Slvtrans ASA Q4 2013 Oslo, 14. February 2014 Roger Halsebakk, CEO - - PowerPoint PPT Presentation

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Sølvtrans ASA

Q4 2013

Oslo, 14. February 2014

Roger Halsebakk, CEO Jon R. Kvalø, CFO

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I. Highlights in the quarter

• II. Financial review
• III. Operational and market review
• IV. Summary and outlook
• V. Appendix

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Highlights – 4th quarter 2013

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• 99 % fleet utilisation in the quarter (95 %)
• Operating income of NOK 79.6 mill
• Reversal of deferred tax of NOK 28.9 mill
• Full year total profit of NOK 112.5 mill
• New wellboat Ronja Polaris delivered and started operation for Marine

Harvest

• DnB and Nordea chosen for long-term bank financing of the Group
• Dividend proposal of NOK 0.60 per share

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I. Highlights in the quarter

• II. Financial review
• III. Operational and market review
• IV. Summary and outlook
• V. Appendix

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Financial highlights

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Operating income (NOKm) EBIT (NOKm) Equity ratio (%) Net-interest bearing debt (NOKm)

59,5 72,7 70,1 72,0 67,9 70,9 67,6 79,6

Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13

14,1 26,7 24,7 26,3 25,3 29,8 25,6 24,2

Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13

30,7 % 30,9 % 31,4 % 34,4 % 34,2 % 35,5 % 36,5 % 34,0 %

Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13

564 565 547 523 577 556 577 781

Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13

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Operating results 4th quarter 2013

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• Operating revenues of NOK 79.6 mill
• 99 % utilisation (95%)
• One vessel hired temporarily (NOK 3.4 mill)
• Operating expenses increased 20 % vs Q3

last year, mainly due to

• Lease cost of one vessel NOK 3.1 mill
• Increased repair and maintenance NOK 2.1 mill
• Bonus accruals NOK 1.7 mill
• EBIT NOK 24.2 mill; slight reduction vs Q4-12
• Net finance cost increased with NOK 2.8 mill
• Mainly due to increase in bank loans
• Pre-tax profit of NOK 10.5 mill

NOK mill.

Q4 2013 Q4 2012

Operating income 79,6 72,0 OPEX excl. depr. 41,7 34,6 EBIT 24,2 26,3

EBIT margin 30,4 % 36,5 %

Net financial items

• 13,7
• 10,9

Pretax profit 10,5 15,4

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Operating results full year 2013

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• Operating income in 2013 increased 5.5%
• 98 % utilisation (92%)
• Sold one vessel in May, and took delivery of a

new vessel in October

• Total operating expenses equal to last year
• Reduced vessel opex (repair costs) with 8 %
• Increased salaries with 6 %
• EBIT increased with 14% to 104.9 mill
• EBIT margin increased 2.9 pts to 36.3%
• Net finance positively impacted by

unrealised agio and derivate effects

• Unrealised gain 2013 of NOK 14.6 mill, vs an

unrealised loss in 2012 of 20.8 mill

• Positive tax cost of NOK 24.1 mill in 2013
• NOK 28.9 mill in reversed defered tax
• Total profit for the year of NOK 112.5 mill
• Equals NOK 6,60 per share
• Dividend proposal of NOK 0,60 per share

NOK mill.

FY 2013 FY 2012

Operating income 289,0 274,3 OPEX excl. depr. 140,5 140,5 EBIT 104,9 91,7

EBIT margin 36,3 % 33,4 %

Net financial items

• 14,3
• 44,2

Pretax profit 90,6 47,5

Tax 24,1 5,4 OCI 1,1 3,6

Profit 112,5 58,7

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Balance sheet per 31 December 2013

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• Cash of NOK 66.9 mill
• Reduced NOK 11.1 mill since Q3 2013
• 13 vessels with book value of NOK 1 054 mill
• Ronja Polaris recognized in the BS in Q4
• Market value of the fleet of NOK 1 300 – 1 420

mill according to independent shipbrokers

• Vessel under construction with book value of

NOK 194 mill

• NIBD of NOK 781 mill
• Increased NOK 204 mill in the quarter du to

payments for new vessel and vessel under construction

• Bank debt increased with NOK 193 mill in Q4,

and with NOK 239 mill during the whole 2013.

