SECOND QUARTER 2013
FINANCIAL STATEMENTS Published 11 July 2013
Vard Holdings Limited Incorporated in Singapore | Company Registration No. 201012504K Unaudited results for the second quarter ended 30 June 2013
VARD HOLDINGS LIMITED Incorporated in Singapore Company Registration No. 201012504K Second Quarter 2013 Financial Statements UNAUDITED RESULTS FOR THE SECOND QUARTER ENDED 30 JUNE 2013 (All amounts in NOK millions unless otherwise stated) TABLE OF CONTENTS Paragraph
Description
1 (a)(i) (a)(ii) (b)(i) (b)(ii) (c) (d)(i) (d)(ii) (d)(iii) (d)(iv) 2 3 4 5 6 7 8 9 10 11 12 13
UNAUDITED FINANCIAL STATEMENTS Statement of Comprehensive Income (Group) Notes to the Statement of Comprehensive Income Statement of Financial Position Aggregate amount of Group’s Borrowings and Debt Securities Statement of Cash Flows (Group) Statements of Changes in Equity Share Capital Number of Issued Shares excluding Treasury Shares Sales, Transfers, Disposals, Cancellations and/or use of Treasury Shares AUDIT AUDITORS REPORT ACCOUNTING POLICIES CHANGES IN ACCOUNTING POLICIES EARNINGS PER ORDINARY SHARE NET ASSETS VALUE PER ORDINARY SHARE REVIEW OF GROUP PERFORMANCE VARIANCE FROM FORECAST STATEMENT PROSPECTS DIVIDEND INTERESTED PERSON TRANSACTIONS CONFIRMATION BY THE BOARD
Page 3 3 4 5 6 7 8 12 12 12 12 12 12 13 13 14 14 15 16 17 17 17
Page 2 of 17
VARD HOLDINGS LIMITED Incorporated in Singapore Company Registration No. 201012504K Second Quarter 2013 Financial Statements UNAUDITED RESULTS FOR THE SECOND QUARTER ENDED 30 JUNE 2013 (All amounts in NOK millions unless otherwise stated) 1
UNAUDITED FINANCIAL STATEMENTS
(a)(i)
Statement of Comprehensive Income (Group)
Revenue Materials, subcontract costs and others Salaries and related costs Other operating expenses EBITDA Depreciation, impairment and amortization Operating profit
Group 2Q-2013 2Q-2012 ended ended 30/06/13 30/06/12
Change %
Group 1H-2013 1H-2012 ended ended 30/06/13 30/06/12
Change %
2,945 (2,163) (518) (143) 121
3,337 (2,272) (484) (121) 460
-11.7% -4.8% 7.0% 18.2% -73.7%
5,692 (3,986) (1,003) (278) 425
6,148 (4,102) (958) (235) 853
-7.4% -2.8% 4.7% 18.3% -50.2%
(101) 20
(29) 431
248.3% -95.4%
(130) 295
(60) 793
116.7% -62.8%
21 -28.6% (9) -111.1% 12 33.3%
37 (33) 4
64 (42) 22
-42.2% -21.4% -81.8%
-200.0% -92.1%
299
2 817
-100.0% -63.4%
Financial income Financial costs Net
15 1 16
Share of results of associates Profit before tax
(1) 35
1 444
Income tax expense Profit for the period
(79) (44)
(166) -52.4% 278 -115.8%
(163) 136
(269) 548
-39.4% -75.2%
Profit for the period attributable to: Equity holders of the Company Non-controlling interest Profit for the period
(20) (24) (44)
279 -107.2% (1) n/m 278 n/m
168 (32) 136
548 548
-69.3% n/m -75.2%
Other comprehensive income: Exchange differences on translation of foreign operations Income tax on other comprehensive income Other comprehensive income for the period, net of income tax Total comprehensive income for the period Total comprehensive income attributable to: Equity holders of the Company Non-controlling interest Total comprehensive income for the period
36 (1)
(12) -
n/m n/m
54 (1)
(41) 1
n/m n/m
35 (9)
(12) 266
n/m n/m
53 189
(40) 508
n/m -62.8%
15 (24) (9)
267 (1) 266
-94.4% n/m n/m
221 (32) 189
508 508
-56.5% n/m -62.8%
Notes: (i) N/M - Not meaningful. (ii) As a result of rounding differences, numbers or percentages may not add up to the total.
Page 3 of 17
VARD HOLDINGS LIMITED Incorporated in Singapore Company Registration No. 201012504K Second Quarter 2013 Financial Statements UNAUDITED RESULTS FOR THE SECOND QUARTER ENDED 30 JUNE 2013 (All amounts in NOK millions unless otherwise stated) 1
UNAUDITED FINANCIAL STATEMENTS (cont.)
