Dear Shareholders,
We would remind you that following the resolutions passed by the
Shareholders’ Meeting on 29 September 2011 and 12 June 2012, the Company’s Board of Directors consists of the following members:
Raffaele Agrusti, Giacomo Costa, Franco Debenedetti, Antonio Dinia, Antonio Gozzi, Stefano Meroi, Alcide Rosina, Anna Rosina, Stefano Rosina,
Alessandro Zapponini and Stefano Zara; it shall remain in office until the
Shareholders’ Meeting called to approve the financial statements as at 31 December 2013.
The Chairman of the Board is Alcide Rosina, whose powers include, amongst others, legal representation towards third parties as well as ordinary and extraordinary administration, excluding certain acts reserved by law for the Board as well as acts of financial significance in excess of certain limits, such as: purchase and sale of ships; contracts for the employment of vessels exceeding 60 months; acquisition and sale of subsidiaries; granting of medium/long-term loans to subsidiaries; provision of guarantees.
The Managing Director is Stefano Rosina, legal representative towards third parties, in charge of running and coordinating the commercial activity of fleet administration, management of fleet operations, as well as the activity and administration of Group Companies.
The Deputy Chairman is Giacomo Costa, Independent Director.
The Board constituted an internal “Internal Control Committee”, a “Transactions with Related Parties Committee” and a “Remuneration
Committee”.
The task of the “Internal Control Committee” is to address issues related to the company's activities with proposal and consultancy functions; it is comprised of Deputy Chairman Giacomo Costa and Directors Antonio Dinia and Stefano Zara and the meetings are attended by the Chairperson of the Board of Statutory Auditors or an Auditor appointed by him or her.
The “Transactions with Related Parties Committee”, comprising the same members of the “Internal Control Committee”, has the task of providing its non-binding opinion on more significant transactions with related parties.
The “Remuneration Committee” is made up of the Directors Raffaele Agrusti, Antonio Gozzi and Stefano Zara. The role of this Committee is to advise the Board of Directors on matters relating to the remuneration of the Chairman and the Managing Director and to set the remuneration criteria for the Senior Management of the Company and the Group. The meetings of this Committee are also attended by the Chairman of the Board of Statutory Auditors or an Auditor appointed by him.
In 2012, the Board of Directors convened on six occasions, all attended by
the Board of Statutory Auditors. During these meetings, pursuant to a well-established procedure, the attendees received updated information on:
market performance, commercial coverage and technical management of the Fleet, trends in costs and profit/loss, performance and activity of subsidiaries and related companies, financial position, as well as all other operations and events concerning management.
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During the year, there were no unusual transactions in relation to the ordinary business management to report and there were no significant non-recurrent transactions with related parties or otherwise generating a conflict of interest. In 2012, as in the year before, the only intra-group transactions that took place concerned the Group's operational structure and were all concluded with or between subsidiaries or affiliated companies. These transactions mainly consisted of management activities and financial support to which ordinary fees or remunerations were applied, always consistent with normal practice and carried out at market value.
All transactions, whether intra-group or with related parties, are summarised in the appendix to the Notes.
The activities carried out by our subsidiaries and affiliates during the Financial Year are detailed hereunder. Nonetheless, we refer you to the Notes for further information on each company.
our Jolly S.p.A., Genoa, built in a partnership with the Messina Group and held 50%, it is the owner of two aframax product carriers each 115,700 dwt, the Four Wind and the Four Sky, delivered by the Shipyard Samsung respectively in July 2009 and March 2010. In FY 2012 - given the low level of the charter market - the Company recorded a period loss of the fleet totalling € 5,989,842 (in FY 2011, a loss was recorded of
€4,940,418). In addition to the loss generated by the management of the fleet during the year, we must add the penalty of approximately € 8.8 million paid to the Shipyard Samsung for having cancelled one of the
two suezmax tankers commissioned (as conditions had not been met - by 31 December 2012 - to exercise the option to develop a new substitute unit) and the provision of € 19.0 million made in view of the capital loss recorded early 2013 following the sale to third parties, at the same time as delivery by the shipyard, of the second of these units. The period result therefore posts a loss of € 33,791,480 (of which we have a 50% share). Premuda International S.A.H., Luxembourg, subsidiary, carries out the traditional function of holding of the Group's foreign assets and owns two aframax tankers Four Atlantica and Four Antarctica, bare chartered to the Stena Group with a long-term contract since delivery (May/November 2006). The Company ended the year with a profit of € 7,833,218 after fleet depreciation of € 3.3 million (in 2011: profits of € 14,501,684 after fleet depreciation for € 3.3 million)
1.0 F
2.0
. Subsidiaries
Premuda International S.A.H. controls the following companies:
Four Handy Ltd., United Kingdom, a wholly-owned subsidiary, operating under the UK Tonnage Tax scheme owns the 34/35,000 dwt handy bulk
carriers Four Aida, Four Nabucco, Four Otello, Four Rigoletto, Four Diamond, Four Butterfly and Four Turandot (the last of which started-
up during the year).
