First quarter 2011 presentation Roger Halsebakk Interim CEO Sølvtrans Holding ASA Oslo, 19. May 2011 Jon Kvalø Jon Kvalø CFO Sølvtrans Holding ASA
Søl t s in Sølvtrans i b brief i f Background Financial Performance Y/Y Established in 1986 The world s largest well boat company p g live fish transporting 13 vessels currently operating in the North Sea & Canada Sølvtrans well boats secure efficient and environmental safe logistics for a growing fish farming industry Sølvtrans was the first wellboat company in the h world ld to be b llisted d stock is traded at Oslo Axess under the ticker STRANS Ålesund Norway HQ in Ålesund, 254 220 189 Sales EBITDA 112 61 26 10 2003 37 31 16 12 2004 2005 96 87 85 2008 2009 2010 51 23 2006 2007 Fleet/Capacity growth (m3) 16 000 16 14 000 14 12 000 12 10 000 10 8 000 8 6 000 6 4 000 4 2 000 2 0 0 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 Capacity (left axis) No. of vessels (right axis)
1 Highlights in the quarter 2 Financial review 3 Operational review 4 Market trends and Sølvtrans position 5 Summary and outlook
Highlights 1st quarter 2011 2 Operating income of NOK 53.5 mill. NO OK 1.0 mill less than Q1 2010 EBITDA of NOK 18.6 mill. NOK 1.5 mill above Q1 2010 Underlying EBITDA of NOK 20.1 mill. Pretax profit of NOK 3.6 mill. NOK 3.2 mill above Q1 2010 Comfortable balance sheet Equity ratio of 30 30.9% 9% Net cash flow affected by investment prrogram in Q1 Ronja Skye has been upgraded to meet contra actual obligations Automatic well washing systems and lice treattment equipment installed on several vessels New contract for Ronja Carrier with Coo oke Aquaculture effective from 1 April 2011 Strong contract coverage currently 89 % coverage for 2011 and 63 % for 2012
1 Highlights in the quarter 2 Financial review 3 Operational review 4 Market trends and Sølvtrans position 5 Summary and outlook
Operating income and EBITDA Q1 2011 Figures in NOK mill. O Operating income Q1 2011 Q1 2010 Operating income 53.5 54.5 Operating income of NOK 53.5 mill. 1.0 mill below Q1 10 EBITDA 18.6 17.1 High degree of market related off hire in Q1 2011: 34.8 % 31.4 % EBIT 8.2 8.8 Net financial items 4.6 8.3 Pretax profit 3.6 0.5 Q1 2011 Q1 2010 Crew expenses 15.3 16.0 Operating expenses vessels Wage costs administration Other operating expenses 10.6 55 5.5 3.4 13.0 27 2.7 5.7 Total operating expenses 34.9 37.4 Severance pay to former CEO 1.5 EBITDA margin Normalised Operating Exp Listing process Normalised operating expenses 2 3 2.3 33.4 35.1 Low spot activity one vessel laid up and three vessels with only partial operation. All in full operation from Q2 11 One vessel Ronja Skye non operational most of the quarter due to maintenance and significant upgrade Technical off hire at a record low level E EBITDA Reported EBITDA of NOK 18.6 mill. 1.5 mill above Q1 10 Includes NOK 1.5 mill in severance cost with former CEO Underlying EBITDA of NOK 20.1 mill in Q1 2011 P Pretax profit NOK 3.6 mill Depreciations p are NOK 2.1 mill. above Q Q1 2010 Net finance cost NOK 3.7 mill. less than Q1 10 due to unrealised gain on derivates
Balance sheet as of 31.0 03.2011 ASSETS Intangible assets Fixed assets Other current assets Cash & cash equivalents Total assets EQUITY & LIABILITIES Equity Current liabilities *)) Non current liabilities Total equity & liabilities 31.03.2011 31.03.2010 31.12.2010 27 949 67 50 1 093 32 961 66 159 1 217 27 922 96 71 1 116 31.03.2011 31.03.2010 31.12.2010 338 52 703 1 093 334 841 42 1 217 335 739 42 1 116 Al l fi gures i n NOK mi l l. *) NOK 677.2 mill / NOK 783.0 of Current liabilities at respectively 31.12.2010 and 31.03.2010 are long term debt related to mortgages on the fleet. Cash & cash equivalents: NOK 50.0 mill Cash reduced with 20.8 mill. since 31.12.2010 Other Current Assets includes NOK 11.6 mill in high interest bond investments. This investment reduced by NOK 30.0 mill since 31.12.2010 Book value of vessels: NOK 936.0 mill Investments of NOK 40 40.5 5 mill during Q1 2011 NOK 25 mill upgrade of Ronja Skye Other vessels upgraded with automatic well washing systems and equipment for lice treatment Net N t interest bearing i t t b i debt: d bt NOK 604.3 604 3 mill. ill 33.8 mill increased since 31.12.2010 All covenants met per 31.03.2011 Equity ratio: 30.9 30 9 % Book value: NOK 338 mill.
