SIEM SHIPPING INC
23 February 2015 - SIEM SHIPPING INC. (the "Company"; OSE Symbol: SSI) announces its preliminary results for the fiscal year and quarter ended 31 December 2014, prepared in accordance with International Financial Reporting Standards ("IFRS"), as discussed below.
Siem Shipping Inc., operating in the specialised reefer industry as STAR Reefers, is a leading global owner and operator of refrigerated vessels, and directly controls 28 vessels with a total capacity of 16 million cbft.
• Net income before loss on sale of vessel and impairment charges of USD3.8 million
(2013: USD3.0 million)
• Net profit USD0.6 million (USD2.7 million)
• EPS USD0.06 (USD0.28)
• EBITDA of USD25.2 million (USD19.7 million)
• Last two of the four C-Class vessels that were lengthened were redelivered from the shipyard and placed on seven-year time charters.
• Four vessels chartered-out on 4.5-year contracts to Chiquita
• Refinanced debt with a new USD100 million credit facility
• Ecuador Star sold and delivered to new owners October 2014
• Ad-hoc buy-back of shares announced December 2014 completed in January 2015
• Contract backlog of USD460 million
• About 84% of fleet capacity is fixed for 2015
In 2014, the Company reported a net income prior to impairment charges of USD3.8 million
(2013: USD3.0 million), or USD0.40 per share (USD0.31 per share). After impairment charges and loss on sale of vessel of USD3.2 million (USD0.3 million) on older vessels, the Company reported a net profit of USD0.6 million (USD2.7 million), or a net profit of USD0.06 per share (USD0.28 per share).
Gross revenues were USD225.9 million (USD255.4 million) and net operating revenue after voyage and other expenses was USD149.4 million (USD149.7 million). The capacity employed increased by 0.5% to 212.2 million cbft (211.2 million cbft).
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Ship operating and administrative expenses were USD59.7 million (USD64.0 million) with the decrease mainly due to fewer vessels. In prior periods, the amortisation of dry-docking costs was recorded in ship operating expenses. In December 2014, the amortisation expenses were reclassified to depreciation and amortisation expenses to reflect industry practice. Dry- docking costs are capitalised and amortised over the period until the next scheduled dry- docking, ranging from 3 to 5 years. For comparative purposes, the amortisation expenses recorded in fiscal year and fourth quarter of 2013 were also reclassified.
Time charter and bareboat charter expenses decreased to USD64.6 million (USD66.0 million), primarily due to several dry-dockings taking place during Q4 2014.
EBITDA was USD25.2 million (USD19.7 million). Depreciation and amortisation expenses were USD16.3 million (USD13.2 million). The increase in depreciation was due to a higher depreciation base following the investment in the lengthening of the four C-Class vessels.
Impairment charges relating to the adjustment of fleet valuation and loss on sale of vessels were USD3.2 million (USD 0.3 million).
Interest expense was USD5.2 million (USD3.7 million). Interest expense increased due to net increased borrowing.
Other financial items were USD0.2 million (USD0.3 million), which included the mark-to- market of five-year interest swaps for a profit of USD0.6 million (USD0.7 million).
During the quarter, the Company recorded a net loss of USD0.8 million (Q4 2013: net loss
USD2.5 million), or a net loss of USD0.08 per share (net loss USD0.26 per share).
Gross revenues were USD47.2 million (USD58.9 million) and net operating revenue after voyage and other expenses was USD34.5 million (USD35.9 million) due to fewer vessels. Capacity employed for the three-month period was 49.7 million cbft (48.5 million cbft). The fourth quarter 2014 was affected by 7 STAR-Class vessels being dry-docked and two vessels going into lay-up. The fourth quarter 2013 was affected by the C-Class vessels not being operational due to the lengthening project.
Ship operating and administrative expenses were USD13.0 million (USD17.4 million), with the decrease mainly due to fewer vessels.
Time charter and bareboat charter expenses decreased to USD15.3 million (USD16.5 million). The reduction was primarily due to several dry-dockings taking place during Q4
2014.
EBITDA was USD6.1 million (USD1.9 million). Depreciation and amortisation expenses were USD4.1 million (USD3.3 million). The increase in depreciation was mainly due to a higher depreciation base following the investment in the lengthening of the four C-Class vessels.
Impairment charges relating to the adjustment of fleet valuation were USD2.2 million.
Interest expense decreased to USD0.6 million (USD1.1 million). The reduction was due to a new credit facility with a lower interest rate.
