyage expenses.
2 Shipping Revenues net of voyage expenses, vessel operating expenses and general and administrative expenses.
3 Q4 2017 includes a non-cash impairment charge of $1.1 million and a net loss of $3.3 million related to the sale of DHT Eagle and DHT Utah. Q1 2017 includes a non-cash impairment charge of $7.5 million related to the sale of DHT Ann and DHT Phoenix. 2017 includes impairment charges of $8.5 million and net loss of $3.5 million related to sale of vessels. 2016 includes total impairment charges of $84.7 million.
4 Diluted shares include the dilutive effect of the convertible senior notes and restricted shares granted to management and members of the board of directors.
5 The cash balance as of December 31, 2016 includes $48.7 million relating to the financing for DHT Tiger which was drawn in 2016 in advance of the delivery of the DHT Tiger on January 16, 2017.
6 Per common share.
7 As % of total operating days in period.

 

2

 
SECOND QUARTER 2018 FINANCIALS

Shipping revenues for the second quarter of 2018 of $67.2 million compared to shipping revenues of $86.3 million in the second quarter of 2017. The change from the 2017 period to the 2018 period was due lower tankers rates and non-cash IFRS 15 adjustment of $4.2 million partly offset by an increase in the fleet.

Voyage expenses for the second quarter of 2018 were $32.8 million, compared to voyage expenses of $26.7 million in the second quarter of 2017. The increase was mainly due to a larger fleet in the 2018 period partly offset by a non-cash IFRS 15 adjustment of $1.5 million.

The Company’s VLCCs achieved time charter equivalent earnings for the vessels operating in the spot market of $11,900 per day in the second quarter of 2018. If IFRS 15 had not been adopted January 1, 2018, the time charter equivalent earnings would have been $13,600 per day in the second quarter of 2018.

Vessel operating expenses for the second quarter of 2018 were $17.7 million, compared to $17.5 million in the second quarter of 2017. The increase was due to an increase in the fleet.

Depreciation and amortization was $24.9 million for the second quarter of 2018, compared to $22.9 million in the second quarter of 2017. The increase was due to an increase in the fleet.

General & administrative expense (“G&A”) for the second quarter of 2018 was $4.0 million, consisting of $3.4 million cash and $0.6 million non-cash charges, compared to $5.4 million in the second quarter of 2017, consisting of $4.5 million cash and $0.9 million non-cash charges. Non-cash G&A includes accrual for social security tax.

Net financial expenses for the second quarter of 2018 were $16.0 million compared to $8.7 million in the second quarter of 2017. The increase is mainly due to increased borrowings in connection with an increase in the fleet, a non-cash finance expense of $4.3 million related to upfront fees in connection with the refinancing and higher LIBOR.

The Company had net loss in the second quarter of 2018 of $28.2 million, or loss of $0.20 per basic share and $0.20 per diluted share, compared to net income in the second quarter of 2017 of $4.8 million, or $0.04 per basic share and $0.04 per diluted share.

Net cash provided by operating activities for the second quarter of 2018 was $12.7 million compared to $35.5 million for the second quarter of 2017. The decrease is mainly due to net loss of $28.2 million in the second quarter 2018 compared to net income of $4.8 million in the second quarter 2017 due to a weaker tanker market.

Net cash used in investing activities was $89.1 million in the second quarter of 2018 and was mainly related to investment in vessels under construction. Net cash used in investing activities was $152.5 million in the second quarter of 2017 comprising $153.8 million related to investment in vessels and $42.0 million related to investment in vessels under construction, offset by $43.3 million related to the sale of DHT Ann and DHT Phoenix.

Net cash provided by financing activities for the second quarter of 2018 was $83.6 million comprising $472.0 million related to issuance of debt offset by $377.9 million related to repayment of long term debt in connection with refinancing, $7.6 million related to scheduled repayment of long term debt and $2.9 million related to cash dividend paid. Net cash provided by financing activities for the second quarter of 2017 was $148.9 million comprising $201.2 million related to issuance of debt offset by $17.1 million related to repurchase of convertible senior notes, $13.3 million related to repayment of long term debt in connection with sale of vessels, $11.8 million related to scheduled repayment of long term debt and $10.1 million related to cash dividend paid.

As of June 30, 2018, our cash balance was $76.9 million, compared to $77.3 million as of December 31, 2017.

We declared a cash dividend of $0.02 per common share for the second quarter of 2018 payable on August 31, 2018 for shareholders of record as of August 24, 2018.

We monitor our covenant compliance on an ongoing basis. As of the date of our most recent compliance certificates submitted for the second quarter of 2018, we are in compliance with our financial covenants.

3

 
As of June 30, 2018, we had 143,592,543 shares of our common stock outstanding compared to 142,347,298 as of June 30, 2017.
 
 
FIRST HALF 2018 FINANCIALS
 
We reported shipping revenues for the first half of 2018 of $147.1 million compared to $178.4 million in the first half of 2017. The change from the 2017 period to the 2018 period was due to lower tanker rates and non-cash IFRS 15 adjustment of $0.4 million partly offset by an increase in the fleet.

Voyage expenses for the first half of 2018 were $66.5 million compared to voyage expenses of $48.1 million in the first half of 2017. The increase was mainly due to an increase in the fleet and more vessels in the spot market partly offset by a non-cash IFRS 15 adjustment of $0.5 million.

Vessel operating expenses for the first half of 2018 were $35.0 million, compared to $31.4 million in the first half of 2017. The increase is mainly due to an increase in the fleet.

Depreciation and amortization, including depreciation of capitalized survey expenses, was $48.5 million for the first half of 2018, compared to $43.9 million in the first half of 2017. The increase was due to an increase in the fleet.

No impairment charge was recorded in the first half of 2018. We recorded an impairment charge of $7.5 million in the first half of 2017 related to the sale of DHT Phoenix and DHT Ann.

G&A for the first half of 2018 was $8.9 million, consisting of $7.1 million cash and $1.8 million non-cash, compared to $11.7 million, consisting of $8.7 million cash and $3.0 million non-cash for the first half of 2017. Cash G&A for the first half of 2017 includes $2.1 million in advisory fees related to the Frontline proposal to acquire all outstanding shares in DHT.

Net financial expenses for the first half of 2018 were $25.5 million, compared to $16.4 million in the first half of 2017. The increase is mainly due to increased borrowings in connection with an increase in the fleet, a non-cash finance expense of $4.3 million related to upfront fees in connection with the refinancing and higher LIBOR.

