Quarterly Report • Nov 30, 2018
Quarterly Report
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Songa Bulk ASA Financial Report Q3 2018
| SONGA BULK | |
|---|---|
| THIRD QUARTER 2018 FINANCIAL HIGHLIGHTS | |
| THIRD QUARTER 2018 EVENTS | |
| THIRD QUARTER 2018 RESULTS | |
| OUTLOOK AND STRATEGY | |
| FORWARD-LOOKING STATEMENTS | |
| RISK FACTORS | |
| MAIN RISK FACTORS | |
| RESPONSIBILITY STATEMENT | |
| FINANCIAL INFORMATION | |
| CONDENSED STATEMENT OF COMPREHENSIVE INCOME | |
| CONDENSED STATEMENT OF FINANCIAL POSITION | |
| CONDENSED STATEMENT OF CHANGES IN EQUITY | |
| CONDENSED STATEMENT OF CASH FLOWS | |
| NOTES |
The Company reports net profit of \$24.8 million in Q3 2018 compared to net loss of \$3.2 million in Q2 2018. Net profit in Q3 2018 comprise of profit from discontinued operations of \$24.8 million. The recognized gain from sale of vessels was \$24.4 million.
| in \$ thousands | ||
|---|---|---|
| Financial performance | Q3 2018 | Q2 2018 |
| Loss from continuing operations | -50 | -50 |
| Profit (-loss) from discontinued operations | 24 863 | $-3171$ |
| Net profit (-loss) | 24 813 | $-3221$ |
| Financial position | 30 September 2018 | 30 June 2018 |
| Total assets | 22 904 | 320 316 |
| Cash and cash equivalents | 10 591 | 16 113 |
| Total equity | 21 300 | 168 986 |
| Cash flow statement | Q3 2018 | Q2 2018 |
| Net cash flow from operating activities from discontinued operations | $-6551$ | 5633 |
| Net cash flow from investing activities from discontinued operations | 144 550 | $-2225$ |
| Net cash flow from financing activities from discontinued operations | $-143520$ | $-3586$ |
| Net change in cash and cash equivalents from discontinued operations | $-5521$ | $-178$ |
Net profit in Q3 2018 was \$24.8 million, compared to a loss of \$3.2 million in Q2 2018. Except for a small amount for general and administrative expenses, being the cost of owning and operating an empty company, all items are considered being results from discontinued operation and classified accordingly. The profit in Q3 2018 is mainly related to gain on sale of vessels.
The Company's total assets amounted to \$22.9 million at 30 September 2018, down from \$320.3 million in last quarter due to sale of all the Company's vessels and subsequently dividend distributions and repayment of debt.
Cash and cash equivalents at the end of Q3 2018 were \$10.6 million. During the quarter all vessels were sold. The cash consideration in the transaction was \$144.55 million. The consideration was used to repay the bond loan at 104% of nominal value.
On the date of this report the remaining assets in the Company consist of approximately 55 000 shares of Star Bulk Carriers Corp, and an estimated cash balance after payment of dividends of \$0.5 million. The Company has resolved to distribute 41 000 of the remaining balance of Star Bulk shares to the shareholders of Songa Bulk, but these shares are held at the Company's account in anticipation of receipt of representation and warranties letter from shareholders that did not yet submit such letter.
Forward-looking statements presented in this report are based on various assumptions. The assumptions were reasonable when made, but are subject to uncertainties and contingencies that are difficult or impossible to predict. Songa Bulk ASA cannot give assurances that expectations regarding the outlook will be achieved or accomplished.
Risk Factors and Responsibility Statement
The Company is through its ownership of shares in Star Bulk exposed to the dry bulk market. Other risks worth to mention is the risk of any unforeseen conditions resulting in claims either way from the transaction with Star Bulk. However, at the date of this report, there are no indications of such circumstances.
We confirm, to the best of our knowledge, that the condensed set of financial statements for the period 1 January to 30 September 2018 have been prepared in accordance with IAS 34 – Interim Financial Reporting, and gives a true and fair view of the Company's assets, liabilities, financial position and profit as a whole.
We also confirm, to the best of our knowledge, that the interim management report includes a fair review of important events that have occurred during the third quarter of the financial year and their impact on the set of financial statements, and a description of the main risks and uncertainties going forward.