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Shareholders' equity was USD157.1 million at 31 December 2014 (31 December 2013:
USD156.5 million), or USD16.28 per share (31 December 2013: USD16.22 per share). On 30
September 2014, Siem Shipping refinanced its credit facilities with ABN AMRO and Siem Industries Inc. (76.8% shareholder of the Company) with a six-year USD100 million loan from ABN AMRO and Credit Suisse. Part of this (USD70 million) was drawn and the proceeds were used to repay the interest-bearing debt to ABN AMRO (USD12.1 million) and Siem Industries (USD44 million). The balance is used for general working capital purposes and for the possible acquisition of vessels. The new facility carries an interest rate of Libor plus a margin of 2.4%, an arrangement fee of 1% and a commitment fee of 1%. The first scheduled repayment was made in November 2014, USD5.8 million. The cash position during
2014 increased from USD16.6 million at year-end 2013 to USD 37.5 million at year-end
2014. In addition to the liabilities on the balance sheet, Siem Shipping has significant long- term charter commitments (see note 7 to the accounts).
In December 2014, Siem Shipping Inc. announced that its Board of Directors had resolved to
initiate an ad-hoc share buy-back program to purchase shares in the Company at a maximum price of NOK 60 per share for a maximum aggregate amount of USD5 million with acceptances to be in inverse order of size of shareholdings tendered in the offer. The offer was extended on the 7th January until 30th January 2015. On completion of the ad-hoc buy-back program, 84 shareholders representing 527,674 shares accepted the offer in the buy-back program for an aggregate consideration of NOK 31.7 million (USD 4.1 million). Following the buy-back, the issued and outstanding number of shares is 9,119,805 shares.
Q4 2014 spot market averaged USC51/cbft per 30 days, very similar to the USC52/cbft per 30
days observed in Q4 2013.
The Atlantic market was dominated by fish exports to West Africa and a strong potato season from the North Continent. The Nigerian fish import quota increased to 750,000 mt which had a very positive effect on demand for smaller refrigerated vessels of less than 350,000cbft. Demand for larger fruit carriers was much more muted.
Ecuadorian banana exports to Mediterranean and North Continent markets were largely serviced by regular long-term specialised reefers and container lines. Very few spot cargoes became available once the Ecuadorian Government increased the minimum reference price to be paid to producers from the beginning of November.
The imposition of sanctions and the sharp reduction in the oil price caused a significant fall in the value of the Russian Rouble against the US dollar and a sharp increase in Russian Rouble interest rates. Consequently, demand for citrus imports from Morocco to St. Petersburg plummeted by 50% compared to 2013. Russian banana imports were less badly affected, but by quarter-end were close to 20% down on the same period in 2013.
The dramatic fall in crude oil prices had little effect on Siem Shipping's results in the short term as the Company's exposure to fuel price variations is minimal, but sustained low fuel pricing will make specialised reefers more competitive compared to reefer containers over time.
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Philippine banana production finally recovered from Typhoon Pablo and much of the surplus fruit was shipped to destinations in the Middle East. Deciduous fruit contracts from Chile to the USA were concluded at similar freight levels to the previous season.
For the whole of 2014, the Company recorded unplanned operational off-hire of 0.5% (2013:
0.6%).
After the recent sale of the Ecuador Star, Chile Star and Uruguay Star, our in-house ship- management Company, STAR Reefers Poland, currently manages the total fleet of 16 Owned vessels as well as two car carriers indirectly owned by Siem Industries Inc. The performance statistics of STAR Reefers Poland demonstrate continued improvement and superior results as compared to previous third-party managers, and it has built on its success with certification to ISO9001, ISO14001 and OHSAS18001 standards and implementation of a new web-based integrated management tool to enhance the management and monitoring processes of the fleet. The Company was saddened by the death of an off-duty Able Seaman on board the Colombian Star in a tragic accident in September. No other major health, safety, environmental and quality (HSEQ) issues were reported during the year.
In March 2014, Siem Shipping agreed to enter into a contract with Chiquita (Great White
Fleet) to charter out four "STAR First"-Class vessels (STAR First, STAR Trust, STAR Service and STAR Quality). The charters are for a 4.5-year fixed period at a profitable rate. The vessels were delivered to Chiquita in June 2014.
In June 2014, Siem Shipping renewed its contract with the Russian banana charterer, the Banex Group, to provide a regular weekly service from Ecuador to St. Petersburg for an additional period of one year. The service employs seven vessels.
