AI assistant
Saga Pure — Annual Report 2014
Apr 30, 2015
3730_rns_2015-04-30_b739b40e-6dbb-4da7-9532-b1418eb71780.pdf
Annual Report
Open in viewerOpens in your device viewer
CONSOLIDATED FINANCIAL STATEMENTS -GROUP
ANNUAL REPORT 2014
CONTENTS
2014 Annual Report
Board of Directors Report 2014 > page 3 - page 5 Responsibility statement > page 30 Consolidated statement of comprehensive income 2014 for the Group > page 6 Consolidated statement of financial position 2014 for the Group > page 7 Consolidated cash flow statement 2014 for the Group > page 8 Consolidated statement of changes in equity 2014 for the Group > page 9 Notes to the financial statements for the Group > page 10 - page 29 Income statement 2014 for ASA > page 33 Financial position 2014 for ASA > page 34 Cash flow statement 2014 for ASA > page 35 Notes to the financial statements for ASA > page 36 - page 44 Corporate Governance > page 31 Independent auditors' report 2014 > page 45
BOARD OF DIRECTORS REPORT
The business activity of the Group is investment and management related to shipping, rig, real estate, stock trading and similar business activities.
A LOOK BACK ON 2014
The year 2014 turned out to be a volatile year for Oslo Stock Exchange with substantial downturn in the oil price in the second half of 2014. During the year Oslo Børs Benchmark Index increased by 5%, the Energy Index decreased of approximately 18% and the Oslo Energy Drilling Index decreased by 58%.
The Group received further assets through a demerger in 2014. Assets as shares in companies are already included in the group's investment portfolio prior to the transaction.
The Group has currently no vessel under operation. Hence the Group has no direct exposure to the shipping market.
FINANCIAL RESULTS 2014 (GROUP)
The Group reports a total comprehensive income for 2014 of NOK -38.6 million (2013 NOK 40.8 million).
The major items of the Groups net comprehensive income consist of income from lease and operation of property 8.1 million and net loss on available-for-sale financial assets of -9.1 million. The net loss on such financial assets was a result of net profit of 8.0 million through sale of share in Prospector Offshore Drilling S.A, and a loss of 17.1 million as a result of impairment to shares in SD Standard Drilling Plc. Further, a reclassification to profit and loss due to the realization of shares in Prospector Offshore Drilling S.A, generated other comprehensive income of NOK-38.6 million.
Gross income for 2014 was - NOK 1.1 million (2013 NOK 3.3 million).
Total operating expenses for 2014 were NOK 15.9 million (2013 NOK 4.2 million). The increase in operating expenses is principally attributable to the acquired business of the Vallhall Arena.
Net operating profit for 2014 was NOK -17.0 million (2013 NOK -0.8 million).
profit before Operating interest. taxes. depreciation and amortization (EBITDA) for 2014 was NOK 1.6 million (2013 NOK 2.6 million). Net financial items for 2014 were NOK 17.1 million (2013 NOK 4.1 million).
Earnings per share for 2014 were NOK 0.00 (2013 NOK 0.05), based on the net profit of TNOK 830 (2013 TNOK 4.329).
As per the end of the year, the Company had a total of 127 shareholders and a total of 175.833.728 shares outstanding, the same number of shares being the average number of shares outstanding throughout the year. The Company's 20 largest shareholders controlled about 99.6 percent of the total number of shares outstanding at year end.
LIQUIDITY AND CASH FLOW
The net cash balance as of 31 December 2014 was TNOK 297.729 (2013: TNOK 102.864). The net change in cash over the year was TNOK 194.865 (2013 TNOK -43.988). The positive change in cash in 2014 comes as a result of net divestment in financial assets.
FINANCIAL POSITION
As at 31 December 2014, the Group's total assets amounted to NOK 447.3 million (2013 NOK 217.7 million). Total equity to share-holders of parent company was NOK 362.4 million (2013 NOK 217.2 million).
It is the opinion of the Board of Directors that the Group is in a sound financial position with an equity ratio of about 86.4 % (99.7 %.) Please see further information described under the Going Concern section.
RISK FACTORS
The Group is exposed to a limited number of different risk factors. The most significant risk factors are market risk, legal risk, credit risk and liquidity risk.
Market risk: The investments in shares and other financial instruments expose the group to market risk in form of equity price risk. The Group moderates this risk through careful selection of securities for investment
Legal risk: The Group has been presented a claim of USD 2 million in relation to the time charterparty of the vessel MT Saga Agnes. The matter will be resolved through arbitration if required by the counter party.
Credit risk: The Group is exposed to credit risk, inherent in the risk that the counterparty will be unable to pay amounts in full when due. The Group has normally insignificant amounts of outstanding receivables. However, this risk is also applicable to bank deposits. The risk is limited through the use of financial institutions with solid credit rating for bank deposits and settlement of transactions.
Liquidity risk: The Group continuously monitors the liquidity requirements, in order to ensure sufficient cash for meeting the operational needs. The Group has no outstanding debt or capital commitments.
Saga Tankers manages these risk factors through internal reporting and control procedures as well as consulting with external advisors. The Group's risk factors are described in more detail in note 17.
HEALTH, SAFETY AND ENVIRONMENT (HSE)
A good and safe working environment has been given a high priority in Saga Tankers. The Group's goal is to ensure that it operates in such a way that no detrimental effects are made on either people or the environment in which we operate. The Group's objective is to ensure safe and secure operations. The business operates in compliance with national and international requirements and regula-tions. There have been no work-related accidents resulting in sick leave during 2014.
Saga Tankers aims to have a workplace free from discrimination on the basis of gender, sex and race in matters such as pay, promotion and recruitment. At year end the Group had one employee.
The Group is not involved in any research or development projects, and has not booked any such costs during 2014.
CORPORATE SOCIAL RESPONSIBILITY
The Group has no formalized guidelines regarding corporate responsibility. However, The Group is constantly focused on conducting its business through a sound code of ethics.
FINANCIAL RESULTS OF PARENT COMPANY
Saga Tankers ASA (the Parent Company) reports a net profit for 2014 of NOK 4.2 million (2013 NOK 1.6 million).
Gross revenues for 2014 were NOK 0.0 million (2013 NOK 3.3 million).
Total operating expenses for 2014 were NOK 15.1 million (2013 NOK 4.0 million).
Operating profit before interest, taxes. depreciation and amortization (EBITDA) for 2014 was NOK 29.2 million (2013 NOK -0.1 million).
Net financial items for 2014 were NOK 45.8 million (2013 NOK 2.3 million).
The Board of Directors proposes that the net profit for 2014 of NOK 4.2 million is attributed to accumulated losses.
CORPORATE GOVERNANCE
The Group strives to comply with the NUES corporate governance guidelines.
Please see the Company's website for a description of the Corporate Governance policies and information about the Company's deviations from the NUES guidelines during 2014.
SUBSEQUENT EVENTS
Saga Invest Holding AS, a subsidiary of the Company, entered into a merger plan with Strata Marine & Offshore on 26 February 2015. The Extra Ordinary General Assembly approved the merger on 27 March 2015. The merger is expected to be completed in the middle of May 2015. Shareholders in Strata Marine & Offshore AS will receive shares in the Company as settlement. Strata Marine & Offshore AS will be dissolved as a consequence of the merger. Saga Invest Holding AS will be renamed to Strata Marine & Offshore AS when the merger is completed. Total 110 898 883 new shares will be issued when the merger is completed.
Following the merger Øystein Stray Spetalen and associated companies will have holding representing approximately 77% of the Company.
Information about Strata Marine & Offshore AS, "Strata": Strata are an investment company headquartered in Oslo. Strata currently hold investment in listed shares as Aqualis ASA, NEL ASA, Weifa ASA, Nickel Mountain Group AB.
Further information can be found in previously stock exchange notices released by the Company at the company website www.sagatankers.no or www.strata.no.
INVESTMENT IN SHARES
After reviewing multiple investment opportunities throughout the year, the Group made some investment in 2014. After the demerger of certain assets owned by Ferncliff TIH 1 AS in 2014 the Group increased the investment in Prospector Offshore Drilling S.A, S.D Standard Drilling Plc and Vallhall Fotballhall KS, Vallhall Fotballhall Drift AS and Vallhall Fotballhall AS. The shares in
made some investment in 2014. After the demerger of certain assets owned by Ferncliff TIH 1 AS in 2014 the Group increased the investment in Prospector Offshore Drilling S.A, S.D Standard Drilling Plc and Vallhall Fotballhall KS, Vallhall Fotballhall Drift AS and Vallhall Fotballhall AS. The shares in Prospector Offshore Drilling S.A were sold during 2014. The Group still has substantial liquidity available to pursue any attractive investment opportunity that may arise. For further information about these investments, please see note 16 and 19in the notes to the consolidated financial state-ments.
GOING CONCERN AND DIVIDEND
The Group is currently in a sound position with a net book equity ratio of 86.4 % and surplus liquidity available.
Board of Directors and management has substantial experience and competence within shipping, real estate and the oil, energy and offshore industries and will continuously pursue
potential investments within these industries and within other markets or industries that may appear attractive. The Group expects to make further investments within the next few years assuming attractive prices and markets, reasonable financing terms and acceptable counterparty risk.
It is expected that the shareholders will receive return on more attractive terms if proceeds are managed by the Group. Hence no suggestions on dividend are made by Board of Directors.
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as endorsed by EU, while the financial statements for the parent company have been prepared in accordance with the Norwegian Generally accepted Principles (NGAAP). The Board of directors confirms that these annual accounts are based on the going concern assumptions, and that these conditions exist.
Oslo, 30 April 2015 The Board of Directors
Board Member
Kristin Hellebust
Board Member
Martin Nes Chairman
Yvonne Litsheim Sandvold Board Member
CEO
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD 01.01-31.12.
| NOK 1000 | NOTE | 2014 | 2013 |
|---|---|---|---|
| OPERATING INCOME | |||
| Net gains and losses on Available-for-sale financial assets | 3, 19 | $-9136$ | 3 2 7 6 |
| Other income | 3 | 8079 | 58 |
| GROSS INCOME | $-1057$ | 3 3 3 4 | |
| OPERATING EXPENSES | |||
| Employee benefit expenses | 5 | 3 4 2 5 | 2 3 1 4 |
| Other operating expenses | 5,15 | 7963 | 1922 |
| Depreciation/amortization | 10 | 1347 | |
| Other losses/(-gains) | 4 | 3 1 6 2 | |
| TOTAL OPERATING EXPENSES | 15 8 96 | 4 2 3 6 | |
| Loss(-gain) sale fixed assets | 10 | - | $-53$ |
| NET OPERATING PROFIT / LOSS (-) | $-16953$ | $-847$ | |
| FINANCIAL INCOME / EXPENSES (-) | |||
| Interest income | 1813 | 1769 | |
| Interest expenses | $-1120$ | $-2$ | |
| Net foreign exchange gain/loss (-) | 16 4 25 | 2 3 3 4 | |
| Other financial Income/expenses (-) | $\overline{2}$ | ||
| NET FINANCIAL INCOME / EXPENSES (-) | 17 118 | 4 1 0 3 | |
| Share of profit from associates | 4 | 753 | 1074 |
| NET PROFIT BEFORE TAX | 918 | 4329 | |
| Taxes | 11 | $-88$ | |
| NET PROFIT / LOSS (-) FOR THE YEAR | 830 | 4329 | |
| Items that may be subsequently reclassified to profit or loss | |||
| Change in available-for-sale financial assets | 19 | $-39479$ | 36 446 |
| OTHER COMPREHENSIVE INCOME | $-39479$ | 36 446 | |
| TOTAL COMPREHENSIVE INCOME | $-38649$ | 40775 | |
| Attributable to: | |||
| Non-controlling interests | 419 | ||
| Shareholders' interests | $-39069$ | 40775 | |
| Basic and diluted earnings per share to shareholders of the | |||
| parent company | 14 | 0,00 | 0,05 |
| Average number of shares in the period | 14 | 131 305 569 | 86 777 409 |
| Number of shares outstanding at period end | 14 | 175 833 728 | 86 777 409 |
The notes on pages 10 to 29 are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER
| NOK 1000 | NOTE | 31 Dec 2014 | 31 Dec 2013 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Deferred tax assets | 11 | $\mathbf{1}$ | |
| Available-for-sale financial assets | 17,18,19 | 53 158 | 99 731 |
| Associates | 4 | 15 0 74 | |
| Fixed assets | 10 | 94 565 | |
| Total non-current assets | 147723 | 114 805 | |
| Current assets | |||
| Trade receivables and other receivables | 8,17,18 | 622 | |
| Other current assets | 7 | 1 2 2 7 | 65 |
| Cash and cash equivalents | 6 | 297729 | 102 864 |
| Total current assets | 299 579 | 102 930 | |
| TOTAL ASSETS | 447 302 | 217 735 | |
| EQUITY AND LIABILITIES | |||
| Share capital | 13 | 175834 | 86777 |
| Other equity | 883 696 | 883 696 | |
| Total paid-in capital | 1059530 | 970 473 | |
| Accumulated losses | $-694519$ | $-790$ 117 | |
| Other components of equity | $-2648$ | 36831 | |
| Non-controlling interests | 24 041 | ||
| Total equity | 386 404 | 217 187 | |
| LIABILITIES | |||
| Long term interest bearing debt | 12, 17 | 54 000 | |
| Total non-current liabilities | 54 000 | ||
| Short-term interest-bearing debt | 12, 17 | 4 0 0 0 | |
| Tax payable | 43 | ||
| Trade and other payables | 17,18 | 191 | 6 |
| Other current liabilities | 9, 18 | 2664 | 543 |
| Total current liabilities | 2899 | 548 | |
| Total liabilities | 64899 | 548 | |
| TOTAL EQUITY AND LIABILITIES | 447 302 | 217735 |
TOTAL EQUITY AND LIABILITIES
The notes on pages 10 to 29 are an integral part of these consolidated financial statements.
