? FAIRSTAR MAINTAINS OPERATING PROFIT IN FIRST QUARTER OF 2012
? FAIRSTAR FLEET ACHIEVES 85% UTILIZATION IN SPITE OF SAVAGE DISCOUNTING
? FORTE CONSTRUCTION ON SCHEDULE FOR DELIVERY ON MAY 23, 2012 AT ORIGINAL PURCHASE PRICE OF USD 101,888,000
The First Quarter of 2011 continued to reflect the
challenging pricing environment that has characterized the
industry for the last three years. In spite of the fact that
the global fleet for semi-submersible vessels was operating
at an overall utilization rate of approximately 60%,
Fairstar's FJORD and FJELL achieved 85% combined utilization
for The Quarter. Contracts with DSME for the CLOV FPSO
Project as well as Hercules Offshore and Northern Offshore
re- affirmed the reputation of Fairstar as a premium provider
of safe and reliable marine transportation for our clients in
the energy industry. Unfortunately, the economics of the spot
market will continue to be characterized by an excess of
supply and a shortage of demand.
Fairstar continued to extend its success in the high value
segment of the market. Two contracts for Golden Eagle were
awarded to Fairstar in January 2012. Contract awards for
Ichthys were signed in the end of February. These high-
value, multi-voyage, long-term contracts are the foundation
of Fairstar's "Red Box Strategy". The Gorgon, Golden Eagle
and Ichthys Projects combined, would have a total contract
value of as much as USD 300 million. Fairstar is carefully
monitoring the status of other similar energy infrastructure
projects requiring modern, asbestos free, true open stern
vessels less than fifteen years of age. Our modern, purpose
built fleet gives us a significant competitive advantage over
the significantly older, converted oil tankers that are not
qualified to compete for this business. We intend to leave
the spot market to these types of vessels and seek out
predictable earnings from energy infrastructure projects
where our vessels and project experience combine to create
sustainable pricing power for the foreseeable future.
Fairstar had been contracted in 2011 to provide marine
transportation of a modularized fertilizer train from Kenai,
Alaska to a Greenfield site near the port of Koko, Nigeria.
Fairstar will also be responsible for the interface
management of the land transportation in both Alaska and
Nigeria. The details and timing of this project have been of
some concern to our Stakeholders. At this time it is unclear
if this project will commence at anytime soon. Fairstar
continues to work closely with our client and remains
optimistic that we will commence with our scope of work
in
2012.
Fairstar recorded an operating profit of USD 0.1 million and
a net loss of USD 6.2 million in the First Quarter of
2012. Other financial gains and losses include a loss of USD
2.8 million attributable to a strengthening of the NOK/USD
exchange rate during The Quarter. Fairstar will continue to
conscientiously manage its NOK
Fairstar Heavy Transport NV 1 2012 Q1 Report
exposure in line with the Company's dynamic hedging
policy.
Fairstar continued to de-leverage its balance sheet during
The Quarter. Net interest bearing debt secured by the FJORD
and FJELL has been reduced to 40% of the Book Value of these
two vessels. Fairstar issued over USD 10 million in equity in
January 2012 to augment its balance sheet strength.
Progress on the FORTE and FINESSE continues on schedule and
on the original projected cost. The FORTE is now well into
the commissioning phase of its construction. Sea-trials are
expected to begin in early April 2012 and the ship will be
formally named and delivered to Fairstar on May 23, 2012.
FINESSE is scheduled to be floated out of the dry dock in
April and will be delivered to Fairstar in October of
2012.
"COOPERATE" "LEAD". A natural, vibrant and permanent safety
culture is essential in our industry. It is now commonplace
for safety and risk management issues to be discussed
frequently throughout Fairstar in a variety of formal and
informal settings. The 4STAR SAFETY LEADERSHIP PROGRAM is
intended to foster a commitment by all Fairstar personnel to
lead by example. We define leadership not as being
charismatic behaviour, but based on a willingness to put the
interests of our colleagues ahead of our own and to accept
that sacrifice and selflessness will create a culture that
will serve the interests of our Stakeholders while
maintaining a fiercely competitive attitude towards the
marketplace.
During the F i r s t Q uarter of 2012, there were no injuries
to any Fairstar employees. There was no damage to the assets
of our clients or to our vessels.
