Shareholders’ Equity
Group’s objectives for equity management are: a) to generate value for shareholderss; b) to protect the Group's continuity; c) to support the Group's development.
The Group intends to maintain adequate leverage, allowing a satisfactory return to shareholders as well as easy access to bank finance. Debt/equity ratio and its pattern are constantly monitored, taking into account the available cash flow.
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Share Capital
Share Capital, fully subscribed and paid-up as at 31 December 2012 was unchanged since the previous year and consisted of 187,706,990 common shares and 74,943 savings shares, all of a par value of € 0.50, and for a total value of € 93,891 thousand.
Share premium reserve
Formed concurrently with the share capital increase finalized in 2010, it amounts to € 11,201 thousand, net of all costs related to the above
transaction and unchanged since the previous year. Legal reserve
This too is unchanged on last year, amounting to € 18,778 thousand and corresponding to one fifth of the share capital.
Retained profit
This item amounted to € 88,483 thousand, a reduction of € 5,827 thousand compared with 31 December 2011. We should remind you that the amount shown includes the overall effect on Shareholders’ Equity deriving from adoption of the international accounting standards.
Profit & Loss for the year
This shows the Group’s loss in the year of € 47,942 thousand, against a loss of € 4,686 thousand the previous year.
Non-controlling interests
This is the interest of third-party minority shareholders and amounts to € 56 thousand.
A more detailed analysis of the changes of the consolidated Shareholders’ Equity can be found in the relevant statement.
Medium/Long-Term Liabilities
Bank loans
Amounts due to banks are detailed as follows (in thousands of euros):
BNL: m/t. Framura Commerzbank: m/t. Four Moon Banca IMI: Banco Popolare m/t. Four Smile ABN AMRO: m/t. Four Antarctica m/t. Four Atlantica Unicredit : m/v. panamax TBN medium long term:
Unicredit
m/v. Four Springs
MPS Capital Services
Banca IMI - Commerzbank:
FPSO Four Rainbow
m/v. Four Diamond m/v. Four Aida m/v. Four Nabucco m/v. Four Otello Banca Carige Corporate m/v. Four Rigoletto m/v. Four Butterfly m/v. Four Turandot Emro Finance m/v. TBN Four Emerald
Banca Popolare di Milano
Commerzbank Banca IMI
Subtotal medium/long term C/a and other overdrafts Total Line 5,000 - 349 2,230 - 4,616 5,000 2,010 2,011 1,112 852 814 1,112 - 1,100 1,100 1,099 - - 4,000 - 32,405 26,494 58,899 - 27,148 - 7,802 7,485 18,464 17,500 8,043 8,043 4,446 3,864 3,690 4,446 24,000 4,426 4,426 4,426 5,601 4,183 2,000 24,294 184,287 - 184,287 - - - - - 5,117 - 8,543 9,547 9,727 9,524 10,342 8,337 - 9,433 9,987 10,541 - - - - 91,098 - 91,098 5,000 27,148 349 10,032 7,485 28,197 22,500 18,596 19,601 15,285 14,240 14,846 13,895 24,000 14,959 15,513 16,066 5,601 4,183 6,000 24,294 307,790 26,494 334,284 within
1 5 years÷ more than5 years total up to
1 year
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It must be noted that values expiring “within one year” are entered in the financial statements under "Current liabilities” as "Short-term bank debts” and “Derivatives”.
Please also note that debts accounted for under the amortized cost method cause a lower value of € 1,561 thousand in the amounts effectively due to banks as per amortization plans.
Details:
Banca Nazionale del Lavoro
Loan signed and drawn at the end of 2011 for the sum of € 5 million, to be repaid in 18 months less one day with instalments decreasing as of the
thirteenth month, guaranteed by the first mortgage on m/t. Framura.
Interest charges are based on the relevant EURIBOR. The average rate applied for the year 2012 was 2.84%.
Unicredit S.p.A.
A loan of a maximum amount of € 30 million, signed on 14 November 2008 to be repaid for € 7.50 million by 30 June 2012 and the residual by 30 June 2013. Interest is linked to the EURIBOR rate at three months. The average rate applied for the year 2012 was 2.10%. Following the renegotiation at end 2012 (which entailed an alignment of the spread to today's current market values),
the loan - today totalling € 27.5 million - must be repaid in the amount of € 5,000,000 by 30 June 2014 and the residual amount by 30 2015.
The loan requires our complying with certain financial covenants (with respect to ratio between the shareholders' equity and residual debt, to ratio between net financial debt and EBITDA and to ratio between net equity and total
indebtedness). The control of the company by the present shareholders is to be maintained too. On the basis of the data as at 31 December 2012, the covenant relating to the ratio of debt and EBITDA does not appear to have been respected. This has no immediate effect but must be restored by 30 June 2013 as otherwise the bank has the right to demand early repayment.