(a)(ii)
Notes to the Statement of Comprehensive Income
Group 2Q-2013 2Q-2012 ended ended 30/06/13 30/06/12
Change %
Group 1H-2013 1H-2012 ended ended 30/06/13 30/06/12
Change %
Interest income Foreign exchange gain Fair value of derivatives and embedded derivatives Other financial income Financial income
9 5 1 15
14 5 2 21
-35.7% n/m n/m -50.0% -28.6%
18 18 1 37
28 34 2 64
-35.7% -47.1% n/m -50.0% -42.2%
Interest expense Foreign exchange loss1) Other financial expenses Financial expenses
(5)
(2)
150.0%
(6)
(6)
0.0%
(6) n/m (1) n/m (9) -111.1%
(26) (1) (33)
(35) (1) (42)
-25.7% 0.0% -21.4%
Net financial items
16
12
4
22
(30) (1) (70) (101)
(29) (29)
Depreciation of property, plant and equipment Amortization of intangibles Impairment charges Depreciation, impairment charges and amortization Bad debt Provisions for bad debt Allowance for doubtful debts and bad debts written off / -back
6 1
n/m 3.4% n/m n/m 248.3%
(59) (1) (70) (130)
n/m
(59) (1) (60)
0.0% 0.0% n/m 116.7%
11 (14)
-
n/m n/m
10 (7)
-
n/m n/m
(3)
-
n/m
3
-
n/m
1)
Due to a reduction in foreign unrealized loss as of Q2 2013 compared to as of Q1 2013 the net change in the quarter represents a "negative loss".
Page 4 of 17
VARD HOLDINGS LIMITED Incorporated in Singapore Company Registration No. 201012504K Second Quarter 2013 Financial Statements UNAUDITED RESULTS FOR THE SECOND QUARTER ENDED 30 JUNE 2013 (All amounts in NOK millions unless otherwise stated) 1
UNAUDITED FINANCIAL STATEMENTS (cont.)
(b)(i)
Statement of Financial Position
Group As at As at 30/06/13 31/12/12
Change %
Company As at As at 30/06/13 31/12/12
Change %
Property, plant and equipment Intangible assets Investment in subsidiary Investment in associates Other investments Interest-bearing receivables Other receivables Deferred tax assets Employee benefits NON-CURRENT ASSETS
1,656 302 113 331 83 38 139 1 2,663
1,384 374 114 316 82 18 121 1 2,410
19.7% -19.3% n/m -0.9% 4.7% 1.2% 111.1% 14.9% 0.0% 10.5%
2,142 600 2,742
2,140 600 2,740
n/m n/m 0.1% n/m n/m 0.0% n/m n/m n/m 0.1%
Inventories Construction work in progress Trade and other receivables Interest-bearing receivables Cash and cash equivalents CURRENT ASSETS
303 5,989 1,791 74 2,040 10,197
380 5,587 1,920 80 2,437 10,404
-20.3% 7.2% -6.7% -7.5% -16.3% -2.0%
41 48 89
50 24 74
n/m n/m -18.0% n/m 100.0% 20.3%
TOTAL ASSETS
12,860
12,814
0.4%
2,831
2,814
0.6%
Paid up capital Restructuring reserve Other reserves Retained earnings Total equity attributable to equity holders of the Comp. Non-controlling interest TOTAL EQUITY
4,138 (3,190) (118) 2,555 3,385 35 3,420
4,138 (3,190) (161) 2,375 3,162 65 3,227
0.0% 0.0% -26.7% 7.6% 7.1% -46.2% 6.0%
4,138 (1,411) 9 86 2,822 2,822
4,138 (1,411) 17 60 2,804 2,804
0.0% 0.0% -47.1% 43.3% 0.6% n/m 0.6%
582 84 25 4 100 795
545 85 25 5 127 787
6.8% -1.2% 0.0% -20.0% -21.3% 1.0%
-
-
n/m n/m n/m n/m n/m n/m
Loans and borrowings Construction loans Construction work in progress Trade and other payables Income tax payable Provisions Other current liabilities CURRENT LIABILITIES
192 3,238 1,591 3,002 181 441 8,645
34 3,351 1,518 2,801 437 652 7 8,800
464.7% -3.4% 4.8% 7.2% -58.6% -32.4% -100.0% -1.8%
5 4 9
4 5 1 10
n/m n/m n/m 25.0% -20.0% n/m -100.0% -10.0%
TOTAL LIABILITIES
9,440
9,587
-1.5%
9
10
-10.0%
12,860
12,814
0.4%
2,831
2,814
0.6%
Loans and borrowings Deferred tax liabilities Employee benefits Other payables Provisions NON-CURRENT LIABILITIES
TOTAL EQUITY AND LIABILITIES
Page 5 of 17
VARD HOLDINGS LIMITED Incorporated in Singapore Company Registration No. 201012504K Second Quarter 2013 Financial Statements UNAUDITED RESULTS FOR THE SECOND QUARTER ENDED 30 JUNE 2013 (All amounts in NOK millions unless otherwise stated) 1
UNAUDITED FINANCIAL STATEMENTS (cont.)