In our Annual Report 2011 (on page 23) we have described our risk management framework and our principal risks which could have a material adverse effect on our strategic objectives, our financial position and results. The risks mentioned on this page are deemed to be included by reference in this report. For the year 2012, the same risks are valid. Although we regularly review our internal and external risk profile, additional risks currently not known to us or believed to be material, may apply and could later turn out to have a material impact.
HEALTH, ENVIRONMENT, SAFETY, SECURITY (HESS)
Fairstar believes that safety is a core human value and
fundamentally relates to everything we do in the performance
of our responsibilities to our employees, clients and other
Fairstar Stakeholders. The nature of our business exposes our
employees, assets, clients and their cargoes to extremely
high levels of risk. The appropriate management of these
risks as well as any environment we operate in demands a
consistent and ongoing commitment to maintaining the
integrity of our ships and the systems we have developed to
ensure we never compromise our commitment to the proactive
management of any risk involving safety, security and
environmental awareness.
Fairstar has developed a "behavioural-based" safety program
in 2011 for all Fairstar employees. The "4STAR SAFETY
LEADERSHIP PROGRAM" is driven by the four CORE PRINCIPALS we
use at Fairstar throughout our organization, namely,
"ANTICIPATE" "COMMUNICATE"
The marine heavy transportation market continues to evolve into three distinct segments. The spot market continues to be characterized by extreme price competition. Operating margins in the First Quarter were at levels close to or even below OPEX for most cargoes when more than one vessel was in the area. Fairstar successfully won business throughout The Quarter at levels higher than our competitors were offering. This
Fairstar Heavy Transport NV 2 2012 Q1 Report
resulted from a number of factors including the operational
superiority of the FJORD and FJELL as well as the consistent
ability of Fairstar's in -house Engineering Team to develop
loading and discharge solutions that provided our clients
with demonstrably higher levels of security with respect to
their true transportation costs. The commitment of Fairstar
to transparency and reliability has been welcomed by our
clients and rewarded Fairstar with a high level of repeat
business over the last four years. Nevertheless, the spot
market will continue to be dominated by down ward pricing
pressure. The barriers to entry will continue to be easily
breached. Speculative tonnage from Asia will continue to be a
significant threat to current market participants. The
construction cost of a converted oil tanker today is about
USD 45 million, significantly less than the USD 95 million
levels reached as recently as two years ago. In this
environment, Fairstar continues to believe the most valuable
assets are our people. We continued to invest
heavily in human resources in The Quarter. We now have a
scalable business model that will allow us to provide our
clients with the high levels of navigational expertise,
precise engineering support and skilled project management by
a Team of Fairstar Professionals committed to maintaining the
highest standards of safe practise and environmental
stewardship set by our clients in the Energy Industry.
Extraordinary General Meeting 1 June 2012
Second quarter 2012 results 30 August 2012
Third quarter 2012 results 1 November 2012
Joint Management and Supervisory Board
Fairstar Heavy Transport NV
18 May 2012
For more information please contact us: Philip Adkins, CEO
(philip.adkins@fairstar.com)
Ingmar den Blanken, Treasurer
(ingmar.den.blanken@fairstar.com)
Web: www.fairstar.com
Tel: +31 (0)10-403 5333
To subscribe to Fairstar email alerts, please send your
contact details to investor.relations@fairstar.com.