For this covenant (already specifically waived in financial year 2012), if necessary the bank will be asked if it is willing to grant a specific exception,
which we are fairly certain to be able to obtain. Commerzbank
Loan disbursed on 13 January 2003, backed by a mortgage on the motor
vessel Four Moon, for an original amount of 15 million dollars to be repaid
in forty monthly instalments in arrears on a straight-line basis of capital, of which the first instalment was paid on 14 April 2003 and the last is due on
14 January 2013.
The loan was effectively converted at origin and kept in euros by means of a specific cross currency swap and discounts interest linked to the period EURIBOR. Starting from 14 October 2008 the floating interest rate has been converted into a fixed one until termination (3.14% spread included).
Taking into account the above hedging transaction, the average rate applied in 2012 as well as the rate for the last instalment due in January 2013 is 3.14%.
Banca IMI
Long term loan amounting to US$ 20 million, signed and drawn in June 2010, to be repaid in equal quarterly instalments, the first due and regularly paid on 31 December 2010 and the last due on 30 June 2017. The loan, backed by a first degree mortgage on the m/t. Four Springs and by the sale of the rights relating to the multi-year charter party on the unit, discounts interest linked to the period LIBOR (2.23% the average rate applied in 2012, 2.03% the rate applied to the instalment due at end March 2013). The loan (sat risk of the bank having the faculty to demand additional guarantees or partial early repayment) establishes the compliance of certain financial covenants such as a minimum shareholders' equity, a minimum amount of available liquidity, a minimum ratio equity/total assets, currently fulfilled. A minimum loan-to-value ratio is also to be maintained (and also this covenant is easily satisfied, provided that the value of the vessel is to be with charter attached). This US$-denominated loan is a partial hedge of the exchange rate risk related to the inflow generated in the same currency by the long term time charter of m/t. Four Springs and, as a consequence - provided that the coverage is efficient - the changes in the counter-value at the end-of-period exchange rate are directly booked as
Shareholder’s Equity. This amount for the year 2012 is - € 60 thousand; the cumulative amount as of the end of the year is equal to - € 825 thousand.
MPS Capital Services
A credit line for € 7.50 million (or US$-equivalent) signed on 27 November 2007, for an original duration of 7 years and extended by a further year in financial year 2012, to be drawn in one or more tranches, secured by mortgage on the company's office premises. Interest charges are based on the relevant EURIBOR/LIBOR. A commitment fee is due on the available and unused portion. At 31 December 2012 the full amount had been drawn. The average interest rate for 2012 was 2.81%.
Banco Popolare
A credit line for US$ 60 million, signed on 30th June 2008, to be reduced till the expiring date (last repayment 30th June 2018). The line was drawn in May 2009
for the reduced amount of US$ 49.50 million to finance the acquisition of m/t. Four Smile. Interests are charged based on the relevant LIBOR.
The average rate applied in 2012 was 1.44%; for interest to be paid in March 2013 the rate will be 1.36%.
The loan is considered as an Hedge for the expected cash flow (in dollars) generated by the vessels Four Smile and (partially) Four Springs. As a consequence, the changes in their counter-value at the end of the year due to €/US$ exchange rate fluctuations are directly booked as Shareholder’s Equity. This amount for the year 2012 is - € 751 thousand; the cumulative amount as of the end of 2010 is equal to - € 628 thousand.
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Banca IMI - Commerzbank
Ten-year loan for an original figure of € 50 million, disbursed on 2 May 2007, to be repaid in 40 constant quarterly instalments, of which the first is due on 2 August 2007 and the last on 2 May 2017. The loan, backed by a mortgage on
the FPSO Four Rainbow and by assignment of the contract for the use of the unit, discounts interest linked to EURIBOR (1.48% as the average offinancial year 2012) with a variable margin in relation to the ratio of residual debt and market value of the unit (which in any case must be less than 0.8).
This loan requires our complying with certain financial covenants (with respect to a minimum shareholders' equity, a minimum amount of available liquidity, a minimum EBITDA to financial charge ratio, a maximum debt to material assets ratio, all of them on consolidated basis), presently fully satisfied. Should such covenants not be fully complied with, the applicable margin will increase and the loan-to-value ratio will be restricted to 0.65.
