Quarterly Report • Nov 9, 2018
Quarterly Report
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Viking Supply Ships AB (publ) is a Swedish shipping company with headquarter in Gothenburg, Sweden. Viking Supply Ships AB (publ) is organized into three segments: Anchor Handling Tug Supply vessels (AHTS), Services as well as Ship Management. The operations are focused on offshore and icebreaking primarily in Arctic and subarctic areas. The company has in total about 300 employees and the turnover in 2017 was MSEK 331. The company's B-share is listed on NASDAQ OMX Stockholm, segment Small Cap, www.vikingsupply.com.
Viking Supply Ships AB (publ) Tel: +47 38 12 41 70 Idrottsvägen 1 E-mail: [email protected] SE-444 31 Stenungsund, Sweden www.vikingsupply.com
For further information, please contact CEO, Trond Myklebust, ph. +47 23 11 70 00 or interim CFO, Morten G. Aggvin, ph. +47 41 04 71 25.
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The third quarter resulted in a proft for the Group. Revenue is still not at a satisfactory level because of the weak activity in the segment, totalling MSEK 72 (93) for the quarter. EBITDA is positive for the quarter at MSEK 2 467. For the third quarter, proft after tax including discontinued operations was MSEK 2 227 (-99). The result was signifcantly impacted by the sale of the three ice-breakers to Her Majesty the Queen in Right of Canada.
The market for PSV vessels has during 2018 continued to be very soft and it was during the second quarter 2018 decided to sell all fve PSV-vessels. In June 2018 VSS entered into an agreement to sell Freyja Viking, Nanna Viking and Sol Viking and the vessels were delivered to its new owners during third quarter. After the end of the third quarter, VSS entered into an agreement to sell the two remaining PSVs.
Shortly after the third quarter, VSS entered into an agreement to sell the small bulk vessels in TransAtlantic AB. The sales, which conclude the remaining business in TransAtlantic, are expected to bring a positive cash contribution to the Group of MSEK 18 and a positive P&L effect of 7 MSEK.
During the third quarter, VSS has sold its three Icebreakers, Tor Viking, Balder Viking and Vidar Viking to Her Majesty the Queen in Right of Canada. The vessels were delivered to its new owners in September, and VSS has received payment in full for the transaction. The net impact on the result is MSEK 2 495. Following the above transactions, VSS core
feet will consist of three Ice-1A and one Ice-1A Super classed AHTS vessels. VSS will maintain its core competence operating in harsh environment, and through the contract with The Swedish Maritime Authority VSS will also maintain its icebreaking competence. As part of this strategy VSS is currently upgrading Loke Viking to Ice-1A Super, which is assumed to increase the probability of obtaining term contracts for the vessel.
Combined with the efforts to continuously reduce the cost base in the Group, the sale of the Icebreakers has positioned the Group in a unique position within the offshore industry. Combined with its competence within the harsh environment offshore segment, the Group is therefore well positioned for the next growth cycle within the offshore industry.
The activity level within the oil and gas industry is increasing due to the improved oil price. This has already started to impact the rig industry, which is far ahead of the OSV segment in the cycle. Despite this, we expect that the general OSV market will continue to be impacted by the huge oversupply of tonnage, which makes the market still challenging. However, VSS expects increased demand for ice-classed vessels.
Gothenburg, 9 November 2018.
Trond Myklebust CEO and President
Q3
| KEY FINANCIALS | Q3 2018 | Q3 2017 |
|---|---|---|
| Net sales, MSEK 1) | 72 | 93 |
| EBITDA, MSEK 1) | 2,467 | -15 |
| Result after tax, MSEK 2) | 2,227 | -99 |
| Earnings per share after tax, SEK 2) | 238.7 | -24.5 |
| Shareholders´equity per share, SEK 4) | 322.8 | 265.1 |
| Return on equity, % 2) | 464.0 | -30.3 |
| Equity ratio, % 3) | 74.6 | 38.9 |
| Market adjusted equity ratio, % 3) | 74.1 | 42.1 |
1) Excludes discontinued operations
2) Includes discontinued operations 3) The calculation includes assets held for sale
4) Retroactive adjustment of key ratios has been made as a result of the reverse share split (1:100) implemented in January 2018.
Q3
RESULTS AND FINANCE
Total revenue for the Group for the year to date was for continuing operations MSEK 248 (264).
The Group's EBITDA for the year to date from continuing operations, including capital gain from sale of vessels, was MSEK 2,407 (-116). EBITDA adjusted for capital gain from sale of vessels was MSEK -88 (-15).
Net fnancial items were for continuing operations MSEK -65 (80). The fnancial items 2017 include a gain from bond settlement of MSEK 112.
The Group's result after tax including discontinued operations was MSEK 1 874 (-200). The result includes capital gain from sale of vessels of MSEK 2 495, impairment losses on the PSV-fleet by MSEK 190, impairment losses on the AHTS vessel Odin Viking by MSEK 137 and a negative result from operations oG MSEK 294.
Total AHTS revenue was MSEK 41 (61) in Q3. Total EBITDA, including capital gain from sale of vessels, was MSEK 2,470 (-16). EBITDA adjusted for capital gain from sale of vessels was MSEK -25 (-16).
During Q3, two vessels have been operating in the North Sea spot market. Brage Viking has for parts of the quarter been operating on a term contract but returned to the North Sea spot market in August. Two AHTS vessels have remained in lay-up during the quarter, while three vessels have been sold during the quarter. The North Sea spot market has remained weak throughout the quarter, and although the utilization for the vessels operating in the spot market has seen a modest increase compared to the corresponding quarter last year, the income levels are still at an unsatisfactory level.
| AHTS Q3 | Fixture rates | (USD) | Utilization | (%) |
|---|---|---|---|---|
| AHTS vessels on term charters | 37,500 | (-) | 100 | (-) |
| AHTS vessels on the spot market | 24,500 | (37,500) | 51 | (36) |
| Total AHTS feet | 27,100 | (37,500) | 56 | (36) |
The table above excludes three laid-up vessels.
| Firm contract | Option | Spot | Layup | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| AHTS | OCT | NOV | DEC | JAN | FEB | MAR | APR | MAY | JUN | JUL | AUG | SEP |
| Odin Viking | ||||||||||||
| Loke Viking | ||||||||||||
| Njord Viking | ||||||||||||
| Magne Viking | ||||||||||||
| Brage Viking |
Figures in the tables are as of 30 September 2018.