The project to lengthen the four C-Class vessels was completed in March 2014. The project took longer than anticipated due to delays by the shipyard. The first two vessels were redelivered in 2013, the third vessel was redelivered in January 2014 and the fourth vessel was redelivered in March 2014. The yard has submitted contract variations on all four vessels for claims for more time on the projects than it had anticipated when it signed the contract. The claims are disputed by the Company. To avoid any delay in redelivering the last vessel, Siem Shipping issued a guarantee letter to Quingdao Beihai Shipbuilding yard stating that it would reimburse any costs for which it was properly liable. Siem Shipping has taken legal advice in this matter and is hopeful that an amicable settlement can be achieved. All four vessels are contracted-out on seven-year time charters.
Ecuador Star was sold in October 2014. In 2005 Siem Shipping entered into a 9 year bareboat charter contract to charter in the Regal Star. That contract came to an end on 31st December
2014. The vessel has been redelivered to the Owner and will no longer form a part of the Siem Shipping fleet. In January 2015, the Company also sold two of its older and smaller vessels, Chile Star and Uruguay Star for USD5 million each. The sale generated a book loss of USD1.1 million per vessel, which has been booked in the 2014 accounts. The delivery of the vessels to new owners has already taken place. The net cash generated from the transactions have increased the Company's working capital.
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At 31 December 2014, 84% of the Company's fleet capacity for 2014 had been fixed and the balance is exposed to the spot market (2013: 80%).
The contract backlog at 31 December 2015 was USD460 million (2013: USD 443 million).
The Russian market is an important demand driver for specialized reefers. The uncertainty
created by the drop in oil prices and sanctions is therefore of significant concern and all operators will be following developments closely. To date, demand for bananas in Russia has reduced by around 20%. More expensive fruit products may be more adversely affected by higher Russian Rouble pricing, although the effect will be partially diluted by the drop in the price of fuel.
Those involved in the fish trades are preparing for another large seasonal catch with a number of former fruit carriers having been acquired for deployment offshore in Peru and Argentina.
The supply and demand for vessels engaged in the fruit trades looks to be reasonably well balanced. There are very few open ships and equally few open orders. In these circumstances, it is unlikely that the historically low rates currently being experienced will pick up in the near future.
20 February 2015
The Board of Directors of Siem Shipping Inc.
Also download our web page www.siemshipping.com
This release contains certain forward-looking statements regarding the intents, beliefs or current expectations. These forward-looking statements are based on information currently held. The Company assumes no obligation to update these statements. It is important to note that these forward-looking statements involve uncertainties about future performance. The Company's actual results may differ materially from these statements as a result of various important factors beyond the control of the Company.
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SIEM SHIPPING INC. GROUP - 4th QUARTER 2014STATEMENTS OF COMPREHENSIVE INCOME 2014 2013 2014 2013
(in $ thousand) 4Q 4Q Jan-Dec Jan-Dec
Restated Restated
Unaudited unaudited Unaudited audited
Gross revenue
$ 47,165 $
58,935
$ 225,937 $
255,433
Voyage expenses and other operating revenue -12,661 -23,084 -76,496 -105,726
Net operating revenue 34,504 35,851 149,441 149,707
Ship operating and administrative expenses -13,024 -17,394 -59,706 -64,015
Time charter hire -14,959 -16,102 -62,920 -64,343
Bareboat charter hire -383 -419 -1,643 -1,662
Earnings before interest, tax, depr. and amort. 6,138 1,936 25,172 19,687
Depreciation and amortisation -4,106 -3,315 -16,310 -13,226
Impairment charges -2,150 - -2,150 -300
Operating income -118 -1,379 6,712 6,161
Interest expense -635 -1,131 -5,181 -3,715
Other financial items net -49 -9 189 308
Loss on sale of vessels - - -1,059 -
Net financial items -684 -1,140 -6,051 -3,407
Net income / (loss) before tax -802 -2,519 661 2,754
Taxes -9 -11 -45 -32
Net income
$ -811 $
-2,530 $
616 $
2,722
Other comprehensive income - - - -
Total comprehensive income / (loss)