We had net loss for the first half of 2018 of $37.4 million, or loss of $0.26 per basic share and $0.26 per diluted share compared to net income of $19.2 million, or $0.18 per basic share and $0.18 per diluted share in the first half of 2017. The difference between the two periods reflects lower freight rates partly offset by a larger fleet.

Net cash provided by operating activities for the first half of 2018 was $30.0 million compared to $76.9 million for the first half of 2017. The decrease is mainly due to lower net income.

Net cash used in investing activities for the first half of 2018 was $87.6 million comprising $106.6 million related to investment in vessels under construction and $1.7 million related to investment in vessels offset by $20.7 million related to the sale of DHT Utik. Net cash used in investing activities for the first half of 2017 was $199.2 million of which $159.8 million related to investment in vessels and $105.9 million related to investment in vessels under construction offset by $66.7 million related to the sale of DHT Ann, DHT Phoenix and DHT Chris.

Net cash provided by financing activities for the first half of 2018 was $57.2 million comprising $472.0 million related to issuance of debt offset by $377.9 million related to repayment of long-term debt in connection with refinancing, $22.4 million related to scheduled repayment of long term debt, $8.7 million related to repayment of long term debt in connection with sale of vessels and $5.7 million related to cash dividend paid. Net cash used in financing activities for the first half of 2017 was $117.0 million comprising $200.5 million related to issuance of debt offset by $25.4 million related to repayment of long term debt in connection with sale of vessels, $23.4 million related to scheduled repayment of long term debt, $17.6 million related to cash dividend paid and $17.1 million related to repurchase of convertible senior notes.

As of June 30, 2018, our cash balance was $76.9 million, compared to $77.3 million as of December 31, 2017.

4

 
As of June 30, 2018, we had 143,592,543 shares of our common stock outstanding compared to 142,347,298 as of June 30, 2017.
 
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
 
USD in thousands except per share
Q2 2018
Q1 2018
Q4 2017
Q3 2017
Q2 2017
2017
2016
Reconciliation of Adjusted Net Revenue
             
               
Shipping revenues
67,233
79,911
92,244
84,374
86,335
355,052
356,010
Voyage expenses
(32,798)
(33,721)
(35,619)
(29,594)
(26,701)
(113,301)
(65,349)
Adjusted Net Revenue
34,435
46,191
56,625
54,780
59,634
241,751
290,661
               
Reconciliation of Adjusted EBITDA
             
               
Net income/(loss) after tax
(28,222)
(9,213)
(7,514)
(5,067)
4,836
6,602
9,260
Income tax expense/(income)
40
18
(2)
55
39
131
95
Other financial (income)/expenses
606
(92)
253
81
(460)
(443)
40
Fair value (gain)/loss on derivative financial instruments
(187)
(359)
(435)
(478)
(521)
(2,154)
(3,235)
Interest expense
15,883
10,244
10,664
10,586
9,902
40,109
35,070
Interest income
(80)
(71)
(41)
(28)
(36)
(140)
(66)
Share of profit from associated companies
(194)
(258)
(172)
(235)
(208)
(802)
(649)
(Profit)/loss, sale of vessel
46
3,257
228
3,540
(138)
Impairment charges
1,053
8,540
84,700
Depreciation and amortization
24,869
23,674
26,417
26,468
22,940
96,758
84,340
Adjusted EBITDA
12,716
23,990
33,479
31,382
36,720
152,141
209,415
 
 
EARNINGS CONFERENCE CALL AND WEBCAST INFORMATION
The company will host a conference call and webcast which will include a slide presentation at 8:00 a.m. EDT/14:00 CEST on Wednesday August 8, 2018 to discuss the results for the quarter.

All shareholders and other interested parties are invited to join the conference call, which may be accessed by calling 1 929 477 0324 within the United States, 23 50 02 96 within Norway and +44 330 336 9411 for international callers. The passcode is “DHT” or “9279966”.

The webcast which will include a slide presentation will be available on the following link: https://edge.media-server.com/m6/p/5hbucz6q and can also be accessed in the Investor Relations section on DHT’s website at http://www.dhtankers.com .

An audio replay of the conference call will be available through August 16, 2018. To access the replay, dial 1 719 457 0820 within the United States, 23 50 00 77 within Norway or +44 207 660 0134 for international callers and enter “9279966” as the pass code.
 
 
ABOUT DHT HOLDINGS, INC.

DHT is an independent crude oil tanker company. Our fleet trades internationally and consists of crude oil tankers in the VLCC and Aframax segments. We operate through our integrated management companies in Oslo, Norway and Singapore. You shall recognize us by our business approach with an experienced organization with focus on first rate operations and customer service, quality ships built at quality shipyards, prudent capital structure with robust cash break even levels to accommodate staying power through the business cycles, a combination of market exposure and fixed income contracts for our fleet and a transparent corporate structure maintaining a high level of integrity and good governance. For further information: www.dhtankers.com .

5

 
FORWARD LOOKING STATEMENTS


This press release contains certain forward-looking statements and information relating to the Company that are based on beliefs of the Company’s management as well as assumptions, expectations, projections, intentions and beliefs about future events, in particular regarding dividends (including our dividend plans, timing and the amount and growth of any dividends), daily charter rates, vessel utilization, the future number of newbuilding deliveries, oil prices and seasonal fluctuations in vessel supply and demand. When used in this document, words such as “believe,” “intend,” “anticipate,” “estimate,” “project,” “forecast,” “plan,” “potential,” “will,” “may,” “should” and “expect” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. These statements reflect the Company’s current views with respect to future events and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements. These forward-looking statements represent the Company’s estimates and assumptions only as of the date of this press release and are not intended to give any assurance as to future results. For a detailed discussion of the risk factors that might cause future results to differ, please refer to the Company’s Annual Report on Form 20-F, filed with the Securities and Exchange Commission on April 24, 2018.

The Company undertakes no obligation to publicly update or revise any forward-looking statements contained in this press release, whether as a result of new information, future events or otherwise, except as required by law. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this press release might not occur, and the Company’s actual results could differ materially from those anticipated in these forward-looking statements.
 
CONTACT:
Laila C. Halvorsen, CFO
Phone: +1 441 299 4981 and +47 984 39 935
E-mail:  lch@dhtankers.com

 
6


 

 
 
 
 

 


DHT HOLDINGS, INC.




UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2018
 
 
 
 
 
 
 
 

 

7


 
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED)
($ in thousands)
 
 
Note
 
June 30, 2018
 
December 31, 2017
ASSETS
         
Current assets
         
Cash and cash equivalents
 
$
76,927
 
77,292
Accounts receivable and accrued revenues
2, 8
 
29,376
 
42,212
Capitalized voyage expenses  2    2,571  
Prepaid expenses
   
5,518
 
3,197
Bunkers, lube oils and consumables
   
26,601
 
23,675
Asset held for sale
 
 
20,762
Total current assets
 
$
140,993
 
167,137
           
Non-current assets
         
Vessels and time charter contracts
5
$
1,565,212
 
1,444,146
Advances for vessels under construction
5
 
52,677
 
114,759
Other property, plant and equipment
   
421
 
464
Investment in associated company
   
4,389
 
3,992
Total non-current assets
 
$
1,622,700
 
1,563,360
           
TOTAL ASSETS
 
$
1,763,693
 
1,730,497
           
LIABILITIES AND STOCKHOLDERS' EQUITY
         
Current liabilities
         
Accounts payable and accrued expenses
 
$
26,072
 
17,427
Derivative financial liabilities
   
 
545
Current portion long term debt
4
 
58,681
 
65,053
Deferred shipping revenues
   
1,354
 
Total current liabilities
 
$
86,107
 
83,026
           
Non-current liabilities
         
Long term debt
4
 
797,310
 
721,151
Other non-current liabilities
 
$
390
 
428
Total non-current liabilities
 
$
797,699
 
721,579
           
TOTAL LIABILITIES
 
$
883,807
 
804,605
           
Stockholders' equity
         
Stock
6, 7
$
1,436
 
1,424
Additional paid-in capital
6, 7
 
1,147,208
 
1,140,794
Accumulated deficit
 2  
(269,999)
 
(222,087)
Translation differences
   
31
 
85
Other reserves
   
1,211
 
5,676
Total stockholders equity
 
$
879,886
 
925,892
           
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
 
$
1,763,693
 
1,730,497

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

8

 
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
($ in thousands except per share amounts)
 
     
2Q 2018
2Q 2017
   
1H 2018
 
1H 2017
 
Note
 
Apr. 1 – Jun. 30
2018
Apr. 1 – Jun. 30
2017
   
Jan. 1 – Jun. 30 2018
 
Jan. 1 – Jun. 30 2017
Shipping revenues
 2
$
67,233
86,335
 
$
147,144
 
178,435
                   
Operating expenses
                 
Voyage expenses
 2  
(32,798)
(26,701)
   
(66,519)
 
(48,088)
Vessel operating expenses
   
(17,744)
(17,535)
   
(34,982)
 
(31,408)
Depreciation and amortization
5
 
(24,869)
(22,940)
   
(48,544)
 
(43,873)
Impairment charge
5
 
   
 
(7,487)
Profit /( loss), sale of vessel
5
 
(228)
   
(46)
 
(283)
General and administrative expense
   
(3,975)
(5,379)
   
(8,938)
 
(11,659)
Total operating expenses
 
$
(79,386)
(72,783)
 
$
(159,028)
 
(142,799)
                   
                   
Operating income/(loss)
 
$
(12,153)
13,552
 
$
(11,884)
 
35,636
                   
Share of profit from associated companies
   
194
208
   
452
 
395
Interest income
   
80
36
   
151
 
71
Interest expense
   
(15,883)
(9,902)
   
(26,127)
 
(18,859)
Fair value gain/(loss) on derivative financial instruments
   
187
521
   
545
 
1,240
Other financial income/(expenses)
   
(606)
460
   
(514)
 
777
Profit/(loss) before tax
 
$
(28,182)
4,874
 
$
(37,377)
 
19,260
                   
Income tax expense
   
(40)
(39)
   
(58)
 
(78)
Net income/(loss) after tax
 
$
(28,222)
4,836
 
$
(37,435)
 
19,182
Attributable to the owners of parent
 
$
(28,222)
4,836
 
$
(37,435)
 
19,182
                   
                   
Basic net income/(loss) per share
   
(0.20)
0.04
   
(0.26)
 
0.18
Diluted net income/(loss) per share
   
(0.20)
0.04
   
(0.26)
 
0.18
                   
Weighted average number of shares (basic)
   
143,574,741
118,581,150
   
143,311,076
 
106,425,134
Weighted average number of shares (diluted)
   
143,575,685
118,581,150
   
143,311,076
 
106,425,134
                   
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Profit/(loss) for the period
 
$
(28,222)
4,836
 
$
(37,435)
 
19,182
                   
Other comprehensive income:
                 
Items that will not be reclassified to income statement:
                 
Remeasurement of defined benefit obligation (loss)
   
   
 
Total
 
$
 
$
 
Items that may be reclassified to income statement:
                 
Exchange gain (loss) on translation of foreign currency
denominated associate and subsidiary
   
11
37
   
54
 
102
Total
 
$
11
37
 
$
54
 
102
                   
Other comprehensive income
 
$
11
37
 
$
54
 
102
                   
Total comprehensive income for the period
 
$
(28,212)
4,873
 
$
(37,381)
 
19,284
                   
Attributable to the owners of parent
 
$
(28,212)
4,873
 
$
(37,381)
 
19,284
 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
9

 

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW (UNAUDITED)
($ in thousands)
 
     
Q2 2018
 
Q2 2017
 
1H 2018
 
1H 2017
 
Note
 
Apr. 1 – Jun. 30,
2018
 
Apr. 1 – Jun. 30,
2017
 
Jan. 1 – Jun. 30,
2018
 
Jan. 1 – Jun. 30,
2017
CASH FLOW FROM OPERATING ACTIVITIES
                 
Net income / (loss)
 2 $
(28,222)
 
4,836
 
(37,435)
 
19,182
                   
Items included in net income not affecting cash flows
     31,000    24,287   57,224   55,758
   Depreciation
5
 
24,869
 
22,940
 
48,544
 
43,873
  Impairment charge 5  
 
 
  7,487
   Amortization of debt issuance costs
   
5,943
 
1,764
 
7,671
 
3,642
   (Profit) / loss, sale of vessel
5
 
 
228
 
46
 
283
   Fair value (gain) / loss on derivative financial instruments
    (187)  
(521)
 
(545)
 
(1,240)
   Compensation related to options and restricted stock
   
567
 
868
 
1,961
 
3,143
   (Gain) / loss purchase of convertible bond
   
 
(783)
 
 
(1,035)
  Share of profit in associated companies
   
(194)
 
(208)
 
(452)
 
(395)
Income adjusted for non-cash items
    $
2,778
 
29,123
 
19,789
 
74,940
                   
Changes in operating assets and liabilities
     9,879   6,352   10,243    1,924
  Accounts receivable and accrued revenues
2, 8
 