ťalen Board Member
Kristin Hellebust Board Member
Oslo, 30 April 2015 The Board of Directors Martin Nes
Chairman
Yvonne Litsheim Sandvold Board Member
Espen Lundaas CEO
SAGA TANKERS 2014 ANNUAL REPORT > PAGE 7
CONSOLIDATED CASH FLOW STATEMENT FOR THE PERIOD $01.01 - 31.12.$
| NOK 1000 | NOTE | 2014 | 2013 |
|---|---|---|---|
| Profit before tax | 918 | 4329 | |
| Profit share from associates | 4 | $-753$ | $-1074$ |
| Depreciation | 10 | 1347 | |
| Impairment charge | 19 | 17 173 | 17523 |
| Loss/(-gain) on sale Available-for-sale financial assets | $-8037$ | ||
| Other gains and losses | 3 1 6 2 | ||
| Loss/(gain) sale fixed asset | $-53$ | ||
| Foreign exchange losses /(gains) | $-16425$ | $-2334$ | |
| Increase/decrease receivables and prepayments | 417 | 73 | |
| Increase/decrease payables and accruals | 130 | $-18957$ | |
| Net cash flow from operating activities | $-2070$ | $-493$ | |
| Investment in Available-for-sale financial assets | 19 | $-66468$ | |
| Divestment in Available-for-sale financial assets | 19 | 167 449 | 20 308 |
| Net payments from associated companies | 3 4 4 7 | ||
| Cash holdings in new subsidiaries | 12044 | ||
| Investment in fixed assets | 10 | $-318$ | |
| Proceeds from sale of other fixed assets | 10 | 331 | |
| Net cash flow from investing activities | 182 622 | $-45829$ | |
| Repayments of long term borrowings | 12 | $-1652$ | |
| Share issuance costs | $-462$ | ||
| Net cash flow from financing activities | $-2114$ | ||
| Net change in cash and cash equivalents | 6 | 178 440 | $-46322$ |
| Cash and cash equivalents at the beginning of period | 102 864 | 146 852 | |
| Net foreign exchange differences (unrealized) | 16 4 25 | 2 3 3 4 | |
| Cash and cash equivalents at end of period | 6 | 297 729 | 102 864 |
(a) The notes on pages 10 to 29 are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER
| Issued | Other | Accumulated | Available-for- | Exchange difference |
Non- controlling |
||
|---|---|---|---|---|---|---|---|
| NOK 1000 | capital | equity | losses | sale reserve | translations | interest | Total |
| Equity as at 1 January 2014 | 86777 | 883 696 | -790 117 | 39 479 | $-2648$ | $\blacksquare$ | 217 187 |
| Net profit/(-loss) | - | 410 | - | 419 | 830 | ||
| Other comprehensive | |||||||
| income | $\overline{\phantom{a}}$ | ۰ | $\overline{\phantom{0}}$ | $-39479$ | $\overline{a}$ | $\overline{\phantom{a}}$ | $-39479$ |
| Total comprehensive | |||||||
| income | 410 | $-39479$ | $\overline{\phantom{0}}$ | 419 | $-38649$ | ||
| Demerger 1 July | 89 056 | $\qquad \qquad$ | 95 650 | $\overline{\phantom{m}}$ | - | 23 6 21 | 208 327 |
| Share Issuance costs | $\overline{\phantom{a}}$ | $-462$ | ٠ | ۰ | $-462$ | ||
| Equity as at 31 December | |||||||
| 2014 | 175833 | 883 696 | $-694519$ | $\overline{\phantom{a}}$ | $-2648$ | 24 041 | 386 404 |
| NOK 1000 | Issued capital |
Other equity |
Accumulated losses |
Available- for-sale reserve |
Exchange difference translations |
Total |
|---|---|---|---|---|---|---|
| Equity as at 1 January 2013 | 86777 | 883 696 | $-794446$ | 3 0 3 3 | $-2648$ | 176 411 |
| Net profit/(-loss) | $\overline{\phantom{a}}$ | $\overline{\phantom{0}}$ | 4 3 2 9 | $\overline{\phantom{0}}$ | $\overline{\phantom{a}}$ | 4 3 2 9 |
| Other comprehensive income | $\overline{\phantom{0}}$ | - | - | 36 446 | $\overline{\phantom{a}}$ | 36 446 |
| Total comprehensive income | $\blacksquare$ | $\overline{\phantom{a}}$ | 4329 | 36 446 | ۰ | 40775 |
| Equity as at 31 December 2013 | 86 777 | 883 696 | $-790117$ | 39 479 | $-2648$ | 217 187 |
|---|---|---|---|---|---|---|
| The notes on pages 10 to 29 are an integral part of these consolidated financial statements. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENT
NOTE 1 - CORPORATE INFORMATION
Saga Tankers ASA ("the Company") is a publicly limited company incorporated and domiciled in Norway. The address of the head office is Sjølyst Plass 2, 0278 Oslo. The Company was incorporated on 24 March 2010 and was listed on the Oslo Stock Exchange "Axess"-list on 18 June 2010.
The consolidated financial statements for the year ended 31 December 2014, were approved by the Board of Directors on 30 April 2015, and will be presented for approval at the Annual General Meeting on 28 May 2015.
The business activity of the Group is investment and management related to shipping, rig, real estate, stock trading and similar business activities.
NOTE 2 - ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been applied to all the years presented, unless otherwise stated.
Basis of preparation
The financial statements for Saga Tankers for the financial year 2014 have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU. The IFRS principles have been applied consistently since incorporation. Below is a summary of the Group's accounting policies to be applied in the consolidated financial statements.
The consolidated financial statements are presented in NOK and all numbers are rounded to the nearest thousands, except where otherwise indicated.
In line with practice, the statement of comprehensive income is presented on a mixed basis (a blend of expenses by nature and function), as this is assessed to be the most relevant and reliable presentation.
Going concern
The financial statements have been prepared on the going concern assumption. For additional information see Board of Director's report.
Basis of consolidation
The consolidated financial statements comprise the financial statements of Saga Tankers ASA and its subsidiaries (the "Group") as of 31 December each year.
Subsidiaries
Subsidiaries are all entities (including structured entities) over which the group has control. The group controls an entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date the control ceases.
The financial statements of the subsidiaries are prepared for the same reporting year as the parent company, using consistent accounting policies.
All inter-company transactions and balances are eliminated in the consolidated financial statements.
Associates
Associates are all entities over which the group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting. Under the equity method, the investment is initially recognized at cost, and the carrying amount is increased or decreased to recognize the investor's share of the profit or loss of the investee after the date of acquisition. The group's investment in associates includes goodwill identified on acquisition.
If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognized in other comprehensive income is reclassified to profit or loss where appropriate.
The group's share of post-acquisition profit or loss is recognized in the income statement, and its share of post-acquisition movements in other comprehensive income is recognized in other comprehensive income with a corresponding adjustment to the carrying amount of the investment. When the group's share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the group does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.
The group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognizes the amount adjacent to 'share of profit/ (loss) of associates in the income statement.
Dilution gains and losses arising in investments in associates are recognized in the income statement.
Significant accounting judgments, estimates and assumptions
The preparation of financial statements in accordance with IFRS requires management to make judgments, estimates and assumptions that may affect assets, liabilities, revenues, expenses and information in notes to the financial statement. Estimates are management's best knowledge based on information available at the date the financial statements are authorized for issue. Actual results may differ from these estimates. Such changes will be recognized when new estimates can be determined with certainty.
Depreciation of fixed assets
Fixed assets are depreciated on a straight-line basis over their expected useful lives. Land is not depreciated.
Recognition other income
Other income related to lease of property and related services. The income is recognised as soon as the services are rendered to the recipients.
Summary of significant accounting policies
Revenue from investment and trading of financial instruments
Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods supplied, stated net of discounts, returns and value added taxes. The group recognizes revenue when the amount of revenue can be reliably measured; when it is probable that future economic benefits will flow to the entity; and when specific criteria have been met for the group's activity (i.e. at trade date).
The group indulges in investment and trading of financial instruments as part of its core business. All such instruments are classified as available-for-sale assets, unless the Group exercises significant control of the investment, in which case the investment will be classified as associate. See the group accounting policy describing Financial Instruments below.
Dividend Income
Dividend income is recognised when the right to receive payment is established. The company classifies such income as 'Other Income' on the face of Consolidated Statement of Comprehensive Income.
Foreign currency
The financial statements are presented in NOK, which is also the functional currency for all the companies in the Group.
Transactions in foreign currencies are recorded at the exchange rate in effect at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the exchange rate at the financial position date. Nonmonetary items that are measured at historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions.
Impairment of non financial assets
$(i)$ Fixed assets
Fixed assets are reviewed for indication of impairment at each reporting date, and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Whenever the carrying amount of an asset exceeds its recoverable amount, an impairment loss is recognized. The recoverable amount is the higher of an assets net selling price and its value in use. The net selling price is the amount obtainable from the sale of an asset in an arm's length transaction less the costs of disposal, while value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. Recoverable amounts are estimated for individual assets if possible, or else for the cash-generating unit.
Impairment of financial assets
For loans and receivables category, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset's original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the consolidated income statement. If a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the group may measure impairment on the basis of an instrument's fair value using an observable market price.
Reversal of impairment losses recognized in prior years is recorded in profit and loss if there is an indication that previous impairment losses recognized no longer exist or have decreased.
(ii) Assets classified as available for sale
The group assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of financial assets is impaired. For debt securities, the group uses the criteria referred to in (i) above. In the case of equity investments classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is also evidence that the assets are impaired. IFRS standards indicates that a drop of more than 20% is classified as significant and that if the assets are below the cost price for six to twelve months, the period is considered to be prolonged. If any such evidence exists for available-for-sale financial assets, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss - is removed from equity and recognised in profit or loss. Impairment losses recognised in the consolidated income statement on equity instruments are not reversed through the consolidated income statement. If, in a subsequent period, the fair value of a debt instrument classified as available for sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed through the consolidated income statement.
Financial instruments
The group classifies its financial assets and liabilities in the following categories: loans and receivables, other financial liabilities and available for sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.
Loans and receivables: Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Group provides money, goods or services directly to a debtor with no intention of trading the receivable. Loans and receivables are initially recognized at fair value plus directly attributable transaction costs. After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest method, less impairment. Gains and losses are recognized in profit and loss when the loans and receivables are de-recognized or impaired, as well as through the amortization process. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non-current assets. The group's loans and receivables comprise 'trade and other receivables' and 'cash and cash equivalents' in the balance sheet.