(b)(ii)
Aggregate amount of Group’s Borrowings and Debt Securities
As at 30.06.13 Secured
Loans and borrowings 28 Construction loans * 3,238 Other current liabilities Total Amount repayable in one year or less, or on demand 3,266 * Construction loans are in general treated as short term maturing on vessel delivery. Loans and borrowings Total Amount repayable after one year Total
As at 31.12.12
Unsecured
Secured
Unsecured
164 164
27 3,351 3,378
7 7 14
566 566
16 16
533 533
12 12
3,832
180
3,911
26
Details of any collaterals The secured portion of the Group's borrowings and debt securities refers mainly to the long term loans from "Innovation Norway" (a state-owned entity which promotes industrial development in Norway) which are secured by mortgages of an aggregate value of NOK 250 million. The loans are secured by investments, fixed assets such as property and plant as well as the dock at the Langsten yard. Vard Singapore Pte Ltd has a long term loan investment facility of USD 15 million with Nordea Bank. The loan is used towards financing of investments in its Vietnam subsidiary. The loan is secured by pledge of the shares in Vard Vung Tau Ltd. Vard Promar SA has a long term yard construction loan of BRL 153 million for the purpose of yard construction. The loan is secured by mortgage in non-current assets, plant and equipment. Vard Niteroi SA has a long term yard construction loan of USD 2 million for the purpose of yard construction. The loan is secured by equipment. Vessels under construction generally have a construction loan where the vessel itself functions as security.
Page 6 of 17
VARD HOLDINGS LIMITED Incorporated in Singapore Company Registration No. 201012504K Second Quarter 2013 Financial Statements UNAUDITED RESULTS FOR THE SECOND QUARTER ENDED 30 JUNE 2013 (All amounts in NOK millions unless otherwise stated) 1
UNAUDITED FINANCIAL STATEMENTS (cont.)
(c)
Statement of Cash Flows (Group)
Group
Group
2Q-2013 2Q-2012 1H-2013 1H-2012 ended ended ended ended 30/06/13 30/06/12 30/06/13 30/06/12 OPERATING ACTIVITIES Profit before tax Adjustments for: Net interest income Unrealised foreign exchange loss Depreciation, impairment and amortization Change in pension assets and liabilities Share-based payment expenses Share of results of associates Operating cash flows before movements in working capital Inventories Construction work in progress (including construction loans) Trade and other receivables, incl. other interest bearing receivables Trade and other payables, incl. other liabilities Provisions Cash generated from operations Interest received Interest paid Income tax paid Cash flows from/ (used in) operating activities
35
444
299
817
(4) 40 101 (1) 8 1 180 34 255 224 (251) (193) 249 13 (204) 58
(12) 1 29 3 (1) 466 29 512 (324) 303 (122) 864 2 (4) (112) 750
(12) 34 130 10 461 77 (442) 93 194 (238) 145 15 (437) (277)
(22) 14 60 6 (2) 873 22 804 (351) (36) 1,312 3 (4) (304) 1,007
INVESTING ACTIVITIES Purchase of property, plant and equipment Issuance of new non-current interest bearing receivables Acquisition of subsidiary, net of cash acquired Acquisition of additional equity interest in existing associates Acquisition of equity interest in associates Changes in other investments Cash flows used in investing activities
(166) (1) (9) (176)
(116) (35) (3) (28) (12) (1) (195)
(312) (1) (15) (328)
(156) (35) (5) (91) (19) (4) (310)
153 (9) 4 (2) (7) 139
192 (29) 21 (550) (1) (367)
189 (19) 4 (2) (7) 165
192 (45) 24 (550) (49) (428)
FINANCING ACTIVITIES Proceeds from loans and borrowings Repayment of loans and borrowings Cash subscribed by non-controlling shareholders Purchase of non-controlling interest in subsidiary Cash settlement of employee share options Dividends paid, net of witholding tax Change in other financial liabilities Cash flows from/ (used in) financing activities NET INCREASE/ (DECREASE) IN CASH AND CASH EQUIVALENTS Effects of currency translation difference on cash and cash equivalents Cash and cash equivalents excl. restricted cash at beginning of financial period Cash and cash equivalents excl. restricted cash at end of financial period Restricted cash at end of financial period Cash and cash equivalents at end of financial period
21 (4) 1,969 1,986 54 2,040
188 10 3,107 3,305 24 3,329
(440) 9 2,418 1,986 54 2,040
269 1 3,035 3,305 24 3,329
Page 7 of 17
VARD HOLDINGS LIMITED Incorporated in Singapore Company Registration No. 201012504K Second Quarter 2013 Financial Statements UNAUDITED RESULTS FOR THE SECOND QUARTER ENDED 30 JUNE 2013 (All amounts in NOK millions unless otherwise stated) 1
UNAUDITED FINANCIAL STATEMENTS (cont.)