The Company plans to withdraw two additional units in this category in 2013, and has ordered from the Korean Shipbuilding yard two further SPP panamax bulk carriers, delivery of which is expected late September 2013 and March 2014.
The Company also controls three supramax vessels (Four Shinano,
Four Kitakami and Four Mogami) under long term time charters with various lease extensions and purchase options (7/8 years -
Japanese scheme).
The Company has been greatly penalised by the negative outlook of
charters in the bulk cargo sector and closed the year with a loss of US$ 21,537,997 (of which US$ 7,525,618 from write-downs due to fleet
impairment), as compared with the corresponding positive result of US$ 4,476,337 last year.
During the year, the company participated with a 60% share in the establishment of the Premuda Sierra Leone Limited, which in turn holds a 49% share in the Sierra Leone National Carrier Limited, joint venture with the government of Sierra Leone for cargo transport to and from that country. At end 2012, neither company was yet operative
Four Vanguard Serviços and Navegaçao Lda., Madeira, wholly-owned, is the owner of the FPSO Four Rainbow (formerly Four Vanguard),
deployed in Australia since May 2003 to June 2012 for crude oil extraction. Subsequent to that date, once the charter contract was over, the unit was transferred to Labuan and disarmed whilst awaiting definition of a new project for its use. During the disarming period, unit depreciation is calculated at the reduced rate of one third the ordinary rate in order to consider the lesser depreciation of the asset connected with its non-use.
The result for the year was a loss of € 1,199,129 compared to a loss of € 452,412 the previous year. During FY 2012, the company won the
arbitration proceedings brought against ENI Australia with regards to the invalidity of the last contractual extension exercised by ENI. As detailed in the management report to the consolidated financial statements, to which we would refer you, in the first part of 2013, all economic claims were formalised with regards to ENI Australia, including that relating to the quantification of the arbitration already won on the merits, and that relating to the several-times-mentioned problem of unpaid charters and damages suffered in the past.
The results of these arbitration procedures are expected to be obtained between the first half of 2014 and the first half of 2015
2.1
. 2.2
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2.3 Australian FPSO Management Pty Ltd., Australia, wholly-owned, is in charge of the technical and operational management of the FPSO
Four Rainbow. The company ended 2012 with a profit of AU$ 298,276 (approximately € 240,000) after a profit of AU$ 292,887 in 2011.
2.4 Premuda (Monaco) SAM, Monaco, 90%-owned, in charge of the commercial and operational management of all of the Group's foreign- flagged units, recorded a profit of € 97,185 (a loss of € 39,903 in 2011). Please refer to the Consolidated Financial Statements for a more detailed analysis of the markets in which the Company and its subsidiaries operate.
It is noted that, as of 1 January 2005 and with a duration of ten years, Premuda S.p.A. joined the Tonnage Tax scheme that was also adopted in Italy,
in line with what was already in effect in most EU countries.
This regulation provides the flat rate calculation of income produced by ships on the International Register, based on their tonnage.
We would point out that a tax assessment is currently underway by the Tax Authority - Provincial Directorate of Trieste. The assessment refers to FY 2010 (substantial) and FY 2013 (formal).
The average euro/dollar exchange rate was 1.2851 as compared with the corresponding figure of 1.3912 for 2011. At end 2012, the euro/dollar exchange rate was 1.3194 (1.2939 at end 2011). The American currency therefore weakened by approximately 1.9% in the end of year values and was 8.3% higher than average values in the previous year.