Available-for-sale financial assets are non-derivatives that are either designated in this category or not designated in any other categories. They are included in non-current assets unless the investment matures or management intends to dispose of it within 12 months of the end of the reporting period. The financial assets are denominated in NOK and are measured at Fair value. Listed shares are valued at quoted market price at each balance sheet date. Partnership shares/other shares acquired just before year end from an independent third parties are deemed to have an acquisition cost considered as its fair value. Other assets in this category not traded in an active market are valued based on valuation techniques, which is considered to be their fair value. Changes in the fair value of monetary and non-monetary securities classified as available for sale are recognised in other comprehensive income. When securities classified as available for sale are sold, the accumulated fair value adjustments recognised in equity are included in the income statement as 'Net gains and losses from AFS assets'.
Other financial liabilities: Other financial liabilities are initially recognized at fair value plus directly attributable transaction costs. After initial recognition other financial liabilities are subsequently measured at amortized cost using the effective interest rate method. Gains and losses are recognized in the income statement when the liabilities are derecognized as well as through the effective interest method amortization process.
Trade receivables and other receivables
Current trade receivables and other receivables are initially recorded at their fair value and subsequently measured at amortized cost using the effective interest method, less provision for impairment.
Trade payables and other payables
Current trade and other payables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method.
Cash, cash equivalents and cash flow statement
Cash represents cash on hand and deposits with bank that is callable on demand.
Cash equivalents represent short-term, highly liquid investments which are readily convertible into known amounts of cash with original maturities of three months or less and that are subject to an insignificant risk of change in value.
The cash flow statement is prepared using the indirect method.
Financial liabilities
Interest-bearing debt is initially recognized at fair value when the Group becomes a party to the contractual provisions of the instrument. After initial recognition, interest bearing loans and borrowings are subsequently measured at amortized cost using the effective interest method. Amortized cost is calculated by taking into account any issue costs, and any discount or premium on the settlement. Financial liabilities are presented as current if the liability is due settled within 12 months after the financial position date, whereas liabilities with the legal right to be settled more than 12 months after the financial position date are classified as non-current.
Financial liabilities are derecognized from the financial position when the contractual obligation expires, is discharged or cancelled. Gains and losses arising on the repurchase, settlement or cancellation of liabilities are recognized respectively in interest income and other financial items and interest and other finance expenses.
Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognizing of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognized in profit or loss.
Provisions
Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as financial expense.
Equity
Transaction costs related to an equity transaction are recognized directly in equity after deduction of tax.
Ordinary taxation
All companies within the Group are subject to the ordinary Norwegian taxation regime. Current income taxes are measured at the amount expected to be paid to (recover from) authorities, deferred tax assets/liabilities are calculated based on temporary differences at the reporting date. Deferred tax assets are recognized to the extent that it is probable that they can be utilized in the future. Dividends and capital gains are taxed according to the Norwegian exemption model.
Financial position classification
Current asset and current liabilities include items due less than one year from the financial position date, and items tied to the operating cycle. The current portion of long-term debt is included as current liabilities.
Non-current assets held for sale
Non-current assets are classified separately as held for sale in the balance sheet when their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is met only when the sale is highly probable, the asset is available for immediate sale in its present condition, and management is committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification. Liabilities directly associated with the assets classified as held for sale and expected to be included as part of the sale transaction are correspondingly also classified separately.
Related parties
Parties are related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also related if they are subject to common control or common significant influence. All transactions between the related parties have been made on an arm's length basis and are settled on a regular basis.
Contingent liabilities
Contingent liabilities are defined as possible obligations that arises from past events whose existence depends on one or more future event not wholly within the control of the entity, or present obligations that are not recognized because it is not probable that they will lead to an outflow or resources.
Contingent liabilities are not recognized on the balance sheet unless arising from assuming assets and liabilities in a business combination. Significant contingent liabilities are disclosed unless the possibility of an outflow of resources embodying economic benefit is a remote one.
Contingent assets are not accounted for unless virtually certain.
Events after financial position date
New information regarding the Group's situation on the financial position date is taken into account in the financial statements. Events occurring after the financial position date, that do not affect the Group on the financial position date but will affect the Group's situation in the future, are disclosed if significant.
New and amended standards adopted by the group
The following standards have been adopted by the group for the first time for the financial year beginning on or after 1 January 2014 and have a material impact on the group:
Amendment to IAS 32, 'Financial instruments: Presentation' on offsetting financial assets and financial liabilities. This amendment clarifies that the right of set-off must not be contingent on a future event. It must also be legally enforceable for all counterparties in the normal course of business, as well as in the event of default, insolvency or bankruptcy. The amendment also considers settlement mechanisms. The amendment did not have a significant effect on the group financial statements.
Amendments to IAS 36, 'Impairment of assets' on the recoverable amount, disclosures for non-financial assets. This amendment removed certain disclosures of the recoverable amount of CGUs which had been included in IAS 36 by the issue of IFRS 13.
Amendment to IAS 39. 'Financial instruments: Recognition and measurement' on the novation of derivatives and the continuation of hedge accounting. This amendment considers legislative changes to 'over-the-counter' derivatives and the establishment of central counterparties. Under IAS 39 novation of derivatives to central counterparties would result in discontinuance of hedge accounting. The amendment provides relief from discontinuing hedge accounting when novation of a hedging instrument meets specified criteria. The group has applied the amendment and there has been no significant impact on the group financial statements as a result.
IFRIC 21, 'Levies', sets out the accounting for an obligation to pay a levy if that liability is within the scope of IAS 37 'Provisions'. The interpretation addresses what the obligating event is that gives rise to pay a levy and when a liability should be recognised. The Group is not currently subjected to significant levies so the impact on the Group is not material.
IFRS 10 "Consolidated Financial Statements": IFRS 10 establishes the principles for the presentation and preparation of consolidated financial statements when an entity controls one or more other entities.
Other standards, amendments and interpretations which are effective for the financial year beginning on 1 January 2014 are not material to the group
New standards, amendments and interpretations not yet adopted
A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after 1 January 2014, and have not been applied in preparing these consolidated financial statements. None of these is expected to have a significant effect on the consolidated financial statements of the Group.
NOTE 3 - OPERATING SEGMENTS
For 2013, operations consist of investments in financial instruments which are reported on an accumulated basis.
In 2014, a new segment of lease and operation of property has been introduced through the demerger. The management monitors the net income from investments in financial assets, and the revenues from lease and operation of property on a separate basis.
| Segment information | 2014 | 2013 |
|---|---|---|
| NOK 1000 | ||
| Outcome | ||
| Net income financial assets | $-9136$ | 3 2 7 6 |
| Revenues from lease and operation of property | 8079 | |
| Target | ||
| Net income financial assets | * | $\ast$ |
| Revenues from lease and operation of property | 9 1 6 5 | |
* Net income financial assets are impacted by a range of external parameters as well as the management's decisions. The management continuously monitors the return on investments and assesses the risk level, but does not set any long term fixed targets for the outcome.
ومعالجتهم
NOTE 4 - INVESTMENT IN ASSOCIATES
| 2014 | 2013 | |
|---|---|---|
| At January 1 | 15 0 74 | 14 000 |
| Additions | ||
| Share of profit | 777 | 1 1 1 8 |
| Amortization of surplus value | $-24$ | $-44$ |
| Repayment of capital | $-3447$ | |
| Reclassified as subsidiaries | $-12381$ | |
| At 31 December | 15 0 74 | |
The Group's share of the results of its principal associates, and its aggregated assets and liabilities are as follows:
31 December 2014
| Name | Country of Incorporation |
Assets | Surplus value | Liabilities | Revenue | Profit | $\%$ Interest held |
|---|---|---|---|---|---|---|---|
| Vallhall Fotballhall AS | Norway | - | $\overline{\phantom{a}}$ | - | $\overline{\phantom{a}}$ | - | - % |
| Vallhall Fotballhall Drift AS | Norway | $\overline{\phantom{a}}$ | $\sim$ | $\sim$ | $\overline{\phantom{0}}$ | 602 | $-$ % |
| Vallhall Fotballhall KS | Norway | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | 175 | $-$ % |
| - | $\sim$ | 777 |
Investments shown above formerly classified as associates are reclassified as subsidiaries as the Group has acquired a controlling interest in these investments as of 1 July 2014 through demerger (Ref note 16). The Profit disclosed above, is for the period from 1 January 2014 to 30 June 2014.
31 December 2013
| Name | Country of Incorporation |
Assets | Surplus value | Liabilities | Revenue | Profit | $\frac{9}{2}$ Interest held |
|---|---|---|---|---|---|---|---|
| Vallhall Fotballhall AS | Norway | 1 2 9 4 | 475 | 284 | $\overline{\phantom{0}}$ | 107 | 19,15% |
| Vallhall Fotballhall Drift AS | Norway | 419 | $\overline{\phantom{a}}$ | 255 | 2 2 2 7 | 20,00% | |
| Vallhall Fotballhall KS | Norway | 18 0 34 | 2710 | 7319 | 2 1 4 5 | 1007 | 17.23% |
| 19746 | 3 1 8 5 | 7858 | 4372 | 1 1 1 8 |
NOTE 5 - OPERATING EXPENSES
| NOK 1000 | 2014 | 2013 |
|---|---|---|
| Employee benefit expenses | ||
| Salaries | 2925 | 2020 |
| Social security costs | 399 | 285 |
| Pension expenses | 49 | |
| Other personnel expenses | 51 | 9 |
| Total employee benefit expenses | 3 4 2 5 | 2 3 1 4 |
| Number of man-years | 3 | 1 |
| Other operating expenses | ||
| Fees | 4 2 1 7 | 1353 |
| Other operating costs Vallhall sports arena | 2459 | |
| Travel expenses and membership fees | 23 | 3 |
| Loss on receivables | 300 | |
| Other expenses | 964 | 566 |
| Total administrative expenses | 7963 | 1922 |
Remuneration to the Board of Directors and executive management
| 2014 | |||||
|---|---|---|---|---|---|
| NOK 1000 | |||||
| Name | Position | Salary and bonus | Other benefits | Pension cost | Director's fees |
| Espen Lundaas | CEO/CFO | 1518 | |||
| Øystein Stray Spetalen | Chairman | 140 | |||
| Martin Nes | Board member | 100 | |||
| Brita Eilertsen | Board member | 100 | |||
| Total remuneration | 1518 | 340 | |||
| 2013 | |||||
|---|---|---|---|---|---|
| NOK 1000 | |||||
| Name | Position | Salary and bonus | Other benefits | Pension cost | Director's fees |
| Espen Lundaas | CEO/CFO | 1500 | - | ||
| Øystein Stray Spetalen | Chairman | $\overline{\phantom{a}}$ | 140 | ||
| Martin Nes | Board member | - | - | 100 | |
| Brita Eilertsen | Board member | 100 | |||
| Total remuneration | 1500 | 340 |
The Group had no outstanding loans or guarantees in favour of any member of the Board of Directors or company management in 2014.
Guidelines for determining salaries and other compensation for company management
In accordance with the regulations in paragraph 6-16a in the Norwegian Public Limited Companies Act, the Board of Directors has established a statement regarding remuneration. The focus of the company is to hire qualified managers and to pay according to the market. Salary and remuneration of the CEO and CFO is determined by the Board of Directors, and payments to other employees are determined by the CEO according to guidelines from the Board of Directors. For the fiscal year ending 31 December 2014, the position as CEO and CFO has been occupied by the same employee.
Saga Tankers Group's compensation schemes include only a limited number of benefits in kind. These benefits are offered in line with what is common practice in international labour markets and typically include personal communication equipment, access to media, and car and parking arrangements
The Statement on the determination salary and other remuneration for senior executives will be presented at the annual general meeting and made available on the Company's webpage.
Stock options program to Board members and Company employees
No stock options or right to stock options are held by members of the board of directors or any of the Company's employees at 31 December 2014.
| AUDIT FEES | ||
|---|---|---|
| NOK 1000 | 2014 | 2013 |
| Audit fees including VAT | ||
| Audit services | 754 | 618 |
| Other attestation services | 34 | |
| Tax services | 1629 | |
| Other non-audit services | 238 | 51 |
| Total | 2655 | 669 |
Fees to the Group's auditors are included in Administrative Expenses, with the exception of TNOK 337 which is included in expenses regarding Share Issuance, hence booked directly towards equity (reference Consolidated statement of changes in equity).
