AKVA group ASA 4Q 2010 financial reporting
Operations and profit
Operating revenues in 4Q were 195.9 MNOK (142.9) with an EBITDA of -8.7 MNOK (-16.1), reports www.megafishnet.com with reference to AKVA Group. The earnings were negatively affected by up revision of costs on recirculation projects amounting to 11.3 MNOK, of which the major part related to two recirculation projects in Norway. Both projects are in the final stages and are operating. The expected cost to finalize the projects is provided for and included in the 2010 figures. In addition to the above there were 1.0 MNOK in restructuring costs related to changes in the recirculation organisation and bad debt provisions totalling 3.8 MNOK related among other, older recirculation projects that have proven difficult to collect. In comparison, the 4Q 2009 figures were negatively affected by special items amounting to net 11 MNOK with 7 MNOK gain on sales of Wavemaster Net Services and 18 MNOK in costs from re-evaluation of projects, accounting errors and other one-offs.
The depreciations in 4Q were 7.9 MNOK (7.2) resulting in an EBIT of -16.6 MNOK (-23.2). Net financial items were -2.6 MNOK (-2.1) resulting in a profit before tax in 4Q of -19.2 MNOK (-25.3). Net loss was -14.5 MNOK (-21.6) after taxes of -4.7 MNOK.
Operating revenues in 2010 were 742.5 MNOK (599.3) with and EBITDA of -9.9 MNOK (-11.5). Depreciations and amortizations amounted to 31.0 MNOK (30.9) resulting in an EBIT of -40.9 MNOK (-42.4). Profit before tax for 2010 was -50.9 MNOK (-52.0) after allowing for net financial items of -9.9 MNOK (-9.6). Net loss was -37.6 MNOK (-39.1).
Balance sheet and cash flow
Working capital in the group balance sheet, defined as non-interest bearing current assets less non-interest bearing current liabilities was 102.7 MNOK, down from 120.0 MNOK from the beginning of the year. Focus is maintained on containing the working capital.
Net interest-bearing debt amounted to 168.6 MNOK at the end of the year versus 141.9 MNOK at the beginning of the year. Gross interest bearing debt amounted to 211.7 MNOK versus 198.3 MNOK at the beginning of the year. Cash and unused credit facilities amounted to 51.7 MNOK. Total assets and total equity amounted to 694.4 MNOK and 227.6 MNOK respectively, resulting in an equity ratio of 32.8%.
Investments in 2010 amounted to 24.2 MNOK whereof 8.9 MNOK is capitalized R&D expenses in accordance with IFRS.
A waiver extending through 2Q 2011 relating to the financial covenants of the major credit facilities and loans was agreed with the company's main bank in 4Q.
Shareholder issues
Earnings per share for 4Q 2010 were -0.84 NOK (-1.25). For the full year earnings per share were -2.19 NOK (-2.27). The calculation is based on 17.222.869 shares average.
Trond Williksen was appointed new CEO in AKVA group ASA and is expected to assume his position on the 1st of March 2011. Trond Williksen has broad experience from fishery and fish farming business and was in his previous position Executive Vice President in Aker Seafoods. Trond Williksen holds an MBA in strategy, finance and operational management from the University of Washington, USA.
Market and future outlook
The order inflow was relative good in 4Q with order inflow stemming basically from all markets. Market fundamentals in the salmon industry are good. The Norwegian salmon farming industry posted record profits in 2010 and is expected to have another good year in 2011. This seems also to be reflected in an increased investment activity both for cage based farming and for land based projects. The same applies also for the UK market.
The recovery of the Chilean salmon farming industry gained momentum in 4Q and resulted in a good order inflow for AKVA group. Unless there is a setback in recovery from the sanitary issues, the outlook for the Chilean salmon industry is good and business volume for AKVA group should increase over the 2010 level.
The Mediterranean market has become increasingly important for AKVA group and accounted for 12% of the total revenues. The order inflow from this market has remained fairly good and set to be maintained for 2011.
The competitive environment is characterized by relative few players with strong competition putting pressure on margins. During 2010 the group implemented measures to improve production and logistic as well as project management to lower the costs. The effects of this should gradually come through during 2011. The earnings were heavily affected by cost overruns on recirculation projects in 2010. Changes have been made in the organization as well as in engineering and project management. Going forward, the group has positioned itself among the leading suppliers of recirculation technology to the salmon farming industry as well as to marine species.
The order backlog was at the end of 4Q 348 MNOK versus 204 MNOK at the end of 4Q last year.