Oslo, 30 November 2018
The Board of Directors of Songa Bulk ASA
JunMr
Arne Blystad Chairman
Thomas Resignes
Thomas Rønningen CEO
Magnus Leonard Roth Director
Vihelu Gwendeh
Vibeke Gwendoline Fængsrud Director
aintine Redeaths
Christine Rødsæther Director
| in \$ thousands | Note | Q3 2018 | Q3 2017 | YTD Q3 2018 | YTD Q3 2017 |
|---|---|---|---|---|---|
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||
| General and administrative expenses | 50 | 50 | 150 | 150 | |
| Total operating expenses | 50 | 50 | 150 | 150 | |
| Operating profit (-loss) | $-50$ | $-50$ | $-150$ | $-150$ | |
| Loss before taxes | $-50$ | $-50$ | $-150$ | $-150$ | |
| Tax expense | |||||
| Loss from continuing operations | 4 | $-50$ | $-50$ | $-150$ | $-150$ |
| Profit (-loss) from discontinued operations | 24 863 | $-666$ | 23 370 | $-1793$ | |
| Net profit (-loss) | 24 8 13 | $-716$ | 23 2 20 | $-1943$ | |
| Total comprehensive income (-loss) | 24 8 13 | $-716$ | 23 2 20 | $-1943$ | |
| Basic and diluted earnings from | |||||
| discontinued operations $-$ \$ per share | 0.692 | $-0.020$ | 0.648 | $-0.060$ | |
| Total basic and diluted earnings $-$ \$ per | |||||
| share | 0.692 | $-0.020$ | 0.648 | $-0.060$ |
| in \$ thousands | Note | 30 September 2018 | 31 December 2017 |
|---|---|---|---|
| (Unaudited) | (Audited) | ||
| Vessels | 266 770 | ||
| Deposit vessels | $\overline{\phantom{a}}$ | 3 0 5 5 | |
| Total non-current assets | 2 | ä, | 269 825 |
| Inventories | $\overline{a}$ | 2 2 3 3 | |
| Trade receivables | 720 | 1312 | |
| Other receivables | 973 | 2 5 0 1 | |
| Financial assets through profit or loss | 10 620 | ||
| Cash and cash equivalents | 10 591 | 41 0 17 | |
| Total current assets | 22 904 | 47 063 | |
| TOTAL ASSETS | 22 904 | 316 888 | |
| Share capital | 121 | 21 6 20 | |
| Share premium | 153 619 | ||
| Other paid-in capital | 574 | ||
| Accumulated profit (-deficit) | 21 179 | $-1648$ | |
| Total equity | 3 | 21 300 | 174 165 |
| Interest-bearing debt | $\overline{\phantom{a}}$ | 136 776 | |
| Financial liabilities at fair value through profit or loss | $\blacksquare$ | 490 | |
| Total non-current liabilities | $\blacksquare$ | 137 266 | |
| Trade payables | 65 | 1745 | |
| Income taxes payable | 253 | 124 | |
| Dividends payable | 413 | ||
| Other liabilities | 874 | 3 5 8 8 | |
| Total current liabilities | 1 604 | 5 4 5 7 | |
| Total liabilities | 1 604 | 142723 | |
| TOTAL EQUITY AND LIABILITIES | 22 904 | 316 888 |
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| in \$ thousands | YTD Q3 2018 | YTD Q3 2017 |
|---|---|---|
| (Unaudited) | (Unaudited) | |
| Profit before taxes | 24 8 13 | $-1943$ |
| Gain from sale of vessels | $-24405$ | |
| Depreciation | 4 6 5 4 | 3 2 4 2 |
| Change in inventories | 2 2 3 3 | $-2698$ |
| Net change in trade receivables/payables | $-1088$ | 775 |
| Employee benefit expenses in connection with issuance of warrants | 174 | |
| Change in financial liabilities at fair value through profit or loss | $-490$ | 156 |
| Net change in other current items | $-2806$ | 1 0 3 3 |
| Net cash flow from operating activities from discontinued operations* | 2911 | 739 |
| Sale of vessels | 144 550 | |
| Purchase of vessels | $-28355$ | $-212882$ |
| Paid deposit on vessels | $-24$ 141 | |
| Dry docking paid | $-2426$ | $-397$ |
| Net cash flow from investment activities from discontinued operations | 113769 | $-237420$ |
| Proceeds from share issuance | 105 244 | |
| Share issuance costs | $-2846$ | |
| Proceeds from issuance of debt | 137 625 | |
| Debt issuance costs | $-692$ | |
| Repayment of interest bearing debt | $-143520$ | |
| Paid dividends | $-3586$ | |
| Net cash flow from financing activities from discontinued operations | $-147$ 106 | 239 331 |
| Net change in cash and cash equivalents | $-30426$ | 2 6 5 0 |
| Cash and bank deposits at beginning of period | 41 0 17 | 57 688 |
| Cash and bank deposits at end of period | 10 591 | 60 338 |
*included in the net cash flow from operating activities from discontinued operations is \$150 thousand in operating expenses from continuing operations.