5,910
 
1,967
 
5,399
 
3,959
  Capitalized voyage expenses
 2  
(1,280)
 
 
(683)
 
  Prepaid expenses     (14)   759   (2,321)    (492)
  Accounts payable and accrued expenses
   
8,552
 
6,548
 
9,459
 
10,332
  Deferred shipping revenues
   
1,354
 
(650)
 
1,354
 
(1,759)
  Bunkers, lube oils and consumables     (4,599)   (2,272)   (2,926)    (10,116)
  Pension liability
   
(45)
 
 
(38)
 
Net cash provided by operating activities
    $
12,657
 
35,475
 
30,032
 
76,864
                   
CASH FLOW FROM INVESTING ACTIVITIES
                 
Investment in vessels
   
6
 
(153,778) 1
 
(1,709)
 
(159,824) 1
Investment in vessels under construction
5
 
(89,082)
 
(42,042) 1
 
(106,561)
 
(105,913) 1
Sale of vessels
   
 
43,330
 
20,715
 
66,669
Investment in property, plant and equipment
   
(16)
 
(47)
 
(85)
 
(134)
Net cash used in investing activities
  $
(89,092)
 
(152,537)
 
(87,640)
 
(199,202)
                   
CASH FLOW FROM FINANCING ACTIVITIES
                 
Cash dividends paid
7
 
(2,871)
 
(10,064)
 
(5,743)
 
(17,634)
Issuance of long term debt
4
 
471,991
 
201,159
 
471,991
 
200,536
Purchase of convertible bonds
6
 
 
(17,104)
 
 
(17,104)
Scheduled repayment of long-term debt
4
 
(7,584)
 
(11,764)
 
(22,408)
 
(23,383)
Repayment of long-term debt refinancing
4
 
(377,935)
 
 
(377,935)
 
Repayment of long-term debt, sale of vessels
4
 
 
(13,343)
 
(8,663)
 
(25,367)
Net cash provided by financing activities
    $
83,601
 
148,884
 
57,242
 
117,047
                   
Net increase/(decrease) in cash and cash equivalents
   
7,166
 
31,823
 
(365)
 
(5,291)
Cash and cash equivalents at beginning of period
   
69,761
 
72,182
 
77,292
 
109,295
Cash and cash equivalents at end of period
  $
76,927
 
104,005
 
76,927
 
104,005
                   
Specification of items included in operating activities:
                 
Interest paid
   
9,275
 
7,071
 
15,993
 
15,088
Interest received
   
80
 
36
 
151
 
71
 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
 
               __________________________
               1 Restated to correct a non-routine non-cash transaction that was incorrectly presented in cash flows in the previous period.  For additional information refer to Item 15 of the Company’s Annual Report on Form 20-F for the year ended December 31, 2017.

10


 
SUMMARY CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
(UNAUDITED)
($ in thousands except shares)
 
             
Paid-in
                
             
Additional
 
Retained
 
Translation 
 
Other
 
Total
    Note
Shares
   
Stock
 
Capital
 
Earnings
 
Differences
 
Reserves
 
Equity
Balance at January 1, 2017
 
93,433,804
 
$
934
$
881,097
$
(205,195)
$
(108)
$
8,283
$
685,011
Net income/(loss) after tax
               
19,182
         
19,182
Other comprehensive income
               
 
 
102
     
102
Total comprehensive income
               
19,182
 
102
     
19,284
Cash dividends declared and paid
               
(17,634)
         
(17,634)
Issuance of stock
 
47,724,395
   
477
 
254,546
             
255,024
Purchase of convertible bonds
           
(2,213)
             
(2,213)
Compensation related to options and restricted stock
 
1,189,099
   
12
 
7,173
         
(4,041)
 
3,143
Balance at June 30, 2017
 
142,347,298
 
$
1,423
$
1,140,604
$
(203,647)
$
(6)
$
4,242
$
942,616
                               
             
Paid-in
               
             
Additional
 
Retained
 
Translation
 
Other
 
Total
  Note  
Shares
   
Stock
 
Capital
 
Earnings
 
Differences
 
Reserves
 
Equity
Balance at January 1, 2018, as previously reported
 
142,417,407
 
$
1,424
$
1,140,794
$
(222,087)
$
85
$
5,676
$
925,892
Impact of change in accounting policy
              (4,734)  
 
     
(4,734)
Adjusted balance at January 1, 2018
   142,417,407     1,424    1,140,794   
(226,821)
 
85
  5,676  
921,158
Net income/(loss) after tax
               
(37,435)
         
(37,435)
Other comprehensive income
     
 
   
   (54)      
(54)
Total comprehensive income
           
 
  (37,435)   (54)      
(37,490)
Cash dividends declared and paid                   (5,743)            (5,743)
Compensation related to options and restricted stock
 
1,175,136
   
12
 
6,414
         
(4,465)
 
1,961
Balance at June 30, 2018
 
143,592,543
 
$
1,436
$
1,147,208
$
(269,999)
$
31
$
1,211
$
879,886


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
 

 
11

 
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED JUNE 30, 2018

Note 1 – General information
DHT Holdings, Inc. (“DHT” or the “Company”) is a company incorporated under the laws of the Marshall Islands whose shares are listed on the New York Stock Exchange. The Company’s principal executive office is located at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda. The Company is engaged in the ownership and operation of a fleet of crude oil carriers.

The financial statements were approved by the Company’s Board of Directors (the “Board”) on August 6, 2018 and authorized for issue on August 7, 2018.


Note 2 – General accounting principles
The condensed consolidated interim financial statements do not include all information and disclosure required in the annual financial statements and should be read in conjunction with DHT’s audited consolidated financial statements included in its Annual Report on Form 20-F for 2017. Our interim results are not necessarily indicative of our results for the entire year or for any future periods.

The interim condensed financial statements have been prepared in accordance with IAS 34 “Interim Financial Reporting” as issued by the International Accounting Standards Board (“IASB”).

The interim condensed financial statements have been prepared on a historical cost basis, except for derivative financial instruments that have been measured at fair value. The accounting policies that have been followed in these interim condensed financial statements are the same as presented in the 2017 audited consolidated financial statements.


These interim condensed consolidated financial statements have been prepared on a going concern basis.