Q3
Total Services and Ship Management revenue was MSEK 31 (32) in Q3. Total EBITDA was MSEK -3 (1).
Viking Ice Consultancy (VIC) has during the third quarter continued the work on several smaller consultancy contracts, with focus on ice management and implementation of the Polar Code.
The operations within the ship management segment proceeded as planned throughout the quarter.
The previous segments TransAtlantic AB and PSV have in this fnancial report been recognized as discontinued operations and assets held for sale, according to IFRS 5 Assets Held for Sale and Discontinued Operations (see note 4, Discontinued operation and assets held for sale).
At the end of the period, the Group's equity amounted to MSEK 3 011. The equity increased during the frst three quarters by net MSEK 2 040 due to the new share issue of MSEK 122 net after expenses, the proft for the period of MSEK 1 874 and a positive change in the translation reserve of MSEK 44 attributable to currency differences on net investments in subsidiaries. Further information of the concluded new share issues can be found in section "Changes in the Group´s shareholders´ equity" on page 11.
The in January 2018 completed equity issue of total MSEK 126, net after expenses, brought liquidity to the Group of total MSEK 120.
Gross investments during the frst nine months amounted to MSEK 0 (1).
The three PSV vessels Freyja-, Nanna- and Sol Viking were sold in July 2018. The sales proceeds amounted to MSEK 75, net after sales expenses. In August 2018 the three AHTS/Icebreaker vessels Tor-, Balder- and Vidar Viking were sold. The sales proceeds amounted to MSEK 3 331, net after sales expenses.
The loan amortizations during the nine month period amounted to MSEK 1 255 (41). All loan facilities related to the PSV Segment and the AHTS/Icebreaker vessels Tor-, Balder- and Vidar Viking have been repaid. Instalments have also been made on remaining loan facilities related to the AHTS segment.
The company is still bound by the restructuring agreement with its banks. Until VSS has reached an agreement to normalize its bank agreements, the company is prohibited from making distributions to its shareholders and from making any signifcant investments.
For further information of the Group´s fnancial position see note 5, Interest bearing liabilities and note 6, Cash and cash equivalents.
Viking Supply Ships AB is obliged to publish this report in accordance with the Swedish Securities Act and/ or the Swedish Financial Instruments Trading Act. This report has been prepared in both Swedish and English
versions. In case of variations in the contents between the two versions, the Swedish version shall govern. This report was submitted for publication at 8:30 am (CET) on 9 November, 2018.
The undersigned certify that the interim report gives a true and fair picture of the Group's fnancial position and results, and describes material risks and uncertainties facing the Parent Company and the companies included in the Group.
Gothenburg, 9 November 2018
Viking Supply Ships AB
Bengt A. Rem Folke Patriksson Erik Borgen Chairman Deputy chairman Board member
Håkan Larsson Magnus Sonnorp Trond Myklebust Board member Board member CEO
Christer Lindgren Employee representative
7 February Q4 Interim report 7 March Annual General Meeting
Please contact Interim CFO, Morten G. Aggvin, ph. +47 41 04 71 25
The interim report is available on the company's website: www.vikingsupply.com
To the Board of Directors of Viking Supply Ships AB (publ), org. nr. 556161-0113 Till styrelsen av Viking Supply Ships AB (publ)
Q3
We have reviewed the accompanying interim report for Viking Supply Ships AB for the period 1 January 2018 to 30 September, 2018. The Board of Directors and the Managing Director are responsible for the preparation and presentation of this interim report in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review. Vi har utfört en översiktlig granskning av bifogade delårsrapport för Viking Supply Ships AB per den 30 september 2018 vilken omfattar perioden 01.01.2018-30.9.2018. Det är styrelsen och verkställande direktören som har ansvaret för att upprätta och presentera denna delårsrapport i enlighet med IAS 34 och årsredovisningslagen. Vårt ansvar är att uttala en slutsats om denna delårsrapport grundad på vår översiktliga granskning.
We conducted our review in accordance with the International Standard on Review Engagements, ISRE 2410 Review of Interim Financial Statements Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and other generally accepted auditing standards in Sweden. The procedures performed in a review do not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Therefore, the conclusion expressed based on a review does not give the same level of assurance as a conclusion expressed based on an audit. Vi har utfört vår översiktliga granskning i enlighet med International Standard on Review Engagements ISRE 2410 Översiktlig granskning av finansiell delårsinformation utförd av företagets valda revisor. En översiktlig granskning består av att göra förfrågningar, i första hand till personer som är ansvariga för finansiella frågor och redovisningsfrågor, att utföra analytisk granskning och att vidta andra översiktliga granskningsåtgärder. En översiktlig granskning har en annan inriktning och en betydligt mindre omfattning jämfört med den inriktning och omfattning som en revision enligt ISA och god revisionssed i övrigt har. De granskningsåtgärder som vidtas vid en översiktlig granskning gör det inte möjligt för oss att skaffa oss en sådan säkerhet att vi blir medvetena om alla viktiga
Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim report does not present fairly, in all material aspects, the financial position of the entity as at 30 September 2018, and of its financial performance and its cash flows for the nine months period then ended in accordance with IAS 34 and Chapter 9 of the Swedish Annual Accounts Act. grundad på en översiktlig granskning har därför inte den säkerhet som en uttalad slutsats grundad på en revision har. Slutsats Grundat på vår översiktliga granskning har det inte kommit fram några omständigheter som ger oss
Stockholm on 5 November 2018 anledning att anse att den bifogade finansiella delårsinformationen inte, i allt väsentligt, ger en
Rödl & Partner Nordic AB rättvisande bild av företagets finansiella ställning per den 30 september 2018 samt av dess finansiella resultat och kassaflöde för den niomånadersperiod som slutade per detta datum i enlighet med IAS 34
Mathias Racz Authorized public accountant Stockholm den 5 november 2018
| (MSEK) | Note | Q3 2018 | Q3 2017 | Q1-Q3 2018 | Q1-Q3 2017 | Q1-Q4 2017 |
|---|---|---|---|---|---|---|
| Net sales | 72 | 93 | 248 | 264 | 331 | |
| Other operating revenue | 2,496 | 0 | 2,496 | 0 | 0 | |
| Direct voyage cost | -7 | -8 | -21 | -25 | -34 | |
| Personnel costs | -59 | -75 | -213 | -263 | -334 | |
| Other costs | -35 | -25 | -103 | -92 | -137 | |
| Depreciation/impairment | 2 | -165 | -33 | -228 | -103 | -135 |
| Operating result | 2,302 | -48 | 2,179 | -219 | -309 | |
| Net fnancial items | -26 | -9 | -65 | 80 | 66 | |
| Result before tax | 2,276 | -57 | 2,114 | -139 | -243 | |
| Tax | 8 | -3 | 0 | -3 | 1 | 1 |
| Result from continuing operations | 3 | 2,273 | -57 | 2,111 | -138 | -242 |
| Result from discontinued operations | 4 | -46 | -42 | -237 | -62 | -90 |
| Result for the period | 2 227 | -99 | 1,874 | -200 | -332 | |
| Earnings attributable to Parent Company's share | ||||||
| holders, per share in SEK (before and after dilution): | ||||||
| -Result from continuing operations | 243.5 | -14.5 | 232.9 | -33.9 | -59.2 | |
| -Result from discontinued operations | -4.8 | -10.0 | -26.1 | -15.1 | -22.1 | |
| Total 1) | 238.7 | -24.5 | 206.8 | -49.0 | -81.3 |
1) Retroactive adjustment of key ratios has been made as a result of the reverse share split (1:100) implemented in January 2018.
