Sølvtrans Holding ASA / Interim report first quarter

Transcription

1 Sølvtrans Holding ASA Interim report first quarter 2011 Ålesund, 19 May 2011 Highlights in the first quarter Operating income. Operating income in the first quarter of NOK 53.5 million, compared with NOK 54.5 million in the first quarter 2010 EBITDA. EBITDA of NOK 18.6 million in the first quarter, compared with NOK 17.1 million in the first quarter EBITDA in the first quarter 2011 was affected negatively by costs of a NOK 1.5 million severance pay to the former CEO, who resigned in January Profit before tax. Profit before tax in the first quarter of NOK 3.6 million, compared with NOK 0.5 million in the corresponding period Solid equity ratio. Equity ratio of 30.9 percent as at 31 March 2011 (30.1 as at 31 December 2010) Positive cash flow development from operations, but net negative cash flow in the quarter. Negative net cash flow in the quarter mainly due to investments of NOK 40.6 million, as well as downpayment on morgages amounting to NOK 16.4 million. The investment level for the remaining quarters in 2011 will be lower than in the first quarter. New and improved loan covenants granted by the company s bank connections. Sølvtrans is in compliance with all its loan covenants as at 31 March 2011 New contract for the Ronja Carrier new seven month contract with Cooke in Canada commenced 1 April Continued strong contract coverage. 89 percent contract coverage for the remainder of 2011 and 63 percent coverage for Process initiated to find new permanent CEO. Founder and former chairman of the board of directors of the company, Roger Halsebakk, was appointed acting CEO in January The board of directors has initiated a process to find a permanent CEO. Operating income (NOK million) EBITDA (NOK million) Equity ratio (in %) % 27.5% 30.1% Q1 11 Q Q1 11 Q Sølvtrans Holding ASA / Interim report first quarter

2 Interim report first quarter 2011 ABOUT SØLVTRANS Sølvtrans is the world s leading wellboat shipping company in the business of transporting live salmon and trout. With a fleet of 13 modern and wholly owned vessels, Sølvtrans is and has been a prominent player in the wellboat industry ever since it was founded in The company has developed a concept for the transport of live fish in a closed and cooled environment, which provides a better end product and prevents transmission of infectious diseases during transport. Nine out of Sølvtrans vessels are fitted with this concept for closed transport. Sølvtrans sold two of its vessels in 2009 and The most recent addition to the fleet was delivered in The fleet s average age is six years. The company s head office is located in Ålesund. CONDITIONS PERTAINING TO THE FIRST QUARTER Operating income and EBITDA are affected negatively by a drop in activities compared to last year for the four vessels that have been operating the spot market in the quarter, and missing revenue from the Ronja Skye which has not generated any income in the quarter due to maintenance work and upgrades. In addition there is a NOK 1.5 million negative EBITDA effect from severance pay made to the former CEO, who resigned in January Cash flow in the quarter was affected by substantial investments in the vessels, largely related to the upgrading of the Ronja Skye and fitting of automatic well cleaning systems on three of the vessels that are chartered to Marine Harvest. Financial review In the financial review for the first quarter 2011 figures for corresponding periods in 2010 are given in brackets. PROFIT AND LOSS FIRST QUARTER 2011 The company had operating income of NOK 53.5 million (NOK 54.5 million) in the first quarter Operating income in the first quarter was reduced particularly as a result of the decline in spot activities compared with the corresponding quarter From the beginning of the second quarter 2011 all spot vessels are fully employed. In addition the Ronja Skye was out of operation until mid March in order to have its equipment upgraded. Operating costs in the first quarter amount to NOK 34.9 million (NOK 37.4 million), including the above mentioned severance pay. Reported operating profit before depreciations and write downs (EBITDA) in the quarter was NOK 18.6 million (NOK 17.1 million). Underlying EBITDA in the quarter amounted to NOK 20.1 million (NOK 19.3 million). Operating profit (EBIT) for the first quarter 2011 was NOK 8.2 million (NOK 8.8 million), after depreciations of NOK 10.4 million (NOK 8.2 million). Net financial items in the first quarter 2011 amounted to NOK 4.6 million (NOK 8.3). The reduction in net financial expenses is largely due to unrealised gains in connection with interest rate and currency derivate contracts. Profit before tax in the first quarter 2011 amounted to NOK 3.6 million (NOK 0.5). BALANCE SHEET AND CASH Sølvtrans has a booked equity of NOK million as at 31 March 2011, corresponding to an equity ratio of 30.9 percent. Based on an external value judgement of the vessels obtained in December 2010, the net asset value was estimated at approx. NOK million as at 31 December The company had net interest bearing liabilities of NOK million as at 31 March Gross mortgage debt and bond debt was paid down by a total of NOK million in 2010 and has been paid down further by NOK 16.4 million in the first quarter In the first quarter 2011 Sølvtrans main bank connections granted the company new and improved loan covenants. As at 31 March 2011 Sølvtrans is in compliance with all loan covenants. Cash holding as at 31 March 2011 was NOK 50.1 million. The cash holding was reduced by NOK 20.8 million in the quarter, mainly due to payments of loans (NOK 16.4 million) and investments of at total of NOK 40.6 million. The investment level is seasonally high in the first quarter, and investments Sølvtrans Holding ASA / Interim report first quarter