Application of new and revised International Financial Reporting Standards (“IFRSs”)
New and revised IFRSs, and interpretations mandatory for the first time for the financial year beginning January 1, 2018 are listed below. With the exception of IFRS 15, the adoption did not have any effect on the financial statements:

IFRS 9 Financial Instruments
IFRS 15 Revenue from Contracts with Customers
Amendments to IFRS 2 Classification and Measurement of Share-based Payment Transactions
Annual Improvements to IFRS Standards 2014-2016 Cycle
IFRIC 22 Foreign Currency Transactions and Advance Consideration


Adoption of IFRS 15 Revenue from Contracts with Customers
Effective from January 1, 2018, we adopted the new accounting standard IFRS 15 Revenue from Contracts with Customers using the modified retrospective method. We recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of accumulated deficit. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.

For vessels operating on spot charterers, voyage revenues are, under the new revenue standard, recognized ratably over the estimated length of each voyage, calculated on a load-to-discharge basis. Voyage expenses are capitalized between the previous discharge port, or contract date if later, and the next load port if they qualify as fulfillment costs under IFRS 15. To recognize costs incurred to fulfil a contract as an asset, the following criteria shall be met: (i) the costs relate directly to the contract, (ii) the costs generate or enhance resources of the entity that will be used in satisfying performance obligations in the future and (iii) the costs are expected to be recovered. Reference is also made to note 2 in the Annual Report on Form 20-F for 2017.
 
 
12

 
Time charters continue to be accounted as operating leases in accordance with IAS 17 and related interpretations and the implementation of the new revenue standard therefore did not have an effect on income recognition from such contracts.


The cumulative effect of the adjustments made to our condensed consolidated statement of financial position at January 1, 2018 from the adoption of IFRS 15 Revenue from Contracts with Customers was as follows:
 
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
 
Balance at
Adjustments
Balance at t
$ in thousands
December 31, 2017
due to IFRS 15
January 1, 2018
ASSETS
     
Accounts receivable and accrued revenues
                           42,212
                            (7,437)
                           34,775
Capitalized voyage expenses
                                     –
                              1,888
                              1,888
LIABILITIES
     
Accounts payable and accrued expenses
                           17,427
                                (815)
                           16,613
EQUITY
     
Accumulated deficit
                       (222,087)
                            (4,734)
                       (226,821)
 
 
The impact of the adoption of IFRS 15 Revenues from Contracts with Customers on our condensed consolidated statement of financial position as of June 30, 2018, condensed consolidated statement of comprehensive income and condensed consolidated statement of cash flow for second quarter and first half of 2018 were as follows:
 
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
 
Balance at June 30, 2018 
$ in thousands
 
As reported
Adjustments
due to IFRS 15
Balance without
adoption of IFRS 15
ASSETS
     
Accounts receivable and accrued revenues
                           29,376
                              7,862
                           37,239
Capitalized voyage expenses
                              2,571
                            (2,571)
                                 –
LIABILITIES
     
Accounts payable and accrued expenses
                           26,072
                                 599
                           26,671
EQUITY
     
Accumulated deficit
                       (269,999)
                              4,693
                       (265,306)
 
 
CONDENSED CONSOLIDATED INCOME STATEMENT
 
2Q 2018                 
Apr. 1 – Jun. 30 2018                 
1H 2018                  
Jan. 1 – Jun. 30, 2018                  
$ in thousands
As
reported
Adjustments
due to IFRS 15
Balance without
adoption of IFRS 15
As
reported
Adjustments
due to IFRS 15
Balance without
adoption of IFRS 15
Shipping revenues
67,233
4,169
71,402
147,144
426
147,570
Voyage expenses
(32,798)
(1,495)
(34,293)
(66,519)
(467)
(66,986)
Net income/(loss) after tax
(28,222)
2,674
(25,548)
(37,435)
(41)
(37,476)
 
 
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
 
2Q 2018                  
Apr. 1 – Jun. 30 2018                  
1H 2018                  
Jan. 1 – Jun. 30, 2018                   
 
$ in thousands
As
reported
Adjustments
due to IFRS 15
Balance without
adoption of IFRS 15
As
reported
Adjustments
due to IFRS 15
Balance without
adoption of IFRS 15
Net income / (loss)
(28,222)
2,674
(25,548)
(37,435)
(41)
(37,476)
Accounts receivable and accrued revenues
5,910
(4,169)
1,741
5,399
(426)
4,973
Capitalized voyage expenses
(1,280)
1,280
(683)
683
Accounts payable and accrued expenses
8,552
215
8,768
9,459
(216)
9,243
Net cash provided by operating activities
12,657
12,657
30,032
30,032
 
 
Voyage expenses are capitalized between the previous discharge port, or contract date if later, and the next load port and amortized between load port and discharge port. The closing balance of assets recognized from the costs to obtain or fulfil a contract was $2.6 million as per June 30, 2018. During second quarter of 2018, $0.8 million was amortized and no impairment losses were recognized in the period.

13

 
IFRS 15 requires disclosure on the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied (or partially unsatisfied) as of the end of the reporting period and an explanation of when an entity expects to recognize these amounts as revenue. We have applied the practical expedient related to performance obligation with reference to IFRS 15:121 (a), as the original expected duration of the underlying contract is one year or less. Consequently, no disclosure is presented in the notes to the interim condensed consolidated financial statements.

According to IFRS 15:114 an entity shall disaggregate revenue recognized from contracts with customers into categories that depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. DHT’s business is to operate a fleet of crude oil tankers and management has organized the entity as one segment based upon on the service provided. Consequently, the Company does not disaggregate revenue recognized from contracts with customers.


Note 3 Segment reporting
Since DHT’s business is limited to operating a fleet of crude oil tankers, management has organized the entity as one segment based upon the service provided. Consequently, the Company has one operating segment as defined in IFRS 8, Operating Segments.

As of June 30, 2018, the Company had 27 vessels in operation; 8 vessels were on time charters and 19 vessels operating in the spot market.


Information about major customers:
For the period from April 1, 2018 to June 30, 2018 five customers represented $12.8 million, $9.9 million, $6.5 million, $6.5 million and $3.8 million, respectively, of the Company’s revenues. The five customers in aggregate represented $39.5 million of the total revenue of $67.2 million for the period from April 1, 2018 to June 30, 2018.

For the period from January 1, 2018 to June 30, 2018 five customers represented $23.6 million, $21.4 million, $11.0 million, $9.8 million and $8.6 million, respectively, of the Company’s revenues. The five customers in aggregate represented $74.4 million of the total revenue of $147.1 million for the period from January 1, 2018 to June 30, 2018.

