Report for the 3 rd quarter Fred. Olsen Production ASA consolidated

Transcription

1 Report for the 3 rd quarter 2013 Fred. Olsen Production ASA consolidated Highlights for the 3 rd quarter Comparable figures for the corresponding period in 2012 are in brackets. Operating revenues were USD 29.4 million (USD 28.4 million) EBITDA was USD 12.3 million (USD 14.5 million) Profit before tax USD 4.7 million (USD 5.9 million) Net profit USD 2.8 million (loss USD 3.7 million) 100% commercial up-time in the 3 rd quarter Contact persons: Eirik Barclay, CEO, eirik.barclay@fpso.no Brad Neve, CFO, brad.neve@fpso.no Tlf: Page 1 of 14

2 Financial information Comparable figures for the corresponding period in 2012 are provided in brackets. Third Quarter Total revenues in the quarter were USD 29.4 million (USD 28.4 million). EBITDA was USD 12.3 million (USD 14.5 million). After depreciation on vessels of USD 7.2 million (USD 7.1 million), the operating result (EBIT) was USD 5.1 million (USD 7.4 million). Net financial expenses were USD 0.4 million (USD 1.5 million). Third quarter net financial expenses include USD 0.5 million unrealized loss related to the mark-to-market revaluation of a fixed rate interest swap. The net result after tax was USD 2.8 million (USD 3.7 million). Year-to-Date Year-to-date total revenues were USD 87.3 million (USD 84.3). EBITDA was USD 38.1 million (USD 34.6 million). After depreciation on vessels of USD 19.9 million (USD 21.3 million), the operating result (EBIT) was USD 18.2 (USD 13.3 million). Net financial expenses were USD 3.1 million (USD 4.1 million). Net financial expenses include a USD 0.5 million unrealized gain related to the mark-to-market revaluation of a fixed rate interest swap and USD 0.2 million net (combined) foreign exchange gain. Year-to-date net financial expenses are negatively affected by the impairment of the available-for-sale EOC shares earlier in the year. The net result after tax was USD 8.9 million (USD 3.0 million). Page 2 of 14

3 Operations During the quarter, FOP operated all four units on contracts - with 100% commercial uptime achieved. The FPSO Knock Adoon operated on contract for Addax Petroleum on the Antan field, offshore Nigeria. FPSO Knock Allan operated on contract for Canadian Natural Resources (CNR) on the Olowi field offshore Gabon. FPSO Petróleo Nautipa (indirectly owned 50% by Fred. Olsen Production ASA) operated on a contract for Vaalco at the Etame license offshore Gabon. The management service contract on the MOPU Marc Lorenceau for Addax Petroleum continued for the whole quarter. Contract status Vessel/Units Country of Contract expiry operation FPSO Knock Adoon Nigeria October options to extend for up to 8 additional years Knock Allan Gabon May option years Petròleo Nautipa Gabon September option years MOPU (on management) Marc Lorenceau Nigeria Contract expired September 2008, FOP continues management with 30 days notice Strategic Review The previously announced strategic review has now been completed with the Board of Directors recommending the voluntary cash offer made by Yinson Production Ltd. A cash consideration of NOK 9.40 per share has been offered, implying a total consideration for all shares of approximately NOK 996 million (approximately US$ 170 million) also taking into account that the shares of the Company as from 30 May 2013 have been trading ex a dividend of NOK 0.50 per share. The Offer represents a premium of 5.1% over the closing price of the shares on 7 June 2013 and a premium of 43.2% over the dividend adjusted closing price of the share the day before the announcement of the strategic review process by the Board. Page 3 of 14

4 Risks and Uncertainties The Company s operations contain inherent risks and uncertainties which may have an impact on the Group s performance over the remaining three months of the financial year and which could cause actual results to differ from expected and historical results. These risks comprise business and operational risk, commercial relationship risk, currency risk and interest rate risk. The Company works on a continuous basis to manage such risks and uncertainties. Oslo, 22 nd October 2013 Fred. Olsen Production ASA Ivar Brandvold Siv Jønland Staubo Anette Olsen Agnar Gravdal Eirik Barclay Chairman CEO Page 4 of 14