NOTE 6 - CASH AND CASH EQUIVALENTS
The Group's cash and cash equivalents are denominated in the following currencies:
| 31 Dec | 31 Dec | |
|---|---|---|
| NOK 1000 | 2014 | 2013 |
| US Dollars | 90 539 | 74 118 |
| Norwegian kroner | 207 190 | 28 747 |
| Total cash and cash equivalents | 297 729 | 102 864 |
| Restricted cash | ||
|---|---|---|
| Employee tax accounts | 1 Q C | |
Interest income is earned at floating interest rates.
NOTE 7-OTHER CURRENT ASSETS
| 31 Dec | 31 Dec | |
|---|---|---|
| NOK 1000 | 2014 | 2013 |
| Other receivables | 747 | |
| Prepayments | 249 | 65 |
| Unbilled revenue | 232 | |
| Total other current assets | 1 2 2 7 | 65 |
NOTE 8 - TRADE RECEIVABLES AND OTHER RECEIVABLES
The outstanding amount of trade receivables at 31 December 2014 was TNOK 1 722 (31 December 2013 of NOK 0). The Group has booked a reserve for loss on trade receivables and other receivables totalling TNOK 1 100, of which TNOK 300 is an increase in 2014 taken over the profit and loss. Trade receivables are related to rental income for the Vallhall Arena and services rendered to the tenants.
NOTE 9 - OTHER CURRENT LIABILITIES
| 31 Dec | 31 Dec | |
|---|---|---|
| NOK 1000 | 2014 | 2013 |
| Public duties payable | 405 | 180 |
| Deferred revenue | 111 | |
| Accrued interest | 298 | |
| Other current liabilities | 1851 | 363 |
| Total | 2664 | 543 |
Other current liabilities are non-interest bearing. Other current liabilities are normally settled on 30 to 60 day terms. Deferred revenues are revenues invoiced, but not earned yet per 31 December.
NOTE 10 - FIXED ASSETS
| Machinery & |
Capitalized costs - work |
||||
|---|---|---|---|---|---|
| Buildings | Equipment | in progress | Land | Total | |
| 2014 | |||||
| NOK 1000 | |||||
| Acquisition cost, opening balance 01.01.14 | - | ||||
| Assets received through demerger | 91529 | 3828 | 38 | 199 | 95 593 |
| Acquisitions during the year | 318 | $\overline{\phantom{0}}$ | 318 | ||
| Disposals during the year | $\overline{a}$ | ||||
| Acquisition cost at 31.12.14 | 91 529 | 4 1 4 6 | 38 | 199 | 95 911 |
| Accumulated depreciation, opening balance | |||||
| 01.01.14 | - | ٠ | - | ٠ | |
| Depreciation during the year | $-923$ | $-423$ | - | ٠ | $-1347$ |
| Disposals during the year | ٠ | ٠ | |||
| Accumulated depreciation at 31.12.14 | $-923$ | $-423$ | ٠ | $-1347$ | |
| Net book value at 31.12.14 | 90 605 | 3722 | 38 | 199 | 94 565 |
| 2013 | Other assets | Total |
|---|---|---|
| NOK 1000 | ||
| Acquisition cost, opening balance 01.01.13 | 575 | 575 |
| Acquisitions during the year | $\overline{\phantom{0}}$ | |
| Disposals during the year | $-575$ | $-575$ |
| Acquisition cost at 31.12.13 | ٠ | |
| Accumulated depreciation, opening balance 01.01.13 | 297 | 297 |
| Depreciation during the year | ||
| Disposals during the year | $-297$ | $-297$ |
| Accumulated depreciation at 31.12.13 | ||
| Net book value at 31.12.13 | - |
Assets received through demerger
Shares in the Vallhall companies received through the demerger of Ferncliff TIH 1 AS at 1 July 2014, lead to formation of new subsidiaries in the Group. The fixed assets in the new subsidiaries have been treated as additions based on the net carrying value of the assets in the subsidiaries at 1 July 2014.
Depreciation
Assets have been depreciated on a straight-line basis over their expected useful lives as follows:
| Buildings: | 67 years |
|---|---|
| Machinery and equipment: | 5-10 years |
| Capitalized cost - Work in progress: | No depreciation before utilization |
| Land: | No depreciation |
Assets received through the demerger are depreciated on a straight-line basis based on the subsidiaries original time of purchase and cost.
NOTE $11 - TAX$
| NOK 1000 | 2014 | 2013 |
|---|---|---|
| Current tax expense | 89 | |
| Deferred tax expense | $-1$ | |
| Tax expense | 88 | |
| Reconciliation of tax expenses | ||
| Net profit before tax | 918 | 4 3 2 9 |
| Tax expense based on nominal tax rate 27% (28 % in 2013) | 247 | 1 2 1 2 |
| Permanent differences | 3075 | $-11653$ |
| Other tax benefits receivables | 252 | 10648 |
| Not recognized deferred tax assets | $-3486$ | $-207$ |
| Tax expense | 88 | |
| Reconciliation of deferred tax (-)/ deferred tax assets 28 % | ||
| Fixed and other assets | 120 366 | 120 541 |
| Deferred tax loss sale of assets | 103 318 | 103 318 |
| Net tax loss carried forward | 56 912 | 59 949 |
| Share in partnership | $-274$ | |
| Deferred tax assets | 280 322 | 283 808 |
| Net deferred tax assets not recognized | $-280321$ | $-283808$ |
| Deferred tax (-)/ deferred tax assets in the balance sheet | $\mathbf{1}$ | |
| Tax on other comprehensive income | ||
| Other comprehensive income | $-39479$ | 36 4 46 |
| Income tax related to other comprehensive income |
The Group has per the balance sheet only recognized deferred tax asset where the possible utilization of this asset is considered probable.
NOTE 12 - INTEREST BEARING DEBT
| 31 Dec | 31 Dec | |
|---|---|---|
| NOK 1000 | 2014 | 2013 |
| Long term interest bearing debt | 54 000 | |
| Current portion of long-term debt | 4 0 0 0 | |
| Total interest bearing debt | 58 000 |
Material loan agreements
In June 2014 a mortgage of TNOK 60 000 was raised. The mortgage is paid in quarterly instalments of TNOK 1 000, of which two has been settled on its due dates in 2014. The maturity of the mortgage is May 2024, with a balloon payment of TNOK 20 000.
As collateral for the mortgage, two 1.st priority mortgage deeds of TNOK 72 800 and 25 000, totalling TNOK 97 800 has been issued on the property gnr. 122 / bnr. 440, in Oslo. The carrying value of the collateral is TNOK 90 605 reference note 10.
Interest rate of the mortgage as of 31 December 2014 is 3.65 % p.a.
NOTE 13 - ISSUED CAPITAL AND SHAREHOLDERS
| Issued capital | ||||
|---|---|---|---|---|
| 2014 | ||||
| Other paid | ||||
| NOK 1000 | Number of shares | Share capital | Own shares | in capital |
| Opening balance 01.01.2014 | 86 777 409 | 86 777 | 883 696 | |
| Demerger 1 July 2014 | 89 056 319 | 89 056 | ||
| Ending balance 31.12.2014 | 175 833 728 | 175834 | 883 696 | |
| 2013 | ||||
| Other paid | ||||
| NOK 1000 | Number of shares | Share capital | Own shares | in capital |
| Opening balance 01.01.2013 | 86 777 409 | 86777 | 883 696 | |
| Ending balance 31.12.2013 | 86 777 409 | 86777 | 883 696 |
The nominal value per share as of 31 December 2014 was NOK 1 per share.
All issued shares have a nominal value of NOK 1 and are of equal rights. Saga Tankers ASA is incorporated in Norway, listed on the Oslo Exchange Axess list, and the share capital is denominated in NOK. As of 31 December 2014 the Company had 127 shareholders. The Company's largest shareholders are presented in the table below.
Overview of the largest shareholders as per 31.12.2014
| NAME | 31.12.2014 | |
|---|---|---|
| $\mathbf{1}$ | SPETALEN | 98,30% |
| $\overline{2}$ | KRISTIAN HODNE AS | 0,17% |
| 3 | KOLBERG MOTORS AS | 0,15% |
| 4 | NORDSTJERNEN AS | 0,14 % |
| 5 | KOLBERG | 0,14% |
| 6 | SKIBSAKTIESELSKAPET ABACO | 0,11% |
| 7 | RAMS AS | 0,09% |
| 8 | DNB NOR MARKETS, AKSJEHAND/ANALYSE | 0,06 % |
| 9 | NISTUÅ II AS | 0,06 % |
| 10 | GADD HOLDING | 0,06 % |
| 11 | MYKLAND INVEST AS | 0,06 % |
| 12 | PAK INVEST AS | 0,05 % |
| 13 | VOLDMO | 0,04 % |
| 14 | INITIUM INVEST AS | 0,04% |
| 15 | JEBSEN | 0,03% |
| 16 | MOMO INVEST AS | 0,03% |
| 17 | BUSINESSPARTNER AS | 0,02% |
| 18 | PEDRO EIENDOM | 0,02% |
| 19 | JAGUAR FUND INVEST 2015 AS | 0,02% |
| 20 | NORDNET PENSJONSFORSIKRING | 0,02% |
| OTHER | 0,39% | |
| TOTAL | 100,00% |
Shareholders per country per 31.12.2014
| SHARES | OWNER'S SHARE % | |
|---|---|---|
| Norway | 175 769 321 | 99,963 % |
| Switzerland | 30 184 | 0,017 % |
| Sweden | 19551 | 0,011% |
| Great Britain | 8077 | 0,005 % |
| Denmark | 4311 | 0,002 % |
| Luxemburg | 2000 | 0,001 % |
| Columbia | 310 | 0,000 % |
| Total | 175,833,728 | 100,00% |
Total paid in capital
Please see table above.
Shareholders rights
There are currently no limitations in voting rights or trade limitations related to the Saga Tankers share.
Power of attorney to repurchase own shares
The Board held no authorization to repurchase own shares as per 31 December 2014.
Authorization to raise convertible loans
The Board held no authorization to raise convertible bonds as per 31 December 2014.
Stock option arrangements
The Company/Group held no stock option or synthetic stock option agreements as of 31 December 2014.
Shares owned by the Board, Management and their Related Parties
| 2014 | # of Shares |
|---|---|
| Board of Directors* | |
| Øystein Stray Spetalen (Chairman) | 175 841 799 |
| Brita Eilertsen | |
| Martin Nes | |
| Group Management | |
| Espen Lundaas, CEO (CFO) | |
| Related Parties | |
| Total number of shares held by Board members and Group management | 175 841 799 |
| Total number of shares held by Board members and Group management in % of total outstanding shares | 98,30% |
| 2013 | # of Shares |
| Board of Directors | |
| Øystein Stray Spetalen (Chairman) | 83 207 085 |
| Brita Eilertsen | |
| Martin Nes | |
| Group Management | |
| Espen Lundaas, CEO (CFO) | |
| Related Parties | |
Total number of shares held by Board members and Group management
83 207 085
Total number of shares held by Board members and Group management in % of total outstanding shares 95,89% * Board of Directors was altered in April 2015. Brita Eilertsen left the Board, and Martin Nes was appointed Chairman. New elected board members Yvonne Litsheim Sandvold and Kristin Hellebust hold no shares in the Group.
NOTE 14 - EARNINGS PER SHARE
Basic earnings per share are calculated by dividing net profit for the year attributable to ordinary equity holders by the weighted average number of ordinary shares outstanding during the year, excluding ordinary shares purchased by the company and held as treasury shares. The company has no such treasury shares as of 31 December 2014.
Diluted earnings per share are calculated by dividing the net profit attributable to ordinary equity holders by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on the conversion of all dilutive potential ordinary shares to ordinary shares. The Company does not have any potential dilutive ordinary shares in addition to its ordinary outstanding number of shares as per 31 December 2014.
| NOK 1000 | 2014 | 2013 |
|---|---|---|
| Net profit/(loss) attributable to the shareholders | 411 | 4 3 2 9 |
| Number of shares | ||
| Weighted average number of ordinary shares outstanding | 131,305,569 | 86,777,409 |
| Weighted average number of shares outstanding, diluted | 131,305,569 | 86,777,409 |
| Number of shares outstanding at period end | 175,833,728 | 86,777,409 |
| NOK per share | ||
| Basic earnings per share | 0.00 | 0,05 |
NOTE 15 - RELATED PARTIES
The company is sharing office locations for its head office with Ferncliff TIH II AS, a company controlled by the Chairman of the Board of Directors*, and the Company's largest shareholder. Transactions with related parties during 2014 are limited to office rent including mutual costs, and services rendered regarding support for financial reporting.