(d)(i)
Statements of Changes in Equity
Group At 1 January 2013
Currency Restructu- Translation ring Reserve Reserve
Paid up Capital
4,138
(3,190)
(177)
Fair Value Reserve
Share option reserve
(3)
Retained Earnings
Total Equity Attributable To Equity Holders of the Company
Noncontrolling Interest
Total Equity
19
2,375
3,162
65
3,227
Comprehensive income Profit for the period Other comprehensive income Exchange differences on translation of foreign operations Total comp. income for the period Transactions with owners Dividend paid to noncontrolling shareholders Cost of share-based payments Total transactions with owners At 31 March 2013
-
-
-
-
-
188
188
(8)
180
-
-
18
-
-
-
18
-
18
-
-
18
-
-
188
206
(8)
198
-
-
-
-
-
-
-
-
-
-
-
-
-
2
-
2
-
2
-
-
-
-
2
-
2
-
2
(3)
21
2,563
3,370
57
3,427
4,138
(3,190)
(159)
Comprehensive income Profit for the period Other comprehensive income Exchange differences on translation of foreign operations Income tax on other comprehensive income Total comp. income for the period Transactions with owners Dividend paid to noncontrolling shareholders Cash subscribed by noncontrolling shareholders Change in non-controlling interests Cost of share-based payments Share-based payments including gain due to cancellation of option scheme Total transactions with owners At 30 June 2013
-
-
-
-
-
(20)
(20)
(24)
(44)
-
-
36
-
-
-
36
-
36
-
-
(1)
-
-
-
(1)
-
(1)
-
-
35
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,138
15
(24)
(9)
-
-
(1)
(1)
-
-
-
4
4
-
-
-
-
(1)
(1)
-
-
7
-
7
-
7
-
-
-
(19)
12
(7)
-
(7)
-
-
-
(12)
12
-
2
2
9
2,555
3,385
35
3,420
(3,190)
(124)
(3)
(20)
Page 8 of 17
VARD HOLDINGS LIMITED Incorporated in Singapore Company Registration No. 201012504K Second Quarter 2013 Financial Statements UNAUDITED RESULTS FOR THE SECOND QUARTER ENDED 30 JUNE 2013 (All amounts in NOK millions unless otherwise stated) 1
UNAUDITED FINANCIAL STATEMENTS (cont.)
(d)(i)
Statements of Changes in Equity
Group At 1 January 2012
Currency Restructu- Translation ring Reserve Reserve
Paid up Capital
4,138
(3,190)
(101)
Fair Value Reserve
Share option reserve
Retained Earnings
Total Equity Attributable To Equity Holders of the Company
Noncontrolling Interest
Total Equity
(3)
7
2,659
3,510
43
3,553
Comprehensive income Profit for the period Other comprehensive income Exchange differences on translation of foreign operations Income tax on other comprehensive income Total comp. income for the period Transactions with owners Dividend paid to noncontrolling shareholders Cash subscribed by noncontrolling shareholders Cost of share-based payments Other adjustments1) Total transactions with owners At 31 March 2012
-
-
-
-
-
269
269
1
270
-
-
(29)
-
-
-
(29)
-
(29)
-
-
1
-
-
-
1
-
1
-
-
(28)
-
-
269
241
1
242
-
-
-
-
-
-
-
(1)
(1)
-
-
-
-
-
-
-
3
3
-
-
-
-
3 -
80
3 80
-
3 80
-
-
-
-
3
80
83
2
85
(3)
10
3,008
3,834
46
3,880
4,138
(3,190)
(129)
Comprehensive income Profit for the period Other comprehensive income Exchange differences on translation of foreign operations Total comp. income for the period Transactions with owners Dividend paid to noncontrolling shareholders Cash subscribed by noncontrolling shareholders Cost of share-based payments Final dividend paid for FY2011 Total transactions with owners At 30 June 2012
-
-
-
-
-
279
279
(1)
278
-
-
(12)
-
-
-
(12)
-
(12)
-
-
(12)
-
-
279
267
(1)
266
-
-
-
-
-
-
-
(1)
(1)
-
-
-
-
-
-
-
21
21
-
-
-
-
3
-
3
-
3
-
-
-
-
-
(548)
(548)
-
(548)
-
-
-
-
3
(548)
(545)
20
(525)
(3)
13
2,739
3,556
65
3,621
4,138
(3,190)
(141)
Page 9 of 17
VARD HOLDINGS LIMITED Incorporated in Singapore Company Registration No. 201012504K Second Quarter 2013 Financial Statements UNAUDITED RESULTS FOR THE SECOND QUARTER ENDED 30 JUNE 2013 (All amounts in NOK millions unless otherwise stated) 1
UNAUDITED FINANCIAL STATEMENTS (cont.)