ABN AMRO (in pool with NIBC)
Two ten-year loans amounting to US$ 42 million each, drawn on 25 May 2006 and 9 November 2006 respectively, concurrently with the deliveries of two new Ice-Class aframax tankers, repayable in monthly instalments plus a US$ 16 million “balloon” due together with the last instalments in May/November
2016. The two loans, secured by mortgage arrangements on the vessels Four Antarctica and Four Atlantica and by the assignment of the two respective
bare-boat contracts, generate interests calculated on LIBOR for the period. By means of specific interest rate swap operations, the loan interest relating to Four Atlantica was established from February 2011 to February 2013 and the loan interest relative to Four Antarctica was established from May 2011 to May 2013. Considering these operations, the average rates applied in 2012 were respectively 1.42% and 1.71%.
These loans require our complying with certain financial covenants (with respect to a minimum shareholders' equity, ratio between the
shareholders' equity and residual debt, and a minimum amount of available liquidity), all of which are currently satisfied. Should such covenants not be fully complied with, the applicable margin will increase and the loan-to-value ratio will be restricted.
We point out that these US$-denominated loans are a partial hedge of the
exchange rate risk related to the inflow generated in the same currency by the-bare boat contracts for the two vessels (“hedge accounting”). As a
consequence, the changes in their counter-value at the end of the year due to €/US$ exchange rate fluctuations are directly booked as Shareholder’s Equity. The change in Shareholders’ Equity in 2012 was € 676 thousand.
Unicredit
Four loans of maximum US$ 22 million each to finance four new handy bulk
carriers, entirely drawn concurrently with the deliveries of Four Aida (early October 2009), Four Nabucco (end May 2010), Four Otello (end June
2010) and Four Diamond (end August 2011) and all duly amortized.
The loans will be repaid in 15 years in quarterly instalments with increasing principle (for the first two vessels) and constant (for the second two) following the final disbursement concurrently with delivery of each ship.
The loans are secured by Premuda S.p.A. and by mortgage on the relevant vessel. Interest charges are based on the relevant LIBOR (average rates 2012 between 1.6% and 1.7%).
Banca Carige - Corporate line
Credit facilities for an original amount of € 30 million, and which today amount to € 24 million, to be reduced, following the renegotiation in financial year 2012 by 8 million per year as from 31 December 2014 (last due date 31.12.2016). The facilities that can also be used in dollars, discount interest linked to EURIBOR/LIBOR for the period (2.44% the average rate applied in 2012) are backed by Premuda S.p.A. and by a pledge over 1,800,000 shares in Premuda International S.A.H. A commitment fee is due on the available and unused
portion. This loan requires our complying with certain financial covenants (with respect to the ratio between operating result and financial charges, ratio
between net debt and net equity and a minimum shareholders' equity, all of them on consolidated basis), which, if not respected, may give the bank the right to demand the early repayment of the loan. As at the date of these financial statements, only one of these covenants had not been respected (EBIT/net financial expense).
Banca Carige
Three loans of US$ 22 million each to three four new handy bulk carriers, entirely drawn concurrently with the deliveries of Four Rigoletto (March 2011), Four Butterfly (October 2011) and Four Turandot (April 2012), all duly amortized. The loans will be repaid in 15 years in quarterly instalments with increasing capital following final disbursement concurrently with the delivery of each vessel. The loans are secured by Premuda S.p.A. guarantee and by mortgage on the relevant vessel. Interest charges are based on the relevant LIBOR (ranging from 2.29% to 2.62% on average in 2012).
Emro Finance
Loan of a maximum amount of US$ 20 million destined to pay for the new handy bulk carrier (Four Emerald) under construction in Vietnam, delivery of which is expected in April 2013. A portion of US$ 7.5 million has already been disbursed to cover the amounts advanced to the shipbuilders and the rest will be provided when the ship is delivered. The loan will be repaid over twelve years in quarterly constant instalments of principal starting from the final disbursement, as well as a balloon of approximately US$ 3.6 million due with the last instalment. The loan establishes (at risk of the bank having the right to demand early repayment) respect with certain financial covenants (relating to
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a minimum shareholders' equity, the ratio of EBITDA and financial expense, the ratio of net financial position and shareholders' equity on a consolidated
level), which are currently all respected. The loan is backed by surety given by Premuda S.p.A. and by the transfer of the refund guarantee during construction, replaced by a mortgage on the ship as from delivery. Interest is charged based on the relevant LIBOR.
Banca Popolare di Milano
Loan of a maximum amount of US$ 31.15 million destined to pay for the first new panamax bulk carrier under construction in Korea, delivery of which is expected in 2013. The amount of US$ 5.7 million has already been disbursed to cover the amounts advanced to the shipbuilders as of today and the rest will be provided on the occasion of the next payments to the shipbuilders, which are thus completely covered, including the instalment on delivery of the ship.