CASHFLOW (NOK mill) CF from operations Cash flow 2011 NOK mill. 100 18.6 8.8 CF from investments 10.6 CF from fin. activities 16.4 NET CASH FLOW 20.8 High level of vessel upgrades and 70 9 70.9 40.6 30.0 60 7.7 11.2 50.1 40 investments 40.5 mill Loan and interest payments of 25.3 mill 11.5 mill reduction of debt 30 0 mill reduction of bond investment 30.0 Positive development in working capital Cash at hand 31.03.2011 Other changes Change in working capital Re payment from high interest bond Investments Neet loan payment 0 Net finance outflow EBITDA YTD 20 Cash at hand 01.01.2011 6.2 Cash flow Q1 2011 affected by 16.5 80 Q1 10 7.6 mill trade receivables reduction since 31.12.2010. 6 mill Total trade receivables now at 28 28.6 mill, 5.5 mill less than per 31.03.2010
Covenant situation All covenants met per 31.03.2011 After negotiations, Sølvtrans received ne ew covenants for 2011 in February 2011 The new covenants for 2011 gives a sligh ht tightening in the Equity % covenant, covenant against an improvement in the NIBD / EBITDA co ovenant There are now three covenants in the jo oint loan agreement with Nordea and Sparebanken Møre: NIBD / EBITDA (NIBD / 12 mnth. rolling EBITDA) E Equity % Working g Capital p NOK
Summary financial review Sølvtrans financial result for Q1 2011 is satisfactory: Apart from severance pay to former CEO O; no other special or extraordinary costs in the quarter Focus on operational improvements are starting to show results Low level of technical issues with the vesssels, except for some issues with spot vessels. Remaining vessels had a 99 % employme ent rate in the quarter Focus F on iimprovements iin working ki capit itall shows h results l Significant reduction in trade receivabless since year end 2010 Net cash outflow in Q1 due to high levell of investments and payment of public debt No issue with covenants per 31.03.2011 1. Sound and reasonable covenants for 2011 Financial outlook going forward is positive: A good underlying EBITDA in Q4 2010, an nd cost improvements seen in Q1 2011 All vessels in full operation at start of Q2 2 2011 Expects low level of upgrade investments for the remainder of 2011 Agreed rate increases of approx. NOK 20 0 mill in 2011 compared to 2010
1 Highlights in the quarter 2 Financial review 3 Operational review 4 Market trends and Sølvtrans position 5 Summary and outlook
Continued focus on operrational improvements Maintained strong focus on accou untability and cost control New technical management team m in place Operating Manager starts early Augu ust strong background from vessel operations and ship owning companies Experienced p Maintenance Manager g started in Februaryy 2011 Technical and operational Supervisorrs with long experience as Captain and Chief on many of our vessels started end of o Q1 Customer focus and hands on hands on opeerations Ensure that the vessels are in full operation and being continuously maintained Avoid technical off hire Results from changed focus alread dy showing results in Q1 2011
Modern fleet average age a of six years Two vessels 1900 0 m3 Built 2007 and 2009 Closed Valve syystem and RSW Lice treatment equipped Five vessels 1000 0 m3 Built 2003 20 008 Closed Valve syystem and RSW Two vessels equipped for lice treatment Six vessels 650 m3 m Built 2001 20 003 Two vessels witth Closed Valve system and RSW Four conventio onal (open valve) vessels Two vessel equ uipped for lice treatment
Our well boats key in efficient e fish farm logistics Transportatio on of of Transporta ation salmon and td trout trout salmon and from from fish farm fishto t farm fish to processin processing png plant plant 60 65 % InternalInternal transportation transportation between fish farm facilities between fish farms Transportation p of Smolt transportation smolt Superior and d 10 15 % 10 % sustainable grow wth and profitabilityy Sorting of fish Grading of fish 10 % Sea licelice treatment Sea treatment 5 10 % In the North Sea it is estimated that a salmon is on board a well boat 2 5 times during its lifetime
And it s a demanding day to day operation Key operational figures per year: Transportation 230.000 tons (equals appr. 50 kg per Norwegian) Lice treatment 100.000 tons (with environmental friendly hydrogen peroxide) Smolt transportation ~ 40 mill fish About 10.000 loading operations per year Average value of each cargo NOK 4,5 mill Organization 130 employees on board the vessels 13 employees l at the h HQ iin Ålesund Ål d Technical Manning Finance Fleet management Administration
Contract coverage 2011 2013 Strong contractual status 89% 63% 15% Vessel 2010 Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 Q4 Q1 2013 Q2 2 Q3 Q4 Country 2011 2012 2013 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 Average remaining lifetime on Ronja Carrier CA Canada current contracts is two years CA Frøyhav Spot Roy Kristian Spot Frøyfisk Spot Norway SSC NHSF Scotland Canada Ronja Skye SSF Scotland Ronja Settler SSF Scotland SSF = Scottish Seafarm, f, MHG = Marine Harvest Group, p, SSC = The Scottish Salmon Company, p y, NH HSF = Northern Harvest Sea Farms CA = Cooke Aquaculture 12 out of 13 vessels under contract with solid counterparts as from Q2 2011 Traditional spot market moving towards awarding more long term contracts Companies with a portfolio of vessels are preferred