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| in \$ thousands | YTD Q3 2018 |
2017 |
|---|---|---|
| Closing balance previous period total non-current assets | 269 825 | 14 963 |
| Purchase price vessels delivered in the period and other additions | 31 4 10 | 272 370 |
| Paid deposits previous periods on vessels delivered in the period | $-3055$ | $-3855$ |
| Paid deposits on vessels for delivery in future periods | 3055 | |
| Book value of vessels sold in the period | ٠ | $-11655$ |
| Dry-docking and other additions in the period | 2426 | 397 |
| Depreciation in the period | -4 654 | $-5450$ |
| Carrying value of vessels sold | $-295952$ | |
| Closing balance total non-current assets | 269 825 |
As at 30 September 2018, the Company's share capital consists of 35 860 000 shares, each at a nominal value of NOK 0.02789. All issued shares are fully paid.
In the annual general meeting of the Company held on 5 June 2018, the shareholders resolved to reduce the share capital of the company by NOK 178 300 000 (approximately \$21 million), from NOK 179 300 000 to NOK 1 000 000. The share capital reduction was registered with the Norwegian Register of Business Enterprises on 21 August 2018.
On 14 May 2018, the Company entered into an agreement with Star Bulk Carriers Corp. (Star Bulk) to sell all its vessels to Star Bulk against a consideration of 13 688 000 shares of Star Bulk and \$144.55 million in cash. The transaction was closed on 6 July 2018 and all vessels were delivered to Star Bulk.
Financial information relating to the discontinued operation:
| YTD Q3 2018 | YTD Q3 2017 | |
|---|---|---|
| Operating income | 34 202 | 14 518 |
| Gain from sale of vessels | 24 40 6 | |
| Operating expenses | 23 995 | 14 922 |
| Operating profit (-loss) | 34 613 | $-404$ |
| Net financial income (-expenses) | $-11243$ | $-1.389$ |
| Profit (-loss) before taxes | 23 370 | $-1793$ |
| Tax expense | ||
| Net profit (-loss) of discontinued operation | 23 370 | $-1793$ |
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In an extraordinary general meeting held on 3 October 2018 the shareholders resolved to distribute an extraordinary dividend of \$10.4 million. On 17 October 2018 a total of 683 473 shares of Star Bulk were distributed to the shareholders. This number do not include the shares corresponding to a total of approximately \$145 thousand withheld to cover withholding tax. The distribution equals approximately \$10.2 million of the resolved dividend of \$10.4 million. The remaining amount of about \$200 thousand will be distributed, mainly as distribution in kind, later upon receipt of representation and warranties letters from shareholders that did not yet submit such letter.
On 24 October 2018 a total of 7 617 shares of Star Bulk were distributed to the shareholders in connection with commencement of the share capital reduction resolved on 5 June 2018. This distribution, together with the distributions on 29 August 2018 and 26 September 2018, equal approximately \$20.9 million of the resolved share capital reduction of \$21 million. The remaining amount of about \$100 thousand will be distributed, mainly as distribution in kind, later upon receipt of representation and warranties letters from shareholders that did not vet submit such letter.
In a board meeting held on 27 November 2018, the Board of Directors of the Company resolved to pay a dividend of NOK 2.25 per share equalling a total distribution amount of approximately \$9.5 million. The dividend distribution is subject to approval by the shareholders in an extraordinary general meeting to be held on 19 December 2018 with payment date 4 January 2019.
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