Fairstar Heavy Transport NV 3 2012 Q1 Report
First Quarter 2012 ReportIn thousands of USD unless otherwise indicated
Statement of Comprehensive Note | Q1 2012 Q1 2011 | |
Income | YTD YTD | |
Gross revenue Voyage related costs Time charter equivalent revenue Vessel operating expenses General and administrative expenses Operating expenses, other than depreciation Earnings before Interest, Tax and Depreciation (EBITDA) Depreciation Earnings before Interest and Tax (EBIT) Interest income and expenses Other financial gains and losses Result before tax Income taxes Net Profit | 8,336 (3,961) | 1,111 (773) |
Gross revenue Voyage related costs Time charter equivalent revenue Vessel operating expenses General and administrative expenses Operating expenses, other than depreciation Earnings before Interest, Tax and Depreciation (EBITDA) Depreciation Earnings before Interest and Tax (EBIT) Interest income and expenses Other financial gains and losses Result before tax Income taxes Net Profit | 4,375 (1,749) (2,554) | 338 (1,978) (2,412) |
Gross revenue Voyage related costs Time charter equivalent revenue Vessel operating expenses General and administrative expenses Operating expenses, other than depreciation Earnings before Interest, Tax and Depreciation (EBITDA) Depreciation Earnings before Interest and Tax (EBIT) Interest income and expenses Other financial gains and losses Result before tax Income taxes Net Profit | (4,303) | (4,390) |
Gross revenue Voyage related costs Time charter equivalent revenue Vessel operating expenses General and administrative expenses Operating expenses, other than depreciation Earnings before Interest, Tax and Depreciation (EBITDA) Depreciation Earnings before Interest and Tax (EBIT) Interest income and expenses Other financial gains and losses Result before tax Income taxes Net Profit | 72 (2,026) | (4,052) (2,015) |
Gross revenue Voyage related costs Time charter equivalent revenue Vessel operating expenses General and administrative expenses Operating expenses, other than depreciation Earnings before Interest, Tax and Depreciation (EBITDA) Depreciation Earnings before Interest and Tax (EBIT) Interest income and expenses Other financial gains and losses Result before tax Income taxes Net Profit | (1,954) (1,619) (2,642) | (6,067) (1,810) 1,454 |
Gross revenue Voyage related costs Time charter equivalent revenue Vessel operating expenses General and administrative expenses Operating expenses, other than depreciation Earnings before Interest, Tax and Depreciation (EBITDA) Depreciation Earnings before Interest and Tax (EBIT) Interest income and expenses Other financial gains and losses Result before tax Income taxes Net Profit | (6,215) - | (6,423) - |
Gross revenue Voyage related costs Time charter equivalent revenue Vessel operating expenses General and administrative expenses Operating expenses, other than depreciation Earnings before Interest, Tax and Depreciation (EBITDA) Depreciation Earnings before Interest and Tax (EBIT) Interest income and expenses Other financial gains and losses Result before tax Income taxes Net Profit | (6,215) | (6,423) |
Change in derivate financial instruments Expenses recognised directly in equity Total recognised income and expenses Total comprehensive income for the period | - - 351 96 | 543 99 |
Change in derivate financial instruments Expenses recognised directly in equity Total recognised income and expenses Total comprehensive income for the period | 447 | 642 - |
Change in derivate financial instruments Expenses recognised directly in equity Total recognised income and expenses Total comprehensive income for the period | (5,768) | (5,781) |
Weighted average number of shares Fully diluted average number of shares Basic earnings per share Diluted earnings per share | 82,515,245 84,144,245 (0.08) (0.07) | 69,812,555 72,028,555 (0.09) (0.09) |
*unaudited and also not reviewed by an auditor
Fairstar Heavy Transport NV 4 2012 Q1 Report
Consolidated balance sheet | Note | 31/03/2012 31/12/2011 |
ASSETS Vessels Vessels under construction Office equipment, computers, cars Non-current assets Inventories Derivative financial instruments Other current assets Cash and cash equivalents Currents assets TOTAL ASSETS EQUITY Issued Capital 2 Share premium Retained earnings Other Reserves Result for the period Equity LIABILITIES Borrowings Non-current liabilities Trade and other payables Derivative financial instruments Current portion of debt Bank overdraft Current liabilities EQUITY & LIABILITIES | 163,492 103,659 923 | 165,468 101,367 727 |
ASSETS Vessels Vessels under construction Office equipment, computers, cars Non-current assets Inventories Derivative financial instruments Other current assets Cash and cash equivalents Currents assets TOTAL ASSETS EQUITY Issued Capital 2 Share premium Retained earnings Other Reserves Result for the period Equity LIABILITIES Borrowings Non-current liabilities Trade and other payables Derivative financial instruments Current portion of debt Bank overdraft Current liabilities EQUITY & LIABILITIES | 268,074 2,035 2 4,697 3,088 | 267,562 1,453 4 1,914 1,540 |