| MSEK | Note | Q3 2018 | Q3 2017 | Q1-Q3 2018 | Q1-Q3 2017 | Q1-Q4 2017 |
|---|---|---|---|---|---|---|
| Result for the period | 2,227 | -99 | 1,874 | -200 | -332 | |
| Other comprehensive income for the period: | ||||||
| Items that will not be restored to the income statemement |
||||||
| Revaluation of net pension obligations | - | - | - | - | 0 | |
| Items that later can be restored to the income statemement |
||||||
| Change in translation reserve, net | -44 | -55 | 44 | -154 | -141 | |
| Other comprehensive income | -44 | -55 | 44 | -154 | -141 | |
| Total comprehensive income for the period | 2,183 | -154 | 1,918 | -354 | -473 |
Q3
| MSEK | Note | Q3 2018 | Q4 2017 |
|---|---|---|---|
| Vessels | 2 | 1,724 | 2,715 |
| Other tangible fxed assets | 0 | 1 | |
| Financial assets | 15 | 15 | |
| Total fxed assets | 1,739 | 2,731 | |
| Other current assets | 6 | 2,214 | 139 |
| Assets held for sale | 4 | 83 | 15 |
| Total current assets | 2,297 | 154 | |
| TOTAL ASSETS | 3 | 4,036 | 2,885 |
| Shareholders' equity | 3,011 | 971 | |
| Long-term liabilities | 5 | 825 | 20 |
| Other current liabilities | 5 | 190 | 1,891 |
| Liabilities related to assets held for sale | 4 | 10 | 3 |
| Total current liabilities | 200 | 1,894 | |
| TOTAL EQUITY, PROVISIONS AND LIABILITIES | 4,036 | 2,885 |
Q3
The valuation of fnancial assets and liabilities in the balance sheet is based on acquisition value or fair value. The valuation of FX derivatives and interest rate derivatives is based on fair value. The balance items "Long-term liabilities" include derivatives of MSEK 0 (5). Valuation of other fnancial assets and liability items in the balance sheets are based on acquisition value.
The valuation of fnancial instruments is based on classifcation in three levels: Level 1, fair values based on market values, where the instruments are traded on an active market are available. Level 2, no market values based on an active market are available, valuations are instead based on measurements of discounted cash fows. Level 3, at least one variable is based on own assessments. The fair value valuation of the Group´s FXand interest rate instruments are based on input according to level 2.
| MSEK | Note | Q3 2018 | Q3 2017 | Q1-Q3 2018 | Q1-Q3 2017 | Q1-Q4 2017 |
|---|---|---|---|---|---|---|
| Cash fow from operations before changes in working capital |
-98 | -22 | -138 | -146 | -210 | |
| Changes in working capital | 22 | -1 | 26 | -77 | -42 | |
| Cash fow from current operations | -76 | -23 | -112 | -223 | -252 | |
| Cash fow from investing activities | 3,331 | 1 | 3,331 | 0 | -1 | |
| Cash fow from fnancing activities | -791 | 2 | -710 | 6 | 38 | |
| Changes in cash and cash equivalents from continuing operations |
2,464 | -20 | 2,509 | -217 | -215 | |
| Cash-fow from discontinued operations: | ||||||
| Cash fow from current operations | -23 | -7 | -26 | -18 | -22 | |
| Cash fow from investing activities | 75 | 0 | 75 | 0 | 0 | |
| Cash fow from fnancing activities | -427 | -4 | -425 | 17 | 17 | |
| Changes in cash and cash equivalents from discontinued operations |
4 | -375 | -11 | -376 | -1 | -5 |
| Cash and cash equivalents at beginning of period | 78 | 71 | 34 | 273 | 273 | |
| Exchange-rate difference in cash and cash equivalents |
-29 | -10 | -29 | -25 | -19 | |
| CASH AND CASH EQUIVALENTS AT END OF PERIOD |
6 | 2,138 | 30 | 2,138 | 30 | 34 |
| Shareholders' equity (MSEK) | Note | Q3 2018 | Q3 2017 | Q1-Q3 2018 | Q1-Q3 2017 | Q1-Q4 2017 |
|---|---|---|---|---|---|---|
| Equity at beginning of period 1) | 828 | 1,240 | 971 | 1,440 | 1,440 | |
| New Share Issue, net after expenses 1) 2) | - | - | 122 | - | 4 | |
| Total comprehensive income for the period | 2,183 | -154 | 1,918 | -354 | -473 | |
| SHAREHOLDERS' EQUITY AT END OF PERIOD | 3,011 | 1,086 | 3,011 | 1,086 | 971 |
1) Shares equivalent to MSEK 7, of the total new share issue of MSEK 131, was subscribed and paid for and thus included in the Group´s closing shareholders´ equity as at 31 December 2017.