All transactions with related parties have been made on an arm's length basis and are settled on a regular basis. Goods and/or services purchased from related parties have been priced at industry standard rates. Transactions with related parties are specified below:
RELATED PARTY TRANSACTIONS
| 2014 | |||||
|---|---|---|---|---|---|
| NOK 1000 | Year | Sales to related parties |
Purchases from related parties |
Amounts owed by related parties |
Amounts owed to related parties |
| Tycoon Industrier AS | 2014 | 345 | |||
| 2013 | |||||
| NOK 1000 | Year | Sales to related parties |
Purchases from related parties |
Amounts owed by related parties |
Amounts owed to related parties |
| Tycoon Industrier AS | 2013 | 160 | ۳ |
*Through 2014, Board member at balance date
NOTE 16 - SUBSIDIARIES
The consolidated financial statements include the financial statements of Saga Tankers ASA and its subsidiaries listed in the table below:
| Consolidated in the Group financial statements | |||
|---|---|---|---|
| Subsidiary | Country of incorporation Ownership share | from | |
| Saga Agnes AS | Norway | 100 % | 2010 |
| Saga Chelsea AS | Norway | 100 % | 2010 |
| Saga Julie AS | Norway | 100 % | 2010 |
| Saga Unity AS | Norway | 100 % | 2010 |
| Vallhall Fotballhall KS | Norway | 54,8% | 2014 |
| Vallhall Fotballhall AS | Norway | 54,8% | 2014 |
| Vallhall Fotballhall Drift AS | Norway | 55,2% | 2014 |
The subsidiaries have their offices in Oslo, Norway.
The demerger resulted in the following changes in interests:
| Company | Sagas share and ownership interest pre transaction |
Shares and ownership interest comprised by the demerger |
Saga share and ownership post Transaction |
|---|---|---|---|
| 17.23 % ownership | 32.072 % ownership | ||
| Vallhall Fotballhall KS* | interest | interest | 49.305 % ownership interest |
| 526 579 shares (19.15 % of | 980 006 shares (35.64 % of | 1 506 585 shares (54.79 % of | |
| Vallhall Fotballhall AS | total outstanding shares | total outstanding shares | total outstanding shares |
| 600 shares (20.00 % of total | 1055 shares (35.17 % of | 1 655 shares (55.17 % of total | |
| Vallhall Fotballhall Drift AS | outstanding shares | total outstanding shares | outstanding shares |
*Vallhall Fotballhall AS acts as General Partner and holds 10 % ownership in Vallhall Fotballhall KS, resulting in an effective ownership of 54,79% in Vallhall Fotballhall KS for the Group. Hence the Group is deemed to be in control in Vallhall Fotballhall KS.
The following assets were transferred:
| Transferred assets NOK 1 000 |
Fair value | Carrying amount |
|---|---|---|
| Deferred tax assets | 46 | 46 |
| Fixed assets | 95 593 | 95 593 |
| Trade receivables | 1027 | 1027 |
| Other current assets | 1 1 7 6 | 1 1 7 6 |
| Cash and cash equivalents | 12044 | 12044 |
| Total | 97842 | 97842 |
The following liabilities were transferred:
| Transferred liabilities NOK 1 000 |
Fair value | Carrying amount |
|---|---|---|
| Long term interest bearing debt | 59 652 | 59 652 |
| Tax payable | 33 | 33 |
| Other current liabilities and accruals | 2 1 4 6 | 2 1 4 6 |
| Total | 61831 | 61831 |
Non controlling interest at time of acquisition amounts to TNOK 23 621.
No goodwill was recognized.
A loss of TNOK 3 162 was recognized through the profit and loss. This reflects the reduction from the group's previous book value of the investment as an associate and the carrying over basis from Ferncliff.
The acquired entities has contributed with revenues of TNOK 8 079, and net profit of TNOK 902 in the consolidated accounts from the date of acquisition.
NOTE 17-FINANCIAL RISK MANAGEMENT
Through its activities the Group is exposed to a variety of financial risks: market risk including currency risk, credit risk and liquidity risk. The Group's overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group's financial performance. To reduce and manage these risks, management periodically assesses the Group's financial market risk in general. The Group has no hedging instruments nor entered into any derivatives during 2014.
Equity price risk
The Group invests in both marketable securities on different stock exchanges as well unlisted securities in order to take advantage of market movements in the equity markets.
All marketable securities present a risk of loss of capital. The Group moderates this risk through a careful selection of securities. The maximum risk resulting from financial instruments is determined by the fair value of the financial instruments. The Group's overall market positions are monitored on a quarterly basis. The Group's maximum exposure to risk at the balance sheet date is NOK 53 million (2013: NOK 114.8 million).
At 31 December 2014, the impact of increases/decreases of the Oslo Stock Exchange and Oslo Axess on the group's post-tax profit for the year and on equity would have been as shown below. The analysis is based on the assumption that the equity indexes had increased/decreased by 5% with all other variables held constant and all the group's equity instruments moved according to the historical correlation with the index.
Increase of 5 %
| Index | Impact on post-tax profit in TNOK | Impact on other components of equity in TNOK |
||
|---|---|---|---|---|
| 2014 | 2013 | 2014 | 2013 | |
| Oslo Stock Exchange | $\overline{\phantom{0}}$ | |||
| Oslo Axess | $\overline{\phantom{0}}$ | $\overline{\phantom{a}}$ | 1807 | 2824 |
| Total | 1807 | 2824 |
Decrease of 5 %
| Index | Impact on post-tax profit in TNOK | Impact on other components of equity in TNOK |
||
|---|---|---|---|---|
| 2014 | 2013 | 2014 | 2013 | |
| Oslo Stock Exchange | $\qquad \qquad \blacksquare$ | |||
| Oslo Axess | $-1807$ | $-178$ | $-2646$ | |
| Total | $-1807$ | $-178$ | $-2646$ |
Currency Risk
The value of monetary assets and liabilities denominated in foreign currencies will fluctuate due to changes in foreign exchange rates. The majority of the Group's financial assets and liabilities are denominated in Norwegian Kroner and at December 31 2014, the only material assets and liabilities denominated in foreign currencies are USD bank accounts of USD 12 180 353, denominated at NOK 90 539 003.
The Group monitors its exposure to currency risk on a regular basis.
At December 31 2014, had the exchange rate between the US Dollar and the Norwegian Kroner increased/(decreased) by 5 percent with all other variables held constant, the decrease or increase respectively in net assets and the income statement +/(-) TNOK 4 527.
Tax risk
Saga Tankers is subject to taxation by Norwegian authorities. Any change in taxation regime may affect the payable taxes of Saga Tankers.
Legal risk
The Charterer of the vessel MT Saga Agnes ("Saga Agnes") redelivered the vessel from its contract to the Company on 27 July 2012. After redelivering the vessel to the Group, the Charterers of Saga Agnes AS has presented the Group with a claim of about USD 2 million related to the time charterparty for the vessel "Saga Agnes". The matter will be resolved through arbitration. Saga Tankers ASA acts as guarantor under the named charterparty. No reserves have been made for this claim, as it is considered by the management of the group to be unlikely that the claim will be supported by the arbitration.
Credit Risk
The Group is exposed to credit risk, inherent in the risk that a counterparty will be unable to pay amounts in full when due. Allowances are made for credit losses that have been incurred by the balance sheet date, if any. The maximum exposure to credit risk on cash and cash equivalents and trade and other receivables (ignoring collateral and credit quality) at December 31, 2014 was NOK 297,7 million (2013:NOK 102,9 million).
Concentration of credit risk exists to the extent that at December 31, 2014 all cash and cash equivalents were held at two financial institutions with credit ratings according to Standard & Poor's of A+ or better:
| Counterparty | Rating | Geographical segment | 2014 | 2013 |
|---|---|---|---|---|
| Cash and cash equivalents | ||||
| DnB | $A+$ | Norway | 285 519 | 102864 |
| Nordea | $AA-$ | Norway | 12 2 10 | $\overline{\phantom{a}}$ |
| Total | 297 729 | 102 864 |
Liquidity risk
The group monitors rolling forecasts of the group's liquidity requirements to ensure it has sufficient cash to meet operational needs. The group has no outstanding capital commitments.
Long term debt of TNOK 60 000 was raised in the subsidiary Vallhall Fotballhall KS in May 2014. Fixed assets in the subsidiary are used as collateral. No group guarantees has been issued related to the debt. The debt has an instalment plan of TNOK 1000 per quarter until final settlement in May 2024. Hence the loan will have a revolving current portion of TNOK 4000 until May 2023.
| Instalment plan long term debt | Initial loan May 2014 | Jun 2014 - Dec 2014 | Jan 2015 - Feb 2024 | May 2024 |
|---|---|---|---|---|
| Opening balance loan | 60 000 | 58 000 | 20 000 | |
| Release loan | 60 000 | $\overline{\phantom{0}}$ | $\overline{\phantom{a}}$ | |
| Instalment 1 000 per quarter | $\overline{\phantom{a}}$ | $-2000$ | $-38000$ | |
| Balloon-payment | $\overline{\phantom{0}}$ | $\qquad \qquad \blacksquare$ | $\overline{a}$ | 20 000 |
| End balance loan | 60 000 | 58 000 | 20 000 | |
| Estimated interest payments* | $-1119$ | $-12944$ | 240 |
* Accrued interest is settled at each instalment. Estimated future interest payments are made at current interest rate at 3.65 % per annum. The interest rate is floating and hence subject to change.
At the reporting date, the group held cash and cash equivalents of TNOK 297 729 (2013: TNOK 102 864) and other liquid assets of TNOK 622 (2013: TNOK 0) that are expected to readily generate cash inflows for managing liquidity risk.
Capital Management
The group's objectives when managing capital are to safeguard the group's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The Group monitors the available cash and projected capital expenditure requirements so that they can capitalize on attractive investment opportunities when such arise. The Group considers the available cash and the existing credit lines, if any, to be at an appropriate level for the short to medium term.
Fair value estimation
The table below analyses financial instruments carried at fair value, by valuation method. The estimated fair value has been determined by the Group using appropriate market information and valuation methodologies. The different levels have been defined as follows:
- Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).
- Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2).
- Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).
The following table presents the group's financial assets and liabilities that are measured at fair value at 31 December 2014. The fair value of financial instruments does not significantly deviate from their carrying amount.
| Available-for-sale assets (Equity securities) in NOK | 2014 | 2013 |
|---|---|---|
| Listed shares (Level 1) | 53 158 | 99 731 |
| Total | 53 158 | 99 731 |
There were no transfers between the levels during the year.
(a) Financial instruments in level 1
The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm's length basis. The quoted market price used for financial assets held by the group is the current bid price. These instruments are included in Level 1. Instruments included in Level 1 comprise primarily Oslo Axess, OSE, DAX and FTSE 100 equity investments classified as trading securities or available for sale.
(b) Financial instruments in level 2
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using valuation techniques. These valuation techniques maximize the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3. Specific valuation techniques used to value financial instruments include:
- Quoted market prices or dealer quotes for similar instruments;
- Other techniques, such as discounted cash flow analysis, are used to determine fair value for the remaining financial $\bullet$ instruments.