The loan will be repaid over twelve years in quarterly constant instalments
of principal starting from the final disbursement, as well as a balloon of US$ million 7.15 due with the last instalment. The loan establishes (at risk
of the bank having the right to demand an increase in the spread applied and, if not restored in the following year, the early repayment) compliance with a financial covenant (ratio of net financial position and shareholders' equity of the debtor), presently respected.
The loan is backed by surety given by Premuda S.p.A. and by the transfer of the refund guarantee during construction, replaced by a mortgage on the ship as from delivery. Interest is charged based on the relevant LIBOR.
Commerzbank
A credit line of an original € 30 million signed on 31 July 2007, for a duration of 5 years, secured by pledge on financial products issued by Commerzbank itself, amounting to € 20 million, to be drawn in one or more tranches. Following renegotiation in financial year 2012 (which entailed bring the spread in line with the current market values) upon expiry of 31 July 2012 the facilities were partially repaid and must be progressively extinguished by April 2014. Interest charges are based on the relevant EURIBOR. A commitment fee is due on the available and unused portion. The average rate applied in 2012 was 1.99%. Banca IMI - Corporate line
Credit facilities subscribed by Premuda International S.A.H. on 24 December
2012 for the original maximum amount of € 32.5 million, disbursed for 25 million in December 2012, to be reimbursed as follows: 6.25 million by
30 June 2014 and the residual amount by 30 June 2015. The facilities are
guaranteed by Premuda S.p.A. and by a pledge over the shares of Four Vanguard Serviços e Navegaçao Lda. Interest charges are based on the
relevant EURIBOR. A commitment fee is due on the available and unused portion. The loan establishes (at the risk of the bank having the right to demand
early repayment) some financial covenants (in relation to a minimum level of liquidity and a minimum level of shareholders' equity for the debtor and
a minimum level of liquidity, a minimum level of shareholders' equity and a minimum ratio of own funds and total assets on a consolidated level) at present all respected.
Banca Popolare di Milano (pooled with eight other banks)
A credit line for € 20.5 million signed on 06 July 2011, available for 18 months less one day, to be drawn in one or more tranches. Interest charges are based on the relevant EURIBOR. The credit line is unsecured. As at 31 December
2012, € 14.45 million had been drawn, all paid back by the last due date of 18 January 2013. The average interest rate applied for 2012 was 3.03%.
As at this reporting date, negotiations are underway to renew the operation. Amounts drawn under the last credit line are represented in the above table as “Overdraft and other”.
We point out that at 31 December 2012 the following loan was cancelled: Efibanca
(in pool with Banca Carige, Centrobanca and Mediocredito Lombardo)
A loan granted in 2000 in the original amount of US$ 48 million and subsequently euro-denominated, secured by a mortgage registered on the two units Four Island and Four Bay.
The loan, encumbered by interest linked to the period EURIBOR rate (average rate for 2012 2.0%) could be repaid in forty-eight increasing quarterly instalments for capital, the last of which due and repaid on 15 October 2012. It should be noted that there is an ongoing interest rate risk related to the above mentioned transactions, covered by financial derivative transactions for a total amount of € 38.6 million, as per the attached table.
The item registered, equivalent to € 3,631 thousand on 31 December 2012, as opposed to a corresponding value of € 3,627 thousand on 31 December
2011, represents the overall allocations for litigations, third party claims and
other liabilities. Particularly, this item includes all provisions accrued by Four Vanguard Serviços and Navegaçao Lda. (totalling € 3,000 thousand), to cover the cost that may arise from the outcome of fiscal litigation regarding
the first years in business and focusing on income received while preparing the FPSO prior to the contract coming into effect and the subsequent tax depreciation of the same. The Australian tax authority issued its final position in December 2011. Backed by the opinions of appointed fiscal advisors, the Australian tax authority's final position drew criticism, as it was deemed excessively harsh and formally incorrect.
The accrued provision - corresponding to approximately 40% of the amount claimed including penalties and interest - appears to be reasonable, also in view of a possible jointly-agreed settlement.
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Provisions for staff severance indemnity
This item refers to sums accrued for employees severance indemnities, determined on an actual basis, as previously stated under the Valuation Criteria.
Current Liabilities
Short-term bank debts
This item refers to overdraft facilities, short-term credit lines and the short-term quota of medium/long-term loans, as stated in the description of the bank loan detail table previously shown.
Derivatives instruments
This item refers to the “fair value” evaluation of the financial derivatives implemented to protect the Group from risks generated by fluctuations of exchange and interest rates, as summarized in the table attached which also reports all information requested by the recently amended version of IFRS 7. Suppliers
This item indicates current sums due to various suppliers, The amount of exposure, significantly lower than in the previous year, and is in line with the volume of activity carried out, in accordance with the agreed payment terms.