For the period from April 1, 2017 to June 30, 2017 five customers represented $11.9 million, $11.9 million, $6.2 million, $6.1 million and $5.2 million, respectively, of the Company’s revenues. The five customers in aggregate represented $41.3 million of the total revenue of $86.3 million for the period from April 1, 2017 to June 30, 2017.

For the period from January 1, 2017 to June 30, 2017 five customers represented $25.8 million, $19.6 million, $14.8 million, $12.7 million and $10.4 million, respectively, of the Company’s revenues. The five customers in aggregate represented $83.3 million of the total revenue of $178.4 million for the period from January 1, 2017 to June 30, 2017.

14

 
Note 4 – Interest bearing debt
As of June 30, 2018, DHT had interest bearing debt totaling $856.0 million (including the $105.8 million convertible senior notes).
 
 
Scheduled debt repayments (USD thousands) and margin above Libor
 
$ in thousands
Margin
above Libor
Q3
2018
Q4
2018
2019
2020
2021
Thereafter
Total
ABN Amro Credit Facility
2.40%
7,059
7,059
28,238
28,238
28,238
282,768
381,600
Credit Agricole Credit Facility
2.19%
1,649
1,649
6,597
6,597
6,597
42,925
66,016
Danish Ship Finance Credit Facility
2.25%
1,300
2,600
39,000
 
 
42,900
Nordea/DNB Credit Facility
2.75%
434
434
8,251
 
 
9,119
Nordea BW VLCC Acquisition Credit Facility
2.40%
5,400
5,400
21,600
21,600
21,600
188,683
264,283
ABN Amro Revolving Credit Facility *
2.50%
 
 
 
 
 
 
 
Convertible Senior Notes
     
105,826
 
 
105,826
Total
 
14,543
15,843
173,112
95,435
56,435
514,376
 869,744
Unamortized upfront fees bank loans
             (8,285)
Difference amortized cost/notional amount convertible note
           
 
 (5,468)
Total interest bearing debt
           
 
  855,991
 
 
   **$57.3 mill. available as of June 30, 2018.  Quarterly reduction of $1.8 million.
 
Refinancing
In April we entered into a $484 million secured credit facility agreement for the refinancing of 13 of the Company’s VLCCs. The following credit facilities were refinanced: Nordea Samco Credit Facility (DHT Sundarbans, DHT Taiga, DHT Redwood, DHT Hawk, DHT China, DHT Falcon and DHT Condor) $215.2 million, Nordea/DNB Credit Facility (DHT Leopard) $44.4 million, ABN Amro Credit Facility (DHT Lion, DHT Panther and DHT Puma) $118.4 million and the undrawn DNB/Nordea Credit Facility (DHT Bronco and DHT Mustang) $82.5 million. We also entered into an agreement with ABN Amro to increase the Company’s revolving credit facility to $57.3 million from the current availability of $43.4 million. Both credit facilities are described below.

ABN Amro Credit Facility
In April 2018 we entered into a credit facility with ABN Amro, Nordea, Credit Agricole, DNB, ING, Danish Ship Finance, SEB, DVB and Swedbank as lenders and DHT Holdings, Inc. as guarantor for the financing of eleven VLCCs and two newbuildings. Borrowings bear interest at a rate equal to Libor + 2.40% and the loan is repayable in quarterly installments of $7.0 million through Q2 2024 and a final payment of $212.2 with the last installment. When the facility is fully drawn, the quarterly installments will be $8.3 million with a final payment of $284.8 million in the second quarter of 2023.

The credit facility contains a covenant requiring that at all times the charter-free market value of the vessels that secure the credit facility be no less than 135% of borrowings. Also, DHT covenants that, throughout the term of the credit facility, DHT, on a consolidated basis, shall maintain:
·
Value adjusted* tangible net worth of $300 million
·
Value adjusted* tangible net worth shall be at least 25% of value adjusted total assets
·
Unencumbered consolidated cash of at least the higher of (i) $30 million and (ii) 6% of our gross interest bearing debt


* Value adjusted defined as an adjustment to reflect the difference between the carrying amount and the market valuations of the Company’s vessels (as determined quarterly by an approved broker).
 
15


Credit Agricole Credit Facility
In June 2015 Samco Gamma Ltd and DHT Tiger Limited entered into a credit agreement with Credit Agricole for the financing of the Samco Scandinavia and the newbuilding DHT Tiger that was delivered in January 2017. In June 2016 we made a voluntary prepayment of $5.0 million and the financing of the Samco Scandinavia is repayable with 30 quarterly installments of $0.97 million each. The $48.7million financing of DHT Tiger was drawn in 2016 in advance of the delivery of the DHT Tiger which took place in January 2017 and is repayable in quarterly installments of $0.7 million with a final payment of $29.7 in December 2023. The loan bears interest at Libor plus a margin of 2.1875%. The credit agreement is guaranteed by DHT and contains a covenant requiring that at all times the charter-free market value of the vessels that secure the credit facility be no less than 135% of borrowings. Also, DHT covenants that, throughout the term of the credit facility, DHT, on a consolidated basis, shall maintain:
·
Value adjusted* tangible net worth of $200 million
·
Value adjusted* tangible net worth shall be at least 25% of value adjusted total assets
·
Unencumbered consolidated cash of at least the higher of (i) $20 million and (ii) 6% of our gross interest bearing debt


* Value adjusted defined as an adjustment to reflect the difference between the carrying amount and the market valuations of the Company’s vessels (as determined quarterly by an approved broker).


Danish Ship Finance Credit Facility
In November 2014 we entered into a credit facility totaling $49.4 million with Danish Ship Finance (“DSF”) as lender and DHT Holdings, Inc. as guarantor for the financing of the VLCC newbuilding DHT Jaguar delivered in Q4 2015. The full amount of the credit facility was drawn in November 2015. Borrowings bear interest at a rate equal to Libor + 2.25% and are repayable in 10 semiannual installments of $1.3 million each from May 2016 to November 2020 and a final payment of $36.4 million in November 2020. The credit facility contains a covenant requiring that at all times the charter-free market value of the vessel that secure the credit facility be no less than 130% of borrowings. Also, DHT covenants that, throughout the term of the credit facility, DHT, on a consolidated basis, shall maintain:
·
Value adjusted* tangible net worth of $300 million
·
Value adjusted* tangible net worth shall be at least 25% of value adjusted total assets
·
Unencumbered consolidated cash of at least the higher of (i) $30 million and (ii) 6% of our gross interest bearing debt


* Value adjusted defined as an adjustment to reflect the difference between the carrying amount and the market valuations of the Company’s vessels (as determined quarterly by an approved broker).