We remind you that our revenues are predominantly dollar-denominated and the fleet value is marked-to-market in the same currency, whereas only some of our costs are normally sustained in dollars. Consequently, a strong dollar generally has a positive effect, both on Balance Sheet and on Profit & Loss, although the effects of currency equivalents in the financial statements at the end of the year from items in foreign currencies has to be considered, with particular reference to any medium/long term financing expressed in US$. Premuda’s common stock was regularly listed on the Stock Exchange. It is to be noted that 14,972,733 shares were exchanged in 2010 (4,532,068 last year).
The total traded value through the Stock Exchange was approximately € 4.3 million compared to approximately € 3.0 million in 2011.
According to data provided by Borsa Italiana S.p.A., our stock's performance for the year was - 58.74% as opposed to - 14.61% for the MICROCAP index. Since end December 2012, the Premuda security has belonged to the SMALLCAP index.
Based on the data available, as at the end of 2012 the number of Company shareholders was unchanged (1,862 as at 31 December 2011).
Miscellaneous information
As at 31 December 2012 (as for the end of last year), the Company Investimenti Marittimi S.p.A. (60% Navigazione Italiana S.p.A., 30% Assicurazioni Generali S.p.A. and 10% Duferco Italia Holding S.p.A.) held 111,033,237 Premuda ordinary shares representing 59.15% of the share capital with voting rights. At the present reporting date, this equity interest is unchanged.
As a result of the above, Navigazione Italiana S.p.A. (which directly owns 12,267,612 ordinary shares corresponding to 6.54% of the share capital with voting rights), through Investimenti Marittimi S.p.A., is the de facto parent
company of Premuda, without, however, exercising management and co-ordination activities, pursuant to Art. 2497 of the Italian Civil Code.
The financial statements as at 31.12.2012 have been audited by the company
PricewaterhouseCoopers S.p.A. which, by meeting resolution passed on 27 April 2010, had been appointed to do so for the period 2010-2018.
PricewaterhouseCoopers S.p.A. also issued the limited review of the official Italian version of the Half Yearly Report 2012.
In accordance with the provisions of art. 2428 of the Italian Civil Code, we hereby inform you that:
- the Company did not carry out any research and development activity in 2012;
- the Company does not own any treasury shares;
- the Company does not own shares or interests in parent companies; - none of the subsidiaries own Company shares;
- the Company has implemented a hedging strategy through derivative financial instruments to cover risks arising from the variations in exchange rates and interest rates.
Pursuant to the aforesaid art. 2428 of the Italian Civil Code, we further inform you that:
- the business of Premuda and the Group is highly regulated, at national and international level, on environmental safety issues, as a pre-requisite to be allowed to trade. These rules also concern air emissions, disposal of waste and waste water, and scrapping of obsolete ships. The company is also
exposed to other risks and unknowns, typical of the shipping industry, such as piracy, war hostilities, bad weather, groundings and collisions, etc.
Such risks are covered, as far as possible, by insurance, and limited by submitting technical management to certification by specialized auditors. For further information, please refer to the chapter on the environment and safety, which along with the glossary is integral part of this Report.
The Group is also exposed to financial risks, as reported in detail in the Notes to the Financial Statements.
- as to health and safety in the workplace, Premuda complies with laws and regulations in force and, in particular, reviews and updates the Risk
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The shares held and/or involved in transactions by members of the administrative and auditing bodies, the General Managers and the
Key Managers - previously indicated in the specific statement attached to the management report - are now described in the Report on Remuneration drawn up in accordance with Italian Legislative Decree no. 58/1998 (Consolidated Law on Finance) and Consob's Issuers' Regulation, published in accordance with the law and made available on the Company's website
in the Investor Relations area.
All information required by art. 123 bis of the Consolidated Law on Finance can be found in the relevant “Report on Corporate Governance and Ownership Structure” released concurrently with this Annual Report and available in the Investor Relations section of the company website .
The Company complies with art. 36 paragraphs a), b) and c) of Consob's “Market Regulations” regarding “Conditions for listing shares
of companies controlling subsidiaries located and subject to Laws outside the European Union”.
In accordance with Italian Legislative Decree no. 196/2003 (on personal data protection), the Company has taken all security measures necessary and made all due checks.
The Company has an organizational model establishing administrative responsibility in accordance with Italian Legislative Decree no. 231/2001 as subsequently amended
and supplemented; it is furthermore and compliant with the dictates of Italian Law no. 262/2005.