• NIBD / 12 month rolling EBITDA = 5,4
• Equity ratio 34,0 %

NOK mill.

31.12.2013 31.12.2012 Fixed assets 1 250 955 Other current assets 70 39 Cash 67 86 Total 1 387 1 080

NOK mill.

31.12.2013 31.12.2012 Equity 472 372 Non-current liabilities 799 601 Current liabilities 116 107 Total 1 387 1 080

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Cash flow 2013

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4th QUARTER 2013

• Operating cash-flow

NOK 25.2m

• Investment cash-flow

NOK -231.3m

• Financing cash-flow

NOK 195.1m

• Net cash-flow

NOK -11.1m

FULL YEAR 2013

• Operating cash-flow

NOK 121.6m

• Investment cash-flow

NOK -336.9m

• Financing cash-flow

NOK 196.4m

• Net cash-flow

NOK -18,6m

85,5 145,5 53,5 327,1

• 7,6
• 29,7
• 391,2
• 87,7
• 12,5
• 5,3
• 10,7

66,9

Cash at 01.01.2013 EBITDA Sale of vessel New loans Change in WC Net finance

• utflow

Investm. Loan re- payment Dividend / share buy- back Paid tax Other changes Cash at 31.12.2013

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Reversal of deferred tax

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• A deferred tax liability of NOK 28.9 mill arose in 2008 in connection with a

restructuring of the Sølvtrans Group

• A revised evaluation done in 2013 concluded that this contingent liability

should not have been recognized in the balance sheet.

• This contingent liability will come to payment if the shares of the fully
• wned Sølvtrans Rederi AS is sold / realized.
• The Board of Directors considers that this will not happen in the

foreseeable future.

• The deferred tax provision of NOK 28.9 mill has thus been reversed in 2013

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Re-financing of the Sølvtrans Group

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• Agreement with DnB and Nordea regarding

syndicate bankloan covering the whole fleet:

• Refinancing existing fleet, including Chile vessels
• Guarantee’s, construction financing and long term

financing of vessel under construction

• Long term financing commitment for further two

new vessels, including construction financing

• GIEK and Exportcredit involvement in long-

term financing of Ronja Polaris and Ronjafisk

• Normal commercial terms
• 12,5 year repayment on loans to existing fleet,

and 15 years for new vessels

• 5 year agreement (12 years for Exportcredit)
• Comfortable covenants related to NIBD / EBITDA,

equity ratio and minimum free cash

• Total long-term financing frame of

NOK 1.3 billion

• Impact for Sølvtrans:
• Ensures stability and predictability for the future

financing of the Group

• Platform for further investments and growth
• Gives a comfortable cash situation
• Competitive terms

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I. Highlights in the quarter

• II. Financial review
• III. Operational and market review
• IV. Summary and outlook
• V. Appendix

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Fleet performance

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A major share of the customer contracts include paid maintenance days. Sølvtrans had a total of 15 maintenance days in 4th quarter, hereof 5 days without the customer paying any charter.

Utilization rate (%) Number of offhire days

75 % 97 % 92 % 96 % 80 % 96 % 95 % 95 % 94 % 100 % 98 % 99 % 70% 80% 90% 100% Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 292 36 97 48 238 51 56 57 71 19 15 50 100 150 200 250 300 350 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Incidents Maintenance Market related

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Operational summary 2013

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• Again strong operational improvement from

2012 till 2013!

• 98% utilisation, vs 92% in 2012!
• A total of 104 offhire days, compared to 401 days

in 2012.

• 56 of the 104 offhire days in 2013 is due to

market related issues

• 10 days of offhire related to incidents / break-

downs in 2013, vs 31 days last year

• Expenses to repair and maintenance reduced

with 14 %

• Sold one old vessel, and took delivery of one

new vessel.

• Full operation and income on the new vessel

from day 1.