NOTE 18 - FINANCIAL INSTRUMENTS
Set out below is a comparison by category for carrying amounts and fair values of all of the Group's financial instruments that are carried in the financial statements.
| Carrying amount |
Fair value | Fair Value Hierarchy level |
|---|---|---|
| 297 729 | 297 729 | 1 |
| 622 | 622 | 2 |
| 53 158 | 53 158 | 1 |
| 54 000 | 54 000 | 2 |
| 4 0 0 0 | 4 0 0 0 | 2 |
| 191 | 191 | 2 |
| 2664 | 2664 | $\overline{2}$ |
| 2013 | |||
|---|---|---|---|
| NOK 1000 | Carrying amount |
Fair value | Fair Value Hierarchy level |
| Loans and receivables | |||
| Cash and cash equivalents | 102 864 | 102 864 | 1 |
| Trade receivables | $\overline{2}$ | ||
| Available-for-sale assets | |||
| Available-for-sale shares | 99 731 | 99 731 | 1 |
| Other financial liabilities | |||
| Trade payables | 6 | 6 | $\overline{2}$ |
| Other current liabilities | 543 | 543 | $\overline{2}$ |
NOTE 19 - AVAILABLE-FOR-SALE FINANCIAL ASSETS
As at year end the Group held the following financial instruments carried at fair value in the statement of financial position:
| NOK 1000 | 2014 | 2013 |
|---|---|---|
| At 1 January | 99 731 | 34 648 |
| Additions | $\overline{\phantom{a}}$ | 66 4 68 |
| Assets received through demerger | 169 490 | |
| Impairment of available-for-sale financial assets | $-17173$ | $-17523$ |
| Increase / (Decrease) in value recognized as other comprehensive income | $-39479$ | 36 446 |
| Disposals | $-159412$ | $-20308$ |
| At 31 December | 53 158 | 99 731 |
| Less non-current portion | $-53158$ | $-99731$ |
| Current portion |
Available-for-sale financial assets include the following:
| Equity securities in NOK | 2014 | 2013 |
|---|---|---|
| S.D Standard Drilling, market price | 53 158 | 5 2 4 2 |
| Prospector Offshore Drilling, market price | $\overline{\phantom{a}}$ | 94 489 |
All the available-for-sale financial assets shown above are denominated in NOK and are measured at fair value as of year-end.
The group booked an impairment of TNOK 17 173 during 2013 (2013: TNOK 17 523) related to the investment in S.D. Standard Drilling.
NOTE 20 - DIVIDENDS PAID AND PROPOSED
No dividends have been paid during 2013 and 2014. The board of Directors has decided not to distribute any dividends in 2015 based on the financial year of 2014.
NOTE 21 - SUBSEQUENT EVENTS
On 27 March 2015 an extraordinary general meeting was held in Saga Tankers ASA, approving the proposed merger with Strata Marine & Offshore AS.
All assets and liabilities in Strata Marine & Offshore AS will be transferred to Saga Invest Holding AS, a new subsidiary of Saga Tankers ASA. Saga Tankers ASA will issue 110 898 883 new shares to the former shareholders of Strata Marine & Offshore AS as settlement for the merger.
Completion of the transaction is expected mid May 2015.
Pro forma balance for Saga Tankers Group as per 1 January 2015 as if the Merger had taken place at 1 January 2015:
| NOK 1000 | Saga Tankers Group 01.01.15 |
Strata Marine & Offshore Group 01.01.15 |
Estimated transaction costs |
New Saga Tankers Group 01.01.15 |
|---|---|---|---|---|
| ASSETS | ||||
| Non-current assets | ||||
| Deferred tax assets | $\mathbf{1}$ | 1 | ||
| Fixed assets | 94 5 65 | 94 5 65 | ||
| Available-for-sale financial assets | 53 158 | 219 608 | ٤ | 272765 |
| Long term receivables | ٠ | 9718 | 9718 | |
| Associates | 27086 | 27086 | ||
| Total non-current assets | 147 723 | 256 411 | 404 134 | |
| Current assets | ||||
| Trade receivables | 622 | 137 | 759 | |
| Other current assets | 1 2 2 7 | 2 1 3 5 | 3 3 6 2 | |
| Cash and cash equivalents | 297729 | 35 106 | 332 835 | |
| Total Current assets | 299 579 | 37 378 | 336 957 | |
| TOTAL ASSETS | 447 302 | 293 789 | 741 091 | |
| EQUITY AND LIABILITIES | ||||
| Equity | ||||
| Share capital | 175 834 | 110 899 | $\overline{a}$ | 286733 |
| Other Equity | 883 696 | $\overline{a}$ | 883 696 | |
| Total paid-in-capital | 1059530 | 110 899 | 1 170 429 | |
| Accumulated losses | $-694519$ | 134 724 | $-514$ | $-560309$ |
| Other components of equity | $-2648$ | 46 181 | 45 532 | |
| Non-controlling interest | 24 04 1 | 24 041 | ||
| Total equity | 386 404 | 291804 | -514 | 677 693 |
| Non-current liabilities | ||||
| Long term interest bearing debt | 58 000 | 58 000 | ||
| Total non-current liabilities | 58 000 | $\blacksquare$ | $\overline{\phantom{a}}$ | 58 000 |
| Current liabilities | ||||
| Tax Payable | 43 | 43 | ||
| Trade and other payables | 728 | 464 | $\overline{\phantom{a}}$ | 1 1 9 2 |
| Other current liabilities | 2 1 2 7 | 1522 | 514 | 4 1 6 3 |
| Total current liabilities | 2899 | 1986 | 514 | 5399 |
| TOTAL EQUITY AND LIABILITIES | 447 302 | 293 789 | $\qquad \qquad \blacksquare$ | 741 091 |
This is an estimated opening balance, and may be subject to change
Pro forma statement of income for 2014 for Saga Tankers Group as if transaction was completed 1 January 2014:
| Strata Marine & Offshore | Estimated transaction | Saga Tankers Group profit and loss 2014 if |
||
|---|---|---|---|---|
| NOK 1000 | Saga Tankers Group | Group | costs | transaction at 01.01.2014 |
| Net gain / (loss) from available for sale assets |
$-9136$ | 9988 | 852 | |
| Other Income | 8079 | 272 | $\overline{a}$ | 8351 |
| Operating revenues | $-1057$ | 10 260 | 9 2 0 3 | |
| General administrative expenses | 11388 | 7735 | 310 | 19 4 33 |
| Depreciation/amortization | 1347 | $\omega$ | 1347 | |
| Other losses/(-gains) | 3 1 6 2 | ä, | 3 1 6 2 | |
| Operating expenses | 15896 | 7735 | 310 | 23 941 |
| Operating profit/(-loss) | $-16953$ | 2525 | 310 | $-14738$ |
| Interest income | 1813 | 2864 | $\overline{a}$ | 4677 |
| Interest expense | $-1120$ | $-2$ | $\overline{a}$ | $-1122$ |
| Other financial items | 16425 | 2 3 6 6 | $\frac{1}{2}$ | 18791 |
| Net financial items | 17 118 | 5 2 2 8 | ٠ | 22 346 |
| Share of profit from associates | 753 | $-1168$ | $\qquad \qquad \blacksquare$ | $-415$ |
| Profit/(-loss) before tax | 918 | 6585 | $-310$ | 7 1 9 3 |
| Taxes | $-88$ | $\overline{a}$ | - | $-88$ |
| Net profit/(-loss) | 830 | 6585 | $-310$ | 7 1 0 5 |
| Change in available-for-sale assets | $-39479$ | 26 892 | $\blacksquare$ | $-12587$ |
| Currency translation | 1 1 0 2 | Ξ | 1 1 0 2 | |
| Other comprehensive income | $-39479$ | 27 994 | $\overline{a}$ | $-11486$ |
| Total comprehensive income | $-38649$ | 34 579 | $-310$ | $-4381$ |
| Attributable to: | ||||
| Non-controlling interests | 419 | 419 | ||
| Shareholders' interests | $-39069$ | 34 579 | $-310$ | $-4800$ |
Pro forma statement of income for 2014 including merger as per 1 January 2014, is made for illustrative purposes only. It is based on assumptions that might or might not been the outcome if the transaction was made at this date.
RESPONSIBILITY STATEMENT
We confirm, to the best of our knowledge, that the financial statements for the period from 1 January 2014 to 31 December 2014 have been prepared in accordance with the applicable accounting standards, and give a true and fair view of the Group and the Company's consolidated assets, liabilities, financial position and results of operations. Furthermore, we confirm that the Report of the Board provides a true and fair view of the development and performance of the business and the position of the Group and the Company, together with a description of the key risks and uncertainty factors that the Group is facing.
Board Member
Hellebust Board Member
Oslo, 30 April 2015 The Board of Directors
Martin Nes Chairman
Yvonne Litsheim Sandvold
Board Member
Espen Lundaas CEO
CORPORATE GOVERNANCE
The Group endeavours to comply with the NUES corporate governance guidelines.
Please see the Company's website for information about the Company's deviations from the NUES guidelines during 2014.
FINANCIAL STATEMENT -PARENT COMPANY
SAGA TANKERS ASA
INCOME STATEMENT FOR THE PERIOD 01.01 - 31.12.
| NOK 1000 | NOTE | 2014 | 2013 |
|---|---|---|---|
| OPERATING REVENUES | |||
| Net gains on financial assets | $\blacksquare$ | 3 2 5 7 | |
| Management income | ÷. | ||
| GROSS REVENUES | 3 2 5 7 | ||
| OPERATING EXPENSES | |||
| Net loss on financial assets | 8651 | ||
| Employee benefit expenses | $\overline{2}$ | 2 1 0 8 | 2 3 1 4 |
| Administration expenses | 2,6 | 4 3 0 4 | 1667 |
| TOTAL OPERATING EXPENSES | 15 062 | 3 9 8 1 | |
| Loss (-gain) sale fixed assets | $-53$ | ||
| NET OPERATING PROFIT / LOSS (-) | $-15062$ | $-670$ | |
| FINANCIAL INCOME / EXPENSES (-) | |||
| Interest income | 1609 | 1767 | |
| Interest expenses | $-2$ | ||
| Impairment financial assets | 47 | $-70971$ | $-38076$ |
| Net foreign exchange gain/(loss) | 115 205 | 38 608 | |
| Other financial income | $\overline{2}$ | ||
| NET FINANCIAL INCOME / EXPENSES (-) | 45 843 | 2 2 9 9 | |
| NET PROFIT BEFORE TAX | 30780 | 1629 | |
| Taxes | 8 | 26 595 | |
| NET PROFIT / LOSS (-) | 4 1 8 5 | 1629 | |
| ATTRIBUTABLE TO | |||
| Accumulated losses | 4 1 8 5 | 1629 |
STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER
| NOK 1000 | NOTE | 31 Dec 2014 | 31 Dec 2013 |
|---|---|---|---|
| ASSETS | |||
| Financial non-current assets | |||
| Shares and other financial assets | 11 | 53 158 | 60 232 |
| Subsidiaries | 17886 | ||
| Associates | 14 000 | ||
| Total financial non-current assets | 71044 | 74 232 | |
| Total non-current assets | 71044 | 74 232 | |
| Current assets | |||
| Intercompany receivables | 4 | 114 278 | 11708 |
| Other current assets | 74 | 66 | |
| Cash and cash equivalents | $\overline{3}$ | 269 740 | 89780 |
| Total current assets | 384 092 | 101 555 | |
| TOTAL ASSETS | 455 136 | 175 787 | |
| EQUITY AND LIABILITIES | |||
| Share capital | 9 | 175 834 | 86777 |
| Other equity | 9 | 883 696 | 883 696 |
| Total paid-in capital | 1059530 | 970 473 | |
| Accumulated losses | 9 | $-704$ 178 | $-795203$ |
| Total equity | 355 351 | 175 270 | |
| LIABILITIES | |||
| Intercompany payables | 12 | 98 500 | |
| Trade and other payables | 5 | ||
| Public duties payable | 131 | 206 | |
| Other current liabilities | 1 1 4 9 | 311 | |
| Total current liabilities | 99 784 | 517 | |
| TOTAL EQUITY AND LIABILITIES | 455 136 | 175 787 | |
U Hen All Board Member
Kot $\overline{C}$
Kristin Hellebust Board Member
Oslo, 30 April 2015 The Board of Directors
Martin Nes Chairman
We
Yvonne Litsheim Sandvold Board Member
Espen Lundaas CEO
CASH FLOW STATEMENT FOR THE PERIOD 01.01 - 31.12
| NOK 1000 | NOTE | 2014 | 2013 |
|---|---|---|---|
| Profit before tax | 30 780 | 1629 | |
| Interest income | |||
| Impairment financial assets | 5 | 88 1 24 | 38 0 76 |
| Dividends received | 17542 | ||
| Loss/(-gain) on sale fixed assets | $-53$ | ||
| Loss/(-gain) on sale financial assets | $-8502$ | ||
| Foreign exchange losses/(gains) | $-115205$ | $-38608$ | |
| Increase/decrease receivables and prepayments | $-8$ | $-66$ | |
| Increase/decrease payables and accruals | 767 | $-18866$ | |
| Net cash flow from operating activities | $-4044$ | $-347$ | |
| Net cash flow from intercompany receivables | 34 158 | ||
| Net investment in financial assets | $-66454$ | ||
| Divestment in financial assets | 167 449 | 20 308 | |
| Proceeds from sale of fixed assets | 331 | ||
| Net payments from/(to) associated companies | 3 4 4 7 | ||
| Net cash flow from investing activities | 170896 | $-11657$ | |
| Share issuance costs | $-462$ | ||
| Net cash flow from financing activities | $-462$ | ||
| Net change in cash and cash equivalents | 4 | 166 391 | $-12004$ |
| Cash and cash equivalents at beginning of period | 89780 | 101 252 | |
| Net foreign exchange differences (unrealized) | 13 5 69 | 532 | |
| Cash and cash equivalents at end of period |
NOTES TO THE FINANCIAL STATEMENT
NOTE 1 - ACCOUNTING POLICIES
Accounting principles for the financial statements of Saga Tankers ASA - parent accounts:
General
The financial statements are presented in accordance with the Norwegian Accounting Act and Norwegian general accepted accounting principles in Norway (NGAAP). The accompanying notes are an integral part of the financial statements. The parent company accounts are presented in NOK which also is the functional currency for the parent company.