3 include upgrades made to the Ronja Skye. Investments in the existing fleet are expected to be considerably lower for the remainder of Current receivables were NOK 55.4 million as at 31 March 2011, matching the level as at 31 December There was a NOK 7.6 million reduction in receivables in the first quarter, largely as a result of a continued determination to recover outstanding accounts receivables. Total asset values as at 31 March 2011 were NOK 1,093 million. Cash flow from operations amounted to NOK 6.2 million in the first quarter, including a negative contribution of NOK 6.8 million due to changes in accounts receivables, accounts payables and other accruals. Cash flow from investments amounted to NOK 10.6 million. Investments of NOK 40.6 million in the quarter are partially compensated for by a NOK 30.0 million draw on high yield bond investments. NOK 16.4 million in payment of mortgage loans were made in the quarter. Net cash flow was NOK 20.8 in the first quarter. ACCOUNTING PRINCIPLES This interim report has been prepared in accordance with the current Interim Financial Reporting Standard (IFRS) and interpretations, and the associated standard for interim reporting (IAS 34 "Interim Financial Reporting") and follows the same accounting principles as in the annual financial statement. in March The contract expires at the end of the second quarter Frøyfisk was employed in the spot market in the first quarter, but embarked on a seven month contract with Northern Harvest Sea Farms in Canada in mid April During the winter 2011 the vessel was fitted with lice treatment facilities, at a total investment of approx. NOK 2.0 million. The remainder of the company s fleet is on contracts expiring at the end of 2011 or beyond. In 2010 Sølvtrans renegotiated contracts for six of its vessels with Scottish Sea Farm, The Scottish Salmon Company and Marine Harvest Scotland. For the full year of 2011 this implies an increase in operating income from the long term agreements of approx. NOK 20 million compared with The group has a solid order situation with a good employment rate based on long term contracts. As at 31 March percent of the capacity is secured for percent is secured for 2012 and 15 percent for The client portfolio consists of substantial and solid companies. The group has a fleet of 13 vessels, of which five operate in Norway, six in Scotland/Shetland, and two in Canada. The fleet is flexible and provides opportunities for favourable combinations of long and short term contracts. Contract situation and operations All vessels are currently employed on incomegenerating contracts. Frøyhav has been employed in the spot market since the end of the third quarter 2010 and is currently on a short term contract with Norwegian Royal Salmon until the beginning of July. Ronja Carrier, operating in Canada, was laid up for the duration of the first quarter In March the vessel was awarded a new time charter agreement with Cooke Aquaculture, commencing 1 April and valid until 1 November Roy Kristian was employed in the spot market at the beginning of the first quarter, and embarked on a new contract with The Scottish Salmon Company An overview of the group s fleet as well as contract situation for each vessel is available on page 10 of this interim report. It should also be mentioned that three of the company s vessels that are on time charter contracts with Marine Harvest have been fitted with automatic tank cleaning equipment during the first quarter A fourth vessel is scheduled for fitting of the same cleaning system in June The agreement is that the client will pay for this through increased charter rates. Automatic tank cleaning equipment ensures a steady, predictable and traceable quality of the cleaning process of the wells, and is becoming a market standard on modern wellboats. Changes in management As part of the company s plans to improve management of the company s fleet, Frode Baade Sølvtrans Holding ASA / Interim report first quarter