2) The amount in Q1 2018 includes issue expenses of MSEK 2, and in Q1-Q4 of MSEK 3.
Q3
| Share capital (MSEK) | Note | Q3 2018 | Q3 2017 | Q1-Q3 2018 | Q1-Q3 2017 | Q1-Q4 2017 |
|---|---|---|---|---|---|---|
| Share capital at beginning of period | 410 | 410 | 410 | 344 | 344 | |
| Reduction to unrestricted reserve 2) | - | - | -307 | - | - | |
| New share issue 1) | - | - | 131 | 66 | 66 | |
| Bonus issue 2) | - | - | 176 | - | - | |
| Share capital at end of period | 410 | 410 | 410 | 410 | 410 |
1) The share issue of total MSEK 131 comprised a MSEK 123 rights issue, a MSEK 7 share issue with payment against set-off to Viking Invest AS for fnancial services and a MSEK 1 share issue payment against set-off to Viking Invest AS for guarantee fee for the guarantee undertaking 2) The reduction to unrestricted reserve and the bonus issue has been carried out to conserve the share capital before the new share issues and the reversed spit.
| Number of shares ('000) | Note | Q3 2018 | Q3 2017 | Q1-Q3 2018 | Q1-Q3 2017 | Q1-Q4 2017 |
|---|---|---|---|---|---|---|
| Number of outstanding shares at beginning of period | 9,327 | 409,593 | 409,593 | 343,545 | 343,545 | |
| Number of new shares issued 1) | - | - | 523,141 | 66,048 | 66,048 | |
| Reversed split 2) | - | - | -923,407 | - | - | |
| Total number of shares at end of period | 9,327 | 409,593 | 9,327 | 409,593 | 409,593 | |
| Average number of shares outstanding | 9,327 | 409,593 | 9,059 | 408,177 | 408,534 |
1) In January 2018 following new share issues were completed:
2) In January 2018 a reversed split was carried out with ratio 100:1, which implied that every 100 of series A- and B shares was replaced by 1 share in the same series, whereby the total number of outstanding shares amounted to 9,327,339.
| (SEK) | Note | Q3 2018 | Q3 2017 | Q1-Q3 2018 | Q1-Q3 2017 | Q1-Q4 2017 |
|---|---|---|---|---|---|---|
| EBITDA 2) | 264.3 | -3.9 | 265.5 | -28.5 | -42.3 | |
| Result after tax (EPS) 2) | 243.5 | -14.5 | 232.9 | -33.9 | -59.2 | |
| Equity 3) | 322.8 | 265.1 | 322.8 | 265.1 | 237.2 | |
| Operating cash fow 2) | -5.9 | -6.6 | -17.1 | -9.0 | -26.4 | |
| Total cash fow 2) | 265.1 | -5.2 | 277.8 | -47.4 | -45.8 |
1) Retroactive adjustment of key ratios has been made as a result of the reverse share split (1:100) implemented in January 2018.
2) Calculated on continuing operations
3) The calculation includes assets held for sale
Q3
The activity in the Parent Company mainly consists of the shareholdings in Viking Supply Ships A/S and TransAtlantic AB, as well as limited Group wide administration.
The Parent Company's result after tax for the nine-month period was MSEK 1,662 (-762). The result includes reversals on previously carried out write-downs on shareholdings in subsidiaries by MSEK 1,659, mainly related to the capital gain from the sale of the icebreakers Tor Viking, Balder Viking and Vidar Viking which materialized in Q3 in the subsidiary Viking Supply Ships A/S.
At the end of the third quarter the Parent Company's equity was MSEK 2,788 (1,005 on Dec 31, 2017), and total assets were MSEK 2,829 (1,090 on Dec 31, 2017). The equity increased during the nine-month period by net MSEK 1,783 due to the result for the period of 1,662 and the completed new share issues of MSEK 121 net after expenses.
The in January 2018 completed equity issues brought liquidity to the Group of total MSEK 120 net after expenses. The cash proceeds from these new share issues have been used to repay a shareholders loan of MSEK 33, and the remainder has been distributed to Viking Supply Ships A/S as part of the fnancial restructuring. For further information also see note 5, Interest bearing liabilities.
The equity ratio on the balance day was 99 % (92 on Dec 31, 2017). Cash and cash equivalents at the end of the period was MSEK 1 (0 on Dec 31, 2017).
| (MSEK) | Note Q3 2018 |
Q3 2017 | Q1-Q3 2018 | Q1-Q3 2017 | Q1-Q4 2017 |
|---|---|---|---|---|---|
| Net sales | 2 | 2 | 6 | 7 | 9 |
| Other costs | -2 | -2 | -6 | -7 | -9 |
| Operating result | 0 | 0 | 0 | 0 | 0 |
| Net fnancial items | 1,855 | -287 | 1,662 | -762 | -986 |
| Result before tax | 1,855 | -287 | 1,662 | -762 | -986 |
| Tax on result for the year | - | - | - | - | - |
| RESULT FOR THE PERIOD | 1,855 | -287 | 1,662 | -762 | -986 |
| Other comprehensive income for the period: | |||||
| Items that will not be restored to the income statemement |
|||||
| Revaluation of net pension obligations | - | - | - | - | 0 |
| TOTAL COMPREHENSIVE INCOME FOR THE | |||||
| PERIOD | 1,855 | -287 | 1,662 | -762 | -986 |
| (MSEK) Note |
Q3 2018 | Q3 2017 |
|---|---|---|
| Financial fxed assets | 2,820 | 1,048 |
| Current assets | 9 | 42 |
| TOTAL ASSETS | 2,829 | 1,090 |
| Shareholders' equity | 2,788 | 1,005 |
| Provisions | 6 | 6 |
| Long-term liabilities | 13 | 13 |
| Current liabilities | 22 | 66 |
| TOTAL SHAREHOLDERS' EQUITY, PROVISIONS AND LIABILITIES | 2,829 | 1,090 |
| (MSEK) | Note | Q3 2018 | Q3 2017 | Q1-Q3 2018 | Q1-Q3 2017 | Q1-Q4 2017 |
|---|---|---|---|---|---|---|
| Equity at beginning of period 1) | 933 | 1,510 | 1,005 | 1,986 | 1,986 | |
| New share issue 1) 2) | - | - | 121 | - | 5 | |
| Total comprehensive income for the period | 1,855 | -287 | 1,662 | -762 | -986 | |
| SHAREHOLDERS' EQUITY AT END OF PERIOD | 2,788 | 1,223 | 2,788 | 1,223 | 1,005 |
1) Shares equivalent to MSEK 7, of the total new share issue of MSEK 131, was subscribed and paid for and thus included in the Group´s closing shareholders´ equity on 31 December 2017.