Nordea/DNB Credit Facility
In October 2015 we entered into a credit facility totaling $50.0 million with Nordea and DNB as lenders and DHT Holdings, Inc. as guarantor for the financing of the VLCC newbuilding DHT Leopard delivered in Q1 2016. The full amount of the credit facility was drawn on December 29, 2015 in advance of the delivery of the DHT Leopard on January 4, 2016. Borrowings bear interest at a rate equal to Libor + 2.25% and are repayable in 20 quarterly installments of $0.625 million from March 2016 to December 2020 and a final payment of $37.5 million in December 2020. In April 2018, DHT Leopard was refinanced as part of the ABN Amro Credit Facility. In September 2016, the four vessels financed by RBS (DHT Ann, DHT Chris, DHT Cathy and DHT Sophie) were included in the credit facility as a separate tranche totaling $40.0 million. Borrowings under the $40.0 million tranche bear interest at a rate equal to Libor + 2.75% and are repayable in 11 quarterly installments of $2.1 million from December 2016 to June 2019 and a final payment of $17.3 million in August 2019. Subsequent to the sale of DHT Chris which was delivered to the buyers in January 2017 and the sale of the DHT Ann which was delivered to the buyers in May 2017, the separate tranche is repayable in quarterly installments of $0.4 million and a final payment of $6.9 million in August 2019. The credit facility contains a covenant requiring that at all times the charter-free market value of the vessels that secure the credit facility be no less than 135% of borrowings. Also, DHT covenants that, throughout the term of the credit facility, DHT, on a consolidated basis, shall maintain:
·
Value adjusted* tangible net worth of $300 million
·
Value adjusted* tangible net worth shall be at least 25% of value adjusted total assets
·
Unencumbered consolidated cash of at least the higher of (i) $30 million and (ii) 6% of our gross interest bearing debt


* Value adjusted defined as an adjustment to reflect the difference between the carrying amount and the market valuations of the Company’s vessels (as determined quarterly by an approved broker).
 
16

 
Nordea BW VLCC Acquisition Credit Facility
$204 million of the $300 million credit facility was borrowed during the second quarter of 2017 in connection with delivery of the nine VLCCs in water from BW. The final $96 million was borrowed in connection with the delivery of the two VLCC newbuildings from DSME in the second quarter of 2018. The credit facility is guaranteed by DHT Holdings, Inc., borrowings bear interest at a rate equal to Libor + 2.40%. Subsequent to the sale of the DHT Utah and DHT Utik and the delivery of DHT Stallion and DHT Colt, the current outstanding is repayable in quarterly installments of $5.4 million with a final payment of $156.3 million in the second quarter of 2023. The credit facility contains a covenant requiring that at all times the charter-free market value of the vessels that secure the credit facility be no less than 135% of borrowings. Also, DHT covenants that, throughout the term of the credit facility, DHT, on a consolidated basis, shall maintain:
·
Value adjusted* tangible net worth of $300 million
·
Value adjusted* tangible net worth shall be at least 25% of value adjusted total assets
·
Unencumbered consolidated cash of at least the higher of (i) $30 million and (ii) 6% of our gross interest bearing debt


* Value adjusted defined as an adjustment to reflect the difference between the carrying amount and the market valuations of the Company’s vessels (as determined quarterly by an approved broker).
 
ABN Amro Revolving Credit Facility
In November 2016, we entered into a secured five year revolving credit facility with ABN Amro totaling $50.0 million to be used for general corporate purposes, including security repurchases and the acquisition of ships. The financing bears interest at a rate equal to Libor + 2.50%. In April 2018, we entered into an agreement with ABN Amro to increase the revolving credit facility to $57.3 million with a quarterly reduction of $1.8 million starting July 31, 2018. The credit facility contains a covenant requiring that at all times the charter-free market value of the vessels that secure the credit facility be no less than 135% of borrowings. Also, DHT covenants that, throughout the term of the credit facility, DHT, on a consolidated basis, shall maintain:
·
Value adjusted* tangible net worth of $300 million
·
Value adjusted* tangible net worth shall be at least 25% of value adjusted total assets
·
Unencumbered consolidated cash of at least the higher of (i) $30 million and (ii) 6% of our gross interest bearing debt


*Value adjusted defined as an adjustment to reflect the difference between the carrying amount and the market valuations of the Company’s vessels (as determined quarterly by an approved broker).


Convertible Senior Notes
During the second quarter of 2017 we repurchased $12.2 million of the convertible senior notes in the open market at a price of 98.4% of par. During the first quarter of 2017 we repurchased $5.0 million of the convertible senior notes in the open market at a price of 100.4% of par. During the fourth quarter of 2016 we repurchased $23.0 million of the convertible senior notes in the open market at an average price of 90.4% of par. In February 2016 we repurchased $3.0 million of the convertible senior notes in the open market at a price of 99% of par and in April 2016 we repurchased $1.0 million of the convertible senior notes in the open market at a price of 99% of par.


Covenant compliance
As of the date of our most recent compliance certificates submitted to the banks, we are in compliance with our financial covenants.


Note 5 Vessels
The carrying values of our vessels may not represent their fair market value at any point in time since the market prices of second-hand vessels tend to fluctuate with changes in charter rates and the cost of constructing new vessels. Historically, both charter rates and vessel values have been cyclical. The carrying amounts of vessels held and used by us are reviewed for potential impairment or reversal of prior impairment charges whenever events or changes in circumstances indicate that the carrying amount of a particular vessel may not accurately reflect the recoverable amount of a particular vessel. The Company is of the view that there were no events or changes in circumstances indicating that the carrying amount of a particular vessel may not accurately reflect the recoverable amount of a particular vessel as of June 30, 2018.
 
 
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Cost of Vessels
$ in thousands
   
Depreciation, impairment and amortization*
$ in thousands
 
At January 1, 2018
1,810,158
 
At January 1, 2018
366,012
Additions
1,709
 
Depreciation and amortization
48,417
Transferred from vessels under construction
167,773  
Retirement **
(1,244)
Retirement **
(1,244)
 
At June 30, 2018
413,184
At June 30, 2018
1,978,396
     
         
         
Carrying Amount
$ in thousands
       
At January 1, 2018
1,444,146
     
At June 30, 2018
1,565,212
     

*Accumulated numbers
**Relates to completed depreciation of drydocking for DHT Sophie.


Vessels under construction
We have entered into agreements with HHI for the construction of two VLCCs with a contract price of $82.4 million each (including scrubbers). As of June 30, 2018 we have paid pre-delivery installments totaling $49.4 million for the two newbuildings to be delivered in Q3 2018. Borrowing costs are capitalized as part of vessels under construction.