4 was appointed new Operating Manager at the beginning of May Baade will assume his new position by 1 August Baade has been employed in the Aker Seafood group for the past eight years, and has recently had the position as manager for the trawling companies Hammerfest Industrifiske AS and Finnmark Havfiske AS. Frode Baade replaces Per Olav Myrstad, who recently left the company. Shareholder information Sølvtrans Holding ASA was listed on Oslo Axess on 30 March Closing price at 31 March 2011 was NOK 17.50, which based on million outstanding shares values the company s equity at the end of the quarter at approx. NOK 318 million. The company had in excess of 200 shareholders as at 31 March The 20 largest shareholders own approximately 84 percent of the total number of outstanding shares. An extraordinary general meeting in Sølvtrans Holding ASA held 17 September 2010 adopted to authorise the board to buy the company s own shares and increase the company s share capital. The board has not yet exercised the authorisations, and the ordinary general meeting on 20 May 2011 will consider the board of director s proposal to continue these authorisations. The ordinary general meeting in Sølvtrans Holding ASA takes place on 20 May at 10 am, at Rica Parken Hotel, Storgata 16, Ålesund. distances from fish farms to harvesting plants. On a general basis the company experiences an increased demand for larger, more efficient and environmentally safe wellboat services. In Norway there is a strong and growing demand for all types of wellboat services. Sølvtrans has five vessels operating in Norway, of which four have a closed technology and one is conventional. Four of the vessels in Norway are on long term contracts, while one operates in the spot market. Sølvtrans regards Norway as the geographical region with the greatest potential for growth, and in terms of strategy, Norway is the market where the company will devote the most efforts to increase its market shares. Sølvtrans currently has no available capacity to add to the market, but a development of the company s fleet through the acquisition of modern used tonnage with closed technology and the construction of new modern vessels with an environmentally safe wellboat technology, is considered continuously. In the autumn 2010 the debate concerning salmon lice reappeared on the Norwegian agenda, resulting in an increased demand for wellboats equipped with delousing facilities. Six of Sølvtrans wellboats have facilities in place to combat salmon lice. In Scotland Sølvtrans has had a share of the wellboat market between 70 and 80 percent for a number of years. The company currently has six vessels operating the Scottish market, and contracts for all these were renegotiated during 2010, resulting in a considerable increase the vessels charter income from January Renegotiations have helped secure the company s strong market position in Scotland. Events after the end of the quarter The changes in management reported at the beginning of May 2011, are dealt with under the section Changes in management above. Market evaluation The global market for wellboat services has grown steadily in recent years, and at the same time structural changes in the fish farming industry has resulted in fewer and larger players. Consolidation and streamlining has also resulted in larger and fewer harvesting plants. This has led to greater In Chile the production of Atlantic salmon was approximately 130,000 tonnes in 2010, down from approximately 403,000 tonnes in 2008 (according to Kontali Analyse). A considerable production increase is expected in the years to come, and Sølvtrans expects to re enter the Chilean market as soon as the market is ready to utilize and pay for vessels with closed technology. The company monitors market developments in Chile closely and has maintained a small work force in the country in order to resume operations when the market situation and the company s fleet status allow. Canada is a new market for Sølvtrans, and during Sølvtrans Holding ASA / Interim report first quarter

5 the second and third quarters 2010 the company entered the market with two vessels, of which one (the Ronja ) has been sold. In addition a time charter contract for a third vessel (the Frøyfisk ) was agreed in the third quarter, effective mid April The Ronja Carrier which has operated the Canadian market from May 2010 was put in temporary lay up at the end of December 2010 pending a new contract. In April the Ronja Carrier started on a new contract with Cooke Aquaculture expiring 1 November Outlook The growth in salmon production, increased environmental focus and consolidation and professionalization among fish farmers are the most important drivers for the wellboat market. The outlook for the transport of salmon and trout is positive in that a strong production growth is expected. The strongest growth in the years ahead is expected in Chile, where the salmon industry is gradually re establishing following the crisis in A solid growth is also expected in the markets where Sølvtrans is currently operating. There is also an increased focus on combating salmon lice and infectious diseases in the salmon industry, as well as a steady increase in the demand for closed technology for the transport of live fish. The wellboat market is still characterised by fluctuations the supply of wellboats is not sufficient to prevent rates to increase further. The company is well prepared to respond to the increased demand for transport with modern wellboats. Acquisition of up to date used tonnage and/or contracting of new vessels will therefore be evaluated continuously vis à vis the observed client expectations and demands. The company has recently focused on securing more cost effective operations in order to improve its competitive edge. The results of these efforts are already visible, and the work will be carried on. The board of directors expects a positive development with improved operating income and EBITDA in the year 2011 compared with Risk exposure and management The most prominent risk and uncertainty factors for the next six months are: Market risk. The market risk is considered to be limited as the company s contract coverage for the remainder of the year is good. As at 31 March 2011 the contract coverage for 2011 is 89 percent of the fleet s capacity. Financial risk Interest rate risk The company is not significantly exposed to fluctuations in the interest rate level as a major share of the interest bearing liabilities are secured by hedging instruments. Client and credit risk The client portfolio consists of few and solid companies, which gives a low credit and liquidity risk. Accounts receivables are followed up continuously. Currency risk Sølvtrans is not significantly exposed to changes in the exchange rates as only 8 percent of the company s income is invoiced in a currency other than NOK. This is secured through forward contracts. All non current liabilities are held in NOK. Operational risk. There will always be a risk of unforeseen operational problems and damage to vessels, which could result in higher operational costs and lower income than predicted and expected. Ålesund, 18 May 2011 The board of directors and acting CEO of Sølvtrans Holding ASA Anders Hvide, chairman Leif Holst, member Oddbjørn Lende, member Kristin Alm, member Marit Dille, member Kristin Krohn Devold, member Roger Halsebakk, Acting CEO Sølvtrans Holding ASA / Interim report first quarter