ASSETS Vessels Vessels under construction Office equipment, computers, cars Non-current assets Inventories Derivative financial instruments Other current assets Cash and cash equivalents Currents assets TOTAL ASSETS EQUITY Issued Capital 2 Share premium Retained earnings Other Reserves Result for the period Equity LIABILITIES Borrowings Non-current liabilities Trade and other payables Derivative financial instruments Current portion of debt Bank overdraft Current liabilities EQUITY & LIABILITIES | 9,822 | 4,911 |
ASSETS Vessels Vessels under construction Office equipment, computers, cars Non-current assets Inventories Derivative financial instruments Other current assets Cash and cash equivalents Currents assets TOTAL ASSETS EQUITY Issued Capital 2 Share premium Retained earnings Other Reserves Result for the period Equity LIABILITIES Borrowings Non-current liabilities Trade and other payables Derivative financial instruments Current portion of debt Bank overdraft Current liabilities EQUITY & LIABILITIES | 277,896 | 272,473 |
ASSETS Vessels Vessels under construction Office equipment, computers, cars Non-current assets Inventories Derivative financial instruments Other current assets Cash and cash equivalents Currents assets TOTAL ASSETS EQUITY Issued Capital 2 Share premium Retained earnings Other Reserves Result for the period Equity LIABILITIES Borrowings Non-current liabilities Trade and other payables Derivative financial instruments Current portion of debt Bank overdraft Current liabilities EQUITY & LIABILITIES | 50,792 80,113 (11,241) (2,812) (6,215) | 45,874 74,707 3,157 (3,259) (14,398) |
ASSETS Vessels Vessels under construction Office equipment, computers, cars Non-current assets Inventories Derivative financial instruments Other current assets Cash and cash equivalents Currents assets TOTAL ASSETS EQUITY Issued Capital 2 Share premium Retained earnings Other Reserves Result for the period Equity LIABILITIES Borrowings Non-current liabilities Trade and other payables Derivative financial instruments Current portion of debt Bank overdraft Current liabilities EQUITY & LIABILITIES | 110,637 101,785 | 106,081 100,809 |
ASSETS Vessels Vessels under construction Office equipment, computers, cars Non-current assets Inventories Derivative financial instruments Other current assets Cash and cash equivalents Currents assets TOTAL ASSETS EQUITY Issued Capital 2 Share premium Retained earnings Other Reserves Result for the period Equity LIABILITIES Borrowings Non-current liabilities Trade and other payables Derivative financial instruments Current portion of debt Bank overdraft Current liabilities EQUITY & LIABILITIES | 101,785 8,070 3,599 44,689 9,116 | 100,809 7,061 3,951 45,456 9,115 |
ASSETS Vessels Vessels under construction Office equipment, computers, cars Non-current assets Inventories Derivative financial instruments Other current assets Cash and cash equivalents Currents assets TOTAL ASSETS EQUITY Issued Capital 2 Share premium Retained earnings Other Reserves Result for the period Equity LIABILITIES Borrowings Non-current liabilities Trade and other payables Derivative financial instruments Current portion of debt Bank overdraft Current liabilities EQUITY & LIABILITIES | 65,474 | 65,583 |
ASSETS Vessels Vessels under construction Office equipment, computers, cars Non-current assets Inventories Derivative financial instruments Other current assets Cash and cash equivalents Currents assets TOTAL ASSETS EQUITY Issued Capital 2 Share premium Retained earnings Other Reserves Result for the period Equity LIABILITIES Borrowings Non-current liabilities Trade and other payables Derivative financial instruments Current portion of debt Bank overdraft Current liabilities EQUITY & LIABILITIES | 277,896 | 272,473 |
*unaudited and also not reviewed by an auditor
Fairstar Heavy Transport NV 5 2012 Q1 Report
Condensed Statement of Cash Flows | Note | Q1 2012 Q1 2011 |
YTD YTD | ||
Result after taxation Share-based payments 3 Change in valuation of financial instruments Depreciation and Amortisation Cash flows from operating activities Changes in working capital Net cash from operating activities Net cash from investing activities Issue of equity net of fees Net Change Borrowings Cash flow from financing activities Net change in cash and cash equivalents Cash and cash equivalent (excluding bank overdraft) as per opening balance Cash and cash equivalents (excluding bank overdraft) per closing balance | (6,215) 96 - 2,026 | (6,423) 99 (3,787) 2,015 |
Result after taxation Share-based payments 3 Change in valuation of financial instruments Depreciation and Amortisation Cash flows from operating activities Changes in working capital Net cash from operating activities Net cash from investing activities Issue of equity net of fees Net Change Borrowings Cash flow from financing activities Net change in cash and cash equivalents Cash and cash equivalent (excluding bank overdraft) as per opening balance Cash and cash equivalents (excluding bank overdraft) per closing balance | (4,093) (2,356) | (8,096) 381 |