$ -811 $
-2,530 $
616 $
2,722
Earnings / (loss) per share, basic and diluted (amounts in $) -0.08 -0.26 0.06 0.28
Wtd. avg. common shares outstanding 9,647,479 9,647,479 9,647,479 9,647,479
Issued and outstanding shares 9,647,479 9,647,479 9,647,479 9,647,479
STATEMENTS OF FINANCIAL POSITION 2014 2013
31 Dec 31 Dec
(in $ thousand) Unaudited Audited
ASSETS
Tangible non-current assets:
Vessels
$ 175,697 $
187,483
Capitalised project costs - 13,362
Other non-current assets 101 169
Other non-current assets
Pension funds 126 195
Current assets:
Inventory 5,563 8,301
Non-current asset held for sale 9,049 - Receivables and other current assets 15,559 24,512
Bank deposits 37,473 16,577
Total assets
$ 243,568 $
250,599
SHAREHOLDERS' EQUITY AND LIABILITIES
Shareholders' equity: Share capital
$ 96 $ 96
Additional paid-in capital 78,687 78,687
Retained earnings 78,284 77,668
Total shareholders' equity 157,067 156,451
Interest-bearing debt, long-term 51,488 46,558
Interest-bearing debt, short-term 11,437 11,944
Other short-term debt 23,576 35,646
Total liabilities 86,501 94,148
Total shareholders' equity and liabilities
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$ 243,568 $
250,599
STATEMENTS OF CASH FLOWS
2014 2013 2014 2013
(in $ thousand) 4Q 4Q Jan-Dec Jan-Dec
Unaudited Unaudited Unaudited Audited
Profit / (loss) before tax
$ -802 $
-2,519 $
661 $
2,754
Depreciation and amortisation 4,106 3,315 16,310 13,226
Impairment charges / Loss on sale of asset 2,151 - 3,209 300
Other 5,260 11,765 -355 2,701
Cash flow from operating activities
Sales of vessels
Capital expenditure vessels
Cash flow from investing activities
New interest-bearing debt Repaid interest-bearing debt Net changes in financing fees
Cash flow from financing activities
Net change in cash
Cash at beginning of period
Cash at end of period
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (in $ thousand) Shareholders' equity at beginning of period - Net profit for the period Shareholders' equity at end of period | 2014 2013 Jan-Dec Jan-Dec Unaudited Audited |
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (in $ thousand) Shareholders' equity at beginning of period - Net profit for the period Shareholders' equity at end of period | 156,451 $ 153,729 616 2,722 |
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (in $ thousand) Shareholders' equity at beginning of period - Net profit for the period Shareholders' equity at end of period | $ 157,067 $ 156,451 |
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (in $ thousand) Shareholders' equity at beginning of period - Net profit for the period Shareholders' equity at end of period |
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Notes to the Accounts
1 Basis for preparation
The cons olidated financial s tatements have been prepared in accordance with IAS 34 "Interim Financial Reporting". The interim financial information for 2014 and 2013 are unaudited.
2 Significant accounting policies
The accounting policies us ed in the preparation of the financial s tatements are cons is tent with thos e dis clos ed in the annual financial s tatements for the year ended 31 December 2013. The cons olidated condens ed financial s tatements
s hould be read in conjunction with the 2013 annual financial s tatements , which include a full des cription of the Group's
accounting policies .
In prior periods , the amortis ation of dry-docking cos ts were recorded in s hip operating expens es . In December 2014, the amortis ation expens es were reclas s ified to depreciation and amortis ation expens es to reflect indus try practice.
Dry-docking cos ts are capitalis ed and amortis ed over the period until the next s cheduled dry-docking, ranging from 3- to 5 years . For comparative purpos es , the amortis ation expens es recorded in fis cal year and fourth quarter of 2013 were als o reclas s ified.
3 Segment reporting
As of 31 December 2014, the Siem Shipping fleet cons is ts of 30 s pecialis ed reefer ves s els with an average s ize of 572,000 cbft The s malles t ves s el has a capacity of 424,000 cbft and the larges t ves s el 618,000 cbft. The ves s els primarily trans port fruit from the Southern to the Northern hemis phere.
Revenue Q4 2014 Q4 2013 2014 2013
Bananas 93% 96% 85% 90% Deciduous 0% 0% 5% 3% Citrus 0% 0% 2% 2% Fis h 6% 4% 7% 4% Other 1% 0% 1% 1% Total 100% 100% 100% 100%
4 Revenue
Revenue cons is ts of time charters and voyage charters .
Other operating revenue cons is ts of net revenue from s hort-term charters on non-core ves s els and management fees .