Estimates
The management has used estimates and assumptions that may have effect on revenues, costs and the valuation of assets and liabilities in the reporting of the annual financial statements. These assumptions are in accordance with generally accepted accounting policies in Norway.
Currency
Transactions in foreign currencies are recorded at the exchange rate in effect at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the exchange rate at the financial position date. Realized currency exchange gains or losses are recorded at the time of payment and recognised as financial income/expense. Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions.
Measurement of revenues and costs
Revenues are recognized as they are earned. Cost is recognized in the same reporting period as the corresponding revenues.
Classification and evaluation of balance sheet items
Current assets and short-term liabilities consist of items due for payment within a year after establishment. Other items are recognized as long-term assets or liabilities. Current assets are valued at the lowest of acquisition value or fair value. Short-term liabilities are recorded at the nominal value at the time of establishment. Non-current assets are valued to the value at the time of acquisition less accumulated depreciation. Long-term loans are valued at nominal value at the time of establishment.
Receivables
Receivables are recorded in the balance sheet at nominal value less provision for doubtful accounts. Provisions for doubtful accounts are based on an individual assessment of the different receivables.
Non-current assets
Non-current assets are recorded in the balance sheet, and are depreciated over the estimated useful economic life of the asset on a straight-line basis. Direct maintenance of the non-current assets is recorded as cost in the profit and loss statement while upgrades and improvements are added to the balance sheet value and depreciated in line with the depreciation of the upgraded asset. An impairment loss is recognized if the fair value of the asset is lower than the book value, and the value reduction is not assumed to be of a short term nature. The impairment loss is reversed if the impairment is no longer recognized.
Taxes
The income tax in the profit and loss statement consists of taxes payable and changes in deferred taxes. Deferred tax and deferred tax benefit is calculated based on temporary differences between tax bases of assets and liabilities and their carrying amount for financial reporting purposes, and is based on nominal values. Net deferred tax benefit is recorded in the balance sheet only in the event that it is probable that is can be utilized in the foreseeable future. Taxes payable and deferred taxes are recorded directly in equity in the event that the tax items are related to equity transactions.
Shares in subsidiaries
Investments in shares in subsidiaries are accounted for using the cost-method in the statutory accounts. An impairment loss is recognized if the fair value is lower than book value and this is viewed as non-temporary. The impairment loss is reversed to the degree that the fair value improve, and that the improvement is not assumed to be of a short-term nature.
Dividends, Group contribution and other distributions are recognized in the same year as they are recognized in the subsidiary's financial statement. If dividends / Group contribution exceed withheld profits after acquisition, the excess amount represents repayment of invested capital, and the distribution will be deducted from the recognized value of the acquisition in the balance sheet for the parent company.
Investments in associates
Investments in shares in associates are accounted for using the cost-method in the statutory accounts. An impairment loss is recognized if the fair value is lower than book value and this is viewed as non-temporary. The impairment loss is reversed to the degree that the fair value improve, and that the improvement is not assumed to be of a short-term nature.
Investments in other shares
Investments in shares in other shares are accounted for using the cost-method in the statutory accounts, unless considered as part of trading portfolio. An impairment loss is recognized if the fair value is lower than book value and this is viewed as nontemporary. The impairment loss is reversed to the degree that the fair value improve, and that the improvement is not assumed to be of a short-term nature.
Pensions
The company's defined-benefit pension plan was terminated as of 1 January 2013. The former employees covered by this plan, has received a paid-up Policy. The company have no further obligations and/or liabilities regarding this pension plan.
Share-based compensation plans
The Company held no share-based compensation plans as of 31.12.2013.
Cash, cash-equivalents and cash flow statement
Cash and cash-equivalents include cash, bank deposits and other short deposits that are repayable on demand. The cash flow statement is prepared using the indirect method. Restricted bank deposits related to the operations are included in cash equivalents.
NOTE 2 - SPECIFICATION OF EXPENSES
The expenses for the financial years are specified below:
| NOK 1000 | 2014 | 2013 |
|---|---|---|
| Employee benefit expenses | ||
| Salaries | 1518 | 1680 |
| Board fees | 340 | 340 |
| Social security costs | 238 | 285 |
| Other personnel expenses | 11 | 9 |
| Total | 2 1 0 8 | 2 3 1 4 |
| Number of employees | 1 | 1 |
| Other operating expenses | ||
| Consultancy fees | 3734 | 1 2 2 5 |
| Other operating expenses | 570 | 442 |
| Total other operating expenses | 4304 | 1667 |
| Auditor's fees including VAT | ||
| Audit services | 636 | 506 |
| Other attestation services | 34 | |
| Tax services | 1629 | |
| Other non-audit services | 225 | 163 |
| Total | 2525 | 669 |
Fees to the Group's auditors are included in Administrative Expenses, with the exception of TNOK 337 in 2014 which is included in expenses regarding Share Issuance, hence booked directly towards equity (reference note 9).
Remuneration to the Board of Directors and executive management for the period 01.01.14 - 31.12.14
| 2014 | |||||
|---|---|---|---|---|---|
| NOK 1000 | |||||
| Name | Position | Salary and bonus | Other benefits | Pension cost | Director's fees |
| Øystein Stray Spetalen | Chairman | 140 | |||
| Martin Nes | Board member | - | - | 100 | |
| Brita Eilertsen | Board member | Ξ | 100 | ||
| Espen Lundaas | CEO/CFO | 1518 | ۰ | ||
| Total remuneration | 1518 | $\blacksquare$ | 340 |
| 2013 | |||||
|---|---|---|---|---|---|
| NOK 1000 | |||||
| Name | Position | Salary and bonus | Other benefits | Pension cost | Director's fees |
| Øystein Stray Spetalen | Chairman | - | $\overline{\phantom{0}}$ | 140 | |
| Martin Nes | Board member | - | 100 | ||
| Brita Eilertsen | Board member | 100 | |||
| Espen Lundaas | CEO/CFO | 1500 | |||
| Total remuneration | 1500 | - | 340 | ||
The company had no outstanding loans, guarantees or sureties in favour of any member of the Board of Directors, company management or other related parties in 2014.
Guidelines for determining salaries and other compensation for company management:
In accordance with the regulations in paragraph 6-16a in the Norwegian Public Limited Companies Act, the Board of Directors has established a statement regarding remuneration. The focus of the company is to hire qualified managers and to pay according to the market. Salary and remuneration of the CEO and CFO is determined by the Board of Directors, and payments to other employees are determined by the CEO according to guidelines from the Board of Directors.
Saga Tankers Group's compensation schemes include only a limited number of benefits in kind. These benefits are offered in line with what is common practice in international labor markets and typically include personal communication equipment, access to media, and car and parking arrangements.
The CEO/CFO of Saga Tankers ASA has no set bonus scheme. It has not been granted any bonus for the year 2014. The senior executive has a mutual three months termination period, and no contractual agreements for severance compensation in case of termination of employment except for salary trough the termination period. The "Statement on the determination salary and other remuneration for senior executives" will be presented at the annual general meeting and made available on the Company's webpage.
Stock options program to Board members and Company employees
No stock options or right to stock options are held by members of the board of directors or any of the Company's employees at 31 December 2014.
NOTE 3 - CASH AND CASH EQUIVALENTS
The Company's cash and cash equivalents are denominated in the following currencies:
| NOK 1000 | 31 Dec 2014 | 31 Dec 2013 |
|---|---|---|
| US Dollars | 74838 | 61 111 |
| Norwegian kroner | 194 902 | 28 6 69 |
| Total cash and cash equivalents | 269 740 | 89780 |
| Restricted cash | ||
| Employee tax account | 98 | 135 |
Interest income is earned at floating interest rates. Restricted cash consists of salary related tax.
NOTE 4 - LOANS TO GROUP COMPANIES
Net book value
| NOK 1000 | 31 Dec 2014 |
31 Dec 2013 |
|---|---|---|
| Saga Agnes AS | 33 859 | 11 203 |
| Saga Chelsea AS | 19 2 15 | 178 |
| Saga Julie AS | 28 0 28 | 253 |
| Saga Unity AS | 33 860 | 75 |
| Intercompany short-term loans | 114 278 | 11708 |
Impairment/ (reversal of impairment) NOK 1000
| Saga Agnes AS | $-962$ | 82 5 52 |
|---|---|---|
| Saga Chelsea AS | $-145$ | 84849 |
| Saga Julie AS | $-15$ | 124 874 |
| Saga Unity AS | 188 | 453 267 |
| Impairment of Loan | $-934$ | 445 543 |
Intercompany loans consist of loans to the subsidiaries provided prior years from the parent company for acquisitions of vessels and working capital purposes.
2014
Accumulated
As a result of currency effects, the nominal NOK value of the loans increased by NOK 101.6 million through 2014.
The effect on the subsidiaries equity caused by the currency effect is more or less compensated by the proposed group contribution for 2014 totalling NOK 98.5 million. (Ref. Note 12). The proposed group contribution increases the investment in the subsidiaries, thereby resulting in impairment to the investments. (Ref. Note 7).
The Company has, as per NGAAP, evaluated if there are reasons to believe that any negative change in value adjusted equity of the subsidiaries are permanent and should lead to an impairment of the intercompany receivables, and consequently written down the receivables with NOK 446 million to a book value of NOK 114 million
Debtors which fall due later than one year
| NOK 1000 | 31 Dec | 31 Dec | |
|---|---|---|---|
| 2014 | 2013 | ||
| Face value | 559821 | 458 185 | |
| Impairment | $-445543$ | $-446477$ | |
| Net book value | 114 278 | 11 708 |
NOTE 5-LEASE AGREEMENTS
The company currently hold no own fixed assets.
Annual rental of non-financial assets
The company has a lease agreement for office space, with a contract period until 30 may 2017 and a mutual termination span of six months. The annual rent for 2014 was TNOK 109. Additional costs TNOK 46 for other mutual costs relating to the premises was also incurred in 2013. It is expected for these costs to remain at approximately this level for the duration of the lease period.
NOTE 6 - RELATED PARTIES
Remuneration to executives is disclosed in note 3, and balance with group companies is disclosed in note 5 and note 12.
Company is sharing office locations for its head office with Ferncliff TIH II AS, the holding company of the Chairman of the Board of Directors, and the Company's largest shareholder. Transactions with related parties during 2014 are limited to office rent including mutual costs, and services rendered regarding support for financial reporting.