• Sølvtrans with efficient administration and

competent and dedicated crews

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Contract coverage

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• Contracts for Ronja Pioneer extended till

30.09.2014

• Contract for Ronja Carrier extended till

31.12.2014

• Ongoing negotiations with customers

regarding free capacity and new vessel (Ronjafisk) to be delivered during Q3 2014

• We believe in a relatively tight wellboat market

based on new regulation and increase in Norwegian salmon production

Contract coverage excluding vessel under construction

76 % 42 % 37 % 0 % 2014 2015 2016 2017

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Sølvtrans – Market overview

Norway:

 Five vessels in operation, all with closed valve

system

Chile Scotland Norway Canada East

Scotland:

 Five vessels in operation, all

with closed valve system

Canada East:

 One vessel on contract until

Dec 2014

Chile:

 Two vessels in full operation

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Proposed regulatory changes in Norway regarding wellboats

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• The Norwegian Food Safety Authority are working with new regulations for wellboats

with the aim of reducing the risk of spreading infections

• Following requirements have been proposed:

a) All wellboats to either operate closed, or install approved disinfection and disinfection equipment to treat suction-, transport- and discharge water b) All wellboats to install and use geographical tracking system together with automatic logging of information about the bottom valve position

• Sølvtrans welcome these new regulations, as they will improve the quality and

environmental security of the Norwegian wellboat fleet and the fish farm industry

• As all Sølvtrans vessels in Norway and Scotland are closed valve vessels, and mostly

equipped with automatic logging systems on the bottom valves, these new regulations will not impact Sølvtrans negatively.

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Continued growth in Norwegian salmon production

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• Slight drop in production in 2013 vs the record

year 2012

• Analysts expect 5 – 7 % growth in 2014, and

then further growth in 2015

• Growth from 2013 – 2015 is approx 120K ton’s
• And 45 new “green” licences are to be handed
• ut during 2014
• The new Norwegian government has further

given positive signals regarding future growth in the industry

• The industry is aiming for a doubling of the

2012 volumes within 2020

• Sølvtrans believe that the growth will

continue and be strong also beyond 2015

Norwegian production of Atlantic salmon

200 400 600 800 1 000 1 200 1 400 2006 2007 2008 2009 2010 2011 2012 2013 2014e 2015e

(Source: Nordea, Pareto and Sølvtrans estimates)

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North Sea wellboat market (excl. Faroe’s, Iceland and Ireland)

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Capacity distribution (share of m3)

• 60 wellboats with a total of 60.000 m3 in
• peration
• 25 operators
• 2 largest players controls 44 %of the fleet
• Top 5 control 67 % of the capacity
• 18 operators with 1 – 2 vessels
• 9 newbuilds at a capacity of 23.000 m3 for

delivery during 2014 till 2016

• Majority of these already fixed on LT contracts
• Sølvtrans expect new capacity absorbed by
• Further production growth
• Increased transport distances
• Changed regulations related to biological

challenges, zone regulations and closed operations

• Increased deliveries to other services

(sealice - and AGD treatment etc.)

• The number of new vessels will not be able to

handle the production growth in all areas, and the industry will thus have to accept an over-capacity.

(Source: Company estimates, Fraktefartøyenes Rederiforening)

Sølvtrans 22 % Rostein 27 % Norsk Fisketr. 11 % Bømlo 7 % Other 33 %

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Summary of market development for wellboats

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• Continued growth in global salmon production drives need for more capacity
• Norwegian production of close to 1.2 million tons in 2012 and 2013 - expected to almost double by 2020
• Increased focus on bio-security issues drives the need for more closed vessels
• Sea lice and diseases
• Zone regulations
• Governmental regulations
• Fewer, larger and more professional salmon producers drives the need for larger and more

efficient specialized vessels

• Longer freight distances and larger processing plants
• Direct delivery to the factory instead of into holding pen’s

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Update on new-building status

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• Construction of Ronjafisk goes according to

plan

• Launching during February
• remaining installation, commissioning and sea-

trials being done at sea

• No cost overruns
• Delivery agreed to take place during Q3 2014
• We agreed with the yard to extend the delivery-

time with 3 months, against the yard covering all

• ur direct costs for the period.