(d)(i)
Statements of Changes in Equity Company At 1 January 2013
Paid up Capital
Restructu- Share option ring Reserve reserve
4,138
(1,411)
Retained Earnings
Total Equity
17
60
2,804
Comprehensive income Profit for the period Total comprehensive income for the period
-
-
-
8
8
-
-
-
8
8
-
-
2 2
-
2 2
4,138
(1,411)
19
68
2,814
Transactions with owners Cost of share-based payments Total transactions with owners At 31 March 2013 Comprehensive income Profit for the period Total comprehensive income for the period
-
-
-
8
8
-
-
-
8
8
-
-
7
-
-
(17) (10)
10 10
(7) -
4,138
(1,411)
9
86
2,822
Transactions with owners Cost of share-based payments Share-based payments including gain due to cancellation of option scheme Total transactions with owners At 30 June 2013
7
Page 10 of 17
VARD HOLDINGS LIMITED Incorporated in Singapore Company Registration No. 201012504K Second Quarter 2013 Financial Statements UNAUDITED RESULTS FOR THE SECOND QUARTER ENDED 30 JUNE 2013 (All amounts in NOK millions unless otherwise stated) 1
UNAUDITED FINANCIAL STATEMENTS (cont.)
(d)(i)
Statements of Changes in Equity Company At 1 January 2012
Paid up Capital
Restructu- Share option ring Reserve reserve
4,138
(1,411)
Retained Earnings
Total Equity
7
39
2,773
Comprehensive income Profit for the period Total comprehensive income for the period
-
-
-
8
8
-
-
-
8
8
-
-
3 3
-
3 3
4,138
(1,411)
10
47
2,784
Transactions with owners Cost of share-based payments Total transactions with owners At 31 March 2012 Comprehensive income Profit for the period Total comprehensive income for the period
-
-
-
1,262
1,262
-
-
-
1,262
1,262
-
-
3 3
(548) (548)
13
761
Transactions with owners Cost of share-based payments Final dividend paid for FY2011 Total transactions with owners At 30 June 2012
4,138
(1,411)
3 (548) (545) 3,501
Page 11 of 17
VARD HOLDINGS LIMITED Incorporated in Singapore Company Registration No. 201012504K Second Quarter 2013 Financial Statements UNAUDITED RESULTS FOR THE SECOND QUARTER ENDED 30 JUNE 2013 (All amounts in NOK millions unless otherwise stated) 1
UNAUDITED FINANCIAL STATEMENTS (cont.)
(d)(ii)
Share Capital There were no ordinary shares issued since the end of 1Q 2013. There are no treasury shares. Share Options No options were issued during 2Q 2013. However as a result of the Mandatory Unconditional Cash Offer from Fincantieri Oil & Gas S.p.A., participants holding unexercised options are entitled to exercise such options in the period commencing on the date of the offer and ending latest 6 months thereafter, whereupon any option then remaining unexercised shall immediately lapse and become null and void. During 2Q 2013, a total number of 10,340,000 share options were exercised and settled in cash. Consequently outstanding options to subscribe for shares remained as 6,130,000 as at 30 June 2013 (30 June 2012: 17,070,000). The outstanding options will expire on 13 August 2013.
(d)(iii)
Number of Issued Shares excluding Treasury Shares The number of issued shares (excluding treasury shares) as at 30 June 2013 is 1,180,000,000 ordinary shares (31 December 2012: 1,180,000,000 ordinary shares)
(d)(iv)
Sales, Transfers, Disposals, Cancellations and/or use of Treasury Shares Not applicable. The Company has no treasury shares.
2
AUDIT The figures have not been audited nor reviewed by the auditors.
3
AUDITORS REPORT Not applicable.