We hereby inform you that the annual Financial Statements of Premuda S.p.A. are issued in accordance with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). A plan for the remuneration of, and incentives for, “Top Management” is in force, as recommended by the Remuneration Committee and resolved by the Board of Directors.
The programme - largely unchanged in the previous three years - refers to the years 2011-2012-2013 and is developed on three levels:
a) an annual compensation, based on the financial result achieved in each year, equal to 5% of the consolidated net profit generated by the Company exceeding 5% of the consolidated Net Equity at the beginning of the period. This amount is allocated: 50% to the Chairman, 25% to the Managing Director, 10% to the General Manager and the residual 15% is shared amongst the other Managers in the Group;
www.premuda.net
b) a compensation based on the growth of the Group's net equity in the 3-year period, payable at the end of FY 2013. This compensation is equal to 5% of the differential between the “Consolidated Net Equity” at the end of the period and the “Consolidated Net Equity” at the beginning of the period, increased by 15%; the proportional allocation is as detailed in item a); c) a nominal “stock option” plan (so-called “phantom stock”) with a
compensation equal to the difference between the monthly average of the Premuda stock price on the option allocation date and its price in the week preceding the option declaration, as listed on the Milan Stock Exchange. This plan was resolved by the Shareholders’ Meeting of 9 June 2011.
The options refer to a maximum cumulative amount of 3,600,000 shares per year and are to be exercised within 36 months starting from 1 January of the following year. The options refer to 1,800,000 shares for the Chairman, 1,080,000 for the Managing Director and 720,000 for the General Manager. The initial share value is € 0.714 for the options assigned in 2011 (monthly average as listed on the Stock Exchange in the month of March 2011) expiring in December 2014; the initial share value for the options assigned in the year 2012 is € 0.344 (equal to the monthly average as listed on the Stock Exchange
in March 2012) expiring in December 2015; the initial share value for the options to be assigned in the year 2013 will be € 0.219, equal to the
monthly average as listed on the Stock Exchange in March 2013 expiring in December 2016.
The incentive plan in place for the past three years remains as it relates to point c) for options assigned at € 0.8925 with reference to the year 2010
(expiring on 31 December 2013).
In relation to the consolidated results obtained and the dynamics of the Group's consolidated Net Equity, no compensation is due for the year 2012 with reference to points a) and b) of the programme.
A provision of about € 0.07 million is accrued to cover the “fair value” at 31.12.2012 of the stock options assigned and still in place, as described in
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The financial position is summarized (in thousands of euro ) in the following table; at the end of the financial year our net financial exposure was € 19.2 million (compare to € 37.9 million at the end of 2011) with available cash of € 23.3 million.
We point out that (like in previous reports) the net financial position is reported net of “Long term financial credits” that - even if not expressly mentioned in the Consob
instruction DEM/6064293 dated 28th July 2006 - contribute to grant a clearer picture of the Group's effective indebtedness.
At 31 December 2012 about 51% of Premuda S.p.A.'s loans are euro-denominated (the residual are Dollars). The entity of financial indebtedness and its composition
represent - in this current turbulence seen on the financial markets and the weak shipping markets of reference - an element to which careful attention must be paid, also in relation to the lesser capacity of the fleet to generate liquidity in the current market contingency.
Please note that by end 2012, the financial negotiations that had begun during the year, as detailed in the explanatory notes to which we would refer you, were successfully
concluded.
The financial forecasts developed on the basis of the budget for FY 2013 show, for the remainder of the year, use of liquidity amounting to approximately € 12 million,
which means that new hedges must be organised.
To this end, negotiations are underway with banks for the renewal of credit facilities for 18 months less one day, for the amount of € 15/20 million, in lieu of the previous facilities
that expired and were duly repaid in January.
We believe that, based on available cash and credit lines, commitments by subsidiaries for new investments and expected cash-flow, the expectations of a positive conclusion to the negotiations mentioned previously, the company will have sufficient financial resources to cover its operating needs and fulfil its obligations at least for the next twelve months. Financial Position at 31.12.11 193 2,504 2,697 (12,904) (18,515) (92) (31,511) (28,814) (72,200) (72,200) (101,014) 63,100 63,100 (37,914) Financial Position Cash Cash equivalent
Cash & Cash equivalent
Short-term bank debt Short-term portion of
medium/long-term bank debt Other short-term financial debt
Short-term borrowings
Total net short-term financial debt
Medium/long-term bank debt
Long-term borrowings