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I. Highlights in the quarter

• II. Financial review
• III. Operational and market review
• IV. Summary and outlook
• V. Appendix

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Outlook

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• Sølvtrans shall continue to be the preferred well boat supplier, through delivering high

quality and reliable services to our customers

• Sølvtrans will maintain a part of the capacity for the spot market, to enable a larger

flexibility when required by our customers and in relation to execution of yearly maintenance of the vessels

• Several new vessels under construction for delivery in 2014-15.
• Sølvtrans believes many of these will be significantly delayed. The tonnage growth is expected

to be absorbed by production growth, changes in regulations, and changed transportation requirements

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Summary

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• Continued high utilization of the fleet
• Continued operational improvements
• Full year total profit of NOK 112.5 mill
• Ronja Polaris delivered and commenced operation for client
• New long term financing facility with DnB, Nordea GIEk and Exportcredit
• Dividend proposal of NOK 0,60 per share

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I. Highlights in the quarter

• II. Financial review
• III. Operational and market review
• IV. Summary and outlook
• V. Appendix

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Sølvtrans’s wellboats – key in efficient fish farming logistics

• 3200 m3 – 2 vessels; 1 delivered and 1 under construction
• State-of-the-art – all necessary equipment for efficient operations
• Closed valve system - specially equipped for filtering all circulation water
• 1900 m3 – 2 vessels
• Closed Valve system and RSW
• All equipped for lice treatment
• 1100 m3 – 5 vessels
• Closed Valve system and RSW
• All equipped for lice treatment
• 650 m3 – 5 vessels
• Open and Closed Valve system and RSW
• Some equipped for lice treatment

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Key Financials

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NOK mill Q4-2013 Q4-2012 2013 2012 2011 2010 2009 2008

Operating income and other revenue 80 72 286 274 265 254 221 189 EBITDA 38 37 145 134 128 85 87 96 EBIT 24 26 105 92 57 39 58 67 Net financial items

• 14
• 11
• 14
• 44
• 46
• 32

21

• 99

Total profit 43 32 112 59

• 2

1 83

• 22

Cash-flow from operations 25 40 122 134 109 81 129 8 Net cash-flow

• 11

8

• 19

19

• 4

46 3

• 37

Total assets 1 387 1 080 1 387 1 080 1 047 1 116 1 060 965 Equity 472 372 472 372 319 335 190 107 Net interest-bearing debt (NIBD) 781 523 781 523 553 571 765 745 Cash and cash equivalents 67 86 67 86 78 112 25 22 Working Capital 96 82 96 82 71 105 38 42 NIBD / EBITDA (12 month rolling) 5,4 3,9 5,4 3,9 4,3 6,7 8,8 7,8 EBITDA margin 48 % 52 % 51 % 49 % 48 % 33 % 39 % 51 % Equity ratio 34,0 % 34,4 % 34,0 % 34,4 % 30,5 % 30,0 % 17,9 % 11,1 % Return on capital employed (ROCE) 8,6 % 11,8 % 9,8 % 10,4 % 6,4 % 4,1 % 6,4 % 8,5 % Earnings per share in NOK 2,51 1,86 6,58 3,41

• 0,09

0,06 4,60

• Equity per share in NOK

27,45 20,49 27,45 20,49 17,59 18,46 10,45 5,89

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Disclaimer

28 This Presentation includes and is based, inter alia, on forward-looking information and statements that are subject to risks and uncertainties that could cause actual results to differ. Such forward-looking information and statements are based on current expectations, estimates and projections about global economic conditions, the economic conditions of the regions and industries that are major markets for Sølvtrans ASA and its subsidiaries. These expectations, estimates and projections are generally identifiable by statements containing words such as "expects", "believes", "estimates" or similar expressions. Important factors that could cause actual results to differ materially from those expectations include, among others, economic and market conditions in the geographic areas and industries that are or will be major markets for Sølvtrans ASA’s businesses, salmon prices, oil prices, market acceptance of new products and services, changes in governmental regulations, interest rates, fluctuations in currency exchange rates and such other factors as may be discussed from time to time. Although Sølvtrans ASA believes that its expectations and the information in this Presentation were based upon reasonable assumptions at the time when they were made, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in this Presentation. Sølvtrans ASA nor any other company within the Sølvtrans Group is making any representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the information in the Presentation, and neither Sølvtrans ASA, any other company within the Sølvtrans Group nor any of their directors, officers or employees will have any liability to you or any other persons resulting from your use of the information in the Presentation. Sølvtrans ASA undertakes no obligation to publicly update or revise any forward-looking information or statements in the Presentation.