4
ACCOUNTING POLICIES Except as disclosed in paragraph 5 below, the Group has applied the same accounting policies and methods of computation in the financial statements for the current financial period compared with those of the audited financial statements for the year ended 31 December 2012.
Page 12 of 17
VARD HOLDINGS LIMITED Incorporated in Singapore Company Registration No. 201012504K Second Quarter 2013 Financial Statements UNAUDITED RESULTS FOR THE SECOND QUARTER ENDED 30 JUNE 2013 (All amounts in NOK millions unless otherwise stated) 5
CHANGES IN ACCOUNTING POLICIES In the current financial period, the Group and the Company have adopted all the new and revised Financial Reporting Standards (FRSs) and Interpretations of FRSs (INT FRSs) that are relevant to its operations and are effective for annual periods beginning on 1 January 2013. The adoption of the new or revised FRSs and INT FRSs does not result in any significant changes to the accounting policies of the Group and the Company, and has no material effect on the amounts reported for the current or prior periods. A number of new standards and amendments to standards and interpretations are effective for annual periods beginning on or after 1 January 2013, and have not been applied in preparing these consolidated financial statements. The most important ones for the Group are set out below: FRS 110 Consolidated Financial Statements, which changes the definition of control such that an investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power with the investee. FRS 110 introduces a single control model with a series of indicators to assess control. FRS 110 also adds additional context, explanation and application guidance based on the principle of control. The Group is currently assessing whether there will be any impact to the Group’s financial statements when the Group adopts FRS 110. FRS 112 Disclosure of Interests in Other Entities, which sets out the disclosures required to be made in respect of all forms of an entity’s interests in other entities, including subsidiaries, joint arrangements, associates and unconsolidated structured entities. The adoption of this standard would result in more extensive disclosures being made in the Group’s financial statements in respect of its interests in other entities; as FRS 112 is primarily a disclosure standard, there will be no financial impact on the results and financial position of the Group and the Company upon adoption of this standard by the Group. The Group is currently collating the information of the additional disclosures required. There are no other FRSs or interpretations that are not yet effective that would be expected to have a material impact on the Group.
6
EARNINGS PER ORDINARY SHARE Earnings per ordinary share (attributable to Equity holders of the Company) for the current financial period reported on and the corresponding period of the immediately preceeding financial year: Group 2Q-2013 2Q-2012 ended ended 30/06/13 30/06/12
Change %
Group 1H-2013 1H-2012 ended ended 30/06/13 30/06/12
Change %
(i)
Earnings for the period (in NOK millions) Earnings for the period (in SGD millions) Weighted average number of shares (in millions)
-20 -4 1,180
279 59 1,180
n/m n/m 0.0%
168 36 1,180
548 116 1,180
-69.3% -69.0% 0.0%
(ii)
Earnings per share (NOK) Earnings per share (SGD cents)
-0.02 -0.34
0.24 5.02
n/m n/m
0.14 3.05
0.46 9.85
-69.6% -69.0%
(iii)
Diluted earnings per share (NOK) Diluted earnings per share (SGD cents) Adjusted weighted average number of shares (in millions)
-0.02 -0.34
0.23 4.97
n/m n/m
0.14 3.05
0.46 9.76
-69.6% -68.8%
1,181
1,191
-0.8%
1,181
1,191
-0.8%
30/06/13 30/06/12 4.606 4.716
-2.3%
30/06/13 30/06/12 4.606 4.716
-2.3%
Exchange rates: SGD/NOK
The SGD amounts are translated from NOK based on the exchange rates prevailing at the reporting date as shown above.
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VARD HOLDINGS LIMITED Incorporated in Singapore Company Registration No. 201012504K Second Quarter 2013 Financial Statements UNAUDITED RESULTS FOR THE SECOND QUARTER ENDED 30 JUNE 2013 (All amounts in NOK millions unless otherwise stated) 7
NET ASSETS VALUE PER ORDINARY SHARE Net assets value (for the Issuer and Group) per ordinary share based on issued share capital of the issuer at the end of the current financial period reported on and immediately preceeding financial year: Group As at As at 30/06/13 31/12/12
Change %
Company As at As at 30/06/13 31/12/12
Change %
Net assets value at the end of the period (NOK millions) Net assets value at the end of the period (SGD millions)
3,385 735
3,162 694
7.1% 5.9%
2,822 613
2,804 615
0.6% -0.3%
Number of shares (millions)
1,180
1,180
0.0%
1,180
1,180
0.0%
2.87 0.62
2.68 0.59
7.1% 5.1%
2.39 0.52
2.38 0.52
0.4% 0.0%
30/06/13 31/12/12 4.606 4.557
1.1%
30/06/13 31/12/12 4.606 4.557
1.1%
Net assets value per ordinary share (NOK) Net assets value per ordinary share (SGD) Exchange rates: SGD/NOK
The SGD amounts are translated from NOK based on the exchange rates prevailing at the reporting date as shown above.