 
Cost of vessels under construction
$ in thousands
 
At January 1, 2018
114,759
Additions
105,692
Transferred to vessels
(167,773)
At June 30, 2018
52,677
   
Carrying Amount
$ in thousands
 
At January 1, 2018
114,759
At June 30, 2018
52,677

The following table is a timeline of future expected payments and dates relating to vessels under construction as of June 30, 2018:

Vessels under construction
$ in thousands
June 30, 2018
January 1, 2018
Not later than one year
115,294
218,565
Later than one year and not later than three years
Later than three years and not later than five years
Total
115,294
218,565

The two newbuildings are financed as a part of the ABN Amro Credit Facility and remaining commitments will be financed with cash at hand.
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NOTE 6 – Equity and Convertible Bond Offerings


Convertible Senior Note Offering
On September 16, 2014 we completed a private placement of $150 million aggregate principal amount of convertible senior notes due 2019 (the “Notes”). DHT will pay interest at a fixed rate of 4.5% per annum, payable semiannually in arrears. Net proceeds to DHT were approximately $145.9 million after the payment of placement agent fees. The value of the conversion right has been estimated to $21.8 million; hence $21.8 million of the aggregate principal amount of $150.0 million was classified as equity. The Notes will be convertible into common stock of DHT at any time after placement until one business day prior to their maturity. The initial conversion price was $8.125 per share of common stock (equivalent to 18,461,538 shares of common stock), and is subject to customary anti-dilution adjustments. As a result of the cumulative effect of previously announced cash dividends, the conversion price was adjusted to $6.2599 effective May 18, 2018. Based on the adjusted conversion price and after adjusting for the repurchase of $44.2 million of the convertible senior notes in the open market at an average price of 94.5% of par, the total number of shares to be issued would be 16,905,409.

We have concluded that the adjustment of the conversion rate upon the payment of cash dividends does not result in an accounting entry as the liability and equity components of the instrument are not re-measured as a result of the cash dividend. This is based on the fact that we have determined that the Notes are non-derivative financial instruments that contain both liability and equity components. The financial liability is the contractual obligation to make interest and principal payments and the equity component is the right of the holders of the Notes to convert the Notes into a fixed number of the Company’s common shares. In accordance with IAS 32, the liability component was measured first and is recorded at its amortized cost over the life of the instrument. The equity component was assigned the residual amount after deducting the amount separately determined for the liability component. The equity component was recorded as part of additional paid-in capital and is never re-measured.

The determination that the conversion feature is an equity instrument (rather than a derivative liability accounted for under IAS 39) was made on the basis that there is no variability in the number of equity instruments delivered upon conversion (i.e. the exchange meets the “fixed for fixed” requirements set forth under IAS 32). In making the determination, the Company considered that the Notes contain a mechanism whereby the conversion rate of the Notes is adjusted for cash dividends paid by the Company. Although this adjustment results in variability in the number of common shares delivered, the fact that this variability serves to maintain the relative economic rights of the holders of the Notes results in no violation of the “fixed for fixed” requirement.


Note 7 – Stockholders equity and dividend payment

   
Common stock
   
Preferred stock
Issued at June 30, 2018
 
143,592,543
   
                                   –
Shares to be issued assuming conversion of
         
   convertible notes*
 
21,133,000
     
Numbers of shares authorized for issue
         
   at June 30, 2018
 
      250,000,000
   
                    1,000,000
Par value
 
$ 0.01
   
$ 0.01
*assuming the maximum Fundamental Change conversion rate.
 
Common stock:
Each outstanding share of common stock entitles the holder to one vote on all matters submitted to a vote of stockholders.

Preferred stock:
In the first quarter 2017, the board established two series of preferred stock: Series C Preferred Stock and Series D Preferred Stock, the terms of which are detailed in Current Reports on Form 6-K dated January 30, 2017 and March 24, 2017, respectively. As of June 30, 2018, no shares of Series C Preferred Stock or Series D Preferred Stock were outstanding. Terms and rights of any other preferred shares will be established by the board when or if such shares would be issued.
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Dividend payment

Dividend payment as of June 30, 2018:

Payment date
Total Payment
Per common share
May 30, 2018
$
2.9 million
$
0.02
February 28, 2018
$
2.9 million
$
0.02
Total payment as per June 30, 2018
$
5.7 million
$
0.04

Dividend payment as of December 31, 2017:

Payment date
Total Payment
Per common share
December 6, 2017
$
2.8 million
$
0.02
August 31, 2017
$
2.8 million
$
0.02
May 31, 2017
$
10.1 million
$
0.08
February 22, 2017
$
7.6 million
$
0.08
Total payment as per December 31, 2017
$
23.3 million
$
0.20


Note 8 – Accounts receivable and accrued revenues
Accounts receivable and accrued revenues totaling $29.4 million as of June 30, 2018 consists mainly of accounts receivable with no material amounts overdue.


Note 9 - Financial risk management, objectives and policies
Note 9 in the 2017 annual report on Form 20-F provides for details of financial risk management objectives and policies.

The Company’s principal financial liability consists of long-term debt with the main purpose being to partly finance the Company’s assets and operations. The Company’s financial assets mainly comprise cash. The Company is exposed to market risk, credit risk and liquidity risk. The Company’s senior management oversees the management of these risks.


Note 10 – Subsequent events
On August 6, 2018 the Board approved a dividend of $0.02 per common share related to the second quarter 2018 to be paid on August 31, 2018 for shareholders of record as of August 24, 2018.

In August, the Company entered into 5-year interest rate swaps with Nordea totaling $168.8 million with an average fixed rate of 3.01% - as compared to current 3m Libor of about 2.34%. $168.8 million equals 22% of total outstanding bank mortgage debt.

On July 27, 2018 the Company took delivery of the first of its two VLCC newbuildings from HHI. The vessel is named the DHT Bronco. A total of $51.4 million of debt was drawn in connection with the delivery.

In July, the Company entered into agreements to install exhaust gas cleaning systems, also known as scrubbers, on twelve of its VLCCs. The Company has entered into agreement with Alfa Laval to supply the systems and has also secured shipyard capacity to install all systems within 2019. These twelve systems will come in addition to the two systems being installed on the newbuildings DHT Bronco, delivered in July 2018, and DHT Mustang set for delivery from Hyundai Heavy Industries (“HHI”) in Q3 2018. The Company has received proposals to finance the majority of the project with debt and is confident to conclude this in the near future.


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