6 Consolidated accounts Sølvtrans Holding ASA First quarter 2011 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 1Q 1Q NOK Freight revenues 53,383 54, ,819 Other operating income ,201 Total operating income and freight revenues 53,504 54, ,020 Crew expenses 15,307 16,046 69,072 Operating expenses vessels 10,636 13,025 67,785 Wage costs administration 5,531 2,711 14,048 Other operating expenses 3,402 5,655 18,222 Total operating expenses 34,876 37, ,127 EBITDA 18,628 17,070 84,893 Depreciation 10,397 8,261 35,585 Write-dow ns ,802 Operating result (EBIT) 8,231 8,809 38,506 Interest income ,486 Interest expenses (9,109) (11,933) (45,107) Other financal items 3,742 3,381 8,415 Net financial items (4,583) (8,343) (32,206) Result before tax charge 3, ,300 Tax charge 730 (376) 5,244 Result for the year 2, ,056 Other comprehensive income: Currency translation differences Total comprehensive income 2, ,893 Sølvtrans Holding ASA / Interim report first quarter

7 IFRS IFRS IFRS NOK /03/ ASSETS Consolidated Balance Sheet Goodw ill 27,228 31,986 27,228 Total intangible assets 27,228 31,986 27,228 Buildings 6,049 7,001 6,100 Vessels 914, , ,441 Capitalized periodic maintenance 21,522 26,734 22,037 Other operating assets 2,543 3,492 2,818 Total property, plant and equipment 944, , ,396 Other non-current receivables 3,114 1,457 6,936 Derivates 1, Total financial assets 4,364 1,457 7,513 Total non-current assets 976, , ,137 Inventory 3,410 5,008 3,285 Trade receivables 28,678 34,160 36,297 Derivates 6,297 1,683 3,041 Other current receivables 16,965 24,616 12,478 High interest bond 11,588-40,994 Cash deposits and cash equivalents 50, ,598 70,899 Total current assets 117, , ,994 TOTAL ASSETS 1,093,222 1,216,646 1,116,132 IFRS IFRS IFRS NOK /03/ EQUITY AND LIABILITIES Consolidated Balance Sheet Share capital 7,262 7,262 7,262 Ow n shares (55) (57) (55) Share premium fund 201, , ,961 Other equity 126, , ,016 Retained earnings 2, Total equity 338, , ,183 Deferred tax 26,512 23,323 26,512 Debt to finance institutions 666,049 5,550 5,250 Non-current payable tax 10,333 12,917 10,333 Total non-current liabilities 702,894 41,793 42,095 Debt to credit institutions - 648, ,226 Bond loan - 134,708 - Trade payables 19,190 26,713 18,936 Payable tax 3,313 8,374 7,535 Public duties 6,988 7,339 18,244 Other current liabilities 22,734 15,388 16,913 Total current liabilities TOTAL EQUITY AND LIABILITIES 1,093,221 1,216,646 1,116,132 Sølvtrans Holding ASA / Interim report first quarter