1 Highlights in the quarter 2 Financial review 3 Operational review 4 Market trends and Sølvtrans position 5 Summary and outlook
Sølvtrans Market Overrview and Status Scotland: Norway: Six vessels. All contracts renewed duringg 2010 Solid position 70 80 % market share Canada: Norway One vessell commenced O d on charter medio April 2011 Ronja Carrier on contract with Cooke from 1 April Canada West 2011 Demand for modern well boats with closed valve technology Scotlan nd Canada East Chile: Market showing promising development Considers re entry when market is ready again Chile Growingg wellboat demand focus on longg term charters 5 vessels currently operating 15% market share a strong market opportunity Ongoing market consolidation
Sølvtrans Strategy goingg forward Remain a market market and technology leader utilise the competitive edge: Maintain a modern fleet Technology leadership Environmental friendly transportation and tre eatment Operate high capacity vessels Well p positioned for further market expansio p on and growth g Footprint established in Canada Consider returning to Chile when the market is ready The Norwegian market represents growth opportunities
1 Highlights in the fourth quartter 2 Financial review 3 Operational review 4 Market trends and Sølvtrans position 5 Summary and outlook
Summary of the first quarteer 2011 Improved EBITDA EBITDA for the quarter ended e at NOK 18.6 mill. Underlying EBITDA, ex. non recurring items, of o NOK 20.5 mill. Comfortable balance sheet equity ratio of 30.9 % High underlying values in the fleet Good cash position Weak cash flow in Q1, mainly due to seasonal effects lower investments expected for the remainder of 2011 Solid contract coverage for 2011 and 2012 Tightening g te g o of financial a c a and a d ope operational at o a co contr trol o starting sta t g to show s o results esu ts
Outllook Short to medium term Growing global salmon production drives demand for further transport capacity Increased bio security focus drives the demand f more closed valve for l d l operations ti and d vessels l with ith environmental friendly parasite treatment equipment Expect higher operating income agreed rate increases from f January 2011 Agreed rate increases from contract re negotiations in 2010 implies an increase in operating income of approx. NOK 20 mill. for 2011 Seasonally higher maintenance and investments in first half Yearly maintenance and refurbishment is normally carried out for the majority of the fleet in H1 2011 both operating income and For the full year 2011, EBITDA are expected to improve vs. 2010 Long term Strong outlook in the market for transportation of salmon and trout: Growing global salmon production Strong St growth th expected t d in i Chile Chil iin coming i years Order book for closed valve vessels not large enough to prevent rate increases going forward Charter rates expected to continue showing solid increase year on year Competitive advantage for players with modern fleet and high capacity vessels Industry consolidation will continue
Th k you for Thank f your y attention! tt ti! In the beginning.. and now!
Disclaimer This Presentation includes and is based, inter alia, on forward lo ooking information and statements that are subject to risks and uncertainties that could cause actual results to differ. Such forw ward looking information and statements are based on current expectations, estimates and projections about global economic con nditions, the economic conditions of the regions and industries that are major markets for Sølvtrans Holding ASA and its subsidiaries. These expectations, estimates and projections are generally identifiable by statements containing words such as "expects", "beelieves", "estimates" or similar expressions. Important factors that could cause actual results to differ materially from those expectatio ons include, among others, economic and market conditions in the geographic areas and industries that are or will be major markets fo or Sølvtrans Holding s businesses, salmon prices, oil prices, market acceptance of new products and services, changes in governmentall regulations, interest rates, fluctuations in currency exchange rates and such other factors as may be discussed from time to time. Alth hough Sølvtrans Holding ASA believes that its expectations and the information in this Presentation were based upon reasonable assum mptions at the time when they were made, it can give no assurance th t those that th expectations t ti will ill be b achieved hi d or that th t the th actual t l results lt will ill be b as sett outt in i this thi Presentation. P t ti Søl t Sølvtrans H ldi ASA nor Holding any other company within the Sølvtrans Holding Group is makin ng any representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the information in the Pressentation, and neither Sølvtrans Holding ASA, any other company within the Sølvtrans Holding Group nor any of their directors, officcers or employees will have any liability to you or any other persons resulting from your use of the information in the Presentation. Sølvvtrans Holding ASA undertakes no obligation to publicly update or revise any forward forward looking looking information or statements in the Presen ntation.