(in $ thousand) Q4 2014 Q4 2013 2014 2013
Gros s revenue T/C 26,697 24,345 107,523 103,790
Gros s revenue V/C 20,468 34,590 118,414 151,643
Total gros s revenue 47,165 58,935 225,937 255,433
Voyage expens es and other operating revenue -12,661 -23,084 -76,496 -105,726
Net operating revenue 34,504 35,851 149,441 149,707
5 Tangible assets
(in $ thousand) 31 Dec 14 31 Dec 13
Book value beginning of year 201,014 174,263
Additions , including capitalis ed project cos ts 7,267 39,977
Dis pos al -3,915 - Reclas s ification - as s ets held for s ale -9,049 - Depreciation and amortis ation of dry-docking for the period -16,310 -13,226
Ves s el impairment -2,150 - Los s on s ale of ves s el -1,059 -
Book value end of period 175,798 201,014
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6 Interest-bearing debt
(in $ thousand)
Siem Indus tries Loan
Bank
Syndicate Total
Balance (including financing fees ) 31 December 2013 34,614 23,888 58,502
New debt 9,000 70,000 79,000
Repaid debt -44,000 -30,093 -74,093
Financing fees 386 -870 -484
Balance (including financing fees ) 31 December 2014 - 62,925 62,925
7 Charter commitments
From 1 January 2015
(in $ thousand) 2015 2016 2017-2023 Total
Long-term charters 63,419 63,419 298,502 425,340
8 Related parties
Siem Indus tries Inc. owns 76.8% of Siem Shipping Inc. Mr. Kris tian Siem is Chairman of the Board in Siem Indus tries . Siem Indus tries is controlled by a trus t whos e potential beneficiaries include Mr. Kris tian Siem and his family.
The Company leas es office s pace from other Siem Group companies and s hares joint office facilities with other companies in the Siem Group in the Cayman Is lands .
Siem Indus tries has provided s econdary guarantees for the timely payment of charter hire, relating to certain of the ves s els Siem Shipping has on long-term charters . The fee paid to Siem Indus tries for providing the guarantees year to date was USD0.6 million. Siem Car Carriers AS is indirectly 100% owned by Siem Indus tries . Siem Shipping provides managment
s ervices to Siem Car Carriers on an arms ' length bas is and the fee charged in 2014 was USD1.3 million.
In January 2013, the Company s ecured USD35 million of financing for the lengthening of the four C-Clas s ves s els
(Caribbean Star, Costa Rican Star, Cote D'Ivoirian Star and Colombian Star ) from Siem Indus tries Inc. The loan was a
3.5-year uns ecured loan, with an arrangement fee of 1.5% and a commitment fee of 3.5% p.a., and carries an interes t rate of
3-month Libor plus a margin of 8.5% p.a. In March 2014, Siem Indus tries provided an additional USD9.0 million for one year for financing of the lengthening project and additional working capital. The loan was als o an uns ecured loan, with an arrangement fee of 0.5% and a commitment fee of 2.5% p.a., and carries an interes t rate of 3-month Libor plus a margin of
8.5% p.a. The Group refinanced all interes t-bearing debt on 30 September 2014, when all interes t-bearing debt to Siem
Indus tries was repaid. Total interes t, commitment and arrangement fee expens ed in 2014 were USD3.2 million.
9 Subsequent Events
Siem Shipping s old in January 2015 two of its older and s maller ves s els , Chile Star and Uruguay Star for USD5 million each. The s ale generated a book los s of USD1.1 million per ves s el, which has been booked in the 2014 accounts . The delivery of the ves s els to new owners has already taken place. The net cas h generated from the trans actions have increas ed the Company's working capital.
In December 2014, Siem Shipping Inc. announced that its Board of Directors had res olved to initiate an ad-hoc s hare buy-back program to purchas e s hares in the Company at a maximum price of NOK 60 per s hare for a maximum aggregate amount of USD5 million with acceptances to be in invers e order of s ize of s hareholdings tendered in the offer.
The offer was extended on the 7th January until 30th January 2015. On completion of the ad-hoc buy-back program 527,674 s hares had been accepted in the buy-back program for an aggregate cons ideration of NOK 31.7 million (USD 4.1 million). Following the acquis ition, the is s ued and outs tanding number of s hares is 9,119,805 s hares .
Als o download our web page: www.s iems hipping.com
For further information, pleas e contact
Simon Stevens , CEO +44 207 747 0500
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