2) The amount in Q1 2018 includes issue expenses of MSEK 2, and in Q1-Q4 of MSEK 3.
Q3
Q3
In order for the Group to have suffcient liquidity and equity to get through the challenging market situation, the Group has during the three last years completed comprehensive restructuring programs, including cost reducing efforts which includes lay-up of vessels, bond delisting, renegotiation of existing loan facilities and charter agreements, new share issues and sale of vessels. These measures, and the sale of vessels carried out during 2018, have signifcantly improved the Group´s fnancial position, both by reduced debts and improved liquidity.
The Group continues to operate in highly competitive markets, and the operation is exposed to various operational and fnancial risks. Viking Supply Ships maintains a positive long term outlook for the offshore industry and is of the opinion that there will be increasing activity in the arctic and subarctic regions during the next few years. Based on the result expectations, the Group´s strong fnancial situation, the current risks and a continued belief in securing contracts within the core market segment, the Board of Directors and Management have concluded that both the company and the Group will be able to continue as going concern at least until 30 September 2019. This conclusion is based on Management's assessment of the current outlook for 2018/2019 and the uncertainties and risks described in this report.
Tangible fxed assets are recognized at cost or after deductions for accumulated depreciation according to plan and possible impairment. Straight-line amortization according to plan is applied.
At each reporting date the accounts are assessed whether there is an indication that an asset may be impaired. If any such indication exists, or when impairment testing for an asset is required, estimates of the asset's recoverable amount are done. The recoverable amount is the highest of the fair market value of the asset, less cost to sell, and the net present value (NPV) of future estimated cash fow from the employment of the asset ("value in use").
The Group has until the second quarter classifed its operation into two groups of similar vessel types, AHTS and PSV. From the third quarter one vessel, Odin Viking, has been separated from the AHTS group of vessels. The reason is that the weaker market conditions has changed the demand for AHTS vessels with lower specifcations. Combined with the vessel not being ice-classed this means that the vessel in its characteristics departs from the other four vessels in the AHTS segment. It is thus deemed that it should not be included in the same group of vessels as the ones with high ice class and specifcations, namely Loke Viking, Njord Viking, Magne Viking and Brage Viking. From the third quarter the vessels are therefore classifed into three groups of vessels; AHTS with ice-class, AHTS with no ice-class and PSV. These three groups of vessels can in reality all be used for the same kind of tasks and are thus interchangeable. Each vessel generates its own cash streams, but the company's customers could, just as easily, have used another vessel from the relevant feet type. Based on this the Group has deemed it appropriate to consider each group of vessels as a separate cash generating unit. As a result, impairment tests are performed on a portfolio level rather than per vessel.
The key assumptions used in the value in use calculation and in the assessment of owned vessels, for 2018 are as follows:
As indication of fair market value valuations of owned vessels are obtained from internationally acknowledged shipbrokers on a quarterly basis.
Q3
The market for PSV vessels has during the frst half year 2018 continued to be very soft. Based on the vessels being laid up for a long period, the continuous weak market, and the within foreseeable future poor market outlook for the segment, it was during the second quarter 2018 decided to sell all fve PSV-vessels. In June 2018 VSS entered into an agreement to sell Freyja Viking, Nanna Viking and Sol Viking. A process is ongoing to fnd buyers also for the remaining two vessels. It is expected to have the sale concluded within 12 months. The decision implies, according to IFRS 5 Assets held for sale and discontinued operations that the assets held for sale shall be measured at the lower of carrying amount and fair value less costs to sell. Accordingly, the fve PSV vessels, all sister vessels, was during Q2 2018 written down to the agreed sales price, MSEK 31 per vessel (MUSD 3.5). The agreed sales price was signifcantly impacted by the weak second-hand market. In Q3 2018 the two remaining vessels was written down with additional MSEK 9 down to MSEK 22 per vessel (MUSD 2.5). (The total impairment loss posted during the second and third quarter 2018 for the fve vessels amounts to MSEK 190 (MUSD 21.6).
In Q3 2018 Management evaluated the AHTS feet and concluded that the AHTS vessels are not to be impaired. The value in use calculations prepared for the AHTS feet amounts to MSEK 1,836, which exceeds the book value of MSEK 1,679. The impairment test also consists of an assessment of average external vessel valuations, less cost to sell, from two internationally acknowledged shipbrokers showing a total feet value of MSEK 1,600 (ranging from MSEK 1,514 to MSEK 1 686).
The evaluation of the AHTS vessel with no ice-class (Odin Viking), which from Q3 2018 is separated from the other AHTS vessels, has during the Q3 resulted in an impairment loss of MSEK 137.The external market value assessment conducted by two internationally acknowledged shipbrokers shows a market value of MSEK 46 (in a range between MSEK 24 to MSEK 68). The value in use is deemed to be in line with the average market value. The book value of the AHTS vessel with no ice-class amounts to MSEK 46 after the write-down. The bareboat charter for Odin Viking has due to change of terms in the fnancial restructuring been re-classifed to a fnancial lease during 2018, in accordance with IAS 17.
The segment information about continuing operations is presented in three segments:
-The segment AHTS comprise 5 offshore vessels that are equipped for and have the capacity to operate in areas with harsh environment, further 4 of these vessels are equipped and classed to operate in Arctic areas. Two of these vessels are currently laid-up in Uddevalla.
-The segment Services provides ice management services and logistical support in the Arctic regions.
-The segment Ship Management is involved in commercial management of fve icebreakers owned by the Swedish Maritime Administration.
