9th of march 2015 - island offshore · 9th of march 2015. the business the ... island dragon...
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The businessThe Island Offshore group has 28 vessels in operation within the vessel segments PSV, AHTS, Well Stimulation, Subsea Construction and Light Well Intervention. The vessel Island Champion was sold and leased back in December 2014.
The fleet operates in Norway, UK, Holland, West Africa, Brazil and Gulf of Mexico. The fleet is modern and versatile and Island Offshore has taken a leading position in attractive market segments.
The Group is privately owned.
Vessel Type/Design Yard Original Delivery
Island Clipper PSV, UT 776 CD Vard Brevik 02.04.2015
Island Defender PSV, UT 717 CDX Vard Brevik 09.07.2015
Island Discoverer PSV, UT 717 CDX Vard Brevik 29.10.2015
Island Diligence PSV, UT 717 CDX Vard Brevik 28.01.2016
Island Victory DWIV, UT 797 CX Vard Brevik 15.06.2016
Island Navigator THDV, UT 777 Kawasaki H.I. 31.03.2017
Type Vessels in operation
Vessels under construction
TOTAL
PSV 15 4 19
AHTS 2 1 3
SCV 4 0 4
RLWI 4 0 4
STIM 3 0 3
THD 0 1 1
TOTAL 28 6 34
Main events 2014
Contract awards
Island Dragon, Lundin Norway
Island Duke, Kosmos Energy
Island Duchess, Anadarko
Island Dawn, Anadarko
Island Commander, ConocoPhillips
Island Endeavour, Peterson Supplylink
Island Performer, FTO
Island Pride, Oceaneering Inc
Island Crown, Siem Industries, MOUK
Financing
Take-out financing, Island Dawn
Tap issue bond, IOSH LP
Take-out financing, Island Pride
Take-out financing, Island Dragon
Refinancing, Island Vanguard/Island Valiant
Take-out financing, Island Performer
Take-out financing, Island Condor
Fleet changes
Sale of Island Pioneer
Delivery of Island Dawn
Delivery of Island Pride
Delivery of Island Dragon
Delivery of Island Performer
Delivery of Island Condor
SBC Island Defender
SBC Island Discoverer
SBC Island Navigator
SBC Island Victory
SBC Island Diligence
Fleet The fleet comprises 28 vessels in operation during Q4 including the Island Condor which
was added to the fleet in November. The vessel Island Champion was sold and leased
back in December 2014 and is still operated by Island Offshore. The remaining new
building program includes an additional 6 vessels to be delivered.
Island Offshore has agreed with Vard Brevik to delay delivery of all the new building
vessels with an average delay of six months, except for Island Clipper which will be
delivered 9. April 2015. Together with the sale leaseback transaction, this agreement is
important to mitigate the negative implications of a weaker market and will improve the
short term cash flow for the Group.
In addition to this program, an SBC has been signed with Kawasaki Heavy Industries for
delivery of the Top Hole Drilling vessel Island Navigator in March 2017. The contract is
subject to firm financing and these negotiations are progressing according to plan.
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Cash Flow Statement
NOK mill 31.12.2014
Profit before tax 406
Taxes paid -14
Profit (-) /Loss (+) by sale of fixed asset -279
Depreciation 300
Change in stock 3
Change in AR -278
Change in AP 184
Change in other working capital -321
Cash flow from operations 1
Drawdown of long term loans 2.946
Repayment of long term liabilities -939
Purchase of minority interest -111
Equity contribution 24
Cash flow from financing activities 1.920
Investments -2.693
Net sales consideration 730
Cash flow from investment activities -1.962
Net cash flow -42
4th 2014 Quarter Financial Report
Quarterly Financial Report - Comments
Income Statement
Revenue totals NOK 696 mill in Q4 2014 including a sales gain of NOK
115 mill; YTD revenue as of December 31, 2014 is NOK 2.732 mill
including a sales gain of NOK 277 mill. Fleet utilization was 85% in Q4
thus lower than previous quarters due to mobilization of two vessels
starting new contracts and an overall weaker spot market.
We still consider the spot market for PSV and AHTS vessels to be
imbalanced and expect average lower day rates going forward,
especially for the PSVs. Accordingly, Island Offshore has resolved
to temporary lay up two PSV vessels pending an improved market.
The current spot market day rates do not provide satisfactory vessel
profitability.
EBITDA totals NOK 315 mill in Q4 2014 including a sales gain of NOK 115 mill compared to NOK 228 mill in Q4 2013.