Result after taxation Share-based payments 3 Change in valuation of financial instruments Depreciation and Amortisation Cash flows from operating activities Changes in working capital Net cash from operating activities Net cash from investing activities Issue of equity net of fees Net Change Borrowings Cash flow from financing activities Net change in cash and cash equivalents Cash and cash equivalent (excluding bank overdraft) as per opening balance Cash and cash equivalents (excluding bank overdraft) per closing balance | (6,449) (2,536) 10,324 209 | (7,715) (868) - 556 |
Result after taxation Share-based payments 3 Change in valuation of financial instruments Depreciation and Amortisation Cash flows from operating activities Changes in working capital Net cash from operating activities Net cash from investing activities Issue of equity net of fees Net Change Borrowings Cash flow from financing activities Net change in cash and cash equivalents Cash and cash equivalent (excluding bank overdraft) as per opening balance Cash and cash equivalents (excluding bank overdraft) per closing balance | 10,533 1,548 1,540 | 556 (8,027) 29,027 |
Result after taxation Share-based payments 3 Change in valuation of financial instruments Depreciation and Amortisation Cash flows from operating activities Changes in working capital Net cash from operating activities Net cash from investing activities Issue of equity net of fees Net Change Borrowings Cash flow from financing activities Net change in cash and cash equivalents Cash and cash equivalent (excluding bank overdraft) as per opening balance Cash and cash equivalents (excluding bank overdraft) per closing balance | 3,088 | 21,000 |
Changes in equity Issued Share Retained Other Result for Total | ||
Capital Premium Earnings Reserves the period | ||
Opening Balance Issue of Equity Cash Flow hedges Change in option reserve Repurchase of shares Result added to Retained Earnings Result for the period Balance as at end of the period | 45,874 74,707 (11,241) (3,259) 4,918 5,406 351 96 (6,215) | 106,081 10,324 351 96 - - (6,215) |
Opening Balance Issue of Equity Cash Flow hedges Change in option reserve Repurchase of shares Result added to Retained Earnings Result for the period Balance as at end of the period | 50,792 80,113 (11,241) (2,812) (6,215) | 110,637 |
*unaudited and also not reviewed by an auditor
Fairstar Heavy Transport NV 6 2012 Q1 Report
Notes to First Quarter 2012 Reportin thousands of USD unless indicated otherwise
1 Accounting policies
The unaudited financial report complies with International
Financial Reporting Standards (IFRS) and has been prepared in
accordance with IAS 34 "Interim Financial Reporting". The
Interim Report should be read in conjunction with the
consolidated financial statements as at 31 December 2011. The
accounting policies and methods of computation applied in
these condensed consolidated interim financial statements are
the same as those applied in the consolidated financial
statements as at and for the year ended 31 December 2011.
Preparation of the consolidated interim financial statements
requires management to make judgments, estimates and
assumptions that affect the application of policies and
reported amounts of assets and liabilities, income and
expenses. Actual result may differ from these estimates. The
estimates and associated assumptions are based on historical
experiences and various other factors that are believed to be
reasonable under the circumstances, the result of which form
the basis of making the judgments about the carrying values
of the assets and liabilities that are not readily apparent
from other sources. The estimates and the underlying
assumptions are reviewed on an ongoing basis.
The audited financial statements 2011 can be found on our
website at www.fairstar.com
The authorised share capital of the Company is EUR 98,900,000
divided into 215 million ordinary shares with a nominal value
of EUR 0.46, of which 89,172,779 shares have been placed at
the end of the period.
The Company currently holds 492,792 Depository Receipts or
Registered Shares in its own capital.
At the end of the period the Company has 1,079,000 employee options outstanding of which 615,667 are fully vested.
Weighted | |
Number average exercise of options price | |
Outstanding at the beginning of the year Granted Forfeited Expired/ cancelled Exercised Outstanding at the end of the period | 1,082,000 7.89 325,000 (3,000) - - |
Outstanding at the beginning of the year Granted Forfeited Expired/ cancelled Exercised Outstanding at the end of the period | 1,404,000 8.51 |
At the end of the period the Company has capital commitments amounting to approximately USD 110 million which are not included in the balance sheet.
5 Contingent assetsThe company has obtained a refund guarantee for the USD 90 million down payments to the yard during the construction period of the vessels.
Fairstar Heavy Transport NV 7 2012 Q1 Report
6 Related Party Transactions
The Supervisory and Management Board of the Company directly
control 0.6% of the voting shares of the Company. Roger
Granheim represents Torghatten Group, controlling 15.2% of
the voting shares of the Company. Belle de Bruin represents
Indofin Group, controlling 10.2% of the voting shares of the
Company. No transactions were conducted during the quarter.
Fairstar Heavy Transport NV 8 2012 Q1 Report
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