For information about the previous segment TransAtlantic and PSV, which in this fnancial report are classifed as discontinued operation and assets held for sale, please see note 4.
| Q3 MSEK |
AHTS | Services | Ship Management |
Continuing operations |
|---|---|---|---|---|
| Net sales | 41 | 0 | 31 | 72 |
| EBITDA | 2,470 | -1 | -2 | 2,467 |
| Result before tax | 2,280 | -1 | -3 | 2,276 |
| Total assets | 3,953 | 0 | 0 | 3,953 |
| Year to date MSEK |
AHTS | Services | Ship Management |
Continuing operations |
|---|---|---|---|---|
| Net sales | 138 | 2 | 108 | 248 |
| EBITDA | 2,414 | -2 | -5 | 2,407 |
| Result before tax | 2,122 | -2 | -6 | 2,114 |
| Total assets | 3,953 | 0 | 0 | 3,953 |
There have been no signifcant transactions between the segments.
Due to the decisions to discontinue the operations in the previous segments TransAtlantic and PSV the Group have recognized these segments as discontinued operations and assets held for sale, according to IFRS 5 Assets held for sale and discontinued operation, which means that these segments are reported as a oneline item in the consolidated proft and loss statements. Assets and liabilities related to the segments are also presented in two rows in the consolidated balance sheet. The consolidated cash fow statement is presented including the segments, but with additional information about cash-fow from current operation and investingand fnancing activities of the discontinued segments. Comparative fgures for prior periods are also presented in accordance with this classifcation in the consolidated proft and loss statement and cash-fow statement.
Discontinued operations are in accordance with IFRS 5 measured at the lower of carrying amount and fair value less costs to sell. The assessment of the valuations of the remaining vessels assets are supported by independent broker valuations and an overall assessment from ongoing sales processes.
Q3
During 2016 it was decided to discontinue the remaining operations in the subsidiary TransAtlantic AB. At the end of Q3 2016 the Group assessed that discontinuation was likely to be completed within the next 12 months.
The remaining operations, classifed as discontinued operations and assets held for sale, comprised at the end of the second quarter 2018 of three small bulk vessels bareboat-chartered by TA AB from a company in which TA AB owns 38% of the shares. The vessels are chartered out on a time-charter.
An agreement has, subsequent to the third quarter, been entered into selling the remaining three small bulk vessels. The vessels will according to the agreement be delivered to the new owners during Q4 2018. The sales, which conclude the remaining business in the previous segment TransAtlantic, are expected to bring a positive cash contribution to the Group of MSEK 18 and a positive P&L effect of 7 MSEK.
The market for PSV vessels has during the frst half year 2018 continued to be very soft. Based on the vessels being laid up for a long period, the continuous weak market, and the within foreseeable future poor market outlook for the segment, it was during the second quarter 2018 decided to sell all fve PSV-vessels.
Viking Supply Ships did in June 2018 enter into an agreement to sell the three medium sized PSV-vessels Freyja Viking, Nanna Viking and Sol Viking. The vessels were delivered to the new owner in July 2018. The sales proceeds, net after expenses, amounted to MSEK 75 (MUSD 8.3). By reason of the sale of the three vessels, and the decision to sell the remaining two vessels, an impairment loss of total MSEK 190 (MUSD 19.7) has been recognized during 2018. The loan facility related to the PSV segment has been repaid, for further information see note 5, Interest bearing liabilities.
After the end of the third quarter, VSS entered into an agreement to sell also the two remaining PSVs. The transaction is expected to be concluded within Q4 2018.
| Q3 2018 | Q3 2017 | Q1-3 2018 | Q1-3 2017 | Q1-4 2017 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (MSEK) | TA | PSV | Total | TA | PSV | Total | TA | PSV | Total | TA | PSV | Total | TA | PSV | Total |
| Net sales | 8 | 0 | 8 | 12 | 0 | 12 | 25 | 0 | 25 | 37 | 0 | 37 | 50 | 0 | 50 |
| Other operating revenue |
-8 | -23 | -31 | -12 | -3 | -15 | -26 | -28 | -54 | -39 | -8 | -47 | -51 | -11 | -62 |
| Deprecitations / write-downs |
0 | -18 | -18 | 0 | -34 | -34 | 0 | -194 | -194 | 0 | -38 | -38 | 0 | -59 | -59 |
| Operating result | 0 | -41 | -41 | 0 | -37 | -37 | -1 | -222 | -223 | -2 | -46 | -48 | -1 | -70 | -71 |
| Net fnancial items | 0 | -5 | -5 | 0 | -5 | -5 | 1 | -15 | -14 | 0 | -14 | -14 | -1 | -18 | -19 |
| Result before tax | 0 | -46 | -46 | 0 | -42 | -42 | 0 | -237 | -237 | -2 | -60 | -62 | -2 | -88 | -90 |
| Tax | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| RESULT FROM DISCONTINUED |
|||||||||||||||
| OPERATIONS | 0 | -46 | -46 | 0 | -42 | -42 | 0 | -237 | -237 | -2 | -60 | -62 | -2 | -88 | -90 |
| Earnings attributable | |||||
|---|---|---|---|---|---|
| to Parent Company's | |||||
| shareholders, per | |||||
| share in SEK (before | |||||
| and after dilution): | |||||
| -Result from discon | |||||
| tinued operations 1) | -4,8 | -10,0 | -26,1 | -15,1 | -22,1 |
| Q3 2018 | Q4 2017 | ||||||
|---|---|---|---|---|---|---|---|
| (MSEK) | TA | PSV | Total | TA | PSV | Total | |
| Other tangible fxed assets | - | 44 | 44 | - | - | - | |
| Intangible fxed assets | 1 | - | 1 | 1 | - | 1 | |
| Financial assets | 10 | - | 10 | 9 | - | 9 | |
| Total fxed assets | 11 | 44 | 55 | 10 | - | 10 | |
| Current assets | 4 | 24 | 28 | 5 | - | 5 | |
| ASSETS HELD FOR SALE | 15 | 68 | 83 | 15 | - | 15 | |
| Current liabilities | 2 | 8 | 10 | 3 | - | 3 | |
| LIABILITIES RELATED TO ASSETS HELD FOR SALE | 2 | 8 | 10 | 3 | - | 3 |
| Q3 2018 | Q3 2017 | Q1-3 2018 | Q1-3 2017 | Q1-4 2017 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (MSEK) | TA | PSV | Total | TA | PSV | Total | TA | PSV | Total | TA | PSV | Total | TA | PSV | Total |
| Cash fow from current operations |
2 | - | - | - | -7 | -7 | 4 | - | 2 | -1 | -10 | -11 | -4 | -18 | -22 |
| Cash fow from investing activities |
- | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
| Cash fow from fnancing activities |
- | - | - | - | - | - | 2 | - | 2 | - | 21 | 21 | - | 17 | 17 |
| NET CASH FLOW FROM DISCONTIN UED OPERATIONS |
- | - | - | - | -7 | -7 | 4 | - | 4 | -1 | 11 | 10 | -4 | -1 | -5 |
Q3
The continued challenging market conditions, including downward pressure on rates and utilization, have impacted the Group's liquidity 2017. As a consequence, shortly after the end of Q2 2017, a dialogue was initiated with the lenders to secure a long-term stable fnancing solution.