5 Consolidated statement of comprehensive income (USD 000) Third Quarter Year-to-date Full Year FOP ASA FOP ASA FOP ASA FOP ASA FOP ASA Notes ) ) ) ) ) Revenue Gain/(loss) on sale of fixed assets Revenues Operating expenses Other administrative expenses Total operating expenses Operating profit before depreciation (EBITDA) Depreciation Operating profit (loss) (EBIT) Interest income Interest expense Other financial items Net financial items Profit (loss) before tax Income tax expense Net profit (loss) for the period Other comprehensive income Exchange differences on translating foreign operations Net value gain/(loss) on available-for-sale Impairment of asset classified as available-for-sale Other comprehensive income/(loss) for the period, net of tax Total comprehensive income/(loss) for the period Attributable to: Result attributable to parent company equity holders Total comprehensive result attributable to parent company equity holders Numbers of shares/diluted numbers of shares (thousands) Basic earnings/(loss) per share (USD) 0,03 0,03 0,08 0,03 0,02 Diluted earnings/(loss) per share (USD) 0,03 0,03 0,08 0,03 0,02 1) Unaudited 2) Audited Page 5 of 14

6 Consolidated statement of financial position (USD 000) FOP ASA FOP ASA FOP ASA 30 September 30 September 31 December ) ) ) Notes ASSETS Non-current assets Offshore units, constructions and equipment Other long-term receivables Deferred tax asset Total non-current assets Current assets Short-term receivables Other investments Inventories Cash and cash equivalents Total current assets TOTAL ASSETS EQUITY AND LIABILITIES Equity Share capital Retained earnings* Total equity Non-current liabilities Interest bearing loan Deferred income Pension liabilities Non-current provisions Total non-current liabilities Current liabilities Tax payable Interest bearing short-term debt Accruals and other short-term debt Total current liabilities Total liabilities TOTAL EQUITY AND LIABILITIES *Including own shares, fair value reserves and translation reserves 1) Unaudited 2) Audited Page 6 of 14

7 Consolidated statement of changes in equity (USD 000) Number of Share Total shares Share Own premium Translation Fair Value Retained Shareholders (thousands) capital Shares reserve reserve reserve earnings equity As of 01 January Net result for the period Unrealised foreign currency gain Changes in fair value, recognised directly in equity As of 31 December Net result for the period Unrealised foreign currency loss Changes in fair value, recognised directly in equity Impairment of asset classified as available-for-sale IAS 19 adjustments Dividends distributed As of 30 September Consolidated statement of cash flows (USD 000) Third Quarter Year-to-date Full Year FOP ASA FOP ASA FOP ASA FOP ASA FOP ASA ) ) ) ) ) Cash flows from operating activities Net result after tax Adjusted for: Depreciation Interest expense Tax expense Net (gain) loss on sale of property, plant and equipment Unrealised (gain) loss on interest rate swaps Changes in trade and other receivables Changes in trade and other payables Changes in other balance sheet items Cash generated from operating activities Interest paid Income tax paid Net cash from operating activities Cash flows from investing activities Purchase of property, plant and equipment Proceeds from sale of property, plant and equipment Net cash used for investing activities Cash flow from financing activities Settlement of interest rate swaps External dividend Repayments of interest bearing loans Net cash used for financing activities Net change in cash and cash equivalents Net translation differences Cash balance at period beginning Cash balance at period ending ) Unaudited 2) Audited Page 7 of 14

