| IMSK - Preliminary result 2009 |
| Freitag, 15. Januar 2010 17:11 |
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| The I.M. Skaugen Group (IMSK) today announced a negative result for the year 2009 - a year of much contradiction, challenges and transition · The pre-tax result before tax was negative USD9.5 million 2009 compared to USD 8.2 million in 2008. The result of the FY09 on an EBITDA basis was USD24.7 million compared to USD50 million for the FY08. · The 4Q09 pre-tax result was negative USD8.3 million compared to a negative USD12.9 million for the 4Q08. The EBITDA result of the 4Q09 was USD5.9 million compared to USD3.1 million for the 4Q08. · The deviation in net profits and EBITDA earnings reflects a weaker operating performance for all business units. For the gas carriers it reflects higher share of spot voyages in the utilization of the Norgas fleet and a much weaker spot market than the year before. For SPT it reflects a more challenging tanker market and for the China based activities it reflects gain from sale of assets in 2008 that was not repeated in 2009 and a loss on sale of 3 "WG" vessels in 2009/2010. Our Net result in 4Q09 has been charged with impairment cost and R&D cost related to discontinued operations in the amount of about USD10,2 million. We have also charged cost as awarded by an arbitration panel for RMB7.8 mill (USD1.1 mill); these are cost related to a contract cancellation in 2007 for newbuildings of two gas carriers that we elected to discontinue. If we adjust for these charges our EBITDA and Net result would have been USD27 million and USD1.7 million respectively. These numbers reflects in our opinion more appropriately the ongoing business and our core activities · The book equity, excluding minority interests, totaled USD94 million or USD3.46/NOK20.00 per share. The book equity represents about 27.1 percent of the total assets. The net debt at the end of 4Q09 was USD62.1 million and the net interest-bearing debt totaled USD116.3 million. The ratio between current assets and current liabilities is 435 percent. · Total liquidity as of the end of 4Q09 was USD96 million, which is regarded as sufficient for the company's ongoing business activities. The working capital requirements continue to be high in historical terms due to the current newbuilding commitments. Interest coverage ratio was 1.6 for 2009, as against 3.2 for 2008. · Given the net loss for the year the Board will not recommend any dividends for the year of 2009. · Issues related to CAPEX and debt financing At the end of 4Q09 total capex commitments on I.M. Skaugen's newbuilding stood at USD 47 million for vessels financed trough sale and leaseback solutions and USD 31 million (adjusted for ownership in JV's) for vessels financed via traditional debt facilities. The IMS Company successfully tapped the Chinese debt markets for its overall corporate purposes in 2009 and this shows the value of its presence in this market. · Bond portfolio of outstanding loans The company has benefited from the bond markets in Norway mainly to provide construction finance or working capital for the newbuilding programs at SMC. Maturity in the outstanding bond portfolio will mostly be offset by funds to be received from sale and lease-back arrangements on ships under construction by SMC. The counter-party in these sale lease-back structures are Teekay LNG Partners for two more "Wintergas" vessels and two "Multigas" 12, 000 cbm sized vessels. Average interest cost (including. of margin) for all outstanding bonds financed now stand at 5.7 percent, given current USD interest rates. The company has USD10.6 million of bonds falling due for repayment within next 12 months. The bond with the longest duration matures in June 2012. Our views on the performance of the company in 2009 The company is not satisfied with the overall financial performance for the year which showed a negative result. The USD11.3 mill charges to the "pandl" of the company in 4Q reflects charges related to discontinued operations and impairment charges on activities that are considered non-core. As such we would like to highlight the positives as the results from ongoing core operations are considered more acceptable. Given the challenging macro economic conditions we are in general pleased with our core activities performance at this point of the economic cycle. A cyclical business like our will normally suffer in the downcycle and the year 2009 is a year of the downcycle. We are benefiting from our strategic decisions made several years ago - a focus on emerging markets, reducing costs and building longer and better contract coverage. In a year where global trade reported the largest contraction since World War II, and where chemical production (a proxy for ethylene) was set back to 2006 volume levels; ethylene production itself ended the year positively compared to 2008 and only marginally lower than the peak year of 2007. This is mainly due to a sharp rebound in demand from "non - Japan Asia" and especially Chinese demand offsetting the weaker markets in North America and Europe. The added volumes for Asia were covered for the most by imports from the Middle East, which is the growth area "no. 1" for petrochemical industry. The low cost Ethane-based ethylene crackers in the Middle East has made the region well placed to cover production shortfalls in other regions as higher costs have pushed many European and some Asian producers towards the uncompetitive end of the global cost curve, thus making the Middle East the major net export area. Over the year a good percentage of the ethylene fleet of the long haul carriers (i.e larger ships) was being employed lifting tons from this region and a large share of this going to Asia. The implication of this trend is that we experience an increase in tonmiles per product transported for these types of ships. And although 13 new ethylene vessels where delivered in 2009, the resilient overall production volumes absorbed to a great extent this additional capacity and prevented spot rates of falling as much as most other markets. We have suffered a USD7.3 million loss at the end of the year in 2009 on a non core IT related investment within health care sector due to impairment valuations made. This company has written off most of its R&D investment made, over several years in a portal technology for the "e-health" sector. This as it was proven that the commercial applications were not acceptable to the key Norwegian client for their future needs. The loss is regrettable and the investment was considered promising despite being outside of our core business focus. The innovative solutions provided by this company were intriguing and did fit our desire to work with such innovations. We will in the future, based on this experience, not embark on a venture that is this much outside of our core focus. The CSAM Health AS (www.csam.no refinanced and will now be without external debts. Our investment has a current book value of USD1.4 mill. We own 25% of the shares in the company and the management team owns 50%. 1Q2010 Outlook In the early part of 1Q10 we experience high utilization of gas carriers on contractual terms and not so much tonnage in the sport market. Crude tanker market has improved and SPT benefits from this. All China activities are progressing better than last year. [HUG#1374053] IMSK - Preliminary result 2009: http://hugin.info/179/R/1374053/336775.pdf |
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