8
REVIEW OF GROUP PERFORMANCE
(a)
Statement of comprehensive income: The operating revenues for the half year ended 30 June 2013 were NOK 5,692 million, decreasing from NOK 6,148 million in the corresponding period of the previous year. Vard delivered eight vessels during the second quarter and secured contracts for three newbuildings. Operating profit for the half year ended 30 June 2013 was NOK 295 million, down from NOK 793 million in the corresponding period of 2012. The operating margin, representing operating profit to total operating revenues, was 5.2 %. The EBITDA margin was 7.5 %. For the corresponding period last year, the operating margin and EBITDA margin were 12.9 % and 13.9 % respectively. Profit before tax was down from NOK 817 million to NOK 299 million compared to the corresponding period of 2012. With an effective tax rate of 54.5 %, due to a loss in Brazil and impairment of goodwill without tax effect, VARD recorded a profit margin after tax of 2.4 % for the first half of 2013 compared with 8.9 % for the corresponding period of 2012. Margins are impacted by further delays and cost overruns at the Niterói yard due to lower than expected productivity, additional costs for outsourcing of hull construction activities to subcontractors, and G983revisions to the estimates of startup costs at the new shipyard, Vard Promar. The adverse development in Niterói is also the reason for the write-down to zero of the remaining goodwill for Niterói. Operations elsewhere in the Group are not affected by the operational challenges in Brazil. The Romanian yards continue to experience a very high workload, while Vietnam is seeing sub-optimal utilization. Operations of the Company as a whole remain profitable for the year to date despite the negative result for the second quarter of 2013.
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VARD HOLDINGS LIMITED Incorporated in Singapore Company Registration No. 201012504K Second Quarter 2013 Financial Statements UNAUDITED RESULTS FOR THE SECOND QUARTER ENDED 30 JUNE 2013 (All amounts in NOK millions unless otherwise stated) 8
REVIEW OF GROUP PERFORMANCE (cont.)
(b)
Statement of financial position: Total assets is relatively stable and increased only by 0.4 % from NOK 12.81 billion at the end of 2012 to NOK 12.86 billion at the end of June 2013. Construction work in progress increased by 7.2 % from NOK 5.587 billion to NOK 5.989 billion when comparing 30 June 2013 to 31 December 2012. At the same time trade and other receivables decreased by 6.7 % from NOK 1.920 billion to NOK 1.791 billion. Cash and cash equivalents decreased by NOK 397 million to NOK 2.0 billion in the first half of 2013. Of the total cash and bank deposits as of 30 June 2013, NOK 54 million relates to restricted bank deposits and restricted bank accounts for employees' tax deduction compared to NOK 19 million as of 31 December 2012. Construction loans decreased by 3.4 % to NOK 3.24 billion from NOK 3.35 billion when comparing year end 2012 to end of first half of 2013. Trade and other payables have increased by 7.2 % to NOK 3.0 billion and construction work in progress have increased by 4.8 % to NOK 1.6 billion versus NOK 2.8 billion and NOK 1.5 billion respectively as of yearend 2012. The movements in these items are related to on-going projects and ordinary business in general. Total interest-bearing liabilities, excluding construction loans, amounted to NOK 774 million at 30 June 2013, up from NOK 579 million at year end 2012. The increase is mainly related to the ongoing construction of the new shipyard in Brazil. Retained earnings increased by NOK 180 million in the first half of 2013. The change mainly reflects the profit for the six months period.
(c)
Statement of cash flows: The cash flows from operating activities was negative NOK 277 million for the first half of 2013 compared to positive NOK 1,007 million in the corresponding period of 2012. Cash flow from operating activities can fluctuate significantly from period to period due to changes in working capital (highly impacted by Construction Work in Progress which in the period was negative by NOK 442 million). Cash flows used investing activities for the first half of 2013 was NOK 328 million compared to NOK 310 million in the corresponding period of 2012. The main driver is the construction of the new shipyard in Brazil and ongoing investments in Romania. The cash flows from financing activities for the first six months of 2013 amounted to NOK 165 million which is the net effect of proceeds and repayments of loans and borrowings as well as the cash settlement of employee share options. During the first half of 2013, the net decrease in cash and cash equivalents by NOK 440 million was due to the aforementioned reasons.
9
VARIANCE FROM FORECAST STATEMENT In Brazil, the new shipyard under construction, started steel cutting on 12 June 2013, in line with the prospect statement contained in the 1Q 2013 announcement made on 14 May 2013.