8 Notes to the accounts Note 1 Basis of presentation The condensed interim consolidated financial information of Fred. Olsen Production ASA has been prepared in accordance with the International Accounting Standard 34 Interim Financial Reporting (IAS 34). The interim financial information was approved by the Board of Directors on 22 October Note 2 - Significant accounting principles estimates and assumptions The accounting principles used for preparation of the condensed interim consolidated financial information are consistent with the principles which are used for annual reporting. The financial information should be read together with the consolidated financial statements for Fred. Olsen Production ASA (FOP ASA) as of 31 December 2012, which is prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU. Various operational entities within the FOP ASA group of companies are exposed to Nigerian or Gabonese withholding tax on contractual revenue. These costs are contractual and are incurred as a result of doing business. The Group accounts for withholding tax under the guidance of International Accounting Standard 1 Presentation of Financial Statements (IAS 1); Income Tax Expenses. The preparation of interim accounts involves the use of appraisals, estimates and assumptions influencing the application of accounting principles and recognized amounts for assets and obligations, revenues and costs. Actual results may differ from these estimates. The most important appraisals when applying the FOP consolidated accounting principles and the primary sources of estimate uncertainties are the same for the preparation of interim accounts as for the fiscal 2012 FOP ASA consolidated accounts. Leases Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risk and rewards incidental to ownership of the leased item to the lessee, otherwise a lease arrangement is classified as an operating lease. This evaluation is based on the substance of the transaction rather than the form of the contract, and the determination is made when the leasing agreement is entered into. The lease contracts held include one or more options for the charterer to purchase the vessel and/or option(s) for the charterer to extend the lease period beyond the set contract period. At the inception of the lease, these options are taken into consideration when assessing whether the lease is a finance lease or an operational lease. Cash flows in the option periods are included in the minimum lease payments described in Note 8 provided that there is reasonable certainty that the option(s) will be exercised. Lease assets held pursuant to an operating lease are included in the balance sheet based on the nature of the asset. Page 8 of 14

9 Leasing Arrangements Operating leases relate to the fleet vessels owned by the Group with lease terms between 1 and 8 years, with option periods ranging from 2 to 10 years. The lease agreements include both a capital expenditure (CAPEX) and an operating expense (OPEX) revenue component. Other elements of contractual revenue are derived from variation clauses in order to optimize production capabilities and maintenance of the fleet vessels and from bonus incentives. The operating leases include contingent rent components. The operating lease contracts held include purchase options. Revenue Recognition Revenue is comprised of the fair value of the consideration received or receivable for chartering and rendering of operational services related to Group assets. Additional income is derived from performance clauses in contracts held as well as by way of variation orders. Lease Payments Payments made under operating leases from the charter hire contracts are recognized in profit or loss on a straight-line basis over the term of the lease pursuant to IAS 17 - Leases. Where a significant portion of the risks and rewards of ownership are retained by the lessor, these arrangements are classified as operating leases. Payments received under operating leases are recognized in profit or loss on a straight-line basis over the term of the lease, unless another systematic basis is more representative of the time pattern in which use benefit derived from the leased asset is diminished. The lease term period for each lease contract is the non-cancellable period for which the lessee has contracted the asset together with an assessment of any further terms that the lessee has the option to continue the lease, when management considers it reasonably certain that the lessee will exercise the option. Operational Services Revenue from operational services is recognized in profit or loss as services are rendered. Page 9 of 14

10 Note 3 Business segments The following is a reconciliation of the segments profit (loss) before income tax (EBIT) according to IFRS 8 Operating Segments: USD 000 Consolidated Nine months ended 30 September 2013 Income Statement Revenue Segment profit (loss) EBIT according to IFRS Total financial items Segment profit (loss) before tax expense Fixed Assets Segment assets as at 31 December Changes during the period Segment assets as at 30 September Reconciling items are representative of intercompany transactions that are eliminated upon consolidation. Note 4 Property, plant and equipment Vessel Operating Group Administrative Group Total Segments Intercompany Eliminations (USD 000) Vessels Other Total Fixed Assets Fixed Assets Carrying amount 01 January Additions Disposals Depreciation for the period Carrying amount 31 December Depreciation for the period Carrying amount 30 September Page 10 of 14