2014 accounts include a provision for loss on receivables of NOK 11 mill related to the vessel operating in Brazil.
Q4 profit before tax of NOK -40 mill includes unrealized disagio of NOK 158 mill related to conversion of ship
mortgages in USD. YTD profit before tax of NOK 406 mill includes unrealized disagio NOK 210 mill.
Q4 2013 Q4 2014 YTD 2013 YTD 2014
NOK mill
Revenue 570 696 2.189 2.732
Net subcontractors -75 -82 -329 -376
Total operating revenue 495 614 1.861 2.356
Operating expenses 267 298 976 1.086
EBITDA 228 315 885 1.270
Depreciation 64 87 251 300
EBIT 164 229 635 970
Net financial items -77 -269 -275 -564Profit before tax 87 -40 360 406
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The PSV vessel Island Condor was delivered from Vard
Brevik in November 2014. The vessel was financed by
Export Credit Norway with a guarantee from GIEK and a
commercial Norwegian bank.
Other asset additions include yard installments for
vessels to be delivered and planned maintenance and
modifications program.
The cash position was strengthened in April 2014
following completion of a NOK 200 mill tap bond issue.
The proceeds will be used to finance the investment
program and strengthen the overall financial position of
the Group.
Net interest bearing debt totals NOK 7.830 mill at
December 31, 2014, which equals a gearing ratio of 6.2
(NIBD/12M rolling EBITDA). The financing program for
vessels under construction is progressing as planned.
The book value of the equity is NOK 2.952 mill, which
equals a ratio of 25%, adjusted for CIRR loans/deposits.
VAE is estimated to NOK 4.676 mill equal to a ratio of
34%, at December 31, 2014 based on broker’s value
appraisal of the fleet. Vessel values are 5% lower as of
December 2014 compared to December 2013.
Net cash flow in 2014 is negative with NOK - 42 mill
due to the investment program and delivery of four
new vessels in 2014. Net working capital has increased
significantly in 2014 due to pending settlement of the
sale consideration for Island Champion (received January
2015), a seller’s credit related to the sale of Island
Pioneer, funding of yard installments and an overall
increase in accounts receivable. The AR balance has
been reduced and normalized post balance sheet date.
Balance Sheet and Cash Flow
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NOK mill 31.12.2013 31.12.2014Ships 7.871 9.839New building contracts 114 28Other financial assets 1.201 1.126Deferred tax asset 34 29Total Fixed Assets 9.219 11.021
Inventory, stock 27 23Debtors 711 1.484Bank, cash 432 390Total Current Assets 1.170 1.898Total Assets 10.388 12.920
Total paid-in equity 596 596Other equity 2.044 2.356Total Equity 2.640 2.952
Deferred tax 122 119Total Provisions 122 119
Liabilities to financial institutions 5.961 7.828Other long term liabilities 1.335 1.340
Total Long Term Liabilities 7.296 9.169Trade creditors 224 408Other Short Term Liabilities 106 273Total Short Term Liabilities 330 681
Total Liabilities 7.748 9.968Total Equity and Liabilities 10.388 12.920
Balance Sheet
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Cash Flow Statement
NOK mill 31.12.2014Profit before tax 406Taxes paid -14Profit (-)/Loss (+) by sale of fixed asset -279Depreciation 300Change in stock 3Change in AR -278Change in AP 184Change in other working capital -321Cash flow from operations 1
Drawdown of long term loans 2.946Repayment of long term liabilities -939Purchase of minority interest -111Equity contribution 24 Cash flow from financing activities 1.920
Investments -2.693Net sales consideration 730Cash flow from investment activities -1.962
Net cash flow -42
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Island Offshore has secured additional
term contracts for the PSV and SCV fleet
in Q4 thus adding to the strong contract
coverage and order backlog.
We expect the spot market for PSV
and AHTS to remain volatile in coming
months. Our strategy remains firm with
focus on securing long term commitment
with strategically preferred clients. The
flow of tenders is however reduced
and tenders are frequently cancelled
or delayed. Price competition is intense
both for term and spot work.
The order backlog excluding charterer’s
options totals NOK 6.4 billion at
31.12.2014. Contract coverage for 2015
is approximately 80%.
Market Outlook & Order Backlog
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Investor relations:
Mr. Henning Sundet, Chief Financial Officer: [email protected], +47 913 65 735
*This financial report represents the consolidated financial statements for the Island Offshore Shipholding LP Group. The report is prepared on the basis of Generally Accepted Accounting Principles in Norway and has not been audited.