In December 2017 Viking Supply Ships received confrmation that it had obtained support for a restructuring proposal from all senior lenders. A fnal restructuring agreement was subject to fnal approval from the senior lenders' credit committees. In January 2018 credit committee approvals from all senior lenders were obtained, and a restructuring term sheet was signed. The signed restructuring term sheet, together with the completed equity issue in Viking Supply Ships AB and subsequent equity injection into Viking Supply Ships A/S, fnalized the fnancial restructuring.
As part of the in January 2018 concluded fnancial restructuring, all loan facilities in Viking Supply Ships A/S are as currently due 31 March 2020. All loan facilities will carry signifcantly less cash interest and instalments until maturity and fnancial covenants on the loan facilities are amended to provide Viking Supply Ships A/S with ample room to operate under the present challenging market conditions. The bareboat charter in respect of the vessel Odin Viking will not be payable in cash but added to the principal amount outstanding under the charter party as payment in kind. Further, Viking Supply Ships A/S will have the right to exercise the previously agreed purchase option in respect of Odin Viking before the end of the charter party. If the option is exercised, the bareboat charter will be terminated against a termination compensation equal to the accumulated and remaining charter hire. Viking Supply Ships A/S would also receive new capital at the amount of MUSD 15 through a new share issue in Viking Supply Ships AB.
As a result of the sale of the ice-breakers, the fnancial position of the Group has signifcantly improved. As a consequence, the Group has during the third quarter initiated a dialogue with its lenders, aiming to agree on a normalized, long term fnancing structure.
The proceeds up to MSEK 135 (MUSD 15) from the sale of the PSV-vessels would, according to the previous mentioned agreement with the lenders, have been deposited on a blocked bank account. These funds were
intended to be available on request from Viking Supply Ships against new issued shares in Viking Supply Ships AB. The proceed from the sale of Freyja Viking, Nanna Viking and Sol Viking has remained deposited on a blocked account until a long-term fnancing structure has been agreed on, see note 6, Cash and cash equivalents.
The vessels owned by the Group are fnanced through bank loans with pledge in the vessels. Further securities have been given in the form of pledge in revenue and insurance policies. The total interest-bearing debt at the end of the quarter was MSEK 889 (1,748 on Dec 31, 2017). Instalments during the nine-month period amounted to MSEK 1,255 (41). All loan facilities related to PSV-vessels and the icebreakers Tor Viking, Balder Viking and Vidar Viking have been repaid. Instalments have also been made on the remaining loan facilities related to the AHTS segment.
The Group has 100% (99%) of its interest-bearing debt in USD 0% in NOK (1%). The Group has 100% (100) of the total loan portfolio swapped into fxed interest rates within the interval of 90 days up to three years and 0% (0) of the total loan portfolio swapped into fxed interest rates for more than 3 years.
| MSEK | Q3 2018 | Q3 2017 | Q4 2017 |
|---|---|---|---|
| Long-term debt to credit institutions | 673 | 1.708 | - |
| Long term fnancial lease debt | 145 | - | - |
| Short-term debt to credit institutions | - | 65 | 1.715 |
| Short-term fnancial lease debt | 71 | - | - |
| Other short term interest bearing liabilities | - | - | 33 |
| TOTAL INTEREST BEARING LIABILITIES | 889 | 1.773 | 1.748 |
Consolidated cash and cash equivalents available at the end of Q3 amounted to MSEK 2 054 (30), including client funds, used in the external ship management operation, of MSEK 18 (19). The cash proceeds of MSEK 84 from the sale of Freyja Viking, Nanna Viking and Sol Viking has remained deposited on a blocked account until a long term fnancing structure has been agreed on, for further information see note 5, Interest bearing liabilities.
| MSEK | Q3 2018 | Q3 2017 | Q4 2017 |
|---|---|---|---|
| Blocked cash holdings | 84 | - | - |
| Free cash and cash equivalents | 2,054 | 30 | 34 |
| TOTAL | 2,138 | 30 | 34 |
Q3
The Group operates in highly competitive markets and is exposed to various operational and fnancial risk factors. The fnancial risk is mainly related to liquidity risk, funding risk and currency risk. The Group works actively to identify, assess and manage these risks.
The main operational risk factors relate to the overall macroeconomic market conditions, degree of competition, fow of goods in prioritized market segments and fnally the overall balance of supply and demand of vessels, affecting rates and proft margins. The objective of the overall risk management policy of the Group is to ensure a balanced risk and return relationship.
The offshore market is to a high degree dependent on the investment level in the oil industry which in turn is driven by the oil price development on the global market. The recent decline in the offshore market has impacted the Group´s proftability and liquidity. The Group has a clear focus on increasing the number of vessels on term contracts within the offshore operations to mitigate fuctuations in rates and utilization.
The remaining business activity in the TransAtlantic segment operates in a competitive market with proft margins under pressure.
Long-term loans are the principal form of fnancing. Accordingly, interest rate fuctuations have an impact on the Groups earnings and cash fow. To reduce this risk the Group aims to actively manage the interest exposure through various types of hedging instruments.
The foreign exchange risk is primarily reduced by matching the exposure to revenues in various currencies with costs in the corresponding currency. In the same manner, assets in a certain currency are primarily matched with liabilities in the same currency.
