Odfjell SE Annual Report 2012

in short-term interest rates, interest rate periods on floating
rate debt and on liquidity are managed to be concurrent.
Total interest-bearing debt as per 31 December 2012 was
USD 1,325 million, while liquid assets amounted to USD
170 million.
CURRENCY
The Group’s revenues are primarily denominated in USD.
Tank terminals outside the USA and our regional European
shipping trade derive income in non-USD currencies. Our
currency exposure relates to the net result and cash flow
from voyage-related expenses, ship operating expenses
and general and administrative expenses denominated in
non-USD currencies, primarily in NOK and EUR. We have
estimated that a 10% depreciation of the USD against the
NOK would impact the pre-tax 2012 result negatively by
around USD 11 million, ignoring the effect of any currency
hedging in place.
Our currency hedging at the end of 2012, under which the
Company sold USD and purchased NOK, covers about 21% of
the Company’s 2013 NOK-exposure. Future hedging periods
may vary depending on changes in market conditions. The
average USD/NOK exchange rate for open hedging positions
as of 31 December 2012 for 2013 was 6.05.
Financing and liquidity
Odfjell has a stable debt structure established with major
international shipping banks, with whom the Company
enjoys long-standing relationships. The Company has
a diversified debt portfolio comprising a combination of
secured loans, export credit finance, finance leases and
unsecured bonds. Although our experience is that funding
is available to Odfjell from various sources, including
the banks and the bond market, the general trend in
the financial market is towards medium terms loans, as
long-term funding is less available and more expensive.
As a consequence our attention to timely refinancing of
maturing debt is a continuous task. The average maturity
of the Group’s interest-bearing debt is about 4.4 years.
Odfjell’s strategy is to maintain a high level of readily available
liquidity. This liquidity is invested in bank deposits and
high-grade bonds and certificates with variable interest rates.
sensitivity
USD MILLION
0
-5
-10
-15
-20
-25
-30
Bunkers,
USD 10
per tonne
higher
USD/NOK
cost analysis
Freight
rates,
5%
decrease
Interest
rates,
1% higher
Currency,
USD 10%
lower
10
9
8
7
6
5
4
3
2
1
0
03 04 05 06 07 08 09 10 11 12 13
The major cost components of a typical
large Odfjell chemical tanker
TAX
The Odfjell Group operates within a number of jurisdictions
and tax systems. Shipping activities are operated in several
countries and under different tax schemes, including the
Norwegian tonnage tax system, the Approved International
Shipping system in Singapore and the tonnage tax systems
in the UK. In addition we operate under local tax systems in
Chile and Brazil. Our tank terminal activities are generally
subject to the ordinary corporate tax rates within the country
in which the activity is located. The variation in tax systems
and rates may cause tax costs to vary significantly depending
on the country in which profits are accumulated and taxed.
16% Other voyage costs
24% Bunkers
28% Capital expenses
32% Operating and general administration costs
111
odfjell annual report 2012