All transactions with related parties have been made on an arm's length basis and are settled on a regular basis. Goods and/or services purchased from related parties have been priced at industry standard rates. Transactions with related parties are specified below:
RELATED PARTY TRANSACTIONS
| 2014 | |||||
|---|---|---|---|---|---|
| NOK 1000 | Year | Sales to related parties |
Purchases from related parties |
Amounts owed by related parties |
Amounts owed to related parties |
| Tycoon Industrier AS | 2014 | 345 | |||
| 2013 | |||||
| NOK 1000 | Year | Sales to related parties |
Purchases from related parties |
Amounts owed by related parties |
Amounts owed to related parties |
| Tycoon Industrier AS | 2013 | 160 | $\qquad \qquad$ |
NOTE 7 - INVESTMENTS IN SUBSIDIARIES
The consolidated financial statements include the financial statements of Saga Tankers ASA and its subsidiaries listed in the table below:
| NOK 1000 | Country of incorporation |
Ownership/ voting rights |
Consolidated in the Group financial statements from |
Share capital/partner capital |
Net book value |
|---|---|---|---|---|---|
| Saga Agnes AS | Norway | 100 % | 2010 | 1 0 0 0 | |
| Saga Chelsea AS | Norway | 100 % | 2010 | 1 0 0 0 | |
| Saga Julie AS | Norway | 100 % | 2010 | 1 0 0 0 | |
| Saga Unity AS | Norway | 100 % | 2010 | 1 0 0 0 | |
| Vallhall Fotballhall KS | Norway | 54,8% | 2014 | 35 000 | 14 5 94 |
| Vallhall Fotballhall AS | Norway | 54,8% | 2014 | 5 500 | 2864 |
| Vallhall Fotballhall Drift AS | Norway | 55,2% | 2014 | 501 | 427 |
| Total | 45 001 | 17886 |
The Saga Agnes AS, Saga Chelsea AS, Saga Julie AS and Saga Unity AS have their offices in Sjølyst Plass 2, 0278 Oslo, Norway. Vallhall Fotballhall KS, Vallhall Fotballhall AS and Vallhall Fotballhall Drift AS have their offices at Innspurten 16, 0663 Oslo, Norway.
| Impairment NOK 1000 |
2014 | Accumulated |
|---|---|---|
| Saga Agnes AS | 13 4 02 | 100 452 |
| Saga Chelsea AS | 13777 | 114 874 |
| Saga Julie AS | 20 25 8 | 112 939 |
| Saga Unity AS | 24 4 68 | 113 987 |
| Impairment subsidiaries | 71 905 | 442 253 |
The impairment of the subsidiaries has been made on basis of their equity. The subsidiaries have for the time being no substantial assets other than cash and receivables towards Saga Tankers ASA.
NOTE 8 - INCOME TAX
| 30 198 Current tax expense Deferred tax expense $-3603$ Tax effect of group contribution Tax expense 26 595 Reconciliation of tax expense Net income before tax 30780 Tax expense based on nominal tax rate 27 % (28 % 2013) 8 3 1 1 Tax effect of permanent differences 21887 Not recognized deferred tax assets $-3603$ Tax expense 26 595 Reconciliation of deferred tax (-)/ deferred tax assets 27 % Tangible assets $-6$ Receivables 120 297 120 549 Net tax loss carried forward* $\mathbf{0}$ Net deferred tax assets 120 290 |
1629 |
|---|---|
| 456 | |
| $-681$ | |
| 225 | |
| -8 | |
| 3 3 5 2 | |
| 123 893 | |
| Net deferred tax assets not recognized -120 290 -123 893 |
|
| Deferred tax (-)/ deferred tax assets in the balance sheet | |
| Tax payable | |
| Current tax expense 30 198 |
|
| Deferred tax expense $-3603$ |
|
| Tax effect of group contribution $-26595$ |
|
| Tax payable |
Tax rate of 27 % adopted by the parliament 13 December 2013, effective as of 1 January 2014, have been used to calculate deferred taxes. The tax rate was 28 % for revenues in Norway for 2013.
* Net tax loss carried forward is available indefinitely for offset against future taxable profits.
The Company has per the balance sheet date not recorded any deferred tax asset as no possible utilization of this asset is foreseen.
NOTE 9 - ISSUED CAPITAL AND SHAREHOLDERS
Issued capital 2014
| NOK 1000 | Number of shares |
Share capital |
Other equity |
Accumulated losses |
Total |
|---|---|---|---|---|---|
| Equity per 31 December 2012 | 86 777 409 | 86777 | 883 696 | $-796832$ | 173 642 |
| Net profit / loss (-) for the year 2013 | 1629 | 1629 | |||
| Equity per 31 December 2013 | 86 777 409 | 86 777 | 883 696 | $-795203$ | 175 270 |
| Demerger June 2014 | 89 056 317 | 89056 | 87 302 | 176 358 | |
| Share issuance costs | - | $-462$ | $-462$ | ||
| Net profit / loss (-) for the year 2014 | - | 4 1 8 5 | 4 1 8 5 | ||
| Equity per 31 December 2014 | 175 833 728 | 175834 | 883 696 | $-704178$ | 355 351 |
The nominal per share as of 31.12.2014 was NOK 1 per share, for all of the Company's shares.
All issued shares have a nominal value of NOK 1 and are of equal rights. Saga Tankers ASA is incorporated in Norway, listed on the Oslo Exchange Axess list, and the share capital is denominated in NOK.
Board authorizations
2014
The board of directors does not have any authorizations to either increase the share capital or to purchase shares in the Company.
| As of 31 December 2014 the Company had 127 shareholders | |||
|---|---|---|---|
| $5111801$ 2021 the company nad 227 sharehold NAME |
31.12.2014 | |
|---|---|---|
| $\mathbf{1}$ | SPETALEN | 98,30% |
| $\overline{2}$ | KRISTIAN HODNE AS | 0,17% |
| 3 | KOLBERG MOTORS AS | 0,15 % |
| 4 | NORDSTJERNEN AS | 0,14 % |
| 5 | KOLBERG | 0,14 % |
| 6 | SKIBSAKTIESELSKAPET ABACO | 0,11% |
| 7 | RAMS AS | 0,09% |
| 8 | DNB NOR MARKETS, AKSJEHAND/ANALYSE | 0,06 % |
| 9 | NISTUÅ II AS | 0,06 % |
| 10 | GADD HOLDING | 0,06 % |
| 11 | MYKLAND INVEST AS | 0,06 % |
| 12 | PAK INVEST AS | 0,05 % |
| 13 | VOLDMO | 0,04 % |
| 14 | INITIUM INVEST AS | 0,04% |
| 15 | JEBSEN | 0,03% |
| 16 | MOMO INVEST AS | 0,03% |
| 17 | BUSINESSPARTNER AS | 0,02% |
| 18 | PEDRO EIENDOM | 0,02% |
| 19 | JAGUAR FUND INVEST 2015 AS | 0,02% |
| 20 | NORDNET PENSJONSFORSIKRING | 0,02% |
| OTHER | 0,39% |
Shares owned by the Board, Management and their Related Parties
of Shares
| Board of Directors | |
|---|---|
| Øystein Stray Spetalen (Chairman) | 175 841 799 |
| Brita Eilertsen | |
| Martin Nes | |
| Group Management | |
| Espen Lundaas, CEO (CFO) | |
| Related Parties | |
| Total number of shares held by Board members and Group management | 175 841 799 |
| Total number of shares held by Board members and Group management in % of total outstanding shares | 98,30% |
|---|---|
| ---------------------------------------------------------------------------------------------------- | -------- |
| 2013 | # of Shares |
|---|---|
| Board of Directors | |
| Øystein Stray Spetalen (Chairman) | 83 207 085 |
| Brita Eilertsen | |
| Martin Nes | |
| Group Management | |
| Espen Lundaas, CEO (CFO) | |
| Related Parties | |
| Total number of shares held by Board members and Group management | 83 207 085 |
| Total number of shares held by Board members and Group management in % of total outstanding shares | 95,89% |
Shares and stock options by Board members and Group management
No stock options or rights to stock options are held by members of the board of directors or any of the Company's employees at 31 December 2014.
NOTE 10-RISKS
The risk exposure of Saga Tankers ASA is considered to be similar as the risks described for the Saga Tankers Group. References are made to note 19 in the Saga Tankers Group consolidated accounts. The sensitivity analysis for the equity instruments in the consolidated accounts will not be applicable to the Company's accounts, due to differences in accounting principles.
NOTE 11 - SHARES AND OTHER FINANCIAL ASSETS
| 2014 | 2013 | |
|---|---|---|
| At 1 January | 60 232 | 31 6 28 |
| Additions | 169 026 | 47 707 |
| Disposals | $-158948$ | $-1560$ |
| Dividends classified as repayments | $-17543$ | |
| Impairment | $-17543$ | |
| At 31 December | 53 158 | 60 232 |
Shares and other financial assets include the following
| 2014 | 2013 | |
|---|---|---|
| Listed shares | 53 158 | 60 232 |
| Total | 53 158 | 60 232 |
The financial assets are denominated in NOK and are measured at cost. The financial assets have been impaired with TNOK 17 543 in 2014 which also is the total accumulated impairment.
NOTE 12 - INTERCOMPANY PAYABLES
Net book value
| NOK 1000 | 31 Dec 2014 |
31 Dec 2013 |
|---|---|---|
| Saga Agnes AS - Group contribution | 18 3 5 9 | |
| Saga Chelsea AS - Group contribution | 18873 | |
| Saga Julie AS - Group contribution | 27750 | |
| Saga Unity AS - Group contribution | 33 5 18 | |
| Intercompany payables | 98 500 |
NOTE 13 - SUBSEQUENT EVENTS
MERGER
On 27 March 2015 an extraordinary general meeting was held in Saga Tankers ASA, approving the proposed merger with Strata Marine & Offshore AS.
All assets and liabilities in Strata Marine & Offshore AS will be transferred to Saga Invest Holding AS, a new subsidiary of Saga Tankers ASA. Saga Tankers ASA will issue 110 898 883 new shares to the former shareholders of Strata Marine & Offshore AS as settlement for the merger.
Completion of the transaction is expected mid May 2015.
$\widetilde{\mathcal{L}}$
AUDITORS' REPORT
$\sim$
To the Annual Shareholders' Meeting of Saga Tankers ASA
Independent auditor's report
Report on the Financial Statements
We have audited the accompanying financial statements of Saga Tankers ASA, which comprise the financial statements of the parent company and the financial statements of the group. The financial statements of the parent company comprise the balance sheet as at 31 December 2014, and the income statement and cash flow statement, for the year then ended, and a summary of significant accounting policies and other explanatory information. The financial statements of the group comprise the balance sheet at 31 December 2014, income statement, changes in equity and cash flow for the year then ended, and a summary of significant accounting policies and other explanatory information.
The Board of Directors and the Managing Director's Responsibility for the Financial Statements
The Board of Directors and the Managing Director are responsible for the preparation and fair presentation of the financial statements of the parent company in accordance with Norwegian Accounting Act and accounting standards and practices generally accepted in Norway, and for the preparation and fair presentation of the financial statements of the group in accordance with International Financial Reporting Standards as adopted by EU and for such internal control as the Board of Directors and the Managing Director determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with laws, regulations, and auditing standards and practices generally accepted in Norway, including International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
PricewaterhouseCoopers AS, Postboks 748 Sentrum, NO-0106 Oslo T: 02316, org. no.: 987 009 713 MVA, www.pwc.no Statsautoriserte revisorer, medlemmer av Den norske Revisorforening og autorisert regnskapsførerselskap
Opinion on the financial statements of the parent company
In our opinion, the financial statements of the parent company are prepared in accordance with the law and regulations and present fairly, in all material respects, the financial position for Saga Tankers ASA as at 31 December 2014, and its financial performance and its cash flows for the year then ended in accordance with the Norwegian Accounting Act and accounting standards and practices generally accepted in Norway.
Opinion on the financial statements of the group
In our opinion, the financial statements of the group present fairly, in all material respects, the financial position of the group Saga Tankers ASA as at 31 December 2014, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by EU.
Report on Other Legal and Regulatory Requirements
Opinion on the Board of Directors' report
Based on our audit of the financial statements as described above, it is our opinion that the information presented in the Board of Directors report concerning the financial statements, the going concern assumption and the proposal for the allocation of the profit is consistent with the financial statements and complies with the law and regulations.
Opinion on Registration and Documentation
Based on our audit of the financial statements as described above, and control procedures we have considered necessary in accordance with the International Standard on Assurance Engagements ISAE 3000 "Assurance Engagements Other than Audits or Reviews of Historical Financial Information", it is our opinion that management has fulfilled its duty to produce a proper and clearly set out registration and documentation of the company's accounting information in accordance with the law and bookkeeping standards and practices generally accepted in Norway.
Oslo, 30 April 2015 PricewaterhouseCoopers AS
$\mu$
Anders Ellefsen State Authorised Public Accountant (Norway)
SAGA TANKERS ASA +47 23 01 49 14 Sjølyst Plass 2, 0278 Oslo Norway
INVESTOR RELATIONS Phone: +47 23 01 49 14 e-mail: [email protected] $\bar{\kappa}$
$\frac{2}{10}$
www.sagatankers.com