8 Consolidated statement of changes in equity NOK 1000 Share capital Own shares Share premium fund Translation differences R etained earnings - other Total equity Balance at ,862 (57) 60, , ,661 Share issue costs - - (6,458) - - (6,458) Capital extension 2, , ,000 Sale of ow n shares Currency translation differences Retained earnings ,056 1,056 Balance at ,262 (55) 201,961 1, , ,183 Retained earnings Year To Date ,918 2,918 Balance at ,262 (55) 201,961 1, , ,101 Consolidated statement of cash flows 1Q 1Q NOK Cash flows from operating activities Result before tax charge 3, ,300 Tax paid in the period (4,952) - (3,423) Depreciations and impairment 10,397 8,261 46,385 Loss from sale of property, plant and equipment - - (7,573) Unrealised profit / loss on forex and derivates 3,929 (3,862) (5,641) Change in stocks, trade receivables and trade payables 7,748 11,262 8,417 Change in net pension liability - - (1,607) Change in other accruals (14,549) (9,616) 1,602 Net cash generated from operating activities 6,221 6,511 44,460 Cash flows from investing activities Purchases of property, plant and equipment (40,571) (15,071) (41,737) Proceeds from sale of property, plant and equipment ,500 Net change in long term investments - 0 5,498 Net change in high interest bond deposit 30,000 - (40,452) Net cash used in investing activities (10,571) (15,070) (34,191) Cash flows from financing activities Proceeds from new mortgage and bond loans - 3, ,000 Repayment of mortgage and bond loans (16,427) - (207,534) Payment from purchase of bond in ow n bond loan - (5,000) - Proceeds from capital extension (equity) - 143, ,621 Sale of ow n shares to employees Net cash used in financing activities (16,427) 142,226 36,167 Exchange rate changes, cash and cash equivalents - - (469) Net change in cash and cash equivalents (20,777) 133,666 45,967 Cash and cash equivalents beginning of period 70,899 24,932 24,932 Cash and cash equivalents end of period 50, ,598 70,899 Sølvtrans Holding ASA / Interim report first quarter

9 1Q 1Q NOK REVENUE Segment information Norw ay / Canada 30,625 35, ,931 UK 22,879 18,527 85,089 Chile Other Total 53,504 54, ,020 OPERATING RESULT (EBIT) Norw ay / Canada 4,291 10,438 34,332 UK 4,180 (3,505) 4,714 Chile (241) (261) (538) Vessels under construction - 2,137 - Total 8,230 8,809 38,508 VESSEL VALUES Norw ay / Canada 617, , ,992 UK 318, , ,486 Total 935, , ,478 Sølvtrans Holding ASA / Interim report first quarter

10 The Group s fleet Vessel Stake Cap. (m 3 ) Built year Type * Sea lice treatment Ronja Atlantic 100% 1, Closed system X Ronja Harvester 100% 1, Closed system X Ronja Nordic 100% 1, Closed system X Ronja Pioneer 100% 1, Closed system Ronja Viking 100% 1, Closed system Ronja Superior 100% 1, Closed system X Ronja Commander 100% Closed system Ronja Carrier 100% X Frøyhav 100% Roy Kristian 100% Frøyfisk 100% X Ronja Skye 100% Closed system Ronja Settler 100% Closed system Sum 12,820 6 * "Closed system" means in a closed and controlled system without spills and with controlled temperature and oxygen to secure animal welfare and best possible quality on slaughter fish. Contract status Vessel Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Country Ronja Atlantic MHG Norway Ronja Harvester MHG Norway Ronja Nordic MHG Norway Ronja Pioneer MHG Scotland Ronja Viking SSC Scotland Ronja Superior MHG Norway Ronja Commander MHG Scotland Ronja Carrier CA CA Canada Frøyhav Spot Norway Roy Kristian Spot SSC Scotland Frøyfisk Spot NHSF Canada Ronja Skye SSF Scotland Ronja Settler SSF Scotland SSF = Scottish Seafarm, MHG = Marine Harvest Group, SSC = The Scottish Salmon Company, NHSF = Northern Harvest Sea Farms CA = Cooke Aquaculture Sølvtrans Holding ASA / Interim report first quarter

11 Largest shareholders as at 31 March2011 Aksjonær pr Antall aksjer % Dolstein Invest AS ,6 Sinberg Ltd AS ,0 Skipsaktieselskapet Widan ,8 Peter Wilhelm Neuman Rederi AS ,2 KLP LK Aksjer ,0 Loco A/S ,1 KLP Aksje Norge ,9 Hustadlitt AS ,8 Goldman Sachs ,7 DnB NOR SMB ,5 Storebrand Verdi ,2 Terje Linga Gilje ,0 Sverre Andreas Farstad ,8 KLP Aksjenorden ,8 WarrenWicklund Norge ,5 Trafalgar AS ,4 Morud Minerals AS ,4 Panema AS ,1 Bergen Kommunale Pensjonskasse ,1 Pareto AS ,1 Sum 20 største aksjonærer ,0 Andre aksjonærer ,0 Totalt ,0 Sølvtrans Holding ASA / Interim report first quarter