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VARD HOLDINGS LIMITED Incorporated in Singapore Company Registration No. 201012504K Second Quarter 2013 Financial Statements UNAUDITED RESULTS FOR THE SECOND QUARTER ENDED 30 JUNE 2013 (All amounts in NOK millions unless otherwise stated) 10
PROSPECTS At the end of the second quarter of 2013, the order book value amounted to NOK 14.0 billion, down from NOK 15.5 billion at the end of the first quarter of 2013. The order reserve comprised 41 vessels yet to be delivered, and the aggregate order value was NOK 22.5 billion. Order intake for the second quarter 2013 was NOK 1.2 billion, down from NOK 2.8 billion in the first quarter 2013. While the order intake in the second quarter consisted of highly specialized, but smaller vessels, the average value per vessel contracted is expected to grow in the second half of 2013. Order intake may vary significantly on a quarter-by-quarter basis as a result of larger projects with longer lead times. As an increasing volume of subsea work translates into big backlogs for subsea contractors, there is a growing need for modern vessels to support such work. VARD continues to work with clients on sizeable opportunities in the subsea support and construction segment. The market for platform supply vessels (PSV) and anchor handlers (AHTS) are expected to benefit from increased rig activity, especially in the North Sea. With a record number of rigs coming into service, supply vessel utilization and day rates should receive a boost, lending support to the new building market as well. In the AHTS market, periods of market tightness have become more frequent during the second quarter, and – if sustained – could trigger a long-awaited upturn, especially as very few high-end anchor handlers are currently under construction world-wide. Strong demand for PSVs in the North Sea, but also outside demand for advanced vessels – including from Petrobras – has resulted in a more favourable PSV market balance than expected during the second quarter. Still, the outlook remains cautious due to the anticipated supply growth in this segment. Overall, while VARD is confident about the prospects for new orders during the remainder of 2013, the market remains fiercely competitive and characterized by uncertainty about the macro outlook. Operationally, managing the high work load in Romania and securing more work for the Vietnam yard are at the top of the agenda in the respective parts of the organization. Stabilizing the Niterói operations and successfully ramping up the new yard in Brazil are a top priority for the Group, and management has initiated mitigating actions in order to regain profitability in Brazil. Despite the current operational challenges, the Company remains confident in the long-term potential of the Brazilian market.The new shipyard in Brazil, Vard Promar, has started operations in mid-June and construction of the yard is scheduled to be completed during 3Q 2013. Recruiting and training are ongoing at high speed and showing good progress. The opening of the new yard represents a milestone for the Company, offering opportunities for growth, better operational stability, and a substantially improved cost position in Brazil, and enabling the Group to secure and successfully execute new projects in this important market.
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VARD HOLDINGS LIMITED Incorporated in Singapore Company Registration No. 201012504K Second Quarter 2013 Financial Statements UNAUDITED RESULTS FOR THE SECOND QUARTER ENDED 30 JUNE 2013 (All amounts in NOK millions unless otherwise stated) 11
DIVIDEND
(a)
Current financial period reported on: Any dividend declared for the current financial period reported on? No
(b)
Corresponding period of preceding financial year: Any dividend declared for the corresponding period of the immediately preceding financial year? Yes Name of dividend Dividend type Dividend amount per ordinary share Tax rate
(c)
Date payable Not applicable
(d)
Book closure date Not applicable
12
INTERESTED PERSON TRANSACTIONS
Special interim dividend 2012 Cash 13.0 Singapore cents One-tier tax exempt
Non-mandated Mandated 2Q-2013 1H-2013 2Q-2013 1H-2013 ended ended ended ended 30/06/13 30/06/13 30/06/13 30/06/13 STX Corporation Group1) Annual Brand Fee Royalties to STX Corp.
1
4
-
-
STX Europe Group1) Management service agreement with STX Norway Florø AS
-
-
-
2
Total
1
4
-
2
1)
Related entities of the former ultimate holding company, STX Corporation Co., Ltd, prior to the change of the immediate and ultimate holding companies to Fincantieri Oil & Gas S.p.A and Cassa Depositi e Prestiti S.p.A., respectively. The IPT mandate for IPTs with STX Corporation Co., Ltd. and its associates was not renewed and therefore expired on 23 April 2013.
13 CONFIRMATION BY THE BOARD The Board of Directors hereby confirms that, to the best of its knowledge, nothing has come to its attention which may render the unaudited financial results for the second quarter ended 30 June 2013 to be false or misleading in any material aspect.
BY ORDER OF THE BOARD
Mr Roy Reite Executive Director & CEO 11 July 2013
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