Viking Supply Ships AB is a limited liability company registered in Sweden, with its domicile in Gothenburg, and corporate registration number 556161-0113. Viking Supply Ships AB is listed on the Small Cap list of the NASDAQ OMX Nordic Exchange in Stockholm under the ticker VSSAB.
The general situation for the Group is that taxes payable is limited to foreign entities. The tax losses carry forward for Swedish entities amounted at end of the period to MSEK 1,058 (1,057 on Dec 31, 2017). There are no tax assets capitalized in the balance sheet related to these tax losses carry forward. The main part of the activities within the group's subsidiaries outside of Sweden is tonnage taxed, which means that the tax is calculated as a lump sum based on the net tonnage, instead of conventional taxation, which is based on the company result. The recognized deferred tax liability for the operations outside Sweden amounted to MSEK 0 (0 on Dec 31, 2017).
The Group has entered into a long-term bareboat charter agreement with a subsidiary to Kistefos AS, Odin Viking SPV AS, in relation to hire of the AHTS vessel Odin Viking. The nominal minimum lease hire payments including accrued unsettled bareboat charter hires of MSEK 39, whereof 24 MSEK has arisen during the three frst quarters 2018, amounts to MSEK 228 until expiry on 2 August 2024 (TUSD 10 per day). The bareboat charter does not contain any variable elements. As part of the fnancial restructuring agreement, this bareboat charter contract has been amended, please also see note 5. The amendment has also caused the bare-boat charter to be re-classifed to a fnancial lease, according to IAS 17. See note 2, Tangible fxed assets.
The Group has during the fourth quarter of 2017 raised a short-term loan of 33 MSEK on market conditions from a subsidiary to Kistefos AS, Viking Invest AS. The loan carried an interest-rate of 12 % and was repaid in January 2018.
Kistefos AS has during the fourth quarter 2017, through consultancy agreements, made fnancial services available during the restructuring process for which a compensation of MSEK 7 has been set off as a part of the share issues in January 2018.
Viking Invest AS has, as a part of the restructuring process, entered into a share subscription guarantee agreement. The compensation for this guarantee amounted to MSEK 1 and was set off as part of the share issues in January 2018.
Further, Kistefos AS has obtained a success fee of MSEK 159 for their efforts in connection with the sale of Tor Viking, Balder Viking and Vidar Viking to the Canadian Government.
Q3
This interim report for the Group was prepared in accordance with the application of IAS 34 Interim Financial Reporting and applicable rules in the Swedish Annual Accounts Act and for the Parent Company, in accordance with the Swedish Annual Accounts Act and the Swedish Financial Reporting Board's recommendation RFR 2 Accounting for Legal Entities. The accounting policies applied for the Group and the parent company correspond, unless otherwise stated below, with the accounting policies applied in the preparation of the latest annual report.
Viking Supply Ships applies IFRS 5 Non-current Assets Held for Sale and Discontinued Operations in accounting for discontinued operations for the segments TransAtlantic and PSV. Non-current assets are classifed as held for sale if their carrying amount will be recovered principally through a sale transaction rather than from continuing use. An asset is classifed as held for sale if it is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets and its sale must be highly probable. These assets are recognized on a separate line as current assets or current liabilities in the consolidated balance sheet. On initial classifcation as held for sale, non-current assets are recognized at the lower of carrying amount and fair value less costs to sell. A discontinued operation is a component of the Group´s business that represents a separate business segment or major line of business within a geographical area of operations or a subsidiary acquired exclusively with a view to sell. Classifcation as a discontinued operation occurs upon disposal or, if earlier, when the operation meets the criteria to be classifed as held for sale. When an operation is classifed as discontinued, the presentation of the consolidated income statement for the comparative year is changed so that the discontinued operation is recognized as if it had been discontinued at the star of the comparative period. The presentation of the consolidated balance sheet for preceding periods is not changed in a corresponding manner.
The same accounting policies for both the Group and the Parent Company have been applied as those used in the most recent Annual Report.
Viking Supply Ships A/S publishes a separate report as a result of the issued debt certifcates. Some values in that report are not comparable to the values in this report, as a result of different acquisition values and depreciation schedules between Viking Supply Ships A/S and the Group. Viking Supply Ships A/S has as of Q3 2011 been built through Group-internal transfers of vessels and operations at then current market prices, which is why differences in acquisition values have arisen.
A new assessment of the leasing agreement of Odin Viking has been made as a result of the amended terms negotiated in connection with the fnancial restructuring, for further information see note 5, Interest bearing liabilities. This entails the lease from Q3 2018 to be classifed as a fnancial lease agreement in accordance with IAS 17. Financial leases are valued according to the amortized cost.
The average number of full time employees in the Group for for the nine-month period 2018 was 311 (Jan-Dec 2017: 364).
| Total number of shares | 9,327,340 |
|---|---|
| Number of Series B shares, listed | 8,872,285 |
| Number of Series A shares | 455,055 |
| Share distribution on 30 September, 2018: |
Q3
Anchor Handling Tug Supply vessel
Proft after fnancial items less 1) current tax, 2) tax on proft for the year (current and deferred tax) in accordance with the consolidated income statement
Earnings before interest and taxes
Earnings before interest, taxes, depreciation and amortization, corresponding to proft/loss before capital expenses and tax
Shareholders' equity divided by total assets
Viking Supply Ships AB, a Limited Liability Company registered in Sweden, with all subsidiaries
International Financial Reporting Standards – an international accounting standard used by all listed companies. Some older standards included in IFRS include IAS (International Accounting Standards)
Shareholders' equity divided by total assets, adjusted for asset market valuations
Proft/loss after fnancial income/expense adjusted for capital gains/losses, depreciation/amortization and impairment
Operating cost consists of crew, technical and administration costs
Proft/loss before fnancial items and tax
Offshore Support Vessels
Proft after fnancial items divided by net sales
Platform Supply Vessel
Proft after fnancial items less tax on proft for the year, divided by average shareholders' equity
Roll-on/roll-off ships are vessels designed to carry wheeled cargo, such as automobiles, trucks etc.
Cash fow from operating activities, investing activities and fnancing activities
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