I.M. Skaugen Posts 4Q 2012 Results (Norway)

The I.M. Skaugen Group (IMSK) said it has achieved a negative pre-tax result for 4Q12 of USD4.4 mill, compared to a loss of USD1.6 mill in 4Q11. EBITDA was USD2.5 mill for 4Q12 compared to USD2.3 mill in 4Q11.

The preliminary pre-tax result for 2012 was a loss of USD15.8 mill, compared to a loss of USD8.1 mill in 2011. EBITDA for 2012 was USD21.2 mill compared to USD23 mill in 2011.

PERFORMANCE 2012

Year 2012 was a year of many external challenges, testing the company’s organisation in all aspects imaginable. The company experienced a “new high” in doing its first LNG cargoes and within ports in China, but also experienced a new low point in the unfortunate and tragic collision involving our vessel Norgas Cathinka in Indonesian waters.

The company is not satisfied with the overall financial performance of the group as it shows a negative result for the year.

IMS no longer considers the Skaugen China Activities nor the Marine Transfer Activities to be part of the Group’s core business activities.  IMS consider its investment in the related entities to be financial investments as of 31 December 2012. The Group will now focus its resources primarily on it Gas Transportation Activities.

Due to the underlying negative results in 2012, the equity ratio has shown a negative trend during the year and ended at 25.7 % and a reduction from 30.1%.  The company’s target is to have an equity ratio of at least 30% and the company has and will take needed steps to maintain it above 25% and bring it back to the target level.  Several projects have been initiated by the Board to accomplish this and measures have been taken during 2012 in order to reduce the negative results in the company’s non-core businesses and the company expects to see the benefits of these actions during 2013.

On a regular basis the company collects “brokers’ estimated values” for all the gas carriers in our fleet, and these are substantially higher than their book value. Currently the brokers’ values are 17% higher than the average book value of the fleet. The company has also applied a “value in use” concept as an estimate for the true earning capacity and thus the earning capacity adjusted value of the  company’s gas carriers are substantially higher than the brokers’ estimated values. The company has also received offers for sale of vessels and these offers are above the “brokers’ estimated values”. Historically, the companyhas most of the time been able to sell its vessels at a price above book value and thus with book gain.

The company is in the process of monetizing the investments it has made in China and specially the investment in Shenghui Gas and Chemical Systems Ltd (50% ownership). The company is reasonably confident that these shares can be sold at a gain compared to book value of the investment and that the process will be concluded in 2013.

The company has taken decisive steps to reduce its cost of operations.

The company’s “centralise and simplify program” initiated in late 2010 to reduce the headcount and by this our overall cost of operations has delivered a positive contribution during the year. The underlying 50 per cent reduction of head count of shore side staff from its start in the late 2010 will now have full effect in 2013. The company has also further scaled down on its new business development activities during the year and it will now start to capitalize on the investments made in the core business activity.

After the repayment of IMSK10 in March, the company is satisfied to have reduced significantly any refinancing risk until 2015.

The bonds have however, increased the company’s financing cost and their effective interest rate has increased to 11.2%.

The company currently has no material capital commitments and remains fully financed.

[mappress]
LNG World News Staff, February 18, 2013; Image: I.M. Skaugen