11 Note 5 - Interest bearing debt USD 500 million credit facility The Singapore FPSO owning companies Adoon Pte. Ltd. and Knock Allan Pte. Ltd., and the Norwegian company Nautipa AS (collectively referred to as the borrowers ), have a revolving reducing credit facility of USD 500 million. The facility is secured by a first priority mortgage on the vessels/units. The available loan amount depends on the present value of the unit s contracts and their scrap values (the borrowing base). The facility is guaranteed by Fred.Olsen Production ASA, and runs for five years from July 2007 without reductions and thereafter a further five years with semi-annual reductions of USD 25 million, bringing the facility down to USD 250 million at maturity. The interest rate is USD Libor with a credit margin of 1.00%. The borrowers are joint and severally liable for the credit facility. As of 30 September 2013 USD 110 million was drawn under the credit facility. Note 6 - Share capital and earnings per share Translation reserve The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations as well as from the translation of long term liabilities with no set terms of repayment, between the Parent Company and its subsidiaries (see statement of comprehensive income). Fair value reserve The reserve includes the cumulative net change in the fair value of available-for-sale investments until the investment is derecognized (see statement of comprehensive income). Own shares The Company purchased its own shares during the second quarter of 2009 on the basis of an authorization at the extraordinary Annual General Meeting in April 2009 authorizing the Company to acquire up to 10,593,000 shares, corresponding to 10% of the share capital of the Company. The par value of the shares purchased at 31 December 2009 is $92,849 and this balance is netted with retained earnings in the statement of financial position. The Company again purchased its own shares during the third quarter of 2011 on the basis of an authorization at the Annual General Meeting in May 2011 for the Board of Directors to acquire up to 10,593,000 shares, corresponding to 10% of the share capital of the Company. The combined, current year, par value of the shares purchased at 31 December 2011 is $107,107. Total shares purchased represent 1.13% of the total outstanding shares or a total of 1,200,000 shares. The balance presented as own shares is presented together with retained earnings in the consolidated statement of financial position. Page 11 of 14

12 (USD 000) Year-to-date Year-end FOP ASA FOP ASA FOP ASA ) ) ) Equity (beginning of period) Total comprehensive income/(loss) for the period Income/(loss) for the period Other comprehensive income Translation differences Effect of changes in available-for-sale assets Impairment of asset classified as available-for-sale IAS 19 adjustments Transactions with ownders recirded directly in equity Dividends distributed Equity (end of period) Note 7 Employee benefits Amendments have been issued to IAS 19, which change the measurement principles of expected return on plan assets and remove the accounting policy choice for recognition of actuarial gains and losses using the corridor method. The expected impact on the Group is quantified below. The impact for the Group is summarized below and the effective retroactively for annual periods beginning on or after 1 January The following table summarizes the financial effects of the implementation of the new accounting policy. Page 12 of 14

13 USD 000 Restated Consolidated Statement of Financial Position 31 December January 2012 Pension assets - - Deferred tax assets - - Employee benefit liability Equity - - Changes in the Consolidated Statement of Comprehensive Income 31 December January 2012 Pension assets - - Employee benefit liability Deferred tax assets - - Net decrease in retained earnings Increase in pension cost 1 Expense in comprehensive income The pension cost for defined benefit plans are estimated to be NOK 8 million in 2013 (2012: NOK 15 million). Discount rate in defined benefit plans The discount rate is determined by reference to high quality corporate bonds, where a deep enough market for such bonds exists. Covered bonds are in this context considered to be corporate bonds. In Norway the discount rate is determined with reference to covered bonds. Page 13 of 14

14 Note 8 Leases FOP has entered into operating lease contracts on all FPSO s owned. As at 30 September, the Company had commitments for future minimum lease receivable under non-cancellable operating lease as follows: 30 Sept Sept 2012 Not later than one year Later than one year and not later than five years Later than five years Total nominal amount Contingent rent recognized as income in the profit and loss in respect of operating leases is as follows: (USD 000) Third Quarter Year-to-date FOP ASA FOP ASA FOP ASA FOP ASA ) ) ) ) Contingent rent Note 9 Related party transactions Transactions between the company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. Year-to-date transactions between the Group and its associates are disclosed below. (USD 000) 30 September December 2012 Management fee Associated companies (Fred. Olsen Marine Services AS) Administrative services Associated companies (First Olsen Ltd.) Associated companies (Knock Tankers Ltd.) Operating expenses Associated company (Fred. Olsen & Co.) Vessel working capital Associated companies (Fred. Olsen Marine Services AS) Employee loans (from First Olsen Ltd.) Key Management - 28 Page 14 of 14